This excerpt taken from the PBR 6-K filed May 16, 2006.
8. Change in Accounting Policy
In the preparation of the earnings statements of the first quarter of 2006, there were no changes in the accounting procedures followed by the Company, in relation to those followed in the prior period, with the exception of those adopted for the scheduled maintenance shut-downs for industrial units and ships.
Until December 2005, the Company followed an accounting policy whereby each month a maintenance provision was registered for industrial units and ships for the prior period by estimating expenses for the programmed shut-down.
Beginning in January 2006, in accordance with Deliberation CVM No. 489/2005 and to Technical Interpretation No. 1/2006 of IBRACON, the Company reversed the reserve balance for programmed shut-downs and adopted the practice of registering the amounts related to the maintenance of industrial units and boats in Property, Plant & Equipment, which includes spare parts, assembly and disassembly services, amongst others.
Such shut-downs occur during scheduled periods, which vary from one to four years and the respective costs are depreciated as a cost of production until the initiation of the next shutdown.
Regarding the change in accounting policy, the reversal of amounts provisioned through of December 31, 2005 for depreciation of a portion of the relevant maintenance costs, capitalization of expenses incurred and accumulated depreciation on these expenses, through December 31, 2005, was made directly to the retained earnings, net of taxes, as a prior period adjustment in the amount of R$ 529 million.