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payable in the acquisition of capital stock of companies undertaking specified governmentapproved projects. The amount so applied is credited to non-operating income and
subsequently appropriated from retained earnings to this reserve.
The legal reserve results from appropriations from retained earnings of 5% of annual net income
recorded in the statutory accounting records. Such appropriations are required until the
balance reaches 20% of the balance of capital stock, based on the statutory accounting
records. At December 31, 2000, such capital stock was R$ 1,855 million and the balance in
the legal reserve was R$ 113 million.
The fiscal incentive and legal reserves may be used to increase capital and to absorb losses, but
are not available for distribution as cash dividends.
14 Pension plans
The Company sponsors a retirement plan covering substantially all of its employees. Prior to
May 1, 1992, the program (“Plan 1”) consisted of a final-pay, defined-benefit pension plan
with benefits based on years of service and salary so as to complement the government social
security benefits. As of May 1,...
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This note was uploaded on 02/05/2014 for the course ECON 101 taught by Professor Gottlieb during the Spring '08 term at Rutgers.
- Spring '08