<SEC-DOCUMENT>0001292814-12-001159.txt : 20120430
<SEC-HEADER>0001292814-12-001159.hdr.sgml : 20120430
<ACCEPTANCE-DATETIME>20120427204903
ACCESSION NUMBER:		0001292814-12-001159
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		7
CONFORMED PERIOD OF REPORT:	20121231
FILED AS OF DATE:		20120430
DATE AS OF CHANGE:		20120427

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			COMPANHIA DE SANEAMENTO BASICO DO ESTADO DE SAO PAULO-SABESP
		CENTRAL INDEX KEY:			0001170858
		STANDARD INDUSTRIAL CLASSIFICATION:	WATER SUPPLY [4941]
		IRS NUMBER:				000000000
		STATE OF INCORPORATION:			D5
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-31317
		FILM NUMBER:		12791585

	BUSINESS ADDRESS:	
		STREET 1:		RUA COSTA CARVALHO, 300
		STREET 2:		SAO PAULO
		CITY:			SP
		STATE:			D5
		ZIP:			05429-900
		BUSINESS PHONE:		011-55-11-3388-8000

	MAIL ADDRESS:	
		STREET 1:		RUA COSTA CARVALHO, 300
		STREET 2:		SAO PAULO
		CITY:			SP
		STATE:			D5
		ZIP:			05429-900
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>sbsdf4q11_6k.htm
<DESCRIPTION>FINANCIAL STATEMENTS 4Q11
<TEXT>

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<DIV><FONT size=1></FONT>&nbsp;</DIV>

<DIV align=center><FONT color=#000000 size=3 face="Times New Roman"><B>SECURITIES AND EXCHANGE COMMISSION </B></FONT></DIV>

<DIV align=center><FONT color=#000000 size=3 face="Times New Roman"><B>Washington, DC 20549 </B></FONT></DIV>

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<DIV align=center><FONT color=#000000 size=3 face="Times New Roman"><B>FORM 6-K</B></FONT></DIV>

<DIV><FONT size=1></FONT>&nbsp;</DIV>

<DIV align=center><FONT color=#000000 size=3 face="Times New Roman"><B>REPORT OF FOREIGN ISSUER</B><BR><B>PURSUANT TO RULE 13a-16 OR 15d-16 OF THE</B></FONT></DIV>

<DIV align=center><FONT color=#000000 size=3 face="Times New Roman"><B>SECURITIES EXCHANGE ACT OF 1934</B></FONT></DIV>

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<DIV><FONT color=#000000 size=2 face="Times New Roman"><B>For&nbsp;April 11, 2012</B></FONT></DIV><FONT color=#000000 size=2 face="Times New Roman"><B>(Commission File No. 1-31317) </B></FONT></DIV>

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<DIV><FONT size=1></FONT>&nbsp;</DIV>

<DIV align=center><FONT color=#000000 size=3 face="Times New Roman"><B>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP </B></FONT></DIV>

<DIV align=center><FONT color=#000000 size=2 face="Times New Roman"><I>(Exact name of registrant as specified in its charter) </I></FONT></DIV>

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<DIV align=center><FONT color=#000000 size=3 face="Times New Roman"><B>Basic Sanitation Company of the State of Sao Paulo - SABESP </B></FONT></DIV>

<P><BR>&nbsp;</P>

<DIV align=center><FONT color=#000000 size=2 face="Times New Roman"><I>(Translation of Registrant's name into English) </I></FONT></DIV>

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<DIV align=center><FONT color=#000000 size=2 face="Times New Roman"><B>Rua Costa Carvalho, 300 <BR>S&#227;o Paulo, S.P., 05429-900 <BR>Federative Republic of Brazil </B></FONT></DIV>

<DIV align=center><FONT color=#000000 size=2 face="Times New Roman"><I>(Address of Registrant's principal executive offices) </I></FONT></DIV><BR>

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<BR>

<DIV align=center><FONT color=#000000 size=2 face="Times New Roman">Indicate by check mark whether the registrant files or will file <BR>annual reports under cover Form 20-F or Form 40-F. <BR><BR>Form 20-F ___X___ Form 40-F ______</FONT></DIV>

<DIV align=center><FONT color=#000000 size=2 face="Times New Roman">Indicate by check mark if the registrant is submitting the Form 6-K <BR>in paper as permitted by Regulation S-T Rule 101(b)(1)__.</FONT></DIV>

<DIV align=center><FONT color=#000000 size=2 face="Times New Roman">Indicate by check mark if the registrant is submitting the Form 6-K <BR>in paper as permitted by Regulation S-T Rule 101(b)(7)__.</FONT></DIV>

<P align=center><FONT size=2 face="'Times New Roman, Times, Serif'">Indicate by check mark whether the registrant by furnishing the <BR>information contained in this Form is also thereby furnishing the <BR>information to the Commission pursuant to Rule 12g3-2(b) under <BR>the Securities Exchange Act of 1934. <BR><BR>Yes ______ No ___X___</FONT></P>

<DIV align=center><FONT color=#000000 size=2 face="Times New Roman">If "Yes" is marked, indicated below the file number assigned to the<BR>registrant in connection with Rule 12g3-2(b):</FONT> </DIV>

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<P style="TEXT-ALIGN: justify"><B><FONT size=6 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento<BR>B&#225;sico do Estado de S&#227;o Paulo -<BR>SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B>&nbsp;</P>

<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Financial Statements as of<BR>December 31, 2011 and 2010</FONT></B></P>

<P style="TEXT-ALIGN: justify"><STRONG></STRONG>&nbsp;</P>

<P style="TEXT-ALIGN: justify"><STRONG></STRONG>&nbsp;</P></DIV>

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<P style="TEXT-ALIGN: justify"><FONT size=5 face="Georgia,Times New Roman,Times,serif">Table of Contents of the 2011 Financial Statements</FONT></P>

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<TR>

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   <TD width="24%"></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>

   <P style="MARGIN-LEFT: 2pt"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Report of Independent Registered Public Accounting Firm</FONT>&nbsp;</P></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>

   <P style="MARGIN-LEFT: 0pt; MARGIN-RIGHT: 2pt"><FONT size=2 face="Georgia,Times New Roman,Times,serif">3</FONT>&nbsp;</P></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>

   <P style="MARGIN-LEFT: 2pt"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Management Report</FONT>&nbsp;</P></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>

   <P style="MARGIN-LEFT: 0pt; MARGIN-RIGHT: 2pt"><FONT size=2 face="Georgia,Times New Roman,Times,serif">6</FONT>&nbsp;</P></TD></TR>

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   <P style="MARGIN-LEFT: 2pt"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Balance Sheets</FONT>&nbsp;</P></TD>

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   <P style="MARGIN-LEFT: 0pt; MARGIN-RIGHT: 2pt"><FONT size=2 face="Georgia,Times New Roman,Times,serif">50</FONT>&nbsp;</P></TD></TR>

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   <P style="MARGIN-LEFT: 2pt"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Statements of Income</FONT>&nbsp;</P></TD>

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   <P style="MARGIN-LEFT: 0pt; MARGIN-RIGHT: 2pt"><FONT size=2 face="Georgia,Times New Roman,Times,serif">52</FONT>&nbsp;</P></TD></TR>

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   <P style="MARGIN-LEFT: 2pt"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Statements of Changes in Equity</FONT>&nbsp;</P></TD>

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   <P style="MARGIN-LEFT: 0pt; MARGIN-RIGHT: 2pt"><FONT size=2 face="Georgia,Times New Roman,Times,serif">53</FONT>&nbsp;</P></TD></TR>

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   <P style="MARGIN-LEFT: 2pt"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Statements of Cash Flows</FONT>&nbsp;</P></TD>

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   <P style="MARGIN-LEFT: 0pt; MARGIN-RIGHT: 2pt"><FONT size=2 face="Georgia,Times New Roman,Times,serif">54</FONT>&nbsp;</P></TD></TR>

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   <P style="MARGIN-LEFT: 2pt"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Statements of Value Added</FONT>&nbsp;</P></TD>

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   <P style="MARGIN-LEFT: 0pt; MARGIN-RIGHT: 2pt"><FONT size=2 face="Georgia,Times New Roman,Times,serif">56</FONT>&nbsp;</P></TD></TR>

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   <P style="MARGIN-LEFT: 2pt"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Notes to the Financial Statements</FONT>&nbsp;</P></TD>

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   <P style="MARGIN-LEFT: 0pt; MARGIN-RIGHT: 2pt"><FONT size=2 face="Georgia,Times New Roman,Times,serif">57</FONT>&nbsp;</P></TD></TR>

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   <P style="MARGIN-LEFT: 2pt"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Statement of Executive Officers</FONT>&nbsp;</P></TD>

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   <P style="MARGIN-LEFT: 0pt; MARGIN-RIGHT: 2pt"><FONT size=2 face="Georgia,Times New Roman,Times,serif">162</FONT>&nbsp;</P></TD></TR>

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   <P style="MARGIN-LEFT: 2pt"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Fiscal Council Report</FONT>&nbsp;</P></TD>

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   <P style="MARGIN-LEFT: 0pt; MARGIN-RIGHT: 2pt"><FONT size=2 face="Georgia,Times New Roman,Times,serif">164</FONT>&nbsp;</P></TD></TR></TABLE></DIV>

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<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-2</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Independent auditor's report</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">To the Management and Shareholders</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Estado de S&#227;o Paulo - SABESP</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">We have audited the accompanying financial statements of Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP ("Company" or "Parent company"), which comprise the balance sheet as at December 31, 2011 and the statements of income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">We have also audited the accompanying consolidated financial statements of Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP and its subsidiaries ("Consolidated"), which comprise the consolidated balance sheet as at December 31, 2011 and the consolidated statements of income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Management's responsibility</FONT></B><BR><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">for the financial statements</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Management is responsible for the preparation and fair presentation of the parent company financial statements in accordance with accounting practices adopted in Brazil, and for the consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and accounting practices adopted in Brazil, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Auditor's responsibility</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Brazilian and International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-3</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Opinion on the parent company</FONT></B><BR><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">financial statements</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In our opinion, the parent company financial statements referred to above present fairly, in all material respects, the financial position of Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP as at December 31, 2011, and its financial performance and cash flows for the year then ended, in accordance with accounting practices adopted in Brazil.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Opinion on the consolidated</FONT></B><BR><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">financial statements</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP and its subsidiaries as at December 31, 2011, and their financial performance and cash flows for the year then ended in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and accounting practices adopted in Brazil.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Emphasis of matter</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">As discussed in Note 2 to these financial statements, the parent company financial statements have been prepared in accordance with accounting practices adopted in Brazil. In the case of Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP, these practices differ from IFRS applicable to separate financial statements only in relation to the measurement of investments in jointly-controlled subsidiaries based on equity accounting, while IFRS requires measurement based on cost or fair value. Our opinion is not qualified in respect of this matter.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-4</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Other matters</FONT></B><BR><BR><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Supplementary information -</FONT></B><BR><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">statements of value added</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">We also have audited the parent company and consolidated statements of value added for the year ended December 31, 2011 prepared by management, the presentation of which is required by the Brazilian corporate legislation for listed companies, but is considered supplementary information for IFRS. These statements were subject to the same audit procedures described above and, in our opinion, are fairly presented, in all material respects, in relation to the financial statements taken as a whole.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">S&#227;o Paulo, March 23, 2012</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">PricewaterhouseCoopers</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Auditores Independentes</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">CRC 2SP000160/O-5</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Valdir Renato Coscodai</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Contador CRC 1SP149262/O-6</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-5</FONT></P></DIV>

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   <TD align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B>&nbsp;</TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT size=2 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Management Report</FONT></B>&nbsp;</TD></TR></TABLE></DIV>

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<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">MESSAGE FROM CEO</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">It is not possible talking about civilization without mentioning basic sanitation, which is human being s basic right and condition necessary so that the environment and natural resources are not fated to exhaustion. In this regard, supply water, collect and treat sewage is an activity intrinsically connected with sustainability. One cannot live without the other.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">A company like Sabesp everyday deals with sustainability in all its dimensions. We are socially responsible for providing a service whose effects over recipient s life quality and health conditions are direct and immediate. We are environmentally involved in the conservation of springs, recovery of water resources and rivers, stream and ocean depollution. We are committed to the financial strength of a business whose maturation is naturally lengthy and costs should necessarily low.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp s commitment to sustainability precepts is already recognized by society. This is the result of a culture that has been built up in our employees daily activities, our service providers, in the quality which is increasingly required from our suppliers, but sustainability does not mean the final destination, it is a direction to be sought towards a future much better than present time.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Therefore, when preparing this report, we were concerned with broadening the limits of boundaries. We enhanced the dimension of the information disclosed, we sought to improve the quality of the information that has already been published, we acknowledge our weaknesses when and where they can be noticed. We are committed to transparency, common good and respect for our stakeholders.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">I understand that our mission of supplying sanitation to over 27.6 million people only is successful if grounded in fundamental principles: transparency, good management and technology. Sabesp has been able to fulfill this mission, efficiently on a solid, dynamic, innovative and sustainable basis in financial, environmental and social terms.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sustainable development cannot be better translated than a sewage treatment station capable of effectively operating over its 50 years of useful life, at lower cost, with greater service scope, taking most advantage of natural resources and with a minimum impact on the environment. This means sustainability.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp is also committed to the universalization of sanitation services in formal areas where we operate by the end of this decade. Therefore, the company foresees to maintain the average of investments recorded in the past years, i.e., approximately R$ 2 billion.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Based on these principles, Sabesp obtained relevant results in the expansion of water and sewage services in 2011. In both cases, the number of new connections was the highest over the last 12 years. By the end of this decade, we plan to make another 1.6 million new water connections and nearly 2.3 million sewage connections in order to materialize our target of universalizing sanitation services in our marketplace.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-6</FONT></P></DIV>

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   <TD align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B>&nbsp;</TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT size=2 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Management Report</FONT></B>&nbsp;</TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">All six performance targets outlined for our organization in 2011 have been achieved. We consider the performance satisfactory, without mentioning that, although our business strategy kept its direction, 2011 was a year of changes in our Management, we exchanged four of six members of our Board of Executive Officers. In our opinion, our performance in new businesses is still far from our plans but it is possible to move forward.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The commitment of universalizing water supply, sewage collection and treatment services by the end of this decade is one of the most privileged and challenging commitments that a company could have. Sabesp has the privilege of, in each of its small to relevant actions, collaborating to a better people s life, a healthier environment, so that society is economically more developed and socially fairer.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Dilma Pena<BR></FONT></B><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Chief Executive Officer of Sabesp</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-7</FONT></P></DIV>

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   <TD align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B>&nbsp;</TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT size=2 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Management Report</FONT></B>&nbsp;</TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Profile</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp is a mixed-capital company with limited liability that operates in the sanitation sector, whose majority shareholder is the S&#227;o Paulo State Government. Its common shares are traded on the </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Novo Mercado </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">(New Market) segment of the Securities, Commodities and Futures Exchange of S&#227;o Paulo (BM&amp;FBovespa), under the ticker SBSP3, and as American Depositary Receipts (ADR level III) at New York Stock Exchange (NYSE), under the ticker SBS.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Founded in 1973, Sabesp is the largest sanitation company of the Americas and the world s fourth largest company in terms of population served, according to the 13</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">rd </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">edition (2011-2012) of the Pinsent Masons Water Yearbook. The Company s head offices are located in the City and State of S&#227;o Paulo.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In addition to providing water and sewage services in the State of S&#227;o Paulo, Sabesp is also accredited to operate in other states and countries, and may also operate in the drainage and city cleaning segments, handling of solid waste and energy.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">We directly operate sanitation services in 363 municipalities of the State of S&#227;o Paulo in 2011, the municipality of Macatuba is no longer our operated base and we supply water on the wholesale basis to other seven municipalities, among which five also utilize our sewage treatment services. Total population supplied with water by Sabesp reaches 27.6 million people (3.5 million referring to wholesale, 200,000 in partnership and 23.9 million directly by the company), which accounts for approximately 70% of the urban population of the State of S&#227;o Paulo.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In addition, we also provide water and sewage services in other three municipalities of the State of S&#227;o Paulo, through special purpose entities (SPE) organized with private companies, namely: &#193;guas de Castilho S.A. and &#193;guas de Andradina S.A., in partnership with CAB Ambiental; Saneaqua Mairinque S.A., jointly with Foz do Brasil. In the city of Mogi Mirim, in partnership with OHL Meio Ambiente and Etep, we are in charge of the modernization, implementation and management of sewage treatment system also through a SPE.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">We also provide consulting services in the water rational use, business and operating management in Panam&#225; and Honduras through a consortium signed with Latin Consult. In addition, we maintain partnerships with sanitation concessionaires of the states of Alagoas (Casal) and Esp&#237;rito Santo (Cesan).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp s mission is to provide sanitation services, contributing to improve life quality and environment . Our vision of the future foresees to be recognized in 2018 as the company that ensured universal access to water and sewage services in its marketplace, in a sustainable and competitive manner, with excellence in costumer service .</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Despite the dimension of the challenge, the company is well positioned to achieve its objective, with sustainability and profitability. We understand that most of level of investments required is already equalized to fulfill our investment plan. Nevertheless, we continue working hard in raising funds, mainly at lower costs, compatible with sanitation activity, in order to deal with investments necessary to expand our services.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In order to achieve the objective of universalizing services in 2011, the Company reformulated its strategic guidelines: growth with economic and financial sustainability; social and environmental sustainability; universalization and quality; proactive behavior in relationships; integration and innovation; and human capital as competitive force. The new cycle of strategic planning covers the period between 2011 and 2020.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-8</FONT></P></DIV>

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   <TD align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B>&nbsp;</TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT size=2 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Management Report</FONT></B>&nbsp;</TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company s commitment to a sustainable and responsible universalization of water and sewage services in its marketplace by the end of this decade is reflected in the financial strategy and social and environmental actions outlined herein.</FONT></P>

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   <TD width="100%" colSpan=8 align=left><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Table of indicators</FONT></I></B></TD></TR>

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   <TD width="100%" colSpan=8>&nbsp;</TD></TR>

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   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-TOP: #000000 1px solid" bgColor=#dbe5f1 width="30%" align=left><B><FONT size=1 face=Calibri-Bold,Arial,Helvetica,sans-serif>Indicators</FONT></B>&nbsp;</TD>

   <TD style="BORDER-TOP: #000000 1px solid" bgColor=#dbe5f1 width="10%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>Unit</FONT>&nbsp;</TD>

   <TD style="BORDER-TOP: #000000 1px solid" bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>2011</FONT>&nbsp;</TD>

   <TD style="BORDER-TOP: #000000 1px solid" bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>2010</FONT>&nbsp;</TD>

   <TD style="BORDER-TOP: #000000 1px solid" bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>2009</FONT>&nbsp;</TD>

   <TD style="BORDER-TOP: #000000 1px solid" bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>2008</FONT>&nbsp;</TD>

   <TD style="BORDER-TOP: #000000 1px solid" bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>2007</FONT>&nbsp;</TD>

   <TD style="BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>2006</FONT>&nbsp;</TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#b8cce4 width="100%" colSpan=8 align=center><B><FONT size=1 face=Calibri-Bold,Arial,Helvetica,sans-serif>Services</FONT></B></TD></TR>

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   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="30%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>Water</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>service</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>ratio</FONT>&nbsp;</TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="60%" colSpan=6 align=center><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>Trend</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>to</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>Univesalization</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><SUP><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>(1)</FONT></SUP></TD></TR>

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   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="30%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>Sewage</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>collection</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>service</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>ratio</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>%</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>82</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>81</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>80</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>79</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>79</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>78</FONT>&nbsp;</TD></TR>

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   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="30%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>Collected</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>sewage</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>treatment</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>ratio</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><SUP><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>(2)</FONT></SUP>&nbsp;</TD>

   <TD width="10%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>%</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>76</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>75</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>74</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>72</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>66</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>63</FONT>&nbsp;</TD></TR>

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   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="30%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>Resident</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>population</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>serviced</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>with</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>water</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>supply</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>thousand</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>inhabitants</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>23,911</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>23,625</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>23,363</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>23,162</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>22,959</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>22,700</FONT>&nbsp;</TD></TR>

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   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="30%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>Resident</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>population</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>serviced</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>with</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>sewage</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>collection</FONT>&nbsp;</TD>

   <TD width="10%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>thousand</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>inhabitants</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>20,498</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>20,024</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>19,600</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>19,198</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>18,881</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>18,519</FONT>&nbsp;</TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#b8cce4 width="100%" colSpan=8 align=center><B><FONT size=1 face=Calibri-Bold,Arial,Helvetica,sans-serif>Operational</FONT></B></TD></TR>

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   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="30%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>Water</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>connections</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>thousand</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>units</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>7,481</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>7,295</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>7,118</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>6,945</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>6,767</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>6,609</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="30%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>Sewage</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>connections</FONT>&nbsp;</TD>

   <TD width="10%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>thousand</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>units</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>5,921</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>5,718</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>5,520</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>5,336</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>5,167</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>5,002</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="30%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>Water</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>losses</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>%</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>25.6</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>26.0</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>26.0</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>27.9</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>29.5</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>31.9</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="30%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>Water</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>produced</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>volume</FONT>&nbsp;</TD>

   <TD width="10%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>million</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>m&#179;</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>2,992</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>2,952</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>2,845</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>2,853</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>2,874</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>2,887</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="30%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>Water</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>billed</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>volume</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>at</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>wholesale</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>million</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>m&#179;</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>297</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>293</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>288</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>285</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>274</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>263</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="30%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>Water</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>billed</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>volume</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>at</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>retail</FONT>&nbsp;</TD>

   <TD width="10%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>million</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>m&#179;</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>1,747</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>1,699</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>1,630</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>1,596</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>1,573</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>1,544</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="30%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>Sewage</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>billed</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>volume</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>million</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>m&#179;</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>1,486</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>1,434</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>1,373</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>1,330</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>1,300</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>1,246</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="30%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>Headcount</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><SUP><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>(3)</FONT></SUP>&nbsp;</TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>14,896</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>15,330</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>15,103</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>16,649</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>16,850</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>16,978</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="30%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>Operational</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>productivity</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>connection/employee</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>900</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>849</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>837</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>738</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>708</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>684</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#b8cce4 width="100%" colSpan=8 align=center><B><FONT size=1 face=Calibri-Bold,Arial,Helvetica,sans-serif>Financial </FONT></B><B><FONT size=1 face=Calibri-Bold,Arial,Helvetica,sans-serif>&nbsp;</FONT></B><B><FONT size=1 face=Calibri-Bold,Arial,Helvetica,sans-serif>(4)</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="30%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>Net</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>revenues</FONT>&nbsp;</TD>

   <TD width="10%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>R$</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>million</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>9,941.6</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>9,231.0</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>8,579.5</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>7,809.3</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>5,970.8</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>5,527.3</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="30%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>EBITDA </FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>(5)</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>R$</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>million</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>3,213.4</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>3,222.5</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>2,727.0</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>2,865.0</FONT>&nbsp;</TD>

   <TD bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>2,698.9</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>2,446.1</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="30%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>EBITDA</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>margin</FONT>&nbsp;</TD>

   <TD width="10%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>%</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>32.4</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>34.9</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>31.8</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>36.7</FONT>&nbsp;</TD>

   <TD width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>45.2</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>44.3</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="30%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>Results</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>(Net</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>income/Loss)</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#dbe5f1 width="10%" align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>R$</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>million</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>1,223.4</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>1,630.4</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>1,507.7</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>862.9</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>1,055.3</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="10%" align=right><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>778.9</FONT>&nbsp;</TD></TR>

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   <TD rowSpan=4 width="100%" colSpan=8 align=left><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>(1)</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>99%</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>or</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>more</FONT><BR><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>(2)</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>Due</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>to</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>methodological</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>reasons,</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>it</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>includes</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>a</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>margin</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>variation</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>of</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>more</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>or</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>less</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>2</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>percentage</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>points</FONT><BR><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>(3)</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>headcount</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>includes</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>own</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>employees,</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>excluding</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>those</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>transferred</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>to</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>other</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>bodies</FONT><BR><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>(4)</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>Calculated</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>as</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>of</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>2008</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>according</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>to</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>CPCs/IFRS</FONT></TD></TR>

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<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Summary of Targets</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company fully achieved six performance targets defined in 2011 that guided the concession of salary benefits established in the Profit Sharing Plan (PPR).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Water supply was maintained in a level we may consider as being universalized in our marketplace. New connections of this service followed the vegetative growth of the areas covered by the company and business. Even so, they reached the second largest record over the last 12 years in 2011.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-9</FONT></P></DIV>

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   <TD align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B>&nbsp;</TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT size=2 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Management Report</FONT></B>&nbsp;</TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The sewage collection and treatment continue growing as projected. It is worth mentioning that in 2011, we achieved the best results over the last 12 years in relation to the number of new sewage connections.</FONT></P>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-TOP: #000000 1px solid" bgColor=#dbe5f1 width="55%" align=left><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>Indicators</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-TOP: #000000 1px solid" bgColor=#dbe5f1 width="15%" align=left><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>Unit</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-TOP: #000000 1px solid" bgColor=#dbe5f1 width="15%" align=left><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>Target</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="15%" align=center><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>Achieved</FONT>&nbsp;</TD></TR>

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   <TD style="BORDER-LEFT: #000000 1px solid" width="55%" align=left><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>EBITDA</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>margin </FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>(1)</FONT>&nbsp;</TD>

   <TD style="BORDER-LEFT: #000000 1px solid" width="15%" align=left><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>%</FONT>&nbsp;</TD>

   <TD style="BORDER-LEFT: #000000 1px solid; TEXT-INDENT: 6px" width="15%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>43.3</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="15%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>43.4</FONT>&nbsp;</TD></TR>

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   <TD style="BORDER-LEFT: #000000 1px solid" bgColor=#dbe5f1 width="55%" align=left><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>Customer</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>satisfaction</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>index</FONT>&nbsp;</TD>

   <TD style="BORDER-LEFT: #000000 1px solid" bgColor=#dbe5f1 width="15%" align=left><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>%</FONT>&nbsp;</TD>

   <TD style="BORDER-LEFT: #000000 1px solid" bgColor=#dbe5f1 width="15%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>80.0</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="15%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>92.0</FONT>&nbsp;</TD></TR>

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   <TD style="BORDER-LEFT: #000000 1px solid" width="55%" align=left><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>Number</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>of</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>new</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>water</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>connections</FONT>&nbsp;</TD>

   <TD style="BORDER-LEFT: #000000 1px solid" width="15%" align=left><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>thousand</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>units</FONT>&nbsp;</TD>

   <TD style="BORDER-LEFT: #000000 1px solid" width="15%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>143.5</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="15%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>207.9</FONT>&nbsp;</TD></TR>

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   <TD style="BORDER-LEFT: #000000 1px solid" bgColor=#dbe5f1 width="55%" align=left><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>Number</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>of</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>new</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>sewage</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>connections</FONT>&nbsp;</TD>

   <TD style="BORDER-LEFT: #000000 1px solid" bgColor=#dbe5f1 width="15%" align=left><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>thousand</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>units</FONT>&nbsp;</TD>

   <TD style="BORDER-LEFT: #000000 1px solid" bgColor=#dbe5f1 width="15%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>195.0</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="15%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>246.4</FONT>&nbsp;</TD></TR>

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   <TD style="BORDER-LEFT: #000000 1px solid" width="55%" align=left><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>Water</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>billing</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>loss</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>ratio</FONT>&nbsp;</TD>

   <TD style="BORDER-LEFT: #000000 1px solid" width="15%" align=left><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>%</FONT>&nbsp;</TD>

   <TD style="BORDER-LEFT: #000000 1px solid" width="15%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>25.7</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="15%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>25.6</FONT>&nbsp;</TD></TR>

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   <TD style="BORDER-LEFT: #000000 1px solid" bgColor=#dbe5f1 width="55%" align=left><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>Sewage</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>&nbsp;</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>treatment</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>&nbsp;</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>actions</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>&nbsp;</FONT></B><B><SUP><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>(2)</FONT></SUP></B><B><FONT size=1 face=Calibri-Bold,Arial,Helvetica,sans-serif>&nbsp;</FONT></B>&nbsp;</TD>

   <TD style="BORDER-LEFT: #000000 1px solid" bgColor=#dbe5f1 width="15%" align=left>&nbsp;</TD>

   <TD style="BORDER-LEFT: #000000 1px solid" bgColor=#dbe5f1 width="15%" align=right>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="15%" align=left>&nbsp;</TD></TR>

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   <TD style="BORDER-LEFT: #000000 1px solid" width="55%" align=left><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>Number</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>of</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>sewage</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>treatment</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>stations</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>delivered</FONT>&nbsp;</TD>

   <TD style="BORDER-LEFT: #000000 1px solid" width="15%" align=left><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>units</FONT>&nbsp;</TD>

   <TD style="BORDER-LEFT: #000000 1px solid" width="15%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>12</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="15%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>12</FONT>&nbsp;</TD></TR>

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   <TD style="BORDER-LEFT: #000000 1px solid" bgColor=#dbe5f1 width="55%" align=left><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>(includes</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>pre</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif> </FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>operation)</FONT>&nbsp;</TD>

   <TD style="BORDER-LEFT: #000000 1px solid" bgColor=#dbe5f1 width="15%" align=left>&nbsp;</TD>

   <TD style="BORDER-LEFT: #000000 1px solid" bgColor=#dbe5f1 width="15%" align=right>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="15%" align=left>&nbsp;</TD></TR>

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   <TD style="BORDER-LEFT: #000000 1px solid" width="55%" align=left><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>Number</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>of</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>authorizations</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>of</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>services</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>issued</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>to</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>start</FONT>&nbsp;</TD>

   <TD style="BORDER-LEFT: #000000 1px solid" width="15%" align=left><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>units</FONT>&nbsp;</TD>

   <TD style="BORDER-LEFT: #000000 1px solid" width="15%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>21</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="15%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>22</FONT>&nbsp;</TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" bgColor=#dbe5f1 width="55%" align=left><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>sewage</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>treatment</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>stations</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>works</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" bgColor=#dbe5f1 width="15%" align=left>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" bgColor=#dbe5f1 width="15%" align=left>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dbe5f1 width="15%" align=left>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px"><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>(1)</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>calculated</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>by</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>method</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>prior</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>to</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>the</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>effictiveness</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>of</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>CPCs/IFRS<BR></FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>(2)</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>The</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>target</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>is</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>composed</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>of</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>two</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>actions,</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>so</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>that</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>to</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>reflect</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>with</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>greater</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>accuracy</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>the</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>company's</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>efforts</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>to</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>expand</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>sewage</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>treatment</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=1 face=Calibri,Arial,Helvetica,sans-serif>systems</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Referring to loss ratio, the result achieved in the year follows the trend outlined by the Company for the next eight years. The target is to reduce the percentage to 13% by 2019, although this ratio may change in 2012. The volume saved in 2011, with the reduction of total losses from 26% to 25.6%, is sufficient to supply 23,000 people without using new springs, neither additional investments in water reservation and production. It is worth mentioning that the indicator has been systematically going down since 2004, when it stood at 34%.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company also maintained a high level of customer s satisfaction, reinforced both by the percentage of 92% measured by opinion polls conducted with 5,860 users, and the fact that Sabesp has been not included in the ranking of companies with the highest number of complaints at Procon (Oversight Board of Consumer Protection and Defense) since March 2010.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">BUSINESS MANAGEMENT</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp keeps its pace of investments in order to achieve its target by the end of this decade, providing services to all city domiciles served by the Company.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, we invested R$2.4 billion, including investments in public-private partnerships (PPP) amounting to R$121.4 million. The utilization of this financing model allows the company to accelerate and optimize the bidding process of works and services and have access to public resources outside the government contingency, speeding up the execution of investment plan.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-10</FONT></P></DIV>

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   <TD align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B>&nbsp;</TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT size=2 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Management Report</FONT></B>&nbsp;</TD></TR></TABLE>

<P style="TEXT-ALIGN: center"><B><U><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Investments Track Record </FONT></U></B><B><U><SUP><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(1) </FONT></SUP></U></B><B><U><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(current R$ million)</FONT></U></B></P>

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<IMG border=0 src="sbsdf4q11_6kx11x1.jpg">&nbsp;</P>

<P style="TEXT-ALIGN: center"><B><U><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Investments Made in 2011 by region (current R$ million)</FONT></U></B></P>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-TOP: #000000 1px solid" bgColor=#b8cce4 width="55%" align=left>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid" bgColor=#b8cce4 width="15%" align=right><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>Water</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid" bgColor=#b8cce4 width="15%" align=center><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>Sewage</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#b8cce4 width="15%" align=right><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>Total</FONT></B>&nbsp;</TD></TR>

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   <TD style="BORDER-LEFT: #000000 1px solid" width="55%" align=left><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>Metropolitan</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>&nbsp;</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>Region</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>&nbsp;</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>of</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>&nbsp;</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>S&#227;o</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>&nbsp;</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>Paulo</FONT></B>&nbsp;</TD>

   <TD width="15%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>633.2</FONT>&nbsp;</TD>

   <TD width="15%" align=center><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>697.8</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="15%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>1,331.0</FONT>&nbsp;</TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" bgColor=#dce6f1 width="55%" align=left><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>Regional</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>&nbsp;</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>System</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>&nbsp;</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>(inland</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>&nbsp;</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>and</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>&nbsp;</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>cost)</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#dce6f1 width="15%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>502.2</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#dce6f1 width="15%" align=center><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>607.0</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="15%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>1,109.2</FONT>&nbsp;</TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="55%" align=left><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>Total</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="15%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>1,135.4</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="15%" align=center><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>1,304.8</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="15%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>2,440.2</FONT>&nbsp;</TD></TR>

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   <P style="MARGIN: 0px"><I><FONT size=1 face="Cambria-Italic,Times New Roman,Times,serif">2011</FONT></I><I><FONT size=1 face="Cambria-Italic,Times New Roman,Times,serif"> </FONT></I><I><FONT size=1 face="Cambria-Italic,Times New Roman,Times,serif"></FONT></I><I><FONT size=1 face="Cambria-Italic,Times New Roman,Times,serif"></FONT></I><I><FONT size=1 face="Cambria-Italic,Times New Roman,Times,serif">excluding</FONT></I><I><FONT size=1 face="Cambria-Italic,Times New Roman,Times,serif"> </FONT></I><I><FONT size=1 face="Cambria-Italic,Times New Roman,Times,serif">financial</FONT></I><I><FONT size=1 face="Cambria-Italic,Times New Roman,Times,serif"> </FONT></I><I><FONT size=1 face="Cambria-Italic,Times New Roman,Times,serif">commitments</FONT></I><I><FONT size=1 face="Cambria-Italic,Times New Roman,Times,serif"> </FONT></I><I><FONT size=1 face="Cambria-Italic,Times New Roman,Times,serif">assumed</FONT></I><I><FONT size=1 face="Cambria-Italic,Times New Roman,Times,serif"> </FONT></I><I><FONT size=1 face="Cambria-Italic,Times New Roman,Times,serif">in</FONT></I><I><FONT size=1 face="Cambria-Italic,Times New Roman,Times,serif"> </FONT></I><I><FONT size=1 face="Cambria-Italic,Times New Roman,Times,serif">program</FONT></I><I><FONT size=1 face="Cambria-Italic,Times New Roman,Times,serif"> </FONT></I><I><FONT size=1 face="Cambria-Italic,Times New Roman,Times,serif">contracts</FONT></I><I><FONT size=1 face="Cambria-Italic,Times New Roman,Times,serif"> </FONT></I><I><FONT size=1 face="Cambria-Italic,Times New Roman,Times,serif">(R$139</FONT></I><I><FONT size=1 face="Cambria-Italic,Times New Roman,Times,serif"> </FONT></I><I><FONT size=1 face="Cambria-Italic,Times New Roman,Times,serif">milion)</FONT></I></P></FONT></TD></TR></TABLE></DIV>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Water supply </FONT></B><FONT size=2 face="Georgia,Times New Roman,Times,serif">kept the trend to universalization in urban areas. In 2011, we achieved the second largest expansion over the last 12 years: 208,000 new connections. The result is important to ensure safe supply, supported by spring recovery and conservation actions, incentive to reduce consumption and decrease water losses. At the end of 2011 the company supplied approximately 23.9 million people directly, which added to the population of municipalities served on wholesale basis and those operated in private partnerships, amounted to 27.6 million.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-11</FONT></P></DIV>

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   <TD align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B>&nbsp;</TD></TR>

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<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">As far as sewage collection services are concerned, 246,000 new connections were made in 2011, the second best result since 1997. The collection ratio was up 82% and treatment reached 76% of collected volume. Approximately 20.5 million people are currently serviced by collection networks, while the company treats the sewage volume generated by 14.9 million people.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, six new municipalities also had universalized sewage services, summing up 147 municipalities.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><U><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">New water and sewage connections executed and population benefited in 2011</FONT></U></B></P>

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   <TD width="27%"></TD>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-TOP: #000000 1px solid" bgColor=#b8cce4 vAlign=middle rowSpan=3 width="49%" colSpan=2 align=center>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #b8cce4; BORDER-TOP: #000000 1px solid" vAlign=middle rowSpan=3 width="12%" align=center><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>RMSP</FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid" bgColor=#b8cce4 vAlign=middle rowSpan=3 width="27%" align=center><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>Regional</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>&nbsp;</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>Systems</FONT></B><BR><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>(Inland</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>&nbsp;</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>and</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>&nbsp;</FONT></B><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>Coast)</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#b8cce4 vAlign=middle rowSpan=3 width="12%" align=center><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>Total</FONT></B></TD></TR>

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<TR vAlign=bottom></TR>

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   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" rowSpan=2 width="1%" align=center><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>Water&nbsp;</FONT></B>&nbsp;</TD>

   <TD width="48%" align=left><FONT size=2><FONT face=Calibri>Number of new connections <SUP>(1)</SUP></FONT></FONT>&nbsp;&nbsp;</TD>

   <TD width="12%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>123.5</FONT>&nbsp;</TD>

   <TD width="27%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>84.4</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="12%" align=center><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>207.9</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #dce6f1" width="48%" align=left><FONT size=2><FONT face=Calibri>Population serviced <SUP>(2)</SUP></FONT></FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #dce6f1" width="12%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>360</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#dce6f1 width="27%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>210</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="12%" align=center><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>570</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" rowSpan=2 width="1%" align=center><B><FONT size=2 face=Calibri-Bold,Arial,Helvetica,sans-serif>Sewage&nbsp;</FONT></B>&nbsp;</TD>

   <TD width="48%" align=left><FONT size=2><FONT face=Calibri>Number of new connections <SUP>(1)</SUP></FONT></FONT>&nbsp;&nbsp;</TD>

   <TD width="12%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>126.0</FONT>&nbsp;</TD>

   <TD width="27%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>120.4</FONT>&nbsp;</TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="12%" align=center><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>246.4</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #dce6f1" width="48%" align=left><FONT size=2><FONT face=Calibri>Population serviced <SUP>(2)</SUP></FONT></FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#dce6f1 width="12%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>510</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#dce6f1 width="27%" align=right><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>370</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="12%" align=center><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>880</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="100%" colSpan=5 align=left><FONT size=1 face=Calibri>(1) in thousands of units</FONT><BR><FONT size=1 face=Calibri>(2) in thousands of inhabitants</FONT></TD></TR>

<TR vAlign=bottom></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="30%"></TD>

   <TD width="10%"></TD>

   <TD width="10%"></TD>

   <TD width="10%"></TD>

   <TD width="10%"></TD>

   <TD width="10%"></TD>

   <TD width="10%"></TD>

   <TD width="10%"></TD></TR>

<TR vAlign=bottom>

   <TD width="100%" colSpan=8 align=center><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif"><U><FONT style="FONT-FAMILY: arial" size=2>Target Plan (2011-2019)</FONT></U></FONT></B></TD></TR>

<TR>

   <TD width="100%" colSpan=8></TD></TR>

<TR>

   <TD width="100%" colSpan=8><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" rowSpan=2 width="30%" align=left><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #b8cce4; BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>Achieved</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #b8cce4; BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="60%" colSpan=6 align=center><B><FONT style="FONT-FAMILY: arial" size=2>Targets</FONT></B><FONT size=2><FONT style="FONT-FAMILY: arial"><B>&nbsp;</B></FONT></FONT><B><SUP><FONT style="FONT-FAMILY: arial" size=2>(1)</FONT></SUP></B></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>2011</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 4px" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>2011</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>2012</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>2013</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>2014</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>2015</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>2019</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BACKGROUND-COLOR: #dbe5f1; BORDER-RIGHT: #000000 1px solid" width="30%" align=left><B><FONT style="FONT-FAMILY: arial" size=2>Water</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>&nbsp;</B><B>supply</B>&nbsp;</FONT></TD>

   <TD style="BACKGROUND-COLOR: #dbe5f1; BORDER-RIGHT: #000000 1px solid" width="10%" align=left><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BACKGROUND-COLOR: #dbe5f1; BORDER-RIGHT: #000000 1px solid" width="60%" colSpan=6 align=center><B><FONT style="FONT-FAMILY: arial" size=2>Trend</FONT></B><FONT size=2><FONT style="FONT-FAMILY: arial"><B>&nbsp;</B><B>to</B><B>&nbsp;</B></FONT></FONT><B><FONT style="FONT-FAMILY: arial" size=2>universalization</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="30%" align=left><B><FONT style="FONT-FAMILY: arial" size=2>Sewage</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>&nbsp;</B><B>collection</B><B>&nbsp;</B><B>(%)</B>&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>82.3</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>82.5</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>83</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>84</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>85</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>86</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>95</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BACKGROUND-COLOR: #dbe5f1; BORDER-RIGHT: #000000 1px solid" width="30%" align=left><B><FONT style="FONT-FAMILY: arial" size=2>Collected</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>&nbsp;</B><B>sewage</B><B>&nbsp;</B><B>treatment</B><B>&nbsp;</B><B>(%)</B>&nbsp;</FONT></TD>

   <TD style="BACKGROUND-COLOR: #dbe5f1; BORDER-RIGHT: #000000 1px solid" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>75.8</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BACKGROUND-COLOR: #dbe5f1" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>79.5</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BACKGROUND-COLOR: #dbe5f1" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>77</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BACKGROUND-COLOR: #dbe5f1" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>78</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BACKGROUND-COLOR: #dbe5f1" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>80</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BACKGROUND-COLOR: #dbe5f1" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>82</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BACKGROUND-COLOR: #dbe5f1; BORDER-RIGHT: #000000 1px solid" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>95</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="30%" align=left><B><FONT style="FONT-FAMILY: arial" size=2>New</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>&nbsp;</B><B>water</B><B>&nbsp;</B><B>connections</B><B>&nbsp;</B><B>(thousand)</B>&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>207.9</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>143.5</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>159</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>161</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>160</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>156</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>635 </FONT></B><FONT style="FONT-FAMILY: arial" size=2><B><SUP>(2)</SUP></B>&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BACKGROUND-COLOR: #dbe5f1; BORDER-RIGHT: #000000 1px solid" width="30%" align=left><B><FONT style="FONT-FAMILY: arial" size=2>Sew</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>&nbsp;</B><B>sewage</B><B>&nbsp;</B><B>connections</B><B>&nbsp;</B><B>(thousand)</B>&nbsp;</FONT></TD>

   <TD style="BACKGROUND-COLOR: #dbe5f1; BORDER-RIGHT: #000000 1px solid" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>246.4</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BACKGROUND-COLOR: #dbe5f1" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>168.7 </FONT></B><FONT style="FONT-FAMILY: arial" size=2><B><SUP>(3)</SUP></B>&nbsp;</FONT></TD>

   <TD style="BACKGROUND-COLOR: #dbe5f1" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>207</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BACKGROUND-COLOR: #dbe5f1" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>212</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BACKGROUND-COLOR: #dbe5f1" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>231</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BACKGROUND-COLOR: #dbe5f1" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>236</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BACKGROUND-COLOR: #dbe5f1; BORDER-RIGHT: #000000 1px solid" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>996</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>&nbsp;</B><B><SUP>(2)</SUP></B>&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="30%" align=left><B><FONT style="FONT-FAMILY: arial" size=2>Water</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>&nbsp;</B><B>losses</B><B>&nbsp;</B><B>(%)</B>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>25.6</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>25.7</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>25.3</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>23.5</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>21.7</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>19.9</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="10%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>13.1</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD rowSpan=5 width="100%"><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>(1) </FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>Targets</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>shall</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>be</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>adjusted</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>with</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>the</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>conclusion</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>of</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>the</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>2011/2012</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>planning</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>cycle</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>and</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>2010</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>Census</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>of</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>IBGE</FONT><BR><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>(2) </FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>Accumulated</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>target</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>2016/2019</FONT><BR><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>(3) </FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>For</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>2011,</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>the</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>target</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>of</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>sewage</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>connections</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>in</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>PPR</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>was</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>higher</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>than</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>the</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>Target</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>Plan</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>as</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>a</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>way</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>of</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>including</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>a </FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>greater</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>realization,</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>necessary</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>to</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>univesalize</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>&nbsp;</FONT><FONT size=2 face=Calibri,Arial,Helvetica,sans-serif>collection</FONT>&nbsp;</TD></TR>

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<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-12</FONT></P></DIV>

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   <TD align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B>&nbsp;</TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT size=2 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Management Report</FONT></B>&nbsp;</TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Structuring Programs</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp s investment plan is based on twofold structuring program: ensure a safe water supply and contribute to depollution and recovery of our rivers, streams and other water bodies.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Our </FONT><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Water Metropolitan Program </FONT></B><FONT size=2 face="Georgia,Times New Roman,Times,serif">aims at increasing by 20% corresponding to 13.2 m</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">3</FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">/s current production capacity until 2017. In 2011, production and intake works were concluded, improving the water supply level of the metropolitan region of S&#227;o Paulo (RMSP). We point out the conclusion of interventions that resulted in expanding the treatment capacity of the Production System of Alto Tiet&#234; by 50%, from 10m&#179;/s to 15 m&#179;/s, through PPP jointly with CAB Ambiental. In addition, more than 14 important projects were delivered, which together, directly and indirectly benefit 6.6 million people, mainly in the east and west regions of the City of S&#227;o Paulo with more treated water. The investment accumulated in the program since 2006 is R$1.7 billion, with own funds and financing authorized by the Federal Savings Bank (</FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Caixa Econ&#244;mica Federal</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">) and the Brazilian Development Bank (BNDES).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The program </FONT><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">&#193;gua no Litoral </FONT></I></B><FONT size=2 face="Georgia,Times New Roman,Times,serif">(Water on the coast) is another initiative. These are works to expand production, improve quality, increase intake and treated water reservation capacity in the metropolitan area on the coast of the State of S&#227;o Paulo (</FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Baixada Santista</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">) and south coast, which have approximately 1.7 million people in nine municipalities, a population that reaches almost 3 million people during holiday season.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, R$158 million were invested in works, such as the implementation of Mambu-Branco Production System estimated to be concluded by the end of second half of 2012, in the city of Itanha&#233;m, and the construction of the Jurubatuba Water Treatment Station to be concluded in 2012 in the city of Guaruj&#225;. The partial startup of this station is estimated for the first half of 2012. By the end of 2011, the amount invested in the program which started in 2008 summed up R$472.7 million.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Concurrently with projects destined to production expansion and water treatment, Sabesp develops among its structuring actions, the </FONT><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Loss Reduction Corporate Program</FONT></B><FONT size=2 face="Georgia,Times New Roman,Times,serif">. Until 2019, we estimate to invest R$4.3 billion in actions, such as, replacement of network, exchange of pipes, division into sectors (reducing water pressure) and replacement of hydrometers. Currently, our goal is to reduce loss ratio to 13% by 2019, but this target has been reviewed due to results achieved up to date.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">We already invested R$1.03 billion in the program, and approximately R$326.7 million in 2011. Resources are partially own funds and the remainder derives from financing authorized by Japan International Cooperation Agency (Jica), Federal Savings Bank (</FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Caixa Econ&#244;mica Federal</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">) and BNDES. It is worth mentioning that in February 2012, a loan agreement related to the second phase of the program with Jica was signed in the amount of R$710 million to which another R$390 million of Sabesp s consideration will be added.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, we achieved to decrease billing loss ratio from 26% to 25.6%. It is worth mentioning that the average losses in Brazil stood at 37%.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">But only this is not sufficient. Considering low water availability, mainly in the metropolitan region of S&#227;o Paulo (RMSP), the company s planning includes the roll-out of a new production system in order to meet growing demands of RMSP: the </FONT><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">S&#227;o Louren&#231;o </FONT></B><FONT size=2 face="Georgia,Times New Roman,Times,serif">system (Alto Juqui&#225;), will have production capacity of </FONT><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">4.7 m</FONT></B><B><SUP><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3</FONT></SUP></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">/s </FONT></B><FONT size=2 face="Georgia,Times New Roman,Times,serif">and will supply the west region of Great S&#227;o Paulo, benefiting almost </FONT><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">1.5 million </FONT></B><FONT size=2 face="Georgia,Times New Roman,Times,serif">inhabitants.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-13</FONT></P></DIV>

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   <TD align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B>&nbsp;</TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT size=2 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Management Report</FONT></B>&nbsp;</TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The recovery and depollution of water bodies represent more serious challenge that assuring supply. In this regard, we understand that the recovery of most important river in the State of S&#227;o Paulo and its affluent is one of the basic tasks with which Sabesp may contribute. This explains our efforts to expand sewage services in the metropolitan region of S&#227;o Paulo, where the structure installed by the company over the last 20 years as part of Tiet&#234; Project represented the inclusion of 8.5 million people in the collection and treatment system.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Tiet&#234; </FONT></I></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Project </FONT></B><FONT size=2 face="Georgia,Times New Roman,Times,serif">is our main sewage investment program and currently is at its third phase, which began in 2009. Its goal is to increase the sewage collection ratio to 87% by 2016 and treatment ratio to 84% of total collected volume, with investments estimated at approximately US$1.1 billion, with own funds and financing authorized by Inter-American Development Bank (IDB), Federal Savings Bank (</FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Caixa Econ&#244;mica Federal</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">) and BNDES. Out of R$423.3 million already invested in this phase of the program, R$228.4 million were invested in 2011.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Approximately 43% of works related to this phase have already been executed and other 25% of works are under bidding process. At the end of interventions, more than 1.5 million people will be benefited with collection and 3 million with sewage treatment.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The fourth and last phases of </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Tiet&#234; </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">Project, with execution estimated between 2013 and 2018, are currently under planning phase. With the latter, we expect to eliminate the release of untreated sewage in Tiet&#234; river in the metropolitan region of S&#227;o Paulo in areas regularly operated by Sabesp.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Therefore, we also consider essential the civil society s involvement in facing this problem. Thus, in 2011 we supported the roll-out of the campaign </FONT><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Tiet&#234; Vivo Compromisso de Todos N&#243;s </FONT></I></B><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">(</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">Live Tiet&#234;, Everyone s Commitment), an initiative of Funda&#231;&#227;o SOS Mata Atl&#226;ntica. Support has been raised on the Facebook web page, concerned with Tiet&#234; river depollution through the ratification of 10 commandments to the benefit of river s recovery.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Specifically in the city of S&#227;o Paulo, Tiet&#234; river depollution actions are supplemented by the program called </FONT><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">C&#243;rrego Limpo </FONT></I></B><FONT size=2 face="Georgia,Times New Roman,Times,serif">(Clean Stream), developed in partnership with the local government. As its name suggests, it aims at recovering water bodies, with the improvement of sewage system and the elimination of untreated sewage in these streams, cleaning of margins and riverbed, the removal and resettlement of real properties located in riparian areas.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011 we formatted the third phase of the program (52 streams) and we concluded the cleaning of another seven streams, benefiting approximately 48,000 people.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">There have been 103 streams depolluted since 2007 in the City of S&#227;o Paulo, benefiting more than 1.7 million people, with total investments of R$129.5 million. Therefore, approximately 1,100 L/s of sewage were no longer discharged in these streams. In 2012, the estimate is to clean another 45 streams, benefiting more than 700,000 people, with Sabesp s investments of R$36 million.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Finally, we also developed the program called </FONT><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Vida Nova </FONT></I></B><FONT size=2 face="Georgia,Times New Roman,Times,serif">(New Life) in the metropolitan region of S&#227;o Paulo, concerned with the recovery and protection of reservoirs, used to supply water in this region. There are interventions in 43 shantytowns in sub-basins Guarapiranga and Billings, benefiting 50,000 households.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp is in charge of implementing and improving water and sewage systems, with investments of R$355 million. In 2011, we invested R$29.4 million of total amount and R$45.5 million were already invested. The program is estimated to be concluded in 2015, with total investments of R$1.3 billion, with funds also from the federal, state, municipal governments, Housing and Urban Development Company and World Bank.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-14</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On the coast, our sewage structuring actions are organized around the program called Onda Limpa (Clean Wave). At the metropolitan area on the coast of State of S&#227;o Paulo (Baixada Santista), works started in 2007 and should be concluded in 2013. In addition to own funds, the program relies on the financing from Jica and resources from the Severance Indemnity Fund for Employees (FGTS).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Up to date R$1.6 billion have been invested, of which R$159.8 million were invested in 2011. With the end of construction of sewage treatment stations and the installation of networks, we have prioritized the connection of real properties to the sewage collection system, which by the end of 2011, summed up 63,000 connections out of 123,000 estimated connections.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Currently, the </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Baixada Santista </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">has one of the lowest child mortality rates in the State of S&#227;o Paulo. Over the last decade, this rate dropped over 30%: from 22.2 deaths for each 1,000 children born alive to 15.2 in the region. It is correct to affirm that an improved water supply and sewage service was one of the factors that contributed to this result.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp has already been preparing a second phase of </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Onda Limpa</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">, which aims the collection and treatment of sewage of cities in </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Baixada Santista </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">until 2018.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Onda Limpa </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">program is also developed in the north coast of the State of S&#227;o Paulo. The target is to increase the sewage collection and treatment ratio in the municipalities of Caraguatatuba, Ilhabela, S&#227;o Sebasti&#227;o and Ubatuba from current 49% to 85% by 2015, and investments estimated at R$500 million, involving own funds, from BNDES and FGTS. It is worth mentioning that in 2007, prior to the program, the percentage stood at 30%. 600,000 people will be benefited, among area residents and tourists visiting the region. In 2011, Sabesp invested R$24.6 million in this program, out of total of R$114.6 million were already invested up to date, involving own funds, from BNDES, FGTS and Caixa. A public-private partnership is also estimated for this program.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">An example of successful initiative in our strategy of recovering important springs was the recovery of Para&#237;ba do Sul river, in Para&#237;ba Valley in the eastern region of the State of S&#227;o Paulo. With works to expand sewage collection and treatment in densely populated municipalities, such as, S&#227;o Jos&#233; dos Campos and Taubat&#233;, Cetesb s analyses recorded a significant increase in water oxidation ratio of Para&#237;ba do Sul river in 2011, then, fishes natives of Brazil that were infrequently seen, such as </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">lambari, piaba</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">, catfish, </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">tra&#237;ra </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">and tilapia returned to the waters of this region.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">New policies and programs</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Currently, one of the greatest challenges posed in the universalization process of sanitation services is the fact that unit investments are growing to the extent that they advance towards lower purchasing power classes, those with less capacity to generate revenues for the company. In this regard, it is important to design new public policies and actions that contribute to execute the company s expansion targets, concur with the success of structuring programs already in effect and meet the precept of social inclusion.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Within this strategy, in 2011, Sabesp s efforts to universalize sanitation services in the State of S&#227;o Paulo were reinforced by two governmental programs: </FONT><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Pr&#243;-Conex&#227;o </FONT></I></B><FONT size=2 face="Georgia,Times New Roman,Times,serif">(Pro-Connection)</FONT><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">, </FONT></B><FONT size=2 face="Georgia,Times New Roman,Times,serif">an initiative destined to subsidize intra-domicile works so that low- income households are able to connect their houses to the sewage public network; and </FONT><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">&#193;gua &#233; Vida </FONT></I></B><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">(</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">Water is Life</FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">)</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">, concerned with the implementation of sanitation services in low-income communities located in areas distant from main cities of S&#227;o Paulo State inland.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The company will be liable for the technical assistance to the municipalities and for the implementation of water systems at the same communities benefited with sewage treatment. After the conclusion of works, Sabesp will be liable for the maintenance and operation of systems.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-15</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In another initiative jointly with the public authority, the program called Nossa Guarapiranga (Our Guarapiranga) started in December, whose objective is to contribute to improve water quality of one of the main springs that supplies the metropolitan region of S&#227;o Paulo. Eleven barriers were installed for waste control at the main streams flowing into water table, in order to collect 20 m3 of waste/day on average. Actions that have already been developed in partnership with the state and local governments, have helped to avoid a load of 106 l/s of sewage to reach Guarapiranga and Billings reservoirs.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Caring for the environment</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The implementation of water supply and sewage systems enables several benefits to the environment and the life quality of population serviced. Among them, the most relevant benefits are the preservation and improved condition of water resources and on the coast, the recovery of bathing water quality at beaches, without mentioning the immediate positive effect on population s health conditions.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Nevertheless, our activity may cause adverse environmental effects deriving from implementation and operation phases. As trunk lines and sewage interceptors follow valley bottom and treatment stations are installed, in general, at lower quotas, situations arise demanding the occupation of permanent preservation areas, in few cases, requiring the recovery of riparian forest.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Adverse social and environmental effects are also associated with the expropriation of areas, removal of vegetation, generation of water and sewage treatment mud, emission of methane in anaerobic treatment and indirect generation of carbon dioxide (CO</FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">2</FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">) due to energy consumption. Note that Sabesp is one of the largest individual consumers of energy in the State of S&#227;o Paulo, accounting for 1.8% of total: in 2011, 2,276 gigawatts-hours were consumed.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp has been seeking to incorporate the environmental variable, from inception until the operation of its systems, including the implementation of practices concerned with sustainability and projects in partnership with society. Customer satisfaction survey conducted in 2011 points out the recognition of this effort: 79% of customers consider us a socially and environmentally responsible company. When we surveyed those interviewed if the company is concerned with preservation of the environment, rivers, water springs and vegetation, 78% of customers agreed.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Social commitment</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp is proud of ties it establishes with the population of the State of S&#227;o Paulo. We believe that when providing better services, ensuring the water supply with quality and regularity and treating well our water resources, we are contributing to create value in our society.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The recognition of these efforts can be seen in the high level of yes answers obtained in customer satisfaction surveys, when interviewee was inquired if the company is concerned with improved people s life quality and well-being. 80% of interviewees answered yes: In your opinion, is Sabesp a socially responsible company?</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Our commitment to customer s satisfaction was even more evidenced in the new Strategic Plan we defined to be effective between 2011 and 2020. We revised our vision of the future, highlighting our concern and our focus on excellence in customer service . The Strategic Map was revised, comprising 14 objectives considered strategic for the period. The Company s mission did not change.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">We also included among our strategic guidelines valuing human capital as competitive force. Within this context, we are committed to make the company the best place to work for. In 2011, we analyzed two issues we consider crucial to increase our employees satisfaction: the adoption of a new Job Position and Salaries Plan and the equalization of our private pension plan, Sabesprev. Actions endeavored allow us to foresee the presentation of results to the company during 2012.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-16</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Market consolidation</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp is concerned with maintaining and expanding the base of municipalities operated through program contracts fully in line with the requirements of the sector s new regulatory framework. This strategy is particularly relevant today, which coincides with the end of first effectiveness cycle of dozen contracts whose initial framework goes back to the time when the company was organized during the first half of 70s.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, 25 program contracts were signed, amounting to 225 renewed contracts complying with Sanitation Law and other 39 contracts covered by legal system prior to that to expire between 2012 and 2033. Together, these municipalities account for 74 of revenues earned by the company.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In order to face competition in large customers segment, where several industrial and commercial consumers prefer to use artesian wells or water trucks to supply water, Sabesp adopted a flexible tariff policy to compete in the market, with the formalization of firm demand contracts.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">New businesses and partnerships in environmental solutions</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp also seeks to operate in new markets, consolidating itself in the sector on a sustainable basis. In this regard, the company has been investing in partnerships to operate in other states and countries, and in the development of Sabesp Environmental Solutions Platform, concerned with the expansion of operations in markets and with large customers. In 2011, our main highlights were the expansion of Rational Water Use Program (PURA) and initiatives favoring the production of reuse water.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Today, </FONT><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Pura </FONT></I></B><FONT size=2 face="Georgia,Times New Roman,Times,serif">program is implemented in more than 2.2 thousand real properties of the State Government of S&#227;o Paulo and city government of S&#227;o Paulo. Sabesp is liable for contracting engineering works and services necessary to reduce water consumption. With these measures, we managed to maintain monthly water volume sufficient to supply approximately 23,000 people without the need of using new springs. The program also contributes to postpone investments in water and sewage systems.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The company has been also strongly investing in the expansion of production of water generated by treatment of sewage for industrial use, refrigeration of equipment and other non-drinkable purposes. Today we have capacity to produce 319,000 m&#179;/month of </FONT><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">reuse water</FONT></B><FONT size=2 face="Georgia,Times New Roman,Times,serif">, however, currently we supply only 160,000 m&#179;/month mainly due to difficult distribution logistics, incipient prospect of new customers and the need of improving production process.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Our most important project in this area, </FONT><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Aquapolo Ambiental </FONT></I></B><FONT size=2 face="Georgia,Times New Roman,Times,serif">(Environmental Aquapolo) must start operations in April 2012. This is the largest plant to produce reuse water in the South Hemisphere, whose final output foreseen is 1 m&#179;/s, volume sufficient to supply 300,000 people. In 2011, this project was ranked second in the Global Water Awards, granted by Global Water Intelligence that awards innovative initiatives in supply and sanitation throughout the world.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Other initiatives concerned with offering environmental solutions are the loyalty contracts with large consumers that ensure annual revenue of approximately R$233 million to the company; the treatment of non-domestic sewage deriving from production processes of Sabesp s customers, through which more than 26 million m&#179; sewage was collected and treated in 2011, resulting in R$181.8 million revenue.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Projects already implemented related to the individualized measurement of water consumption in residential condominiums and tele-measurement (which enables the monitoring of consumption in real time via internet) have been analyzed and re-planned so that to make feasible its evolvement.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-17</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp also operates in new markets in partnership with private partners and through special purpose entities in: (i) the rendering of water and/or sewage services in four municipalities of the State of S&#227;o Paulo: Andradina, Castilho, Mairinque and Mogi Mirim; (ii) the implementation and operation of industrial sewage treatment station and mud conditioning in the city of Barueri; (iii) rendering of consulting services in water rational use, business and operational management in Panam&#225; and Honduras; and (iv) partnerships with sanitation concessionaires in the states of Alagoas (Casal) and Esp&#237;rito Santo (Cesan).</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Research and Innovation</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The specific supervision created in 2010 has been already obtaining positive results, such as the nationwide innovative experience of using the gas generated by sewage treatment as fuel for cars, which currently has been implemented.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">A partnership with Fraunhofer Institute in Germany proposes to capture methane from mud bio-digesters of Franca ETE (sewage treatment station) and help to reduce the emission of pollutants in the atmosphere. In the second quarter of 2012, the system will start supplying 49 cars of the company in that region. There will be three years of tests, including the fuel distribution logistics and analysis of results. The company is investing R$900,000 in this system and the German partner, another R$5.1 million.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In addition, according to the cooperation agreement signed with Fapesp (Foundation of Research Support of the State of S&#227;o Paulo), in 2011, 11 projects were approved, involving universities, whose themes include alternatives of treatment, disposal and utilization of mud from water and sewage treatment stations; monitoring of water quality; and energy efficiency, among others.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Concerning the protection of intellectual property rights at the Company, in 2011, the letter patent called disposition in building hydraulic simulator for informative purposes was obtained. In addition, three patent applications were filed, which are confidential and the software SGH Hydrometry Management System was registered.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Regional Systems Executive Board launched in 2011 the Excellence and Innovation Program, concerned with the identification, recognition, promotion and dissemination of innovative practices and projects that add value to the business. Certain objectives are to reduce energy costs, the number of occupational accidents and customers complaint.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Our investments in research, development and innovation in 2011 reached R$3.2 million.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">ECONOMIC AND FINANCIAL SUSTAINABILITY</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The company committed to add value to the business and reach the universalization of sanitation in the regions where it operates, it carried on the proper management of its finances in 2011. The Added Value Management model, implemented in 2009, was incorporated into the corporate system, allowing management to get a detailed view of its marketplace and contributing to optimizing its asset base and also a continued improvement of its results.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, the gross operating revenue from water and sewage supply services was up 8.5%, from R$7.7 billion to R$8.3 billion in 2011. If we also include the construction revenue, total revenues were up from R$9.8 billion in 2010 to R$10.5 billion in 2011, a 7.6% increase.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-18</FONT></P></DIV>

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<P style="TEXT-ALIGN: center"><B><U><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Gross Operating Revenue Track Record (current R$ billion)</FONT></U></B></P>

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<IMG border=0 src="sbsdf4q11_6kx19x1.jpg">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Driving factors of increased gross revenue from water and sewage were billed volume growth of 2.6% in water and 3.6% in sewage, besides a tariff adjustment of 4.05%, applied in September 2010 and 6.83% applied in September 2011.</FONT></P>

<P style="TEXT-ALIGN: center"><B><U><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Water and sewage billed volume</FONT></U></B><B><U><SUP><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(1) </FONT></SUP></U></B><B><U><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">by use category (millions of m</FONT></U></B><B><U><SUP><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3</FONT></SUP></U></B><B><U><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">)</FONT></U></B></P>

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   <TD width="8%"></TD>

   <TD width="8%"></TD>

   <TD width="8%"></TD>

   <TD width="8%"></TD>

   <TD width="8%"></TD>

   <TD width="8%"></TD>

   <TD width="8%"></TD>

   <TD width="8%"></TD>

   <TD width="8%"></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#b8cce4 rowSpan=2 width="28%" align=left><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#b8cce4 width="24%" colSpan=3 align=center><B><FONT style="FONT-FAMILY: arial" size=2>Water</FONT></B></TD>

   <TD style="BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#b8cce4 width="24%" colSpan=3 align=center><B><FONT style="FONT-FAMILY: arial" size=2>Sewage</FONT></B></TD>

   <TD style="BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#b8cce4 width="24%" colSpan=3 align=center><B><FONT style="FONT-FAMILY: arial" size=2>Water+</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>&nbsp;</B><B>Sewage</B>&nbsp;</FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#b8cce4 width="8%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>2010</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#b8cce4 width="8%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>2011</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 4px; BORDER-RIGHT: #000000 1px solid" bgColor=#b8cce4 width="8%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>%</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 3px" bgColor=#b8cce4 width="8%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>2010</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 4px" bgColor=#b8cce4 width="8%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>2011</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 4px; BORDER-RIGHT: #000000 1px solid" bgColor=#b8cce4 width="8%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>%</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#b8cce4 width="8%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>2010</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#b8cce4 width="8%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>2011</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 4px; BORDER-RIGHT: #000000 1px solid" bgColor=#b8cce4 width="8%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>%</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD></TR>

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   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="28%" align=left><FONT style="FONT-FAMILY: arial" size=2>Residential</FONT><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>1,449.0&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>1,488.0&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>2.7&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>1,177.2&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>1,220.7&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>3.7&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>2,626.2&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>2,708.7&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>3.1&nbsp;</FONT></TD></TR>

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   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="28%" align=left><FONT style="FONT-FAMILY: arial" size=2>Commercial</FONT><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>162.3&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>167.6&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>3.3&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>150.8&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>156.4&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>3.7&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>313.1&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>324.0&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>3.5&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="28%" align=left><FONT style="FONT-FAMILY: arial" size=2>Industrial</FONT><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>37.2&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>38.7&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>4.0&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>37.8&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>40.5&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>7.1&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>75.0&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>79.2&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>5.6&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="28%" align=left><FONT style="FONT-FAMILY: arial" size=2>Public</FONT><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>50.2&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>53.1&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>5.8&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>40.1&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>41.5&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>3.5&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>90.3&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>94.6&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>4.8&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="28%" align=left><B><FONT style="FONT-FAMILY: arial" size=2>Total</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>&nbsp;</B><B>retail</B>&nbsp;</FONT></TD>

   <TD width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>1,698.7</B>&nbsp;</FONT></TD>

   <TD width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>1,747.4</B>&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>2.9</B>&nbsp;</FONT></TD>

   <TD width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>1,405.9</B>&nbsp;</FONT></TD>

   <TD width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>1,459.1</B>&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>3.8</B>&nbsp;</FONT></TD>

   <TD width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>3,104.6</B>&nbsp;</FONT></TD>

   <TD width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>3,206.5</B>&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>3.3</B>&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="28%" align=left><FONT style="FONT-FAMILY: arial" size=2>Wholesale</FONT><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>293.3&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>297.3&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>1.4&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>28.4&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>27.2&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>(4.2)&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>321.7&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>324.5&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>0.9&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="28%" align=left><FONT style="FONT-FAMILY: arial" size=2>Reuse</FONT><FONT style="FONT-FAMILY: arial" size=2>&nbsp;water&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>0.3&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>0.3&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>0.3&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>0.3&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="28%" align=left><B><FONT style="FONT-FAMILY: arial" size=2>Total</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>&nbsp;</B>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>1,992.3</B>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>2,045.0</B>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>2.6</B>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>1,434.3</B>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>1,486.3</B>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>3.6</B>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>3,426.6</B>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>3,531.3</B>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>3.1</B>&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD width="100%" colSpan=10 align=left><FONT style="FONT-FAMILY: arial" size=1><SUP>(1) </SUP></FONT><FONT style="FONT-FAMILY: arial" size=1>Unaudited</FONT></TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><B><U><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Water and sewage billed volume </FONT></U></B><B><U><SUP><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(1) </FONT></SUP></U></B><B><U><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">by region (millions of m</FONT></U></B><B><U><SUP><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3</FONT></SUP></U></B><B><U><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">)</FONT></U></B></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-19</FONT></P></DIV>

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   <TD align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B>&nbsp;</TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT size=2 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Management Report</FONT></B>&nbsp;</TD></TR></TABLE><BR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#b8cce4 rowSpan=2 width="28%" align=left><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#b8cce4 width="24%" colSpan=3 align=center><B><FONT style="FONT-FAMILY: arial" size=2>Water</FONT></B></TD>

   <TD style="BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#b8cce4 width="24%" colSpan=3 align=center><B><FONT style="FONT-FAMILY: arial" size=2>Sewage</FONT></B></TD>

   <TD style="BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#b8cce4 width="24%" colSpan=3 align=center><B><FONT style="FONT-FAMILY: arial" size=2>Water</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>&nbsp;</B><B>+</B><B>&nbsp;</B><B>Sewage</B>&nbsp;</FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#b8cce4 width="8%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>2010</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#b8cce4 width="8%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>2011</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 4px; BORDER-RIGHT: #000000 1px solid" bgColor=#b8cce4 width="8%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>%</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 3px" bgColor=#b8cce4 width="8%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>2010</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 4px" bgColor=#b8cce4 width="8%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>2011</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 4px; BORDER-RIGHT: #000000 1px solid" bgColor=#b8cce4 width="8%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>%</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#b8cce4 width="8%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>2010</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#b8cce4 width="8%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>2011</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 4px; BORDER-RIGHT: #000000 1px solid" bgColor=#b8cce4 width="8%" align=center><B><FONT style="FONT-FAMILY: arial" size=2>%</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="28%" align=left><FONT style="FONT-FAMILY: arial" size=2>Metropolitan</FONT><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>1,119.2&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>1,150.6&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>2.8&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>947.2&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>976.8&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>3.1&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>2,066.4&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>2,127.4&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>3.0&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="28%" align=left><FONT style="FONT-FAMILY: arial" size=2>Regional</FONT><FONT style="FONT-FAMILY: arial" size=2>&nbsp;Systems&nbsp;<SUP>(2)</SUP>&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>579.5&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>596.8&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>3.0&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>458.7&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>482.3&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>5.1&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>1,038.2&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>1,079.1&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>3.9&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="28%" align=left><B><FONT style="FONT-FAMILY: arial" size=2>Total</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>&nbsp;</B><B>retail</B>&nbsp;</FONT></TD>

   <TD width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>1,698.7</B>&nbsp;</FONT></TD>

   <TD width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>1,747.4</B>&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>2.9</B>&nbsp;</FONT></TD>

   <TD width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>1,405.9</B>&nbsp;</FONT></TD>

   <TD width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>1,459.1</B>&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>3.8</B>&nbsp;</FONT></TD>

   <TD width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>3,104.6</B>&nbsp;</FONT></TD>

   <TD width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>3,206.5</B>&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>3.3</B>&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="28%" align=left><FONT style="FONT-FAMILY: arial" size=2>Wholesale</FONT><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>293.3&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>297.3&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>1.4&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>28.4&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>27.2&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>(4.2)&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>321.7&nbsp;</FONT></TD>

   <TD bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>324.5&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>0.9&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="28%" align=left><FONT style="FONT-FAMILY: arial" size=2>Reuse</FONT><FONT style="FONT-FAMILY: arial" size=2>&nbsp;water&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>0.3&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>0.3&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>0.3&nbsp;</FONT></TD>

   <TD width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT style="FONT-FAMILY: arial" size=2>0.3&nbsp;</FONT></TD>

   <TD style="BORDER-RIGHT: #000000 1px solid" width="8%" align=right><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT style="FONT-FAMILY: arial" size=2>&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="28%" align=left><B><FONT style="FONT-FAMILY: arial" size=2>Total</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>&nbsp;</B>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>1,992.3</B>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>2,045.0</B>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>2.6</B>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>1,434.3</B>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>1,486.3</B>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>3.6</B>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>3,426.6</B>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>3,531.3</B>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#dce6f1 width="8%" align=right><B><FONT style="FONT-FAMILY: arial" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT style="FONT-FAMILY: arial" size=2><B>3.1</B>&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="100%" colSpan=10 align=left><FONT style="FONT-FAMILY: arial" size=1><SUP>(1)</SUP></FONT><FONT style="FONT-FAMILY: arial" size=1>&nbsp;Unaudited<BR><SUP>(2)</SUP>&nbsp;Composed&nbsp;of&nbsp;coast&nbsp;and&nbsp;inland&nbsp;regions</FONT></TD></TR>

<TR vAlign=bottom></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Net operating revenue was also up 7.6% over previous year, amounting to R$9.9 billion.</FONT></P>

<P style="TEXT-ALIGN: center"><B><U><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Net Operating Revenue Track Record </FONT></U></B><B><U><SUP><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(1) </FONT></SUP></U></B><B><U><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(current R$ billion)</FONT></U></B></P>

<P align=center>
<IMG border=0 src="sbsdf4q11_6kx20x1.jpg"></P><BR>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, construction revenue was up 4.4%, mainly due to higher construction cost in 2011. The 4.4% variation in revenue against 4.6% in construction cost is due to the change in the index to calculate construction margin which decreased 2.6% in 2010 to 2.3% in 2011.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-20</FONT></P></DIV>

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   <TD align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT size=2 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Management Report</FONT></B>&nbsp;</TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Costs and expenses added to construction costs, in the amount of R$7.5 billion were up 14.0% compared to 2010. EBITDA remained in line at R$3.2 billion between two periods. EBTIDA margin reached 32.4%, compared to 34.9% in 2010. Excluding revenue and construction cost effects, EBTIDA margin stood at 41.1% in 2011 (44.7% in 2010).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Also excluding the complementing effect of actuarial liability in the amount of R$ 157.5 million referring to G0 Plan, non-recurring for the next years and the revenue and construction cost effects, EBTIDA margin reached 43.1% in 2011.</FONT></P>

<P style="TEXT-ALIGN: center"><B><U><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">EBITDA and EBTIDA Margin Track Record </FONT></U></B><B><U><SUP><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(1) </FONT></SUP></U></B><B><U><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(current R$ billion)</FONT></U></B></P>

<P align=center>
<IMG border=0 src="sbsdf4q11_6kx21x1.jpg">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, the company posted a net income of R$1.2 billion, down 25.0% over 2010, mainly due to exchange variation on foreign loans and financing, amounting to R$ 448.5 million deriving from 12.6% appreciation of US dollar in 2011 against 4.3% depreciation in 2010. Despite the dimensions related to the challenge of universalizing services, the company is considered well positioned to achieve its goal, with financial, environmental and social sustainability and profitability to shareholder.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Approximately 75% corresponding to R$6.5 billion of investment planned for 2009-2013 was already achieved. The company has been prioritizing funding at lower costs and compatible with sanitation activity, including through the lengthening of debt terms on the capital markets, fact of which distributes maturities and accordingly, minimizes cash pressures.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, the Tariffs and Costs Department was created, within the scope of the Chief Financial and Investor Relations Officer, aiming at developing proposals and analyses to subsidize Sabesp s discussions with its stakeholders, as well as in the processes to define costs deriving from services rendered, restructuring and tariff review. The new tariff methodology proposed by the Sanitation Regulatory Agency of the State of S&#227;o Paulo (Arsesp) will enable revenue foreseeability, which is fundamental so that the company may achieve service coverage targets foreseen in the investment plan, besides ensuring quality services.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-21</FONT></P></DIV>

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   <TD align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT size=2 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Management Report</FONT></B>&nbsp;</TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Also in relation to the tariff review, the services agreement executed with the municipality of S&#227;o Paulo in June 2010 provides that Sabesp shall contribute with 7.5% of gross revenue earned with the rendering of services in the city of S&#227;o Paulo, net of COFINS and PASEP (taxes on revenues) for the Municipal Fund of Environmental Sanitation and Infrastructure. Since the agreement was signed, we have been tranfering to the Fund, even without compensation in tariffs, since the 7.5% were not taken into consideration when the calculation of the formula for the tariff adjustment was established. Arsesp is structuring the tariff methodology of the second cycle, which is estimated to be implemented in August 2012, which we expect will include this costs transfer and accordingly, provide more appropriate remuneration to the Company.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">We also advanced towards a solution for our private pension plan, Sabesprev. By the end of December, Sabesp entered into an agreement with entities representing employees so that to made few changes in their private pension plans, which include the possibility of employees migrating from Defined Benefit to Defined Contribution and changes in risk benefits.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The proposal, which was negotiated during six months, will also allow to facing the technical deficit problem of the basic plan, estimated at R$538.6 million. In addition, it will ensure that deficit will not be recurrent, thus, improving the organizational climate and greater confidence of our employees as to the planning of their future. The proposals submitted also need the approval of control authorities of the State Government and are also submitted to the analysis of the Judiciary Branch, in view of lawsuit that in November 2010, suspended migrations to Sabesprev Mais.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">It is also worth mentioning that the effectiveness of strategy the company has been adopting over the past years was recognized by the market in several occasions during 2011, such as:</FONT></P>

<UL>

<LI><FONT size=2 face="Georgia,Times New Roman,Times,serif">The company s rating was upgraded by the credit risk rating agency Standard &amp; Poors, on</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">Global Scale from BB to BB+ and on Brazil National Scale from brAA- to brAA+ ;</FONT>

<LI><FONT size=2 face="Georgia,Times New Roman,Times,serif">a tribute conferred by Anefac (National Association of Finance, Management and</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">Accounting Executives) at the ceremony of the 2011 Transparency Award, as the company</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">was one of the finalists in 11 of 15 editions of this award that recognizes the outstanding</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">performance of companies for their transparency and qualify of information reported in</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">their balance sheets. Sabesp won this award in 2000, 2006 and 2010;</FONT>

<LI><FONT size=2 face="Georgia,Times New Roman,Times,serif">the </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Valor 1000 </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">Award, promoted by </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Valor Econ&#244;mico </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">newspaper, under the Water and</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">Sanitation category: for the fifth time, Sabesp was recognized for its good management</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">and strict administration of operating expenses , according to the yearbook;</FONT>

<LI><FONT size=2 face="Georgia,Times New Roman,Times,serif">the outstanding performance of Sanitation and Water and Gas Services sector conferred</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">by </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Pr&#234;mio Abrasca de Cria&#231;&#227;o de Valor 2011 </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">(2011 Abrasca Value Creation Award), as</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">the company that achieved the highest percentages of value creation, in relation to its</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">market capitalization over the past three years; and</FONT>

<LI><FONT size=2 face="Georgia,Times New Roman,Times,serif">for the fifth consecutive year, Sabesp is included in the Corporate Sustainability Index</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">(ISE) of BM&amp;FBovespa.</FONT> </LI></UL>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-22</FONT></P></DIV>

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   <TD align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B>&nbsp;</TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT size=2 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Management Report</FONT></B>&nbsp;</TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Indebtedness Analysis</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">At the end of 2011, the company s total indebtedness was R$8.4 billion and net debt/EBTIDA ratio was 2.0 x.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In line with the maturation of investments, which is a characteristic of the sector, most of this debt (68%) was contracted with multilateral agencies and Brazilian development institutions at low costs and long terms. The foreign currency-denominated debt accounts for 36% of total debt.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, R$1.7 billion were raised and the company amortized R$1.9 billion.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In order to ensure investments required to universalize sanitation in the State of S&#227;o Paulo, the company continued looking for funding sources more compatible with the profile of its businesses, the results of which are outlined as follows:</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Loans and financing</FONT></P>

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   <TD width="98%" colSpan=2><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Japan International Cooperation Agency JICA</FONT></I></B> </TD></TR>

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   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="CourierNewPSMT,Courier New,Courier,monospace">o</FONT>&nbsp; &nbsp; &nbsp; </TD>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">Resources adding the </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Onda Limpa </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">Program- 1</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">st </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">Phase</FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">, </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">approximately amounting to &#165;19.2 billion, corresponding to R$371.5 million, fully disbursed in March and April 2011. These resources have been used to execute works and services in the metropolitan region of </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Baixada Santista</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">. This loan matures within 18 years with annual interest rates between 1.8% and 2.5%;</FONT> </P></TD></TR>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">In February 2012, the company signed a loan agreement for the second phase of the Water Loss Reduction Corporate Program, amounting to &#165; 33.6 billion (corresponding to approximately R$710 million on the date of signature). This phase has investments estimated at R$1.1 billion (&#165; 52.207 billion) of which R$390 million (&#165;18.623 billion) will be the consideration of Sabesp. The loan term is 25 years, with seven years of grace period, with annual interest rates of 1.7%.</FONT> </P></TD></TR>

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   <TD width="98%" colSpan=2><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Caixa Econ&#244;mica Federal </FONT></I></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(Federal Savings Bank)</FONT></B> </TD></TR>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">We have 36 agreements for: studies and projects, water supply and sewage works in several municipalities operated by the company. Total approximate amount is R$215 million, with interest rates indexed to TR (Reference Rate), plus 6% p.a. and management fee of 1.4% p.a. and risk rate of 0.3% p.a.. Total term is 9 years for studies and projects and 24 years for water supply and sewage works.</FONT> </P></TD></TR>

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   <TD width="98%" colSpan=2><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Brazilian Development Bank BNDES</FONT></I></B> </TD></TR>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">Related to sewage works and services in the municipalities of the metropolitan region of S&#227;o Paulo and executive Project of the S&#227;o Louren&#231;o Production System, at the approximate amount of R$183.4 million and interest rates indexed to TJLP (long-term interest rates) plus 1.72% p.a.. Total term is 15 years for works and eight years for the executive project.</FONT> </P></TD></TR></TABLE>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-23</FONT></P></DIV>

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   <TD align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B>&nbsp;</TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT size=2 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Management Report</FONT></B>&nbsp;</TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Debt instruments</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In January 2011, Sabesp conducted the 13</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">rd </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue of debentures in a single series, at the total amount of R$600 million, paying half-yearly interest rates indexed to CDI (interbank deposit rate) plus average annual spread of 0.95%, destined to redemption of the 5</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue of company s promissory notes at the same amount.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In February 2011, Sabesp launched the 14</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue of non-convertible debentures, at the amount of R$275.3 million. This is the second issue of a total of three issues provided for in the subscription agreement signed with BNDES. Resources are applied in several investment projects of the company, i.e., water supply, sewage collection and treatment systems.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In March 2011, FIDC SABESP I (receivables securitization fund) was settled, with the amortization of the last installment of senior quotas, amounting to R$8.3 million.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In addition, in June 2011, the 8</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue of debentures were finally amortized at the amount of R$481.4 million related to the remaining balance of the second series.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In addition, in October 2011, Sabesp with cash resources redeemed in advance the total balance of outstanding debentures of the 9</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue, amounting to R$240.7 million, thus, amortizing its higher cost debentures.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In addition, in February 2012, Sabesp concluded its 15</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue of debentures, at the total amount of R$771.1 million, in two series, and 1</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">st </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">series at the amount of R$ 287.3 million indexed to CDI + 0.99% p.a. and the 2</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">nd </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">series at the amount of R$ 483.8 million, with IPCA (Extended Consumer Price Index) and annual interest rates of 6.20%, and these resources were raised to settle financial commitments falling due in 2012, mainly, the settlement of the 13</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">rd </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue of debentures. Thus, in February 2012, we settled in advance the entire amount of the 13</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">rd </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">Issue of Debentures of R$ 600 million to mature in August 2012. Resources raised also supported the amortization occurred in March 2012 of 50% of the 2</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">nd </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">series of the 11</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue of debentures, summing up R$202.5 million.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Stock market</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">2011 was a very positive year for Sabesp shares. Despite the 18.11% drop seen at Ibovespa, the company s shares at BM&amp;FBovespa ended 2011 priced at R$52.03, with 22.16% appreciation compared to 2010. Among the shares composing Ibovespa, Sabesp s shares were one of the best performers.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The company s shares participated 100% at the trading sessions of BM&amp;FBovespa and had a financial volume of R$2.9 billion in 2011.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The company ADRs appreciated 5.24%, closing the year at US$55.65, with 30 million ADRs outstanding on the market. The financial volume traded at NYSE in 2011 was US$3.7 billion, almost 31% higher compared to 2010.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, the number of financial institutions covering Sabesp s shares remained in line at 19 institutions.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-24</FONT></P></DIV>

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<P style="TEXT-ALIGN: center"><B><U><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Ownership structure on 12/31/2011</FONT></U></B></P>

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<IMG border=0 src="sbsdf4q11_6kx25x1.jpg"> </P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp s shares are traded at BM&amp;FBovespa under the ticker SBSP3 and at the New York Stock Exchange under the ticker SBS and compose main indexes of Brazil s stock exchange. For the fifth consecutive year, its shares are included in Corporate Sustainability Index - ISE.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Dividends</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Pursuant to the Company s Bylaws, common shares are entitled to minimum mandatory dividend corresponding to 25% of net income for the year, after deductions determined or accepted by laws which can be paid as interest on shareholders equity.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Referring to 2010, Sabesp credited the amount of R$456 million in dividends, as interest on shareholders equity, corresponding to approximately R$2.00 per common share and dividend yield of 4.7%.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Referring to 2011, the Board of Directors approved the payment of interest on shareholders equity at the amount of R$578.7 million, corresponding to R$2.54 per common shares and dividend yield of 4.88% to be paid within 60 days after the 2012 Annual Shareholders Meeting to approve the 2011 accounts.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Debits of municipalities serviced on a wholesale basis</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, the most important advance in this area was the approval of the creation of a mixed-capital company to explore water and sewage services in the city of Diadema, eighth largest municipality of the metropolitan region of S&#227;o Paulo, with 390,000 inhabitants.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On July 29, 2011 the municipal law n&#186; 3.123/2011 was published providing for the creation of a new water and sewage company in the city of Diadema (CAED), and authorized the executive branch to execute agreements or other types of necessary adjustments with Sabesp. However, few articles of this law had to be amended, which are still pending approval from the local government. The new company will be created by the municipality and the proposal, according to the model developed, is that subsequently Sabesp buys 49.9% of its shares.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-25</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp engaged a company specialized in the economic advisory services in order to conduct an economic and financial valuation of Saned and PricewaterhouseCoopers to carry out the due diligence. These works must be concluded by the end of March 2012. It is not possible to anticipate when this new company will start its operations.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In addition to the end of discussions with Diadema, in 2011, Sabesp carried on negotiations with the municipalities serviced on wholesale to recover amounts due in view of the supply of treated water and sewage treatment. Developments in 2011 were the following:</FONT></P>

<UL>

<LI><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Guarulhos</FONT></B><FONT size=2 face="Georgia,Times New Roman,Times,serif">: payments related to 2011 monthly consumption remained partial and the collection</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">referring to certificate of judgment debt of the government has not been made in view of the</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">Constitutional Amendment n&#186; 62/2009. Nevertheless, writs of mandamus have been filed against</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">decisions that extinguished levies of execution and recently only one of these writs of mandamus</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">has been granted relief. For this reason, few pleadings for levy of execution upon revenues</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">referring to overdue and unpaid amounts now will resume. Concurrently, all reasonable measures</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">have been taken to recover all levies of execution;</FONT>

<LI><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Santo Andr&#233;</FONT></B><FONT size=2 face="Georgia,Times New Roman,Times,serif">: In 2011, payment remained partial, even with the court decision rendered in</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">2009, which required the municipality to include in the budget total expenses related to Sabesp s</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">water supply;</FONT>

<LI><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Mau&#225;</FONT></B><FONT size=2 face="Georgia,Times New Roman,Times,serif">: payments related to 2011 monthly consumption remained partial. Nevertheless, the</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">municipality made deposits referring to invoices overdue in 2008, contributing to reduce debt. In</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">addition, similar to Guarulhos, writs of mandamus were also filed against decisions that</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">extinguished Sabesp s pleadings for levy of execution upon revenue related to certificate of</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">judgment debt of the government. One of them was recently judged by the Court of Justice of S&#227;o</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">Paulo, which was granted relief. For this reason, pleadings for levy of execution upon revenue</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">referring to overdue and unpaid amounts now will resume;</FONT>

<LI><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Mogi das Cruzes</FONT></B><FONT size=2 face="Georgia,Times New Roman,Times,serif">: the renegotiation of previous debt of approximately R$8.5 million was fully</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">paid to Sabesp and a new agreement was signed to pay overdue and unpaid invoices in the period</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">between January and June 2011, at the approximate amount of R$13.0 million. Payments started</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">in December.</FONT> </LI></UL>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Sabesp at the new regulated environment</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">With the new basic sanitation guidelines in Brazil Federal Law n&#186; 11.445/2007 and State Supplementary Law n&#176; 1,025/2007, the rendering of water supply and sewage services by Sabesp is submitted to the inspection and regulation, including tariffs, of the Sanitation and Energy Regulatory Agency of the State of S&#227;o Paulo (Arsesp).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The new scenario resulted in the first quarter of 2011 in the creation of a Committee of Regulatory Affairs at the company, as a permanent, advisory and decision-making body, composed of the Chief Executive Officer, Chief Financial and Investor Relations Officer, Metropolitan and Regional Systems Officer, in order to guide, define guidelines, strategies and coordinate the works of the Regulatory Affairs Department.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-26</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">This specific department is Sabesp s exclusive channel of communication with the agency and shall ensure the strict compliance with regulatory requirements, discussing and integrating internal areas in the identification, adjustment, creation and implementation of processes necessary, always in observance to the best practices.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, Arsesp published relevant rules aiming the return on capital invested, the tariff review, the confidentiality and secrecy in the discussion of regulatory information.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">An extremely relevant issue for the company s economic and financial breakeven, the economic regulation started to be materialized in 2011 from two basic parameters: the remuneration basis of assets and the cost of capital of the company (WACC or weighted average cost of capital).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The definition of WACC at 8.06% to be applied in the second cycle of tariff review was one of the most important economic and financial facts occurred in 2011 for the future tariff rule of services rendered by Sabesp, therefore, the company s future revenues and cash.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">According to the regulatory agency, the tariff review will be guided to:</FONT></P>

<UL>

<LI><FONT size=2 face="Georgia,Times New Roman,Times,serif">Define an initial framework for periodic tariff reviews provided for by laws and in Sabesp s</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">agreements with municipalities;</FONT>

<LI><FONT size=2 face="Georgia,Times New Roman,Times,serif">Re-discuss all the criteria adopted in relation to the cost of services, tariff structure, subsidies policy</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">and others;</FONT>

<LI><FONT size=2 face="Georgia,Times New Roman,Times,serif">Establish methodology, rules and procedures for future reviews and adjustments.</FONT> </LI></UL>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Also in 2011, Arsesp defined the phases of the process and the schedule of events to implement the first tariff review, starting works to evaluate the company s assets and to calculate the regulatory basis of remuneration. This schedule shall be extended until the publication of results, estimated for August 30, 2012, with the ratification of structure and prices to be practiced.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In October, the company submitted a business plan to Arsesp, containing information about revenue, expenses and investments and awaits the publication of the Proposal for Initial Average Tariff and Efficiency Gains Factor, estimated by regulator for May 2012.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In addition, the company pleads with Arsesp the anticipation of tariff adjustment, aiming at speeding up the recovery of expenditures already incurred, and thus, relieve pressure on cash. This pleading has been analyzed by regulatory agency.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Also in 2011, Arsesp ruled the classification and procedures related to the internal progress of documents, data and material, providing greater legal security when dealing with confidential information. Currently, two public consultations have been conducted at ARSESP (ARSESP n&#176; 03/2011 and ARSESP n&#176; 01/2012), aiming, respectively, establish the concept of shortages in supply and corresponding administrative sanctions and a detailed methodology for Sabesp s tariff review process Second Cycle. These processes are in progress and the company participates by preparing requests and making contributions.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The processes to implement the rules issued by Arsesp began in 2009 gradually and progressively and were intensified in 2011. Results and impacts are relevant, especially in commercial and operational areas and must be equalized in the restructuring and tariff review.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-27</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">It is worth mentioning the sending of the adhesion agreement according to Arsesp standard to all company s customers. Thus, the rule on tariff collection changed: previously, it was sent to the owner of the real property connected to sewage public networks, now it is sent to the user-consumer. Despite the fact this change is suitable, it may affect litigations in progress and commercial processes.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp is frequently inspected by Arsesp and seeks to comply with decisions and recommendations deriving from Notification Instrument, besides presenting its technical, legal and factual justification. This conduct has resulted in the drawing up of few deficiency notices and in the application of non-relevant fines.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The inspection rules and the notification of accidents when rendering services were incorporated into our processes. Part of the inspection occurs online through the Accident Communication System created by Arsesp, giving more transparency and control to procedures.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Corporate Governance</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">2011 was a year of changes in our controlling shareholder, the State Government of S&#227;o Paulo, significantly altering the structure of our Management, but without impacting the Company s performance.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">At the Board of Directors, among other changes, Dilma Pena who previously was the chairwoman was nominated to the position of the Company s Chief Executive Officer, now composing our main governance body only as a member, in line with the best corporate governance practices. Manuelito Pereira Magalh&#227;es Junior, who was a board member, now is in charge of the corporate management office. Except for the chief executive officer, no other officer is a member of the Board of Directors.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Currently, the Board of Directors is composed of 10 members. Among them, five of them were our board members and were re-elected at the Shareholders General Meeting held in April 2011. Three are independent members, according to the </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Novo Mercado </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">criteria. At the board of executive officers, four of six members, including the chief executive officer were exchanged in 2011.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The following chart shows how our governance structure is organized. Further information about the operation of different levels composing it is available in the Corporate Governance section, Investor Relations area at the company s website.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-28</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Pursuant to the Brazilian Corporation law, the compensation to be paid to the board of directors, fiscal council members and executive officers is defined globally at the Shareholders General Meeting. The compensation of board members and officers in 2011, including benefits, was approximately R$2.6 million. Approximately R$1.1 million are added to this amount referring to the variable compensation.</FONT></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Our shares are listed at the </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Novo Mercado </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">of BM&amp;FBovespa and at the New York Stock Exchange as ADR level III both in the first and second cases, these refer to the highest governance level. At the Brazilian stock exchange, Sabesp is also included in the Corporate Governance Index IGC and Bovespa Special Tag Along Stock Index ITAG, besides participating in the Corporate Sustainability Index ISE since 2007.</FONT></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Code of Ethics and Conduct</FONT></B></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Code of Ethics and Conduct of Sabesp is its main guiding reference, whose ethical values emphasize respect for society, customer, environment and people. It establishes the company s relation with its stakeholders: management, board members, employees, customers, suppliers, shareholders, governments, community and the society in general.</FONT></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Committee of Ethics and Conduct is liable for fomenting employees commitment to the Code and ensure its disclosure, dissemination and relevance, update and conformity, and shall guide and propose actions to be observed in all company s levels. This Code is also fundamental to consolidate Sabesp s reputation as a company socially responsible and committed to transparency.</FONT></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Channel of Complaints</FONT></B></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">This channel is prepared to receive internal and external complaints, via telephone, e-mail, post office box, Ombusdman and Customer Call Center, always preserving anonymity. In 2011, 152 complaints were recorded, of which 62% were answered and 38% of them have been analyzed. Among them:</FONT></P>

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<LI><FONT size=2 face="Georgia,Times New Roman,Times,serif">46% refer to irregularities in the processes involving connections and operational water and sewage</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">services;</FONT>

<LI><FONT size=2 face="Georgia,Times New Roman,Times,serif">19% refer to supposed improper behavior, such as moral distress, discrimination, harassment and</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">injustice;</FONT> </LI></UL></DIV>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-29</FONT></P>

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<LI><FONT size=2 face="Georgia,Times New Roman,Times,serif">24% refer to situations involving several administrative processes, such as the improper use of</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">transport, product inventory, information technology; and</FONT>

<LI><FONT size=2 face="Georgia,Times New Roman,Times,serif">11% refer to supposed irregularities in biddings and purchases, management of contractors services</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">agreements.</FONT> </LI></UL>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The number of complaints registered in 2011 remained in line. In this period, penalties were applied to 31 employees or service providers (14 warnings, 3 suspensions and 14 layoffs).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, aiming at mitigating the risks involving supposed irregularities in water and sewage operational services, a program was initiated to combat frauds at business units of the metropolitan region of S&#227;o Paulo, accounting for approximately 70% of the company s gross sales revenue. In order to comply with the program, 33 employees were trained.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Also in 2011, eight business units liable for approximately 80% of the company s gross sales revenue were submitted to corruption-related risk evaluations. These risks are listed in a computerized system and are the basis of audit works.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Internal Controls</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The evaluation of internal controls systematically conducted on a structured basis since 2005 uses as reference the frameworks of the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and Control Objectives for Information and Related Technology (COBIT).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Yearly, the internal controls evaluation process is re-examined considering both any existence of new risks associated with the preparation and disclosure of financial statements and possible significant changes in the processes and computerized systems.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Controls, which are tested by a company s independent unit, comprise procedures ensuring the accuracy of accounting records; the preparation of financial statements according to official rules; and proper authorization of transactions related to acquisition, use and disposal of the company s assets.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The revision conducted on the efficacy of internal controls in 2010, in compliance with section 404 of Sarbanes-Oxley Act, was concluded in June 2011 and did not identify any relevant deficiency, as already occurred in previous years. Tests related to 2011 will be concluded in April 2012.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Risk Management</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Generally speaking, every day the organizations are exposed to uncertainties and the maximization of companies value is achieved to the extent strategies and objectives are established guiding the balance between growth targets, return on investments and related risks.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In this direction, in 2008 Sabesp systematized the corporate risk management, with procedures to identify, measure and treat risks of sources internal and external to the organization.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In the second half of 2011, the company advanced in the improvement of its governance process and proposed to the controlling shareholder the creation of a specific unit to manage risks, previously conducted by audit area observing strict criteria of Independence and in line with contemporary market requirements, such as the Sarbanes-Oxley Act, the Code of Best Corporate Governance Practices of the Brazilian Institute of Corporate Governance, technical standards, such as ABN NBR ISO 31000 Risk Management Principles and Guidelines and other procedures defined by the Brazilian Securities and Exchange Commission (CVM), SEC and BM&amp;FBovespa.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-30</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Among the objectives of this new area: (i) the preservation and the increased value of the organization through the reduction of the probability and/or impact of loss events, combined with the decrease of capital costs resulting from lower perception of risk by lenders, insurance companies and the market in general; (ii) the promotion of greater transparency to investors and public in general from the implementation of risk techniques and mitigation actions; (iii) the improvement of governance standards through the explanation of risk profile adopted.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">ENVIRONMENTAL MANAGEMENT</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp has been prioritizing the implementation of policies concerned with environmental sustainability and improved life quality of the population.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Our Environment Policy effective as of January 2008 sets forth the guidelines for the company s environmental management.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, the company took several actions to improve environmental management. The integrated performance of the company, based on the guidelines proposed in its policy, is one of the driving factors for the universalization of sanitation services in our marketplace, on an environmentally sustainable basis, until the end of this decade.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Environmental Management System and ISO 14001 Certification</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The strategy adopted by Sabesp in its environmental management was the implementation of the Environmental Management System (EMS) at the sewage treatment stations (ETE) and water treatment stations (ETA), associated with ISO 14001 certification of part of operating units. We established targets to implement EMS, progressively, considering the geographic distribution of the operated base, and also seeking to cover several types of treatment and sizes.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In December 2010, 50 of our ETEs have been certified by ISO 14001. EMS was implemented in 65 ETEs and ETAs.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, our challenge was to consolidate the methodology of EMS implementation and maintenance. In addition, Sabesp was submitted to re-certification audit. Over the next years, the company plans to continue implementing EMS at its sites. The target is to reach 302 ETEs and ETAs with EMS implemented by 2018, as well as certify those considered as strategic, totaling 155 by 2018.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Environmental Permit Regularization Corporate Program and Rights for the Use of Water Resources</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Considering the need of maintaining and regularizing the environmental permit of the company s facilities, as well as rights to use water resources, Sabesp has been improving its management tools. Part of the operational complex is the purpose of the Environmental Permit Maintenance and Regularization Corporate Program and Regularization of Rights for the Exploitation of Water Resources.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Concerning new projects, the obtainment of these permits and grants is already part of its life cycle.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-31</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Participation in the Water Resources Joint Committees</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Currently, approximately 150 employees directly participate in 21 committees of hydrographic basin within S&#227;o Paulo state scope and 2 committees within the federal scope.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp also participates in technical panels of the National Council of Water Resources occupying seats reserved for the Association of State Sanitation Companies (AESBE), and State Council of Water Resources, as representative of the Sanitation and Water Resources Department of the State of S&#227;o Paulo.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Collection for the use of water resources</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp started paying for the use of water in rivers under federal domain at the hydrographic basin of Para&#237;ba do Sul in 2003 and basins of Piracicaba, Capivari and Jundia&#237; rivers in 2006. In 2007, the State of S&#227;o Paulo implemented the collection for the use of water in rivers of its domain at the basins of Para&#237;ba do Sul rivers and Piracicaba, Capivari and Jundia&#237; rivers, and in 2010, at the basin of Sorocaba and M&#233;dio Tiet&#234; rivers.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, Sabesp paid R$19.3 million for the use of water resources at these 3 basins. For the next year, payments related to another 5 basins are expected: </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Baixada Santista </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">and Alto Tiet&#234;, have already announced the call notice and Baixo Tiet&#234;, Tiet&#234; / Batalha and Tiet&#234; / Jacar&#233;, whose decrees were already signed in December 2010. Other 6 basins already had their criteria approved by the State Council of Water Resources and await decree to be signed and may start charging next year.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Environmental Educational Program PEA Sabesp</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp develops environmental and sanitary educational actions as an integral part of its values and corporate communication, in pursuit of consciousness-raising and change of its employees culture and society. The Environmental Educational Corporate Program - PEA provides guidelines for more than 100 actions and projects, and it is worth mentioning the following actions in 2011:</FONT></P>

<UL>

<LI><FONT size=2 face="Georgia,Times New Roman,Times,serif">1,843 school visits at ETA and ETE attended by a total amount of 72,671 people;</FONT>

<LI><FONT size=2 face="Georgia,Times New Roman,Times,serif">workshops at schools, communities and companies attended by 165,607 people, summing up</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">2,169 events;</FONT>

<LI><FONT size=2 face="Georgia,Times New Roman,Times,serif">the adoption of the Rational Water Use Program (</FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Pura</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">) at schools, which allowed to reduce by 72</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">million liters/month the water consumption at schools of the municipality of S&#227;o Paulo;</FONT>

<LI><FONT size=2 face="Georgia,Times New Roman,Times,serif">the Community Participation Program, which makes use of environmental education to make</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">population sensitive to the regularization of water and sewage connections and the intelligent use</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">of sanitation equipment.</FONT> </LI></UL>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In addition, we also offer environmental education for children, pointing out </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Clubinho Sabesp </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">(www.clubinhosabesp.com.br), which currently has 30,000 members between 6 and 13 years old. In 2011, we launched the campaign </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Privada n&#227;o &#233; Lixeira</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif"> (Toilet is not a Waste bin), orienting children to not throw rubbish into the toilet.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-32</FONT></P></DIV>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT size=2 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Management Report</FONT></B>&nbsp;</TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Climate Change and Greenhouse Gas Emission Management</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Over the past years, the climate change has been included in the world s political and economic agendas, significantly affecting companies lives, demanding innovation and new scientific and technological knowledge in order to overcome this huge challenge for the mankind. It is worth mentioning that changes may affect business in several ways, for instance, the alteration of rainfall climatology, greater evaporation at reservoirs, greater consumption caused by higher average temperature and increasing level and alteration in tidal regime, potentially affecting the operation of ocean outfalls.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Greenhouse Gas Emission Management Program</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp has been playing its role concerning its global efforts to improve knowledge about climate change, as well as is seeking new ways of production.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2008, we prepared our first corporate inventory of greenhouse gas emissions related to 2007. Then, we started to improve the methodologies and tools applied and currently we are concluding the early stages of conception of our Greenhouse Gas (GHG) Emissions Management Program .</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">One of the advances of this work in 2011 was the completion of GHG emissions company inventory for 2008, whose results confirm the conclusions obtained in the previous survey: approximately 92% of GHG emissions of the company come from the sewage process (collection and treatment) and 6.45% from electricity consumption. Company inventories related to 2009 and 2012 must be concluded by the end of 2012.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">It is worth mentioning that the company has been endeavoring its efforts to develop initiatives that reduce these emissions. Among them we point out the initiatives to utilize biogas generated from sewage sludge digestion as fuel for our vehicle fleet; the substitution of older vehicle fleet by light vehicles using flex fuel technology, with mandatory supply of ethanol and actions to recover riparian forest at springs to capture dioxide carbon.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Carbon Disclosure Project - CDP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp has been participating in the Carbon Disclosure Project CDP Investors for the past five years. It refers to the disclosure of greenhouse gas emission data, as well as information about its business as of the impacts, potential risks and opportunities related to climate change, based on a questionnaire prepared by CDP, an entity supported by approximately 550 institutional investors that manage over US$70 trillion throughout the world.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Carbon Disclosure Project Supply Chain</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In December 2010, Sabesp adhered to the CDP Supply Chain, an arm of CDP. The project is based on the collaboration with our main suppliers as to climate change risks and greenhouse gas emissions.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">This project enabled in 2011 the interaction between Sabesp and approximately 100 of our main suppliers, with the possibility of applying management cooperating strategies. The level of suppliers adhesion was nearly 20%.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Cycle of Environmental Management Conferences</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Yearly Sabesp conducts Environmental Management Conferences, such as corporate environmental management strategy with a view to promoting the discussion, knowledge exchange and the dissemination of information about environmental issues under development at the company.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-33</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">With the participation of approximately 3,000 people, 14 conferences have been held since early 2008 to date. Two events were organized in 2011: one of them is concerned with the institutional representation and water resources management and the other to discuss the role of environmental education and challenges of technological innovation in the sanitation sector.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Sabesp 3Rs Program and Ecoposto Sabesp</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Aiming at organizing and standardizing company s several selective garbage collection initiatives and defining recycling material disposal criteria for recyclables collection cooperatives, Sabesp 3Rs Program was implemented in 2008. Based on the concept reducing, reusing and recycling , in 2011 the company sent 286 tonnes of material for recycling.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Another initiative of the company was to launch in 2011 ecopostos (eco stations) to collect recycling material at the company s main facilities located in residential areas.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Environmental Good Practices</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp is engaged in several partnerships in order to increasingly improve its environmental good practices, among them, we point out the following:</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Nossa Guarapiranga </FONT></I></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Program</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In December, we started the </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Nossa Guarapiranga </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">Program, which is concerned with the protection and cleaning of Guarapiranga reservoir. Among its goals, we mention the improvement of environmental quality of one of the most important springs that supplies the metropolitan region of S&#227;o Paulo and the minimization of water quality risks.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">11 eco-barriers were installed to control waste at the outlets of main springs that flow into the reservoir. In addition, 10 rowboats and one boat were contracted. The target is to collect 20 m</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">3 </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">waste/day on average, corresponding to four carts.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Benefits will be directly seen by approximately 1 million people and indirectly by 2 million people supplied with spring water in the metropolitan region of S&#227;o Paulo.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">1 Million Trees at Cantareira</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">This is a successful experience launched in 2008 in partnership with the NGO The Nature Conservancy (TNC) and Ecological Research Institute (IP&#202;). In less than two years, we exceeded the original target, with 1.25 million seedlings planted in the Cantareira System, which accounts for 50% of water supply in the metropolitan region of S&#227;o Paulo. Now we are preparing the second phase to reach another one million.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, this project won the </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">5 de Junho </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">Award, promoted by Brazilian Institute of Public Business, in the degraded area recovery category.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Community Gardens</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, we expanded the area and the number of households benefited with this program, with over 2,000 m</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">2 </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">cultivated area at the intake range with ETA Guara&#250; and nine households. Currently, we have 32 households benefited with income generation through the cultivation of pesticide-free vegetables and greens. This initiative also reduces problems in the conservation of intake servitude area, such as rubbish discard.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-34</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Abra&#231;o Verde Project</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Abra&#231;o Verde </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">Project launched in 2008, aims at complementing the afforestation of pavements at approximately 4,000 company s facilities.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In August 2011, this initiative was considered one of the 30 social and environmental best practices for the Brazilian Environmental Benchmarking , conducted by Instituto Mais, which then integrated successful case studies (www.maisprojetos.com.br).</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Verde Vida </FONT></I></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Program</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">This program which has been developed at the business unit Pardo e Grande since 2007 includes environmental education, riparian forest recovery, reforestation, cultural preservation with cavalcade in the region, and mainly, actions to preserve and recover Canoas river, accounting for 80% of the water supply in Franca. One of its main partnerships is the </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Associa&#231;&#227;o Amigos do Rio Canoas </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">(Friends Association of Canoas River). 80,000 seedlings have already been planted, 4,020 in 2011, many of them deriving from a nursery supported by ETE of Franca.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">ETE of Jales provides social and environmental wealth</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">With an area of 72,000 hectares, Sabesp maintains at ETE of Jales, in partnership with universities, schools and NGOs of the region, an opened huge natural space for community, which includes the planting of approximately 130,000 trees over the past 10 years. This project includes thematic gardens, seedling nursery, trails, orchards and an organic garden, besides a tank for fishery, supplying the needs of elderly people for leisure in the region.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-35</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, ETE received 2,232 visitors and students from 45 schools in the region. ETE of Jales also in partnership with the local public maternity hospital executed the project called Nasce uma crian&#231;a, plante uma &#225;rvore (A child is born, plant a tree), when 10,664 seedlings of fruit and native trees were planted in 2011. This initiative won the Mario Covas Award, promoted by the Public Management State Department, under the Public Management Innovation category.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Ecomobiliza&#231;&#245;es</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">This is a community effort to collect garbage and plant seedlings at the margins of water bodies in partnership with Funda&#231;&#227;o SOS Mata Atl&#226;ntica, with the support of local governments, district associations and community surrounding the streams, reservoirs and beaches. Overall, 17 editions of this project already occurred, five of them in 2011.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Sustainable purchases</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">This set of actions advances in several fronts, in the acquisition of items that generate less social and environmental impacts, especially through the purchase of bulk chemical products, energy efficiency and restrictions to hazardous substances in electronic equipment and the prohibition to use asbestos.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">It is worth mentioning that in 2011, the Sustainable Public Contract State Program granted the social and environmental seal for 171 purchase specifications of Sabesp. The target is to extend this program to approximately 700 items in 2012.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Use of aggregate recycled debris at works</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011 we increased the utilization of aggregates from construction and demolition debris (C&amp;D) in our works. We adopted the environmentally correct alternative and approximately 50% cheaper to seal 2,500 m of ditch (base and sub-base) of Vila Marchi-Alvarenga water mains, part of Tiet&#234; Project. 3,750 m&#179; aggregates were used deriving from Urbem plants.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In October, the company s Committee of Public Biddings approved amendments to contractual clauses so that to authorize the use of aggregate from C&amp;D for non-structural applications, with brickwork settlement, pavement, sub-base of internal pavements and covering for water and sewage pipeline ditches.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Supports and sponsorship to environmentally relevant initiatives</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp supports NGO projects, universities and companies focused on sustainability and preservation of water resources, so that this support meets the company s business and allows leveraging proposals that improve life quality, may be expanded or reproduced in other locations.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp also supports with resources or non-onerous approval, the edition of books, the performance of seminars and sports competitions and other events to reinforce the institutional image.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Cooking Oil Recycling Program Prol</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Prol is a program that foments cooking oil recycling initiatives at the entire base operated by Sabesp. It aims at preventing the pollution of water bodies, generating income for cooperatives, firms and non-profit organizations and making available cheaper raw material. In addition, by avoiding the improper discard of oil, recycling prevents the obstruction of sewage network.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, we broke the record of 50 commercial agencies and other facilities of the company with oil collection available to population. There are already stations installed in approximately 35 municipalities.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-36</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Banco Cyan</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, we executed a partnership with Ambev at Banco Cyan, a rebate system that awards who saves water. This action consists of establishing consumption reduction targets, suggested according to the real property s usage profile. Any decreased use results in scores that customer may exchange for rebates in online shopping with the institutions participating in the project.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">This initiative was launched in March, which has been contributing to save 60 million liters of water.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Sustainability hearings</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">These hearings are events to stimulate discussions and disclose ecological, social, cultural and sports initiatives related to sustainability. Sabesp invites NGO, associations, companies, universities to present proposals on a certain theme.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">As of December 2007, 28 editions already took place. In 2011 three hearings were organized: two of them to launch our 2010 sustainability report and previously discuss its content, working as panels of commitment to society and another one about education and culture on the preservation of springs.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Radio Program: </FONT></B><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">Meu Ambiente</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In August 2010, we launched the </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Meu Ambiente</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif"> program which, at least, once every week, radio broadcasts an innovative content of sustainability. These programs are available free of charge for radios throughout the country on the web page. In 2011, 110 editions were produced.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Since broadcasts started, 308 people were interviewed, among experts, public authorities, company s technicians and citizens. Until December 2011, this radio program had 8,478 accesses by radio stations and internet surfers.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><I><FONT size=2 face="Georgia-BoldItalic,Times New Roman,Times,serif">SOCIAL RESPONSIBILITY</FONT></I></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp s commitment with society derives from the assumption that positive impacts a company is able to generate in the value chain in which operates go beyond the offering of products and services with quality and regularity, or the maintenance of jobs and generation of economic and financial results.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">To develop relationship practices, communication and commitment with our stakeholders (customers, shareholders, employees, governments and community), guided by principles of ethics and transparency, is essential factor for the company s sustainability. We established corporate guidelines related to social and environmental sustainability and appreciation of the human capital, in line with our Code of Ethics and Conduct, in pursuit of sustainable development, integrated management, respect for human rights, diversity and improved life quality.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In our bidding process, we adopted criteria that aim at reducing the impacts in the supply chain. Sabesp tried to use its level of influence, based on contract portfolio of R$3.05 billion in 2011, to stimulate the production of goods and services socially fairer and environmentally more responsible.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In the social area, we point out the maintenance of voluntary adhesions to domestic and international actions. We point out the UN Global Pact, which gathers companies to the benefit of labor human rights, environmental protection and anti-corruption actions. Sabesp is also partner of Ethos Institute, besides supporting and promoting the UM Millennium Eight Objectives, integrated with our Corporate Volunteer Program. We also supported the Sustainable Planet project, led by Editora Abril.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-37</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">It is also worth mentioning that the company is proud of its commitment to Brazilian childhood, it is concerned with prevention and eradication of child labor and it is recognized as Empresa Amiga da Crian&#231;a (child-friendly company) by Funda&#231;&#227;o Abrinq. We are also co-supporters of Instituto Crian&#231;a Cidad&#227;, concerned with the personal development of young people facing economic and social difficulties, by providing education, culture and assistance in the metropolitan region of S&#227;o Paulo. In 2011, we contributed with R$2.4 million, providing free-of-charge assistance to 7,000 children and adolescents.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">These initiatives are incorporated into our Code of Ethics and Conduct, whose values are: respect for society, customer, environment and people; integrity; competency and citizenship. In order to ensure that these principles are observed, we have an in-house channel of complaints and a corporate procedure to verify responsibilities. We also maintain an open channel to receive external complaints, through the Ombudsman and Customer Call Center. In 2011, for the second consecutive year, we were excluded from the most complained-about firms on Procon s list, wherein we were included until March 2010.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Relationship with customers</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">A change occurred in 2011 in the vision of the company s future reflects our maximum commitment to the satisfaction of our 27.5 million customers. As part of the company s new strategic planning for 2011-2020, our vision became: to be recognized in 2018 as the company that ensured universal access to water and sewage services in its marketplace, in a sustainable and competitive manner, with excellence in customer service .</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In the pursuit of our targets, we are improving the customer service channels; the disclosure and distribution of adhesion contracts; and the initiatives aiming at solving outstanding debts with the company, especially, low-income households and regularize water and sewage connections in areas occupied irregularly or illegally.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In observance to Arsesp s resolutions, as of September 2011, Sabesp started to deliver the adhesion contracts to its users, explaining their rights and duties and ratifying our position to the benefit of a transparent relationship with customers. Until the end of 2011, more than 5.7 million contracts have been delivered.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The improved relationship with our customers also can be seen in our call centers by dialing the number 195 where in 100% of our calls, customer await 60 seconds and we have approximately 350 public service bureaus and customer service offices 60 in the metropolitan region of S&#227;o Paulo and around 290 in inland and on the coast of the State of S&#227;o Paulo.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, we expanded the implementation of Tace (Service Technician for External Customer) in more than 70 municipalities served. Currently, 308 cities already have this system. Sabesp s professionals visit user s domicile and right away carries out the reading, emission and check the consumption of water/sewage. At these occasions, our employees also provide clarifications and give advices aiming at serving and reducing the need of customer going to a service office.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Also in 2011, we have made available on our website the Virtual Bureau , launched in November. The objective is that by the second half of 2012, 80% of most requested services in other service channels of the company, such as water and sewage connection, re-connection, regularization of overdue bills, change of user s address and bill maturity date are answered through the internet.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-38</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Our concern with social inclusion can be seen in the adoption of the social tariff , through which low-income population may pay lower amounts for the services rendered by the company. This benefit is regulated by Arsesp and assists households earning up to three minimum wages, besides observing dwelling size criteria and energy consumption. Currently, approximately 8.6 thousand domiciles gain this benefit. Sabesp s social tariff is one of the lowest tariffs practiced by state sanitation companies, and it is even 64% lower than the regular residential tariff considering domiciles with average consumption of 15 m3 month/water.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The company is also working in the regularization of irregular connections, an important challenge for sanitation companies, which produces significant results in terms of improvement of public health conditions and social inclusion. The project called Parit&#225; (Project to Regularize, Integrate and Transform Informal Areas) was implemented in the east zone of the metropolitan region of S&#227;o Paulo.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, approximately 1,300 water connections were regularized in 14 areas irregularly occupied; between 2008 and 2010, other 37 areas have been regularized. Considering the results achieved over the past four years, we decreased by 22.5% the universe of domiciles with irregular connections located in the east zone of RMSP and approximately 20,000 inhabitants have been assisted. It is worth mentioning that these actions also enable to decrease annual losses of 2.3 million m</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">3 </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">water.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Also in areas of lower income, the company developed the pilot project to prevent fire at the S&#244;nia Ribeiro community, in Jardim Aeroporto, in the city of S&#227;o Paulo, by installing fire hydrants in water distribution networks. This experience will result in the agreement to be signed with the local government of S&#227;o Paulo to install prevention equipment in risky 21communities of the city of S&#227;o Paulo in 2012.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp has been conducting satisfaction survey with its customers since 2004/2005. In 2006, this survey became annual, always applying same methodology, in order to enable the comparison between different business units and periods. The objective is to improve services rendered to our users from answers obtained.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, the overall satisfaction level in relation to the company reached 92%. Compared to results of previous survey in 2010, we saw an increase of three percentage points. We believe that good results are mainly based on the quality and regularity of water supplied by the company: 92% of interviewees said they were satisfied or very satisfied with services. The survey results consider a margin of error of 1.3 percentage point, within a confidence level of 95%. 5,860 customers were interviewed of all categories and consumption sizes in the region operated by Sabesp in the State of S&#227;o Paulo.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Ombudsman</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Ombudsman is a service qualified channel. It measures conflicts between the company and its customers and monitors the complaints filed with Arsesp. In 2011, the Ombudsman received 44,169 customers complaints, of which 99% were answered and/or solved. In order to ensure the agility to solve complaints received, the Company adopts procedures and maintains agreements with Procon and the Judiciary Branch aiming at looking for conciliation alternatives.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">One of these experiences is the Digital Small-Claims Court (JEC), a partnership between the company and the Small-Claims Court System. In 2011, we answered 354 requests, reducing by 15% the number of customers who appealed to the small-claims court compared to same previous year period. The ratio of advanced settlements at hearing remained at satisfactory levels of approximately 72% of requests, reiterating the company s commitment to seeking a balanced relationship with customers and faster and more appropriate solutions for both parties.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-39</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Ombudsman also follows-up the complaints registered by Funda&#231;&#227;o Procon. In 2011, 1,488 customers complaints were received at Funda&#231;&#227;o Procon statewide, a down 5.5% compared to the previous year. The follow-up in this preliminary phase, which precedes the recording of formal administrative process by Procon, allowed to reducing by 88% the number of complaints to be submitted for hearing. Therefore, in 2011 only 179 complaints continued being monitored by Funda&#231;&#227;o Procon after the first answer sent by Sabesp.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">We consider the number of initial records currently enrolled at all Procon s units and sent for Sabesp s evaluation represents a small volume against total number of consumers directly served by the company, i.e. 23.9 million people. All complaints are recorded and sent through the CRM (Customer Relationship Management), for evaluation and treatment by Sabesp s business units and are fully answered.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Investor relations</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, the company participated in major conferences held with investors, in Brazil and abroad, and received hundreds of analysts, investors and shareholders at its facilities.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Our concern to promote easy and quality communication with the market, which contributes to the perception of our shares value, accordingly, the company s value, was recognized by the 2011 IR Global Rankings, which awarded Sabesp for having achieved a great advance of quality in its IR website in Latin America. Through the IR website, shareholders and investors may contact the Investor Relations team, liable for communicating market demands to the company s top management.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The company also stood out at the Sanitation, Water and Gas Services sector of Abrasca s 2011 Value Creation Award. The entity considered that Sabesp achieved the highest percentages of value creation, in relation to our market capitalization over the past three years.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Supplier relations</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In our relations with supply chain, we seek to stimulate competition and allow the achievement of best results for the company and higher value generation for society. We foment local companies participation, although by force of law, we cannot adopt any discrimination or privilege in this regard. We also seek to encourage our suppliers to adhere to management practices and reduce greenhouse gas emissions.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">As a mixed-capital company, Sabesp depends on previous selection procedure when it contracts, this is a constitutional requirement regulated by Law n&#186; 8,666/93 (Bidding Law). This implies to offer same bidding and participation conditions to suppliers, irrespective of location where they are installed. This equal protection of the laws can be seen in the broad disclosure of bidding procedures through our electronic bidding portal, available in our website.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp was the first government company to roll out an electronic procurement process in Brazil. Besides reducing costs, this system offers to its suppliers and population a greater transparency, efficiency and agility. In 2011, nearly 2,000 electronic trading sessions were held, amounting to R$1.5 billion, with R$211 million savings for the company s treasury.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp promotes the participation and contracting of local suppliers in the regions where it operates. As our organizational structure is divided into business units, each one has its own budget and independence to contract on a decentralized basis.</FONT></P>

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<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">As part of the compliance with a broad peripheral legislation on contracting, a special treatment is also assured to small-sized companies and cooperatives, also encouraging the participation and contracting of local suppliers. In 2011, this participation, only considering contracting due to exemption of bidding by value and invitation, reached 40%.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp also discloses to the market as much as possible its procurement planning, in order to stimulate competition. In this regard, we prepared the manual Bidding Guidelines in Public Procurements , available on our website, where we establish the general guidelines to increase the number of suppliers and promote greater competition. Pursuant to State Decree n&#176; 53,336/08, Sabesp also discloses its Sustainable Public Contract Report, which lists our main social and environmental actions and good practices applied to our supply chain.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Social and environmental aspects are also included in the public bidding rules and drafts of agreement, pointing out participation conditions: interdicted companies due to environmental crimes are prohibited from participating in Sabesp s bidding processes pursuant to Article 10 of Law n&#186; 9,605/98; restraints to minor children labor; declaration of non-utilization of workforce similar to forced or compulsory labor, in any of its forms, in its production chain; only wood products and byproducts of exotic or native origin deriving from legal sources will be utilized in the execution of engineering works and services, pursuant to State Decree n&#176; 53.047/08; Normative Guideline for Qualification of Suppliers who are committed to environment and its surrounding. It also requires the compliance with local environmental laws through installation and operation licenses issued by environmental authorities. In addition, it assesses the products toxicological risks, so that to ensure safety of use both at treatment stations and for end consumer.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Relationship with employees</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In order to maintain leadership, grow in the required pace and overcome ongoing challenges of the market, it is essential to Sabesp rely on professionals who are capable and committed to the organizational results. This competitive advantage composed of our staff is the strategic asset we seek to preserve. Sabesp plans to become a benchmark in people management, making feasible the professional growth through opportunities and recognition, increasing satisfaction and well-being at the workplace.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Our company currently has 14,896 employees ruled by CLT (Consolidation of Labor Laws). Male employees are the majority (80%), who completed secondary school (49%), white ethnic group (84%), over 40 years of age(70%). Average period of services rendered to the company is 17 years.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp relies on service providers when necessary. Currently, the company has approximately 7.4 thousand professionals. In addition, we have 918 trainees and 506 young apprentices, who combine the opportunity of working and taking administrative qualification courses in partnership with Senai.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The building of a fairer and more sustainable society necessarily means valuing diversity and social inclusion. Sabesp complies with Federal Decree n&#186; 3,298 of 1999, which determines to set aside 5% of vacant positions offered in the public selection processes for disabled people. In 2011, we had 63 job positions under these conditions, 71% physically-impaired, 21% hearing-impaired and 8% visually-impaired employees. We also have been maintaining since 2005, an agreement with the Avape Association Valuing People with a Disability, through which, currently, 100 disabled people work in our public service bureaus and they receive over 108 hours of previous training.</FONT></P>

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<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The work developed by the company evidences actions against prejudice and discrimination, valuing differences as strategy for the corporate and social development. Sabesp was granted with the Selo Paulista de Diversidade Categoria Plena (S&#227;o Paulo Diversity Seal Top Category) by Employment and Labor Relations Department of the State Government of S&#227;o Paulo. In order to obtain its renewal, in 2011, the company was audited by the certifying entity Funda&#231;&#227;o Vanzolini. This seal reveals our concern with inclusion, the adequacy of bureaus and in-house facilities, aiming the accessibility and the creation of a service channel for hearing-impaired people.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The company also maintains a package of benefits that goes beyond legal provisions, seeking to ensure the maintenance of health conditions, well-being, development, improved life quality, satisfaction and safety of employees and dependents. These benefits cover all employees, regardless of working hours system or position, gender or ethnic group only the apprentices comply with specific laws.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Employees with child custody receive day-care assistance reimbursement or utilization of the company s day care center for children between 6 months and 6 years of age (incomplete). The company provides reimbursement of expenses to those employees having children with special needs for treatment at specialized institutions and twice the amount of day-care assistance, without limit of age.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Employees under leave due to sickness allowance or accident whose salary is above the maximum amount paid by INSS (National Institute of Social Security), are automatically granted an addition to salary for a period of up to six months.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In addition to these benefits, through Funda&#231;&#227;o Sabesp Sabesprev, the company subsidizes the health and private pension plans of all its employees. In 2011, the company contributed with 1.41% of the monthly payroll to its private pension plan under the Defined Benefit mode.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">By the end of December 2011, Sabesp signed an agreement with employees unions in order to change their pension plans. The proposal foresees other incentives for those willing to migrate from Defined Benefit Mode (Basic Plan) to Defined Contribution (Sabesprev Mais Plan). I also includes changes in risk benefits.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">With this agreement, we expect to deal with the technical deficit of the Basic Plan, estimated at R$506.4 million, however, the solution is still subject to the approval of control authorities of the State government, as well as the evaluation of the Judiciary Branch, in view of lawsuit which in November 2010, suspended migrations to Sabesprev Mais Plan.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Referring to Sabesprev health plan, in 2011 a similar committee was created to establish proposals to improve insurance coverage, with costs compatible with the market, including a performance analysis of plans currently administered by Sabesprev concerning the following items: financial results, services and services network for inactive and active members.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">People Management</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The adoption of a people management model in line with market s reality, agile and flexible is indispensable in business performance. We understand it is necessary to discuss again the bases and outline new scenarios in relation to the human resources policy and company s outsourcing. This approach must reflect and include the market s trend, the expectation of the management and employees.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">We are also seeking employees involvement through integration and motivation strategies and we expect to resume the Organizational Climate Management in 2012. We plan to be viewed in the near future as one of Brazil s best companies to work for. In order to achieve this goal, we started actions concerned with the improvement of current staff of the organization and company s relation with its employees. Among them, we mention the improvement of the Career and Salary Plan (PCS). We seek to align Sabesp with the practices and procedures effective on the Market and roll out an effective career plan based on the merit, in the performance evaluation, capacities and competencies.</FONT></P>

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<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Labor and union relations</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp incentives and supports its employees to participate in professional entities and associations, as a way of fully exercising their rights, besides promoting the personal development and improving the organizational climate. All our employees are free to be members of an association, to be represented by Unions which is covered by collective bargaining agreements.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The company conducts negotiation processes with responsibility and transparency and value a health dialogue with Union entities. They also hold meetings at any time to discuss reasonable proposals which aim at meeting employees expectations and maintaining good organizational climate, observing the limit of its financial capacity and governmental guidelines. In 2011, no situation has been seen that this free right of association and negotiation has been under risk.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Yearly Sabesp holds negotiations with five main Unions that represent the majority (90%) of its employees: Sintaema, Sintius, Seesp, Sasp and Sintec. It is worth mentioning that 80% of our employees are voluntary members of each of these Unions</FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">.</FONT></I></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The collective bargaining process of 2011/2012 took place in May and involved main Unions representing employees, which resulted in 8% adjustment to payroll and benefits and in the establishment of the Profit Sharing Program PPR. It is worth mentioning that as agreed with Union in the 2010 collective bargaining agreement, on January 31, 2011 a 30% advance of amounts related to PPR of that year was paid and the final payment related to the fulfillment of targets was made on April 29, 2011. The amount distributed was R$51 million, including 15,424 employees.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, 2.7 thousand changes in personnel occurred, which included promotions, reallocations, designation and exclusion of job positions. These were preceded by employees competency or performance evaluations by corresponding managers.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp complies with the Brazilian laws, concerned with employees so that changes that affect their work conditions do not occur. In the event of changes in the processes that would impact labor relations, the company previously discuss this issue with employees representatives.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Qualification and training of the workforce</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">We know that the sustainability of our business relies on people who will hold leadership positions at the company in the medium and long terms. This is even more fundamental when we know that 35% of our managers will be entitled to retirement in the next five years. In this regard, in 2011 we set our first group of the Succession and Career Program, composed of 39 people with essential and potential competencies to become leaders at Sabesp in the future. The development process includes MBA, coaching, evaluation, language courses and individualized improvement, nationwide and internationally, in business s priority issues. In 2012, we started a Managerial Excellence Program and we opened the second succession and career group.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The qualification and training of our employees always deserved special attention. Sabesp is one of the pioneers in corporate education in Brazil with its Corporate University, implemented in 2001 to qualify leaderships and employees at all levels.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, the qualification process recorded 112,000 participants, 4% of them were managers, 17% were undergraduates, 28% were operational workers, 42% were technicians, 5% were trainees and 4% were apprentices, reaching the average of 46 hours/person. It is worth mentioning the distance education, with a list of approximately 350 courses, summing up annual average of 12,000 participants.</FONT></P>

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<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The University s investments in training are approximately R$9 million and they privilege courses mainly concerned with sustainability, corporate governance, environment, social responsibility, quality, health and safety, besides competencies essential to the business.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, the company strongly invested in training activities related to the hygiene, occupational safety and medicine, including human rights aspects. The company also endeavored efforts to improve the qualification of its professionals, subsidizing graduate course, MBA, technical and specialized courses and language courses, through partnerships with renowned institutions on the market. In addition, agreements with over 150 educational institutions providing discounts of up to 40% for employees and legal dependents in undergraduate, graduate courses, primary and secondary schools, technical school, elementary school, language school, high school equivalency education and literacy program.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Occupational health and safety</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Basic sanitation activities due to own nature are susceptible to occupational accidents. Therefore, the objective of the company s occupational health and safety management is to ensure actions that promote the development of the prevention culture at the company, as well as the improvement of work conditions, adding life quality to employees and service providers.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp s Occupational Health and Safety Management System is certified by OHSAS 18001, comprising 100 establishments within the scope of services and works including digging and restricted areas executed at public ducts. In 2011, Bureau Veritas Certification audited Sabesp regarding the maintenance of certification and the company was certified again.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">One fourth of our employees, including managers and employees, work in formal health and safety committees and include activities such as: systematization, monitoring and specific programs. In particular, we point out the efforts and commitment of our 3,650 CIPA (Internal Commission of Accident Prevention) members, members of the fire brigade and area s professionals.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The mains drivers of the company s health and safety policy are: (i) everyone is responsible for occupational health and safety; and (ii) the performance related to occupational health and safety must be continuously monitored and improved.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Occupational health and safety programs developed have been obtained gradual reduction in frequency and severity of accidents. Most frequent accidents are related to traffic (26%) and falls (24%). Main causes are related to behavior attitudes (66%).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, an average investment of R$10 million was made in accident prevention. In addition, a communication channel was created for the external public specifically concerned with occupational health and safety issues.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Quality Management</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">With growing prospects for operating in new markets, products and services, and the sector s regulation, the Quality Integrated System is a great ally to a continued improvement of Sabesp s management.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Quality Management Excellence program has been prioritizing the improvement of ISO 14001 standard (environmental management) and the maintenance of integrated certification for ISO 9001 (quality) and OHSAS 18001 standards (occupational health and safety).</FONT></P>

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<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, maintenance and re-certification audits were carried out at the Quality Integrated System referring to ISO 9001, ISO 14001 and OHSAS 18001 standards. Currently, Sabesp has 13 laboratories accredited by ISO/IEC 17025 standard and certified by Inmetro (National Institute of Metrology, Quality and Technology) ensuring that water does not pose direct effects on its users health.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In this regard, it is worth mentioning that although procedures related to the minimization of products and service labeling are not conducted, as these are destined to bottled products the company disclosed in its water and/or sewage monthly bill, the water quality parameters (turbidity, chloride, fluorine, total coliform bacteria, fecal coliforms), according to the President s Decree n&#186; 5,440/05 and Ordinance n&#186; 518/04 of the Ministry of Health.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Community relations</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp pursues the support of educational activities concerned with customers, suppliers and communities, in reply to the needs expressed in our opinion polls. In this regard, we point out trainings related to the rational use of water and environmental education. The company opens the doors of its facilities for schools wanting to know the water and/or sewage treatment process: in 2011, nearly 2,000 visits took place, summing up over 72,000 people.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp works with communities in partnership with local governments. Programs concerned with low-income population include technical and social works and aim the social, economic and environmental sustainability of projects, which include the community s participation and the environmental education, observing the characteristics of works and the profile of benefited population.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">It is worth mentioning the methodology called Cooperative Governance, developed by the Brazilian Center of Analysis and Planning (Cebrap) utilized, for instance, in programs such as </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">C&#243;rrego Limpo</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif"> (Clean Stream) by Metropolitan Executive Board In this approach, social and environmental projects are maintained with the participation of all related parties and beneficiaries are monitored and supported by visits of teams related to the company s social responsibility.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In the metropolitan region of S&#227;o Paulo, Sabesp also develops the program called </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Agente da Gente</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif"> (People s Agent) a Community Participation Program, through which we establish an effective communication channel among our 40 technicians and local community leaders. Together, they work to involve area residents, transforming them into environmental consciousness-raising multipliers. In 2011, over 600,000 people participated in workshops and events related to sanitation.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The company continuously seeks means of approaching professionals of its operational area in the communities operated. In this regard, one of the issues has been to provide services through its own labor, a model adopted by the Regional Systems Executive Board. Referred to as </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Gente que Faz</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif"> (People Who Works) also deals with the strategy aiming at valuing the staff and add value to the company s results.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">It is also worth mentioning the performance of meetings with public authority s representatives and civil associations during the weeks preceding the 2011 rainfall period, with a view to presenting the management of the Cantareira System dam operations, as well as establishing coordinated actions to deal with and prevent emergency situation during summer. Five meetings were held in the cities of Atibaia, Campinas, Nazar&#233; Paulista, Piracicaba and Vargem involving authorities, such as Department of Water and Energy of the State of S&#227;o Paulo (DAEE), Civil Defense of the State, municipal authorities (executive and legislative branches), civil association s representatives, municipal consortia, other sanitation companies and press agencies.</FONT></P>

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<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Government relations</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp is a concessionaire of public utilities. Under these conditions, its main related parties are the federal, state or municipal governments. We comply with the laws, rules and regulations issued by the Executive Branch, at concurrently, we seek to collaborate in the process to formulate public sanitation policies.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Our relations with the federal government are guided by defense of public interests. As a government-controlled Corporation, we depend, for instance, of approval from federal authorities to raise foreign loans. We also endeavored efforts to have access to budgetary resources eventually made available by federal government. Through sector s representative entities we try to have influence on discussions about federal taxes levied on the rendering of water and sewage services, which we consider to be very high in Brazil it is worth mentioning that in 2011, Sabesp paid R$1.21 billion as income tax, Pasep, Cofins (taxes on revenue) and CSLL (social contribution on net income).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Statewide, the State Government of S&#227;o Paulo is our controlling shareholder. We cooperate in the preparation of public programs and in the definition of guidelines for the sanitation sector, with a view to speeding up the execution of services universalization target in our state. We also set aside resources for actions supported by the state government, such as support to culture and sports, based on tax incentives.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The municipalities are the granting authorities of services rendered, therefore, we deem them as our major customers. Our program contracts are defined in strict partnership with local governments, so that to improve the adhesion of our works and actions to the needs and demands of the population. We also develop social and environmental projects with the municipalities, in order to generate greater benefits to the population.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Incentive to culture and sports</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp provides institutional and financial support to environmental, social, cultural and sports projects developed by organizations concerned with environmental preservation and in line with social responsibility principles, incentive to culture and well-being of the community.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Over the past years, the company has been narrowing its relations with culture by means of event sponsorships and the creation of new spaces and cultural programs, such as </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Sabesp para quem tem sede de cultura</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif"> (Sabesp for those yearning for culture), through which the Company supports projects related to movies, literature, fine arts, music, dance, theater, circus and preservation of cultural heritage.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, R$13.4 million were invested and 19 movies were selected to receive a total amount of R$8 million through the S&#227;o Paulo Movies Incentive Program. Movies were selected by the State Department of Culture and receive funds that Sabesp makes available through Rouanet and Audiovisual laws. Two of them discuss sustainability: </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Metr&#243;polis Desafios para o Desenvolvimento Sustent&#225;vel</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif"> (metropolis sustainable development challenges) by Chico Guariba, and </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Cora&#231;&#227;o do Brasil</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif"> , by Daniel Santiago.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Since 2004, when the company adhered to the program, 127 movies had already been sponsored, with total investments of R$48 million in the sector one of them is Xingu , directed by Cao Hamburger, to debut in 2012. The selection is made by specialists, directors, producers and curators, according to criteria, such as cultural and artistic interest, project quality and professionals involved.</FONT></P>

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<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Currently, Sabesp is the company that most invests in movies in the State of S&#227;o Paulo and one of the three largest sponsors of the sector throughout the country. In respect for diversity, the company was pioneer in Brazil when required as of 2011 that productions sponsored thereby make available copies with resources enabling hearing and visually-impaired people to watch the movies. Onde Est&#225; a Felicidade? (Where is Happiness?), directed by Carlos Alberto Riccelli, was the first movie to show subtitles and audio-description. All movies that received the company s investments in 2011 assumed equal commitment.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">We also implemented the project called </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Escola no Cinema</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif"> (School goes to the Cinema), destined to improve the relationship between students and teachers: 10,000 students already watched commented sessions at Cine Sabesp , one of the recent movie streets in the city of S&#227;o Paulo and currently supported by the company. More than a half of viewers had never seen a movie. This room is also used in the Ecocine Festival, which will have a new edition in 2012.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp also sponsored sports activities, setting aside R$3 million as tax incentives in 2011. Among the beneficiaries are the aquatic team of Esporte Clube Pinheiros and water polo of the Association </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Comunidade M&#227;os Dadas</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">. Another R$3 million were remitted by the company to the State Fund of Child and Adolescent Rights, through Condeca.</FONT></P>

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<P style="TEXT-ALIGN: justify"><FONT size=3 face=ArialMT,Arial,Helvetica,sans-serif>ANNUAL SOCIAL BALANCE SHEET/ 2011</FONT></P>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" bgColor=#002060 width="40%" align=left><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>1) Calculation basis</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#002060 width="30%" colSpan=3 align=center><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>2011 (R$ thousand)</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#002060 width="30%" colSpan=3 align=center><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>2012 (R$ thousand)</FONT></B>&nbsp;</TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Net revenue (NR)</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>9,927,445</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>9,230,370</FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Operating income (OI)</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>2,354,495</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>2,672,119</FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Gross payroll (GP)</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>1,395,844</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>1,291,749</FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#002060 width="10%" align=right><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>R$ thousand</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#002060 width="10%" align=center><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>% on GP</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#002060 width="10%" align=right><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>% on NR</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#002060 width="10%" align=right><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>R$ thousand</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#002060 width="10%" align=center><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>% on GP</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#002060 width="10%" align=right><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>% on NR</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Meals</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>109,966</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>7.88%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>1.11%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>100,278</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>7.76%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>1.09%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Taxes</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>133,908</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>9.59%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>1.35%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>127,207</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>9.85%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>1.38%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Private pension plans</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>65,923</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>4.72%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.66%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>5,329</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.41%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.06%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Healthcare</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>108,243</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>7.75%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>1.09%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>98,695</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>7.64%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>1.07%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Occupational health and safety</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>10,254</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.73%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.10%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>9,631</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.75%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.10%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Education</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>688</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.05%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.01%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>292</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.02%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.00%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Culture</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>970</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.07%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.01%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>767</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.06%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.01%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Professional qualification and training</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>8,779</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.63%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.09%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>7,026</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.54%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.08%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>On-site child care and child-care benefits</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>1,473</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.11%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.01%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>1,592</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.12%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.02%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Employee profit sharing</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>56,692</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>4.06%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.57%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>27,525</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>2.13%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.30%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Other</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>4,563</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.33%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.05%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>3,581</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.28%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.04%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><B><FONT size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Total Internal social indicators</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><B><FONT size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>501,459</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><B><FONT size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>35.93%</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><B><FONT size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>5.05%</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><B><FONT size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>381,923</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><B><FONT size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>29.57%</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><B><FONT size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>4.14%</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" bgColor=#002060 width="40%" align=left><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>3) External social indicators</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#002060 width="10%" align=right><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>R$ thousand</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#002060 width="10%" align=center><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>% on OI</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#002060 width="10%" align=right><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>% on NR</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#002060 width="10%" align=right><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>R$ thousand</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#002060 width="10%" align=center><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>% on OI</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#002060 width="10%" align=right><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>% on NR</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Education</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.00%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.00%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>24</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.00%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.00%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Culture</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>20,163</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.83%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.20%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>15,182</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.57%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.16%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Health and basic sanitation</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>2,510</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.10%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.03%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>240</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.01%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.00%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Sports</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>5,943</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.24%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.06%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>3,493</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.13%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.04%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Fight on hunger and food security</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.00%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.00%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.00%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.00%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Other</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>7,820</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.32%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.08%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>12,294</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.46%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.13%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><B><FONT size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Total contribution to society</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>36,436</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>1.49%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.37%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>31,233</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>1.17%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.34%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Taxes (excluding social charges)</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>1,466,228</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>62.27%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>14.77%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>1,557,913</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>58.30%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>16.88%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><B><FONT size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Total External social indicators</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>1,502,664</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>63.82%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>15.14%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>1,589,146</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>59.47%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>17.22%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" bgColor=#002060 width="40%" align=left><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>4) Environmental indicators</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#002060 width="10%" align=right><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>R$ thousand</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#002060 width="10%" align=center><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>% on OI</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#002060 width="10%" align=right><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>% on NR</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#002060 width="10%" align=right><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>R$ thousand</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#002060 width="10%" align=center><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>% on OI</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#002060 width="10%" align=right><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>% on NR</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" rowSpan=2 width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Investments related to company </FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>production/operation</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 rowSpan=2 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>9,304</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 rowSpan=2 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.38%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 rowSpan=2 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.09%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 rowSpan=2 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>411</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 rowSpan=2 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.02%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 rowSpan=2 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.00%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" rowSpan=2 width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Investments in external programs and/or </FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>projects</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 rowSpan=2 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>21,122</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 rowSpan=2 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.87%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 rowSpan=2 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.21%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 rowSpan=2 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>22,359</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 rowSpan=2 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.84%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 rowSpan=2 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.24%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" rowSpan=2 width="40%" align=left><B><FONT size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Total investments in environmental </FONT></B><B><FONT size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>protection</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 rowSpan=2 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>30,426</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 rowSpan=2 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>1.25%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 rowSpan=2 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.31%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 rowSpan=2 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>22,770</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 rowSpan=2 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.85%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 rowSpan=2 width="10%" align=right><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0.25%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" vAlign=middle rowSpan=6 width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>With regards to the establishment of </FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>"annual </FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>goals" for minimizing waste, general </FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>production/operation consumption and </FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>increasing the efficient use of natural </FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>resources, the company:</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 rowSpan=6 width="30%" colSpan=3 align=left>

   <P style="MARGIN-LEFT: 5pt"><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>(x) has no established goals</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) complies 0 to 50%</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) complies 51 to 75%</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) complies 76 to 100%</FONT></P></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 rowSpan=6 width="30%" colSpan=3 align=left>

   <P style="MARGIN-LEFT: 5pt"><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>(x) has no established goals</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) complies 0 to 50%</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) complies 51 to 75%</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) complies 76 to 100%</FONT></P></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" bgColor=#002060 width="40%" align=left><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>5) Employees indicators</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#002060 width="30%" colSpan=3 align=center><B><FONT style="COLOR: #ffffff" size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>2011</FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#002060 width="30%" colSpan=3 align=center><B><FONT style="COLOR: #ffffff" size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>2010</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Employees at the end of the period</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>14,896</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>15,330</FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Admissions during the period</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>723</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>1,090</FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Outsourced employees*</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>7,399</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>0</FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Trainees/interns</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>1,424</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>1,056</FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Employees older than 45</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>7,757</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>7,868</FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Female employees</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>2,928</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>2,932</FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>% of management positions held by women</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>19.09%</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>21.57%</FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Employees of African descent</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>2,137</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>2,150</FONT></TD></TR></TABLE></DIV>

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<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-48</FONT></P></DIV>

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   <TD align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B>&nbsp;</TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT size=2 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Management Report</FONT></B>&nbsp;</TD></TR></TABLE></DIV>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" rowSpan=2 width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>% of management positions held by </FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>employees of African descent</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 rowSpan=2 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>3.72%</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 rowSpan=2 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>3.83%</FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" rowSpan=3 width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Employees with disabilities or employees </FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>with special needs (including employees and</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>AVAPE partnership)</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 rowSpan=3 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>163</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 rowSpan=3 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>57</FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" bgColor=#002060 rowSpan=2 width="40%" align=left><B><FONT style="COLOR: #ffffff" size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>6) Key information regarding the exercise </FONT></B><FONT style="COLOR: #ffffff"><B><FONT size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>of business citizenship</FONT></B>&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#002060 rowSpan=2 width="30%" colSpan=3 align=center><B><FONT style="COLOR: #ffffff" size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>2011 (R$ thousand)</FONT></B><FONT style="COLOR: #ffffff">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#002060 rowSpan=2 width="30%" colSpan=3 align=center><B><FONT style="COLOR: #ffffff" size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Goals 2012</FONT></B></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" rowSpan=2 width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Ratio between maximum and minimum </FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>salary</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 rowSpan=2 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>23</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 rowSpan=2 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>N/A</FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Total number of occupational accidents</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>187</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 width="30%" colSpan=3 align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>136</FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" vAlign=middle rowSpan=5 width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>The company's social and environmental </FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>projects were established by:</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=5 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) directors</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=5 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>(x) directors</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>and<BR></FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>managers</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=5 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) all</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>employees</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=5 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) directors</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=5 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>(x) directors</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>and</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>managers</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=5 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) all</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>employees</FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" vAlign=middle rowSpan=3 width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Occupational safety and health standards </FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>were defined by:</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=3 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>(x) directors</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=3 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) all</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>employees</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=3 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) all + Cipa</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=3 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>(x) directors</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=3 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) all</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>employees</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=3 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) all + Cipa</FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" vAlign=middle rowSpan=7 width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>With regards to freedom of trade union </FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>activities, collective bargaining rights and</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>internal employee representation, the </FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>company:</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=7 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) does not</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>interfere</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=7 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) complies</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>with</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>OIT rules</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=7 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>(x)</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>encourages</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>and complies</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>with OIT</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=7 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) does not</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>interfere</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=7 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) complies</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>with<BR></FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>OIT rules</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=7 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>(x)</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>encourages</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>and complies</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>with OIT</FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" vAlign=middle rowSpan=5 width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Private pension plans are offered to:</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=5 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) directors</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=5 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) directors</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>and</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>managers</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=5 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>(x) all</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>employees</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=5 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) directors</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=5 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) directors</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>and</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>managers</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=5 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>(x) all</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>employees</FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" vAlign=middle rowSpan=5 width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>The company's profit sharing plan is </FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>distributed to:</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=5 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) directors</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=5 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) directors</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>and</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>managers</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=5 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>(x) all</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>employees</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=5 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) directors</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=5 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) directors</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>and</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>managers</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=5 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>(x) all</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>employees</FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" vAlign=middle rowSpan=3 width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>When selecting suppliers, the ethical, </FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>social </FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>and environmental responsibility standards</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>adopted by the company:</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=3 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) are not</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>considered</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=3 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) are</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>suggested</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=3 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>(x) are</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>required</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 1px" bgColor=#d9d9d9 vAlign=middle rowSpan=3 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) are not</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>considered</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=3 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) are</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>suggested</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=3 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>(x) are</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>required</FONT></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" vAlign=middle rowSpan=4 width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>With regards to the participation of </FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>employees in voluntary work programs, the </FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>company:</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=4 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) does not</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>interfere</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=4 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) gives</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>support</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=4 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>(x) organizes</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>and</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>encourages</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>participation</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=4 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) does not</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>interfere</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=4 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>( ) gives</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>support</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=4 width="10%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>(x) organizes</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>and</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>encourages</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>participation</FONT></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" vAlign=middle rowSpan=2 width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Total number of consumer s complaints and </FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>criticisms:</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=2 width="10%" align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>In company:</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>44,169</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=2 width="10%" align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>At Procon:</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>1,488</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=2 width="10%" align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>In court:</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>354</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 2px" bgColor=#d9d9d9 vAlign=middle rowSpan=2 width="10%" align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>In company:</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>N/A</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=2 width="10%" align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>At Procon:</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>N/A</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=2 width="10%" align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>In court:</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>N/A</FONT></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" vAlign=middle rowSpan=2 width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>% of complaints and criticisms solved:</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=2 width="10%" align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>In company:</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>99%</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=2 width="10%" align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>At Procon:</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>88%</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=2 width="10%" align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>In court:</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>72%</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 2px" bgColor=#d9d9d9 vAlign=middle rowSpan=2 width="10%" align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>In company:</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>N/A</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=2 width="10%" align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>At Procon:</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>N/A</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#d9d9d9 vAlign=middle rowSpan=2 width="10%" align=center><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>In court:</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>N/A</FONT></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" rowSpan=2 width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Total value added to be distributed (R$ </FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>thousand):</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#abbdef rowSpan=2 width="30%" colSpan=3 align=center><B><FONT size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>5,714,179 in 2011</FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#abbdef rowSpan=2 width="30%" colSpan=3 align=center><B><FONT size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>5,316,928 in 2010</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" width="40%" align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Distribution of value added (DVA):</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#abbdef vAlign=middle rowSpan=3 width="30%" colSpan=3 align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>25.6% Government, 28.9% Employees</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>5.1% Shareholders, 24.1% Outsourced<BR></FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>labor; 16.3% Retained</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#abbdef vAlign=middle rowSpan=3 width="30%" colSpan=3 align=left><FONT size=1 face=Arial>29.1% Government, 23.6% Employees<BR>7.3% Shareholders, 18.5% Outsourced</FONT><BR><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>Labor, 23.4% Retained</FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid" rowSpan=2 width="40%" align=left></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" bgColor=#002060 width="100%" colSpan=7 align=left><B><FONT color=#ffffff size=1 face=Arial-BoldMT,Arial,Helvetica,sans-serif>7) Other information</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" rowSpan=3 width="100%" colSpan=7 align=left><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif><FONT size=1 face=Arial>"</FONT>This Company does neither employ child nor slave labor, it is not involved with prostitution or child/adolescent sexual exploitation, </FONT><FONT size=1 face=ArialMT,Arial,Helvetica,sans-serif>nor with corruption. The Company appreciates and respects the internal and external diversity."</FONT></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-RIGHT: #000000 1px solid" width="100%" colSpan=7 align=left><FONT size=1 face=Arial>* The number of outsourced employees is estimated considering the labor allocated to service agreements, as Sabesp does not directly hire outsourced employees.</FONT></TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-49</FONT></P></DIV>

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   <TD align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B>&nbsp;</TD></TR>

<TR height=20>

   <TD align=left><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif><FONT size=2><STRONG>Balance Sheets as of December 31, 2011 and 2010</STRONG></FONT><FONT face="Times New Roman"> </FONT></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><STRONG><FONT size=1 face=Arial>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG> </TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<DIV align=left>&nbsp;</DIV>

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<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="40%" align=left></TD>

   <TD rowSpan=2 width="2%" align=left></TD>

   <TD rowSpan=2 width="10%" align=left></TD>

   <TD rowSpan=2 width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 9px; BORDER-TOP: #000000 1px solid" rowSpan=2 width="22%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">(BR GAAP)</FONT></B>&nbsp;</TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid" rowSpan=2 width="22%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">(BR GAAP and IFRS)</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Assets</FONT></B>&nbsp;</TD>

   <TD rowSpan=2 width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Note</FONT></B>&nbsp;</TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31,</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31,</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31,</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31,</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Current assets</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Cash and cash equivalents</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">6</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,142,079</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,988,004</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,149,989</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,989,179</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Trade accounts receivable, net</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">8</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,072,015</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">971,047</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,072,659</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">971,318</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Accounts receivable from related party</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">9</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">185,333</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">137,772</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">185,333</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">137,772</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Inventories</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44,576</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">36,090</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44,611</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">36,096</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Restricted cash</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">7</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">99,729</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">302,570</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">99,729</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">302,570</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Recoverable taxes</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">117,893</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">108,675</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">118,116</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">108,675</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other accounts receivable</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">43,069</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">30,716</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">55,396</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44,511</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total current assets</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,704,694</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,574,874</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,725,833</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,590,121</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=11>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Noncurrent assets</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Long-term assets</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Trade accounts receivable</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">8</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">333,713</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">352,839</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">333,713</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">352,839</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Accounts receivable from related party</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">9</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">170,288</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">231,076</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">170,288</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">231,076</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Indemnities receivable</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">10</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">60,295</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">146,213</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">60,295</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">146,213</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Escrow deposits</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">54,178</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">43,543</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">54,178</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">43,543</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Deferred income tax and social contribution</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">15</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">177,926</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">77,913</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">179,463</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">78,440</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">National Water Agency ANA</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">100,551</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">62,540</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">100,551</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">62,540</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other accounts receivable</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">35,034</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">47,884</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">39,933</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">49,370</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">931,985</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">962,008</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">938,421</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">964,021</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=11>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Investments</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">21,986</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,262</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Investment property</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">52,585</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">52,585</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Intangible assets</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">11</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">20,125,721</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,541,522</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">20,141,677</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,546,836</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Property, plant and equipment</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">12</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">181,585</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">206,384</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">356,468</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">249,606</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=11>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total noncurrent assets</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">21,313,862</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,718,176</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">21,489,151</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,760,463</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total assets</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">25,018,556</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">23,293,050</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">25,214,984</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">23,350,584</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-50</FONT></P></DIV>

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   <TD width="99%"></TD></TR>

<TR vAlign=bottom>

   <TD align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B>&nbsp;</TD></TR>

<TR height=20>

   <TD align=left><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif><FONT size=2><STRONG>Balance Sheets as of December 31, 2011 and 2010</STRONG></FONT><FONT face="Times New Roman"> </FONT></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><STRONG><FONT size=1 face=Arial>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG> </TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<DIV align=left>&nbsp;</DIV>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="40%" align=left></TD>

   <TD rowSpan=2 width="2%" align=left></TD>

   <TD rowSpan=2 width="10%" align=left></TD>

   <TD rowSpan=2 width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 9px; BORDER-TOP: #000000 1px solid" rowSpan=2 width="22%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">(BR GAAP)</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid" rowSpan=2 width="22%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">(BR GAAP and IFRS)</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Liabilities and equity</FONT></B>&nbsp;</TD>

   <TD rowSpan=2 width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Note</FONT></B>&nbsp;</TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31,</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31,</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31,</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31,</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Current liabilities</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Accounts payable to suppliers and contractors</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">244,658</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">142,634</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">255,557</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">144,043</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Current portion of long-term loans and financing</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">13</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,629,184</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,239,716</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,630,010</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,242,143</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Accrued payroll and related charges</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">243,502</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">246,325</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">243,876</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">246,467</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other taxes payable</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">14</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">180,794</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">157,768</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">181,122</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">158,050</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest on shareholders' equity payable</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">247,486</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">354,254</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">247,486</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">354,254</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Provisions</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">16</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">764,070</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">766,603</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">764,070</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">766,603</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Services payable</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">383,116</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">295,172</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">383,116</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">295,172</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other liabilities</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">263,336</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">299,314</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">263,431</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">299,382</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total current liabilities</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,956,146</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,501,786</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,968,668</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,506,114</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=11>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Noncurrent liabilities</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Loans and financing</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">13</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,794,148</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,969,576</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,966,285</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,022,472</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other taxes payable</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">14</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,363</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">53,045</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,363</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">53,045</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Accrued taxes on revenues</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">114,106</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">112,962</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">114,957</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">112,962</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Provisions</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">16</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">807,759</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">693,227</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">807,759</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">693,227</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Pension obligations</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">17(b)</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,050,697</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,804,038</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,050,697</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,804,038</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other liabilities</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">731,441</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">476,616</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">742,359</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">476,926</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total noncurrent liabilities</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10,516,514</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10,109,464</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10,700,420</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10,162,670</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="40%">&nbsp;</TD>

   <TD width="2%"></TD>

   <TD width="10%">&nbsp;</TD>

   <TD width="2%"></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%">&nbsp;</TD>

   <TD width="2%"></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%">&nbsp;</TD>

   <TD width="2%"></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%">&nbsp;</TD>

   <TD width="2%"></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%">&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total liabilities</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">14,472,660</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">13,611,250</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">14,669,088</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">13,668,784</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=11>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Equity</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">18</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Capital stock</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,203,688</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,203,688</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,203,688</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,203,688</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Capital reserve</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">124,255</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">124,255</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">124,255</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">124,255</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Earnings reserves</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,217,953</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,353,857</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,217,953</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,353,857</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total equity</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10,545,896</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,681,800</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10,545,896</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,681,800</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total equity and liabilities</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">25,018,556</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">23,293,050</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">25,214,984</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">23,350,584</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-51</FONT></P></DIV>

<HR align=center SIZE=2 width="100%" noShade>



<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>



<P><A name="page_52"></A></P>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="99%"></TD></TR>

<TR vAlign=bottom>

   <TD align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Statements of Income</FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="40%" align=left></TD>

   <TD rowSpan=2 width="2%" align=left></TD>

   <TD rowSpan=2 width="10%" align=left></TD>

   <TD rowSpan=2 width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 2px" rowSpan=2 width="22%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">(BR GAAP)</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="22%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">(BR GAAP and IFRS)</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Note</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=11>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Net revenue from sales and services</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">21</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,927,445</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,230,370</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,941,637</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,231,027</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Cost of sales and services</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">22</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(6,018,732)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(5,194,154)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(6,030,977)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(5,194,548)</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=11>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Gross profit</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,908,713</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,036,216</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,910,660</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,036,479</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=11>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Selling expenses</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">22</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(619,304)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(712,941)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(619,542)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(712,946)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Administrative expenses</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">22</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(841,077)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(651,271)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(846,593)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(653,200)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other operating income (expenses), net</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">24</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(90,253)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,809</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(90,138)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,830</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=11>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Equity share of investment subsidiaries</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Equity share of investment in investee</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3,584)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,694)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=11>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Operating profit</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,354,495</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,672,119</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,354,387</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,672,163</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=11>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Financial expenses</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">23</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(701,889)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(788,832)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(702,766)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(789,467)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Financial income</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">23</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">465,753</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">343,807</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">465,926</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">343,914</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 4px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Inflation adjustment and foreign exchange result, net</FONT>&nbsp;</P></FONT></TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></FONT></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">23</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(396,882)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">66,151</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(396,801)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">66,146</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=11>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Financing cost, net</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(633,018)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(378,874)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(633,641)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(379,407)</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=11>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG>Profit before income tax and social</STRONG><FONT size=3> </FONT><STRONG>contribution</STRONG></FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG></STRONG></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,721,477</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,293,245</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,720,746</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,292,756</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Income tax and social contribution</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Current</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">15</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(598,024)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(697,077)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(598,303)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(697,115)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Deferred</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">15</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">99,966</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">34,279</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">100,976</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">34,806</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(498,058)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(662,798)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(497,327)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(662,309)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG>Net income for the year attributable to the</STRONG><FONT size=3> </FONT><STRONG>Company's shareholders</STRONG></FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG></STRONG></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,223,419</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,630,447</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,223,419</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,630,447</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia-BoldItalic,Times New Roman,Times,serif"><STRONG>Earnings per share - basic and diluted (in</STRONG><FONT size=3> </FONT><STRONG><EM>reais</EM></STRONG></FONT><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG>)</STRONG></FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia-BoldItalic,Times New Roman,Times,serif"><STRONG></STRONG></FONT></TD>

   <TD width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">19</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5.37</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7.16</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5.37</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7.16</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company has no other comprehensive income for the year, then the statement of comprehensive income is not presented.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=1 face="Georgia,Times New Roman,Times,serif">The accompanying notes are an integral part of these financial statement.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-52</FONT></P></DIV>

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<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>



<P><A name="page_53"></A></P>

<P>&nbsp;</P>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="99%"></TD></TR>

<TR vAlign=bottom>

   <TD align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif><B><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Statements </FONT></B><FONT style="FONT-FAMILY: Times New Roman"></FONT><FONT style="FONT-FAMILY: Times New Roman" size=2><B>of </B><B>Changes </B><B>in </B><B>Equity</B></FONT></P></FONT></B></FONT></B></TD></TR>

<TR height=20>

   <TD align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify">&nbsp;</P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="28%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=center>&nbsp;</TD>

   <TD width="1%" align=center></TD>

   <TD width="8%" align=center>&nbsp;</TD>

   <TD width="1%" align=center></TD>

   <TD width="8%" align=center>&nbsp;</TD>

   <TD width="1%" align=center></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="17%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Earnings reserves</FONT></B></TD>

   <TD width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="8%" align=center>&nbsp;</TD>

   <TD width="1%" align=center></TD>

   <TD width="8%" align=center>&nbsp;</TD>

   <TD width="1%" align=center></TD>

   <TD width="8%" align=center>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=3 width="28%" align=left></TD>

   <TD rowSpan=3 width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Note</FONT></B></TD>

   <TD rowSpan=3 width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Capital</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">stock</FONT></B></TD>

   <TD rowSpan=3 width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Capital</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">reserve</FONT></B></TD>

   <TD rowSpan=3 width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Legal</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">reserve</FONT></B></TD>

   <TD rowSpan=3 width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Investments</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">reserve</FONT></B></TD>

   <TD rowSpan=3 width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Additional </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">proposed</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">dividend</FONT></B></TD>

   <TD rowSpan=3 width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Retained </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">earnings</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">(losses)</FONT></B></TD>

   <TD rowSpan=3 width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Total</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Balances as of December 31, 2009</FONT></B>&nbsp;</TD>

   <TD width="1%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,203,688</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">124,255</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">378,526</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,732,115</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,438,584</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=17>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Net income for the year</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,630,447</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,630,447</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Legal reserve</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="8%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">18(c)</FONT>&nbsp;</TD>

   <TD width="1%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">81,522</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(81,522)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest on shareholders' equity (R$ 1.70 per share)</FONT>&nbsp;</P></FONT></TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></FONT></TD>

   <TD width="8%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">18(c)</FONT>&nbsp;</TD>

   <TD width="1%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(387,231)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(387,231)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Additional proposed dividends</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">68,761</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(68,761)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Transfer to investments reserve</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,092,933</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,092,933)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=17>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Balances as of December 31, 2010</FONT></B>&nbsp;</TD>

   <TD width="1%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,203,688</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">124,255</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">460,048</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,825,048</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">68,761</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,681,800</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=17>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Net income for the year</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="8%" align=center>&nbsp;</TD>

   <TD width="1%" align=center></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,223,419</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,223,419</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Legal reserve</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="8%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">18(e)</FONT>&nbsp;</TD>

   <TD width="1%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">61,171</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(61,171)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest on shareholders' equity (R$ 1.27 per share)</FONT>&nbsp;</P></FONT></TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></FONT></TD>

   <TD width="8%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">18(c)</FONT>&nbsp;</TD>

   <TD width="1%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(290,562)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(290,562)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">2010 additional proposed dividends</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(68,761)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(68,761)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Additional proposed dividends</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">288,143</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(288,143)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Transfer to investments reserve</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">583,543</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(583,543)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Balances as of December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="1%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,203,688</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">124,255</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">521,219</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,408,591</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">288,143</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10,545,896</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=1 face="Georgia,Times New Roman,Times,serif">The </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">accompanying </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">notes are an </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">integral </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">part of these </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">financial statement.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-53</FONT></P></DIV>

<HR align=center SIZE=2 width="100%" noShade>



<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

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<P><A name="page_54"></A></P>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="12%" colSpan=2></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" colSpan=2 align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" colSpan=2 align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Statements of Cash Flows<FONT size=3> </FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" colSpan=2 align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right>&nbsp;<STRONG><FONT size=1>(continued)</FONT></STRONG> </TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<DIV align=left>&nbsp;</DIV>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="40%" align=left></TD>

   <TD rowSpan=2 width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 4px" rowSpan=2 width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">(BR GAAP)</FONT></B>&nbsp;</TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 7px" rowSpan=2 width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">(BRGAAP and IFRS)</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="40%" align=left></TD>

   <TD rowSpan=2 width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">31, 2011</FONT></B>&nbsp;</TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">31, 2010</FONT></B>&nbsp;</TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">31, 2011</FONT></B>&nbsp;</TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">31, 2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Profit before income tax and social contribution</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">1,721,477</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2,293,245</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">1,720,746</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2,292,756</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Adjustments for:</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Depreciation and amortization</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">768,704</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">552,176</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">768,769</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">552,184</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 4px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Losses on disposal of property, plant and equipment and<FONT size=3 face="Times New Roman"> </FONT>intangible assets</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">56,548</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16,385</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">56,548</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16,385</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Allowance for doubtful accounts expense</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">289,589</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">402,694</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">289,589</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">402,694</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Change in provisions</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">614,993</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">352,614</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">614,993</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">352,614</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest on loans and financing</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">434,315</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">449,682</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">439,117</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">450,297</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Inflation adjustment and foreign exchange (gains) losses<FONT size=3 face="Times New Roman"> </FONT>on loans and financing</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">442,954</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">21,139</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">442,954</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">21,139</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest and inflation adjustment losses</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">31,422</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,112</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">31,422</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,112</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest and inflation adjustment gains</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(33,589)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(59,916)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(33,589)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(59,916)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 4px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Fair value margin on intangible assets arising from concession<FONT size=3 face="Times New Roman"> </FONT>contracts</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(47,589)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(49,603)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(47,589)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(49,603)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Indemnities receivable</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">85,918</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">85,918</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Equity share of investment in investee</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,584</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,694</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Provision from S&#227;o Paulo agreement</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">15,386</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">80,368</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">15,386</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">80,368</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Provision for defined contribution plan</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(8,746)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">32,587</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(8,746)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">32,587</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other adjustments</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,833</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,332</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,833</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,331</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Adjusted net income</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">4,379,799</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">4,116,509</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">4,380,351</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">4,114,948</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Changes in assets</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Trade accounts receivable</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(358,143)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(245,412)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(358,516)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(245,683)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Accounts receivable from related party</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">20,455</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">36,708</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">20,455</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">36,708</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Inventories</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(8,490)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,490</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(8,519)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,484</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Recoverable taxes</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(61,926)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(157,916)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(62,149)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(157,916)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Escrow deposits</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">573</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(14,864)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">573</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(14,864)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other accounts receivable</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(41,080)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(16,038)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(43,025)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(30,508)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Changes in liabilities</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Accounts payable to suppliers and contractors</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">135,961</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(67,337)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">145,451</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(66,087)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Services received</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">87,944</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">55,678</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">87,944</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">55,678</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Accrued payroll and related charges</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(49,814)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(17,624)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(49,582)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(17,525)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other taxes payable</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(14,416)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(8,558)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(14,649)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(8,316)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Accrued taxes on revenues</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,144</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(7,455)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,995</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(7,455)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Provisions</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(197,521)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(330,256)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(197,521)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(330,256)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Pension obligations</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(11,268)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(15,881)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(11,268)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(15,881)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other liabilities</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">140,220</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">118,396</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">150,855</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">118,774</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Cash generated from operations</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">4,023,438</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">3,449,440</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">4,042,395</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">3,435,101</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 4px" width="40%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest paid</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(736,382)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(618,600)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(736,853)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(618,600)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 4px" width="40%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Income tax and social contribution paid</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(588,484)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(733,452)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(588,484)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(733,452)</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Net cash generated from operating activities</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2,698,572</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2,097,388</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2,717,058</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2,083,049</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Cash flows from investing activities</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Restricted cash</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">202,841</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(189,820)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">202,841</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(189,820)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Investment increase</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(17,308)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(5,620)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Purchases of property, plant and equipment</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(11,995)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(44,161)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(143,684)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(87,383)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Purchases of intangible assets</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(2,056,756)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,810,999)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(2,067,435)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,814,166)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Net cash used in investing activities</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">(1,883,218)</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">(2,050,600)</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">(2,008,278)</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">(2,091,369)</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="55%" colSpan=3 align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">The accompanying notes are an integral part of these financial statement.</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-54</FONT></P></DIV>

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<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

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<P><A name="page_55"></A></P>

<P>&nbsp;</P>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="12%" colSpan=2></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" colSpan=2 align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" colSpan=2 align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Statements of Cash Flows<FONT size=3> </FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" colSpan=2 align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right>&nbsp;<STRONG><FONT size=1>(continued)</FONT></STRONG> </TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<DIV align=left>&nbsp;</DIV>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Cash flows from financing activities</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Loans and financing</FONT></B>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></P></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Proceeds from borrowings</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,685,506</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,370,709</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,854,052</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,425,417</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Repayments of borrowings</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,923,862)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,800,507)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,979,099)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,800,507)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Payment of interest on shareholders' equity</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(422,923)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(398,419)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(422,923)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(398,419)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Net cash provided by (used in) financing activities</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">(661,279)</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">1,171,783</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">(547,970)</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">1,226,491</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Increase (decrease) in cash and cash equivalents</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Cash and cash equivalents at beginning of year</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,988,004</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">769,433</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,989,179</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">771,008</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Cash and cash equivalents at end of year</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,142,079</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,988,004</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,149,989</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,989,179</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Increase (decrease) in cash and cash equivalents</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">154,075</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">1,218,571</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">160,810</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">1,218,171</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Additional information</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Capitalization of interest and financial charges</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">261,886</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">228,899</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">261,886</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">228,899</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=1 face="Georgia,Times New Roman,Times,serif">The accompanying notes are an integral part of these financial statement.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-55</FONT></P></DIV>

<HR align=center SIZE=2 width="100%" noShade>



<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

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<P><A name="page_56"></A></P>

<P>&nbsp;</P>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3>

   <P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Statements of Value Added</FONT></B></P></FONT></FONT></B></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<DIV align=left><BR>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="28%"></TD>

   <TD width="1%"></TD>

   <TD width="7%"></TD>

   <TD width="1%"></TD>

   <TD width="7%"></TD>

   <TD width="1%"></TD>

   <TD width="7%"></TD>

   <TD width="1%"></TD>

   <TD width="7%"></TD>

   <TD width="1%"></TD>

   <TD width="7%"></TD>

   <TD width="1%"></TD>

   <TD width="7%"></TD>

   <TD width="1%"></TD>

   <TD width="7%"></TD>

   <TD width="1%"></TD>

   <TD width="7%"></TD>

   <TD width="1%"></TD>

   <TD width="7%"></TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="23%" colSpan=5 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B>&nbsp;</TD>

   <TD width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="31%" colSpan=7 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Note</FONT></B>&nbsp;</TD>

   <TD width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 2px" width="7%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="7%" align=center>&nbsp;</TD>

   <TD width="1%" align=center></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 2px" width="7%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD>

   <TD width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="7%" align=center>&nbsp;</TD>

   <TD width="1%" align=center></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 2px" width="7%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="7%" align=center>&nbsp;</TD>

   <TD width="1%" align=center></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 2px" width="7%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD>

   <TD width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Revenues</FONT></B>&nbsp;</TD>

   <TD width="1%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Sales and services</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">21(a)</FONT>&nbsp;</TD>

   <TD width="1%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,305,043</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,655,226</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,310,120</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,655,891</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other income</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=center>&nbsp;</TD>

   <TD width="1%" align=center></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">80,821</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44,315</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">80,936</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44,336</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Income related to<FONT size=3 face="Times New Roman"> </FONT>construction of own assets</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">21(b)</FONT>&nbsp;</TD>

   <TD width="1%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,224,633</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,130,675</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,234,778</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,130,684</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Allowance for doubtful<FONT size=3 face="Times New Roman"> </FONT>accounts</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">8(c)</FONT>&nbsp;</TD>

   <TD width="1%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(120,260)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(232,505)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(120,393)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(232,505)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=center>&nbsp;</TD>

   <TD width="1%" align=center></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10,490,237</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,597,711</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10,505,441</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,598,406</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG>Inputs purchased from</STRONG><FONT size=3> </FONT><STRONG>third parties</STRONG></FONT>&nbsp;</TD>

   <TD width="1%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="7%" align=center>&nbsp;</TD>

   <TD width="1%" align=center></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Cost of sales and services</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=center>&nbsp;</TD>

   <TD width="1%" align=center></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3,623,440)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3,371,656)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3,634,890)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3,371,938)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" rowSpan=3 width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Materials, electricity, </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">outsourced services, and </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">other</FONT>&nbsp;</P></TD>

   <TD rowSpan=3 width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD rowSpan=3 width="7%" align=center></TD>

   <TD rowSpan=3 width="1%" align=center></TD>

   <TD rowSpan=3 width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(667,932)</FONT>&nbsp;</TD>

   <TD rowSpan=3 width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD rowSpan=3 width="7%" align=right></TD>

   <TD rowSpan=3 width="1%" align=right></TD>

   <TD rowSpan=3 width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(660,171)</FONT>&nbsp;</TD>

   <TD rowSpan=3 width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD rowSpan=3 width="7%" align=right></TD>

   <TD rowSpan=3 width="1%" align=right></TD>

   <TD rowSpan=3 width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(670,492)</FONT>&nbsp;</TD>

   <TD rowSpan=3 width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD rowSpan=3 width="7%" align=right></TD>

   <TD rowSpan=3 width="1%" align=right></TD>

   <TD rowSpan=3 width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(661,133)</FONT>&nbsp;</TD>

   <TD rowSpan=3 width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD rowSpan=3 width="7%" align=left></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other operating expenses</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">24</FONT>&nbsp;</TD>

   <TD width="1%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(162,639)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(37,626)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(162,639)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(37,626)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=center>&nbsp;</TD>

   <TD width="1%" align=center></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(4,454,011)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(4,069,453)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(4,468,021)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(4,070,697)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Gross value added</FONT></B>&nbsp;</TD>

   <TD width="1%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,036,226</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,528,258</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,037,420</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,527,709</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Retentions</FONT></B>&nbsp;</TD>

   <TD width="1%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Depreciation and<FONT size=3 face="Times New Roman"> </FONT>amortization</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(769,735)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(553,612)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(769,799)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(553,620)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=19>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG>Wealth created by the</STRONG><FONT size=3> </FONT><STRONG>Company</STRONG></FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG></STRONG></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,266,491</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,974,646</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,267,621</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,974,089</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG>Wealth received in</STRONG><FONT size=3> </FONT><STRONG>transfer</STRONG></FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG></STRONG></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Equity share of investment in<FONT size=3 face="Times New Roman"> </FONT>investee</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3,584)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,694)</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Financial income</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">451,272</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">343,976</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">451,526</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">344,083</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">447,688</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">342,282</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">451,526</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">344,083</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Wealth for distribution</FONT></B>&nbsp;</TD>

   <TD width="1%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,714,179</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,316,928</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,719,147</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,318,172</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG>Distribution of wealth</STRONG><FONT size=3> </FONT><STRONG>Employees</STRONG></FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG></STRONG></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Salaries and wages</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">992,045</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">17.4%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">869,991</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16.4%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">994,312</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">17.4%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">870,694</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16.4%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Benefits</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">551,616</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9.7%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">293,211</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5.5%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">551,921</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9.7%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">293,237</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5.5%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Severance Indemnity Fund</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">for Employees (FGTS)</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">105,900</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1.8%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">89,233</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1.7%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">106,048</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1.8%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">89,281</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1.7%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,649,561</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">28.9%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,252,435</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">23.6%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,652,281</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">28.9%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,253,212</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">23.6%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG>Taxes, fees and</STRONG><FONT size=3> </FONT><STRONG>contributions</STRONG></FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG></STRONG></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Federal</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,398,783</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">24.5%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,491,591</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">28.0%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,399,691</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">24.5%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,491,299</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">28.0%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">State</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">42,843</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">0.7%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">39,358</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">0.7%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">42,857</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">0.7%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">39,359</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">0.7%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Municipal</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">24,602</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">0.4%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">26,964</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">0.5%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">24,738</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">0.4%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">27,002</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">0.5%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,466,228</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">25.6%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,557,913</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">29.2%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,467,286</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">25.6%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,557,660</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">29.2%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Lenders and lessors</FONT></B>&nbsp;</TD>

   <TD width="1%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest, Exchange and<FONT size=3 face="Times New Roman"> </FONT>monetary variations</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,336,380</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">23.4%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">842,949</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">15.9%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,337,258</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">23.4%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">843,588</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">15.9%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Rentals</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">38,591</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">0.7%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">33,184</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">0.6%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">38,903</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">0.7%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">33,265</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">0.6%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,374,971</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">24.1%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">876,133</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16.5%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,376,161</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">24.1%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">876,853</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16.5%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Shareholders</FONT></B>&nbsp;</TD>

   <TD width="1%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 2px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest on shareholders equity</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">18(c)</FONT>&nbsp;</TD>

   <TD width="1%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">290,562</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5.1%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">387,231</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7.3%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">290,562</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5.1%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">387,231</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7.3%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="28%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Retained earnings</FONT>&nbsp;</P></TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">932,857</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16.3%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,243,216</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">23.4%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">932,857</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16.3%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,243,216</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">23.4%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,223,419</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">21.4%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,630,447</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">30.7%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,223,419</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">21.4%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,630,447</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">30.7%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Wealth distributed</FONT></B>&nbsp;</TD>

   <TD width="1%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,714,179</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">100.0%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,316,928</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">100.0%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,719,147</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">100.0%</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,318,172</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="7%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">100.0%</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=19>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=19>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="60%" colSpan=9 align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">The accompanying notes are an integral part of these financial statement.</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="7%" align=left>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-56</FONT></P></DIV>

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<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

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<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%" align=center>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operations</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo ("SABESP" or the "Company") is a mixed-capital company headquartered in S&#227;o Paulo, controlled by the S&#227;o Paulo State Government. The Company is engaged in the provision of basic and environmental sanitation services in the State of S&#227;o Paulo, as well as it supplies treated water on a wholesale basis.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In addition to providing basic sanitation services in the State of S&#227;o Paulo, SABESP may perform these activities in other states and countries, and can operate in drainage, urban cleaning, solid waste handling and energy markets. The objective set in the new vision of SABESP is to be recognized as the company that ensured universal access to water and sewage services in its marketplace, focused on the customer, and in a sustainable and competitive manner, with excellence in environmental solutions.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On December 31, 2011, the company operates water and sewage services in 363 of municipalities of the State of S&#227;o Paulo, having temporarily discontinued operations in five of these municipalities, Itapira, Ara&#231;oiaba da Serra, Iper&#243;, Cajobi, &#193;lvares Florense and Macatuba, due to judicial orders under ongoing lawsuits. Most of these municipalities operations are based on 30-year concession agreements. As of December 31, 2011, 99 concessions had expired and are being negotiated. From 2012 to 2033, 39 concessions will expire, and the remaining concessions operate on rollover basis. These concessions with indefinite terms and expired concessions under negotiation are amortized over the useful lives of the underlying assets. By December 31, 2011, 225 contracts were signed (201 contracts in 2010).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Management believes that all concessions expired and not yet renewed will result in new contracts or contract extensions, disregarding the risk of discontinuity in the provision of municipal water supply and sewage services. As of December 31, 2011, the carrying amount of the underlying assets used in the 99 concessions of the municipalities under negotiation totaled R$6,588 million, accounting for 32.44% of total, and the related revenue for the year then ended totaled R$2,513 million, accounting for 23.87% of total.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company's operations are concentrated in the municipality of S&#227;o Paulo, which represents 55.1% of the gross revenues in 2011 (54.7% in December 2010).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On June 23, 2010, the State of S&#227;o Paulo, the Municipality of S&#227;o Paulo, the Company and the regulatory agency Sanitation and Energy Regulatory Agency ARSESP signed an agreement to share the responsibility for water supply and sewage services to the Municipality of S&#227;o Paulo based on a 30-year concession agreement. This agreement is extendable for another 30 years. This agreement sets forth SABESP as the exclusive service provider and designates ARSESP as regulator, establishing prices, controlling and monitoring services.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Also, on June 23, 2010, the State of S&#227;o Paulo, the city of S&#227;o Paulo and SABESP signed the Public service provision agreement of water supply and sewage services , a 30-year concession agreement which is extendable for another 30 years. This agreement involves the following activities:</FONT></P>

<TABLE style="WIDTH: 96%" border=0 cellSpacing=0 cellPadding=0>



<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(i)</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">protection of the sources of water in collaboration with other agencies of the State and the City;</FONT> </TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(ii)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">capture, transport and treat of water;</FONT> </TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(iii)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">collect, transport, treatment and final dispose of sanitary sewage; and</FONT> </TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(iv)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">adoption of other actions of basic and environmental sanitation.</FONT> </TD></TR></TABLE>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-57</FONT></P></DIV>

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<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In the municipality of Santos, in the Baixada Santista region, which has a significant population, the Company operates under an authorization by public deed, a situation similar to other municipalities in that region and in the Ribeira valley, where the Company started to operate after the merger of the companies that formed it.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On January 5, 2007, Law 11,445 was enacted, establishing the basic sanitation regulatory framework, providing for the nationwide guidelines and basic principles for the provision of such services, such as social control, transparency, the integration authority of sanitation infrastructure, water resources management, and the articulation between industry policies and public policies for urban and regional development, housing, suppression of poverty, promotion of health and environmental protection, and other related issues.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company's shares have been listed in the </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Novo Mercado </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">(New Market) segment of BM&amp;FBOVESPA (the S&#227;o Paulo Stock Exchange) since April 2002 and on the New York Stock Exchange (NYSE) as American Depositary Receipts ( ADRs ) since May 2002.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Since 2008, the Company has been setting up partnerships with other companies, which resulted in the following companies: Sesamm, &#193;guas de Andradina, Saneaqua Mairinque, Aquapolo Ambiental, &#193;guas de Castilho and Attend Ambiental. Although SABESP has no majority interest in the capital stock of these companies, the shareholders agreements provide for the power of veto and casting vote in certain issues jointly with associates, indicating the shared control in the management of investees. For the purposes of accounting classification in the financial statements, these companies are considered "joint ventures , under the criteria of CPC 19.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">These financial statements were approved by the Board of Directors on March 22, 2012.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Basis of preparation and presentation of the financial statements</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company is presenting the parent Company and consolidated financial statements.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The financial statements of the parent company was prepared in accordance with accounting policies accepted in Brazil, in conformity with Pronouncements, Interpretations and Orientations of the Brazilian Pronouncements Committee CPC. These accounting policies applied in the financial statements of the parent company are different from the International Financial Reporting Standards - IFRS in the valuation of the joint controlled entities by equity method, since in IFRS the valuation should be at cost or fair value.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The consolidated financial statements of the Company have been prepared in accordance with the IFRS, issued by the International Accounting Standards Board ("IASB"), and the accounting practices adopted in Brazil and issued by CPC.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The financial statements have been prepared under the historical cost except for certain financial instruments which were measured at fair value according to IFRS.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The preparation of financial statements in conformity with IFRS and CPC s requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company's accounting policies. The areas involving a higher degree to judgment or complexity, or areas where assumptions and estimates are significant to the individual and consolidated financial statements are described in Note 5.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-58</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">2.1 Consolidated financial statements</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The consolidated financial statements include the financial statements of the Company and its investees: Sesamm Servi&#231;os de Saneamento de Mogi Mirim S/A, &#193;guas de Andradina S.A., Saneaqua Mairinque S.A., Aquapolo Ambiental S.A., Attend Ambiental and &#193;guas Castilho, which were proportionally consolidated according to the equity interest over its investees. The Company shares the control of its investees, which has the same fiscal year basis. The accounting policies of its investees are consistent with the accounting policies adopted by the Company. The consolidation processes of assets, liabilities and statement of incomes add the assets, liabilities, revenues and expenses, according to the nature, complementing by the elimination of the shares hold by the parent company in the equity and statement of income of the investees.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Although SABESP has no majority shares of its investees, the shareholders agreement provides for the power of veto in certain management issues, indicating participating shared control. Therefore, the financial statements were proportionally consolidated.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The following entities were consolidated:</FONT></P>

<P style="TEXT-ALIGN: justify"><U><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sesamm</FONT></U></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On August 15, 2008, the Company, together with the companies OHL M&#233;dio Ambiente, Inima S.A.U. Unipersonal ("Inima"), T&#233;cnicas y Gesti&#243;n Medioambiental S.A.U. ("TGM") and Estudos T&#233;cnicos e Projetos ETEP Ltda. ("ETEP") incorporated the company Servi&#231;os de Saneamento de Mogi Mirim S.A. - SESAMM ("SESAMM"), for a period of 30 years from the date the concession agreement with the municipality of Mogi Mirim for the purpose of providing complementary services to the sewage diversion system and implementing and operating sewage treatment system in the municipality of Mogi Mirim, including the disposal of solid waste.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">SESAMM's capital as of December 31, 2011, totaled R$ 19,532, and was represented by 19,532,409 registered shares without a par value. SABESP holds 36% of its equity interest and Inima holds another 46% of its equity interest. The Company concluded that both, SABESP and Inima, have joint control over SESAMM. Accordingly, SABESP records their interest over SESAMM applying the proportional consolidation method, equivalent to the 36% of SESAMM's assets and liabilities, revenues and expenses.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">As of December31, 2011, SESAMM&#180;s operations had not been started yet.</FONT></P>

<P style="TEXT-ALIGN: justify"><U><FONT size=2 face="Georgia,Times New Roman,Times,serif">&#193;guas de Andradina</FONT></U></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On September 15, 2010, the Company, together with the company Companhia de &#193;guas do Brasil Cab Ambiental incorporated the company &#193;guas de Andradina S.A., with indefinite term, for the purpose of providing water supply and sewage services to the municipality of Andradina.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On December 31, 2011, the capital of &#193;guas de Andradina totaled R$ 2,908, and was represented by 2,908,985 registered shares without a par value. SABESP holds 30%of its equity interest.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The operations started in October 2010.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-59</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><U><FONT size=2 face="Georgia,Times New Roman,Times,serif">Saneaqua Mairinque</FONT></U></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On June 14, 2010, the Company, together with the company Foz do Brasil S.A. incorporated the company Saneaqua Mairinque S.A., with indefinite term, for the purpose of exploring the public service of water supply and sewage services to the municipality of Mairinque.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On December 31, 2011, the capital of Saneaqua Mairinque totaled R$ 2,000, and was represented by 2,000,000 registered shares without a par value. SABESP holds 30%of its equity interest.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The operations initiated in October 2010.</FONT></P>

<P style="TEXT-ALIGN: justify"><U><FONT size=2 face="Georgia,Times New Roman,Times,serif">Aquapolo Ambiental S.A.</FONT></U></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On October 8, 2009, the Company, together with the company Foz do Brasil S.A. incorporated the company Aquapolo Ambiental S.A., for the purpose of producing, providing and commercializing of reused water for Quattor Qu&#237;mica S.A., Quattor Petriqu&#237;mica S.A., Quattor Participa&#231;&#245;es S.A. and other companies comprising the Petrochemical Complex.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On December 31, 2011, the capital of Aquapolo totaled R$ 36,412, and was represented by 42,419,945 registered shares without a par value. SABESP holds 49%of its equity interest.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The operations are expected to initiate in April 2012.</FONT></P>

<P style="TEXT-ALIGN: justify"><U><FONT size=2 face="Georgia,Times New Roman,Times,serif">&#193;guas de Castilho</FONT></U></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On October 29, 2010, the Company, together with the company &#193;guas do Brasil Cab Ambiental, incorporated the company &#193;guas de Castilho, for the purpose of providing water supply and sewage services to the municipality of Castilho. The capital of &#193;guas de Castilho totaled R$ 622, and was represented by 622,160 registered shares without a par value. SABESP holds 30%of its equity interest.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The operations initiated in January 2011.</FONT></P>

<P style="TEXT-ALIGN: justify"><U><FONT size=2 face="Georgia,Times New Roman,Times,serif">Attend Ambiental</FONT></U></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On August 23, 2010 Companhia Estre Ambiental S.A, incorporated the company Attend Ambiental S.A, for constructing and operating a pretreatment of non-domestic effluent station, mud transportation and related services in the city of S&#227;o Paulo as well as implement similar structures in other areas in Brazil and abroad. The capital totaled R$ 2,000, and it is represented by 2,000,000 registered shares without a par value. SABESP holds 45%of its equity interest.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The operations initiated in January 2011.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-60</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE><BR>

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<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD></TR>

<TR vAlign=bottom>

   <TD width="80%" colSpan=9 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">See below a summary of financial information of the joint-controlled entities:</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

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   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="58%" colSpan=11 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B></TD></TR>

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   <TD rowSpan=3 width="40%" align=left></TD>

   <TD rowSpan=3 width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=middle rowSpan=3 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">SESAMM</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">36%</FONT></B></TD>

   <TD vAlign=middle rowSpan=3 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=middle rowSpan=3 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">&#193;GUAS DE </FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">ANDRADINA</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">30%</FONT></B></TD>

   <TD vAlign=middle rowSpan=3 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=middle rowSpan=3 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">&#193;GUAS DE</FONT></B><BR><FONT style="FONT-FAMILY: times new roman" size=1><STRONG>CASTILHO</STRONG></FONT><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">30%</FONT></B></TD>

   <TD vAlign=middle rowSpan=3 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=middle rowSpan=3 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">SANEAQUA</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">MAIRINQUE</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">30%</FONT></B></TD>

   <TD vAlign=middle rowSpan=3 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=middle rowSpan=3 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">AQUAPOLO</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">AMBIENTAL</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">49%</FONT></B></TD>

   <TD vAlign=middle rowSpan=3 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=middle rowSpan=3 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">ATTEND</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">AMBIENTAL</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">45%</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Current assets</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,658</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">360</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">133</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">561</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">12,424</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,003</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Non-current assets</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">14,447</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,300</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">423</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">164</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">180,717</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">223</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Current liabilities</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">832</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">815</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">256</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">228</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10,262</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">127</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Non-current liabilities</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">11,120</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">84</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">47</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">28</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">167,498</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,130</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Equity</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,153</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">761</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">253</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">469</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">15,381</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(31)</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Operating revenue</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,203</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,985</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">651</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,498</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Operating expenses</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(10,494)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(2,954)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(568)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(2,730)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,438)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(992)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Financial income, net</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">115</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">31</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">60</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Profit (loss) for the year</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,176)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">62</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">88</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(188)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,438)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(932)</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="60%" colSpan=5 align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="38%" colSpan=7 align=center><STRONG><FONT size=1>2010</FONT></STRONG></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=3 width="60%" colSpan=5 align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD rowSpan=3 width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=middle rowSpan=3 width="8%" align=center><STRONG><FONT size=1>SESAMM 36%</FONT></STRONG></TD>

   <TD vAlign=middle rowSpan=3 width="2%" align=center><STRONG><FONT size=1></FONT></STRONG></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=middle rowSpan=3 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">&#193;GUAS DE</FONT></B><BR><STRONG><FONT size=1>ANDRADINA</FONT></STRONG><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">30%</FONT></B></TD>

   <TD vAlign=middle rowSpan=3 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=middle rowSpan=3 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">SANEAQUA</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">MAIRINQUE</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">30%</FONT></B></TD>

   <TD vAlign=middle rowSpan=3 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=middle rowSpan=3 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">AQUAPOLO</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">AMBIENTAL</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">49%</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="60%" colSpan=5 align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Current assets</FONT></TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">420</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">178</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">851</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">13,798</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="60%" colSpan=5 align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Non-current assets</FONT></TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,353</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">106</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">46,094</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="60%" colSpan=5 align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Current liabilities</FONT></TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,702</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">119</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">177</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,331</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="60%" colSpan=5 align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Non-current liabilities</FONT></TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">301</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">53,909</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="60%" colSpan=5 align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Equity</FONT></TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,071</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(136)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">675</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,652</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="60%" colSpan=5 align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Operating revenue</FONT></TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">247</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">447</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="60%" colSpan=5 align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Operating expenses</FONT></TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(638)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(451)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(384)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,023)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="60%" colSpan=5 align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Financial income, net</FONT></TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">95</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">12</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="60%" colSpan=5 align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Profit (loss) for the year</FONT></TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(543)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(204)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">75</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,023)</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-61</FONT></P></DIV>

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<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Summary of Significant Accounting Practices</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Main accounting policies applied in the preparation of these financial statements are defined below. These policies have been applied consistently in all years presented.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Cash and cash equivalents include cash in hand, bank deposits, other short-term highly liquid investments with original maturities of three month or less, with insignificant risk of changing value, as well as current account overdrafts.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial Instruments</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Classification</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company classifies its financial assets according to the following categories: measured at fair value through profit or loss, loans and receivables, held-to-maturity and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of the financial assets at inception. On December 31, 2011 and 2010, the Company did not have financial assets classified under the held-to-maturity and available-for-sale financial instruments category.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Financial assets calculated at fair value through profit or loss</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">These are financial assets held for trading. A financial asset is classified into this category when mainly acquired for sale purposes in the short term. These assets are classified as current assets. Gains or losses arising from changes in the fair value of financial assets measured at fair value through profit or loss are presented in the statement of income in 'Financial income' or 'Financial expenses' in the period they occur, unless the instrument has been contracted in connection to another transaction. In this case, changes are recognized in the same line item of income affected by this transaction.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Loans and receivables</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">These comprise receivables which are non-derivative financial assets with fixed or determinable payments, not quoted in an active market. Loans and receivables are presented in current assets or liabilities, except for those with maturity of more than 12 months after the balance sheet date (these are classified as noncurrent assets or liabilities). The Company's loans and receivables include cash and cash equivalents, balances of trade accounts receivable, other accounts receivable and loans. Loans and receivables are recorded at fair value and subsequently at amortized cost, under the effective interest rate method.</FONT></P>

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   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.3</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Revenue from sales and services</FONT></B> </TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(a)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Revenue from sales and services</FONT> </TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Revenue from water supply and sewage collection are recognized as the water is consumed and services are provided. Revenues, including the revenues unbilled, are recognized at the fair value of the consideration received or receivable for the sale of those services. Revenue is shown net of value-added tax, rebates and discounts. Revenues from unbilled represent incurred revenues in which the services were provided, but not yet billed until the end of the each period. Water supply and sewage services are recorded as trade accounts receivable based on monthly estimates of the completed services.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-62</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

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   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

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<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company recognizes revenue when: i) products are delivered or services are rendered; ii) the amount of revenue can be reliably measured, iii) it is probable that future economic benefits will flow to the Company and iv) it is probable that the amounts will be collected. The amount of revenue is not considered to be reliably measurable until all conditions relating to the sale have been satisfied. Amounts in dispute are recognized as revenue when collected.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">(b) Construction revenue</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Revenue from concession construction contracts is recognized in accordance with CPC 17 and IAS 11 (Construction Contracts), using the percentage-of-completion method, provided that the applicable conditions for application are fulfilled. The percentage of completion is calculated from the ratio of the actual costs incurred on the balance sheet date to the planned total costs (cost-to-cost method). Revenue from cost plus contracts is recognized by reference to the construction costs incurred during the period plus a fee earned. The fee represents the additional margin related to the work performed by the Company in relation to such construction contracts and it is added to the construction costs incurred and the total is recognized as construction revenue.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Customer accounts receivable and allowance for doubtful accounts</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Customer accounts receivable are amounts due from customers for services performed in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as noncurrent assets.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company records an allowance for doubtful accounts for receivable balances in an amount that is deemed by management to be sufficient to cover probable losses in accounts receivable, based on the analysis of the history of receipts and current guarantees and it does not expect to incur in additional significant losses, mainly in relation to the municipalities.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventories</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Inventories of supplies for consumption and maintenance of the water and sewage systems are stated at the lower of average cost of acquisition or realizable value, and are classified in current assets.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment Property</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The investment properties are recorded at the acquisition or construction cost, less accumulated depreciation, calculated by the straight-line method at rates that consider the estimated useful life of assets. Expenditures related to repairs and maintenance are recorded in the statement of income when incurred.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company also maintains few assets for indeterminate use in the future, i.e., it is not defined if the Company will use the property in the operation or sell the property in the short term during the ordinary course of business.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-63</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

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   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

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<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property, plant and equipment</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Property, plant and equipment comprise mainly administrative facilities not composing the assets, subject-matter of the concession contracts. Those assets are stated at historical acquisition or construction cost less depreciation, net of impairment charge, when necessary. Interest, other financial charges and inflationary effects deriving from financing effectively applied to construction in progress are recorded as cost of respective property, plant and equipment.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Subsequent costs included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that the future economic benefit associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of income during the financial period in which they were incurred.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Depreciation is calculated using the straight-line method to allocate their cost and is described in Note 12(a). Residual values and the useful life of assets are revised and adjusted, where applicable, at the end of each year.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Gain and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized within other operating income (expenses) in the statement of incomes.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible assets</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Intangibles are stated at cost combined with the following aspects:</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Valued at acquisition cost and/or construction of the underlying assets, including construction margin, interest and other financial charges capitalized during the construction period, in this case, for the qualifying assets. Qualifying assets are assets that, necessarily, take a substantial period to get ready for its intended use or sale. The Company considers that substantial period means a period greater than 12 months. This period was established by considering the completion period of the majority of its constructions which is greater than 12 months.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The amortization is calculated when the intangible assets are available for use in the necessary condition established by the Company.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The amortization reflects the period over the expected future economic benefits generated by the intangible asset and can be the period of the contract, depending on the contract or the useful life of the asset, what occurs first.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The amortization of the intangible assets finish when the asset is totally consumed or it is alienated, what occurs first.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Infrastructure to which the operator is given access by the grantor of the concession or donation received from third parties is not recognized in the consolidated balance sheet, since such donations are controlled by the granting authority.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Financial resources received as <FONT size=2 face=Georgia>"</FONT>sinking fund" for the construction of infrastructure are recorded under Other operating income .</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-64</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

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   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

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<P style="TEXT-ALIGN: justify"><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></P><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(a)&nbsp;&nbsp; Concession arrangements/programs</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company operates concession contracts including the rendering of basic sanitation, environmental, water supply and sewage collection services signed with the granting authority. The infrastructure used by SABESP subject to service concession arrangements is considered to be controlled by the granting authority when:</FONT></P>

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   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(i)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The grantor controls or regulates what services the operator must provide with the infrastructure, to whom it most provide them, and at what price; and</FONT> </TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(ii)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The grantor controls the infrastructure, i.e., retains the right to take back the infrastructure at the end of the concession.</FONT> </TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">SABESP's rights over infrastructure operated under concession arrangements is accounted for as an intangible asset as SABESP has the right to charge for use of the infrastructure assets, and users (consumers) have the primary responsibility to pay SABESP for the services.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The fair value of construction and other work on the infrastructure represents the cost of the intangible asset and is recognized as revenue when the infrastructure is built, provided that this work is expected to generate future economic benefits. The accounting policy to recognize construction revenue is described in Note 3.3 Revenue from sales and services. </FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Intangible assets related to Concession contracts and Program contracts, when there is no right to receive the residual value of the assets at the end of the contract, are amortized on a straight-line basis over the period of the contract, or the useful life of the underlying asset.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Investments made and not recovered through rendering of services, within the agreement term, must be indemnified by the granting authority, (1) with cash or cash equivalents or also, in general (2) with the contract extension. These investments are amortized by the useful life of asset.</FONT></P>

<P style="TEXT-ALIGN: justify; MARGIN-LEFT: 15pt"><FONT size=2 face="Georgia,Times New Roman,Times,serif">(1) A financial asset is recognized when the Company has the unconditional right of receiving cash or cash equivalents at the end of concession, as indemnity for investments made and not recovered through services within the agreement term. No financial asset has been recognized, in view of the expectation and history of services rendered. We do not expect to receive indemnity in cash. (2) In the continued operation, the asset will be maintained as intangible.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(b)&nbsp;&nbsp; Software licenses</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Software licensing of computer programs and business management systems acquired are capitalized and amortized over the useful lives and the expenses associated with maintaining these are recognized as expenses when incurred.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-65</FONT></P></DIV>

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   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

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<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Impairment of non-financial assets</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Property, plant and equipment, intangibles and other noncurrent assets with definite useful lives, are yearly reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In case of assets with indefinite useful lives, therefore, not subject to amortization, these are tested yearly, regardless of the existence of impairment evidence. The recoverable amount is the higher of value in use and fair value less cost to sell. An impairment loss is recognized, in the statement of income for the amount by which the asset's carrying amount exceeds its recoverable value, which is the higher between fair value less sale costs and vale in use of an asset. For the purposes of measuring impairment, assets are grouped in the lowest level for which there are separately identifiable cash flows (CGU - Cash Generating Units). Assets that have been adjusted by impairment will be subsequently reviewed to analyze eventual reversal of impairment on the reporting date, except for goodwill.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">CGUs analyzed by the Company to measure the recoverable value of an asset were defined according to the Management s business view, and analyzed by business unit, i.e., a group of municipalities with shared costs or serviced by same water basin.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The methodology applied was the discounted cash flow, mainly concession assets, considering a five-year period operating cash flow. From 2017 until the maturity date of each contract, the operating cash flow is yearly restated at 4.5% and adjusted at present value by the weighted average cost of capital (WACC).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The process to estimate the value in use involves assumptions, judgments and estimates on future cash flows and represents the Company s best estimate, approved by the Management.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On December 31, 2011, the Management believed there is no indication that carrying amounts will not be recovered by future operations.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable to suppliers and contractors</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Accounts payable to contractors and suppliers are obligations to pay for goods or services purchased from suppliers in the ordinary course of business and are classified as current liabilities if the payment is due in the period up to one year. Otherwise, the accounts payable are presented as non-current liabilities and are initially measured at fair value, which generally correspond to the bill and subsequently at amortized cost.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans and financing</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Borrowings are initially recognized at fair value, upon receipt of funds, net of transaction costs. Subsequently, borrowings are stated at amortized cost, as presented in Note 13. Loans and financing are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Nonconvertible debentures issued by the Company are recognized in a similar manner to borrowings.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-66</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

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   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

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<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrowing costs</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The cost of loans attributable to acquisition, construction or production of an asset, which, necessarily, requires a substantial time period to be ready for use or sale are capitalized as part of the cost of these assets. Other borrowing costs are recognized as expenses in the period they are incurred. Borrowing costs are interest rates and other charges incurred by the Company related to loans, including exchange variation, as described below.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The capitalization occurs during the period in which the asset has been built, considering the weighted average rate of loans effective on the capitalization date.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">For foreign currency-denominated loans or financing, the Company analyzes them as if they were contracted in domestic currency, restricting the capitalization of interest and/or exchange variation by the amount that would be capitalized if these were closed in the domestic market.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.13&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payroll and related charges</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Salaries include an accrual for vacations and the 13</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">salary and additional payments negotiated in collective labor agreements plus related charges and are recorded on the accruals basis.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.14&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Profit sharing</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company's profit sharing plan for its employees is based on general targets of the Company as a whole, and based on the performance of each business units. The Company recognizes a provision when it is contractually required or when there is a practice in the past that created a constructive obligation. The accrual for profit sharing is recorded on the accrual basis period as operating expenses and as cost of sales and services rendered.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.15&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provisions, legal liabilities, judicial deposits, escrow deposits and contingent assets</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Provisions related to claims are recognized when: i) the Company has a present legal or constructive obligation as a result of past events; ii) it is probable that an outflow of resources will be required to settle the obligation; and iii) the amount can be reliably estimated. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognized as interest expense.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">For financial statement presentation purposes, the provision for contingencies is stated net of the related escrow deposits based on the legal right to offset. The bases and the nature of the provisions for civil, tax, labor and environmental risks are described in Note 16.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-67</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

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   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Escrow deposits not linked to related liabilities are recorded in noncurrent assets. Escrow deposits are restated for inflation.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Legal liabilities derive from tax liabilities, the purpose of which is to question its legality or constitutionality, whose amounts are fully recognized in the financial statements.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Contingent assets are not recognized in the books, except when the Company deems that the gain is practically certain or when there are secured guarantees or favorable court decisions, over which no other appeals will apply.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.16&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Environmental costs</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Costs related to ongoing environmental programs are expensed as incurred. Ongoing programs are designed to minimize the environmental impact of the operations and to manage the environmental risks inherent to the Company's activities.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.17&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income taxes current and deferred</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In order to calculate the income tax and social contribution, since 2008, the Company has been adopting the Transition Tax Regime - RTT, as provided for by Law 11,941/09, i.e., in the calculation of taxable income considered the accounting criteria of Law 6,404/76 preceding the amendments to Law 11,638/07.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The RTT will be effective until the enactment of the law ruling the tax effects from new accounting methods, seeking tax neutrality.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">This regime was optional in the 2008 and 2009 calendar years and mandatory as of 2010.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company opted for adopting RTT in 2009. In order to calculate the income tax and social contribution for the years ended December 31, 2011 and 2010, the Company adopted the prerogatives defined by RTT.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The tax expense for the period comprises current and deferred tax.</FONT></P>

<P style="TEXT-ALIGN: justify"><U><FONT size=2 face="Georgia,Times New Roman,Times,serif">Current tax</FONT></U></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The current income tax and social contribution expense are calculated on the basis of the laws enacted or substantively enacted at the balance sheet date, pursuant to Brazilian tax regulations. The income tax was accrued at rate 15%, added by 10% over the taxable income exceeding R$ 240. The social contribution was accrued at rate 9% over adjusted accounting result. Taxable income differs from net income (profit presented in the statement of income), because it excludes income and expenses taxable or deductible in other years, and excludes items not permanently taxable or not deductible. Income tax and social contribution are accrued individually (per each subsidiary), based on legislation in place in the end of the year. Management periodically evaluates and measures the positions taken in the income tax return with respect to situations in which applicable tax regulations are subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-68</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

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   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><U><FONT size=2 face="Georgia,Times New Roman,Times,serif">Deferred tax</FONT></U></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax basis of assets and liabilities and their carrying amounts in the consolidated financial statements, according to CPC 32 and IAS 12. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss, except for business combinations. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized and tax losses can be carryforward.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Deferred taxes assets and liabilities are offset when there is a legally enforceable right of offsetting current tax assets against current tax liabilities and when deferred income tax assets and liabilities are related to income taxes levied by same tax authority over the tax entity.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.18&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued taxes on revenues</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Accrued taxes on revenues are recognized on accrual basis for PASEP and Cofins. These taxes are calculated on differences from tax basis of billing to government entities, which are taxable when the invoices are settled.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">As these taxes are non-cumulative, they are presented net of tax credits, as deductions from gross revenues. Debts and credits arising from other operating income and expenses, respectively, are presented as deductions from the respective operating income or expense.</FONT></P>

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   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.19</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Pension obligations</FONT></B> </TD></TR>

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   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(a)</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Defined benefit</FONT></B> </TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Liabilities from defined benefit pension plan obligations correspond to the present value of the defined benefit obligation at balance sheet date, less the fair value of the plan's assets, and adjusted by unrecognized actuarial gains or losses. The defined benefit obligation (G1) and (G0) are calculated on an annual basis by independent actuaries, using the projected unit credit method. The estimated future cash outflows is discounted to its present value, using the interest rates of Government bonds with maturities that approximate the maturity of the related liability.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company adopts the corridor method to recognize actuarial gains and losses. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are in excess of the greater of 10% of the fair value of plan assets or 10% of the present value of the defined benefit obligation are charged or credited to income over the employees' expected average remaining working lives. The expenses related to pension plan are recognized in profit and loss of the year as cost of sales and services, selling expenses or administrative expenses, according to employee s allocation.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In an event where a curtailment relates to only some of the employees covered by a plan, or where only part of an obligation is settled, the gain or loss includes a proportionate share of the previously unrecognized past service cost and actuarial gains and losses. The proportionate share is determined on the basis of the present value of the obligations before and after the curtailment or settlement.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-69</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

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   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company makes fixed contribution to a closed private pension entity, the Funda&#231;&#227;o Sabesp de Seguridade Social Sabesprev on mandatory, contractual or voluntary basis. The regular contributions are recognized in the statement of income of the period.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(b)&nbsp;&nbsp; Defined contribution</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company participates in a defined contribution plan (Sabesprev Mais), controlled by a closed private pension entity Funda&#231;&#227;o Sabesp de Seguridade Social (Sabesprev) that provide postretirement benefits to the Company&#180;s employees.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">A defined contribution plan is a pension plan according to which the Company makes fixed contributions to a separate entity. The Company has neither legal nor contractual liabilities of making contributions if the fund has no sufficient funds to pay to all employees the benefits related to employee s services in current and previous period.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.20&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial income and expenses</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Financial income is primarily comprised of interest, inflation adjustments and exchange variations on short term investments and client negotiation. Financial expenses are primarily comprised of interest, inflation adjustments and exchange variations on loans and financing and provisions. These financial income and expenses are calculated using the effective interest rate method.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.21&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Leases</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Lease agreements are classified as financial lease when property, risks and benefits inherent to the ownership of asset to the lessee are transferred. Other lease is classified as operational lease, recognized as expenses in the statement of income on a straight-line basis during the lease term.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Financial lease agreements are measured based on the lower amount between the present value of minimum mandatory payments of the agreement or fair value of asset on the start date the lease agreement. The amounts payable deriving from considerations of financial lease agreements are recognized and allocated between financial expenses and amortization of financial lease liabilities so that to obtain a constant interest rate. The corresponding lessor s liability is recorded as short and long-term debt.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.22&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other current and noncurrent assets and liabilities</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Other assets are stated at cost of acquisition, net of any impairment loss, where applicable. The amounts recognized as other liabilities are stated at known or estimated amounts, including, where applicable, related charges and monetary variations.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.23&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends and Interest on Shareholders' Equity</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company uses the tax benefits of distributing dividends as interest on shareholders' equity, as permitted by Brazilian Law. This distribution of dividend is accounted for in accordance with Brazilian Law 9,249/95 for tax deductibility purposes, limited to the daily pro rata fluctuation of the Long-term Interest Rate (TJLP). The benefit attributed to the shareholders is recognized in the current liability against Equity, based on its by-laws. Dividends and interest on shareholders&#180; equity over the minimum established in the by-laws are recognized when approved by the shareholders in the general meeting. The tax effects of the interest on shareholders equity are recognized in the statement of income of the year.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-70</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

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   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

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<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.24&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Present value adjustment</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Current and noncurrent financial assets and liabilities are adjusted to present value based on discount rate at current market rate as of the transaction date, when the effects are relevant.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.25&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Statements of value added (DVA)</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The purpose of the statement of value added is to present the wealth generated and distributed by the Company as required by Brazilian law. The statement of value added is part of the financial statements as supplementary information and it is not required by IFRS.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The DVA was prepared based on information obtained in the accounting books, which is the base to prepare the financial statements. In its first part is presented the wealth generated by the Company representing revenues (gross revenue, including taxes on revenues, other revenues and the effects of the allowance for doubtful account), by services and products acquired from third party (cost of sales and material purchases, electricity and outsourced services, the effects of losses and recoverable of assets, depreciation and amortization) and by value added received from third parties (equity share of investment in investee, financial income and other revenues). The second part of the DVA present the distribution of the wealth segregated in employees, taxes, fees and contributions, lenders and lessors and shareholders.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.26&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Segment reporting</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Executive Board that makes strategic decisions.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Based on how the Company treats its business and how decision-making of resources allocation is made, two operating segments (water and sewage) were stated for financial reporting purposes. The segment reporting is detailed in Note 20.</FONT></P>

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   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">3.27</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Translation into foreign currency</FONT></B> </TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(a)</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Functional and reporting currency</FONT></B> </TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Items included in the financial statements are measured using the currency of the primary economic environment in which the company operates ("the functional currency"). The financial statements are presented in Brazilian </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">reais </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">(R$), which is also the Company's functional and presentation currency. All financial information presented has been presented in reais, except where indicated.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign currency translation</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Foreign currency-denominated transactions are translated into Brazilian </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">reais </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">using the exchange rates prevailing at the transaction dates. Balance sheet accounts are translated at the exchange rate prevailing at balance sheet date.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Exchange gains and losses arising on the settlement of these transactions and the translation of foreign currency-denominated cash assets and liabilities are recognized in foreign exchange result in the statement of income.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-71</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

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   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

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   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">4</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Changes in accounting practices and disclosures</FONT></B> </TD></TR>

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   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">4.1</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">New standards, amendments and interpretations of standards that took effect as January 1, 2011</FONT></B> </TD></TR>

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   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">a)</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">New standards and reviews</FONT></B> </TD></TR></TABLE>

<DIV align=left>&nbsp;</DIV>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="32%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Standard</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="32%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Key requirements</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="32%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Effective date</FONT></B>&nbsp;</TD></TR>

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   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

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   <TD vAlign=top width="32%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Amendment to IAS 32, "Financial<BR></FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">Instruments:<BR></FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">Presentation Classification of Rights </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">Issues"</FONT> </P></TD>

   <TD vAlign=top width="2%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Amendment to ensure that rights, options or guarantees to </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">acquire a fixed number of issuing entity s own equity instruments </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">by a fixed amount in any currency to be classified as equity </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">instruments, provided that the entity offers rights, options and </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">guarantees pro-rata to all existing shareholders of a class of non-</FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">derivative equity instruments.</FONT></P></TD>

   <TD vAlign=top width="2%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD vAlign=top width="32%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">February 1, 2010</FONT></P></TD></TR>

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   <TD vAlign=top width="100%" colSpan=5>&nbsp;</TD></TR>

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   <TD vAlign=top width="32%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">IFRIC 19 - "Extinguishing Financial </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">Liabilities with Equity Instruments"</FONT> </P></TD>

   <TD vAlign=top width="2%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">It clarifies IFRS requirements when an entity renegotiates the </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">terms of a financial liability with its creditor and the latter accepts </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">the entity s shares or other equity instruments to settle the </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">financial liability fully or partially.</FONT> </P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">July 1, 2010</FONT></P></TD></TR>

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   <TD vAlign=top width="100%" colSpan=5>&nbsp;</TD></TR>

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   <TD vAlign=top width="32%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Amendment to IFRS 1 First-Time</FONT>&nbsp;<FONT size=1 face="Georgia,Times New Roman,Times,serif">Adoption of IFRS Limited Exemption</FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">from Comparative IFRS 7 Disclosures </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">for First-Time Adopter </FONT></P></TD>

   <TD vAlign=top width="2%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">It offers for those entities adopting the IFRS for the first time the </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">same options given to current users of IFRS in the adoption of </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">amendments to IFRS 7. It also clarifies the provisions for </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">transition to IFRS 7 amendments.</FONT> </P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">July 1, 2010</FONT></P></TD></TR>

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   <TD vAlign=top width="100%" colSpan=5>&nbsp;</TD></TR>

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   <TD vAlign=top width="32%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">IAS 24 - "Related Party Disclosures" </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">(revised in 2009)</FONT> </P></TD>

   <TD vAlign=top width="2%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">It changes the definition of a related party and modifies certain </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">related party reporting requirements concerned with government-</FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">related entities.</FONT> </P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">January 1, 2011</FONT></P></TD></TR>

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   <TD vAlign=top width="100%" colSpan=5>&nbsp;</TD></TR>

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   <TD vAlign=top width="32%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Amendment to IFRIC 14 - </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">"IAS 19 The Limit on a Defined</FONT> <FONT size=1 face="Georgia,Times New Roman,Times,serif">Benefit Asset" </FONT><FONT size=1 face=Georgia>Minimum Funding Requirements and their Interaction</FONT></P></TD>

   <TD vAlign=top width="2%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">It removes the non-intentional consequences deriving from the </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">treatment of prepayments, where there are minimum funding</FONT> <FONT size=1 face="Georgia,Times New Roman,Times,serif">requirements. The results on prepaid contributions under certain</FONT> <FONT size=1 face="Georgia,Times New Roman,Times,serif">circumstances are recognized as assets and not as expense.</FONT> </P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">January 1, 2011</FONT></P></TD></TR>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="2%" align=left></TD>

   <TD width="32%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="32%" align=left>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-72</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

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   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

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   <TD align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">b)&nbsp;&nbsp;&nbsp; Improvements to IFRSs made in 2010 to be applied in 2011</FONT></B>&nbsp;</TD></TR>

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   <TD>&nbsp;</TD></TR>

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   <TD rowSpan=2 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">Generally, the amendments apply to annual periods beginning on/or after January 1, 2011, unless they are stated </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">otherwise.</FONT>&nbsp;</TD></TR>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Standard</FONT></B>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></P></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="32%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Main requirements</FONT></B>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></P></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="32%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Effective date</FONT></B></P></TD></TR>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">IFRS 1, First-time adoption of the </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">Applied prospectively.</FONT><BR><FONT size=1 face="Georgia,Times New Roman,Times,serif">international financial reporting</FONT>&nbsp;<FONT size=1 face=Georgia>standards</FONT></P></TD>

   <TD vAlign=top rowSpan=7 width="2%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1><STRONG></STRONG></FONT></P></TD>

   <TD vAlign=top rowSpan=7 width="32%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1><STRONG>(a) Changes in the accounting policy in the year of adoption<BR></STRONG></FONT><FONT size=3></FONT><BR><FONT size=1 face="Georgia,Times New Roman,Times,serif">It clarifies that, if a first-time adopter changes its accounting </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">policies or its use of any IFRS 1 exemptions after having&nbsp; published </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">an interim financial reporting under IAS 34, Interim Financial </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">Reporting , this entity must explain the changes and update the </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">reconciliations between previous GAAP and the IFRS.</FONT>&nbsp;</P></TD>

   <TD vAlign=top rowSpan=7 width="2%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1><STRONG></STRONG></FONT></P></TD>

   <TD vAlign=top rowSpan=7 width="32%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face=Georgia>Applied prospectively.</FONT></P>

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   <TD vAlign=top rowSpan=10 width="2%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">(b) Revaluation basis as deemed cost<BR></FONT></B><BR><FONT size=1 face="Georgia,Times New Roman,Times,serif">It allows first-time adopters of IFRS to apply fair </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">value </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">determined by a specific event as deemed cost, even if the </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">event </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">occurs after the transition date, but before the first IFRS </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">financial </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">statements to be issued. When this re-measurement occurs </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">after </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">the date of transition to the IFRS, but during a period covered </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">by </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">its first IFRS financial statements, any subsequent adjustment </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">to </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">that fair value determined by event will be recognized in equity.</FONT></P></TD>

   <TD vAlign=top rowSpan=10 width="2%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></P></TD>

   <TD vAlign=top rowSpan=10 width="32%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1 face="Georgia,Times New Roman,Times,serif">Entities that adopted IFRS in </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">previous periods may apply the </FONT><FONT size=1 face=Georgia>amendment retroactively in the </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">first annual period after the </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">amendment becomes effective, </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">provided</FONT> <FONT size=1 face="Georgia,Times New Roman,Times,serif">that</FONT> <FONT size=1 face="Georgia,Times New Roman,Times,serif">the </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">measurement</FONT> <FONT size=1 face="Georgia,Times New Roman,Times,serif">date</FONT> <FONT size=1 face="Georgia,Times New Roman,Times,serif">is within </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">the period covered</FONT> <FONT size=1 face="Georgia,Times New Roman,Times,serif">by first </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">IFRS financial statements.</FONT></P></TD></TR>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></P>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT>&nbsp;</P></TD></TR>

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   <TD vAlign=top rowSpan=8 width="2%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG></STRONG></FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG>(c) Use of estimated cost in operations subject to regulated prices<BR></STRONG><FONT size=3></FONT></FONT><BR><FONT size=1 face="Georgia,Times New Roman,Times,serif">Entities subject to tariff regulation may apply previous carrying&nbsp; </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">amounts under the previous GAAP of property, plant and </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">equipment or intangible assets as deemed cost in a basis, item per </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">item. Entities applying this exemption are required to test each </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">item for impairment according to the IAS 36 on the transition </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">date.</FONT>&nbsp;</P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG></STRONG></FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face=Georgia>Applied prospectively.</FONT></P></TD></TR>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

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   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">IFRS 3 Business Combinations</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">(a) Transition</FONT></B> <B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">requirements</FONT></B> <B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">for</FONT></B> <B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">contingent </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">consideration</FONT></B> <B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">from a business</FONT></B> <B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">combination </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">occurred prior to the effective date of revised IFRS</FONT></B></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face=Georgia>Applicable to annual periods </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">beginning on or after July 1,</FONT><BR><FONT size=1 face="Georgia,Times New Roman,Times,serif">2010. Applied retroactively.</FONT>&nbsp;</P></TD></TR>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1 face="Georgia,Times New Roman,Times,serif">It clarifies that amendments to IFRS 7, Financial instruments:&nbsp; </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">Disclosures , IAS 32, Financial instruments: Presentation , and</FONT><BR><FONT size=1 face="Georgia,Times New Roman,Times,serif">IAS 39, Financial instruments: Recognition and Measurement , </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">which remove the exemption of contingent consideration, the </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">contingent consideration deriving from business combination </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">shall not apply, whose dates of acquisition precede the&nbsp; application </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">of IFRS 3 (as revised in 2008).</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">(b) Measurement of non-controlling interest<BR></FONT></B><BR><FONT size=1 face="Georgia,Times New Roman,Times,serif">The option of measuring non-controlling interest at fair value or at </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">the pro-rat amount of acquired company s net assets only apply to </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">instruments representing current shareholding and entitle their </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">holders to a pro-rate amount of net assets in the event of </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">liquidation. All other non-controlling interest components are </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">measured at fair value, unless other measurement is required by </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">IFRS.</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1 face="Georgia,Times New Roman,Times,serif">Applicable to annual periods </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">beginning on or after July 1,</FONT><BR><FONT size=1 face="Georgia,Times New Roman,Times,serif">2010. Applied prospectively as </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">of the date the entity applies </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">the IFRS 3.</FONT></P></TD></TR>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">(c) Concessions of share-based payments not replaced </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">or replaced voluntarily<BR></FONT></B><BR><FONT size=1 face="Georgia,Times New Roman,Times,serif">The recommendation of IFRS 3 applies to all share-based </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">payments which partially compose a business combination, </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">including concessions of share-based payments not replaced or </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">replaced voluntarily.</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1 face="Georgia,Times New Roman,Times,serif">Applicable to annual periods </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">beginning on or after July 1,</FONT><BR><FONT size=1 face="Georgia,Times New Roman,Times,serif">2010. Applied prospectively.</FONT></P></TD></TR>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">IFRS 7, Financial instruments</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1 face="Georgia,Times New Roman,Times,serif">It emphasizes the interaction between quantitative and </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">qualitative disclosures about the nature and the extent of </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">financial instruments-related risks.</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1 face="Georgia,Times New Roman,Times,serif">Applicable to annual periods </FONT><FONT size=1 face=Georgia>beginning on or after January </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">1, 2011 Applied retroactively.</FONT></P></TD></TR>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">IAS 1, Presentation of financial </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">statements</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify>&nbsp;<FONT size=1 face=Georgia>It clarifies that an entity will present an analysis of other Applicable to annual periods </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">comprehensive income for each equity component in the beginning on or after January </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">statement of changes in equity or in the notes to the financial </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">statements .</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Applicable to annual periods </FONT><FONT size=1 face=Georgia>beginning on or after January </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">1, 2011 Applied retroactively.</FONT></P></TD></TR>

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<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-74</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

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   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">IAS 27, <FONT size=1 face=Georgia>"</FONT>Consolidated</FONT> <FONT size=1 face="Georgia,Times New Roman,Times,serif">and</FONT> <FONT size=1 face="Georgia,Times New Roman,Times,serif">separate </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">financial statements"</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1 face="Georgia,Times New Roman,Times,serif">It clarifies the resulting amendments from IAS 27 to IAS 21 </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">Effects of changes in foreign exchange rates , IAS 28 </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">Investments in associates and IAS 31 Interest in joint </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">ventures , apply prospectively to annual periods beginning on or </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">after July 1, 2009, or before this date, when IAS 27 (R) is applied </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">in advance.</FONT>&nbsp;</P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1 face="Georgia,Times New Roman,Times,serif">Applicable to annual periods </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">beginning on or after July 1,</FONT><BR><FONT size=1 face="Georgia,Times New Roman,Times,serif">2010. Applied retroactively.</FONT></P></TD></TR>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"><FONT size=1 face=Georgia>IAS 34, "Presentation of </FONT>interim&nbsp;financial reporting"</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt">&nbsp;<FONT size=1 face=Georgia>It provides guidance to illustrate how to apply reporting </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">principles in IAS 34 and add reporting requirements about:</FONT><BR><FONT size=1 face="Georgia,Times New Roman,Times,serif">- Circumstances that probably will affect the financial </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">instruments fair values and their classification;</FONT><BR><FONT size=1 face="Georgia,Times New Roman,Times,serif">- transfer of financial instruments between different levels of the </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">fair value hierarchy;</FONT><BR><FONT size=1 face="Georgia,Times New Roman,Times,serif">- changes in the classification of financial assets; and</FONT><BR><FONT size=1 face="Georgia,Times New Roman,Times,serif">- changes in contingent assets and liabilities.</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1 face="Georgia,Times New Roman,Times,serif">Applicable to annual periods </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">beginning on or after January </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">1, 2011. Applied retroactively.</FONT></P></TD></TR>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">IFRIC 13, "Constumer Loyalty Programs"</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face=Georgia>The meaning of "fair value" is clarified within the context of </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">measurement of concession of credits in customer loyalty </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">programs.</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1 face=Georgia>Applicable to annual periods </FONT><FONT size=1 face=Georgia>beginning on or&nbsp; after&nbsp;January </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">1, 2011.</FONT></P></TD></TR>

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<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(c) Future requirements</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Below, a list of standards/interpretations issued and effective for periods as of January 1, 2011.</FONT></P>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Standard</FONT></B>&nbsp;</P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Key requirements</FONT></B>&nbsp;</P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Effective date</FONT></B>&nbsp;</P></TD></TR>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1 face="Georgia,Times New Roman,Times,serif">Amendments to IFRS 7 - "Financial </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">Instruments: </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">Disclosures on derecognition of </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">financial assets</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1 face="Georgia,Times New Roman,Times,serif">This amendment will promote the transparency in the disclosure </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">of transfer&nbsp; transactions and will improve the user s understanding </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">about the exposure to the risk associated with the transfer of </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">financial assets, as well as the effect of these risks on the entity's </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">financial position, especially those involving the securitization of </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">financial assets. The early adoption, subject to the EU s approval, </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">is allowed.</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">July 1, 2011</FONT></P></TD></TR>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1 face="Georgia,Times New Roman,Times,serif">Amendment to IFRS 1 - "First-time </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">adoption", on the removal of fixed dates </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">and hyperinflation</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1 face="Georgia,Times New Roman,Times,serif">It includes two amendments to IFRS 1, First-Time Adoption of </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">IFRS . The first amendment replaces references to the fixed date </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">of January 1, 2004 with transition date to IFRS, thus, avoiding </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">first-time adopters of IFRS to restate derecognition transactions </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">that occurred prior to the transition date. The second amendment </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">provides recommendations on how an entity must resume the </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">presentation of financial reporting according to the international </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">standards after a period an entity was not able to comply with </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">IFRS provisions, as its functional currency was subject to severe </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">hyperinflation.</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">July 1, 2011</FONT></P></TD></TR>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Amendment to IAS 12 - "Income Taxes </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">on deferred taxes</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt" align=justify><FONT size=1 face="Georgia,Times New Roman,Times,serif">Currently, IAS 12 - "Income Taxes" requires that deferred taxes </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">are measured based on the expectation of recovery of asset s </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">carrying amount due to its use or sale. </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">Nevertheless, for "Investment Properties" measured at fair value </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">under IAS 40, it may be difficult and subjective to assess irecovery will occur through use or sale.f</FONT></P></TD>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

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   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Standard</FONT></B>&nbsp;</P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Key requirements</FONT></B>&nbsp;</P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Effective date</FONT></B>&nbsp;</P></TD></TR>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Therefore, this amendment introduces an exception to current </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">principle to measure the deferred tax assets or liabilities on </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">investment property measured at fair value. The amendment to </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">IAS 12 resulted in the incorporation of SIC 21 - "Income Taxes</FONT><BR><FONT size=1 face="Georgia,Times New Roman,Times,serif">Recovery of revalued non-depreciable assets " will no longer be </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">applicable to investment properties recorded at fair value. These </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">amendments also include in IAS 12 the recommendations </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">previously contained in SIC 21, which was removed.</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Amendment to IAS 1 - "Presentation of </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">Financial Statements" in relation to </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">other comprehensive income</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">The main change resulting from these amendments was the </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">requirement that entities group items reported in other </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">comprehensive income based on the likelihood of becoming or </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">not potentially classifiable again to profit or losses subsequently </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">(reclassification adjustments). These changes do not establish </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">which items must be reported in other comprehensive income.</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">July 1, 2012</FONT></P></TD></TR>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Amendment to IAS 19 - "Employees </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">Benefits"</FONT>&nbsp;</P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">These amendments remove the corridor approach and calculate </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">the financial costs based on net funding.</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">IFRS 9 - "Financial Instruments"</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">IFRS 9 is the first standard issued as part of a larger project to </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">replace IAS 39. IFRS 9 maintains, but simplifies, the combined </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">measurement model and establishes two main measurement </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">categories for financial assets: amortized cost and fair value. The </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">basis of classification depends on the entity s business model and </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">the characteristics of financial asset s contractual cash flows. The </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">recommendation of IAS 39 on financial assets impairment and </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">hedge accounting shall apply.</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">January 1, 2013</FONT></P></TD></TR>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">IFRS 10 - "Consolidated Financial </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">Statements"</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">The objective of IFRS 10 is to establish principles for the </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">presentation and preparation of the consolidated financial </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">statements when there is, at least, subsidiary-parent company </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">relation. It defines the principles and establishes controls as basis </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">of consolidation. It defines how to apply the principle of control in</FONT><BR><FONT size=1 face="Georgia,Times New Roman,Times,serif">order to identify if an investee should be considered a subsidiary, </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">therefore, consolidated. It defines the requirements in the </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">preparation of the consolidated financial statements.</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">January 1, 2013</FONT></P></TD></TR>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">IFRS 11 - "Joint Ventures"</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">IFRS 11 provides for a more realistic analysis of joint ventures, </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">with greater focus on rights and obligations of the agreement, </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">instead of its legal form. Joint&nbsp; arrangements are classified into </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">two types: joint operations and joint ventures.</FONT><BR><FONT size=1 face="Georgia,Times New Roman,Times,serif">Joint operations is a joint arrangement whereby the parties that </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">have joint control of the arrangement (joint operators) have rights </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">to the assets and obligations relating to the arrangement, </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">therefore, they record their assets, liabilities,&nbsp; evenues and </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">expenses. Joint ventures exist when joint operators have rights </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">over the net asset of the arrangement, and therefore, they record </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">their interest under the equity method. The pro-rata </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">consolidation of joint ventures is no longer allowed.</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">January 1, 2013</FONT></P></TD></TR>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">IFRS 12 - "Disclosure of Interest in </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other Entities"</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">IFRS 12 deals with reporting requirements for all forms of interest </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">in other entities, including joint ventures, associations, interest </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">with specific purposes and other interests not recorded in the books.</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">January 1, 2013</FONT></P></TD></TR>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

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   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Standard</FONT></B>&nbsp;</P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Key requirements</FONT></B>&nbsp;</P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Effective date</FONT></B>&nbsp;</P></TD></TR>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">IFRS 13 - "Fair Value Measurement"</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">The objective of IFRS 13 is to improve the consistency and reduce </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">the complexity of fair value measurement, providing a more </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">accurate definition and a single source of fair value measurement </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">and its reporting requirements under the IFRS.</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">January 1, 2013</FONT></P></TD></TR>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">These requirements, which are highly in line with IFRS and US </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">GAAP, do not broaden the application of fair value accounting, </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">but provide recommendations on how to apply it when its </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">application was already required or allowed by other IFRS or US </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">GAAP standards.</FONT></P></TD>

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   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD vAlign=top rowSpan=5 width="32%" align=left></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top rowSpan=3 width="32%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">IAS 27 (revised in 2011) -"Separate </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">Financial Statements"</FONT></P></TD>

   <TD vAlign=top rowSpan=3 width="2%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD vAlign=top rowSpan=3 width="32%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">IAS 27 (revised in 2011) includes other considerations about </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">separate financial statements, besides control provisions of IAS 27 </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">included in the new IFRS 10.</FONT></P></TD>

   <TD vAlign=top rowSpan=3 width="2%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD vAlign=top rowSpan=3 width="32%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">January 1, 2013</FONT></P></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top rowSpan=2 width="32%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">IAS 28 (revised in 2011) - "Associates </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">and Joint Ventures"</FONT></P></TD>

   <TD vAlign=top rowSpan=2 width="2%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD vAlign=top rowSpan=2 width="32%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">IAS 28 (revised in 2011) requires associates and joint ventures to </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">be measured by the equity method as of the issue of IFRS 11.</FONT></P></TD>

   <TD vAlign=top rowSpan=2 width="2%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD vAlign=top rowSpan=2 width="32%" align=left>

   <P style="MARGIN-LEFT: 5pt; MARGIN-RIGHT: 5pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">January 1, 2013</FONT></P></TD></TR>

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<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">4.2 New standards, amendments and interpretations to existing standards that are not yet effective</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The following new standards, amendments and interpretations to standards were issued by IASB, however, they are not effective for 2011. The early adoption of these standards, although encouraged by IASB, has not been adopted in Brazil by the Brazilian Pronouncements Committee (CPC):</FONT></P>

<UL>

<LI><FONT size=2 face="Georgia,Times New Roman,Times,serif">IAS 19 - "Employees Benefits" amended in June 2011. Main impacts of these amendments are: (i) removal</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">of the corridor approach, (ii) recognition of actuarial gains and losses in other comprehensive income to</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">the extent they occur, (iii) prompt recognition of past costs of services in the statement of income, and (iv)</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">replacement of cost of interest and expected return on plan assets by an amount of net interest, calculated</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">by applying the discount rate to the asset (liability) of net defined benefit. The Management is evaluating</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">the impacts of these changes for the Company.</FONT> </LI></UL>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-77</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<P></P>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<UL>

<LI><FONT size=2 face="Georgia,Times New Roman,Times,serif">IFRS 9 - "Financial Instruments", discusses the classification, measurement and recognition of financial</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">assets and liabilities. IFRS 9 was issued in November 2009 and October 2010 and replaces parts of IAS 39</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">related to the classification and measurement of financial instruments. IFRS 9 requires the classification</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">of financial assets into two categories: measured at fair value and at amortized cost. The calculation is</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">made upon initial recognition. The basis of classification depends on the entity s business model and the</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">contractual characteristics of the financial instruments cash flows. In relation to financial liability, this</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">standard maintains most of requirements set forth by IAS 39. The main change is that in cases the fair</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">value option is adopted in financial liabilities, the amount of change in fair value due to entity s credit risk</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">is recorded in other comprehensive income and not in the statement of income, except when it results in</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">accounting mismatch. This standard shall be effective as of January 1, 2013. The Management is</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">evaluating the impacts of these changes for the Company.</FONT></LI></UL></DIV>

<UL>

<LI><FONT size=2 face="Georgia,Times New Roman,Times,serif">IFRS 10 - "Consolidated Financial Statements" is supported in already existing principles, identifying the</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">concept of control as main factor to determine if an entity should or not be included in the parent s</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">company consolidated financial statements. This standard provides additional guidance in order to</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">determine control. This standard shall be effective as January 1, 2013. The Management is evaluating the</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">impacts of these changes for the Company.</FONT>&nbsp;<BR>&nbsp;

<LI><FONT size=2 face="Georgia,Times New Roman,Times,serif">IFRS 11 - "Joint ventures", issued in May 2011. This standard provides for a more realistic analysis of joint</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">ventures, with focus on rights and obligations of the agreement, instead of its legal form. Joint</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">arrangements are classified into two types: (i) joint operations which occurs when an operator has rights</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">over contractual assets and liabilities, and as a result, it will record its percentage in assets, liabilities,</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">revenues and expenses; and (ii) shared control it occurs when an operator has rights over the net assets</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">of the arrangement and records the investment by the equity method. The method of pro-rata</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">consolidation will no longer be allowed in joint control. This standard shall be effective as January 1, 2013.</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Management is evaluating the impacts of these changes for the Company.</FONT>&nbsp;<BR>&nbsp;

<LI><FONT size=2 face="Georgia,Times New Roman,Times,serif">IFRS 12 - "Disclosure of Interest in Other Entities" refers to the reporting requirements for all forms of</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">interest in other entities, including joint ventures, associations, interest with specific purposes and other</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">interests not recorded in the books. This standard shall be effective as January 1, 2013. The Management</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">is evaluating the impacts of these changes for the Company.</FONT>&nbsp;<BR>&nbsp;

<LI><FONT size=2 face="Georgia,Times New Roman,Times,serif">IFRS 13 - "Fair value measurement", issued in May 2011. The objective of IFRS 13 is to improve the</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">consistency and reduce the complexity of fair value measurement, providing a more accurate definition</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">and a single source of fair value measurement and its reporting requirements under the IFRS. These</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">requirements, which are highly in line with IFRS and US GAAP, do not broaden the application of fair</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">value accounting, but provide recommendations on how to apply it when its application was already</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">required or allowed by other IFRS or US GAAP standards. This standard shall be effective as January 1,</FONT> <FONT size=2 face="Georgia,Times New Roman,Times,serif">2013. The Management is evaluating the impacts of these changes for the Company.</FONT> </LI></UL>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">There are neither other IFRS standards nor IFRIC interpretations not effective yet that could adversely affect the Company s financial statements.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-78</FONT></P>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><BR>

<TABLE border=0 cellSpacing=0>



<TR>

   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">4.3</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Financial Risk Management</FONT></B> </TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">4.3.1</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Financial risk factors</FONT></B> </TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company's activities are exposed to Brazilian economic scenario, including foreign currency, inflation rates and interest rate, expositing to market risk, such as exchange rate, interest rate, credit risk and liquidity risk. The Company s global risk management is focused on the unforesseableness of financial markets and seeks to minimize potential adverse effects on the Company s financial performance.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company has not utilized derivative instruments, although it may enter in forward exchange transactions and financing funding transactions in Brazilian </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">reais </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">to mitigate the foreign currency exposure.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(a) Market risk Foreign currency risk</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">SABESP s foreign exchange exposure implies market risks associated with Brazilian </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">real </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">currency fluctuations against the US dollar and yen. SABESP s foreign currency-denominated liabilities mainly include US dollar and yen-denominated loans.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In case of Brazilian </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">real </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">depreciation in relation to foreign currency in which the debt is denominated, SABESP will incur in monetary loss in relation to such debt.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">SABESP s specific foreign currency risks are related to exposures caused by its short and long-term debts denominated in foreign currency.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The management of SABESP s foreign currency exposure considers several current and projected economic factors, besides market conditions. The Company does not have hedge or swap contracts to hedge against this risk. The Company monitors the financial debts to reduce the exposure to exchange rate variation on the capital markets, prioritizing the assumption of new debts with multilateral agencies, banks and foreign government s official agencies, characterized by low cost and long term, and also taking advantage of opportunities to exchange debts on the capital markets with lower cost debts.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On December 31, 2011 and 2010, R$3,053.4 million and R$2,248.9 million, corresponding to 36.4% and 27.2%, respectively of SABESP s indebtedness were denominated in foreign currency. SABESP s foreign currency-denominated indebtedness mainly consists of debts contracted with the Inter-American Development Bank - IDB. As a result, SABESP is exposed to currency risks that may cause adverse effects to its businesses.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-79</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE><BR>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="100%" colSpan=9 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">Below, the Company s exposure to foreign currency risk of principal:</FONT></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="40%" align=right></TD>

   <TD rowSpan=2 width="2%" align=right></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Foreign</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">currency</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">R$</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Foreign</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">currency</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">R$</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Loans and financing - US$</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,113,236</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,088,208</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,084,898</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,807,657</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Loans and financing - Yen</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">39,456,912</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">959,198</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">21,316,000</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">436,978</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Funding costs</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(13,656)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(10,801)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest and charges</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,671</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">15,094</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">TOTAL</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,053,421</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,248,928</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">As of December 31, 2011, if the Brazilian </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">rea</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">l had weakened or strengthened by 10% against the US dollar and Yen with all other variables held constant, post-tax profit and equity for the year would have been R$201,129 (R$148,146 in December 2010) lower or higher, mainly as a result of foreign exchange losses or gains on the translation of foreign currency-denominated loans.</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="70%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Projection of valuation / devaluation of Real by 10%</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Loans and financing</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,047,406</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,244,635</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Variation Dollar/ Yen</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Valuation or devaluation of Real</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">304,741</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">224,464</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Income tax and social contribution rate</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">34%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">34%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Income tax and social contribution</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">103,612</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">76,318</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Valuation or devaluation net of taxes</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">201,129</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">148,146</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Interest rate risk</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">This risk arises from the possibility that the Company could incur losses due to fluctuations in interest rates, increasing the financial expenses related to loans and financing.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On December 31, 2011 and 2010, R$2,364.1 million, or 28.1%, and R$2,529.4 million, or 30.6%, of SABESP s financial indebtedness were denominated in Brazilian </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">reais</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">, based on the Reference Standard Unit UPR variation, which consists of Reference Rate TR. Also on December 31, 2011 and 2010, R$1,882.3 million, or 22.3%, and R$2,009.4 million, or 24.4%, of SABESP s financial indebtedness were denominated in Brazilian </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">reais</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">, based on the DI rate variation.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On December 31, 2011 and 2010, R$1,152.1 million and R$996.1 million, respectively of SABESP s financial indebtedness denominated in U.S. dollars were based on the variation of the Inter-American Development Bank IDB, calculated based on the fixed assets cost of these organizations.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-80</FONT></P></DIV>

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<TR>

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<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On December 31, 2011 and 2010, SABESP did not hold any hedge financial instrument against the interest rates of UPR Reference Standard Unit, DI (Interbank Deposit) rates or those practiced by World Bank and IDB; however, the Company continually monitors market interest rates, in order to evaluate the possible need to replace its debt. SABESP is legally required to invest the balance of cash flows in a financial institution controlled by the federal government.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">SABESP allocates the cash surplus, whose balances in cash and cash equivalents corresponded to R$2,031.1 million on December 31, 2011 and R$1,853.2 million on December 31, 2010, mainly in short-term operations. As a result, SABESP s exposure to interest rates practiced in Brazil is partially restricted by SABESP s short-term investments gain, which usually earn interest based on the DI rate variation.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company maintained approximately 28% of its loans in domestic and foreign currency with payment with fixed interest rate. During 2011 and 2010, loans at variable rates were maintained in Brazilian </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">reais</FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">, US dollar and yen.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The table below provides the Company's loans and financing denominated in Brazilian </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">reais </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">subject to variable and fixed interest rate:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="70%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">UPR </FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">(i)</FONT></SUP>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,364,126</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,529,398</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">CDI</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">(ii)</FONT></SUP>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,882,341</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,009,391</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">IGP-M</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">(iii)</FONT></SUP>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">493,869</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">TJLP</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">(iv)</FONT></SUP>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">886,138</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">703,710</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">IPCA</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">(v)</FONT></SUP>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">187,697</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">223,996</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Fixed</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">49,609</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total loans and financing in local currency</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,369,911</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,960,364</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<TABLE border=0 cellSpacing=0>



<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=1 face="Georgia,Times New Roman,Times,serif">(i)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=1 face="Georgia,Times New Roman,Times,serif">UPR (</FONT><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">Unidade Padr&#227;o de Refer&#234;ncia</FONT></I><FONT size=1 face="Georgia,Times New Roman,Times,serif">), a Reference Standard Unit, which is equal to the TR (</FONT><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">Taxa Referencial</FONT></I><FONT size=1 face="Georgia,Times New Roman,Times,serif">), a Reference Rate.</FONT> </TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=1 face="Georgia,Times New Roman,Times,serif">(ii)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=1 face="Georgia,Times New Roman,Times,serif">CDI (</FONT><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">Certificado de Dep&#243;sito Interbanc&#225;rio</FONT></I><FONT size=1 face="Georgia,Times New Roman,Times,serif">), an interbank deposit certificate.</FONT> </TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=1 face="Georgia,Times New Roman,Times,serif">(iii)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=1 face="Georgia,Times New Roman,Times,serif">IGP-M </FONT><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">(&#205;ndice Geral de Pre&#231;os do Mercado), </FONT></I><FONT size=1 face="Georgia,Times New Roman,Times,serif">a general market price index.</FONT> </TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=1 face="Georgia,Times New Roman,Times,serif">(iv)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=1 face="Georgia,Times New Roman,Times,serif">TJLP </FONT><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">(Taxa de Juros a Longo Prazo), </FONT></I><FONT size=1 face="Georgia,Times New Roman,Times,serif">a long-term interest rate index.</FONT> </TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=1 face="Georgia,Times New Roman,Times,serif">(v)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=1 face="Georgia,Times New Roman,Times,serif">IPCA </FONT><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">(&#205;ndice Nacional de Pre&#231;os ao Consumidor Amplo</FONT></I><FONT size=1 face="Georgia,Times New Roman,Times,serif">), a consumer price index.</FONT> </TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Another risk to which the Company is exposed, is the mismatch of the monetary restatement indices of its loans and financing with those of its receivables. Water supply and sewage services tariffs do not necessarily follow the increases in the interest rates affecting the Company's indebtedness.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">As of December 31, 2011, if interest rates on loans and financing denominated in Brazilian </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">reais </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">had been 100 basis points higher or lower with all other variables held constant, post-tax profit would have been R$35,114 (R$ 39,338 in December 2010) lower or higher, mainly as a result of a lower or higher interest expense on floating rate loans and financing.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-81</FONT></P></DIV>

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<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(b)&nbsp;&nbsp; Credit risk</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Credit risk arises from cash and cash equivalents, deposits in banks and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding accounts receivable. The Company is required by law to invest its surplus cash with Banco do Brasil (rating AA+(bra)). Credit risk exposure is mitigated by sales to a geographically dispersed customer base.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The maximum exposure to credit risk at the reporting date are the carrying amounts of debt instruments classified as cash equivalents, deposits in banks and financial institutions, trade accounts receivable in the balance sheet. (See notes 4.3 (e), 6, 8, 9 and 10).</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(c)&nbsp;&nbsp; Liquidity risk</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company's liquidity is primarily reliant upon cash provided by operating activities, borrowings from Brazilian Federal and State governmental financial institutions, and financing in the domestic and international capital markets. The liquidity risk management considers the assessment of its liquidity requirements to ensure it has sufficient cash to meet operational and capital expenditures needs.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The cash surplus maintained by the Company is invested in interest-bearing current accounts, time deposits, short-term deposits and securities, selecting instruments with appropriate maturity or liquidity sufficient to provide margin as determined by projections mentioned above.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The table below analyzes the financial liabilities of the Company, into relevant maturities, including the installment of principal and interest to be paid according to the agreement.</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="58%" colSpan=9 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="40%" align=left></TD>

   <TD rowSpan=2 width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2012</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2013</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2014/2015/</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2016</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2017</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">onwards</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Total</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR>

   <TD width="100%" colSpan=11>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">As of December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Loans and financing</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,115,837</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,689,526</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,008,577</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,162,889</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">11,976,829</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Accounts payable to suppliers and contractor</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">255,557</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">255,557</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Services payable</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">383,116</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">383,116</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=11>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">As of December 31, 2010</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Loans and financing</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,744,324</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,071,161</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,834,599</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,880,026</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">12,530,110</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Accounts payable to suppliers and contractor</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">144,043</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">144,043</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Services payable</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">295,172</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">295,172</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">There are no financial assets or liabilities classified as in Other assets or Other liabilities .</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-82</FONT></P></DIV>

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<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<P style="MARGIN: 5pt 0cm"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif"><BR>(d)&nbsp;&nbsp; Sensitivity analysis</FONT></B></P>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif"><BR>The table below shows the sensitivity analysis of the financial instruments which can have significant impact to the Company, considering the amounts of the main financial liabilities, converted to a&nbsp; projected rate to the maturity of each contract, converted to a market value (scenario I), appreciation of 25% (scenario II) and 50% (scenario III).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The purpose of the sensitivity analysis is measure the changes in the market over the financial instruments of the Company, considering constant all other variables. In the time of settlement the amounts can be different from those presented above, due to the estimates used in the measurement.</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="15%"></TD>

   <TD width="15%"></TD>

   <TD width="15%"></TD>

   <TD width="15%"></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="60%" colSpan=4 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">12/31/2011</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top rowSpan=2 width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Financial instruments</FONT></P></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top rowSpan=2 width="15%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Risk</FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top rowSpan=2 width="15%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Scenario I</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">R$</FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top rowSpan=2 width="15%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Scenario II</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">R$</FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top rowSpan=2 width="15%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Scenario III</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">R$</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Financial liabilities</FONT></B>&nbsp;</P></TD>

   <TD width="15%" align=left>&nbsp;</TD>

   <TD width="15%" align=left>&nbsp;</TD>

   <TD width="15%" align=left>&nbsp;</TD>

   <TD width="15%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Loans and financing</FONT></B>&nbsp;</P></TD>

   <TD width="15%" align=left>&nbsp;</TD>

   <TD width="15%" align=left>&nbsp;</TD>

   <TD width="15%" align=left>&nbsp;</TD>

   <TD width="15%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Banco do Brasil, CEF (i)</FONT>&nbsp;</P></TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Increase TR</FONT>&nbsp;</TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,746,424</FONT>&nbsp;</TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,024,832</FONT>&nbsp;</TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,385,658</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Debentures (ii)</FONT>&nbsp;</P></TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Increase TJLP</FONT>&nbsp;</TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">326,806</FONT>&nbsp;</TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">362,493</FONT>&nbsp;</TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">404,856</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Debentures (ii)</FONT>&nbsp;</P></TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Increase CDI</FONT>&nbsp;</TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,897,259</FONT>&nbsp;</TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,238,530</FONT>&nbsp;</TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,297,422</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Debentures (ii)</FONT>&nbsp;</P></TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Increase IPCA</FONT>&nbsp;</TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">184,939</FONT>&nbsp;</TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">194,376</FONT>&nbsp;</TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">204,648</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Debentures (ii)</FONT>&nbsp;</P></TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Increase TR</FONT>&nbsp;</TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">371,690</FONT>&nbsp;</TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">412,091</FONT>&nbsp;</TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">460,249</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">IDB, IBRD and EUROBONDS (iii)</FONT>&nbsp;</P></TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Increase US$</FONT>&nbsp;</TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,238,998</FONT>&nbsp;</TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,309,419</FONT>&nbsp;</TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,379,841</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">JICA (iv)</FONT>&nbsp;</P></TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Increase Yen</FONT>&nbsp;</TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,051,366</FONT>&nbsp;</TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,314,208</FONT>&nbsp;</TD>

   <TD width="15%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,577,049</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=1 face="Georgia,Times New Roman,Times,serif">(i) The agreements with Banco do Brasil and CEF (Federal Savings Bank) were projected until final maturity, at contractual rates (projected TR + spread) and discounted at present value by TR x DI, both rates were obtained from BM&amp;F. For scenarios</FONT></P>

<TABLE border=0 cellSpacing=0>



<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=1 face="Georgia,Times New Roman,Times,serif">II</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=1 face="Georgia,Times New Roman,Times,serif">and III a deterioration of 25% and 50%, respectively, was considered, in discount rates;</FONT> </TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=1 face="Georgia,Times New Roman,Times,serif">(ii)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Debentures were projected until final maturity date (IPCA, DI, TJLP or TR), discounted at present value at interest rate</FONT> </TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><FONT size=1 face="Georgia,Times New Roman,Times,serif">futures market, published by ANBIMA (Brazilian Association of Market Entities) on the secondary market, and reference date on December 31, 2011 and the Company s securities traded on the domestic market. For scenarios II and III, a deterioration of 25% and 50%, respectively, was considered at the discount rates. For debentures indexed to DI, a sensitivity analysis was made as of the increase of 25% and 50% in market DI curve;</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=1 face="Georgia,Times New Roman,Times,serif">(iii) Agreements with IDB, IBRD, were projected until final maturity in origin currency, using interest rates contracted, discounted at present value at Libor futures rate, obtained from Bloomberg. Eurobonds were priced at market value through quotes published by Bloomberg. All amounts obtained were translated into Brazilian </FONT><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">reais </FONT></I><FONT size=1 face="Georgia,Times New Roman,Times,serif">at the exchange rate of December 31, 2011. For scenarios II and III we considered the increases of 25% and 50%, respectively in exchange rates;</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=1 face="Georgia,Times New Roman,Times,serif">(iv) Agreements with JICA, were projected until final maturity in origin currency, applying interest rates contracted and discounted at present value, at Tibor futures rate obtained from Bloomberg. The amounts obtained were translated into Brazilian </FONT><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">reais </FONT></I><FONT size=1 face="Georgia,Times New Roman,Times,serif">using the exchange rate of December 31, 2011. For scenarios II and III we considered the increases of 25% and 50%, respectively, in exchange rates.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-83</FONT></P></DIV>

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<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<P></P>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(e)&nbsp;&nbsp;&nbsp;Quality credit of the financial assets</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates. The credit quality of counterparties which are banks, such as cash and cash equivalents, the Company considers the lower rating of the counterparty published by three mainly international rating agencies (Moody's, Fitch and S&amp;P), according to internal policy of market risk management:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="70%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Cash at bank and short term bank deposits</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">brAAA</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">38,058</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">27,673</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">brAA+</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,102,304</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,945,697</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Others (*)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,717</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">14,634</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,142,079</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,988,004</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=1 face="Georgia,Times New Roman,Times,serif">(*) This category includes current accounts and investments funds in banks which have no credit rating information available.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The available credit rating information of the banks in which the Company made transactions during 2011 is as follow:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="55%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Banks</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Fitch</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Moody's</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Standard Poor's</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=7>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Banco do Brasil S.A.</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">AA+ (bra)</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">Aaa.br</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">brAAA</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Banco Santander Brasil S.A.</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">AAA (bra)</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">Aaa.br</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">brAAA</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Caixa Economica Federal</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">AA+ (bra)</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">Aaa.br</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Banco Bradesco S.A.</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">AAA (bra)</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">Aaa.br</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">brAAA</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Ita&#250; Unibanco Holding S.A.</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">AAA (bra)</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">Aaa.br</FONT>&nbsp;</TD>

   <TD width="2%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">AAAbr</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-84</FONT></P></DIV>

<HR align=center SIZE=2 width="100%" noShade>



<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

<!--$$/page=--><A name="page_85"></A><BR>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE><BR>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">4.4&nbsp;&nbsp; Capital management</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company's objectives when managing capital are ensure its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company monitors capital based on the leverage ratio. This ratio corresponds to net debt divided by total capital. Net debt corresponds to total loans and financing (including short and long-term loans, as stated in the balance sheet) less cash and cash equivalents. Total capital is calculated as total equity as shown in the balance sheet plus net debt.</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="70%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total loans and financing</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,423,332</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,209,292</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Less: cash and cash equivalents</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(2,142,079)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,988,004)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Net debt</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,281,253</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,221,288</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total equity</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10,545,896</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,681,800</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total capital</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16,827,149</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">15,903,088</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Leverage ratio</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">37%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">39%</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On December 31, 2011, the Company's leverage ratio decreased to 37%, compared to 39% as of December 31, 2010, due to increase in short-term investments.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The capital is not managed in the Consolidated, only in the Parent Company, as investees do not report relevant balances.</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="2%"></TD>

   <TD width="98%"></TD></TR>

<TR vAlign=bottom>

   <TD width="100%" colSpan=2 align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">4.5&nbsp;&nbsp; Fair value estimates</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="100%" colSpan=2 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">We presuppose that balances from trade accounts receivable and accounts payable to suppliers by carrying</FONT>&nbsp;<FONT size=2 face=Georgia>amount, less impairment approximate fair values.</FONT> </TD></TR>

<TR height=20>

   <TD width="100%" colSpan=2 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></FONT></TD></TR>

<TR vAlign=bottom>

   <TD width="100%" colSpan=2 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">The fair value was measured by level of the following hierarchy:</FONT>&nbsp;</TD></TR>

<TR height=20>

   <TD width="100%" colSpan=2 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></FONT></TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">.</FONT></TD>

   <TD vAlign=top width="98%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">Quoted prices (unadjusted) in active markets for identical assets and liabilities (level 1).</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top rowSpan=2 width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">.</FONT></TD>

   <TD vAlign=top rowSpan=2 width="98%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">Inputs other than quoted prices included within level 1 that are adopted by the market for the asset or liability, </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">either directly as prices or indirectly derived from prices (level 2).</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD vAlign=top rowSpan=2 width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">.</FONT></TD>

   <TD vAlign=top rowSpan=2 width="98%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">Inputs for the asset or liability that are not based on data adopted by the market, i.e., unobservable inputs </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">(level 3).</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-85</FONT></P></DIV>

<HR align=center SIZE=2 width="100%" noShade>



<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

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<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE><BR>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif"><BR>The fair value of financial instruments traded in active markets (as securities held for trading and available for sale) is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing or service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. The quoted market price used for financial assets is the current bid price. These instruments are included in level 1.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The fair value of financial instruments that are not traded in an active market (for example, time deposits and certificates of bank deposit) is determined by using valuation techniques. These techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Specific valuation techniques used to value financial instruments include:</FONT></P>

<P><FONT size=2 face="Georgia,Times New Roman,Times,serif">. Quoted market prices or dealer quotes for similar instruments.</FONT></P>

<P><FONT size=2 face="Georgia,Times New Roman,Times,serif">. Other techniques, such as analysis of discounted cash flows, are used to determine the fair value of the remaining financial instruments.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The only financial instrument measured at fair value are represented by the short-term investment on Certified of Bank Deposits (CDB), classified as cash equivalent, amounting to R$2,027,285 and R$1,852,588 on December 31, 2011 and 2010 (parent company) and R$2,031,122 and R$1,853,177 on December 31, 2011 and 2010 (consolidated), respectively. These investments are financial assets measured at fair value through profit or loss at level 2.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">4.6&nbsp;&nbsp;Financial Instruments</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company operates with many financial instruments, particularly cash and cash equivalents, including financial investments, and loans and financing as described below.</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="55%" colSpan=3 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">The estimated fair values of financial instruments are as follows:</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="58%" colSpan=7 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="40%" align=left></TD>

   <TD rowSpan=2 width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Carrying</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">amount</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Fair</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">value</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Carrying</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">amount</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Fair</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">value</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Financial assets</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Cash and cash equivalents</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,142,079</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,142,079</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,988,004</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,988,004</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Restricted cash</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">99,729</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">99,729</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">302,570</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">302,570</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Trade accounts receivable,net</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,405,728</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,405,728</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,323,886</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,323,886</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Accounts receivable from related<FONT size=3 face="Times New Roman"> </FONT>party, net</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">355,621</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">355,621</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">368,848</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">368,848</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Escrow deposits</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">54,178</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">54,178</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">43,543</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">43,543</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Financial liabilities</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Loans and financing</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,423,332</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,368,632</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,209,292</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,644,938</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Accounts payable to suppliers and contractors</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">244,658</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">244,658</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">142,634</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">142,634</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-86</FONT></P></DIV>

<HR align=center SIZE=2 width="100%" noShade>



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<P><A name="page_87"></A></P>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<DIV align=left>&nbsp;</DIV>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="58%" colSpan=7 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="40%" align=left></TD>

   <TD rowSpan=2 width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Carrying</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">amount</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Fair</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">value</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Carrying</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">amount</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Fair</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">value</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Financial assets</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Cash and cash equivalents</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,149,989</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,149,989</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,989,179</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,989,179</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Restricted cash</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">99,729</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">99,729</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">302,570</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">302,570</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Trade accounts receivable,net</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,406,372</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,406,372</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,324,157</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,324,157</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Accounts receivable from related<FONT size=3 face="Times New Roman"> </FONT>party, net</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">355,621</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">355,621</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">368,848</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">368,848</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">54,178</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">54,178</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">43,543</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">43,543</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Financial liabilities</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Loans and financing</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,596,295</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,500,515</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,264,615</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,698,547</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Accounts payable to suppliers and<FONT size=3 face="Times New Roman"> </FONT>Contractors</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">255,557</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">255,557</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">144,043</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">144,043</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Loans and financing</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In conformity with accounting practices related to financial instruments, see below the market value of the discounted projected cash flow of the loans and financing as of December 31, 2011 and 2010:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="58%" colSpan=7 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Carrying amount</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">&nbsp;</FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Fair value</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">&nbsp;</FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Carrying amount</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">&nbsp;</FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Fair value</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Bank loans (i)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,856,471</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,746,424</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,666,495</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,812,635</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Debentures (ii)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,962,290</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,780,694</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,771,562</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,372,377</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">BNDES (iiii)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">496,823</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">496,823</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">509,572</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">509,572</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other (iv)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,718</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,718</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">12,735</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">12,735</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Foreign currency (v)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,053,421</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,290,364</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,248,928</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,937,619</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Leasing (vi)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">49,609</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">49,609</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,423,332</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,368,632</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,209,292</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,644,938</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="58%" colSpan=7 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Carrying amount</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">&nbsp;</FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Fair value</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">&nbsp;</FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Carrying amount</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">&nbsp;</FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Fair value</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Bank loans (i)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,866,936</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,756,889</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,721,818</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,866,244</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Debentures (ii)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,124,159</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,901,483</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,771,562</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,372,377</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">BNDES (iiii)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">496,823</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">496,823</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">509,572</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">509,572</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other (iv)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,347</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,347</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">12,735</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">12,735</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Foreign currency (v)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,053,421</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,290,364</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,248,928</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,937,619</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Leasing (vi)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">49,609</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">49,609</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,596,295</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,500,515</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,264,615</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,698,547</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-87</FONT></P></DIV>

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<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%" align=right>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The fair value was obtained as follow:</FONT></P>

<TABLE style="WIDTH: 98%" border=0 cellSpacing=0 cellPadding=0>



<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(i)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">Agreements with Banco do Brasil and CEF (Federal Savings Bank) were projected until final maturity, at contractual rates (projected TR + spread) and discounted at present value by TR x DI, both rates were obtained from BM&amp;F.</FONT> </TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%" align=left>

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(ii)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%" align=left>

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">Debentures were projected up to the final mature date (IPCA, DI, TJLP or TR), and discounted to present value considering the future interest rate published by ANBIMA in the secondary market, as of December 31, 2011 and the Company s share traded in the Brazilian market.</FONT> </P></TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%" align=left>

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(iii)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%" align=left>

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">BNDES loans are financial instruments valued at carrying amount plus contractual interest rate till mature date, and are indexed by long term interest rate TJLP, which is a specific rate and cannot be compared to any other rate available in the market. The Company considers the market value of the financing the same amount recognized in the financial statements as of December 31, 2011.</FONT> </P></TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%" align=left>

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(iv)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%" align=left>

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">Other financing in local currency are considered by carrying amount plus contractual interest rate till mature date, discounted to present value considering a future interest rate published by BM&amp;F</FONT> <FONT size=2 face=Georgia>Bovespa.</FONT> </P></TD></TR>

<TR>

   <TD width="2%">&nbsp;</TD>

   <TD width="98%" align=left>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(v)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%" align=left>

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">Agreements with IDB, IBRD, were projected until final maturity in origin currency, applying interest rates contracted, discounted at present value at Libor futures rate, obtained from Bloomberg. </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">Eurobonds agreements were priced at market value through quotes published by Bloomberg. All the amounts obtained were translated into Brazilian </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">reais </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">at the exchange rate of December 31, 2011. Agreements with JICA, were projected until final maturity in origin currency, using interest rates contracted and discounted at present value, at Tibor futures rate obtained from Bloomberg. The amounts obtained were translated into Brazilian reais at the exchange rate of December 31, 2011..</FONT> </P></TD></TR>

<TR>

   <TD width="2%">&nbsp;</TD>

   <TD width="98%" align=left>

   <P align=justify>&nbsp;</P></TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(vi)</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>

   <TD width="98%" align=left>

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">Leasing is an instrument considered by face value restated until maturity date, whose characteristic is the indexation by fixed contractual rate, which is a specific type, not compared to any other market rate. Thus, the Company discloses as market capitalization, the amount recorded on December 31, 2011.</FONT> </P></TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Critical accounting estimates and judgments</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Estimates and judgments are continually evaluated and are based on historical experience and on other factors, including expectations of future events that are believed to be reasonable under the circumstances</FONT><FONT size=2 face=ArialMT,Arial,Helvetica,sans-serif>.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below:</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(a)&nbsp;&nbsp; Allowance for doubtful accounts</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company records allowance for doubtful accounts in an amount that management considers sufficient to cover probable losses, based on an analysis of trade accounts receivable, in accordance with the accounting policy stated in Note 3.4.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-88</FONT></P></DIV>

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   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif"><BR>The methodology for determining the allowance for doubtful accounts receivable requires significant estimates, considering a number of factors including historical receipt experience, current economic trends, estimates of forecast write-offs, the aging of the accounts receivable portfolio and other factors. While the Company believes that the estimates used are reasonable, actual results could differ from those estimates.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(b) Intangible assets arising from concession and program contracts</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company recognizes as intangible assets arising from concession contracts. The Company estimates the fair value of construction and other work on the infrastructure to recognize the cost of the intangible asset, which is recognized when the infrastructure is built and provided that it will generate future economic benefits. The great majority of the Company's contracts for service concession arrangements entered with each grantor is under service concession agreements in which the Company has the right to receive, at the end of the contract, a payment equivalent to the unamortized asset balance of the concession intangible asset, which in this case, are amortized over the useful life of the underlying physical assets, thus at the end of the contract, the remaining value of the intangible would be equal to the residual value of the related physical asset.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Concession intangible assets under Concession contracts and Program contracts, in which, at the end of the contract, the Company has no right to receive a payment equivalent to the unamortized asset balance of the concession intangible, are amortized on a straight-line basis over the useful life of asset or contract period, which occurs first. Additional information on the accounting for intangible assets arising from concession contracts is described in Note 3.8.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The recognition of fair value for the intangible assets arising on concession contracts is subject to assumptions and estimates, and the use of different assumptions could affect the balances recorded. The definition of useful lives of the underlying assets also requires significant assumptions and estimates, which different assumptions and estimates and changes in future circumstances, could affect the remaining useful lives of the intangible assets and can have a significant impact on the results of operations.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(c) Impairment of long-lived assets</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company annually review long-lived assets for indicators of impairment or whenever events or changes in circumstances indicate that the carrying value of an asset or group of assets may not be recoverable. The assets include the intangible asset of the concession contracts related to water and sewage systems.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In evaluating impairment of long-lived assets, the evaluation requires significant assumptions and estimates regarding matters that are inherently uncertain, including projections of future operating income and cash flows, future growth rates, and the remaining useful lives of the assets and/or the period of the contract, among other factors. In addition, projections are computed over an extended period of time, which subjects those assumptions and estimates to an even larger degree of uncertainty. While the Company believes that the estimates used are reasonable, the use of different assumptions could materially affect the recoverable amount.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-89</FONT></P></DIV>

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<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE><BR>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(d)&nbsp;&nbsp; Provisions</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company is party to a number of legal proceedings involving significant claims. These legal proceedings include, among other types, tax, labor, civil, environmental, dispute with customers and suppliers and other proceedings. The Company accrues for contingencies referring to lawsuits to which probably outflow will be necessary to settle the liability and the amount of such loss can be reasonably estimated. Therefore, the Company is required to make judgments regarding future events. As a result of the significant judgment required in assessing and estimating these provisions for contingencies, actual losses realized in future periods could differ significantly from actual estimates and could exceed the amounts provisioned. Provisions are revised and adjusted to take into consideration changes in circumstances involved. Additional information of these legal proceedings is disclosed in Note 16.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(e)&nbsp;&nbsp; Pension benefits</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company has defined benefit and defined contribution plans.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The defined contribution plan does neither result in legal nor constructive obligations for the Company of making additional contributions if the fund does not have sufficient assets to pay the benefits related to services rendered in the current and previous period to employees. Contributions are recognized as employee benefit expenses, when they become due.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Defined benefit plans, in general, establish the amount of benefit the employee will receive when he retires and usually depending of one or other factors, such as age, length of service and compensation.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The liability recognized in the balance sheet in relation to defined benefit pension plans is the present value of defined benefit obligation on the balance sheet date, less the fair value of plan assets, including the adjustments of derecognized cost of past services. The defined benefit obligation is calculated yearly by independent actuaries, applying the projected credit unit method. The present value of defined benefit obligation is determined by discounting the estimated future cash outflows, using interest rates compatible with the market, which are denominated in currency in which benefits will be paid and with maturity terms close to those of corresponding pension plan obligation.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company applies the corridor method to recognize actuarial gains and losses. Therefore, these gains and losses, deriving from adjustments based on the experience and changes in actuarial assumptions that exceed 10% of plan assets or 10% of plan liabilities, are debited or credited in the statement of income for the expected period of employees remaining services.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Cost of past services are immediately recognized in the statement of income.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-90</FONT></P></DIV>

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<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<DIV align=left><BR>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="70%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">6&nbsp;&nbsp; Cash and Cash Equivalents</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 13px" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Cash and banks</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">114,794</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">135,416</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Cash equivalents</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,027,285</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,852,588</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,142,079</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,988,004</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Cash and banks</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">118,867</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">136,002</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Cash equivalents</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,031,122</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,853,177</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,149,989</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,989,179</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Cash and cash equivalents include cash, bank deposits, other high-liquidity short-term investments, represented by Bank Deposit Certificates - CDB's, deposited in financial institutions controlled by the S&#227;o Paulo State Government, whose original maturities are lower than three months, which are convertible into a cash amount and subject to an insignificant risk of change in value.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The average yield of financial investments corresponds to 100.19% of CDI in December 2011 (99.2% in December 2010).</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">7 Restricted Cash</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On December 31, 2011, the restricted cash totaled R$99,729, of which R$ 8,280 corresponded to BNDES collateral and R$90,984 to proceeds from services provided to entities related to the Municipal Government of S&#227;o Paulo, net of taxes. These funds shall be reinvested in the water and sewage system of the city of S&#227;o Paulo.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-91</FONT></P></DIV>

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<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%"></DIV>

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<TR>

   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">8</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Trade Accounts Receivable</FONT></B> </TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(a)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Balance sheet balances</FONT> </TD></TR></TABLE></DIV>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">&nbsp;</DIV>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%" align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="70%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Private sector:</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">General and special customers (i) (ii)</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">885,203</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">827,990</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Agreements (iii)</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">249,929</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">250,300</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,135,132</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,078,290</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Government entities:</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Municipal</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">578,463</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">556,212</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Federal</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,517</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,645</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Agreements (iii)</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">182,381</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">170,892</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">763,361</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">729,749</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Wholesale customers - Municipal governments: (iv)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Guarulhos</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">513,218</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">462,221</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Mau&#225;</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">244,204</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">220,228</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Mogi das Cruzes</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">14,864</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,818</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Santo Andr&#233;</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">547,764</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">489,486</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">S&#227;o Caetano do Sul</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,955</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,537</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Diadema</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">164,337</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">149,155</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total wholesale customers Municipal governments</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,486,342</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,343,445</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Unbilled supply</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">457,321</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">391,822</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Subtotal</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,842,156</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,543,306</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Allowance for doubtful accounts</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(2,436,428)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(2,219,420)</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,405,728</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,323,886</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Current</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,072,015</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">971,047</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Noncurrent (v)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">333,713</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">352,839</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,405,728</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,323,886</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px; PADDING-LEFT: 0%; PADDING-RIGHT: 0%">&nbsp;</P>

<P style="TEXT-ALIGN: center; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-92</FONT></P>

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<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The consolidated figures amounted R$1,406,372 (R$ 1,324,157 in December 2010). The R$644 (R$271 in December 2010) difference refers to account receivable of the investees.</FONT></P>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<TABLE border=0 cellSpacing=0>



<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(i)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">General customers - residential and small and mid-sized companies.</FONT> </TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">&nbsp;</FONT></TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(ii)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Special customers - large consumers, commercial, industries, condominiums and special billing consumers (industrial waste, wells, etc.).</FONT> </TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT>&nbsp;</TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(iii)</FONT></TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">

   <P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Agreements - installment payments of past-due receivables, plus monetary restatement and interest.</FONT></P></FONT></TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">

   <P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P></FONT></TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(iv)</FONT></TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">

   <P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Wholesale customers - municipal governments - This balance refers to the sale of treated water to municipalities, which are responsible for distributing to, billing and charging final customers. Some of these municipalities are questioning in court the tariffs charged by SABESP and do not pay for the amounts in dispute. These amounts are not recognized as operating revenues due to the uncertainty involving receipts. </FONT></P></FONT></TD></TR></TABLE></DIV>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT>&nbsp;</DIV>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The overdue amounts are substantially included in the allowance for doubtful account and are classified in noncurrent assets, as movement below:</FONT></DIV>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%" align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="70%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Balance at beginning of year</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,343,445</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,182,744</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Services provided</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">340,068</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">353,546</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Receipts - services in the current year</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(167,024)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(183,882)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Receipts - services in previous years</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(30,147)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(8,963)</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Balance at end of year</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,486,342</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,343,445</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Current</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">26,485</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">38,665</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Noncurrent</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,459,857</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,304,780</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px; PADDING-LEFT: 0%; PADDING-RIGHT: 0%">&nbsp;</P>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<TABLE border=0 cellSpacing=0>



<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(v)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The noncurrent portion consists of trade accounts receivable that are past due and renegotiated with customers and amounts past due related to wholesale to municipal governments, and the amounts are net of allowance for doubtful account.</FONT> </TD></TR></TABLE></DIV>

<P style="TEXT-ALIGN: center; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-93</FONT></P>

<HR align=center SIZE=2 width="100%" noShade>



<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

<!--$$/page=-->

<P><A name="page_94"></A></P>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<DIV align=left><BR>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="70%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="85%" colSpan=3 align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(b)&nbsp;&nbsp; The aging of trade accounts receivable is as follows:</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Current</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,129,337</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,086,073</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Past-due:</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Up to 30 days</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">184,958</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">150,358</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">From 31 to 60 days</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">79,720</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">67,539</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">From 61 to 90 days</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">50,020</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">45,153</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">From 91 to 120 days</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">39,686</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">39,084</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">From 121 to 180 days</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">70,037</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">73,300</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">From 181 to 360 days</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">137,039</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">119,967</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Over 360 days</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,151,359</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,961,832</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total past-due</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,712,819</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,457,233</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,842,156</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,543,306</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(c)&nbsp;&nbsp; Allowance for doubtful accounts</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Previous balance</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,219,420</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,854,231</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Private sector/government entities</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">47,679</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">200,321</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Wholesale customers</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">169,329</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">164,868</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Additions for the year</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">217,008</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">365,189</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Balance</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,436,428</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,219,420</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Current</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,132,638</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,075,939</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Noncurrent</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,303,790</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,143,481</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company accounted for probable losses on accounts receivable in 2011 totaling R$120,260 (R$232,505 in December 2010), of which R$77,995 (net of recoveries) were written off from accounts receivable (R$37,505 in December 2010), under Selling expenses .</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company does not rely on any specific major customers and no single external customer segment represents 10% or more of our revenues.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-94</FONT></P></DIV>

<HR align=center SIZE=2 width="100%" noShade>



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<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Related Party Balances and Transactions</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company is a party to transactions with its controlling shareholder, the State Government, and companies related to it</FONT><FONT size=2 face=ArialMT,Arial,Helvetica,sans-serif>.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(a) Accounts receivable, interest on shareholders' equity payable and revenue and expenses with the S&#227;o Paulo State Government</FONT></B></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="55%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Accounts receivable</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Current:</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="55%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Water and sewage services (i)</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">116,441</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">96,004</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="55%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">GESP Agreement (iii), (iv) and (v)</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">41,360</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">21,360</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="55%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Allowance for losses (v)</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(12,389)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(12,389)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="55%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Reimbursement for pension benefits paid </FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="55%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">GESP Agreement (ii) and (vi)</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">31,887</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">28,203</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="55%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Reimbursement for<FONT size=3 face="Times New Roman"> </FONT>pension benefits paid - Monthly flow (ii) and (vi)</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,034</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,594</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=7>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total current</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">185,333</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">137,772</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=7>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Non-current:</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="55%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Water and sewage services - GESP Agreement (iii), (iv) and (v)</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">52,228</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="55%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Reimbursement for pension benefits paid - GESP Agreement (ii) and (vi)</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">170,288</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">178,848</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=7>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total noncurrent</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">170,288</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">231,076</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=7>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total receivables from shareholder</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">355,621</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">368,848</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=7>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Provision of water and sewage services</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">145,412</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">157,203</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="55%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Reimbursement of additional retirement and<FONT size=3 face="Times New Roman"> </FONT>pension benefits</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">210,209</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">211,645</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=7>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">355,621</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">368,848</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=7>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest on shareholders' equity payable to related party</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">153,368</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">179,319</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=7>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=7>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Gross revenue from sales and services</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="55%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Water supply</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">216,933</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">204,595</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="55%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Sewage services</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">188,059</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">178,935</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="55%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Payments received from related parties</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(425,129)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(401,626)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="55%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Financial income</FONT>&nbsp;</P></TD>

   <TD width="2%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">271,847</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">137,613</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-95</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

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   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

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   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(i)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Water and sewage services</FONT> </TD></TR>

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   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT>&nbsp;</TD></TR>

<TR>

   <TD width="2%">&nbsp;</TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company provides water supply and sewage collection services to the S&#227;o Paulo State Government and other companies related to it in accordance with usual market terms and conditions, as considered by management, except for the settlement which can be made according to items (iii), (iv) and (v).</FONT> </TD></TR>

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   <TD width="2%"></TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT>&nbsp;</TD></TR>

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   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(ii)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Reimbursement for pension benefits paid</FONT> </TD></TR>

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   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT>&nbsp;</TD></TR>

<TR>

   <TD width="2%">&nbsp;</TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Refers to amounts of supplementary retirement and pension benefits provided for in State Law 4,819/58 ("Benefits") paid by the Company to former employees and pensioners.</FONT> </TD></TR>

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   <TD width="2%"></TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT>&nbsp;</TD></TR>

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   <TD width="2%">&nbsp;</TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">Under the Agreement referred on item (iii) with the S&#227;o Paulo State Government ("GESP" or the "State"), GESP recognizes its liability from charges arising from the Benefits, provided that the payment criteria set forth by the State Department of Personnel (DDPE), based on legal guidance of the Legal Consultancy of the Department of Finance and of the State Attorney General's Office (PGE).</FONT> </P></TD></TR>

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   <TD width="2%"></TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P>&nbsp;</TD></TR>

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   <TD width="2%">&nbsp;</TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">As discussed on item (vi), during the assessment of the debt due from GESP to the Company there were certain divergences in the calculation and eligibility criteria of the benefits paid by the Company on behalf of GESP.</FONT> </P></TD></TR>

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   <TD width="2%"></TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P>&nbsp;</TD></TR>

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   <TD width="2%">&nbsp;</TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">For the years ended December 31, 2011 and 2010, 2,492 and 2,554 retired employees, respectively, received additional retirement benefits, and for the years ended December 31, 2011 and 2010, the Company paid R$ 124,421 and R$ 118,408, respectively. There were 14 active employees as of December 31, 2011 who will be entitled to these benefits as a result to their retirement as compared to 32 as of December 31, 2010.</FONT> </P></TD></TR>

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   <TD width="2%"></TD>

   <TD width="98%" align=left>

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P>&nbsp;</TD></TR>

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   <TD width="2%">&nbsp;</TD>

   <TD width="98%" align=left>

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">In January 2004, the payments of supplement retirement and pension benefits were transferred to the Department of Finance and would be made in accordance with the calculation criteria determined by the PGE. As a result of a court decision, the responsibility for making the payments returned to SABESP, as originally established.</FONT> </P></TD></TR>

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   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT>&nbsp;</TD></TR>

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   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(iii)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">GESP Agreement</FONT> </TD></TR>

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   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT>&nbsp;</TD></TR>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">On December 11, 2001, the Company, the S&#227;o Paulo State Government (through the State Department of</FONT> <FONT size=2 face=Georgia>Finance </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">Affairs, currently Department of Finance) and the Water and Electricity Department (DAEE), with</FONT> <FONT size=2 face=Georgia>the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">intermediation of the State Department of Sanitation and Energy (former Department of Water</FONT> <FONT size=2 face=Georgia>Resources, </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sanitation and Construction Works), entered into the Obligations, Payment Commitment and</FONT> <FONT size=2 face=Georgia>Other </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">Covenants Acknowledgement and Consolidation Agreement ("GESP Agreement") for the settlement of</FONT>&nbsp; <FONT size=2 face=Georgia>outstanding </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">debts between GESP and the Company related to the provision of water supply and sewage</FONT> <FONT size=2 face=Georgia>services </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">and to the Benefits.</FONT> </P></TD></TR>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P>&nbsp;</TD></TR>

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   <TD rowSpan=8 width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">In view of the strategic importance of the Taia&#231;upeba, Jundia&#237;, Biritiba, Paraitinga and Ponte Nova reservoirs</FONT> <FONT size=2 face=Georgia>for </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">ensuring and maintaining the Alto Tiet&#234; water volume, the Company agreed to receive them as partial</FONT> <FONT size=2 face=Georgia>repayment </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">of the reimbursement related to the Benefits. The DAEE would transfer the reservoirs to the</FONT> <FONT size=2 face=Georgia>Company, </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">replacing the amount owed by GESP. However, the S&#227;o Paulo State Public Prosecution Office</FONT> <FONT size=2 face=Georgia>challenged </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">the legal validity of this agreement, and its main argument is the absence of a specific legislative</FONT>&nbsp; <FONT size=2 face=Georgia>authorization </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">for disposal of DAEE's assets. The Company's legal advisors assess the risk of loss in this </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">as probable, in case the legislative authorization is not obtained, which would hinder the transfer of</FONT> <FONT size=2 face=Georgia>lawsuit</FONT> <FONT size=2 face=Georgia>the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">related reservoirs as a partial settlement of the balance receivable</FONT><FONT size=2 face=ArialMT,Arial,Helvetica,sans-serif>.</FONT> </P></TD></TR>

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<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-96</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

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   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE><BR>

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   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(iv)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">First Amendment to the GESP Agreement</FONT> </TD></TR>

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   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD></TR>

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   <TD width="2%">&nbsp;</TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">On March 22, 2004, the Company and the S&#227;o Paulo State Government amended the terms of the original GESP Agreement, (1) consolidating and recognizing the amounts due by the S&#227;o Paulo State Government for water supply and sewage collection services provided, monetarily adjusted through February 2004; (2) formally authorizing the offset of amounts due by the S&#227;o Paulo State Government with interest on shareholders' equity declared by the Company and any other debt owed to the S&#227;o Paulo State Government as of December 31, 2003, monetarily adjusted through February 2004; and (3) defining the payment conditions of the remaining liabilities of the S&#227;o Paulo State Government for the receipt of the water supply and sewage services.</FONT> </P></TD></TR>

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   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

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   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(v)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Second Amendment to the GESP Agreement</FONT> </TD></TR>

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   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD></TR>

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   <TD width="2%">&nbsp;</TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">On December 28, 2007, the Company and the S&#227;o Paulo State Government, represented by the Department of Finance, signed the second amendment to the terms of the original GESP Agreement, agreeing upon the payment in installments of the remaining balance of the First Amendment, amounting to R$ 133,709 at November 30, 2007, to be paid in 60 monthly and consecutive installments of the same amount, beginning on January 2, 2008. The amount of the installments will be monetarily restated according to the fluctuation of the IPCA-IBGE, plus interest of 0.5% per month.</FONT> </P></TD></TR>

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   <TD width="2%"></TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD></TR>

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   <TD width="2%">&nbsp;</TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">The State and SABESP agreed on immediately resuming their compliance with their mutual obligations under new assumptions: (a) implementation of an electronic bill management system to facilitate and speed up the monitoring of payment processes and budget management procedures; (b) structuring of the Rational Water Use Program (PURA) to rationalize the consumption of water and the amount of the water and sewage bills under the responsibility of the State; (c) establishment, by the State, of criteria for budgeting so as to avoid the reallocation of amounts to a specific water and sewage accounts as from 2008; (d) possibility of registering state bodies and entities in a delinquency system or reference file; (e) possibility of interrupting</FONT> <FONT size=2 face=Georgia>water</FONT> <FONT size=2 face=Georgia>supply to state bodies and entities in the case of nonpayment of water and sewage bills.</FONT> </P></TD></TR>

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   <TD width="2%"></TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD></TR>

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   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(vi)</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Third Amendment to the GESP Agreement</FONT> </TD></TR>

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   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD></TR>

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   <TD vAlign=top rowSpan=15 width="2%" noWrap></TD>

   <TD rowSpan=15 width="98%">

   <P></P>

   <P style="MARGIN: 0cm 0cm 0pt" align=justify><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=EN-US face=georgia>On November 17, 2008, GESP, SABESP and DAEE signed the third amendment to the GESP Agreement, </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>through which GESP recognized a debt balance payable to SABESP totaling R$915,251, monetarily adjusted </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>up to September 2008 in accordance with the fluctuation of the IPCA-IBGE, corresponding to the </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>Undisputed Reimbursement, determined by FIPECAFI. SABESP accepted on a provisional basis the </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>reservoirs (see item (iii) above) as part of the payment of the Undisputed Reimbursement and offered to </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>GESP a provisional settlement, recognizing a credit totaling R$ 696,283, corresponding to the value of the </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>reservoirs in the Alto Tiet&#234; system. The Company did not recognize the reimbursement receivable of </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>R$696,283 related to the reservoirs, as it is not virtually certain that will be transferred by the State. The final </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>settlement will only be effected with the actual transfer of the property with the proper Registry of Deeds </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>Office. The remaining balance totaling R$218,967 is being paid in 114 monthly, consecutive installments, </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>totaling R$1,920 each, including the annual IPCA/FIPE fluctuation, plus interest of 0.5% p.m., the first of </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>which fell due on November 25, 2008. </FONT></P>

   <P style="MARGIN: 0cm 0cm 0pt">&nbsp;</P>

   <P style="MARGIN: 0cm 0cm 0pt" align=justify><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>The Company and the S&#227;o Paulo State Government are working together to obtain legislative authorization to </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>transfer the reservoirs to SABESP, overcoming the uncertainties arising from the public lawsuit challenging </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>the absence of a specific legislative authorization for the transfer of the property of the reservoirs.</FONT></P></TD></TR>

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<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-97</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

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   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">

   <P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In addition, the third amendment provides for the regularization of the monthly flow of benefits. While SABESP is liable for the flow of monthly payment of benefits, the State shall reimburse SABESP based on the criteria identical to those applied when determining the Undisputed Reimbursement. Should there be no preventive court decision, the State will assume the flow of monthly payment of benefits portion deemed as undisputed.</FONT></P></FONT></TD></TR>

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   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(vii)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Controversial Amount of Benefits</FONT> </TD></TR>

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   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD></TR>

<TR>

   <TD width="2%">&nbsp;</TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">As mentioned before, on November 17, 2008 the Company and the State signed the third amendment to the GESP Agreement, when the reimbursements called disputed and undisputed were quantified. The amendment established the efforts to calculate the so-called Disputed Reimbursement of the Benefits. Under the fourth clause of the amendment, the Disputed Reimbursement represents the difference between the Undisputable Reimbursement and the amount actually paid by the Company as pension benefits and pensioners set out in Law 4,819/58, for which, the Company understands, the State of S&#227;o Paulo is originally liable, but paid by SABESP under a court order.</FONT> </P></TD></TR>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD></TR>

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   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">By entering into the third amendment, the State's Legal Representative (PGE) agreed to reassess the differences that gave rise to the disposed reimbursement of benefits set out in Law 4,819/58. At the time, the expectation was based on the willingness of the PGE to reanalyze the issue and the implied right of the Company to the reimbursement, including based on opinions from outside legal advisors.</FONT> </P></TD></TR>

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   <TD width="2%"></TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P></TD></TR>

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   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">However, new opinions issued by the PGE and received on September 4 and 22, 2009 and January 4, 2010, refute the reimbursement of the largest portion of the controversial amount.</FONT> </P></TD></TR>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">Even though the negotiations with the State are still in progress, it is not possible to assure that the Company will recover the receivables related to the Disputed Reimbursement without dispute.</FONT> </P></TD></TR>

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   <P></P>

   <P style="MARGIN: 0cm 0cm 0pt" align=justify><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=EN-US face=georgia>As part of the actions intended to recover the receivables that management considers due by the State, </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>related to discrepancies in the reimbursement of the pension benefits paid by the Company, the Company: (i) </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>on March 24, 2010, reported to the controlling shareholder the official letter approved by the executive </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>committee, proposing that the matter be discussed at the S&#227;o Paulo Stock Exchange (BM&amp;FBovespa) </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>Arbitration Chamber; (ii) in June 2010, presented to Department of Finance a proposal to solve the </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>outstanding items, such proposal was not accepted; (iii) on November 9, 2010, filed a judicial action against </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>the State of S&#227;o Paulo pleading the entire reimbursement related to employee benefits set out in Law </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>4,819/58 to finalize the discussion between the Company and GESP. The Company will persist to obtain an </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>agreement with GESP since the management believes that it is the better to the Company and to its </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>shareholders than wait until the end of the judicial action. </FONT></P>

   <P style="MARGIN: 0cm 0cm 0pt"><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia></FONT>&nbsp;</P>

   <P style="MARGIN: 0cm 0cm 0pt" align=justify><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>The Company's management decided to not recognize the reimbursements which were not considered </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>virtually certain that will be reimbursed by the State. As of December 31, 2011 and 2010, the amounts not </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>recorded by the Company, related to the pension benefits paid on behalf of the State by the Company, totaled </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>R$1,290,663 and R$1,230,064, respectively, including the amount of R$696,283 related to the transfer of the </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>reservoirs in the Alto Tiet&#234; system. As a result, the Company also recognized the obligation related to&nbsp; the </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>pension benefit obligations maintained with the beneficiaries and pensioners of Plan G0. As of December 31, </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>2011 and 2010, the pension benefit obligations of Plan G0 totaled R$1,512,078 and R$1,316,706, respectively. </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>For detailed information on the pension benefit obligations refer to Note 17.</FONT></P></TD></TR></TABLE>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-98</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

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   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(b) Agreements for the use of reservoirs</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In its operations, the Company uses the Guarapiranga and Billings reservoirs, which are owned by another entity controlled by the S&#227;o Paulo State Government; should these reservoirs not be available for use to the Company, there could be the need to collect water in more distant places. The Company does not pay any fee for the use of these reservoirs but it is responsible for their maintenance and operating costs.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(c) Agreements with reduced tariffs with State and Municipal Government Entities that joined the Rational Water Use Program (PURA)</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company has signed agreements with government entities related to the State Government and municipalities where it operates that benefit from a reduction of 25% in the tariff of water supply and sewage services when they are not in default. These agreements provide for the implementation of the rational water use program, which takes into consideration the reduction in the consumption of water.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(d) Guarantees</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The State Government provides guarantees for some loans and financing of the Company and does not charge any fee with respect to such guarantees.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(e) Personnel assignment agreement among entities related to the State Government</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company has personnel assignment agreements with entities related to the State Government, under which the expenses are fully passed on and monetarily reimbursed. In 2011, the expenses related to personnel assigned by SABESP to other state government entities amounted to R$10,888 (R$5,640 in December 2010).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">No expenses related to personnel assigned by other entities to SABESP were recorded on December 31, 2011 (R$264 in December 2010).</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(f) Services obtained from state government entities</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">As of December 31, 2011 and 2010, SABESP had an outstanding amount payable of R$12,062 and R$11,395, respectively, for services rendered by S&#227;o Paulo State Government entities, including the supply of electric power by Companhia Energ&#233;tica de S&#227;o Paulo CESP, representing 86% of the amount in 2011.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(g) Nonoperating assets</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">As of December 31, 2011 the Company had an amount of R$21,531 (R$25,371 in December 31, 2010) mainly related to free land lend to the associations, support entities, non-governmental organizations and to DAEE (Water and Electricity Department), among others. The free land lend to DAEE amounts to R$2,289.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-99</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

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   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

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<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(h) Banco do Brasil</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company filed a declaratory action against the Department of Finance of S&#227;o Paulo asking for financial compensation related to exclusive rights in bank services of the companies managed direct and indirectly by Banco Nossa Caixa, later Banco do Brasil, asking for a percentage of the amounts that the Estate of S&#227;o Paulo received from the financial institutions.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On June 28, 2011, the Company and the State Government of S&#227;o Paulo entered into a Settlement Agreement where the Company received the amount of R$63,366 through rebates, as offset of credit held by the State Government, corresponding to 2010 interest on shareholders equity.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(i) SABESPREV</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company sponsors a private defined benefit pension plan, which is operated and administered by Funda&#231;&#227;o Sabesp de Seguridade Social - SABESPREV. The net actuarial liability recognized as of December 31, 2011 amounted to R$538,619 (R$487,332 in December 31, 2010).</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(j) Compensation of Management Key Personnel</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Compensation:</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">SABESP's compensation policy for the Management and officers is set out according to guidelines of the S&#227;o Paulo State Government, the CODEC (State Capital protection Board), and are based on performance, market competitiveness, or other indicators related to the Company's business, and is subject to approval by shareholders at an Annual Shareholders' Meeting.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Officers' compensation is limited to the compensation of the State Governor, and the Board of Directors' compensation is equivalent to 30 percent of the executive committee' overall compensation, contingent on attendance of at least one monthly meeting</FONT><FONT size=2 face=ArialMT,Arial,Helvetica,sans-serif>.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The objective of the compensation policy is to set a private sector management paradigm to retain its staff and recruit competent, experienced and motivated professionals, considering the level of management efficiency currently required by the Company.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In addition to monthly fee, the members of the Board of Directors and the Executive Committee receive:</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Bonuses:</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">For the purposes of compensating directors and officers of the companies where the State is the controlling shareholder, as an incentive policy, providing the company records quarterly, half-yearly, and yearly profits, and distributes mandatory dividends to shareholders, even if in the form of interest on shareholders' equity. Annual bonuses cannot exceed the lower of six times the monthly compensation of the officers/directors nor 10 percent of the interest on shareholders' equity paid by the company.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-100</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

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   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

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<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Annual award:</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Equivalent to a monthly fee, calculated on a prorated basis in December of each year.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The purpose of this award is to correspond to the thirteenth salary paid to Company employees, as officers and directors' relationship with the Company is governed by its bylaws and not the labor code.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Benefits paid only to statutory officers - meal ticket, basket of food staples, medical care, weekly paid rest typified as a paid leave of 30 calendar days, and payment of a premium equivalent to one third of the monthly fee.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Expenses related to the compensation to the members of its board of directors and officers amounted to R$2,614 and R$2,601 for the years ended December 31, 2011 and 2010, respectively, and they refer to short-term benefits. An additional amount of R$1,069, related to the bonus program, was recorded from January to December 31, 2011 (R$845 in December 2010).</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">10 Indemnities Receivable</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Indemnities receivable are a noncurrent asset that represents amounts receivable from the municipality of Diadema as an indemnity for their unilateral termination of the concession for water supply and sewage services of the Company in 1995. As of December 31, 2011, this balance totaled R$60,295. On December 31, 2010, the balance of indemnities receivable was R$146,213, which represented the municipalities of Diadema and Mau&#225;, totaling R$60,295 and R$85,918, respectively.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company invested in the construction of water and sewage systems in the municipalities of Diadema and Mau&#225; in order to meet the concession service commitments. For the unilateral termination of the Diadema and Mau&#225; concessions, the municipalities assumed the responsibility of supplying water and sewage services in those regions. At that time, the Company reclassified the balances of property, plant and equipment related to the assets used in those municipalities to noncurrent assets (indemnities receivable).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">As of December 31, 2011, the net book value of property, plant, and equipment relating to the municipality of Diadema, reclassified in December 1996, amounted to R$75,231 and the indemnity balance from the municipality amounted to R$60,295, on December 31, 2011.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">SABESP filed lawsuits to collect the amounts due by the municipalities. Referring to the municipality of Diadema, an execution was initiated against the agreement entered into between the municipality of Diadema and Companhia de Saneamento de Diadema Saned related to the payment of indemnity; the lower court judge accepted Diadema municipality s motion to stay execution and dismissed the execution. SABESP appealed to this decision and in December 2005 an appeal was granted partial relief to declare the validity of the agreement and sentencing that motions to stay execution had to be judged again at the lower court. In December 2007, the court decision that accepted the execution of the Companhia de Saneamento the Diadema - Saned was rendered, ordering this company to be summoned to pay the full amount of the debt within 15 days under the penalty of fine. The judge approved the seizure of cash from Saned's bank accounts and short-term investments (online seizure) of up to 10% of the adjusted debt, and the amount of R$2,919 were seized and withdrawn on March 3, 2009. Subsequently, the Court of Justice issued an injunction determining the seizure through weekly deposits by Saned in the amount corresponding to 20% of everything received in its bank accounts and short-term investments. Saned filed special and extraordinary appeals against this decision. The extraordinary appeal was rejected and the special appeal was suspended, justifying the filing of an interlocutory appeal at the Federal Supreme Court.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-101</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

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   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

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   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

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<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">With respect to Diadema, in October 2009 the decision recognized the debt and the execution against the municipality should be by certificate of judgment debt of the government precatorio (not by pawn). The Company and the municipality appealed. In September 2011, SABESP obtained a favorable decision from the Special Agency of the Court of Justice, declaring to be constitutional the municipal law that authorized the restriction on ICMS transfer.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On December 29, 2008, Saned and the Municipality of Diadema entered into a Letter of Intent with the S&#227;o Paulo State and SABESP for the purpose of preparing studies and conducting negotiations to guide Diadema's and SABESP's decisions, aiming to establish SABESP as the exclusive provider of water supply and sewage services for the City of Diadema.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The parties agree that the settlement of the existing conflicts between the companies is indispensable for the proper development of the public utility services of water supply and sewage services in the municipality of Diadema.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In January 2009, the parties filed a joint petition requesting the suspension of new seizures, for a three-month period, trying to enable an agreement. The suspension was confirmed by the Tax Court. As the settlement on which a possible agreement will be based was maintained, the suspension request was last renewed in November 2011.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The residual value of fixed assets related to the municipality of Mau&#225;, reclassified in December 1999 was R$ 103,763, and indemnities receivable from the municipality were R$85,918 on December 31, 2010. Court decisions have been favorable to the Company and the receipt of amounts due by municipality shall occur as certificate of judgment debt of the government, which will be recognized upon effective receipt, in view of uncertainties related to the settlement of amounts involved. For this reason, in December 2011, an accounting provision was recorded corresponding to total amount of credit held by the Company, and litigations remain in progress.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Also with respect to Mau&#225;, a lower court decision demanded this Municipality pay the amount of R$153.2 million to SABESP as a compensation for investments made in the municipality by SABESP and loss of profits. The Municipality of Mau&#225; filed an appeal against this decision. In August 2008, the Court of Justice decided for the integral maintenance of the lower court decision. The Municipality of Mau&#225; filed special and extraordinary appeals against the decision. Both appeals were denied by the Court of Justice, which led to the filing of an interlocutory appeal with the Superior Court of Justice and Federal Supreme Court. In motions for clarifications against the decision that rejected the special appeal, the Superior Court of Justice partially accepted the appeal only to reduce the attorney s fees related to loss of suit. Subsequently, the Supreme Federal Court reiterated the rejection of extraordinary appeal, in judgment made final and unappealable.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Based on legal opinion, management believes that the Company has legal rights to receive the indemnities and is monitoring the judicial lawsuit.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-102</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<DIV align=left>&nbsp;</DIV>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD></TR>

<TR vAlign=bottom>

   <TD width="100%" colSpan=13 align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible Assets</FONT></B></TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="58%" colSpan=11 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=5 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B></TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=5 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="40%" align=left></TD>

   <TD rowSpan=2 width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Cost</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Accumulated</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">amortization</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Net</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Cost</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Accumulated</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">amortization</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Net</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Intangible rights arising from:</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Agreements equity value (i)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">14,388,176</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(2,848,783)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">11,539,393</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">13,974,819</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3,242,262)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10,732,557</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Concession contracts </FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">economic value (ii)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">762,987</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(223,693)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">539,294</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">706,423</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(189,145)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">517,278</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Program contracts(iii)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,120,104</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(49,324)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,070,780</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">900,686</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(36,302)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">864,384</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Program contracts </FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">commitments (iv)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">473,327</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(38,341)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">434,986</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">333,942</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(22,666)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">311,276</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Services contract S&#227;o Paulo(v)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,039,763</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(517,288)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,522,475</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,196,699</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(99,837)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,096,862</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">New businesses (vi)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">21,400</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(4,923)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16,477</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">12,129</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(901)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">11,228</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Software licenses</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">52,743</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(50,427)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,316</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">49,458</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(41,521)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,937</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">23,858,500</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3,732,779)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">20,125,721</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">22,174,156</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3,632,634)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,541,522</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="58%" colSpan=11 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="40%" align=left></TD>

   <TD rowSpan=2 width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Cost</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Accumulated</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">amortization</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Net</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Cost</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Accumulated</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">amortization</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Net</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Intangible rights arising from:</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Agreements equity value (i)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">14,404,168</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(2,848,829)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">11,555,339</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">13,980,141</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3,242,270)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10,737,871</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Concession contracts </FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">economic value (ii)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">762,987</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(223,693)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">539,294</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">706,423</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(189,145)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">517,278</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Program contracts(iii)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,120,104</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(49,324)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,070,780</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">900,686</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(36,302)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">864,384</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Program contracts </FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">commitments (iv)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">473,327</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(38,341)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">434,986</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">333,942</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(22,666)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">311,276</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Services contract S&#227;o Paulo(v)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,039,763</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(517,288)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,522,475</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,196,699</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(99,837)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,096,862</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">New businesses (vi)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">21,400</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(4,923)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16,477</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">12,129</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(901)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">11,228</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Software licenses</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">52,755</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(50,429)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,326</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">49,458</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(41,521)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,937</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">23,874,504</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3,732,827)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">20,141,677</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">22,179,478</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3,632,642)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,546,836</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-103</FONT></P></DIV>

<HR align=center SIZE=2 width="100%" noShade>



<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

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<P><A name="page_104"></A></P>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<DIV align=left>&nbsp;</DIV>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD></TR>

<TR vAlign=bottom>

   <TD width="100%" colSpan=13 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">Breakdown of intangible assets are as follows:</FONT></TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="58%" colSpan=11 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=5 width="40%" align=left></TD>

   <TD rowSpan=5 width="2%" align=left></TD>

   <TD rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">31, 2009</FONT></B></TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Additions</FONT></B></TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Reclassification</FONT></B></TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Write-off </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">and</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">disposals</FONT></B></TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amortization</FONT></B></TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31,</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Intangible rights arising from:</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Agreements equity value (i)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">15,369,960</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,764,580</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(6,019,568)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(15,857)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(366,558)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10,732,557</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Concession contracts </FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">economic value (ii)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">504,145</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">37,122</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(23,989)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">517,278</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Program contracts(iii)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">772,789</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">106,125</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(14,530)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">864,384</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Program contracts </FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">commitments (iv)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">258,803</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">62,748</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(10,275)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">311,276</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Services contract S&#227;o Paulo(v)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">177,131</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,019,568</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(99,837)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,096,862</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">New businesses (vi)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">12,129</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(901)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">11,228</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Software licenses</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,565</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,779</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(8,407)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,937</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16,915,262</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,166,614</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(15,857)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(524,497)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,541,522</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="58%" colSpan=11 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=5 width="40%" align=left></TD>

   <TD rowSpan=5 width="2%" align=left></TD>

   <TD rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">31, 2010</FONT></B></TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Additions</FONT></B></TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Reclassification</FONT></B></TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Write-off </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">and</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">disposals</FONT></B></TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amortization</FONT></B></TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31,<BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Intangible rights arising from:</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Agreements equity value (i)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10,732,557</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,114,666</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(63,487)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(16,228)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(228,115)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">11,539,393</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Concession contracts </FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">economic value (ii)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">517,278</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,167</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">57,718</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(2,780)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(35,089)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">539,294</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Program contracts(iii)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">864,384</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">225,510</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(31)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3,810)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(15,273)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,070,780</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Program contracts </FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">commitments (iv)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">311,276</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">139,385</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(15,675)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">434,986</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Services contract S&#227;o Paulo(v)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,096,862</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">930,959</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(36,234)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(32,383)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(436,729)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,522,475</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">New businesses (vi)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">11,228</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,271</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(4,022)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16,477</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Software licenses</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,937</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,285</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(8,906)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,316</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,541,522</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,425,243</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(42,034)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(55,201)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(743,809)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">20,125,721</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-104</FONT></P></DIV>

<HR align=center SIZE=2 width="100%" noShade>



<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

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<P><A name="page_105"></A></P>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<DIV align=left>&nbsp;</DIV>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="58%" colSpan=11 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=5 width="40%" align=left></TD>

   <TD rowSpan=5 width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">31, 2009</FONT></B></TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Additions</FONT></B></TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Reclassification</FONT></B></TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Write-off </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">and</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">disposals</FONT></B></TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amortization</FONT></B></TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31,</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Intangible rights arising from:</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Agreements equity value (i)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">15,372,115</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,767,747</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(6,019,568)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(15,857)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(366,566)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10,737,871</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Concession contracts </FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">economic value (ii)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">504,145</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">37,122</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(23,989)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">517,278</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Program contracts(iii)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">772,789</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">106,125</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(14,530)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">864,384</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Program contracts </FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">commitments (iv)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">258,803</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">62,748</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(10,275)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">311,276</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Service contract S&#227;o Paulo(v)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">177,131</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,019,568</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(99,837)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,096,862</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">New businesses (vi)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">12,129</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(901)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">11,228</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Software licenses</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,565</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,779</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(8,407)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,937</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16,917,417</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,169,781</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(15,857)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(524,505)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,546,836</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="58%" colSpan=11 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=5 width="40%" align=left></TD>

   <TD rowSpan=5 width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">31, 2010</FONT></B></TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Additions</FONT></B></TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Reclassification</FONT></B></TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Write-off </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">and</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">disposals</FONT></B></TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amortization</FONT></B></TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31,</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Intangible rights arising from:</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Agreements equity value (i)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10,737,871</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,125,335</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(63,487)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(16,228)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(228,152)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">11,555,339</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Concession contracts </FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">economic value (ii)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">517,278</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,167</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">57,718</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(2,780)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(35,089)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">539,294</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Program contracts(iii)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">864,384</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">225,510</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(31)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3,810)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(15,273)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,070,780</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Program contracts </FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">commitments (iv)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">311,276</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">139,385</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(15,675)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">434,986</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Services contract S&#227;o Paulo(v)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,096,862</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">930,959</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(36,234)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(32,383)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(436,729)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,522,475</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">New businesses (vi)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">11,228</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,271</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(4,022)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16,477</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Software licenses</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,937</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,297</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(8,908)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,326</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,546,836</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,435,924</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(42,034)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(55,201)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(743,848)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">20,141,677</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">-Reclassification of intangibles</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Reclassifications amounting to R$42,034 were carried to the account Investment Properties. </FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The status of the cost and construction revenue recognized in concession/program contracts at the end of the year is as follows:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="55%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="43%" colSpan=5 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="43%" colSpan=5 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Water supply</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Sewage services</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Total</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=7>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Construction costs incurred</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,028,115</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,052,966</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,081,081</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Recognition of construction revenue</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,051,419</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,079,265</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,130,684</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=7>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="43%" colSpan=5 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="43%" colSpan=5 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Water supply</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Sewage services</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Total</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Construction costs incurred</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,044,122</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,142,198</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,186,320</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="55%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Recognition of construction revenue</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,066,524</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,168,254</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,234,778</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-105</FONT></P></DIV>

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<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">There are no contingent assets or liabilities related to the construction contracts outstanding.</FONT></P>

<P style="TEXT-ALIGN: justify"><U><FONT size=2 face="Georgia,Times New Roman,Times,serif">Investments committed</FONT></U></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The estimated amount related to investments is R$2,274 million to be spent from 2012 to 2015 (unaudited).</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Intangible arising from concession contracts</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company operates concession contracts covering the provision of basic and environmental sanitation services, water supply and sewage services. These concession arrangements set out rights and obligations relative to the infrastructure and to the public service (See Note 3.8 (a)). A general obligation also exists to return the concession infrastructure to the granting authority in good working condition at the end of the concession.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">As of December 31, 2011 and 2010, the Company operates in 363 municipalities in the State of S&#227;o Paulo. In most of these municipalities operations are based on 30-year concession period.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The services provided by the Company are billed at a price regulated and controlled by the Sanitation and Energy Regulatory Agency of the State of ("ARSESP").</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Intangible rights arising on concession contracts are comprised of:</FONT></P>

<TABLE border=0 cellSpacing=0>



<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(i)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Service concession agreements equity value</FONT> </TD></TR>

<TR height=20>

   <TD width="2%"></TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P>&nbsp;</TD></TR>

<TR>

   <TD width="2%">&nbsp;</TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">The concession contracts state that the property will revert to the grantor at the end of the period, through compensation for the residual value or market value of the underlying physical assets in accordance with the stipulations in each contract and amortization are calculated using the straight-line method, which consider the physical assets economic useful lives.</FONT> </P></TD></TR>

<TR height=20>

   <TD width="2%"></TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(ii)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Concession contracts economic value</FONT> </TD></TR>

<TR height=20>

   <TD width="2%"></TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P>&nbsp;</TD></TR>

<TR>

   <TD width="2%">&nbsp;</TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">From 1999 through 2006, the negotiations for new concessions were conducted on the basis of the economic and financial profit or loss of the transaction, determined in a valuation report issued by independent appraisers.</FONT> </P></TD></TR>

<TR height=20>

   <TD width="2%"></TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P>&nbsp;</TD></TR>

<TR>

   <TD width="2%">&nbsp;</TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">The amount determined in the related contract, after the transaction is closed with the municipal authorities, realized through the subscription of the Company's shares or in cash, is recorded as "concession contract" and amortized over the period of the related concession (usually 30 years). As of December 31, 2011 and 2010 there were no amounts pending related to these payments to the municipalities.</FONT> </P></TD></TR>

<TR height=20>

   <TD width="2%"></TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P>&nbsp;</TD></TR>

<TR>

   <TD width="2%">&nbsp;</TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">Intangible assets are amortized on a straight line basis over the term of the concession agreements or for the useful lives of the underlying assets, which was lower, entered into with the related municipality.</FONT> </P></TD></TR>

<TR height=20>

   <TD width="2%"></TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(iii)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Program contracts</FONT> </TD></TR>

<TR height=20>

   <TD width="2%"></TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P>&nbsp;</TD></TR>

<TR>

   <TD width="2%">&nbsp;</TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">These refer to the renewal of contracts previously referred to as concession contracts whose purpose is the water supply, sewage and public sanitary service. Assets acquired or built are amortized during the contracted period (30 years) or during the useful lives of underlying assets, whichever is lower.</FONT> </P></TD></TR></TABLE>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-106</FONT></P></DIV>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%"></DIV>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">&nbsp;</DIV>

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<TR height=20>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(iv) </FONT></TD>

   <TD width="98%" colSpan=2><FONT size=2 face="Georgia,Times New Roman,Times,serif">

   <P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Program contracts - Commitments</FONT></P></FONT></TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%" colSpan=2><FONT size=2 face="Georgia,Times New Roman,Times,serif">

   <P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P></FONT>&nbsp;</TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%" colSpan=2><FONT size=2 face="Georgia,Times New Roman,Times,serif">

   <P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">After the enactment of the regulatory framework in 2007, Law 11,445 of 2007, renewals of concession agreements are made through "program contracts". In some program contracts the Company committed to financially participate in social and environmental sanitation actions. These assets built and commitments assumed are being amortized on a straight line basis according to the effective period of the program contract (mostly 30 years).</FONT></P></FONT></TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%" colSpan=2><FONT size=2 face="Georgia,Times New Roman,Times,serif">

   <P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P></FONT>&nbsp;</TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%" colSpan=2><FONT size=2 face="Georgia,Times New Roman,Times,serif"><FONT size=2 face="Georgia,Times New Roman,Times,serif">

   <P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The amounts not yet disbursed related to commitments under the program contracts are recorded in Other obligations in current liabilities (in the amount of R$62,287 and R$83,084 on December 31, 2011 and 2010) and noncurrent liabilities (in the amount of R$130,978 and R$66,856, as of December 31, 2011 and 2010).</FONT></P></FONT></FONT></TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%" colSpan=2><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">(v)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%" colSpan=2><FONT size=2 face="Georgia,Times New Roman,Times,serif">Agreement with the Municipality of S&#227;o Paulo</FONT> </TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%" colSpan=2><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT>&nbsp;</TD></TR>

<TR>

   <TD rowSpan=19 width="2%"></TD>

   <TD vAlign=top rowSpan=19 width="98%" colSpan=2>

   <P></P>

   <P style="MARGIN: 0cm 0cm 0pt"><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=EN-US face=georgia>On November 14, 2007, the Company and the Municipality of S&#227;o Paulo (the Parties) entered into an </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>Agreement to establish the conditions that ensure the stability in the provision of water supply and sewage </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>services, and environmental utility services in the city of S&#227;o Paulo, the main provisions of which are as :</FONT></P>

   <P></P>

   <P></P>

   <P style="MARGIN: 0cm 0cm 0pt"><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>(a) the Parties made the commitment to take basic sanitation and environmental actions, complementary to </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>the actions of the Municipality of S&#227;o Paulo, by investing in the deployment and continuity of programs such </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>as: Programa C&#243;rrego Limpo (Clean River Program) and Programa de Uso Racional da &#193;gua - PURA (Rational </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>Water Use Program), the purpose of which is to ensure a decrease in water consumption by City government </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>units, ensuring water supply to and the quality of living of the population;</FONT></P>

   <P></P>

   <P></P>

   <P style="MARGIN: 0cm 0cm 0pt"><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>(b) a starting November 14, 2007, all the amounts paid by the Municipality of S&#227;o Paulo to SABESP, referring </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>to consumption by City departments, agencies, and foundations, net of taxes, will be used in basic sanitation </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>and environmental actions in the municipality; and</FONT></P>

   <P></P>

   <P></P>

   <P style="MARGIN: 0cm 0cm 0pt"><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>(c) the Municipality is committed to restart the payment of consumption bills issued by SABESP, starting from </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>November 14, 2007.</FONT></P>

   <P></P>

   <P></P>

   <P style="MARGIN: 0cm 0cm 0pt"><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>The agreement is valid, but the payments made by the Municipalities, as described in item (b) is not separated </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>to actions in the basic sanitation service and environmental in the municipality. The total amount on </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>December 31, 2011, referred to payment not yet specified was R$86,956 (R$80,379 in December 2010).</FONT></P>

   <P></P>

   <P></P>

   <P style="MARGIN: 0cm 0cm 0pt"><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>On June 23, 2010, the Company entered into an agreement with the State of S&#227;o Paulo and the Municipality of </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>S&#227;o Paulo to regulate the provision of water and sewage services in the city of S&#227;o Paulo for a 30-year period, </FONT><FONT style="LINE-HEIGHT: normal; FONT-SIZE: 9.5pt" lang=PT-BR face=georgia>which is extendable for an another 30-year period.</FONT></P></TD></TR>

<TR></TR>

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<TR></TR>

<TR></TR>

<TR></TR>

<TR></TR>

<TR></TR>

<TR></TR>

<TR></TR>

<TR></TR>

<TR></TR>

<TR></TR>

<TR></TR>

<TR></TR>

<TR></TR>

<TR></TR>

<TR></TR>

<TR></TR></TABLE>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-107</FONT></P></DIV>

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<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<P></P>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif"><BR>On June 23, 2010, an agreement was signed between the state, municipal governments and the Company, as well as an arrangement between the state and municipal government, and SABESP and the Sanitation and Energy Regulatory Agency of the State of S&#227;o Paulo ( ARSESP ) are the consenting and intervening parties, whose main aspects are the following:</FONT></P>

<TABLE border=0 cellSpacing=0>



<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">1.</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">The State and the Municipality of S&#227;o Paulo grant to Sabesp the right to explore the sanitation service in the capital of the State of S&#227;o Paulo, which consists of the obligation to such provide service and charge the respective tariff for this service;</FONT> </P></TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">2.</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The State and the Municipality sets forth ARSESP as the agency responsible for regulating the tariff, controlling and monitoring the services;</FONT> </TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">3.</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The evaluation model of the contract was the discounted cash flow which considered the financial and economic sustainability of the operation;</FONT> </TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">4.</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">All operational costs, taxes, investments and the opportunity cost of the investees and the creditors of Sabesp were considered in the cash flow analysis;</FONT> </TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">5.</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">The agreement provides for investments established in the agreement comply with the minimum of 13% of the gross revenue from the municipality of S&#227;o Paulo, net of the taxes on revenues. Investment plans referring to Sabesp s execution shall be compatible with the activities and programs foreseen in the state, municipal sanitation plans, and where applicable, the metropolitan plan. The investment plan is not definite and will be revised by Managing Committee every four years, especially as to investments to be made in the following period.</FONT> </P></TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">6.</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">The payment related to the Municipal Fund of Environmental Sanitation and Infrastructure to be applied in the sanitation service within the municipality must be recovered through the tariffs charges. Such payment represents 7.5% of the total revenue from the municipality of S&#227;o Paulo, net of the taxes on revenue;</FONT> </P></TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">7.</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">The opportunity cost of the investees and the creditors was established by the Weighted Average Cost of Capital (WACC) methodology. The WACC was the interest rate used to discount the cash flow of the operation;</FONT> </P></TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></P>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">8.</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%">

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">The agreement considers the recovery of net assets in operation, preferably evaluated through equity valuation or carrying amount monetarily restated, as defined by ARSESP. In addition, the agreement provides for the remuneration of investments to be made by SABESP, so that there is no residual value at the end of the agreement.</FONT> </P></TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The agreement represents approximately 55.1% of the total revenue of the Company, guarantee the judicial and patrimonial security, adequate return to shareholders and quality services to its customers.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The municipality of S&#227;o Paulo and the Company did not conclude an agreement to equalize financial pending issues existing until the signature date of the Agreement related to the rendering of water supply and sewage collection services to the real properties of the municipality, reason that, the Company sued these accounts.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-108</FONT></P></DIV>

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<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">(vi) New businesses</FONT></P>

<P style="TEXT-ALIGN: justify; MARGIN-LEFT: 15pt"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In August 2009, the Company and Companhia de Saneamento de Alagoas CASAL signed 60 month-period agreement to provide specialized technical services to implement a program to reduce the losses and retain revenues in the municipality of Maceio. Services started to be rendered in 2010.</FONT></P>

<P style="TEXT-ALIGN: justify; MARGIN-LEFT: 15pt"><FONT size=2 face="Georgia,Times New Roman,Times,serif">As of December 31, 2011 the total amount recorded in the "New businesses" item was R$16,477 (R$11,228 in December 2010) where the amount recorded for CASAL on December 31, 2011 was R$15,664 (R$11,228 in December 2010).</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(a) Disposals of concession intangible underlying assets</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, the Company wrote off intangible underlying assets items totaling R$55,202 (R$15,857 in December 2010), due to obsolescence, theft, misplacements, unproductive wells and projects considered economically unfeasible.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(b) Capitalization of interest and other financial charges</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, the Company capitalized interest and inflation adjustment, including related foreign currency exchange effects, in concession intangible assets during the construction period of the qualifying assets totaling R$261,886 (R$228,899 in December 2010), during the period of the construction.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(c) Construction margin</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company acts as a primary responsible to construct and install the infrastructure related to the concession, using own efforts or hiring outsourcing services, receiving the risks and benefits.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">However, the Company recognizes revenue from construction service corresponding to the cost of construction increased by margin. Generally, the constructions related to the concessions are performed by third parties, in such case, the margin of the Company is lower, normally, to cover eventual administration costs, and the responsibility of the primary risk. In 2011 the margin was 2.3% (2.6% in 2010).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Construction margin for 2011 and 2010 was R$48,458 and R$49,603, respectively.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(d) Expropriations</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">As a result of the construction of priority projects related to water and sewage systems, the Company was required to expropriate or establish rights of way in third-parties' properties, and the owners of these properties will be compensated either amicably or through courts.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The assets received as a result of expropriations are recorded as concession intangible assets after the transaction is completed. In 2011, the total amount related to expropriations was R$12,167 (R$10,779 in December 2010).</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-109</FONT></P></DIV>

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<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(e) Assets pledged as guarantee</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">As of December 31, 2011 and 2010, the Company had underlying physical assets totaling R$249,034 offered as guarantee to the request for the PAES (tax debt refinancing program) (Note 14).</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(f) Public-Private-Partnership (PPP)</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company and CAB-Sistema Produtor Alto Tiet&#234; S.A., special purpose entity, formed by Galv&#227;o Engenharia S.A. and Companhia &#193;guas do Brasil Cab Ambiental, signed in June 2008 the contract of public-private-partnership of Alto Tiet&#234; production system.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The contract last 15 years which purpose is to expand the capacity of treated water of Taia&#231;upeba from 10 thousand to 15 thousand of liters per second, whose operation began in October 2011.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">As of December 31, 2011 and 2010 the amount recognized as intangible asset related to PPP was R$474,818 and R$353,468, respectively.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(g) Impairment</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">No provisions for impairment were recorded on December 31, 2011 and 2010.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(h) Works in progress</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The amount of R$ 5.7 billion is recorded as intangible assets from works in progress on December 31, 2011 (R$5.3 billion on December 31, 2010).</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-110</FONT></P></DIV>

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   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<DIV align=left>&nbsp;</DIV>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD></TR>

<TR vAlign=bottom>

   <TD width="100%" colSpan=13 align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property, Plant and Equipment</FONT></B></TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="58%" colSpan=11 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=5 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B></TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=5 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="40%" align=left></TD>

   <TD rowSpan=2 width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Cost</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Accumulated</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">depreciation</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Net</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Cost</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Accumulated</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">depreciation</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Net</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Land</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">109,303</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">109,303</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">119,567</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">119,567</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Buildings</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">39,574</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(30,142)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,432</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">41,014</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(28,983)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">12,031</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Equipment</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">160,833</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(100,616)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">60,217</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">162,270</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(90,804)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">71,466</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Transportation equipment</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">21,023</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(19,532)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,491</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">20,025</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(18,364)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,661</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Furniture, fixtures and equipment</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">27,690</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(27,593)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">97</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">26,831</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(26,378)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">453</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,758</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,713)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,045</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,590</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,384)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,206</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">361,181</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(179,596)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">181,585</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">372,297</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(165,913)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">206,384</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="58%" colSpan=11 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B> <B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=5 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B></TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=5 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="40%" align=left></TD>

   <TD rowSpan=2 width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Cost</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Accumulated</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">depreciation</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Net</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Cost</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Accumulated</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">depreciation</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Net</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Land</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">109,303</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">109,303</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">119,567</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">119,567</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Buildings</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">39,574</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(30,142)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,432</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">41,014</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(28,983)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">12,031</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Equipment</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">160,915</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(100,626)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">60,289</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">162,270</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(90,804)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">71,466</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Transportation equipment</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">21,071</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(19,549)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,522</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">20,025</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(18,364)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,661</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Furniture, fixtures and equipment</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">27,810</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(27,601)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">209</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">26,831</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(26,378)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">453</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,758</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,713)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,045</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,590</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,384)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,206</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Land</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">174,668</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">174,668</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">43,222</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">43,222</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">536,099</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(179,631)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">356,468</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">415,519</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(165,913)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">249,606</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-111</FONT></P></DIV>

<HR align=center SIZE=2 width="100%" noShade>



<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

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<P><A name="page_112"></A></P>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<P style="MARGIN: 5pt 0cm"><FONT style="FONT-SIZE: 12pt" lang=EN-US face="Times New Roman"></FONT>&nbsp;</P>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD></TR>

<TR vAlign=bottom>

   <TD width="100%" colSpan=11 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">Breakdown of property, plant and equipment are as follows:</FONT></TD></TR>

<TR>

   <TD width="100%" colSpan=11>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="58%" colSpan=9 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="40%" align=left></TD>

   <TD rowSpan=2 width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">31, 2009</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Additions</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Write-off and</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Disposals</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Depreciation</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">31, 2010</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Land</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">119,885</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(318)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">119,567</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Buildings</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">15,555</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(210)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3,314)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">12,031</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Equipment</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">45,550</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">41,251</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(15,335)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">71,466</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Transportation equipment</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,504</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,831</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,674)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,661</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Furniture, fixtures and equipment</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,354</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,079</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(6,980)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">453</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,582</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(376)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,206</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">190,430</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44,161</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(528)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(27,679)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">206,384</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="58%" colSpan=11 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="40%" align=left></TD>

   <TD rowSpan=2 width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">31, 2010</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Additions</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Reclassification</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Write-offand</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Disposals</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Depreciation</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">31, 2011</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Land</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">119,567</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(10,264)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">109,303</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Buildings</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">12,031</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(287)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(2,309)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,432</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Equipment</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">71,466</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,858</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,333)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(19,774)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">60,217</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Transportation equipment</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,661</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,002</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(4)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,168)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,491</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Furniture, fixtures and equipment</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">453</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">961</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(7)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,310)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">97</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,206</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">174</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(335)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,045</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">206,384</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">11,995</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(10,551)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,347)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(24,896)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">181,585</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="58%" colSpan=9 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="40%" align=left></TD>

   <TD rowSpan=2 width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">31, 2009</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Additions</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Write-off and</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Disposals</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Depreciation</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="10%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">31, 2010</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Land</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">119,885</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(318)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">119,567</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Buildings</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">15,555</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(210)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3,314)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">12,031</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Equipment</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">45,550</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">41,251</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(15,335)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">71,466</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Transportation equipment</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,504</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,831</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,674)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,661</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Furniture, fixtures and equipment</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,354</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,079</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(6,980)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">453</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,582</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(376)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,206</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Works in progress</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">43,222</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">43,222</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">190,430</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">87,383</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(528)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(27,679)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">249,606</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-112</FONT></P></DIV>

<HR align=center SIZE=2 width="100%" noShade>



<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

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<P><A name="page_113"></A></P>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<P style="MARGIN: 5pt 0cm"><FONT style="FONT-SIZE: 12pt" lang=EN-US face="Times New Roman"></FONT>&nbsp;</P>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="58%" colSpan=11 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="40%" align=left></TD>

   <TD rowSpan=2 width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">31, 2010</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Additions</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Reclassification</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Write-offand</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Disposals</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Depreciation</FONT></B></TD>

   <TD rowSpan=2 width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">31, 2011</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Land</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">119,567</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(10,264)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">109,303</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Buildings</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">12,031</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(287)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(2,309)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,432</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Equipment</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">71,466</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,940</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,333)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(19,784)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">60,289</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Transportation equipment</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,661</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,050</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(4)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,185)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,522</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Furniture, fixtures and equipment</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">453</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,081</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(7)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,318)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">209</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,206</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">174</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(335)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,045</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Works in progress</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">43,222</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">131,446</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">174,668</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">249,606</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">143,691</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(10,551)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,347)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(24,931)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">356,468</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">- Reclassifications of property, plant and equipment</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Reclassifications amounting to R$10,551 were carried to the account Investment Property .</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(a) Depreciation</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company revises the estimated useful lives of its property, plant and equipment annually. The annual depreciation rates were as follows: buildings 2%; equipment 5%; transportation equipment 10% and furniture, fixture and equipment 6.7%. Lands are not depreciated.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-113</FONT></P></DIV>

<HR align=center SIZE=2 width="100%" noShade>



<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

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<P><A name="page_114"></A></P>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<P style="MARGIN: 5pt 0cm"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif"><BR>13&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Loans </FONT></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">and </FONT></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Financing<BR></FONT></B></P>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="58%" colSpan=11 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=5 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B></TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=5 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Financial institution</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Current</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Noncurrent</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Total</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Current</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Noncurrent</FONT></B>&nbsp;</TD>

   <TD width="2%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Total</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">DOMESTIC</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Federal Government/Banco do Brasil</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">348,695</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">479,548</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">828,243</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">316,541</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">818,359</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,134,900</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">8</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue debentures</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">465,086</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">465,086</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">9</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue debentures</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">33,333</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">198,242</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">231,575</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">10</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue debentures</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,008</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">283,293</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">285,301</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">279,497</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">279,497</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">11</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue debentures</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">202,500</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,005,748</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,208,248</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,205,451</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,205,451</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">12</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue debentures</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">499,613</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">499,613</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">499,715</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">499,715</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">13</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue debentures</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">599,411</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">599,411</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">14</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue debentures</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">279,810</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">279,810</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Caixa Econ&#244;mica Federal</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">110,479</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">908,452</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,018,931</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">91,031</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">783,426</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">874,457</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Promissory notes</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">599,755</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">599,755</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">FIDC - SABESP I</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">13,889</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">13,889</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Brazilian Development Bank- BNDES</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">37,554</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,491</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">41,045</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">43,403</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">40,518</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">83,921</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Brazilian Development Bank - BNDES BAIXADA SANTISTA</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16,309</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">114,165</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">130,474</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">130,474</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">130,474</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Brazilian Development Bank - BNDES PAC</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,428</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">67,489</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">73,917</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,649</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44,352</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">46,001</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Brazilian Development Bank - BNDES ONDA LIMPA</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">14,270</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">235,383</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">249,653</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">246,986</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">246,986</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Leasing</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">49,609</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">49,609</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,155</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,503</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,658</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,816</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,850</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,666</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest and charges</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">100,998</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">100,998</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">141,991</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">141,991</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">TOTAL DOMESTIC</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,439,807</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,930,104</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,369,911</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,109,739</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,850,625</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,960,364</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-114</FONT></P></DIV>

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<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

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<P><A name="page_115"></A></P>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<DIV align=left>&nbsp;</DIV>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="1%"></TD>

   <TD width="9%"></TD>

   <TD width="1%"></TD>

   <TD width="9%"></TD>

   <TD width="1%"></TD>

   <TD width="9%"></TD>

   <TD width="1%"></TD>

   <TD width="9%"></TD>

   <TD width="1%"></TD>

   <TD width="9%"></TD>

   <TD width="1%"></TD>

   <TD width="9%"></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="59%" colSpan=11 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="29%" colSpan=5 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B></TD>

   <TD width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="29%" colSpan=5 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Financial institution</FONT></B>&nbsp;</TD>

   <TD width="1%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Current</FONT></B>&nbsp;</TD>

   <TD width="1%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Noncurrent</FONT></B>&nbsp;</TD>

   <TD width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Total</FONT></B>&nbsp;</TD>

   <TD width="1%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Current</FONT></B>&nbsp;</TD>

   <TD width="1%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Noncurrent</FONT></B>&nbsp;</TD>

   <TD width="1%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Total</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">ABROAD</FONT></B>&nbsp;</TD>

   <TD width="1%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Inter-American Development Bank - IDB US$386,862 thousand (US$ 344,898 thousand</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">in December 2010)</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">71,591</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">652,141</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">723,732</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">63,185</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">511,484</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">574,669</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">International Bank for Reconstruction and Development -IBRD US$ 10,316 thousand</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,928</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,928</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Eurobonds - US$140,000 thousand (US$140,000 thousand in December 2010)</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">262,067</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">262,067</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">232,612</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">232,612</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Eurobonds - US$350,000 thousand (US$350,000 thousand in December 2010)</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">649,024</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">649,024</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">576,107</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">576,107</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">JICA -&#165; 39,456,912 thousand (&#165; 21,316,000 thousand in December 2010)</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">53,204</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">905,529 </FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">958,733</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">11,810</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">425,168</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">436,978</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">BID 1983AB - US$226,058 thousand (US$250,000 thousand in December 2010)</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44,911</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">376,355</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">421,266</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">39,893</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">373,575</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">413,468</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest and charges</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,671</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,671</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">15,089</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">15,094</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">TOTAL ABROAD</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">189,377</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,864,044</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,053,421</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">129,977</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,118,951</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,248,928</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">TOTAL LOANS AND FINANCING</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,629,184</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,794,148</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,423,332</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,239,716</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,969,576</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,209,292</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="100%" colSpan=13 align=left><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">Price on December 31, 2011 US$1.8758 Yen 0.024310 (US$1.6662 and Yen 0.0205 on December 31, 2010)</FONT></I><BR><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">The Company did not record balances of short-term loans and financing on December 31, 2011.</FONT></I></TD></TR>

<TR vAlign=bottom></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-115</FONT></P></DIV>

<HR align=center SIZE=2 width="100%" noShade>



<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

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<P><A name="page_116"></A></P>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<DIV align=left>&nbsp;</DIV>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="1%"></TD>

   <TD width="9%"></TD>

   <TD width="1%"></TD>

   <TD width="9%"></TD>

   <TD width="1%"></TD>

   <TD width="9%"></TD>

   <TD width="1%"></TD>

   <TD width="9%"></TD>

   <TD width="1%"></TD>

   <TD width="9%"></TD>

   <TD width="1%"></TD>

   <TD width="9%"></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=center>&nbsp;</TD>

   <TD width="1%" align=center></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="59%" colSpan=11 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=center>&nbsp;</TD>

   <TD width="1%" align=center></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="29%" colSpan=5 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B></TD>

   <TD width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="29%" colSpan=5 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B></TD></TR>

<TR>

   <TD width="100%" colSpan=13 align=center>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Financial institution</FONT></B>&nbsp;</TD>

   <TD width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Current</FONT></B>&nbsp;</TD>

   <TD width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Noncurrent</FONT></B>&nbsp;</TD>

   <TD width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Total</FONT></B>&nbsp;</TD>

   <TD width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Current</FONT></B>&nbsp;</TD>

   <TD width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Noncurrent</FONT></B>&nbsp;</TD>

   <TD width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Total</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">DOMESTIC</FONT></B>&nbsp;</TD>

   <TD width="1%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Federal Government/Banco do Brasil</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">348,695</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">479,548</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">828,243</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">316,541</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">818,359</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,134,900</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">8</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue debentures</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">465,086</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">465,086</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">9</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue debentures</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">33,333</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">198,242</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">231,575</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">10</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue debentures</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,008</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">283,293</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">285,301</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">279,497</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">279,497</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">11</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue debentures</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">202,500</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,005,748</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,208,248</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,205,451</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,205,451</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">12</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue debentures</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">499,613</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">499,613</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">499,715</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">499,715</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">13</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue debentures</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">599,411</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">599,411</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">14</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue debentures</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">279,810</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">279,810</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">1</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">st </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue debentures Aquapolo</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">160,099</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">160,099</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Caixa Econ&#244;mica Federal</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">110,646</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">917,574</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,028,220</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">91,031</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">783,426</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">874,457</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Promissory notes</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">599,755</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">599,755</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">FIDC - SABESP I</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">13,889</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">13,889</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Brazilian Development Bank - BNDES</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">37,554</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,491</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">41,045</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">43,403</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">40,518</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">83,921</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Brazilian Development Bank - BNDES BAIXADA SANTISTA</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16,309</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">114,165</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">130,474</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">130,474</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">130,474</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Brazilian Development Bank - BNDES PAC</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,428</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">67,489</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">73,917</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,649</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44,352</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">46,001</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Brazilian Development Bank - BNDES ONDA LIMPA</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">14,270</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">235,383</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">249,653</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">246,986</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">246,986</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Loan - Foz do Brasil</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">52,896</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">52,896</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Santander</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,427</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,427</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Leasing</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">49,609</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">49,609</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,784</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,503</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,287</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,816</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,850</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,666</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest and charges</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">101,028</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,916</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">103,944</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">141,991</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">141,991</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">TOTAL DOMESTIC</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,440,633</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,102,241</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,542,874</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,112,166</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,903,521</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,015,687</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-116</FONT></P></DIV>

<HR align=center SIZE=2 width="100%" noShade>



<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

<!--$$/page=--><A name="page_117"></A>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE><BR>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="1%"></TD>

   <TD width="9%"></TD>

   <TD width="1%"></TD>

   <TD width="9%"></TD>

   <TD width="1%"></TD>

   <TD width="9%"></TD>

   <TD width="1%"></TD>

   <TD width="9%"></TD>

   <TD width="1%"></TD>

   <TD width="9%"></TD>

   <TD width="1%"></TD>

   <TD width="9%"></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="59%" colSpan=11 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="29%" colSpan=5 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B></TD>

   <TD width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="29%" colSpan=5 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B></TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Financial institution</FONT></B>&nbsp;</TD>

   <TD width="1%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Current</FONT></B>&nbsp;</TD>

   <TD width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Noncurrent</FONT></B>&nbsp;</TD>

   <TD width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Total</FONT></B>&nbsp;</TD>

   <TD width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Current</FONT></B>&nbsp;</TD>

   <TD width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Noncurrent</FONT></B>&nbsp;</TD>

   <TD width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Total</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">ABROAD</FONT></B>&nbsp;</TD>

   <TD width="1%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Inter-American Development Bank - IDB US$386,862mil (US$344,898 thousand in</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">December 2010)</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">71,591</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">652,141</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">723,732</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">63,185</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">511,484</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">574,669</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">International Bank for Reconstruction and Development -IBRD US$ 10,316 thousand</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,928</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,928</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Eurobonds - US$140,000 thousand (US$140,000 thousand in December 2010)</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">262,067</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">262,067</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">232,612</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">232,612</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Eurobonds - US$350,000 thousand (US$350,000 thousand in December 2010)</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">649,024</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">649,024</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">576,107</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">576,107</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">JICA -&#165; 39,456,912 thousand (&#165;21,316,000 thousand in December 2010)</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">53,204</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">905,529</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">958,733</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">11,810</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">425,168</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">436,978</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">IDB 1983AB - US$226,058 thousand (US$250,000 thousand in December 2010)</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44,911</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">376,355</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">421,266</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">39,893</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">373,575</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">413,468</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest and charges</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,671</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,671</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">15,089</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">15,094</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">TOTAL ABROAD</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">189,377</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,864,044</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,053,421</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">129,977</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,118,951</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,248,928</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">TOTAL LOANS AND FINANCING</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,630,010</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,966,285</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,596,295</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,242,143</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,022,472</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="9%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,264,615</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="50%" colSpan=3 align=left><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">Price on December 31, 2011 US$1.8758 Yen 0.024310 (US$1.6662 and Yen 0.0205 on December 31, 2010)</FONT></I>&nbsp;</TD>

   <TD width="1%" align=left><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="50%" colSpan=3 align=left><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">The Company did not record balances of short-term loans and financing on December 31, 2011</FONT></I>&nbsp;</TD>

   <TD width="1%" align=left><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="9%" align=left>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-117</FONT></P></DIV>

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<TR>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<DIV align=left>&nbsp;</DIV>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="16%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=3 width="40%" align=left></TD>

   <TD rowSpan=3 width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="16%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Guarantees</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">&nbsp;</FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Maturity</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">&nbsp;</FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Annual interest rates</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">&nbsp;</FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Inflation and</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">foreign exchange</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">adjustment</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">S&#227;o Paulo State Government and</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Federal Government/Banco do Brasil</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Own funds</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2014</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">UPR + 8.50%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">8</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue debentures</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">OWN FUNDS</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2011</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">IGP-M + 10.75%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="16%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">IPCA + CDI + 2.75% and</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">9</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue debentures</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">OWN FUNDS</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2015</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">12.87%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="16%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">IPCA + TJLP +1.92 and</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">10</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue debentures</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">OWN FUNDS</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2020</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9.53%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">11</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue debentures</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">OWN FUNDS</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2015</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">DI + 1.95% and DI + 1.4%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">12</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue debentures</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">OWN FUNDS</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2025</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">TR + 9.5%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">13</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue debentures</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">OWN FUNDS</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2012</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">CDI + 0.65%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">14</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue debentures</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">OWN FUNDS</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2022</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">TJLP +1.92 and 9.19%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">1</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">st </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue debentures- Aquapolo</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">OWN FUNDS</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2029</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">TR + 8.75%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Caixa Econ&#244;mica Federal</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">OWN FUNDS</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2011/32</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">UPR + 5% to 9.5%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Promissory notes - 5</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">issue</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">OWN FUNDS</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2011</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">CDI + 0.65%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">FIDC - SABESP I</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">OWN FUNDS</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2011</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">CDI + 0.70%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Brazilian Development Bank - BNDES</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">OWN FUNDS</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2013</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3% + TJLP 6% LIMIT</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Brazilian Development Bank - BNDES BAIXADA SANTISTA</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">OWN FUNDS</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2019</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2.5% + TJLP 6% LIMIT</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Brazilian Development Bank - BNDES PAC</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">OWN FUNDS</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2023</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2.15% + TJLP 6% LIMIT</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Brazilian Development Bank - BNDES ONDA LIMPA</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">OWN FUNDS</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2025</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1.92% + TJLP 6% LIMIT</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Loan - Foz do Brasil</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2012</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">CDI + 1.75 + IOF</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Santander</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2011</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">CDI</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2011/2018</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">TJLP + 6% /CDI/ 12%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-118</FONT></P></DIV>

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   <TD width="12%"></TD></TR>

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   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<DIV align=left>&nbsp;</DIV>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="16%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=3 width="40%" align=left></TD>

   <TD rowSpan=3 width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="16%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Guarantees</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">&nbsp;</FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Maturity</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">&nbsp;</FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Annual interest rates</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">&nbsp;</FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Inflation and</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">foreign exchange</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">adjustment</FONT></B>&nbsp;</TD></TR>

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<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">ABROAD</FONT></B>&nbsp;</TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="16%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="16%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Currency Basket</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="16%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Fluctuation +</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Inter-American Development Bank - IDB 713</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">FEDERAL GOVERNMENT</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2017</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2.26%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">US$</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Inter-American Development Bank - IDB 896</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">FEDERAL GOVERNMENT</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2016</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3.00%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">US$</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Inter-American Development Bank - IDB 1212</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">FEDERAL GOVERNMENT</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2025</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3.29%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">US$</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Inter-American Development Bank - IDB 2202</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">FEDERAL GOVERNMENT</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2035</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1.14%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">International Bank for Reconstruction and Development -IBRD</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">FEDERAL GOVERNMENT</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2034</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">0.43%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">US$</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Eurobonds 140</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2016</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7.50%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">US$</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Eurobonds 350</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2020</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6.30%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">US$</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">to B Loan</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2023</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2.49 to 2.99%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">US$</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">JICA (JBIC)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">FEDERAL GOVERNMENT</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2029</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1.8% and 2.5%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Yen</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">JICA (JBIC)</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="16%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">FEDERAL GOVERNMENT</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2029</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1.2% and 0.01%</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Yen</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-119</FONT></P></DIV>

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   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="12%" align=left><B><FONT style="FONT-FAMILY: Times New Roman" size=3>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B><FONT style="FONT-FAMILY: Times New Roman">&nbsp;</FONT></TD></TR>

<TR height=20>

   <TD width="12%" align=left><B><FONT size=3 face=Arial-BoldMT,Arial,Helvetica,sans-serif>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2><FONT size=3><FONT size=2>Notes to the Financial Statements</FONT></FONT></FONT></B></P></FONT></B></TD></TR>

<TR height=20>

   <TD width="12%" align=left><FONT style="FONT-FAMILY: Arial" size=2>

   <P style="TEXT-ALIGN: justify"><B><FONT style="FONT-FAMILY: Times New Roman" size=2>Years Ended December 31, 2011 and 2010 </FONT></B></P></FONT></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="87%" align=left><FONT size=1><STRONG><FONT style="FONT-FAMILY: Times New Roman" size=1>Amounts in thousands of reais, unless otherwise indicated</FONT></STRONG></FONT></TD></TR></TABLE>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<DIV align=left>&nbsp;</DIV>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="28%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">(i) Payment schedule</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=17>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="64%" colSpan=9 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">The following table provides the maturities of loans and financing as of December 31, 2011.</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">Amounts in thousands of R$</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=17>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="71%" colSpan=15 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="28%" align=left></TD>

   <TD rowSpan=2 width="1%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2012</FONT></B></TD>

   <TD rowSpan=2 width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2013</FONT></B></TD>

   <TD rowSpan=2 width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2014</FONT></B></TD>

   <TD rowSpan=2 width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2015</FONT></B></TD>

   <TD rowSpan=2 width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2016</FONT></B></TD>

   <TD rowSpan=2 width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2017</FONT></B></TD>

   <TD rowSpan=2 width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2018</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">up to 2035</FONT></B></TD>

   <TD rowSpan=2 width="1%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">TOTAL</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><B><I><FONT size=1 face="Georgia-BoldItalic,Times New Roman,Times,serif">DOMESTIC</FONT></I></B>&nbsp;</TD>

   <TD width="1%" align=left><B><I><FONT size=1 face="Georgia-BoldItalic,Times New Roman,Times,serif"></FONT></I></B></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Banco do Brasil</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">348,695</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">379,532</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">100,016</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">828,243</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Caixa Econ&#244;mica Federal</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">110,479</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">112,441</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">73,879</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">52,074</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">51,181</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">53,476</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">565,401</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,018,931</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Debentures</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">803,919</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">506,642</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">348,615</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">381,154</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">116,239</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">116,239</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">599,575</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,872,383</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">BNDES</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">37,554</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,491</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">41,045</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">BNDES BAIXADA SANTISTA</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16,309</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16,309</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16,309</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16,309</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16,309</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16,309</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">32,620</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">130,474</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">BNDES PAC</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,428</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,428</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,428</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,428</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,428</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,428</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">35,349</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">73,917</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">BNDES ONDA LIMPA</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">14,270</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,243</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,243</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,243</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,243</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,245</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">139,166</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">249,653</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Leasing</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">49,609</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">49,609</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,155</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">590</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">496</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">559</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">629</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">709</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">520</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,658</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest and charges</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">100,998</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">100,998</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">In domestic currency</FONT></I>&nbsp;</TD>

   <TD width="1%" align=left><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">1,439,807</FONT></I>&nbsp;</TD>

   <TD width="1%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">1,044,676</FONT></I>&nbsp;</TD>

   <TD width="1%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">564,986</FONT></I>&nbsp;</TD>

   <TD width="1%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">475,767</FONT></I>&nbsp;</TD>

   <TD width="1%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">210,029</FONT></I>&nbsp;</TD>

   <TD width="1%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">212,406</FONT></I>&nbsp;</TD>

   <TD width="1%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">1,422,240</FONT></I>&nbsp;</TD>

   <TD width="1%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">5,369,911</FONT></I>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><B><I><FONT size=1 face="Georgia-BoldItalic,Times New Roman,Times,serif">ABROAD</FONT></I></B>&nbsp;</TD>

   <TD width="1%" align=left><B><I><FONT size=1 face="Georgia-BoldItalic,Times New Roman,Times,serif"></FONT></I></B></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%" align=left></TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">IDB</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">71,591</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">71,591</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">71,591</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">71,591</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">71,591</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">74,123</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">291,654</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">723,732</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">IRBD</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,928</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,928</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Eurobonds</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">262,067</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">649,024</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">911,091</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">JBIC</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">53,204</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">53,205</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">53,205</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">53,205</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">53,205</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">53,321</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">639,388</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">958,733</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">IDB 1983AB</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44,911</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44,911</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44,911</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44,911</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44,911</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44,916</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">151,795</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">421,266</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest and charges</FONT>&nbsp;</TD>

   <TD width="1%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,671</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,671</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">In foreign currency</FONT></I>&nbsp;</TD>

   <TD width="1%" align=left><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">189,377</FONT></I>&nbsp;</TD>

   <TD width="1%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">169,707</FONT></I>&nbsp;</TD>

   <TD width="1%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">169,707</FONT></I>&nbsp;</TD>

   <TD width="1%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">169,707</FONT></I>&nbsp;</TD>

   <TD width="1%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">431,774</FONT></I>&nbsp;</TD>

   <TD width="1%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">172,360</FONT></I>&nbsp;</TD>

   <TD width="1%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">1,750,789</FONT></I>&nbsp;</TD>

   <TD width="1%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">3,053,421</FONT></I>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">Overall total</FONT></I>&nbsp;</TD>

   <TD width="1%" align=left><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">1,629,184</FONT></I>&nbsp;</TD>

   <TD width="1%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">1,214,383</FONT></I>&nbsp;</TD>

   <TD width="1%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">734,693</FONT></I>&nbsp;</TD>

   <TD width="1%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">645,474</FONT></I>&nbsp;</TD>

   <TD width="1%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">641,803</FONT></I>&nbsp;</TD>

   <TD width="1%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">384,766</FONT></I>&nbsp;</TD>

   <TD width="1%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">3,173,029</FONT></I>&nbsp;</TD>

   <TD width="1%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif"></FONT></I></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">8,423,332</FONT></I>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-120</FONT></P></DIV>

<HR align=center SIZE=2 width="100%" noShade>



<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

<A name="page_121"></A><BR>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia </FONT></B><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">de </FONT></B><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Saneamento B&#225;sico </FONT></B><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">do </FONT></B><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Estado </FONT></B><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">de S&#227;o </FONT></B><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Paulo </FONT></B><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">- </FONT></B><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the </FONT></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Financial Statements<BR></FONT></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Years </FONT></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Ended December </FONT></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">in </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">thousands </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">of reais, unless </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

</P>

<P></P>

<P style="TEXT-ALIGN: justify"></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="28%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD>

   <TD width="1%"></TD>

   <TD width="8%"></TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="71%" colSpan=15 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=center>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=center>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=center>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=center>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=center>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=center>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2018</FONT></B>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=center>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2012</FONT></B>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2013</FONT></B>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2014</FONT></B>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2015</FONT></B>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2016</FONT></B>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2017</FONT></B>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">up to 2035</FONT></B>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">TOTAL</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><B><I><FONT size=1 face="Georgia-BoldItalic,Times New Roman,Times,serif">DOMESTIC</FONT></I></B>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Banco do Brasil</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">348,695</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">379,532</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">100,016</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">828,243</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Caixa Econ&#244;mica Federal</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">110,646</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">112,921</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">74,359</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">52,554</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">51,661</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">53,956</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">572,123</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,028,220</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Debentures</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">803,919</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">516,060</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">358,033</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">390,572</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">125,657</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">125,657</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">712,584</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,032,482</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">BNDES</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">37,554</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,491</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">41,045</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">BNDES BAIXADA SANTISTA</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16,309</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16,309</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16,309</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16,309</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16,309</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">16,309</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">32,620</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">130,474</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">BNDES PAC</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,428</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,428</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,428</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,428</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,428</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,428</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">35,349</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">73,917</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">BNDES ONDA LIMPA</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">14,270</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,243</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,243</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,243</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,243</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,245</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">139,166</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">249,653</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Leasing</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">49,609</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">49,609</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,784</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">590</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">496</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">559</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">629</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">709</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">520</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,287</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest and charges</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">101,028</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,916</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">103,944</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">In domestic currency</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">1,440,633</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">1,057,490</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">574,884</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">485,665</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">219,927</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">222,304</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">1,541,971</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">5,542,874</FONT></I>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><B><I><FONT size=1 face="Georgia-BoldItalic,Times New Roman,Times,serif">ABROAD</FONT></I></B>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=left>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">IDB</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">71,591</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">71,591</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">71,591</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">71,591</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">71,591</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">74,123</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">291,654</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">723,732</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">IBRD</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,928</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,928</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Eurobonds</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">262,067</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">649,024</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">911,091</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">JBIC</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">53,204</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">53,205</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">53,205</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">53,205</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">53,205</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">53,321</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">639,388</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">958,733</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">IDB 1983AB</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44,911</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44,911</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44,911</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44,911</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44,911</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44,916</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">151,795</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">421,266</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest and charges</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,671</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,671</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">In foreign currency</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">189,377</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">169,707</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">169,707</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">169,707</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">431,774</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">172,360</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">1,750,789</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">3,053,421</FONT></I>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="28%" align=left><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">Overall total</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">1,630,010</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">1,227,197</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">744,591</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">655,372</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">651,701</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">394,664</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">3,292,760</FONT></I>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">8,596,295</FONT></I>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-121</FONT></P></DIV>

<HR align=center SIZE=2 width="100%" noShade>



<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

<A name="page_122"></A><BR>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

</P>

<P></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(a) Banco do Brasil</FONT></B></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In March 1994, the Company refinanced the existing loan agreements with Caixa Econ&#244;mica Federal, which assigned loans rights represented by receivables to the Federal Government, with Banco do Brasil acting as financial agent. Under the agreement entered into with the Federal Government, payments are made based on the Price amortization system, monthly indexed by the Standard Reference Unit (UPR), which is equal to the Government's benchmark Interest Rate (TR), plus interest of 8.5% per year. The interest and principal amount are monthly paid with final maturity in 2014. This financing is guaranteed by the S&#227;o Paulo State Government by a pledge of its own revenues and revenues of the Company.</FONT></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(b) </FONT></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Debentures</FONT></B></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(i) </FONT></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">8</FONT></B><B><SUP><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">th </FONT></SUP></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">issue of debentures</FONT></B></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">To terminate the program registered with the CVM on September 17, 2004, the Company issued on June 1, 2005, 700,000 debentures, using the option to increase the number of debentures allowed by up to 20%, as provided for in Paragraph 2 of Article 14 of CVM Instruction 400/03, distributed in two series, without renegotiation, with the face value of R$ 1 each, totaling R$ 700,000. The date for the financial settlement of the operation was June 24, 2005. Proceeds were used in the settlement of Eurobonds agreement.</FONT></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The debentures were placed on the market as follows:</FONT></P>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%" align=right>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="22%"></TD>

   <TD width="2%"></TD>

   <TD width="11%"></TD>

   <TD width="2%"></TD>

   <TD width="11%"></TD>

   <TD width="2%"></TD>

   <TD width="11%"></TD>

   <TD width="2%"></TD>

   <TD width="11%"></TD>

   <TD width="2%"></TD>

   <TD width="11%"></TD>

   <TD width="2%"></TD>

   <TD width="11%"></TD></TR>

<TR vAlign=bottom>

   <TD width="22%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Number </FONT></B></TD>

   <TD width="2%" align=center></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=left>&nbsp;<STRONG><FONT size=1>Adjustment</FONT></STRONG>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Interest</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Interest payment</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Repayment</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Maturity</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="22%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Series 1</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="TEXT-INDENT: 1px" width="11%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">350,000</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">CDI+1.5% p.a.</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Semiannual</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Single installment</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">June 2009</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="22%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Series 2</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="TEXT-INDENT: 1px" width="11%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">350,000</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">IGP-M</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">10.75% p.a.</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Annual</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Single installment</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">June 2011</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px; PADDING-LEFT: 0%; PADDING-RIGHT: 0%">&nbsp;</P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Interest expense totaled R$49,863 and R$22,742 in 2010 and 2011, respectively, related to series 2.</FONT></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Series 1 of the 8</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue of debentures was fully repaid on June 1, 2009.</FONT></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The 8</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue of debentures was fully repaid on June 1, 2011.</FONT></P>

<P style="TEXT-ALIGN: center; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-122</FONT></P>

<HR align=center SIZE=2 width="100%" noShade>



<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

<A name="page_123"></A><BR>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

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<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(ii) 9</FONT></B><B><SUP><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">th </FONT></SUP></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">issue</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On October 23, 2008, the Company registered with the CVM a securities program for a total amount of R$ 3 billion and made a Public Offering of Simple Debentures, unsecured and non-convertible, of the 9th issue, in the context of the said program.</FONT></P>

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   <TD width="11%"></TD>

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   <TD width="61%" colSpan=7 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">The debentures were placed on the market as follows:</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="11%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="11%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="11%" align=left>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="22%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Number </FONT></B></TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=left><STRONG><FONT size=1>Adjustment</FONT></STRONG>&nbsp;&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Interest</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Interest payment</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Repayment</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Maturity</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

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   <TD vAlign=top width="22%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Series 1</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">100,000</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">CDI+2.75% p.a.</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Semiannual</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=left>

   <P style="TEXT-INDENT: -8pt; MARGIN-LEFT: 8pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Annually (from</FONT>&nbsp;<FONT size=1 face=Georgia>October 15, 2011)</FONT></P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">October 15, 2013</FONT>&nbsp;</TD></TR>

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   <TD vAlign=top width="22%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Series 2</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">100,000</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">IPCA</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">12.87% p.a.</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Annual</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=left>

   <P style="TEXT-INDENT: -8pt; MARGIN-LEFT: 8pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Annually (from</FONT>&nbsp;<FONT size=1 face=Georgia>October 15, 2013)</FONT></P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">October 15, 2015</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Repayment will be made in three annual and consecutive installments of the same amount, the first of which falls due on October 15, 2011 for series 1 and October 15, 2013 for the series 2.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Settlement date of series 1 was on November 7, 2008 and of series 2 on November 10, 2008.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The funds arising from this issuance were used to refinance debts falling due.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Interest expenses totaled R$11,896 and R$12,354 in 2011 and 2010 related to series 1, and R$16,486 and R$ 16,993, respectively, related to series 2.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The 9</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue of debentures was fully repaid on October 17, 2011.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(iii) 10</FONT></B><B><SUP><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">th </FONT></SUP></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">issue of debentures</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On November 15, 2009, the Company launched 100 debentures, subscribed exclusively by the Brazilian Development Bank (BNDES). These debentures were distributed in three nonconvertible series, at a nominal value of R$2,753, totaling R$275,370. This transaction was settled on December 15, 2009, for all series.</FONT></P>

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   <TD width="1%"></TD>

   <TD width="15%"></TD>

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   <TD width="100%" colSpan=13 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">The debentures were placed on the market as follows:</FONT></TD></TR>

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   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

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   <TD width="13%" align=left>&nbsp;</TD>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Number&nbsp;</FONT></B>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=left><STRONG><FONT size=1>Adjustment</FONT></STRONG>&nbsp;</TD>

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   <TD style="BORDER-BOTTOM: #000000 1px solid" width="15%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Interest</FONT></B>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="18%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Interest payment</FONT></B>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="18%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Repayment</FONT></B>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Maturity</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

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   <TD vAlign=top width="13%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Series 1</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">28</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="10%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="15%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">TJLP + 1.92% p.a.</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="18%" align=left>

   <P style="TEXT-INDENT: -8pt; MARGIN-LEFT: 8pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Quarterly to </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">November 2012 </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">and monthly from </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">then on</FONT></P></TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="18%" align=left>

   <P style="TEXT-INDENT: -8pt; MARGIN-LEFT: 8pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Monthly (from December </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">2012)</FONT></P></TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="10%" align=left>

   <P style="TEXT-INDENT: -8pt; MARGIN-LEFT: 8pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">November </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">2020</FONT></P></TD></TR>

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   <TD vAlign=top width="13%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Series 2</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">30</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="10%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">IPCA</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="15%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">9.53% p.a.</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="18%" align=left>

   <P style="TEXT-INDENT: -8pt; MARGIN-LEFT: 8pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Annual</FONT>&nbsp;</P></TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="18%" align=left>

   <P style="TEXT-INDENT: -8pt; MARGIN-LEFT: 8pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Annual (from December </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">2013)</FONT></P></TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="10%" align=left>

   <P style="TEXT-INDENT: -8pt; MARGIN-LEFT: 8pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">December </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">2020</FONT></P></TD></TR>

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   <TD vAlign=top width="13%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Series 3</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">42</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="10%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="15%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">TJLP + 1.92% p.a.</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="18%" align=left>

   <P style="TEXT-INDENT: -8pt; MARGIN-LEFT: 8pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Quarterly to </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">November 2012 </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">and monthly from </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">then on</FONT></P></TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="18%" align=left>

   <P style="TEXT-INDENT: -8pt; MARGIN-LEFT: 8pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Monthly (from December </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">2012)</FONT></P></TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="10%" align=left>

   <P style="TEXT-INDENT: -8pt; MARGIN-LEFT: 8pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">November </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">2020</FONT></P></TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-123</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

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<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The funds raised in this issuance will be used in expenditures in water supply and sewage systems in the following projects: Water Treatment Stations at Rio Grande, North Coast Norte, Para&#237;ba Valley and Mantiqueira, Bacia do Piracicaba-Capivari-Jundiai; and for program of reduction of losses.</FONT></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011 and 2010, interest expense related to series 1 were R$6,016 and R$6,016, R$8,862 and R$9,156 related to series 2 and R$9,025 and R$9,025 related to series 3.</FONT></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Financial covenants</FONT></P>

<P style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">-&nbsp;&nbsp; EBITDA/Net operating revenue: equal or higher than 38%.</FONT> </P>

<P style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">-&nbsp;&nbsp; EBITDA/Financial expenses: equal to or higher than 2.35.</FONT> </P>

<P style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">-&nbsp;&nbsp; Net debt/EBITDA: equal to or higher than 3.65.</FONT> </P>

<P><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(iv)&nbsp; 11</FONT></B><B><SUP><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">th </FONT></SUP></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">issue of debentures</FONT></B> </P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On March 1, 2010, the Company issued the 11th debentures. On April 30 and May 3, 2010 the Company settled series 1 and 2, respectively, through a public offering, this debenture was issued to repay the 90 promissory notes issued by the bank in December 1, 2009, as summarized below:</FONT></P>

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<TR>

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   <TD width="11%"></TD>

   <TD width="2%"></TD>

   <TD width="11%"></TD>

   <TD width="2%"></TD>

   <TD width="11%"></TD>

   <TD width="2%"></TD>

   <TD width="11%"></TD>

   <TD width="2%"></TD>

   <TD width="11%"></TD>

   <TD width="2%"></TD>

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   <TD width="22%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Number </FONT></B></TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=left><STRONG><FONT size=1>Adjustment</FONT></STRONG>&nbsp;&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Interest</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Interest payment</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Repayment</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Maturity</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top width="22%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Series 1</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">810,000</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">DI + 1.95% p.a.</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=left>

   <P style="TEXT-INDENT: -8pt; MARGIN-LEFT: 8pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Semiannual </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">(September and </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">March)</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=left>

   <P style="TEXT-INDENT: -8pt; MARGIN-LEFT: 8pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Annual (from March </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">2013)</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">March 2015</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top width="22%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Series 2</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">405,000</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">DI + 1.40% p.a.</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=left>

   <P style="TEXT-INDENT: -8pt; MARGIN-LEFT: 8pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Semiannual </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">(September and </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">March)</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=left>

   <P style="TEXT-INDENT: -8pt; MARGIN-LEFT: 8pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Annual (from March </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">2012)</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">March 2013</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The interest expense in 2011 and 2010 related to the series 1 was R$107,081 and R$80,077 and R$52,369 and R$ 38,103 related to series 2, respectively.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Financial covenants of 11</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="2%"></TD>

   <TD width="98%"></TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"><FONT size=2 face="Georgia,Times New Roman,Times,serif">.</FONT></FONT></TD>

   <TD vAlign=top width="98%" align=left>

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">Adjusted </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">current ratio (current assets divided by current liabilities, excluding from current liabilities the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">current portion of noncurrent debts incurred by the Company that are recorded in current liabilities) higher </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">than 1.0.</FONT>&nbsp;</P></TD></TR>

<TR>

   <TD vAlign=top width="2%"></TD>

   <TD vAlign=top width="98%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"><FONT size=2 face="Georgia,Times New Roman,Times,serif">.</FONT></FONT></TD>

   <TD vAlign=top width="98%" align=left>

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">EBITDA to financial expenses ratio equ</FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">al to or higher than 1.5.</FONT>&nbsp;</P></TD></TR>

<TR>

   <TD vAlign=top width="2%"></TD>

   <TD vAlign=top width="98%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"><FONT size=2 face="Georgia,Times New Roman,Times,serif">.</FONT></FONT></TD>

   <TD vAlign=top width="98%" align=left>

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">Noncompliance with these obligations will </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">only be typified when verified in the quarterly financial statements </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">for at least two consecutive quarters or two nonconsecutive quarters within a twelve-month period.</FONT>&nbsp;</P></TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In case of noncompliance with the covenants, the trustee should call an extraordinary debenture holders' meeting within 48 hours from the acknowledgement of the noncompliance to resolve on the declaration of accelerated maturity of the debentures.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-124</FONT></P>

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<A name="page_125"></A><BR>

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<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

</P>

<P></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(v) 12</FONT></B><B><SUP><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">th </FONT></SUP></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">issue of debentures</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company issued R$500 million in debentures to Government Severance Indemnity Fund for Employees (FGTS). The debentures will be invested in program of structures to comply with the goal to universalize the sanitation service in the State of S&#227;o Paulo until 2018. Among the programs that will receive this investment are Vida Nova (water sources), Programa Metropolitano de &#193;gua (Water Metropolitan Program), Programa Metropolitano de Esgoto (Sewage Metropolitan Program), Programas de &#193;gua e Esgotos do Interior e Litoral (Water and Sewage Program inside the state and coastal region).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Initially, R$170 million was released and the other part is invested in a restricted bank account and will be released in 2 installments. The first installment will be released after 6 months and the second installment will be released after 12 months from the issuance date. The condition for releasing these installments is the execution of the investment in these projects by Sabesp.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">One of the conditions for approving this transaction is the allocation of 60% of the investments in poor areas.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The issuance of the debentures occurred on September 22, 2010 through a public offer under the Brazilian securities exchange commission rules, according to CVM instruction n&#186; 476, simple debentures, nonconvertible, are as follows:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="22%"></TD>

   <TD width="2%"></TD>

   <TD width="11%"></TD>

   <TD width="2%"></TD>

   <TD width="11%"></TD>

   <TD width="2%"></TD>

   <TD width="11%"></TD>

   <TD width="2%"></TD>

   <TD width="11%"></TD>

   <TD width="2%"></TD>

   <TD width="11%"></TD>

   <TD width="2%"></TD>

   <TD width="11%"></TD></TR>

<TR vAlign=bottom>

   <TD width="22%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Number </FONT></B></TD>

   <TD width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=left><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG>Adjustment</STRONG><FONT size=3>&nbsp;</FONT></FONT></TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Interest</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Interest payment</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Repayment</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Maturity</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="22%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Single Series</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="11%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">500,000 </FONT></TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">-<FONT size=3 face="Times New Roman">&nbsp;</FONT></FONT></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">TR + 9.5% p.a.</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Monthly (from July</FONT>&nbsp;<FONT size=1 face=Georgia>2010)</FONT></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Monthly (from July </FONT><FONT size=1 face=Georgia>2014)</FONT></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="11%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">June 2025</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The interest expense in 2011 and 2010 related to the single series was R$51,434 and R$26,879, respectively.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Financial covenants of 12</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="2%"></TD>

   <TD width="98%"></TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"><FONT size=2 face="Georgia,Times New Roman,Times,serif">. </FONT></FONT></TD>

   <TD vAlign=top width="98%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">Adjusted current ratio (current assets divided by current liabilities, excluding from current liabilities the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">current portion of noncurrent debts incurred by the Company that are recorded in current liabilities) higher </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">than 1.0.</FONT>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="2%"></TD>

   <TD vAlign=top width="98%">&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"><FONT size=2 face="Georgia,Times New Roman,Times,serif">. </FONT></FONT></TD>

   <TD vAlign=top width="98%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">EBITDA to financial expenses ratio equal to or higher than 1.5.</FONT>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="2%"></TD>

   <TD vAlign=top width="98%">&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"><FONT size=2 face="Georgia,Times New Roman,Times,serif">. </FONT></FONT></TD>

   <TD vAlign=top width="98%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">Noncompliance with these obligations will only be typified when verified in the quarterly financial statements </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">for at least two consecutive quarters or two nonconsecutive quarters within a twelve-month period.</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In case of noncompliance with the covenants, the trustee should call an extraordinary debenture holders' meeting within 48 hours from the acknowledgement of the noncompliance to resolve on the declaration of accelerated maturity of the debentures.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-125</FONT></P></DIV>

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<A name="page_126"></A><BR>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

</P>

<P style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%"></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(vi) 13</FONT></B><B><SUP><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">th </FONT></SUP></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">issue of debentures</FONT></B></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On January 11, 2011, the Company raised funds for the 13</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">Issue of non-convertible, unsecured debentures, in a single series, for public offering, with restricted placement efforts, pursuant to CVM Instruction 476, whose characteristics are the following:</FONT></P>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%" align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="11%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="23%"></TD>

   <TD width="2%"></TD>

   <TD width="17%"></TD>

   <TD width="2%"></TD>

   <TD width="12%"></TD>

   <TD width="2%"></TD>

   <TD width="11%"></TD></TR>

<TR vAlign=bottom>

   <TD align=left>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">Number</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest payment</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">Amortization</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 2px" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">Maturity</FONT>&nbsp;</TD></TR>

<TR>

   <TD colSpan=11>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Single series</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="TEXT-INDENT: 3px" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">600,000</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">DI + 0.65% / 0.75% / 0.85% /1.25% p.a.<FONT size=3 face="Times New Roman">&nbsp;</FONT></FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="TEXT-INDENT: 6px" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Semi-annually</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="TEXT-INDENT: 8px" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Single</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">August 29, 2012</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px; PADDING-LEFT: 0%; PADDING-RIGHT: 0%">&nbsp;</P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%; MARGIN-BOTTOM: 0px"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Date of issue: 1/11/2011</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Number: 60</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Unit value (R$ thousand) R$ 10,000</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Voluntary redemption: partial or total at any time</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Plus DI:</FONT></P>

<P style="TEXT-ALIGN: justify; MARGIN-TOP: 0pt; PADDING-LEFT: 0%; PADDING-RIGHT: 0%; MARGIN-LEFT: 4%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">1</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">st </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">period: 1/11/2011 to 2/26/2011 = 0.65%</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">2</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">nd </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">period: 2/26/2011 to 8/30/2011 = 0.75%</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">3</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">period: 8/30/2011 to 3/1/2012 = 0.85%</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">4</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">period: 3/1/2012 to 8/29/2012 = 1.25%</FONT></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Funds raised through the 13</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue of debentures were allocated to the accelerated redemption of sixty (60) Promissory Notes of the Company&#8217;s 5</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue, with maturity scheduled for February 26, 2011. The final payment of the 5</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue of Promissory Notes was made on January 11,2011.</FONT></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Financial covenants of the 13</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue of debentures:</FONT></P>

<P style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">-&nbsp;&nbsp; Total debt/EBITDA equal to or lower than 3.65.</FONT> </P>

<P style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">-&nbsp;&nbsp; EBITDA/financial expenses equal to or higher than 1.5.</FONT> </P>

<P><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif"><FONT size=2 face="Times New Roman">(vii)&nbsp; </FONT>14</FONT></B><B><SUP><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">th </FONT></SUP></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">issue of debentures</FONT></B> </P>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On February 15, 2011, the Company issued 100 debentures through exclusive subscription by the Brazilian Development Bank &#8211; BNDES. These debentures were distributed into three series, not convertible into shares, by the face value of R$2,753.70, totaling R$275,370. The repayment of operation occurred on April 15, 2011, for all series.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-126</FONT></P></DIV>

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<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

<A name="page_127"></A><BR>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

</P>

<P></P>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%" align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="14%"></TD>

   <TD width="1%"></TD>

   <TD width="10%"></TD>

   <TD width="1%"></TD>

   <TD width="10%"></TD>

   <TD width="1%"></TD>

   <TD width="13%"></TD>

   <TD width="1%"></TD>

   <TD width="20%"></TD>

   <TD width="1%"></TD>

   <TD width="14%"></TD>

   <TD width="1%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="100%" colSpan=13 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">Debentures were placed on the market as follows:</FONT></TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="14%" align=center>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">Number</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 2px" width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">Restatement</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="20%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest payment</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="14%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">Amortization</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">Maturity</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top width="14%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">1</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">st </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">series</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">28</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="10%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">TJLP + 1.92% p.a.</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="20%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Quarterly up to February 2014 </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">and monthly as of this date</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="14%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Monthly</FONT><BR><FONT size=1 face="Georgia,Times New Roman,Times,serif">(as of March 2014)</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">February 2022</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top width="14%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">2</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">nd </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">series</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">30</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="10%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">IPCA</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9.19% p.a.</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="20%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Annual</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="14%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Annually</FONT><BR><FONT size=1 face="Georgia,Times New Roman,Times,serif">(as of March 2015)</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">March 2022</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top width="14%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">3</FONT><SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">rd </FONT></SUP><FONT size=1 face="Georgia,Times New Roman,Times,serif">series</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">42</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="10%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">TJLP + 1.92% p.a.</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="20%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Quarterly up to February 2014 </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">and monthly as of this date</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="14%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Monthly</FONT><BR><FONT size=1 face="Georgia,Times New Roman,Times,serif">(as of March 2014)</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD vAlign=top width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">February 2022</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px; PADDING-LEFT: 0%; PADDING-RIGHT: 0%">&nbsp;</P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The proceeds obtained with this issue are allocated to the Company&#8217;s investments in water supply and sewage treatment systems in the projects: ETA Rio Grande, North Coast, Para&#237;ba Valley and Mantiqueira, Bacia do Piracicaba-Capivari-Jundia&#237; and the Loss Reduction Program.</FONT></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Interest expenses in 2011 referring to the series 1 amounted to R$5,254, R$6,916 for series 2 and R$7,881 for series 3.</FONT></P>

<P style="TEXT-ALIGN: justify; PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Financial covenants of the 14</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue of debentures:</FONT></P>

<P style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">-&nbsp;&nbsp; EBITDA/net operating revenue equal to or higher than 38%.</FONT> </P>

<P style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">-&nbsp;&nbsp; EBITDA/financial expenses equal to or higher than 2.35.</FONT> </P>

<P style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">-&nbsp;&nbsp; Net bank debt/EBITDA equal to or lower than 3.65.</FONT> </P>

<P><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(vii)&nbsp; 1</FONT></B><B><SUP><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">st </FONT></SUP></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">issue of Debentures - Aquapolo</FONT></B> </P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In August 2011, subsidiary Aquapolo held the 1</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">st </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue of non-convertible debentures, whose characteristics are:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="10%"></TD>

   <TD width="1%"></TD>

   <TD width="10%"></TD>

   <TD width="1%"></TD>

   <TD width="10%"></TD>

   <TD width="1%"></TD>

   <TD width="13%"></TD>

   <TD width="1%"></TD>

   <TD width="20%"></TD>

   <TD width="1%"></TD>

   <TD width="18%"></TD>

   <TD width="1%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="10%" align=left>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">Number</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">Restatement</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="20%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest payment</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="18%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">Amortization</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">Maturity</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=13>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="10%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Single series</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="TEXT-INDENT: 2px" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">326,732</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="TEXT-INDENT: 12px" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="13%" align=center><FONT size=1 face="Georgia,Times New Roman,Times,serif">TR + 8.75% p.a.</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="20%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Monthly (as of December 2013)</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="18%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Monthly (as of December 2013)<FONT size=3 face="Times New Roman">&nbsp;</FONT></FONT></TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">August 2029</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-127</FONT></P>

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<A name="page_128"></A><BR>

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<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

<BR>

<TABLE border=0 cellSpacing=0>



<TR>

   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(c)</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Caixa Econ&#244;mica Federal - Pro-sanitation Program</FONT></B> </TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(i)</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Water and sewage</FONT></B> </TD></TR></TABLE></P>

<P></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Several loan agreements were entered into from 1996 to 2004 under the Pro-Sanitation Program for expanding and improving the water supply and sewage systems of several municipalities of the State of S&#227;o Paulo and of the City of S&#227;o Paulo. Loans are collateralized by the collections of the daily billings of water supply and sewage services up to the total amount of the debt.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Contractually established repayment terms range from 120 to 180 months, after the beginning of the repayment period.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The balance of these facilities as of December 31, 2011 was R$563,750 (R$607,638 in December 2010).</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="23%"></TD>

   <TD width="2%"></TD>

   <TD width="23%"></TD>

   <TD width="2%"></TD>

   <TD width="23%"></TD>

   <TD width="2%"></TD>

   <TD width="24%"></TD></TR>

<TR vAlign=bottom>

   <TD width="23%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">The contractual charges are:</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="23%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="23%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="24%" align=left>&nbsp;</TD></TR>

<TR>

   <TD width="99%" colSpan=7>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="23%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Contract signed in</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="23%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">1996</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="23%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">1997</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="24%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">1998 to 2004</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="99%" colSpan=7>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top width="23%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest rate</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="23%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9.5% p.a.</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="23%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6.5% to 8.0% p.a.</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="24%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6.5% to 8.0% p.a.</FONT>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="99%" colSpan=7>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top width="23%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">During grace period</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="23%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="23%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="24%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" vAlign=top width="23%" align=left>

   <P style="MARGIN-LEFT: 15pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Risk rate</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="23%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1.0% p.a. on amount disbursed</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="23%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1.0% p.a. on amount disbursed</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="24%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">0.6% p. a. or 2% p.a. on </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">outstanding debt balance</FONT>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="99%" colSpan=7>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top width="23%" align=left>

   <P style="MARGIN-LEFT: 18pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Management fee</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="23%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">0.12% p.m. on the contract</FONT>&nbsp;<FONT size=1 face=Georgia>amount</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="23%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2.0% p.a. on amount disbursed</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="24%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1.0% p.a. on amount disbursed or </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">2% p.a. on outstanding balance for </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">contracts entered into in 2003 and </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">2004</FONT></TD></TR>

<TR>

   <TD vAlign=top width="99%" colSpan=7>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top width="23%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">During repayment</FONT></B>&nbsp;<STRONG><FONT size=1>period</FONT></STRONG>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="23%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="23%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="24%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top width="23%" align=center>

   <P style="MARGIN-LEFT: 18pt" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Management fee</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="23%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Difference between installment </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">calculation and a 10.5% p.a. </FONT><FONT size=1 face="Georgia,Times New Roman,Times,serif">rate less the 9.5% p.a. rate</FONT></TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="23%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1.0% on the outstanding balance</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD vAlign=top width="24%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1.0% on the outstanding balance</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="99%" colSpan=7>&nbsp;</TD></TR>

<TR>

   <TD width="99%" colSpan=7>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px"><STRONG><FONT size=2>(ii) Pr&#243;-Sanear Program</FONT></STRONG>&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 1997, 1998 and 2008, contracts were signed under the Pr&#243;-Sanear Program for the improvement of water and sewage services, with the involvement of the communities receiving the services, in several municipalities of the Metropolitan Region of S&#227;o Paulo. The credit facilities are collateralized by the collections of the daily billings of water supply and sewage services up to the total amount of the debt. Repayment will be made in 180 months after the beginning of the repayment period. As of December 31, 2011, the balance was R$14,448 (R$16,752 in December 2010).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The financial charges are:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="2%"></TD>

   <TD width="98%"></TD></TR>

<TR vAlign=bottom>

   <TD width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"><FONT size=2 face="Georgia,Times New Roman,Times,serif">. </FONT></FONT></TD>

   <TD width="98%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">interest rate - 5.0% p.a.;</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"><FONT size=2 face="Georgia,Times New Roman,Times,serif">. </FONT></FONT></TD>

   <TD width="98%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">management fee (grace period) - 2.0% p.a. on debt outstanding balance;</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"><FONT size=2 face="Georgia,Times New Roman,Times,serif">. </FONT></FONT></TD>

   <TD width="98%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">management fee (repayment phase) - 1.0% p.a. on debt outstanding balance;</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"><FONT size=2 face="Georgia,Times New Roman,Times,serif">. </FONT></FONT></TD>

   <TD width="98%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">risk rate (grace period) - 1.0% p.a. on amounts disbursed.</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-128</FONT></P></DIV>

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<A name="page_129"></A><BR>

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<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

</P>

<P></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(iii) Growth Acceleration Program (PAC)</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2007 and 2008, the Company entered into agreements linked to the Universal Water and Sewage Services were entered with several municipalities, with funds from the Government Severance Indemnity Fund for Employees (FGTS). The credits facilities are guaranteed by a monthly flow of the billings corresponding to the minimum of three times the monthly charge. Repayments will be made in 240 months after the beginning of the repayment period. The balance as of December 31, 2011 was R$440,733 (R$250,067 in December 2010).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The financial charges are:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="2%"></TD>

   <TD width="98%"></TD></TR>

<TR vAlign=bottom>

   <TD width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"><FONT size=2 face="Georgia,Times New Roman,Times,serif">. </FONT></FONT></TD>

   <TD width="98%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">interest rate - 6% p.a.;</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"><FONT size=2 face="Georgia,Times New Roman,Times,serif">. </FONT></FONT></TD>

   <TD width="98%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">management fee - 1.05% p.a. during the period of the contract;</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">. </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">risk rate - 0.3% p.a. on the adjusted debt balances.</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Covenants</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">An Agreement for Performance Improvement sets targets for financial indicators (billing losses, revenue evasion, cash and cash equivalents and reduction of the number of days of committed receivables), and operating indicators that, based on the past two years, are annually projected for the following five years.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Noncompliance with 4 of the 8 covenant clauses will accelerate the maturity of the contract.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(d) BNDES</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Contract 01.2.619.3.1 - Entered into in August 2002, totaling up to R$60,000, for the purpose of financing part of the Company's contribution to the Tiet&#234; River Pollution Abatement Project - Stage II, related to loan agreement 1212/OC - BR with the Inter-American Development Bank (IADB). The related project is in progress and the outstanding balance as of December 31, 2011 was R$11,638 (R$20,980 in December 2010).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Contract 10/669.748-6, amounting to R$180,000, is in performance of works stage and the debt balance as of December 31, 2011 was R$29,407 (R$62,941 in December 2010). The funds are onlent from BNDES to the agents and from the latter to SABESP. The onlending agreement has the same purpose as the agreement between BNDES and SABESP, and the same interest and repayment terms, as follows:</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Interest - TJLP limited to 6% p.a., plus a 3% p.a. spread, paid quarterly during the grace period, and monthly in the repayment period. The TJLP portion exceeding 6% p.a. will be added to the debt outstanding balance.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Repayment of borrowings was initiated in September 2005, with monthly payments, and conclusion scheduled for February 2013.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Loans are collateralized by part of revenues from the provision of water and sewage services.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Covenants</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="2%"></TD>

   <TD width="98%"></TD></TR>

<TR vAlign=bottom>

   <TD width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"><FONT size=2 face="Georgia,Times New Roman,Times,serif">. </FONT></FONT></TD>

   <TD width="98%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">Adjusted current ratio: higher than 1.0.</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"><FONT size=2 face="Georgia,Times New Roman,Times,serif">. </FONT></FONT></TD>

   <TD width="98%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">Ebitda/Net Operating Revenue: equal to or higher than 38%.</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"><FONT size=2 face="Georgia,Times New Roman,Times,serif">. </FONT></FONT></TD>

   <TD width="98%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">Total connections (water and sewage)/own employees: equal to or higher than 520.</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"><FONT size=2 face="Georgia,Times New Roman,Times,serif">. </FONT></FONT></TD>

   <TD width="98%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">EBITDA/Debt Service cost: equal to or higher than 1.5.</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"><FONT size=2 face="Georgia,Times New Roman,Times,serif">. </FONT></FONT></TD>

   <TD width="98%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">Equity to Total Liabilities: equal to or higher than 0.8.</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-129</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

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<P></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Noncompliance with covenants will accelerate the maturity of the contract.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company obtained from BNDES the suspension for 13 months of the compliance of covenants as from December 2011.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(e) BNDES Baixada Santista</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In November 2007, the Company entered into a financing agreement with BNDES for the Environmental Recovery Program of the Santos Metropolitan Region, totaling R$129,973 with interest of 2.5% p.a. plus TJLP limited to 6%.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Repayment will be made in 96 monthly, consecutive installments, starting January 2012 to December 2019.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">A portion of the Company's revenue is pledged as guarantee for this financing.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The agreement is in progress and the outstanding balance as of December 31, 2011 was R$130,474 (2010 R$ 130,474).</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(f) Receivables Securitization Fund (FIDC &#8211; SABESP I)</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On March 23, 2006, a single series of senior shares and 26 subordinated shares, held in a deposit account in the name of its holders, were issued with unit value on issue date corresponding to R$ 500. The senior shares are being repaid in 54 monthly installments, starting October 2006, and their final maturity is in March 2011. FIDC was fully repaid in March 2011.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Fund is managed by Caixa Econ&#244;mica Federal and its custodian and recording agent is Banco do Brasil S.A.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The funds raised, totaling R$250 million, were used by the Company to settle debts in 2006.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(g) Leasing</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company has lease agreements signed as Assets Lease. During the construction period, works are capitalized to intangible assets in progress and the lease amount is recorded at the same proportion. Works are estimated to be concluded in June 2013.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">After startup, the lease payment period starts (192 installments), whose amount is periodically restated by contracted price index.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">No work related to these contracts were executed on December 31, 2011.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(h) Eurobonds</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On November 3, 2006, the Company issued Eurobonds abroad (Eurobonds 2016) totaling US$140 million. The issue was led by Deutsche Bank Trust Company Americas and the principal agent was Deutsche Bank Luxembourg S.A. The interest rate is 7.5% p.a., paid semiannually, and maturity is in November 2016. The funds raised were used for the early repayment and partial issue of US$225 million in the Eurobonds, with final maturity in June 2008, and the amount redeemed was US$126,948 thousand.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">As of December 31, 2011 the balance of the Eurobonds was US$140,000 thousand, corresponding to R$262,067, net of issuance costs amounting to R$ 546, that will be amortized during the period of the contract.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Covenants - for Eurobonds 2016.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-130</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

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</P>

<P></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="2%"></TD>

   <TD width="98%"></TD></TR>

<TR vAlign=bottom>

   <TD width="100%" colSpan=2 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">Limit new debt so that:</FONT>&nbsp;</TD></TR>

<TR height=20>

   <TD width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">. </FONT></TD>

   <TD width="98%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">adjusted total debt to EBITDA does not exceed 3.65;</FONT>&nbsp;</TD></TR>

<TR height=20>

   <TD width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="98%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD width="2%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">. </FONT></TD>

   <TD width="98%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">the Company's debt service coverage ratio, determined on the date this debt was incurred, shall not be lower</FONT>&nbsp;<FONT size=2 face=Georgia>than 2.35.</FONT> </TD></TR></TABLE></DIV>

<P style="MARGIN: 0px"><FONT size=2 face="Georgia,Times New Roman,Times,serif"><BR>On December 9, 2010, the Company concluded the international offer to international qualified foreign institutions of its US$350 million senior unsecured notes due 2020, with interest rate is 6.25% p.a., paid semi-annually and due on December 2020 (the Eurobonds 2020). The funds were used for partial repayment of outstanding debts.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">As of December 31, 2011 the balance of the Eurobonds was US$350,000 thousand equivalent to R$649,024, net of issuance costs amounting to R$7,507, that will be amortized during the period of the contract.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Noncompliance with covenants will accelerate the maturity of the contract.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(i) Inter-American Development Bank (IDB)</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Loan Agreement 713 - In December 1992, the Company entered into a loan agreement with the IDB for US$400 million to finance the first stage of the Tiet&#234; River Pollution Abatement Project. The repayment period started in June 1999 in semiannual installments, subject to annual floating rate interest, varying according to the loans raised by the Bank in each six-month period, and final maturity in 2017. In December 1992, the Federal Republic of Brazil signed a guarantee contract with the IDB guaranteeing the funds for the fulfillment of the contractual obligations. The outstanding balance as of December 31, 2011 was US$150,658 thousand, equivalent to R$282,605 (R$ 290,019 in December 2010).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Loan Agreement 896 - In December 1992, the Company entered into a loan agreement with the IDB for US$50 million to finance the first stage of the Tiet&#234; River Pollution Abatement Project. Semiannual repayments started in June 1999, with annual interest of 3% and final maturity in December 2016. In December 1992, the Federal Republic of Brazil signed a guarantee contract with the IDB guaranteeing the funds for the fulfillment of the contractual obligations. The outstanding balance as of December 31, 2011 was US$13,889 thousand, equivalent to R$26,053 (R$ 27,770 in December 2010).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Loan Agreement 1212 - In July 2000, the Company entered into a loan agreement with the IDB for US$200 million to finance the second stage of the Tiet&#234; River Pollution Abatement Project. In 2008, total disbursement for this agreement was US$2,434 thousand and there are no amounts to be disbursed. The loan is being amortized semiannually and final maturity in July 2025. Interest is being paid on a semiannual basis, based on daily balances, at an annual variable rate according to the costs of loans of the Bank in the preceding six-month period, plus a spread, and changes every six months. The debt balance as of December 31, 2011 was US$143,893 thousand, equivalent to R$269,915 (R$256,880 in December 2010).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Loan Agreement 2202/OC-BR &#8211; On September 3, 2010 the Company and the Inter-American Development Bank (Banco Inter-Americano de Desenvolvimento or BID) signed the contract for partially finance the third stage of the Tiet&#234; River Project, denominated the decontamination of the Tiet&#234; river. The total estimated cost of this investment is US$800 million, of which US$600 million will be financed by the IDB and US$200 million will be invested by the Company&#180;s own resources. The final maturity of the loan is in 25 years with 6-year grace period. Interest is based on USD-Libor, calculated every quarter, as stipulated in the IDB rules and procedures.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The 1</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">st </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">disbursement of the agreement executed on September 3, 2010, no. 2202/OC-BR occurred on March 17, 2011. Funds will be used to recover the water quality of Tiet&#234; River basin in the Metropolitan Region of S&#227;o Paulo. The agreement amounts to US$600,000, corresponding to R$977,220, with final maturity in September 2035. The 1</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">st </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">disbursement of US$1,829, corresponding to R$3,044, occurred in the first quarter of 2011.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-131</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

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</P>

<P></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The balance of this agreement on December 31, 2011 was US$78,422 thousand, corresponding to R$145,159, less part of funding costs amounting to R$1,944, which will be repaid over the agreement term.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Covenants</FONT></P>

<P style="TEXT-ALIGN: justify">

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0 cellPadding=0>



<TR>

   <TD vAlign=top width="2%"><FONT size=2 face=Georgia>.</FONT></TD>

   <TD width="98%">

   <P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Loan agreements 713, 896 and 1212 - Tariffs must: (a) produce revenues sufficient to cover the system's operating expenses, including administrative, operating, maintenance, and depreciation expenses; (b) provide a return on property, plant, and equipment no less than 7%; and (c) during project execution, the balances of short-term loans must not exceed 8.5% of total equity.</FONT></P></TD></TR></TABLE></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Noncompliance with covenants will accelerate the maturity of the contract.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(j) Japan Bank for International Cooperation - JICA ("JBIC")</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On August 6, 2004, the Company entered into a financing agreement with the JBIC - Japan Bank for International Cooperation, currently JICA - Japan International Cooperation Agency, guaranteed by the Federal Government, totaling &#165;21,320 million, equivalent to approximately R$337,687, for the Environmental Recovery Program of </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Baima Santista </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">Metropolitan Region. Total financing period is 25 years, with a seven-year grace period and 18 years of repayment in semi-annual installments. Interest is being paid on a semiannual basis since 2006, and is 2.5% p.a. for the sewage network and 1.8% p.a. for sewage treatment facilities.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On February 15, 2011, the Company and JICA (Japan International Cooperation Agency) signed a supplementary loan agreement related to </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Onda Limpa </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">Program &#8211; 1st phase, no. BZ-P 18, amounting to nineteen billion, one hundred, sixty-nine million Yen (&#165; 19,169,000) corresponding to R$375,904 on March 31, 2011. Funds will be applied to execute works and services in the Program of </FONT><I><FONT size=2 face="Georgia-Italic,Times New Roman,Times,serif">Baixada Santista </FONT></I><FONT size=2 face="Georgia,Times New Roman,Times,serif">Metropolitan Region. The agreement term is 18 years and the interest rate vary from 1.8% to 2.5% per annum.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The balance of this loan agreement as of December 31, 2011 was R$958,733 (R$436,978 in December 2010).</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(k) AB Loan (IADB 1983AB)</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On May 27, 2008, the Company entered into a loan agreement AB loan with IDB, totaling US$250 million, which was fully disbursed in June 2008. The funds obtained were used to settle Eurobonds 2008 and to partially perform the Company's investment plan.</FONT></P>

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<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="45%"></TD>

   <TD width="13%"></TD>

   <TD width="1%"></TD>

   <TD width="13%"></TD>

   <TD width="1%"></TD>

   <TD width="13%"></TD>

   <TD width="1%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="100%" colSpan=8 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">The characteristics of this loan agreement are as follows:</FONT></TD></TR>

<TR>

   <TD width="100%" colSpan=8>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=2 width="45%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="13%" align=right><STRONG><FONT size=1>US$ </FONT></STRONG></TD>

   <TD rowSpan=2 width="1%"></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="13%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Repayment from</FONT></B>&nbsp;</TD>

   <TD rowSpan=2 width="1%"></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="13%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Maturity</FONT></B>&nbsp;</TD>

   <TD rowSpan=2 width="1%"></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=2 width="13%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Interest</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">(LIBOR + spread)</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR>

   <TD width="100%" colSpan=8>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="45%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">1983 A</FONT>&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">100.0 million </FONT></TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="13%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">May 2011</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="13%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">May 2023</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="13%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Libor + 2.99%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="45%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">1983 B1</FONT>&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">100.0 million </FONT></TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="13%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">May 2011</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="13%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">May 2020</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="13%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Libor + 2.69%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="45%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">1983 B2</FONT>&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">50.0 million </FONT></TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="13%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">May 2011</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="13%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">May 2018</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="13%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Libor + 2.49%</FONT>&nbsp;</TD></TR></TABLE></DIV>

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<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-132</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

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</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Interest is being paid on a semiannual basis since November 2008. The balance of this loan agreement as of December 31, 2011 was US$226 million, equivalent to R$421,266 (R$431,468 in December 2010), less part of the borrowing costs, totaling R$2,771 (R$3,080 in December 2010), which will be repaid over the agreement term.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(l) Promissory notes</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On May 3, 2010, the Company fully paid the 4</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue of promissory notes.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On August 30, 2010, R$ 600,000 Promissory Notes were issued in the as a bridge loan, related to an advance to the 13</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue of debentures.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The amount obtained from the 13</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue of debentures will be fully used to repay the 60 promissory notes of the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">5</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue of the Company.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The proceeds obtained with the funding through the 13th issue of debentures were allocated to the accelerated redemption of sixty (60) Promissory Notes of the Company&#8217;s 5</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue, with maturity scheduled for February 26, 2011. The 5</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue of promissory notes was fully repaid on January 11, 2011.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(m) International Bank for Reconstruction and Development - BIRD</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On October 28, 2009, the Company and &#8220;The World Bank&#8221; &#8211; International Bank for Reconstruction and Development (IBRD) signed a contract (the IBRD agreement 7662BR) amounting to US$100,000 thousand. On December 31, 2011, the balance of this agreement amounted to US$10,316 thousand, corresponding to R$18,928, less part of borrowing costs in the amount of R$424, which will be repaid over the agreement term.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(n) Covenants</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">As of December 31, 2011 and 2010, the Company had met all the requirements set forth by its loan and financing agreements.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company obtained from BNDES the suspension for 13 months of the compliance of covenants as from December 2011.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-133</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

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</P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="100%" colSpan=9 align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">14 Other Taxes Payable</FONT></B></TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="58%" colSpan=7 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Current</FONT></B></TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Noncurrent</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31,</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31,</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31,</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31,</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">COFINS and PASEP</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">57,073</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">48,149</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">PAES (tax debt refinancing program)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">36,716</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">35,364</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,363</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">53,045</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">INSS (Social Security contribution)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">25,645</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">24,112</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">IRRF (Withholding Income Tax)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">44,172</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">34,572</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">17,516</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">15,853</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">181,122</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">158,050</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,363</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">53,045</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On December 31, 2011 the amount of R$328 (R$282 in December 2010) was consolidated, referring to current tax payable of the investees, totaling R$181,122 (R$158,050 December 2010).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company applied for enrollment in PAES on July 15, 2003, in accordance with Law N</FONT><U><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">o </FONT></SUP></U><FONT size=2 face="Georgia,Times New Roman,Times,serif">10,684 of May 30, 2003, and included in its application the debts related to COFINS and PASEP which were involved in a legal action challenging application of Law 9718/98, and the outstanding balance under the Tax Recovery Program (REFIS). The original amount included in PAES was R$316,953, as follows:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Tax</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Principal</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Fine</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Interest</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Total</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">COFINS</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">132,499</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">13,250</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">50,994</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">196,743</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">PASEP</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,001</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">509</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,061</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,571</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">REFIS</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">112,639</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">112,639</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">250,139</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">13,759</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">53,055</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">316,953</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The loan related to Peas (Special Installment Payment) is being paid in 120 months. The amounts paid in 2011 and 2010 were R$36,091 and R$34,744, respectively, and financial expenses of R$2,761 and R$4,112, respectively, were recorded. The outstanding balance as of December 31, 2011 was R$55,079 (R$88,409 in December 2010). The assets offered as guarantee in REFIS, totaling R$249,034, are still guaranteeing the amounts in the PAES program.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-134</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

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</P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="70%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="100%" colSpan=5 align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">15 Deferred Income Taxes</FONT></B></TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="100%" colSpan=5 align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Breakdown of deferred taxes &#8211; parent company</FONT></B></TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Deferred income tax assets (i)</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Provision for contingencies</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">575,473</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">539,394</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Pension obligations &#8211; G1</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">180,018</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">162,552</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Accounts receivable from related party &#8211; G0</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">85,271</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">85,271</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Donations of underlying assets on concession agreements</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">38,213</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">38,213</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Allowance for loan losses</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">135,223</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">129,248</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">77,175</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">48,568</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total deferred tax assets</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,091,373</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,003,246</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Deferred income tax liabilities (ii)</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Temporary differences of concession intangible assets</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(692,210)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(711,283)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Capitalization of borrowing costs</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(101,507)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(102,339)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Revenue - government entities</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(76,773)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(72,968)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(42,957)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(38,743)</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total deferred tax liabilities</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(913,447)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(925,333)</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Deferred tax asset (liability) in the balance sheet</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">177,926</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">77,913</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Deferred income tax assets (i)</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">To be realized within 1 year</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">259,784</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">281,164</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">To be realized after 1 year</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">831,589</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">722,082</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total deferred tax assets</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,091,373</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,003,246</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Deferred income tax liabilities (ii)</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">To be realized within 1 year</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(27,282)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(13,663)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">To be realized after 1 year</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(886,165)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(911,670)</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total deferred tax liabilities</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(913,447)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(925,333)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Deferred tax asset (liability) in the balance sheet</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">177,926</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">77,913</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<TABLE border=0 cellSpacing=0>



<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=1 face="Georgia,Times New Roman,Times,serif">(i)</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>

   <TD width="98%"><FONT size=1 face="Georgia,Times New Roman,Times,serif">The expectation of the Company&#8217;s management is to realize the deferred income tax assets in 2013, in the same portion of 2012, and the residual amount to be realized in 2014.</FONT> </TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=1 face="Georgia,Times New Roman,Times,serif">(ii)</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>

   <TD width="98%"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Deferred tax liability is expected to be realized in 2013, in the same portion of 2012, and the residual amount to be realized in subsequent years as of 2014.</FONT> </TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">If occur any relevant fact that modify the expectation, the management will review such projections during the year.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-135</FONT></P></DIV>

<HR align=center SIZE=2 width="100%" noShade>



<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

<A name="page_136"></A><BR>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

</P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="70%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="100%" colSpan=5 align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Breakdown of deferred taxes consolidated</FONT></B></TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Deferred income tax assets</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Provision for contingencies</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">575,473</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">539,394</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Pension obligations G1</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">180,018</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">162,552</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Accounts receivable from related party G0</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">85,271</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">85,271</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Donations of underlying assets on concession agreements</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">38,213</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">38,213</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Allowance for loan losses</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">135,223</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">129,248</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">78,717</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">50,108</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total deferred tax assets</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,092,915</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,004,786</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Deferred income tax liabilities</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Temporary differences of concession intangible assets</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(692,210)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(711,283)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Capitalization of borrowing costs</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(101,507)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(102,339)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Revenue - government entities</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(76,773)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(72,968)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(42,962)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(39,756)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total deferred tax liabilities</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(913,452)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(926,346)</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Deferred tax asset (liability) in the balance sheet</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">179,463</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">78,440</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The breakdown in deferred income tax assets and liabilities in 2011 and 2010 are as follows:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="23%"></TD>

   <TD width="1%"></TD>

   <TD width="10%"></TD>

   <TD width="1%"></TD>

   <TD width="10%"></TD>

   <TD width="1%"></TD>

   <TD width="10%"></TD>

   <TD width="1%"></TD>

   <TD width="10%"></TD>

   <TD width="1%"></TD>

   <TD width="10%"></TD>

   <TD width="1%"></TD>

   <TD width="10%"></TD>

   <TD width="1%"></TD>

   <TD width="10%"></TD></TR>

<TR vAlign=bottom>

   <TD width="23%" align=left><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="76%" colSpan=13 align=center><B><FONT style="FONT-SIZE: 7pt" face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="23%" align=left><FONT face="Georgia-Bold,Times New Roman,Times,serif"><STRONG><FONT style="FONT-SIZE: 7pt">Deferred income</FONT></STRONG><FONT style="FONT-SIZE: 7pt">&nbsp;<STRONG>tax assets</STRONG></FONT></FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT face="Georgia-Bold,Times New Roman,Times,serif"><STRONG><FONT style="FONT-SIZE: 7pt">Provision for</FONT></STRONG><FONT style="FONT-SIZE: 7pt">&nbsp;<BR><STRONG>contingencies</STRONG></FONT></FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT face="Georgia-Bold,Times New Roman,Times,serif"><STRONG><FONT style="FONT-SIZE: 7pt">Pension</FONT></STRONG><FONT style="FONT-SIZE: 7pt">&nbsp;<BR><STRONG>obligations G1</STRONG></FONT></FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT face="Georgia-Bold,Times New Roman,Times,serif"><STRONG><FONT style="FONT-SIZE: 7pt">Pension</FONT></STRONG><FONT style="FONT-SIZE: 7pt">&nbsp;<BR><STRONG>obligations G0</STRONG></FONT></FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT face="Georgia-Bold,Times New Roman,Times,serif"><STRONG><FONT style="FONT-SIZE: 7pt">Donations of</FONT></STRONG><FONT style="FONT-SIZE: 7pt">&nbsp;<BR><STRONG>underlying</STRONG>&nbsp;<BR><STRONG>assets on</STRONG>&nbsp;<BR><STRONG>concession</STRONG>&nbsp;<BR><STRONG>agreements</STRONG></FONT></FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT face="Georgia-Bold,Times New Roman,Times,serif"><STRONG><FONT style="FONT-SIZE: 7pt">Loan</FONT></STRONG><FONT style="FONT-SIZE: 7pt">&nbsp;<BR><STRONG>losses</STRONG></FONT></FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><B><FONT style="FONT-SIZE: 7pt" face="Georgia-Bold,Times New Roman,Times,serif">Other</FONT></B><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><B><FONT style="FONT-SIZE: 7pt" face="Georgia-Bold,Times New Roman,Times,serif">Total</FONT></B><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD width="23%" align=left><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">As of December 31,<FONT face="Times New Roman">&nbsp;</FONT>2009</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">541,511</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">177,736</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">85,271</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">35,334</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">47,806</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">39,271</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">926,929</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD width="23%" align=left><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">Credited (charged) to<FONT face="Times New Roman">&nbsp;</FONT>statement of income</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">(2,117)</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">(15,184)</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">-</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">2,879</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">81,442</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">9,297</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">76,317</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD width="23%" align=left><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">As of December 31,<FONT face="Times New Roman">&nbsp;</FONT>2010</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">539,394</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">162,552</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">85,271</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">38,213</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">129,248</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">48,568</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">1,003,246</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD width="23%" align=left><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">Credited (charged) to<FONT face="Times New Roman">&nbsp;</FONT>statement of income</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">36,079</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">17,466</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">-</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">-</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">5,975</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">28,607</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">88,127</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD></TR>

<TR vAlign=bottom>

   <TD width="23%" align=left><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">As of December 31,<FONT face="Times New Roman">&nbsp;</FONT>2011</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">575,473</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">180,018</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">85,271</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">38,213</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">135,223</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">77,175</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD width="1%"><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT style="FONT-SIZE: 7pt" face="Georgia,Times New Roman,Times,serif">1,091,373</FONT><FONT style="FONT-SIZE: 7pt">&nbsp;</FONT></TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="35%"></TD>

   <TD width="1%"></TD>

   <TD width="12%"></TD>

   <TD width="1%"></TD>

   <TD width="12%"></TD>

   <TD width="1%"></TD>

   <TD width="12%"></TD>

   <TD width="1%"></TD>

   <TD width="12%"></TD>

   <TD width="1%"></TD>

   <TD width="12%"></TD></TR>

<TR vAlign=bottom>

   <TD width="35%" align=left><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG>Deferred income tax</STRONG><FONT size=3>&nbsp;</FONT><STRONG>liabilities</STRONG></FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG>Temporary</STRONG><FONT size=3>&nbsp;<BR></FONT><STRONG>differences of</STRONG><FONT size=3>&nbsp;<BR></FONT><STRONG>concession</STRONG><FONT size=3>&nbsp;<BR></FONT><STRONG>intangible assets</STRONG></FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG>Capitalization of</STRONG><FONT size=3>&nbsp;<BR></FONT><STRONG>borrowing costs</STRONG></FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG>Revenue -</STRONG><FONT size=3>&nbsp;<BR></FONT><STRONG>government</STRONG><FONT size=3>&nbsp;<BR></FONT><STRONG>entities</STRONG></FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Other</FONT></B>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Total</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="35%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">As of December 31, 2009</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(721,620)</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(66,507)</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(73,005)</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(22,161)</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(883,293)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="35%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Credited (charged) to<FONT size=3 face="Times New Roman">&nbsp;</FONT>statement of income</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10,337</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(35,832)</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">37</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(16,582)</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(42,040)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="35%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">As of December 31, 2010</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(711,283)</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(102,339)</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(72,968)</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(38,743)</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(925,333)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="35%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Credited (charged) to<FONT size=3 face="Times New Roman">&nbsp;</FONT>statement of income</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,073</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">832</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3,805)</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(4,214)</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">11,886</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="35%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">As of December 31, 2011</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(692,210)</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(101,507)</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(76,773)</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(42,957)</FONT>&nbsp;</TD>

   <TD width="1%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(913,447)</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-136</FONT></P></DIV>

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<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

<!--$$/page=--><A name="page_137"></A><BR>

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<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

</P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="30%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD>

   <TD width="2%"></TD>

   <TD width="8%"></TD></TR>

<TR vAlign=bottom>

   <TD width="30%" align=left>&nbsp;</TD>

   <TD width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="68%" colSpan=13 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=5 width="30%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Deferred income</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">tax assets</FONT></B></TD>

   <TD rowSpan=5 width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Provision for</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">contingencies</FONT></B>&nbsp;</TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Pension</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">obligations G1</FONT></B>&nbsp;</TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Pension</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">obligations G0</FONT></B>&nbsp;</TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Donations of </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">underlying </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">assets on </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">concession </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">agreements</FONT></B></TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Loan</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">losses</FONT></B>&nbsp;</TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Other</FONT></B>&nbsp;</TD>

   <TD rowSpan=5 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=5 width="8%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Total</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD width="30%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">As of December 31,<FONT size=3 face="Times New Roman">&nbsp;</FONT>2009</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">541,511</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">177,736</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">85,271</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">35,334</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">47,806</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">39,271</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">926,929</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="30%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Credited (charged) to<FONT size=3 face="Times New Roman">&nbsp;</FONT>statement of income</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(2,117)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(15,184)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,879</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">81,442</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10,837</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">77,857</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="30%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">As of December 31,<FONT size=3 face="Times New Roman">&nbsp;</FONT>2010</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">539,394</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">162,552</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">85,271</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">38,213</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">129,248</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">50,108</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,004,786</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="30%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Credited (charged) to<FONT size=3 face="Times New Roman">&nbsp;</FONT>statement of income</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">36,079</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">17,466</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,975</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">28,609</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">88,129</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="30%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">As of December 31,<FONT size=3 face="Times New Roman">&nbsp;</FONT>2011</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">575,473</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">180,018</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">85,271</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">38,213</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">135,223</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">78,717</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="8%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,092,915</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=4 width="40%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Deferred income tax </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">liabilities</FONT></B></TD>

   <TD rowSpan=4 width="2%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=4 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Temporary </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">differences of </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">concession </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">intangible assets</FONT></B></TD>

   <TD rowSpan=4 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=4 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Capitalization of </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">borrowing costs</FONT></B></TD>

   <TD rowSpan=4 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=4 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Revenue - </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">government </FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">entities</FONT></B></TD>

   <TD rowSpan=4 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=4 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Other</FONT></B></TD>

   <TD rowSpan=4 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=4 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Total</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">As of December 31, 2009</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(721,620)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(66,507)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(73,005)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(22,161)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(883,293)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Credited (charged) to<FONT size=3 face="Times New Roman">&nbsp;</FONT>statement of income</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10,337</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(35,832)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">37</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(17,595)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(43,053)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">As of December 31, 2010</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(711,283)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(102,339)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(72,968)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(39,756)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(926,346)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Credited (charged) to<FONT size=3 face="Times New Roman">&nbsp;</FONT>statement of income</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">19,073</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">832</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3,805)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3,206)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">12,894</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">As of December 31, 2011</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(692,210)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(101,507)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(76,773)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(42,962)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(913,452)</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Reconciliation of the effective tax rate Parent Company</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The amounts recorded as income and social contribution tax expenses in the financial statements are reconciled to the statutory rates, as shown below:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="70%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Profit before income taxes</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,721,477</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,293,245</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Statutory rate</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">34%</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">34%</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Estimated expenses at statutory rate</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(585,302)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(779,704)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Tax benefits from interest on shareholders' equity</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">122,170</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">131,658</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Permanent differences</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 13px" width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Donations</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(13,692)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(2,820)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 13px" width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other differences</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(21,234)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(11,932)</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Income tax and social contribution</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(498,058)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(662,798)</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Current income tax and social contribution</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(598,024)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(697,077)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Deferred income tax and social contribution</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">99,966</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">34,279</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Effective rate</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">29%</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">29%</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-137</FONT></P></DIV>

<HR align=center SIZE=2 width="100%" noShade>



<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

<A name="page_138"></A><BR>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

</P>

<P></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Transition Tax Regime (RTT)</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">For purpose to calculate the income tax and the social contribution related to 2009 and 2008, the Company opted to adopt the Transition Tax Regime (RTT), which allow eliminate the accounting effects of the Law 11,638/07 and the Provisional Measure 449/08, converted into Law No. 11,941/2009, by the registers in the fiscal books &#8211;LALUR and auxiliary controls, without any modification in the bookkeeping.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011 and 2010 the Company adopted the same fiscal practices adopted in 2009 and 2008, since RTT commenced being obligatory and will be valid till enact new law regulating the fiscal effects over the new accounting practices, reaching the fiscal neutrality.</FONT></P>

<TABLE border=0 cellSpacing=0>



<TR>

   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">16</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Provisions</FONT></B> </TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(a)</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Lawsuits with probable likelihood of loss</FONT></B> </TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company is party to a number of claims and legal proceedings arising in the normal course of business, including civil, tax, labor and environmental matters. Management, based on a jointly analysis with its legal advisors, recognized provisions at an amount considered sufficient to cover probable losses. These provisions, net of escrow deposits based on the legal right to offset, are as follows:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="70%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company and Consolidated</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Customer claims (i)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">618,533</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">659,182</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Supplier claims (ii)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">420,767</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">372,035</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other civil claims (iii)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">178,366</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">167,628</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Tax claims (iv)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">76,448</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">58,658</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Labor claims (v)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">156,536</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">137,232</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Environmental claims (vi)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">121,179</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">65,095</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,571,829</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,459,830</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Current</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">764,070</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">766,603</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Noncurrent</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">807,759</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">693,227</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Changes to the provisions for the year ended December 31, 2011 are shown below:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD>

   <TD width="2%"></TD>

   <TD width="10%"></TD></TR>

<TR vAlign=bottom>

   <TD rowSpan=3 width="40%" align=left></TD>

   <TD rowSpan=3 width="2%" align=left></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31,</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B></TD>

   <TD rowSpan=3 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Additions</FONT></B></TD>

   <TD rowSpan=3 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Payments and</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">reversals</FONT></B></TD>

   <TD rowSpan=3 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Interest and</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">inflation</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">adjustment</FONT></B></TD>

   <TD rowSpan=3 width="2%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" rowSpan=3 width="10%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31,</FONT></B><BR><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Customer claims</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">770,205</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">136,026</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(159,161)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(19,809)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">727,261</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Supplier claims</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">372,889</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10,199</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(483)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">39,990</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">422,595</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other civil claims</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">175,932</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">28,983</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(26,272)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,903</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">188,546</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Tax claims</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">58,658</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,944</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,141)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">11,987</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">76,448</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Labor claims</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">137,232</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">39,126</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(33,938)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">14,116</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">156,536</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Environmental claims</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">65,095</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">81,305</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(25,341)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">120</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">121,179</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Subtotal</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,580,011</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">302,583</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(246,336)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">56,307</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,692,565</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Escrow deposits</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(120,181)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(14,360)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,785</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(4,980)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(120,736)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total</FONT>&nbsp;</TD>

   <TD width="2%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,459,830</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">288,223</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(227,551)</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">51,327</FONT>&nbsp;</TD>

   <TD width="2%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif"></FONT></TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="10%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,571,829</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The total amount paid during the year related to judicial lawsuit was R$197,521 (R$330,256 on December 31, 2010).</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-138</FONT></P></DIV>

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<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

<A name="page_139"></A><BR>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

</P>

<P></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(b) Lawsuits with possible likelihood of loss</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The company maintains lawsuits in course in administrative and judicial levels which are not accrued, as these involve loss risk classified by Management and legal advisors and consultants as possible loss. The contingencies are thus represented:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="70%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company and Consolidated</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Customer claims (i)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">844,100</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">827,500</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Supplier claims (ii)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">699,300</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">606,600</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other civil claims (iii)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">359,600</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">275,200</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Tax claims (iv)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">420,400</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">348,900</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Labor claims (v)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">145,100</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">127,800</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Environmental claims (vi)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">153,300</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">111,900</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,621,800</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,297,900</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(i) Customer claims</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Approximately 1,500 lawsuits were filed by commercial customers, which claim that their tariffs should be equal to the tariffs of another consumer category, and therefore claim the refund of the amounts collected by SABESP. The Company was granted both favorable and unfavorable final decisions at several courts, and recognized a provision when the likelihood of loss is considered probable. The change of R$40.6 million in the lawsuits classified as probable loss (net of escrow deposits) arose from payments made and changes of expectations caused by favorable decisions to the Company in 2011.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(ii) Supplier claims</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Suppliers' claims include claims filed by some construction companies alleging an underpayment of monetary adjustments, withholding of amounts related to the understatement of official inflation rates after the Real economic plan, and the economic and financial imbalance of the agreements. These lawsuits are in progress at different courts and a provision is recognized when the likelihood of loss is considered probable. The R$48.7 million and R$92.7 million increase in lawsuits whose likelihood of loss is considered probable (net of escrow deposits) and possible, respectively, is related to interest, fees and update of lawsuits in progress.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(iii) Other civil claims</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company is a party to several civil lawsuits related to indemnities for property damage, pain and suffering, and loss of profits allegedly caused to third parties. As of December 31, 2011, total accrued amount of R$ 178.4 million (R$ 167.6 million in December 2010) refers to claims with a loss likelihood considered probable. There was an increase both in lawsuits with probable and possible risk of loss, arising from the increase in lawsuits and, also, the levy of monetary adjustment, interest and fees for the year.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(iv) Tax claims</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The provision for tax contingencies refers mainly to issues related to tax collections challenged due to differences in the interpretation of legislation by the Company's legal advisors. The R$71.5 million increase in lawsuits with chances of possible losses is mainly related to the restatement deriving from lawsuits filed by the municipality of S&#227;o Paulo, related to ISS (services tax) collection, as outlined in item &#8220;b&#8221; below.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-139</FONT></P></DIV>

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<!--$$/page=--><A name="page_140"></A><BR>

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<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

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<P></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="3%"></TD>

   <TD width="2%"></TD>

   <TD width="94%"></TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top rowSpan=6 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">(a)</FONT></TD>

   <TD rowSpan=6></TD>

   <TD vAlign=top rowSpan=6 align=left>

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2006, the Federal Revenue Service, by means of a tax execution, audited the Company's compliance with </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">the tax obligations related to income tax and social contribution for calendar year 2001, and recognized taxes </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">payable adjusted through December 31, 2011 in the amount of R$379.3 million (R$357.7 million in </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">December 2010). The Company filed a timely objection and will appeal against the tax assessment at </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">administrative level and in courts. According to its legal advisors, the likelihood of loss of this administrative </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">proceeding is approximately 90% considered remote and 10% possible.</FONT>&nbsp;</P></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR>

   <TD colSpan=3>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top rowSpan=12 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">(b)</FONT></TD>

   <TD rowSpan=12></TD>

   <TD vAlign=top rowSpan=12 align=left>

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">The company filed for a preliminary injunction to challenge the revocation of the tax on service revenue </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">exemption granted by the Municipality of S&#227;o Paulo, under a City Law enacted in 2002. In April 2003, the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">exemption was granted and the tax payment was suspended by an injunction. In May 2005, court rendered </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">its decision rejecting the preliminary injunction. In July 2005, SABESP filed appeal aiming at upholding the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">effectiveness of injunction granted and in January 2012, we were summoned about the publication of court </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">decision that rejected our appeal, and in view of omissions in court decision we filed motion for clarification </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">with modification effect, which is pending judgment. Referring to tax deficiency notices drawn up by the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">municipality of S&#227;o Paulo, aiming the recording of tax credit related to ISS and penalties due to the failure to </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">comply with respective instrument liabilities, an injunction approved in the records of the action for a </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">provisional remedy is still pending judgment, which aims at annulling the administrative decision. As of </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">December 31, 2011, the estimated amount of the claim is R$223.9 million (R$178.7 million in December </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">2010). The Company's legal advisors assessed the likelihood of loss as possible.</FONT>&nbsp;</P></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR>

   <TD vAlign=top colSpan=3>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top rowSpan=4 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">(c)</FONT></TD>

   <TD rowSpan=4></TD>

   <TD vAlign=top rowSpan=4 align=left>

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Federal Revenue Service rejected some offset requests made by the Company for the extinction of </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">IRPJ/CSLL payable, using favorable amounts, arising from undue payments of&nbsp; IRPJ/CSLL, which were paid </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">based on monthly estimates. The amount involved was adjusted through December 31, 2011 and is estimated </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">at R$44.7 million (R$40.9 million in December 2010). Our legal advisors assessed it has a possible loss.</FONT>&nbsp;</P></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR>

   <TD vAlign=top colSpan=3>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top rowSpan=7 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">(d)</FONT></TD>

   <TD rowSpan=7></TD>

   <TD vAlign=top rowSpan=7 align=left>

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company requested an authorization to offset the Corporate Income Tax (IRPJ) and Social Contribution </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">on Net Income (CSLL) of the period of July, August and September 2002 against the amount of IRPJ paid in </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">excess in 1997 and 1998, due to monetary restatement over the financial statements (Law 8.200/91), which </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">was anticipated in 1996 due to an injunction, after excluded by giving up the process and adopted the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">Provisional Measure 38/02. The Administrative Counsel of Fiscal Resources rejected the credit from 1997. </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">The estimated amount is R$41.0 million on December 31, 2011 (R$39.1 million in December 2010). The </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">Company&#180;s legal advisors assessed this claim as a possible loss.</FONT>&nbsp;</P></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR>

   <TD vAlign=top colSpan=3>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top rowSpan=6 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">(e)</FONT></TD>

   <TD rowSpan=6></TD>

   <TD vAlign=top rowSpan=6 align=left>

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">On June 23, 2010, the Company and the municipality of S&#227;o Paulo signed an agreement to provide water </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">supply and sewage services. The negotiation of this agreement led to the extinction of some judicial lawsuits, </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">but others were not part of the referred agreement, and lawsuit proceeds as usual. The remaining judicial </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">lawsuits considered as possible and probable loss are mainly related to taxes and fines. As of December 31, </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">2011 the amounts of such judicial lawsuits were R$27.7 million and R$ 30.6 million (R$22.3 million and R$ </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">27.2 million in December 2010, respectively).</FONT>&nbsp;</P></TD></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR vAlign=bottom></TR>

<TR>

   <TD vAlign=top colSpan=3>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD vAlign=top rowSpan=8 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">(f)</FONT></TD>

   <TD rowSpan=8></TD>

   <TD vAlign=top rowSpan=8 align=left>

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2005, the Federal Revenue Service partially rejected the Company&#180;s request of offsetting tax credits </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">related to the Corporate Income Tax (IRPJ) and the Social Contribution on Net Income (CSLL) in the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">amount of approximately R$56.1 million, and R$8.7 million, respectively, which relate to the period from </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">January to April 2003, for which the Company offset prior year IRPJ and CSLL negative balances. The </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">amounts not ratified by the authority of IRPJ and CSLL are R$11.2 million and R$0.7 million, totaling R$ </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">11.9 million. As the Company obtained a partial favorable decision on this matter, the Company&#180;s legal </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">advisors believe likelihood of loss amounts to R$6.5 million (R$6.2 million in December 2010) and R$ 1.1 </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">million (R$ 1.1 million in December 2010) are possible and probable, respectively.</FONT>&nbsp;</P></TD></TR>

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<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-140</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company filed lawsuits against the Municipalities of Bragan&#231;a Paulista and S&#227;o Paulo due to the collection by these municipalities of a charge on the use of public areas to install the structures used for the water supply and sewage services. In the lawsuit filed against the Municipality of Bragan&#231;a Paulista, the Company granted a preliminary injunction related to this charge which prevents the municipality from any current or future of charge collection until is the Company reach a final court decision on this matter. In June 2005, the Company got a favorable decision of the lower court and the initial remedy was maintained. The municipality appealed against the decision, which has not been decided by the Court of Appeals yet. With respect to the Municipality of S&#227;o Paulo, the Company got a unfavorable decision in the lower court which issued a decision confirming the legality of the municipal charge. The Company filed an appeal and awaits the judgment. Subsequently, a new law was approved regarding the implementation of the collection of a charge on the use of public areas in the Municipality of S&#227;o Paulo. In April 2004, the Company filed an injunction to suspend the collection of the municipal charge. The Company had a favorable decision of the lower court, as the injunction was granted which recognizes the municipal charge as undue. The municipality filed an appeal, which was rejected and awaits the judgment by the Court of Justice. The Company's legal advisors assessed the likelihood of loss on this matter as a possible.</FONT> </P></TD></TR>

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   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(v)</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Labor claims</FONT></B> </TD></TR></TABLE></P>

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<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company is a party to labor lawsuits, involving issues such as overtime, health hazard premium and hazardous duty premium, prior notice, change of function, salary equalization, and other. Part of the amount involved is in provisional or final execution at various court levels, and thus is classified as of probable or possible loss. The Company recognized a provision for claims which likelihood of loss is considered probable.</FONT></P>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">On January 27, 2005, the S&#227;o Paulo Water, Sewage and Environmental Workers' Union ("Sintaema") filed a lawsuit against the Company, claiming compensation for work shifts, which was dismissed by the lower court under Company arguments that Sintaema did not have legitimacy to file such lawsuit. However, the Labor Regional Court overruled this decision favorably to Sintaema and required that the lawsuit returned to the original court for judgment. The Company's appeal to the Superior Labor Court was overruled. The lawsuit returned to the original court and was accepted. The Company appealed but the Labor Regional Court maintained the decision; and filed an appeal with the Superior Labor Court, for which is awaiting judgment.</FONT> <FONT size=2 face=Georgia>The Company's legal advisors assess the likelihood of loss on December 31, 2011 of R$62.6 million (R$55.9 million in December 2010), as probable.</FONT> </P></TD></TR>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">The S&#227;o Paulo Water, Sewage and Environmental Workers' Union ("Sintaema") and other unions, filed a lawsuit against the Company claiming for, among other matters, over time rate at 100% and a 1.5% salary increase over inflation for the years of 2010 and 2011. The Labor Regional Court decided favorably to Sintaema. The Company appealed to the Superior Labor Court to suspend such decision, which was accepted. Currently, the Company awaits the judgment. The Company's legal advisors assess the likelihood of loss on December 31, 2011 of R$11.8 million (R$10.5 million in December 2010), as probable.</FONT> </P></TD></TR></TABLE>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-141</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

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<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(vi) Environmental claims</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The public civil actions to which the Company is party include the following:</FONT></P>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">Public civil action at the Judicial District of Paragua&#231;u Paulista (1</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">st </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">Court of Paragua&#231;u Paulista) seeking for </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">compensation and end of environmental damages allegedly caused by disposal of untreated sewage by the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">Company into the Alegre river, in the municipality of Paragua&#231;u Paulista. The lower court judge ruled against </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">the Company, ordering it to: (a) cease the disposal of untreated sewage into Alegre river; (b) invest in the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">water and sewage treatment system of the municipality of Paragua&#231;u Paulista; (c) pay indemnity for recovery </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">of environmental damages, determined by court at R$168.9 million. The decision also determined that the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">failure to comply with items (a) and (b) above would subject the Company to pay daily fines. The Company </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">has appealed against the decision. On September 21, 2006, the S&#227;o Paulo State Court of Justice rejected the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">Company s appeal. A settlement was entered into with the Public Prosecution Office, in the amount of </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">R$42.7 million, with a 54-month term for the execution of the works, R$34 million referring to the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">compensation for environmental damages. Certain issues regarding compliance with the terms of the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">commitments assumed in the agreement are under discussion. Accordingly, the Company s legal advisors </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">assessed the likelihood of loss as probable. The amount accrued for this claim is R$43.7 million (R$15 </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">December 2010).</FONT></P></TD></TR>

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   <TD vAlign=top rowSpan=8 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">(b)</FONT></TD>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">Public civil action filed by the Public Prosecution Office against SABESP, which result was unfavorable. </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp was condemned to: (i) stop disposing untreated sewage in the fluvial system, a under a penalty of R$ </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">150 for each illegal act; ii) invest in water supply and sewage treatment system in the municipality of Guarei, </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">considering that all necessary actions to have water supply and sewage treatment system concluded in 180 </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">days, under a penalty of R$100 in case of default; 3) indemnify for damages caused to the environment, to be </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">calculated in court decision. Sabesp filed an appeal and awaits the decision. As of December 31, 2011, the&nbsp;</FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">mount provisioned for this claim was R$38.4 million (R$4.4 million in December 2010). The Company's </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">legal advisors' assessed the likelihood of loss as probable.</FONT>&nbsp;</P></TD></TR>

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   <TD vAlign=top rowSpan=14 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">(c)</FONT></TD>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">Public civil action filed by the Public Prosecution Office against SABESP and the City of Cotia seeking </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">individual and joint sentencing of the defendants to: (i) the termination of untreated water effluents </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">discharges into the Cotia River or its tributaries, subject to a daily fine in the case of noncompliance; (ii) the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">treatment of sewage prior to discharging it into the Cotia River, subject to a daily fine, in the event of&nbsp;</FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">oncompliance; (iii) the full restoration of soil, of surface and underground water bodies and of vegetation to </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">their original condition, subject to a daily fine, in the event of noncompliance; and (iv) the payment of </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">compensation for environmental damages caused to soil, to water sources and to underground and surface </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">water bodies that cannot be recovered. The appellate court rendered favorable decisions to us with respect to </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">items (i), (iii) and (iv) above. According to evaluations by the court's technical expert, on October 17 2006,</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">compensation for environmental damages was R$827 or, alternatively, R$5.8 million, if the Company </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">includes the damages caused to the river banks (Cotia river). This amount is still under discussion and its </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">approval is subject to a final decision by a lower court. As of December 31, 2011, the restated amount of the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">expert's report is R$11.6 million (R$10.7 million in December 2010). The Company's legal advisors' assessed </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">the likelihood of loss as probable.</FONT>&nbsp;</P></TD></TR>

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<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-142</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

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   <TD vAlign=top rowSpan=11 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">(d)</FONT></TD>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">The municipal government of &#193;guas de S&#227;o Pedro filed a Public Civil Action against SABESP aiming at </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">sentencing the Company to execute the necessary works and services to remove the direct discharge of </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">sewage near a green area, headwaters and Pantanal lake, located on Pinheiros Street in the municipality of&nbsp; </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">&#193;guas de S&#227;o Pedro. This claim is also includes, indemnities due to environmental damages and attorney's </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">fees. The Company got a favorable decision of the lower court. The Company got an unfavorable decision of </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">the Court of Justice and SABESP had 180 days to implement the necessary services to treat the regions </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">sewage before disposing it in streams, providing appropriate studies supported by environmental technical </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">rules, re-establishing the daily fine of R$5. Motions for clarification have been filed and rejected. SABESP </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">appealed to this decision. The amount of the daily fine calculated on December 31, 2011 totaled R$2.0 </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">million (R$14.0 million in December 2010), amount of which was decreased as calculation of daily fine </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">changed. The Company s legal advisors assessed the likelihood of loss as probable.</FONT>&nbsp;</P></TD></TR>

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   <TD vAlign=top rowSpan=16 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">(e)</FONT></TD>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">A public civil action filed by the Public Prosecution Office against SABESP which result was unfavorable. </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">Sabesp was condemned to: (i) stop disposing untreated sewage in the S&#227;o Sebasti&#227;o s canal before getting the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">operating and inspection licenses, under a penalty of R$100 thousands per day; ii) obligation to prepare and </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">maintain the operation of the EPC (Pre-conditioning station) Ara&#231;&#225; with the respective operating and </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">inspection licenses, under a penalty of R$ 100 thousands per day; iii) stop disposing untreated domicile </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">sewage in the S&#227;o Sebasti&#227;o s canal; iv) comply with all requirements of the inspection and operating </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">licenses, including the requirements from CETESB; v) pay indemnity of R$50 million regarding </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">environmental damages. The Company must present to the court the operating and inspection licenses of&nbsp;</FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">ra&#231;&#225; in 6 months, under a penalty of R$ 100 thousands per day. The Company must also contract an expert </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">to prepare an environmental study, in 30 days for inspection and collection of samples from S&#227;o Sebasti&#227;o </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">channel along with diffuser of marine outfall of Ara&#231;&#225; and beaches 8 km at south and north, beyond the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">mangrove, where besides water quality that shall be analyzed as to sediments, auditors warns about the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">existence of concentrated fecal coliforms, monthly reports to the court, which shall be referred to as&nbsp; </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">independent auditor s report. This action is commencing and the Company awaits the judgment in lower </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">court. As of December 31, 2011, this claim amounted to R$123.4 million (R$78.1 million in December 2010). </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company's legal advisors' assessed the likelihood of loss as possible.</FONT>&nbsp;</P></TD></TR>

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   <TD vAlign=top rowSpan=7 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">(f)</FONT></TD>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">Public civil action filed by the S&#227;o Paulo Public Prosecution Office against SABESP and the Municipality of </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">Piracaia seeking conviction of the defendants for the obligation not to discharge untreated household sewage </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">into the Atibaia river, which is not in compliance with the quality standards provided for in law, under the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">penalty of specific execution or a daily fine. This lawsuit is awaiting ruling at the lower courts, however, as </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">the interlocutory appeal was granted, the amount of this action changed from R$3.5 million to R$100. As of </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">December 31, 2011, the restated amount of this lawsuit is R$ 262 (R$9.6 million in December 2010). The </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">Company's legal advisors assessed it as a possible loss.</FONT>&nbsp;</P></TD></TR>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company is a party to other environmental lawsuits in municipalities where it operates, arising from the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">discharge of untreated waste, assessed as probable and possible risks of loss by its legal advisors. The </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">amounts recognized as provisions do not always represent the final amount to be disbursed as indemnity of </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">alleged damages, in view of the current stage in which the such lawsuits are and management's ability to </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">reasonably estimate the amounts of future disbursements. As of December 31, 2011, total accrued amount </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">represents the R$121.2 million (R$65.1 million in December 31, 2010), already including the amounts </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">referred to in items (a), (b), (c) and (d).</FONT>&nbsp;</P></TD></TR>

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<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-143</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

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<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(vii) Settlements reached in 2011</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011 the Company reached several settlements, which were accrued, related to environmental issues, as follows:</FONT></P>

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   <TD vAlign=top align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">&#193;guas de Santa B&#225;rbara</FONT>&nbsp;</TD></TR>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">On August 5, 2011, the Company and the Municipality of &#193;guas de Santa B&#225;rbara signed a judicial agreement </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">with the Justice Department of the municipality of Cerqueira C&#233;sar for the execution of works necessary for&nbsp; </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">the previous treatment of all domestic sewage collected in the municipality of &#193;guas de Santa B&#225;rbara, </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">environmental compensation and mapping of the municipality s riparian forests, as well as those to be </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">recovered. The estimated investment in the Water Treatment Station is R$6.1 million and the estimated cost </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">of the forest recovery is R$ 200.</FONT>&nbsp;</P></TD></TR>

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   <TD vAlign=top align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">Campos do Jord&#227;o</FONT>&nbsp;</TD></TR>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">On July 11, 2011, the Company and the Justice Department of the municipality of Campos do Jord&#227;o signed a </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">judicial agreement for the execution of construction works for the Campos do Jord&#227;o Sewage Treatment </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">Station, estimated at R$108.7 million, and indemnify for eventual environmental damages that may or may </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">not be remedied and in relation to the daily fine determined in court decision: forest recovery, estimated at </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">R$850, environment center, estimated at R$440, and anticipation of works, estimated at R$41 million.</FONT>&nbsp;</P></TD></TR>

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   <TD vAlign=top align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">Mococa</FONT>&nbsp;</TD></TR>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Consent Decree entered into on May 3, 2011 between the S&#227;o Paulo State Public Prosecution Office - </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">GAEMA Ribeir&#227;o Preto and SABESP for the execution of sanitary sewage system works in the municipality of </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">Mococa and in the District of Igara&#237;, estimated at R$2.9 million.</FONT>&nbsp;</P></TD></TR>

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   <TD vAlign=top colSpan=3 align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(viii) Other concession-related legal proceedings</FONT></B>&nbsp;</TD></TR>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">On March 25, 2005, the municipality of Itapira approved a decree that revokes the concession contract. In </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">addition, a municipal law was enacted which revokes previous law which authorized the municipality to </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">execute an agreement with SABESP. The municipality filed an Asset Repossession Action against Sabesp </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">seeking to take back the ownership of all reversible assets, rights and privileges transferred within the scope </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">of water supply and sewage collection services and was granted an injunction, which was subsequently </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">ratified by court decision. SABESP filed appeal and subsequently discontinued the lawsuit due to the filing of </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">action for damages against said municipality, which is in progress, with expectations of possible favorable </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">decision.</FONT>&nbsp;</P></TD></TR>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">The municipality of Cajobi has filed a Repossession Action that seeks the takeover the water supply and </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">sewage services, and sentencing the Company to pay for losses and damages for amounts received as water </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">and sewage tariffs not received in view of utilities explored since the enactment of the Municipal Decree, and </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">for the use of assets related to the concession. The court decision confirmed the Municipality's takeover of </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">the water and sewage services. On August 25, 2008, SABESP filed an appeal that awaits judgment. The </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">Municipality provides water supply and sewage collection services since May 29, 2007 under injunction </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">granted in the interlocutory appeal. SABESP filed an injunctive relief of anticipated discovery to calculate the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">amount to be paid by the municipality, which is under expert s examination phase, to subsequently file an </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">action for damages, with chances of a favorable decision.</FONT>&nbsp;</P></TD></TR>

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<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-144</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">The City of Ara&#231;oiaba da Serra filed a Repossession Action seeking an authorization to enter concession-</FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">related facilities, including all properties and chattels linked to the water supply and sewage treatment </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">services. The Municipality is now managing and operating these services in view of the termination of the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">concession agreement on September 23, 2006. The Municipality also claims the definitive takeover of the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">services, including due handover of all assets, rights and privileges previously transferred to SABESP. The </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">initially granted injunction and confirmed by the appellate court maintain the Municipality as the service </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">provider. The Company has subsequently filed for an injunction to request the early production of evidence. </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">The lawsuit is in the fact-finding phase, with chances of possible losses.</FONT>&nbsp;</P></TD></TR>

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   <TD vAlign=top rowSpan=9 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">(d)</FONT></TD>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">On July 2, 2010, the City of Tarum&#227; filed a writ of prevention related to all assets related to the collection, </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">treatment and water supply and sewage services systems. Initially, the court had granted injunction, decision </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">of which was subsequently reviewed, reason that on January 19, 2011 the Company restarted its operation in </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">this municipality by a court decision. Through another writ of prevention preceding this, which aimed the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">municipality of Tarum&#227; on injunction, the register of existing assets and used in the execution of water and </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">sewage services rendered in that municipality, determining that these assets are under its custody until </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">settlement of any indemnity on behalf of SABESP. By injunction decision, the assets will be under&nbsp; Sabesp&#180;s </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">custody due to eventual liquidation of the indemnity to Sabesp. Both lawsuits are under discovery/hearing </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">phase and await final decision, and their chances are classified as possible and remote, respectively.</FONT>&nbsp;</P></TD></TR>

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   <TD vAlign=top rowSpan=8 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">(e)</FONT></TD>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">In December 2, 1997, the municipality of Santos enacted a law expropriating the Company's water and </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">sewerage mains in Santos. The Company requested an injunction against the expropriation which was denied </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">by the lower court. This decision was subsequently reversed by the State of S&#227;o Paulo appellate court, which </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">then issued an injunction suspending the law. The Company was granted a favorable decision at the lower </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">court, and the municipality of Santos appealed against the decision. Although the decision was maintained by </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">the Court of Justice, it is not final. Despite the pending action, the Company is operating the water supply </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">and sewage collection systems in the municipality of Santos. The chances of this lawsuit are of probable&nbsp; </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">success.</FONT>&nbsp;</P></TD></TR>

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   <TD vAlign=top rowSpan=13 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">(f)</FONT></TD>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">The municipality of Tuiuti has brought a declaratory action seeking to recognize the inexistence of any </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">judicial or legal grounds to justify our permanence as the provider of water supply and sewage services in the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">municipality of Tuiuti, and the subsequent taking over of these services by the municipality. The Company </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">responded with a counterclaim against the municipality seeking a statement corroborating the existence of a </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">legal relationship between the two parties for subsequent compensation for investments made. The lower </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">court decision was partially unfavorable to SABESP as it declared that there was no legal relationship </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">between the Municipality and SABESP relate to the service concession and confirmed the injunction </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">authorizing the takeover of the services. However, the court's decision was favorable to the counterclaim filed </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">by SABESP and sentenced the Municipality to pay R$541, restated from March 1996. The Company filed an </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">appeal on July 22, 2009. On the other hand, the Municipality also filed an appeal. The State Appellate Court </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">partially agreed with Sabesp to increase the indemnity to R$1.1 million (December/1995). SABESP is not </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">operating in this municipality as required by injunction granted to the Municipality. Referring to </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">counterclaim, the expectation is of probable success.</FONT>&nbsp;</P></TD></TR>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">On January 12, 2001, the Company filed an ordinary action against the municipality of Presidente Prudente </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">for the purpose of recognizing the contractual right to maintain Sabesp as the sanitation service until the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">legal and formal cancellation of the contract, including the respective indemnity, which recognizes the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">abusive and illegal the acts of the municipality. The Company still provides sanitation service in Presidente </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">Prudente by force of a court decision that ensured it the right to continue operating the concession until the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">previous payment of compensation, with a remote likelihood of loss.</FONT>&nbsp;</P></TD></TR>

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   <TD vAlign=top rowSpan=5 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">(h)</FONT></TD>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">On March 15, 2011, SABESP filed a Repossession Action against the municipality of &#193;lvares Florence, seeking </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">on an injunction basis to regain the possession of the affected facilities to the concession, including all the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">properties and assets related to water supply and sewage services, resuming management, operation and </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">exploration of said services in view of the forced repossession by the municipality after the end of the </FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">agreement. It pleads the final repossession, ensuring the continuance of sanitation services. The injunction</FONT>&nbsp;<FONT size=2 face="Georgia,Times New Roman,Times,serif">was initially granted and subsequently reversed by the Court of Justice through an interlocutory appeal to maintain the municipality as the service provider. Currently, this lawsuit relies on lower court decision unfavorable to SABESP and an appeal is pending judgment, with chances of success.</FONT></P></TD></TR>

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<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-145</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">On August 19, 2011, SABESP filed a Repossession Action against the municipality of Macatuba, seeking on an injunction basis to regain the possession of the affected facilities to the concession, including all the property and assets related to water supply and sewage services, resuming management, operation and exploration of said services in view of the end of the agreement. The injunction was denied and up to date SABESP has not resumed operations in this municipality. The lawsuit is awaiting a lower court decision. SABESP has also filed ordinary proceedings cumulated with imposition of fine sentencing the municipality to pay indemnity for amounts of investments linked to reversible assets not yet amortized or depreciated, which is under services of process, with a possible chances of success.</FONT> </P></TD></TR>

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   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">After the expiration of the Concession Contract of the municipality of Iper&#243;, it has filed an administrative request to resume services. On December 30, 2009, SABESP filed a Repossession Action to maintain the possession of services until the payment of indemnity, initially obtaining an injunction granting the Company the maintenance of possession. This same injunction was subsequently revoked by the lower court.</FONT> </P>

   <P align=justify><FONT size=2 face="Georgia,Times New Roman,Times,serif">An interlocutory appeal was filed, but did not change the outcome. The municipality is providing the services. The Repossession Action was denied and currently awaits the judgment of the appeal. Concurrently, SABESP has also filed an injunctive relief of anticipated discovery, where an injunction was granted only to list the assets composing the services rendered, which is under expert&#8217;s examination, with chances of remote success.</FONT> </P></TD></TR>

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   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">17</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Employee Benefits</FONT></B> </TD></TR>

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   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(a)</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Health benefit plan</FONT></B> </TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The health benefit plan is managed by Funda&#231;&#227;o SABESP de Seguridade Social - SABESPREV and consists of optional, free choice, health plans sponsored by contributions of SABESP and the active participants, as follows:</FONT></P>

<P><FONT size=2 face="Georgia,Times New Roman,Times,serif">.&nbsp;&nbsp; Company - 7.5% (December 31, 2010 - 7.6%) on average, of gross payroll;</FONT></P>

<P><FONT size=2 face="Georgia,Times New Roman,Times,serif">.&nbsp;&nbsp; Participating employees - 3.21% of base salary and premiums, equivalent to 2.2% of gross payroll, on average.</FONT></P>

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   <TD width="100%" colSpan=5 align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(b) Pension plan benefits</FONT></B></TD></TR>

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   <TD width="100%" colSpan=5 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">The amounts recognized in the balance sheet are determined as follows:</FONT></TD></TR>

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   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Funded plan - G1</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Present value of defined benefit obligations</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,638,220</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,572,933</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Fair value of plan assets</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,203,493)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,113,189)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Unrecognized actuarial gains (losses)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">103,892</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">27,588</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Net liabilities recognized for defined benefit obligations</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">538,619</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">487,332</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Unfunded plan - G0</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Present value of defined benefit obligations</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,581,600</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,638,036</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Unrecognized actuarial gains (losses)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(69,522)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(321,330)</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Net liabilities recognized for defined benefit obligations</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,512,078</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,316,706</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Liability as per balance sheet - Pension obligations</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,050,697</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,804,038</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-146</FONT></P></DIV>

<HR align=center SIZE=2 width="100%" noShade>



<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

<!--$$/page=--><A name="page_147"></A><BR>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

</P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Plan G1</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company sponsors a defined benefit pension plan for its employees ("Plan G1"), which is managed by Funda&#231;&#227;o SABESP de Seguridade Social - SABESPREV, the defined benefit pension plan is sponsored by monthly contributions as follows: 2.10% from the Company and 2.3% from the participants.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">As of December 31, 2011, SABESP had a net actuarial liability of R$538,619 (R$487,332 on December 31, 2010) representing the difference between the present value of the Company's defined benefit obligations to the participating employees, retired employees, and pensioners; the fair value of the related assets; and unrecognized actuarial gains.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Changes in the present value of defined benefit obligation for 2011 and 2010 are as follows:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="70%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Defined benefit obligation, beginning of year</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,572,933</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,422,993</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Service cost</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">26,869</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">27,200</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest cost</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">158,069</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">152,470</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Actuarial (gain) losses</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(57,583)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">222,510</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Curtailment</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(195,561)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Benefits paid</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(62,068)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(56,679)</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Defined benefit obligation, end of year</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,638,220</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,572,933</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="85%" colSpan=3 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">Changes in the fair value of plan assets over the year are as follows:</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Fair value of plan assets, beginning of year</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,113,189</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,123,695</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Expected return on plan assets</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">111,307</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">122,630</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Actuarial gain or loss</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,805</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">28,318</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Company's contributions</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,853</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">13,835</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Employees' contributions</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">13,407</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">15,574</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Curtailment</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(134,184)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Benefits paid</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(62,068)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(56,679)</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Fair value of plan assets, end of year</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,203,493</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,113,189</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="85%" colSpan=3 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">The amounts recognized in the statement of income are as follows:</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Current service cost</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">26,869</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">27,200</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest cost</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">158,069</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">152,470</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Expected return on plan assets</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(111,307)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(122,630)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Gain or loss amortization</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(10,397)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Curtailment</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(61,377)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Gain not recognized of curtailment</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(15,266)</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">73,631</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(30,000)</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-147</FONT></P></DIV>

<HR align=center SIZE=2 width="100%" noShade>



<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

<A name="page_148"></A><BR>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011, the gain of the curtailment, net of the expenses related to the defined benefit obligation under Plan G1 was recorded in the statement of income R$56,613 in cost of sales and services, R$8,928 in Selling expenses and R$8,090 in Administrative expenses. In 2010, the expenses related to defined pension plan amounting to R$ 24,314, R$3,547 and R$2,139, was recorded in cost of sales and services, Selling expenses and Administrative expenses, respectively.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Curtailment</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">As of July, 2010, aiming at resolving the deficit related to the Defined Benefit Plan (G1), SABESP and SABESPREV have structured a process through which the participants may elect to move from the Defined Benefit Plan to a Defined Contribution Plan, the SABESPREV Mais.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The migration from plan G1 to Sabesprevmais resulted in actuarial gain, related to proportional part of the employees who migrated, determined by the present value of the assets and liabilities of the pension plan. The Company recognized gain related to curtailment and partial payment of the present value of the defined benefit pension plan and the fair value of the plan assets, amounting to R$61,377. The Company also recognized prior actuarial gains amounting to R$15,266.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The period for the plan migration (from July to November 2010) was suspended through an injunctive relief granted by the Court of Justice of the State of Sao Paulo, on October 20, 2010 until the claims from the parties involved are taken into consideration. Up to October 20, 2010, 4,023 employees, which corresponded to 26.0% of G1 Plan participants, migrated to Sabesprev Mais.</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="70%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="70%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Expected expenses</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2012</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Current service cost</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">27,764</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest cost</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">176,762</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Expected return on plan assets</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(147,550)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total additional expenses</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">56,976</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="100%" colSpan=5 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">The principal actuarial assumptions used were as follows:</FONT></TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Discount rate &#8211; real</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5.75% p.a.</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6.0% p.a.</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Inflation rate</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5.00% p.a.</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4.0% p.a.</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Expected rate of return on assets</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">12.53% p.a.</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10.2% p.a.</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Future salary increase</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7.10% p.a.</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6.1% p.a.</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The mortality table used in the 2011 calculation was AT-2000 (AT 83 redressed at 10% in 2010). This change did not have a relevant effect and change occurred as it adheres to the plan&#8217;s population.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The 5.75% actuarial discount rate in 2011 (6.0% in 2010) is compatible with federal bonds (NTN-B).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The number of active participants as of December 31, 2011 was 9,833 (10,444 on December 31, 2010). The number of inactive participants as of December 31, 2011 was 5,936 (5,579 on December 31, 2010).</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-148</FONT></P></DIV>

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<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

</P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Sensitivity analysis of the pension plan as of December 31, 2011 regarding the changes in the main assumptions are:</FONT></B></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="33%"></TD>

   <TD width="34%"></TD>

   <TD width="33%"></TD></TR>

<TR vAlign=bottom>

   <TD width="33%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Funded plan - G1</FONT></B>&nbsp;</TD>

   <TD width="34%" align=left>&nbsp;</TD>

   <TD width="33%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%" align=left>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="34%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Change in expectation</FONT></B>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Impact on liability</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="33%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Discount rate</FONT>&nbsp;</TD>

   <TD width="34%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Increase of 0.5%</FONT>&nbsp;</TD>

   <TD width="33%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Decrease of 6.19%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%" align=left>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="34%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Decrease of 0.5%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Increase of 6.87%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="33%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Wages increase rate</FONT>&nbsp;</TD>

   <TD width="34%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Increase of 0.5%</FONT>&nbsp;</TD>

   <TD width="33%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Increase of 2.73%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%" align=left>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="34%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Decrease of 0.5%</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Decrease of 2.46%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Life expectation</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="34%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Increase of 1 year</FONT>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Increase of 1.36%</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Plan assets</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The plan's investment policies and strategies are aimed to reduce investment risk through diversification, considering such factors as the liquidity needs and funded status of plan liabilities, types and availability of financial instruments in the local market, general economic conditions and forecasts as well as requirements under the law. The plan's asset allocation and external asset management strategies are determined with the support of reports and analysis prepared by SABESPREV and independent financial consultants. Under its allocation strategy, pension assets of the Company are comprised as follows:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="70%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Allocation - %</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="70%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Asset category</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">69%</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">72%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Fixed rate securities</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">26%</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">21%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Equity securities</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3%</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Real estate</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2%</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">100%</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">100%</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Restrictions with respect to asset portfolio investments, in the case of federal government securities for internal management:</FONT></P>

<TABLE border=0 cellSpacing=0>



<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">i)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">papers securitized by the National Treasury will not be permitted;</FONT> </TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">ii)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">exposure to fluctuations in exchange rates will not be permitted, i.e., if there are any exchange bills in the&nbsp;</FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">portfolio, swaps must be used to hedge existing exposure.</FONT></TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Restrictions with respect to asset portfolio investments, in the case of variable-income securities for external management, are as follows:</FONT></P>

<TABLE border=0 cellSpacing=0>



<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">i)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">day-trade operations will not be permitted;</FONT> </TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">ii)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">sale of uncovered share is prohibited;</FONT> </TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">iii)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">swap operations without guarantee are prohibited;</FONT> </TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=2 face="Georgia,Times New Roman,Times,serif">iv)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">leverage will not be permitted, i.e., operations with derivatives representing leverage of asset or selling short,&nbsp;</FONT><FONT size=2 face="Georgia,Times New Roman,Times,serif">such operations cannot result in losses higher than invested amounts.</FONT></TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">SABESPREV does not invest in stock or bonds issued by the Company on December 31, 2011. The real estate held in the portfolio is not used by the Company.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The plan assets had a return of 14.9% in 2011 and 13.4% in 2010.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The expected long-term rate of return on plan assets was determined based on the weighted average estimated return of the plan assets, which includes fixed rate securities, equity securities, real estate, and loans. This projected long-term rate includes the projected long-term inflation rate and takes into consideration such factors as projected future interest yield curves and economic projections available in the market.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-149</FONT></P></DIV>

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<!--$$/page=--><A name="page_150"></A><BR>

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<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company expects contributions to Plan G1 for the year ending December 31, 2012 in the amount of 11,018.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">SABESPREV's technical deficit as of December 31, 2011 was R$506,431 (R$437,652 in December 2010). The Company and the SABESPREV are in process of negotiation to resolve the technical deficit, by changing the pension plan from a Defined Benefit Plan to Defined Contribution Plan. Management expects not to incur in additional material costs resulting from the change of the referred plans.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(i) Pension plan &#8211; Defined Contribution</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On December 31, 2011, after the migration of the participants, the Defined Contribution Plan remained with 4,452 participants.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">With respect to the defined contribution pension plan, the contributions from the sponsor represent 100% over the total basic contribution from the participants.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Regarding the Defined Contribution Plan, the commitment to all participants who migrated up to December 31, 2011, as per the actuarial report, amounted to R$14,688 referred to active participants. The Company has made payments in the amount of R$10,241 in 2011 (R$13,256 in December 2010).</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(ii) Plan G0</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company is also co-obligor to a supplemental defined benefit pension plan. Pursuant to Law 4,819/58, employees who provided services prior to May 1974 and were retired as an employee of the Company acquired a legal right to receive supplemental pension payments, which rights are referred as "Plan G0". The Company pays these supplemental benefits on behalf of the State Government and makes claims for reimbursements from the State Government, which are recorded as accounts receivable from shareholder, limited to the amounts considered virtually certain that will be reimbursed by the State Government. As of December 31, 2011, the Company recorded a defined benefit obligation for Plan G0 of R$1,512,078 (R$1,316,706 in December 2010).</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="70%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="85%" colSpan=3 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">Changes in the present value of defined benefit obligation over the year:</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Defined benefit obligation, beginning of year</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,316,706</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,299,761</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest cost</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">319,793</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">135,353</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Benefits paid</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(124,421)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(118,408)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Defined benefit obligation, end of year</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,512,078</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,316,706</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="85%" colSpan=3 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">The amounts recognized in the statement of income are as follows:</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Current service cost</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">548</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest cost</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">161,718</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">135,344</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Amortization (gains)/losses</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">157,527</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">319,793</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">135,353</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-150</FONT></P></DIV>

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<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

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<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In 2011 and 2010, the expense related to the defined benefit obligation under Plan G0 was recorded in administrative expenses.</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="70%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="70%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Expected expenses</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2012</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Current service cost</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">400</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest cost</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">167,387</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total additional expenses</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">167,787</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">The principal actuarial assumptions used:</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Discount rate &#8211; real</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5.75% p.a.</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6.00% p.a.</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Inflation rate</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5.00% p.a.</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4.00% p.a.</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Future salary increase</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7.10% p.a.</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6.10% p.a.</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The mortality table used in the 2011 calculation was AT-2000 (AT 83 redressed at 10% in 2010). This change did not have a relevant effect and this change occurred as it adheres to the plan&#8217;s population.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The 5.75% actuarial discount rate in 2011 (6.0% in 2010) is compatible with federal bonds (NTN-B).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The number of active participants of Plan - Go as of December 31, 2011 was 36 (62 on December 31, 2010). The number of beneficiaries, retirees and survivors as of December 31, 2011 was 2,259 (2,474 on December 31, 2010).</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The benefit payable from the Go pension plan expected for 2012 is R$133,635.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">The sensitivity analysis of total liabilities of pension plans on December 31, 2011 to the changes in the main weighted assumptions is:</FONT></B></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="56%"></TD>

   <TD width="2%"></TD>

   <TD width="20%"></TD>

   <TD width="2%"></TD>

   <TD width="20%"></TD></TR>

<TR vAlign=bottom>

   <TD width="56%" align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Plan &#8211; G0</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="20%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Change in expectation</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="20%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Impact on liability</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="56%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Discount rate</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="20%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Increase of 0.5%</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="20%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Decrease of 4.47%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="56%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="20%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Decrease of 0.5%</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="20%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Increase of 4.86%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="56%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Wages increase rate</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="20%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Increase of 0.5%</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="20%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Increase of 0.02%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="56%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="20%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Decrease of 0.5%</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="20%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Decrease of 0.02%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="56%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Life expectation</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="20%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Increase of 1 year</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="20%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">Increase of 1.88%</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="56%" align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(c) Profit sharing</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="20%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="20%" align=left>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company has a profit sharing program in accordance with an agreement with labor union and Sabesp. The period covered represents the Company fiscal year, commence in January to December. The limit of the profit sharing is one month salary for each employee, depending on performance goals reached. As of December 31, 2011 the profit distribution accrued amounted to R$56,576 (R$ 52,600 in 2010).</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-151</FONT></P></DIV>

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<A name="page_152"></A><BR>

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<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

<BR>

<TABLE border=0 cellSpacing=0>



<TR>

   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">18</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Equity</FONT></B> </TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(a)</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Authorized capital</FONT></B> </TD></TR></TABLE></P>

<P></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company is authorized to increase capital by up to R$10,000,000, based on a Board of Directors' resolution, after submission to the Fiscal Council.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(b) Subscribed and paid-in capital</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Subscribed and paid-in capital is represented by 227,836,623 registered common shares, without par value, held as follows:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31, 2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG>Number of </STRONG><STRONG>shares</STRONG></FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">%</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif"><STRONG>Number of </STRONG><STRONG>shares</STRONG></FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">%</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">State Department of Finance</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">114,508,086</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">50.26%</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">114,508,085</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">50.26%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Companhia Brasileira de Liquida&#231;&#227;o e Cust&#243;dia</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">52,990,545</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">23.26%</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">51,707,376</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">22.69%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">The Bank Of New York ADR Department (equivalent in shares) (*)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">60,144,856</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">26.40%</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">61,418,144</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">26.96%</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">193,136</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">0.08%</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">203,018</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">0.09%</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">227,836,623</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">100.0%</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">227,836,623</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">100.0%</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">(*) each ADR is equal to 2 shares</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Subscribed and paid-in capital is represented by 227,836,623 registered common shares, without par value as of January 1, 2011 and December 31, 2011; there was no change during the year.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(c) Distribution of earnings</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Shareholders are entitled to a minimum mandatory dividend of 25% of the adjusted net income under Brazilian GAAP, calculated according to the Brazilian corporate law. The dividends do not bear interest and the amounts not claimed within three years from the date of the Shareholders' Meeting that approved them mature in favor of the Company.</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="85%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="85%" align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">The minimum mandatory dividends are calculated as follows:</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="85%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="85%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Net income of the year</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,223,419</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="85%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">(-) Legal reserve - 5%</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(61,171)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="85%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,162,248</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="85%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">minimum mandatory dividend - 25% (R$ 1.27 per share)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">290,562</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On April 28, 2011, the Shareholders&#8217; General Meeting approved the distribution of dividends as interest on shareholders&#8217; equity amounting to R$455,992, for the 2010 fiscal year. Therefore, the amount of R$68,761 related to the surplus minimum mandatory dividends of 25%, set forth in the Bylaws, recorded in the 2010 equity under &#8220;Additional proposed dividends&#8221; was transferred to current liabilities, and these amounts were paid in June 2011. The R$455,992 interest, net of withholding income tax of R$33,032, totaled R$422,960.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company proposed dividends as interest on shareholders' equity in the amount of R$578,705 corresponding to R$2.54 per common share. This interest, net of income tax of R$43,168, was R$535,537. In 2010, interest was R$455,992, net of income tax of R$33,032, amounted to R$422,960.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-152</FONT></P></DIV>

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<A name="page_153"></A><BR>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%" align=right>

<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

</P>

<P></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company declared dividends in the amount of R$578,705 approved at the general shareholders meeting on April 23, 2012. The Company recorded dividends payable as interest on shareholders&#8217; equity in the amount of R$ 290,562, which considers the minimum dividend amount set forth in the by-laws. The R$288,143 difference was reclassified in equity to the &#8220;additional proposed dividends&#8221; account.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(d) Capital reserve</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The capital reserve includes tax incentives and donations received by the company and may only be used for future capital increases.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(e) Legal reserve</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Earnings reserve - legal reserve is a requirement for all Brazilian corporations and represents accrual of 5% of annual net income determined based on Brazilian law, up to 20% of capital. However, we are not required to make any allocations to our legal reserve in a year in which the legal reserve, when added to our other established capital and earnings reserves, exceeds 30% of our capital stock. The amounts allocated to such reserve may only be used to increase our capital stock or to offset losses. Therefore, they are not available for the payment of dividends.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(f) Investments reserve</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Earnings reserve - investments reserve is specifically formed by the portion corresponding to own funds assigned to the expansion of the water supply and sewage treatment systems.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Pursuant to the Brazilian Corporation Law, an amount of a Company&#8217;s net income may be allocated to discretionary investment reserves, whose value is based on a capital budget previously submitted to the Company&#8217;s Management and approved by a Shareholders&#8217; Meeting, The Company&#8217;s by-laws do not refer to the approval of the capital budget by the Shareholders&#8217; Meeting; however, the Company adopts the rules of the Brazilian Corporation Law. After concluding the respective capital projects, the Company may retain said reserve until shareholders approve the transfer of all or part of the reserve to the capital or retained earnings reserve. Under Brazilian Corporation Law, if a project to which a portion of the capital budget reserve is allocated has a term of over a year, the budget related to this project must be submitted to the analysis of the Shareholders&#8217; Meeting annually, until the project is concluded.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Pursuant to Paragraph four of Article 29 of the by-laws, the Board of Directors may propose to the Shareholders&#8217; Meeting that the remaining balance of net income for the year, after deducting the legal reserve and minimum mandatory dividends, be allocated to an investment reserve that will comply with the following criteria:</FONT></P>

<P style="TEXT-ALIGN: justify; MARGIN-LEFT: 2%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">I- its balance, jointly with the balance of the other profit reserves, except for reserves for contingencies and realizable profits, may not exceed the capital stock; <BR>II- the reserve is intended to guarantee the investment plan and its balance may be used:</FONT></P>

<TABLE style="WIDTH: 96%" border=0 cellSpacing=0 cellPadding=0>



<TR>

   <TD vAlign=top width="2%" noWrap align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">a)</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">to absorb losses, whenever necessary;</FONT> </TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">b)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">to distribute dividends, at any moment;</FONT> </TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">c)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">in share redemption, reimbursement or purchase transactions authorized by law; and</FONT> </TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">d)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=2 face="Georgia,Times New Roman,Times,serif">in incorporation to the capital stock.</FONT> </TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The investment reserve is constituted specifically by the portion corresponding to own funds that will be allocated to the expansion of water supply and sanitary sewage systems based on the capital budged approved by Management. On December 31, 2011 and 2010, the investment reserve balance was R$3,408,591 and R$2,825,048, respectively.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-153</FONT></P></DIV>

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<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

<A name="page_154"></A><BR>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

</P>

<P></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="5%"></TD>

   <TD width="2%"></TD>

   <TD width="70%"></TD>

   <TD width="2%"></TD>

   <TD width="21%"></TD></TR>

<TR vAlign=bottom>

   <TD width="77%" colSpan=3 align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(g)</FONT></B>&nbsp;&nbsp; <B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Destination of profit of the year</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="21%" align=left>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="5%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="21%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="77%" colSpan=3 align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Net profit</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="21%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="5%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">(+)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="TEXT-INDENT: 2px" width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Retained earnings</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="21%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,223,419</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="5%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">(-)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="TEXT-INDENT: 2px" width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Legal reserve &#8211; 5%</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="21%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">61,171</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="5%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">(-)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="TEXT-INDENT: 2px" width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Minimum mandatory dividend</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="21%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">290,562</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="5%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">(-)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="TEXT-INDENT: 2px" width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Additional dividend</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="21%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">288,143</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 1px" width="77%" colSpan=3 align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Investment reserve</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="21%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">583,543</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="77%" colSpan=3 align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(h)</FONT></B>&nbsp; <B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Retained earnings (accumulated losses)</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="21%" align=left>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Retained earnings (accumulated losses): the statutory balance of this account is zero as all retained earnings must be distributed or allocated to an earnings reserve at year end.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">19&nbsp; Earnings per Share Basic and diluted</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Basic earnings per share is calculated by dividing the income attributable to the Company's shareholders by the weighted average number of common shares issued during the year.</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="70%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Attributable income to the Company's shareholders</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,223,419</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,630,447</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Weighted average number of common shares issued</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">227,836,623</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">227,836,623</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Basic and diluted earnings per share (</FONT><I><FONT size=1 face="Georgia-Italic,Times New Roman,Times,serif">reais </FONT></I><FONT size=1 face="Georgia,Times New Roman,Times,serif">per share)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5.37</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7.16</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company does not have potentially dilutive common shares outstanding or debts convertible into common shares. Accordingly, basic and diluted earnings per share are equal.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">20 Operating Segments</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Management has determined the operating segments based on the information used to make strategic decisions, with the purpose of allocating resources and evaluating the performance between segments.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Executive Board considers the business from a rendering of services perspective (water supply and sewage services). No operating segment has been aggregated.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-154</FONT></P></DIV>

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<!--$$/page=--><A name="page_155"></A><BR>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B></P>

<HR align=left color=#000000 SIZE=1 width="100%">



<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The segment information for the reportable segments for the year ended December 31, 2011 is as follows:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="58%" colSpan=7 align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Reconciliation</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Total per</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">to the financial</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Statement of</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Water</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Sewage</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">statements</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">income</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Gross revenue from sales and services - from external customers</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,610,204</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,699,916</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,234,778</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10,544,898</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Gross sales deductions</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(334,616)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(268,645)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(603,261)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Net revenue from sales and services - from external customers</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,275,588</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,431,271</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,234,778</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,941,637</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Costs, selling and administrative expenses</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3,309,145)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(2,001,647)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(2,186,320)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(7,497,112)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Income from operations before other operating expenses, net</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">966,443</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,429,624</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">48,458</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,444,525</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other operating expenses, net</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(90,138)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Income from operations before financial income</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 12px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">(expenses) and income taxes</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,354,387</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Depreciation and amortization</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">415,065</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">353,704</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">768,769</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="58%" colSpan=7 align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Reconciliation</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Total per</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">to the financial</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Statement of</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Water</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Sewage</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">statements</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">income</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Gross revenue from sales and services - from</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 12px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">external customers</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,257,158</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,398,733</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,130,684</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,786,575</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Gross sales deductions</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(314,282)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(241,266)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(555,548)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Net revenue from sales and services - from external</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 12px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Customers</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,942,876</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,157,467</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,130,684</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,231,027</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Costs, selling and administrative expenses</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(2,789,529)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,690,084)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(2,081,081)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(6,560,694)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Income from operations before other operating</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 12px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">expenses, net</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,153,347</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,467,383</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">49,603</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,670,333</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other operating expenses, net</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,830</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Income from operations before financial income</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 12px" width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">(expenses) and income taxes</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,672,163</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Depreciation and amortization</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">291,841</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">260,343</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">552,184</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The operating income of the Parent company amounts to R$2,354,495 (R$2,672,119 in December 2010). The difference of R$108 (R$44 in December 2010) representing the financial income and expenses and the income taxes of the joint-controlled entities.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-155</FONT></P></DIV>

<HR align=center SIZE=2 width="100%" noShade>



<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

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<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

</P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="70%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="100%" colSpan=5 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">Adjustments for reconciliation of the financial statements are comprised of:</FONT></TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 5px" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 5px" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31</FONT></B></TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Gross revenue from construction recognized under ICPC 1</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,234,778</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,130,684</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Construction costs recognized under ICPC 1</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(2,186,320)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(2,081,081)</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Revenue from concession construction contracts is recognized in accordance with CPC 17, Construction Contracts (IAS 11), using the percentage-of-completion method.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Reportable segment's assets are reconciled to total assets as follows:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="70%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31,</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">December 31,</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Water supply</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,237,071</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,980,302</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Sewage services</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">10,584,402</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,145,194</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Segment assets for reportable segments</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">18,821,473</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">17,125,496</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total current assets</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,725,833</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,590,121</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Noncurrent assets</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Customer accounts receivable, net</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">333,713</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">352,839</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Accounts receivable from related party, net</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">170,288</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">231,076</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Indemnities receivable</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">60,295</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">146,213</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Escrow deposits</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">54,178</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">43,543</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Deferred income taxes</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">179,463</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">78,440</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Property, plant and equipment, net</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">356,468</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">249,606</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="70%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other noncurrent assets</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,513,273</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,533,250</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="70%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total assets per the balance sheet</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">25,214,984</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">23,350,584</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=5>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="100%" colSpan=5 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">There are no liabilities allocated to the reportable segments.</FONT></TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-156</FONT></P></DIV>

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<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

<A name="page_157"></A><BR>

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<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

<BR>

<TABLE border=0 cellSpacing=0>



<TR>

   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">21</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Revenue</FONT></B> </TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(a)</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Gross revenue from sales and services:</FONT></B> </TD></TR></TABLE></P>

<P></P>

<DIV align=left>&nbsp;</DIV>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Greater S&#227;o Paulo Metropolitan area</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,144,669</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,699,618</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,144,669</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,699,618</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Regional Systems (i)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,160,374</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,955,608</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,165,451</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,956,273</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,305,043</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,655,226</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,310,120</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,655,891</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="100%" colSpan=9 align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(b)&nbsp;&nbsp;&nbsp; Reconciliation between gross revenue and net revenue:</FONT></B></TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Gross revenue from sales and services</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,305,043</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,655,226</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">8,310,120</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,655,891</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Gross revenue from construction</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,224,633</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,130,675</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,234,778</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,130,684</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Service taxes and deductions</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(602,231)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(555,531)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(603,261)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(555,548)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Net revenues</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,927,445</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,230,370</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,941,637</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">9,231,027</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="100%" colSpan=9 align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">(i) Comprises the municipalities operated in the inland and the coast of S&#227;o Paulo State.</FONT></TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-157</FONT></P></DIV>

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<!--$$/page=--><A name="page_158"></A><BR>

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<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

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   <TD colSpan=9 align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">22 Operating Costs and Expenses</FONT></B></TD></TR>

<TR>

   <TD colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD colSpan=9 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">The operating costs and expenses are composed of the following:</FONT></TD></TR>

<TR>

   <TD colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD align=left>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent company</FONT></B>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD align=left>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Cost of sales and services</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=left>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=left>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=left>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Salaries and payroll charges</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,131,774</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">994,530</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,132,403</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">994,631</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Pension plan</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">49,374</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(11,799)</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">49,374</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(11,799)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Construction costs</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,177,045</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,081,071</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,186,320</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,081,081</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">General supplies</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">147,268</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">135,058</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">147,464</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">135,113</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Treatment supplies</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">154,748</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">136,533</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">154,867</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">136,546</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Outsourced services</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">668,138</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">603,849</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">668,994</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">603,924</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Electricity</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">582,410</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">529,352</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">583,418</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">529,480</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">General expenses</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">368,932</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">202,633</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">369,054</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">202,645</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Depreciation and amortization</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">739,043</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">522,927</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">739,083</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">522,927</FONT>&nbsp;</TD></TR>

<TR>

   <TD colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD align=left>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,018,732</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,194,154</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,030,977</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,194,548</FONT>&nbsp;</TD></TR>

<TR>

   <TD colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Selling expenses</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=left>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=left>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=left>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Salaries and payroll charges</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">194,747</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">185,012</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">194,832</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">185,012</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Pension plan</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,942</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,375)</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,942</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,375)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">General supplies</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,703</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,488</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,703</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,488</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Outsourced services</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">201,941</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">216,034</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">201,955</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">216,038</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Electricity</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">622</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">775</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">622</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">775</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">General expenses</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">78,654</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">69,580</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">78,660</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">69,581</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Depreciation and amortization</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,435</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,922</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,435</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">3,922</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Allowance for doubtful accounts, net of recoveries (Note 8 (c))</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">120,260</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">232,505</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">120,393</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">232,505</FONT>&nbsp;</TD></TR>

<TR>

   <TD colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD align=left>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">619,304</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">712,941</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">619,542</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">712,946</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Administrative expenses</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=left>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=left>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=left>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Salaries and payroll charges</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">157,704</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">140,933</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">160,262</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">141,749</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Pension plan</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">262,597</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">93,683</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">262,597</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">93,683</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">General supplies</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,142</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,131</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">4,267</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">5,167</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Outsourced services</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">123,500</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">149,570</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">125,502</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">150,300</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Electricity</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,047</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,219</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,052</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,268</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">General expenses</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">208,365</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">172,028</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">208,978</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">172,241</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Depreciation and amortization</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">22,226</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">25,327</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">22,251</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">25,335</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Tax expenses</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">61,496</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">63,380</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">61,684</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">63,457</FONT>&nbsp;</TD></TR>

<TR>

   <TD colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD align=left>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">841,077</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">651,271</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">846,593</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">653,200</FONT>&nbsp;</TD></TR>

<TR>

   <TD colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Cost, Sales and Administrative expenses</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=left>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=left>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=left>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Salaries and payroll charges</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,484,225</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,320,475</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,487,497</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,321,392</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Pension plan</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">319,913</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">80,509</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">319,913</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">80,509</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Construction costs</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,177,045</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,081,071</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,186,320</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">2,081,081</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">General supplies</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">159,113</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">146,677</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">159,434</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">146,768</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Treatment supplies</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">154,748</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">136,533</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">154,867</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">136,546</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Outsourced services</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">993,579</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">969,453</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">996,451</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">970,262</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Electricity</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">584,079</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">531,346</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">585,092</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">531,523</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">General expenses</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">655,951</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">444,241</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">656,692</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">444,467</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Depreciation and amortization</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">768,704</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">552,176</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">768,769</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">552,184</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Tax expenses</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">61,496</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">63,380</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">61,684</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">63,457</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Allowance for doubtful accounts, net of recoveries (Note 8 (c))</FONT>&nbsp;</P></TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">120,260</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">232,505</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">120,393</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">232,505</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD align=left>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,479,113</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,558,366</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">7,497,112</FONT>&nbsp;</TD>

   <TD>&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">6,560,694</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-158</FONT></P></DIV>

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<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

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<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="85%" colSpan=7 align=left><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Years Ended December 31, 2011 and 2010</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="100%" colSpan=9 align=left><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B></TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="100%" colSpan=9 align=left><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">23 Financial Expenses and Income</FONT></B></TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Financial expenses</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest and charges on loans and financing - local currency</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(354,813)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(388,414)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(355,526)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(388,502)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest and charges on loans and financing - foreign currency</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(79,816)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(50,797)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(79,816)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(50,797)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other financial expenses (*)</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(81,510)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(167,915)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(81,675)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(168,462)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Income tax over international remittance</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(9,795)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3,412)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(9,795)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(3,412)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Inflation adjustment on loans and financing</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(48,879)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(87,330)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(48,878)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(87,330)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Inflation adjustment on Sabesprev Mais deficit</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,794)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(1,794)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">-</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other inflation adjustments</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(68,975)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(47,041)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(68,975)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(47,041)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Provision for financial contingencies</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(56,307)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(43,923)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(56,307)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(43,923)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total financial expenses</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(701,889)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(788,832)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(702,766)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(789,467)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Financial income</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Inflation adjustment gains</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">89,351</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">120,779</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">89,361</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">120,779</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Income on short-term investments</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">271,847</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">137,613</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">271,973</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">137,720</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Interest and other income</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">104,555</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">85,415</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">104,592</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">85,415</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total financial income</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">465,753</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">343,807</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">465,926</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">343,914</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=9>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Financial expenses, net</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(236,136)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(445,025)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(236,840)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(445,553)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Net foreign exchange variations</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Foreign exchange variation on loans and financing</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(382,305)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">66,191</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(382,304)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">66,191</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other foreign exchange variations</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(96)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(209)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(97)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(214)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD style="TEXT-INDENT: 3px" width="40%" align=left>

   <P style="MARGIN-LEFT: 10pt"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Inflation adjustment gains</FONT>&nbsp;</P></TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(14,481)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">169</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(14,400)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">169</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(396,882)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">66,151</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(396,801)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">66,146</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<TABLE border=0 cellSpacing=0>



<TR>

   <TD vAlign=top width="2%" noWrap><FONT size=1 face="Georgia,Times New Roman,Times,serif">(*)</FONT>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other financial expenses are mainly comprised of interest paid related to lawsuit and interest related to liabilities of contract programs.</FONT> </TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">24</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Other Operating Expenses, Net</FONT></B> </TD></TR></TABLE>

<DIV align=left>&nbsp;</DIV>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="40%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="70%" colSpan=5 align=left><FONT size=2 face="Georgia,Times New Roman,Times,serif">The breakdown of other operating income (expenses), net is as follows:</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=left>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Parent Company</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="28%" colSpan=3 align=center><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Consolidated</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2011</FONT></B>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">2010</FONT></B>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other net operating income</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">72,386</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">39,435</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">72,501</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">39,456</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other operating expenses</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(162,639)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(37,626)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(162,639)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(37,626)</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="40%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Other operating income (expenses), net</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(90,253)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,809</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">(90,138)</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">1,830</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Other operating income is comprised of sale of property, plant and equipment, sale of contracts awarded in public bids, and indemnities and reimbursement of expenses, fines and collaterals, property leases, reuse water, PURA and Aqualog projects and services.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Other operating expenses consist mainly of write-off of property, plant and equipment due to obsolescence, discontinued construction works, unproductive wells, projects considered economically unfeasible, losses on property, plant and equipment and provision referring to concession assets in the municipality of Mau&#225; (R$ 85,918).</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-159</FONT></P></DIV>

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<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

<A name="page_160"></A><BR>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

<BR>

<TABLE border=0 cellSpacing=0>



<TR>

   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">25</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Commitments</FONT></B> </TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B></TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></B>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(i)</FONT></B>&nbsp; &nbsp; &nbsp; </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Operating leases</FONT></B> </TD></TR></TABLE></P>

<P></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">As of December 31, 2011, operating leases already contracted require the following minimum payments, as follows:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="85%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="85%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">2012</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">63,314</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="85%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">2013</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">54,067</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="85%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">2014</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">25,119</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="85%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">2015</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">867</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=3>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="85%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">143,367</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Lease expenses for the years ended December 31, 2011 and 2010 were R$34,337 and R$29,002, respectively. Lease expenses refer to the following: property rentals, vehicle rentals, machinery and equipment leases, IT equipment leases, photocopiers leases and automotive equipment. The contracts of operating leases mature in 2015.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">(ii) Electricity</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The Company has entered into long-term contracts with electric power providers. As of December 31, 2011, the main amounts regarding this type of contracts are presented as follows:</FONT></P>

<DIV align=left>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD width="85%"></TD>

   <TD width="2%"></TD>

   <TD width="13%"></TD></TR>

<TR vAlign=bottom>

   <TD width="85%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">2012</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">283,183</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="85%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">2013</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">88,102</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="85%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">2014</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">82,583</FONT>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="85%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">2015</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">80,564</FONT>&nbsp;</TD></TR>

<TR>

   <TD width="100%" colSpan=3>&nbsp;</TD></TR>

<TR vAlign=bottom>

   <TD width="85%" align=left><FONT size=1 face="Georgia,Times New Roman,Times,serif">Total</FONT>&nbsp;</TD>

   <TD width="2%">&nbsp;</TD>

   <TD style="BORDER-BOTTOM: #000000 3px double" width="13%" align=right><FONT size=1 face="Georgia,Times New Roman,Times,serif">534,432</FONT>&nbsp;</TD></TR></TABLE></DIV>

<P style="MARGIN: 0px">&nbsp;</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Electric power expenses for the years ended December 31, 2011 and 2010 were R$584,373 and R$531,661, respectively. The contracts mature in 2015.</FONT></P>

<TABLE style="WIDTH: 100%" border=0 cellSpacing=0>



<TR>

   <TD vAlign=top width="2%" noWrap><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">26</FONT></B> </TD>

   <TD width="98%"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Subsequent events</FONT></B> </TD></TR>

<TR height=20>

   <TD vAlign=top width="2%" noWrap><B><U><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></U></B></TD>

   <TD width="98%"><B><U><SUP><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif"></FONT></SUP></U></B>&nbsp;</TD></TR>

<TR>

   <TD vAlign=top width="100%" colSpan=2><B><U><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">15</FONT></U></B> <B><U><SUP><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">th </FONT></SUP></U></B><B><U><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">issue of debentures</FONT></U></B> </TD></TR></TABLE>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On January 16, 2012, the Company registered the 15</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue of nonconvertible unsecured debentures, in two series for public offering and restricted placement efforts according to Brazilian Securities and Exchange Commission (CVM), instruction n&#186; 476.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Issue date: February 15, 2012</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Series: Two</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Total amount: R$771,080 thousand</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Quantity: 77,108</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Unitary amount: R$ 10</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-160</FONT></P></DIV>

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<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

<!--$$/page=--><A name="page_161"></A><BR>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Notes to the Consolidated Financial Statements <BR>Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

</P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Series:One</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Total Amount: R$ 287,330</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Quantity: 28,733</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Payment: semi-annually</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Maturity date: February 15, 2017</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Accelerated redemption: as of the 24</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">month</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Interest: DI plus 0.99% p.a.</FONT><BR><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Series Two</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Total Amount: R$483,750</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Quantity: 48,375</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Payment: annually</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Maturity date: February 15, 2019</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Accelerated maturity: none</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Interest: IPCA plus annual interest of 6.20%</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The amount obtained in the 15</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue of debentures will be allocated to repay financial commitments falling due up to December 31, 2012.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Redemption of the 13</FONT></B><B><SUP><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">th </FONT></SUP></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">issue of debentures</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">On February 17, 2012, the Company fully redeemed the 13</FONT><SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="Georgia,Times New Roman,Times,serif">issue of debentures in the amount of R$633,343.</FONT></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">SABESP signs contract to expand actions against water loss</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">In February 2012, the Company, aiming at leveraging funds for the second phase of the Loss Reduction and Control Corporate Program at the water supply systems, signed a loan agreement with JICA (Japan International Cooperation Agency) in the amount of &#165; 33.6 billion (corresponding to R$710 million on the signature date). This phase of program has investments estimated at R$1.1 billion (&#165; 52.2 billion), of which R$390 million (&#165; 18.6 billion) will be SABESP&#8217;S consideration.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The loan matures within 25 years, with seven years of grace period, with annual interest rate of 1.7%. The loan will be used to expand and speed up investments of SABESP&#8217;s Water Loss Reduction Corporate Program.</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">* * *</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-161</FONT></P></DIV>

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<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

<!--$$/page=--><A name="page_162"></A><BR>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Statements of Officers<BR></FONT></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

</P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Reports and Statements/Statement of Officers on the Financial Statements</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">STATEMENT</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The officers of Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP, with Corporate Taxpayer&#8217;s ID (CNPJ/MF): 43.776.517/0001-80, with headquarters located at Rua Costa Carvalho, n&#186; 300, Pinheiros, S&#227;o Paulo, declare that, in compliance with Paragraph 1 of Article 25, items V and VI of CVM Instruction 480 of December 7, 2009 that:</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">They revised, discussed and agreed with the financial statements for the year ended December 31, 2011.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">S&#227;o Paulo, March 23, 2012.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo &#8211; SABESP</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">/signed/ Dilma Seli Pena</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Chief Executive Officer</FONT><BR><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">/signed/ Rui de Britto &#193;lvares Affonso</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Chief Financial and Investor Relations Officer</FONT><BR><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">/signed/ Manuelito Pereira Magalh&#227;es Junior</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Corporate Management Officer</FONT><BR><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">/signed/ Jo&#227;o Baptista Comparini</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Technology, Project and Environment Officer</FONT><BR><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">/s/ Paulo Massato Yoshimoto</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Metropolitan Officer</FONT><BR><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">/s/ Luiz Paulo de Almeida Neto</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Regional Systems Officer</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-162</FONT></P></DIV>

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<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

<!--$$/page=--><A name="page_163"></A><BR>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Statements of Officers<BR></FONT></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

</P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Reports and Statements/Statement of Officers on the Report of Independent Registered Public Accounting Firm</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">STATEMENT</FONT></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The officers of Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP, with Corporate Taxpayer&#8217;s ID (CNPJ/MF): 43.776.517/0001-80, with headquarters located at Rua Costa Carvalho, n&#186; 300, Pinheiros, S&#227;o Paulo, declare that, in compliance with Paragraph 1 of Article 25, items V and VI of CVM Instruction 480 of December 7, 2009:</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">They revised, discussed and agreed with the Report of Independent Registered Public Accounting Firm on the financial statements for the year ended December 31, 2011.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">S&#227;o Paulo, March 23, 2012.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo &#8211; SABESP</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">signed/ Dilma Seli Pena</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Chief Executive Officer</FONT><BR><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">/signed/ Rui de Britto &#193;lvares Affonso</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Chief Financial and Investor Relations Officer</FONT><BR><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">/signed/ Manuelito Pereira Magalh&#227;es Junior</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Corporate Management Officer</FONT><BR><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">/signed/ Jo&#227;o Baptista Comparini</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Technology, Project and Environment Officer</FONT><BR><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">/signed/ Paulo Massato Yoshimoto</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Metropolitan Officer</FONT><BR><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">/signed/ Luiz Paulo de Almeida Neto</FONT><BR><FONT size=2 face="Georgia,Times New Roman,Times,serif">Regional Systems Officer</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-163</FONT></P></DIV>

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<DIV style="PAGE-BREAK-BEFORE: always">&nbsp;</DIV>

<!--$$/page=--><A name="page_164"></A><BR>

<DIV style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">

<P style="TEXT-ALIGN: justify"><B><FONT size=3 face="Georgia-Bold,Times New Roman,Times,serif">Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP</FONT></B></P>

<P style="TEXT-ALIGN: justify"><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Fiscal Council Report<BR></FONT></B><B><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">Years Ended December 31, 2011 and 2010 <BR></FONT></B><B><FONT size=1 face="Georgia-Bold,Times New Roman,Times,serif">Amounts in thousands of reais, unless otherwise indicated</FONT></B>

<HR align=left color=#000000 SIZE=1 width="100%">

</P>

<P style="TEXT-ALIGN: justify"><B><U><FONT size=2 face="Georgia-Bold,Times New Roman,Times,serif">FISCAL COUCIL REPORT</FONT></U></B></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">The members of the Fiscal Council of COMPANHIA DE SANEAMENTO B&#193;SICO DO ESTADO DE S&#195;O PAULO &#8211;SABESP, undersigned hereinbelow, within its duties and legal responsibilities, examined the Consolidated Financial Statements, the Annual Management Report and the Management Proposal For the Allocation of Income for the year ended December 31, 2011 and based on analysis conducted, additional clarifications rendered by Management and the Audit Committee, also considering the Report of Independent Registered Public Accounting Firm of PricewaterhouseCoopers, dated March 23, 2012, concluded that these are fairly presented, reason that they recommend to be sent for approval at the Shareholders' General Meeting.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">S&#227;o Paulo, March 23, 2012.</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">HUMBERTO MACEDO PUCCINELLI</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">JOS&#201; ANTONIO XAVIER</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">DERALDO DE SOUZA MESQUITA JUNIOR</FONT></P>

<P style="TEXT-ALIGN: justify"><FONT size=2 face="Georgia,Times New Roman,Times,serif">ALEXANDRE LUIZ OLIVEIRA DE TOLEDO</FONT></P>

<P style="TEXT-ALIGN: center"><FONT size=2 face="Georgia,Times New Roman,Times,serif">F-164</FONT></P></DIV>

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<DIV style="PAGE-BREAK-BEFORE: always">

<P></P>

<DIV align=center><FONT color=#000000 size=3 face="Times New Roman"><B><U>

<DIV align=center><FONT color=#000000 size=3 face="Times New Roman"><B><U>SIGNATURE&nbsp;</U></B></FONT><FONT size=1>&nbsp;</FONT></DIV></U></B></FONT>

<DIV><FONT size=1></FONT>&nbsp;</DIV>

<DIV align=justify><FONT color=#000000 size=3 face="Times New Roman">Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city S&#227;o Paulo, Brazil. <BR></FONT></DIV>

<DIV align=justify><FONT color=#000000 size=3 face="Times New Roman">Date:&nbsp;April 11, 2012</FONT></DIV>

<DIV><FONT size=1></FONT>&nbsp;</DIV>

<DIV align=center>

<TABLE style="WIDTH: 70%" cellSpacing=0 cellPadding=0>



<TR>

   <TD vAlign=top width="50%" colSpan=3>

   <DIV align=left><FONT color=#000000 size=3 face="Times New Roman"><B>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP </B></FONT></DIV></TD></TR>

<TR>

   <TD height=16></TD>

   <TD height=16></TD>

   <TD height=16></TD></TR>

<TR>

   <TD vAlign=top align=left><FONT color=#000000 size=2 face="Times New Roman">By:</FONT></TD>

   <TD vAlign=bottom align=left>/s/&nbsp;&nbsp;<FONT style="FONT-FAMILY: times new roman" size=3>Rui de Britto &#193;lvares Affonso</FONT>&nbsp;&nbsp;&nbsp;&nbsp;

   <HR align=left color=#000000 SIZE=1 noShade>

</TD>

   <TD></TD></TR>

<TR>

   <TD><FONT size=1>&nbsp;</FONT></TD>

   <TD vAlign=bottom width="53%" align=center>

   <DIV align=left><FONT color=#000000 size=2 face="Times New Roman">Name: Rui de Britto &#193;lvares Affonso </FONT></DIV>

   <DIV align=left><FONT color=#000000 size=2 face="Times New Roman">Title: Chief Financial Officer and Investor Relations Officer </FONT></DIV></TD>

   <TD></TD></TR></TABLE></DIV>

<DIV><FONT size=1></FONT>&nbsp;</DIV>

<P>&nbsp;</P>

<DIV><FONT size=1></FONT>&nbsp;</DIV>

<DIV align=center><FONT color=#000000 size=3 face="Times New Roman"><B>FORWARD-LOOKING STATEMENTS </B></FONT></DIV>

<P align=justify><FONT size=2 face="'Times New Roman, Times, Serif'">This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations. </FONT></P>

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<DOCUMENT>
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..***`"BBB@`HHHH`__]D_
`
end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
