siditr3q14_6ka.htm - Generated by SEC Publisher for SEC Filing
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 6-K/A
 
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
 
For the month of December 5, 2014
Commission File Number 1-14732
 

 
COMPANHIA SIDERÚRGICA NACIONAL
(Exact name of registrant as specified in its charter)
 
 
National Steel Company
(Translation of Registrant's name into English)
 
Av. Brigadeiro Faria Lima 3400, 20º andar
São Paulo, SP, Brazil
04538-132
(Address of principal executive office)
 
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F. 
Form 20-F ___X___ Form 40-F _______

 Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.  

Yes _______ No ___X____

 
CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE    
ITR –– Quarterly Financial Information - September 30, 2014 – CIA SIDERURGICA NACIONAL

Version: 1


 

 

 

 

 

Table of Contents

 

Company Information

 

Capital Breakdown

1

Cash Distribution

2

Parent Company Financial Statements

 

Balance Sheet – Assets

3

Balance Sheet – Liabilities

4

Statement of Income

5

Statement of Comprehensive Income

6

Statement of Cash Flows

7

Statement of Changes in Shareholders’ Equity

 

1/1/2014 to 9/30/2014

9

1/1/2013 to 9/30/2013

10

Statement of Value Added

11

Consolidated Financial Statements

 

Balance Sheet - Assets

12

Balance Sheet - Liabilities

13

Statement of Income

14

Statement of Comprehensive Income

15

Statement of Cash Flows

16

Statement of Changes in Shareholders’ Equity

 

1/1/2014 to 9/30/2014

18

1/1/2013 to 9/30/2013

19

Statement of Value Added

20

Comments on the Company’s Consolidated Performance

22

Notes to the Financial Statements

30

Reports and Statements

 

Unqualified Independent Auditors’ Review Report

82

 


 
CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE    
ITR –– Quarterly Financial Information - September 30, 2014 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Company Information / Capital Breakdown

 

Number of Shares

(Units)

Current Quarter

9/30/2014

 

Paid-in Capital

 

 

Common

1,387,524,047

 

Preferred

0

 

Total

1,387,524,047

 

Treasury Shares

 

 

Common

6,791,300

 

Preferred

0

 

Total

6,791,300

 

                                                                                                                                                                              Page 1 of 83


 
     
 

 


 

 

 

Company Information / Cash distribution

         
             

Event

Approval

Dividends

Inition Payment

Type of share

Class of share

Dividends per common share (R$/share)

             

Meeting of Board of Directors

02/28/2014

Dividends

03/11/2014

Ordinary

 

0.29150

 

 

PAGE 2 of 83

 


 

 

     
 

 

 

Parent Company Statements / Balance Sheet - Assets

 

(R$ thousand)

 

 

     

 

Code

Description

Current Quarter 9/30/2014

Previous Year 12/31/2013

1

Total assets

49,048,756

48,689,176

1.01

Current assets

5,255,094

5,054,174

1.01.01

Cash and cash equivalents

477,282

206,624

1.01.03

Trade receivables

1,189,074

1,992,704

1.01.04

Inventories

3,064,068

2,459,230

1.01.08

Other current assets

524,670

395,616

1.02

Non-current assets

43,793,662

43,635,002

1.02.01

Long-term receivables

4,318,947

4,134,846

1.02.01.06

Deferred taxes

3,186,320

2,612,998

1.02.01.09

Other non-current assets

1,132,627

1,521,848

1.02.02

Investments

26,455,426

27,005,592

1.02.03

Property, plant and equipment

12,863,307

12,418,095

1.02.04

Intangible assets

155,982

76,469

 

 

 

PAGE 3 of 83

 


 

 

     
 

 

 

Parent Company Statements / Balance Sheet – Liabilities

 

(R$ thousand)

   
       

Code

Description

Current Quarter 9/30/2014

Previous Year 12/31/2013

2

Total liabilities

49,048,756

48,689,176

2.01

Current liabilities

6,324,047

6,503,789

2.01.01

Payroll and related taxes

191,438

159,892

2.01.02

Trade payables

1,157,495

926,935

2.01.03

Taxes payable

100,747

150,066

2.01.04

Borrowings and financing

3,593,638

3,854,694

2.01.05

Other payables

851,132

1,138,956

2.01.06

Provisions

429,597

273,246

2.01.06.01

Provision for tax, social security, labor and civil risks

429,597

273,246

2.02

Non-current liabilities

36,841,925

34,088,817

2.02.01

Borrowings and financing

24,086,936

21,394,660

2.02.02

Other payables

10,765,066

10,173,732

2.02.04

Provisions

1,989,923

2,520,425

2.02.04.01

Provision for tax, social security, labor and civil risks

167,164

438,114

2.02.04.02

Other provisions

1,822,759

2,082,311

2.02.04.02.03

Provision for environmental liabilities and asset retirement obligation - ARO

231,019

365,716

2.02.04.02.04

Pension and healthcare plan

485,084

485,084

2.02.04.02.05

Provision for losses on investments

1,106,656

1,231,511

2.03

Shareholders’ equity

5,882,784

8,096,570

2.03.01

Issued capital

4,540,000

4,540,000

2.03.02

Capital reserves

30

30

2.03.04

Earnings reserves

1,668,280

2,839,568

2.03.04.01

Legal reserve

361,641

361,641

2.03.04.02

Statutory reserve

1,373,309

2,477,927

2.03.04.09

Treasury shares

-66,670

0

2.03.05

Retained earnings/Accumulated losses

-173,056

0

2.03.08

Other comprehensive income

-152,470

716,972

 

 

PAGE 4 of 83

 


 
     
 

 

 

 

Parent Company Statements / Statements of Income

 

 

 

(R$ thousand)

   

 

 

Code

Description

Current Quarter

7/1/2014 to 9/30/2014

Current Year

1/1/2014 to 9/30/2014

Same Quarter of Previous Year
7/1/2013 to 9/30/2013

Previous Year

1/1/2013 to 9/30/2013

3.01

Net revenue from sales and/or services

3,092,336

9,812,948

3,730,830

9,872,130

3.02

Cost of sales and/or services

-2,290,584

-6,661,971

-2,626,539

-7,248,285

3.03

Gross profit

801,752

3,150,977

1,104,291

2,623,845

3.04

Operating expenses/income

772,653

-343,970

54,531

376,874

3.04.01

Selling expenses

-113,556

-324,964

-126,726

-366,150

3.04.02

General and administrative expenses

-92,761

-279,520

-72,816

-236,009

3.04.04

Other operating income

2,537

12,366

-28,817

-23,608

3.04.05

Other operating expenses

-42,618

-222,859

-114,177

-336,862

3.04.06

Share of profits of investees

1,019,051

471,007

397,067

1,339,503

3.05

Profit before finance income (costs) and taxes

1,574,405

2,807,007

1,158,822

3,000,719

3.06

Finance income (costs)

-1,938,797

-3,256,374

-724,391

-2,504,369

3.06.01

Finance income

71,393

97,259

28,275

98,895

3.06.02

Finance costs

-2,010,190

-3,353,633

-752,666

-2,603,264

3.06.02.01

Net exchange gains (losses) on financial instruments

-1,153,777

-605,862

-36,435

-625,692

3.06.02.02

Finance costs

-856,413

-2,747,771

-716,231

-1,977,572

3.07

Loss (profit) before taxes on income

-364,392

-449,367

434,431

496,350

3.08

Income tax and social contribution

114,287

276,311

65,251

525,127

3.09

Profit from continuing operations

-250,105

-173,056

499,682

1,021,477

3.11

Profit for the period

-250,105

-173,056

499,682

1,021,477

3.99

Earnings per share - (R$/share)

   

 

 

3.99.01

Basic earnings per share

   

 

 

3.99.01.01

Common shares

-0.18008

-0.12105

0.34272

0.70062

3.99.02

Diluted earnings per share

   

 

 

3.99.02.01

Common shares

-0.18008

-0.12105

0.34272

0.70062

 

PAGE 5 of 83

 


 

 

     
 

 

 

 

 

Parent Company Statements / Statement of Comprehensive Income

 

 

(R$ thousand)

   

 

 

Code

Description

 

Current Quarter

7/1/2014 to 9/30/2014
 

Current Year
1/1/2014 to 9/30/2014

 

Same Quarter of
Previous Year
7/1/2013 to 9/30/2013

Previous Year
1/1/2013 to 9/30/2013

4.01

Profit for the period

-250,105

-173,056

499,682

1,021,477

4.02

Other comprehensive income

-98,799

-869,442

399,378

-171,048

4.02.01

Cumulative translation adjustments for the period

60,745

-26,602

47,884

128,932

4.02.02

Actuarial (losses) gains on defined benefit pension planfrom investments in

0

1,710

0

0

 

subsidiaries

   

 

 

4.02.03

Available-for-sale financial assets

-149,474

-1,208,939

538,983

-203,457

4.02.04

Income tax and social contribution on available-for-sale financial assets

50,821

411,039

-183,255

69,175

4.02.05

Available-for-sale financial assets from investments in subsidiaries

0

-17,470

-4,234

-167,922

4.02.06

Impairment of available-for-sale financial assets

18,429

66,476

0

3,369

4.02.07

Income tax and social contribution on available-for-sale financial assets

-6,266

-22,602

0

-1,145

4.02.08

(Loss)/gain on the percentage change of investments

-73,054

-73,054

0

0

4.03

Comprehensive income for the period

-348,904

-1,042,498

899,060

850,429

 

 

 

 

 

 

 

 

 

 

 

 

 

PAGE 6 of 83

 


 

 

     
 

 

 

 

 

       

Parent Company Statements / Statement of Cash Flows – Indirect Method

(R$ thousand)

   

Code

Description

Current Year
1/1/2014 to 9/30/2014

Previous Year
1/1/2013 to 9/30/2013

6.01

Net cash generated by operating activities

806,633

1,091,241

6.01.01

Cash generated from operations

2,832,279

2,437,171

6.01.01.01

Profit for the period

-173,056

1,021,477

6.01.01.02

Charges on borrowings and financing

2,394,687

1,828,087

6.01.01.03

Charges on loans and financing granted

-10,446

-34,054

6.01.01.04

Depreciation, depletion and amortization

747,644

698,973

6.01.01.05

Share of profits of investees

-471,007

-1,339,503

6.01.01.06

Deferred income tax and social contribution

-306,781

-525,127

6.01.01.08

Provision for tax, social security, labor, civil and environmental risks

-57,122

77,526

6.01.01.09

Monetary variation and exchange differences, net

586,628

741,618

6.01.01.10

Gain on derivative transactions

943

3,385

6.01.01.11

Impairment of available-for-sale financial assets

66,476

3,369

6.01.01.12

Residual value of permanent assets written off

11,970

7,771

6.01.01.14

Other provisions

42,343

-46,351

6.01.02

Changes in assets and liabilities

-2,025,646

-1,345,930

6.01.02.01

Trade receivables - third parties

142,114

-1,628

6.01.02.02

Trade receivables - related parties

-248,444

-97,096

6.01.02.03

Inventories

-697,314

53,629

6.01.02.05

Recoverable taxes

56,066

-9,286

6.01.02.06

Judicial deposits

-30,801

-9,754

6.01.02.07

Dividends received from related parties

274,335

295,912

6.01.02.09

Trade payables

191,100

-251,948

6.01.02.10

Payroll and related taxes

6,175

90,743

6.01.02.11

Taxes in installments - REFIS

-59,898

-20,231

6.01.02.13

Payables to related parties

45,133

-3,122

6.01.02.15

Interest paid

-1,733,891

-1,356,808

6.01.02.16

Interest received

13,595

2,420

6.01.02.17

Interest on swaps paid

-1,279

-3,434

6.01.02.18

Other

17,463

-35,327

6.02

Net cash used in investing activities

-1,005,313

-1,410,481

6.02.01

Investments

-49,679

-83,111

6.02.02

Purchase of property, plant and equipment

-1,092,393

-1,048,763

6.02.07

Purchase of intangible assets

0

-11

6.02.08

Related parties loans

-31,506

-299,167

6.02.09

Receipt of related parties loans

168,265

20,150

6.02.10

Cash from merger of subsidiaries

0

421

6.03

Net cash used in financing activities

469,338

-1,139,453

6.03.01

Borrowings and financing raised

1,364,400

557,517

6.03.02

Borrowings and financing raised - related parties

1,528,240

0

6.03.03

Repayment of borrowings

-1,127,864

-414,053

6.03.04

Repayment of borrowings - related parties

-124,215

-126,181

6.03.05

Dividends and interest on capital paid

-424,935

-1,156,736

6.03.06

Treasury shares

-746,288

0

6.05

Increase (decrease) in cash and cash equivalents

270,658

-1,458,693

6.05.01

Cash and equivalents at the beginning of the period

206,624

2,995,757

6.05.02

Cash and equivalents at the end of the period

477,282

1,537,064

 

PAGE 7 of 83

 


 

 

     
 

 

 

 

Parent Company Statements / Statement of Changes in Shareholders´ Equity - 1/1/2014 to 9/30/2014

 

(R$ thousand)

           

 

Code

Description

Paid-in capital

Capital reserve, granted options and treasury shares

Earnings reserve

Retained earnings/

(accumulated losses)

Other comprehensive income

Shareholders´ Equity

5.01

Opening balances

4,540,000

30

2,839,568

0

716,972

8,096,570

5.03

Adjusted opening balances

4,540,000

30

2,839,568

0

716,972

8,096,570

5.04

Capital transactions with shareholders

0

0

-1,171,288

0

0

-1,171,288

5.04.04

Treasury shares acquired

0

0

-746,288

0

0

-746,288

5.04.06

Dividends

0

0

-425,000

0

0

-425,000

5.04.08

Cancelled of treasury shares

0

0

679,618

0

0

679,618

5.04.09

Cancelled of treasury shares

0

0

-679,618

0

0

-679,618

5.05

Total comprehensive income

0

0

0

-173,056

-869,442

-1,042,498

5.05.01

Profit for the period

0

0

0

-173,056

0

-173,056

5.05.02

Other comprehensive income

0

0

0

0

-869,442

-869,442

5.05.02.04

Cumulative translation adjustments for the period

0

0

0

0

-26,602

-26,602

5.05.02.08

Actuarial (losses) gains on defined benefit pension plan, net of taxes

0

0

0

0

1,710

1,710

5.05.02.09

Available-for-sale financial assets, net of taxes

0

0

0

0

-771,496

-771,496

5.05.02.10

Loss/gain on the percentage variation of investments

0

0

0

0

-73,054

-73,054

5.07

Closing balances

4,540,000

30

1,668,280

-173,056

-152,470

5,882,784

                         

 

 

PAGE 8 of 83

 


 

 

     
 

 

 

 

Parent Company Statements / Statement of Changes in Shareholders´ Equity - 1/1/2013 to 9/30/2013

 

(R$ thousand)

           

 

Code

Description

Paid-in capital

Capital reserve, granted options and treasury shares

Earnings reserve

Retained earnings/

(accumulated losses)

Other comprehensive income

Shareholders´ Equity

5.01

Opening balances

4,540,000

30

3,690,543

0

386,324

8,616,897

5.03

Adjusted opening balances

4,540,000

30

3,690,543

0

386,324

8,616,897

5.04

Capital transactions with shareholders

0

0

-560,000

-400,026

0

-960,026

5.04.06

Dividends

0

0

0

-210,000

0

-210,000

5.04.07

Interest on equity capital

0

0

0

-190,026

0

-190,026

5.04.11

Approval of prior year's proposed dividends

0

0

-560,000

0

0

-560,000

5.05

Total comprehensive income

0

0

0

1,021,477

-171,048

850,429

5.05.01

Profit for the period

0

0

0

1,021,477

0

1,021,477

5.05.02

Other comprehensive income

0

0

0

0

-171,048

-171,048

5.05.02.04

Cumulative translation adjustments for the period

0

0

0

0

128,932

128,932

5.05.02.08

Available-for-sale financial assets, net of taxes

0

0

0

0

-299,980

-299,980

5.07

Closing balances

4,540,000

30

3,130,543

621,451

215,276

8,507,300

                         

 

 

 

 

PAGE 9 of 83

 


 

 

     
 

 

 

 

 

 

Parent Company Statements / Statement of Value Added

 

(R$ thousand)

   
       

Code

Description

 Current year
1/1/2014 to 9/30/2014

Previous year
1/1/2013 to 9/30/2013

7.01

Revenues

11,922,194

12,096,876

7.01.01

Sales of products and services

11,881,880

12,047,163

7.01.02

Other revenues

49,646

48,006

7.01.04

Allowance for (reversal of) doubtful debts

-9,332

1,707

7.02

Raw materials acquired from third parties

-6,967,591

-7,970,108

7.02.01

Costs of sales and services

-6,103,603

-6,990,593

7.02.02

Materials, electric power, outside services and other

-794,338

-994,376

7.02.03

Impairment/recovery of assets

-69,650

14,861

7.03

Gross value added

4,954,603

4,126,768

7.04

Retentions

-747,644

-698,973

7.04.01

Depreciation, amortization and depletion

-747,644

-698,973

7.05

Wealth created

4,206,959

3,427,795

7.06

Value added received as transfer

581,102

1,635,586

7.06.01

Share of profits of investees

471,007

1,339,503

7.06.02

Finance income

97,259

98,895

7.06.03

Other

12,836

197,188

7.07

Wealth for distribution

4,788,061

5,063,381

7.08

Wealth distributed

4,788,061

5,063,381

7.08.01

Personnel

961,743

795,133

7.08.01.01

Salaries and wages

749,074

617,705

7.08.01.02

Benefits

160,345

132,127

7.08.01.03

Severance pay fund (FGTS)

52,324

45,301

7.08.02

Taxes, fees and contributions

640,026

440,244

7.08.02.01

Federal

510,356

309,068

7.08.02.02

State

111,656

114,238

7.08.02.03

Municipal

18,014

16,938

7.08.03

Lenders and lessors

3,359,348

2,806,527

7.08.03.01

Interest

2,747,158

1,977,339

7.08.03.02

Leases

7,326

7,638

7.08.03.03

Other

604,864

821,550

7.08.04

Shareholders

-173,056

1,021,477

7.08.04.01

Interest on equity capital

0

190,026

7.08.04.02

Dividends

0

210,000

7.08.04.03

Retained earnings (accumulated losses) for the period

-173,056

621,451

 

PAGE 10 of 83

 


 

 

     
 

 

 

 

 

Consolidated Financial Statements / Balance Sheet - Assets

 

(R$ thousand)

   
       

Code

Description

Current Quarter
9/30/2014

Previous Year
12/31/2013

1

Total assets

49,731,948

50,402,539

1.01

Current assets

15,597,390

16,402,042

1.01.01

Cash and cash equivalents

8,971,362

9,995,672

1.01.03

Trade receivables

1,487,952

2,522,465

1.01.04

Inventories

3,856,384

3,160,985

1.01.08

Other current assets

1,281,692

722,920

1.02

Non-current assets

34,134,558

34,000,497

1.02.01

Long-term receivables

4,587,176

4,636,608

1.02.01.02

Investments measured at amortized cost

32,539

30,756

1.02.01.06

Deferred taxes

3,354,960

2,770,527

1.02.01.09

Other non-current assets

1,199,677

1,835,325

1.02.02

Investments

13,204,192

13,487,023

1.02.03

Property, plant and equipment

15,341,609

14,911,426

1.02.04

Intangible assets

1,001,581

965,440

           

 

 

 

PAGE 11 of 83

 


 

 

     
 

 

 

 

 

Consolidated Financial Statements / Balance Sheet - Liabilities

 

(R$ thousand)

   
       

Code

Description

Current Quarter
9/30/2014

Previous Year
12/31/2013

2

Total liabilities

49,731,948

50,402,539

2.01

Current liabilities

7,155,426

5,564,230

2.01.01

Payroll and related taxes

253,595

208,921

2.01.02

Trade payables

1,469,748

1,102,037

2.01.03

Taxes payable

289,221

304,095

2.01.04

Borrowings and financing

3,657,719

2,642,807

2.01.05

Other payables

974,061

972,851

2.01.06

Provisions

511,082

333,519

2.01.06.01

Provision for tax, social security, labor and civil risks

511,082

333,519

2.02

Non-current liabilities

36,654,387

36,769,250

2.02.01

Borrowings and financing

25,061,112

25,103,623

2.02.02

Other payables

10,435,163

10,061,571

2.02.03

Deferred taxes

237,707

268,833

2.02.04

Provisions

920,405

1,335,223

2.02.04.01

Provision for tax, social security, labor and civil risks

199,139

479,664

2.02.04.02

Other provisions

721,266

855,559

2.02.04.02.03

Provision for environmental liabilities and asset retirement obligation - ARO

236,161

370,454

2.02.04.02.04

Pension and healthcare plan

485,105

485,105

2.03

Shareholders’ equity

5,922,135

8,069,059

2.03.01

Issued capital

4,540,000

4,540,000

2.03.02

Capital reserves

30

30

2.03.04

Earnings reserves

1,668,280

2,839,568

2.03.04.01

Legal reserve

361,641

361,641

2.03.04.02

Statutory reserve

1,373,309

2,477,927

2.03.04.09

Treasury shares

-66,670

0

2.03.05

Retained earnings/Accumulated losses

-173,056

0

2.03.08

Other comprehensive income

-152,470

716,972

2.03.09

Non-controlling interests

39,351

-27,511

 

 

PAGE 12 of 83

 


 

 

     
 

 

 

 

Consolidated Financial Statements / Statements of Income

 

 

 

(R$ thousand)

   

 

 

 

 

 

 

 

 

Code

Description

Current Quarter

7/1/2014 to 9/30/2014

Current Year

1/1/2014 to 9/30/2014

Same Quarter of

Previous Year 7/1/2013 to 9/30/2013

Previous Year

1/1/2013 to 9/30/2013

3.01

Net revenue from sales and/or services

3,882,986

12,306,271

4,661,416

12,363,601

3.02

Cost of sales and/or services

-2,911,961

-8,693,082

-3,259,211

-9,131,010

3.03

Gross profit

971,025

3,613,189

1,402,205

3,232,591

3.04

Operating expenses/income

-244,156

-1,216,581

-238,753

-869,689

3.04.01

Selling expenses

-268,052

-691,619

-208,791

-666,415

3.04.02

General and administrative expenses

-110,470

-338,494

-105,862

-338,909

3.04.04

Other operating income

27,471

44,937

10,083

35,289

3.04.05

Other operating expenses

-90,686

-316,094

-142,641

-407,392

3.04.06

Share of profits of investees

197,581

84,689

208,458

507,738

3.05

Profit before finance income (costs) and taxes

726,869

2,396,608

1,163,452

2,362,902

3.06

Finance income (costs)

-944,459

-2,500,593

-597,118

-1,582,220

3.06.01

Finance income

42,735

134,217

59,280

157,382

3.06.02

Finance costs

-987,194

-2,634,810

-656,398

-1,739,602

3.06.02.01

Net exchange gains (losses) on financial instruments

-77,250

-193,453

4,844

39,681

3.06.02.02

Finance costs

-909,944

-2,441,357

-661,242

-1,779,283

3.07

Loss (profit) before taxes on income

-217,590

-103,985

566,334

780,682

3.08

Income tax and social contribution

-32,798

-75,274

-63,446

240,408

3.09

Profit from continuing operations

-250,388

-179,259

502,888

1,021,090

3.11

Consolidated Profit and Loss

-250,388

-179,259

502,888

1,021,090

3.11.01

Attributed to owners of the Company

-250,105

-173,056

499,682

1,021,477

3.11.02

Attributed to non-controlling interests

-283

-6,203

3,206

-387

3.99

Earnings per share - (R$/share)

 

 

 

 

3.99.01

Basic earnings per share

 

 

 

 

3.99.01.01

Common shares

-0.18008

 

-0.12105

 

0.34272

 

0.70062

3.99.02

Diluted earnings per share

 

 

 

 

3.99.02.01

Common shares

-0.18008

-0.12105

0.34272

0.70062

                   

 

PAGE 13 of 83

 


 

 

     
 

 

 

 

 

Consolidated Financial Statements / Statement of Comprehensive Income

 

 

(R$ thousand)

   

 

 

Code

Description

Current Quarter
7/1/2014 to 9/30/2014

 Current Year
1/1/2014 to 9/30/2014

Same Quarter of

Previous Year

7/1/2013 to 9/30/2013

Previous

Year

1/1/2013 to 9/30/2013

4.01

Consolidated profit for the period

-250,388

-179,259

502,888

1,021,090

4.02

Other comprehensive income

-98,799

-869,442

399,378

-171,048

4.02.01

Cumulative translation adjustments for the period

60,745

-26,602

47,884

128,932

4.02.02

Actuarial (losses) gains on defined benefit pension plan from investments in

0

1,710

0

0

 

subsidiaries

   

 

 

4.02.03

Available-for-sale financial assets

-151,034

-1,241,037

532,567

-459,517

4.02.04

Income tax and social contribution on available-for-sale financial assets

51,351

421,952

-181,073

156,236

4.02.05

Impairment of available-for-sale financial assets

19,989

72,104

0

5,002

4.02.06

Income tax and social contribution on available-for-sale financial assets

-6,796

-24,515

0

-1,701

4.02.07

(Loss)/gain on the percentage variation of investments

-73,054

-73,054

0

0

4.03

Consolidated comprehensive income for the period

-349,187

-1,048,701

902,266

850,042

4.03.01

Attributed to owners of the Company

-348,904

-1,042,498

899,060

850,429

4.03.02

Attributed to non-controlling interests

-283

-6,203

3,206

-387

 

 

PAGE 14 of 83

 


 

 

     
 

 

 

 

 

Consolidated Financial Statements / Statement of Cash Flows – Indirect Method

(R$ thousand)

   

Code

Description

Current Year
01/01/2014 to 9/30/2014

Previous Year
01/01/2013 to 9/30/2013

6.01

Net cash generated by operating activities

600,432

1,401,537

6.01.01

Cash generated from operations

2,644,889

3,765,285

6.01.01.01

Profit for the period attributable to owners of the Company

-173,056

1,021,477

6.01.01.02

Profit (loss) for the period attributable to non-controlling interests

-6,203

-387

6.01.01.03

Charges on borrowings and financing

2,056,128

1,597,890

6.01.01.04

Charges on loans and financing granted

-30,671

-33,593

6.01.01.05

Depreciation, depletion and amortization

934,555

868,884

6.01.01.06

Share of profits of investees

-84,689

-507,738

6.01.01.07

Deferred income tax and social contribution

-332,332

-527,544

6.01.01.08

Provision for tax, social security, labor, civil and environmental risks

-42,306

49,430

6.01.01.09

Monetary variation and exchange differences, net

185,777

1,272,140

6.01.01.10

Gain (loss) on derivative transactions

1,395

18,693

6.01.01.11

Impairment of available-for-sale financial assets

72,104

5,002

6.01.01.16

Residual value of permanent assets written off

12,935

26,805

6.01.01.17

Other provisions

51,252

-25,774

6.01.02

Changes in assets and liabilities

-2,044,457

-2,363,748

6.01.02.01

Trade receivables - third parties

315,486

-213,722

6.01.02.02

Trade receivables - related parties

-145,262

-26,814

6.01.02.03

Inventories

-769,929

20,856

6.01.02.04

Receivables from related parties

1,963

-29,758

6.01.02.05

Recoverable taxes

47,995

27,095

6.01.02.06

Judicial deposits

-34,323

14,132

6.01.02.07

Dividends received from related parties

232,383

268,470

6.01.02.08

Trade payables

408,619

-771,473

6.01.02.09

Payroll and related taxes

27,527

105,464

6.01.02.10

Taxes in installments - REFIS

-43,397

38,181

6.01.02.12

Payables to related parties

2,600

-3,173

6.01.02.14

Interest paid

-2,103,382

-1,772,921

6.01.02.15

Interest received - related parties

13,595

20,393

6.01.02.16

Interest on swaps paid

-1,279

-3,434

6.01.02.17

Other

2,947

-37,044

6.02

Net cash used in investing activities

-1,239,860

-1,446,979

6.02.02

Investments

-8,376

0

6.02.03

Purchase of property, plant and equipment

-1,292,180

-1,749,615

6.02.09

Receipt/payment in derivative transactions

-73,670

332,655

6.02.10

Purchase of intangible assets

-610

-70

6.02.11

Related parties loans

-31,506

-301

6.02.12

Receipt of related parties loans

168,265

0

6.02.13

Investment, net of redeemed amount

-1,783

-29,648

6.03

Net cash used in financing activities

-771,732

-411,840

6.03.01

Borrowings and financing raised

1,630,664

1,228,957

6.03.02

Repayment of borrowings

-1,175,234

-489,485

6.03.04

Dividends and interest on capital paid

-424,935

-1,156,736

6.03.05

Capital contribution by non-controlling shareholders

0

5,424

6.03.06

Treasury shares

-746,288

0

6.03.07

Repurchase of debt securities

-55,939

0

6.04

Exchange differences on translating cash and cash equivalents

386,850

-287,664

6.05

Increase (decrease) in cash and cash equivalents

-1,024,310

-744,946

6.05.01

Cash and equivalents at the beginning of the period

9,995,672

11,891,821

6.05.02

Cash and equivalents at the end of the period

8,971,362

11,146,875

 

PAGE 15 of 83

 


 

 

     
 

 

 

 

Consolidated Financial Statements / Statement of Changes in Shareholders´ Equity - 1/1/2014 to 9/30/2014

(R$ thousand)

               

Code

Description

Paid-in capital

Capital reserve, granted options and treasury shares

Earnings reserve

Retained earnings/

(accumulated losses)

Other comprehensive income

Shareholders´ Equity

Non-controlling interests

Consolidated shareholders' equity

5.01

Opening balances

4,540,000

30

2,839,568

0

716,972

8,096,570

-27,511

8,069,059

5.03

Adjusted opening balances

4,540,000

30

2,839,568

0

716,972

8,096,570

-27,511

8,069,059

5.04

Capital transactions with shareholders

0

0

-1,171,288

0

0

-1,171,288

0

-1,171,288

5.04.04

Treasury shares acquired

0

0

-746,288

0

0

-746,288

0

-746,288

5.04.06

Dividends

0

0

-425,000

0

0

-425,000

0

-425,000

5.04.08

Cancelled of treasury shares

0

0

679,618

0

0

679,618

0

679,618

5.04.09

Cancelled of treasury shares

0

0

-679,618

0

0

-679,618

0

-679,618

5.05

Total comprehensive income

0

0

0

-173,056

-869,442

-1,042,498

-6,203

-1,048,701

5.05.01

Profit for the period

0

0

0

-173,056

0

-173,056

-6,203

-179,259

5.05.02

Other comprehensive income

0

0

0

0

-869,442

-869,442

0

-869,442

5.05.02.04

Cumulative translation adjustments for the period

0

0

0

0

-26,602

-26,602

0

-26,602

5.05.02.08

Actuarial (losses) gains on defined benefit pension plan, net of taxes

0

0

0

0

1,710

1,710

0

1,710

5.05.02.09

Available-for-sale financial assets, net of taxes

0

0

0

0

-771,496

-771,496

0

-771,496

5.05.02.10

Loss/gain on the percentage variation of investments

0

0

0

0

-73,054

-73,054

0

-73,054

5.06

Internal changes in shareholders´equity

0

0

0

0

0

0

73,065

73,065

5.06.04

Non-controlling interest in subsidiaries

0

0

0

0

0

0

73,065

73,065

5.07

Closing balances

4,540,000

30

1,668,280

-173,056

-152,470

5,882,784

39,351

5,922,135

 

 

 

 

PAGE 16 of 83

 


 

 

     
 

 

 

 

Consolidated Financial Statements / Statement of Changes in Shareholders´ Equity - 1/1/2013 to 9/30/2013

(R$ thousand)

               

Code

Description

Paid-in capital

Capital reserve, granted options and treasury shares

Earnings reserve

Retained earnings/

(accumulated losses)

Other comprehensive income

Shareholders´ Equity

Non-controlling interests

Consolidated shareholders' equity

5.01

Opening balances

4,540,000

30

3,690,543

0

386,324

8,616,897

390,616

9,007,513

5.03

Adjusted opening balances

4,540,000

30

3,690,543

0

386,324

8,616,897

390,616

9,007,513

5.04

Capital transactions with shareholders

0

0

-560,000

-400,026

0

-960,026

0

-960,026

5.04.06

Dividends

0

0

0

-210,000

0

-210,000

0

-210,000

5.04.07

Interest on capital

0

0

0

-190,026

0

-190,026

0

-190,026

5.04.11

Approval of additional dividends at Annual General Meeting

0

0

-560,000

0

0

-560,000

0

-560,000

5.05

Total comprehensive income

0

0

0

1,021,477

-171,048

850,429

-387

850,042

5.05.01

Profit for the period

0

0

0

1,021,477

0

1,021,477

-387

1,021,090

5.05.02

Other comprehensive income

0

0

0

0

-171,048

-171,048

0

-171,048

5.05.02.04

Cumulative translation adjustments for the period

0

0

0

0

128,932

128,932

0

128,932

5.05.02.08

Available-for-sale financial assets, net of taxes

0

0

0

0

-299,980

-299,980

0

-299,980

5.06

Internal changes in shareholders' equity

0

0

0

0

0

0

9,585

9,585

5.06.04

Non-controlling interests in subsidiaries

0

0

0

0

0

0

9,585

9,585

5.07

Closing balances

4,540,000

30

3,130,543

621,451

215,276

8,507,300

399,814

8,907,114

 

 

 

PAGE 17 of 83

 


 

 

     
 

 

 

 

 

Consolidated Financial Statements / Statement of Value Added

(R$ thousand)

   
       

Code

Description

Current year
1/1/2014 to 9/30/2014

Previous year
1/1/2013 to 9/30/2013

7.01

Revenues

14,684,931

14,859,753

7.01.01

Sales of products and services

14,643,220

14,797,947

7.01.02

Other revenues

52,594

60,159

7.01.04

Allowance for (reversal of) doubtful debts

-10,883

1,647

7.02

Raw materials acquired from third parties

-9,030,859

-9,705,748

7.02.01

Costs of sales and services

-7,729,543

-8,390,767

7.02.02

Materials, electric power, outside services and other

-1,222,881

-1,344,612

7.02.03

Impairment/recovery of assets

-78,435

29,631

7.03

Gross value added

5,654,072

5,154,005

7.04

Retentions

-934,555

-868,884

7.04.01

Depreciation, amortization and depletion

-934,555

-868,884

7.05

Wealth created

4,719,517

4,285,121

7.06

Value added received as transfer

970,429

2,659,610

7.06.01

Share of profits of investees

84,689

507,738

7.06.02

Finance income

134,217

157,382

7.06.03

Other

751,523

1,994,490

7.07

Wealth for distribution

5,689,946

6,944,731

7.08

Wealth distributed

5,689,946

6,944,731

7.08.01

Personnel

1,270,926

1,091,666

7.08.01.01

Salaries and wages

1,007,607

876,460

7.08.01.02

Benefits

202,041

162,038

7.08.01.03

Severance pay fund (FGTS)

61,278

53,168

7.08.02

Taxes, fees and contributions

1,220,251

1,087,961

7.08.02.01

Federal

1,012,091

771,974

7.08.02.02

State

180,115

290,865

7.08.02.03

Municipal

28,045

25,122

7.08.03

Lenders and lessors

3,378,028

3,744,014

7.08.03.01

Interest

2,391,954

1,779,545

7.08.03.02

Leases

11,397

11,512

7.08.03.03

Other

974,677

1,952,957

7.08.04

Shareholders

-179,259

1,021,090

7.08.04.01

Interest on equity capital

0

190,026

7.08.04.02

Dividends

0

210,000

7.08.04.03

Retained earnings (accumulated losses) for the period

-173,056

621,451

7.08.04.04

Non-controlling interests in retained earnings

-6,203

-387

 

PAGE 18 of 83

 


 

 

     
 

 

 

Economic Scenario

The recovery of global economic activity has been occurring at a moderate pace and on heterogeneous way. While among the developed countries, the United States and the United Kingdom have been recording growth, the slower-than-expected recovery in the Eurozone and the less optimistic prospects for certain emerging economies have contributed to more conservative revisions of global growth. The International Monetary Fund (IMF) reduced the global growth projections to 3.3% in 2014 and 3.8% in 2015.

 

USA

 

The latest figures from the U.S. Department of Commerce and the FED indicate an upturn in domestic economic activity. In 3Q14, the U.S. economy recorded growth of 3.5%, reflecting the good performance of exports, investments and consumption, as well as the increase in government spending. In September, industrial production increased by 1.0% over August, giving 12-month growth of 4.3%, and installed capacity use remained at 79% throughout the year.

 

Manufacturing PMI averaged 57.6 points in 3Q14, 2.4 points above the average in the previous quarter and continuing the expansion that began in June 2013.

 

In September 2014, the unemployment rate reached 5.9%, the lowest level for the last six years, giving a year-to-date decline of 1.3 p.p.

 

At its last meeting in October, the FED's Monetary Policy Committee (FOMC) announced the end of the securities purchase program, designed to stimulate the economy, maintaining interest rates at between 0 and 0.25%. The Committee considered it appropriate to maintain interest at this level for a considerable period of time, especially in a scenario of inflation lower than the 2% target.

 

As a result, the FED estimates GDP growth of between 2.0% and 2.2% in 2014.

 

Europe

 

The European recovery continues at a slower pace. After four quarters of moderate expansion, 2Q14 GDP in the Eurozone remained virtually flat. Industrial output fell by 1.8% in August over July, chiefly reflecting the 4.8% reduction in capital goods production, while the manufacturing PMI declined from 52.8 points in June to 52.0 points in September, the lowest figure in the last ten months.

 

Eurozone unemployment rate remained stable, but still high, recording 11.5% in September. Austria and Germany recorded the lowest rates among the countries, while Greece and Spain had the highest.

 

Eurozone inflation came to 0.3% in the 12 months ended September 2014, well below the long-term goal of 2% established by the European Central Bank (ECB) and the lowest figure since October 2009. Certain countries such as Spain, Greece, Hungary and Bulgaria actually recorded negative inflation in the same period. In this context, the ECB implemented new measures to stimulate the economy, including the repurchase of securities, with a minimum duration of two years. The institution expects a GDP growth of 0.9% in 2014 and 1.6% in 2015.

 

UK GDP expanded for the seventh consecutive quarter, moving up by 0.7% in 3Q14, fueled by the service and construction sectors, which grew by 0.7% and 0.8%, respectively. The British Chamber of Commerce estimates annual GDP growth of 3.2% in 2014.

 

The labor market continues to improve, with unemployment between June and August 2014 declining by 6%, the lowest level since the end of 2008 and 0.4 p.p. less than in the previous three-month period from March to May. In the year through September, inflation fell to 1.2%, below the 1.5% recorded through August.

 

Asia

 

 

PAGE 19 of 83

 


 

 

     
 

 

 

 

Preliminary 3Q14 figures from the National Bureau of Statistics point to Chinese GDP growth of 7.3% over 3Q13, below the 7.5% recorded in 2Q14. In 9M14, the Chinese economy grew by 7.4% over 9M13, slightly below the 7.5% target established by the government.

 

In September 2014, the manufacturing PMI published by HSBC reached 50.2 points, continuing the expansion begun in June. Industrial production increased by 8.0% in September, higher than the 6.9% registered in August. In the first nine months, investments in fixed assets moved up by 16%, less than the 20% recorded in 9M13.

 

Manufacturing PMI also continued to expand in Japan, reaching 51.7 points in September. Unemployment rate recorded 3.5% in August, the lowest rate since July 2007. At its last monetary policy meeting, the Central Bank of Japan (BoJ) increased the ceiling of the security buyback program from between 60 and 70 trillion yen, to 80 trillion yen per year, maintaining interest at 0.1%. The BoJ’s long-term inflation target is 2% p.y. and it is projecting GDP growth of 1.0% in 2014.

 

Brazil

 

In Brazil, the economic fundamentals remain unfavorable, with GDP declining by 0.6% in 2Q14, following the 0.2% slide in 1Q14 over 4Q13. The 2Q14 result was primarily due to the negative performance of the industrial (-1.5%) and service (-0.5%) sectors. September’s activity indicators, notably industrial production, suggest a further slowdown in the third quarter. Industrial output fell by 0.2% in September over August, largely due to the 1.6% reduction in the production of intermediate goods, giving a year-to-date downturn of 2.9%. The Central Bank’s Focus report expects GDP growth of 0.2% in 2014 and 0.8% in 2015.

 

According to CAGED (the employment and unemployment registry), 80,000 new registered jobs were created in September, 41% down on the same month last year and the worst result since mid-2001. In the year through September, a net total of 905 thousand formal jobs were created.

 

Inflation recorded by the IPCA consumer price index moved up by 0.57% in September, giving year-to-date and last-12-month growth of 4.61% and 6.75%, respectively, exceeding the 6.5% ceiling of the annual inflation target. Given this scenario, at its last meeting in October, the Monetary Policy Committee (COPOM) raised the Selic base rate once again, this time to 11.25% p.a. The Focus report expects 2014 inflation of 6.39%, with a Selic of 11.50% at year-end.

 

On the foreign exchange front, the real depreciated by 11.3% against the U.S. dollar in 3Q14, closing September at R$2.451/US$, reflecting greater risk aversion in the domestic market, coupled with international factors such as the end of the U.S. government’s security repurchase program and a possible increase in interest rates by the FED.

 

Macroeconomic Projections

 

 

 

2014

2015

IPCA (%)

6.39

6.40

Commercial dollar (final) – R$

2.50

2.60

SELIC (final - %)

11.50

12.00

GDP (%)

0.20

0.80

Industrial Production (%)

-2.21

1.46

Source: FOCUS BACEN                   Base: 11/07/2014

Net Revenue

In the third quarter, consolidated net revenue totaled R$3,883 million, 4% down on the R$4,052 million recorded in 2Q14, chiefly influenced by the reduction in mining revenue, due to lower iron ore prices in the international market.

 

 

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Cost of Goods Sold (COGS)

COGS totaled R$2,912 million in 3Q14, 6% up on the R$2,747 million posted in 2Q14, basically due to a nominal increase in COGS from steel operations, given non-recurring adjustments booked in 2Q14.

Selling, General, Administrative and Other Operating Expenses

Consolidated SG&A expenses totaled R$379 million in 3Q14, 6% more than the R$358 million reported in 2Q14, due to higher selling expenses. 

 

Other Operating Revenue/Expenses came to R$63 million in 3Q14, versus R$31 million in 2Q14, basically due to the write-off of judicial deposits.

EBITDA

 

The Company uses Adjusted EBITDA to measure the segments' performance and operating cash flow capacity. It comprises net income before the net financial result, income and social contribution taxes, depreciation and amortization, results from investees and other operating revenue (expenses), plus the proportional EBITDA of the jointly-owned subsidiaries, Namisa, MRS Logística and CBSI.

 

Third-quarter adjusted EBITDA amounted to R$977 million, 25% less than the R$1,303 million posted in 2Q14, basically due to the lower contribution from steel and mining operations, accompanied by a margin of 23%, down by 7 p.p. over 2Q14.

 

 

                                                                

Financial Result and Net Debt

In 3Q14, CSN’s consolidated net financial result was negative by R$944 million, mainly due to the following factors:

 

·         Interest on loans and financing totaling R$707 million;

·         The R$119 million effect related to the complement of interest on contingencies included in the tax repayment program REFIS (Law 11941/09);

·         Monetary and foreign exchange variations amounting to R$77 million;

·         Expenses of R$40 million with the monetary restatement of tax payment installments;

·         Other financial expenses totaling R$44 million.

 

These negative effects were partially offset by consolidated financial revenue of R$43 million.

 

Gross debt, net debt and the net debt/EBITDA ratio presented below reflect the Company’s proportional interest in Namisa, MRS Logística and CBSI, as well as the impact from the partial spin-off of Transnordestina Logística S/A.

 

At the close of September 30, 2014, net debt stood at R$17.6 billion, R$0.9 billion more than on June 30, 2014. The net debt/EBITDA ratio based on LTM adjusted EBITDA closed the third quarter at 3.2x, 0.5x more than the 2.7x recorded at the end of 2Q14. Net debt was impacted by the following factors:

 

·         Investments of R$0.6 billion in fixed assets;

·         A R$0.7 billion effect related to the cost of debt;

 

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·         Foreign exchange variation of R$0.4 billion;

·         Disbursements of R$0.3 billion on the share buyback program.

 

These negative effects were partially offset by 3Q14 EBITDA of R$1.0 billion and the R$0.1 billion reduction in working capital.

 

 

 

Indebtedness (R$ million) and Net Debt /Adjusted EBITDA ratio

 

Equity Result

CSN’s equity result was positive by R$198 million in 3Q14, versus a negative R$67 million in 2Q14, chiefly due to the result of the jointly-owned subsidiary Namisa.

Net Income

In the third quarter, the Company posted a consolidated net loss of R$250 million, basically reflecting the lower operating result in the quarter.

Capex

Investments reflect the Company’s proportional interest in Namisa, MRS Logística and CBSI. The Company has ceased consolidating its interest in Transnordestina Logística S/A, due to the partial spin-off on December 27, 2013 and the consequent entry into effect of the new shareholders’ agreement.

 

CSN invested R$613 million in 3Q14. Of this total, the main investments were R$156 million in mining, R$128 million in steel, R$203 million in cement and R$108 million in logistic.

Working Capital

In the third quarter, the Company reviewed the balance of the accounts composing its working capital, which includes Inventories, Suppliers, Salaries and Taxes. For comparison purposes, 2Q14 working capital was recalculated and reduced by R$493 million.

 

At the close of 3Q14, working capital applied to the Company’s businesses totaled R$2,094 million, a reduction of R$144 million compared to 2Q14, particularly due to the reduction in accounts receivable and the increase in salaries and social contributions, partially offset by higher inventories.

 

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The average receivables period contracted by five days, the average payment period by one day, while the average inventory turnover period widened by seven days.

       
WORKING CAPITAL (R$ MM)
2Q14 3Q14 Change
3Q14 x 2Q14 
Assets  4,602  4,523  (79) 
Accounts Receivable  1,716  1,406  (309) 
Inventory (*)  2,766  2,997  231 
Advances to Taxes  121  119  (1) 
Liabilities  2,363  2,429  65 
Suppliers  1,567  1,509  (58) 
Salaries and Social Contribution  284  358  74 
Taxes Payable  481  539  58 
Advances from Clients  31  23  (8) 
Working Capital  2,239  2,094  (145) 
 
TURNOVER RATIO
Average Periods 
2Q14 3Q14 Change
3Q14 x 2Q14 
Receivables  31  26  (5) 
Supplier Payment  49  48  (1) 
Inventory Turnover  87  94  7 
Cash Conversion Cycle  69  72  3 
(*) Inventory - includes "Advances to Suppliers" and does not include "Supplies". 
 

Results by Segment

The Company maintains integrated operations in five business segments: steel, mining, logistics, cement and energy. The main assets and/or companies comprising each segment are presented below:

 

         
Steel  Mining  Logistics  Cement  Energy 
Usina Presidente Vargas  Casa de Pedra  Railways:  Volta Redonda  CSN Energia 
Porto Real  Namisa (60%)  - MRS  Arcos  Itasa 
Paraná  Tecar  - FTL     
LLC  ERSA  - TLSA     
Lusosider    Port:     
Prada (Distribution and    - Sepetiba Tecon     
Packaging)         
Metalic         
SWT         

 

The information on CSN’s five business segments is derived from the accounting data, together with allocations and the apportionment of costs among the segments. Results by segment reflect the Company’s proportional interest in Namisa, MRS Logística and CBSI, as well as the full consolidation of FTL.

 

 

Net revenue by segment (R$ million)

 

 
  

 

 

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Results by segment                 
R$ million                3Q14 
 
Consolidated Results  Steel  Mining   Logistics (Port)  Logistics
(Railways)
Energy  Cement   Corporate/
Eliminations
Consolidated 
Net Revenue  2,788  914  39  335  97  120  (410)  3,883 
Domestic Market  2,138  71  39  335  97  120  (316)  2,484 
Foreign Market  649  843  -  -  -  -  (94)  1,399 
Cost of Goods Sold  (2,173)  (796)  (33)  (219)  (49)  (86)  445  (2,912) 
Gross Profit  614  118  7  115  48  34  35  971 
Selling, General and Administrative Expenses  (161)  (13)  -  (25)  (5)  (18)  (155)  (379) 
Depreciation  205  99  3  42  4  10  (37)  326 
Proportional EBITDA of Jointly Controlled Companies  -  -  -  -  -  -  58  58 
Adjusted EBITDA  658  203  10  132  47  26  (99)  977 
 
R$ million                2Q14 
Consolidated Results  Steel  Mining   Logistics
(Port)
 Logistics
(Railways)
Energy  Cement   Corporate/
Eliminations
Consolidated 
Net Revenue  2,843  1,117  47  226  87  113  (380)  4,052 
Domestic Market  2,185  82  47  226  87  113  (211)  2,529 
Foreign Market  657  1,035  -  -  -  -  (169)  1,523 
Cost of Goods Sold  (2,083)  (740)  (31)  (156)  (49)  (72)  385  (2,747) 
Gross Profit  759  377  16  70  38  42  5  1,306 
Selling, General and Administrative Expenses  (168)  (20)  -  (21)  (5)  (17)  (126)  (358) 
Depreciation  202  85  2  39  4  9  (45)  296 
Proportional EBITDA of Jointly Controlled Companies  -  -  -  -  -  -  58  58 
Adjusted EBITDA  793  442  18  87  37  34  (107)  1,303 

 

 

Steel

Scenario

 

According to the World Steel Association (WSA), global crude steel production totaled 1.2 billion tonnes in the first nine months of 2014, 2% higher than in 9M13, the same percentage growth recorded in China, which was responsible for 618 million tonnes. Global capacity use reached 76% in September 2014, 2 p.p. down on June. For 2014, the WSA expects a 2% growth in world apparent steel consumption and an increase of 1% in China.

 

 

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According to the Brazilian Steel Institute (IABr), domestic crude steel production came to 25.5 million tonnes in 9M14, down 1% on 9M13, while rolled flat output totaled 18.7 million tonnes, down by 5%. Flat steel apparent consumption in 9M14 reached 9.0 million tonnes, 3% less year-on-year, with domestic sales totaling 8.4 million tonnes, 8% down on 9M13. On the other hand, flat steel imports climbed by 26% to 1.8 million tonnes, while exports fell by 3% to 1.2 million tonnes.

 

The IABr reduced its estimates for domestic steel product sales from 23.7 to 21.7 million tonnes in 2014, with apparent consumption moving down from 27.2 to 25.3 million tonnes.

 

Automotive

 

According to ANFAVEA (the Auto Manufacturers’ Association), Brazil’s vehicle production totaled 2.4 million units in 9M14, 17% less than the 2.9 million vehicles produced in 9M13. It is important mentioning truck production, which fell by 24%, followed by vehicles, light commercial vehicles and buses, down by 17%, 14% and 12%, respectively.

 

Vehicle sales declined by 9% in 9M14 over 9M13, led by the bus and trucks segments, with respective downturn of 17% and 14%, partially offset by the 1% growth in the light commercial vehicle segment. Exports fell by 39% year-on-year in the first nine months, basically influenced by the lower sales to Argentina.

 

In this scenario, ANFAVEA revised its estimates for 2014, estimating reduction of 10% in production and 5% in vehicle sales over 2013.

 

With relation to light vehicles, FENABRAVE (the Vehicle Distributors’ Association) registered reduction of 8% in the number of vehicles licensed, from 2.6 million units in 9M13 to 2.4 million units in 9M14. The association expects 2014 light vehicle sales to fall by 8% over last year.

 

Construction

 

According to ABRAMAT (the Construction Material Manufacturers’ Association), sales of building material in the last twelve months ended in September 2014 fell by 4.9% over the same period in 2013. In this context, the association revised its estimates for 2014, to a reduction of 4% in sales.

 

Home Appliances

 

According to the IBGE (Brazilian Institute of Geography and Statistics), home appliance production grew by 17% in 3Q14 over 2Q14, with expansion of 3% in the first nine months of 2014 over 9M13.

 

Distribution

 

According to INDA (the Brazilian steel distributors’ association), flat steel sales by domestic distributors totaled 3.3 million tonnes in 9M14, 2% down on the previous year. 9M14 purchases by the associated network came to 3.2 million tonnes, 9.7% down year-on-year, while inventories totaled 1.0 million tonnes at the close of 3Q14, declining by 1% over 2Q14. In this scenario, the association estimates sales to fall by 3% in 2014 over 2013.

 

Sales Volume

 

In 3Q14, CSN’s steel sales totaled 1.27 million tonnes. Of this total, 72% went to the domestic market, 25% were sold by overseas subsidiaries and 3% went to exports.

 

Domestic Sales Volume

 

 

CSN’s domestic steel sales came to 921 thousand tonnes in 3Q14, slightly more than the 918 thousand tonnes sold in 2Q14.

 

 

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Foreign Sales Volume

 

Foreign sales amounted to 353 thousand tonnes in 3Q14, 3% more than in the previous quarter. Of this total, the overseas subsidiaries sold 319 thousand tonnes, 180 thousand tonnes of which by SWT. Direct exports came to 34 thousand tonnes.

 

Prices

 

Net revenue per tonne averaged R$2,130 in 3Q14, a 3.8% reduction over 2Q14, essentially due to the sales mix.

 

Net Revenue

 

Net revenue from steel operations totaled R$2,788 million in 3Q14, 2% down on the R$2,843 million recorded in 2Q14.

 

Cost of Goods Sold (COGS)

 

In 3Q14, steel COGS amounted to R$2,173 million, 4% higher than the 2Q14 figure, basically due to a nominal increase in COGS given non-recurring adjustments booked in 2Q14.

 

Adjusted EBITDA

 

Adjusted steel segment EBITDA totaled R$658 million in 3Q14, 17% down on the R$793 million recorded in 2Q14, due to the aforementioned reasons. The adjusted EBITDA margin came to 24% in 3Q14, 4 p.p. down on 2Q14.

 

Production

 

The Presidente Vargas Steelworks (UPV) produced 1.2 million tonnes of crude steel in 3Q14, 5% more than in 2Q14, with additional consumption of 125,000 slabs purchased from third parties. Third-quarter rolled steel output totaled 1.1 million tonnes, the same level of the previous quarter.

 

 

Production (in thousand t)

2Q14

3Q14

First Nine months of

Change

2013

2014

3Q14 x 2Q14

9M14 X 9M13

Crude Steel (UPV)

1,120

1,177

3,365

3,395

5%

1%

Purchased Slabs from Third Parties

103

125

434

329

21%

-24%

Total Crude Steel

1,222

1,302

3,799

3,724

7%

-2%

Total Rolled Products

1,099

1,097

3,446

3,250

0%

-6%

 

 

 

Production Costs (Parent Company)

 

In 3Q14, total production costs at the Presidente Vargas Steelworks (UPV) came to R$1,651 million, in line with the second-quarter figure.

 

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Mining

 

At the close of 3Q14, seaborne iron ore prices recorded the lowest figure in the last five years, with the Platts Fe62% CFR China index reaching US$77.75/dmt. Compared to the US$134.50/dmt registered in early 2014, the price reduction came to 42%. Pressed by the capacity expansion in Australian mining companies, iron ore prices were still impacted by demand factors, such as the poor performance of the real estate sector in China, the low availability of credit for steelmakers and the high level of iron ore inventories in Chinese ports.

 

In this scenario, the Platts Fe62% CFR China index averaged US$90.21/dmt in 3Q14, 12% down on the 2Q14 average. The iron ore quality premium varied between US$1.45/dmt and US$1.70/dmt per 1% of Fe content, while freight costs on the Tubarão/Qingdao route averaged US$21.06/wmt, 3.7% more than the previous quarter’s average.

 

Brazil exported 92.5 million tonnes of iron ore in the third quarter, 9% up on 2Q14.

Iron ore sales

In 3Q14, sales of finished iron ore products totaled 7.7 million tonnes, 7% up on the 7.2 million tonnes sold in 2Q14. Of this total, 2.6 million tonnes were sold by Namisa1. Almost all iron ore sold in 3Q14 was exported. Iron ore volume for own consumption reached 1.5 million tonnes in 3Q14.

In 9M14, sales of finished iron ore products totaled a record of 21.3 million tonnes, 19% up on 9M13. Of this total, 7.1 million tonnes were sold by Namisa1. Virtually all iron ore sold in 9M14 was exported. In addition to sales to third-parties, CSN’s steel production consumed 4.5 million tonnes in 9M14.

It is important mentioning the record volume of iron ore shipments at Tecar, which totaled 24.4 million tonnes in the first nine months, climbing by 23% year-on-year.

1 Sales volumes include 100% of the stake in NAMISA.

Net Revenue

Net revenue from mining operations totaled R$914 million in 3Q14, 18% less than in 2Q14, primarily due to the reduction in iron ore prices.

Cost of Goods Sold (COGS)

Mining COGS came to R$796 million in 3Q14, 8% up on 2Q14, mostly due to the increase in iron ore sales volume.

Adjusted EBITDA

 

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Adjusted EBITDA from mining operations totaled R$203 million in 3Q14, 54% down on the R$442 million reported in 2Q14, for the above mentioned reasons, accompanied by an adjusted EBITDA margin of 22%.

Logistics

 

Scenario

Railway Logistics

According to the ANTF (the National Rail Transport Association), the Brazilian railways transported 233 million tonnes in 1H14 of useful cargo. The association expects rail cargo volume to move up by 12% to 510 million tonnes between 2014 and 2016.

Port Logistics

 

According to ANTAQ (the National Waterway Transport Agency), Brazil’s port installations handled around 463 million tonnes in 1H14, 6% up on the same period the year before.

 

Also in 1H14, bulk solids totaled 281 million tonnes, 6% more than in 1H13, while container handling in Brazilian ports came to 4.5 million TEUs1, 9% up year-on-year.

1 TEU (Twenty‐Foot Equivalent Unit) – transportation unit equivalent to a standard 20-feet intermodal container

 

Analysis of Results

 

Railway Logistics

 

Net revenue from railway logistics totaled R$335 million in 3Q14. On the other hand, COGS came to R$219 million, and adjusted EBITDA totaled R$132 million, with an adjusted EBITDA margin of 39%.

 

Port Logistics

 

Net revenue from port logistics amounted to R$39 million in 3Q14, COGS totaled R$33 million and adjusted EBITDA came to R$10 million, with an adjusted EBITDA margin of 24%.

 

Cement

 

The Portland Cement Association (PCA) expects global cement production to grow by approximately 4% in 2014, and 4.6% in South America.

 

Analysis of Results

 

Cement sales reached the record level of 589 thousand tonnes in 3Q14, 4% up on 2Q14, with record net revenue of R$120 million, while COGS came to R$86 million, generating EBITDA of R$26 million, with a margin of 22%.

 

Cement sales reached the record level of 1.6 million tonnes in 9M14, 9% more than in 9M13, generating record net revenue of R$331 million, while COGS came to R$223 million, generating record EBITDA of R$86 million, accompanied by a margin of 26%.

Energy

Scenario

 

 

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According to the Energy Research Company (EPE), Brazilian electricity consumption increased by 2.5% year-on-year in the first nine months of 2014, led by the commercial and residential segments, with respective growth of 7.6% and 5.9%.

 

Analysis of Results

 

In 3Q14, net revenue from electricity reached the record amount of R$97 million. COGS came to R$49 million, generating record EBITDA of R$47 million, with an EBITDA margin of 48%.

 

In 9M14, net revenue from electricity reached the record amount of R$249 million. COGS came to R$140 million, generating record EBITDA of R$107 million, with an EBITDA margin of 43%.

Capital Market

 

CSN’s shares depreciated by 7% in 3Q14, while the Company’s ADRs fell by 17% on the NYSE. Daily traded volume in CSN’s shares averaged R$60 million in 3Q14, from 5.7 million shares traded. On the NYSE, daily traded volume in CSN’s ADRs averaged US$25 million, from 5.5 million ADRs traded.

 

 

   
Capital Markets - CSNA3 / SID / IBOVESPA / DOW JONES
  3Q14 
N# of shares  1,387,524 
Market Capitalization   
Closing price (R$/share)  8.70 
Closing price (US$/share)  3.55 
Market Capitalization (R$ million)  12,071 
Market Capitalization (US$ million)  4,926 
Total return including dividends and interest on equity   
CSNA3 (%)  -7% 
SID (%)  -19% 
Ibovespa  7% 
Dow Jones  1% 
Volume   
Average daily (thousand shares)  5,678 
Average daily (R$ Thousand)  59,968 
Average daily (thousand ADRs)  5,513 
Average daily (US$ Thousand)  25,279 
Source: Economática   

 

 

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 (Expressed in thousands of reais – R$, unless otherwise stated)

 

1.     DESCRIPTION OF BUSINESS

 

Companhia Siderúrgica Nacional “CSN”, also referred to as the Company or Parent Company, is a publicly-held company incorporated on April 9, 1941, under the laws of the Federative Republic of Brazil (Companhia Siderúrgica Nacional, its subsidiaries, associates and jointly controlled entities collectively referred to herein as the "Group”). The Company’s registered office is located in São Paulo, SP, Brazil.

                                                               

CSN has shares listed on the São Paulo Stock Exchange (BM&F BOVESPA) and the New York Stock Exchange (NYSE). Accordingly, it reports its information to the Brazilian Securities Commission (CVM) and the U.S. Securities and Exchange Commission (SEC).

 

The Group's main operating activities are divided into five (5) operating segments as follows:

 

·       Steel:

 

The Company’s main industrial facility is the Presidente Vargas Steel Mill (“UPV”), located in the city of Volta Redonda, State of Rio de Janeiro. This segment consolidates the operations related to the production, distribution and sale of flat steel, long steel, metallic containers and galvanized steel. In addition to the facilities in Brazil, CSN has operations in the United States, Portugal and Germany aimed at gaining markets and performing excellent services for final consumers. Its steels are used in the home appliances, civil construction and automobile industries. 

 

·       Mining:

 

The production of iron ore is developed in the city of Congonhas, in the State of Minas Gerais. It further mines tin in the State of Rondônia to supply the needs of UPV, with the excess of these raw materials being sold to subsidiaries and third parties. CSN holds the concession to operate TECAR, a solid bulk terminal, one of the 4 (four) terminals that comprise the Itaguaí Port, in Rio de Janeiro. Importations of coal and coke are carried out through this terminal.

 

·       Cement:

 

CSN entered the cement market boosted by the synergy between this new activity and its already existing businesses. Next to the Presidente Vargas Steel Mill in Volta Redonda (RJ), it installed a new business unit: CSN Cimentos, which produces CP-III type cement by using slag produced by the UPV blast furnaces in Volta Redonda. It also explores limestone and dolomite at the Arches drive in the State of Minas Gerais, to supply the needs of UPV and of the cement plant.

 

·       Logistics

 

Railroads:

 

CSN has equity interests in three railroad companies: MRS Logística S. A., which manages the former Southeast Railway System of Rede Ferroviária Federal S.A., Transnordestina Logística S. A. (“TLSA”) and FTL - Ferrovia Transnordestina Logística S.A. (“FTL”), which operate the Northeast Railway System of RFFSA, in the States of Maranhão, Piauí, Ceará, Rio Grande do Norte, Paraíba, Pernambuco and Alagoas, with TLSA being responsible for the streches of Missão Velha - Salgueiro, Salgueiro - Trindade, Trindade - Eliseu Martins, Salgueiro - Porto de Suape and Missão Velha - Porto de Pecém (Railway System II) and FTL being responsible for the streches of São Luiz - Mucuripe, Arrojado - Recife, Itabaiana - Cabedelo, Paula Cavalcante - Macau and Propriá - Jorge Lins (Railway System I).

 

Ports:

 

In the State of Rio de Janeiro, by means of its subsidiary Sepetiba Tecon S. A., the Company operates the Container Terminal (Tecon) at the Itaguaí Port.  Located in the Bay of Sepetiba, this port has privileged highway, railroad and maritime access.

 

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Tecon handles the shipments of CSN steel products, movement of containers, as well as storage, consolidation and deconsolidation of cargo.

 

·       Energy:

 

As energy is fundamental in its production process, the Company has assets for generation of electric power to guarantee its self-sufficiency.

 

For further details on the Group's segments, see Note 24 - Business Segment Reporting.

 

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

(a)      Basis of preparation

 

The consolidated condensed interim financial statements have been prepared and are being presented in accordance with the International Accounting Standards (IAS 34 – Interim Financial Reporting) issued by the International Accounting Standards Board (IASB), which correlate in Brazil is the CPC 21 (R1) (Interim Financial Statements and Consolidated Interim Financial Statements) issued by the CPC (Accounting Pronouncements Committee) and approved by CVM (Brazilian Securities Commission).

 

The individual condensed interim financial statements have been prepared in accordance with the standards issued by the CPC and the CVM applicable to the preparation of the financial statements.

 

The significant accounting policies applied in these condensed interim financial statements are consistent with the policies described in Note 2 to the Company's financial statements for the year ended December 31, 2013, filed with the CVM.

 

These condensed interim financial statements do not include all requirements of annual or full financial statements and, accordingly, should be read together with the Company's financial statements for the year ended December 31, 2013.

 

Therefore, in these condensed interim financial statements the following notes were not repeated, either due to redundancy or to relevance in relation to those already presented in the annual financial statements:

 

Note 02 – Summary of significant accounting policies

Note 03 – Changes in accounting policies

Note 04 – Business combination

Note 28 – Employee benefits

 

The individual and consolidated condensed interim financial statements were approved by the Board of Directors on November 13, 2014.

 

(b)      Basis of presentation

 

The consolidated condensed interim financial statements are presented in Brazilian reais (R$), which is the Company’s functional currency and the Group’s presentation currency.

 

Transactions in foreign currencies are translated into the functional currency using the exchange rates in effect at the dates of the transactions or valuation on which items are remeasured. The asset and liability balances are translated at the exchange rate in effect at the end of the reporting period. As of September 30, 2014, US$1 is equivalent to R$2.4510 (R$2.3426 as of December 31, 2013), €1 is equivalent to R$3.0954 (R$3.2265 as of December 31, 2013), and ¥1 is equivalent to R$0.02235 (R$0.02233 as of December 31, 2013).

 

(c)      Basis of consolidation

 

 

PAGE 31 of 83

 


 

 

     
 

 

 

The consolidated condensed interim financial statements for the period ended September 30, 2014 and the year ended December 31, 2013 include the following direct and indirect subsidiaries and jointly controlled entities, as well as the exclusive funds as described below:

 

·           Companies

 

   

Equity interests (%)

   

Companies

 

09/30/2014

 

12/31/2013

 

Core business

             

Direct interest in subsidiaries: full consolidation

 

 

 

 

 

 

CSN Islands VII Corp.

 

100.00

 

100.00

 

Financial transactions

CSN Islands VIII Corp.

 

100.00

 

100.00

 

Financial transactions

CSN Islands IX Corp.

 

100.00

 

100.00

 

Financial transactions

CSN Islands X Corp.

 

100.00

 

100.00

 

Financial transactions

CSN Islands XI Corp.

 

100.00

 

100.00

 

Financial transactions

CSN Islands XII Corp.

 

100.00

 

100.00

 

Financial transactions

CSN Minerals S.L.U.

 

100.00

 

100.00

 

Equity interests

CSN Export Europe, S.L.U.

 

100.00

 

100.00

 

Financial transactions and equity interests

CSN Metals S.L.U.

 

100.00

 

100.00

 

Equity interests and financial transactions

CSN Americas S.L.U.

 

100.00

 

100.00

 

Equity interests and financial transactions

CSN Steel S.L.U.

 

100.00

 

100.00

 

Equity interests and financial transactions

TdBB S.A

 

100.00

 

100.00

 

Dormant company

Sepetiba Tecon S.A.

 

99.99

 

99.99

 

Port services

Mineração Nacional S.A.

 

99.99

 

99.99

 

Mining and equity interests

Companhia Florestal do Brasil

 

99.99

 

99.99

 

Reforestation

Estanho de Rondônia S.A.

 

99.99

 

99.99

 

Tin mining

Cia Metalic Nordeste

 

99.99

 

99.99

 

Manufacture of packaging and distribution of steel products

Companhia Metalúrgica Prada

 

99.99

 

99.99

 

Manufacture of packaging and distribution of steel products

CSN Cimentos S.A.

 

100.00

 

99.99

 

Cement manufacturing

CSN Gestão de Recursos Financeiros Ltda.

 

99.99

 

99.99

 

Dormant company

Congonhas Minérios S.A.

 

99.99

 

99.99

 

Mining and equity interests

CSN Energia S.A.

 

99.99

 

99.99

 

Sale of electric power

FTL - Ferrovia Transnordestina Logística S.A.

 

88.41

 

88.41

 

Railroad logistics

             

Indirect interest in subsidiaries: full consolidation

 

 

 

 

 

 

CSN Aceros S.A. (1)

     

100.00

 

Equity interests

Companhia Siderúrgica Nacional LLC

 

100.00

 

100.00

 

Steel

CSN Europe Lda.

 

100.00

 

100.00

 

Financial transactions, product sales and equity interests

CSN Ibéria Lda.

 

100.00

 

100.00

 

Financial transactions, product sales and equity interests

CSN Portugal, Unipessoal Lda.

 

100.00

 

100.00

 

Financial transactions and product sales

Lusosider Projectos Siderúrgicos S.A.

 

99.99

 

99.99

 

Equity interests

Lusosider Aços Planos, S. A.

 

99.99

 

99.98

 

Steel and equity interests

CSN Acquisitions, Ltd.

 

100.00

 

100.00

 

Financial transactions and equity interests

CSN Resources S.A.

 

100.00

 

100.00

 

Financial transactions and equity interests

CSN Holdings (UK) Ltd

 

100.00

 

100.00

 

Financial transactions and equity interests

CSN Handel GmbH

 

100.00

 

100.00

 

Financial transactions, product sales and equity interests

Companhia Brasileira de Latas

 

99.99

 

59.17

 

Sale of cans and containers in general and equity interests

Rimet Empreendimentos Industriais e Comerciais S. A.

 

99.99

 

58.96

 

Production and sale of steel containers and forestry

Companhia de Embalagens Metálicas MMSA

 

99.66

 

58.98

 

Production and sale of cans and related activities

Empresa de Embalagens Metálicas - LBM Ltda. (2)

     

58.98

 

Sales of containers and holding interests in other entities

Empresa de Embalagens Metálicas - MUD Ltda. (2)

 

 

 

58.98

 

Production and sale of household appliances and related products

Companhia de Embalagens Metálicas - MTM do Nordeste

 

99.66

 

58.98

 

Production and sale of cans and related activities

Companhia de Embalagens Metálicas - MTM

 

99.66

 

58.98

 

Production and sale of cans and related activities

CSN Steel Comercializadora, S.L.U.

 

100.00

 

100.00

 

Financial transactions, product sales and equity interests

CSN Steel Holdings 1, S.L.U.

 

100.00

 

100.00

 

Financial transactions, product sales and equity interests

CSN Steel Holdings 2, S.L.U.

 

100.00

 

100.00

 

Financial transactions, product sales and equity interests

Stalhwerk Thüringen GmbH

 

100.00

 

100.00

 

Production and sale of long steel and related activities

CSN Steel Sections UK Limited

 

100.00

 

100.00

 

Dormant company

CSN Steel Sections Czech Republic s.r.o. (3)

 

 

 

100.00

 

Financial transactions, product sales and equity interests

CSN Steel Sections Polska Sp.Z.o.o

 

100.00

 

100.00

 

Financial transactions, product sales and equity interests

CSN Asia Limited (4)

 

100.00

 

 

 

Commercial representation

             

Direct interest in jointly controlled entities: proportionate consolidation

       

Itá Energética S.A.

 

48.75

 

48.75

 

Electric power generation

CGPAR - Construção Pesada S.A.

 

50.00

 

50.00

 

Mining support services and equity interests

Consórcio da Usina Hidrelétrica de Igarapava

 

17.92

 

17.92

 

Electric power consortium

             

Direct interest in jointly controlled entities: equity method

           

Nacional Minérios S.A.

 

60.00

 

60.00

 

Mining and equity interests

MRS Logística S.A.

 

27.27

 

27.27

 

Railroad transportation

Aceros Del Orinoco S.A. (5)

 

31.82

 

22.73

 

Dormant company

CBSI - Companhia Brasileira de Serviços de Infraestrutura

 

50.00

 

50.00

 

Provision of services

Transnordestina Logística S.A.

 

62.68

 

77.30

 

Railroad logistics

             

Indirect interest in jointly controlled entities: equity method

           

Namisa International Minérios SLU

 

60.00

 

60.00

 

Financial transactions, product sales and equity interests

Namisa Europe, Unipessoal Lda.

 

60.00

 

60.00

 

Equity interests and sales of products and minerals

Namisa Handel GmbH

 

60.00

 

60.00

 

Financial transactions, product sales and equity interests

MRS Logística S.A.

 

6.00

 

6.00

 

Railroad transportation

Aceros Del Orinoco S.A. (5)

 

 

 

9.08

 

Dormant company

Namisa Asia Limited (6)

 

60.00

     

Commercial representation

             

Direct interest in associates: equity method

 

 

 

 

 

 

Arvedi Metalfer do Brasil S.A.

 

20.00

 

20.00

 

Steel and equity interests

 

 

PAGE 32 of 83

 


 

 

     
 

 

 

(1)  Company liquidated on August 5, 2014.

(2)  Companies merged into Companhia de Embalagens Metálicas MMSA on July 31, 2014.

(3)  Company liquidated on May 27,  2014.

(4)  Company established on June 30, 2014.

(5)  Transfer to CSN of the rights to subscribe to the shares of Aceros del Orinoco S. A. held by CSN Aceros, S.A.

(6)  Company established on July 10, 2014.

 

·           Exclusive funds

   

Equity interests (%)

   

Exclusive funds

 

09/30/2014

 

12/31/2013

 

Core business

Direct interest: full consolidation

 

 

 

 

 

 

Diplic - Private credit balanced mutual fund

 

100.00

 

100.00

 

Investment fund

Mugen - Private credit balanced mutual fund

 

100.00

 

100.00

 

Investment fund

Caixa Vértice - Private credit balanced mutual fund

 

100.00

 

100.00

 

Investment fund

 

 

3.     CASH AND CASH EQUIVALENTS

 

 

 

 

Consolidated

 

 

 

Parent Company

 

09/30/2014

 

12/31/2013

 

09/30/2014

 

12/31/2013

Current

 

 

 

 

 

 

 

Cash and cash equivalents

             

Cash and banks

188,351

 

178,920

 

14,989

 

36,553

               

Short-term investments

 

 

 

 

 

 

 

In Brazil:

             

Government securities

191,146

 

48,206

 

139,573

 

42,575

Private securities

422,102

 

240,852

 

293,107

 

57,564

 

613,248

 

289,058

 

432,680

 

100,139

Abroad:

             

Time deposits

8,169,763

 

9,527,694

 

29,613

 

69,932

Total short-term investments

8,783,011

 

9,816,752

 

462,293

 

170,071

Cash and cash equivalents

8,971,362

 

9,995,672

 

477,282

 

206,624

 

 

The funds available in the Company and subsidiaries set up in Brazil are basically invested in investment funds, classified as exclusive, which were consolidated, with repurchase agreements backed by government and private bonds, with fixed rate yield and immediate liquidity.

 

Private securities are short-term investments in Bank Deposit Certificates (CDBs) with yields pegged to the Interbank Deposit Certificate (CDI) fluctuation, and government securities are basically repurchase agreements backed by National Treasury Notes and National Treasury Bills. The exclusive funds managed by BTG Pactual Serviços Financeiros S.A. DTVM and Caixa Econômica Federal and their assets collateralize possible losses on investments and transactions carried out. Investments in funds were consolidated.

 

In addition, a significant part of the funds of the Company and its foreign subsidiaries is invested in Time Deposits with leading banks, bearing fixed rates.

 

 

 

 

PAGE 33 of 83

 


 

 

     
 

 

 

 

4.     TRADE RECEIVABLES

 

   

 

Consolidated

 

 

 

Parent Company

 

09/30/2014

 

12/31/2013

 

09/30/2014

 

12/31/2013

Trade receivables

 

 

 

 

 

 

 

Third parties

 

 

 

 

 

 

 

Domestic market

786,854

 

790,225

 

430,687

 

545,927

Foreign market

639,403

 

950,145

 

57,502

 

80,434

Estimated losses on doubtful debts

(125,055)

 

(114,172)

 

(97,850)

 

(88,518)

 

1,301,202

 

1,626,198

 

390,339

 

537,843

Related parties (Note 17 - b)

105,107

 

107,443

 

660,030

 

632,645

 

1,406,309

 

1,733,641

 

1,050,369

 

1,170,488

 

 

 

 

 

 

 

 

Other receivables

 

 

 

 

 

 

 

Dividends receivable (*) (Note 17 - b)

31,535

 

717,595

 

104,552

 

774,147

Employees liabilities

27,093

 

35,267

 

17,953

 

22,237

Other receivables

23,015

 

35,962

 

16,200

 

25,832

 

81,643

 

788,824

 

138,705

 

822,216

 

1,487,952

 

2,522,465

 

1,189,074

 

1,992,704

 

(*) Reversal of dividends of the jointly controlled entity Nacional Minérios S.A., as mentioned in note 7 c.

 

The breakdown of gross trade receivables from third parties is as follows:

     

 

Consolidated

 

 

 

Parent Company

   

09/30/2014

 

12/31/2013

 

09/30/2014

 

12/31/2013

Falling due

 

1,144,459

 

1,339,481

 

328,281

 

373,190

Overdue until 180 days

 

156,294

 

216,392

 

58,067

 

90,165

Overdue above 180 days

 

125,504

 

184,497

 

101,841

 

163,006

 

 

1,426,257

 

1,740,370

 

488,189

 

626,361

 

In order to meet the needs of some customers in the domestic market, related to the extension of the payment term for billing of steel, in common agreement with CSN’s internal commercial policy and maintenance of its very short-term receipts (up to 7 days), at the request of the customer, transactions are carried out for assignment of receivables without co-obligation negotiated between the customer and banks with common relationship, where CSN assigns the trade notes/bills that it issues to the banks with common relationship.

 

Due to the characteristics of the transactions for assignment of receivables without co-obligation, after assignment of the customer’s trade notes/bills and receipt of the funds from the closing of each transaction, CSN settles the trade receivables and becomes entirely free of the credit risk on the transaction. This transaction totals R$252,010 as of September 30, 2014 (R$386,732 as of December 31, 2013), less the trade receivables.

 

The changes in the Company’s allowance for doubtful debts are as follows:

 

        

       

Consolidated

 

 

 

Parent Company

   

09/30/2014

 

12/31/2013

 

09/30/2014

 

12/31/2013

Opening balance

 

(114,172)

 

(111,532)

 

(88,518)

 

(86,391)

Allowance for losses on trade receivables

 

(15,936)

 

(17,988)

 

(13,093)

 

(13,902)

Recovery of receivables

 

5,053

 

15,348

 

3,761

 

11,775

Closing balance

 

(125,055)

 

(114,172)

 

(97,850)

 

(88,518)

 

PAGE 34 of 83

 


 

 

     
 

 

 

 

5.     INVENTORIES

                                                  

     

Consolidated

 

 

 

Parent Company

 

09/30/2014

 

12/31/2013

 

09/30/2014

 

12/31/2013

Finished products

1,177,260

 

743,831

 

972,303

 

529,068

Work in process

900,382

 

650,311

 

767,061

 

550,227

Raw materials

731,583

 

714,365

 

382,034

 

436,283

Storeroom supplies

986,354

 

1,003,473

 

859,645

 

877,944

Iron ore

160,571

 

139,275

 

160,571

 

139,275

Advances to suppliers

6,669

 

11,915

 

5,627

 

9,859

(-) Estimated losses

(106,435)

 

(102,185)

 

(83,173)

 

(83,426)

 

3,856,384

 

3,160,985

 

3,064,068

 

2,459,230

 

Changes in the allowance for inventory losses are as follows:

 

       

Consolidated

 

 

 

Parent Company

   

09/30/2014

 

12/31/2013

 

09/30/2014

 

12/31/2013

Opening balance

 

(102,185)

 

(108,160)

 

(83,426)

 

(90,344)

Allowance for/reversals of slow-moving inventories
and obsolescence

 

(4,250)

 

5,975

 

253

 

6,918

Closing balance

 

(106,435)

 

(102,185)

 

(83,173)

 

(83,426)

 

 

As of September 30, 2014, the Company has long-term iron ore inventories amounting to R$144,483, classified in other non-current assets (R$144,483 as of December 31, 2013), as described in note 6.

 

6.     OTHER CURRENT AND NON-CURRENT ASSETS

 

The group of other current and non-current assets is comprised as follows:

 

 

 

 

 

 

 

   

Consolidated

 

   

 

 

   

Parent Company

 

Current

Non-current

 

Current

 

Non-current

 

09/30/2014

 

12/31/2013

 

09/30/2014

 

12/31/2013

 

09/30/2014

 

12/31/2013

 

09/30/2014

 

12/31/2013

Judicial deposits (Note 15)

 

 

 

 

546,071

 

693,714

 

 

 

 

 

499,849

 

650,463

Credits with the PGFN (*)

     

 

79,394

 

88,921

 

     

 

79,394

 

88,921

Recoverable taxes (**)

518,717

 

480,495

 

162,825

 

112,788

 

361,400

 

298,279

 

97,049

 

94,342

Prepaid expenses

27,436

 

37,369

 

34,495

 

38,117

 

15,076

 

27,394

 

16,365

 

18,600

Actuarial asset - related party (Note 17 b)

 

 

 

 

97,051

 

97,051

 

 

 

 

 

96,665

 

96,665

Derivative financial instruments (Note 11 I)

147,075

 

9,681

     

3,879

 

             

Securities held for trading (Note 11 I)

20,390

 

9,906

 

 

 

 

 

13,976

 

7,041

 

 

 

 

Ore inventory (Note 5)

       

144,483

 

144,483

         

144,483

 

144,483

Northeast Investment Fund (FINOR)

 

 

 

 

8,452

 

8,452

 

 

 

 

 

8,452

 

8,452

Other receivables (Note 11 I)

       

893

 

9,970

         

1,543

 

10,631

Loans with related parties (Note 17 b)

533,182

 

147,273

 

99,522

 

603,862

 

112,643

 

46,722

 

32,427

 

237,710

Other receivables from related parties (Note 17 b)

14,982

 

15,658

 

11,655

 

18,129

 

21,575

 

16,180

 

141,871

 

155,932

Other

19,910

 

22,538

 

14,836

 

15,959

 

 

 

 

 

14,529

 

15,649

 

1,281,692

 

722,920

 

1,199,677

 

1,835,325

 

524,670

 

395,616

 

1,132,627

 

1,521,848

                               
                               

 

 

 

(*) Refers to the excess judicial deposit originated by the 2009 REFIS (Tax Debt Refinancing Program).

.

(**) Refers mainly to taxes on revenue (PIS/COFINS) and State VAT (ICMS) on the acquisition of fixed assets which will be recovered over a 48-month period, and income tax and social contribution for offset.

 

PAGE 35 of 83

 


 

 

     
 

 

 

 

 

7.     INVESTMENTS

 

The information related to the description of activities of subsidiaries, jointly controlled entities, associates and other investments did not have changes in relation to that disclosed in the Company's financial statements as of December 31, 2013 and, accordingly, the Company decided not to repeat it in the condensed interim financial statements as of September 30, 2014.

 

a)     Direct equity interests in subsidiaries, jointly controlled entities, joint operations and associates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

09/30/2014

             

12/31/2013

 

09/30/2013

Companies

 

Number of

                     

 

 

             
 

shares held by CSN

 

%

             

Profit

 

%

             

Profit

 

in units)

 

Direct equity

         

Shareholders'

 

(loss)

 

Direct equity

         

Shareholders'

 

(loss)

 

Common

 

Preferred

 

interest

 

Assets

 

Liabilities

 

equity

 

for the period

 

interest

 

Assets

 

Liabilities

 

equity

 

for the period

Subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CSN Islands VII Corp.

 

20,001,000

     

100.00

 

7,158,114

 

7,608,217

 

(450,103)

 

245,117

 

100.00

 

7,958,296

 

8,653,517

 

(695,221)

 

(309,117)

CSN Islands VIII Corp.

 

2,501,000

 

 

 

100.00

 

 

 

 

 

 

 

(183)

 

100.00

 

16,236

 

 

 

16,236

 

(28,975)

CSN Islands IX Corp.

 

3,000,000

     

100.00

 

1,002,577

 

1,000,741

 

1,836

 

(133)

 

100.00

 

981,698

 

979,730

 

1,968

 

77

CSN Islands X Corp.

 

1,000

 

 

 

100.00

 

20

 

56,471

 

(56,451)

 

(3,659)

 

100.00

 

46

 

52,838

 

(52,792)

 

(4,782)

CSN Islands XI Corp.

 

50,000

     

100.00

 

1,848,018

 

1,839,933

 

8,085

 

145

 

100.00

 

1,796,485

 

1,788,545

 

7,940

 

744

CSN Islands XII Corp.

 

1,540

 

 

 

100.00

 

1,865,675

 

2,452,931

 

(587,256)

 

(111,941)

 

100.00

 

1,868,122

 

2,343,437

 

(475,315)

 

(136,858)

International Investment Fund

             

 

 

 

 

 

 

 

     

 

 

 

 

 

 

(28)

CSN Minerals S.L.U.

 

131,649,926

 

 

 

100.00

 

4,349,141

 

264

 

4,348,877

 

(208,053)

 

100.00

 

4,558,786

 

1,856

 

4,556,930

 

491,807

CSN Export Europe, S.L.U.

 

35,924,748

     

100.00

 

962,759

 

65

 

962,694

 

20,850

 

100.00

 

942,194

 

350

 

941,844

 

95,858

CSN Metals S.L.U.

 

256,951,582

 

 

 

100.00

 

1,508,789

 

885

 

1,507,904

 

58,579

 

100.00

 

1,450,763

 

1,438

 

1,449,325

 

121,063

CSN Americas S.L.U.

 

151,877,946

     

100.00

 

1,965,792

 

1,545

 

1,964,247

 

(36,237)

 

100.00

 

1,995,959

 

13,962

 

1,981,997

 

165,519

CSN Steel S.L.U.

 

454,072,527

 

 

 

100.00

 

2,634,551

 

424,651

 

2,209,900

 

(23,320)

 

100.00

 

2,714,157

 

435,831

 

2,278,326

 

65,266

Sepetiba Tecon S.A.

 

254,015,052

     

99.99

 

369,608

 

133,942

 

235,666

 

16,524

 

99.99

 

324,698

 

81,973

 

242,725

 

37,657

Mineração Nacional S.A.

 

999,999

 

 

 

99.99

 

1,090

 

18

 

1,072

 

59

 

99.99

 

1,067

 

15

 

1,052

 

36

Florestal Nacional S.A.

             

 

 

 

 

 

 

 

     

 

 

 

 

 

 

(46,509)

Estanho de Rondônia S.A.

 

34,236,306

 

 

 

99.99

 

33,528

 

18,573

 

14,955

 

(9,537)

 

99.99

 

34,189

 

9,697

 

24,492

 

(1,150)

Cia Metalic Nordeste

 

92,459,582

     

99.99

 

183,717

 

42,405

 

141,312

 

196

 

99.99

 

182,845

 

41,730

 

141,115

 

2,082

Companhia Metalúrgica Prada

 

675,317

 

 

 

99.99

 

640,778

 

451,811

 

188,967

 

(74,332)

 

99.99

 

771,436

 

465,032

 

306,404

 

(13,544)

CSN Cimentos S.A.

 

3,734,582,665

     

100.00

 

1,066,198

 

89,330

 

976,868

 

66,619

 

99.99

 

1,012,370

 

84,651

 

927,719

 

42,728

Congonhas Minérios S.A.

 

64,610,862

 

 

 

99.99

 

2,058,113

 

2,070,958

 

(12,845)

 

(4,662)

 

99.99

 

1,996,614

 

2,004,797

 

(8,183)

 

(1,377)

CSN Energia S.A.

 

43,149

     

99.99

 

101,261

 

19,785

 

81,476

 

61,909

 

99.99

 

33,416

 

13,850

 

19,566

 

9,084

FTL - Ferrovia Transnordestina Logística S.A.

306,241,571

 

 

 

88.41

 

560,400

 

260,217

 

300,183

 

(2,397)

 

88.41

 

542,162

 

239,582

 

302,580

 

 

Companhia Florestal do Brasil

 

21,120,514

     

99.99

 

29,057

 

8,075

 

20,982

 

(70)

 

99.99

 

20,858

 

1,567

 

19,291

 

(49)

Jointly controlled entities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nacional Minérios S.A.

 

285,040,443

     

60.00

 

9,890,522

 

626,543

 

9,263,979

 

432,646

 

60.00

 

9,404,480

 

1,058,093

 

8,346,387

 

798,666

Itá Energética S.A.

 

253,606,842

 

 

 

48.75

 

316,841

 

14,113

 

302,728

 

2,609

 

48.75

 

341,188

 

18,059

 

323,129

 

6,751

MRS Logística S.A.

 

52,414,152

 

40,301,916

 

27.27

 

1,908,129

 

1,128,347

 

779,782

 

82,396

 

27.27

 

1,853,628

 

1,126,803

 

726,825

 

86,297

CBSI - Companhia Brasileira de Serviços de Infraestrutura

1,876,146

 

 

 

50.00

 

22,642

 

19,546

 

3,096

 

(84)

 

50.00

 

20,590

 

16,244

 

4,346

 

1,760

CGPAR - Construção Pesada S.A.

50,000

     

50.00

 

66,850

 

57,675

 

9,175

 

9,115

 

50.00

 

53,527

 

48,703

 

4,824

 

6,451

Transnordestina Logística S.A.

 

22,714,245

 

1,397,545

 

62.68

 

4,073,546

 

2,767,640

 

1,305,906

 

(19,209)

 

77.30

 

4,286,381

 

2,961,282

 

1,325,099

 

(35,312)

Associates

                                               

Arvedi Metalfer do Brasil

 

27,239,971

 

 

 

20.00

 

58,810

 

39,659

 

19,151

 

(1,624)

 

20.00

 

49,800

 

34,441

 

15,359

 

(4,883)

 

 

The number of shares, the balances of assets, liabilities and shareholders' equity, and the amounts of profit or loss for the year refer to the equity interests held by CSN in those companies.

 

b)     Events in 2013 and in the third quarter of 2014

 

·       Transnordestina Logística S.A. (“TLSA”)

 

On September 20, 2013, the Company signed (i) An Addendum to the Concession Agreement of the Northeast Railway System, which encompasses the stretches between the cities of São Luís to Mucuripe, Arrojado to Recife, Itabaiana to Cabedelo, Paula Cavalcante to Macau, and Propriá to Jorge Lins (“Railway System I”) and the stretches between the cities of Missão Velha to Salgueiro, Salgueiro to Trindade, Trindade to Eliseu Martins, Salgueiro to Porto de Suape, and Missão Velha to Porto de Pecém (“Railway System II”), to include therein obligations assumed by TLSA related to the implementation of the Railway System II, as well as the adaptation of the streches that comprise it and (ii) Conduct Adjustment Agreement between ANTT and TLSA, with the purpose of resolving pending items existing between the parties.

 

PAGE 36 of 83

 


 

 

     
 

 

 

 

 

On that date the following agreements were also signed (i) a new Shareholders' Agreement of TLSA between CSN, Valec Engenharia, Construções e Ferrovias S.A. (“Valec”), Fundo de Desenvolvimento do Nordeste – FDNE (“FDNE”) and BNDES Participações S.A. – BNDESPAR (“BNDESPAR”), with the intervenience of TLSA, whose effectiveness was conditioned to the disproportionate spin-off of TLSA, to be implemented under the terms of ANTT Resolution 4,042/2013; and (ii) Investment Agreement between CSN, Valec and FDNE, with the intervenience of TLSA, which besides other matters, deals with the new budget and the sources of funds that will have to be contributed to TLSA or financed for implementation of the Railway System II.

 

At the Extraordinary Shareholders' Meeting held on December 27, 2013, as part of the reorganization process described above, the shareholders approved the disproportionate spin-off of TLSA, completing the segregation of Railway System I and Railway System II.

 

The purpose of this restructuring was to rebalance economically and financially the Northeast Railway System concession, leading to the extension of the Railway System II operation concession, which could reach 2057, and the segregation of the assets related to Railway System I, which were merged into subsidiary FTL - Ferrovia Transnordestina Logística S.A. (“FTL”), . (“FTL”), with the maintenance of the assets related to Railway System II in TLSA.

 

As a result of the spin-off, CSN became the holder of an 88.41% stake in FTL and a 77.30% stake in TLSA.

 

In April 2014, the shareholders of Transnordestina approved a capital increase in the amount of R$400,000, through the issuance of 7,278,020 class A preferred shares, which were fully subscribed by the shareholder Valec and paid up through the capitalization of credits from Advances for Future Capital Increase held by such shareholder against Transnordestina. As a result of such increase CSN no longer holds a 77.30% interest, it currently holds 62.68% of the total capital of Transnordestina.

 

With the completion of the spin-off, the new Shareholders’ Agreement became effective and control is now jointly held with the shareholders part of the public block, which became the holders of substantive rights to make certain material company decisions and influence the ordinary course of business, as well as CSN, by influencing budgeting, internal policies, capital expenditures, debt, etc., thus typifying the loss of control by CSN, pursuant to specific IFRS criteria.

 

Accordingly, as of December 31, 2013, in accordance with IFRS 10, corresponding to CPC 36(R3), CSN reversed all TLSA assets and liabilities and non-controlling interests and started to recognize the remaining stake in this investment at fair value on the date control was lost. After this initial recognition, the investment starts to be measured under the equity method.

 

The gain generated by the loss of control over the investment recognized in the income statement, in other operating income in 2013, is broken down as follows:

   

Consolidated

 

Parent Company

   

12/31/2013

 

12/31/2013

(+)

Fair value of the remaining investment

1,984,204

 

1,984,204

(-)

Carrying amount of net assets

1,714,232

 

1,325,099

(+)

Carrying amount of non-controlling interests

389,133

 

 

 

Gain on loss of control over Transnordestina

659,105

 

659,105

 

       

(-)

Capitalized interest written off

185,206

 

185,206

         
 

Gain on loss of control over Transnordestina

473,899

 

473,899

         

(-)

Income tax and social contribution

161,126

 

161,126

         
 

Gain on loss of control, net of income tax and social contribution

312,773

 

312,773

 

 

(*) the goodwill will be amortized monthly, from the completion of the construction work to the final concession date.

 

 

PAGE 37 of 83

 


 

 

     
 

 

 

 

·       Companhia Metalúrgica Prada (“Prada”)

 

On August 1, 2014, Prada subscribed 10,820,723,155 common shares in its subsidiary Companhia Brasileira de Latas (“CBL”), which were paid up through capitalization of receivables from Advances for Future Capital Increase held against CBL in the amount of R$108,207. Due to this increase, Prada's interest increased from 59.17% to 95.55% of CBL’s total capital.

 

On August 28, 2014, Prada acquired all of the shares issued by CBL held by the minority shareholders representing 4.45% of the capital for R$5, becoming the holder of a 100% interest in CBL’s capital.

 

c)     Changes in investments in subsidiaries, jointly controlled entities, joint ventures, associates, and other investments

 

     

Consolidated

     

Parent Company

 

09/30/2014

 

12/31/2013

 

09/30/2014

 

12/31/2013

Opening balance of investments

13,487,023

 

10,839,787

 

27,005,592

 

23,356,506

Opening balance of impairment loss allowance

 

 

 

 

(1,231,511)

 

(851,298)

Transnordestina Investment balance at 12.31.2012

 

 

1,452,074

 

 

 

 

Capital increase/acquisition of shares

10,147

 

164,941

 

41,874

 

654,692

Capital reduction

 

 

(153,305)

 

 

 

 

Merger and partial spin-off of subsidiaries

           

132,725

Dividends (1)

453,611

 

(85,998)

 

386,163

 

(139,887)

Comprehensive income (2)

(1,239,304)

 

73,213

 

(1,324,355)

 

456,978

Share of profits of investees (3)

492,718

 

542,711

 

471,007

 

1,502,450

Gain on loss of control over Transnordestina

   

659,106

     

659,106

Other

(3)

 

(5,506)

 

 

 

2,809

Closing balance of investments

13,204,192

 

13,487,023

 

26,455,426

 

27,005,592

Closing balance of impairment loss allowance

 

 

 

 

(1,106,656)

 

(1,231,511)

 

 

1.   On March 28, 2014, the Annual General Meeting of the jointly controlled entity Nacional Minérios S.A. decided to allocate fully the profit (loss) for 2012 to the Investment Reserve and Contingencies Reserve accounts. In view of this decision of the general meeting, the company reversed the dividends receivable in the amount of R$484,946 that had been recorded according to NAMISA's management proposal and that were not approved by such meeting.

 

2.   Refers to the mark-to-market of investments classified as available for sale and translation to the reporting currency of the foreign investments, the functional currency of which is not the Brazilian reais.

 

3.   Below is the reconciliation of the share of profit of jointly controlled entities with the share of profit of investees recognized in the balance sheet after the reclassifications:

     

Consolidated

 

09/30/2014

 

12/31/2013

Share of profit of jointly controlled entities

492,718

 

542,711

Reclassifications

     

To cost of sales

(124,944)

 

(137,418)

To finance costs

(493,282)

 

(624,096)

To taxes

210,197

 

258,914

Other

     

Elimination of Transnordestina’s profit

 

 

120,102

Other

   

(2,075)

Adjusted share of profit of investees

84,689

 

158,138

 

 

PAGE 38 of 83

 


 

 

     
 

 

 

 

d)     Investments in joint ventures and joint operations

 

The balances of the balance sheets and income statements of the companies under shared control are stated below:

 

 

   

 

 

 

 

 

 

 

 

   

09/30/2014

         

 

         

12/31/2013

 

 

Nacional Minérios (*)

 

Itá Energética

 

MRS Logística

 

CBSI

 

CGPAR

 

Transnordestina Logística

 

Nacional Minérios (*)

 

Itá Energética

 

MRS Logística

 

CBSI

 

CGPAR

 

Transnordestina Logística

Equity interest (%)

 

60.00%

 

48.75%

 

27.27%

 

50.00%

 

50.00%

 

62.68%

 

60.00%

 

48.75%

 

27.27%

 

50.00%

 

50.00%

 

77.30%

Balance sheet

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

                                               

Cash and cash equivalents

 

5,089,351

 

25,009

 

345,058

 

1,844

 

30,124

 

687,648

 

4,815,211

 

45,894

 

471,079

 

12,897

 

28,582

 

195,830

Other current assets

 

925,789

 

15,044

 

603,513

 

36,996

 

32,903

 

50,862

 

1,135,192

 

16,682

 

630,121

 

21,407

 

33,055

 

39,183

Total current assets

 

6,015,140

 

40,053

 

948,571

 

38,840

 

63,027

 

738,510

 

5,950,403

 

62,576

 

1,101,200

 

34,304

 

61,637

 

235,013

Non-current assets

                                               

Long-term assets

 

9,052,009

 

32,883

 

448,238

 

83

 

35

 

247,264

 

8,391,119

 

34,029

 

414,624

 

4

 

11

 

229,280

Investments, PP&E and intangible assets

 

1,410,426

 

576,994

 

5,600,516

 

6,360

 

70,637

 

5,513,602

 

1,356,909

 

603,268

 

5,281,642

 

6,872

 

45,405

 

5,080,841

Total non-current assets

 

10,462,435

 

609,877

 

6,048,754

 

6,443

 

70,672

 

5,760,866

 

9,748,028

 

637,297

 

5,696,266

 

6,876

 

45,416

 

5,310,121

Total assets

 

16,477,575

 

649,930

 

6,997,325

 

45,283

 

133,699

 

6,499,376

 

15,698,431

 

699,873

 

6,797,466

 

41,180

 

107,053

 

5,545,134

                                                 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings and financing

 

383,497

     

363,272

     

27,601

 

164,841

 

42,247

     

333,796

     

20,053

 

97,681

Other current liabilities

 

297,602

 

28,949

 

787,715

 

34,657

 

46,699

 

90,946

 

1,318,884

 

35,174

 

841,681

 

22,437

 

36,733

 

51,901

Total current liabilities

 

681,099

 

28,949

 

1,150,987

 

34,657

 

74,300

 

255,787

 

1,361,131

 

35,174

 

1,175,477

 

22,437

 

56,786

 

149,582

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings and financing

 

30,695

     

2,556,288

 

 

 

41,050

 

4,156,777

 

339,961

     

2,566,412

     

21,664

 

3,479,420

Other non-current liabilities

 

325,816

 

 

 

430,501

 

4,434

 

 

 

3,229

 

86,694

 

1,870

 

390,228

 

10,050

 

18,956

 

201,900

Total non-current liabilities

 

356,511

 

 

 

2,986,789

 

4,434

 

41,050

 

4,160,006

 

426,655

 

1,870

 

2,956,640

 

10,050

 

40,620

 

3,681,320

Shareholders’ equity

 

15,439,965

 

620,981

 

2,859,549

 

6,192

 

18,349

 

2,083,583

 

13,910,645

 

662,829

 

2,665,349

 

8,693

 

9,647

 

1,714,232

Total liabilities and shareholders’ equity

 

16,477,575

 

649,930

 

6,997,325

 

45,283

 

133,699

 

6,499,376

 

15,698,431

 

699,873

 

6,797,466

 

41,180

 

107,053

 

5,545,134

                   

 

 

 

                       
   

 

 

 

 

 

 

 

 

01/01/2014 to 09/30/2014

                 

01/01/2013 to 09/30/2013

   

 

 

Nacional Minérios (*)

 

Itá Energética

 

MRS Logística

 

CBSI

 

CGPAR

 

Transnordestina Logística

 

Nacional Minérios (*)

 

Itá Energética

 

MRS Logística

 

CBSI

 

CGPAR

   

Equity interest (%)

 

60.00%

 

48.75%

 

27.27%

 

50.00%

 

50.00%

 

62.68%

 

60.00%

 

48.75%

 

27.27%

 

50.00%

 

50.00%

   

Statements of Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

Net revenue

 

1,218,791

 

104,222

 

2,320,733

 

111,898

 

204,572

 

14

 

1,873,759

 

111,537

 

2,194,355

 

76,869

 

118,638

   

Cost of sales and services

 

(970,154)

 

(64,304)

 

(1,563,603)

 

(105,780)

 

(171,723)

 

 

 

(1,026,348)

 

(58,204)

 

(1,428,344)

 

(67,697)

 

(99,298)

   

Gross profit

 

248,637

 

39,918

 

757,130

 

6,118

 

32,849

 

14

 

847,411

 

53,333

 

766,011

 

9,172

 

19,340

   

Operating (expenses) income

 

(169,508)

 

(34,295)

 

(187,972)

 

(6,397)

 

(3,192)

 

(19,345)

 

(178,363)

 

(33,090)

 

(202,826)

 

(4,322)

 

(37)

   

Finance income (costs), net

 

1,058,652

 

2,562

 

(109,858)

 

170

 

(899)

 

(11,318)

 

1,150,359

 

705

 

(77,750)

 

477

 

217

   

Income before income tax and social contribution

1,137,781

 

8,185

 

459,300

 

(109)

 

28,758

 

(30,649)

 

1,819,407

 

20,948

 

485,435

 

5,327

 

19,520

   

Current and deferred income tax and social contribution

(416,704)

 

(2,832)

 

(157,146)

 

(59)

 

(10,529)

     

(488,297)

 

(7,098)

 

(168,976)

 

(1,808)

 

(6,619)

   

Profit for the period

 

721,077

 

5,353

 

302,154

 

(168)

 

18,229

 

(30,649)

 

1,331,110

 

13,850

 

316,459

 

3,519

 

12,901

   

 

 

 

(*) Refer to the consolidated balances and profit or loss of Nacional Minérios S. A.

 

The balance sheet and income statement amounts refer to 100% of the companies’ results.

 

 

 

PAGE 39 of 83

 


 
     
 

 


 

 

 

 

 

8.     PROPERTY, PLANT AND EQUIPMENT

 

The information related to property, plant and equipment did not have significant changes in relation to that disclosed in the Company's financial statements as of December 31, 2013.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

Land

 

Buildings and infrastructure

Machinery, equipment and facilities

 

Furniture and fixtures

 

Construction in progress

 

Other (*)

 

Total

Balance at December 31, 2013

213,301

 

1,826,519

 

7,782,833

 

34,127

 

4,771,635

 

283,011

 

14,911,426

Cost

213,301

 

2,196,994

 

12,968,200

 

151,479

 

4,771,635

 

627,845

 

20,929,454

Accumulated depreciation

 

 

(370,475)

 

(5,185,367)

 

(117,352)

 

 

 

(344,834)

 

(6,018,028)

Balance at December 31, 2013

213,301

 

1,826,519

 

7,782,833

 

34,127

 

4,771,635

 

283,011

 

14,911,426

Effect of foreign exchange differences

(2,085)

 

(5,911)

 

(19,896)

 

(142)

 

(625)

 

379

 

(28,280)

Acquisitions

52

 

986

 

223,744

 

4,839

 

1,027,200

 

35,359

 

1,292,180

Capitalized interest (Notes 23 and 29)

 

 

 

 

 

 

 

 

123,755

 

 

 

123,755

Write-offs

(49)

 

(109)

 

(6,936)

 

(12)

 

(5,701)

 

(128)

 

(12,935)

Depreciation

 

 

(57,532)

 

(814,183)

 

(4,926)

 

 

 

(25,929)

 

(902,570)

Transfers to other asset categories

3,127

 

532,670

 

2,977,328

 

1,019

 

(3,524,127)

 

9,983

 

 

Transfers to intangible assets

 

 

 

 

 

 

 

 

(86,381)

 

(922)

 

(87,303)

Other

 

     

89,960

 

3

 

(30,284)

 

(14,343)

 

45,336

Balance at September 30, 2014

214,346

 

2,296,623

 

10,232,850

 

34,908

 

2,275,472

 

287,410

 

15,341,609

Cost

214,346

 

2,725,507

 

16,186,651

 

155,705

 

2,275,472

 

652,413

 

22,210,094

Accumulated depreciation

 

 

(428,884)

 

(5,953,801)

 

(120,797)

 

 

 

(365,003)

 

(6,868,485)

Balance at September 30, 2014

214,346

 

2,296,623

 

10,232,850

 

34,908

 

2,275,472

 

287,410

 

15,341,609

                                       

 

 

(*) In consolidated, refer basically to railway assets, such as yards, tracks and railway sleepers.

 

 

 

PAGE 40 of 83

 


 
     
 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Parent Company

 

 

Land

 

Buildings and infrastructure

 

Machinery, equipment and facilities

 

Furniture and fixtures

 

Construction in progress

 

Other (*)

 

Total

Balance at December 31, 2013

 

107,475

 

1,225,222

 

6,355,738

 

26,409

 

4,345,142

 

358,109

 

12,418,095

Cost

 

107,475

 

1,390,013

 

10,423,838

 

129,930

 

4,345,142

 

467,481

 

16,863,879

Accumulated depreciation

 

 

 

(164,791)

 

(4,068,100)

 

(103,521)

 

 

 

(109,372)

 

(4,445,784)

Balance at December 31, 2013

 

107,475

 

1,225,222

 

6,355,738

 

26,409

 

4,345,142

 

358,109

 

12,418,095

Acquisitions

 

 

 

280

 

179,017

 

4,275

 

880,553

 

28,268

 

1,092,393

Capitalized interest (Notes 23 and 29)

                 

123,755

     

123,755

Write-offs

 

 

 

 

 

(6,263)

 

(6)

 

(5,700)

 

(1)

 

(11,970)

Depreciation

     

(35,700)

 

(692,907)

 

(3,535)

     

(9,200)

 

(741,342)

Transfers to other asset categories

 

2,706

 

526,490

 

2,725,854

 

918

 

(3,081,981)

 

(173,987)

 

 

Transfers to intangible assets

                 

(85,701)

     

(85,701)

Other

 

 

 

 

 

110,351

 

2

 

(27,080)

 

(15,196)

 

68,077

Balance at September 30, 2014

 

110,181

 

1,716,292

 

8,671,790

 

28,063

 

2,148,988

 

187,993

 

12,863,307

Cost

 

110,181

 

1,918,856

 

13,411,310

 

133,985

 

2,148,988

 

304,345

 

18,027,665

Accumulated depreciation

     

(202,564)

 

(4,739,520)

 

(105,922)

     

(116,352)

 

(5,164,358)

Balance at September 30, 2014

 

110,181

 

1,716,292

 

8,671,790

 

28,063

 

2,148,988

 

187,993

 

12,863,307

                                     

 

 

(*) includes leasehold improvements, vehicles, hardware, mines and ore bodies and replacement storeroom supplies.

 

 

 

 

 

 

PAGE 41 of 83

 


 
     
 

 


 

 

 

 

 

The breakdown of the projects comprising construction in progress is as follows:

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

Project objective

 

Start date

 

Completion date

 

9/30/2014

 

12/31/2013

Logistics

 

 

 

 

 

 

 

 

 

 

   

Equalization of Berth 301.

 

2012

 

2014

     

151,932

 

 

Current investments for maintenance of current operations.

 

 

 

 

 

70,531

 

231,832

 

 

 

 

 

 

 

 

70,531

 

383,764

 

 

 

 

 

 

 

 

 

 

 

Mining

 

Expansion of Casa de Pedra Mine capacity production.

 

2007

 

2015/2016

(1)

524,515

 

1,090,568

 

 

Expansion of TECAR’s export capacity.

 

2009

 

2017

(2)

419,264

 

404,374

   

Current investments for maintenance of current operations.

         

65,941

 

42,866

 

 

 

 

 

 

 

 

1,009,720

 

1,537,808

                     

Steel

 

Construction of a long steel plant to produce rebar and machine wire.

 

2008

 

2014

(3)

149,855

 

1,592,016

   

Implementation of the AF#3’s gas pressure recovery.

 

2006

 

2014

 

336

 

74,337

 

 

Expansion of the service center/Mogi.

 

2013

 

2015

(4)

32,058

 

11,000

   

Current investments for maintenance of current operations.

         

119,061

 

668,495

 

 

 

 

 

 

 

 

301,310

 

2,345,848

Cement

                   

 

 

Construction of cement plants.

 

2011

 

2016

(5)

886,413

 

476,076

   

Current investments for maintenance of current operations.

         

7,498

 

28,139

 

 

 

 

 

 

 

 

893,911

 

504,215

Total Construction in Progress

         

2,275,472

 

4,771,635

 

 

(1)  Expected date for completion of the Central Plant Stage 1 and Magnetic Separators;

(2)   Expected date for completion of the 60 Mtpa stage;

(3)  Operations started in the first half of 2014, in progress disbursements with commitment balances and gradual increase of the operation ramp-up.

(4)  Expected date for completion of Service Center/Mogi;

(5)  Expected date for completion of Minas Gerais unit.

 

 

PAGE 42 of 83

 


 

 

     
 

 

 

a)      Additions to depreciation, amortization and depletion for the year were distributed as follows:

 

             

Consolidated

 

Nine-month period ended

 

 

 

Three-month period ended

 

 

 

9/30/2014

 

9/30/2013

 

9/30/2014

 

9/30/2013

Production cost

889,896

 

804,255

 

320,077

 

265,849

Selling expenses

6,755

 

6,208

 

2,308

 

2,033

General and administrative expenses

10,688

 

12,257

 

3,360

 

4,294

 

907,339

 

822,720

 

325,745

 

272,176

Other operating expenses (*)

27,216

 

46,164

 

8,657

 

17,219

 

934,555

 

868,884

 

334,402

 

289,395

               
               
 

 

 

 

 

 

 

Parent Company

 

Nine-month period ended

 

 

 

Three-month period ended

 

 

 

9/30/2014

 

9/30/2013

 

9/30/2014

 

9/30/2013

Production cost

734,750

 

666,414

 

266,327

 

221,106

Selling expenses

5,162

 

4,818

 

1,773

 

1,567

General and administrative expenses

7,018

 

6,421

 

2,152

 

2,297

 

746,930

 

677,653

 

270,252

 

224,970

Other operating expenses (*)

714

 

21,320

 

 

 

7,171

 

747,644

 

698,973

 

270,252

 

232,141

 

(*) Refers to the depreciation of unused equipment (see note 22).

 

 

9.     INTANGIBLE ASSETS

 

The information related to intangible assets did not have significant changes in relation to that disclosed in the Company's financial statements as of December 31, 2013 and, accordingly, the Company decided not to repeat it fully in the condensed interim financial statements as of September 30, 2014.

 

 

                     

Consolidated

             

Parent Company

 

Goodwill

 

Customer relations

 

Software

 

Rights and permits (*)

 

Other

 

Total

 

Goodwill

 

Software

 

Rights and permits (*)

 

Total

Balance at December 31, 2013

407,434

 

381,480

 

67,354

 

 

 

109,172

 

965,440

 

13,091

 

63,378

 

 

 

76,469

Cost

666,768

 

415,899

 

107,416

     

109,172

 

1,299,255

 

14,135

 

89,255

     

103,390

Accumulated amortization

(150,004)

 

(34,419)

 

(40,062)

 

 

 

 

 

(224,485)

 

(1,044)

 

(25,877)

 

 

 

(26,921)

Adjustment for accumulated recoverable value

(109,330)

                 

(109,330)

               

Balance at December 31, 2013

407,434

 

381,480

 

67,354

 

 

 

109,172

 

965,440

 

13,091

 

63,378

 

 

 

76,469

Effect of foreign exchange differences

   

(15,437)

 

(29)

     

(4,435)

 

(19,901)

             

 

Acquisitions and expenditures

 

 

 

 

610

 

 

 

 

 

610

 

 

 

 

 

 

 

 

Transfer of property, plant and equipment

     

17,608

 

69,695

     

87,303

     

16,928

 

68,773

 

85,701

Amortization

 

 

(24,830)

 

(7,155)

 

 

 

 

 

(31,985)

 

 

 

(6,302)

 

 

 

(6,302)

Other transactions

       

114

         

114

     

114

     

114

Balance at September 30, 2014

407,434

 

341,213

 

78,502

 

69,695

 

104,737

 

1,001,581

 

13,091

 

74,118

 

68,773

 

155,982

Cost

666,768

 

398,999

 

147,615

 

69,695

 

104,737

 

1,387,814

 

14,135

 

106,300

 

68,773

 

189,208

Accumulated amortization

(150,004)

 

(57,786)

 

(69,113)

 

 

 

 

 

(276,903)

 

(1,044)

 

(32,182)

 

 

 

(33,226)

Adjustment for accumulated recoverable value

(109,330)

                 

(109,330)

             

 

Balance at September 30, 2014

407,434

 

341,213

 

78,502

 

69,695

 

104,737

 

1,001,581

 

13,091

 

74,118

 

68,773

 

155,982

 

 

 

(*) Refers to investments in the acquisition of the right to expand the Casa de Pedra mine to 40Mpta.

 

 

PAGE 43 of 83

 


 

 

     
 

 

 

 

10.   BORROWINGS, FINANCING AND DEBENTURES

 

The information related to borrowings, financing and debentures did not have significant changes in relation to that disclosed in the Company's financial statements as of December 31, 2013.

 

The balances of borrowings, financing and debentures, which are carried at amortized cost, are as follows:

 

                   

Consolidated

 

 

 

 

 

 

 

Parent Company

   

Rates p.a. (%)

 

Current liabilities

 

Non-current liabilities

 

Current liabilities

 

Non-current liabilities

     

9/30/2014

 

12/31/2013

 

9/30/2014

 

12/31/2013

 

9/30/2014

 

12/31/2013

 

9/30/2014

 

12/31/2013

FOREIGN CURRENCY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prepayment

 

1% to 3.50%

 

55,587

 

105,874

 

1,933,009

 

1,166,615

 

52,711

 

105,874

 

1,919,133

 

1,166,615

Prepayment

 

3.51% to 7.50%

 

268,551

 

207,331

 

1,580,895

 

1,276,717

 

139,039

 

343,912

 

6,106,176

 

4,084,099

Perpetual bonds

 

7.00%

 

3,336

 

3,189

 

2,451,000

 

2,342,600

               

Fixed rate notes

 

4.14 to 10%

 

1,039,521

 

156,868

 

4,719,437

 

5,505,110

 

1,129,411

 

19,439

 

1,470,600

 

2,433,517

BNDES/FINAME

         

12,356

             

11,334

       

Intercompany

 

6M Libor + 2.25 and 3%

 

 

 

 

 

 

 

 

 

62,801

 

737,297

 

840,217

 

110,268

Other

 

1.2% up to 8%

 

136,574

 

49,306

 

371,448

 

442,843

 

49,484

           

 

 

 

 

1,503,569

 

534,924

 

11,055,789

 

10,733,885

 

1,433,446

 

1,217,856

 

10,336,126

 

7,794,499

                                     

LOCAL CURRENCY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BNDES/FINAME

 

TJLP + 1.5% to 3.2% and 2.5% to 10% fixed rate

 

80,584

 

97,044

 

969,406

 

962,684

 

41,856

 

57,759

 

875,216

 

853,379

Debentures

 

105.8% to 111.20% CDI

 

811,199

 

846,387

 

1,550,000

 

1,932,500

 

811,199

 

846,387

 

1,550,000

 

1,932,500

Prepayment

 

106.5% to 110.79% CDI and 8% fixed rate

179,998

 

101,330

 

5,345,000

 

5,345,000

 

94,444

 

79,302

 

3,345,000

 

3,345,000

CCB

 

112.5% CDI

 

1,099,393

 

1,085,436

 

6,200,218

 

6,200,000

 

1,099,393

 

1,085,436

 

6,200,000

 

6,200,000

Intercompany

 

110.79% CDI

                 

130,288

 

591,423

 

1,842,325

 

1,338,771

Other

 

 

 

7,656

 

8,527

 

13,990

 

15,505

 

2,178

 

2,119

 

1,089

 

2,118

       

2,178,830

 

2,138,724

 

14,078,614

 

14,455,689

 

2,179,358

 

2,662,426

 

13,813,630

 

13,671,768

Total borrowings and financing

 

3,682,399

 

2,673,648

 

25,134,403

 

25,189,574

 

3,612,804

 

3,880,282

 

24,149,756

 

21,466,267

Transaction costs and issue premiums

 

(24,680)

 

(30,841)

 

(73,291)

 

(85,951)

 

(19,166)

 

(25,588)

 

(62,820)

 

(71,607)

Total borrowings and financing + transaction costs

 

3,657,719

 

2,642,807

 

25,061,112

 

25,103,623

 

3,593,638

 

3,854,694

 

24,086,936

 

21,394,660

 

 

 

The balances of prepaid related parties borrowings total R$4,641,837 as of September 30, 2014 (R$2,943,964 as of December 31, 2013) and the balances of Fixed Rate Notes and related parties Bonds total R$2,600,011 (R$2,452,956 as of December 31, 2013), see note 17.

 

·       Maturities of borrowings, financing and debentures presented in non-current liabilities

 

As of September 30, 2014, the inflation-adjusted principal of long-term borrowings, financing and debentures by maturity year is as follows:

 

 

   

 

 

Consolidated

 

 

 

Parent Company

2015

 

1,317,537

 

5%

 

1,362,970

 

6%

2016

 

2,549,840

 

10%

 

3,856,694

 

16%

2017

 

3,857,024

 

15%

 

3,670,987

 

15%

2018

 

4,214,239

 

17%

 

3,872,641

 

16%

2019

 

5,336,259

 

21%

 

3,954,622

 

16%

After 2019

 

5,408,504

 

22%

 

7,431,842

 

31%

Perpetual bonds

 

2,451,000

 

10%

 

 

 

 

 

 

25,134,403

 

100%

 

24,149,756

 

100%

 

 

PAGE 44 of 83

 


 

 

     
 

 

 

 

·       Amortizations and new borrowings, financing and debentures

 

The table below shows the amortizations and new funding in the current period:

 

       

Consolidated

     

Parent Company

 

 

9/30/2014

 

12/31/2013

 

9/30/2014

 

12/31/2013

Opening balance

 

27,746,430

 

29,304,704

 

25,249,354

 

24,139,992

Funding

 

1,630,664

 

1,697,363

 

2,892,640

 

1,363,253

Amortization

 

(3,278,616)

 

(4,300,240)

 

(2,985,970)

 

(3,991,884)

Loss of control over Transnordestina

     

(3,180,821)

       

Other (*)

 

2,620,353

 

4,225,424

 

2,524,550

 

3,737,993

Closing balance

 

28,718,831

 

27,746,430

 

27,680,574

 

25,249,354

 

 

(*) Includes unrealized foreign exchange and monetary variations.

 

Borrowing and financing contracts with certain financial institutions contain some covenants that are usual in financial agreements in general and the Company is compliant with them as of September 30, 2014.

 

·       Debentures

 

7th issue

 

In March 2014 the Company issued 40,000 nonconvertible, unsecured debentures, in single series, with a unit face value of R$10 totaling R$400,000 that pay interest equivalent to 111.20% of the CDI Cetip rate per year, maturing in March 2021, with early redemption option.

 

·       Guarantees provided

 

Guarantees provided for the borrowings comprise property, plant and equipment items and sureties and do not include guarantees provided for subsidiaries and jointly controlled entities. As of September 30, 2014, the amount is R$3,266 (R$4,234 as of December 31, 2013).

 

 

 

 

PAGE 45 of 83

 


 

 

     
 

 

 

11.   FINANCIAL INSTRUMENTS

 

The information related to financial instruments did not have significant changes in relation to that disclosed in the Company's financial statements as of December 31, 2013 and, accordingly, the Company decided not to repeat it fully in the condensed interim financial statements as of September 30, 2014.

 

I - Identification and measurement of financial instruments

 

The Company enters into transactions involving various financial instruments, mainly cash and cash equivalents, including short-term investments, marketable securities, trade receivables, trade payables, and borrowings and financing. Additionally, it also carries out transactions involving derivative financial instruments, especially exchange and interest rate swaps.

 

·           Classification of financial instruments

 

Consolidated

     

9/30/2014

 

12/31/2013

 

Notes

 

Available for sale

 

Fair value through profit or loss

 

Loans and receivables - effective interest rate

 

Other liabilities - amortized cost method

 

Balances

 

Available for sale

 

Fair value through profit or loss

 

Loans and receivables - effective interest rate

 

Other liabilities - amortized cost method

 

Balances

                     

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

                                           

Cash and cash equivalents

 

3

 

 

 

 

 

8,971,362

 

 

 

8,971,362

 

 

 

 

 

9,995,672

 

 

 

9,995,672

Trade receivables, net

 

4

 

 

 

 

 

1,406,309

 

 

 

1,406,309

 

 

 

 

 

1,733,641

 

 

 

1,733,641

Derivative financial instruments

 

6

 

 

 

147,075

 

 

 

 

 

147,075

 

 

 

9,681

 

 

 

 

 

9,681

Trading securities

 

6

     

20,390

         

20,390

     

9,906

         

9,906

Total

 

 

 

 

 

167,465

 

10,377,671

 

 

 

10,545,136

 

 

 

19,587

 

11,729,313

 

 

 

11,748,900

                       

                 

Non-current assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other trade receivables

 

6

         

893

     

893

         

9,970

     

9,970

Investments

 

 

 

1,171,667

 

 

 

 

 

 

 

1,171,667

 

2,405,174

 

 

 

 

 

 

 

2,405,174

Derivative financial instruments

 

6

                 

     

3,879

         

3,879

Short-term investments

 

 

 

 

 

 

 

32,539

 

 

 

32,539

 

 

 

 

 

30,756

 

 

 

30,756

Total

     

1,171,667

 

 

 

33,432

 

 

 

1,205,099

 

2,405,174

 

3,879

 

40,726

 

 

 

2,449,779

                                             

Total assets

 

 

 

1,171,667

 

167,465

 

10,411,103

 

 

 

11,750,235

 

2,405,174

 

23,466

 

11,770,039

 

 

 

14,198,679

                                             

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

                     

                 

Borrowings and financing

 

10

 

 

 

 

 

 

 

3,682,399

 

3,682,399

 

 

 

 

 

 

 

2,673,648

 

2,673,648

Derivative financial instruments

 

12

     

17,088

         

17,088

     

6,822

         

6,822

Trade payables

 

 

 

 

 

 

 

 

 

1,469,748

 

1,469,748

 

 

 

 

 

 

 

1,102,037

 

1,102,037

Total

     

 

 

17,088

 

 

 

5,152,147

 

5,169,235

 

 

 

6,822

 

 

 

3,775,685

 

3,782,507

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current liabilities

                     

                 

Borrowings and financing

 

10

 

 

 

 

 

 

 

25,134,403

 

25,134,403

 

 

 

 

 

 

 

25,189,574

 

25,189,574

Derivative financial instruments

 

12

     

17,827

         

17,827

     

17,375

         

17,375

Total

 

 

 

 

 

17,827

 

 

 

25,134,403

 

25,152,230

 

 

 

17,375

 

 

 

25,189,574

 

25,206,949

                                             

Total liabilities

     

 

 

34,915

 

 

 

30,286,550

 

30,321,465

 

 

 

24,197

 

 

 

28,965,259

 

28,989,456

 

 

·           Fair value measurement

 

The following table shows the financial instruments recognized at fair value through profit or loss using a valuation method:

 

 

 

PAGE 46 of 83

 


 

 

     
 

 

 

Consolidated

 

 

 

 

 

 

 

9/30/2014

 

 

 

 

 

 

 

12/31/2013

 

 

Level 1

 

Level 2

 

Level 3

 

Balances

 

Level 1

 

Level 2

 

Level 3

 

Balances

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial assets at fair value through profit or loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

 

 

 

147,075

 

 

 

147,075

 

 

 

9,681

 

 

 

9,681

Trading securities

 

20,390

 

 

 

 

 

20,390

 

9,906

 

 

 

 

 

9,906

Non-current assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

1,171,667

 

 

 

 

 

1,171,667

 

2,405,174

 

 

 

 

 

2,405,174

Financial assets at fair value through profit or loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

 

 

 

 

 

 

 

 

 

 

 

3,879

 

 

 

3,879

Total assets

 

1,192,057

 

147,075

 

 

 

1,339,132

 

2,415,080

 

13,560

 

 

 

2,428,640

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities at fair value through profit or loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

 

 

 

17,088

 

 

 

17,088

 

 

 

6,822

 

 

 

6,822

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities at fair value through profit or loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

 

 

 

17,827

 

 

 

17,827

 

 

 

17,375

 

 

 

17,375

Total liabilities

 

 

 

34,915

 

 

 

34,915

 

 

 

24,197

 

 

 

24,197

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

II – Investments in financial instruments classified as available for sale and measured at fair value through OCI  

 

These consist mainly of investments in shares acquired in Brazil involving top ranked companies, which are recognized in non-current assets, and any gains or losses are recognized in shareholders' equity, where they will remain until actual realization of the securities or when any loss is considered unrecoverable.

 

Impairment of financial assets classified as available for sale  

 

The Company has investments in common (USIM3) and preferred (USIM5) shares (“Usiminas Shares”), designated as available-for-sale financial assets  as they do not meet the criteria to be classified within any of the other categories of financial instruments (loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss). The asset is classified as a non-current asset under line item “investments” and is carried at fair value based on the quoted price on the stock exchange (BM&FBOVESPA).

 

Considering the volatility of the quotations of Usiminas shares, the Company evaluated whether, at the end of the reporting period, there was objective evidence of impairment of these financial assets, i.e., the Company’s management evaluated if the decline in the market value of Usiminas shares should be considered either significant or prolonged. In turn, this valuation requires judgment based on CSN’s policy, prepared according to practices used in the domestic and international markets, and consists of an instrument by instrument analysis based on quantitative and qualitative information available in the market, from the time an instrument shows a drop of 20% or more in its market value or from the time there is a significant drop in its market value as compared to its acquisition price during more than twelve months.

 

On June 30, 2014 and 2013, there was a decline in the quotation of the common shares (USIM3) which, according to the Company’s accounting policy, generated a loss of R$34,396 and R$3,302, net of income tax and social contribution, and R$52,115 and R$5,002 were recorded in other operating expenses and R$17,719 and R$1,701 in deferred taxes, respectively.

 

On September 30,  2014, after a new decline in the quotation of the common shares (USIM3) in relation to the quotation of June 30, 2014, the Company reclassified the accumulated losses for the quarter recognized in other comprehensive income, in the amount of R$13,193, net of income tax and social contribution, to profit or loss for the period, in the amount of R$19,989 in other operating expenses and R$6,796 in deferred taxes, totaling in 2014 R$72,104 in other operating expenses and R$24,515 in deferred taxes.

 

 

PAGE 47 of 83

 


 

 

     
 

 

 

Beginning this date, pursuant to a Company's policy, gains and losses arising from the variation of the quotation of shares were recognized in other comprehensive income.

 

On April 9, 2014, the Administrative Council for Economic Defense (CADE - Conselho Administrativo de Defesa Econômica) issued its decision on the matter and a commitment agreement (Performance Commitment Agreement), or TCD, was signed between CADE and CSN. Under the terms of the decision of CADE and TCD, CSN must reduce its interest in Usiminas within a specified term. The term and percentage of reduction are confidential. Moreover, the political rights at Usiminas will continue suspended until the Company reaches the limits established in the TCD.

 

The Company’s interest in Usiminas has not changed as compared with the percentage disclosed in the financial statements as of December 31, 2013.

 

The Company will continue to evaluate strategic alternatives with respect to its investment in Usiminas.

 

III – Fair values of assets and liabilities as compared to their carrying amounts

 

The estimated fair values of consolidated long-term borrowings and financing were calculated at prevailing market rates, taking into consideration the nature, terms and risks similar to those of the recorded contracts, as compared below:

 

 

 

 

9/30/2014

 

 

 

12/31/2013

 

Carrying amount

 

Fair value
Fair value

 

Carrying amount

 

Fair value

Perpetual bonds

2,454,336

 

2,225,003

 

2,345,789

 

1,938,780

Fixed Rate Notes

5,758,958

 

6,024,515

 

5,661,978

 

6,032,207

 

 

IV     Financial risk management policy

 

As of September 30, 2014, there were no changes in the financial risk management policies in relation to those disclosed in the Company's financial statements for the year ended December 31, 2013.

 

·           Foreign exchange exposure

 

The consolidated net exposure as of September 30, 2014 is as follows:

 

 

 

 

 

9/30/2014

Foreign Exchange Exposure

 

(Amounts in US$’000)

 

(Amounts in €’000)

Cash and cash equivalents overseas

 

3,358,639

 

2,466

Trade receivables - foreign market

 

184,734

 

9,135

Related parties borrowings

 

154,549

 

79,778

Other assets

 

128

 

9,154

Total assets

 

3,698,050

 

100,533

Borrowings and financing

 

(4,928,517)

 

(119,968)

Trade payables

 

(216,184)

 

(5,931)

Other liabilities

 

(15,578)

 

(23,700)

Related parties borrowings

 

(34,537)

 

 

Total liabilities

 

(5,194,816)

 

(149,599)

Gross exposure

 

(1,496,766)

 

(49,066)

Notional amount of derivatives contracted (*)

 

1,508,000

 

(90,000)

Net exposure

 

11,234

 

(139,066)

 

 

PAGE 48 of 83

 


 

 

     
 

 

 

 

 

·            Exchange swap transactions

 

 

               

 

 

 

 

9/30/2014

     

 

 

 

 

12/31/2013

 

9/30/2014

               

Appreciation (R$)

 

Fair value (market)

     

Appreciation (R$)

 

Fair value (market)

 

Impact on finance income (cost) in 2014

Counterparties

 

Transaction maturity

 

Functional currency

 

Notional amount

 

Asset position

 

Liability position

 

Amounts receivable/ (payable)

 

Notional amount

 

Asset position

 

Liability position

 

Amounts receivable/ (payable)

 

Santander

 

02/01/15

 

US dollar

 

10,000

 

27,911

 

(24,405)

 

3,506

 

10,000

 

26,512

 

(22,633)

 

3,879

 

(373)

Deutsche

 

11/10/14

 

US dollar

 

20,000

 

49,389

 

(50,812)

 

(1,423)

                 

(1,423)

Goldman Sachs

 

 

 

US dollar

 

 

 

 

 

 

 

 

 

10,000

 

23,697

 

(22,799)

 

898

 

(1,434)

HSBC

     

US dollar

                 

90,000

 

213,306

 

(205,171)

 

8,135

 

(13,377)

Total dollar-to-CDI swap

 

 

 

30,000

 

77,300

 

(75,217)

 

2,083

 

110,000

 

263,515

 

(250,603)

 

12,912

 

(16,607)

                                             

Itaú BBA

 

10/1/2014 to 1/6/2015

 

US dollar

 

518,000

 

1,264,679

 

(1,213,179)

 

51,500

 

85,000

 

199,753

 

(199,844)

 

(91)

 

19,152

Itaú BBA

 

2/12/2014 to 1/30/2015

 

US dollar

 

80,000

 

195,127

 

(198,119)

 

(2,992)

                 

(2,992)

HSBC

 

10/1/2014 to 1/6/2015

 

US dollar

 

490,000

 

1,196,224

 

(1,143,365)

 

52,859

 

208,000

 

488,843

 

(489,349)

 

(506)

 

17,866

HSBC

 

12/2/2014 to 1/30/2015

 

US dollar

 

160,000

 

390,010

 

(400,689)

 

(10,679)

                 

(10,679)

Deutsche Bank

 

10/1/2014 to 12/4/2014

 

US dollar

 

130,000

 

317,746

 

(304,775)

 

12,971

 

 

 

 

 

 

 

 

 

8,991

Deutsche Bank

 

1/30/2015

 

US dollar

 

20,000

 

48,692

 

(50,436)

 

(1,744)

                 

(1,744)

Goldman Sachs

 

01/08/15

 

US dollar

 

30,000

 

73,100

 

(68,842)

 

4,258

 

 

 

 

 

 

 

 

 

4,258

BTG Pactual

 

12/02/14

 

US dollar

 

50,000

 

122,030

 

(122,280)

 

(250)

                 

(250)

Total dollar-to-real swap (NDF)

 

 

 

1,478,000

 

3,607,608

 

(3,501,685)

 

105,923

 

293,000

 

688,596

 

(689,193)

 

(597)

 

34,602

                                             

Itaú BBA

 

11/21/2014

 

Euro

 

30,000

 

97,703

 

(92,868)

 

4,835

 

30,000

 

94,858

 

(96,632)

 

(1,774)

 

12,862

HSBC

 

11/21/2014

 

Euro

 

60,000

 

195,413

 

(185,736)

 

9,677

 

30,000

 

94,900

 

(96,632)

 

(1,732)

 

10,366

Goldman Sachs

 

 

 

Euro

 

 

 

 

 

 

 

 

 

30,000

 

94,880

 

(96,632)

 

(1,752)

 

342

Total dollar-to-euro swap (NDF)

     

90,000

 

293,116

 

(278,604)

 

14,512

 

90,000

 

284,638

 

(289,896)

 

(5,258)

 

23,570

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BES

 

11/17/14 to 1/30/15

 

US dollar

 

37,544

 

92,357

 

(87,278)

 

5,079

 

11,801

 

27,878

 

(27,861)

 

17

 

4,835

BNPP

 

10/7/2014

 

US dollar

 

12,536

 

30,839

 

(28,449)

 

2,390

 

 

 

 

 

 

 

 

 

2,390

Total dollar-to-euro swap

     

50,080

 

123,196

 

(115,727)

 

7,469

 

11,801

 

27,878

 

(27,861)

 

17

 

7,225

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CSFB

                         

21,500

 

36,526

 

(36,862)

 

(336)

 

(943)

Total LIBOR-to-CDI interest rate swap

 

 

 

 

 

 

 

 

 

 

 

21,500

 

36,526

 

(36,862)

 

(336)

 

(943)

                                             

Itaú BBA

 

03/01/16

 

Real

 

150,000

 

165,245

 

(172,503)

 

(7,258)

 

150,000

 

152,610

 

(159,712)

 

(7,102)

 

(156)

HSBC

 

2/5/16 to 3/1/16

 

Real

 

185,000

 

202,827

 

(212,891)

 

(10,064)

 

185,000

 

187,395

 

(197,157)

 

(9,762)

 

(302)

Deutsche Bank

 

03/01/16

 

Real

 

10,000

 

10,952

 

(11,457)

 

(505)

 

10,000

 

10,114

 

(10,625)

 

(511)

 

6

Total fixed rate-to-CDI interest rate swap

     

345,000

 

379,024

 

(396,851)

 

(17,827)

 

345,000

 

350,119

 

(367,494)

 

(17,375)

 

(452)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

       

4,480,244

 

(4,368,084)

 

112,160

     

1,651,272

 

(1,661,909)

 

(10,637)

 

47,395

 

 

·         Classification of the derivatives in the balance sheet and statement of income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2014

Instruments

 

Assets

 

Liabilities

 

Finance income (costs), net (Note 23)

 

Current

 

Non-current

 

Total

 

Current

 

Non-current

 

Total

 

Dollar-to-CDI swap

 

3,506

 

 

 

3,506

 

1,423

 

 

 

1,423

 

(16,607)

Dollar-to-real swap (NDF)

 

121,588

     

121,588

 

15,665

     

15,665

 

34,602

Dollar-to-euro swap (NDF)

 

14,512

 

 

 

14,512

 

 

 

 

 

 

 

23,570

Dollar-to-real swap

 

7,469

     

7,469

         

 

 

7,225

Libor-to-CDI swap(*)

 

 

 

 

 

 

 

 

 

 

 

 

 

(943)

Fixed rate-to-CDI swap

         

 

     

17,827

 

17,827

 

(452)

 

 

147,075

 

 

 

147,075

 

17,088

 

17,827

 

34,915

 

47,395

 

 

 

 

PAGE 49 of 83

 


 
     
 

 

 

 

 

                       

12/31/2013

 

9/30/2013

Instruments

 

Assets

 

Liabilities

 

Finance income (costs), net (Note 23)

 

Current

 

Non-current

 

Total

 

Current

 

Non-current

 

Total

 

Dollar-to-CDI swap

 

9,033

 

3,879

 

12,912

 

 

 

 

 

 

 

232

Dollar-to-real swap (NDF)

 

631

     

631

 

1,228

     

1,228

   

Dollar-to-euro swap (NDF)

 

 

 

 

 

 

 

5,258

 

 

 

5,258

 

(5,031)

Yen-to-dollar swap (**)

                         

(58)

Dollar-to-euro swap

 

17

 

 

 

17

 

 

 

 

 

 

 

3,851

Libor-to-CDI swap

             

336

     

336

 

(3,385)

Fixed rate-to-CDI swap

 

 

 

 

 

 

 

 

 

17,375

 

17,375

 

(15,308)

   

9,681

 

3,879

 

13,560

 

6,822

 

17,375

 

24,197

 

(19,699)

 

(*) The positions of the swap transactions were settled in May 2014, together with their prepayment.

 

(**) The positions of the swap transactions were settled in December 2013, together with their guarantee deposit.

 

·         Sensitivity analysis of exchange rate swaps

 

The Company considered scenarios 1 and 2 as 25% and 50% of appreciation for volatility of the currency, using as reference the closing exchange rate as of September 30, 2014 for dollar-to-real exchange swap R$2.4510, and for dollar-to-euro exchange swap R$1.2629.

 

                   

9/30/2014

Instruments

 

Notional amount

 

Risk

 

Probable scenario (*)

 

Scenario 1

 

Scenario 2

Dollar-to-CDI exchange swap

 

30,000

 

Dólar

 

2,083

 

(19,325)

 

(38,650)

                     

Dollar-to-real exchange swap (NDF)

 

1,478,000

 

Dólar

 

105,923

 

(785,527)

 

(1,571,053)

                     

Dollar-to-euro exchange swap (NDF)

 

(90,000)

 

Euro

 

14,512

 

69,678

 

138,731

                     

Dollar-to-euro exchange swap (NDF)

 

50,080

 

Dólar

 

7,469

 

40,708

 

122,125

 

 

(*) The sensitivity analysis is based on the assumption of maintaining, as a probable scenario, the market values as of September 30, 2014 recognized in the company's assets and liabilities.

 

·         Sensitivity analysis of interest rate swaps

 

The Company considered scenarios 1, 2, 3 and 4 as 25% and 50% of appreciation and devaluation for volatility of the interest as of September 30, 2014.

 

 

   

9/30/2014

Instruments

 

Notional amount

 

Risk

 

Scenario 1

 

Scenario 2

 

Scenario 3

 

Scenario 4

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed rate-to-CDI interest rate swap

 

345,000

 

CDI

 

(15,128)

 

(30,400)

 

14,981

 

29,812

 

 

PAGE 50 of 83

 


 

 

     
 

 

 

 

·         Sensitivity analysis of changes in interest rates

 

The Company considers the effects of a 5% increase or decrease in interest rates on its outstanding borrowings, financing and debentures as of September 30, 2014 in the condensed interim financial statements.

 

 

       

Impact on profit or loss

Changes in interest rates

 

% p.a

 

9/30/2014

 

12/31/2013

TJLP

 

5.00

 

2,479

 

2,521

Libor

 

0.33

 

7,594

 

5,725

CDI

 

10.81

 

76,823

 

71,507

 

·         Share market price risks

 

The Company is exposed to the risk of changes in equity prices due to the investments made and classified as available-for-sale. Equity investments refer to blue chips traded on BM&F BOVESPA.

 

The following table shows the impact of the net changes in the market value of financial instruments classified as available-for-sale on shareholders' equity, in other comprehensive income (note 30).

 

           

Consolidated

   

Other comprehensive income

   

9/30/2014

 

12/31/2013

 

Net change

Net change in available-for-sale financial assets

 

8,030

 

779,526

 

(771,496)

 

 

The Company considers as probable scenario the amounts recognized at market prices as of September 30, 2014, net of tax. Sensitivity analysis is based on the assumption of maintaining as probable scenario the market values as of September 30, 2014. Therefore, there is no impact on the financial instruments classified as available for sale already presented above. The Company considered scenarios 1 and 2 as 25% and 50% of appreciation for volatility of the shares.

 

   

 

Impact on equity

Companies

 

Probable

 

Scenario 1

 

Scenario 2

Usiminas

 

3,953

 

187,814

 

375,628

Panatlântica

 

4,077

 

3,504

 

7,007

 

 

8,030

 

191,318

 

382,635

 

 

Pursuant to the Company's accounting policies, the negative variations in Usiminas investment, when considered significant (impairment), are recognized in profit or loss for the period.

 

 

PAGE 51 of 83

 


 
     
 

 

 

 

·         Liquidity risk

 

 

 

 

 

 

 

 

 

 

 

Consolidated

At September 30, 2014

Less than one year

 

From one to two years

 

From two to five years

 

Over five years

 

Total

Borrowings, financing and debentures

3,682,399

 

3,867,377

 

13,407,522

 

7,859,504

 

28,816,802

Derivative financial instruments

17,088

 

17,827

 

 

 

 

 

34,915

Trade payables

1,469,748

 

 

 

 

 

 

 

1,469,748

 

 

 

 

 

 

 

 

 

 

At December 31, 2013

 

 

 

 

 

 

 

 

 

Borrowings, financing and debentures

2,673,648

 

6,391,523

 

11,439,993

 

7,358,058

 

27,863,222

Derivative financial instruments

6,822

 

17,375

 

 

 

 

 

24,197

Trade payables

1,102,037

 

 

 

 

 

 

 

1,102,037

 

12.   OTHER PAYABLES

 

The group of other payables classified in current and non-current liabilities is comprised as follows:

 

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

Parent Company

 

Current

Non-current

 

Current

 

Non-current

 

9/30/2014

 

12/31/2013

 

9/30/2014

 

12/31/2013

 

9/30/2014

 

12/31/2013

 

9/30/2014

 

12/31/2013

Payables to related parties (Note 17 b)

450,129

 

422,150

 

8,911,410

 

8,522,685

 

494,308

 

735,880

 

9,479,246

 

8,873,825

Derivative financial instruments (Note 11 I)

17,088

 

6,822

 

17,827

 

17,375

 

 

 

336

 

 

 

 

Dividends and interest on capital payable non-controlling shareholders

2,099

 

2,036

 

 

 

 

 

2,099

 

2,036

 

 

 

 

Advances from customers

22,942

 

28,213

         

17,504

 

17,501

       

Taxes in installments (Note 14)

259,804

 

247,387

 

1,455,931

 

1,454,838

 

226,792

 

218,667

 

1,279,711

 

1,294,666

Profit sharing - employees

104,129

 

121,631

         

87,668

 

113,039

       

Other payables

117,870

 

144,612

 

49,995

 

66,673

 

22,761

 

51,497

 

6,109

 

5,241

 

974,061

 

972,851

 

10,435,163

 

10,061,571

 

851,132

 

1,138,956

 

10,765,066

 

10,173,732

                                                     

 

 

 

13.   INCOME TAX AND SOCIAL CONTRIBUTION

 

The information related to income tax and social contribution did not have significant changes in relation to that disclosed in the Company's financial statements as of December 31, 2013 and, accordingly, the Company decided not to repeat it fully in the condensed interim financial statements as of September 30, 2014.

 

(a)   Income tax and social contribution recognized in profit or loss:

 

The income tax and social contribution recognized in profit or loss for the period are as follows:

 

 

 

PAGE 52 of 83

 


 
     
 

 


 

 

             

Consolidated

 

Nine-month period ended

 

Three-month period ended

 

9/30/2014

 

9/30/2013

 

9/30/2014

 

9/30/2013

Income tax and social contribution (expenses) income

 

 

 

 

 

 

 

Current

(407,606)

 

(287,136)

 

(187,241)

 

(123,290)

Deferred

332,332

 

527,544

 

154,443

 

59,844

 

(75,274)

 

240,408

 

(32,798)

 

(63,446)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

             

Parent Company

 

Nine-month period ended

 

Three-month period ended

 

9/30/2014

 

9/30/2013

 

9/30/2014

 

9/30/2013

Income (expenses) tax and social contribution income

 

 

 

 

 

 

 

Current

(30,470)

 

 

 

(30,470)

 

 

Deferred

306,781

 

525,127

 

144,757

 

65,251

 

276,311

 

525,127

 

114,287

 

65,251

 

The reconciliation of Company and consolidated income tax and social contribution expenses and income and the result from applying the effective rate on profit before income tax (IRPJ) and social contribution (CSLL) are as follows:

 

        

         

Consolidated

 

Nine-month period ended

 

Three-month period ended

 

9/30/2014

 

9/30/2013

 

9/30/2014

 

9/30/2013

Profit before income tax and social contribution

(103,985)

 

780,682

 

(217,590)

 

566,334

Tax rate

34%

 

34%

 

34%

 

34%

Income tax and social contribution at combined statutory rate

35,355

 

(265,432)

 

73,981

 

(192,554)

Adjustment to reflect effective rate:

             

Interest on capital benefit

 

 

255,009

 

 

 

64,609

Share of profits of investees

28,794

 

172,631

 

67,178

 

70,876

Income subject to special tax rates or untaxed

(75,555)

 

125,121

 

(145,882)

 

(195)

Transfer pricing adjustment

(21,164)

     

(9,655)

   

Tax loss carryforwards without recognizing deferred taxes

(24,822)

 

(33,504)

 

(3,541)

 

(26,137)

Other permanent deductions (add-backs)

(17,882)

 

(13,417)

 

(14,879)

 

19,955

Income tax and social contribution in profit for the period

(75,274)

 

240,408

 

(32,798)

 

(63,446)

Effective tax rate

-72%

 

-31%

 

-15%

 

11%

               

 

 

 

 

PAGE 53 of 83

 


 
     
 

 

 

 

             

Parent Company

 

Nine-month period ended

 

Three-month period ended

 

9/30/2014

 

9/30/2013

 

9/30/2014

 

9/30/2013

Loss (profit) before income tax and social contribution

(449,367)

 

496,350

 

(364,392)

 

434,431

Tax rate

34%

 

34%

 

34%

 

34%

Income tax and social contribution at combined statutory rate

152,785

 

(168,759)

 

123.893

 

(147,707)

Adjustment to reflect effective rate:

             

Interest on capital benefit

 

 

255,009

 

 

 

64,609

Share of profits of investees

160,142

 

455,431

 

4,133

 

135,003

Transfer pricing adjustment

(21,164)

 

 

 

(9,655)

 

 

Other permanent deductions (add-backs)

(15,452)

 

(16,554)

 

(4,084)

 

13,346

Income tax and social contribution in profit for the period

276,311

 

525,127

 

114,287

 

65,251

Effective tax rate

61%

 

-106%

 

31%

 

-15%

                     

 

(b)   Deferred income tax and social contribution:

                

The deferred income tax and social contribution are calculated on income tax and social contribution loss carryforwards and related temporary differences between the tax bases of assets and liabilities and the accounting balances of the condensed interim financial statements. They are presented at net amounts when related to a sole jurisdiction.

 

                   

Consolidated

   

Opening balance

 

Movement

 

 

 

Closing balance

   

12/31/2013

 

Comprehensive income

 

Profit or loss

 

Refis credit Law 12.996/14

 

9/30/2014

Deferred tax assets

 

 

 

 

 

 

 

 

 

 

Income tax loss carryforwards

 

1,132,296

 

(8,239)

 

119,228

 

(89,630)

 

1,153,655

Social contribution loss carryforwards

 

389,306

 

 

 

45,211

 

(32,266)

 

402,251

Temporary differences

 

1,248,925

 

402,914

 

147,215

     

1,799,054

- Provision for tax, social security, labor, civil and environmental risks

 

207,507

 

 

 

4,500

 

 

 

212,007

- Provision for environmental liabilities

 

117,795

     

(46,424)

     

71,371

- Asset impairment losses

 

53,450

 

 

 

6,249

 

 

 

59,699

- Inventory impairment losses

 

28,556

     

337

     

28,893

- (Gains) losses on financial instruments

 

(4,722)

 

419

 

(62)

 

 

 

(4,365)

- (Gains) losses on available-for-sale financial assets

 

287,876

 

397,437

 

24,515

     

709,828

- Actuarial liability (pension and healthcare plan)

 

131,938

 

 

 

 

 

 

 

131,938

- Accrued supplies and services

 

91,807

     

(21,791)

     

70,016

- Estimated losses on doubtful debts

 

27,749

 

 

 

1,949

 

 

 

29,698

- Goodwill on merger

 

(123,172)

 

5,058

 

(51)

     

(118,165)

- Unrealized exchange differences (*)

 

546,041

 

 

 

155,584

 

 

 

701,625

- (Gain) on loss of control over Transnordestina

 

(224,096)

             

(224,096)

- Other

 

108,196

 

 

 

22,409

 

 

 

130,605

Non-current assets

 

2,770,527

 

394,675

 

311,654

 

(121,896)

 

3,354,960

                     

Deferred tax liabilities

 

 

 

 

 

 

 

 

 

 

- Business combination

 

252,109

 

(9,775)

 

(21,487)

     

220,847

- Other

 

16,724

 

(673)

 

809

 

 

 

16,860

Non-current liabilities

 

268,833

 

(10,448)

 

(20,678)

 

 

 

237,707

 

 

 

 

 

 

PAGE 54 of 83

 


 

 

     
 

 

 

 

             

Parent Company

   
 

Opening balance

 

Movement

 

Closing balance

 

Closing balance

 

12/31/2013

 

Comprehensive income

 

Profit (loss)

 

Refis credit Law 12.996/14

 

9/30/2014

Deferred tax assets

 

 

 

 

 

 

 

 

 

Income tax loss carryforwards

919,910

 

 

 

134,626

 

(89,630)

 

964,906

Social contribution loss carryforwards

389,306

 

 

 

45,211

 

(32,266)

 

402,251

Temporary differences

1,303,782

 

388,437

 

126,944

 

 

 

1,819,163

- Provision for tax, social security, labor, civil and environmental risks

199,445

 

 

 

3,454

 

 

 

202,899

- Provision for environmental liabilities

117,795

     

(46,424)

     

71,371

- Asset impairment losses

47,087

 

 

 

5,932

 

 

 

53,019

- Inventory impairment losses

28,365

     

(86)

     

28,279

- (Gains) losses on financial instruments

(3,875)

 

 

 

(2,092)

 

 

 

(5,967)

- (Gains) losses on available-for-sale financial assets

264,172

 

388,437

 

22,602

     

675,211

- Actuarial liability (pension and healthcare plan)

132,063

 

 

 

 

 

 

 

132,063

- Accrued supplies and services

89,767

     

(22,040)

     

67,727

- Estimated losses on doubtful debts

26,179

 

 

 

1,643

 

 

 

27,822

- Unrealized exchange differences (*)

546,041

     

155,584

     

701,625

- (Gain) on loss of control over Transnordestina

(224,096)

 

 

 

 

 

 

 

(224,096)

- Other

80,839

 

 

 

8,371

 

 

 

89,210

Non-current assets

2,612,998

 

388,437

 

306,781

 

(121,896)

 

3,186,320

 

 

 

(*) The Company taxes foreign exchange differences on a cash basis to calculate income tax and social contribution.

 

Some Group companies recognized tax credits on income tax and social contribution loss carryforwards not subject to statute of limitations and based on the history of profitability and expected future taxable profits determined in technical studies approved by Management.

 

Since they are subject to significant factors that may change the projections for realization, the carrying amounts of deferred tax assets and projections are reviewed annually. These studies indicate the realization of these tax assets within the term stipulated by CVM Instruction 371/02 and the limit of 30% of the taxable profit.

 

 

Certain group companies have income tax and social contribution loss carryforwards in the amounts of R$2,872,260 and R$309,805, respectively, for which no deferred taxes were set up, of which R$141,466 expire in 2015, R$42,144 in 2018, R$139,555 in 2015, R$42,567 in 2027, R$64,994 in 2029, and R$80,082 in 2030.

 

The Company’s corporate structure includes foreign subsidiaries whose profits are subject to income tax levied by the related countries, recognized at tax rates lower than in Brazil.

 

For the years from 2010 to 2014 these subsidiaries generated profits amounting to R$3,567,806, which tax authorities may understand that have already been distributed, hence, it would be subject to additional taxation in Brazil, in the approximate amount of R$1,213,054. The Company, based on its legal counsel's opinion, assessed the likelihood of loss in a potential challenge by tax authorities as possible and, therefore, no provision was recognized in the condensed interim financial statements.

 

·         Law 12,973/14

 

Provisional Act 627, converted into Law 12,973 in May 2014, which revokes the Transition Tax Regime (RTT) and introduces other measures, such as: (i) amendments to Decree-Law 1,598/77, which addresses the corporate income tax and social contribution on net income law; (ii) definition that any change in or adoption of accounting methods and criteria through administrative acts issued based on a competence attributed by the commercial law shall not have any impact on the calculation of federal taxes; (iii) inclusion of a specific treatment on the taxation of profits or dividends; (iv) inclusion of provisions on the calculation of interest on capital; and (v) new considerations about investments accounted for under the equity method of accounting. The provisions established in the law are effective starting 2015, however, companies may opt for their early adoption, on an irreversible basis, in 2014.

 

 

PAGE 55 of 83

 


 

 

     
 

 

 

 

The Company prepared studies on the possible effects that could arise from the application of the provisions of Law 12,973 and concluded that they do not result in material adjustments to its financial statements as of September 30, 2014 and December 31, 2013.

 

The Brazilian Tax Authority, through Normative Ruling 1,499/14, regulated the form of declaration of the option for the adoption or not of the legislation still in 2014, which will be made through the DCTF (Declaration of Federal Tax Debits and Credits) of December 2014, to be filed in February 2015, when the Company will disclose its definitive option.

 

(c)   Income tax and social contribution recognized in shareholders' equity:

 

The income tax and social contribution recognized directly in shareholders' equity are as follows:

 

     

Consolidated

 

   

Parent Company

 

9/30/2014

 

12/31/2013

 

9/30/2014

 

12/31/2013

Income tax and social contribution

 

 

 

 

 

 

 

Actuarial gains on defined benefit pension plan

33,012

 

33,012

 

32,876

 

32,876

Changes in the fair value on available-for-sale financial assets

(4,137)

 

(401,574)

 

(4,137)

 

(392,574)

Exchange differences on translating foreign operations

(425,510)

 

(425,510)

 

(425,510)

 

(425,510)

 

(396,635)

 

(794,072)

 

(396,771)

 

(785,208)

 

 

 

14.   TAXES IN INSTALLMENTS

 

The information related to taxes in installments did not have significant changes in relation to that disclosed in the Company's financial statements as of December 31, 2013 and, accordingly, the Company decided not to repeat it fully in the condensed interim financial statements as of September 30, 2014.

 

The position of the Refis debts and other tax installment plans, recorded in taxes in installments in current and non-current liabilities, as mentioned in note 12, is as follows:

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

Parent Company

 

Current

Non-current

 

Current

 

Non-current

 

9/30/2014

 

12/31/2013

 

9/30/2014

 

12/31/2013

 

9/30/2014

 

12/31/2013

 

9/30/2014

 

12/31/2013

Federal REFIS Law 11,941/09 (a)

158,578

 

140,446

 

1,016,967

 

1,001,630

 

134,686

 

121,399

 

852,552

 

845,838

Federal REFIS Law 12,865/13 (a)

29,541

 

27,124

 

390,523

 

384,872

 

29,849

 

27,167

 

390,523

 

384,872

Other taxes in installments (b)

71,685

 

79,817

 

48,441

 

68,336

 

62,257

 

70,101

 

36,636

 

63,956

 

259,804

 

247,387

 

1,455,931

 

1,454,838

 

226,792

 

218,667

 

1,279,711

 

1,294,666

 

 

a)      Tax Recovery Program (Federal Refis) – Law 11,941/09 and Law 12,865/13

 

·         New deadline – Law 11,941/09

 

On November 26, 2009, the Group companies joined the Tax Recovery Programs established by Law 11,941/09 and Provisional Act 470/2009, aimed at settling tax liabilities through a special payment system and installment plan for the settlement of tax and social security obligations.

 

With the new deadline to join the Law 11,941/09 tax installment program established by the RFB/PGFN, pursuant to Laws 12,865/13, 12,973/14 and 12,996/14(*),  the Company analyzed with its legal counsel the lawsuits that could have changed or been subject to new jurisprudence. After the analysis, the Company concluded that there were debts that could be included in the program and applied for the Law 11,941/09 tax installment payment on December 27, 2013 and August 22, 2014, respectively.

 

 

PAGE 56 of 83

 


 

 

     
 

 

 

 

(*) Law 12,996/14

 

Law 12,996/2014 introduced the new deadline to join the "Crisis Refis", originally governed by Law 11,941, of 2009.

 

The Company analyzed with its legal counsel the lawsuits that could have changed or been subject to new jurisprudence. After the analysis, the Company concluded that there were debts that could be included in the program and applied for the tax installment payment.

 

Both programs establish reductions of fines and interest. The Company joined the program in the modality  “In cash” with payment in credit from tax loss carryforwards of R$95,000 and the other lawsuits were included in the modality “180 installments” with utilization of credits from tax loss carryforwards of R$27,000. The program is subject to approval by the tax authorities.

 

The joining of the program above generated an impact on profit or loss as shown below:

   

Consolidated

 

Parent Company

Taxes

 

(50,364)

 

(43,736)

Fines

 

(37,399)

 

(20,823)

Interest/Legal charges

 

(210,254)

 

(205,592)

Total

 

(298,017)

 

(270,151)

 

 

 

 

 

Discounts

       

Fines

 

25,864

 

20,611

Interest/Legal charges

 

85,098

 

83,910

Total

 

110,962

 

104,521

         

Provision reversal

 

28,776

 

28,776

         

Effect before tax

 

(158,279)

 

(136,854)

         

Income tax and social contribution credit

 

72,660

 

67,591

         

Statement of income net effect

 

(85,619)

 

(69,263)

 

 

·         Overseas profits – Law 12,865/13

 

Under Article 40 of Law 12,865/13, the federal government allowed the payment in installments of income tax and social contribution arising from the application of Article  74 of Provisional Act 2158-35/2001, the so-called overseas profits, which requires that profits earned by foreign subsidiaries or associates be taxed at yearend.

 

The Company elected to join the amounts corresponding to the assessed period (2004-2009), on November 29, 2013.    

 

Both programs provide for reductions in fines and interest, however, only income tax and social contribution debt arising from the application of Law 12,865/12 could be settled with tax credits claimed on tax loss carryforwards of subsidiaries and the parent company. The tax credit utilized by the subsidiaries total R$565,273, of which R$550,270 did not have a recognized tax credit.

 

The remaining balance was divided into 179 monthly installments adjusted by the SELIC and the amount determined pursuant to Laws 11,941/09 and 1,2865/13 is subject to approval by the tax authorities.

 

b)      Other tax installments (regular and other)

The Group companies also joined the Regular social security tax (INSS) installment plan and other plans.

 

 

PAGE 57 of 83

 


 
     
 

 

 

 

 

15.   PROVISION FOR TAX, SOCIAL SECURITY, LABOR, CIVIL AND ENVIRONMENTAL RISKS AND JUDICIAL DEPOSITS

 

As of September 30, 2014, the information related to judicial deposits and proceedings did not have significant changes in relation to that disclosed in the Company's financial statements as of December 31, 2013.

 

Details of the accrued amounts and related judicial deposits are as follows:

 

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

Parent Company

 

 

 

 

9/30/2014

 

 

 

12/31/2013

 

 

 

9/30/2014

 

 

12/31/2013

 

 

Accrued liabilities

 

Judicial deposits

 

Accrued liabilities

 

Judicial deposits

 

Accrued liabilities

 

Judicial deposits

 

Accrued liabilities

 

Judicial deposits

Tax

 

137,103

 

320,002

 

428,141

 

469,692

 

105,908

 

307,648

 

387,315

 

457,973

Social security and labor

 

481,096

 

192,829

 

298,637

 

185,104

 

415,545

 

166,689

 

254,116

 

161,772

Civil

 

89,817

 

23,611

 

82,143

 

29,022

 

73,103

 

19,339

 

65,667

 

24,614

Environmental

 

2,205

 

961

 

4,262

 

961

 

2,205

 

892

 

4,262

 

892

Escrow deposits

 

 

 

8,668

 

 

 

8,935

 

 

 

5,281

 

 

 

5,212

   

710,221

 

546,071

 

813,183

 

693,714

 

596,761

 

499,849

 

711,360

 

650,463

                                 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

Parent Company

 

 

 

 

9/30/2014

 

 

 

12/31/2013

 

 

 

9/30/2014

 

 

12/31/2013

 

 

Accrued liabilities

 

Judicial deposits

 

Accrued liabilities

 

Judicial deposits

 

Accrued liabilities

 

Judicial deposits

 

Accrued liabilities

 

Judicial deposits

Tax

 

137,103

 

320,002

 

428,141

 

469,692

 

105,908

 

307,648

 

387,315

 

457,973

Social security and labor

 

481,096

 

192,829

 

298,637

 

185,104

 

415,545

 

166,689

 

254,116

 

161,772

Civil

 

89,817

 

23,611

 

82,143

 

29,022

 

73,103

 

19,339

 

65,667

 

24,614

Environmental

 

2,205

 

961

 

4,262

 

961

 

2,205

 

892

 

4,262

 

892

Escrow deposits

 

 

 

8,668

 

 

 

8,935

 

 

 

5,281

 

 

 

5,212

   

710,221

 

546,071

 

813,183

 

693,714

 

596,761

 

499,849

 

711,360

 

650,463

                                 

 

 

The changes in the provisions for tax, social security, labor, civil and environmental risks in the period ended September 30, 2014 were as follows:

 

                   

Consolidated

 

 

 

 

 

 

 

 

 

 

Current + Non-current

Nature

 

12/31/2013

 

Additions

 

Net adjustment

 

Net utilization of reversal

 

9/30/2014

Tax

 

428,141

 

46,294

 

37,561

 

(374,893)

 

137,103

Social security

 

47,261

 

12,977

 

2,833

 

(3,240)

 

59,831

Labor

 

251,376

 

297,596

 

45,620

 

(173,327)

 

421,265

Civil

 

82,143

 

5,944

 

28,289

 

(26,559)

 

89,817

Environmental

 

4,262

 

443

 

294

 

(2,794)

 

2,205

   

813,183

 

363,254

 

114,597

 

(580,813)

 

710,221

 

 

 

 

 

 

 

 

 

 

 

 

Parent Company

 

 

 

 

 

 

 

 

 

 

Current + Non-current

 

Nature

 

12/31/2013

 

Additions

 

Net adjustment

 

Net utilization of reversal

 

9/30/2014

Tax

 

387,315

 

44,635

 

36,036

 

(362,078)

 

105,908

Social security

 

46,537

 

12,197

 

3,557

 

(3,240)

 

59,051

Labor

 

207,579

 

271,829

 

30,251

 

(153,165)

 

356,494

Civil

 

65,667

 

4,936

 

27,002

 

(24,502)

 

73,103

Environmental

 

4,262

 

443

 

294

 

(2,794)

 

2,205

   

711,360

 

334,040

 

97,140

 

(545,779)

 

596,761

 

 

PAGE 58 of 83

 


 

 

     
 

 

 

 

The provision for tax, social security, labor, civil and environmental liabilities was estimated by management and is mainly based on the legal counsel’s assessment. Only proceedings for which the risk is classified as probable loss are accrued. Moreover, this provision includes tax liabilities resulting from contingencies filed by the Company, subject to SELIC (Central Bank’s policy rate).

 

The Company has tax assessment notices related to transfer of imported raw material for an amount lower than the import document, and the Rio de Janeiro state tax authorities are requiring the following: (i) difference of the ICMS levied on the operation, (ii) disallowance of the alleged ICMS credit recorded in duplicate in the tax books, and (iii) fine for non-recording of invoices. On December 31, 2013, CSN had a provision for contingencies recorded since Management, together with the internal and external legal counsel, understood that the likelihood of loss on this cause was probable.

 

During the third quarter of 2014, in line with the Company’s accounting policy of continuous review of the likelihood of losses on lawsuits in progress, Management, supported by its internal and external legal counsel, reviewed the assumptions involving these tax assessment notices and, in view of the favorable previous court decision of the Superior Court of Justice and the evolution of the lawsuits, as well as the existence of new and consistent arguments to cancel the assessment notices, considered that the chances of success in these lawsuits are good and that it is no longer probable that an outflow of resources that incorporate future economic benefits will be required to settle an eventual obligation derived from an outcome unfavorable to the Company. Accordingly, Management reversed the provision for contingencies recognized through June 30, 2014, in the net amount of R$162,651.

 

Starting September 30, 2014, the updated amount of these assessments is disclosed in the notes to the interim financial statements as contingent liability with likelihood of loss classified as possible.

 

§  Other administrative and judicial proceedings

 

The Group is a defendant in other administrative and judicial proceedings (tax, social security, labor, civil, and environmental), in the approximate amount of R$15,970,944, of which

 

(a)  R$6,912,278 refers to the tax assessment notice issued against the Company for an alleged sale of 40% of the shares of its subsidiary NAMISA to a Japanese-Korean consortium, thus failing to determine and pay taxes on the capital gain resulting from this transaction, and in May 2013, the São Paulo (SP) Regional Judgment Office (lower administrative court) issued a decision favorable to the Company and cancelled the tax assessment notice. In light of this decision, an ex-officio appeal was filed that will be judged by the Administrative Board of Tax Appeals (CARF). In a trial the appeal was partially granted and the Company awaits the publication of the decision for the analysis of the filing of an appeal to the Superior Board of Tax Appeals.

 

(b)  R$1,585,174 refer to the notification received  on October 20, 2014, in which the Company had its request for installment payment of IRPJ and CSLL debts, regulated by Law 12,865/14, also known as installment payment of Profits Abroad, denied. The basis of the decision, in summary, is that there would be inconsistency in the amounts of interest declared. An hierarchical appeal was filed against this decision, stating that such interest had been paid in the installment payment program of Law 11,941/09, with a new deadline introduced by Law 12,996/14. Of the total amount informed above, the amounts provided for in the specific account of taxes in installments were excluded. The opinion of our lawyers is that the chances of success as regards the continuity of the Company in the program of installment payment of Profits Abroad, both at the administrative and judicial levels, is very good. 

 

(c)  R$716,227 refers to tax foreclosures filed to require the Company to pay the ICMS, as liable party, allegedly due on the electricity purchased from a Generating Plant and fully consumed in the manufacturing of steel products. The tax auditors believe that the use of electricity in the production process does not exclude the Company responsibility for withholding ICMS levied on delivery of this input in the plant.

 

(d)  R$512,546 refers to the decision issued by the Federal Revenue Service that partially approved the request to pay debts in installments governed by Provisional Act 470/09, due to the insufficiency of tax loss carryforwards. When it consolidated the tax installment plan, the Federal Revenue Service considered the existing outstanding balance in the Inflationary Profit Tax Return (SAPLI) as the correct amount: however, this balance already included the adjustments to tax loss carryforwards as a result of the Overseas Profits tax assessment notice issued against the Company.

 

PAGE 59 of 83

 


 
     
 

 

 

 

 

(e)   R$499,482 refers to the offset of taxes that were not approved by the Federal Revenue Service for different reasons. The taxes involved are CSLL, IRPJ, IPI, PIS and COFINS. The analysis of the entire documentation evidences the right to claim credits and the right to file the offset requests, processed at the time. 

 

(f)   R$459,321 refers to the assessment notice issued against the Company for an alleged nonpayment of income tax (IRPJ) and social contribution on net income (CSLL) on profits recognized in the balance sheets of its foreign subsidiaries in 2010.

 

(g)  R$427,791 refers to the disallowance of the ICMS credits claimed by the Company in the period 04/1999-07/2002 on the transfer of iron ore between the Casa de Pedra mine and the Presidente Vargas Plant. According to the tax auditors, the tax base used on the transfer under the Minas Gerais State Law is not accepted under the Rio de Janeiro State Law, reason why the difference was disallowed. 

 

(h)  R$248,347 refers to the disallowance of the ICMS credits on the acquisition of subsidiary INAL’s units located in the State of Rio de Janeiro. According to the tax auditors, the acquisition of a unit does not entitle an entity to claim ICMS credits. In light of these tax assessments, the Company filed for an injunction at the time and its right to change its State taxpayer master file was recognized, to state that the units acquired belong to CSN. This decision was favorable to the Company and can be applied in the judgment of our appeals by the Rio de Janeiro State Taxpayers Board.

 

(i)   R$222,567 refers to transfer of imported raw material for an amount lower than the import document, and the state tax authorities are requiring the following: (i) difference of the ICMS levied on the operation, (ii) disallowance of the alleged ICMS credit recorded in duplicate in the tax books, and (iii) fine for non-recording of invoices.

 

(j)   R$2,525,000 refers to other tax (federal, state, and municipal) lawsuits.

 

(k)  R$1,273,358 refers to labor and social security lawsuits; R$478,803 refers to civil lawsuits, and R$110,050 refers to environmental lawsuits.

 

The assessments made by the legal counsel define these administrative and judicial proceedings as entailing risk of possible loss and, therefore, no provision was recorded in conformity with Management’s judgment and accounting practices adopted in Brazil.

 

 

 

16.   PROVISION FOR ENVIRONMENTAL LIABILITIES AND ASSET RETIREMENT OBLIGATION - ARO

 

The balance of the provision for environmental liabilities and asset retirement obligation - ARO is as follows:

 

 

 

 

Consolidated

 

 

 

Parent Company

 

9/30/2014

 

12/31/2013

 

9/30/2014

 

12/31/2013

Environmental liabilities

209,915

 

346,455

 

209,915

 

346,455

Asset retirement obligation - ARO

26,246

 

23,999

 

21,104

 

19,261

 

236,161

 

370,454

 

231,019

 

365,716

       

 

     

 

 

In the second quarter of 2014, the Company reassessed the costs with the remediation of environmental liabilities and concluded a new study of remediation alternatives for some areas in Volta Redonda (RJ) that were used as landfill by the Company in the past. The study comprised the change of the remediation technology, replacing the material removal by the on-site geotechnical confinement, as permitted by the Brazilian environmental legislation, resulting in a reversal of R$120,582. For the other liabilities, there were no significant changes as compared with the balance as of December 31, 2013.

 

PAGE 60 of 83

 


 

 

     
 

 

 

 

 

 

17.   RELATED-PARTY BALANCES AND TRANSACTIONS

 

The information related to related-party transactions did not have significant changes in relation to that disclosed in the Company's financial statements as of December 31, 2013.

 

a)     Transactions with Holding Company

 

·  Liabilities

 

Companies

 

Paid

 

Dividends

 

Interest on Capital

Vicunha Siderurgia

 

203,386

 

 

Rio Iaco

 

16,963

 

 

Total at 9/30/2014

 

220,349

 

 

Total at 12/31/2013

 

471,801

 

388,855

 

 

b)     Transactions with subsidiaries, jointly controlled entities, associates, exclusive funds and other related parties

 

·           By transaction

 

 

                   

Consolidated

Assets

 

Current

 

Non-current

 

Total

 

Liabilities

 

Current

 

Non-current

 

Total

             

Trade receivables

 

105,107

 

 

 

105,107

 

Other payables

 

 

 

 

 

 

Loans

 

533,182

 

99,522

 

632,704

 

Accounts payable

 

3,201

 

546

 

3,747

Dividends receivable

 

31,535

 

 

 

31,535

 

Advances from customers

 

446,928

 

8,910,864

 

9,357,792

Actuarial asset

     

97,051

 

97,051

 

Trade payables

 

38,975

     

38,975

Short-term investments

 

 

 

 

 

 

 

 

 

 

 

11,139

 

11,139

Other receivables (note 6)

14,982

 

11,655

 

26,637

 

Actuarial liability

           

Total at 9/30/2014

 

684,806

 

208,228

 

893,034

 

Total at 9/30/2014

 

489,104

 

8,922,549

 

9,411,653

Total at 12/31/2013

 

987,969

 

719,042

 

1,707,011

 

Total at 12/31/2013

 

475,099

 

8,533,824

 

9,008,923

 

 

 

                       
   

Statement of Income

                       

Revenues

 

 

                       

Sales

 

882,721

                       

Interest

 

36,442

                       

Expenses

                           

Purchases

 

(650,330)

                       

Interest

 

(332,035)

                       

Total at 9/30/2014

 

(63,202)

                       

Total at 9/30/2013

 

(235,346)

                       

 

 

PAGE 61 of 83

 


 

 

     
 

 

 

 

·           By company

        

   

 

         

Consolidated

   

Assets

 

Liabilities

 

Statement of Income

 

Current

 

Non-current

 

Total

 

Current

 

Non-current

 

Total

 

Sales

 

Purchases

 

Finance income and costs, net

 

Total

                   

Subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ferrovia Transnordestina Logística S.A. (1)

 

47,082

 

99,522

 

146,604

                     

8,463

 

8,463

 

 

47,082

 

99,522

 

146,604

 

 

 

 

 

 

 

 

 

 

 

8,463

 

8,463

Jointly controlled entities

                                       

Nacional Minérios S.A. (2)

 

444,626

 

 

 

444,626

 

448,618

 

8,911,410

 

9,360,028

 

236,314

 

(4,917)

 

(314,891)

 

(83,494)

MRS Logística S.A.

 

30,369

     

30,369

 

7,319

     

7,319

     

(279,944)

     

(279,944)

Transnordestina Logística S.A (3)

 

92,722

 

3,229

 

95,951

 

11,227

 

 

 

11,227

 

 

 

 

 

8,448

 

8,448

CBSI - Companhia Brasileira de Serviços e Infraestrutura

 

6,151

 

3,808

 

9,959

 

9,948

     

9,948

     

(115,816)

     

(115,816)

CGPAR Construção Pesada S.A.

 

4,804

 

4,618

 

9,422

 

 

 

 

 

 

 

 

 

(225,290)

 

 

 

(225,290)

   

578,672

 

11,655

 

590,327

 

477,112

 

8,911,410

 

9,388,522

 

236,314

 

(625,967)

 

(306,443)

 

(696,096)

Other related parties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CBS Previdência

     

97,051

 

97,051

     

11,139

 

11,139

               

Fundação CSN

 

319

 

 

 

319

 

16

 

 

 

16

 

 

 

(1,611)

 

48

 

(1,563)

Banco Fibra

                                 

1,048

 

1,048

Usiminas

 

46

 

 

 

46

 

11,976

 

 

 

11,976

 

58,845

 

(15,348)

 

 

 

43,497

Panatlântica

 

44,426

     

44,426

             

587,562

         

587,562

Ibis Participações e Serviços

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,862)

 

 

 

(5,862)

Companhia de Gás do Ceará

                             

(1,412)

     

(1,412)

Taquari Participações S.A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(130)

 

 

 

(130)

   

44,791

 

97,051

 

141,842

 

11,992

 

11,139

 

23,131

 

646,407

 

(24,363)

 

1,096

 

623,140

Associates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Arvedi Metalfer do Brasil S.A.

 

14,261

     

14,261

                     

1,291

 

1,291

Total at 9/30/2014

 

684,806

 

208,228

 

893,034

 

489,104

 

8,922,549

 

9,411,653

 

882,721

 

(650,330)

 

(295,593)

 

(63,202)

Total at 12/31/2013

 

987,969

 

719,042

 

1,707,011

 

475,099

 

8,533,824

 

9,008,923

 

 

 

 

 

 

 

 

Total at 9/30/2014

 

 

 

 

 

 

 

 

 

 

 

 

 

639,855

 

(566,213)

 

(308,988)

 

(235,346)

 

1.   Refers to loans of the subsidiary FTL - Ferrovia Transnordestina Logística S.A to the jointly controlled entity Transnordestina Logística S.A.

 

2.   Nacional Minérios S.A: Asset: Refers mainly to prepayment transactions with the indirect subsidiaries CSN Europe, CSN Export and CSN Ibéria. Contracts in US$: interest equivalent to 5.37% to 6.80% p.a. with final maturity in June 2015. As of September 30, 2014, borrowings total R$378,804 (R$360,990 as of December 31, 2013) classified in short term.

Liabiliy: The advance from customer received from jointly controlled entity Nacional Minérios S.A. refers to the contractual obligation of supply of iron ore and port services. The contract is subject to interest rate of 12.5% p.a. and expires in September 2042.

 

3.   Transnordestina Logística S.A: Contracts in R$: interest equivalent to 102.00% of the CDI with final maturity in March 2016. As of September 30, 2014, borrowings total R$92,722 (R$270,693 as of December 31, 2013) classified in short term.

 

 

PAGE 62 of 83

 


 
     
 

 

 

·           By transaction

 

   

 

           

Parent Company

 

Assets

 

Current

 

Non-current

 

Total

 

Liabilities

 

Current

 

Non-current

 

Total

 

             

 

Trade receivables (1)

 

660,030

 

 

 

660,030

 

Borrowings and financing

 

 

 

 

 

 

Loans

 

112,643

 

32,427

 

145,070

 

Prepayment

 

116,555

 

4,525,282

 

4,641,837

 

Dividends receivable

 

104,552

 

 

 

104,552

 

Fixed rate notes and intercompany bonds

1,129,411

 

1,470,600

 

2,600,011

 

Actuarial asset

     

96,665

 

96,665

 

Related parties borrowings

193,089

 

2,682,542

 

2,875,631

 

Short-term and other investments (2)

 

288,688

 

65,746

 

354,434

 

Other payables

 

 

 

 

 

 

Other receivables (note 6)

 

21,575

 

141,871

 

163,446

 

Accounts payable

47,380

 

568,382

 

615,762

 

 

 

 

 

 

 

 

 

Advances from customers (3)

446,928

 

8,910,864

 

9,357,792

 

               

Trade payables

91,073

     

91,073

 

 

 

 

 

 

 

 

 

Actuarial liability

 

 

11,118

 

11,118

 

Total at 9/30/2014

 

1,187,488

 

336,709

 

1,524,197

 

Total at 9/30/2014

2,024,436

 

18,168,788

 

20,193,224

 

Total at 12/31/2013

 

1,570,254

 

624,850

 

2,195,104

 

Total at 12/31/2013

2,302,367

 

15,574,882

 

17,877,249

 

                                             

 

 

Statement of Income

Revenues

 

Sales

4,345,410

Interest

10,033

Exclusive Funds

56,341

   

Expenses

 

Purchases

(982,443)

Interest

(1,279,220)

Exchange differences

(395,695)

Total at 9/30/2014

1,754,426

Total at 9/30/2014

1,113,205

 

1.   Related parties receivables arise from product sales and service transactions between the parent and its subsidiaries and jointly controlled entities.

 

2.   Short-term investments total R$288,688 as of September 30, 2014 (R$100,560 as of December 31, 2013) and investments in Usiminas shares classified as available-for-sale total R$65,746 (R$134,543 as of December 31, 2013).

 

3.   Nacional Minérios S.A.: The advance from customer received from jointly controlled entity Nacional Minérios S.A. refers to the contractual obligation of supply of iron ore and port services. The contract is subject to interest rate of 12.5% p.a. and expires in September 2042.

 

 

 

 

 

 

PAGE 63 of 83

 


 

 

     
 

 

 

 

·           By company

 

 

   

 

             

Parent Company

   

Assets

 

Liabilities

 

Statement of Income

 

Current

 

Non-current

 

Total

 

Current

 

Non-current

 

Total

 

Sales

 

Purchases

 

Finance income and costs, net

 

Exchange differences, net

 

Total

                     

Subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Companhia Siderúrgica Nacional, LLC

 

37,044

     

37,044

             

3,375

         

674

 

4,049

CSN Portugal, Unipessoal Lda.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,979)

 

(2,159)

 

(7,138)

CSN Europe Lda.

             

5,742

 

75,294

 

81,036

         

(628)

 

(3,330)

 

(3,958)

CSN Resources S.A. (1)

 

 

 

 

 

 

 

1,202,276

 

5,461,187

 

6,663,463

 

 

 

 

 

(221,272)

 

(289,921)

 

(511,193)

CSN Export Europe, S.L.

             

78,829

     

78,829

                   

Lusosider Aços Planos, S.A.

 

36,038

 

 

 

36,038

 

 

 

 

 

 

 

 

 

(798)

 

 

 

1,862

 

1,064

CSN Handel GmbH (2)

 

237,192

     

237,192

             

2,483,358

         

(6,012)

 

2,477,346

CSN Islands XII Corp. (3)

 

 

 

 

 

 

 

21,920

 

1,236,530

 

1,258,450

 

 

 

 

 

(35,800)

 

(93,996)

 

(129,796)

CSN Ibéria Lda.

                 

63,088

 

63,088

         

(1,092)

 

(2,813)

 

(3,905)

Companhia Metalúrgica Prada (4)

 

198,302

 

2,800

 

201,102

 

24,539

 

196

 

24,735

 

733,936

 

(106,276)

 

 

 

 

 

627,660

CSN Cimentos S.A. (5)

 

17,271

     

17,271

 

302

 

378,297

 

378,599

 

153,024

 

(5,066)

 

(27,353)

     

120,605

Companhia Metalic Nordeste

 

357

 

 

 

357

 

32

 

 

 

32

 

26,431

 

(352)

 

 

 

 

 

26,079

Estanho de Rondônia S.A.

 

2,852

 

7,115

 

9,967

                 

(8,474)

         

(8,474)

Florestal Brasil S.A.

 

 

 

8,017

 

8,017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sepetiba Tecon S.A.

 

77,476

     

77,476

 

3,620

     

3,620

 

2,069

 

(2,673)

 

246

     

(358)

Congonhas Minérios S.A. (6)

 

 

 

 

 

 

 

130,288

 

1,860,632

 

1,990,920

 

 

 

 

 

(165,959)

 

 

 

(165,959)

Ferrovia Transnordestina Logística S.A.

     

29,473

 

29,473

     

171,036

 

171,036

                   

CSN Energia S.A.

 

 

 

 

 

 

 

45,689

 

 

 

45,689

 

 

 

(183,391)

 

 

 

 

 

(183,391)

Companhia Brasileira de Latas

 

28,486

 

78,193

 

106,679

 

26,745

     

26,745

 

60,496

 

(5,689)

         

54,807

Stahlwerk Thüringen GmbH

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,394)

 

 

 

 

 

(19,394)

   

635,018

 

125,598

 

760,616

 

1,539,982

 

9,246,260

 

10,786,242

 

3,462,689

 

(332,113)

 

(456,837)

 

(395,695)

 

2,278,044

Jointly controlled entities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nacional Minérios S.A.

 

65,880

     

65,880

 

448,566

 

8,911,410

 

9,359,976

 

236,314

 

(4,917)

 

(822,137)

     

(590,740)

Transnordestina Logística S.A.

 

92,722

 

35,433

 

128,155

 

 

 

 

 

 

 

 

 

 

 

8,448

 

 

 

8,448

MRS Logística S.A.

 

30,369

     

30,369

 

14,302

     

14,302

     

(279,944)

         

(279,944)

CBSI - Companhia Brasileira de Serviços e Infraestrutura

 

6,151

 

3,808

 

9,959

 

9,594

 

 

 

9,594

 

 

 

(115,816)

 

 

 

 

 

(115,816)

CGPAR Construção Pesada S.A.

 

9,608

 

9,236

 

18,844

                 

(225,290)

         

(225,290)

 

 

204,730

 

48,477

 

253,207

 

472,462

 

8,911,410

 

9,383,872

 

236,314

 

(625,967)

 

(813,689)

 

 

 

(1,203,342)

Other related parties

                                           

CBS Previdência

 

 

 

96,665

 

96,665

 

 

 

11,118

 

11,118

 

 

 

 

 

 

 

 

 

 

Fundação CSN

 

319

 

223

 

542

 

16

     

16

     

(1,611)

 

48

     

(1,563)

Usiminas

 

46

 

 

 

46

 

11,976

 

 

 

11,976

 

58,845

 

(15,348)

 

 

 

 

 

43,497

Panatlântica

 

44,426

     

44,426

             

587,562

             

587,562

Ibis Participações e Serviços

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,862)

 

 

 

 

 

(5,862)

Companhia de Gás do Ceará

                             

(1,412)

         

(1,412)

Taquari Participações S.A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(130)

 

 

 

 

 

(130)

   

44,791

 

96,888

 

141,679

 

11,992

 

11,118

 

23,110

 

646,407

 

(24,363)

 

48

 

 

 

622,092

Associates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Arvedi Metalfer do Brasil S.A.

 

14,261

     

14,261

                     

1,291

     

1,291

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exclusive funds

                                           

Diplic, Mugen e Vértice

 

288,688

 

65,746

 

354,434

 

 

 

 

 

 

 

 

 

 

 

56,341

 

 

 

56,341

Total at 9/30/2014

 

1,187,488

 

336,709

 

1,524,197

 

2,024,436

 

18,168,788

 

20,193,224

 

4,345,410

 

(982,443)

 

(1,212,846)

 

(395,695)

 

1,754,426

Total at 12/31/2013

 

1,570,254

 

624,850

 

2,195,104

 

2,302,367

 

15,574,882

 

17,877,249

 

 

 

 

 

 

 

 

 

 

Total at 9/30/2013

 

 

 

 

 

 

 

 

 

 

 

 

 

3,763,514

 

(970,827)

 

(1,113,713)

 

(565,769)

 

1,113,205

 

 

1.     CSN Resources S.A.: Contracts in dollars of Prepayment, Fixed Rate Notes and Intercompany Bonds, interest of 9.13% with final maturity in June 2047. As of September 30, 2014, borrowings total R$6,663,463 (R$5,605,934 as of December 31, 2013) of which R$1,202,276 is classified in short term and R$5,461,187 is classified in long term.

 

2.   CSN Handel GMBH: Receivables of R$237,192 as of September 30, 2014 (R$303,073 as of December 31, 2013), classified in short term. Refer to sales transactions on mining products.

 

3.   CSN Islands XII Corp: Contracts in US$: interest of 7.64% with final maturity in February 2025. As of September 30, 2014, borrowings total R$1,258,450 (R$353,569 as of December 31, 2013) of which R$21,920 is classified in short term and R$1,236,530 is classified in long term.

 

4.   Companhia Metalúrgica Prada: Receivables of R$198,302 as of September 30, 2014 (R$201,726 as of December 31, 2013), classified in short term. Refers to the purchase of steel.

 

 

PAGE 64 of 83

 


 
     
 

 

 

 

5.     CSN Cimentos S.A.: Payables of R$378,297 as of September 30, 2014 (R$350,943 as of December 31, 2013), classified in long term related to the purchase of the clinker plant.

 

6.   Congonhas Minérios S.A.: Contracts in R$: interest of 101.50% of the CDI with final maturity in March 2018. As of September 30, 2014, borrowings total R$1,972,613 (R$1,930,194 as of December 31, 2013) of which R$130,288 is classified in short term and R$1,842,325 is classified in long term.

 

c)     Key management personnel

 

The key management personnel, who have authority and responsibility for planning, directing and controlling the Company’s activities, include the members of the Board of Directors and statutory directors. The following is information on the compensation of such personnel and the related balances as of September 30, 2014.

 

   

9/30/2014

 

9/30/2013

   

Statement of Income

Short-term benefits for employees and officers

 

31,867

 

26,705

Post-employment benefits

 

52

 

94

Other long-term benefits

 

n/a

 

n/a

Severance benefits

 

n/a

 

n/a

Share-based compensation

 

n/a

 

n/a

   

31,919

 

26,799

 

n/a – Not applicable

 

18.   SHAREHOLDERS' EQUITY

 

i. Paid-in capital

 

Fully subscribed and paid-in capital as of September 30, 2014 and December 31, 2013 is R$4,540,000 represented by 1,387,524,047 book-entry common shares (1,457,970,108 as of December 31, 2013), without par value. Each common share entitles its holder to one vote in Shareholders’ Meetings.

 

ii. Authorized capital

 

The Company’s bylaws in effect as of September 30, 2014 determine that the capital can be raised to up to 2,400,000,000 shares by decision of the Board of Directors.

 

iii Legal reserve

 

This reserve is recognized at the rate of 5% of the profit for each period, as provided for by Article  193 of Law 6,404/76, up to the ceiling of 20% of share capital.  

 

iv Ownership structure

 

As of September 30, 2014, the Company’s ownership structure was as follows:

 

 

 

PAGE 65 of 83

 


 

 

     
 

 

 

 

   

 

 

 

 

9/30/2014

 

 

 

12/31/2013

   

Number of common shares

 

% of total shares

 

% voting capital

 

Number of common shares

 

% of total shares

Vicunha Siderurgia S.A.

 

697,719,990

 

50.29%

 

50.53%

 

697,719,990

 

47.86%

Rio Iaco Participações S.A. (*)

 

58,193,503

 

4.19%

 

4.21%

 

58,193,503

 

3.99%

Caixa Beneficente dos Empregados da CSN - CBS

 

12,788,231

 

0.92%

 

0.93%

 

12,788,231

 

0.88%

BNDES Participações S.A. - BNDESPAR

 

8,794,890

 

0.63%

 

0.64%

 

8,794,890

 

0.60%

NYSE (ADRs)

 

349,973,683

 

25.22%

 

25.35%

 

356,019,691

 

24.42%

BM&FBovespa

 

253,262,450

 

18.25%

 

18.34%

 

324,453,803

 

22.25%

 

 

1,380,732,747

 

99.51%

 

100.00%

 

1,457,970,108

 

100.00%

Treasury shares

 

6,791,300

 

0.49%

 

 

 

 

 

 

Total shares

 

1,387,524,047

 

100.00%

 

 

 

1,457,970,108

 

100.00%

 

 

(*) Rio Iaco Participação S. A. is a company part of the control group.

 

v. Treasury shares

 

The Board of Directors authorized several programs for repurchase of shares issued by the Company, to be held in treasury for subsequent sale or cancelation in order to maximize the generation of value to the shareholder through an efficient capital structure management, as shown in the table below:

 

Program

 

Board Authorization

 

Quantity authorized

 

Term of the program

 

Average purchase price

 

Minimum and maximum purchase price

 

Quantity acquired

 

Share cancellations

   

Balance in treasury

 

3/13/2014

 

70,205,661

 

From 3/14/2014 to 4/14/2014

 

R$ 9.34

 

R$ 9.22 e R$ 9.45

 

2,350,000

 

 

 

 

2,350,000

 

4/15/2014

 

67,855,661

 

From 4/16/2014 to 5/23/2014

 

R$ 8.97

 

R$ 8,70 e R$ 9.48

 

9,529,500

       

11,879,500

 

5/23/14

 

58,326,161

 

From 5/26/2014 to 6/25/2014

 

R$ 9.21

 

R$ 8.61 e R$ 9.72

 

31,544,500

 

 

 

 

43,424,000

 

6/26/14

 

26,781,661

 

From 6/26/2014 to 7/17/2014

 

R$ 10.42

 

R$ 9.33 e R$ 11.54

 

26,781,661

       

70,205,661

 

 

7/18/14

 

 

 

 

 

Non applicable

 

Non applicable

 

 

 

60,000,000

(1)

 

10,205,661

 

7/18/14

 

64,205,661

 

From 7/18/2014 to 8/18/2014

 

R$ 11.40

 

$11.40

 

240,400

       

10,446,061

 

 

8/19/14

 

 

 

 

 

Non applicable

 

Non applicable

 

 

 

10,446,061

(1)

 

-

 

8/19/14

 

63,161,055

 

From 8/19/2014 to 9/25/2014

 

R$ 9.82

 

R$ 9.47 e R$ 10.07

 

6,791,300

       

6,791,300

7º (*)

 

9/29/14

 

56,369,755

 

From 9/29/2014 to 12/29/2014

 

 

 

 

 

 

 

 

 

 

 

 

(*) Until September 30, 2014 there was no repurchase of shares under this program. 

 

1.   On July 18, 2014 and  August 19, 2014, the Board of Directors approved the cancelation of 60,000,000 and 10,446,061 shares held in treasury, respectively, without any change in the amount of the Company’s capital.

 

As of September 30, 2014, the position of the treasury shares was as follows:

 

 

 

 

PAGE 66 of 83

 


 
     
 

 

 

 

 

Quantity

 

Total amount

 

Share price

 

Share

acquired

 

paid/payable

   

market price

(in units)

 

for the shares

 

Minimum

 

Maximum

 

Average

 

at 9/30/2014 (*)

6,791,300

 

R$ 66,670

 

R$9.47

 

R$10.07

 

R$9.82

 

R$ 59,220

 

 

(*) The quotation of the shares on the BM&FBovespa as of September 30, 2014, of R$8.72 per share, was used.

 

19.   DIVIDENDS AND INTEREST ON CAPITAL

 

On February 28, 2014, the Board of Directors approved the proposal for payment, as advance of mandatory minimum dividend, from the retained earnings reserve (statutory reserve of working capital), the amount of R$425,000 in dividends, corresponding to R$ 0.29150 per share.

 

 

 

20.   NET SALES REVENUE

 

Net sales revenue is comprised as follows:

 

               

Consolidated

   

Nine-month period ended

 

Three-month period ended

   

9/30/2014

 

9/30/2013

 

9/30/2014

 

9/30/2013

Gross revenue

 

 

 

 

 

 

 

 

Domestic market

 

10,083,008

 

10,728,602

 

3,256,166

 

3,699,436

Foreign market

 

4,659,461

 

4,210,529

 

1,420,550

 

1,846,759

 

 

14,742,469

 

14,939,131

 

4,676,716

 

5,546,195

Deductions

 

 

 

 

 

 

 

 

Cancelled sales and discounts

 

(99,249)

 

(141,184)

 

(45,016)

 

(48,858)

Taxes levied on sales

 

(2,336,949)

 

(2,434,346)

 

(748,714)

 

(835,921)

 

 

(2,436,198)

 

(2,575,530)

 

(793,730)

 

(884,779)

Net revenue

 

12,306,271

 

12,363,601

 

3,882,986

 

4,661,416

 

 

   

 

 

 

     

Parent Company

   

Nine-month period ended

 

Three-month period ended

   

9/30/2014

 

9/30/2013

 

9/30/2014

 

9/30/2013

Gross revenue

 

 

 

 

 

 

 

 

Domestic market

 

9,209,018

 

9,901,371

 

2,918,104

 

3,393,243

Foreign market

 

2,760,901

 

2,287,710

 

874,509

 

1,123,363

 

 

11,969,919

 

12,189,081

 

3,792,613

 

4,516,606

Deductions

 

 

 

 

 

 

 

 

Cancelled sales and discounts

 

(88,039)

 

(141,918)

 

(40,874)

 

(51,687)

Taxes levied on sales

 

(2,068,932)

 

(2,175,033)

 

(659,403)

 

(734,089)

 

 

(2,156,971)

 

(2,316,951)

 

(700,277)

 

(785,776)

Net revenue

 

9,812,948

 

9,872,130

 

3,092,336

 

3,730,830

 

 

 

 

PAGE 67 of 83

 


 

 

     
 

 

 

21.   EXPENSES BY NATURE

 

               

Consolidated

   

Nine-month period ended

 

Three-month period ended

   

9/30/2014

 

9/30/2013

 

9/30/2014

 

9/30/2013

Raw materials and inputs

 

(4,019,809)

 

(4,370,900)

 

(1,302,431)

 

(1,533,895)

Labor cost

 

(1,253,600)

 

(1,170,721)

 

(442,531)

 

(415,768)

Supplies

 

(778,729)

 

(833,407)

 

(267,854)

 

(291,798)

Maintenance cost (services and materials)

 

(798,535)

 

(954,140)

 

(271,004)

 

(355,144)

Outsourcing services

 

(1,747,501)

 

(1,580,926)

 

(670,504)

 

(556,985)

Depreciation, amortization and depletion (Note 8 a)

(907,339)

 

(822,720)

 

(325,745)

 

(272,176)

Other

 

(217,682)

 

(403,520)

 

(10,414)

 

(148,098)

   

(9,723,195)

 

(10,136,334)

 

(3,290,483)

 

(3,573,864)

                 

Classified as:

 

 

 

 

 

 

 

 

Cost of sales (Note 24)

 

(8,693,082)

 

(9,131,010)

 

(2,911,961)

 

(3,259,211)

Selling expenses (Note 24)

 

(691,619)

 

(666,415)

 

(268,052)

 

(208,791)

General and administrative expenses (Note 24)

 

(338,494)

 

(338,909)

 

(110,470)

 

(105,862)

 

 

(9,723,195)

 

(10,136,334)

 

(3,290,483)

 

(3,573,864)

 

   

 

 

 

     

Parent Company

   

Nine-month period ended

 

Three-month period ended

   

9/30/2014

 

9/30/2013

 

9/30/2014

 

9/30/2013

Raw materials and inputs

 

(2,673,781)

 

(3,030,604)

 

(912,698)

 

(1,082,040)

Labor cost

 

(1,027,677)

 

(933,033)

 

(373,550)

 

(326,036)

Supplies

 

(746,274)

 

(797,730)

 

(257,831)

 

(277,844)

Maintenance cost (services and materials)

 

(777,208)

 

(919,819)

 

(264,074)

 

(344,084)

Outsourcing services

 

(1,123,789)

 

(1,081,322)

 

(401,225)

 

(413,456)

Depreciation, amortization and depletion (Note 8 a)

(746,930)

 

(677,653)

 

(270,252)

 

(224,970)

Other

 

(170,796)

 

(410,283)

 

(17,271)

 

(157,651)

   

(7,266,455)

 

(7,850,444)

 

(2,496,901)

 

(2,826,081)

                 

Classified as:

 

 

 

 

 

 

 

 

Cost of sales (Note 24)

 

(6,661,971)

 

(7,248,285)

 

(2,290,584)

 

(2,626,539)

Selling expenses (Note 24)

 

(324,964)

 

(366,150)

 

(113,556)

 

(126,726)

General and administrative expenses (Note 24)

 

(279,520)

 

(236,009)

 

(92,761)

 

(72,816)

 

 

(7,266,455)

 

(7,850,444)

 

(2,496,901)

 

(2,826,081)

 

 

 

 

 

PAGE 68 of 83

 


 

 

     
 

 

 

22.   OTHER OPERATING INCOME (EXPENSES)

               

Consolidated

   

Nine-month period ended

 

Three-month period ended

   

9/30/2014

 

9/30/2013

 

9/30/2014

 

9/30/2013

Other operating income

 

 

 

 

 

 

 

 

Lawsuit indemnities/wins

 

4,106

 

5,732

 

868

 

1,081

Rentals and leases

 

804

 

602

 

276

 

200

Reversal of provisions

 

20,790

     

17,654

 

(2,072)

Other revenues

 

19,237

 

28,955

 

8,673

 

10,874

   

44,937

 

35,289

 

27,471

 

10,083

                 

Other operating expenses

 

 

 

 

 

 

 

 

Taxes and fees

 

(20,112)

 

(32,572)

 

(1,420)

 

(16,153)

Provision for tax, social security, labor, civil and environmental risks,
net of reversals

 

(15,180)

 

(155,101)

 

28,322

 

(44,516)

Contractual, nondeductible fines

 

(7,080)

 

(3,845)

 

(19)

 

13,293

Depreciation of unused equipment (Note 8 a)

 

(27,216)

 

(46,164)

 

(8,657)

 

(17,219)

Residual value of permanent assets written off (Note 8)

 

(12,935)

 

(26,805)

 

(7,114)

 

(970)

Inventory impairment losses/reversals (Note 5)

 

(4,250)

 

16,262

 

5,317

 

(431)

Spare losses

 

(20,651)

     

(20,651)

   

Expenses on studies and project engineering

 

(38,829)

 

(45,466)

 

(16,550)

 

(20,576)

Pension plan expenses

 

(43,074)

 

(35,051)

 

(16,522)

 

(13,325)

Impairment of available-for-sale financial assets

 

(72,104)

 

(5,002)

 

(19,989)

 

 

REFIS effect Law nº 11.941/09 and Law nº 12.996/14, net

 

(37,308)

     

(37,308)

   

Other expenses

 

(17,355)

 

(73,648)

 

3,905

 

(42,744)

   

(316,094)

 

(407,392)

 

(90,686)

 

(142,641)

Other operating income (expenses), net

 

(271,157)

 

(372,103)

 

(63,215)

 

(132,558)

                         

 

 

   

 

 

 

   

Parent Company

   

Nine-month period ended

 

Three-month period ended

   

9/30/2014

 

9/30/2013

 

9/30/2014

 

9/30/2013

Other operating income

 

 

 

 

 

 

 

 

Lawsuit indemnities/wins

 

3,492

 

2,823

 

813

 

1,081

Rentals and leases

 

804

 

602

 

276

 

200

Reversal of provisions

 

3,136

 

(34,862)

     

(35,755)

Other revenues

 

4,934

 

7,829

 

1,448

 

5,657

   

12,366

 

(23,608)

 

2,537

 

(28,817)

                 

Other operating expenses

 

 

 

 

 

 

 

 

Taxes and fees

 

(16,313)

 

(20,552)

 

(482)

 

(3,364)

Provision for tax, social security, labor, civil and environmental risks,
net of reversals

 

10,818

 

(155,368)

 

44,443

 

(45,157)

Contractual, nondeductible fines

 

(6,744)

     

207

 

13,412

Depreciation of unused equipment (Note 8 a)

 

(714)

 

(21,320)

 

 

 

(7,171)

Residual value of permanent assets written off (Note 8)

 

(11,970)

 

(7,771)

 

(6,880)

 

(509)

Inventory impairment losses/reversals (Note 5)

 

253

 

16,178

 

8,431

 

1,361

Spare losses

 

(20,651)

     

(20,651)

   

Expenses on studies and project engineering

 

(38,409)

 

(44,708)

 

(16,434)

 

(20,287)

Pension plan expenses

 

(43,074)

 

(35,066)

 

(16,522)

 

(13,329)

Impairment of available-for-sale financial assets

 

(66,476)

 

(3,369)

 

(18,429)

 

 

REFIS effect Law nº 11.941/09 and Law nº 12.996/14, net

 

(19,853)

     

(19,853)

   

Other expenses

 

(9,726)

 

(64,886)

 

3,552

 

(39,133)

   

(222,859)

 

(336,862)

 

(42,618)

 

(114,177)

Other operating income (expenses), net

 

(210,493)

 

(360,470)

 

(40,081)

 

(142,994)

                           

 

23.   FINANCE INCOME (COSTS)

 

PAGE 69 of 83

 


 

 

     
 

 

 

 

               

Consolidated

   

Nine-month period ended

 

Three-month period ended

   

9/30/2014

 

9/30/2013

 

9/30/2014

 

9/30/2013

Finance income

 

 

 

 

 

 

 

 

Related parties (Note 17 b)

 

36,442

 

772

 

14,047

 

362

Income from short-term investments

 

59,898

 

100,110

 

19,338

 

42,271

Gains on derivatives (*)

         

(3,183)

   

Other income

 

37,877

 

56,500

 

12,533

 

16,647

   

134,217

 

157,382

 

42,735

 

59,280

Finance costs

 

 

 

 

 

 

 

 

Borrowings and financing - foreign currency

 

(512,832)

 

(545,945)

 

(184,154)

 

(186,987)

Borrowings and financing - local currency

 

(1,335,016)

 

(1,117,087)

 

(460,091)

 

(426,856)

Related parties (Note 17 b)

 

(332,035)

 

(309,760)

 

(112,422)

 

(104,759)

Capitalized interest (Notes 8 and 29)

 

123,755

 

374,902

 

49,985

 

133,020

Losses on derivatives (*)

 

(1,395)

 

(18,693)

 

(452)

 

(2,482)

Interest, fines and late payment charges

 

(120,514)

 

(53,401)

 

(39,812)

 

(29,626)

REFIS reopening effect Law 11.941/09, net

 

(118,657)

     

(118,657)

   

Other finance costs

 

(144,663)

 

(109,299)

 

(44,341)

 

(43,552)

   

(2,441,357)

 

(1,779,283)

 

(909,944)

 

(661,242)

Monetary variations and exchange differences, net

 

 

 

 

 

 

 

 

Monetary variations, net

 

6,877

 

(29,627)

 

2,160

 

4,194

Exchange differences, net

 

(249,120)

 

70,314

 

(307,945)

 

8,935

Exchange losses on derivatives (*)

 

48,790

 

(1,006)

 

228,535

 

(8,285)

 

 

(193,453)

 

39,681

 

(77,250)

 

4,844

                 

Finance costs, net

 

(2,500,593)

 

(1,582,220)

 

(944,459)

 

(597,118)

 

 

 

 

 

 

 

 

 

(*) Statement of gains and losses on derivative transactions

               

Dollar-to-CDI swap

 

(16,607)

 

232

 

5,480

 

(806)

Dollar-to-euro swap (NDF)

 

34,602

     

193,398

   

Dollar-to-euro swap (NDF)

 

23,570

 

(5,031)

 

22,895

 

(7,056)

Dollar-to-euro swap

 

7,225

 

3,851

 

6,762

 

(425)

Yen-to-dollar swap

 

 

 

(58)

 

 

 

2

   

48,790

 

(1,006)

 

228,535

 

(8,285)

Libor-to-CDI swap

 

(943)

 

(3,385)

 

 

 

(1,091)

Fixed rate-to-CDI swap

 

(452)

 

(15,308)

 

(3,635)

 

(1,391)

 

 

(1,395)

 

(18,693)

 

(3,635)

 

(2,482)

   

47,395

 

(19,699)

 

224,900

 

(10,767)

                           

 

 

 

PAGE 70 of 83

 


 

 

     
 

 

 

 

   

 

 

 

 

Parent Company

   

Nine-month period ended

 

Three-month period ended

   

9/30/2014

 

9/30/2013

 

9/30/2014

 

9/30/2013

Finance income

 

 

 

 

 

 

 

 

Related parties (Note 17 b)

 

66,374

 

35,002

 

60,238

 

10,284

Income from short-term investments

 

2,535

 

13,455

 

552

 

8,523

Other income

 

28,350

 

50,438

 

10,603

 

9,468

 

 

97,259

 

98,895

 

71,393

 

28,275

Finance costs

               

Borrowings and financing - foreign currency

 

(81,639)

 

(53,021)

 

(31,527)

 

(18,335)

Borrowings and financing - local currency

 

(1,157,583)

 

(858,415)

 

(396,954)

 

(327,434)

Related parties (Note 17 b)

 

(1,279,220)

 

(1,148,715)

 

(290,409)

 

(395,948)

Capitalized interest (Notes 8 and 29)

 

123,755

 

232,064

 

49,985

 

86,228

Losses on derivatives (*)

 

(943)

 

(3,385)

 

 

 

(1,091)

Interest, fines and late payment charges

 

(109,451)

 

(64,918)

 

(35,321)

 

(24,066)

REFIS reopening effect Law 11.941/09, net

 

(115,309)

 

 

 

(115,309)

 

 

Other finance costs

 

(127,381)

 

(81,182)

 

(36,878)

 

(35,585)

 

 

(2,747,771)

 

(1,977,572)

 

(856,413)

 

(716,231)

Monetary variations and exchange differences, net

               

Monetary variations, net

 

(16,740)

 

(26,648)

 

(10,865)

 

4,979

Exchange differences, net

 

(589,122)

 

(599,044)

 

(1,142,912)

 

(41,414)

 

 

(605,862)

 

(625,692)

 

(1,153,777)

 

(36,435)

                 

Finance costs, net

 

(3,256,374)

 

(2,504,369)

 

(1,938,797)

 

(724,391)

 

 

 

 

 

 

 

 

 

(*) Statement of gains and losses on derivative transactions

               

Libor-to-CDI swap

 

(943)

 

(3,385)

 

 

 

(1,091)

   

(943)  

 

(3,385)

 

 

 

(1,091)  

                         

 

 

 

 

PAGE 71 of 83

 


 

 

     
 

 

 

 

 

24.   SEGMENT INFORMATION

 

The information related to segment information did not have changes in relation to that disclosed in the Company's financial statements as of December 31, 2013 and, accordingly, the Company decided not to repeat it in the condensed interim financial statements as of September 30, 2014.

 

According to the Group’s structure, its businesses are distributed into five (5) operating segments.

 

 

                               

Nine-month period ended

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2014

Profit or loss

 

Steel

 

Mining

 

Logistics

 

 

 

Energy

 

Cement

 

Corporate expenses/ elimination

 

Consolidated

     

Port

 

Railroads

       

Metric tons (thou.) - (not reviewed) (*)

 

3,924,689

 

18,484,709

 

 

 

 

 

 

 

1,640,177

 

 

 

 

Net revenues

                             

 

Domestic market

 

6,679,245

 

252,828

 

146,292

 

837,882

 

248,669

 

331,229

 

(776,960)

 

7,719,185

Foreign market

 

2,077,929

 

3,025,359

 

 

 

 

 

 

 

 

 

(516,202)

 

4,587,086

Total net revenue (Note 20)

 

8,757,174

 

3,278,187

 

146,292

 

837,882

 

248,669

 

331,229

 

(1,293,162)

 

12,306,271

Cost of sales and services (Note 21)

 

(6,651,195)

 

(2,252,299)

 

(97,710)

 

(580,892)

 

(140,100)

 

(222,856)

 

1,251,970

 

(8,693,082)

Gross profit

 

2,105,979

 

1,025,888

 

48,582

 

256,990

 

108,569

 

108,373

 

(41,192)

 

3,613,189

General and administrative expenses (Note 21)

 

(495,232)

 

(49,445)

 

(1,143)

 

(75,093)

 

(14,742)

 

(50,270)

 

(344,188)

 

(1,030,113)

Depreciation (Note 8 a)

 

601,073

 

253,517

 

7,361

 

119,937

 

12,818

 

27,873

 

(115,240)

 

907,339

Proportionate EBITDA of jointly controlled entities

                         

228,482

 

228,482

Adjusted EBITDA

 

2,211,820

 

1,229,960

 

54,800

 

301,834

 

106,645

 

85,976

 

(272,138)

 

3,718,897

                                 

Sales by geographic area

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

21,553

 

2,930,527

 

 

 

 

 

 

 

 

 

 

 

2,952,080

North America

 

510,809

                         

510,809

Latin America

 

115,093

 

 

 

 

 

 

 

 

 

 

 

 

 

115,093

Europe

 

1,414,530

 

94,832

                     

1,509,362

Other

 

15,944

 

 

 

 

 

 

 

 

 

 

 

(516,202)

 

(500,258)

Foreign market

 

2,077,929

 

3,025,359

 

 

 

 

 

 

 

 

 

(516,202)

 

4,587,086

Domestic market

 

6,679,245

 

252,828

 

146,292

 

837,882

 

248,669

 

331,229

 

(776,960)

 

7,719,185

TOTAL

 

8,757,174

 

3,278,187

 

146,292

 

837,882

 

248,669

 

331,229

 

(1,293,162)

 

12,306,271

                                 
                                 
                               

Three-month period ended

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2014

Profit or loss

 

Steel

 

Mining

 

Logistics

 

 

 

Energy

 

Cement

 

Corporate expenses/ elimination

 

Consolidated

     

Port

 

Railroads

       

Metric tons (thou.) - (not reviewed) (*)

 

1,273,924

 

6,682,099

 

 

 

 

 

 

 

588,994

 

 

 

 

Net revenues

                               

Domestic market

 

2,138,428

 

70,903

 

39,308

 

334,640

 

96,948

 

119,990

 

(316,059)

 

2,484,158

Foreign market

 

649,297

 

843,078

 

 

 

 

 

 

 

 

 

(93,547)

 

1,398,828

Total net revenue (Note 20)

 

2,787,725

 

913,981

 

39,308

 

334,640

 

96,948

 

119,990

 

(409,606)

 

3,882,986

Cost of sales and services (Note 21)

 

(2,173,391)

 

(795,965)

 

(32,728)

 

(219,481)

 

(48,986)

 

(85,992)

 

444,582

 

(2,911,961)

Gross profit

 

614,334

 

118,016

 

6,580

 

115,159

 

47,962

 

33,998

 

34,976

 

971,025

General and administrative expenses (Note 21)

 

(161,094)

 

(13,474)

 

(341)

 

(25,364)

 

(5,284)

 

(18,327)

 

(154,638)

 

(378,522)

Depreciation (Note 8 a)

 

204,563

 

98,630

 

3,368

 

42,177

 

4,273

 

10,057

 

(37,323)

 

325,745

Proportionate EBITDA of jointly controlled entities

                         

58,259

 

58,259

Adjusted EBITDA

 

657,803

 

203,172

 

9,607

 

131,972

 

46,951

 

25,728

 

(98,726)

 

976,507

                                 

Sales by geographic area

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

5,154

 

810,486

 

 

 

 

 

 

 

 

 

 

 

815,640

North America

 

178,882

                         

178,882

Latin America

 

47,706

 

 

 

 

 

 

 

 

 

 

 

 

 

47,706

Europe

 

407,343

 

32,592

                     

439,935

Other

 

10,212

 

 

 

 

 

 

 

 

 

 

 

(93,547)

 

(83,335)

Foreign market

 

649,297

 

843,078

 

 

 

 

 

 

 

 

 

(93,547)

 

1,398,828

Domestic market

 

2,138,428

 

70,903

 

39,308

 

334,640

 

96,948

 

119,990

 

(316,059)

 

2,484,158

TOTAL

 

2,787,725

 

913,981

 

39,308

 

334,640

 

96,948

 

119,990

 

(409,606)

 

3,882,986

 

 

 

 

PAGE 72 of 83

 


 

 

     
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                               

Nine-month period ended

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2013

Profit or loss

 

Steel

 

Mining

 

Logistics

 

 

 

Energy

 

Cement

 

Corporate expenses/ elimination

 

Consolidated

     

Port

 

Railroads

       

Metric tons (thou.) - (not reviewed) (*)

 

4,668,491

 

14,655,337

 

 

 

 

 

 

 

1,502,798

 

 

 

 

Net revenues

                               

Domestic market

 

7,324,839

 

236,511

 

132,598

 

776,337

 

155,096

 

307,629

 

(724,108)

 

8,208,902

Foreign market

 

1,967,717

 

3,140,340

 

 

 

 

 

 

 

 

 

(953,358)

 

4,154,699

Total net revenue (Note 20)

 

9,292,556

 

3,376,851

 

132,598

 

776,337

 

155,096

 

307,629

 

(1,677,466)

 

12,363,601

Cost of sales and services (Note 21)

 

(7,514,714)

 

(1,883,276)

 

(66,324)

 

(525,072)

 

(118,741)

 

(207,318)

 

1,184,435

 

(9,131,010)

Gross profit

 

1,777,842

 

1,493,575

 

66,274

 

251,265

 

36,355

 

100,311

 

(493,031)

 

3,232,591

General and administrative expenses (Note 21)

 

(532,249)

 

(56,024)

 

(14,954)

 

(72,826)

 

(15,273)

 

(51,809)

 

(262,189)

 

(1,005,324)

Depreciation (Note 8 a)

 

572,641

 

159,016

 

5,394

 

101,396

 

12,795

 

22,972

 

(51,494)

 

822,720

Proportionate EBITDA of jointly controlled entities

                         

598,444

 

598,444

Adjusted EBITDA

 

1,818,234

 

1,596,567

 

56,714

 

279,835

 

33,877

 

71,474

 

(208,270)

 

3,648,431

                                 

Sales by geographic area

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

19,479

 

2,468,611

 

 

 

 

 

 

 

 

 

 

 

2,488,090

North America

 

471,237

                         

471,237

Latin America

 

113,007

 

 

 

 

 

 

 

 

 

 

 

 

 

113,007

Europe

 

1,342,435

 

671,729

                     

2,014,164

Other

 

21,559

 

 

 

 

 

 

 

 

 

 

 

(953,358)

 

(931,799)

Foreign market

 

1,967,717

 

3,140,340

 

 

 

 

 

 

 

 

 

(953,358)

 

4,154,699

Domestic market

 

7,324,839

 

236,511

 

132,598

 

776,337

 

155,096

 

307,629

 

(724,108)

 

8,208,902

TOTAL

 

9,292,556

 

3,376,851

 

132,598

 

776,337

 

155,096

 

307,629

 

(1,677,466)

 

12,363,601

                                 
                                 
                               

Three-month period ended

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2013

   

Steel

 

Mining

 

Logistics

 

 

 

Energy

 

Cement

 

Corporate expenses/ elimination

 

Consolidated

       

Port

 

Railroads

       

Metric tons (thou.) - (not reviewed) (*)

 

1,531,044

 

6,534,083

 

 

 

 

 

 

 

523,503

 

 

 

 

Net revenues

                             

 

Domestic market

 

2,523,072

 

81,312

 

50,103

 

288,001

 

55,162

 

104,669

 

(268,252)

 

2,834,067

Foreign market

 

675,204

 

1,565,024

 

 

 

 

 

 

 

 

 

(412,879)

 

1,827,349

Total net revenue (Note 20)

 

3,198,276

 

1,646,336

 

50,103

 

288,001

 

55,162

 

104,669

 

(681,131)

 

4,661,416

Cost of sales and services (Note 21)

 

(2,531,714)

 

(828,176)

 

(23,567)

 

(176,584)

 

(44,220)

 

(70,207)

 

415,257

 

(3,259,211)

Gross profit

 

666,562

 

818,160

 

26,536

 

111,417

 

10,942

 

34,462

 

(265,874)

 

1,402,205

General and administrative expenses (Note 21)

 

(194,590)

 

(1,708)

 

(4,721)

 

(26,333)

 

(5,307)

 

(18,455)

 

(63,539)

 

(314,653)

Depreciation (Note 8 a)

 

200,067

 

55,317

 

1,846

 

34,539

 

4,272

 

7,587

 

(31,452)

 

272,176

Proportionate EBITDA of jointly controlled entities

                         

292,024

 

292,024

Adjusted EBITDA

 

672,039

 

871,769

 

23,661

 

119,623

 

9,907

 

23,594

 

(68,841)

 

1,651,752

                                 

Sales by geographic area

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

7,277

 

1,214,175

 

 

 

 

 

 

 

 

 

 

 

1,221,452

North America

 

161,054

                         

161,054

Latin America

 

39,163

 

 

 

 

 

 

 

 

 

 

 

 

 

39,163

Europe

 

460,056

 

350,849

                     

810,905

Other

 

7,654

 

 

 

 

 

 

 

 

 

 

 

(412,879)

 

(405,225)

Foreign market

 

675,204

 

1,565,024

 

 

 

 

 

 

 

 

 

(412,879)

 

1,827,349

Domestic market

 

2,523,072

 

81,312

 

50,103

 

288,001

 

55,162

 

104,669

 

(268,252)

 

2,834,067

TOTAL

 

3,198,276

 

1,646,336

 

50,103

 

288,001

 

55,162

 

104,669

 

(681,131)

 

4,661,416

 

(*) The ore sales volumes presented in this note take into consideration Company sales and the interest in its subsidiaries and jointly controlled entities (Namisa 60%).

 

Adjusted EBITDA is the tool based on which the chief operating decision maker measures segment performance and the capacity to generate recurring operating cash, and consists of profit for the year less net finance income (costs), income tax and social contribution, depreciation and amortization, share of profits of investments, and other operating income (expenses), plus the proportional EBITDA of jointly controlled entities.

 

Even though it is an indicator used in segment performance measurements, EBITDA is not a measurement recognized by accounting practices adopted in Brazil or IFRS, does not have a standard definition, and may not be comparable with measurements using similar names provided by other entities.

 

As required by IFRS 8, the table below shows the reconciliation of the measurement used by the chief operating decision maker with the results determined using the accounting practices.

 

PAGE 73 of 83

 


 

 

     
 

 

 

 

               

Consolidated

   

Nine-month period ended

 

Three-month period ended

   

9/30/2014

 

9/30/2013

 

9/30/2014

 

9/30/2013

Profit (Loss) for the period

 

(179,259)

 

1,021,090

 

(250,388)

 

502,888

Depreciation (Note 8 a)

 

907,339

 

822,720

 

325,745

 

272,176

Income tax and social contribution (Note 13)

 

75,274

 

(240,408)

 

32,798

 

63,446

Finance income (Note 23)

 

2,500,593

 

1,582,220

 

944,459

 

597,118

EBITDA

 

3,303,947

 

3,185,622

 

1,052,614

 

1,435,628

Other operating income (expenses) (Note 22)

 

271,157

 

372,103

 

63,215

 

132,558

Share of profits of investees

 

(84,689)

 

(507,738)

 

(197,581)

 

(208,458)

Proportionate EBITDA of jointly controlled entities

 

228,482

 

598,444

 

58,259

 

292,024

Adjusted EBITDA (*)

 

3,718,897

 

3,648,431

 

976,507

 

1,651,752

 

 

 

(*) The Company discloses its adjusted EBITDA net of its share of profits of investments and other operating income (expenses) because it understands that these should not be included in the calculation of recurring operating cash generation.

 

25.   EARNINGS PER SHARE (EPS)

 

             

Consolidated

 

Nine-month period ended

 

Three-month period ended

 

9/30/2014

 

9/30/2013

 

9/30/2014

 

9/30/2013

 

Common shares

 

Common shares

(Loss)Profit for the period

 

 

 

 

 

 

 

Attributed to owners of the Company

(173,056)

 

1,021,477

 

(250,105)

 

499,682

Weighted average number of shares

1,429,584

 

1,457,970

 

1,388,837

 

1,457,970

Basic and diluted EPS

(0.12105)

 

0.70062

 

(0.18008)

 

0.34272

               
             

Parent Company

 

Nine-month period ended

 

Three-month period ended

 

9/30/2014

 

9/30/2013

 

9/30/2014

 

9/30/2013

 

Common shares

 

Common shares

(Loss)Profit for the period

 

 

 

 

 

 

 

Attributed to owners of the Company

(173,056)

 

1,021,477

 

(250,105)

 

499,682

Weighted average number of shares

1,429,584

 

1,457,970

 

1,388,837

 

1,457,970

Basic and diluted EPS

(0.12105)

 

0.70062

 

(0.18008)

 

0.34272

 

 

 

 

PAGE 74 of 83

 


 

 

     
 

 

 

 

26.   GUARANTEES

 

The Company is liable for guarantees for its subsidiaries and jointly controlled entities, as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency

 

Maturities

 

Loans

 

Tax foreclosure

 

Other

 

Total

         

9/30/2014

 

12/31/2013

 

9/30/2014

 

12/31/2013

 

9/30/2014

 

12/31/2013

 

9/30/2014

 

12/31/2013

Transnordestina Logísitca

R$

 

Up to 9/19/2056 and indefinite

 

2,485,181

 

1,875,360

 

38,766

 

20,600

 

5,975

 

168,009

 

2,529,922

 

2,063,969

                                       

FTL - Ferrovia Transnordestina

R$

 

11/15/2020

 

140,550

 

125,250

         

142

     

140,692

 

125,250

                                       

CSN Cimentos

R$

 

Up to 10/25/2015 and indefinite

 

 

 

 

 

26,423

 

26,423

 

39,689

 

39,287

 

66,112

 

65,710

                                       

Prada

R$

 

Up to 2/10/2016 and indefinite

         

10,133

 

10,133

 

21,040

 

21,916

 

31,173

 

32,049

                                       

CSN Energia

R$

 

Indefinite

 

 

 

 

 

2,829

 

2,829

 

 

 

 

 

2,829

 

2,829

                                       

Congonhas Minérios

R$

 

5/21/2019

 

2,000,000

 

2,000,000

                 

2,000,000

 

2,000,000

                                       

Fundação CSN

R$

 

Indefinite

 

1,003

 

1,003

 

 

 

 

 

 

 

 

 

1,003

 

1,003

                                       

Estanho de Rondônia

R$

 

12/31/2014

                 

106

     

106

   
                                       

Others (*)

R$

 

12/31/2014

 

12,000

 

 

 

 

 

 

 

 

 

 

 

12,000

 

 

                                       

Total in R$

       

4,638,734

 

4,001,613

 

78,151

 

59,985

 

66,952

 

229,212

 

4,783,837

 

4,290,810

                                       

CSN Islands IX

US$

 

1/15/2015

 

400,000

 

400,000

 

 

 

 

 

 

 

 

 

400,000

 

400,000

                                       

CSN Islands XI

US$

 

9/21/2019

 

750,000

 

750,000

                 

750,000

 

750,000

                                       

CSN Islands XII

US$

 

Perpetual

 

1,000,000

 

1,000,000

 

 

 

 

 

 

 

 

 

1,000,000

 

1,000,000

                                       

CSN Resources

US$

 

7/21/2020

 

1,200,000

 

1,200,000

                 

1,200,000

 

1,200,000

                                       

Sepetiba Tecon

US$

 

 

 

 

 

15,708

 

 

 

 

 

 

 

 

 

 

 

15,708

                                       

CSN Handel

US$

 

6/27/2015

 

100,000

 

100,000

                 

100,000

 

100,000

                                       

Total in US$

 

 

 

 

3,450,000

 

3,465,708

 

 

 

 

 

 

 

 

 

3,450,000

 

3,465,708

                                       

CSN Steel S.L.

EUR

 

1/31/2020

 

120,000

 

120,000

                 

120,000

 

120,000

                                       

Lusosider Aços Planos

EUR

 

Indefinite

 

25,000

 

 

 

 

 

 

 

 

 

 

 

25,000

 

 

                                       

Total in EUR

       

145,000

 

120,000

 

 

 

 

 

 

 

 

 

145,000

 

120,000

Total in R$

 

 

 

 

8,904,783

 

8,505,948

 

 

 

 

 

 

 

 

 

8,904,783

 

8,505,948

         

13,543,517

 

12,507,561

 

78,151

 

59,985

 

66,952

 

229,212

 

13,688,620

 

12,796,758

                                       

 

(*) CSN Corporate Guarantee with the subsidiaries CSN Cimentos, Nacional Minérios, Companhia Metalúrgica Prada, Cia Metalic Nordeste, Sepetiba Tecon and CSN Energia.

 

 

 

PAGE 75 of 83

 


 

 

     
 

 

 

 

 

27.   COMMITMENTS

 

a.      Take-or-pay contracts

 

As of September 30, 2014, the Company was a party to take-or-pay contracts as shown in the following table:

   

Payments in the period

 

 

 

 

 

 

 

 

 

 

 

 

Type of service

 

2013

 

2014

 

2014

 

2015

 

2016

 

2017

 

After 2017

 

Total

Transportation of iron ore, coal, coke, steel products, cement and mining products.

 

219,147

 

216,766

 

358,032

 

584,537

 

544,767

 

516,974

 

4,430,280

 

6,434,590

Unloading, storage, movement, loading and railroad transportation services.

     

4,915

 

3,339

 

9,046

 

3,769

         

16,154

Supply of power, natural gas, oxigen, nitrogen, argon and iron ore pellets.

 

635,875

 

727,928

 

7,214

 

127,935

 

127,935

 

26,396

 

157,492

 

446,972

Processing of slag generated during pig iron and steel production

 

36,157

 

38,601

 

359

 

9,731

 

7,074

 

7,074

 

44,212

 

68,450

Manufacturing, repair, recovery and production of ingot casting machine units.

 

30,823

 

33,060

 

 

 

 

 

 

 

 

 

 

 

 

   

922,002

 

1,021,270

 

368,944

 

731,249

 

683,545

 

550,444

 

4,631,984

 

6,966,166

 

 

 

b.      Concession agreements

 

Minimum future payments related to government concessions as of September 30, 2014 fall due according to the schedule set out in the following table:

 

 

 

     

 

 

 

 

 

 

 

 

 

   

Company

     

 

 

 

 

 

 

 

 

 

   

Concession

 

Type of service

 

2014

 

2015

 

2016

 

2017

 

After 2017

 

Total

                             

MRS

 

30-year concession, renewable for another 30 years, to provide iron ore railway transportation services from the Casa de Pedra mines, in Minas Gerais, coke and coal from the Itaguaí Port, in Rio de Janeiro, to Volta Redonda, transportation of export goods to the Itaguaí and Rio de Janeiro Ports, and shipping of finished goods to the domestic market.

 

23,344

 

90,697

 

90,697

 

90,697

 

748,248

 

1,043,683

FTL (Ferrovia Transnordestina Logística)

 

30-year concession granted on December 31, 1997, renewable for another 30 years for the development of public utility to operate the Northeastern railway system. The railway system covers 4,238 kilometers of railroads in the states of Maranhão, Piauí, Ceará, Paraíba, Pernambuco, Alagoas and Rio Grande do Norte.

 

1,908

 

7,281

 

7,281

 

7,281

 

68,559

 

92,310

                             

Tecar

 

Concession to operate TECAR, a solid bulk terminal, one of the four terminals that comprise the Itaguaí Port, in Rio de Janeiro, for a period ending 2022 and renew able for another 25 years.

 

126,989

 

263,858

 

263,858

 

263,858

 

1,319,290

 

2,237,853

                             

Tecon

 

25-year concession granted in July 2001, renewable for another 25 years, to operate the container terminal at the Itaguaí Port.

 

6,491

 

25,965

 

25,965

 

25,965

 

207,724

 

292,110

                             

 

 

 

 

158,732

 

387,801

 

387,801

 

387,801

 

2,343,821

 

3,665,956

                             

 

 

28.   INSURANCE

 

In 2014, after negotiation with insurers and reinsurers in Brazil and abroad, an Insurance Issue Certificate was issued for the contracting of a policy of Operational Risk of Property Damages and Loss of Profits, with effect from September 30, 2014 to September 30, 2015. Under the insurance policy, the LMI (Maximum Limit of Indemnity) is US$600,000,000 and covers the following units and subsidiaries of the Company:  Usina Presidente Vargas, Mineração Casa de Pedra, CSN Paraná, Terminal de Cargas Tecar, Terminal Tecon, Namisa, CSN Handel and Namisa Handel. CSN takes responsibility for a range of retention of US$375,000,000 in excess of the deductibles for property damages and loss of profits.

 

 

PAGE 76 of 83

 


 

 

     
 

 

 

 

 

In view of their nature, the risk assumptions adopted are not part of the scope of an audit of condensed interim financial statements and, accordingly, were not reviewed by our independent auditors.

 

 

 

29.   ADDITIONAL INFORMATION TO CASH FLOWS

 

     

Consolidated

     

Parent Company

 

9/30/2014

 

9/30/2013

 

9/30/2014

 

9/30/2013

Income tax and social contribution paid

81,618

 

26,493

 

20,470

 

 

Increase of PP&E with interest capitalization

123,755

 

374,902

 

123,755

 

232,064

 

205,373

 

401,395

 

144,225

 

232,064

 

30.   STATEMENT OF COMPREHENSIVE INCOME

 

 

 

Consolidated

 

Nine-month period ended

 

Three-month period ended

 

9/30/2014

 

9/30/2013

 

9/30/2014

 

9/30/2013

Profit for the period

(179,259)

 

1,021,090

 

(250,388)

 

502,888

               

Other comprehensive income

             
               

Items that will not be subsequently reclassified to the statement of income

 

 

 

 

 

 

 

Actuarial gains on defined benefit pension plan from investments in subsidiaries

1,710  

 

 

 

 

 

 

1,710

 

 

 

 

 

 

               

Items that could be subsequently reclassified to the statement of income

 

 

 

 

 

 

 

Cumulative translation adjustments for the period

(26,602)

 

128,932

 

60,745

 

47,884

Available-for-sale financial assets

(1,241,037)

 

(459,517)

 

(151,034)

 

532,567

Income tax and social contribution on available-for-sale financial assets

421,952

 

156,236

 

51,351

 

(181,073)

Available-for-sale financial assets from investments in subsidiaries

 

 

 

 

Impairment of available-for-sale financial assets

72,104

 

5,002

 

19,989

   

Income tax and social contribution on impairment of available-for-sale financial assets

 (24,515)  

(1,701)

 

(6,796)

 

 

(Loss)/gain on the percentage change of investments

(73,054)

     

(73,054)

   

 

(871,152)

 

(171,048)

 

(98,799)

 

399,378

               
 

(869,442)

 

(171,048)

 

(98,799)

 

399,378

               

Total comprehensive income for the period

(1,048,701)

 

850,042

 

(349,187)

 

902,266

               

Attributable to:

 

 

 

 

 

 

 

Owners of the Company

(1,042,498)

 

850,429

 

(348,904)

 

899,060

Non-controlling interests

(6,203)

 

(387)

 

(283)

 

3,206

 

(1,048,701)

 

850,042

 

(349,187)

 

902,266

 

 

 

 

PAGE 77 of 83

 


 
     
 

 


 

   

Parent Company

   

Nine-month period ended

 

Three-month period ended

   

9/30/2014

 

9/30/2013

 

9/30/2014

 

9/30/2013

Profit for the period

 

(173,056)

 

1,021,477

 

(250,105)

 

499,682

                 

Other comprehensive income

               
                 

Items that will not be subsequently reclassified to the statement of income

 

 

 

 

 

 

 

 

Actuarial gains on defined benefit pension plan from investments in subsidiaries

   1,710      

 

 

 

 

 

1,710

 

 

 

 

 

 

                 

Items that could be subsequently reclassified to the statement of income

 

 

 

 

 

 

 

 

Cumulative translation adjustments for the period

 

(26,602)

 

128,932

 

60,745

 

47,884

Available-for-sale financial assets

 

(1,208,939)

 

(203,457)

 

(149,474)

 

538,983

Income tax and social contribution on available-for-sale financial assets

 

411,039

 

69,175

 

50,821

 

(183,255)

Available-for-sale financial assets from investments in subsidiaries

   (17,470)    (167,922)        (4,234)

Impairment of available-for-sale financial assets

 

66,476

 

3,369

 

18,429

   

Income tax and social contribution on impairment of available-for-sale financial assets

(22,602)

 

(1,145)

 

(6,266)

 

 

(Loss)/gain on the percentage change of investments

 

(73,054)

     

(73,054)

   

 

 

(871,152)

 

(171,048)

 

(98,799)

 

399,378

                 
   

(869,442)

 

(171,048)

 

(98,799)

 

399,378

                 

Total comprehensive income for the period

 

(1,042,498)

 

850,429

 

(348,904)

 

899,060

                 

Attributable to:

 

 

 

 

 

 

 

 

Owners of the Company

 

(1,042,498)

 

850,429

 

(348,904)

 

899,060

   

(1,042,498)

 

850,429

 

(348,904)

 

899,060

 

 

 

 

PAGE 78 of 83

 

Companhia Siderúrgica Nacional

 

(Convenience Translation into English from the Original Previously Issued in Portuguese)

 

REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION

 

To the Board of Directors and Shareholders of

Companhia Siderúrgica Nacional

São Paulo – SP

Introduction

We have reviewed the accompanying individual and consolidated interim financial information of Companhia Siderúrgica Nacional (“the Company”), identified as Parent and Consolidated, respectively, included in the Interim Financial Information Form (ITR), for the nine-month period ended September 30, 2014, which comprises the balance sheet as of September 30, 2014 and the related statements of income, and of comprehensive income, for the nine-months periods then ended and of changes in equity and of cash flows for the nine-month period then ended, including the explanatory notes.

The Company’s management is responsible for the preparation of the individual interim financial information in accordance with technical pronouncement CPC 21 (R1) – Interim Financial Information and of the consolidated interim financial information in accordance with technical pronouncement CPC 21 (R1) and with international standard IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board - IASB, as well as for the presentation of such information in accordance with the standards issued by the Brazilian Securities and Exchange Commission (CVM), applicable to the preparation of Interim Financial Information (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of review

We conducted our review in accordance with Brazilian and international standards on review of interim financial information (NBC TR 2410 and ISRE 2410 – Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with standards on auditing and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion on the individual interim financial information

Based on our review, nothing has come to our attention that causes us to believe that the accompanying individual interim financial information included in the ITR referred to above was not prepared, in all material respects, in accordance with technical pronouncement CPC 21 (R1), applicable to the preparation of the Interim Financial Information (ITR) and presented in accordance with the standards issued by the Brazilian Securities Commission.

Conclusion on the consolidated interim financial information

Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated interim financial information included in the ITR referred to above was not prepared, in all material respects, in accordance with technical pronouncement CPC 21 (R1) and international standard IAS 34, applicable to the preparation of Interim Financial Information (ITR) and presented in accordance with the standards issued by the Brazilian Securities Commission.

 


 

Other matters

Statements of value added

We have also reviewed the individual and consolidated interim statements of value added (DVA), for the nine-month period ended September 30, 2014, prepared under the responsibility of the Company's Management, the presentation of which is required by the standards issued by the CVM applicable to the preparation of Interim Financial Information (ITR), and considered as supplemental information for International Financial Reporting Standards – IFRS, which do not require the presentation of DVA. These statements were subject to the same review procedures described above and, based on our review, nothing has come to our attention that causes us to believe that they were not prepared, in all material respects, consistently with the individual and consolidated interim financial information taken as a whole.

The accompanying individual and consolidated interim financial information has been translated into English for the convenience of readers outside Brazil.

São Paulo, November 13, 2014

DELOITTE TOUCHE TOHMATSU

Roberto Wagner Promenzio

Auditores Independentes

Engagement Partner

 

 

 

 


 
 

SIGNATURE
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: December 5, 2014
 
COMPANHIA SIDERÚRGICA NACIONAL
 
By:
/S/ Benjamin Steinbruch

 
Benjamin Steinbruch
Chief Executive Officer

 

 
 
By:
/S/ David Moise Salama

 
David Moise Salama
Investor Relations Executive Officer

 
 

 

 
FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.