2.0.0.10 false Note 17 - Shareholders Equity 00916 - Disclosure - Note 17 - Shareholders Equity true false false false 1 usd $ false false Dollars Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 2 Notes to Financial Statements [Abstract] 0 pbra_NotesToFinancialStatementsAbstract pbra false na duration string No definition available. false false false false false true false false false false false false 1 false false false false 0 0 false false false No definition available. false 3 Note 17 - Shareholders Equity 1 us-gaap_StockholdersEquityNoteDisclosureTextBlock us-gaap true na duration string No definition available. false false false false false false false false false false false false 1 false false false false 0 0 <div style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%"> 17. Shareholders Equity a)   Capital The Companys subscribed and fully paid-in capital at December 31, 2009 and 2008, consisted of 5,073,347,344 common shares and 3,700,729,396 preferred shares as retroactively restated for the stock split discussed below. The preferred shares do not have any voting rights and are not convertible into common shares and vice-versa. Preferred shares have priority in the receipt of dividends and return of capital. The Extraordinary General Meeting held on March 24, 2008, decided to effect a split of each Companys share into two, resulting: (a) in a free distribution of 1 (one) new share of the same type for each original share and based on the shareholding structure at April 25, 2008; (b) in a free distribution of 1 (one) new American Depository Shares (ADS) of the same type for each original ADS and based on the shareholding structure at April 25, 2008. At the same date, an amendment to article 4 of the Companys by-laws to cause capital be divided into 8,774,076,740 shares, of which 5,073,347,344 are common shares and 3,700,729,396 are preferred shares, with no nominal value, was approved. This amendment to the Companys bylaws is effective from April 25, 2008. The relation between the ADS and shares of each class remains of 2 (two) shares for one ADS. All share, ADS, per share and per ADS information in the accompanying financial statements and notes have been adjusted to reflect the result of the share split. Current Brazilian law requires that the Federal Government retain ownership of 50% plus one share of the Companys voting shares. The Management of Petrobras is proposing to the Special General Shareholders Meeting to be held jointly with the Annual General Shareholders Meeting on April 22, 2010, a capital increase in the Company from US$36,194 (R$78,967 million) to US$40,225 (R$85,986 million), through capitalization of a capital reserve in the amount of US$296 (R$515 million), of part of a profit reserve recorded in prior years in the amount of US$3,727 (R$6,490 million), of which US$516 (R$899 million) is from a statutory reserve, US$320 (R$557 million) from a tax incentive reserve and US$2,891 (R$5,034 million) from a profit retention reserve, and, in addition, US$8 (R$14 million) from part of a tax incentive reserve formed in 2009, without issuing new shares, in accordance with article 169, paragraph 1, of Law 6,404/76. </div> <div style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%"> The Extraordinary General Meeting, held together with the Ordinary General Meeting on April 4, 2008, approved the increase of the Companys capital from US$20,816 (R$52,644 million) to US$36,194 (R$78,967 million), through the capitalization of part of retained earnings recorded during previous years amounting to US$14,782 (R$25,302 million) and part of the capital reserves, amounting to US$596 (R$1,020 million), consisting of US$99 (R$169 million) of the Merchant Navy AFRMM subsidy reserve and US$497 (R$851 million) from the tax incentives reserve, and without issuing any new shares, in accordance with article 169, paragraph 1 of Law Nº 6404/76. b)   Capital reserves      AFRMM Relates to the Merchant Marine (AFRMM) freight surcharges levied in accordance with relevant legislation. These funds are used to purchase, enlarge or repair vessels of the Companys transport fleet.      Fiscal incentive reserve This reserve consists of investments in tax incentives, arising from allocations of part of the Companys income tax. It relates to tax incentives in the Northeast, within the region covered by the Northeast Development Agency (ADENE), granting a 75% reduction in income tax payable, calculated on the profits of the exploration of the incentived activities. Up to December 31, 2009, this incentive amounted to US$167 (US$219 on December 31, 2008), which may only be utilized to offset losses or for a capital increase, as provided for in Article 545 of the Income Tax Regulations and has been accounted for under the flow through method. On May 10, 2007, the Brazilian Federal Revenue Office recognized Petrobras right to deduct this incentive from income tax payable, covering the tax years of 2006 until 2015. c)   Appropriated retained earnings Brazilian Law and the Companys by-laws require that certain appropriations be made from retained earnings to reserve accounts annually. The purpose and basis of appropriation to such reserves are as follows:      Legal reserve This reserve is a requirement for all Brazilian corporations and represents the annual appropriation of 5% of net income as stated in the statutory accounting records up to a limit of 20% of capital stock. The reserve may be used to increase capital or to compensate for losses, but may not be distributed as cash dividends. </div> <div style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%">      Undistributed earnings reserve This reserve is established in accordance with Article 196 of Law No. 6,404/76 to fund the Companys annual investment program. The destination of net income for the year ended December 31, 2007, includes retention of profits of US$7,954 with a US$7,951 amount, arising from net income for the year, and the US$3 retaining earnings remaining balance. This proposal was intended cover to partially meet the annual investment program established in the 2008 capital budget, ad referendum of the General Shareholders Meeting held on April 4, 2008. The destination of net income for the year ended December 31, 2008, includes retention of profits of US$10,790 with a US$10,175 amount, arising from net income for the year, and the US$615 retaining earnings remaining balance. This proposal was intended cover to partially meet the annual investment program established in the 2009 capital budget, ad referendum of the General Shareholders Meeting held on April 8, 2009. The destination of net income for the year ended December 31, 2009, includes retention of profits of US$10,667 with a US$10,661 amount, arising from net income for the year, and the US$6 retaining earnings remaining balance. This proposal is intended cover to partially meet the annual investment program established in the 2010 capital budget, ad referendum of the General Shareholders Meeting to be held on April 22, 2010.      Statutory reserve This reserve is provided through an amount equivalent to a minimum of 0.5% of subscribed and fully paid in capital at year-end. The reserve is used to fund the costs incurred with research and technological development programs. The accumulated balance of this reserve cannot exceed 5% of the capital stock, according to Article 55 of the Companys by-laws. </div> <div style="PADDING-RIGHT: 0%; PADDING-LEFT: 0%"> d)   Basic and diluted earnings per share Basic and diluted earnings per share amounts have been calculated as follows: <div align="left"> <table style="FONT-SIZE: 8pt; WIDTH: 100%; FONT-FAMILY: '''''''''''Times New Roman'''''''''''" cellspacing="0" border="0"> <tr> <td></td> <td width="1%"></td> <td width="13%"></td> <td width="1%"></td> <td width="13%"></td> <td width="1%"></td> <td width="13%"></td> </tr> <tr valign="bottom"> <td align="left"> </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="center" colspan="5">Year ended December 31, </td> </tr> <tr valign="bottom"> <td align="left"> </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="center">2009 </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="center">2008 </td> <td> </td> <td style="TEXT-INDENT: 7px; BORDER-BOTTOM: #000000 1px solid" align="center">2007 </td> </tr> <tr> <td colspan="7"> </td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 1px; BACKGROUND-COLOR: #cceeff" align="left">Net income for the year attributable to Petrobras </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">15,504</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">18,879</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">13,138</td> </tr> <tr> <td colspan="7"> </td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left">Less priority preferred share dividends </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">(1,159)</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">(749)</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">(813)</td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 1px" align="left">Less common shares dividends, up to the priority preferred shares dividends on a per- share basis </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="right">(1,589)</td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="right">(1,027)</td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="right">(1,115)</td> </tr> <tr> <td style="BACKGROUND-COLOR: #cceeff" colspan="7"> </td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 1px" align="left">Remaining net income to be equally allocated to common and preferred shares </td> <td> </td> <td style="BORDER-BOTTOM: #000000 3px double" align="right">12,756</td> <td> </td> <td style="BORDER-BOTTOM: #000000 3px double" align="right">17,103</td> <td> </td> <td style="BORDER-BOTTOM: #000000 3px double" align="right">11,210</td> </tr> <tr> <td style="BACKGROUND-COLOR: #cceeff" colspan="7"> </td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 1px" align="left">Weighted average number of shares outstanding </td> <td> </td> <td align="left"> </td> <td> </td> <td align="left"> </td> <td> </td> <td align="left"> </td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 1px; BACKGROUND-COLOR: #cceeff" align="left">    Common/ADS </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">5,073,347,344</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">5,073,347,344</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">5,073,347,344(*)</td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 1px" align="left">    Preferred/ADS </td> <td> </td> <td style="BORDER-BOTTOM: #000000 3px double" align="right">3,700,729,396</td> <td> </td> <td style="BORDER-BOTTOM: #000000 3px double" align="right">3,700,729,396</td> <td> </td> <td style="BORDER-BOTTOM: #000000 3px double" align="right">3,700,729,396(*)</td> </tr> <tr> <td style="BACKGROUND-COLOR: #cceeff" colspan="7"> </td> </tr> <tr valign="bottom"> <td align="left">Basic and diluted earnings per share </td> <td> </td> <td align="left"> </td> <td> </td> <td align="left"> </td> <td> </td> <td align="left"> </td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 1px; BACKGROUND-COLOR: #cceeff" align="left">    Common and preferred </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">1.77</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">2.15</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">1.50(*)</td> </tr> <tr> <td colspan="7"> </td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left">Basic and diluted earnings per ADS </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">3.54</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">4.30</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">3.00(*)</td> </tr> <tr> <td colspan="7"> </td> </tr> <tr> <td align="left" colspan="7"> </td> </tr> <tr valign="bottom"> <td align="left" colspan="7">(*) Considers effect of 2 for 1 stock split that occurred on April 25, 2008. </td> </tr> </table> </div>   e)   Dividends and interest on shareholders equity In accordance with the Companys by-laws, holders of preferred and common shares are entitled to a minimum dividend of 25% of annual net income as adjusted under Brazilian Corporate Law. In addition, the preferred shareholders have priority in the receipt of an annual dividend of at least 3% of the book value of the shares or 5% of the paid-in capital in respect of the preferred shares as stated in the statutory accounting records. As of January 1, 1996, amounts attributed to shareholders as interest (see below) can be deducted from the minimum dividend computation. Dividends are paid in Brazilian reais. The Company paid US$1,535 in dividends during the year ended December 31, 2009 (2008 - US$158, 2007 - US$778). No withholding tax is payable on distributions of dividends made since January 1, 1996. </div> <div style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%"> The Company provides either for its minimum dividends or for the total interest on shareholdersequity where the tax benefit has been recognized as of December 31. Brazilian corporations are permitted to attribute interest on shareholders equity, which may either be paid in cash or be used to increase capital stock. The calculation is based on shareholders equity amounts as stated in the statutory accounting records and the interest rate applied may not exceed the Taxa de Juros de Longo Prazo (long-term interest rate or the TJLP) as determined by the Brazilian Central Bank. Such interest may not exceed the greatest of 50% of net income or 50% of retained earnings plus revenue reserves. Interest on shareholders equity, is subject to withholding tax at the rate of 15%, except for untaxed or exempt shareholders, as established by Law No. 9,249/95. The Company paid US$6,177 in interest on shareholders equity during the year ended December 31, 2009 (2008 - US$4,589, 2007 - US$3,225). Interest on shareholders equity was included with the proposed dividend for the year, as established in the Companys by-laws, and generated an income tax and social contribution credits of US$1,331 (US$995 in 2008, and US$998 in 2007) (see Note 3). The proposal for 2009 dividends that is being submitted by the Petrobras Board of Directors for approval of the shareholders at the Ordinary General Meeting to be held on March 31, 2010, in the amount of US$4,565, conforms to the by-laws in regard to guaranteed rights of preferred shares (article 5), include interest on capital, already approved by the Board of Directors, as established in article 9 of Law 9.249/95 and Decrees 2.673/98 and 3.381/00, as follows: <ul> <li>On June 24, 2009, in the amount of US$1,347 (R$2,632 million), which was made available to shareholders on November 30, 2009, based on the share position of July 3, 2009. </li> <li> On September 21, 2009, in the amount of US$964 (R$1,755 million), which was made available to shareholders on December 21, 2009, based on the share position of September 30, 2009. </li> <li> On December 17, 2009, in the amount of US$1,002 (R$1,755 million), which was made available to shareholders on December 29, 2009, based on the share position of December 18, 2009.</li> </ul> </div> <div style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%"> <ul> <li>On February 26, 2010, the final portion of interest on shareholders equity, to be made available based on the shareholding position as of April 22, 2010, the date of the Annual General Shareholders Meeting, which will decide on the subject, in the amount of US$601 (R$1,053 million), together with the dividends of US$651 (R$1,140 million).</li> </ul> </div> The portions of interest on shareholders equity distributed in advance in 2009 will be discounted from the dividends proposed for this year, corrected by the benchmark (SELIC) rate from the date of its payment until December 31, 2009. Interest on shareholders equity is subject to the levy of 15% (fifteen percent) income tax, except for shareholders that are declared immune or exempt. The dividends and the final portion of the interest on shareholders equity will be paid on a date to be established by the Ordinary General Meeting of Shareholders. These amounts will be monetarily restated from December 31, 2009, to the initial date of payment, according to the variation in the SELIC rate. On April 08, 2009, the Ordinary General Meeting approved dividends referring to the year ended December 31, 2008, in the amount of US$4,242, conforms to the by-laws in regard to guaranteed rights of preferred shares (article 5), include interest on shareholders equity, already approved by the Board of Directors, in the amount of US$3,004. Interest on shareholders equity is subject to withholding tax at the rate of 15%, except for untaxed or exempt shareholders. The dividends were monetarily restated in accordance with the SELIC rate variation as from December 31, 2008 to the initial date of payment. Dividends and interest on shareholders equity were distributed as follows: <ul> <li> On April 29, 2009, amounting to US$1,527 (R$3,334 million), which was made available to shareholders based on the shareholding position of December 26, 2008, monetarily restated in accordance with the SELIC rate variation as from December 31, 2008; </li> <li>  On June 24, 2009, amounting to US$1,690 (R$3,334 million), which was made available to shareholders based on the shareholding position of December 26, 2008, monetarily restated in accordance with the SELIC rate variation as from December 31, 2008; </li> <li> The remaining balance of dividends relating to the financial year of 2008, was made available to shareholders on August 14, 2009. </li> </ul> <div style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%"> On April 04, 2008, the Ordinary General Meeting approved dividends referring to the year ended December 31, 2007, in the amount of US$3,715, conforms to the by-laws in regard to guaranteed rights of preferred shares (article 5), include interest on shareholders equity, already approved by the Board of Directors. The dividends were monetarily restated in accordance with the SELIC rate variation as from December 31, 2007 to the initial date of payment. The remaining balance of dividends relating to the financial year of 2007, approved by the Ordinary General Meeting held on April 04, 2008, in the amount of US$495 (after deducting those distributed earlier to shareholders on January 23, March 31 and April 30, 2008, in the amount of US$3,220), were paid out to shareholders on June 03, 2008. Interest on shareholders equity was included with the proposed dividend for the year, as established in the Companys By-laws. Brazilian law permits the payment of dividends only from retained earnings as stated in the statutory accounting records. At December 31, 2009, the Company had appropriated all such retained earnings. In addition, at December 31, 2009, the undistributed reserve in appropriated retained earnings, amounting to US$30,755, may be used for dividend distribution purposes, if so approved by the shareholders, however, the Companys stated intent is to use such reserve to fund working capital and capital expenditures. </div> 17. Shareholders Equity a)   Capital The Companys subscribed and fully paid-in capital at December 31, 2009 and 2008, consisted of false false false Disclosures related to accounts comprising shareholders' equity, including other comprehensive income. Includes: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables; effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure. 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