The year-on-year reduction in 9M-2007 consolidated net income reflected the expenses related to the Petros Plan regulation amendments and the impact of the appreciation of the Real on export prices and net dollar-denominated assets. These and other factor for Petrobras (PBR)

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PBR » Topics » The year-on-year reduction in 9M-2007 consolidated net income reflected the expenses related to the Petros Plan regulation amendments and the impact of the appreciation of the Real on export prices and net dollar-denominated assets. These and other factor

This excerpt taken from the PBR 6-K filed Nov 21, 2007.

The year-on-year reduction in 9M-2007 consolidated net income reflected the expenses related to the Petros Plan regulation amendments and the impact of the appreciation of the Real on export prices and net dollar-denominated assets. These and other factors are listed below:

• A R$ 700 million growth in gross profit:


Main Items	Net Revenues	Cost of Goods Sold	Gross Profit
. Domestic Market: - effect of volumes sold	1.809	(959)	850
- effect of prices	(197)	-	(197)
. Intl. Market: - effect of export volumes	3.975	(1.744)	2.231
- effect of export price	(2.521)	-	(2.521)
. Increase in expenses: (*)	-	(385)	(385)
. Extraordinary items: - adjustment to special participations ⁽¹⁾	-	426	426
- expenses with re-injected gas⁽²⁾	-	408	408
. Increase in profitability of Distribution Segment	404	(113)	291
. Increase in operations of commercialization abroad	1.260	(1.047)	213
. Decrease in international sales	6.293	(6.306)	(13)
. FX effect on controlled companies abroad	(2.497)	2.031	(466)
. Others	(563)	426	(137)

	7.963	(7.263)	700


*() Expenses Composition:**		Value
- domestic government take		2.138
- third-party services		413
- transportation: maritime and pipelines ⁽³⁾		(163)
- non-oil products, including alcohol		(330)
- salaries, benefits and charges		(383)
- materials, services and depreciation		(808)
- import of gas, crude oil and oil products⁽⁴⁾		(1.252)

.		(385)


(1)	New ANP interpretation of the deductibility of project finance expenses related to the Marlim field when calculating 2006 special participations.
(2)	Adjustment, in 2006, of expenses from gas produced and reinjected in reservoirs in the Solimões, Campos and Espírito Santo Basin.
(3	Expenditures on cabotage, terminals and pipelines.
(4)	CIF values.

This excerpt taken from the PBR 6-K filed Nov 13, 2007.

• A R$ 700 million growth in gross profit:


. Main Items	Net Revenues	Cost of Goods Sold	Gross Profit


. Domestic Market: - effect of volumes sold	1.809	(959)	850
- effect of prices	(197)	-	(197)
. Intl. Market: - effect of export volumes	3.975	(1.744)	2.231
- effect of export price	(2.521)	-	(2.521)
. Increase in expenses: (*)	-	(385)	(385)
. Extraordinary items: - adjustment to special participations ⁽¹⁾	-	426	426
- expenses with re-injected gas⁽²⁾	-	408	408
. Increase in profitability of Distribution Segment	404	(113)	291
. Increase in operations of commercialization abroad	1.260	(1.047)	213
. Decrease in international sales	6.293	(6.306)	(13)
. FX effect on controlled companies abroad	(2.497)	2.031	(466)
. Others	(563)	426	(137)

	7.963	(7.263)	700


*() Expenses Composition:**		Value
- domestic government take		2.138
- third-party services		413
- transportation: maritime and pipelines ⁽³⁾		(163)
- non-oil products, including alcohol		(330)
- salaries, benefits and charges		(383)
- materials, services and depreciation		(808)
- import of gas, crude oil and oil products⁽⁴⁾		(1.252)

		(385)

(1) New ANP interpretation of the deductibility of project finance expenses related to the Marlim field when calculating 2006 special participations.
(2) Adjustment, in 2006, of expenses from gas produced and reinjected in reservoirs in the Solimões, Campos and Espírito Santo Basin.
(3) Expenditures on cabotage, terminals and pipelines.
(4) CIF values.

• An increase in the following expenses:

•	Selling expenses (R$ 252 million) to meet increased export volume (R$ 158 million) and operations abroad (R$ 104 million), R$ 74 million of which in off-shore operations, offset by the reduction in distribution expenditure (R$ 74 million);


PETROBRAS SYSTEM	Financial Performance

•	General and administrative expenses (R$ 791 million) from personnel in Brazil (R$ 265 million) and abroad (R$ 72 million); greater expenditure on third-party services (R$ 242 million), especially IT and consulting services; and new companies abroad (R$ 43 million);

•	Exploration costs (R$ 280 million), related to higher expenditure in Brazil (R$ 84 million) and abroad (R$ 362 million) and the monetary restatement of provisions for abandonment (R$ 49 million), offset by the reduction in the write-off of dry wells in the US and Bolivia in 2007 (R$ 211 million);

•	R&D (R$ 109 million), most of which went to projects in ANP-accredited universities and institutes (R$ 59 million) and personnel (R$ 43 million);

•	The Pension and Health Plan (R$ 598 million), due to the amendments to the Petros Plan regulations;

•	Other operating expenses (R$ 1,817 million), especially from the amendments to the Petros Plan (R$ 1,051 million) and the Collective Bargaining Agreements (R$ 287 million); contractual charges related to natural gas and electricity supply (R$ 263 million); and the addition to the provisions for legal contingencies (R$ 125 million), offset by the recovery of ICMS tax credits (R$ 101 million), pursuant to the agreement with the Ceará State Finance Department.

• A negative impact of R$ 1,823 million on the net financial result, due to:

•	The appreciation of the Real and the increase in dollar credit exposure, especially in operations between Petrobras and its overseas subsidiaries (R$ 2,566 million);

•	Part of this impact was offset by the reduction in financial expenses (R$ 742 million), reflecting the restructuring of the debt profile and increased financing for ongoing projects, resulting in higher interest capitalization.

• Recognition of exchange losses from the conversion of foreign subsidiaries’ shareholders equity (R$ 137 million), reflected in the Special Participations result.


PETROBRAS SYSTEM	Financial Performance

EXCERPTS ON THIS PAGE:

6-K	Nov 21, 2007

6-K	Nov 13, 2007

Petrobras (PBR)

PBR » Topics » The year-on-year reduction in 9M-2007 consolidated net income reflected the expenses related to the Petros Plan regulation amendments and the impact of the appreciation of the Real on export prices and net dollar-denominated assets. These and other factor

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