Eng Version Notes

Financial Statements

Estácio Participações S.A.
December 31, 2008 and 2007
With Report of Independent Auditors

ESTÁCIO PARTICIPAÇÕES S.A.

FINANCIAL STATEMENTS

December 31, 2008 and 2007

Contents

Report of Independent Auditors .......................................................................................... 1

Audited Financial Statements

Balance Sheets .................................................................................................................. 3
Statements of Income ......................................................................................................... 4
Statement of Changes in Shareholders’ Equity................................................................... 5
Statement of Cash Flows .................................................................................................... 6
Statement of Added Value .................................................................................................. 7
Notes to Financial Statements ........................................................................................... 8

Report of Independent Auditors

To the Shareholders, Directors and Executives of
Rio de Janeiro - RJ

1. We have audited the accompanying balance sheet of Estácio Participações S.A. and the
consolidated balance sheet of Estácio Participações S.A. and its subsidiaries as of
December 31, 2008, and the related statements of income, changes in shareholders’
equity, cash flows and added value for the year then ended. These financial statements
are the responsibility of the Company’s Management. Our responsibility is to express an
opinion on these financial statements.

2. Our audits were conducted in accordance with auditing standards in Brazil and comprised:
(a) planning of the work, taking into consideration the significance of the balances, the
volume of transactions, and the accounting and internal control systems of the Company
and its subsidiaries; (b) checking, on a test basis, of the evidence and records supporting
the amounts and accounting information disclosed; and (c) assessment of the accounting
practices used and significant estimates made by the Management of the Company and its
subsidiaries, as well as an evaluation of the overall financial statement presentation.

3. In our opinion, the financial statements referred to in paragraph 1 present fairly, in all
material respects, the financial position of Estácio Participações S.A. and the consolidated
financial position of Estácio Participações S.A. and its subsidiaries as of December 31,
2008, and the results of their operations, the changes in their shareholders’ equity, their
cash flows and the value added in operations for the year then ended, in conformity with the
Brazilian accounting practices.

1

4. As mentioned in Note 7, on June 4, 2008, the Company entered into a services agreement
with an entity owned by shareholders in the total amount of R$ 14 million, with a four-year
duration, to be executed as detailed in the related note to financial statements. In view of the
nature of said document, it is a single and exclusive agreement.

5. We had previously audited the individual and consolidated financial statements of Estácio
Participações S.A. for the year ended December 31, 2007, comprising the balance sheets,
statements of income, changes in shareholders’ equity and changes in financial position for
the year then ended, and supplemental information comprising the statement of cash flows, on
which we issued an unqualified report, dated March 10, 2008. As mentioned in Note 2, the
accounting practices adopted in Brazil were changed as from January 1, 2008. The financial
statements for the year ended December 31, 2007, except for the statement of sources and
applications of funds, presented together with the 2008 financial statements, have been
prepared in accordance with the Brazilian accounting practices in effect until December 31,
2007 and, as permitted by Technical Pronouncement CPC 13 – Initial Adoption of Law no.
11,638/07 and Provisional Measure no. 449/08, are not being resubmitted with adjustments for
purposes of comparison between years.

Rio de Janeiro, March 18, 2009

ERNST & YOUNG
Auditores Independentes S.S.
CRC - 2SP 015.199/O - 6 - F - RJ

Fernando Alberto S. de Magalhães
Accountant CRC - 1SP 133.169/O-0 - S - RJ

2


Balance sheets as of December 31
In thousands of reais

Controladora Consolidado Controladora Consolidado

2008 2007 2008 2007 2008 2007 2008 2007
Ativo Passivo e patrimônio líquido

Circulante Circulante
Caixa e equivalentes de caixa 186 2.974 38.130 22.853 Empréstimos e financiamentos 6.735 175
Títulos e valores mobiliários 117.046 198.001 164.077 206.365 Fornecedores 637 1.115 24.396 17.212
Contas a receber 100.371 89.487 Salários e encargos sociais 162 40 56.205 58.510
Contas a compensar - Sistema FIES 2.253 3.705 Obrigações tributárias 2.129 52 16.806 12.810
Adiantamentos a funcionários / terceiros 9.094 6.423 Mensalidades recebidas antecipadamente 29.147 30.967
Partes relacionadas 29.287 93 13.905 Parcelamento de tributos 1.484 502
Despesas antecipadas 700 2.913 583 Partes relacionadas 3
Outros 5.005 1.161 15.989 5.821 Dividendos a pagar 17.866 13.658 17.866 13.658
Compromissos a pagar 1.500 5.702
Outros 3.782 2.835
152.224 202.136 332.920 349.142
20.794 14.868 157.921 142.371

Não circulante
Realizável a longo prazo Não circulante
Despesas antecipadas 1.692 2.983 946 Exigível a longo prazo
Depósitos judiciais 748 283 Empréstimos e financiamentos 4.838 2
Provisão para contingências 20.166 13.703
1.692 3.731 1.229 Adiantamento de convênio 16.500 26.460 11.395
Parcelamento de tributos 4.025 223

Total do passivo não circulante 16.500 55.489 25.323

Investimentos
Em controladas 242.011 164.726
Outros 233 233
242.011 164.726 233 233 Patrimônio líquido

Imobilizado 190.738 160.393 Capital social 295.237 295.237 295.237 295.237
Intangível 62.442 53.382 106.863 62.073 Reservas de capital 96.482 96.482 96.482 96.482
Reservas de lucros 28.959 13.657 28.959 13.657
304.453 218.108 297.834 222.699 Ajustes de avaliação patrimonial 397 397
421.075 405.376 421.075 405.376
Total do ativo não circulante 306.145 218.108 301.565 223.928

Total do ativo 458.369 420.244 634.485 573.070 Total do passivo e patrimônio líquido 458.369 420.244 634.485 573.070

The accompanying notes are an integral part of these financial statements.
3


Statements of income as of December 31

Controladora Consolidado
2008 2007 2008 2007

Receita bruta das atividades
Graduação 1.187.657 803.761
Politécnico 186.715 105.632
Especialização 35.079 26.323
Outras 22.815 13.868

1.432.266 949.584
Deduções da receita bruta
Gratuidades - bolsas de estudo (361.067) (253.800)
Devolução de mensalidades e taxas (3.240) (2.165)
Descontos concedidos (45.459) (29.953)
Impostos (42.534) (28.164)

(452.300) (314.082)

Receita líquida das atividades 979.966 635.502

Custos diretos dos serviços prestados (630.791) (409.537)

Lucro bruto 349.175 225.965

(Despesas) receitas das operacionais
Despesas Comerciais (83.802) (40.786)
Gerais e administrativas (13.840) (3.632) (241.466) (157.358)
Resultado da equivalência patrimonial, líquida 38.738 42.762
Amortização de ágio de investimentos (7.742) (2.321) (10.405) (2.321)
Receitas financeiras 21.076 9.174 39.441 20.323
Despesas financeiras (58) (1.198) (13.099) (8.133)
Outras receitas operacionais 1.506 8.396 5.739
Resultado das atividades não continuadas (17.470) (1.913) (14.004)

39.680 27.315 (302.848) (196.540)

Lucro operacional 39.680 27.315 46.327 29.424

Lucro antes da contribuição social
e do imposto de renda 39.680 27.315 46.327 29.424

Contribuição social (550) (2.314) (554)
Imposto de renda (1.495) (6.378) (1.555)

Lucro líquido do exercício 37.635 27.315 37.635 27.315

4


Statement of changes in shareholders’ equity as of December 31

Reserva de
capital

Ágio na Reservas de lucros

Capital subscrição Ajustes de avalição Retenção Lucros

social de ações patrimonial Legal Lucros acumulados Total

Constituição da Companhia em 31 de março de 2007 1 1

Aumento de capital em 31 de março de 2007 27.072 27.072

Constituição de reserva 96.482 96.482

Aumento de capital em 01 de agosto de 2007 268.164 268.164

Lucro líquido do período 27.315 27.315

Destinação do lucro líquido:

Constituição de reservas 1.365 12.292 (13.657)

Dividendos propostos (13.658) (13.658)

Em 31 de dezembro de 2007 295.237 96.482 1.365 12.292 405.376

Ajustes pela adoção da Lei 11.638/07 397 (4.467) (4.070)

Lucro líquido do exercício 37.635 37.635

Destinação do lucro líquido:

Constituição de reservas 1.658 13.644 (15.302)

Dividendos propostos (17.866) (17.866)

Em 31 de dezembro de 2008 295.237 96.482 397 3.023 25.936 421.075

5


Statement of cash flows for the years ended December 31

2008 2007 2008 2007

Fluxo de caixa das atividades operacionais
Lucro líquido do exercício 37.635 27.315 37.635 27.315
Ajustes para conciliar o resultado às disponibilidades geradas
pelas atividades operacionais:
Depreciação e amortização 34.367 19.005
Valor residual baixado do imobilizado 5.143 1.372
Amortização de ágio 7.742 2.321 10.405 2.321
Provisão para devedores duvidosos 58.925 27.587
Provisão para contingências 7.423 864
Juros sobre empréstimos a sociedades controladas (457)
Equivalência patrimonial (38.738) (42.762)
6.182 (13.126) 153.898 78.464
Variações nos ativos e passivos:
(Aumento) em contas a receber (69.809) (41.635)
(Aumento) em outros ativos (6.236) (1.161) (16.219) (8.987)
Aumento (redução) em fornecedores (478) 1.115 7.184 2.205
Aumento (redução) em obrigações tributárias 2.077 52 3.996 1.496
Aumento em salários e encargos sociais 122 40 (2.305) (22.663)
Aumento em mensalidades recebidas antecipadamente (1.820) 2.058
Aumento (redução) na provisão para contingências (960) (1.238)
Aumento (redução) em outros passivos 1.531 6.416
Aumento (redução) adiantamento de convênios 16.500 15.065 (2.386)
Variações nas operações com partes relacionadas:
(Aumento) de contas a receber (28.830) 13.812 (5.309)
Aumento (redução) de contas a pagar (3) 3
Disponibilidades líquidas geradas (aplicadas) pelas
atividades operacionais (10.666) (13.077) 104.372 8.421
Fluxo de caixa das atividades de investimentos:
Aplicações financeiras 80.955 (198.001) 42.288 (159.515)
Investimentos em empresas controladas (56.711) 1.590 (4.070)
Dividendos recebidos de controladas 14.094
Ágio na aquisição de participações acionárias (16.802) (55.703) (48.210) (55.703)
Outros investimentos (6)
Imobilizado e intangível (65.555) (34.573)
Disponibilidades líquidas aplicadas nas atividades de
investimento 21.536 (252.114) (75.547) (249.797)
Fluxo de caixa das atividades de financiamentos:
Aumento de capital 268.165 268.165
Dividendos distribuidos (13.658) (13.658)
Aquisição de empréstimo 2.069
Pagamento de empréstimos e financiamentos (1.959) (3.936)
Disponibilidades líquidas geradas nas atividades de
financiamentos (13.658) 268.165 (13.548) 264.229

Aumento nas disponibilidades (2.789) 2.974 15.277 22.853
No início do exercício 2.974 22.853
No final do exercício 186 2.974 38.130 22.853
Variação no saldo de disponibilidades (2.788) 2.974 15.277 22.853

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Statement of added value for the year ended December 31, 2008

2008 % 2008 %

1 – RECEITAS 963.575 100

2 - INSUMOS ADQUIRIDOS DE TERCEIROS 12.379 191.127 20%
Materiais, energia, serviços de terceiros e outros 12.379 184.299 19%
Outras 6.828 1%

3 - VALOR ADICIONADO BRUTO (1-2) (12.379) 772.448 80%

4 - DEPRECIAÇÃO, AMORTIZAÇÃO E EXAUSTÃO 34.367 4%

5 - VALOR ADICIONADO LÍQUIDO PRODUZIDO PELA ENTIDADE (3-4) (12.379) 738.081 77%

6 - VALOR ADICIONADO RECEBIDO EM TRANSFERÊNCIA 53.580 37.904 4%
Resultado de equivalência patrimonial 38.738
Receitas financeiras 21.076 39.914 4%
Outras (6.235) (2.010) 0%

7 - VALOR ADICIONADO TOTAL A DISTRIBUIR (5+6) 41.200 100 775.985 81%

8 - DISTRIBUIÇÃO DO VALOR ADICIONADO
Colaboradores 896 2% 501.861 52%
Governo 2.611 6% 123.665 13%
Financiadores 58 0% 112.824 12%
Acionistas 17.866 43% 17.866 2%
Reinvestimento 19.769 48% 19.769 2%

7


Notes to financial statements as of December 31
In thousands of reais, unless otherwise stated

1 Operations

Estácio Participações S.A. (“Estácio” or “Company”), incorporated by private investors that
subscribed to shares on March 31, 2007, is a business corporation based in the city and
state of Rio de Janeiro, primarily engaged in developing and/or managing activities and
institutions in the post-secondary and professional education areas, as well as in other
education-related areas, managing own assets and businesses, and holding equity interest in
other non-business or business companies, either as member or shareholder, in Brazil or
abroad.

On the same date of its incorporation, the shareholders approved a capital increase through
issue of 299,999,000 common shares and 100,000,000 preferred shares, all of them
registered, book-entry shares with no par value, which were fully subscribed and paid up with
the transfer of the investment held by each shareholder of Estácio Participações S.A. in units
of interest of the following entities: Sociedade de Ensino Superior Estácio de Sá Ltda.
(“SESES”) and the Controlling Institutions Sociedade de Ensino Superior do Pará Ltda.
(“SESPA”), Sociedade de Ensino Superior do Ceará Ltda. (“SESCE”), Sociedade de Ensino
Superior de Pernambuco Ltda. (“SESPE”) and Sociedade Tecnopolitana da Bahia Ltda.
(“STB”), based on the appraisal reports prepared by a specialist firm, in the amount of R$
27,072.

On June 21, 2007, the reverse split of shares representing the Company’s capital was
approved in the proportion of 2 (two) shares to 1 (one) share of the same type and class, in
accordance with the provisions of Article 12 of the Brazilian Corporate Law.

On July 26, 2007, the Company obtained registration with the Brazilian Securities
Commission (CVM) to trade its shares on the São Paulo Stock Exchange (“Bovespa”).

On July 27, 2007, the Company communicated the beginning of the Public Offering of
Primary Distribution of Share Deposit Certificates (Units) of its issue. There was an issue of
11,918,400 Units, each representing 1 (one) common share and 2 (two) preferred shares of
the Company, which were all acquired by new shareholders. The Units offered were traded
for R$ 22.50 (twenty-two reais and fifty cents) per share. The primary shares offered were
sold for R$ 268,164, which resulted in the Company’s cash inflow of R$ 255,083.

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1 Operations--Continued

On September 3, 2007, upon the financial settlement of the transaction, the Company
acquired all the units of interest representing 100% of the capital of Irep Sociedade de
Ensino Superior, Médio e Fundamental Ltda. (“IREP”) and Faculdade Radial de Curitiba
Sociedade Ltda. (“Curitiba”), companies that comprise the Radial University Center. The total
cost of acquisition amounted to R$ 54,113, and the units of interest purchase and sale
agreement was entered into on August 20, 2007. In addition, the Company acknowledged
the Sellers’ credit right before IREP in the amount of R$ 5,152 as dividends receivable,
settled on January 30, 2008, and in the amount of R$ 550, disclosed in the consolidated
financial statements in “commitments payable”.

On February 29, 2008, through subsidiary IREP, the Company concluded the acquisition of
all the units of interest of (i) Sociedade Interlagos de Educação e Cultura S/S Ltda.,
controlling institution of Faculdade Interlagos (“Fintec”) for R$ 6,295; (ii) Sociedade Abaeté
de Educação e Cultura Ltda., controlling company of Instituto Euro-Latino-Americano de
Cultura e Tecnologia Ltda. (“Europan”), for R$ 8,352; and (iii) Faculdade Brasília de São
Paulo Ltda. (“Faculdade Brasília”), for R$ 2,235. On said date, these acquisitions were
financially settled, in part through debt assumption (which totaled R$ 3,818).

On June 3, 2008, through subsidiary IREP, the Company acquired all the units of interest of
União Cultural e Educacional Magister Ltda. (“Unicem”) for R$ 4,244.

On August 14, 2008, the Company acquired from the controlling shareholder all the units of
interest of Sociedad de Enseñanza. Superior S.A. (“SESSA”), for R$ 2,337, corresponding to
SESSA’s book value on June 30, 2008.

On October 10, 2008, the Company acquired from the controlling shareholder interests in the
following controlling companies of post-secondary education institutions: (i) Sociedade de
Ensino Superior de Sergipe Ltda. (“SESSE”); (ii) Sociedade de Ensino Superior de Alagoas
Ltda. (“SESAL”); (iii) União Nacional de Educação e Cultura Ltda. (“UNEC”); and (iv)
Sociedade de Ensino Superior do Amapá Ltda. (“SESAP”), by means of subscription of a
capital increase at said companies, as follows:

- amounting to R$ 6,436 at SESSE, upon the issue of 6,436,000 new shares, arising from
loans receivable of this entity corresponding to R$ 5,623, and the remaining balance in
Brazilian currency. Immediately thereafter, 4,999 shares were acquired for R$ 5, which were
indirectly held by the controlling shareholders;

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1 Operations--Continued

- amounting to R$ 3,980 at SESAL, upon the issue of 3,980,000 new shares, arising from
loans receivable of this entity. Immediately thereafter, 4,999 shares were acquired for R$ 5,
which were indirectly held by the controlling shareholders;

- amounting to R$ 4,031 at UNEC, upon the issue of 4,031,000 new shares, arising from
loans receivable of this entity corresponding to R$ 3,430, and the remaining balance in
Brazilian currency. Immediately thereafter, 4,999 shares were acquired for R$ 5, which were
indirectly held by the controlling shareholders; and

- amounting to R$ 1,019 at SESAP, upon the issue of 1,019,000 new shares, arising from
loans receivable of this entity. Immediately thereafter, 4,999 shares were acquired for R$ 5,
which were indirectly held by the controlling shareholders.

After said transactions, the Company concluded the acquisition of 99.99% of the capital of
such companies.

The aforementioned acquisitions were carried out pursuant to the terms and conditions set
forth in a Memorandum of Understanding executed between the Company and the
controlling shareholders of said entities, on April 07, 2007, as disclosed at the time of the
Company’s IPO.

On November 07, 2008, the Company, through subsidiary IREP, acquired all the units of
interest of Maria Montessori de Educação e Cultura Ltda. (“Montessori”), Cultura e Educação
de Cotia Ltda. (“Cotia”) and Unidade de Ensino Superior Montessori de Ibiúna S/C Ltda.
(“Unissori”), with main offices and campuses located in the cities of São Paulo, Cotia and
Ibiúna, respectively. The total investment amounted to R$ 10,299, from which debts reaching
nearly R$ 2,300 were discounted.

10



2 Basis of preparation and presentation of financial statements and initial adoption of
Law no. 11,638/07 and Provisional Measure no. 449/08

2a. Financial statements

The individual and consolidated financial statements are under the responsibility of the
Company’s Management and have been prepared in accordance with the accounting
practices adopted in Brazil and the rules issued by the Brazilian Securities Commission
(CVM), with the observance of the accounting guidelines established by the Brazilian
Corporate Law (Law no. 6,404/76), which include the new provisions introduced, amended
and revoked by Law no. 11,638, of December 28, 2007, and Provisional Measure no. 449
(“MP no. 449/08”), of December 03, 2008.

The authorization to conclude the preparation of these financial statements was granted at
the Board of Directors’ meeting held on March 18, 2009.

Since the Company was incorporated on March 31, 2007, the 2007 individual and
consolidated statements of income comprise the result of operations from April 01 to
December 31, 2007.

2b. Initial adoption of Law no. 11,638/07 and Provisional Measure no. 449/08

As permitted by CVM Resolution no. 565, of December 17, 2008, which approved Technical
Pronouncement CPC no. 13 – Initial Adoption of Law no. 11,638/07 and Provisional Measure
no. 449/08 (“MP no. 449/08”), the Company chose December 31, 2007 as the transition date
to adopt the new accounting rules. The transition date is the starting point to implement the
changes in Brazilian accounting rules and represents the base date for the Company’s initial
balance sheet adjusted to the 2008 new accounting provisions.

CPC 13 exempted companies from implementing the provisions set forth in NPC 12 and CVM
Resolution no. 506/06 – Accounting Practices, Changes in Accounting Estimates and Error
Correction, upon the initial adoption of Law no. 11,638/07 and MP no. 449/08. Such Resolution
determines that, besides listing the effects of the new accounting rules in the retained earnings
or losses account, companies are required to show the opening balance sheet for each account
or group of accounts related to the oldest period for comparison purposes, together with the
remaining comparative amounts, as if the new accounting rules had always been in use.

11



Law no. 11,638/07 and Provisional Measure no. 449/08--Continued

2b. Initial adoption of Law no. 11,638/07 and Provisional Measure no. 449/08--Continued

As allowed by said pronouncement, the Company chose to book the adjustments arising from
the changes in accounting rules in the retained earnings account on January 1, 2008. The
financial statements for the year ended December 31, 2007, jointly presented with the financial
statements for 2008, were prepared in accordance with the Brazilian accounting practices in
force up to December 31, 2007. As permitted by Technical Pronouncement CPC 13 – Initial
Adoption of Law no. 11,638/07 and MP no. 449/08, such financial statements are not being
resubmitted for comparison purposes between years.

The following technical pronouncements issued by the Accounting Standards Committee
(CPC) and approved by the Brazilian Securities Commission and the Federal Accounting
Council were observed and assessed by the Company regarding their impact on its opening
balance sheet as of January 1, 2008 and on the preparation of its financial statements for the
year ended 2008:

• Conceptual Framework for the Preparation and Presentation of Financial Statements,
approved by CVM Resolution no. 539, of March 14, 2008;

• CPC 01 Asset Impairment, approved by CVM Resolution no. 527, of November 01,
2007;

• CPC 02 Effects of Changes in Exchange Rates and Translation of Financial
Statements, approved by CVM Resolution no. 534, of January 29, 2008;

• CPC 03 Statement of Cash Flows, approved by CVM Resolution no. 547, of August
13, 2008;

• CPC 04 Intangible Assets, approved by CVM Resolution no. 553, of November 12,
2008;

• CPC 05 Related-party Disclosures, approved by CVM Resolution no. 560, of
December 11, 2008;

• CPC 06 Commercial Leasing, approved by CVM Resolution no. 554, of November 12,
2008;

12





• CPC 07 Governmental Subsidies and Assistances, approved by CVM Resolution
no. 555, of November 12, 2008;

• CPC 09 Statement of Added Value, approved by CVM Resolution no. 557, of
November 12, 2008;

• CPC 10 Stock-based Compensation, approved by CVM Resolution no. 562, of
December 17, 2008;

• CPC 12 Adjustment to Present Value, approved by CVM Resolution no. 564, of
December 17, 2008;

• CPC 13 First-time Adoption of Law no. 11,638/07 and Provisional Measure no.
449/08, approved by CVM Resolution no. 565, of December 17, 2008;

• CPC 14 Financial Instruments: Recognition, Measurement and Evidencing, approved
by CVM Resolution no. 566, of December 17, 2008;

• OCPC-02 Disclosures about the 2008 Financial Statements.

The initial balance sheet as of December 31, 2007 (transition date) was prepared considering
the required exceptions and some optional exemptions allowed by Technical Pronouncement
CPC 13, as follows:

a) Exemption about presentation of comparative financial statements:

The financial statements for 2007 were prepared based on the accounting rules
prevailing in 2007. The option granted by CPC 13 to not adjust the 2007 financial
statements to the 2008 accounting standards was exercised by the Company, as
mentioned above.

13





b) Exemption about maintenance of balances in deferred assets until their realization:

Law no. 11,638/07 limited the registration of expenses in deferred assets, and MP no.
449/08 discontinued this group of accounts. Accordingly, the Company reclassified
part of the balances recognized in the deferred assets group to intangible assets, in
the amount of R$ 5,517 (R$ 3,586 in 2007), as they related to software and user
licenses. In addition, the amounts under the pre-operating expenses group that could
not be reclassified to other groups of the balance sheet were written off directly to the
retained earnings account on the transition date.

c) Exemption about determination of present value adjustments:

The Company measured the present value adjustment by performing a global
calculation on outstanding balances for each monetary assets and liabilities account
group, and also applied discount rates based on market assumptions prevailing on the
transition date. The present value adjustment was not recorded given its immaterial
effects.

d) Exemption about recognition of stock-based compensation:

Stock-based payments related to the compensation of the Company’s executives and
employees were granted only in 2008. For such reason, there were no effects coming
from such amounts on the transition date.

e) Exemption about added value statement without indicating the corresponding amounts
in the preceding year:

The Company chose to present the added value statement solely for the year ended
December 31, 2008.

14





f) Exemption about cash flow statements without indicating the corresponding amounts
in the preceding year:

The Company chose to present the cash flow statement for the year ended
December 31, 2008, including the corresponding amounts for the preceding year,
and chose to no longer present the statement of changes in financial position as of
December 31, 2007.

g) Neutrality for tax purposes of the initial application of Law no. 11,638/07 and
Provisional Measure no. 449/08:

The Company decided to follow the Transition Tax Regime (RTT) implemented by
Provisional Measure no. 449/08, whereby Corporate Income Tax (IRPJ), Social
Contribution on Net Profits (CSLL), Social Integration Program (PIS) contribution
and Social Security Financing Contribution (COFINS), for the years 2008-2009,
continue to be determined based on the accounting methods and criteria set forth by
Law no. 6,404, of December 15, 1976, prevailing on December 31, 2007. Deferred
income tax and social contribution, calculated on the adjustments arising from the
adoption of the new accounting rules pursuant to Law no. 11,638/08 and MP 449/08,
were not booked in the Company’s financial statements, for the same reasons
mentioned in Note 19. The Company will record such option in the Statement of
Corporate Economic and Tax Information (DIPJ) in 2009.

h) Exception regarding goodwill amortization:

The goodwill amounts recorded by the Company were amortized on a straight-line
basis up to December 31, 2008.

i) Exception regarding the first regular review of the useful life of fixed assets:

Up to December 31, 2009, the Company’s subsidiaries will review the useful life
estimates for their fixed assets, which are used to calculate their depreciation rates.
Should any material changes in such estimates arise from this review, they will be
addressed as a change in accounting estimates and will be recognized on a
prospective basis.

15





j) Exception regarding the treatment for investment subsidies:

Up to December 31, 2007, the amounts corresponding to the University for All
Program (“PROUNI”) incentive were directly credited to the capital reserve account
in the shareholders’ equity of subsidiaries. The Company followed the accounting
procedures prevailing on the date they were originated, including the bookkeeping of
the related balances in the capital reserve account of subsidiaries.

Pursuant to CVM Resolution no. 555/08, which approved CPC 07, the amount
corresponding to the PROUNI incentive determined as from the effectiveness of Law
no. 11,638/07, that is, as from January 01, 2008, was accounted for in the P&L for
the year to reduce expenses with income tax and social contribution on net profits,
and was then transferred to the earnings reserve account.

k) Exception regarding financial leasing:

Leased assets were incorporated to fixed assets, on the transition date, at their fair
value or, if lower, at the present value of the minimum payments of the lease, on the
initial date of the contract, adjusted by accumulated depreciation up to the transition
date. The net difference was recorded in the retained earnings account on the
transition date.

16




2c. Effects from adjustments to Law no. 11,638/07 and Provisional Measure no. 449/08

To comply with the disclosure requirements about the initial adoption of the new accounting
rules, the Company provides below, for fiscal year 2008, a brief description and the amounts
corresponding to the impact on shareholders’ equity and P&L, for both the company and
consolidated results, related to the changes enforced by Law no. 11,638/07 and MP no. 449/08.

Lucro Patrimônio Lucro Patrimônio
líquido líquido líquido líquido

Saldos conforme demonstrações financeiras em 31 de
dezembro de 2008: 37.635 421.075 37.635 421.075

Efeitos da Lei nº 11.638/07 e MP nº 449/08 :
Ajuste acumulado de conversão (1) 397 (397) 397 (397)
Opções outorgadas reconhecidas (2) 969
Resultado de equivalência patrimonial 757
Ativo diferido (3) 1.520 1.520
Ajuste de arrendamento mercantil (4) 2.947 (212) 2.947
Saldos anteriores à aplicação da Lei 11.638/07 e
Medida Provisória nº 449/08 38.789 425.145 38.789 425.145

1. In compliance with CVM Resolution no. 534/08, which approved CPC 02, the effects arising from exchange
rate variations of the offshore investment, made on August 14, 2008, represented by SESSA, started to be
recorded in the “Equity Valuation Adjustment” account, in Shareholders’ Equity (Note 8).

2. Recognition of stock-based compensation expenses, pursuant to CVM Resolution no. 562/08, which approved
CPC 10 (Note 23b).

3. Deferred assets write-off related to amounts that are neither qualified as pre-operating expenses nor allowed to
reclassification to other groups in the balance sheet, as set forth by CVM Resolution no. 527/08, which approved
CPC 13.

4. Leased assets (financial leasing) were incorporated to fixed assets, adjusted by accumulated depreciation up to
the transition date.

17




2c. Effects from adjustments to Law no. 11,638/07 and Provisional Measure no. 449/08--
Continued

In addition, in compliance with MP no. 449/08, the Company performed the following
reclassifications in the financial statements for the years ended December 31, 2008 and 2007:
(i) non-operating income was reclassified to income from discontinued operations, (ii) deferred
income (subsidies advance) was reclassified to the Long-term Liabilities group.

2008 2007 2008 2007

Resultado não operacional 17.470 1,913 14,004
Resultado de exercício futuro 16.500 26,460 11,395

3 Summary of the main accounting practices

The main accounting practices adopted by the Company are summarized as follows:

(a) Cash and cash equivalents

They comprise cash, bank deposits and short-term investments with immediate liquidity and
low risk of changes in market value, which are kept to meet the Company’s short-term
commitments. Such investments are valued at cost, plus interest accrued up to the balance
sheet date, and are marked to market, with the related profit or loss booked in the P&L for
the year.

18



3 Summary of the main accounting practices--Continued

(b) Marketable securities

The Company’s financial investments are classified as trading securities, considering the
purpose for which they were acquired.

The financial investments classified as trading securities are measured based on their fair
value. Interest, monetary variation and exchange rate changes, when applicable, are
recorded in the P&L for the year when incurred.

(c) Accounts receivable and prepaid monthly tuition fees

Accounts receivable are derived from the rendering of educational activity services and do
not include any amounts of services rendered after the balance sheet dates. Services billed
but not yet rendered at the balance sheet dates are accounted for as prepaid monthly tuition
fees and are recognized in the respective net income (loss) for the year under the accrual
basis of accounting

Accounts receivable – FIES System are represented by educational loans, contracted by
students with Caixa Econômica Federal (CEF), whereby the financed funds are transferred
monthly by CEF into a specific bank checking account. This amount has been used
exclusively to pay the social security taxes withheld (INSS) on the salaries of the Company’s
employees.

(d) Allowance for doubtful debts

This allowance, recorded as a reduction of accounts receivable, is set up in an amount
considered sufficient by the Company’s Management to cover any losses on the collection of
amounts related to monthly tuition fees and checks receivable, considering the risks involved.

(e) Investments in subsidiaries

Investments in subsidiaries are carried under the equity method, and eliminated on
consolidation.

19




(e) Investments in subsidiaries--Continued

For the subsidiary located abroad (SESSA), the Company’s Management concluded that, in
view of SESSA’s administrative, financial and operational independence, its assets and
liabilities are translated into reais based on the exchange rates at the balance sheet closing
dates, and its related income (loss) for the year is determined based on the average monthly
fees for the periods. The income (loss) for the period, proportionally to the Company’s
investment stake, was recorded as equity adjustment. The investment account updates
arising from exchange rate variations are booked at Equity Valuation Adjustments, in the
Company’s shareholders’ equity. For consolidation purposes, the financial statements of
such subsidiary are included in the consolidated financial statements, and the adjustments
arising from exchange rate variations in assets and liabilities denominated in foreign currency
are booked at Equity Valuation Adjustments, in the consolidated balance sheet.

(f) Fixed assets

Stated at acquisition or construction cost, less accumulated depreciation. Depreciation is
calculated by the straight-line method over the useful life of the assets at the rates mentioned
in Note 9.

(g) Intangible assets

Stated at acquisition cost, less accumulated amortization and losses from reduction in
amounts recoverable, when applicable. Intangible assets comprise: (i) goodwill recorded
upon interest acquisition that has been amortized over the period and duration of the
projections of future results on which it was based; (ii) software and user licenses, which are
amortized based on an estimated useful life of five years.

As from January 1, 2009, goodwill amounts upon interest acquisition are no longer amortized
and will continue to be submitted to impairment tests on an yearly basis.

(h) Provision for asset recovery

Management annually revises the net book value of assets in order to check events or
changes in economic and/or operating circumstances that might indicate deterioration or loss
in their recoverable amount. To date, no evidence signaling that the net book value exceeds
the recoverable value has been found. As a result, setting up a provision for deterioration
was not deemed necessary.

20




(i) Financial leasing

In 2008, financial leasing agreements were recognized in fixed assets and in liabilities under
loans and financing at the lowest of (i) the present value of the required minimum
installments of the agreement or (ii) the fair value of the asset. The amounts recorded in fixed
assets are depreciated based on the estimated useful life of the assets and the estimated
duration of the leasing agreement, whichever is shortest. Interest in liabilities related to loans
and financing is recognized in the statement of income based on contract duration at the
effective interest rate method. Operational leasing agreements are recognized as expense
on a systematic basis that represents the period over which the benefit arising from the
leased asset is obtained, even if such payments are not made under this basis.

In 2007, leasing agreements were booked in the results for the year, regardless of the
classification between financial or operational leasing, upon the payment of installments on a
monthly basis, and are registered under the operating expenses caption.

(j) Provision for contingencies

Set up based on an estimate made by the Company’s Management, supported by the
opinion of its internal and external legal advisors, in amounts considered sufficient to cover
any probable losses related to the legal proceedings.

(k) Other current and non-current liabilities

Stated at known or estimated values, increased by charges and monetary restatement, as
applicable.

A provision is recognized in the balance sheet when the Company has a legal or constructive
obligation arising from past events, the settlement of which is expected to result in an outflow
of economic benefits. Certain liabilities due to uncertainty with respect to the timing and
amount of the outflow of economic benefits required for their settlement are estimated as
incurred and recorded as a provision. Provisions are recorded reflecting the best estimates of
the risk involved.

21




(l) Taxation

On September 30, 2005, the controlling entities SESPA, SESCE, SESPE and STB had their
form of business organization modified from non-profit entities to business entities, thus
being subject to the tax burden levied on the latter. SESES was considered a non-profit
philanthropic entity until February 9, 2007, when its form of organization was modified and it
became a business company. Therefore, to that date, SESES had benefited from tax
immunity and exemption, pursuant to the terms of Articles 150 - item VI, C - and 195 -
paragraph 7 - of the Federal Constitution, and Articles 12 and 15 of Law no. 9,532/97, ruling
on tax immunity and exemption, and was recognized as an entity of public interest within
federal and state laws by Decree no. 86,072 of June 4, 1981 and Law no. 2,536 of January
3, 1975, respectively. IREP and Curitiba, as well as the other companies acquired in 2008,
detailed in Note 1, have already been set up as commercial companies. However, as
SESES, the controlling entities, IREP, Curitiba and the other companies acquired in 2008
had already enrolled under the University for All Program (PROUNI), in accordance with Law
no. 11,096/2005, regulated by Decree no. 5,493/2005 and Normative Ordinance of the
Brazilian Internal Revenue Agency no. 456, dated October 5, 2004, pursuant to the terms of
Article 5 of Provisional Measure no. 213, dated September 10, 2004, they benefit from
exemption, during the program enrollment effective term, from the following federal taxes:

• Corporate Income Tax (IRPJ) and Social Contribution on Net Profits (CSLL), introduced
by Law no. 7,689 of December 15, 1988;
• Social Security Financing Contribution (COFINS), introduced by Complementary Law no.
70, of December 30, 1991; and
• Social Integration Program Contribution (PIS), introduced by Complementary Law no. 7,
of September 7, 1970.

The above exemptions are applicable to the amount of revenues earned from post-secondary
education activities, derived from undergraduate and occupationally specific sequential
courses. Also as a result of such change in the form of organization to business companies,
the controlling entities and SESES became subject to the following events as from October
2005 and February 2007, respectively:

(i) loss of Service Tax (ISS) immunity; and
(ii) loss of 100% exemption regarding the employer contribution to the National Institute for
Social Security (INSS), which is required to be paid through a system of staggered
payments as provided for under PROUNI legislation (20% in the 1st year, 40% in the 2nd
th
year up to 100% in the 5 year).

22




(l) Taxation--Continued

IRPJ and CSLL

Current income tax and social contribution were determined following the criteria established
by the Normative Ordinance of the Brazilian Internal Revenue Agency, specifically to
PROUNI, whereby the taxpayer is allowed not to pay such taxes on profit from regular
undergraduate and technological educational activities that benefit from favorable tax
treatment and to convert them into capital reserve.

PIS and COFINS

The PROUNI rules provide that revenues from traditional undergraduate and technological
courses are exempt from PIS and COFINS contributions. Revenues from other educational
activities are subject to PIS and COFINS at the rate of 0.65% and 3.00%, respectively,
whereas revenues from activities not related to education are subject to PIS at the rate of
1.65% and COFINS, at 7.6%.

(m) Stock-based payment

The Company granted its managers and employees participating in the program stock
options, which shall only be exercised after specific grace periods. Such options are
calculated during their related grace periods, the value of which is determined based on the
Black-Scholes valuation method on the dates when the compensation program is granted.
The options are booked in the operating result, under the “recognized granted options”
caption, in the general and administrative expenses group, in accordance with the allowed
periods to exercise the options as defined in the programs and described in Note 23.b.

23




(n) Use of estimates

Estimates are used to measure and recognize certain assets and liabilities in the financial
statements of the Company and its subsidiaries. The calculation of such estimates
considered the experience of past and current events, assumptions related to future events,
as well as other elements of objective and subjective nature. Significant items subject to
estimates include: the selection of useful lives of fixed assets and intangible assets; the
provision for doubtful debts; the provision for inventory losses; the analysis of recoverability
of fixed and intangible assets; the provision for contingencies; the calculation of the fair value
of stock-based compensation and financial instruments (only in 2008). The settlement of
transactions involving such estimates may result in significantly different amounts from those
recorded in the financial statements because of the imprecision inherent to their calculation
process. The Company revises its estimates and assumptions at minimum on a quarterly
basis.

(o) Statements of Cash Flows and Added Value

The statement of cash flows was prepared and is presented in accordance with CVM
Instruction no. 547, of August 13, 2008, which approved Technical Pronouncement CPC 03 –
Statement of Cash Flows, issued by the Accounting Standards Committee (CPC). The
statement of added value was prepared and is presented in conformity with CVM Instruction
no. 557, of November 12, 2008, which approved Technical Pronouncement CPC 09 –
Statement of Added Value, issued by CPC.

(p) Net income per thousand shares

The net income per thousand shares was determined based on the number of shares
outstanding on the dates of the financial statements.

24



4 Consolidation principles

The consolidated financial statements comprise the operations of the Company and its
following subsidiaries, whose ownership interest on the balance sheet date is summarized as
follows:

Participação no capital
2008 2007
Direta Indireta Direta Indireta
SESES 100% 100%
SESPA 100% 100%
SESCE 100% 100%
SESPE 100% 100%
STB 100% 100%
IREP 100% 100%
Curitiba 100%
Fintec 100%
Europan 100%
Faculdade de Brasília 100%
Unicem 100%
SESSA 100%
SESSE 100%
SESAL 100%
UNEC 100%
SESAP 100%
Montessori 100%
Cotia 100%
Unissori 100%

25



4 Consolidation principles--Continued

The reporting period in the financial statements of consolidated subsidiaries is the same as
that of the Company, and accounting practices have been uniformly applied by consolidated
companies and are consistent with those used in prior period. The operations of subsidiaries
were consolidated as from their acquisition; therefore, subsidiaries Fintec, Europan,
Faculdade de Brasília and Unicem were consolidated as from March 2008 and subsidiaries
SESSA, SESSE, SESAL, UNEC, SESAP, Montessori, Cotia and Unissori, as from October
2008 (3 months).

The main consolidation procedures are:

• Elimination of balances of current accounts and others, components of assets and/or
liabilities, between consolidated companies;
• Elimination of the effects arising from significant intercompany transactions;
• Elimination of interest in capital, reserves and retained earnings of the consolidated
companies; and
• Elimination of revenues and expenses balances arising from business transactions
between consolidated companies.

26



5 Cash and cash equivalents and marketable securities

31/12/2008 31/12/2007 31/12/2008 31/12/2007
Caixa e equivalentes de caixa:
Caixa e bancos 186 2.766 35.686 21.923
Aplicações financeiras 0 208 2.444 930
186 2.974 38.130 22.853
Titulos e valores mobiliários:
Títulos Públicos Federais - LFT 44.747 98.387 62.731 102.543
Certificados de Depósitos Bancários - CDB 49.452 20.754 69.320 21.630
Debêntures de Instituições Financeiras 22.847 78.860 32.026 82.192
117.046 198.001 164.077 206.365
Total 117.232 200.975 202.207 229.218

Exclusive investment funds offer daily liquidity and are mainly composed of Brazilian
government bonds and bank deposit certificates. These exclusive investment fund quotas
are managed by third parties that follow the investment policies defined by the Company.
Said fund comprises Federal Securities (38.23%), Bank Deposit Certificates - CDB
(42.25%) and Debentures of Financial Institutions (19.52%), remunerated at rates varying
from 100.70% and 101.40% of the Interbank Deposit Certificate (CDI). The investment fund
allows prompt redemption with no grace period. On December 31, 2008, the CDI rate stood
at 13.62% p.a.

Based on the financial statements of exclusive funds, prepared in accordance with the rules
set forth by the Brazilian Securities Commission – CVM, such investments are classified as
fund quotas backed by marketable securities, based on their market value, the yields of
which are reflected in financial revenues.

27



6 Accounts receivable

Consolidado
31/12/2008 31/12/2007

Mensalidades de alunos 199.914 195.644
Cheques a receber 13.002 17.340
Créditos a identificar (9.424) (3.353)
Provisão para devedores duvidosos (103.121) (120.144)
100.371 89.487

Breakdown of accounts receivable by aging is as follows:

Consolidado
31/12/2008 % 31/12/2007 %
A vencer 19.000 9% 15.424 7%
Vencidas até 30 dias 30.231 14% 19.238 9%
Vencidas de 31 a 60 dias 22.076 10% 16.191 8%
Vencidas há mais de 180 dias 83.755 39% 120.144 56%

212.916 100% 212.984 100%

Changes in the consolidated allowance for doubtful debts were as follows:

Saldo em 31 de março de 2007 (data de constituição) 91.788
Constituição de provisão para devedores duvidosos 27.587
(1)
Adição (empresas adquiridas) 2.185
Baixa da provisão (1.416)
Saldo em 31 de dezembro de 2007 120.144
Constituição de provisão para devedores duvidosos 58.925
(1)
Adição (empresas adquiridas) 9.183
(2)
Baixa da provisão
(85.131)

Saldo em 31 de dezembro de 2008 103.121

28



6 Accounts receivable--Continued
(1)
Relates to the balance of the acquisitions made in 2007 and 2008, as detailed in Note 1.
(2)
Reversals against accounts receivable after resorting to all collection procedures
(amounts overdue until December 31, 2006).

In 2008, Management revised the criterion used to set up the provision for doubtful debts,
and decided to increase the provision for receivables from students with monthly tuition fees
in arrears arising from renegotiation.

The prepaid monthly tuition fees, amounting to R$ 29,147 on December 31, 2008 (R$ 30,967
on December 31, 2007), will be recognized in the results for the year under the accrual
method.

7 Balances and transactions with related parties

Transactions with related parties were carried out under the terms agreed by the parties and
are described as follows:

29



7 Balances and transactions with related parties--Continued

Natureza da transação 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Indexação

Ativo circulante
Sociedades ligadas (1)
SESSE 5.028 CDI + 3,66% a.a.
SESAL 3.618 CDI + 3,66% a.a.
UNEC 3.073 CDI + 3,66% a.a.
SESAP 2.186 CDI + 3,66% a.a.
13.905

Sociedades controladas
SESES 27.154 110% CDI
IREP 1.206 93 110% CDI
SESSE 392 110% CDI
UNEC e SESAP 251 110% CDI
BRASÍLIA e INTERLARGOS 201 110% CDI
29.204 93
Pessoas ligadas
Administrador (3d) 83

Despesas antecipadas (3c)
Curto prazo 700 700
Longo prazo 1.692 1.692
2.392 2.392

Passivo circulante
Sociedades controladas
SESES 3
3

Aluguéis a pagar a acionistas (2) 11
Fornecedores 1 1

Resultado
Receitas financeiras
Mútuo com acionistas
e sociedades ligadas 329 104 1.636 2.181

Despesas gerais e administrativas
Aluguéis (2) 52 255
Serviço de consultoria (3c) 1.631 1.631
Serviços diversos (3b) 1.579 1.258
1.631 3.262 1.513

30




(1) The balances with controlling companies of post-secondary education institutions: (i)
SESSE, controlling entity of Faculdade de Sergipe; (ii) SESAL, controlling entity of
Faculdade de Alagoas; (iii) UNEC, controlling entity of Faculdade Câmara Cascudo, in
the state of Rio Grande de Norte; and (iv) SESAP, amounting to R$ 13,905 on
December 31, 2007, were used by the Company for capital increase purposes in such
entities upon their acquisition from the controlling shareholder in November 2008 (refer
to comments in Note 1).

(2) Annual rent contracts were entered into for 12 properties owned by shareholder João
Uchôa Cavalcanti Netto, of which 8 were commercial rooms used by Management, 3
were stores used by SESES and 1 apartment was used by an employee transferred to
Rio de Janeiro. In November 2007, the rent contracts of 3 commercial rooms were
rescinded. The rent contracts of the other commercial rooms were rescinded in July
2008.

(3) Other transactions with related parties:

(a) Editora Rio’s main business purpose is to publish books and periodicals, as well as
receive commissions on advertising and promotion of Universidade Estácio de Sá,
according to the contract entered into by the parties, rescinded on May 29, 2007. For
publicity intermediation services, 20% fees were charged, as determined by the
Executive Council for Standard Rules (CENP), which regulates this type of activity. The
shareholding structure of Editora Rio is: (i) 98% of units of interest are held by SVJ
Participações Ltda. (in 2007, owned by 2 employees of SESES and José Roberto
Vasconcelos, Academic Director); (ii) 1% of units of interest is held by Dílson Gomes
Navarro, Managing Vice-President of SESES); and (iii) 1% of units of interest is held by
Sylvio Augusto do Rego Barros Reis (SESES former employee). The amounts paid to
Editora Rio until May 29, 2007 and disclosed in the December 31, 2007 consolidated
financial statements aggregated R$ 948. No amounts paid to Editora Rio were booked in
2008.

(b) On January 7, 2008, SESES entered into a contract to sponsor Estácio de Sá Futebol
Clube Ltda., valid for 12 months. This sponsoring totals R$ 1,430. The contract was
terminated in 2008 and no renewal was made.

31




(3) Other transactions with related parties:--Continued

(c) On June 04, 2008, the Company entered into a Consulting Agreement (“Agreement”) with
Marone Consultoria e Participações Ltda. (“Marone”), a company controlled by André
Cleófas Uchôa Cavalcanti and Marcel Cleófas Uchôa Cavalcanti, holders of nearly
1.74% of common shares issued by the Company and members of the Shareholders’
Agreement, executed on June 04, 2008, the purpose of which is to render services
connected with academic and post-secondary educational activities, as well as strategic
planning and development of new businesses, besides setting forth the non-compete
obligation on the part of Marone. Said Agreement shall have a duration of 48 (forty-eight)
months as from its signature date.

As compensation for the commitment to not perform activities in the education line of
business in the competition and to not, by any means, compete with the Company and
its subsidiaries, as well as for the monthly services to be rendered, it is hereby agreed
that a total remuneration of R$ 14,000 shall be paid, as follows: R$ 2,800, upon
signature of this Agreement, as an advance that will be diluted throughout the
effectiveness thereof, for which there is no provision for monetary restatement or
financial charges, and 48 monthly installments, equal and consecutive, amounting to R$
233, the first of which having expired on June 06, 2008. It is also agreed that the amount
of such installments shall be restated, in the shortest period as allowed by the legislation,
based on IGP-M/FGV or, in the absence thereof, based on an equivalent index, since the
signing date of the Agreement until the effective payment date of each installment.

The non-compete obligation assumed by Marone, its partners and any companies in
which they might hold a controlling interest is valid in Brazil as a whole. Nevertheless, the
following controlling institutions are excluded from such obligation: SESSE, SESAL,
SESAP, UNEC, SESSA, the share control of which was transferred to the Company, as
mentioned in Note 1, and Asociación de Enseñanza Superior de Las Américas (“AESA”),
whose share control might be transferred to the Company, under the terms and
provisions set forth in the Memorandum of Understanding entered into, on April 07,
2007, with the controlling shareholders of such Institutions, including André Cleófas
Uchôa Cavalcanti and Marcel Cleófas Uchôa Cavalcanti.

32




(3) Other transactions with related parties:--Continued

The Agreement may be terminated by either Party, upon a prior 60 (sixty) day notice to
the other Party. In such case, all the implications set forth in the Agreement shall be
observed, including the obligation to pay a lump-sum compensation to Marone, duly
restated by IGP-M/FGV, amounting to the sum of installments due until contract
termination, should the Company decide to rescind said Agreement. In case Marone
decides to terminate the Agreement with the proper previous notice, no indemnification
to the Company shall be paid.

The Board of Directors, in a meeting held on July 23, 2008, approved the execution of
said Consulting Agreement.

(d) On December 22, 2008, a loan contract was signed with Administrator, amounting to R$
83, the expiration date of which is June 22, 2010.

33



8 Investments in subsidiaries

(a) Changes in investments

Ajuste
Saldos em Dividendos de avaliação Ajustes Equivalência Saldos em
31/12/2007 Adições recebidos patrimonial Lei nº 11.638/07 patrimonial 31/12/2008

Investimento
SESES 112.517 (2.419) (3.555) 1.291 107.834
SESPA 8.124 (2.733) (5) 3.339 8.725
SESCE 16.905 (3.734) (176) 21.179 34.174
SESPE 7.878 (1.985) (18) 7.279 13.154
STB 22.047 (3.223) (584) 9.725 27.965
IREP (2.368) 45.097 (3.275) 39.454
CURITIBA (377) 1.710 508 1.841
SESSA 3.219 397 (140) 3.476
SESAP 1.363 (22) (536) 805
SESAL 2.455 (32) 701 3.124
SESSE 1.051 (75) (195) 781
UNEC 1.816 (1.138) 678
Total 164.726 56.711 (14.094) 397 (4.467) 38.738 242.011

On July 15, 2008, the Company increased the capital stock of IREP with the advance
balance for future capital increase it holds in such institution, amounting to R$ 23,297.

On December 17 and 18, 2008, the Company carried out a capital increase at subsidiaries
IREP and Curitiba, amounting to R$ 21,800 and R$ 1,710, respectively.

The companies SESSA, SESAP, SESAL, SESSE and UNEC were acquired in 2008, as
mentioned in Note 1.

34



8 Investments in subsidiaries--Continued

(b) Information about subsidiaries
SESES SESPA SESCE SESPE STB IREP CURITIBA SESSA

Participação no capital 100% 100% 100% 100% 100% 100% 100% 100%
Quantidade de quotas detidas 12.113.000 964.400 6.897.000 3.727.000 3.371.000 25.255.656 248.134 10.607
Capital social integralizado 12.113 964 6.897 3.727 3.371 25.256 253 2.544
Patrimônio líquido (passivo a descoberto)
31 de dezembro de 2008 107.834 8.725 34.174 13.154 27.965 39.454 1.841 3.476
31 de dezembro de 2007 112.517 8.124 16.905 7.878 22.047 (2.368) (377)
Saldo reserva de capital - PROUNI
31 de dezembro de 2008 8.825 1.305 10.212 3.401 5.872 112 543 -
31 de dezembro de 2007 6.792 225 3.204 910 2.380 (377)
Constituição reserva
31 de dezembro de 2008 2.032 1.079 7.008 2.491 3.492 111 167
31 de dezembro de 2007 6.792 225 3.204 910 2.380
Lucro (prejuízo) líquido do exercício/período
31 de dezembro de 2008 (741) 2.259 14.171 4.790 6.233 (3.387) 340 (140)
31 de dezembro de 2007 15.478 769 6.565 1.830 5.763 (1.077) (78)
Investimento total:
31 de dezembro de 2008 107.834 8.725 34.174 13.154 27.965 39.454 1.841 3.476
31 de dezembro de 2007 112.517 8.124 16.905 7.878 22.047 (2.368) (377)

Investimentos adquiridos em 01 de outubro de 2008:

ALAGOAS SERGIPE NATAL AMAPÁ

Participação no capital 100% 100% 100% 100%
Quantidade de quotas detidas 6.185 8.741 6.036 2.524
Capital social integralizado 6.185 8.741 6.036 2.524
Patrimônio líquido (passivo a descoberto)
31 de dezembro de 2008 3.124 781 678 805
31 de dezembro de 2007
Saldo reserva de capital - PROUNI
31 de dezembro de 2008 955 - - 146
Constituição reserva
31 de dezembro de 2008 98
Lucro (prejuízo) líquido do exercício/período
31 de dezembro de 2008 603 (194) (1.138) (536)
Investimento total (inclui ágio):
31 de dezembro de 2008 3.124 781 678 805

Investimento total:
31 de dezembro de 2008 242.011
31 de dezembro de 2007 164.726

The result of equity pickup booked by the Company comprises the portion of the tax incentive
related to PROUNI recorded in the subsidiaries’ result, as provided by Law no. 11,638, in the
amount of R$ 16,478. On December 31, 2007, such tax incentive was booked in the capital
reserve account (R$ 13,511 in 2007).

The financial statements used for application of the equity method of accounting were
prepared as of December 31, 2008.

35




(b) Information about subsidiaries--Continued

The description of subsidiaries and the activities developed thereby are summarized as
follows:

(i) SESES

With its principal place of business in the city of Rio de Janeiro, until February 9, 2007
SESES was defined as a non-profit philanthropic company, mainly engaged in maintaining
schools for any educational level, in conformity with Brazilian laws, as well as developing
philanthropic initiatives, on a free-of-charge basis, aiming at assisting the community in the
areas including healthcare and legal, medical, and social services, as well as recreation,
sports and charitable assistance to invalids. As from February 10, 2007, the form of business
organization adopted was changed and SESES became a business company.

Currently, SESES includes 48 units in seven Brazilian states and comprises one University –
Universidade Estácio de Sá – and eight colleges. Universidade Estácio de Sá consists of 39
units located in the state of Rio de Janeiro. Colleges supported by SESES are: Faculdade
Estácio de Sá in the city of Campo Grande, state of Mato Grosso do Sul; Faculdade Estácio
de Sá in the city of Belo Horizonte and Faculdade Estácio de Sá in the city of Juiz de Fora,
both in the state of Minas Gerais; Faculdade Estácio de Sá in the city of Ourinhos, state of
São Paulo; Faculdade Estácio de Sá of Santa Catarina, in the state of Santa Catarina;
Faculdade Estácio de Sá in the city of Vitória and Faculdade Estácio de Sá in the District of
Vila Velha, both in the state of Espírito Santo; and Faculdade Estácio de Sá of Goiás, in the
state of Goiás.

(ii) SESPA

With its principal place of business in the city of Belém, until September 30, 2005 SESPA
was defined as a non-profit company. As from that date, the form of business organization
adopted was changed and SESPA became a business company. SESPA is the sponsor of
Faculdade do Pará – FAP.

(iii) SESCE

With its principal place of business in the city of Fortaleza, until September 30, 2005 SESCE
adopted was changed and SESCE became a business company. SESCE is the sponsor of
Faculdade Integrada do Ceará – FIC, located in the city of Fortaleza, which includes two
units, and Faculdade de Medicina de Juazeiro do Norte – FMJ, located in the city of Juazeiro
do Norte.

36





(iv) SESPE

With its principal place of business in the city of Recife, until September 30, 2005 SESPE
adopted was changed and SESPE became a business company. SESPE is the sponsor of
Faculdade Integrada do Recife – FIR.

(v) STB

With its principal place of business in the city of Salvador, until September 30, 2005 STB was
defined as a non-profit company. As from that date, the form of business organization was
changed and STB became a business company. STB is the sponsor of Centro Universitário
da Bahia – UNIFIB, which comprises two units.

(vi) IREP

Located in São Paulo, IREP is a business company, with 8 units: 6 in São Paulo, 1 in the
ABC region in São Paulo and 1 in Curitiba.

(vii) CURITIBA

With its principal place of business in Curitiba, CURITIBA is a business company the main
purpose of which is to manage institutions offering post-secondary education, regular and
distance learning courses, as well as sequential, undergraduation, extension, graduation (lato
and stricto sensu), master, doctor, technical and technologist courses, which render
consulting services, perform research and offer training.

(viii) SESSA

With its principal place of business in the city of Asuncion, in Paraguay, controlling entity of
Universidade de La Integración de Las Americas – UNIDA, SESSA is an education institution
offering undergratuate courses in the following areas, among others: administration,
marketing, law, education, information technology, physical education, medicine and nursing.

37





(ix) SESSE

With its main place of business in Sergipe, until February 2007, SESSE was defined as a
non-profit company. As from that date, the form of business organization adopted was
changed and SESSE became a business company. SESSE is the sponsor of Faculdade de
Sergipe – FASE.

(x) SESAL

With its main place of business in Maceió, in the state of Alagoas, SESAL is a limited liability
company, which was incorporated on October 14, 1997. Its academic activities began in April
1999. SESAL is the sponsor of Faculdade de Alagoas – FAL.

(xi) UNEC

With its main place of business in Natal, until February 2007, UNEC was defined as a non-
profit company. As from that date, the form of business organization adopted was changed
and UNEC became a business company. UNEC is the sponsor of Faculdade Câmara
Cascudo - FCC.

(xii) SESAP

With its main place of business in Amapá, until February 2007, SESAP was defined as a
non-profit company. As from that date, the form of business organization adopted was
changed and SESAP became a business company. SESAP is the sponsor of Faculdade do
Amapá - FAMAP.

38

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