UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN ISSUER PURSUANT TO
RULE 13a-16 OR 15d-16 OF THE SECURITIES
EXCHANGE ACT OF 1934

For the month of August, 2011

Commission

File Number 000-5149

CONTAX PARTICIPAÇÕES S.A.

(Exact name of Registrant as specified in its Charter)

Contax Holding Company

(Translation of Registrant's name in English)

Rua do Passeio, 56 – 16th floor
Rio de Janeiro, RJ
Federative Republic of Brazil

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.

Form 20-F þ Form 40-F o

Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934.

Yes o No þ

	*Contax Participações*
	*S.A. and subsidiaries*


	Quarterly Financial Information - ITR
	for the quarter ended June 30, 2011 and
	Auditors’ Report on the Quarterly Financial
	Information

	Deloitte Touche Tohmatsu Auditores Independentes

REPORT ON REVIEW OF INTERIM FINANCIAL STATEMENTS

(Convenience Translation into English from the Original Previously Issued in Portuguese)

To the Board of Directors and Shareholders of

Contax Participações S.A.

Rio de Janeiro – RJ

Introduction

We have reviewed the individual and consolidated interim financial information of Contax Participações S.A. (“Company”) and its subsidiaries, contained in the Quarterly Financial Information Form – ITR for the quarter ended June 30, 2011, comprising the balance sheets and the related statements of income, comprehensive income for the three and six-month period ended on that date, changes in shareholders’ equity and cash flows for the six-month period then ended, including the explanatory notes to the interim financial statements.

Management is responsible for preparing individual interim financial information according to the Technical Pronouncement CPC 21 – Interim Financial Reporting and consolidated interim financial information in accordance with CPC 21 and IAS 34 – Interim Financial Reporting, issued by the International Accounting Standards Board – IASB and fair presentation of this interim financial information in accordance with the standards established by the Brazilian Securities and Exchange Commission, applicable to the preparation of the Quarterly Financial Information - ITR. Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of Review

We conducted our review in accordance with Brazilian and International Standards on Review Engagements (NBC TR 2410 - Revisão de Informações Intermediárias Executada pelo Auditor da Entidade and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of the interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards and accordingly does not allow us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion on the individual interim financial information

Based on our review, we are not aware of any facts that would lead us to believe that the individual interim financial information included in the aforementioned quarterly financial information was not prepared, in all material respects, in accordance with CPC 21 applicable to the preparation of Quarterly Financial Information – ITR and were fairly presented in accordance with the standards issued by the Brazilian Securities and Exchange Commission.

Conclusion on the consolidated interim financial information

Based on our review, we are not aware of any facts that would lead us to believe that the consolidated interim financial information included in the aforementioned quarterly financial information are not prepared, in all their material respects, in accordance with CPC 21 and IAS 34 applicable to the preparation of the Quarterly Financial Information – ITR and are fairly presented in accordance with the standards issued by the Brazilian Securities and Exchange Commission.

Other matters

Interim Information of Value Added

We also have reviewed the individual and consolidated interim statements of value added (“DVA”), for the six-month period ended June 30, 2011, the presentation of which is required according to the standards issued by Brazilian Securities and Exchange Commission - CVM applicable to the preparation of the Quarterly Financial Information (ITR) and as supplemental information for IFRS that do not require a presentation of DVA. This information was submitted to the same review procedures described above and, based on our review, we are not aware of any facts that would lead us to believe that these statements were not fairly presented, in all their material respects, in relation to the individual and consolidated interim financial statements taken as a whole.

The accompanying financial statements have been translated into English for the convenience of readers outside Brazil.

Rio de Janeiro, August 2, 2011

DELOITTE TOUCHE TOHMATSU	John Alexander Harold Auton
Auditores Independentes	Engagement Partner
CRC No. 2SP 011.609/O-8 “F” RJ	CRC No. 1RJ 078.183/O-2

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

BALANCE SHEETS AS OF JUNE 30, 2011 AND DECEMBER 31, 2010
(Amounts in thousands of Brazilian reais – R$)

	Note	Parent Company (BR GAAP)		Consolidated (IFRS and BR GAAP)
ASSETS		6/30/2011	12/31/2011	6/30/2011	12/31/2011


CURRENT ASSETS
Cash and cash equivalents	5	18,010	74,553	235,159	387,803
Restricted cash	5	-	-	4,163	-
Accounts receivable	6	-	-	241,071	176,302
Recoverable taxes	7	339	922	11,026	7,133
Dividends receivable	-	100,087	24,884	-	-
Prepaid expenses and other assets	9	41	-	32,411	30,835
Total current assets		118,477	100,359	523,830	602,073

NON-CURRENT ASSETS
Court deposits	19	-	-	113,392	93,865
Financial investments held to maturity	5	51,161	48,659	73,325	69,869
Restricted cash	5	-	-	26,073	2,013
Recoverable taxes	7	5,243	5,056	13,186	10,383
Deferred taxes	8	-	-	74,383	64,269
Debentures receivable	14	58,250	-	-	-
Credits receivable	32	-	-	9,893	9,485
Prepaid expenses and other assets	9	-	-	325	2,573
Investment in subsidiaries	10	261,371	316,948	-	-
Property, plant and equipment	11	-	-	448,441	405,873
Goodwill on investments	12	49,081	49,081	211,059	49,081
Other intangible assets	13	-	-	146,574	69,073
Total non-current assets		425,106	419,744	1,116,651	776,484

TOTAL ASSETS		543,583	520,103	1,640,481	1,378,557

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

BALANCE SHEETS AS OF JUNE 30, 2011 AND DECEMBER 31, 2010
(Amounts in thousands of Brazilian reais – R$)

	Note	Parent Company (BR GAAP)		Consolidated (IFRS and BR GAAP)
LIABILITIES		6/30/2011	12/31/2011	6/30/2011	12/31/2011


CURRENT LIABILITIES
Loans and financing	15	-	-	124,901	64,873
Suppliers	-	91	22	79,154	83,160
Payroll and related charges	16	132	81	302,021	230,569
Leasing	17	-	-	1,226	4,277
Taxes payable	18	113	11	37,193	43,093
Dividends payable	-	103,736	28,959	103,737	28,959
Transfer to shareholders	-	26,182	26,374	26,182	26,374
Contingent consideration	33	-	-	4,163	-
Other liabilities	20	-	-	25,544	23,171
Total current liabilities		130,254	55,447	704,121	504,476

NON-CURRENT LIABILITIES
Loans and financing	15	-	-	361,853	317,994
Contingent laibilities	19	-	-	101,845	88,266
Leasing	17	-	-	608	-
Contingent consideration	33	45,685	45,685	76,153	45,685
Deferred taxes	-	-	-	24,825	-
Other liabilities	20	-	-	940	1,165
Total non-current liabilities		45,685	45,685	566,224	453,110

TOTAL LIABILITIES		175,939	101,132	1,270,345	957,586

CAPITAL AND RESERVES
Capital stock	21	223,873	223,873	223,873	223,873
Capital reserve	22.1	16,799	14,731	16,799	14,731
Profit reserves	22.2	118,329	118,329	118,329	118,329
Treasury shares	23	(10,636)	(12,147)	(10,636)	(12,147)
Equity valuation adjustments	22.2	3,962	(46)	3,962	(46)
Retained earnings	-	15,317	-	15,317	-
Proposal for distribution of additional dividend	-	-	74,231	-	74,231
Shareholders' equity attributable to parent company's owners		367,644	418,971	367,644	418,971

Non-controlling interest	24	-	-	2,492	2,000

Total shareholders' equity		367,644	418,971	370,136	420,971

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		543,583	520,103	1,640,481	1,378,557


The notes are an integral part of the financial statements

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)


CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

INCOME STATEMENTS FOR THE QUARTERS ENDED JUNE 30, 2011 AND 2010
(Amounts in thousands of Brazilian reais - R$ - except when stated otherwise)

	Note	Parent Company (BR GAAP)		Consolidated (IFRS and BR GAAP)		Parent Company (BR GAAP)		Consolidated (IFRS and BR GAAP)
		Six-month period ended		Six-month period ended		Quarter ended		Quarter ended
		6/30/2011	6/30/2011	6/30/2011	6/30/2011	6/30/2011	6/30/2011	6/30/2011	6/30/2011



Net operating revenue	25	-	-	1,335,967	1,141,387	-	-	711,419	584,740

Cost of services provided	27	-	-	(1,179,320)	(977,483)	-	-	(631,924)	(503,546)

Gross operating income		-	-	156,647	163,904	-	-	79,495	81,194

Operating income (expenses)
Selling	27	-	-	(16,975)	(12,332)	-	-	(8,537)	(4,845)
General and administrative	27	(1,956)	(1,555)	(91,813)	(62,128)	(676)	(582)	(49,127)	(28,661)
Share-based payments	27	(3,070)	(344)	(3,070)	(344)	(2,273)	(5)	(2,273)	(5)
Equity income	10	15,069	48,236	-	-	5,372	24,869	-	-
Financial revenues	27	7,579	4,807	20,208	13,997	4,194	3,276	9,086	7,902
Financial expenses	27	(540)	(219)	(25,875)	(13,493)	(563)	(211)	(15,770)	(7,452)
Other operating expenses, net	27	(56)	(34)	(13,537)	(12,434)	(4)	(3)	(5,327)	(6,417)
		17,026	50,891	(131,062)	(86,734)	6,050	27,344	(71,948)	(39,478)
Operating income before income tax
and social contribution		17,026	50,891	25,585	77,170	6,050	27,344	7,547	41,716

Income tax and social contribution:
Current	28	(1,709)	(632)	(8,867)	(28,822)	(1,003)	(589)	(1,882)	(17,549)
Deferred	28	-	(271)	(909)	1,777	-	(253)	(316)	2,375

Net income for the six-month period deriving from		15,317	49,988	15,809	50,125	5,047	26,502	5,349	26,542
continued operations

Net income for the six-month period		15,317	49,988	15,809	50,125	5,047	26,502	5,349	26,542

Income attributable to:	29
Owners of the parent company		15,317	49,988	15,317	49,988	5,047	26,502	5,047	26,502
Non-controlling interest		-	-	492	137	-	-	302	40
		15,317	49,988	15,809	50,125	5,047	26,502	5,349	26,542
Earnings per share:	29
From continued operations
Basic
Common shares (centavos per share)		0.2580	0.8466	0.2580	0.8466	0.0850	0.4400	0.0850	0.4400
Preferred shares (centavos per share)		0.2578	0.8375	0.2578	0.8375	0.0849	0.4500	0.0849	0.4500
Diluted
Common shares (centavos per share)		0.2559	0.8374	0.2559	0.8374	0.0843	0.4400	0.0843	0.4400
Preferred shares (centavos per share)		0.2578	0.8375	0.2578	0.8375	0.0849	0.4500	0.0849	0.4500

The notes are an integral part of the financial statements.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)


CONTAX PARTICIPAÇÕES S. A. AND SUBSIDIARIES

STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2011 AND 2010
(Amounts in thousands of Brazilian reais – R$)

	Note	Parent Company (BR GAAP)		Consolidated (IFRS and BR GAAP)		Parent Company (BR GAAP)		Consolidated (IFRS and BR GAAP)
		Six-month period ended		Six-month period ended		Quarter ended		Quarter ended
		6/30/2011	6/30/2011	6/30/2011	6/30/2011	6/30/2011	6/30/2011	6/30/2011	6/30/2011

Net income for the six-month period		15,317	49,988	15,809	50,125	5,047	26,502	5,349	26,542

Other comprehensive income:
Exchange rate difference when translating operations abroad:
Exchange rate differences in the six-month period	22	4,008	-	4,008	-	4,210	-	4,210	-
		19,325	49,988	19,817	50,125	9,257	26,502	9,559	26,542

Total comprehensive income for the six-month period		19,325	49,988	19,817	50,125	9,257	26,502	9,559	26,542

Total comprehensive income attributed to:
Owners of the parent company		19,325	49,988	19,325	49,988	9,257	26,502	9,257	26,502
Non-controlling interest		-	-	492	137	-	-	302	40
		19,325	49,988	19,817	50,125	9,257	26,502	9,559	26,542

The notes are an integral part of the financial statements.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)


	Capital Stock	Capital Reserve	Profit Reserves		Treasury shares	Asset Valuation Adjustment Foreign currency equity translation reserve	Retained earnings	Proposal for distribution of additional dividends	Shareholders' equity attributable to the owners of the parent company (BR GAAP)	Non-controlling interest	Consolidated (IFRS and BR GAAP)
	Capital Stock	Capital Reserve	Legal Reserve	Statutory Reserve	Treasury shares		Retained earnings	Proposal for distribution of additional dividends		Non-controlling interest	Consolidated (IFRS and BR GAAP)

Balance on December 31, 2009	223,873	19,639	21,907	87,924	(10,686)	-	-	59,403	402,060	1,445	403,505

Acquisition of own shares	-	-	-	-	(9,282)	-	-	-	(9,282)	-	(9,282)
Sale of own shares	-	-	-	-	17,564	-	-	-	17,564	-	17,564
Dividends	-	-	-	-	-	-	-	(59,403)	(59,403)	-	(59,403)
Equity instruments for share-based payments:									-
2007 Program	-	344	-	-	-	-	-	-	344	-	344
Surplus value of realized equity instrument	-	(6,578)	-	-	-	-	-	-	(6,578)	-	(6,578)
Net income for the six-month period	-	-	-	-	-	-	49,988	-	49,988	138	50,126

Balance on June 30, 2010	223,873	13,406	21,907	87,924	(2,404)	-	49,988	-	394,694	1,583	396,276


Balance on December 31, 2010	223,873	14,731	27,332	90,997	(12,147)	(46)	-	74,231	418,971	2,000	420,971
Acquisition of own shares	-	(1,002)	-	-	1,511	-	-	-	509	-	509
Exchange rate difference when translating operations abroad	-	-	-	-	-	4,008	-	-	4,008	-	4,008
Dividends	-	-	-	-	-	-	-	(74,231)	(74,231)	-	(74,231)
Equity instruments for share-based payments:
2010 Plan	-	3,070	-	-	-	-	-	-	3,070	-	3,070
Net income for the six-month period	-	-	-	-	-	-	15,317	-	15,317	492	15,809

Balance on June 30, 2011	223,873	16,799	27,332	90,997	(10,636)	3,962	15,317	-	367,644	2,492	370,136


The notes are an integral part of the financial statements.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)


CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

CASH FLOW STATEMENTS FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2011 AND 2010
(Amounts in thousands of Brazilian reais – R$)

	Parent Company (BR GAAP)		Consolidated (IFRS and BR GAAP)
	Six-month period ended		Six-month period ended
	6/30/2011	6/30/2010	6/30/2011	6/30/2010

CASH FLOW FROM OPERATING
ACTIVITIES
Net income for the six-month period from continued operations	15,317	49,988	15,317	49,988
Net Income adjustments:
Depreciation and amortization	-	-	63,934	59,196
Equity income	(15,069)	(48,236)	-	-
Losses on the sale of property, plant and equipment	-	-	-	(34)
Expenses with provision for contingencies	-	-	9,953	16,336
Deferred income tax	-	264	909	(1,777)
Net gain (loss) with monetary variation, net	(2,502)	-	(2,699)	(815)
Recognized expenses from share-based payments settled
with equity instruments	3,070	345	3,070	345
Interest expenses on loans and financing	(1,286)	-	17,985	9,406
Non-controlling interest	-	-	492	137
Changes in current capital:
Accounts receivable	-	-	4,095	(12,435)
Prepaid expenses	(41)	(46)	2,919	(2,930)
Recoverable taxes	686	(693)	(4,449)	10,395
Other assets	-	-	(2,415)	(4,846)
Payroll and related charges	52	33	44,419	49,028
Suppliers	69	170	(28,975)	(19,593)
Taxes payable	102	387	(19,136)	(18,583)
Other liabilities	(192)	10,241	827	(1,395)
Interest expenses on loans and financing	-	-	(18,168)	(9,281)
Net cash from (used in) operating
activities	206	12,452	88,078	123,142
CASH FLOW FROM INVESTMENT
ACTIVITIES

Acquisition of investment, net of acquired cash	-	-	(194,824)	-
Payments received from sale of property, plant and equipment	-	-	-	77
Acquisition of property, plant and equipment	-	-	(60,800)	(55,266)
Court deposits	-	-	(16,501)	(20,499)
Financial investments held to maturity	-	(19,924)	-	(19,924)
Restricted cash	-	-	(28,223)	-
Dividends received	-	131,347	-	-
Net cash used in investment
activities	-	111,423	(300,348)	(95,612)
CASH FLOW FROM FINANCING
ACTIVITIES
Payment of commercial leasing	-	-	(4,513)	(5,974)
BNDES financing	-	-	80,888	53,702
Grupo Allus financing			19,014
Payment of Grupo Allus financing			(9,078)
Payment of BNDES financing	-	-	(27,186)	-
Debentures	(57,250)	-	-	-
Dividends paid	(8)	(88,972)	(8)	(88,972)
Sale of shares	-	(9,282)	-	(9,282)
Share buyback	509	10,986	509	10,986
Cash used in (invested in) financing activities	(56,749)	(87,268)	59,626	(39,540)
Net increase in cash and cash equivalents	(56,543)	36,607	(152,644)	(12,010)
Cash and cash equivalents at the beginning of the six-month	74,553	47,136	387,803	357,853
period
Cash and cash equivalents at the end of the six-month period	18,010	83,744	235,159	345,843
Items not affecting cash:
Additional information:

Income tax and social contribution paid

The notes are an integral part of the financial statements.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)


CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

STATEMENTS OF VALUE ADDED FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2011 AND 2010


	Parent Company (BR GAAP)		Consolidated (IFRS and BR GAAP)
	6/30/2011	6/30/2011	6/30/2011	6/30/2011
	.
Revenues
From services	-	-	1,439,576	1,230,861
Non-deductible loss write-off	-	-	(988)	-
Other revenue	-	-	204	124
	-	-	1,438,792	1,230,985
Inputs from third parties
Cost of services rendered	(100)	(35)	(12,623)	(12,582)
Material, electricity and outsourced services	(1,104)	(725)	(179,629)	(148,936)
Loss /recovery of asset value	-	-	-	34
	(1,204)	(760)	(192,252)	(161,484)

Gross value added	(1,204)	(760)	1,246,540	1,069,501

Depreciation and amortization	-	-	(63,934)	(59,197)
Net added value generated by the company	(1,204)	(760)	1,182,606	1,010,304

Added value received in transfer
Equity income	15,069	48,236	-	-
Financial revenues	7,579	4,807	20,208	13,997
Total added value to distribute	21,444	52,283	1,202,814	1,024,301

Personnel
Payroll and charges	-	-	846,036	677,940
Training	-	-	12,596	9,153
Management fees	3,701	999	629	655
Taxes, fees and contributions
Federal taxes	1,833	1,078	194,679	178,866
Municipal taxes	-	-	51,458	46,943
Value distributed to providers of capital
Interest and monetary variations	552	172	23,129	12,149
Rentals	41	46	58,478	48,469
Value distributed to shareholders
Non-controlling interest	-	-	492	138
Retained earnings /Recording of reserves	15,317	49,988	15,317	49,988

Value-added distributed	21,444	52,283	1,202,814	1,024,301

The notes are an integral part of the financial statements.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

CONTENTS OF NOTES TO THE FINANCIAL STATEMENTS

We present the accompanying notes, an integral part of the Quarterly Information - ITR of Contax Participações S.A. and its subsidiaries, distributed as follows:

1. General information

2. Main accounting policies

3. Main accounting judgment and sources of uncertainties in the estimates

4. New IFRS pronouncements and interpretations still not effective and not early adopted by the Group

5. Cash and cash equivalents, restricted cash and investments

6. Trade accounts receivable (Consolidated)

7. Taxes recoverable

8. Deferred taxes (Consolidated)

9. Prepaid expenses and other assets (Consolidated)

10. Investment in subsidiaries

11. Property, plant and equipment (Consolidated)

12. Goodwill on investments

13. Other intangible assets (Consolidated)

14. Debentures

15. Loans and financing (Consolidated)

16. Payroll, social charges and benefits

17. Finance lease (Consolidated)

18. Taxes payable

19. Provisions (Consolidated)

20. Other liabilities (Consolidated)

21. Capital

22. Reserves and equity valuation adjustments

23. Treasury shares

24. Non-controlling interest

25. Revenue (Consolidated)

26. Operating segments

27. Information on the nature of costs and expenses of operations recognized in the income statement

28. Income tax and social contribution

29. Earnings per share

30. Financial instruments

31. Share-based payments

32. Related party transactions

33. Business combinations

34. Insurance coverage

35. Commitments (Consolidated)

36. Subsequent events

37. Approval of the quarterly financial information - ITR

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

1. INFORMATION

Contax Participações S.A. (the "Company"), established In July 2000, is a publicly-held company, listed in the BM&FBovespa, whose registered corporate purpose is to hold interests in other commercial enterprises and civil societies as a partner, shareholder or quotaholder in Brazil or abroad. The Company is headquartered at Rua do Passeio n^o 48 a 56 (Parte), Centro – Rio de Janeiro – RJ.

The Company has (i) Contax S.A. and Ability Comunicação Integrada Ltda., as direct subsidiaries, and (ii) TODO Soluções em Tecnologia S.A., BRC Empreendimentos Imobiliários Ltda, and Contax Sucursal Empresa Extranjera, Contax Colômbia S.A.S and Stratton Spain S.L. as indirect subsidiaries. The Company and its subsidiaries are jointly referred to in this Quarterly Financial Information as “Company” or “Group”. The operations of the direct and indirect subsidiaries are as follows:

1.1. Operations of Contax S.A.’s direct and indirect subsidiaries

1.1.1. Contax S.A. (“Contax”) was established in December 2002, after changing the corporate name of the extinguished TNext S.A., an entity established in August 1998. Contax is a joint-stock, privately-held company, whose corporate purpose is providing tele-assistance services in general, offering a variety of integrated customer interaction solutions between its customers and their consumers, including telemarketing operations, customer services, customer retention, technical support and bill collection through a variety of communication channels, including telephone contacts, internet access, e-mail, fax, development of technological solutions related to the tele-assistance services, among others.

1.1.2. Ability Comunicação Integrada Ltda.

In September 2010, Contax acquired the entire control of Ability Comunicação Integrada Ltda. (“Ability”). Incorporated in June 2001, Ability is a limited-liability company whose purpose is to provide services related to publicity and advertising, sales promotion, merchandising and marketing, campaign and publicity planning, publicity consulting, market and public-opinion research, among others.

1.1.3. TODO Soluções em Tecnologia S.A.

TODO Soluções em Tecnologia S.A. (“TODO”), established in September 2008, a joint-stock, privately-held company, whose corporate purpose is to provide information technology services, software development and integrated, full and customized solutions, including the full or partial management of the value chain of outsourced processes of business in general; back office processing; customer relationship management, among others.

1.1.4. BRC Empreendimentos Imobiliários Ltda.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

In November 2009, Contax acquired BRC Empreendimentos Imobiliários Ltda. (“BRC”) for R$61. This acquisition aimed at separately developing and executing the real estate project included in the Selective Incentive Program for the adjacent region of Estação da Luz (“Nova Luz Program”), in the downtown area of the city of São Paulo.

1.1.5. Contax Sucursal Empresa Extranjera

Contax Sucursal Empresa Extranjera (“Contax Argentina”) was incorporated in September 2010 with an initial capital stock of R$817, in the city of Buenos Aires, Argentina. Contax Argentina’s corporate purpose is to provide general telephone services, offering integrated services for customer-consumer relations in Argentina.

1.1.6. Contax Colômbia S.A.S

Contax Colômbia S.A.S (“Contax Colômbia”) was incorporated on March 25, 2011, with initial capital of approximately R$1, in the city of Bogota, Colombia. Contax Colômbia’s purpose is to provide telemarketing services in general, offering integrated customer-consumer relationship services in Colombia.

1.1.7. Stratton Spain S.L.

In May 2011, Contax took over Stratton Spain S.L. (“Stratton Spain”), and its subsidiaries Allus Spain S.L., Stratton Argentina S.A., Stratton Peru S.A. and Multienlance S/A, the latter through its subsidiary Contax Colômbia, (which, jointly integrate “Allus Group”). Allus Group is one of the largest contact center service provider in Latin America, with 22 units distributed in Argentina, Colombia and Peru with business activity in the United States and Spain (Note 33).

1.2. Integration of the Company’s activities with Portugal Telecom, SGPS

On January 25, 2011, the Managements of Contax and Mobitel S.A., an entity controlled by Portugal Telecom, SGPS, (“Dedic”) and its subsidiary GPTI Tecnologia da Informação S.A. (“GPTI” or, jointly with Dedic, “Dedic GPTI”), as they operate in the same business segment and their activities, customer base and services are complementary, they decided to propose to shareholders, subject to certain conditions, the integration of their activities aiming at strengthening their market positions.

1.2.1. Dedic Share Merger into Contax

The Agreement for the Merger of Dedic Shares into Contax was executed, which, subject to certain conditions, provides for the summoning of these companies general meetings to resolve on the merger into Contax of shares issued by Dedic, accordingly, Contax’s capital increase which will be determined based on the book value of Dedic shares, according to the valuation report to be timely prepared (“Dedic Share Merger”). As a result of Dedic Share Merger, Contax will issue new common and preferred shares which will be received by current shareholders of Dedic in replacement of Dedic shares then held thereby.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

Contax’ Management contracted a fairness opinion, independently prepared by Banco BTG Pactual S.A. (“BTG Pactual”). According to the figures indicated in referred report, a swap ratio ranging between 0.0342 and 0.0417 common share was pointed out and ranging between 0.0343 and 0.0418 preferred share issued by Contax to each share issued by Dedic.

Based on this swap ratio range, the Managements of Contax and Dedic pointed out a swap ratio of 0.0362 common share and 0.0363 preferred share issued by Contax for each share issued by Dedic. This swap ratio will be adjusted in view of eventual declaration of dividends, as well as the companies assumption of debts.

Despite the swap ratio pointed out by Managements and notwithstanding Dedic Share Merger does not involve parent company and subsidiary, the Managements of Contax and Dedic, in compliance with the CVM Guideline Report 35/08, will properly set up an independent committee (“Independent Special Committee”) for all purposes and pursuant to said Report. The Independent Special Committee will rely on one financial advisor who will evaluate the merger conditions of Dedic Shares.

1.2.2. Purchase and sale of shares issued by CTX Participações S.A.

On this same date, shareholders of CTX Participações S.A. (“CTX”), AG Telecom Participações S.A. (“AG Telecom”), L.F. Tel S.A. (“L.F. Tel”), Fundação Atlântico de Seguridade Social (“FASS”), Portugal Telecom SGPS and Portugal Telecom Brasil S.A. (jointly “Portugal Telecom”) reached an agreement to become shareholders of CTX in operations that will result in the acquisition of 100% shares currently held by BNDES Participações S.A. - BNDESPAR (“BNDESPAR”), Caixa de Previdência dos Funcionários do Banco do Brasil - PREVI (“PREVI”), Fundação Petrobras de Seguridade Social – PETROS (“PETROS”) and Fundação dos Economiários Federais – FUNCEF (“FUNCEF”), described below.

Through CTX Share Purchase Agreements executed on this date, between AG Telecom and L.F. Tel, on the one hand, and PREVI, PETROS and FUNCEF, on the other hand; between Portugal Telecom, on the one hand, and BNDESPAR, on the other hand and Portugal Telecom, on the one hand, and PREVI, PETROS and FUNCEF, on the other hand (“Purchase Agreements”), subject to certain conditions:

(i) AG Telecom and L.F. Tel will acquire partial interest held by PREVI, PETROS and FUNCEF in CTX; and

(ii) Portugal Telecom will acquire 100% interest held by BNDESPAR, besides remaining interest held by PREVI, PETROS and FUNCEF in CTX.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

With the conclusion of operations provided for in the Purchase Agreement, AG Telecom and L.F. Tel will hold 36.80% interest each one in the capital stock of CTX, and Portugal Telecom will become a direct holder of shares representing 16.21% of CTX’s capital stock.

On this same date, Shareholders’ Agreement was entered into between AG Telecom, L.F. Tel, Portugal Telecom and FASS (“Shareholders’ Agreement”), in replacement of prevailing agreements, which shall rule their relationship as shareholders of CTX. The new Shareholders’ Agreement will have its effectiveness suspended until the effective acquisition of CTX shares by Portugal Telecom.

1.2.3. CTX partial acquisition of shares issued by Contax held by Portugal Telecom / CTX’s capital increase

According to the Share Purchase Agreement executed on this date, subject to certain conditions, including the approval of Dedic Share Merger, CTX will partially acquire common and preferred shares issued by Contax received by Portugal Telecom as a result of Dedic Share Merger (“Acquisition of Contax Shares”).

In addition, on this date, the Share Subscription Agreement of CTX was executed, through which Portugal Telecom, AG Telecom, L.F. Tel and FASS undertook, subject to certain conditions, to approve CTX’s capital increase to be subscribed by Portugal Telecom and FASS (“CTX’s Capital Increase”).

Due to the Acquisition of Contax Shares and CTX’s Capital Increase and taking into account the swap ratio proposed by the Managements of Contax and Dedic and subject to analysis, evaluation and approval by the Independent Special Committee, Portugal Telecom may then hold a direct interest of 19.90% in CTX’s capital stock and a direct and indirect interest of 19.52% in Contax’s capital stock, and FASS will maintain its direct interest of 10.18% in CTX’s capital stock and an indirect interest of 3.48% in Contax’s capital stock.

1.2.4. Ownership structure after the operations mentioned above

After the conclusion of the aforementioned corporate operations, we estimate that the ownership structure of CTX and Contax will be as follows:

(i) Estimated ownership structure of CTX after the conclusion of the aforementioned operations:

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)


Shareholder	Common shares	Common shares - %
AG Telecom	784,730,222	24.12
L.F. Tel	1,137,460,810	34.96
Luxemburgo Participações S.A.	352,730,588	10.84
FASS	331,151,534	10.18
Portugal Telecom	647,451,385	19.90
Directors	10	-
Total	3,253,524,549	100

(ii) Estimated ownership structure of Contax (thousands of shares) after the conclusion of the aforementioned operations:


	Common	Common	Preferred	Preferred
Shareholder	shares	shares - %	shares	shares - %	Total

CTX Participações S.A.	17,871	72.70	4,136	10.40	22,007
Portugal Telecom	0,000	0.00	2,782	7.00	2,782
Outstanding shares	6,695	27.30	32,800	82.60	39,495
TOTAL	24,566	100.00	39,718	100.00	64,284

1.3. New restricting rules on outsourced services

Currently, there is no specific legislation referring to outsourced services in Brazil. The Judiciary Branch has been discussing the issue through Precedent 331 of Labor Superior Court (TST), which authorizes the outsourcing of companies’ “ancillary activity”.

In 2009, the Regional Labor Court (TRT) of Minas Gerais rendered a decision against a wireless operator, forbidding it from outsourcing its contact center and telemarketing activities. Also on this matter, another wireless company filed a complaint at the Federal Supreme Court (STF), evidencing that subsequent law to TST Precedent could not be revoked by it and that outsourcing in telecommunication operations is mentioned by laws in view of specialization and interests, including the national security interest, due to the nature of the activity performed.

In November 2010, the STF Justice who accepted this thesis in injunction deemed as legal the outsourcing of telecommunication operations.

Since there is no specific legislation on outsourced services, as well as labor relations deriving therefrom, and the lawmaker’s need of ratifying the concepts on this issue, the Legislative Branch found reasons to propose four (4) bills on this issue, three (3) of which are in progress at the National Congress and one (1) at the President’s Chief of Staff. New proposals establish restrictions on the outsourcing in several sectors, including contact center, thus, revealing a restricted scenario to the Company’s customers.

Labor court decisions and the enactment of eventual laws setting restrictions on the outsourcing will characterize a stricter scenario within the scope of services currently allowed. In addition, other government measures may affect the positioning of the Company’s current and potential customers, if outsourcing is not an option, thus, causing negative effects on its profit margins and operations.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

1.4. Authorization to issue promissory notes

At Contax’s Extraordinary General Meeting held on June 21, 2011, the issue of subsidiary’s promissory notes was approved in the amount of R$230,000 in a single series (“Promissory Notes”), for public offering pursuant to CVM Rule476/09, which refers to the tender offer of securities with restricted efforts and trading of these securities on the market (“Issue”). The promissory notes have the following characteristics:

· Total issue amount: R$230,000;

· Issue date: date when promissory notes are subscribed and fully paid;

· Number of promissory notes: 115, at the unit face value of R$2,000 each;

· Maturity date: 180 days as of the Issue Date.

Promissory notes will bear compensatory interest corresponding to the accumulated variation of 100% of daily average rates of interbank deposits – DI, over extra-group (“DI Rate”). Compensatory interest will incur on the unit face value of each promissory note, as of the issue date until the date of effective payment. Promissory notes will not be entitled to any surety, collateral or preference.

The future issue of debt comprises the Company’s financial strategy to improve its liquidity financial ratios (i.e., lengthening of the debt profile). The consolidated financial information related to the quarter and six-month period ended June 30, 2011 reflect the effects from acquiring Allus Group, with the decrease in the Company’s cash and cash equivalents and accordingly, increase in current and non-current liabilities in view of the obligations assumed with said acquisition. On June 30, 2011, the Company recorded consolidated negative net current assets in the amount of R$180,122 (positive net current assets of R$97,597 on December 31, 2010).

2. MAIN ACCOUNTING POLICIES

2.1. Declaration of compliance

The Company's Quarterly Financial Information - ITR comprises:

• The consolidated financial information prepared pursuant to the International Financial Reporting Standards ("IFRS"), issued by the International Accounting Standards Board – IASB, and the accounting practices adopted in Brazil, referred to as Consolidated – IFRS and BR GAAP; and

• The separate financial information of the parent company, prepared pursuant to the accounting practices adopted in Brazil, referred to as Parent – BR GAAP.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

The accounting practices adopted in Brazil comprise the practices included in the Brazilian Corporate Law, and in the Technical Pronouncements, Guidelines and Interpretations issued by the Brazilian Accounting Standards Board (CPC) and approved by the Brazilian Securities and Exchange Commission (CVM).

In the separate financial information, investments in subsidiaries are recorded using the equity accounting method, pursuant to the Brazilian law. Therefore, these separate financial statements are considered to be in compliance with the IFRS, which require that such investments be reported at their fair value or cost in the parent company's separate financial statements.

As there is no difference between the consolidated shareholders' equity and the consolidated income attributable to shareholders of the parent company, included in the consolidated financial information prepared pursuant to the IFRS and the accounting practices adopted in Brazil, and the shareholders' equity and income of the parent company, included in the separate financial information prepared pursuant to the accounting practices adopted in Brazil, the Company has chosen to present the separate and consolidated financial information side by side.

2.2. Basis of preparation

The financial information has been prepared under the historical cost convention, except for certain financial instruments measured at fair value, as described below. The historical cost is usually based on the fair value of the consideration paid in exchange for assets.

In addition, no significant changes occurred in the accounting policies, in relation to those stated in the Note 3 to the Company’s annual financial statements for the year ended December 31,2010.

2.3. Basis of consolidation

The consolidated financial information includes the financial statements of the Company and of its subsidiaries, on the same reporting date and under the same accounting practices. Control is obtained when the Company has the power to control the financial and operating policies of an entity in order to derive benefits from its activity.

Thus, the balance sheet, statements of income and comprehensive statements of income consolidation process corresponds to the sum of respective assets, liabilities, revenues and expenses, added by the following eliminations between the Parent Company and its direct or indirect subsidiaries: (I) interest in the capital stock, reserves, retained earnings/accumulated losses and investments, (ii) checking account balances and other assets and/or liabilities, (iii) material transactions effects, (iv) non-controlling interest and subsidiaries shareholders’ equity.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

The results of subsidiaries acquired or sold during reporting periods are included in the consolidated statement of income and comprehensive income from the acquisition date through the disposal date, where applicable.

Whenever necessary, the financial information of the subsidiaries are adjusted to adapt their accounting policies to those determined by the Group. All transactions, balances, revenues and expenses among the companies included in the consolidated financial information (intragroup) are eliminated in full.

The Company’s financial information stated herein comprises the financial information of the following direct and indirect subsidiaries:


Telemarketing services in general	Control	Interest

Contax	Direct	100%
Contax Argentina	Indirect	100%
Contax Colômbia	Indirect	100%
Stratton Espanha	Indirect	100%

Trade Marketing
Ability	Direct	100%

Information Technology
TODO	Indirect	80%

Nova Luz Project
BRC	Indirect	100%

The figures of the balance sheets, as of June 30, 2011 and December 31, 2010 of the main items of the consolidated financial information of direct and indirect subsidiaries are shown in the chart below:

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)


	Direct Subsidiaries				Indirect Subsidiaries
	Contax		Ability		TODO		Contax Colombia	Stratton Espanha
	6/30/2011	12/31/2011	6/30/2011	12/31/2011	6/30/2011	12/31/2011	6/30/2011	6/30/2011

Asset:
Current	486,315	473,740	25,968	28,929	26,280	25,644	39,550	49,610
Non-current	937,006	647,590	35,278	34,598	6,794	5,789	205,534	90,662
Total assets	1,423,321	1,121,330	61,246	63,527	33,074	31,433	245,084	140,272

Liabilities:
Current	651,718	427,719	26,755	26,619	20,588	21,406	211,790	44,676
Non-current	539,985	402,286	4,738	10,438	28	27	29,610	6,075
Shareholders' equity	231,618	291,325	29,753	26,470	12,458	10,000	3,685	89,521
Total liabilities and shareholders' equity	1,423,321	1,121,330	61,246	63,527	33,074	31,432	245,084	140,272

The financial information of indirect subsidiaries BRC, Contax Argentina has not been reported given their irrelevant balances.

3. KEY ACCOUNTING JUDGMENTS AND SOURCES OF UNCERTAINTIES IN ESTIMATES

In applying the Group’s accounting policies (Note 2), Management must make judgments and prepare estimates regarding the book value of assets and liabilities that are not easily obtained from other sources. Estimates and assumptions are based on historical experience and other factors considered significant. Actual results may differ from these estimates.

Accounting estimates and assumptions are continuously revised and are based on the track record experience and other factors, including expectations of future events deemed as reasonable for the circumstances. These estimates and assumptions may differ from actual results. Effects deriving from revisions of the accounting estimates are recognized in the revision period.

Relevant estimates and assumptions for the financial information are listed below:

3.1. Revenue recognition

The Group recognizes revenue on an accrual basis, when services are provided, except for certain performance-based services, which are recognized after measurement and acceptance by the customer. Most contract revenues are calculated based on indicators such as number of workstations, conversation time, and performance goals. Revenue is calculated based on information available in the Information Technology (IT) systems regarding the volume of data services provided to each customer. Revenues from performance-based services are calculated based on data available in the IT systems of the Company and of its customers. Additionally, we usually designate operations managers to revise, reconcile and discuss these indicators with customers. Some revenue adjustments are recorded after these discussions.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

3.2. Held-to-maturity financial assets

Management has revised the Group’s financial assets in conformity with capital maintenance and liquidity requirements, and confirmed its intention and capacity to hold these assets to maturity. The book value of held-to-maturity financial assets is R$73,325 (R$69,869 on December 31, 2010). Details on these assets are mentioned in Note 30.

3.3. Operating Lease Commitments – Group as a Lessor

The Group has contracted commercial leases for computer equipment and furniture. The Group has determined, based on an assessment of the terms and conditions of the contracts that assumes all the significant risks and rewards of ownership of such assets; therefore, the Company accounts for the contracts as operating leases.

3.4. Impairment of goodwill

To determine if goodwill is impaired, it is necessary to estimate the value in use of the cash-generating unit goodwill was allocated to. The calculation of the value in use requires that Management estimates the future cash flow expected to be derived from the cash-generating unit, and the appropriate discount rate for the present value to be calculated.

The goodwill book value on June 30, 2011 is R$178,176 (R$49,081 on December 31, 2010).

3.5. Useful life of property, plant and equipment items

As described in Note 11, the Group revises the estimated useful life of property, plant and equipment items on a yearly basis, at the end of each reporting period.

3.6. Assessment of financial instruments

The Group uses assessment techniques that include information that is not based on observable market data to estimate the fair value of certain types of financial instruments. Note 30 provides further detail on the main assumptions used in the determination of the fair value of financial instruments, as well as the sensitivity analysis of these assumptions.

3.7. Non-Financial Assets Impairment Loss

An impairment loss occurs when the book value of an asset or cash-generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The calculation of fair value less costs to sell is based on available information on sale transactions for similar assets or market prices less additional costs to dispose of such asset. The calculation of the value in use is based on the discounted cash flow model. Cash flows derive from the budget for the next 5 years and do not include reorganization activities the Group has not committed with yet, or significant future investments that will improve the asset base of the cash-generating unit being tested for impairment. The recoverable value is sensitive to the discount rate used in the discounted cash flow method, as well as to expected future cash flows to be received, and to the growth rate used for extrapolation purposes.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

3.8. Share-based Payment Transactions

The Group measures the cost of share-settled transactions with executives based on the fair value of the equity instruments at the grant date. The estimated fair value of share-based payments requires that the most suitable assessment model be determined for the granting of equity instruments, which depends on the terms and conditions of the grant. This also requires that the most appropriate data be determined for the assessment model, including the expected life of the option, volatility and dividend yield, and the corresponding assumptions. The assumptions and models used to estimate the fair value of share-based payments are reported in Note 31.

3.9. Taxes

There are uncertainties regarding the interpretation of complex tax regulations and the value and timing of future taxable results. Given the long-term nature and the complexity of existing contracts, differences between the actual results and the assumptions adopted or future changes in such assumptions could require future adjustments to the tax income and expense already recorded. The Group records provisions, based on applicable estimates, for possible consequences of auditing by tax authorities of the respective jurisdictions where it operates. The amount of such provisions is based on several factors, such as prior experiences with fiscal audits and different interpretations of the tax regulations by the taxable entity and by the tax authority in question. Such differences in interpretation may arise for the most diverse matters, depending on the conditions in force in the respective domicile of the Group’s entity.

3.10. Deferred and recoverable income tax and social contribution

The Group records assets related to deferred taxes resulting from temporary differences between the book value of assets and liabilities and their tax bases. Deferred tax assets are recognized to the extent that the Group expects to generate sufficient taxable profit based on projections and forecasts prepared by Management. Such projections and forecasts include several assumptions regarding the Group’s performance, foreign exchange rates, volume of services, other rates and factors that may differ from current estimates.

Under the current Brazilian tax legislation, tax losses do not expire for utilization. However, cumulative tax losses can only be offset up to 30.0% of the annual taxable profit. For further detail on deferred taxes, please refer to Note 8.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

3.11. Measurement at fair value of a contingent consideration

Contingent consideration in a business combination is measured at fair value on the date of acquisition as part of the business combination. If the contingent consideration is classified as a derivative, and, therefore, a financial liability is recognized, it must be subsequently remeasured at fair value on the balance sheet date. The fair value is based on the discounted cash flow and the main assumptions take into account the probability of meeting each goal and the discount factor.

3.12. Provisions for Tax, Civil and Labor Risks

The Company is party in several legal and administrative proceedings, as described in Note 19. Provisions are recorded for all risks referring to the lawsuits that represent probable losses and which can be estimated with a certain degree of safety. The assessment on the probability of loss includes an analysis of available evidence, the hierarchy of laws, the available court precedents, the latest decisions of courts of law and their relevance in the legal system, as well as the opinion of external legal counsels.

The Management believes that these provisions for tax, civil and labor risks are appropriately stated in the Quarterly Financial Information – ITR.

3.13. Provisions for payroll and related charges

Payroll and related charges are the most representative costs of the Group’s operations, and are calculated and accrued according to the payroll. Payroll and related charges include salaries, paid vacation, Christmas bonus (13^th salary), social charges, profit-sharing plan for employees, and taxes on payroll, most of which is determined by the Brazilian labor law.

The provision for paid vacation considers that each employee has the right to thirty (30)-day paid vacation per year, corresponding to 133.3% of the monthly salary. The Group accrues a monthly provision for paid vacation until the benefit is paid, i.e., when the employees use their vacation. A monthly provision equivalent to one twelfth (1/12) of the monthly salary of each employee is accrued in the 13^th salary provision until such benefit is paid. Benefits such as transportation and meal vouchers are recognized as expense on a monthly basis, when provided to employees.

The variable compensation plan paid to employees is based on the achievement of performance, financial and quality goals, and on individual goals of each employee, determined on a yearly basis. This provision is accrued on a monthly basis and recalculated at the end of the reporting period based on the best estimates of the goals met, as provided for in the annual budget. However, the final overall amount is only defined after being analyzed and approved by the Board of Directors.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

3.14. Seasonality

The Company and its direct and indirect subsidiaries do not suffer seasonality in its operations.

4. NEW IFRS PRONOUNCEMENTS AND INTERPRETATIONS STILL NOT IN EFFECT AND NOT EARLY ADOPTED BY THE GROUP

4.1. Pronouncements, interpretations and amendments to the rules effective on June 30,2011 and without any relevant effects on the Company’s financial information.

Interpretations and amendments to the following effective rules were issued and were effective on June 30,2011, however, without any relevant effects on the Company’s Quarterly Financial Information (ITR):

Standard	Main requirements	Effective start date
Improvements to IFRSs - 2010	Amendment to several accounting pronouncements	Applicable to annual periods starting on or as of January 1, 2011
Amendments to IFRS 1	Restricted exemption referring to IFRS 7 comparative disclosures for first-time adopters	Applicable to annual periods starting on or as of July 1, 2010
Amendments to IAS 24	Related parties disclosures	Applicable to annual periods starting on or as of January 1, 2011
Amendments to IFRIC 14	Loan minimum requirement advance payments	Applicable to annual periods starting on or as of January 1, 2011
Amendments to IAS 32	Classification of issue rights	Applicable to annual periods starting on or as of February 1, 2010
IFRIC 19	Financial liabilities extinguishment through equity instruments	Applicable to annual periods starting on or as of July 1, 2010

4.2. Pronouncements, interpretations and amendments to current rules not in force yet and not early adopted by the Company.

Standards and amendments to current rules were published and are mandatory for the Company’s annual accounting periods starting on or as of January 1, 2012. Nevertheless, these standards and amendments to the rules have not been adopted in advance by the Company.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

Standard

Main requirements

Effective start date

IFRS 9 (as amended in 2010)

Financial instruments

Applicable to annual periods starting on or as of January 1, 2013

Amendments to IFRS 1

Removal of fixed dates for IFRS first-time adopters

Applicable to annual periods starting on or as of July 1, 2011

Amendments to IFRS 7

Disclosures – transfers of financial assets

Applicable to annual periods starting on or as of July 1, 2011

Amendments to IAS 12

Deferred taxes – recovery of underlying assets when asset is measured by fair value model according to IAS 40

Applicable to annual periods starting on or as of January 1, 2012

IAS 28 (Revised in 2011) “Investments in Affiliated Companies and Shared Control Entities”

Revision of IAS 28 in order to include the amendments introduced by IFRS 10, 11 and 12

Applicable to annual periods starting on or as of January 1, 2013

IAS 27 (Revised in 2011), “Separate Financial Statements”

IAS 27 requirements related to the consolidated financial statements are replaced with IFRS 10. Separate financial statements requirements are maintained.

Applicable to annual periods starting on or as of January 1, 2013

IFRS 10 “Consolidated Financial Statements”

In replacement of IAS 27 in relation to the requirements applicable to the consolidated financial statements and SIC 12. IFRS 10 established a single consolidation model based on control, regardless of the nature of investment.

Applicable to annual periods starting on or as of January 1, 2013

IFRS 11 “Shared Agreements”

It removed the consolidation model proportional to shared control entities, only maintaining the model by the equity accounting method. It also removed the concept of “shared control assets”, only maintaining “shared control operations” and “shared control entities”.

Applicable to annual periods starting on or as of January 1, 2013

IFRS 12 “Interest in Other Entities Disclosures”

It increases disclosure requirements for entities which are or not consolidated over which entities have influence.

Applicable to annual periods starting on or as of January 1, 2013

IFRS 13 “Fair Value Measurements”

It replaces and consolidated all the guidance and requirements related to the fair value measurement contained in other IFRS pronouncements in a single pronouncement. IFRS 13 defines fair value, guides how to calculate fair value and disclosure requirements related to fair value measurement. However, it does not introduce any new requirements of amendment in relation to the items that should be measured at fair value, which remain in original pronouncements.

Applicable to annual periods starting on or as of January 1, 2013

Amendments to IAS 19

“Employee Benefits”

Removal of corridor approach, and actuarial gains or losses are recognized as other comprehensive income concerning pension plans and results of other long-term benefits, when incurred, among other amendments.

Applicable to annual periods starting on or as of January 1, 2013

Amendments to IAS 1 “Presentation of the Financial Statements”

It introduces the requirement that items recorded in other comprehensive income are separated and summed up among items which are and not are subsequently reclassified into profit and loss.

Applicable to annual periods starting on or as of January 1, 2013

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

Taking into account the Company's current operations, Management does not expect that these new standards, interpretations and amendments will have relevant effects on the financial information as of their adoption.

CPC has not issued yet respective pronouncements and amendments related to the new and revised IFRS previously presented. As a result of CPC’s and CVM’s commitment to keep updated the set of rules issued based on the updates of the International Accounting Standards Board - IASB, these pronouncements and amendments should be issued by CPC and approved by CVM until the date of their mandatory adoption.

5. CASH AND CASH EQUIVALENTS, RESTRICT CASH AND FINANCIAL INVESTMENTS


	Parent Company (BR GAAP)		Consolidated (IFRS and BR GAAP)
	6/30/2011	12/31/2010	6/30/2011	12/31/2010

Current:
Cash and banks ⁽ⁱ⁾	259	315	14,814	70,491
Restricted cash - Allus Group ^(v)	-	-	4,163	-
Financial investments ⁽ⁱⁱ⁾	17,751	74,238	220,345	317,312
Total current	18,010	74,553	239,322	387,803

Non-current:
Restricted cash - Ability ⁽ⁱⁱⁱ⁾	-	-	2,132	2,013
Restricted cash - Allus Group (v)	-	-	23,941	-
Long-term investments ^(iv)	51,161	48,659	73,325	69,869
Total non-current	51,161	48,659	99,398	71,882

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

(i) The amounts are held in a bank checking account given that the Company pays suppliers, taxes and payroll for accounts payable on the first day of each month.

(ii) The financial investments are immediately convertible into a known cash amount and are subject to an insignificant risk of changing value. These financial statements, mainly refer to bank deposit certificates paid at the variation of Interbank Deposit Certificate – (CDI).

(iii) As a partial guarantee to the payment of the additional price, as provided for in Ability’s Agreement, Contax offers all funds deposited in the secured account. The retained amount under the Agreement is invested in CDBs, paid at a weighted average rate of 99% of the CDI. On June 30, 2011, the balance of the restricted amount recorded in the non-current assets corresponded to R$2,132, with maturity in November 2012 (Note 33).

The restricted amount deposited in a secured account will be released to the Seller in two annual installments (“annual release”), whereby (i) the first installment, due in the fourth year as of the Closing Date (August 16, 2010), will correspond to 50% of the amount resulting from the secured account, plus proportional earnings from the financial investments, and discounting the amounts corresponding to materialized contingencies (if applicable) and (ii) the second installment, due in the fifth year from the Closing Date, will correspond to the amount remaining in the secured account, after the release of the first installment, plus proportional earnings from the financial investment, and discounting the amounts corresponding to materialized contingencies (if applicable).

(iv) On June 30, 2011, the long-term investments, amounting to R$73,325 in the consolidated (R$69,869 on December 31, 2010) and R$ 51,161 in the parent company (R$48,659 on December 31,2010), are composed of bank deposit certificates (CDB), whose original maturities will be for the consolidated in 2014 (R$30,406) and in 2015 (R$42,919), and in 2014 (R$30,406) and in 2015 (R$20,755) in the parent company and were acquired with the financial capacity and intention to be held in portfolio until maturity. These investments are valued by the acquisition cost, plus income earned against income for the year.

(v) As partial guarantee to the payment of additional price, as provided for in Allus Agreement, Contax offers total funds deposited in the secured account. The amount retained subject to the Agreement is invested in CDBs, yielded at 99% weighted average rate of CDI. On June 30, 2011, the balance of restricted amount recorded in current and non-current assets, corresponding to R$4,163 and R$23,941, respectively to mature within the next 36 months, with annual checks and 18 months according to the revenues deriving from services rendered to Telefônica or its affiliates by acquired companies (Note 33).

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

6. TRADE ACCOUNT RECEIVABLES (CONSOLIDATED)


	Consolidated (IFRS and BR GAAP)
	6/30/2011	12/31/2010
Customers
Related parties	14,676	12,118
Other customers (third parties)	226,395	164,184
	241,071	176,302

On June 30, 2011, the balance of accounts receivable with related parties amounting to R$1,741 (R$3,790 on December 31, 2010) is payable by Telemar Norte Leste S/A (Oi Fixa), main customer of the Company (Note 32).

Transactions with related parties account for 44% of the revenues from services rendered in the quarter ended June 30, 2011 (49% in the quarter ended June 30, 2010).

The breakdown of trade accounts receivable by maturity is shown below:


	Consolidated (IFRS and BR GAAP)
	6/30/2011	12/31/2010

Due	227,486	162,517
Overdue for up to 30 days	6,009	7,883
Overdue from 31 to 60 days	1,814	1,794
Overdue from 61 to 90 days	436	797
Overdue from 91 to 180 days	5,321	2,422
Overdue for over 180 days	1,176	889
	242,242	176,302

The allowance for doubtful account is broken down as follows:


	Consolidated (IFRS and BR GAAP)
	2011	2010
Year's opening balance	-	-
Recording of allowance for doubtful accounts	(1,171)	-
Balance in the end of the period	(1,171)	-

To determine the recovery of a receivable, the Company considers any changes to its quality as of the date the credit was granted up to the date the results are disclosed. Credit risk concentration is limited due to the large basis of independent customers. Therefore, the Company believes that provision for additional loss will not be required in addition to that one recorded on June 30,2011.

The allowance for doubtful accounts represents R$918 in Contax and R$253 in Multienlace (Allus Group).

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

7. RECOVERABLE TAXES


	Parent Company (BR GAAP)
	6/30/2011		12/31/2010
		Non		Non
	Current	Current	Current	Current

Recoverable income tax	-	-	32	-
Recoverable social contribution	-	-	11	-
Withholding income tax⁽ⁱ⁾	339	5,243	879	5,056
	339	5,243	922	5,056


	Consolidated (IFRS and BR GAAP)
	6/30/2011		12/31/2010
		Non		Non
	Current	current	Current	Current

Recoverable income tax	-	-	32	-
Recoverable social contribution	-	-	11	-
Withholding income tax-IRRF ⁽ⁱ⁾	7,336	5,665	4,638	5,273
Withheld PIS/COFINS/CSLL	2,351	5	1,815	-
INSS recoverable	395	-	389	-
ISS recoverable ⁽ⁱⁱ⁾	4	7,516	11	5,110
Other taxes recoverable	940	-	237	-
	11,026	13,186	7,133	10,383

(i) Withheld income tax on financial investment redemptions.

(ii) The ISS recoverable is classified as non-current assets due to the refund maturities with municipal agencies.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

8. DEFERRED TAXES (CONSOLIDATED)

Deferred income tax and social contribution on the final dates of the fiscal periods refer to:

	Consolidated (IFRS and BR GAAP)
	6/30/2011				12/31/2011
	Temporary differences	Income tax	Social contribution	Total IRPJ/CSLL	Temporary differences	Income tax	Social contribution	Total IRPJ/CSLL
Assets:

Depreciation	13,424	3,879	620	4,499	19,148	4,786	1,724	6,510
Contingency liabilities	88,905	22,286	7,934	30,220	74,411	18,603	6,697	25,300
Goodwill from investment and other ⁽ⁱ⁾	115,318	31,611	7,250	38,861	80,555	20,139	7,250	27,389
Profit sharing program	1,487	372	134	506	12,762	3,191	1,149	4,340
Tax loss	875	219	78	297	2,150	537	193	730
Deferred income tax and social contributions - assets	220,009	58,367	16,016	74,383	189,026	47,256	17,013	64,269

(i) On December 21, 2010, Contax transferred the control of Ability to the Company through a partial spin-off of assets, as well as the liabilities mentioned above (contingent consideration amounting to R$45,585, according to the balance as of June 30, 2011). Therefore, goodwill previously recorded in Contax was transferred to Ability’s records as tax credit in the approximate amount of R$25 million, according to the balance as of June 30, 2011, pursuant to CVM Rule no. 319/99 and to the Technical Interpretation ICPC 09 (Separate Financial Statements, Consolidated Financial Statements and Use of the Equity Accounting Method). In addition, the Company has a tax credit referring to the goodwill recorded at Multienlace based on the balance of the transferring balance sheet as of April 30, 2011, calculated based on the effective rate in the country of origin (33% - Colombia) in the approximate amount of R$11 million.

As required by CVM Rule 371/02, in the fiscal year ended December 31, 2010, the Company’s Management conducted economic feasibility studies which were approved by the Company’s Management bodies, point to tax credits full realization until 2015, as follows:


Consolidated (IFRS and BR GAAP)

2011	25,636
2012	31,573
2013	7,204
2014	6,211
2015	3,759
	74,383

(i) Technical studies prepared about future taxable income consider estimates related, among other things, to the Company’s performance, as well as the behavior of operating markets and certain economical aspects. Actual amounts may differ from the adopted estimates.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

9. PREPAID EXPENSES AND OTHER ASSETS (CONSOLIDATED)

	Consolidated (IFRS and BR GAAP)
	6/30/2011	12/31/2011

Payments in advance (i)	31,817	28,452
Credits receivable (ii)	919	4,956

	32,736	33,408

Current	32,411	30,835
Non-current	325	2,573

(i) These basically refer to advances to suppliers, advances of payroll, vacation and transportation ticket to employees;

10. INVESTMENTS IN SUBSIDIARIES

Below, the breakdown of investments in subsidiaries, stated in separate financial statements:

	Direct subsidiaries			Indirect subsidiaries
	Contax	Ability	Total	TODO	Contax Argentina	BRC	Contax Colômbia	Stratton Espanha	Total

Balance on December 31, 2010	290,478	26,470	316,948	8,000	848	1	-	-	8,849

Increase in investments	-	-	-	-	11,751	-	2,048	88,084	101,883

Equity income	11,787	3,282	15,069	1,966	(5,112)	-	1,563	3,609	2,025

Dividends	(74,654)	-	(74,654)	-	-	-	-	-	-

Equity valuation adjustment	4,008	-	4,008	-	(1,107)	-	74	(2,171)	(3,204)

Balance on June 30, 2011	231,619	29,752	261,371	9,966	6,380	1	3,685	89,522	109,553

(i) As disclosed in Note 1.1.7, in May 2011, Contax took over Stratton Spain and Multienlace, the latter through its subsidiary Contax Colômbia.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

11. PROPERTY, PLANT AND EQUIPMENT (CONSOLIDATED)


			Facilities in thrid-party properties (ii)
	Telecomand IT Equipment (i)	Furniture and Fixture (i)		Construction in progress (iii)			Energy equipment
Cost	Telecomand IT Equipment (i)	Furniture and Fixture (i)		Construction in progress (iii)	Buildings	Land	Energy equipment	Transmission	Other	Total
On December 31, 2010	405,006	98,163	283,993	35,199	3,028	831	31,402	3,247	25,638	886,507
Additions	9,626	491	421	7,694	-	-	370	193	509	19,304
Transfers	(8)	8	-	-	-	-	-	-	-	-
On March 31, 2011	414,624	98,662	284,414	42,893	3,028	831	31,772	3,440	26,147	905,811
Additions	9,819	5,534	2,815	14,052	-	-	-	44	1,850	34,114
Transfers	37	26	112	-	-	-	-	580	(755)	-
Write-offs	(8)	(31)	(786)	-	-	-	-	-	-	(825)
Acquisition from mergers (iv)	7,604	7,172	5,973	-	-	-	1,948	11,305	3,718	37,720
On June 30, 2011	432,076	111,362	292,528	56,945	3,028	831	33,719	15,370	30,960	976,820


On December 31, 2010	(316,562)	(44,170)	(100,548)	-	(322)	-	(9,349)	(1,991)	(7,692)	(480,634)
Amortization	(12,460)	(2,808)	(7,193)	-	(29)	-	-	-	(1,525)	(24,015)
Transfers	2	(2)	-	-	-	-	-	-	-	-
On March 31, 2011	(329,020)	(46,980)	(107,741)	-	(351)	-	(9,349)	(1,991)	(9,217)	(504,649)
Amortization	(11,782)	(2,872)	(7,449)	-	(32)	-	(1,058)	(122)	(870)	(24,185)
Transfers	-	-	-	-	-	-	-	322	(322)	-
Write-offs	8	-	446	-	-	-	-	-	-	453
On June 30, 2011	(340,794)	(49,850)	(114,743)	-	(382)	-	(10,406)	(1,790)	(10,408)	(528,379)

Net Property, plant and
equipment

December 31, 2010	88,444	53,993	183,445	35,199	2,706	831	22,053	1,256	17,946	405,873
June 30, 2011	91,283	61,512	177,785	56,945	2,646	831	23,314	13,579	20,552	448,441

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

The chart below shows the annual depreciation weighted average rates, which have been defined according to the assets’ economic useful lives:

	Average weighted annual depreciation rate - %

Telecom and IT equipment	25.33%
Furniture and fixture	12.5%
Facilities in third-party properties	10% to 20%
Buildings	7%
Energy equipment	10%
Transmission equipment	10%
Other	13%

(i) The acquired assets’ monthly depreciation rates under the items “IT and telecom equipment” and “furniture and fixtures” were reviewed due to the reduction of its economic useful life estimate. The evaluation studies to determine the new economic useful lives of these assets were prepared in accordance with the rules of Brazilian Association of Technical Rules (ABTN) by a specialized consultant qualified for this type of activity and supported by technical appraisal reports.

(ii) The depreciation rates of facilities in third party’s properties consider the effectiveness term of the real estate lease agreements, which varies from five (5) to ten (10) years. The Company may renew the agreements for the same period.

(iii) Constructions in progress mainly record the expenses related to new constructions and installations of equipment until their startup, when they are reclassified into the corresponding operational assets accounts. The additions occurred in this period are expressed by the net amount of transfers.

(iv) Amount referring to the fixed assets recorded in Allus Group companies on the reference date of April 30,2011, whose controlling interest was acquired by Contax in May 2011.

Finance lease

Assets acquired through finance lease agreements as ruled by CVM Resolution 554/08, which approved the Technical Pronouncement CPC 06 (leasing operations), were classified as property, plant and equipment and recorded under “IT equipment” and “Furniture and fixtures” and generated R$335 and R$451 increases in depreciation on June 30, 2011 and 2010, respectively.

The book value of property, plant and equipment held under finance lease agreements on June 30, 2011 was R$1,785 (R$2,120 on December 31, 2010).

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

12. GOODWILL ON INVESTMENTS

On May 18, 2001, all shares issued by the companies composing Allus Group (Note 33) were transferred to subsidiaries Contax S/A and Contax Colômbia S.A.S pursuant to the purchase and sale agreement entered into between the parties for R$246,261, of which R$161,978, as goodwill based on its economic value, in view of future profitability estimate (non-allocated goodwill amount).

In September 2010, Contax acquired full control of Ability for R$72,585, of which R$74,365 as goodwill based on its economic value, due to the estimate of business’ future profitability. On December 21, 2010, Contax transferred the control of Ability to the Company, by means of a partial spin-off and the transfer of R$49,081 as net goodwill of the tax credits to the Company. Ability recognized R$25 million as deferred income tax and social contribution in consolidated and as investment in the parent company.

		6/30/2011




On December 31, 2010		49,081
Additions
Goodwill from future profitability (Grupo Allus)		161,978
On June 30, 2011		211,059

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

13. OTHER INTANGIBLE ASSETS (CONSOLIDATED)

	Data Processing System (ii)	Brands and Patents	Client Portfolio (Acquisition of Grupo Allus)	Brands (Acquisition of Grupo Allus)	Total

Cost

On December 31, 2010	192,885	82	-	-	192,967
Additions	1,341	-	-	-	1,341

On March 31, 2011	194,226	82	-	-	194,308
Additions	15,571	233	-	-	15,804
Acquisition through business combination (i)	-	-	69,775	5,257	75,032
Write-offs	(73)	-	-	-	(73)

On June 30, 2011	209,724	315	69,775	5,257	285,071


Accumulated Amortization

On December 31, 2010	(123,894)	-	-		(123,894)
Additions	(6,949)	-	-		(6,949)

On March 31, 2011	(130,843)	-	-	-	(130,843)
Additions	(7,647)	(7)	-	-	(7,654)

On June 30, 2011	(138,490)	(7)	-	-	(138,497)




Net Intangible Assets

On December 31, 2010	68,991	82	-	-	69,073
On June 30, 2011	71,234	308	69,775	5,257	146,574

(i) As disclosed in Notes 1.1.7, 12 and 33, Allus Group was acquired by Contax and Contax Colômbia for the total amount of R$246,261. During the process of adopting the Technical Pronouncement CPC 15 – Business Combinations (corresponding to IFRS3), other intangible assets were identified, such as trademarks and customer portfolio (i.e. non-contractual relationship with customers).

(ii) According to the Management, the useful life of software is 5 (five) years.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

14. DEBENTURES

On April 20,2011, the Company raised the amount of R$57,250, deriving from the private issue of debentures, approved at the Board of Directors Meeting held on March 25,2011, as follows:

Number of

Value at

Annual

Issue

Type of

Outstanding

Issue

Financial

Series

Date

Issue

Debentures

Date

Charges

6/30/2011

1st series

4/20/2011

Private

3,525

35,250

105% CDI

Principal

35,250

Interest

801

Withholding income tax

(180)

35,871

Number of

Value at

Annual

Issue

Type of

Outstanding

Issue

Financial

Date

Issue

Debentures

Date

Charges

6/30/2011

2nd series

4/25/2011

Private

2,200

22,000

105% CDI

Principal

22,000

Interest

489

Withholding income tax

(110)

22,379

58,250

Debentures were issued in two series and are not convertible into shares. The amortization period is one year as of the issue date. Debentures were issued by Contax, aiming at strengthening its operating working capital.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

15. LOANS AND FINANCING (CONSOLIDATED)

15.1. Loans and Financing in domestic currency


					Consolidated (IFRS and BRGAAP)
	Effectiveness			Financial
Object			Guarantees	charges	6/30/2011	12/31/2011
	Start	Maturity

In Domestic Currency
Expansion of installed capacity			Bank
(BNDES) (i)	10/2007	09/2013	guarantee	TJLP + 2% p.a.	122,728	150,033
			Accounts
			receivable
Expansion of installed capacity			from Oi
(BNDES) (i)	05/2010	09/2016	clients	TJLP + 2.73% p.a.	228,524	158,052
			Accounts
			receivable
Acquisition of domestic machinery			from Oi
and equipment	05/2010	09/2016	clients	4.5% p.a.	34,111	23,579
			Accounts
			receivable
Construction of the Santo Amaro site			from Net
(BNB)	11/2009	03/2016	clients	10% p.a.	51,190	51,203
					436,553	382,867

In foreign currency
				DTF (ii) + 2.15%
Working Capital Bancolombia	12/2008	12/2013		p.a.	29,610	-
Working Capital Interbank	03/2009	6/2014	Stand By	4.5% a 8.95% p.a.	6,145	-
Working Capital BBVA	03/2010	12/2013	Stand By	5% a 5.50% p.a.	1,360	-
Working Capital Banco Galicia	06/2011	08/2011	No guarantee	p.a.	2,765	-
Working Capital Santander	06/2011	08/2011	No guarantee	p.a.	7,645	-
Working Capital BCP	08/2010	10/2013	Stand By	3.55% a 4.9% p.a.	2,675	-


					50,201	-

					486,754	382,867

Current					124,901	64,873
Non-current					361,853	317,994

(i) The annual long-term interest rate was 6.00% in 2011 and 2010.

(ii) Fixed rate government bond (reference rate of the Colombian financial market)

15.2. Summary of loans and financing

15.2.1. Financing agreement with BNDES (Brazilian Development Bank)

Expansion of installed capacity – I

In August, 2007, Contax entered into a loan agreement with BNDES in the amount of R$216,514 with the purpose of financing the expansion of its installed capacity, improving current facilities, qualifying human resources, improving the quality of services rendered, productivity and investing in marketing actions. The financing funds were released in five installments, the first of them in October 2007 and the last in November 2008.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

The maturity date of the financial charges was quarterly until September 15, 2009, becoming monthly for the period between October 15, 2009 until the maturity date or settlement of contract. The principal shall be settled monthly as of October 15, 2009.

Contax contractually opted for tendering guarantees through sureties (Note 34) from financial institutions, in this case, not applicable to receivables structure and financial covenants on June 30, 2011. In the six-month period ended June 30, 2011, sureties costs totaled R$417 (R$743 on June 30, 2010).

Expansion of installed capacity – II

In March 2010, Contax entered into a new loan agreement with BNDES in the amount of R$323,552, divided into two sub-loans:

Sub-loan “A” in the amount of R$281,455 destined to investments to increase the installed capacity and improve facilities, implement quality programs, train human resources and invest in Research and Development, within the scope of BNDES Program for the Development of the National Industry of Software and Information Technology Services – BNDES PROSOFT; and

Sub-loan “B” in the amount of R$42,097 destined to investments to acquire domestic machinery and equipment, classified into the criteria of the Special Agency of Industrial Financing - FINAME, required by the project.

Annual interest rate of 1.73% shall incur over the principal amount of sub-loan “A” plus the TJLP variation accrued of 1% p.a., while an annual interest rate of 4.5% shall incur over the sub-loan “B”.

The principal of debt will be settled in 60 monthly and consecutive installments, the first installment maturing on October 15, 2011 and the last installment maturing on September 15, 2016. Financial charges will mature on a quarterly basis between March 2010 and September 2011, and on a monthly basis from October 2011.

Contax will tender as guarantee the receivables deriving from the Services Agreement executed with Oi Fixa, TNL PCS S/A (“Oi Móvel”) and Telemar Internet Ltda. In addition, during the effectiveness of this Agreement, Contax shall maintain the Debt Service Coverage Ratio (“Ratio”) equal or higher than 1.65, of which:

a) Debt Service Coverage Ratio calculated by dividing the Earnings Before Interest, Tax, Depreciation and Amortization – EBITDA by Debt Service on a half-yearly basis;

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

b) EBITDA corresponds to the operating income before the financial result, income tax and social contribution and depreciation and amortization expenses in the half year;

c) The Debt Service corresponds to the amount of debt effectively paid to creditors as amortization of principal and interest rates in the half year.

On June 30, 2011, Contax reviewed the restrictive covenants referring to this financing agreement, and it concluded that said Ratio had been honored.

On May 28, 2010 the first releases referring to this agreement were received, R$70,364 referring to the sub-loan “A” and R$10,524 referring to sub-loan “B.” On December 10, 2010 the following releases referring to this agreement were received, R$87,000 referring to sub-loan “A” and R$13,000 referring to sub-loan “B.” On March 22, 2011, the following releases referring to this agreement were received, R$70,364 referring to sub-loan “A” and R$10,524 referring to sub-loan “B.”

15.2.2. Loan agreement with Banco do Nordeste do Brasil S.A. (BNB)

In March 2010, Contax executed a loan agreement with BNB in the amount of R$51,000, aiming at financing the implementation of a new operating unit in the city of Recife, state of Pernambuco. The outstanding balance will be adjusted by a fixed rate of 10% p.a., including full performance bonus of 15%. The maturity of financial charges shall occur quarterly until March 2012, and then monthly between April 2012 and March 2015. The principal shall be paid in 36 monthly installments, from April 2012 to March 2015. As long as each installment is paid on the maturity date, the loan will bear interest rate of 8.5% p.a.; otherwise, the interest rate will be 10% p.a.

On September 21, 2010, the first release under this agreement was received for a total of R$29.880. On December 15, 2010 the second release under this agreement was received for a total of R$21,120.

15.2.3. Working capital loans

In December 2008, Allus Group companies contracted several working capital loans with several financial institutions. On June 30,2011, the total amount for these loans was R$50,201.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

The loan and financing breakdown in the six-month period ended June 30, 2011 is shown as follows:



	BNDES	BNB	BANCO INTERBANK	BANCO DE GALICIA YBUENOSAIRES S.A.	HSBC	BANCO SANTANDER S.A.	ITAÚ	BANCOLOMBIA	BCP	BBVA	TOTAL
On December 31, 2010	331,664	51,203	-	-	-	-	-	-	-	-	382,867
Acquisitions through Mergers	-	-	4,374	-	6	-	-	33,003	3,026	1,611	42,020
Release	80,888	-	4,222	6,321	15	7,914	540	-	-	-	99,900
Amortization - principal	(27,186)	-	(2,003)	(3,481)	(8)	(156)	(522)	(2,613)	(186)	(111)	(36,266)
Amortization - interest	(14,279)	(2,485)	(133)	-	-	-	-	(467)	(20)	(13)	(17,397)
Exchange variation	-	-	(56)	-	-	-	-	-	(70)	(37)	(163)
Financial charges	14,276	2,472	(259)	(75)	(13)	(113)	(18)	(313)	(74)	(90)	15,793
On June 30, 2011	385,363	51,190	6,145	2,765	-	7,645	-	29,610	2,676	1,360	486,754

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

As of June 30, 2011, the maturities of the principal installment recorded in non-current liabilities are as follows:

		Principal

2012		70,670
2013		125,958
2014		69,355
2015		56,605
2016		39,266

		361,853

The amount of interest payable will be based on future long-term interest rates.

16. SALARIES, CHARGES AND BENEFITS


	Parent Company (BR GAAP)		Consolidated (IFRS and BR GAAP)
	6/30/2011	12/31/2010	6/30/2011	12/31/2010

Payroll	16	6	111,839	57,316
Provisioned vacation	-	-	96,221	85,082
Payroll charges	116	75	71,826	72,023
Other	-	-	22,135	16,148
	132	81	302,021	230,569

17. LIABILITIES WITH FINANCE LEASE (CONSOLIDATED)

Contax has several finance lease agreements related to IT equipment and furniture for the maintenance of its operations. These agreements are recorded at present value in current and non-current liabilities.

The Group has the right, as set forth in the agreement, to acquire the equipment at face value (significantly lower than the fair value) at the end of the lease agreements. The Group’s obligations with finance lease agreements are guaranteed by the lessees.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)


	Number of	Consolidated (IFRS and BR GAAP)
Lessor	installments	6/30/2011	12/31/2010
HP Financial Services Arrendamento Mercantil S/A	60	208	2,724
IBM Brasil-Industria Maquinas e Serviços Limitada	60	181	1,424
Bradesco Leasing S/A	96	16	129
BBVA Banco Continental	36	160	-
Banco de Galicia y Buenos Aires S.A.	25	278	-
Banco de Galicia y Buenos Aires S.A.	60	67	-
Hewllet Packard	36	924	-
Total		1,834	4,277
Current		1,226	4,277
Non-current		608	-

18. TAXES PAYABLE

	Parent Company (BR GAAP)		Consolidated (IFRS and BR GAAP)
	6/30/2011	12/31/2011	6/30/2011	12/31/2011

IRPJ and CSLL⁽ⁱ⁾	73	-	3,242	16,290
ISS	22	-	12,799	14,344
PIS and COFINS	-	-	9,151	9,113
INSS paid in installments ⁽ⁱⁱ⁾	-	-	70	646
Taxes and Contributions paid abroad⁽ⁱⁱⁱ⁾	-	-	9,716	-
Other taxes payable	18	11	2,215	2,700
	113	11	37,193	43,093

(i) There are advance payments to offset the taxes calculated, in accordance with the amounts recorded under Recoverable Income Tax and Social Contribution (Note 7).

(ii) It refers to the payment by installments related to INSS (National Institute of Social Security) delinquency notice of joint liability, fully transferred to third parties, not affecting Contax’s results, recorded in the item “Other Assets” in the current assets.

(iii) It refers to the value-added tax (VAT) verified in Allus Group companies and in Contax Argentina.

19. PROVISIONS (CONSOLIDATED)

19.1. Contingent assets

The Company has not recorded contingent assets.

The Company has five (5) lawsuits involving Sudeste Construções Empreendimentos Ltda. (“Sudeste”), alleging failure to complete the works foreseen in the construction turnkey agreement executed with Sudeste. The subject-matter of these lawsuits aims at retaining the amounts charged by Sudeste due to the failure to provide the services then contracted. On June 30, 2011, the amount involved is R$12,072.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

In view of bills unduly protested by Sudeste, motion for provisional remedy to stay protest was filed, as well as action for annulment of bills and indemnity action for property damage and personal injury.

19.2. Contingent liabilities

The Group is party to tax, civil and labor lawsuits filed in the normal course of business and have been discussing these issues in the administrative and judicial levels, and where applicable, it is supported by court deposits. The Management, based on its legal counsels’ opinion, understands that the applicable legal measures and procedures that have already been taken in each situation are sufficient to cover possible losses and preserve the Company’s shareholders’ equity, and these are assessed periodically.

Among these lawsuits are included the legalization of certain properties, own or third-party, which the Company deems will not have unfavorable outcomes during the Company’s regular operations.

19.3. Breakdown of contingent liabilities


	Court deposits		Provision for risks
	6/30/2011	12/31/2010	6/30/2011	12/31/2010
Tax contingencies	26,729	20,156	39,859	30,039
Labor contingencies	86,551	73,597	61,299	57,500
Civil contingencies	112	112	687	727
	113,392	93,865	101,845	88,266

19.3.1. Tax contingencies

On June 30, 2011, the Company was party to 53 tax claims (52 lawsuits on December 31, 2010), and defendant in 19 lawsuits mainly related to contributions due to the INSS, Service Tax (ISS) and Social Integration Program (PIS)/Contribution for Social Security Financing (COFINS).

On June 30, 2011, the total provisioned for tax claims was R$39,859 (R$30,039 on December 31, 2010). Out of this amount, R$14,391 (R$12,625 on December 31, 2010) refer to PIS/COFINS and R$2,251 (R$2,347 on December 31, 2010) refer to ISS.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

19.3.2. Labor contingencies

a) Lawsuits filed in court

As part of its operations, the Group is the defendant in several lawsuits filed by the Unions and the Labor Prosecution Office, therefore creating a reserve to cover these demands, which the Group’s Management understands to be sufficient. On June 30, 2011, the Group was party to approximately 10,097 labor claims (8,796 on December 31, 2010). The total amount estimated for such lawsuits on June 30, 2011 was R$694,012 (R$587,614 on December 31, 2010). The company records provisions for contingent liabilities proportional to historic losses which, on June 30, 2011 amounted to approximately R$61,299 (R$57,500 on December 31, 2010).


	6/30/2011	12/31/2010

Types of risk ⁽ⁱ⁾

Positive outcome is more
probable than a negative
outcome	61,299	57,500
Possible/Remote	632,713	530,114
Total	694,012	587,614

(i) The types of risks were established by the Management based on opinion of the Company’s external legal counsels and court precedents.

The lawsuits mainly refer to: (i) overtime; (ii) equal pay; (iii) permanence in the job; and (iv) injury, physical and psychological suffering. The increased number of labor claims, from 8,796 on December 31, 2010 to 10,097 on June 30, 2011, is directly related to the significant increased number of employees since 2004.

b) Administrative proceedings

On June 30, 2011, 292 deficiency notices, under the argument of infringement to labor laws, were pending judgment. The amounts of the deficiency notices depend on the type of violation, the number of employees involved and on whether it was the first time the alleged violation occurred in the Company. Court deposits amounting to approximately R$52 were made this year until June 30, 2011, so that the Company could file for administrative appeals, in accordance with the legal provisions.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

The Company has been challenging in full the deficiency notices with the administrative authorities and currently awaits final decisions. In case the administrative proceeding outcome is not favorable, the Company can file a lawsuit requesting the annulment of any and all debt in the administrative proceeding and the reimbursement of fines paid to present funds recorded in a provision for payment purposes.

Considering that the Company, based on the opinion of its external legal counsels, classified as “possible” the risk of losing the deficiency notices, those were not included in the contingencies and the fine amounts were not deposited.

The abovementioned labor violations mainly refer to (i) the non-compliance with the rules that regulate the occupational health and safety; (ii) the lack of intraday intervals and weekly day-offs given to employees; (iii) the non-compliance with the quota for handicapped employees; and (iv) the lack of an Occupational Accident Prevention Commission (CIPA).

According to the Brazilian law, if an entity has over 100 employees, from 2% to 5% of them should be beneficiaries of the social security who were on a labor-related leave or handicapped. Given the Company’s lack of capacity to reach this percentage, in September 2002, the Company entered into a Consent Decree (TAC) with the Labor Prosecutor Office, and the Company had 3 years to comply with substitute obligations (publication of vacant positions in newspapers) After this term, the compliance shall be evidenced whenever required. However, even with the implementation of a program to hire beneficiaries of the social security who were on a labor-related leave or handicapped, the positions available have not been completely filled, but TAC has been duly complied with.

In January 2010, the Regional Labor Superintendence notified the Company based on procedures relating to the social contribution and contributions to the government severance indemnity fund for employees related to employees transport voucher. The notification corresponds to R$29 million. The Company is currently challenging this lawsuit. Based on the opinion of the external legal counsels, the Management understands that the possibility of an unfavorable decision is “possible”.

19.3.3. Civil contingencies

The Company has three (3) lawsuits discussing the renewal of lease agreements (“Actions for Renewal”) for the properties located in the Rubens Meireles and Passeio sites, and 2 lawsuits discussing the rental amounts set forth in the property lease agreement of the Passeio site.

In the action for Compulsory Renewal of the lease agreements of Contorno and Paulista sites, the parties reached an agreement. In other related lawsuits, the parties are negotiating.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

In addition to the aforementioned civil lawsuits, Contax was punished with a fine from Empresa Brasileira de Correios e Telégrafos, due to the violation of obligations provided for in the agreement executed between the parties on May 13, 2002 with a 6-year term of effectiveness. Fines applied at the end of the agreement term amounted to R$2,645 million, due to alleged violation of phone calls confidentiality, failure for not transferring toll-free phone calls (0800) and failure for not recording 100% of the phone calls. The fine amount was arbitrarily retained by Brazilian Postal Company of amounts overdue to Contax, as a result of the contact center services agreement. In spite of this fact, Contax believes legal grounds are sufficiently strong to challenge the equity of these fines, then, the Company accrued R$442thousand. Contax filed an action for annulment, ensuring the amount of the claim through a surety insurance policy and obtained an injunction on November 30,2009 to release the amount retained by the Brazilian Postal Company.

In June 2010, the Brazilian Postal Company deposited R$2,645 million, on behalf of Contax, in observance to the injunction.

19.4. Breakdown of provisions for contingencies and legal obligations in judicial dispute

The breakdown of provisions for tax, labor and civil risks in the period ended June 30, 2011, is shown below:

	PIS/COFINS (i)	FAP (ii)	Tax on services – ISS	INSS	CSLL (iii)	Tax	Labor (iv)	Civil	Total

On December 31, 2010	12,625	14,711	2,349	178	176	30,039	57,500	727	88,266
Additions	1,597	7,121	-	-	-	8,718	10,251	14	18,983
Usage	-	-	-	-	-	-	(5,529)	-	(5,529)
Reversal	-	-	-	-	-	-	(3,056)	(27)	(3,083)
Monetary restatement	169	910	(98)	125	(4)	1,102	2,133	(27)	3,208
June 30, 2011	14,391	22,742	2,251	303	172	39,859	61,299	687	101,845

(i) Provisioned amount related to the deduction of the ISS cost on the calculation basis for determination of PIS/COFINS, based on the granting of interlocutory relief for the appeal until decision of the interlocutory appeal 2007.01.00.017041-3/DF with the Federal Regional Court of the 1^st region.

(ii) The Company is arguing in court the application of the multiplier FAP – Accident Prevention Factor incurred on the social security charge RAT – Occupational Accident Risk, whose new system of calculation took effect as of January 1, 2010. On February 11, 2010, an injunction was obtained to make the court deposit deriving from the difference resulting from FAP multiplier.

(iii) It refers to the 2004 negative basis of social contribution used to offset the payment of subsequent year’s estimate and not formalizing in PER/Dcomp.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

(iv) The labor claims filed against Contax by employees and former employees hired by it during its operations amounted to R$57,475. According to the service agreements executed between Oi Fixa and Contax, labor claims arising from the migration of employment contracts shall be incumbent upon that entity, whose amount was recorded as corresponding entry to “Credits receivable”. The amount of labor claims under Oi Fixa’s responsibility represents R$185.

The amount for labor contingencies related to Ability was R$3,797 on June 30, 2011 (R$3,826 on December 31, 2010).

19.5. Contingent liabilities classified as possible losses

On January 22, 2010, Contax was assessed by the Regional Labor and Employment Superintendence (SRTE) of Rio de Janeiro, in the amount of R$29,136. In the assessment notice, which concerns the period from January 2001 to February 2009, the demanded amounts relate to the FGTS (Government Severance Indemnity Fund for Employees) (Law 8,036/90) and the Social Contribution (Supplementary Law nº 110/01) levied on the cash payments made to Contax’s employees corresponding to the transport voucher fringe benefit. Contax challenged the assessment notice in the administrative level and currently awaits judgment.

The Management, based on the opinion of its external legal counsels, considers the likelihood of loss as possible and did not record any provision for eventual unfavorable outcomes.

In addition to the FGTS notification, on June 30, 2011, the Company had tax and civil contingent liabilities, restated based on the SELIC rate, amounting to R$44,932 and R$26,473, respectively (R$44,932 and R$26,473 on December 31, 2010, respectively). These amounts are not provisioned given that Contax filed an appeal and took into consideration the opinion of its external legal counsels, to whom the likelihood of losses is possible or remote.

20. OTHER LIABILITIES (CONSOLIDATED)


	Consolidated (IFRS and BR GAAP)
	6/30/2011	12/31/2010

Deferred income (i)	17,064	23,107
Other accounts payable (ii)	2,706	1,164
Advances from customers for promotional onlending (iii)	6,714	65
	26,484	24,336

Current	25,544	23,171
Non-current	940	1,165

(i) It refers to deferred revenues, which are allocated to income statement upon their effective realization.

(ii) It mainly refers to charges payable on payroll.

(iii) It mainly refers to accounts payable due to Allus Group companies foreign market relationship.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

21. CAPITAL

21.1. Capital stock

The subscribed and paid-up capital on June 30, 2011 and December 31, 2010 was R$223,873, represented by 59,770,600 non-par registered book-entry shares (23,089,600 common shares and 36,681,000 preferred shares). Each common share is entitled to one voting right in the resolutions of the General Meeting.

The preferred shares issued by the Company shall not have voting rights, but shall have priority of refund in the event the Company is liquidated, without premium, and in the payment of non-cumulative minimum dividends of (i) 6% per year, on the amount resulting from the division of the subscribed capital by the number of shares of the Company or (ii) 3% of net equity value of shares, prevailing the highest amount between (i) and (ii).

The preferred shares may represent up to two thirds of the total shares issued by the Company, with the possibility of changing the previous existing ratio between common and preferred shares.


	Number of shares		Capital interest
	6/30/2011	12/31/2010	6/30/2011	12/31/2010

Common shares	23,089,600	23,089,600	86,483	86,483
Preferred shares	36,681,000	36,681,000	137,390	137,390
			223,873	223,873

21.1.1 Common shares

Each common share entitles its holder to a voting right at the Company’s General Shareholders’ Meeting. Except for the provisions set forth in law, the resolutions of the General Shareholders’ Meeting are voted by common shareholders. Blank votes will not be computed.

21.1.2. Preferred Shares

Preferred shares issued by the Company do not have voting rights. They, however, have priority in reimbursement if the Company is liquidated, without premium, and in the payment of minimum non-cumulative dividends of (i) 6% per year, whose amount is the remainder of capital subscribed divided by the number of shares, or (ii) 3% of the net worth of shares, whichever is the higher. The payment of the minimum statutory dividend depends on income payable or earned profit reserves.

Preferred shareholders can obtain unrestricted voting rights as of the moment the Company no longer pays dividends for 3 (three) consecutive years. Voting rights will last until dividends are duly paid.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

Stock option granted to executives by the stock option plan

On June 30, 2011, the program’s beneficiaries held approximately 351,868 (401,868 on December 31, 2010) stock options for the Company’s common shares of which 1,868 (1,868 on December 31, 2010) expire on October 1, 2012, 300,000 (300,000 on December 31, 2010) expire on October 1, 2013, and 50,000 (100,000 on December 31, 2010)expire on October 1, 2014.

Stock options granted within the scope of the stock option plan do not entitle its holders to voting or dividend rights. For more information on the stock option plan, see Note 31.

First reverse split of shares

At the Extraordinary General Meeting held on October 17, 2007, the reverse split of all shares representing the Company’s capital stock was approved, at the ratio of 20 shares for 1 share of the same type. As per the notice to shareholders, a term until November 16, 2007 was granted to carry out the adjustments to share positions. The information disclosed regarding the amount of shares prior to this date does not include a retroactive effect of the reverse split of shares.

Share fractions resulting from reverse split were divided, grouped into whole numbers and sold at Bovespa auction on August 13, 2008, as per Notice to the Market dated August 12, 2008. The amounts resulting from this auction totaled R$22,106, out of which R$5,762 were transferred to shareholders of fractioned shares. The R$16,282 non-transferred amount corresponds to shareholders whose shares are either blocked or their records are not updated and will be exclusively paid upon the presentation of the supporting documentation evidencing the unblocked shares and/or shareholder’s identification, whichever is the case.

Second reverse split of shares

The following was approved at the Extraordinary General Meeting held on October 27, 2009, (i) the share reverse split, at the 50:1 share ratio, according to the corresponding types and (ii) the concurrent splitting of all shares existing after the reverse split, at the 1:200 share ratio of the same type, pursuant to Article 12 of Law 6,404/76.

The concurrently share reverse split and split aim at: (a) adjusting the shareholder base and decrease the administrative and operating costs for the Company and shareholders; (b) improving the efficiency of records, controls and reporting systems; (c) diminishing the possibilities of errors of information and communication, improving services to the Company’s shareholders; and (d) maintaining the quoted value of Company’s shares in the market at an attractive trading level, providing better liquidity to the Company's shares in the market.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

As per the notice to shareholders, a term until January 15, 2010 was granted to carry out the adjustments to share positions. Once elapsed the terms for shareholding adjustments by shareholders, eventual fractions of shares resulting from the reverse split, except for those which are manifestly expressed by the holder’s non-participation in the auction, would be reversely split into whole figures and sold in an auction to be held at BM&FBOVESPA S.A.

The information disclosed regarding the amount of shares prior to this date does not include a retroactive effect of the reverse split of shares.

As of January 18, 2010, the Company’s shares began to be traded exclusively at the ratio resulting from the reverse split and simultaneous split of shares, carried out on said date. Said transactions resulted in 59,770,600 shares, of which 23,089,600 are common shares and 36,681,000 are preferred shares.

21.2. Policy of dividend distribution

In compliance with the Company’s Bylaws, preferred shares are entitled to receive until the limit of available profit and reserves, non-cumulative dividend corresponding to (i) six percent of the product from division of subscribed capital stock by total number of shares, and (ii) three percent of each share book value (“Preferred Dividend”), whichever the highest amount. In the event of additional profit to be shared, the Company is required to share with all shareholders an amount corresponding to, at least, twenty-five percent of the adjusted net income (“Mandatory Dividend”), as provided for in the Brazilian Corporation Law. The Company is required to pay the Mandatory Dividend to the preferred shareholders to the extent Preferred Shares Dividends are paid. The payment of Mandatory Dividend may be restricted to the realized net income for the year, provided that the difference is recorded as unrealized reserve. The net income recorded as unrealized profit reserve, when realized, and, as long as it is not offset by losses of subsequent years, it shall be added to the first dividend declared, after respective realization. The Company may carry out other distributions, to the extent profits and reserves are available. All distributions mentioned above may be realized as dividends or as interest on equity, income tax-deferred.

At the Annual General Meeting held on April 25, 2011 the proposal for the allocation of net income for the year ended December 31, 2010, was approved as follows: (a) allocation of R$5,425 to the legal reserve; (b) dividends distributed to Company’s shareholders with ownership position on the payment date, amounting to R$100,000; and (c) allocation of R$3,073 to the statutory reserve.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

22. RESERVES AND EQUITY VALUATION ADJUSTMENTS

22.1. Capital reserve on the subscription of shares and stock option plan

The capital reserve, amounting to R$50,000, was set up and paid-up in November 2004. On June 30, 2011, its balance was R$16,799, due to utilization resolved at the Meeting.


	6/30/2011	12/31/2010

Balance at the beginning of the year	14,731	19,639
Acquisition of own shares	(1,002)	-
Stock Option Plan:
2007 Program	-	(7,024)
2010 Program	3,070	2,116
Balance at the end of the year/quarter	16,799	14,731

22.2. Profit Reserves

Legal reserve

According to Article 193 of the Brazilian Corporation Law, this reserve is recorded based on 5% of the net income for each year, and should not exceed 20% of the capital stock paid-up or 30% of the capital stock realized plus the capital reserves. The legal reserve guarantees the integrity of the capital stock and can only be used to offset losses or increase capital. It cannot be paid as dividends.

Statutory reserve

Pursuant to Article 194 of the Brazilian Corporation Law and to Article 29 of the Company’s Bylaws, the Company allocated a Statutory Reserve to ensure investments of the Company’s interests, as well as to preserve its working capital. The Statutory Reserve is limited, together with all other profit reserves, to the amount of the capital stock.

As per resolutions of the Board of Directors, the Statutory Reserve was partially used in share buyback programs (Note 23).

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

22.3. Equity Valuation Adjustments

Reserve for the translation of foreign currency


	6/30/2011	12/31/2010

Balance at the beginning of the year	(46)	-
Foreign exchange differences from the
translation of assets from operations abroad	4,008	(46)
Balance at the end of the year/quarter	3,962	(46)

Exchange differences related to the translation of net assets of the foreign subsidiaries operations, from its functional currencies to the Company’s reporting currency (Brazilian Real) are directly recognized in “Other comprehensive income” and accumulated in the reserve for the translation of foreign currency.

23. TREASURY SHARES

Own equity instruments that are reacquired (treasury shares) are recognized at cost and deduced from shareholders’ equity. No gain or loss is recognized in the income statement upon the purchase, disposal, issue or cancellation of the Company’s own equity instruments. Any difference between the book value and consideration is recognized in other capital reserves.

23.1. Share buyback

23.1.1. First share buyback program

At the Extraordinary Meeting of the Board of Directors held on June 29, 2006, the share buyback proposal was approved, with funds registered in the Capital Reserve and Statutory Reserve accounts, totaling the buyback of 5,886,700 common shares and 11,773,900 preferred shares, fully cancelled as per resolution of the Extraordinary General Meeting held on November 28, 2006.

23.1.2. Second share buyback program

At the Extraordinary Meeting held on November 30, 2006, the Board of Directors approved the launch proposal of the share buyback program, with funds registered in the Capital Reserve and Statutory Reserve accounts, which amounted to the buyback of 5,298,300 common shares and 24,058,190 preferred shares, cancelled on July 31, 2007, thus 1,750,000 common shares are held in treasury, as per resolution at the Extraordinary General Meeting held on July 27, 2007.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

23.1.3. Third share buyback program

At the Extraordinary Meeting, held on July 26, 2007, the Board of Directors approved the new share buyback program with funds registered in the Capital Reserve and Statutory Reserve accounts, totaling the buyback of 3,193,472 common shares and 18,277,422 preferred shares, cancelled on October 17, 2007, of which 1,750,000 common shares are held in treasury, pursuant to the resolutions of the General Extraordinary Meeting, totaling 3,500,000 common shares in treasury.

23.1.4. Fourth share buyback program

At the Extraordinary Meeting held on September 5, 2008, the Board of Directors approved a new share buyback program, with funds from Capital Reserve and Statutory Reserve accounts, totaling the buyback of 52,337 common shares and 861,664 preferred shares, which are held in treasury.

The Extraordinary General Meeting held on December 17, 2008 approved the cancellation of 52,337 common shares and 861,664 preferred shares held in treasury, without decreasing the Company’s capital stock, and 166,018 common shares are held in treasury.

23.1.5. Fifth share buyback program

The Extraordinary General Meeting held on October 27, 2009 approved the Company’s Share Buyback Program pursuant to CVM Rule 10/80 and subsequent amendments, without reducing the Capital Stock. Funds from the capital and statutory reserves will be used for the acquisition of shares, excluding the amount of treasury shares. The maximum number of shares to be acquired is 699,996 common shares and 1,945,000 preferred shares, which represent less than 10% of outstanding common and preferred shares. Said Program may be implemented up to October 28, 2010.

Until June 30, 2011, 15,120 common shares were repurchased.

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)


			R$
	Thousand		Average	Maximum	Minimum
	of shares	Buyback price	price	price	price
Preferred shares
1st Share Buyback Program	11,774	21,517	1.83	1.95	1.61
Cancellation of shares	(11,774)	(21,517)	1.83
2nd Share Buyback Program	24,058	46,242	1.92	2.00	1.84
Cancellation of shares	(24,058)	(46,242)	1.92
3rd Share Buyback Program	18,277	46,424	2.54	2.65	2.46
Cancellation of shares	(18,277)	(46,424)	2.54
4th Share Buyback Program	862	36,206	42.00	42.81	41.59
Cancellation of shares	(862)	(36,206)	42.00
	-	-
Common shares
1st Share Buyback Program	5,887	19,097	3.24	3.41	3.12
Cancellation of shares	(5,887)	(19,097)	3.24
2nd Share Buyback Program	5,298	16,144	3.05	3.29	2.97
Cancellation of shares	(3,548)	(10,812)	3.05
3rd Share Buyback Program	3,193	11,287	3.53	3.62	3.52
Cancellation of shares	(1,443)	(5,102)	3.54
Sale of shares	(180)	(605)	3.36
	3,320	10,912
Grouping of shares (1/20)	166	10,912	65.73
4th Share Buyback Program	52	2,730	52.50	52.94	51.73
Cancellation of shares	(52)	(3,270)	62.88
5th Share Buyback Program	3	314	97.97	98.83	85.00
	169	10,686
Reverse split (1/50) and Split
(1/200) of shares	677	10,686	15.79
5th Share Buyback Program	216	6,311	29.23	30.00	28.50
Sale of shares	(893)	(16,996)	19.04
5th Share Buyback Program	102	2,971	29.13	30.00	25.59
Sale of shares	(19)	(568)	29.89
	83	2,404
5th Share Buyback Program	369	11,254	30.14	32.00	29.25
Sale of shares	(50)	(1,511)	30.22
Sale of shares	(50)	(1,511)	30.22

	352	10,636

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

24. NON-CONTROLLING INTEREST


	Consolidated
	(IFRS and BR GAAP)
	6/30/2011	12/31/2010
Balance at the beginning of the year	2,000	1,445
Profit sharing for the year/quarter	492	555
Balance at the end of the year/quarter	2,492	2,000

25. REVENUE (CONSOLIDATED)

The reconciliation between the gross revenue and net operating revenue reported in the income statement for the quarter is as follows:


	Consolidated (IFRS e BR GAAP)
	Quarter ended		Six month-period ended
	6/30/2011	6/30/2010	6/30/2011	6/30/2010

Gross revenue	764,900	630,479	1,439,780	1,230,985

Tax on sales
COFINS	(23,544)	(19,014)	(45,359)	(37,078)
ISS	(24,973)	(22,606)	(48,838)	(44,487)
PIS	(4,964)	(4,119)	(9,616)	(8,033)
Net revenue	711,419	584,740	1,335,967	1,141,387

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

26. OPERATING SEGMENTS

26.1. Products and services that generate revenue for reportable segments

The information presented to the main decision maker to allocate funds and assess the segment performance is focused on the type of services provided, thus, according to the IFRS 8 and CPC 22, the Group is divided into 3 segments of operation:

(a) Provision of telephone assistance services in general (Contax, Contax Argentina and Allus Group);

(b) Provision of information technology services in general (TODO); and

Pursuant to the IFRS 8 and CPC 22, information per segment is presented only in the consolidated financial statements.

26.2. Revenues and results from reportable segments

The table below shows an analysis of the results of operations of the Group by reportable segment:


	Quarter ended 6/30/2011

	Telemarketing	IT services in	Publicity and advertising	Write-off between segments and
	services in general	general	services	others	Consolidated

Net operating revenue	738,469	30,799	26,938	(84,787)	711,419
Cost of services rendered	(657,202)	(25,082)	(20,886)	71,247	(631,924)
Gross operating income	81,267	5,717	6,052	(13,540)	79,495

Operating revenue (expenses):
Selling	(8,566)	(510)	(386)	925	(8,537)
General and administrative	(49,866)	(2,822)	(4,007)	7,568	(49,127)
Management fees	-	-	-	(2,273)	(2,273)
Financial revenue	6,418	313	358	1,996	9,086
Financial expenses	(17,686)	(105)	(136)	2,157	(15,770)
Other operating expenses, net	(4,816)	(133)	(20)	(356)	(5,327)
	(74,516)	(3,257)	(4,191)	10,017	(71,948)

Operating revenue before income tax and social contribution	6,751	2,460	1,861	(3,523)	7,547

Income tax and Social Contribution:
Current	1,120	(600)	(739)	(1,663)	(1,882)
Deferred	(206)	(352)	(34)	276	(316)

Net income for the year	7,665	1,508	1,088	(4,910)	5,349

Non-controlling interest					302

Net income for the year					5,651

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)


	Quarter ended 6/30/2010
				Write-off between
	Telemarketing	IT services in	Publicity and advertising	segments and
	services in general	general	services	others	Consolidated

Net operating revenue	589,882	23,352	-	(28,493)	584,740
Cost of services rendered	(497,156)	(20,985)	-	14,595	(503,546)
Gross operating income	92,726	2,367	-	(13,898)	81,194

Operating revenue (expenses):
Selling	(4,859)	(66)	-	81	(4,845)
General and administrative	(28,326)	(2,135)	-	1,800	(28,661)
Management fees	0	0	-	(5)	(5)
Financial revenue	4,626	192	-	3,083	7,902
Financial expenses	(7,240)	(12)	-	(199)	(7,452)
Other operating expenses, net	(4,401)	(54)	-	(1,962)	(6,417)
	(40,200)	(2,075)	-	2,798	(39,478)

Operating revenue before income tax and social contribution	52,526	292	-	(11,100)	41,716

Income tax and Social Contribution:
Current	(16,961)	(60)	-	(528)	(17,549)
Deferred	2,628	(32)	-	(220)	2,375

Net income for the year	38,193	200	-	(11,848)	26,542

Non-controlling interest					40

Net income for the year					26,582


	Six-month period ended 6/30/2011
				Write-off between
	Telemarketing	IT services in	Publicity and advertising	segments and
	services in general	general	services	others	Consolidated

Net operating revenue	1,340,607	56,381	52,200	(113,220)	1,335,967
Cost of services rendered	(1,190,409)	(45,686)	(40,436)	97,212	(1,179,320)
Gross operating income	150,198	10,695	11,764	(16,008)	156,647

Operating revenue (expenses):
Selling	(16,862)	(1,254)	(528)	1,669	(16,975)
General and administrative	(88,743)	(5,915)	(6,537)	9,382	(91,813)
Management fees	-	-	-	(3,070)	(3,070)
Financial revenue	14,057	610	568	4,972	20,208
Financial expenses	(27,902)	(128)	(255)	2,410	(25,875)
Other operating expenses, net	(12,950)	(197)	(44)	(344)	(13,537)
	(132,400)	(6,884)	(6,796)	15,019	(131,062)

Operating revenue before income tax and social contribution	17,798	3,811	4,968	(989)	25,585

Income tax and Social Contribution:
Current	(4,280)	(943)	(1,618)	(2,026)	(8,867)
Deferred	(765)	(409)	(68)	333	(909)

Net income for the year	12,753	2,459	3,282	(2,682)	15,809

Non-controlling interest					492

Net income for the year					16,301

CONTAX PARTICIPAÇÕES S.A. AND SUBSIDIARIES

Notes to the Quarterly Financial Information – ITR for the period ended June 30, 2011

(In thousands of reais, except when otherwise indicated)

	Six-month period ended 6/30/2010
	Telemarketing services in general	IT services in general	Publicity and advertising services	Write-off between segments and others	Consolidated

Net operating revenue	1,189,178	44,615	-	(92,405)	1,141,387
Cost of services rendered	(1,025,013)	(40,701)	-	88,231	(977,483)
Gross operating income	164,165	3,914	-	(4,174)	163,904


Operating revenue (expenses):	(12,346)	(66)	-	81	(12,332)
Selling	(60,819)	(4,303)	-	2,994	(62,128)
General and administrative	-	-	-	(344)	(344)
Management fees	9,189	332	-	4,475	13,997
Financial revenue	(13,274)	(32)	-	(186)	(13,493)
Financial expenses	(12,536)	(90)	-	192	(12,434)
Other operating expenses, net	(89,786)	(4,159)	-	7,212	(86,734)

Operating revenue before income tax and social contribution	74,379	(245)	-	3,038	77,170

Income tax and Social Contribution:
Current	(28,190)	(105)	-	(527)	(28,822)
Deferred	2,048	1,036	-	(1,306)	1,777

Net income for the year	48,237	686	-	1,205	50,125

Non-controlling interest

CONTAX HOLDING CO 6-K