CHINESE STATEGIC (OUTWARD) INVESTMENT
IN
LATIN AMERICA
CASE STUDY -BRAZIL
By

Barnard Foo, P .Eng
M.Eng, University of British Columbia, 2007
B.Eng. (Mining Engineering), Laurentian University, 1998

Project Submitted in Partial Fulfillment Of
The Requirement For The Degree Of
Master of Business Administration

University of Northern British Columbia
April 2010
© Barnard Foo, 2010

UNIVERSITY of NORTHER~'
BRITISH COLUMBIA
LmRARY
Prince George, B.C.

ABSTRACT
Chinese remarkable economic growth averaging at 10 per cent per
annum since the late 70's has been facilitated by a strategy of promoting
exports and attracting foreign capital. Multinational companies from the US,
Japan, and Europe have led their way in using China as off-shoring platform
for the labor-intensive stages of goods production. China currently has an
account surplus of 6-7 per cent of their GDP and has accumulated more
reserves than any country in the world at approximately US$ 300 trillion.
Given its standing as one of the major suppliers of global capital, Chinese
government in the recent years has been pursuing a policy of "outward FDI"
under which some of the state-owned Chinese enterprises have been provided
with soft capital to become global leaders on the lines of Japanese and Korean
trading houses. The financial crisis of 2007/08 had enabled the Chinese
government an opportunity to provide capital to companies in the developed
and developing world who are currently starved for financing.
The analytical framework of internationalization theory suggests that
one should look into the motivations for internationalization and the literatures
identified the following drivers of internationalization process: (a) Marketseeking FDI, (b) Resource-seeking FDI, (c) Efficiency seeking FDI and (d)
Strategic asset-seeking FDI. Using the case study of PETROBRAS and MMX
Mining in Brazil, the study found that major driver of investment by Chinese
companies is in acquisition of strategic assets for China's future development.
In the case of PETROBRAS, the mode of investment was supplier's
credit rather than the traditional FDI or portfolio investment. In the case of
MMX, it was the stake in the equity capital of the firm. Thus, the modem
modes of outward FDI by Chinese firms are more roundabout forms rather
than the traditional modes of Foreign Direct Investment and Foreign Portfolio
Investments addressed by most researchers.
These investments have blurred the traditional distinction between
investments (in share capital) and supply contracts (supplier's credit). The
benefits it brings to Chinese companies are apparent - it ensures supply of raw
materials (strategic assets) which are required for future development of the
country. By supplying capital to overseas business enterprises including
friendly countries like Brazil, the Chinese government is able to deploy its
excess reserves and ensure its future economic security.

ii

TABLE OF CONTENTS
ABSTRACT ...................................................................................................................................... 11
TABLE OF CONTENTS .................................................................................................................. 111
LIST OF TABLE ..............................................................................................................................IV
LIST OF FIGURES ........................................................................................................................... V
ACKNOWLEDGEMENT ..................................................................................................................VI
CHAPTER 1.0

INTRODUCTION .................................................................................... 1

CHAPTER 2.0

LITERATURE REVIEW .......................................................................... 4

SECTION 2.1

THEORETICAL FRAMEWORK ..... ............... .. .. .... .... ... ... ... ... ... ... ... .... ... ..... ................. 4

SECTION2.2

EMPIRICAL LITERATURE ..... .... ...................... ..... .... ................. ....... .. ... ....... .. ... .. .... 6

SECTION2.3

CONCLUSIONS ............ .... ................. .. ...................................... ... ......................... 6

CHAPTER 3.0
SECTION 3.1

CHAPTER4.0

CHINESE STRATEGIC ENTRY MODE INTO FOREIGN MARKETS .... 8
ENTRY MODES ......... ... ............ ...................... ...... ................. .... ....................... ... ..8

TRENDS IN OUTWARD FDI BY CHINESE FIRMS ............................. 12

SECTION4.1

BROAD TRENDS IN CHINESE "OUTWARD FDI" ................ .... .. .................. ........... .. 12

SECTION4.2

TRENDS IN FINANCIAL FLOWS FROM CHINA INTO LATIN AMERICA ............ .... .. ....... 16

CHAPTER 5.0

CHINESE OUTWARD FDIIN BRAZIL· CASE STUDY ....................... 19

SECTION 5.1

BROAD TRENDS IN ECONOMIC CO-OPERATION BETWEEN CHINA AND BRAZIL ........ 19

SECTION 5.2

PETROBRAS- CASE STUDY ................................... ....................................... .. 21

SECTION 5.3

MMX MINING - CASE STUDY......................................................................... .... .29

SECTION 5.4

CONCLUSIONS .............................................. ...... ....... ...... ....... ..... .... ......... .. ....... 34

CHAPTER 6.0

CONCLUSION AND OBSERVATIONS ................................................ 35

REFERENCES ............................................................................................................................... 38

iii

,

LIST OF TABLE
Table 3-1
Table 3-2
Table 4-1
Table 4-2
Table 5-1
Table 5-2

FDI Entry Mode Strategic Behaviour Variables .. .. ... .. .. ... ... ... .. ...... .. ... .. .... ...... 11
Distribution Frequency of Entry Mode ... ..... .... .. ............................... ... ...... ... ... 11
Challenges and Advantages of China .......... ....... .. .. .. ... .. ... ..... .. .. .. .......... ... ... .. 14
China's Outward Investment by Sector (2004 and 2007) ... .. .. .... ....... ... .. ...... . 15
PETROBRAS and Exxon Mobil- Financial Ratios- 2007 and 2008 .. ....... .. .. 28
MMX Financial Statement- 2009 (Quarterly) ..... .. ..... ... ... .. ......... .. .. ... .. .. .. .. .... 32

iv

LIST OF FIGURES
Figure 4-1
Figure 4-2
Figure 4-3
Figure 4-4
Figure 4-5
Figure 5-1
Figure 5-2
Figure 5-3
Figure 5-4
Figure 5-5
Figure 5-6

China's Inward and Outward FDI - 1970 to 2009 ....... ................ ... .... ............ 13
China's Inward and Outward FPI - 1970 to 2009 ..... .. ....... ..... .. .. ......... ... ..... .. 13
China's Top 5 Trade Partners in Latin America, 2003-2007 (US$ Billions) .. . 17
China's Overseas Direct Investment by Region 2007 .... ... ..... ..... ..... ... .. ..... .. .. 18
China's Outward Investment by Sector 2007 .. .. .. .. .. .. .. ... ........ .. .... .. ...... ...... .... 18
Chinese & Brazilian Outward Investment Ties .. ... ... ...... ... ........... ..... .......... .... 20
Brazil's Historic Crude Oil Production ... .. ..... .... .. .. .... ... ...... .. .. .... ......... .. .. .. ...... 22
PETROBRAS Global Presence ... .. .. .. .. ..... .. .. .. ... .. .. ..... .. .. .. ......... ... ............. .. .. 23
Santo Basin of the Brazilian Coast ...... .. .............. ... .. .... .. .... ... ...... ... ...... .... ..... 25
Deep Water Exploration .. .. .. .. .. .. .... .. ..... ..... .. ..... .. .. .. .. ... .. .. .. ..... .. .. .. ..... .. ........... 25
Cash Flows of PETROBRAS -2004 to 2009 (US$ Billion) ... ......... ... ...... ...... .. 27

v

ACKNOWLEDGEMENT
I would like to dedicate this report to my fiancee and my parents. Keila had been
very supportive throughout the program and had provided joy, laughter, fun, great
team work and spirit through sleepless nights during the program and the time we
were in class and at home burning the midnight oil. A very special thanks to my
parents for their continuous encouragement to the both of us in our education

',

,,

.

endeavors, my sisters who had been providing countless support and Dr. Ajit
Dayanandan for his guidance during the preparation of this project.

,,

vi

.q

[1

...

·

CHAPTER 1.0 INTRODUCTION
The recent financial crisis has brought into focus the role of sovereign wealth
funds as suppliers of capital worldwide.

When countries ran current account

surpluses, they accumulate more reserves than it require. Many countries created
sovereign funds to manage these "extra resources". Sovereign wealth funds have
existed since 1950 and refer to assets held by governments in another country's
currency (IMF, 2007).

Prominent among them are the Abu Dhabi Investment

Authority of United Arab Emirates, Singapore Investment Corporation and China
Investment Corporation (CIC).

These funds have become the "new financial

superpower" and provider of the current global capital.
The last decade saw the emergence of China as one of the fastest growing
economies of the world. China recorded an average annual growth rate above 10
per cent per annum between 1980 - 2008. After embracing economic reforms in
1978, China has followed a policy of global economic integration with export-led
growth and a policy of attracting foreign capital into the country, especially Foreign
Direct Investment (FDI). China's export growth has led to current account surplus
of about 6-7 per cent ofGDP between 2000-2005. China's current account surplus
now accounts for 70 per cent of the regional surplus of about $260 Billion in 2006
(IMF, 2007). Since 1978, Chinese companies pursued a policy of strategic asset
acquisition through "inward internationalization" under the slogan "yin jin lai"
(Welcome in) namely through the attraction of Federal Direct Investment (FDI):

China, on the average, attracted US$30- 50 Billion per year of FDI; its foreign
exchange reserves peaked to around US$300 trillion by end of2000.
In the quest to continue the rapid growth momentum, China has recently
embraced a policy of promoting "outward FDI" of Chinese firms by acquiring
strategic assets throughout the world. In recent years, the amount of "outward FDI"
from China exceeded US$50 Billion by 2005. As at the end of 2007, there were
more than 10,000 Chinese companies operating overseas that were financed by
Chinese capital (Icksoo, 2009).
The Chinese government's "Go Global" policy encourages Chinese
companies to make foreign investments and is part of the government's aim to make
100 to 150 state-owned companies as global leaders modeled on the lines of
Japanese and Korean trading houses. The future of China as a global manufacturing
hub also depends on its ability to maintain its high rate of economic growth for
which it requires raw materials which are in short supply domestically.

This

recognition has prompted the government of China to look for 'strategic
partnerships' with industries throughout the world.
The outward orientation of FDI from Chinese Multi-national Enterprises
(MNEs) is an area which has received relatively little attention in academic
literature and research (Child and Rodrigues, 2005, Deng 2007). The absence of
reliable published data and the relative secrecy of such strategic deals have made
research into this area rather difficult, non-transparency, and challenging.

The

present study contributes to the literature on "outward FDI" and aims to fill data
2

gaps in this area by undertaking two case studies of Chinese "outward-oriented FDI"
in Brazil. The study examines the modes of outward FDI, the benefits derived from
such

strategic

investments

companies/government)

for

the

and beneficiaries

supplier

of

capital

of capital flows

(the

(Chinese
Brazilian

companies).
The study is divided into six (6) chapters. Chapter 2 reviews the literature on
the subject. Chapter 3 reviews the broad trends in Chinese strategic entry modes.
Chapter 4 examines the trends in Chinese "outward investment" and financial flows
into Brazil by examining the case studies on PETROBRAS and MNX mining in
Chapter 5. Chapter 6 summarizes the conclusions and observations made during the
study.

3

CHAPTER 2.0 LITERATURE REVIEW
This chapter provides a brief review of literature on theory of
internationalization of firms especially from the point of view of "outward FDI".
The literature review is organized into three sections. Section 2.1 reviews the
theoretical framework and section 2.2 reviews the empirical studies on the subject
and section 2.3 summarizes the theoretical and empirical literature.

SECTION 2.1

THEORETICAL fRAMEWORK

The literature in international business analyses the growth and foreign
expansion phase of MNEs. The starting point of this theory of MNE is the
proposition that an MNE goes abroad to further expand, on its firm-specific
advantage (FSA). The FSA's are propriety to the firm and they can be technology
or knowledge based or they can reflect managerial and/or marketing skills (Rugman
and Verbeke, 2003).
The analytical framework of internationalization theory suggests that one
should look into the motivations for internationalization and the mode of entry into
international markets (Madhok, 1997). Wells (1983) argues that manufacturing
firms pursue internationalization strategies mainly to protect their export market.
Durming (1993) as well as Eden and Monteils (2000) divide the major drivers of
internationalization into four categories: (a) Market-seeking FDI, (b) Resourceseeking FDI, (c) Efficiency seeking FDI and (d) Strategic asset-seeking FDI.
4

In international business literature, there is also a new stream of literature on
the motivations of FDI from the perspective of behavioral science of the firm called organizational capability theory (Madhok, 1997). The basic thrust of the
organizational capability theory is that firms tend to collaborate or invest across
borders for the purpose of developing their capabilities.

Zhang (2003) argues

developing organizational capability through FDI is in line with the rationale of the
motive for strategic assets-seeking FDI.
Apart from the theory of internationalization of firms, a number of
institutional factors influence the conduct and behavior of firms internationally.
One such influence is the role of the government. In countries like Japan, Korea and
China, the government defines, diffuses or enforces prevailing norms and
requirement of acceptable firm conduct (Oliver, 1991 ).
In China, as part of the economic reforms, the Chinese government has
maintained political control and also maintained its ability to reward and discipline
firms for their adherence to its directives. China has established clear direction
about the types of outward FDI it would like to encourage and has been able to
compel firms to follow its policies (Deng, 2004). In China, the corporate strategic
decisions to a large extent are governed by a mix of political and economic motives
(Deng, 2004).

5

SECTION 2.2

EMPIRICAL LITERATURE

The empirical literature on "outward FDI" is rather limited although m
recent times there is increasing attention to this topic. One of the earlier attempts to
study outward FDI found that they tend to concentrate in countries with relatively
higher income or industrial countries because of their superior investment
environment, high technology and advanced management methods (Kumar, 1988).
This conclusion was reaffirmed by the study of Wang (2002) who found that
Chinese overseas investment excluding Hong Kong and Macau was in industrial
countries in the area ofR & D and design centers.
One of the pioneering studies on outward FDI is that of Deng (2004, 2007).
Deng (2007) using the case study approach of merger and acquisitions of foreign
firms by Chinese companies during 2002 to 2004 concluded that Chinese MNEs
outward FDI is primarily motivated by the quest for strategic resources and
capabilities, like R & D. Deng (2009) again using some the case study of three
leading Chinese firms - TCL, BOE and Lenovo, found that the primary motive for
outward FDI is to acquire strategic assets.

SECTION 2.3

CONCLUSIONS

The literature on outward FDI is based on the theory of MNEs - why MNEs
go abroad?. The analytical framework of internationalization theory suggests that
firms pursue internationalization strategies mainly to protect their export market.
The literature divides drivers of internationalization of firms into four categories: (a)
Market-seeking FDI, (b) Resource-seeking FDI, (c) Efficiency seeking FDI and (d)

6

Strategic asset-seeking FDI. The limited empirical study based on China's outward
FDI has found that primary motive is to acquire strategic assets. In Chapter 3, a
review on the determinants of China's strategic FDI entry modes into foreign
markets will be provided.

7

CHAPTER 3.0 CHINESE STRATEGIC
ENTRY MODE INTO FOREIGN MARKETS
This chapter provides a brief literature review on the type of entry mode and
strategic approach utilized by Chinese companies when they are going abroad.

SECTION 3.1

ENTRY MODES

The pioneering study made by Lin and Fuming in 2008 investigates Chinese
strategic behavior perspective entry mode that "escapes from the transaction cost
premises and highlights the special characteristics of Chinese firms' FDI" by
incorporating "strategic fit and strategic intent aspect" in their frame work through
surveying of 588 Chinese firms who engaged in outward FDI in 2005 (Lin and
Fuming, 2008).

Previous literatures examine how market structure, market size, tariffs and
transportation costs influence entry modes and also whether Multi-National Entities
(MNE) engages in FDI or trade (Eicher and Kang, 2005).
The authors utilized binomial logistic regression approach on 138 data out of
500 data sets to confirm their hypothesis by determining probability of one event
occurs rather than another: Wholly Owned Subsidiaries (WOS) vs. Joint venture
(JV) entry mode.

8

The conclusion of the study along with finding from various researches in
which strategic behavior entry mode Chinese firms choose are presented in table
(Table 3-1).
Chinese firms' overseas investment is to expand their Country-Specific
Advantages (CSA) and to explore sustainable global competitive advantages. The
Chinese firms' choices of FDI entry modes are not only minimize costs of
transferring firm-specific assets but to facilitate their cost advantage-based regional
expansion, and their global competitiveness strategy.

In order to expand cost

advantages into other regional emerging economies, Chinese firms have
strategically aligned their FDI entry mode to the host industry environment which
will facilitates strategic fit between the firm's competitiveness advantage and the
environment by considering the strategic behavioral variables indicated (Lin and
Fuming 2008).
Table 3-2 shows that export is still the most important sector of the entry
mode for Chinese companies at 167 and 69 companies for direct and indirect export
out of the 297 Chinese companies having substantial international business activities
analyzed by Deng (2009). There are only 36 and 25 enterprises who are abroad
through building overseas factories, and Mergers and Acquisition (M&A) indicating
that China is still at the initial stage of internationalization (Rugman and Jing, 2007;
X. Deng, November, 2009).
However, Chinese enterprises are differentiating themselves and more
adaptive to entry modes that the number of companies with of "Listing Abroad" is
9

currently at 49 enterprises, which is higher than Joint Venture (N) at 41 companies;
M&A at 36 companies; Wholly-Owned Subsidiary (WOS) at 21 companies; and
Research and Development (R&D) Institution Establishment at 26 enterprises.
The industry in which Chinese enterprises have substantial international
business activities are in:

•

Steel

•

Telecommunication

•

Building materials and construction

These are all generally large state-owned industry (Deng X, November, 2009).

10

Wholly-Owned
Subsidiary (WOS)

o

Host Industry Competition 1

o Greenfield investment6

Global Strategic Motivation (Finn Size)

o

Emerging Economy Firms'

o

Market Seekers 9

Assets Seeking Motivation'

Host Industry Growth4

Joint Venture (JV)
o

Global Strategic Motivation (Country
Risk, Cultural Barrier)'

Host Country Uncertainty, Access to
Complementary Assets, High Tech Sector, Small
Firm, Less Experience Finns'

Reference:
I.

Lin and Fuming 2008; Eicher and Kang 2005

2.

Lin and Fuming 2008

3.

Lin and Fuming 2008; Chi ld and Rodrigues 2005; Rui and Yip 2008;

4.

Lin and Fuming 2008; Frvnas. Mellahi and Pigman 2006;

5.

Lin and Fuming 2008; Kim and Hwang 1992; Yiu and Makino 2002

6.

Lin and Fuming 2008

7.

Lin and Fuming 2008

8.

Mutinelli and Piscitello I 998

11

CHAPTER 4.0 TRENDS IN OUTWARD
FDI BY CHINESE FIRMS
This chapter presents an overview of outward foreign direct investment by
Chinese firms in recent years. The chapter is organized into three sections. Section
4.1 discusses the broad trends in Chinese outward. Section 4.2 discusses the broad
trends in financial flows from China into Latin America and especially to Brazil.

SECTION

4.1

BROAD TRENDS IN CHINESE "OUTWARD FDI"

According to United Nations Conference on Trade and Development,
UNCTAD, China's inward and outward FDI grew by 130 per cent and 232 per cent
during 2007 and 2008 respectively (UNCTAD, 2009). During 2007/08, globally the
FDI flows had recorded an absolute decline. China, taking advantage of the global
shortage of capital, has been progressively scaling up its outward FDI with the
magnitude increasing from US$ 21.2 Billion in 2007 to US$ 52.2 Billion in 2008
(UNCTAD, 2009). The Chinese economic growth has not only attracted inward
FDI in the past decades but lately has encouraged outward FDI ().

China's outward FDI has not been completely smooth, acceptable and often been
critique by international communities and researchers. In 2005, Accenture lists the
operational, human capital , economic and political, advantages and challenges faced
by China's internationalization . Summary of this list is presented in Table 4-1.

12

Figure 4-1

China's Inward and Outward FDI-1970 to 2009
China -Inward and Outward FDI

120000

100000

-w
~

~

80000

VI

2

1:
E

"

t;

60000

">

.5

tl
~

cs

40000

20000

0

~

~

~~

~

~~~

~

Ye ar

Source: UNTCAD, W IR 2009

Figure 4-2

- + - China- Flow (Inward)

- - China I - Flow (Outward)

China's Inward and Outward FPI-1970 to 2009
China - Inward and Outward FPI

400000

350000

-;;;- 300000
c

,g
~
VI

2

250000

c

"E 200000

t;

!I

.5

tl 150000
~

i5
100000

50000

0

~

~

~~

~

~~~

Year

-+- China - Stock (Inward)

- - China I - Stock (Outward)

Source: UNTCAD, WIR 2009

13

~

T bl 41

Ch II

I

Operational

Human Capital

Economic and
Political

•

dAd

t

. . ~~ ~ ~

•

face
particular Jlroblcms in going
~

-"

~

:

~.. -,

~

fCh "

I

...

but have many factors working in
their favor

,;e',

~''~ ' '

• Chinese companies going
global have to get to grips with
very different management
styles, cultures, priorities and
mindsets.

• With a higher labor-to-capital mix,
Chinese companies are more flexible
in adapting processes than their
Western counterparts.

• They also have to conform to
international standards,
systems and processes. Their
corporate governance
framework in particular
remains underdevelo ed.

• Chinese companies have the
advantages of local knowledge and
cultural overlap in Asia's fast-growing
markets that are the main target of
today's multinationals.

• Chinese companies have so
far struggled to establish
international brands. No
Chinese company features in
the Business Week-Inter-brand
I 00 To Global Brands.

• Chinese firms still enjoy a significant
cost advantage over Western
multinationals that tend to set up only
selected operations in China.

• Chinese companies often
lack managerial expertise and
experience. China will need
75,000 executives with
international experience in the
next five years, currently there
are 5,000

• There is a strategic push to nurture
new talent in science and technology in
China. There will be about 3.3 million
college graduates in 2005 of who
600,000 wi ll be engineers.

• Chinese companies still face
obstacles in the war for talent.
Non-Chinese multinationals
still enjoy advantages in terms

• The diasporas of Chinese talent western-educated and familiar with
Chinese culture and values - provide a
valuable resource for Chinese
lobal.
• The prospect of further currency
revaluations will reduce the cost of
overseas acquisitions for Chinese
companies.
• China' s "national champions" receive
cheap land and finance, tax breaks and
preferential access to listing their
shares.

• The recent outcry
surrounding Chinese
purchases abroad, particularly
in the United States and
European Un ion, has
highlighted protectionist
obstacles to China's
lobalization.
• State influence on corporate
planning may lead to the
pursuit of goals beyond profit
maximization.

• By operating in previously protected
markets, large state-owned enterpri ses
have accumulated cash hoards that

• Large state firms in protected
industries are likely to be less
efficient due to the lack of
com
Source: (Accenture, 2005)

14

28,866

27,17 1

120,605

-5.9%

180,021

406,277

1,50 1,381

125.7%

75,555

212,650

954,425

181.5%

7,849

15,138

59,539

92.9%

Construction

4,795

32,943

163,434

587.0%

Transport, Storage and Post

82,866

406,548

1,205,904

390.6%

Information Transmission,
Computer Services and
Software

3,050

30,384

190,089

896.2%

Wholesale and Retail Trades

79,969

660,418

2,023,288

725.8%

Hotels and Catering Services

203

955

12,067

370.4%

166,780

1,67 1,99 1

and Supply of
Gas and Water

Financial Intermediation
Real Estate

851

90,852

451,386

10575.9%

Leasing and Business Services

74,93 1

560,734

3,051 ,503

648.3%

Scientific Research, Technical
Service and

1,806

30,390

152,103

1582.7%

120

271

92,121

125.8%

8,8 14

7,621

129,885

-13.5%

Education

892

1,740

Health, Social Security and
Social Welfare

75

369

7400.0%

510

9,220

420.4%

Geologic Prospecting
Management of Water
Conservancy, Environment
and
Public Facilities
Services to Households and
Other Services

98
and Social

5

Source: China Statistical Yearbook (2004; 2007)

15

Table 4-2 reports broad trends in China's outward investment by sector
during 2004 and 2007. Broadly, there has been an increase of 382 per cent in
outward investment from China from 2004 to 2007. Bulk of the increase in
outward investment has occurred in real estate (10575%), scientific research and
Technical series (1582%), information transmission, computer services and
software (896 %) and construction (587%). What was interesting to note is that
Financial Intermediation sector was not recorded by the Chinese government until
2007 which is currently at US$ 1.67 Billion.

SECTION 4.2

TRENDS IN FINANCIAL FLOWS FROM CHINA
INTO LATIN AMERICA

According to statistics published by Chinese national authority, Chinese
imports from Latin America countries increased by 242 per cent during 2003-2007;
with imports values increasing from US$14.9 Billion in 2004 to US$51.1 Billion in
2007 (Chinese Statistical Yearbook, 2007). The top five Latin American import
markets for China in 2007 are: Brazil at US$18.3 Billion, Chile at US$10.3 Billion,
Argentina at $6.3 Billion, Peru at $4.3 Billion and Mexico at $3.3 Billion (Figure
4-3).

China's increasing trade interface in Latin American can be traced to

increasing economic and political cooperation and solidarity with many of the leftleaning Latin American countries including Venezuela, Bolivia, Ecuador and Peru.
In 2007, the Chinese outward FDI to Latin American countries account for
US$118 Billion which comprises 21% of Chinese total outward FDI (China
Statistical Yearbook, 2007).

Latin America is the second largest recipient of

Chinese FDI since 2004 (Figure 4-4). The economic relations between China and

16

Latin America were further strengthened in November 2008 with the release of
China's Policy paper towards Latin America clarifying China's diplomatic goals in
the region (Embassy of the People's of China in the United States of America,
2008). However, China has not signed the bilateral trade agreement with
MERCOSUR, the Latin American free trade bloc. An interesting aspect of outward
FDI by China is the parking of capital in offshore tax havens in the Cayman Islands
and Bermuda ready for deployment in the region (Telegraph.co.uk, 2009). Figure
4-5, presents the sectors in which Chinese outward FDI were deployed where
Leasing and Business Services (29%), followed by Wholesale and Retail Trades
(20%), Financial Intermediation (16%).

These trends show signs of Chinese

increasing influence in Latin America.

Figure 4-3
Billions)

China's Top 5 Trade Partners in Latin America, 2003-2007 (US$

35.0

no
25.0

~
lUO

r---

-

~

uo

I Brazii Elq:xrt • Brazillrrp:rt

I OileElq:xrt

I Oilelrrp::rt

1 Argertina Elcpat 1 kgertinalrrp:rt

So.rte' o;,.. Stltistical Yearbxl< (2004, l!X6, ;ro;. l007)

17

I Peru Expert

• Peru lrrp:rt

• tv'ecic:oExp::rt

• rv'ecic:olrllJC(t

Figure 4-4

China's Overseas Direct Investment by Region 2007

China's Overseas Direct Investment by Region 2007

Source: China Statistical Yearbook l007

Figure 4-5

China's Outward Investment by Sector 2007

China's Outward Investment by Sector 2007

l

Source: China Statistical Yearbookl007

18

CHAPTER 5.0 CHINESE OUTWARD FDI
IN BRAZIL- CASE STUDY
In this chapter broadly looks at the increasing China-Brazil economic cooperation. Two case study were preformed on Brazilian companies - PETROBRAS
(the largest oil company in Brazil) and MMX Mining (a junior-private mining
company in Brazil) to illustrate the Chinese outward FDI in Brazil. The chapter is
organized as follows: Section 5.1 discusses the broad trends in economic cooperation between China and Brazil.

Section 5.2 discusses the case study of

PETROBRAS. Section 5.3 further illustrates the Chinese outward FDI in MMX
Mining. Section 5.4 summaries the main conclusions of this chapter.

SECTION 5.1

BROAD TRENDS IN ECONOMIC CO-OPERATION
BETWEEN CHINA AND BRAZIL.

The economic ties between China and Brazil has been enhanced over the
years and the Brazilian trade minister, Mr. Welber Barral, indicated that China's
trade relations with Brazil had surpassed US and "China is now a platinum partner
for Brazil" (Telegraph.co.uk, 2009; China Daily, 2007). The US has been Brazil's
principal trading partner for last 80 years, but in recent years China has surpassed
US as the leading trade partner of Brazil. Brazil's typical exports to China include
soya beans, iron ore, cellulose, and currently have been extended to include future
contracts for oil and gas. Today, China is the fastest growing supplier of electronic
goods in Latin American including Brazil.

19

According to figures released by the Chinese Ministry of Commerce,
Chinese enterprises invested nearly US$1 00 Million in Brazil by the end of June
2007, mainly in the mining, telecommunications, trade, services, lumber processing
and assembly line production of household electrical appliances industry (China,
2007). Meanwhile, Brazilian investment in China reached US$210 Million, mostly
in manufacturing, real estate and construction industries. The overall Chinese and
Brazilian outward investment ties are presented in Figure 5-l. Brazil occupies a
leading position in renewable energy, civil aviation, agribusiness, paper pulp and
minerals - where Chinese investors have increasing financial, economic cooperation and interest.

Figure 5-1

70

Chinese & Brazilian Outward Investment Ties

China & Brazil Investment Ties

60
....

c

50

~ 40

~ 30

~

VI

::>

20
10
0

Year

..... China Outwa rd Investm ent to Brazil
-+-Br azi l Outward Investm ent to China
Source:

~
tarbool< 2001; 2002, 2003; 2004; 200 5; 2007. 200$1
Banco Central Do Brasil 201tl

20

SECTION 5.2

PETROBRAS- CASE STUDY

The Petrol eo Brasileiro S/A (PETROBRAS) was formed by the Brazilian
Government in 1954, was responsible for all the activities related to the oil sector in
Brazil. Today the company is currently the eight (8 1h) largest oil companies in the
world and leading the sector in the development of one of advanced deep-water and
ultra-deep water technology for oil production in the Campos Basin.
By 1997, PETROBRAS made Brazil one of the 16 nations who produced
more than 1 Million bpd and within the same year the Brazilian Federal government
approved and opened the Brazilian oil industry to the private sector. A National
Petroleum Agency (ANP) was established to regulate, contract and inspecting all the
activities of the oil sector and the National Policy Council Energy was responsible
for designing public energy policies. In less than six (6) years their oil and gas
production exceed 2 Million bpd (Figure 5-2).

Their business structures are

subdivided into four (4) business areas: (1) Exploration and Production, (2)
Downstream, (3) Gas & Energy, (4) International and two support functions:
Finance and Services.

21

I

Figure 5-2

Brazil's Historic Crude Oil Production

Historic Crude Oil Production
Source: Petroras , 2010

4 .0

~

3.5

0
.0

:i: 3 .0

....c
QJ

iii
:>

·:;

tT

UJ

0

2.5
2.0

0

...... 1.5
"'

Q;
<tl

0

"'

1.0

c

,g
~

0 .5
0 .0

1957

1967

1977

1987

19S7

2007

Year
-

o n Sh ore -

Off Shore -

Off Sh ore (Campo Basin ) -

Total Production

The total crude oil production for PETROBRAS in 2008 was 3.4 Million
barrels of oil equivalent (Mboe), a milestone achieved by only few companies
globally and their gross operating profit increased from US$1.39 Billion in 2007 to
US$5.44 Billion in 2008 (PETROBRAS, 2010). PETROBRAS has 112 production
platforms out of which 78 are fixed and 34 floating, with 15 refineries at capacity to
process 2.2 Million bpd. Throughout Brazil, they have 5,998 gas stations and 990
internationally. PETROBRAS is present in 27 countries on four continents: United
States, United Kingdom, Mexico, Angola, Nigeria, Tanzania, Libya, Mozambique,
Senegal, India, Iran, Pakistan, Turkey, Portugal, Bolivia, Colombia, Cuba, Ecuador,

22

Peru, Venezuela, Uruguay, Paraguay, Argentina, China and Japan, and count on the
support of their offices in Houston, New York, London, Tokyo, Singapore, China,
and Chile (Figure 5-3).

Figure 5-3

PETROBRAS Global Presence

23

PETROBRAS has the largest continental off-shore oil reserve platform is at
approximately 143,000,000 km 2 which stretches from the State of Espirito Santo,
close to the city of Vit6ria; to the Arraial do Cabo, off the northern coast of the State
of Rio de Janeiro. The basin is comparative to the size of the Gulf of Mexico, and
currently accounts for nearly 84% of Brazil's oil production and 80% of the oil
reserves discovered (Figure 5-4). PETROBRAS reported that about 1.49 Million
barrels of oil and 22 Million m 3 of gas are extracted daily and production is expected
to reach 1.8 million bpd and 34.6 million m3 by 2010. The exploration of the
Campos Basin commenced in late 1976 with shallow wells and fixed type oil
platforms. Out of the 55 fields, 36 are mature and consequently PETROBRAS has
increased its exploration drilling activities in deeper water. Currently approximately
65% of PETROBRAS offshore explorations are in deep waters more than 400
meters (Figure 5-5).

24

Figure 5-4

Santo Basin of the Brazilian Coast

Figure 5-5

Deep Water Exploration

25

The discovery of oil reserve in the recent years at Tupi, Santos Basin and
their current reserve at the Campo Basin have provided substantial business
opportunities and growth. Santo Basin has the potential to become the largest world
reserve with total proven reserve of 15.08 Billion barrels of oil equivalent and
142,300,000 km2 of exploratory area with Reserve Replacement Index of 18.2 years.
In order to meet the growth opportunities, PETROBRAS was looking for
fresh capital for exploration. It was in this context that the Chinese onward FDI
became relevant for the company. On February 18 2009, The China Development
Bank finalized a deal with PETROBRAS to extend a US$1 0 Billion line of credit in
exchange for future oil supply. The fmancial deal entered by PETROBRAS with
Chinese state-owned oil company Shanghai Petrochemical Company, SINOPEC, to
provide supply of 100,000 bpd of oil in exchange for the supply of Chinese capitals
(Reuters, UK, 2009).

Prior to this, on December 27, 2007, the Chinese

Development Bank had signed a long-term credit lines US$750,000, as an onlending of foreign funds the Gasene Project (part of PETROBRAS division) in
Brazil for the construction of natural gas pipeline for a total length of 14,000 km
with a capacity of 20 Million m3 per day, connecting the Cabiunas Terminal in Rio
de Janeiro to the City of Catu, Bahia (PETROBRAS, 2008).
Figure 5-6 presents the PETROBRAS cash from 1st quarter of 2004 to 3rd
quarter of 2009, showing an increase in cash from 2nd to 3rd quarter of 2009. The
Chinese suppler credit can be observed from the figure, where a spike of more than
US$10 Billion from the 2nd to the 3rdquarter of2009.

26

The fmancing is based on China's policy of attempting to secure future supplies in
natural resources especially petroleum, agricultural goods and minerals for their
voracious economy. Within the next day, China Development Bank, Russia's state
oil Rosneft and Transneft Pipeline Company also signed a US$25 Billion financing
deal in exchange for future oil from the huge new East Siberian oil fields that China
hopes will power its economy for the next two decades.
PETROBRAS also announced that they are negotiation with four oil consumer
countries to receive financing from them in exchange for future oil supply
guarantees.

Figure 5-6

Cash Flows of PETROBRAS -2004 to 2009 (US$ Billion)

Petrobras Cash Flow
Sourco: PETROS RAS 2009

18
16
14

"'r:::

12

~ 10

iii

<I>
V'l

::I

8

-

---

6
II

2
0

~

27

Table 5-1

PETROBRAS and Exxon Mobil - Financial Ratios- 2007 and 2008
Exxon Mobil

FINANCIAL RATIOS

PETROBRAS

%change
(2008-07}

2008

2007

%change
(2008-07}

2008

2007

Cash & market Sec. To Total Assets

-1.80%

0.138

0.140

173.20%

0.090

0.033

Acid Test Ratio

-22 .32%

1.143

1.472

89.18%

0.836

0.442

Current Ratio

-0.16%

1.472

1.474

-8.27%

1.220

1.330

Working Capital/Sales

-29 .00%

0.049

0.068

-15.12%

5.950

7.010

Debt to Total Assets

1.54%

0.505

0.497

0.00%

0.470

0.470

Debt to Common Equity

-22.02%

8.669

11.117

1.08%

0.940

0.930

Long-Term Debt to Common Equity

-9.21%

1.322

1.456

-7.51%

0.750

0.811

Total Debt to EBITDA

-15.80%

0.286

0.340

n/a

n/a

n/a

EBITDA/Interest

-31.05%

121.47
1

176.185

n/a

n/a

n/a

EBIT/Interest

-33 .82%

67 .192

101.525

n/a

n/a

n/a

Return on Common Equity

-3.26%

11.751

12.147

29.15%

15.496

11.999

Return on Assets

-15.40%

5.043

5.961

-28.95%

16.007

22.528

Net Profit Margin

5.74%

10.163

9.612

0.75%

8.139

8.079

n/a

n/a

n/a

-16.62%

21.580

25.880

Liquidity

Financial Leverage

Profitability

Common Stock Ratio's
Price to Earnings Ratio
Source: (PETROBRAS, 2008; Exxon Mobil, 2008}

In the following sections, a brief financial analysis on PETROBRAS was
performed. For comparative purposes, the financial statement for PETROBRAS is
compared with a similar US oil company - Exxon Mobil (Table 5-l ).
PETROBRAS has a relatively lower cash and marketable securities to assets (in

28

the range of0.03 to 0.09 in the last two years). This is relatively low compared to
its growth opportunities. For example, the corresponding ratio for Exxon Mobil is
as high 0.14 in the last two years (2007 and 2008). With the financial deal from
China, PETROBRAS will be able to boost this parameter substantially and
channel the additional supply of capital for its ambitious oil and gas exploration
plans at Campos Basin. PETROBRAS will also be able to boost its working
capital/sales ratio (from the present 5.95 per cent) which will improve its liquidity.
PETROBRAS has a relatively low leverage - debt to total assets is around 0.47
and the availability of supplier credit from the Chinese company would slightly
boost its leverage, but this will still be lower compared to Exxon Mobil.
The injection of capital to fund its growth is what PETROBRAS is looking for and
the sector in which PETROBRAS is seeking for funding is aligned with China's
outward strategic FDI which is providing supplier's credit for strategic assets- in
this case, Oil. The next section examines another major Chinese FDI in Brazil, in
the mining sector with MMX Mining.

SECTION 5.3

MMX MINING- CASE STUDY

MMX is a junior mining company in Brazil incorporated in 2005 with
three green field projects centered on iron ore and steel products organized into the
following systems: MMX Corumba System, MMX Amapa System, and MMX
Minas-Rio System. In July 2006, MMX launched its Initial Public Offering (IPO)
on the Sao Paulo Stock Exchange, to raise about US$509 Million for the
development of its projects.
29

On June, 22 2009, a Notice to Investor was issued to inform their
shareholders and the market in general that MMX and Wuhan Iron and Steel
Group Company of China (WISCO) executed a Share Subscription Agreement to
purchase newly issued common shares of MMX in a private share issuance at a
total subscription of US$400 Million, allowing WISCO to achieve an equity
participation in MMX's capital stock of21.52 per cent. Based on MMX, WISCO
has also entered into agreement for Iron Ore Purchase and Sale Contract to sell at
least 50% of the iron ore at MMX's Serra Azul Mines with the possibility to
extend this to at least 50% of the iron to be produced at their Sudeste's Born
Sucesso Mines which could ultimately result in combined export of at least
16 Millions tonnes of iron ore per year to WISCO.
The Iron Ore Purchase and Sale Contract shall be valid for a term of 20
years from April 15 \ 2010.

During the same period MMX also entered into

Cooperation Agreement with WISCO which establishes the key terms of a
potential joint venture between MMX and WISCO for the construction of an
integrated 5 (five) million tonnes steel plant at A<;u Super Port Industrial District
where WISCO will use its best endeavors to seek financing for the steel plant from
China Development Bank for this agreement where both companies are to jointly
pursue capitalization opportunities for the steel plant via capital markets
transactions.
This transaction will allow for WISCO to hold 70% of the joint venture's
voting and MMX reported that "This is a historic transaction that marks the largest
equity investment by a Chinese industrial company in Brazil ever". The President

30

of WISCO also indicated that "The cooperation from both sides on the underlying
project is of great significance and the cooperation on the project is beneficial to
secure the supply of iron ore resources to WISCO, beneficial to capitalize the
respective core competitive advantages from WISCO and MMX to further
advance the economic and social developments ofBrazil" (MMX, 2010).
After reviewing the financial statements for MMX for 2009, it is clear the
injection ofUS$400 Million by Chinese company has not taken effect (Table 5-2).
It is clear that the agreement between WISCO and MMX was to ensure supply of

iron ore for Chinese steel plant in China in the future.

This is another good

example of China's outward FDI in securing strategic-assets.
Appendix A, details the financial statement for PETROBRAS, ExxonMobil and MMX Mining.

31

T

,go,:;;:
~

~~

~~ S

Millions (US$)

2009Q I

2009Q2

2009Q3

1,969.0

2,081.3

1,799.8

409.7

652.4

354.3

81.9

247.1

62.8

Credits

194.5

168.5

188.2

Inventories

133.3

135.7

102.2

0.0

101.1

1.1

1,559.3

1,428.9

1,445.5

Long-term Assets

170. 1

168.9

195.5

Sundry Credits

30.4

35. 1

69.9

Total Assets
Current Assets
Cash

Others
Non-current assets

Credits with Related Parties

1.5

1.5

0.9

138.1

132.3

124.7

1,389.3

1,260.0

1,250.1

0.0

0.0

0.0

PP&E

407.9

289.2

290.3

Intangible

954.2

944.3

937.0

Deferred Items

27 .1

26.4

22.8

Others
Permanent Assets
Investments

Consolidated - Balance Sheet Liabilities
Millions (US$)
Total Liabilities and Stockholders' Equity
Current Liabilities
Loans and Financing

IQ09

2Q09

3Q09

1,969.0

2,081.3

1,799.8

1,21 1.6

1,328.0

1,061.4

489. 1

642.4

677.7

Debentures

0.0

0.0

0.0

Suppliers

43.2

72.5

52.6

30.0

28.8

24.9

0.0

0.0

0.0

345.3

304.9

29.0

1.2

2.1

0.6

302.8

277.3

276.8

1,012.0

995.8

I ,02 1.5

1,012 .0

995.8

I ,02 1.5

808.8

440.7

403.5

Debentures

0.0

357.2

453.6

Provisions

0.0

0.0

0.0

Debt with Related Parties

0.0

0.0

0.0

203 .1

198.0

164.4

0.0

0.0

0.0

Taxes, Charges and

~

.. ,;ihuuvu•

Dividends Payable
Provisions
Debt with Related Parties
Others
Current Liabilities
Long-term Liabilities
Loans and Financing

Others
Deferred Income

32

Minority Interests

(46.8)

(57.7)

(64.8)

Stockholders' Equity

(207.7)

(184.7)

(218.3)

Paid-up Capital

775 .9

775 .9

776.0

Capital Reserves

12.2

14.0

14.4

Revaluation Reserves

0.0

0.0

0.0

0.0

0.0

0.0

(I ,005.2)

(978.6)

(I ,005.8)

IQ09

2Q09

3Q09

Gross Sales Revenues

92.1

140.4

253 .2

Deductions from Gross Revenue

(5.2)

( 11.3)

(19.5)

Net Sales Revenues

86.9

129.1

233.7

Cost of Goods Sold and/or Services Rendered

(100.3)

(128 .3)

(166.6)

Operating Expenses/Revenues

(13.4)

0.8

67.2

Operating Expenses/Revenues

(142.1)

(118.1)

(206.4)

Selling

(48. 1)

(143 .3)

(216.8)

General and Administrative

(26.7)

(57.7)

(116.7)

Financial

21.4

211.6

272.7

Other Operating Revenues

1.8

3.9

4.6

Other Operating Expenses

(90.6)

(132.6)

(150.2)

0.0

0.0

0.0

( 155.6)

(117.4)

(139.2)

Revenue Reserves
Retained Earnings/Losses
Consolidated - Income Statement Accrued
Millions (US$)

Equity Income
Gross Income
Operating Expenses/Revenues

0.0

0.0

0.0

(155.6)

(117.4)

(139.2)

Non-operating Result

(3.6)

(3 .2)

(0.4)

Income before Taxes/Participations

0.0

(23.0)

(38.2)

Provision for Income Tax and Social Contribution

0.0

0.0

0.0

Deferred Income Tax

0.0

0.0

0.0

Operating Result

Profit Sharing/Contributions

10.8

21.8

28.9

Reversal oflnterest on Equity

(148.3)

(121.7)

(148 .9)

Source: MMX 2010, h!t[1://mmx.infoinvest.com.br/enu/P1 PLANTLHA DRE C AA-enu.htm1

33

SECTION 5.4

CONCLUSIONS

The study has been cast in the background of increasing economic interface
between China and Brazil. China has replaced US as the major trading partner in
recent years. Chinese enterprise has invested around US$1 00 Million in Brazil up
to end of 2007, mainly in the mining, telecommunication, real estate and other
areas. Using the case study of PETRO BRAS and MMX mining, it was evident the
motives, entry modes and benefit Chinese outward investment in Brazil to China.
In the case of PETRO BRAS agreement, the mode of outward FDI was in
the form of supplier's credit to PETROBRAS in return for supply of oil and gas
for Chinese companies.

On the other hand, in the case of MMX financial

arrangement, the Chinese firm took some ownership interest in the Brazilian
company (MMX) in return for again supply of iron ore, a crucial raw material for
Chinese steel plants. These investments have blurred the traditional distinction
between investments (in share capital) and supply contracts (suppliers' credit).
The benefits it brings to Chinese companies are apparent - it ensures supply of
raw materials which is a strategic assets securing a future for development of their
country. By supplying capital to overseas business enterprises including friendly
countries like Brazil, the Chinese government is able to deploy its excess reserves
and ensure economic security for the future. By using the strategic acquisition
route, whether Chinese government will be able to convert the Chinese companies
into global icons similar to Japanese and Korean trading houses will be a
discussion for many economists, financial analysts, corporations and researchers in
the near future.
34

CHAPTER 6.0 CONCLUSION AND
OBSERVATIONS
The remarkable Chinese economic growth of around 10 per cent per annum
since the late 70's has been facilitated by a strategy of promoting exports and
attracting foreign capital. Multinational companies from the US, Japan, and Europe
have led their way in using China as off shoring platform for the labor-intensive
stages of goods production.

With the current financial crisis, there has been a

shortage of capital throughout the world. China with a current account surplus of 67 per cent of GDP has accumulated more reserves than any country in the world (to
the tune of US$ 300 Trillion). Given its standing as one of the major suppliers of
global capital, Chinese government in recent years has been pursuing a policy of
"outward FDI" under which some of the state-owned Chinese enterprises have been
provided with soft capital to become global leaders on the lines of Japanese and
Korean trading houses.

The current financial crisis has provided Chinese

government with an opportunity to provide capital to capital-starved companies in
the developed and developing world.
The analytical framework of internationalization theory suggests that one
should look into the motivations for internationalization and the literature identifies
the following drivers of internationalization process: (a) Market-seeking FDI, (b)
Resource-seeking FDI, (c) Efficiency seeking FDI and (d) Strategic asset-seeking
FDI. Using the case study ofPETROBRAS and MMX Mining in Brazil, the study
found that major driver of investment by Chinese companies is acquisition of
strategic assets, for the future development of China. In the case of PETRO BRAS,
35

the mode of investment was suppliers' credit rather than the traditional FDI or
portfolio investment. In the case of MMX, it was stake in the equity capital of the
firm.

Thus, the modem modes of outward FDI by Chinese firms are more

roundabout forms rather than the traditional modes of Foreign Direct Investment
and Foreign Portfolio Investments.
The new modes of financing like supplier credit route allows China,
especially the Chinese Development Bank to provide funding in developed and
developing countries like Brazil and remove constraints of capital.

China is

particularly interested in Latin America for its natural resource assets and currently
the second largest trading and investment partner in Brazil, surpassing US. Two
natural resources companies were evaluated in this study where PETROBRAS,
Brazilian state owned Oil and Gas Company and MMX Mining, a private holding
of Iron Ore Company were analyzed. China Development Bank and SINOPEC,
state-owned, entered in an agreement to provide supplier credit PETROBRAS
Brazil for future exchange of oil. At the same period SINOPEC is the beneficiaries
of a year's supply of 100,000 bpd. In 2009, WISCO executed a share purchase
agreement on MMX Mining in exchange for 50% of the iron ore produced by their
Brazilian operations.
These investments have blurred the traditional distinction between
investments (in share capital) and supply contracts (suppliers' credit).

The

benefits it brings to Chinese companies are apparent - it ensures supply of raw
materials (strategic assets) which are required for future development of the

36

country. By supplying capital to overseas business enterprises including friendly
countries like Brazil, the Chinese government is able to deploy its excess reserves
and ensure its future economic security.
Supplier's credit route of outward investment on strategic assets enable China, its
government, wholly-owned subsidiaries and private companies to meets it "Go
Global" policy to invest internationally without facing typical challenges and
criticisms of international business for misalignment in business culture,
partnering goals, strategy, management 1ssues and the past perception of their
communist governing structure.
Supplier's credit enables a lot of Chinese compames to go global, no
wonder this is one of China's current internationalization approach compared to
traditional outward FDI or FPI studies by most researchers .
At the current stage the absence of reliable published data and the relative
secrecy of such strategic deals have made research into this area rather difficult,
non-transparency, and challenging.

This study contributes to the literature on

"outward FDI" and aims to fill data gaps in this area by undertaking the Brazilian
case studies.

The area of supplier's credit requires further studies to fully

understand the strategic behavioral variables, it distribution frequency amongst
traditional entry modes, their trends, monetary values leaving China to host
countries and sectors invested.

37

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41

APPENDIX A

PETRO BRAS
FINANCIAL STATEMENT

PETROBRAS
FINANCIAL STATEMENT
Consolidated - Balance Sheet Assets
(US$ X 1000)

Account
Total Assets
Current Assets
Cash
Credits
Inventories
Others
Non-current assets
Long-term Assets
Sundry Credits
Credits with Related Parties
Others
Permanent Assets
Investments
PP&E
Intangible
Deferred Items

3009
187,807,079.820
42,603,419.227
16,929,210.599
7,676,425.4 76
11 ,610,355.594
6,387,427 .558
145,203,660.593
14,181 ,107.859
5,083,443.988
66,387.217
9,031 ,276.655
131 ,022,552.734
3,144,631 .182
122,588,788.599
3,870,455.184
1,418,677 .769

2009
156,482,133.009
29 ,537,388.616
5,163,093.243
7,461 '179.225
10,085,373 .993
6,827 '742.155
126,944,744.392
12,529,419.072
3,870 ,227.201
71 ,240.006
8,587,951 .865
114,415,325.320
2,818,974.863
106,542,477.536
3,721 ,668.144
1,332 ,204 .776

1009
131 ,535,737 .370
27,754 ,187.338
8,439,493.760
6,153,400.994
7,758,872.420
5,402,420 .165
103,781 ,550.032
10,009,057 .390
3,199,860.498
69,141 .031
6,740,055.861
93,772,492.642
2,196,672 .180
86,772,431 .591
3,390,026.851
1,413,362.020

4008
125,059,430.761
27,213,114.473
6,801 ,042.722
6,379,476 .075
8,551 ,139.033
5,481,456.642
97,846,316.288
9,098,040.840
2,594 ,653.712
61 ,669.806
6,441 ,717.322
88,748,275.448
2,185,812.432
81,651,471 .233
3,425,739.664
1,485,252.120

3009
187,807,079.820
29,436,331 .511
5,752,668.654
0.000
8,334,920.947
5,693 ,597 .029
2,346 ,868.283
3,271 ' 187.756
0.000
4 ,037 ,088.842
68 ,335,757.040
68,335,757.040
44,582 ,690.593
0.000
18,041 ,693 .016
28,733.472
5,682,639.959
0.000
2,603,663.984
87,431 ,327 .285
44,430,704.435
289,684 .915
5,467.844
33 ,121,403.249
9,264 ,819.107

2009
156,482,133.009
28,571 ,546.882
6,470,352 .868
0.000
7,432,243.403
6,551,551.866
3,086,800.891
1,763 ,288.447
0.000
3,267,309.406
49,100,918 .519
49,100,918.519
28,324 ,993.665
0.000
15,373,993.69 1
25,988.826
5,375,942 .337
0.000
1,996 ,067.314
76,813 ,600.294
40,479 ,133.354
263,920 .963
5,085.093
30,174,994.233
5,596,886.572

1009
131 ,535,737.370
27,473,393.607
6,492,137 .174
0.000
6,862,130.699
5,294 ,856 .215
4,161,413.833
1,970 ,277.862
0.000
2,692,577 .823
40 ,588,584 .393
40 ,588,584 .393
23,314 ,299.165
0.000
12,638,922 .198
21 ,715.780
4 ,613,647 .250
0.000
1,078,825.201
62,394,934.170
34,119,725.391
222,458 .093
4 ,377.809
25,407 ,055.857
2,512 ,929.531

4008
125,059,430.761
26,777,314.027
5,682,076.452
0.000
7,288,579.320
5,453 ,891 .793
4 ,243 ,946.154
1,954,737.609
0.000
2,154,082 .699
37,919,837.789
37,919,837 .789
21,423,440.213
0.000
11 ,911 ,530.697
21 ,097.937
4,563,768.943
0.000
1'135,636.504
59,226,642.440
33,801 ,340.227
220 ,382.245
4,402.020
25,101 ,895.826
0.000

3009
95,499,526.800
-19,498,184.322
76,001,342.478
-44 ,679,502.612
31,321 ,839.866
-13 ,276,844 .088
-3 ,019,508.243
-3 ,124,191 .189
-935,382.321
0.000
-6,373 ,030.439
175,268 .103
18,044 ,995.778
0.000
18,044 ,995.778
-4,836 ,750 .689
295,116.750
0.000
0.000
-1 ,770,488.381
11 ,732 ,873.458

2009
56,113,849.320
-11 ,414,459.535
44,699,389.785
-25,832,206.530
18,867,183.255
-8 ,200,846 .051
-1 ,850,518.817
-1,838,784.656
-586,906 .927
0.000
-3,925,633 .190
997.540
10,666,337.204
0.000
10,666 ,337 .204
-3 ,199,846 .825
616,957 .164
0.000
0.000
-1 ,137,441 .596
6,946,005.948

1009
23,148,724.931
-4 ,744 ,139.389
18.404,585.542
-11 ,139,072.966
7,265,512.577
-3 ,376,636.339
-805,453 .696
-757,439.955
-187,428.279
0.000
-1 ,466,025.779
-160,288 .631
3,888 ,876.238
0.000
3,888,876.238
-1 ,032,595.940
-195,616 .146
0.000
0.000
-147 ,800.297
2,512,863.855

4008
114,071 ,603.514
-21 ,991,072 .693
92,080 ,530.822
-60,621 ,247.782
31,459,283.039
-10,825,434.043
-3,065,775.192
-3,102,199.300
-299,077.990
0.000
-3,984,176.442
-374,205.120
20,633,848.996
0.000
20 ,633,848.996
-4,790,696.860
-2,041,756.272
-575,518 .363
0 .000
894,399.881
14,120,277 .380

Consolidated - Balance Sheet Liabilities
(US$ x 1000)

Account
Total Liabilities and Stockholders' Equity
Curren t Liabilities
Loans and Financing
Debentures
Suppliers
Taxes, Charges and Contributions
Dividends Payable
Provisions
Debt with Related Parties
Others
Curren t Liabilities
Long-term Liabilities
Loans and Financing
Debentures
Provisions
Debt with Related Parties
Others
Deferred Income
Minority Interests
Stockholders' Equity
Paid-up Capital
Capital Reserves
Revaluation Reserves
Revenue Reserves
Retained Earnings/Losses

Consolidated -Income Statement Accrued
Account

(US$ X 1000)

Gross Sales Revenues

Deductions from Gross Revenue
Net Sales Revenues
Cost of Goods Sold and/or Services Rendered
Operating Expenses/Revenues
Operating Expenses/Revenues
Selling
General and Administrative
Financial
Other Operating Revenues
Other Operating Expenses
Equity Income
Gross Income
Operating Expenses/Revenues
Operating Result
Non-operating Result
Income before Taxes/Participations
Provision for Income Tax and Social Contribution
Deferred Income Tax
Profit Sharing/Contributions
Reversal of Interest on Equity

Source: PETROBRAS,
http://petrobrasri.inloinvest.eom.br/modulos/balancos i nterativos.asp?area=&codcvm=009512

PETROBRAS
FINANCIAL STATEMENT
Consolidated - Balance Sheet Assets
Account
Total Assets
Current Assets
Cash
Credits
Inventories
Others

(US$ X 1000)

3008
142,118,924.438
33 ,908 ,699.059
5,631 ,633.799
8,844 ,777 .335
13,575,544 .636
5,856,743 .290
108,210,225.379
11,659,468.810
3,257,086.57 4
67,778.418
8,334,603.818
96 ,550,756.570
4 ,056,347 .634
87,890,165.286
3,364,467 .292
1,239,776.358

2008
157,290,139.237
37,712,764 .030
6,942,522 .881
9,805,078 .386
14,454,505.264
6,510,657.499
119,577,375.207
13,828 ,117.850
4 ,062 ,005.588
384,001 .640
9,382,110.622
105,749,257 .357
4,808,585.952
95,702,166.522
3,614 ,643.380
1,623 ,861 .502

1008
137,205,476 .173
31 ,305,454 .080
6,611,914 .596
7,404,661 .284
11,093,850.303
6,195,027 .896
105,900,022 .093
12,484,166.073
3,557 ,314 .623
482 ,096.334
8,444 ,755.116
93,415,856.020
4,484,880 .281
84 ,072,279.742
3,281 ,786.389
1,576,909.609

4007
130,600,286.486
30 ,146,155.136
7,382,575.209
6,398 ,738.974
9,940,130.782
6.424,710 .170
100,454,131 .351
12,438,767.404
3,827,505.909
479,385.499
8,131 ,875.995
88,015,363.947
4,418,002.962
79,040 ,231 .783
3,124,571 .123
1,432,558.079

3008
142,118,924.438
27,357,087 .186
6,043,614.473
0.000
9,104,007.548
7,135,869.531
0.000
1,715,025.912
0.000
3,358,569.722
38,118,201 .648
37,193,299.613
18,541 ,647.715
0.000
14,382,192.161
71 ,299.192
4,198,160.546
924,902.036
3,244,747.404
73,398,888.200
41 ,268,195.980
269,065.593
7,353.541
17,949,009.079
13,905,264.006

2008
157,290,139.237
27 ,992 ,742.524
5,217 ,258 .574
0.000
10,473,391 .513
7,183,747.195
0.000
2,165,466.060
0.000
2,952 ,879.182
43 ,640,857 .257
42,229,083 .622
20,395,732.172
0.000
17,077,363.701
90,453.147
4 ,665 ,534 .602
1,411 ,773 .636
4,135,630.126
81,520,909.330
49,630 ,250.843
323,585.574
9,584 .564
21 ,655,748.531
9,901 ,739 .817

1008
137,205,476.173
24,216,416.552
4,117,657 .256
0.000
8,356,006.615
5,838,358.551
1,196,020.164
1,823 ,124.223
0.000
2,885,249.743
40,303,592.496
39,312,038.962
19,839,079.601
0.000
15,169,106.940
54,451 .183
4 ,249,401.239
991 ,553 .534
3,569,453.272
69,116,013.853
30,111,800.787
888,766.824
29,269.005
34 ,119,232.106
3,966,945.131

4007
130,600,286.486
26,859,651 .220
4 ,801 ,598.569
0.000
7,789,437 .126
5,651 ,664 .678
3,716,778.992
2,053,018.421
0.000
2,847,153.435
35,872,672 .682
35,872,672.682
16,835,125.632
0.000
14,021,492 .107
53,467.384
4,962,587 .560
0.000
3,561 ,760.631
64,306,201 .953
29,734,234.196
877,622 .733
34 ,747 .248
33,659,597 .776
0.000

3008
105,200,418.143
-20 ,025,168.003
85,175,250.140
-54,373,258 .241
30 ,801 ,991 .899
-9,449,661 .594
-2,618,798 .081
-2,656,498 .630
-462,607.799
0.000
-3.833,118.990
121 ,361 .905
21 ,352 ,330 .305
0.000
21,352,330.305
-6,912,996.779
-508,352.247
0.000
0.000
73,922.657
14,004,903.936

2008
80 ,208,105.591
-15,599,171 .863
64,608,933.728
-40 ,212,012 .385
24,396 ,921 .343
-7,928 ,195.700
-2 ,111 ,911 .286
-1 ,992,602.630
-251 ,526 .620
0.000
-3,911 ,815.780
339,660 .617
16,468,725.643
0.000
16,468,725.643
-4,749,193.078
-779,585.204
0.000
0.000
-283 ,282.639
10,656,664 .722

1008
33,801 ,192.860
-7,012,097.641
26.789,095.218
-16,882,811 .152
9,906,284.066
-3,385,350.997
-891 ,230 .932
-888,260 .618
-34,149.174
0 .000
-1,583,366.167
11,655.895
6,520,933.069
0.000
6,520,933 .069
-1,846,730.012
-401,766 .869
0.000
0.000
-131,718.244
4,140,717.944

4007
123,272,624.015
-26,928,240.886
96,344,383.129
-58 ,965,290.179
37,379,092.950
-17,306,069.448
-3.422,611 .799
-3,630,551 .935
-493,839 .609
0.000
-9.496,273.666
-262,792.440
20,073,023.502
0.000
20,073 ,023.502
-6,097,443.850
-269,547.594
-571 ,541 .390
0.000
-984 ,369.418
12,150,121 .249

Non-current assets

Long-term Assets
Sundry Credits
Credits with Related Parties
Others
Permanent Assets
Investments
PP&E
Intangible
Deferred Items

Consolidated - Balance Sheet Liabilities
(US$ X 1000)

Account
Total Liabilities and Stockholders' Equity
Current liabilities
Loans and Financing
Debentures
Suppliers
Taxes. Charges and Contributions
Dividends Payable
Provisions
Debt with Related Parties
Others
Current Liabilities
Long-term liabilities
Loans and Financing
Debentures
Provisions
Debt with Related Parties
Others
Deferred Income
Minority Interests
Stockholders' Equity
Paid-up Capital
Capital Reserves
Revaluation Reserves
Revenue Reserves
Retained Earnings/Losses

Consolidated - Income Statement Accrued
(US$ x 1000)

Account
Gross Sales Revenues
Deductions from Gross Revenue
Net Sales Revenues
Cost of Goods Sold and/or Services Rendered
Operating Expenses/Revenues
Operating Expenses/Revenues
Selling
General and Administrative

Financial

Other Operating Revenues
Other Operating Expenses
Equity Income
Gross Income
Operating Expenses/Revenues
Operating Result
Non-operating Result
Income before Taxes/Participations
Provision for Income Tax and Social Contribution
Deferred Income Tax
Profit Sharing/Contributions
Reversal of Interest on Equity
Source: PETROBRAS,
http://petrobrasri.infoinvest.com.br/modulos/
balancos_interativos.asp?area=&codcvm=009
512

PETROBRAS
FINANCIAL STATEMENT
Consolidated - Balance Sheet Assets
Account

(US$ X 1000)

Total Assets
Current Assets
Cash
Credits
Inventories
Others
Non-current assets
Long-term Assets
Sundry Credits
Credits with Related Parties
Others
Permanent Assets
Investments
PP&E
Intangible
Deferred Items

3007
118,108,357.073
29,433,305.740
7,734,305.172
6,385,678 .297
9,451 ,803 .172
5,861 ,519.098
88,675,051 .334
11 ,663,838.4 78
3,493,109.816
161 ,231.710
8,009,496.952
77,011 ,212 .855
2,574,596.655
70,308,383.688
2,900,913.512
1,227,319.000

2007
109,528,121.405
29,911,522.510
9 ,272,848.149
6,117,767.158
8,811,254.719
5,709,652.484
79,616,598.895
9,205,473 .059
1,616,692.100
184,138.359
7,404,642.600
70,411 ,125.836
2,500,898.490
63,887,734.915
2,850,982.625
1'171 ,509.805

1007
101 ,274,047 .888
29,110,501.230
9,983,751 .043
7,012,529.176
7,350,415.612
4,763 ,805.398
72,163,546.658
8,418 ,647 .034
1,425,368.932
116,169.503
6,877 ' 108.599
63 ,744,899.625
2,181,357 .947
57,716,292.732
2,746 ,047.674
1,101,201 .271

3007
118,108,357.073
22,806,702.569
5,450 ,972.329
0.000
6,244,338.867
4,779,414 .726
2,386,724 .391
1,317 ,912 .006
0.000
2,627 ,340.250
31,356,256.114
30,754 ,477.633
14,742,936.533
0.000
13,393 ,957.120
52 ,258.311
2,565,325.669
601,778.481
3,654,402.458
60,290 ,995.932
28,640 ,694 .873
769,181 .782
33 ,155.977
24,280,194 .797
6,567 ,768.503

2007
109,528,121.405
21 ,090,656.802
5,325,806.534
0.000
6 ,176,515.989
4 ,720,432.592
1,139,253.651
1,099,751 .210
0.000
2,628,896.827
29,389,746.780
28,765,628.681
14,327,322.495
0.000
11 ,891 ,812.495
51,369.585
2,495,124.106
624 ,118.099
3,329,992.696
55,717,725.126
27,342,089.690
667,803.047
32,609.847
21 ,997,923.854
5,677,298.688

1007
101 ,274,047.888
19,779,749.344
5,545,298 .903
0.000
4,657,364 .135
4,650,909.705
771,841 .378
883,818 .355
0.000
3,270,516.868
28,116,178.380
27,924,424 .856
15,023,728.881
0.000
10,677,891 .890
52,639.054
2, 170,165.031
191 ,753.524
3, 735,525. 188
49,642,594.976
23,548,002.384
181 ,530.065
31 ,525.177
23,866,159.115
2,015,378.235

3007
87 ,227,007.123
-19,134,547.539
68,092,459.584
-41 ,044 ,790 .156
27,047,669.428
-12,403,992.459
-2,444 ,248.467
-2,501,438.501
-413,686.425
0.000
-6 ,832,525.051
-212,094.015
14,643,676.969
-47,743.323
14,595,933.646
-4 ,576,835.971
-273,044.455
0.000
0.000
-791,560.326
8,954,492 .895

2007
53,889,936.633
-11,980,660.006
41,909,276.626
-25,023,902.323
16,885,374 .304
-7 ,576,142.027
-1 ,484,130.556
-1 ,580,404.576
-295,103.872
0.000
-4,119,227.134
-97,275.890
9,309,232 .277
26,749.247
9,335,981 .524
-3,452,374 .538
265,522.486
0.000
0.000
-471,830 .784
5,677,298.688

1007
24,457,064.690
-5,480,459.907
18,976,604.784
-11,559,321.486
7,417 ,283.297
-3,734,634.283
-690,340.105
-753,972.036
-97 ,158.475
0.000
-2,152 ,116.630
-41,047.036
3,682,649.014
13,084.993
3,695,734 .007
-1 ,396,394 .008
-51 ,661.791
0.000
0.000
-232,299.974
2,015,378.235

Consolidated - Balance Sheet Liabilities
(US$ x 1000)

Account
Total Liabilities and Stockholders' Equity
Current Liabilities
Loans and Financing
Debentures
Suppliers
Taxes, Charges and Contributions
Dividends Payable
Provisions
Debt with Related Parties
Others
Current Liabilities
Long-term Liabilities
Loans and Financing
Debentures
Provisions
Debt with Related Parties
Others
Deferred Income
Minority Interests
Stockholders' Equity
Paid-up Capi tal
Capital Reserves
Revaluation Reserves
Revenue Reserves
Retained Earnings/Losses

Consolidated - Income Statement Accrued
Account

(US$ X 1000)

Gross Sales Revenues
Deductions from Gross Revenue
Net Sales Revenues

Cost of Goods Sold and/or Services Rendered
Operating Expenses/Revenues
Operating Expenses/Revenues
Selling
General and Administrative
Financial
Other Operating Revenues
Other Operating Expenses
Equity Income
Gross Income

Operating Expenses/Revenues
Operating Result
Non-operating Result
Income before Taxes/Participations
Provision for Income Tax and Social Contribution
Deferred Income Tax
Profit Sharing/Contributions
Reversal of Interest on Equity
Source: PETROBRAS,
http://petrobrasri.infoinvest.com.br/modulos/
balancos_interativos.asp?area=&codcvm=009
512

EXXON MOBIL
FINANCIAL STATEMENT

II

EXXON MOBIL CORPOAAT I OU. 2008 SUMMARY AUNUA L REPORT)

~

R

STATEM.¢NT OF,INCOME

(millions of dollars)

.
2006

2007

2006

365,467

Revenu es a nd Other Inc om e
Sales and other operating revenue 1'1

459,579

390,328

Income from equity affiliates

11,081

8,901

6,985

Other incometll

6,699

5,323

5,183

477,359

404,552

377,635

Crude oil and product purchases

249,454

199,498

182,546

Production and manufacturing expenses

37,905

31 ,885

29,528

Selling, general and administrative expenses

15,873

14,890

14,273

Depreciation and depletion

12,379

12,250

11,416

Exploration expenses, Including dry holes

1,451

1,469

1,181

Total revenues and other Income
Costs and Other Deduction s

673

400

654

Sales-based taxes 1'1

34,508

31,728

30,381

Other taxes and duties

41,719

40,953

39,203

Income appkable to minority interests

1,647

1,005

1,051

jTotal costs and other deductions

395,609

334,078

310,233

1

1ncome before income taxes

81,750

70,474

67,402

Income taxes

36,530

29,864

27,902

r et Income

45,220

40,610

39,500

et Income per Common Share (dollars)

8.78

7.36

6.68

et Income per Common Share- Assuming Dilution {dollars)

8.69

7.28

6.62

Interest expense

1) Sales and othefopefatng
~ flckJdes sales·based taxes of $34,508 mlion for 2008. $3 1,726 milon for 2007, and $;30,381 rrvb1 for2006.
2) OthGr income for 2006 ilcWes a $62 mi!on gain from the sale of a non-U.S. irnestment and a related $143 mlion foreign exchange loss.
information n the St.mnaty StatemEfll of Income (for 2006 to 2000). the Sunmaty Ba.;nce Shoot (for 2007 and 2006). and the &.mnary Statement of Cash Flows ~ 2006
o 2006). shown on pages 38 Uv<XJg140, COtTespoods to the ilformation In the Consof®ted StatemEfll of Income, ConsoWated Ba.;nce Sheet. and the Coosoldated Statement
Cash flows n the financial statements of ExxonMobil's 2009 Proxy Statement. For complete consoldated finandal statemEflls, ixixf119 notes, please refe< to Appendix A of
onW.obi's 2009 Proxy Statement. See also Management's Discussion and MPJysls of Fmnclal CoOOtion and Re&Jts of Operations and other nformation
Appendx A of the 2009 Proxy Statement.

(EXXON

.SUMMARY BAL_AN:(!E SHE!=T f\T

E~R E '

-:

O~

.

CORPORATION • 2008 SUMMARY ANNUAL REPORT

.
2008

2007

31,437

33,981

570

519

24,702

36,450

Crude oil, products and merchandise

9,331

8,863

Materials and supplies

2,315

2,226

3,911

3,924

Total current assets

72,266

85,963

Investments, advances, and long-term receivables

28,556

28,194

Property, plant and equipment, at cost,
less accumulated depreciati?n and depletion

121,346

120,869

5,884

7,056

228,052

242,082

(millions of dollars)

Assets
Current assets
Cash and cash equivalents
Marketable securities
Notes and accounts receivable,
less estimated doubtful amounts
Inventories

Other current assets

Other assets, Including intangibles, net
Total assets
liabilities
Current liabilities
Notes and loans payable

2,400

2,383

Accounts payable and accrued liabilities

36,643

45,275

Income taxes payable

10,057

10,654

49,100

58,312

Total current liabilities
Long-term debt

7,025

7,183

Postretirement benefits reserves

20,729

13,278

Deferred income tax liabilities

19,726

22,899

Other long-term obligations

13,949

14,366

Equity of minority Interests

4,558

4,282

115,087

120,320

Total liabilities
Commitments and contingencies!'>
Shareholders' Equity
Common stock without par value
Earnings reinvested

5,314

4,933

265,680

228,518

Accumulated other comprehensive Income
Cumulative foreign exchange translation adjustment
Postretirement benefits reserves adjustment
Common stock held in treasury

1,146

7,972

(11,077)

(5,983)

(148,098)

(113,678)

Total shareholders' equity

112,985

121,762

Total liabilities and shareholders' equity

228,052

242,082

(1) For more ilformation, please refer to AppencJx A, Nole 15 of Exxon.V.obi's 2009 Proxy Statement.
The nformation In the Summaty Statement of Income (fOt 2006 to 2008). the Summaty Bal<n::e Sheet (for 2007 and 2008), and the Summaty Statement o1 Cash Flcw.-s ~ 2006
to 2008), sl'cMl on pages 38 1/vough 40. cooesponds to the information in the Consofldated Statement of Income. Consof;dated Balance Sheet, and the Consoidated Statement
or Cash Flows in the rt'lallCial statements of Exxon.V.obl's 2009 Proxy Statement. For complete consoldated financial statements, ncixfllg notes, please refer to AppenOx A of
ExxonMobi's 2009 Proxy Statement Seo also Management's Oiscuss.ion and Ar.a¥>is of Fvlancial Condition and ResUts of Operations and other in/ormation
in Appeodix A of the 2009 Proxy Statement.

•»•

• I

EXXON MOBIL CORPORATION • 2008 SUMMARY ANUUAL RE P ORT

(millions of dollars}

2008

2007

2006

45,220

40,610

39,500

1,647

1,005

1,051

12,379

12,250

11,416

1,399

124

1,717

57
(63)

(1,314)

(1 ,787)

1,065

(666)

921

(714)

(579)

8,641
(1 ,285)
(509)
(5,415)

(5,441)

(181)

72

(1,057)

280

(385)

6,228

1,160

(3,757)

(2,217)

(1,531)

490
59,725

54

628

52,002

49,286

(19,318)

(15,387)

(15,462)

5,985

4,204

3,080

Cash Flows from Operating Activiti es
Net income
Accruing to ExxonMobil shareholders
Accruing to minority interests
Adjustments for noncash transactions
Depreciation and depletion
Deferred Income tax charges/(credils)
Postretirement benefits expense In excess of/(less than) payments
Other long-term obligation provisions in excess of/(less than) payments
Dividends received greater than/(Jess than)
equity in current earnings of equity companies
Changes in operational working capital, excluding cash and debt
Reduction/(increase)- Notes and accounts receivable
- Inventories
- Other current assets
lncrease/(reduction) - Accounts and other payables
Net (gain) on asset sales
All other items- net
Net cash provided by operating activities
Cash Flows from Investing Activities
Additions to property, plant and equipment
Sales of subsidiaries, Investments, and property, plant and equipment
Decrease In restricted cash and cash equjvalents
Additional investments and advances
Collection of advances
Additions to marketable securities
Sales of marketable securities
Net cash used In Investing activities

4,604

(2,495)

(3,038)

(2,604)

574
(2,113)

391

756

(646)

1,868
(15,499)

(9,728)

(14,230)

592

318

144

Cash Flows from Financing Activities
Additions to long-term debt
Reductions in long-term debt
Additions to short-term debt
Reductions In short-term debt
Additions/(reductions) in debt with three months or less maturity
Cash dividends to ExxonMobil shareholders
Cash dividends to minority interests
Changes In minority interests and sales/(purchases) of affiliate stock
Tax benefits related to stock-based awards
Common stock acquired
Common stock sold
Net cash used In financing activities

79
(192)
1,067
(1,624)
143
(8,058)
(375)
(419)

(209)

(33)

1,211

334

(809)

(451)

(187)

(95)

(7,621)

(7,628)

(289)

(239)

(659)

(493)

333
(35,734)

369

462

(31,822)

(29,558)

753

1,079

1,173

(44,027)

(38,345)

(36,210)

Effects of exchange rate changes on cash

(2,743)

1,808

727

Increase/{decrease) in cash and cash equivalents

(2,544)

5,737

(427)

Cash and cash equivalents at beginning of year

33,981

28,244

28,671

Cash and cash equivalents at end of year

31,437

33,981

28,244

The ilformatlon In the Sum1aty Statement ollncome (lor 2006 to 2008), the &mmaly Balance Sheet (for 2007 and 2008), and the Sum1aty Statement ol Cash Flows Uor 2006
to 2008), sllO';..n on pages 38 tlvough 40, corresponds to the hlormatlon illhe Consolidated Statement ollncome. Consolidated Bal<roce Sheet, and the Consoidated Statement
of Cash FbviS i1 the frnncial statements ol Exxon.V.obi's 2009
~ Statement. For- OOiflllete oonsoldated fv1anclal statements, ilctxfng notes, please ~
~ A o1
ExxonMobi's 2009 Proxy Statement. See also MMagement's I:Xscosslon and Analysis ol Arlanclal Condtlon and ResU!s ol Opetatlons and other ilformatlon
11 NJpendx Aolthe 2009 Proxy &.atemeot.

( exxo N MOB I L CO R P O R ATI O tl • 2ooa S U M MARY ANPIU A L REP ORT

CIIJ

DIViDEND
·AND .SHAREH-OLDER
INFORMATION
.
- . RETURN
. -·
. -·
~

~

Net Income per common share (dollars)
Net Income per common share - assuming dilution (dollars)

~

2008

2007

2GOfl

2005

2004

8.78
8.69

7.36
7.28

6.68
6.62

5.76
5.71

3.89

0.35
0.40
0.40
0.40
1.55
13.1

0.32
0.35
0.35
0.35
1.37
7.0

0.32
0.32
0.32
0.32
1.28
12.3

0.27
0.29
0.29
0.29
1.14
7.5

0.25
0.27
0.27
0.27
1.06
8.2

5,149
5,203
4,976
8,058
18
13
(13.2)

5,517
5,577
5,382
7,621
19
15
24.3

5,913
5,970
5,729
7,628
19
15
39.2

6,266
6,322
6,133
7,185

6,482
6,519
6,401
6,896

20
15
11 .7

27
17
27.9

96.12
56.51
82.68
79.83

95.27
69.02
83.23
93.69

79.00
56.42
65.35
76.63

65.96
49.25
58.24
56.17

52.05
39.91
45.29
51 .26

3.91

Dividends per common share (dollars)
First quarter
Second quarter
Third quarter
Fourth quarter
Total
Dividends per share growth (annual percent)
Number of common shares outstanding (millions)
Average
Average - assuming dilution
Year end
Cash dividends paid on common stock (miflions of dollars)
Cash dividends paid to net Income {percent)

Cash dividends paid to cash flow 111(percent)
Total return to shareholders (annual percent)

Market quotations for common stock (dollars)
High
Low
Average daily close
Year-end close
(1) Net cash prO'i.ded by opernting actMiies.

MMX MINERA<;Ao E METALICOS S.A.
FINANCIAL STATEMENT

MMX MINERACAO E METALICOS S.A.
FINANCIAL STATEMENT

Consolidated - Balance Sheet Assets
Millions (US$)
Total Assets
Current Assets
Cash
Credits

2007

3007

2,011 .2

3,006.2

4007
3,989.5

Non-current assets

Long-term Assets
Sundry Credits
Credits with Related Parties
Others
Permanent Assets

1008

2008

4 ,713.3

1,894.6

989.0

976.1

1,784.6

1,749.7

1,789.4

809.7

728.1

747.8

1,515.0

1,424.9

1,430.3

528.6

209.7

105.9

138.2

169.4

225.4

140.3

49.7

Inventories

Others

121 .9

131 .3

154.0

132.0

140.8

1.5

0.5

0.2

1.4

1.8

0.0

802.6

1,035.2

1,221 .6

2,239.8

2,923.8

1,084.9

0.3
0.0
0.0
0.3

55.1

97.6

185.5

44 .9

55.7

26.8

0.0

64.1
34.2
0.0

4.4

2.8

31.3

29.9

42.5

127.1

14.6

1, 157.5

2,142.2

1,040.0

23.8

50.7

3.5

Investments

2.2

980.0
2.2

2.4

3.4

2.736.3
3.4

PP&E

346.4

561 .5

809. 1

1,115. 1

1,361 .2

370.6

Intangible

298. 1

185.4

126. 1

744.7

871 .5

619.0

Deferred Items

155.6

231 .0

219.9

279.0

502.2

49.2

802.3

Consolidated - Balance Sheet Liabilities
Millions (US$)
Total

1007
1,791 .5

and Stockholders' Equity

~

Current
~
Loans and Financing
Debentures

603.0
239.6
205.5
157.8
0.0
1,574.9
157.9
27.4
1.2
129.3
1,417.0
1.2
407.9
956.5
51 .4

1007

2007

3007

4007

1008

2008

3008

1,791 .5

2 ,011 .2

3,006.2

3,989.5

4 ,713.3

1,894.6

2 ,177.9

558.9

736.6

970.2

1,220.8

1,793.2

638.9

1,023.4

405.8

547.1

712.5

701.9

1,263.6

333.3

436.6

0.0

0.0
96.8

0.0

0.0

0.0

0.0

0.0

108.8

129.1

100.7

35.7

48.0
25.8
168.4

73.8

Suppliers

1.2

3008
2 ,177.9

18.7

27.7

40.2

61.4

57.3

27 .6

0.0
0.0
0.0
60.6

0.0
0.0
0.0

0.0
66.1
0.0

0.0

0.0

122.9

146.1

0.0

0.0
5.6
0.5

65.0

42.5

205.4

225.5

236.2

343.6

179.8

167.4

104.0

911 .5

791 .1

483.3

722.3

179.8

167.4

45.1

911.5

523.6

483.3

722.3

125.5

117.4

19.2

388.2

14.8

108.1

340.4

0.0
0.0
0.0
54 .3
0.0
1.2

0.0
0.0
0.0
50.0
0.0

0.0
0.0
0.0

0.0
0.0
0.0

0.0
0.0
0.0

0.0
0.0
0.0

0.0
0.0
0.0

25.9

523.2

508.7

375.2

381 .9

59.0

267.5

51.4

50.0

0.0
43.6

0.0
(6.0)

0.0
(2.8)

Stockholders' Equity

1,051 .6

1,055.9

1,681 .9

1,813.7

1,997.6

778.4

435.0

Paid-up Capital

1,142.5

1,142.5

1,142.8

1,142.8

1,142.8

775.8

775.8

0.0
0.0
0.0
(90.9)

0.0
0.0
0.0
(86.7)

0.0
0.0
0.0

0.0
0.0

0.0
0.0

670.9

670.9

739.1

0.0

184.0

0.0
0.0
0.0
2.6

0.0
0.0
0.0
(340.8)

1007

2007

3007

4007

1008

25.4

50.6

109.3

206.8

168.0

2008
269.9
(19.7)

522.6

Taxes, Charges and Contributions
Dividends Payable
Provisions
Debt with Related Parties
Others
Current liabilities

Long-term Liabilities

loans and Financing
Debentures
Provisions

Debt with Related Parties
Others
Deferred Income
Minority Interests

Capital Reserves
Revaluation Reserves
Revenue Reserves
Retained Eamingsllosses

0.0

131 .4

0.0
1.0

Consolidated • Income Statement Accrued
Millions (US$)
Gross Sales Revenues

(2.7)

(7.9)

3008
(32.4)

(0.6)

(1.0)

25.1

50.0

108.3

204.1

160. 1

(38.5)

(167.4 )

18.9

(159.7)
0.4

82.8

179.7

(5.0)
(35.7)
(29.6)

727.9

160.4

(68.9)
(106.0)

Financial

24.9

57.5

78.3

(33.5)
(53.0)
7.4

0.0
(2.9)
0.0
2.8
0.0
2.8
(4.2)

2.8
0.0
0.0
6.5
0.0
6.5
(7.7)
0.0
0.0
0.0
9.3
8.1

(84.4)
23.9
(22.6)
(50.8)
(62.0)
86.1
4.1
0.0
0.0
1.4

(185.2)

General and Administrative

(27.3)
(2.2)
5.0
(3.5)
(13.4)

834.2

254.7

(73.0)
(69.0)
(65.7)
83.4
0.0
(21 .6)
0.0
9.7
0.0
9.7
(10.6)
0.0
0.0
0.0
3.5
2.6

(544.0)
(132.9)
(90.5)
(274.5)
0.3
(46.3)
0.0

Deductions from Gross Revenue
Net Sales Revenues
Cost of Goods Sold and/or Services Rendered
Operating Expenses/Revenues
Operating Expenses/Revenues
Selling

Other Operating Revenues
Other Operating Expenses
Equity Income
Gross Income
Operating Expenses/Revenues
Operating Result
NorK>perating Result
Income before Taxes/Participations
Provision for Income Ta:x and Social Contribution
Deferred Income Ta:x

(0.3)

0.0
0.0
0.0

Profit Sharing/Contributions

5 .2

Reversal of Interest on Equity

3 .8

11 .5

(9.8)
0.0

(15.2)
0.0

746.7

160.8

831.0

0.0

0.0

832.4

746.7

160.8

(8.7)
0.0
0.0
0.0

(3.7)
0.0
0.0
0.0

(1 .2)
0.0
0.0
0.0

10.2

22.6

24.6

833.9

765.6

184.2

250.2

490.2
(310.5)

(364.3)

0.0
(364.3)

(0.9)
0.0
0.0
0.0
24.4

(340.8)

Source: MMX 2010, htto://mm:x.infoinvest.com.br/enu/PI PLANILHA ORE C AA-enu.html

I

MMX MINERAc;:AO E METALICOS SA
FINANCIAL STATEMENT

Consolidated - Balance Sheet Assets
Millions (US$)
Total Assets
Current Assets
Cash
Credits

4008

1009

2009

3009

2,328.7

1,969.0

2,081 .3

1,799.8

714.8

409.7

652.4

354.3

291.6

81 .9

247.1

62.8

210.8

194.5

168.5

188.2

210.9

Inventories

133.3

135.7

102.2

1.4

0.0

101.1

1.1

1,613.8

1,559.3

1,428.9

1,445.5

169.8

170.1

168.9

195.5

30.0

Credits with Related Parties

30.4
1.5

35.1

1.5

1.5

0.9

Others

138.2

138.1

132.3

124.7

1,444 .1

1,389.3

1,260 .0

1,250.1

Others
Non-current assets
Long-term Assets
Sundry Credits

Permanent Assets
Investments
PP&E
Intangible
Deferred Items

Consolidated - Balance Sheet Liabilities
M illions (US$)
Total Liabilities and Stockholders' Equity
Current Liabilities

69.9

0.0

0.0

0.0

438.9

407.9

949.7

954.2

289.2
944.3

937.0

55.4

27.1

26.4

22.8

2009

0 .0
290.3

3009

4008

1009

2,328.7

1,969.0

2,081.3

1,799.8

1,285.5

1,211 .6

1,328 .0

1,061.4
677.7

542.5

489.1

642.4

Debentures

0.0

0.0

0.0

Suppliers

78.6

43.2

72.5

52.6

24.9

0.0

30.0
0 .0

427.3

345.3

28.8
0.0
304.9
2.1

24.9
0.0
29.0
0.6

Loans and Financing

Taxes, Charges and Contributions
Dividends Payable
Provisions

4.4

Debt with Related Parties

1.2

0 .0

207.9

302.8

277.3

276.8

1,144.2

1,012.0

995.8

1,021 .5

1,144.2

1,012.0

995.8

1,021.5

811 .5

403.5

357.2

453.6

Debt with Related Parties

808.8
0.0
0.0
0.0

440.7

0.0
0.0
0.0

0.0
0.0

0.0
0.0

Others

332.7

203.1

198.0

164.4

0.0
(36.0)
(65.1)

0.0
(46.8)
(207.7)

0.0
(57.7)
(164.7)

0.0
(64.8)
(218.3)

Paid-up Capital

775.9

775.9

775.9

776.0

Capital Reserves

11 .7

12.2

14.0

14.4

0.0
0.0
(856.8)

0.0
0 .0
(1 ,005.2)

0.0
0.0
(978.6)

0.0
0.0
(1,005.8)

4008

1009

2009

3009

697.0

92.1

140.4

253.2

(11.3)
129.1
(128.3)
0.8
(118.1)

(19.5)

Others
Current Liabilities
Long-term Liabilities
Loans and FinallCing
Debentures
Provisions

Deferred Income
Minority Interests
Stockholders' Equity

Revaluation Reserves
Revenue Reserves
Retained Earnings/Losses

Consolidated - Income Statement Accrued
Millions (US$)
Gross Sales Revenues
Deductions from Gross Revenue
Net Sales Revenues
Cost of Goods Sold and/or Services Rendered
Operating Expenses/Revenues
Operating Expenses/Revenues
Selling
General and Administrative
Financial
Other Operating Revenues
Other Operating Expenses
Equity Income
Gross Income
Operating Expenses/Revenues
Operating Result
Non-operating Result
Income before Taxes/Participations
Provision for Income Tax and Social Contribution
Deferred Income Tax
Profit Sharing/Contributions
Reversal of Interest on Equity

257.4

(5.2)
86.9
(100.3)
(13.4)

(1 ,161 .5)

(142.1)

(180.0)

(48.1)
(26.7)

(143.3)

(57.7)

(206.4)
(216.8)
(116.7)

21 .4

211 .6

272.7

1.8
(90.6)
0 .0
(155.6)
0.0
(155.6)
(3.6)
0.0
0.0

3.9
(132.6)
0.0
(117.4)
0.0
(117.4)
(3.2)
(23.0)
0.0

4.6
(150.2)
0 .0
(139.2)
0.0
(139.2)
(0.4)
(38 .2)
0 .0
0.0

(44.5)
652.4

(395.1)

(123.9)
(790.0)
8.8
(76.4)
0.0
(904.2)
0.0
(904.2)
(1 .5)
0.0
0.0
0.0

0.0

0.0

57.6

10.8

21.8

(848.0)

(148.3)

(121 .7)

Source: MMX 2010, htto:l/mmx.infoinvest.com.brl enuiPI PLANILHA ORE C M-enu .html

233.7

(166.6)
67.2

28.9
(148.9)

MMX MINERACAO E METALICOS S.A.
FINANCIAL STATEMENT

Consolidated • Balance Sheet Assets
Millions (US$)
Total Assets
Current Assets
Cash
Credits
Inventories

4003

4004

4005

1006

2006

3006

4006

0.0

0.0

272.2

273.9

425.8

1,607.1

0.0

0.0

20.2

21.4

52.4

1,173.2

0 .0
0.0

0.0

19.9

19.7

38.6

1,005.8

0.0

0.3

1.4

6.4

149.3

0 .0

0.0
0.0

0.0

0.0

16.6

0.0

0.3

5.9
1.5

0.0

252.0

252.5

373.4

434.0

0.0

0.1
0.0
0.1
0.0

0.0

0.8

0.0

0.0
0.0

0.0

0.7
0.0
0.7
0.0

0.0

0.8

0.0

251 .3

252.4

373.4

433.2

0.0

227.0

230.4

271 .6

265.8

1,592.5
1,010.3
779.2
192.7
37.3
1.0
582.2
1.0
0.0
0.0
1.0
581 .3
215.0

0.0
0.0

7 .1
0.0

7.9

32.6

59.4

0.0

0.0

17.2

14.1

69.2

108.0

4003

4004

4005

1006

4006

0.0
0.0
0.0
0.0
0 .0
0.0
0 .0
0 .0
0.0
0 .0
0.0

272.2

273.9

2006
425.8

3006

0.0

1,607.1

1,592.5

172.4

179.6

300.2

342.6

369.9

81 .7

93.1

198.5

236.9

256.4

0.0
0.5
0.4

0 .0

0.0
7.9

0 .0
33.7

60.5

3.6

6.2
0.0

15.6

0.0

0.0

0.3

0.0

89.5

83.3

89.9

65.4

37.4

85.7

81 .6

101 .6

221.3

173.1

0.0

85.7

81 .6

101 .6

221.3

173.1

0 .0

0 .0
0.0

0.0

29.5

129.4

131 .5

0.0

0.0

0.0

0.0

0.0

0.0
0.0

0.0

0.0

0.0
0.0
0.0

81 .6

72.1

91 .9

41.6

0.0

0.0
4.1

0.0
1.7

14.0

0.0
12.7

0.0
8.2
15.9

1,039.1

1,047.8

16.7

16.7

23.6

1,142.5

1,142.5

0 .0

0 .0

0.0

0.0

0.0

0.0

0.0

0.0

0.0
0 .0
(2 .7)

0.0

Othe<S
Non-current assets

long-term Assets
Sundry Credits

Credits with Related Parties
Others
Permanent Assets
Investments
PP&E
Intangible
Deferred Items

Consolidated - Balance Sheet Liabilities
Millions (US$)
Total Liabilities and Stockholders' Equity
Current Liabilities

Loans alld Financing
Debentures

0 .0
0.0
0.0
0.0
0.0
0.0
0 .0
0.0

0 .0
0 .0
0 .0

0.0

Suppliers
Taxes, Charges and Contributions
Dividends Payable

Provisions
Debt with Related Parties

Othe<s
Current liabilities
Long-term Liabilities
loans and Financing

0.0
0 .0
0.0
0.0
0.0
0.0
0 .0
0.0

0.0

Debentures
Provisions
Debt with Related Parties

Others
Deferred Income
Minority Interests
Stockholders' Equity

0 .0
0.0
0 .0
0.0
0 .0
0.0

0.0

Paid-up Capital

0.0
0.0
0.0
0.0

Capital Reserves

Revaluation Reserves
Revenue Reserves
Retained Earnings/Losses

0.0
0.0

0.0
0.0
0 .0
0.0
0.0

0.0
0.0
0 .0
0.0
0.0
0.0

0.0

0 .0
0 .3

0.0
85.7
0.0
0 .0

1.8

0 .0

1.1
0 .0
0 .0

0.0
0.0

0.3

0.3

1.5

206.7
0.0
159.6

0.0

0.0

0.0

0.0

0.0

0.0
0.0

(4.0)

(7.7)

(103.4)

0 .0
0.0
(94.7)

1006
0.5
(0.1)

2006

3006

4006

0.9
(0.1)
0.8

1.7
(0.1)

9.4
(0.2)
9.2

Consolidated - Income Statement Accrued
4003

4004

4005

Gross Sales Revenues

0 .0

0 .0

Deductions from Gross Revenue

0.0
0.0
0.0
0.0
0 .0
0.0
0.0

0.0
0 .0

0 .0
0.0
0 .0
0 .0
0 .0
(0.2)
0.0
(0.2)
0 .0
0 .0

Millions (US$}

Net Sales Revenues
Cost of Goods Sold and/or Services Rendered
Operating Expenses/Revenues
Operating Expenses/Revenues
Selling
General and Administrative
Financial

Other Operating Revenues
Other Operating Expenses

Equity Income
Gross Income
Operating Expenses/Revenues
Operating Result

0.0
0.0
0 .0
0.0
0.0
0 .0
0.0
0 .0

0.0
0.0
0 .0
0.0

0 .0
0.0
0.0
0.0
0.0
0 .0
0.0

0.0
0.0
(0.2)

0.0

(2.1)
(2.3)

Income before Taxes/Participations

0.0

0 .0
0 .0

0.0
0.0

Provision for Income Tax and Social Contribution

0 .0

0.0

Deferred Income Tax

0.0
0.0

Profit Sharing/Contributions

0 .0

0.0

Reversal of Interest on Equity

0.0

0.0

Non-operating Result

Source : MMX 2010, http:/lmmx.infoinvest.com.br/enu/PI PLANILHA ORE C AA-enu.html

0.0

0.0
0 .0

(2.3)

(17.9)

(1 .0)

1.6
(6.1)
(4.5)

(4.2)

(99.1)

(90.0)

0.0

0.0
(37.9)

(0.3)

0.4
(0.9)

(1.8)

(0.5)
(0.8)
0 .0
(1 .0)

0 .2
0 .0
0 .0
0 .0

(1.3)
0 .0
(1.3)
0.0
0.0
0.0
0.0
0.0
(1 .3)

(4.2)
0.0
0.0
0.0

0.0
(5.2)
0.0
(5.2)
0.0
0.0
0.0

0.0

(52.6)
0.0

(8.7)
0.0
(103.6)
(1 .3)
(104.9)
0.0
0.0
0 .0

0.0

0.1

4.2

(5.0)

(100.7)

(8.7)

(60.0)
(20.9)
(7.4)
(1.4)
0.0
(98.7)
0.0
(98.7)
0.0
0.0
0.0
0.0
6.6
(92.1)

MMX MINERA<;AO E METALICOS S.A.
FINANCIAL STATEMENT

Consolidated - Balance Sheet A ssets
Millions (US$)
Total Assets

CuiTent Assets
Cash
Credits

Inventories
Others
Non-current assets

976.1

1,784.6

728.1

747.8

1,515.0

1,424.9

1,430.3

528.6

3008
2,177.9
603.0
239.6

209.7

105.9

138.2

169.4

225.4

140.3

205.5

49.7

121 .9

131 .3

154.0

132.0

140.8

157.8

1.8

0.0
1,084.9

0.0
1,574.9

2007

3007

4007

1008

2008

2,011.2

3,006.2

3 ,989.5

4,713.3

1,894.6

1,789.4

809.7

1.5

0.5

0 .2

1.4

802.6

1,035.2

1,221 .6

2,239.8

2,923.8

55.1

64.1
34.2

97.6

185.5

44.9

50.7

55.7

26 .8

0.0
29.9

4.4

2.8

3.5

42.5

127.1

14.6

2 ,142.2

2,738.3

1,040.0

980.0
2.2

1,157.5

Investments

0.3
0.0
0 .0
0.3
802.3
2.2

2.4

3.4

3.4

PP&E

346.4

561 .5

809.1

1,115. 1

1,361 .2

1.2
370.6

298.1

185.4

126.1

744.7

871.5

619.0

155.6

231.0

219.9

279.0

502.2

49.2

long-term Assets
Sundry Credits
Credits with Related Parties

Others
Permanent Assets

Intangible

Deferred 1tems

Consolidated - Balance Sheet liabilities
Millions (US$)
T

989.0

1,749.7

1007
1,791 .5

and Stockholders' Equity

~

Current Liabilities
Loans and Financing

DebentlH'es
Suppliers
Taxes, Charges and Contributions
Dividends Payable
Provisions
Debt with Related Parties
Others
Current Liabilities

long-term liabilities
Loans and Financing
Debentures

Provisions
Debt with R~

Parties

Others
Deferred Income
Minority Interests

23.8

0 .0
31 .3

157.9
27.4
1.2
129.3
1,417.0
1.2
407.9
956.5
51.4

1007

2007

3007

4007

1008

2008

3008

1,791.5

2,011 .2

3,006.2

3 ,989.5

4 ,713.3

1,894.6

2 ,177.9

558.9

736.6

970.2

1,220.8

1,793.2

638.9

1,023.4

405.8

547.1

712.5

701.9

1,263.6

333.3

436.6

0.0

0 .0

0.0

0.0

0.0

0.0

73.8

0.0
96.8

108.8

129.1

100.7

35.7

48.0

18.7

27.7

40.2

61.4

57.3

27.6

25.8

0.0
0.0
0.0
60 .6

0.0
0.0
0.0

0.0
66.1
0.0

0.0

0.0

122.9

146.1

0.0

0.0
5.6
0 .5

168.4

0.0

65.0

42.5

205.4

225.5

236.2

343.6

179.8

167.4

104.0

911 .5

791 .1

483.3

722.3

179.8

167.4

45.1

911 .5

523.6

483.3

722.3

125.5

117.4

19.2

388.2

14.8

108.1

0.0
0.0
0 .0
54 .3
0.0
1.2

0.0
0.0
0.0

0.0
0.0
0 .0

0.0
0.0
0.0

0.0
0.0
0.0

0.0
0.0
0.0

50.0

25.9

523.2

508.7

375.2

0.0

59.0

0.0

267.5

51.4

50.0

43.6

131.4

0.0
(6.0)

340.4
0.0
0.0
0.0
381.9
0.0
(2.8)

778.4

435.0

0.0
1.0

Stockholders' Equity

1,051 .6

1,055.9

1,881 .9

1,813.7

1,997.6

Paid-up Capital

1, 142.5

1,142.5

1,142.8

1,142.8

1,142.8

775.8

775.8

0.0
0.0
0.0
(90.9)

0.0

0.0
0 .0
0.0

0.0
0.0

0.0
0.0

670.9

670.9

739.1

0.0

164.0

0.0
0.0
0.0
2 .6

0.0
0.0
0.0
(340.8)

2008
269.9
(19. 7)

522.6

Capital Reserves
Revaluation Reserves
Revenue Reserves
Retained Earnings/Losses

0.0
0.0
(86.7)

Consolidated • Income Statement Accrued
Millions (US$)
Gross Sales Revenues
Deductions from Gross Revenue
Net Sales Reveooes

1007
25.4

(0.3)
25.1

2007
50.6
(0.6)
50.0
(38.5)

3007

4007

1008

109.3

206.8

168.0

(1.0)

(2.7)

(7 .9)

108.3

204 .1
(185.2)

160.1

Cost of Goods Sold and/or Services Rendered

(27.3)

Operating Expenses/Revenues

(2.2)

11.5

23.9

18.9

(159.7)
0.4

(5.0)
(35. 7)
(29.6)

(22.6)
(50.8)

727.9

160.4

(68.9)

General and Administrative

5.0
(3.5)
(13.4)
24.9

57.5

0.0
(2.9)
0.0
2.8
0.0
2.8
(4.2)
0.0
0.0
0.0

2.8

(62.0)
86.1
4.1
0.0
0.0
1.4

(106.0)

Financial

831 .0

Operating Expenses/Revenues
Selling

Other Operating Revenues
Other Operating Expenses
Equ ity Income
Gross Income
Operating Expenses/Revenues
Operating Result
Non-operating Result
Income before T axes/Participations
Provision for Income Tax and Social Contribution
Deferred Income Tax
Profit SharingiContributions

5.2

Reversal of Interest on Equity

3.8

0.0
0.0
6 .5
0.0
6 .5
(7.7)
0.0

0.0
0.0
9.3
8.1

(84.4)

78.3

(33.5)
(53.0)
7.4

834.2

254.7

(9.8)
0.0

(15.2)
0.0

746.7

160.8

0.0

0.0

832.4

746.7

160.8

(8.7)
0.0
0.0

(3.7)
0.0

(1 .2)
0.0
0.0

0.0

0.0
0.0

10.2

22.6

24.6

833.9

765.6

184.2

0.0

250.2
(167.4)

3008
(32.4)
490.2
(310.5)

82.8

179.7

(73.0)
(69.0)
(65.7)

(544.0)
(132.9)
(90.5)
(274.5)
0.3
(46.3)
0.0

83.4

0.0
(21 .6)
0.0
9.7
0.0
9.7
(10.6)
0.0
0.0
0.0
3.5
2.6

(364.3)

0.0
(364.3)

(0.9)
0.0
0.0

0.0
24.4

(340.8)

Source: MMX 2010, htto:/lmmx.infoinvest.com.br/enu/PI PLANILHA ORE C AA-enu.html

I

MMX MINERACAO E METALICOS S.A.
FINANCIAL STATEMENT

Consolidated - Balance Sheet Assets
Millions (US$)
Total Assets
Current Assets

Cash
Credits

Inventories
Others
Non-current assets

long-term Assets
Sundry Credits
Credits with Related Parties
Others

Permanent Assets
Investments

PP&E
Intangible

Deferred Items

Consolidated - Balance Sheet Liabilities

4008
2,328.7

1009
1,969.0

2009
2 ,081 .3

714 .8

409.7

652.4
247.1
168.5
135.7
101 .1
1,428.9
168.9
35.1
1.5

291 .6
210.8
210.9
1.4
1,613.8
169.8
30.0
1.5
138.2
1,444.1
0.0
438.9
949.7
55.4

81 .9

194.5
133.3
0.0
1,559.3
170.1
30.4
1.5
138.1
1,389.3
0 .0
407.9
954.2
27.1

3009
1,799.8
354.3
62.8
188.2
102.2
1.1
1,445.5
195.5
69.9
0 .9

132.3

124.7

1,260.0
0.0
289.2
944.3

1,250.1
0.0
290.3

26.4

22.8

2009

937.0

4008
2,328.7

1009
1,969.0

2,081 .3

1,285.5

1,211 .6

1,328.0

3009
1,799.8
1,061 .4

542.5

489.1

642.4

677.7

Debentures

0.0

0.0

0.0

0.0

Suppliers

78.6

43.2

72.5

52.6

Millk>ns (US$)
Total liabilities and Stockholders' Equity

Current liabilities
Loans and Financing

Dividends Payable

0.0

30.0
0.0

Provisions

427.3

345.3

4.4

1.2
302.8

Taxes, Charges and Contributions

Debt w ith Related Parties

24.9

Long-term Liabilities

24.9
29.0

2.1

0.6

0 .0

277.3

276.8

1,144.2

1,012.0

995.8

1,021 .5

1,144.2

1,012.0

995.8

1,021.5

207.9

Others
Current Liabilities

28.8

0.0
304.9

811 .5

808.8

440.7

403.5

Debentures

0.0

357.2

453.6

Provisions

0.0
0.0

0 .0
0.0
0 .0

0.0
0.0

0.0
0 .0

Loans and Financing

Debt with Related Parties

203.1

198.0

164.4

Stockholders' Equity

332.7
0.0
(36.0)
(65.1)

0.0
(46.8)
(207.7)

0.0
(57.7)
(184.7)

0.0
(64.8)
(218.3)

Others
Deferred Income
Minority Interests
Paid-up Capital

775.9

775.9

775.9

776.0

Capital Reserves

11.7

12.2

14.0

14.4

Revaluation Reserves

0.0
0.0
(856.8)

0.0
0 .0
(1 ,005.2)

0.0
0.0
(978.6)

0.0
0.0
(1 ,005.8)

Revenue Resel\fes
Retained Earnings/Losses

Consolidated · Income Statement Accrued
4008

1009

2009

3009

697.0

92.1

140.4

253.2

Deductions from Gross Revenue

(44.5)

(11 .3)

Net Sales Revenues

652.4

129.1

233.7

(128.3)
0.8

(166.6)
(206.4)
(216.8)
(116.7)

Millions (US$)
Gross Sales Revenues

Operating Expenses/Revenues

257.4

(5.2)
86.9
(100.3)
(13.4)

Operating Expenses/Revenues

(1 , 161.5)

(142.1 )

(118.1)

(180.0)

(48.1)
(26.7)

(143.3)
(57.7)

Cost of Goods Sold and/or Services Rendered

Selling
General and Administrative
Financial
Other Operating Revenues
Other Operating Expenses
Equity Income
Gross Income
Operating Expenses/Revenues
Operating Result
Non-operating Result

(395.1)

(123.9)
(790.0)
8.8
(76.4)
0.0
(904.2)
0.0
(904.2)
(1.5)
0.0
0.0

(19.5)

67.2

21.4

211.6

272.7

1.8
(90.6)
0 .0
(155.6)

3.9
(132.6)
0.0
(117.4)
0.0
(117.4)
(3.2)
(23.0)

4.6
(150.2)
0.0
(139.2)
0.0
(139.2)
(0.4)
(38.2)

0 .0
(155.6)
(3.6)

Deferred Income Tax

0.0

0.0
0.0
0.0

0.0
0.0

0.0
0.0

Profit Sharing/Contributions

57.6

10.8

21.8

28.9

Reversal of Interest on Equity

(848.0)

(148.3)

(121 .7)

(148.9)

Income before TaxesfParticipations
Provision for Income Tax and Social Contribution

Source: MMX 2010, htto:llmmx.infoinvest.com.br/enu/PI PLANILHA ORE C AA-enu.htmt