CVM ORIENTING OPINION NO. 11, OF SEPTEMBER 15, 1986.

SUMMARY: Procedures to be observed by public companies in the preparation of financial statements relating to the closing of the fiscal year from 28.02.86 onwards. Interpretation of provisions of Instructions Nos. 48, 50, 52 and 53, of 20.03, 24.04, 18.06 and 01.07.86 respectively. Completion of forms ITR and IDF, governed by CVM Instructions Nos. 32, 39 and 41, of 16.03 and 07.06.11.84 and 03.01.85, respectively.

1. INTRODUCTION

This opinion aims to guide all public companies in the preparation and disclosure of financial statements relating to the fiscal year whose closing occurs from February 28, 1986 onwards, as well as the completion of the respective "Quarterly Information - ITR" and "Information on Financial Statements - IDF" forms.

Several of the aspects addressed here were the subject of meetings and debates held with the Brazilian Institute of Accountants - IBRACON, having incorporated, in addition, some of the suggestions presented in a meeting held between the aforementioned Institute and the Brazilian Association of Publicly Held Companies - ABRASCA.

2. DETERMINATION AND ALLOCATION OF THE RESULT OF THE FISCAL YEAR

CVM INSTRUCTION NO. 48, of 20.03.86, in its art. 3rd, determines that the balances of the accounts referred to in items III and IX of art. 2nd will be added to the net result to be determined from 01.03.86 until the end of the respective fiscal year, for the purposes of determining participations and the allocation of the net profit of the year as provided for in LAW NO. 6.404/76.

It is important to emphasize that the result of the year must be determined according to the accrual basis, encompassing all gains obtained and losses incurred during the fiscal year, regardless of their nature - operational or non-operational, normal or extraordinary (arts. 177 and 187 of LAW NO. 6.404/76).

Therefore, the balance of the special and transitional account used in the determination of the period result until 28.02.86, as well as the balance of the special account named "Adjustments of the Economic Stabilization Program - DL No. 2,284/86" will be computed in the formation of the result of the fiscal year closed from 28.02.86, for all effects of corporate law.

The net profit of the year determined as described above will be fully and normally allocated according to the provisions of arts. 193 to 197 and 202 of LAW NO. 6.404/76 and the company's bylaws.

3. FINANCIAL STATEMENTS

All public companies shall prepare and publish the financial statements relating to the fiscal year closed from 28.02.86, in accordance with the provisions of art. 176 of LAW NO. 6.404/76, including, when applicable, consolidated financial statements (CVM Instruction No. 15/80), being dispensed with the publication of comparative values relating to the previous fiscal year, except with respect to the balance sheet whose comparison must be made with the values of 28.02.86.

The presentation of the financial statements at the end of the fiscal year may be made according to the suggestions contained in Annexes I to V of this Opinion, complemented by the pertinent explanatory notes, especially when there is a need for clarifications regarding differences in data presented in relation to the extraordinary financial statements of 28.02.86.

The models presented in the annex are suggestions that take as a basis the fiscal year ending on 31.12.86, as it is the most common, but they apply, with the necessary adaptations, to earlier or later dates.

It is also worth noting the following aspects relating to the publication of financial statements:

a) although the models have been presented in Cr$ Millions and Cz$ Thousand, they may be published in Cr$ Thousand and Cz$ 1.00;

b) Annex V refers to the Statement of the Account "Adjustments of the Economic Stabilization Program - DL No. 2,284/86". If the company has already published this statement, it may replace it with an Explanatory Note indicating a summary of the main items that form the balance of this account.

In any circumstance, this detail (in the Statement or Note) must segregate the effects of this account until 28.02.86, the total of which must coincide with the value stated in the Balance Sheet, from the effects determined from 01.03.86.

Since these are suggestions, the financial statement models attached to this Opinion should not inhibit public companies from presenting a higher level of information disclosure, with a view to better understanding by shareholders and other market participants.

4. QUARTERLY INFORMATION - ITR

Companies must adopt as the monetary unit for filling out this form the Cz$ Mil (thousands of cruzados), and this situation must be explicit in the forms where the thousand cruzeiros still appears as the monetary unit.

Table 09 - "Statement of the Result of the Quarter" - and tables 05 and 07 of Annex 01 "Statement of the Result of the Quarter of the Controlled/Associated Company" and "Statement of the Consolidated Result of the Quarter" must, in this exercise, have filled only the first two columns - "Quarter of the Information" and "Accumulated Current Year" - in accordance with art. 7th of CVM INSTRUCTION NO. 48/86.

According to the sole paragraph of the aforementioned normative device, the column "Accumulated Current Year" will be named "Partial Accumulation of the Year" and must contain the results determined from 01.03.86.

The columns, "Same Quarter Previous Year" and "Accumulated Previous Year" may be left blank during the current fiscal year.

The tables demonstrating the quarterly result should not include the balance of the account "Adjustments of the Economic Stability Program - DL No. 2,284/86", and this fact must be explicit in explanatory notes.

Tables 03 and 04 of Annex 02 - Balance Sheet - ASSETS AND LIABILITIES must present filled only the columns of the end of the quarter. The balance of the result until 28.02.86 and the balance of the account "Adjustments of the Economic Stabilization Program - DL No. 2,284/86" must be included in profits (or losses) accumulated.

As indicated by the ORIENTATION MANUAL for registration and updating of information of public companies, in table 05 of Annex 02 explanatory notes must be disclosed that contribute to a perfect understanding of the financial statements.

5. INFORMATION ON FINANCIAL STATEMENTS - IDF

Companies must adopt as the monetary unit for filling out this form the Cz$ Mil (thousands of cruzados), and this situation must be explicit in the forms where the "thousand cruzeiros" still appears.

Tables 04, 05, 06 and 07 "Balance Sheet" must include only data from the end of the last fiscal year.

Tables 09 and 10 relating to "Statements of Results" must be filled out as follows:

• in the first column the Statement of the Result relating to the period comprised between the beginning of the year and 28.02.86 must be presented, in Cr$ millions, excluding the "Adjustments of the Economic Stabilization Program - DL No. 2,284/86";
• in the second column the Statement of the Result relating to the period comprised between 01.03.86 and the closing of the fiscal year must be presented, in Cz$ thousand;
• in the third column only the following items must be filled:
  1. the net balance of the account "Adjustments of the Economic Stabilization Program - DL No. 2,284/86", classified in "Non-Operational Revenues (Expenses)", as the case may be, in Cz$ thousand;
  2. the "Net Profit (Loss) of the Year" in Cz$ thousand, comprising the sum of the results of the first two columns plus the balance of the "Adjustments of the Economic Stabilization Program - DL No. 2,284/86";
  3. in table 09, the "Profit (Loss) per Share", which must only be informed in this third column.

Tables 11 and 13 "Statements of the Sources and Applications of Resources" must be filled out as follows:

• in the first column the period comprised between the beginning of the year and 28.02.86 must be presented, in Cr$ millions;
• in the second column the period comprised between 01.03.86 and the closing of the fiscal year must be presented, in Cz$ thousand; and
• in the third column the effect of the "Adjustments of the Economic Stabilization Program - DL No. 2,284/86" must be informed on the Net Working Capital, in "Sources of Resources" (code 50) or "Applications of Resources" (code 60), as the case may be.

In tables 12 and 14, "Variation of Net Working Capital", the increase (reduction) of net working capital must be contemplated in each period, with the third column informing the sum of the first two columns, added (decreased) by the value of the effect of the "Adjustments of the Economic Stabilization Program - DL No. 2,284/86".

Table 15 "Statement of Accumulated Profits or Losses" must present filled only the column relating to the closing of the fiscal year, with the item referring to the Previous Balance of Accumulated Profits (or Losses) informing the balance existing in the previous year, expressed in Cr$ millions. In this table, the Monetary Correction on the adjusted balance (creditor or debtor, as the case may be) must correspond to the sum of the monetary correction determined on 28.02.86, plus the special monetary correction (CVM Instruction No. 50) and the complementary monetary correction (CVM Instruction No. 52).

In the case of initial registration of a public company, data from the last three fiscal years must appear in the form in Cr$ Millions and Cz$ Thousand, according to the currencies in which the financial statements were prepared, with the adopted monetary unit highlighted at the top of each column.

For exemplification, we are attaching the IDF tables referred to above, duly filled out based on the data obtained from the financial statement models presented.

It is worth noting, finally, that the differences existing between the models suggested for publication and the completion of the ITR and IDF forms arise from the needs to utilize the forms in use and to facilitate their completion.

Signed originally by

HUGO ROCHA BRAGA
Superintendent of Accounting Standards

Signed originally by

HÉLCIO FAJARDO HENRIQUES
Superintendent of Corporate Relations