EXHIBIT 99.1
(A free translation of the original in Portuguese)
GERDAU S.A.
REPORT OF INDEPENDENT ACCOUNTANTS
ON LIMITED REVIEWS OF QUARTERLY
INFORMATION (ITR)
MARCH 31, 2004
(A free translation of the original in Portuguese)
REPORT OF INDEPENDENT ACCOUNTANTS
ON LIMITED REVIEWS
1 We have carried out limited reviews of the Quarterly Information (ITR) of
Gerdau S.A. and its subsidiaries for the quarters ended March 31, 2004 and
2003. This information is the responsibility of the Company's management.
2 Our reviews were carried out in conformity with specific standards
established by the Institute of Independent Auditors of Brazil (IBRACON),
in conjunction with the Federal Accounting Council (CFC), and mainly
comprised: (a) inquiries of and discussions with management responsible for
the accounting, financial and operating areas of the Company with regard to
the main criteria adopted for the preparation of the quarterly information
and (b) a review of the significant information and of the subsequent
events which have, or could have, significant effects on the Company's
financial position and operations.
3 Based on our limited reviews, we are not aware of any material
modifications that should be made to the quarterly information referred to
above in order that such information be stated in conformity with the
accounting practices adopted in Brazil applicable to the preparation of
quarterly information, consistent with the Brazilian Securities Commission
(CVM) regulations.
4 Our reviews were conducted in order to issue a report on the Quarterly
Information (ITR) referred to in paragraph 1, taken as a whole. The
statement of cash flows, presented to provide additional information on the
Company and its subsidiaries, is not required as an integral part of the
Quarterly Information (ITR). The statement of cash flows was submitted to
the review procedures mentioned in paragraph 2, and, based on our review,
we are not aware of any material modifications that should be made for it
to be properly presented, in all material respects, in relation to the
Quarterly Information (ITR) taken as a whole.
2
April 25, 2003
Gerdau S.A.
5 The Quarterly Information (ITR) also includes accounting information for
the quarter ended December 31, 2003. We audited this information upon its
preparation, in connection with the audit of the financial statements at
that date, on which we issued an unqualified opinion dated February 20,
2004.
Porto Alegre, April 26, 2004
PricewaterhouseCoopers Carlos Alberto de Sousa
Auditores Independentes Contador CRC 1RJ056561/O-0
CRC 2SP000160/O-5 "F" RJ
3
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
- --------------------------------------------------------------------------------
REGISTRATION WITH CVM DOES NOT IMPLY ANY APPROVAL OF THE COMPANY. THE ACCURACY
OF THE INFORMATION IS THE RESPONSIBILITY OF COMPANY MANAGEMENT.
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01.01 - IDENTIFICATION
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1 - CVM CODE 2 - COMPANY NAME 3 - General Taxpayers' Registration (CNPJ)
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
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4 - Register Inscription Number - NIRE
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33300032266
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01.02 - HEAD OFFICE
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1 - FULL ADDRESS 2 - SUBURB OR DISTRICT
Av. Joao XXIII, 6777 Sta. Cruz
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3 - ZIP CODE 4 - MUNICIPALITY 5 - STATE
23560-900 Rio de Janeiro RJ
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6 - AREA CODE 7 - TELEPHONE 8 - TELEPHONE 9 - TELEPHONE 10 - TELEX
021 2414-6000 - -
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11 - AREA CODE 12 - FAX 13 - FAX 14 - FAX
021 2414-6243 - -
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15 - E-MAIL
INFORM@GERDAU.COM.BR
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01.03 - INVESTOR RELATIONS OFFICER (Company Mail Address)
- --------------------------------------------------------------------------------
1 - NAME 2 - ADDRESS
Osvaldo Burgos Schirmer Av. Farrapos, 1811
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3 - SUBURB OR DISTRICT 4 - ZIP CODE 5 - MUNICIPALITY 6 - STATE
Floresta 90220-005 Porto Alegre RS
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6 - AREA CODE 7 - TELEPHONE 8 - TELEPHONE 9 - TELEPHONE 10 - TELEX
051 3323-2000 - -
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11- AREA CODE 12 - FAX 13 - FAX 14 - FAX
051 3323-2281 - -
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15 - E-MAIL
inform@gerdau.com.br
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01.04 - GENERAL INFORMAION / INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
CURRENT YEAR CURRENT QUARTER PRIOR QUARTER
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1-BEGINNING 2-END 3-NUMBER 4-BEGINNING 5-END 6-NUMBER 7-BEGINNING 8-END
- --------------------------------------------------------------------------------
1/1/2004 12/31/2004 1 1/1/2004 3/31/2004 4 10/1/2003 12/31/2003
- --------------------------------------------------------------------------------
9 - NAME OF INDEPENDENT ACCOUNTANTS 10 - CODE CVM
PricewaterhouseCoopers Auditores Independentes 00287-9
- --------------------------------------------------------------------------------
11 - NAME OF RESPONSIBLE ACCOUNTANT 12 - TAXPAYER ID NO. OF
RESP. ACCOUNTANT
Carlos Alberto Sousa 724.687.697-91
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1
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- ------------------------------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - General Taxpayers' Registration (CNPJ)
- ------------------------------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
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01.05 - CAPITAL COMPOSITION
- ------------------------------------------------------------------------------------------------------
NUMBER 1 - CURRENT QUARTER 2 - PRIOR QUARTER 3 - SAME QUARTER
(THOUSANDS) 3/31/2004 12/31/2003 PRIOR YEAR
3/31/2003
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SUBSCRIBED CAPITAL
- ------------------------------------------------------------------------------------------------------
1 - Common 51,468 51,468 39,590,942
2 - Preferred 96,886 96,886 74,527,529
3 - Total 148,354 148,354 114,118,471
TREASURY STOCK
4 - Common 0 0 0
5 - Preferred 787 0 0
6 - Total 787 0 0
01.06 - CHARACTERISTICS OF THE COMPANY
1 - TYPE OF COMPANY
Commercial, Industrial and Other
2 - SITUATION
Operating
3 - SHARE CONTROL NATURE
Private National
4 - ACTIVITY CODE
134 - Administration and Investment Company
5 - MAIN ACTIVITY
Investment and administration
6 - CONSOLIDATION TYPE
Total
7 - TYPE OF REPORT OF INDEPENDENT ACCOUNTANTS
Without exception
01.07 - COMPANIES EXCLUDED FROM THE CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1-ITEM 2- CNPJ 3-NAME
01.08 - DIVIDENDS APPROVED AND/OR PAID DURING AND AFTER THE QUARTER
- ------------------------------------------------------------------------------------------------------
1- ITEM 2 - EVENT 3 - DATE 4 - TYPE 5 - DATE OF 6 - TYPE OF 7 - AMOUNT
APPROVED PAYMENT SHARE PER SHARE
- ------------------------------------------------------------------------------------------------------
01 Board Meeting 12/30/2003 Interest on capital 2/17/2004 Common 1.0200000000
02 Board Meeting 12/30/2003 Interest on capital 2/17/2004 Preferred 1.0200000000
03 Board Meeting 3/30/2004 Interest on capital 5/18/2004 Common 0.6400000000
04 Board Meeting 3/30/2004 Interest on capital 5/18/2004 Preferred 0.6400000000
2
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- -------------------------------------------------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - General Taxpayers' Registration (CNPJ)
- -------------------------------------------------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
01.09 - SUBSCRIBED CAPITAL AND ALTERATIONS DURING THE CURRENT YEAR
- -------------------------------------------------------------------------------------------------------------------------
1- ITEM 2 - DATE OF 3 - Subscribed 4 - CHANGE 5 - NATURE 6 - NUMBER OF 7 - SHARE PRICE
CHANGE Capital AMOUNT OF CHANGE SHARES ISSUED ON ISSUE DATE
(Thousands of reais) (Thousands of reais ) (Thousand) (Reais)
- -------------------------------------------------------------------------------------------------------------------------
Revenue
4/30/2003 1,735,656 400,536 reserve 34,235,541 0.0116965010
01.10 - INVESTOR RELATIONS OFFICER
- -------------------------------------------------------------------------------------------------------------------------
1 - DATE 2 - SIGNATURE
4/28/2004
3
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- -------------------------------------------------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- -------------------------------------------------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
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02.01 - BALANCE SHEET - ASSETS (R$ THOUSANDS)
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1 - CODE 2 - DESCRIPTION 3 - 3/31/2004 4 - 12/31/2003
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1 Total assets 5,185,356 4,727,498
1.01 Current assets 275,303 415,089
1.01.01 Cash and banks 44 10
1.01.02 Credits 192,422 179,518
1.01.02.01 Trade accounts receivable 0 0
1.01.02.03 Tax credits 2,940 1,844
1.01.02.05 Marketable securities 189,482 177,674
1.01.03 Inventories 0 0
1.01.03.01 Finished products 0 0
1.01.03.02 Work in process 0 0
1.01.03.03 Raw materials 0 0
1.01.03.04 Warehouse materials 0 0
1.01.03.05 Advances to suppliers 0 0
1.01.04 Other 82,837 235,561
1.01.04.01 Other accounts receivable 1,220 102
1.01.04.02 Deferred income tax and social contribution 0 0
1.01.04.03 Dividends receivable 81,617 235,459
1.02 Long-term receivables 74,715 64,097
1.02.01 Sundry credits 8,908 8,908
1.02.01.01 Eletrobras loans 8,908 8,908
1.02.02 Receivables from related companies 0 0
1.02.02.01 Associated companies 0 0
1.02.02.02 Subsidiaries 0 0
1.02.02.03 Other related persons 0 0
1.02.03 Other 65,807 55,189
1.02.03.01 Judicial deposits and other 25,503 25,503
1.02.03.02 Credits from swap transactions 0 0
1.02.03.03 Deferred income tax and social contribution 40,304 29,686
1.03 Permanent assets 4,835,338 4,248,312
1.03.01 Investments 4,835,338 4,248,312
1.03.01.01 In associated companies 0 0
1.03.01.02 In subsidiaries 4,835,295 4,248,269
1.03.01.03 Other 43 43
1.03.02 Fixed assets 0 0
1.03.02.01 Land, buildings and structures 0 0
1.03.02.02 Machinery, equipment and installations 0 0
1.03.02.03 Furniture and fixtures 0 0
1.03.02.04 Vehicles 0 0
1.03.02.05 Electronic data equipment 0 0
1.03.02.06 Construction in progress 0 0
1.03.02.07 Forestation/reforestation 0 0
1.03.02.08 Accumulated depreciation 0 0
1.03.03 Deferred charges 0 0
4
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- -------------------------------------------------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- -------------------------------------------------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
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02.02 - BALANCE SHEET - LIABILITIES AND SHAREHOLDERS' EQUITY (R$ THOUSANDS)
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1 - CODE 2 - DESCRIPTION 3 - 3/31/2004 4 - 12/31/2003
- -------------------------------------------------------------------------------------------------------------------------
2 Total liabilities and shareholders' equity 5,185,356 4,727,498
2.01 Current liabilities 388,439 190,261
2.01.01 Loans and financing 0 0
2.01.02 Debentures 0 0
2.01.03 Suppliers 0 0
2.01.04 Taxes, charges and contributions 17,191 42,455
2.01.05 Dividends payable 82,614 131,916
2.01.06 Provisions 0 0
2.01.07 Payables to related companies 285,282 0
2.01.08 Other 3,352 15,890
2.01.08.01 Salaries payable 421 4,089
2.01.08.02 Other payables 2,931 11,801
2.01.08.03 Deferred income tax and social contribution 0 0
2.02 Long-term liabilities 408,041 408,841
2.02.01 Loans and financing 0 0
2.02.01.01 Local financing 0 0
2.02.01.02 Foreign financing 0 0
2.02.02 Debentures 249,787 227,878
2.02.03 Provisions 0 0
2.02.04 Payables to related companies 0 20,961
2.02.05 Other 158,254 160,002
2.02.05.01 Provision for contingencies 95,021 95,000
2.02.05.02 Deferred income tax and social contribution 59,833 57,530
2.02.05.03 Other payables 3,400 7,472
2.02.05.04 Benefits to employees 0 0
2.03 Deferred income 0 0
2.05 Shareholders' equity 4,388,876 4,128,396
2.05.01 Paid-up capital 1,735,656 1,735,656
2.05.02 Capital reserves 376,672 376,672
2.05.02.01 Capital restatement 0 0
2.05.02.02 Investment subsidies 342,909 342,910
2.05.02.03 Special reserve - Law 8200/91 21,487 21,487
2.05.02.04 Other 12,276 12,275
2.05.03 Revaluation reserves 0 0
2.05.03.01 Own assets 0 0
2.05.03.02 Associated/subsidiary companies' assets 0 0
2.05.04 Revenue reserves 1,989,031 2,016,068
2.05.04.01 Legal 184,429 184,429
2.05.04.02 Statutory 1,804,602 1,831,639
2.05.04.03 Contingencies 0 0
2.05.04.04 Unrealized profits 0 0
2.05.04.05 Retention of profits 0 0
2.05.04.06 Special for undistributed dividends 0 0
2.05.04.07 Other 0 0
2.05.05 Retained earnings/accumulated losses 287,517 0
5
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- -------------------------------------------------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- -------------------------------------------------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
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03.01 - STATEMENT OF INCOME (R$ THOUSANDS)
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Code Description 3 - 1/1/2004 4 - 1/1/2004 5 - 1/1/2003 6 - 1/1/2003
to 3/31/2004 to 3/31/2004 to 3/31/2003 to 3/31/2003
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3.01 Gross sales and/or services 0 0 1,526,932 1,526,932
3.02 Deductions 0 0 (313,684) (313,684)
3.02.01 Taxes on sales 0 0 (273,851) (273,851)
3.02.02 Freight and discounts 0 0 (39,833) (39,833)
3.03 Net sales and/or services 0 0 1,213,248 1,213,248
3.04 Cost of sales and/or services rendered 0 0 (714,417) (714,417)
3.05 Gross profit 0 0 498,831 498,831
3.06 Operating expenses/income 373,937 373,937 (173,602) (173,602)
3.06.01 Selling expenses 0 0 (71,022) (71,022)
3.06.02 General and administrative expenses (9,315) (9,315) (84,327) (84,327)
3.06.03 Financial 3,117 3,117 (48,733) (48,733)
3.06.03.01 Financial income 0 0 23,865 23,865
3.06.03.02 Financial expenses 0 0 (72,598) (72,598)
3.06.04 Other operating income 694 694 1,638 1,638
3.06.05 Other operating expenses 0 0 0 0
3.06.06 Equity in the earnings of subsidiaries and 379,441 379,441 28,842 28,842
associated companies
3.07 Operating profit 373,937 373,937 325,229 325,229
3.08 Non-operating results 0 0 (606) (606)
3.08.01 Income 0 0 0 0
3.08.02 Expenses 0 0 (606) (606)
3.09 Income before taxes and participations 373,937 373,937 324,623 324,623
3.10 Provision for income tax and social 0 0 (56,618) (56,618)
contribution
3.11 Deferred income tax 8,316 8,316 (17,566) (17,566)
3.12 Statutory participations and contributions (294) (294) (4,538) (4,538)
3.12.01 Participations 0 0 (4,538) (4,538)
3.12.02 Contributions 0 0 0 0
3.13 Reversal of interest on own capital 0 0 0 0
3.15 Net income/loss for the period 381,959 381,959 245,901 245,901
Number of shares (thousands), excluding 147,567 147,567 114,118,471 114,118,471
treasury stock
Net income per share 2.58838 2.58838 0.00215 0.00215
Loss per share
6
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
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04.01 - NOTES TO THE QUARTERLY INFORMATION
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NOTE 1 - OPERATIONS
Gerdau S.A. is a company of the Gerdau Group dedicated mainly to the production
of common and special steel rods and to the selling of general steel products
(flat and rods), through plants located in Brazil, Uruguay, Chile, Canada,
Argentina and the United States of America.
The Gerdau Group has an installed capacity of 14.5 million tons of coarse steel
per year, basically producing steel in electrical furnaces, from scrap and pig
iron acquired, for the most part, in the region near each plant (mini-mill
concept). Gerdau also operates plants which are capable of producing steel from
iron ore (through blast furnaces and direct reduction) and has a unit used
exclusively to produce special steel. It is the largest scrap recycling company
in Latin America and it is among the largest recycling companies in the world.
The industrial sector is the Company's most important market, including
manufacturers of goods such as vehicles and household and commercial equipment,
which basically use profiled steel in various available specifications. The next
most important market is the civil construction sector, which demands a high
volume of rods and grids for concrete. There are also numerous customers for
nails, staples and wires, commonly used in the agribusiness sector.
NOTE 2 - PRESENTATION OF THE QUARTERLY INFORMATION
The quarterly information has been prepared in conformity with accounting
practices adopted in Brazil, together with the rules established by the
Brazilian Securities Commission (CVM).
NOTE 3 - SIGNIFICANT ACCOUNTING PRACTICES
a) CASH AND BANKS AND FINANCIAL INVESTMENTS - financial investments are
recorded at cost plus income accrued up to the date of the Quarterly
Information, using the interest rates agreed with the financial
institutions, and do not exceed the market value;
7
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
b) CUSTOMERS - are stated at realizable values, and trade accounts receivable
from foreign customers are adjusted based on exchange rates effective at
the date of the Quarterly Information. The provision for credit risks was
calculated based on a credit risk analysis, which included the history of
losses, the individual situation of customers and the economic group to
which they belong, the collateral and guarantees and the legal advisors'
opinion, and is considered sufficient to cover eventual losses on amounts
receivable;
C) INVENTORIES - are stated at the lower of market value and average
production or purchase cost;
d) INVESTMENTS IN SUBSIDIARIES - are accounted for using the equity method.
The result of the equity adjustment is recorded in an operating results
account;
e) FIXED ASSETS - are recorded at cost, net of depreciation. Depreciation is
calculated on the straight-line basis, at rates which take into
consideration the estimated useful lives of assets. Interest on financing
used to finance construction in progress is added to the cost of
construction;
f) DEFERRED CHARGES - amortization is calculated on the straight-line basis,
at rates determined based on the actual production of the implemented
projects in relation to their installed capacities;
g) FINANCING - is stated at the contract value plus the contracted charges,
including interest and monetary or foreign exchange variations. Swap
contracts that are linked to the loan agreements are classified together
with the related loans;
h) INCOME TAX AND SOCIAL CONTRIBUTION - current and deferred income tax and
social contribution are calculated in accordance with the legislation in
force;
i) OTHER CURRENT AND LONG-TERM ASSETS AND LIABILITIES - are recorded at their
realizable amounts (assets) and at their known or estimated amounts plus
accrued charges and indexation readjustments (liabilities), when
applicable;
j) TRANSLATION OF FOREIGN CURRENCY BALANCES - the criterion used for asset and
liability balances in foreign currency is the translation to local currency
(R$) at the foreign exchange rate in effect at the date of the closing of
the Quarterly Information (March 31, 2004 - US$ 1.00 = R$ 2.9086 and
December 31, 2003 - US$ 1.00 = R$ 2.8892).
-8-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
NOTE 4 - CONSOLIDATED QUARTERLY INFORMATION
a) The consolidated Quarterly Information at March 31, 2004 include the
accounts of Gerdau S.A. and the directly or indirectly controlled
subsidiaries listed below:
Shareholders'
Consolidated company Percentage equity
- ---------------------------------------------------------------------------- ---------------- -------------------
Gerdau Acominas S.A. 92 3,273,198
Gerdau Internacional Empreendimentos Ltda. - Grupo Gerdau 100 1,992,587
Gerdau GTL Spain S.L. 100 1,863,901
Gerdau Ameristeel Corporation e subsidiarias* 69 1,617,538
Gerdau Steel Inc. 100 1,341,924
Aramac S.A. 100 594,613
GTL Equity Investments Corp. 100 594,537
Axol S.A. 100 351,700
Gerdau Chile Inversiones Ltda. 100 351,659
Industria Del Aciero S.A.-Indac 100 351,620
Gerdau Aza S.A. 100 350,057
Seiva S.A. - Florestas e Industrias 97 172,054
Sipar Aceros S.A. 38 76,999
Margusa - Maranhao Gusa S.A. 92 54,682
Itaguai Com. Imp. e Exp. Ltda. 100 50,552
Armafer Servicos de Construcao Ltda. 92 40,403
Florestal Rio Largo Ltda. 100 36,723
Gerdau Laisa S.A. 100 36,699
GLT Brasil Ltda. 100 35,501
Acominas Com. Imp. Exp. S.A.- Acotrading 92 22,589
GTL Financial Corp. 100 12,067
Acominas Overseas Ltd. 92 7,602
Florestal Itacambira S.A. 92 7,287
Aceros Cox S.A. 100 6,572
Siderco S.A. 38 6,078
Siderurgica Riograndense S.A. 87 545
GTL Trade Finance Inc. 100 29
Dona Francisca Energetica S.A. 52 (17,805)
* Subsidiaries:
Gerdau Ameristeel MRM Special Sections Inc.(69%), Gerdau USA Inc.(69%), AmeriSteel Bright Bar Inc.(69%),
Gerdau AmeriSteel US Inc.(69%), Gerdau Ameristeel Perth Amboy Inc.(69%), Gallatin Steel Company (34%),
Gerdau Ameristeel Sayreville Inc.(69%).
-9-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
b) The more significant accounting practices used in preparing the
consolidated quarterly information are as follows:
I) Gerdau S.A. and its subsidiaries adopt consistent practices to record
their transactions and value their assets and liabilities. The
financial statements of foreign companies were translated using the
exchange rate in effect at the date of the Quarterly Information and
were adjusted to be in conformity with accounting practices adopted in
Brazil.
II) Balance sheet balances arising from transactions between consolidated
companies have been eliminated.
III) Holdings of minority shareholders in subsidiaries are shown
separately.
c) On February 16, 2004 the subsidiary Gerdau Ameristeel Corporation signed an
agreement for the purchase of all assets of Potter Form & Tie Co.,
headquartered in Belvidere, Illinois, in the United States. The purchase
price was US$ 11 million, equivalent at that date to R$ 31,995.
d) Due to the operational integration with Acominas on November 28, 2003,
presented below is the pro-forma statement of income, showing the results
of the Company if this integration had occurred on January 1, 2003:
PRO FORMA STATEMENT OF INCOME - GERDAU S.A.
3/31/2003
Gross sales -
Gross sales deductions -
Net sales -
Cost of sales -
Gross profit -
Selling expenses -
General and administrative expenses (3,278)
Financial expenses/income, net (5,321)
Equity in the results 252,529
Other operating income (expenses) -
Operating profit (loss) 243,930
Non-operating result -
Provision for income tax and social contribution 2,924
Management interest (284)
Net income (loss) for the year 246,570
-10-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
e) The financial statements of the jointly-controlled subsidiary Dona Francisca
Energetica S.A. and the jointly-controlled indirect subsidiaries Gallatin
Steel Company and Sipar Aceros S.A. were consolidated proportionally based
on the direct or indirect interest of the parent company in the capital of
these subsidiaries.
The main groups of assets, liabilities, income and expenses of these companies
are shown as follows:
Dona Gallatin Sipar
Francisca Steel (consolidated)
---------------- ------------------ -------------------
3/31/2004 3/31/2004 3/31/2004
Assets
Current assets 114,318 344,283 139,107
Long-term receivables 133,922 - 224
Permanent assets 188,704 723,747 21,640
---------------- ------------------ -------------------
Total assets 436,944 1,068,030 160,971
================ ================== ===================
Liabilities
Current liabilities 30,312 151,681 80,211
Long-term liabilities 424,437 232,118 3,761
Sockholders' equity (17,805) 684,231 76,999
---------------- ------------------ -------------------
Total liabilities 436,944 1,068,030 160,971
================ ================== ===================
Dona Gallatin Sipar
Francisca Steel (consolidated)
---------------- ------------------ -------------------
Statement of income 3/31/2004 3/31/2004 3/31/2004
Gross sales 11,004 439,225 115,434
Gross sales deductions (851) (3,764) (22,949)
---------------- ------------------ -------------------
Net sales 10,153 435,461 92,485
Cost of sales (4,567) (378,819) (66,886)
---------------- ------------------ -------------------
Gross profit 5,586 56,642 25,599
Selling expenses - (1,321) (960)
General and administrative expenses (638) (9,354) (3,389)
Other financial income (losses) (3,534) (5,308) (937)
Other operating income (expenses) - - 58
---------------- ------------------ -------------------
Operating profit 1,414 40,659 20,371
Non-operating results 152 - (15)
Provision for income tax and social contribution (526) (931) (6,364)
---------------- ------------------ -------------------
Net income for the period 1,040 39,728 13,992
================ ================== ===================
-11-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
f) The Company and its direct and indirect subsidiaries have goodwill and
negative goodwill balances, which are being amortized either as the assets
that generated them are realized or based on projections of future results,
as follows:
-12-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
Amortization
period Company Consolidated
---------------- -------------- -----------------
Goodwill in the investment account
Balance at December 31, 2003 21,951 432,077
(+) Goodwill for the period 280,882 3,930
(-) Reversal of goodwill through adjustment to the purchase price
(Margusa - Maranhao Gusa S.A.) - (5,258)
(+) Foreign exchange adjustment - 863
(- ) Amortized portion for the period 10 years (610) (10,098)
-------------- -----------------
Balance at March 31, 2004 based on: 302,223 421,514
- undervaluation of assets 280,882 285,906
- expectation of future profitability 21,341 135,608
The goodwill composition by subsidiary is explained in Note 7a
Negative goodwill in the investment account
Balance at December 31, 2003 (270,949) -
(- ) Amortized portion for the period 10 years 6,774 -
-------------- -----------------
Balance at March 31, 2004 (overvaluation of assets) (264,175) -
The negative goodwill composition by subsidiary is explained in Note 7a
Goodwill in the fixed asset account
Balance at December 31, 2003 - 239,740
(+) Foreign exchange adjustment - 1,229
(- ) Amortized portion for the period 10 years - (8,681)
-------------- -----------------
Balance at March 31, 2004 (undervaluation of assets) - 232,288
The goodwill mainly resulted from the assets of the subsidiary Gerdau
Ameristeel US Inc.
Negative goodwill in the fixed asset account
Balance at December 31, 2003 - (272,130)
(- ) Amortized portion for the period 10 years - 6,767
-------------- -----------------
Balance at March 31, 2004 (overvaluation of assets) - (265,363)
The negative goodwill mainly resulted from the assets of the subsidiary
Gerdau Acominas S.A.
The amount of equity in the results in the consolidated statement of income
refers, basically, to amortization of goodwill, tax incentives and to the effect
of the foreign exchange devaluation on foreign investments, which was not
eliminated.
-13-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
NOTE 5 - CUSTOMERS
Consolidated
---------------------------
3/31/2004 12/31/2003
------------ ----------
Trade accounts receivable - Brazil 640,241 533,631
Trade accounts receivable from Brazilian exports 263,900 235,442
Trade accounts receivable from foreign companies 1,063,779 835,212
Provision for credit risks (80,303) (78,109)
--------- ---------
1,887,617 1,526,176
========= =========
NOTE 6 - INCOME TAX AND SOCIAL CONTRIBUTION
a) Adjustements to income tax and social contribution on income:
COMPANY
-------------------------------------------------------------------
3/31/2004 3/31/2003
-------------------------------------------------------------------
IR CS Total IR CS Total
------- ------- -------- ------- ------- --------
Income before income tax and social contribution,
after statutory participation 373,643 373,643 373,643 320,085 320,085 320,085
Nominal rates 25% 9% 34% 25% 9% 34%
Income tax and social contribution expenses at nominal rates (93,411) (33,628) (127,039) (80,021) (28,808) (108,829)
Tax effect on:
- equity adjustment 94,860 34,150 129,010 7,211 2,596 9,807
- interest on capital 6,260 2,254 8,514 18,546 6,677 25,223
- permanent differences (net) (1,614) (555) (2,169) (236) (149) (385)
------- ------- -------- ------- ------- --------
Income tax and social contribution on income 6,095 2,221 8,316 (54,500) (19,684) (74,184)
======= ======= ======== ======== ======== ========
Current - - - (43,108) (13,510) (56,618)
Deferred 6,095 2,221 8,316 (11,392) (6,174) (17,566)
CONSOLIDATED
-------------------------------------------------------------------
3/31/2004 3/31/2003
-------------------------------------------------------------------
IR CS Total IR CS Total
------- ------- -------- ------- ------- --------
Income before income tax and social contribution,
after statutory participation 575,306 575,306 575,306 347,229 347,229 347,229
Nominal rates 25% 9% 34% 25% 9% 34%
Income tax and social contribution expenses at nominal rates (143,827) (51,778) (195,605) (86,808) (31,251) (118,059)
Tax effect on:
- tax rate difference for foreign companies (10,947) 13,042 2,095 36,312 10,607 46,919
- equity adjustment 4,238 1,526 5,764 (22,234) (8,004) (30,238)
- interest on capital 25,129 9,046 34,175 18,546 6,677 25,223
- foreign exchange effect (1,514) (545) (2,059) - - -
- recovery of deferred tax assets - Acominas - - - 27,635 11,687 39,322
- permanent differences (net) 5,447 2,172 7,619 (14,922) (8,207) (23,129)
------- ------- -------- ------- ------- --------
Income tax and social contribution on income (121,474) (26,537) (148,011) (41,471) (18,491) (59,962)
======= ======= ======== ======== ======== ========
Current (91,661) (21,714) (113,375) (50,913) (21,988) (72,901)
Deferred (29,813) (4,823) (34,636) 9,442 3,497 12,939
-14-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
b) Composition of deferred income tax and social contribution assets and liabilities, at nominal rates:
ASSETS
---------------------------------------------------------------------------------------------------
Company Consolidated
---------------------------------------------------------------------------------------------------
3/31/2004 12/31/2003 3/31/2004 12/31/2003
--------------------- ------------------- ---------------------- ------------------------
IR CS IR CS IR CS IR CS
--------------------- ------------------- ---------------------- ------------------------
Income tax losses 7,753 - 119 - 490,928 - 457,597 -
Social contribution losses - 3,292 - 517 - 85,291 - 89,175
Provision for contingencies 12,918 4,650 12,916 4,650 40,825 14,570 40,732 14,536
Benefits to employees - - - - 99,061 - 95,839 -
Commissions/other - - - - 89,896 1,661 80,071 1,453
Amortized goodwill 763 274 610 220 831 299 610 220
Provision for losses 9,663 991 9,663 991 92,646 30,864 94,462 31,519
------ ----- ------ ----- ------ ------ ------ ------
Total 31,097 9,207 23,308 6,378 814,187 132,685 769,311 136,903
====== ===== ====== ===== ======= ======= ======= =======
Current - - - - 102,497 22,407 90,818 26,050
Long-term 31,097 9,207 23,308 6,378 711,690 110,278 678,493 110,853
LIABILITIES
---------------------------------------------------------------------------------------------------
Company Consolidated
---------------------------------------------------------------------------------------------------
3/31/2004 12/31/2003 3/31/2004 12/31/2003
--------------------- ------------------- ---------------------- ------------------------
IR CS IR CS IR CS IR CS
--------------------- ------------------- ---------------------- ------------------------
Accelerated depreciation - - - - 544,662 848 426,751 854
Amortized negative goodwill 43,995 15,838 42,301 15,229 57,514 17,210 55,821 16,601
Inflationary effect - - - - 20,207 - 19,790 -
------ ------ ------ ------ ------- ------- ------- ------
Total 43,995 15,838 42,301 15,229 622,383 18,058 502,362 17,455
====== ====== ====== ====== ======= ======= ======= ======
Current - - - - 47,785 - 35,721 -
Long-term 43,995 15,838 42,301 15,229 574,598 18,058 466,641 17,455
The tax benefits recognized on tax losses and social contribution losses, as
well as the provision for losses, both in the Company and consolidated, are
supported by projections of future taxable income at present value, based on
technical studies of feasibility, approved by management. These studies
considered the history of the Company's profitability and the perspective of
maintaining future profitability, permitting estimated realization of these tax
benefits in a period not over ten years.
The deferred taxes on temporary differences, mainly tax contingencies, were
recorded based on the probability of their realization, after the evaluation of
the Company's legal advisors.
-15-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
c) Estimated recovery of deferred income tax and social contribution assets:
3/31/2004 12/31/2003 3/31/2004 12/31/2003
2004 - - 124,904 116,868
2005 2,172 1,843 131,856 129,587
2006 6,395 3,201 129,240 124,612
2007 9,918 6,723 130,879 126,239
2008 10,671 9,371 140,088 137,865
2009 5,043 3,743 177,476 182,669
2010 to 2012 6,105 4,805 112,429 88,374
------- ----- ------- -------
40,304 29,686 946,872 906,214
-16-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
NOTE 7 - INVESTMENTS IN SUBSIDIARIES, ASSOCIATES AND RELATED COMPANIES
a) INVESTMENT BALANCES
Company
--------------------------------------------------------------------------------------
3/31/2004 12/31/2003
------------------------------------------------------------------------- ------------
Deposit for Goodwill
Provision future capital (negative
Investment for losses increase goodwill) Total Total
---------- ---------- -------- --------- ----- -----
Subsidiaries:
Gerdau Acominas S.A . 2,713,877 - - (264,175) 2,449,702 2,241,553
Gerdau Internacional Empreendimentos Ltda.(*) 1,884,962 - - - 1,884,962 1,820,606
Dona Francisca Energetica S.A. - (9,226) - 21,341 12,115 12,186
Seiva S.A. - Florestas e Industrias 77,592 - - - 77,592 74,478
Itaguai Com. Imp e Exp Ltda 50,552 - 43,316 - 93,868 98,777
GTL Brasil Ltda.(**) 35,500 - - 280,882 316,382 -
Other 503 - 171 - 674 669
--------- ------ ------ ------ --------- ---------
4,762,986 (9,226) 43,487 38,048 4,835,295 4,248,269
Other investments 43 - - - 43 43
--------- ------ ------ ------ --------- ---------
4,763,029 (9,226) 43,487 38,048 4,835,338 4,248,312
========= ====== ====== ====== ========= =========
TABLE CONT'D
Consolidated
-----------------------------------------------------
3/31/2004 12/31/2003
------------------------------------- -------------
Goodwill
(negative
Investment goodwill) Total Total
---------- ---------- ------- --------
Gerdau AmeriSteel US Inc - 281,904 281,904 281,870
Gerdau AmeriSteel Corporation - 76,918 76,918 80,470
Dona Francisca Energetica S.A. - 21,341 21,341 21,951
Margusa - Maranhao Gusa S.A. - 37,349 37,349 43,564
Joint ventures 9,934 - 9,934 9,984
Other investments 19,987 4,002 23,989 23,573
------ ------- ------- -------
29,921 421,514 451,435 461,412
====== ======= ======= =======
(*) Holding company of the investments in foreign companies.
(**) Company purchased on March 30, 2004 from the subsidiary GTL Equity Investments Corp.
b) CHANGES IN INVESTMENTS
Company
-------------------------------------------------------------------------------------------
Dividends/
Equity Interest on Balance
Balance 12/31/2003 Purchases Goodwill in the results(*) own capital 3/31/2004
------------------ --------- -------- ----------------- ----------- ---------
Subsidiaries:
Gerdau Acominas S.A . 2,241,553 - - 293,717 (85,568) 2,449,702
Gerdau Internacional Empreendimentos Ltda. 1,820,606 - - 64,356 - 1,884,962
Dona Francisca Energetica S.A. 12,186 - - (71) - 12,115
Seiva S.A. - Florestas e Industrias 74,478 - - 3,114 - 77,592
Itaguai Com. Imp e Exp Ltda 98,777 - - 2,560 (7,469) 93,868
GTL Brasil Ltda. - 26,261 280,882 15,699 (6,460) 316,382
Other investments 712 - - 66 (61) 717
--------- ------ ------- ------- ------- ---------
4,248,312 26,261 280,882 379,441 (99,558) 4,835,338
--------- ------ ------- ------- ------- ---------
(*) Includes amortization of (goodwill) negative goodwill.
-17-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
c) INFORMATION ON INVESTMENTS Company - 3/31/2004
-----------------------------------------------------------------------------------
% holding
Stockholders' Net in capital Quotas Shares
Capital equity income social held held
--------- ------------ --------- ---------- -------------- ------------
Subsidiaries:
Gerdau Acominas S.A . 2,340,576 3,273,198 312,854 82.91% - 131,541,277
Gerdau Internacional Empreendimentos Ltda. 2,207,189 1,992,587 68,030 94.60% 2,087,971,416 -
Seiva S.A. - Florestas e Industrias 74,280 172,054 6,905 45.10% - 4,298,717
Dona Francisca Energetica S.A . 66,600 (17,805) 1,040 51.82% - 345,109,212
Itaguai Com. Imp e Exp Ltda 3,596 50,552 2,560 99.99% 3,595,998 -
GTL Brasil Ltda. (*) 285,916 35,501 19,848 99.99% 285,914,997 -
(*) Company with 9.24% holding in Gerdau Acominas S.A.
d) COMPOSITION OF LOANS BALANCES
Company Consolidated
-----------------------------------------------------------
3/31/2004 12/31/2003 3/31/2004 12/31/2003
Assets ------------ ------------- ------------ --------------
Fundacao Gerdau - - 15,411 16,762
Sipar Aceros S.A. and other - - 7,648 13,607
Metalurgica Gerdau S.A. - - 7,937 (3,390)
------------ ------------- ------------ -------------
Total Assets - - 30,996 26,979
------------ ------------- ------------ -------------
Liabilities
Fundacao Gerdau - (32) - -
Gerdau Acominas S.A . 18,719 (22,606) - -
GTL Equity Investments Corp. (*) (305,776) - - -
Sipar Aceros S.A. and other 1,775 1,677 - -
Total liabilities (285,282) (20,961) - -
Financial (expenses) income (772) 62,497 (419) 70,071
The loans between the companies in Brazil are restated by the average weighted
rate of funds obtained in the market. The contracts with foreign companies are
restated by charges
(LIBOR + 3% p.a) plus exchange rate variation
(*) Refers to debt assumed for the purchase of the subsidiary GTL Brasil Ltda,
settled in April/2004.
e) TRANSACTIONS WITH RELATED COMPANIES
Company - 3/31/2004
--------------------------------------------------------------
Accounts
Income Expenses receivable
---------------------------------------------------------------
Banco Gerdau S.A. 79 - 2,193
Indac - Ind. Adm. e Comercio S.A. (*) - 508 -
Gerdau Ameristeel Corporation (**) 86 - -
(*) Payment of guarantees by sureties in contracts.
(**) Receipt of guarantees for sureties in contracts
-18-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
NOTE 8 - DEFERRED CHARGES
Consolidated deferred charges comprise pre-operating expenses for power plant
construction, as well as reforestation, research, development and restructuring
projects.
NOTE 9 - LOCAL AND FOREIGN FINANCING
Financing is as follows:
Financing is as follows:
Annual Consolidated
charges (%) 3/31/2004 12/31/2003
---------------- -------------- --------------
SHORT TERM
Working capital financing (R$) IGPM/CDI 1,695 48,465
Fixed assets financing (R$) 12.00% 1,106 3,054
Investment financing (R$) CDI 4,500 4,500
Investment financing (US$) - 16,937 45,649
Working capital financing (US$) 1.36% to 11.13% 1,413,072 1,341,746
Fixed assets financing and others (US$) 5.00% 31 8,692
Working capital financing (Clp$) 0.18% to 0.19% 22,074 30,025
Short-term portion of long-term financing 763,429 932,245
--------- ---------
2,222,844 2,414,376
LONG TERM
Working capital financing (R$) 10.48% to 13.64% - 3,812
Fixed assets financing and others (R$) 8.00% to 9.66% 609,928 627,727
Investment financing (R$) IGPM +8.5% 33,433 35,019
Fixed assets financing and others (US$) 3.25% to 9.97% 774,273 761,288
Working capital financing (US$) 2.00% to 10.75% 2,722,178 2,643,325
Working capital financing (Cdn$) 2.00% to 3.25% 232,958 164,974
Fixed assets financing (Cdn$) 3.25% to 6.00% 3,386 3,837
Working capital financing (Clp$) 0.26% to 0.29% 21,148 29,952
Fixed assets financing (Clp$) 0.26% to 0.39% 51,671 58,396
(-) Short-term portion (763,429) (932,245)
--------- ---------
3,685,546 3,396,085
--------- ---------
Total financing 5,908,390 5,810,461
--------- ---------
-19-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
Summarized by Currency:
CONSOLIDATED
------------------------------
3/31/2004 12/31/2003
-------------- --------------
Brazilian Real (R$) 650,662 722,577
U.S. Dollar (US$) 4,926,491 4,800,700
Canadian Dollar (Cdn$) 236,344 168,811
Chilean Peso (Clp$) 94,893 118,373
-------------- --------------
5,908,390 5,810,461
============== ==============
The schedule for payment of the long-term portion of financing is as follows:
CONSOLIDATED
--------------
In 2005 573,582
In 2006 417,611
In 2007 299,364
In 2008 657,749
In 2009 178,408
After 2009 1,558,832
-------------
3,685,546
=============
a) GUARANTEES
The loans contracted under the FINAME/BNDES program are backed by the financed
assets of the subsidiary Gerdau Acominas S.A. The other loans are backed by
sureties from controlling shareholders, on which the subsidiary pays
remuneration of 1% p.a. on the guaranteed amount.
b) COVENANTS
In the place of the tangible collateral usually required, certain financial
covenants must be observed, as follows:
I) Consolidated Interest Coverage Ratio - measures the debt service payment
capacity in relation to the Earnings before Interest, Taxes, Depreciation and
Amortization (EBITDA);
II) Consolidated Leverage Ratio - measures the debt coverage capacity in
relation to the EBITDA.
All covenants mentioned above are calculated on a consolidated basis and have
been observed. The penalty for non-compliance is the accelerated maturity of the
contracts.
-20-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
C) CREDIT LINES
The North American subsidiaries have a credit line in the amount of US$ 350
million, equivalent to R$ 1,018,010 at the date of the Quarterly Information,
falling due in June 2008, which can be drawn in U.S. dollars (at the LIBOR rate
plus interest between 2.25% and 2.75% p.a. or US Prime/FED Funds plus interest
of 0.5% p.a.) or in Canadian dollars (at the Bankers Acceptance (BA) rate plus
interest between 2.35% and 2.85% p.a. or Canadian Prime plus interest of 1.00%
p.a.). The distribution of this credit line among the companies is made in
proportion to the working capital of each North American subsidiary.
The subsidiary Gerdau Aza S.A. has a credit line for working capital amounting
to CLP$ 32 billion, equivalent to R$ 152,948 at the date of the Quarterly
Information, bearing interest of 3.12% p.a., and a credit line for fixed assets
in the amount of CLP$ 17 billion, equivalent to R$ 82,326 at the date of the
Quarterly Information, bearing interest of 4.68% p.a.
NOTE 10 - DEBENTURES
GENERAL NUMBER
ISSUE MEETING ISSUED IN PORTFOLIO MATURITY ANNUAL RATE
- ---------------------------------- --------------- ------------- -------------- --------------- ---------------
3rd - A and B 5.27.82 48,000 30,140 6.1.2011 CDI
4th 6.10.83 42,000 42,000 2.28.2012 CDI
7th 7.14.82 22,800 18,496 7.1.2012 CDI
8th 11.11.82 59,988 24,095 5.2.2013 CDI
9th 6.10.83 41,880 41,253 9.1.2014 CDI
10th 2.27.81 6,450 6,450 11.30.2015 CDI
11th - A and B 6.29.90 50,000 44,406 6.1.2020 CDI
13th 11.23.01 30,000 30,000 11.1.2008 CDI + 1%
COMPANY
Seiva S.A. - Florestas e Industrias 11.11.81 12,000 12,000 11.1.2015 variable
Gerdau Ameristeel Corporation 4.23.97 125,000 - 4.30.2007 6.5%
Debentures held by consolidated subsidiaries
CONSOLIDATED
(-) Short-term portion
Long-term portion
TABLE CONT'D
ISSUE 3/31/2004 12/31/2003
- ---------------------------------- ---------------- ----------------
3rd - A and B 73,243 73,508
4th - -
7th 22,557 21,628
8th 122,908 83,566
9th 3,286 29,927
10th - -
11th - A and B 27,793 19,249
13th - -
---------------- ----------------
COMPANY 249,787 227,878
Seiva S.A. - Florestas e Industrias - -
Gerdau Ameristeel Corporation 225,537 226,021
Debentures held by consolidated
subsidiaries (5,270) (1,833)
---------------- ----------------
470,054 452,066
CONSOLIDATED ================ ================
7,514 3,027
(-) Short-term portion 462,540 449,039
Long-term portion
The debentures of Gerdau Ameristeel Corporation are convertible into common
shares of that subsidiary, up to their maturity date.
Of the outstanding debentures, the controlling shareholders hold, directly or
indirectly, the amount of R$ 90,572 at March 31, 2004.
-21-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
NOTE 11 - FINANCIAL INSTRUMENTS
a) GENERAL COMMENTS - Gerdau S.A. and its subsidiaries enter into transactions
involving financial instruments, the risks of which are managed through
financial positions and exposure limit controls. All instruments are fully
recognized in the books and restricted to the instruments listed below:
- - FINANCIAL INVESTMENTS - are recognized at their redemption value as of the
date of the Quarterly Information; - INVESTMENTS AND LOANS AMONG SUBSIDIARIES
AND RELATED PARTIES - are explained and presented in Note 7; - FINANCING - is
explained and presented in Note 9;
- - DEBENTURES - are explained and presented in Note 10;
- - FINANCIAL DERIVATIVES - in order to minimize the effects of fluctuations in
foreign exchange rates on their liabilities, the subsidiaries Gerdau Acominas
S.A. and Dona Francisca Energetica S.A. entered into swap contracts that were
converted into Brazilian reais on the contract date and linked to changes in the
Interbank Deposit Rate (CDI) and the General Market Price Index (IGP-M) plus
interest. The subsidiary Gerdau Ameristeel Corporation also entered into swap
contracts, subject to the London Interbank Offered Rate (LIBOR) plus interest
between 6.05% and 6.45% p.a. Swap contracts are listed below:
- -----------------------------------------------------------------------------------------------------------------
Contract date Purpose Amount - US$ thousand
- ------------------------------------ ---------------------------------------- --------------------------------
2.12 to 7.18.2001 Eurobonds 130,000
5.6 to 5.8.2002 Suppliers 85,000
3.30.2001 to 8.13.2003 Imports 8,770
7.16.2001 to 5.7.2002 Prepayment 53,708
2.20.2002 to 5.14.2003 Resolution 2770 74,000
8.8.2002 to 4.9.2003 Advance on Export Contracts (ACC) 75,000
4.17.2003 Fixed assets 8,421
4.17.2003 Fixed assets 16,779
10.30.2003 to 11.3.2003 Bank notes 200,000
6.26.2003 Investment 66,050
TABLE CONT'D
Consolidated
- ------------------------------------------------------------------------------------------------------------
Contract date Rate Maturity
- ------------------------------------ ------------------------------------------ --------------------------
2.12 to 7.18.2001 84.5% to 103.70% of CDI 5.20.2004
5.6 to 5.8.2002 97.00% to 100.00% of CDI 4.1 to 7.1.2004
3.30.2001 to 8.13.2003 95.00% to 100.00% of CDI 4.1.2004 to 10.6.2004
7.16.2001 to 5.7.2002 85.55% to 100.00% of CDI 7.13.2004 to 3.1.2006
2.20.2002 to 5.14.2003 105.00% to 106.00% of CDI 5.10.2004 to 6.20.2005
8.8.2002 to 4.9.2003 89.86% to 100.00% of CDI 4.2.2004 to 7.28.2004
4.17.2003 IGPM + 12.95% 5.17.2004 to 11.16.2010
4.17.2003 97.00% to 100.00% of CDI 5.17.2004 to 11.18.2013
10.30.2003 to 11.3.2003 LIBOR + interest between 6.05% to 6.12% 7.15.2011
6.26.2003 4.86% to 6.45% 9.27.2004 to 10.2.2006
-22-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
b) MARKET VALUE - the market values of financial instruments are as follows:
COMPANY
------------------------------------------------------------------------
31/03/2004 31/12/2003
------------------------------------------------------------------------
BOOK MARKET BOOK MARKET
VALUE VALUE VALUE VALUE
------------------------------------------------------------------------
Financial investments 189,482 189,482 177,674 177,674
Debentures 249,787 249,787 227,878 227,878
Investments 4,835,338 4,835,338 4,248,312 4,248,312
Related companies (liabilities) 285,282 285,282 20,961 20,961
Stock options (liabilities) - Note 16 - 5,088 - 5,088
CONSOLIDATED
------------------------------------------------------------------------
31/03/2004 31/12/2003
------------------------------------------------------------------------
BOOK MARKET BOOK MARKET
VALUE VALUE VALUE VALUE
------------------------------------------------------------------------
Financial investments 929,281 929,281 895,391 895,391
Swap contracts - investment (liabilities) 13,180 13,180 12,303 12,303
Eurobonds 67,305 51,010 83,235 72,581
Import financing 624,177 610,009 605,051 611,458
Prepayment financing 835,324 851,880 807,385 818,786
Financing - Resolution 2770 267,803 302,325 365,573 390,235
ACC financing 586,952 625,261 500,118 524,935
Financing - Resolution 4131 14,249 18,087 24,243 24,468
Bank notes financing 1,147,246 1,148,028 1,144,601 1,292,733
Fixed assets financing 50,251 51,398 48,280 49,781
Other financing 2,315,083 2,315,083 2,231,975 2,252,617
Debentures 470,054 470,054 452,066 452,066
Investments 451,435 451,435 461,412 461,412
Related companies (assets) 30,996 30,996 26,979 26,979
Stock options (liabilities) - Note 16 - 8,298 - 8,298
The market value of Eurobonds was obtained using the quotation of the securities
in the secondary market.
The market value of swap contracts of subsidiaries in Brazil was obtained based
on future income projections for each contract, calculated based on the present
value of the forward U.S. dollar + coupon rates (assets) and forward CDI/IGP-M
rates (liabilities) and discounted to current value at the date of the Quarterly
Information using the projected future CDI/IGP-M rate for each maturity. The
same methodology is applied for the calculation of the market values of the swap
contracts of the subsidiary Gerdau Ameristeel Corporation, using the LIBOR rate
as the discount rate.
-23-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
Swap contracts related to financing contracts are classified together with the
related financing, as a contra entry to the "Financial expenses" account, and
are stated at cost plus accrued charges up to the date of the Quarterly
Information. Contracts not linked to such financing have been recorded at their
market value under the heading "Other accounts payable", in long-term
liabilities.
The Company believes that the balances of the other financial instruments, which
are recognized in the books at net contracted values, are substantially similar
to those that would be obtained if they were negotiated in the market. However,
because the markets for these instruments are not active, differences could
exist if they were settled in advance.
c) RISK FACTORS THAT COULD AFFECT THE COMPANY'S AND ITS SUBSIDIARIES' BUSINESS
Price risk: this risk is related to the possibility of price variations of the
products that the subsidiaries sell or in the prices of raw materials and other
inputs used in the production process. Since the subsidiaries operate in a
commodity market, their sales revenue and cost of sales may be affected by the
changes in the international prices of their products or materials. In order to
minimize this risk, the subsidiaries constantly monitor the price variations in
the local and international markets.
Interest rate risk: this risk arises as a result of the possibility of losses
(or gains) due to fluctuations in interest rates relating to Company assets
(investments) and liabilities. In order to minimize possible impacts resulting
from interest rate fluctuations, the Company and its subsidiaries have adopted a
policy of diversification, alternating between fixed rates and variable rates
(such as LIBOR and CDI), and periodically renegotiate contracts to adjust them
to the market.
Exchange rate risk: this risk is related to the possibility of fluctuations in
foreign exchange rates affecting financial expenses (or income) and the
liability (or asset) balance of contracts denominated in a foreign currency. In
order to manage the effects of these fluctuations, the Company and its
subsidiaries use "hedge" instruments, usually swap contracts, as described in
item "a" above.
Credit risk: this risk arises from the possibility of the subsidiaries not
receiving amounts arising from sales or investments at financial institutions.
In order to minimize this risk, the subsidiaries adopt the procedure of
analyzing in detail the financial and equity position of their customers,
establishing a credit limit and constant monitoring of their balance. In
relation to financial investments, the Company and its subsidiaries invest
solely in institutions with low credit risk, as assessed by rating agencies. In
addition, each institution has a maximum limit for investment, determined by the
credit committee.
-24-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
NOTE 12 - FINANCIAL EXPENSES/INCOME, NET
COMPANY CONSOLIDATED
------------------------------- ----------------------------------
3/31/2004 3/31/2003 3/31/2004 3/31/2003
-------------- --------------- ----------------- ---------------
FINANCIAL EXPENSES
Interest on debt (8,902) (92,332) (120,488) (142,480)
Other financial expenses (507) (4,735) (6,608) (12,244)
-------------- --------------- ----------------- ---------------
(9,409) (97,067) (127,096) (154,724)
FINANCIAL INCOME
Financial investments 6,521 7,911 21,152 20,768
Interest received 1 6,704 6,509 7,305
Other financial income 4,760 9,068 2,002 10,185
-------------- --------------- ----------------- ---------------
11,282 23,683 29,663 38,258
Monetary variations, net (168) (6,866) (3,441) (8,061)
Foreign exchange variations, net 1,412 153,374 (26,156) 201,970
Results from swap contracts - (121,857) (26,545) (186,923)
-------------- --------------- ----------------- ---------------
FINANCIAL EXPENSES/INCOME, NET 3,117 (48,733) (153,575) (109,480)
============== =============== ================= ===============
NOTE 13 - TAX RECOVERY PROGRAM (REFIS) AND SPECIAL INSTALLMENT PAYMENT
PROGRAM (PAES)
c) REFIS
On December 6, 2000, the Company enrolled in the REFIS to pay the Social
Integration Program (PIS) and the Social Contribution on Revenues (COFINS)
contributions in installments. The balances of these tax debts are recorded
under taxes and contributions in current liabilities, and under other accounts
payable in long-term liabilities. The balances of renegotiated taxes, which were
originally divided into 60 installments, of which 14 installments are not yet
due, are restated by the Long-Term Interest Rate (TJLP) rate, and are as
follows, at March 31, 2004:
-25-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
COMPANY AND CONSOLIDATED
---------------------------------------------------------------------------------------
3/31/2004 12/31/2003
-------------------------------------------- -----------------------------------------
Principal Interest Total Principal Interest Total
--------------- ------------- ------------ ------------- ------------ ------------
PIS 7,952 5,787 13,739 9,895 6,494 16,389
COFINS 1,890 1,372 3,262 2,351 1,540 3,891
--------------- ------------- ------------ ------------- ------------ ------------
Total 9,842 7,159 17,001 12,246 8,034 20,280
=============== ============= ============ ============= ============ ============
Short-term 8,436 6,136 14,572 8,644 5,671 14,315
Long-term 1,406 1,023 2,429 3,602 2,363 5,965
--------------- ------------- ------------ ------------- ------------ ------------
Total 9,842 7,159 17,001 12,246 8,034 20,280
=============== ============= ============ ============= ============ ============
Taxes, contributions and other liabilities are paid by the Company on their due
dates, which is a basic requirement to remain eligible for the REFIS program.
As collateral for this installment payment program, the Company pledged the land
and buildings of the subsidiary Gerdau Acominas S.A., located in the
municipality of Charqueadas, in the state of Rio Grande do Sul, where the
Piratini plant is located, amounting to R$ 78,494.
The total income tax and social contribution credits acquired from third parties
and used to offset fines and interest on the consolidation of the REFIS debts on
December 6, 2000, totaled R$ 57,040, and they were acquired for R$ 4,351. The
Company's own tax credits were not used.
d) PAES
The proportionally consolidated (52%) subsidiary Dona Francisca Energetica S.A.
enrolled, on June 30, 2003, in the PAES, established by Law 10684/03 through the
Federal Revenue Secretariat, to settle Corporate Income Tax (IRPJ), Social
Contribution on Net Income (CSLL), Social Integration Program (PIS) and Social
Contribution on Revenues (COFINS) debts. The balances of these tax debts are
recorded in Taxes and contributions payable, in current liabilities, and in
Other accounts payable, in long-term liabilities. The balances of the
renegotiated taxes were divided into 180 installments, of which 170 are not yet
due, are restated based on the TJLP and, at March 31, 2004, are composed as
follows:
-26-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
CONSOLIDATED
---------------------------------------------------------------------------------------
3/31/2004 12/31/2003
-------------------------------------------- -----------------------------------------
Principal Interest Total Principal Interest Total
--------------- ------------- ------------ ------------- ------------ ------------
IRPJ 21,438 1,769 23,207 21,816 1,255 23,071
CSLL 7,772 641 8,413 7,908 455 8,363
PIS 760 63 823 774 45 819
COFINS 3,512 290 3,802 3,574 206 3,780
--------------- ------------- ------------ ------------- ------------ ------------
Total 33,482 2,763 36,245 34,072 1,961 36,033
=============== ============= ============ ============= ============ ============
Short-term 2,322 192 2,514 2,363 136 2,499
Long-term 31,160 2,571 33,731 31,709 1,825 33,534
--------------- ------------- ------------ ------------- ------------ ------------
Total 33,482 2,763 36,245 34,072 1,961 36,033
=============== ============= ============ ============= ============ ============
Dona Francisca Energetica S.A. pays its taxes, contributions and other
liabilities on their due dates, which is a basic requirement to remain eligible
for the PAES program.
NOTE 14 - PROVISION FOR CONTINGENCIES
The Company and its subsidiaries are parties to labor, civil, and tax processes.
Based on the opinion of its legal advisors, management believes that the
provision for contingencies is sufficient to cover probable and reasonably
estimable losses from unfavorable court decisions, and the final decisions will
not have significant effects on the financial position at March 31, 2004.
The balances of contingencies, net of the related judicial deposits, are as
follows:
COMPANY CONSOLIDATED
------------------------------- -----------------------------
3/31/2004 12/31/2003 3/31/2004 12/31/2003
--------------- -------------- -------------- -------------
Tax contingencies 87,049 87,028 114,152 103,417
Labor contingencies 7,972 7,972 19,782 19,365
Civil contingencies 98,516 98,430
--------------- -------------- -------------- -------------
Total 95,021 95,000 232,450 221,212
=============== ============== ============== =============
-27-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
I) TAX CONTINGENCIES
a) CONTINGENT LIABILITIES PROVIDED
a.1) Of the total provision, R$ 50,456 (Company and consolidated) refers to the
contingency of compulsory loans to Eletrobras, the constitutionality of which is
being questioned by the Company. In March 1995, the Federal Supreme Court judged
the proceedings against the taxpayers. In relation to the Company's proceedings,
some are pending decision, but the outcomes are already foreseeable, taking into
consideration prior decisions. The Company established a provision related to
"compulsory loans", taking into consideration that, although the payment to
Eletrobras was made as a loan: (i) the reimbursement to the Company would
probably be in the form of shares of Eletrobras; (ii) the conversion will be
made based on the equity value of shares; and (iii) based on the current
available information, the shares of Eletrobras are valued at substantially less
than the equity value.
a.2) R$ 6,891 (Company) and R$ 6,898 (consolidated) related to the
unconstitutionality of the Social Investment Fund (FINSOCIAL). Although the
Supreme Court has confirmed the constitutionality of the tax at the rate of
0.5%, some proceedings are still pending judgment, most of them in the Superior
Courts.
a.3) R$ 1,099 (Company) and R$ 18,106 (consolidated) related to amounts for
Value Added Tax on Sales and Services (ICMS), the majority of which is related
to credit rights involving the Finance Secretariat and the State Courts of the
First Instance in the state of Minas Gerais.
a.4) R$ 8,978 (Company) and R$ 47,695 (consolidated) related to social
contribution on net income. The amounts refer to challenges of the
constitutionality of the contribution in 1989, 1990 and 1992. Some proceedings
are pending decision, most of them in the Superior Courts. Of the provision, R$
38,600, fully deposited in court, refers to the offset of social contribution
losses over the limit of 30% of taxable income by the subsidiary Gerdau Acominas
S.A. The matter is the object of a court injunction in progress in the Federal
Regional Court of the 1st Region.
-28-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
a.5) R$ 19,993 (Company) and R$ 116,939 (consolidated) related to Corporate
Income Tax (IRPJ). Of the total provided, R$ 96,946 was fully deposited in
court, related to a lawsuit of the subsidiary Gerdau Acominas S.A. for the right
to pay the IRPJ after the full offset of tax losses, without complying with the
limit of 30% of taxable income. a.6) R$ 12,962 (Company) and R$ 25,834
(consolidated) on contributions due to social security which correspond to suits
for annulment by the Company with judicial deposits of practically the whole
amount involved, in progress in the Federal Court of the First Instance in the
state of Rio de Janeiro.
In the consolidated statements, the remaining amount refers to lawsuits
questioning the position of the National Institute of Social Security (INSS) in
terms of charging INSS contributions on profit sharing payments made by the
subsidiary Gerdau Acominas S.A., as well as on payments for services rendered by
cooperatives. Also, part of this provision refers to several INSS assessments
due to services contracted from third parties, in which the Institute accrued
debts related to the last ten years and assessed Gerdau Acominas S.A. as jointly
responsible. The assessments were challenged administratively and, if sustained,
will be challenged later in annulment proceedings, since the Company understands
that the right to set up part of the credits had expired, and that, anyway, the
subsidiary is not responsible.
a.7) R$ 1,831 (Company) and R$ 2,029 (consolidated), related to contributions
for the Social Integration Program (PIS), and R$ 6,387 (Company) and R$ 6,941
(consolidated), to Social Contribution on Revenues (COFINS), in connection with
lawsuits questioning the constitutionality of Law 9718, which changed the
calculation basis of these contributions. These suits are in progress in the
Federal Regional Court of the 2nd Region and the Federal Supreme Court.
a.8) R$ 1,273 (consolidated) related to a lawsuit brought by the subsidiary
Gerdau Acominas S.A. regarding the Government Severance Indemnity Fund for
Employees (FGTS) surcharges, which arose from the changes introduced by
Complementary Law 110/01. Currently, the corresponding court injunction is
awaiting the judgment of the extraordinary appeal filed by the Company. The
provided amount is fully deposited in court.
-29-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
a.9) R$ 9,307 (Company) and R$ 13,237 (consolidated), related to the Emergency
Capacity Charge (ECE), as well as R$ 5,283 (Company) and R$ 7,400 (consolidated)
related to the Extraordinary Tariff Recomposition (RTE) included in the electric
energy bills of the Company's plants. According to the Company, these charges
are of a tax nature and, as such, are incompatible with the National Tax System
provided in the Federal Constitution. For this reason, the constitutionality of
this charge is being challenged in court. The lawsuits are in progress in the
Federal Justice of the First Instance of the states of Pernambuco, Ceara, Minas
Gerais, Rio de Janeiro, Sao Paulo, Parana, and Rio Grande do Sul, as well as in
the Federal Regional Courts of the 1st and 2nd Regions. The Company has fully
deposited in court the amount of the disputed charges.
a.10) R$ 300 (Company) and R$ 1,068 (consolidated) related to other processes of
a tax nature, most of which is deposited in court.
a.11) Judicial deposits, representing restricted assets of the Company, are
related to amounts deposited and maintained in court until the resolution of the
related legal matters. The balances of these deposits, which at March 31, 2004
amounted to R$ 36,438 (Company), R$ 183,724 (consolidated), are classified as a
reduction of the provision for tax contingencies recorded in the books.
b) REMOTE OR POSSIBLE CONTINGENT LOSSES, INVOLVING GREAT UNCERTAINTIES IN
RELATION TO THEIR REALIZATION AND WHICH THEREFORE HAVE NOT BEEN PROVIDED FOR:
b.1) The Company is defendant in debt foreclosures filed by the state of Minas
Gerais to demand ICMS credits arising mainly from the sales of products to
commercial exporters. The restated amount of the lawsuits totals R$ 31,466. The
Company did not set up a provision for contingency in relation to these
processes, since it considers this tax undue, because products for export are
exempted from ICMS.
b.2) The Company and its subsidiary Gerdau Acominas S.A. are defendants in tax
foreclosures filed by the state of Minas Gerais, which demand ICMS credits on
the export of semi-finished manufactured products. The total amount demanded is
R$ 173,135. The companies did not set up a provision for contingency in relation
to these processes since they consider this tax undue, because the products do
not fit the definition of semi-finished manufactured products defined by the
federal complementary law and, therefore, are not subject to ICMS.
-30-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
b.3) Also, R$ 54,763 are demanded due to the understanding of the Federal
Revenue Secretariat that the transactions carried out by the subsidiary Gerdau
Acominas S.A. under the drawback concession granted by DECEX were not in
conformity with the legislation. Gerdau Acominas filed a preliminary
administrative defense of the legality of the arrangement, which is pending
judgment. Since the tax credit has not been definitely set up, and considering
that the arrangement that originated the mentioned demand conforms with the
assumptions required for the drawback concession, and also that the concession
was granted after analysis by the legal administrative authority, Gerdau
Acominas S.A. considers an unfavorable outcome to be remote and, for this
reason, did not set up a provision for the contingency.
c) CONTINGENT TAX GAINS:
c.1) The Company believes that the realization of certain contingent gains is
probable. Among them is a court-order debt security issued in 1999 in favor of
the Company by the state of Rio de Janeiro in the amount of R$ 26,580, arising
from an ordinary lawsuit regarding non-compliance with the Loan Agreement for
Periodic Execution in Cash under the Special Industrial Development Program
(PRODI).
Due to the default by the state of Rio de Janeiro and the non-regulation of
Constitutional Amendment 30/00, which granted the government a ten-year
moratorium for the payment of securities issued to cover court-order debts not
related to food, the realization of this credit is not expected in 2004.
c.2) Gerdau S.A. and its subsidiaries have filed several ordinary proceedings
related to the correction of the PIS calculation basis under Complementary Law
07/70, due to the declarations of unconstitutionality of Decree Laws 2445/88 and
2449/88. The companies expect to recover the taxes unduly paid. The Company
believes that the amount under discussion totals R$ 173,090 (consolidated).
c.3) Also, due to prior favorable decisions by the Courts, the Company and its
subsidiary Gerdau Acominas S.A. expect to recover IPI premium credits. Gerdau
S.A. has filed administrative appeals, which are pending judgment. With regards
to the subsidiary Gerdau Acominas S.A., the proceedings were directed directly
to the courts and are pending decision. The Company estimates a credit in the
amount of R$ 394,002 (consolidated).
II) LABOR CONTINGENCIES
The Company is also defending labor proceedings, for which there is a provision
of R$ 16,257 (Company) and R$ 30,048 (consolidated) at March 31, 2004. None of
these lawsuits refers to individually significant amounts, and the lawsuits
mainly involve claims due to overtime, health hazards and risk premium, among
others.
-31-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
The balances of deposits in court, which, at March 31, 2004, totaled R$ 8,285
(Company) and R$ 10,266 (consolidated), are classified as a reduction of the
provision for labor contingencies.
II) CIVIL CONTINGENCIES
a) CONTINGENT LIABILITIES INCLUDED IN THE PROVISION
The Company (consolidated) is also defending in court civil proceedings arising
from the normal course of its operations and of its subsidiaries' operations,
including lawsuits arising from workplace accidents, and, at March 31, 2004, has
a provision of R$ 99,778 (consolidated) for these proceedings.
The provision refers mainly to the issue involving the jointly controlled (52%)
subsidiary Dona Francisca Energetica S.A. According to the resolution of the
Brazilian Electricity Regulatory Agency (ANEEL), the operations of the
subsidiary are restricted to the South submarket. Since some of its transactions
were carried out in the remaining submarkets, Dona Francisca Energetica S.A. may
have to acquire the sold energy from third parties. The subsidiary challenges in
court the validity of the ANEEL resolution and has obtained a favorable
preliminary injunction.
At March 31, 2004, the balances of deposits in court totaled R$ 1,262
(consolidated) and are classified as a reduction of the provision for
contingencies.
b) REMOTE OR POSSIBLE CONTINGENT LOSSES, INVOLVING GREAT UNCERTAINTIES IN
RELATION TO THEIR REALIZATION, AND WHICH HAVE NOT BEEN PROVIDED FOR:
b.1) An antitrust process involving Gerdau S.A., related to the representation
of two civil construction syndicates in the state of Sao Paulo that alleged that
Gerdau S.A. and other long steel producers in Brazil divide customers among
them, violating the antitrust legislation. After investigations carried out by
the National Secretariat of Economic Law (SDE) and based on public hearings, the
SDE is of the opinion that a cartel exists. This conclusion was also supported
by an earlier opinion by the Secretariat for Economic Monitoring (SEAE). The
process is pending evaluation by the Administrative Council for Economic Defense
(CADE), which will decide the matter.
Gerdau S.A. denies having engaged in any type of anti-competitive behavior and
understands, based on information available, including the opinion of its legal
advisors, that the administrative process until now includes many
irregularities, some of which are impossible to resolve.
-32-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
In addition, the SDE report was issued before Gerdau S.A. had the chance to
reply to the closing arguments, which indicates that there was a bias in the
judgment made by the SDE. The same applies to the SEAE report, which does not
analyze the economic issues and is based exclusively on the witnesses'
testimony.
The mentioned irregularities also include non-compliance with the related
constitutional provisions and will affect, in a way that cannot be overcome, the
decision in the administrative system, based on the conclusions presented by the
antitrust authorities until now. Gerdau S.A. has pointed out and tried to defeat
all these irregularities and will continue doing so in relation to the
allegations and the irregularities in the administrative process. Gerdau S.A.
believes in a favorable outcome to this process, if not in the administrative
system, possibly in the judicial system.
Because of the above factors, no provision was set up for this case. According
to Brazilian legislation, fines of up to 30% of gross revenue in the prior
fiscal years may be applied against the Company and, if the personal
responsibility of an executive is proven, such executive may be penalized by 10%
to 50% of the fine applied to the Company. There are no precedents in the
country for fines exceeding 4%. In a similar case involving flat steel
companies, the fine was 1%.
b.2) A civil lawsuit filed against Gerdau Acominas S.A. regarding the
termination of a contract for the supply of slag and indemnities for losses and
damages. At March 31, 2004, the lawsuit amounts to approximately R$ 36,366.
Gerdau Acominas S.A. contested all bases for the lawsuit and filed a
counterclaim for termination of the contract and indemnity for breach of
contract.
The judge declared the contract to be terminated, since such demand was common
to both parties. With regards to the remaining discussion, the judge understood
that both parties were at fault and judged unfounded the requests for indemnity.
This decision was maintained by the Court of Civil Appeals of the State of Minas
Gerais, and the agreement is based on expert evidence and interpretation of the
contract. The process is now with the High Court of Justice, for the judgment of
the appeal.
Gerdau Acominas S.A. believes that a loss from the case is remote, since it
understands that a change in the judgment is unlikely.
-33-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
b.3) A civil lawsuit filed by Sul America Cia Nacional de Seguros against Gerdau
Acominas S.A. and Banco Westdeustsche Landesbank Girozentrale, New York Branch
(WestLB), for the payment of R$ 34,383 to settle an indemnity claim, which was
deposited in court. The insurance company pleads doubt in relation to whom
payment should be made and alleges that the Company is resisting in receiving
and settling it. The lawsuit was contested both by the bank (which claimed
having no right over the amount deposited, which resolves the doubt raised by
Sul America) and by the Company (which claimed inexistence of doubt and
justification to refuse the payment, since the amount owed by Sul America is
higher than stated). After pleading, Sul America claimed fault in the Bank's
representation, and the lawsuit is in its initial stage. Based on the opinion of
its legal advisors, the Company expects a loss to be remote and that the
sentence will declare the amount due within the amount stated in the pleading.
Also, Gerdau Acominas S.A. filed, prior to the above-mentioned lawsuit, a
lawsuit for the collection of the amount recognized by the insurance companies.
The lawsuits are pending. The Company expects a favorable outcome in this
lawsuit.
The civil lawsuits arise from the accident on March 23, 2002 with the blast
furnace regenerators of the Ouro Branco unit of the subsidiary Gerdau Acominas
S.A., which resulted in the stoppage of several activities, material damages to
the steel mill equipment and loss of profits. Equipment, as well as loss of
profits arising from the accident, was covered by an insurance policy. The
report on the event, as well as the loss claim, was filed with IRB - Brasil
Resseguros S.A., and an advance of R$ 62,000 was received in 2002.
In 2002, a preliminary and conservative estimate of indemnities related to the
coverage of loss of profits and material damages, in the total amount of
approximately R$ 110,000, was recorded, based on the amount of fixed costs
incurred during the period of partial stoppage of the steel mill activities and
the immediate expenses to be incurred to recover the equipment temporarily. This
estimate approximates the advance amount received plus the amount proposed by
the insurance company as a complement to settle the indemnity. Subsequently, new
amounts were added to the discussion, as stated in the Company's plea, although
not yet recorded.
Based on the opinion of its legal advisors, the Company considers that losses
from other contingencies that may affect the results of operations or the
Company's consolidated financial position are remote.
-34-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
NOTE 15 - POST-EMPLOYMENT BENEFITS
a) PENSION PLAN - DEFINED BENEFIT
The Company and other Group subsidiaries in Brazil are the co-sponsors of
defined benefit pension plans that cover substantially all employees in Brazil
("Gerdau Plan" and "Acominas Plan").
The Gerdau Plan is managed by Gerdau - Sociedade de Previdencia Privada, a
closed supplementary pension entity to complement the social security benefits
of employees and retired employees of the Company, of the other units of Gerdau
Acominas S.A and other subsidiaries in Brazil. The assets of the Gerdau Plan
comprise investments in bank deposit certificates, federal public notes and
marketable securities.
The Acominas Plan is managed by Fundacao Acominas de Seguridade Social - Acos, a
closed supplementary pension entity to complement the social security benefits
of employees and retired employees of the Ouro Branco unit of Gerdau Acominas
S.A. The assets of the Acominas Plan mainly comprise investments in bank deposit
certificates, federal public notes, marketable securities and properties.
As a result of the operational integration on November 28, 2003, the assets and
liabilities of the Gerdau Plan, relating to the employees transferred to Gerdau
Acominas S.A., were allocated to the new sponsor, and the companies filed a
request with the Supplementary Social Security Secretariat to add Gerdau
Acominas S.A. as a sponsor of the Retirement and Supplementary Retirement Plans
managed by Gerdau - Sociedade de Previdencia Privada.
Also, the Canadian and American subsidiaries sponsor defined benefit plans
(Canadian Plan and American Plan) that cover substantially all their employees.
The Canadian and American plans are managed by Royal Trust/Great West Life and
Wells Fargo, respectively, to complement the social security benefits of
employees of Gerdau Ameristeel Corporation and its subsidiaries. The assets of
the Plans mainly comprise marketable securities.
-35-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
Current expenses of the defined pension plan are as follows:
COMPANY CONSOLIDATED
--------------------------------------- --------------------------------------
3/31/2004 3/31/2003 3/31/2004 3/31/2003
------------------ -------------------- ------------------ ------------------
Cost of current service 28 1,403 12,301 10,170
Interest cost 86 3,601 32,682 27,279
Expected return of plan assets (142) (3,824) (41,708) (30,139)
Amortization of cost of past service - - 210 333
Amortization of unrecognized liability - - 125 117
Amortization of (gain) loss (12) - 871 691
Expected contributions of employees - - (1,096) (894)
------------------ -------------------- ------------------ ------------------
Pension plan cost, net (40) 1,180 3,385 7,557
================== ==================== ================== ==================
b) PENSION PLAN - DEFINED CONTRIBUTION
The Company and its subsidiaries in Brazil are also the co-sponsors of a defined
contribution pension plan administered by Gerdau - Sociedade de Previdencia
Privada. Contributions are based on a percentage of the compensation of
employees.
The foreign subsidiary Gerdau AmeriSteel US Inc. has a defined contribution
plan, the contributions to which are 50% of the amount paid by the participants,
limited to 4% of the salary. The other companies do not have this type of
pension plan.
c) OTHER POST-EMPLOYMENT BENEFITS
The Company estimates that the balance payable, due to employees' retirement or
discharge, amounts to R$ 8,854 (consolidated) at March 31, 2004.
The American Plan includes, in addition to pension benefits, specific health
benefits for employees who retire after a certain age and with a certain number
of years of service. The American subsidiary has the right to change or
eliminate these benefits, and the contributions are based on amounts actuarially
calculated.
-36-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
The composition of the net periodic cost for the post-employment health benefits
is as follows:
CONSOLIDATED
-------------------------------------
3/31/2004 3/31/2003
---------------- --------------------
Cost of service 675 636
Interest cost 1,588 1,623
Amortization of cost of past service (154) -
Amortization of (gain) loss 20 -
---------------- --------------------
Expenses for post-retirement health benefit, net 2,129 2,259
================ ====================
Considering all types of benefits to employees granted by the Company, the
assets and liabilities position at March 31, 2004 is as follows:
CONSOLIDATED
----------------------------
3/31/2004 12/31/2003
----------------------------
Pension plan liabilities - defined benefit 165,348 162,719
Post-retirement health benefit 109,931 105,964
Retirement and discharge benefits payable 8,854 10,187
------------- --------------
Total liabilities 284,133 278,870
============= ==============
NOTE 16 - LONG-TERM INCENTIVE PLANS
At the Extraordinary General Meeting (AGE) held on April 30, 2003, the
shareholders decided, based on a previously agreed plan and within the limit of
the authorized capital, to grant options to purchase preferred shares to
management, employees or persons who render services to the Company or the
companies under its control, and approved the creation of the Long-Term
Incentive Program that represents a new form of compensation of the strategic
executives of the Company. The shareholders also authorized the grant proposed
by management for 683,936 options, at the fixed price of R$ 23.88 per share, of
which 280,785 options are within the regular program, with a grace period of
five years and, exceptionally for this first year, 403,151 additional options
with a grace period of three years. Options should be exercised over a period of
five years after the grace period.
As mentioned in Note 17b, at March 31, 2004, the Company has a total of 786,600
preferred shares in treasury. These shares can be used for this plan.
-37-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
At March 31, 2004, the plan status is as follows:
Total stock options granted 683,936
Exercise price - R$ 23.88
Fair value of options at the grant date - R$ per option (*) 7.44
Average term of option to be exercised at the grant date (years) 3.5
(*) calculated based on Black-Scholes model
The percentage of dilution in interest that the current shareholders may
experience if all options are exercised is approximately 0.1%.
Gerdau Ameristeel Corporation and its subsidiaries also have stock compensation
plans for their employees.
The effect on income for the year and shareholders' equity would have been as
follows, had the expenses for the option plans of Gerdau S.A. and Gerdau
Ameristeel Corporation been recorded:
COMPANY CONSOLIDATED
-------------------------------- ------------------------------------
SHAREHOLDERS' SHAREHOLDERS
NET INCOME EQUITY NET INCOME EQUITY
---------------- -------------- ---------------- ------------------
Balances based on financial statements 381,959 4,388,876 427,294 4,388,876
Expenses for the period* (386) (1,426) (587) (3,608)
------------ ------------------ ---------------- ------------------
Pro-forma balances 381,573 4,387,450 426,707 4,385,268
============ ================== ================ ==================
NOTE 17 - SHAREHOLDERS' EQUITY
a) CAPITAL - capital, authorized at March 31, 2004, comprises 240,000,000 common
shares and 480,000,000 preferred shares, with no par value.
At March 31, 2004, 51,468,224 common shares and 96,885,787 preferred shares are
subscribed and paid-up, totaling R$ 1,735,656. Preferred shares do not have
voting rights and cannot be redeemed, but have the same rights of common shares
in terms of profit distributions.
-38-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
b) TREASURY STOCK - at the meeting held on November 17, 2003, management
authorized the purchase of own shares, considering the reserve for investments
and working capital, in conformity with legal and statutory provisions, to be
held in treasury for subsequent sale in the market or cancellation. At March 31,
2004, the Company had acquired in the stock exchange 786,600 preferred shares,
held for treasury, for the amount of R$ 44,139.
c) INTEREST ON CAPITAL - At March 30, 2004 the shareholders received interest on
own capital (R$ 94,443) as prepayment of the minimum statutory dividend for the
current year. The Company calculated the interest on capital according to the
terms established by Law 9249/95. The corresponding amount was recorded as
financial expenses for tax purposes. For presentation purposes, this amount was
recorded as dividends, not affecting the net income.
NOTE 18 - STATUTORY PROFIT SHARING
The management's profit sharing is limited to 10% of net income for the year,
after income tax and management fees.
NOTE 19 - GUARANTEES GRANTED
The Company is the guarantor of loan agreements of the jointly-controlled
subsidiary Dona Francisca Energetica S.A., in the total amount of R$ 104,810,
corresponding to 51.82% of the joint guarantee. The Company is also the
guarantor of the Euro Commercial Paper program of the subsidiary GTL Trade
Finance Inc., in the amount of US$ 100,000, equivalent to R$ 290,860 at the date
of the Quarterly Information, and loans of the subsidiary Gerdau Ameristeel
Corporation, in the amount of US$ 25,000, equivalent to R$ 72,715 at the date of
the Quarterly Information. The subsidiary Gerdau Acominas S.A. is the guarantor
of the vendor financing of the associated company Banco Gerdau S.A., in the
amount of R$ 45,578, at March 31, 2004.
-39-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
NOTE 20 - INFORMATION BY GEOGRAPHIC AREA AND BUSINESS SECTOR
INFORMATION BY GEOGRAPHIC AREA:
GEOGRAPHIC AREAS
---------------------------------------------------------------------------
BRAZIL SOUTH AMERICA(*)
------------------------------------ ------------------------------------
2004 2003 2004 2003
----------------- ----------------- ----------------- -----------------
Gross sales revenue 2,578,432 2,114,441 215,910 159,381
Net sales revenue 1,987,936 1,712,981 157,482 119,787
Cost of sales (1,228,984) (980,005) (94,229) (78,788)
Gross profit 758,952 732,976 63,253 40,999
Selling expenses (87,821) (79,293) (1,508) (1,231)
Net financial income (97,149) (79,117) (1,299) (2,618)
General and administrative expenses (154,716) (117,579) (8,833) (7,451)
Operating income 448,767 362,400 52,357 29,926
Net income for the year 323,675 287,281 41,069 22,285
EBITDA (**) 619,689 618,226 59,609 38,406
GEOGRAPHIC AREAS
---------------------------------------------------------------------------
BRAZIL SOUTH AMERICA(*)
------------------------------------ ------------------------------------
2004 2003 2004 2003
----------------- ----------------- ----------------- -----------------
Assets 9,178,200 8,708,913 666,936 629,774
Liabilities 6,054,329 6,193,565 249,174 328,148
Capital expenditures 144,341 199,388 7,420 5,229
Depreciation/amortization 103,273 82,121 6,697 6,089
TABLE CONT'D
---------------------------------------
NORTH AMERICA CONSOLIDATED
------------------------------------- ------------------------------------
2004 2003 2004 2003
----------------- ----------------- ----------------- ----------------
Gross sales revenue 2,178,584 1,650,693 4,972,926 3,924,515
Net sales revenue 2,027,588 1,494,071 4,173,006 3,326,839
Cost of sales (1,832,525) (1,436,478) (3,155,738) (2,495,271)
Gross profit 195,063 57,593 1,017,268 831,568
Selling expenses (7,753) (11,473) (97,082) (91,997)
Net financial income (55,127) (27,745) (153,575) (109,480)
General and administrative expenses (44,903) (63,401) (208,452) (188,431)
Operating income 91,535 (39,562) 592,659 352,764
Net income for the year 62,551 (22,299) 427,295 287,267
EBITDA (**) 203,971 49,050 883,269 705,682
---------------------------------------
NORTH AMERICA CONSOLIDATED
------------------------------------- ------------------------------------
2004 2003 2004 2003
----------------- ----------------- ----------------- ----------------
Assets 5,256,513 5,553,190 15,101,649 14,891,877
Liabilities 3,639,013 3,747,893 9,942,516 10,269,606
Capital expenditures 67,690 74,040 219,451 278,657
Depreciation/amortization 61,565 66,332 171,535 154,542
( * ) Does not include Brazilian operations.
(**) Income before financial expenses, income tax and social contribution, and
depreciation and amortization.
NOTE 21 - SUBSEQUENT EVENTS
a) On April 16, 2004, Gerdau S.A., through its indirect subsidiary Gerdau Steel
Inc., purchased 26,800,000 shares issued by Gerdau Ameristeel Corporation,
through a capitalization of Cdn$ 131 million, equivalent to R$ 283,937 at that
date. With the conclusion of the transaction, Gerdau S.A. indirectly holds 72%
of Gerdau Ameristeel Corporation.
b) At the shareholders meeting on April 29, 2004 the Board of Directors will
present a proposal to approve a capital increase from R$ 1,735,656 to R$
3,471,312, through the capitalization of the Reserve for Investment and Working
Capital, in the amount of R$ 1,735,656, with a bonus of 148,354,011 new shares
(100% on the current position), of which 51,468,224 are common shares and
96,885,787 are preferred shares.
-40-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
NOTE 22 - SUPPLEMENTARY INFORMATION - STATEMENT OF CASH FLOWS
In order to permit additional analysis, the statement of cash flows prepared
using the indirect method is being presented as supplementary information.
COMPANY CONSOLIDATED
---------------------------- --------------------------------
3/31/2004 3/31/2003 3/31/2004 3/31/2003
------------- -------------- ---------------- ---------------
NET INCOME FOR THE PERIOD 381,959 245,901 427,295 287,267
Equity in the earnings of subsidiaries (379,441) (28,842) (16,953) 88,934
Provision for credit risks - 2,441 2,514 2,399
Gain and/or loss on disposal of fixed assets - 571 5,274 844
Gain and/or loss on investment disposal - 35 35
Monetary and exchange variations (1,239) (24,228) 54,836 (7,661)
Depreciation and amortization - 48,462 171,535 154,542
Income tax and social contribution (19,398) 31,660 99,211 33,404
Interest on debt 8,902 92,332 124,623 144,114
Contingencies/judicial deposits 21 2,852 8,575 (1,227)
Changes in trade accounts receivable - (157,850) (374,381) (340,219)
Changes in inventory - (148,684) (186,067) (138,275)
Changes in suppliers (12) (2,514) 348,634 204,794
Other operating activity accounts (8,361) 26,372 (49,692) (24,264)
Net cash provided by (used in) operating activities (17,569) 88,508 615,404 404,687
Acquisition/disposal of fixed assets - (72,372) (219,451) (278,657)
Increase in deferred charges - (239) (2,637) 743
Acquisition/disposal of investments - (55,123) (3) (138)
Interest on capital/profit distribution received 243,060 24,328 - -
Net cash provided by (used in) investing activities 243,060 (103,406) (222,091) (278,052)
Suppliers of fixed assets - 7,321 (5,237) 1,963
Working capital financing - 67,648 272,972 145,002
Debentures 13,475 (2,938) 10,050 2,065
Permanent asset financing - 29,831 44,488 126,666
Amortization of permanent asset financing - (84,702) (228,957) (185,660)
Payment of interest on financing - (27,926) (136,068) (64,438)
Loan with related companies (42,050) 461 262 3,164
Capital increase/treasury shares (27,036) - (26,469) -
Payment of dividends/interest on capital and participations (158,038) (193,520) (194,505) (197,396)
Net cash used in financing activities (213,649) (203,825) (263,464) (168,634)
Changes in cash balance 11,842 (218,723) 129,849 (41,999)
Cash balance
At the beginning of the period 177,684 365,680 1,017,006 1,430,656
Restatement of opening cash - - 4,003 (57,121)
Opening balance of consolidated companies for the period - - - 12,789
At the end of the period 189,526 146,957 1,150,858 1,344,325
Composition of final cash
Marketable securities 189,482 75,292 929,281 1,202,161
Cash and banks 44 71,665 221,577 142,164
-41-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION
- --------------------------------------------------------------------------------
********************
-42-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
05.01 - COMMENTS ON THE QUARTERLY PERFORMANCE
- --------------------------------------------------------------------------------
With the transfer of its operating assets to the subsidiary Gerdau Acominas S.A.
on November 28, 2003, the revenues of Gerdau S.A., as from that date, were
provided by the investments in subsidiaries and associated companies. The amount
of these investments, at the end of March, totaled R$ 4.8 billion.
In the first quarter of 2004, these investments generated in equity in the
results of R$ 379.4 million.
Net income reached R$ 382.0 million in the quarter, which represents R$ 2.59 per
share.
On March 31, shareholders' equity of Gerdau S.A. amounted to R$ 4.4 billion,
equivalent to an equity amount of R$ 29.74 per share.
At the end of the quarter, the Company presented the following financial
economic data:
1ST QUARTER/04
--------------
Income from investments - R$ thousand 379,441
Net income - R$ thousand 381,959
Net income per share - R$ 2.59
3/31/04
-------
Capital - R$ thousand 1,735,656
Shareholders' equity - R$ thousand 4,388,876
Book value per share - R$ 29.74
Interest on own capital relating to the first quarter of 2004, to be paid on May
18, 2004, amounts to R$ 94.4 million and is equivalent to R$ 0.64 per share held
on March 30.
At the shareholders meeting on April 29 the Board of Directors will present its
proposal for 100% share bonus on the shares held at the meeting's date. If
approved, the number of shares issued will increase from 148.3 million to 296.7
million
At the Sao Paulo Stock Exchange (BOVESPA), the activity in Gerdau S.A. (GGBR)
shares in the quarter amounted to R$ 1.3 billion. This volume represents an
increase of 273.7% compared to the first three months of 2003. 38,019 trades
were carried out and 20.6 million securities were traded. From January to March,
preferred shares appreciated by 13.1% and the daily average of negotiations
reached R$ 20.1 million.
-43-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
05.01 - COMMENTS ON THE QUARTERLY PERFORMANCE
- --------------------------------------------------------------------------------
Transactions in ADRs of Gerdau S.A. (GGB) on the New York Stock Exchange totaled
3.5 million securities and US$ 31.2 million in the first quarter of this year,
equivalent to a daily average of US$ 511.4 thousand.
Transactions in the ADRs of Gerdau S.A. (GGB) on the New York Stock Exchange
totaled US$ 221.4 million in the first quarter of 2004, 610.3% higher than the
same 2003 period and equivalent to a daily average of US$ 3.6 million. 10.2
million of securities were traded, compared to 3.5 million in the prior year.
During the quarter, 72.3 thousand preferred shares of Gerdau S.A. (XGGB) were
traded in the Madrid Stock Exchange (Latibex), resulting in trades of about
(euro) 1.3 million.
In order to comply with CVM Instruction 381/2003, Gerdau S.A. informs that
PricewaterhouseCoopers Auditores Independentes, the provider of external audit
services to the Company, did not provide services that were not related to
external audit during the first three months of 2004.
-44-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
06.01 - CONSOLIDATED BALANCE SHEET - ASSETS (R$ THOUSANDS)
- -------------------------------------------------------------------------------------------------------------------
1 - CODE 2 - DESCRIPTION 3 - 3/31/2004 4 - 12/31/2003
- -------------------------------------------------------------------------------------------------------------------
1 Total assets 15,101,649 14,246,741
1.01 Current assets 6,108,200 5,334,880
1.01.01 Cash and banks 221,577 121,615
1.01.02 Credits 2,981,395 2,542,382
1.01.02.01 Trade accounts receivable 1,887,617 1,526,176
1.01.02.02 Tax credits 164,497 120,815
1.01.02.03 Marketable securities 929,281 895,391
1.01.03 Inventories 2,562,324 2,336,598
1.01.03.01 Finished products 881,438 868,147
1.01.03.02 Work in process 366,329 323,373
1.01.03.03 Raw materials 687,252 586,311
1.01.03.04 Warehouse materials 559,014 517,010
1.01.03.05 Advances to suppliers 68,291 41,757
1.01.04 Other 342,904 334,285
1.01.04.01 Other receivables 218,000 217,417
1.01.04.02 Deferred income tax and social contribution 124,904 116,868
1.02 Long-term receivables 1,096,843 1,051,257
1.02.01 Sundry credits 10,212 10,212
1.02.01.01 Eletrobras loans 10,212 10,212
1.02.02 Receivables from related companies 30,996 26,979
1.02.02.01 Associated companies 0 0
1.02.02.02 Subsidiaries 30,996 26,979
1.02.02.03 Other related companies 0 0
1.02.03 Other 1,055,635 1,014,066
1.02.03.01 Judicial deposits and other 233,667 224,720
1.02.03.02 Deferred income tax and social contribution 821,968 789,346
1.03 Permanent assets 7,896,606 7,860,604
1.03.01 Investments 451,435 461,412
1.03.01.01 In associated companies 0 0
1.03.01.02 In subsidiaries 0 0
1.03.01.03 Other 0 0
1.03.02 Fixed assets 7,423,214 7,378,725
1.03.02.01 Land, buildings and structures 3,419,621 3,383,668
1.03.02.02 Machinery, equipment and installations 7,013,421 6,839,096
1.03.02.03 Furniture and fixtures 125,988 208,041
1.03.02.04 Vehicles 43,791 35,669
1.03.02.05 Electronic data equipment 229,097 495,178
1.03.02.06 Construction in progress 769,025 445,926
1.03.02.07 Forestation/reforestation 181,084 177,944
1.03.02.08 Accumulated depreciation (43,58,813) (4,206,797)
1.03.03 Deferred charges 21,957 20,467
-45-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
06.02 - CONSOLIDATED BALANCE SHEET - LIABILITIES AND SHAREHOLDERS' EQUITY (R$ THOUSANDS)
- -------------------------------------------------------------------------------------------------------------------
1 - CODE 2 - DESCRIPTION 3 - 3/31/2004 4 - 12/31/2003
- -------------------------------------------------------------------------------------------------------------------
2 Total liabilities and shareholders' equity 15,101,649 14,246,741
2.01 Current liabilities 4,483,800 4,342,899
2.01.01 Loans and financing 2,222,844 2,414,376
2.01.02 Debentures 7,514 3,027
2.01.03 Suppliers 1,535,936 1,192,428
2.01.04 Taxes, charges and contributions 244,449 171,776
2.01.05 Dividends payable 90,607 154,220
2.01.06 Provisions 0 0
2.01.07 Payables to related companies 0 0
2.01.08 Other 382,450 407,072
2.01.08.01 Salaries payable 128,704 148,626
2.01.08.02 Deferred income tax and social contribution 47,785 35,721
2.01.08.03 Other payables 205,961 222,725
2.02 Long-term liabilities 5,458,716 5,048,695
2.02.01 Loans and financing 3,685,546 3,396,085
2.02.02 Debentures 462,540 449,039
2.02.03 Provisions 0 0
2.02.04 Payables to related companies 0 0
2.02.05 Other 1,310,630 1,203,571
2.02.05.01 Provision for contingencies 232,450 221,212
2.02.05.02 Deferred income tax and social contribution 592,656 484,096
2.02.05.03 Other payables 201,391 219,393
2.02.05.04 Benefits to employees 284,133 278,870
2.03 Deferred income 0 0
2.04 Minority interest 770,257 726,751
2.05 Shareholders' equity 4,388,876 4,128,396
2.05.01 Paid-up capital 1,735,656 1,735,656
2.05.02 Capital reserves 376,672 376,672
2.05.02.01 Investments 342,910 342,910
2.05.02.02 Special - Law 8200/91 21,487 21,487
2.05.02.03 Other 12,275 12,275
2.05.03 Revaluation reserves 0 0
2.05.03.01 Own assets 0 0
2.05.03.02 Subsidiary/associated companies 0 0
2.05.04 Revenue reserves 1,989,031 2,016,068
2.05.04.01 Legal 184,429 184,429
2.05.04.02 Statutory 1,804,602 1,831,639
2.05.04.03 Contingencies 0 0
2.05.04.04 Unrealized profits 0 0
2.05.04.05 Retention of profits 0 0
2.05.04.06 Special for undistributed dividends 0 0
2.05.04.07 Other 0 0
2.05.05 Retained earnings/accumulated losses 287,517 0
-46-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
07.01 - CONSOLIDATED STATEMENT OF INCOME (R$ THOUSANDS)
- -------------------------------------------------------------------------------------------------------------------------
CODE DESCRIPTION 3 - 1/1/2004 4 - 1/1/2004 5 - 1/1/2003 6 - 1/1/2003
to 3/31/2004 to 3/31/2004 to 3/31/2003 to 3/31/2003
- -------------------------------------------------------------------------------------------------------------------------
3.01 Gross sales and/or services 4,972,926 4,972,926 3,924,515 3,924,515
3.02 Deductions (799,920) (799,920) (597,676) (597,676)
3.02.01 Taxes on sales (460,997) (460,997) (339,741) (339,741)
3.02.02 Freights and discounts (338,923) (338,923) (257,935) (257,935)
3.03 Net sales and/or services 4,173,006 4,173,006 3,326,839 3,326,839
3.04 Cost of sales and/or services rendered (3,155,738) (3,155,738) (2,495,271) (2,495,271)
3.05 Gross profit 1,017,268 1,017,268 831,568 831,568
3.06 Operating expenses/income (424,609) (424,609) (478,804) (478,804)
3.06.01 Selling (97,082) (97,082) (91,997) (91,997)
3.06.02 General and administrative (208,452) (208,452) (188,431) (188,431)
3.06.03 Financial (153,575) (153,575) (109,480) (109,480)
3.06.03.01 Financial income 0 0 7,888 7,888
3.06.03.02 Financial expenses 0 0 (117,368) (117,368)
3.06.04 Other operating income 17,547 17,547 38 38
3.06.05 Other operating expenses 0 0 0 0
3.06.06 Equity in the results of subsidiary and associated 16,953 16,953 (88,934) (88,934)
companies
3.07 Operating profit 592,659 592,659 352,764 352,764
3.08 Non-operating results (9,518) (9,518) (997) (997)
3.08.01 Income 0 0 0 0
3.08.02 Expenses (9,518) (9,518) (997) (997)
3.09 Income before taxes and participations 583,141 583,141 351,767 351,767
3.10 Provision for income tax and social (113,375) (113,375) (72,901) (72,901)
contribution
3.11 Deferred income tax (34,636) (34,636) 12,939 12,939
3.12 Statutory participations and contributions (7,835) (7,835) (4,538) (4,538)
3.12.01 Participations (7,835) (7,835) (4,538) (4,538)
3.12.02 Contributions 0 0 0 0
3.13 Reversal of interest on capital 0 0 0 0
3.14 Minority interest (45,336) (45,336) (41,366) (41,366)
3.15 Net income for the period 381,959 381,959 245,901 245,901
Number of shares (thousands), excluding 147,567 147,567 114,118,471 114,118,471
treasury stock
Net income per share 2.58838 2.58838 0.00215 0.00215
Loss per share
-47-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
08.01 - COMMENTS ON THE CONSOLIDATED PERFORMANCE
- --------------------------------------------------------------------------------
PERFORMANCE IN THE 1ST QUARTER OF 2004
--------------------------------------
PRODUCTION AND SALES
o During the first quarter of 2004, Gerdau companies produced 3.1 million tons
of plates, blocks and billets, 5.8% higher than the volume of the same period
of 2003.
o Operations in Brazil contributed 54.8% of the accumulated production for the
quarter, reaching 1.7 million tons, while North America contributed 1.3
million tons, 42.5% of total volume. The companies in Chile and Uruguay
contributed the other 2.7%, that is, 86.0 thousand tons.
o The volume of rolled steel produced during the quarter reached 2.4 million
tons, 11.9% higher than the first quarter of 2003.
- -------------------------------------------------------------------------------------------------------------------------
PRODUCTION 1ST Q. 2004 1ST Q. 2003 VARIATION 4TH Q. 2003 VARIATION
(1,000 TONS) 1Q04/1Q03 1Q04/4Q03
- -------------------------------------------------------------------------------------------------------------------------
CRUDE STEEL (plates, blocks and billets)
Brazil 1,719.6 1,688.2 1.9% 1,818.3 (5.4%)
North America 1,333.5 1,195.5 11.5% 1,253.5 6.4%
South America 86.0 84.8 1.4% 93.6 (8.1%)
TOTAL 3,139.1 2,968.5 5.7% 3,165.4 (0.8%)
ROLLED STEEL
Brazil 1,021.3 921.4 10.8% 1,017.7 0.4%
North America 1,262.0 1,122.2 12.5% 1,241.1 1.7%
South America 106.4 91.5 16.3% 107.3 (0.8%)
TOTAL 2,389.7 2,135.1 11.9% 2,366.1 1.0%
- -------------------------------------------------------------------------------------------------------------------------
o Consolidated sales in the quarter totaled 3.1 million tons, 8.6% higher than
the volume sold in the first quarter of 2003.
o Gerdau Acominas S.A. sold, in the quarter, 1.6 million tons of steel
products, of which 43.8% were exported to various regions, generating
revenues of US$ 219.9 million compared to US$ 153.4 million in the first
quarter of 2003. In the domestic market, the increase of demand in the
period, especially in the sectors with good export capacity, permitted sales
to increase by 7.2% in relation to the same prior year period.
o Abroad, the economic recovery in North and South American countries permitted
sales to increase by 9.5% in comparison to the first quarter of last year.
-48-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
08.01 - COMMENTS ON THE CONSOLIDATED PERFORMANCE
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
SALES 1ST Q. 2004 1ST Q. 2003 VARIATION 4TH Q. 2003 VARIATION
1,000 tons) 1Q04/1Q03 1Q04/4Q03
- ------------------------------------------------------------------------------------------------------
BRAZIL
Domestic market 914.6 853.5 7.2% 849.5 7.7%
Exports 713.6 657.2 8.6% 869.3 (17.9%)
TOTAL 1,628.2 1,510.7 7.8% 1,718.8 (5.3%)
FOREIGN
North America 1,389.0 1,271.0 9.3% 1,294.9 7.3%
South America 120.8 107.4 12.5% 109.0 10.8%
TOTAL 1,509.8 1,378.4 9.5% 1,403.9 7.5%
TOTAL CONSOLIDATED 3,138.0 2,889.1 8.6% 3,122.7 0.5%
- ------------------------------------------------------------------------------------------------------
RESULTS
o Net consolidated sales reached R$ 4.2 billion in the first quarter of the
year, 25.4% higher than in the same quarter of 2003, due to the increase in
physical sales volume, better performance in the North American operations
and the increase in prices of steel products in the foreign market. In
relation to the fourth quarter of last year, net sales increased 18.7%.
- ------------------------------------------------------------------------------------------------------
NET SALES 1ST Q. 2004 1ST Q. 2003 VARIATION 4TH Q. 2003 VARIATION
(R$ million) 1Q04/1Q03 1Q04/4Q03
- ------------------------------------------------------------------------------------------------------
Brazil 1,988.0 1,717.0 15.8% 1,888.2 5.3%
North America 2,027.6 1,490.0 36.1% 1,473.6 37.6%
South America 157.4 119.8 31.4% 154.3 2.0%
TOTAL 4,173.0 3,326.8 25.4% 3,516.1 18.7%
- ------------------------------------------------------------------------------------------------------
o In consolidated terms, the better operating margins of exports and of North
American and Southern Cone operations were responsible for the maintenance of
the Gross margin above 24%, even with the reduction of margins in Brazil,
arising from the pressure on the input prices. During the first quarter of
2004, consolidated gross margin was 24.4% against 25.0% in the same period of
2003 and 24.7% in the last quarter of the year. Gross profit reached R$ 1.0
billion in the months from January to March, 22.3% higher than the same prior
year period.
o Selling, general and administrative expenses reduced as a percentage of net
sales for the quarter to 7.3%. This reduction, in relation to the first and
fourth quarters of 2003, is a consequence, mainly, from the reduction of
exports (less cost with port services) and the reduction of expenses in
Gerdau Ameristeel. The operating expenses totaled R$ 305.5 million in the
quarter.
-49-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
08.01 - COMMENTS ON THE CONSOLIDATED PERFORMANCE
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
EBTDA 1ST Q. 2004 1ST Q. 2003 VARIATION 4TH Q. 2003 VARIATION
(R$ MILLION) 1Q04/1Q03 1Q04/4Q03
- ----------------------------------------------------------------------------------------------------------------------------
Gross profit 1,017.3 831.6 22.3% 868.5 17.1%
Selling expenses (97.1) (92.0) 5.5% (125.8) (22.8%)
General and administrative expenses (208.4) (188.4) 10.6% (238.4) (12.6%)
Depreciation and amortization 171.5 154.5 11.0% 156.5 9.6%
EBITDA 883.3 705.7 25.2% 660.8 33.7%
Financial expenses, net (excluding
exchange and monetary variations) (101.6) (118.1) (14.0%) (118.6) (14.3%)
Exchange and monetary variations (52.0) 8.6 - (37.7) 37.9%
EBTDA 729.7 596.2 22.4% 504.5 44.6%
- ----------------------------------------------------------------------------------------------------------------------------
o EBITDA reached R$ 883.3 million in the quarter, 25.2% and 33.7% higher than
in the first and fourth quarters of 2003, respectively. The margin remained
at the same level as the first quarter of the prior year (21.2%) and above
the 18.8% of the fourth quarter.
- ------------------------------------------------------------------------------------------------------------
EBITDA 1ST Q. 2004 1ST Q. 2003 VARIATION 4TH Q. 2003 VARIATION
(R$ MILLION) 1Q04/1Q03 1Q04/4Q03
- ------------------------------------------------------------------------------------------------------------
Brazil 619.7 614.0 0.9% 547.8 13.1%
North America 204.0 53.3 282.7% 66.0 209.1%
South America 59.6 38.4 55.2% 47.0 26.8%
TOTAL 883.3 705.7 25.2% 660.8 33.7%
- ------------------------------------------------------------------------------------------------------------
o Net financial expenses totaled R$ 153.6 million in the quarter. This amount
includes monetary variation expenses of R$ 3.4 million and foreign exchange
variation expenses of R$ 48.6 million. In the first quarter of 2003, net
financial expenses totaled R$ 109.5 million, of which R$ 8.1 million were
monetary variation expenses and R$ 16.7 million foreign exchange income.
o Equity accounting was positive in the amount of R$ 17.0 million in the
quarter. This amount reflects the variations of the different currencies in
relation to the Real on Gerdau's foreign investments and also the tax
incentives and amortization of goodwill.
o Net income reached R$ 427.3 million in the first quarter of 2004, 48.7%
higher than the first quarter of 2003. Net margin increased from 8.6% in the
first three months of the year 2003 to 10.2% in the period from January to
March 2004. In the comparison of the result for the quarter (R$ 427.3
million) with the last quarter of last year (R$ 459.9 million) we note a
reduction of 7.1%, but it should be considered that the 2003 profit includes
R$ 135.7 million of tax credits. Excluding this amount, the effective growth
would be 31.8% in the first quarter of 2004 in relation to the fourth quarter
of 2003.
-50-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
08.01 - COMMENTS ON THE CONSOLIDATED PERFORMANCE
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
NET INCOME 1ST Q. 2004 1ST Q. 2003 VARIATION 4TH Q. 2003 VARIATION
(R$ MILLION) 1Q04/1Q03 1Q04/4Q03
- -----------------------------------------------------------------------------------------------------
Brazil 323.6 287.4 12.6% 431.4 (25.0%)
North America 62.6 (22.4) - (4.3) -
South America 41.1 22.3 84.3% 32.8 25.3%
TOTAL 427.3 287.3 48.7% 459.9 (7.1%)
- -----------------------------------------------------------------------------------------------------
INVESTMENTS
o During the quarter, investments in fixed assets totaled US$ 76.8 million. Of
this amount, US$ 51.5 million (67.1% of the total) were invested in the
Brazilian companies, US$ 23.3 million (30.3% of total) in North America and
the other US$ 2.0 million (2.6% of total) in South America.
o On February 16, Gerdau Ameristeel purchased the assets of Potter Form & Tie
Co., headquartered in Belvidere, Illinois, USA. This company is the leader
for more than 30 years in the supply of cut and fabricated rods and other
materials for the steel concrete industry in the U.S. Midwest. Potter has
units in Belvidere, Urbana and Decatur, Illinois; Madison and Appleton,
Wisconsin; and Eldridge, Iowa.
FINANCIAL DEBT
o At the end of the quarter, net debt was R$ 5.2 billion, 11.6% lower than at
March 2003.
o Of the Gross debt, 35.0% was short-term (R$ 2.2 billion) and 65.0% was
long-term (R$ 4.2 billion). Approximately 14.1% of total debt was contracted
in local currency, mainly with the BNDES, 43.6% is subject to U.S. dollar
(37.2% protected by swap contracts) and 42.3% was contracted by foreign
companies.
o At March 31, cash and short-term investment balances totaled R$ 1.2 billion,
of which 63.3% (R$ 729.9 million) was indexed to the U.S. dollar.
-51-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
08.01 - COMMENTS ON THE CONSOLIDATED PERFORMANCE
- --------------------------------------------------------------------------------
DEBT 3.31.2004 3.31.2003 12.31.2003
(R$ million)
- --------------------------------------------------------------------------------
SHORT-TERM
Local currency 186.5 475.3 280.9
Foreign currency 1,539.8 1,852.4 1,342.7
Foreign companies 504.0 2,242.0 793.8
TOTAL 2,230.3 4,569.7 2,417.4
LONG-TERM
Local currency 713.9 1,120.8 717.2
Foreign currency 1,243.1 812.9 1,030.7
Foreign companies 2,191.1 756.0 2,097.2
TOTAL 4,148.1 2,689.7 3,845.1
GROSS DEBT 6,378.4 7,259.4 6,262.5
Cash and banks and short-term investments 1,150.9 1,344.3 1,017.0
NET DEBT 5,227.5 5,915.1 5,245.5
- --------------------------------------------------------------------------------
On March 31, 2004, 37% of debt in foreign currency was protected by hedge
contracts.
o At March 31, the payment schedule of long-term debt, including debentures,
was as follows:
---------------------------------
YEAR R$ MILLION
---------------------------------
2005 573.6
2006 417.6
2007 512.2
2008 657.7
2009 and after 1,987.0
TOTAL 4,148.1
---------------------------------
o At the end of the quarter, the main indices related to the debt were the
following:
- --------------------------------------------------------------------------------
INDICES 3. 31.2004 3. 31.2003 12. 31.2003
Net debt/Total net capitalization 50.3% 56.1% 51.9%
EBITDA(1)/Net financial expenses(1) 5.6x 6.0X 5.0x
(excluding monetary and exchange variations)
Gross debt/EBITDA1 2.2x 3.0X 2.3x
Net debt/EBITDA1 1.8x 2.4X 2.0x
- --------------------------------------------------------------------------------
(1) Accumulated for the last 12 months
-52-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
08.01 - COMMENTS ON THE CONSOLIDATED PERFORMANCE
- --------------------------------------------------------------------------------
MEETINGS OF THE ASSOCIATION OF CAPITAL MARKETS ANALYSTS AND PROFESSIONALS
(APIMEC)
o Continuing with the policy of transparency and relations with the Capital
Markets, next May, Gerdau's management will be meeting with APIMEC associates
and other investors for a presentation on the performance of the first
quarter and perspectives for 2004. On the 26th, the meetings will be in Sao
Paulo and Brasilia, on the 27th in Rio de Janeiro and on the 28th in Porto
Alegre.
-53-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
09.01 - INVESTMENTS IN SUBSIDIARY AND/OR ASSOCIATED COMPANIES
- -----------------------------------------------------------------------------------------------------------
1-ITEM 2-COMPANY NAME 3-CNPJ 4-CLASSIFICATION 5-% OF INVESTEES 6-%OF SHARE
CAPITAL HOLDERS' EQUITY OF
INVESTOR
- -----------------------------------------------------------------------------------------------------------
7-TYPE OF COMPANY 8-NUMBER OF SHARES FOR THE QUARTER 9-NUMBER OF SHARES IN THE PRIOR QUARTER
(THOUSANDS) (THOUSANDS)
01 GERDAU INTERN. EMPREEND. LTDA. 87.040.598/0001-20 CLOSED SUBSIDIARY 94.60 42.95
COMMERCIAL, INDUSTRIAL AND OTHER 2,087,971 2,087,971
03 GERDAU ACOMINAS S.A. 17.227.422/0001-05 CLOSED SUBSIDIARY 82.91 55.82
COMMERCIAL, INDUSTRIAL AND OTHER 131,541 131,541
-54-
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
10.01 - CHARACTERISTICS OF PUBLIC OR PRIVATE ISSUE OF DEBENTURES
- --------------------------------------------------------------------------------
1 - ITEM 01
2 - ORDER NUMBER 03
3 - CVM REGISTRATION NUMBER DCA-82/018
4 - CVM REGISTRATION DATE 7/29/1982
5 - ISSUED SERIES A
6 - TYPE OF ISSUANCE SIMPLE
7 - NATURE OF ISSUANCE PUBLIC
8 - DATE OF ISSUANCE 6/1/1982
9 - MATURITY DATE 6/1/2011
10 - TYPE OF DEBENTURE WITHOUT PREFERENCE
11 - CONDITION OF REMUNERATION IN EFFECT CDI
12 - PREMIUM/DISCOUNT
13 - NOMINAL VALUE (reais) 373.68
14 - ISSUED AMOUNT (thousands of reais) 8,968
15 - NUMBER OF ISSUED DEBENTURES (UNIT) 24,000
16 - OUTSTANDING DEBENTURES (UNIT) 13,739
17 - TREASURY DEBENTURES (UNIT) 10,261
18 - REDEEMED DEBENTURES (UNIT) 0
19 - CONVERTED DEBENTURES (UNIT) 0
20 - DEBENTURES TO BE PLACED (UNIT) 0
21 - DATE OF THE LAST RENEGOTIATION 9/19/2002
22 - DATE OF THE NEXT EVENT 6/1/2011
55
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
10.01 - CHARACTERISTICS OF PUBLIC OR PRIVATE ISSUE OF DEBENTURES
- --------------------------------------------------------------------------------
1 - ITEM 02
2 - ORDER NUMBER 03
3 - CVM REGISTRATION NUMBER DCA-82/019
4 - CVM REGISTRATION DATE 8/11/1982
5 - ISSUED SERIES B
6 - TYPE OF ISSUANCE SIMPLE
7 - NATURE OF ISSUANCE PUBLIC
8 - DATE OF ISSUANCE 6/1/1982
9 - MATURITY DATE 6/1/2011
10 - TYPE OF DEBENTURE WITHOUT PREFERENCE
11 - CONDITION OF REMUNERATION IN EFFECT CDI
12 - PREMIUM/DISCOUNT
13 - NOMINAL VALUE (reais) 373.68
14 - ISSUED AMOUNT (thousands of reais) 8,968
15 - NUMBER OF ISSUED DEBENTURES (UNIT) 24,000
16 - OUTSTANDING DEBENTURES (UNIT) 4,121
17 - TREASURY DEBENTURES (UNIT) 19,879
18 - REDEEMED DEBENTURES (UNIT) 0
19 - CONVERTED DEBENTURES (UNIT) 0
20 - DEBENTURES TO BE PLACED (UNIT) 0
21 - DATE OF THE LAST RENEGOTIATION 9/19/2002
22 - DATE OF THE NEXT EVENT 6/1/2011
56
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
10.01 - CHARACTERISTICS OF PUBLIC OR PRIVATE ISSUE OF DEBENTURES
- --------------------------------------------------------------------------------
1 - ITEM 03
2 - ORDER NUMBER 04
3 - CVM REGISTRATION NUMBER DCA-83/043
4 - CVM REGISTRATION DATE 8/8/1983
5 - ISSUED SERIES 1
6 - TYPE OF ISSUANCE SIMPLE
7 - NATURE OF ISSUANCE PUBLIC
8 - DATE OF ISSUANCE 5/31/1983
9 - MATURITY DATE 2/28/2012
10 - TYPE OF DEBENTURE WITHOUT PREFERENCE
11 - CONDITION OF REMUNERATION IN EFFECT CDI
12 - PREMIUM/DISCOUNT
13 - NOMINAL VALUE (reais) 373.68
14 - ISSUED AMOUNT (thousands of reais) 15,695
15 - NUMBER OF ISSUED DEBENTURES (UNIT) 42,000
16 - OUTSTANDING DEBENTURES (UNIT) 0
17 - TREASURY DEBENTURES (UNIT) 42,000
18 - REDEEMED DEBENTURES (UNIT) 0
19 - CONVERTED DEBENTURES (UNIT) 0
20 - DEBENTURES TO BE PLACED (UNIT) 0
21 - DATE OF THE LAST RENEGOTIATION 9/19/2002
22 - DATE OF THE NEXT EVENT 2/28/2012
57
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
10.01 - CHARACTERISTICS OF PUBLIC OR PRIVATE ISSUE OF DEBENTURES
- --------------------------------------------------------------------------------
1 - ITEM 05
2 - ORDER NUMBER 07
3 - CVM REGISTRATION NUMBER DCA-82/024
4 - CVM REGISTRATION DATE 2/28/1982
5 - ISSUED SERIES 1
6 - TYPE OF ISSUANCE SIMPLE
7 - NATURE OF ISSUANCE PUBLIC
8 - DATE OF ISSUANCE 7/1/1982
9 - MATURITY DATE 7/1/2012
10 - TYPE OF DEBENTURE WITHOUT PREFERENCE
11 - CONDITION OF REMUNERATION IN EFFECT CDI
12 - PREMIUM/DISCOUNT
13 - NOMINAL VALUE (reais) 373.68
14 - ISSUED AMOUNT (thousands of reais) 8,520
15 - NUMBER OF ISSUED DEBENTURES (UNIT) 22,800
16 - OUTSTANDING DEBENTURES (UNIT) 4,304
17 - TREASURY DEBENTURES (UNIT) 18,496
18 - REDEEMED DEBENTURES (UNIT) 0
19 - CONVERTED DEBENTURES (UNIT) 0
20 - DEBENTURES TO BE PLACED (UNIT) 0
21 - DATE OF THE LAST RENEGOTIATION 9/19/2002
22 - DATE OF THE NEXT EVENT 7/1/2012
58
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
10.01 - CHARACTERISTICS OF PUBLIC OR PRIVATE ISSUE OF DEBENTURES
- --------------------------------------------------------------------------------
1 - ITEM 06
2 - ORDER NUMBER 08
3 - CVM REGISTRATION NUMBER DCA-82/004
4 - CVM REGISTRATION DATE 12/23/1982
5 - ISSUED SERIES 1
6 - TYPE OF ISSUANCE SIMPLE
7 - NATURE OF ISSUANCE PUBLIC
8 - DATE OF ISSUANCE 11/1/1982
9 - MATURITY DATE 5/2/2013
10 - TYPE OF DEBENTURE WITHOUT PREFERENCE
11 - CONDITION OF REMUNERATION IN EFFECT CDI
12 - PREMIUM/DISCOUNT
13 - NOMINAL VALUE (reais) 373.68
14 - ISSUED AMOUNT (thousands of reais) 22,416
15 - NUMBER OF ISSUED DEBENTURES (UNIT) 59,988
16 - OUTSTANDING DEBENTURES (UNIT) 35,893
17 - TREASURY DEBENTURES (UNIT) 24,095
18 - REDEEMED DEBENTURES (UNIT) 0
19 - CONVERTED DEBENTURES (UNIT) 0
20 - DEBENTURES TO BE PLACED (UNIT) 0
21 - DATE OF THE LAST RENEGOTIATION 9/19/2002
22 - DATE OF THE NEXT EVENT 5/2/2013
59
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
10.01 - CHARACTERISTICS OF PUBLIC OR PRIVATE ISSUE OF DEBENTURES
- --------------------------------------------------------------------------------
1 - ITEM 07
2 - ORDER NUMBER 09
3 - CVM REGISTRATION NUMBER DCA-83/044
4 - CVM REGISTRATION DATE 8/8/1983
5 - ISSUED SERIES 1
6 - TYPE OF ISSUANCE SIMPLE
7 - NATURE OF ISSUANCE PUBLIC
8 - DATE OF ISSUANCE 5/1/1983
9 - MATURITY DATE 9/1/2014
10 - TYPE OF DEBENTURE WITHOUT PREFERENCE
11 - CONDITION OF REMUNERATION IN EFFECT CDI
12 - PREMIUM/DISCOUNT
13 - NOMINAL VALUE (reais) 373.68
14 - ISSUED AMOUNT (thousands of reais) 15,650
15 - NUMBER OF ISSUED DEBENTURES (UNIT) 41,880
16 - OUTSTANDING DEBENTURES (UNIT) 627
17 - TREASURY DEBENTURES (UNIT) 41,253
18 - REDEEMED DEBENTURES (UNIT) 0
19 - CONVERTED DEBENTURES (UNIT) 0
20 - DEBENTURES TO BE PLACED (UNIT) 0
21 - DATE OF THE LAST RENEGOTIATION 9/19/2002
22 - DATE OF THE NEXT EVENT 9/1/2014
60
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
10.01 - CHARACTERISTICS OF PUBLIC OR PRIVATE ISSUE OF DEBENTURES
- --------------------------------------------------------------------------------
1 - ITEM 08
2 - ORDER NUMBER 10
3 - CVM REGISTRATION NUMBER DEB-81/017
4 - CVM REGISTRATION DATE 5/7/1981
5 - ISSUED SERIES 1
6 - TYPE OF ISSUANCE SIMPLE
7 - NATURE OF ISSUANCE PUBLIC
8 - DATE OF ISSUANCE 2/27/1981
9 - MATURITY DATE 11/30/2015
10 - TYPE OF DEBENTURE SUBORDINATED
11 - CONDITION OF REMUNERATION IN EFFECT
12 - PREMIUM/DISCOUNT
13 - NOMINAL VALUE (reais) 1,121.03
14 - ISSUED AMOUNT (thousands of reais) 7,231
15 - NUMBER OF ISSUED DEBENTURES (UNIT) 6,450
16 - OUTSTANDING DEBENTURES (UNIT) 0
17 - TREASURY DEBENTURES (UNIT) 6,450
18 - REDEEMED DEBENTURES (UNIT) 0
19 - CONVERTED DEBENTURES (UNIT) 0
20 - DEBENTURES TO BE PLACED (UNIT) 0
21 - DATE OF THE LAST RENEGOTIATION
22 - DATE OF THE NEXT EVENT 11/30/2015
61
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
10.01 - CHARACTERISTICS OF PUBLIC OR PRIVATE ISSUE OF DEBENTURES
- --------------------------------------------------------------------------------
1 - ITEM 09
2 - ORDER NUMBER 11
3 - CVM REGISTRATION NUMBER EB-90/041
4 - CVM REGISTRATION DATE 9/3/1990
5 - ISSUED SERIES A
6 - TYPE OF ISSUANCE SIMPLE
7 - NATURE OF ISSUANCE PUBLIC
8 - DATE OF ISSUANCE 6/1/1990
9 - MATURITY DATE 6/1/2020
10 - TYPE OF DEBENTURE WITHOUT PREFERENCE
11 - CONDITION OF REMUNERATION IN EFFECT CDI
12 - PREMIUM/DISCOUNT
13 - NOMINAL VALUE (reais) 1,410.10
14 - ISSUED AMOUNT (thousands of reais) 35,253
15 - NUMBER OF ISSUED DEBENTURES (UNIT) 25,000
16 - OUTSTANDING DEBENTURES (UNIT) 4,110
17 - TREASURY DEBENTURES (UNIT) 20,890
18 - REDEEMED DEBENTURES (UNIT) 0
19 - CONVERTED DEBENTURES (UNIT) 0
20 - DEBENTURES TO BE PLACED (UNIT) 0
21 - DATE OF THE LAST RENEGOTIATION 9/19/2002
22 - DATE OF THE NEXT EVENT 6/1/2020
62
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
10.01 - CHARACTERISTICS OF PUBLIC OR PRIVATE ISSUE OF DEBENTURES
- --------------------------------------------------------------------------------
1 - ITEM 10
2 - ORDER NUMBER 11
3 - CVM REGISTRATION NUMBER DEB-91/004
4 - CVM REGISTRATION DATE 1/8/1991
5 - ISSUED SERIES B
6 - TYPE OF ISSUANCE SIMPLE
7 - NATURE OF ISSUANCE PUBLIC
8 - DATE OF ISSUANCE 6/1/1990
9 - MATURITY DATE 6/1/2020
10 - TYPE OF DEBENTURE WITHOUT PREFERENCE
11 - CONDITION OF REMUNERATION IN EFFECT CDI
12 - PREMIUM/DISCOUNT
13 - NOMINAL VALUE (reais) 1,410.10
14 - ISSUED AMOUNT (thousands of reais) 35,253
15 - NUMBER OF ISSUED DEBENTURES (UNIT) 25,000
16 - OUTSTANDING DEBENTURES (UNIT) 1,484
17 - TREASURY DEBENTURES (UNIT) 23,516
18 - REDEEMED DEBENTURES (UNIT) 0
19 - CONVERTED DEBENTURES (UNIT) 0
20 - DEBENTURES TO BE PLACED (UNIT) 0
21 - DATE OF THE LAST RENEGOTIATION 9/19/2002
22 - DATE OF THE NEXT EVENT 6/1/2020
63
(A free translation of the original in Portuguese) UNAUDITED
FEDERAL GOVERNMENT SERVICE
BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION
QUARTERLY INFORMATION (ITR) 3/31/2004
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
- --------------------------------------------------------------------------------
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
10.01 - CHARACTERISTICS OF PUBLIC OR PRIVATE ISSUE OF DEBENTURES
- --------------------------------------------------------------------------------
1 - ITEM 11
2 - ORDER NUMBER 13
3 - CVM REGISTRATION NUMBER DEB/2002/016
4 - CVM REGISTRATION DATE 5/27/2002
5 - ISSUED SERIES 1
6 - TYPE OF ISSUANCE SIMPLE
7 - NATURE OF ISSUANCE PUBLIC
8 - DATE OF ISSUANCE 11/1/2001
9 - MATURITY DATE 11/1/2008
10 - TYPE OF DEBENTURE SUBORDINATED
11 - CONDITION OF REMUNERATION IN EFFECT
12 - PREMIUM/DISCOUNT
13 - NOMINAL VALUE (reais) 10,000.00
14 - ISSUED AMOUNT (thousands of reais) 300,000
15 - NUMBER OF ISSUED DEBENTURES (UNIT) 30,000
16 - OUTSTANDING DEBENTURES (UNIT) 0
17 - TREASURY DEBENTURES (UNIT) 30,000
18 - REDEEMED DEBENTURES (UNIT) 0
19 - CONVERTED DEBENTURES (UNIT) 0
20 - DEBENTURES TO BE PLACED (UNIT) 0
21 - DATE OF THE LAST RENEGOTIATION 11/1/2003
22 - DATE OF THE NEXT EVENT 11/1/2008
64
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
CORPORATE GOVERNANCE - LEVEL 1
In compliance with the Regulation of Differentiated Practices for Corporate
Governance (Level 1), we present below tables showing ownership interests
involving all direct or indirect holdings that exceed 5% of voting capital, down
to the level of individual holdings.
- POSITION AS OF MARCH 31, 2004
GERDAU S.A. - CNPJ NO. 33.611.500/0001-19
- - CAPITAL: R$ 1,735,656,174.86
OWNERSHIP
NUMBER OF SHARES
---------------------------------------------------------------------------------
SHAREHOLDER'S NAME COMMON PREFERRED TOTAL
---------------------------------------------------------------------------------
NUMBER OF NUMBER OF NUMBER OF
SHARES % SHARES % SHARES %
---------------------------------------------------------------------------------
METALURGICA GERDAU S/A 42,897,208 83.35 22.505.852 23.23 65,406,060 44.09
STA. FELICIDADE COM. EXP. DE PRODS SID LTDA 1,218,034 2.37 4,913.618 5.07 6,131,652 4.13
OTHER CONTROLLING SHAREHOLDERS 1,694,505 3.29 131,853 0.14 1,826,358 1.23
---------------------------------------------------------------------------------
SUBTOTAL 45,809,747 89.01 27,551,323 28.44 73,361,070 49.45
TREASURY SHARES - 786,600 0.81 786,600 0.53
OUTSTANDING SHARES 5,658,477 10.99 68,547,864 70.75 74,206,341 50.02
---------------------------------------------------------------------------------
TOTAL ISSUED 51,468,224 100.00 96,885,787 100.00 148,354,011 100.00
---------------------------------------------------------------------------------
METALURGICA GERDAU S.A. - CNPJ NO. 92.690.783/0001-09
- - CAPITAL: R$ 1,280,000,000.00
OWNERSHIP
NUMBER OF SHARES
---------------------------------------------------------------------------------
SHAREHOLDER'S NAME COMMON PREFERRED TOTAL
---------------------------------------------------------------------------------
NUMBER OF NUMBER OF NUMBER OF
SHARES % SHARES % SHARES %
---------------------------------------------------------------------------------
INDAC - IND. ADM. E COM. S/A 4,065,551 29.33 - - 4,065,551 9.78
GRUPO GERDAU EMPREEND. LTDA 3,544,667 25.57 1,650 0.01 3,546,317 8.53
GERSUL EMPREEND. IMOBS. LTDA 1,930,243 13.93 - - 1,930,243 4.64
OTHER CONTROLLING SHAREHOLDERS 10,486 0.08 113,829 0.41 124,315 0.30
SUBTOTAL 9,550,947 68.90 115,479 0.42 9,666,426 23.25
- - 341,000 1.23 341,000 0.82
OTHER 4,310,518 31-10 27,266,451 98.35 31,576,969 75.93
TOTAL 13,861,465 100.00 27,722,930 100.00 41,584,395 100.00
65
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
STA FELICIDADE COM., IMPORT. E EXPORT DE PROD.
SIDERURGICOS LTDA - CNPJ NO. 78.566.288/0001-53
- - CAPITAL: R$ 108,000,000.00
OWNERSHIP
TOTAL
QUOTAHOLDER'S NAME NUMBER OF QUOTAS %
METALURGICA GERDAU S/A 107,999,850 100.00
GRUPO GERDAU EMPREENDIMENTOS LTDA 150 0.00
SUBTOTAL 108,000,000 100.00
OTHER - 0.00
TOTAL 108,000,000 100.00
INDAC - INDUSTRIA, ADMINISTRACAO E COMERCIO S/A -
CNPJ NO. 92.690.817/0001-57
- - CAPITAL: R$ 225,411,900.81
OWNERSHIP
NUMBER OF SHARES
---------------------------------------------------------------------------------
SHAREHOLDER'S NAME COMMON PREFERRED TOTAL
---------------------------------------------------------------------------------
NUMBER OF NUMBER OF NUMBER OF
SHARES % SHARES % SHARES %
---------------------------------------------------------------------------------
CINDAC - EMPREEND. E PART. S/A 468,383,161 100.00 936,766,147 100.00 1,405,149,3086 100.00
OTHER - - 175 0.00 175 0.00
TOTAL 468,383,161 100.00 936,766,322 100.00 1,405,149,483 100.00
GRUPO GERDAU EMPREENDIMENTOS LTDA - CNPJ NO. 87.153.730/0001-00
- - CAPITAL: R$ 115,143,000.00
OWNERSHIP
TOTAL
QUOTAHOLDER'S NAME NUMBER OF QUOTAS %
GERSUL EMPREENDIMENTOS IMOBILIARIOS LTDA. 101,125,328 87.83
OTHER 14,017,672 12.17
TOTAL 115,143,000 100.00
66
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
GERSUL EMPREENDIMENTOS IMOBILIARIOS LTDA - CNPJ No. 89.558.555/0001-67
- - Capital: R$ 220,827,384.00
OWNERSHIP
TOTAL
------------------------------
QUOTAHOLDER'S NAME NUMBER OF QUOTAS %
------------------------------
INDAC - ADMINISTRACAO, INDUSTRIA. E COMERCIO S/A 163,068,976 73.84
ACOTER PARTICIPACOES LTDA 35,853,183 16.25
------------------- --------
SUBTOTAL 198,922,159 90.08
OTHER 21,905,225 9.92
------------------- --------
TOTAL 220,827,384 100.00
------------------- --------
ACOTER PARTICIPACOES S.A. - CNPJ NO. 02.290.525/0001-34
- - CAPITAL: R$ 32,529,000.00
OWNERSHIP
TOTAL
------------------------------
QUOTAHOLDER'S NAME NUMBER OF QUOTAS %
------------------------------
INDAC - INDUSTRIA, ADMINISTRACAO E COMERCIO S.A. 32,528,996 100.00
OTHER 4 0.00
TOTAL 32,529,000 100.00
CINDAC - EMPREENDIMENTOS E PARTICIPACOES S/A - CNPJ NO. 89.550.883/0001-17
- - CAPITAL: R$ 202,153,942.56
OWNERSHIP
NUMBER OF SHARES
---------------------------------------------------------------------------------
SHAREHOLDER'S NAME COMMON PREFERRED TOTAL
---------------------------------------------------------------------------------
NUMBER OF NUMBER OF NUMBER OF
SHARES % SHARES % SHARES %
---------------------------------------------------------------------------------
Stichting GERDAU JOHANNPETER 202,154,204 100.00 - - 202,154,204 100.00
TOTAL 202,154,204 100.00 - - 202,154,204 100.00
67
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
STICHTING GERDAU JAHANNPETER
Dutch
QUOTAHOLDER'S NAME NUMBER OF QUOTAS %
-------------------------------------
GERMANO HUGO GERDAU JOHANNPETER Manager and 25.00
Beneficiary
KLAUS GERDAU JOHANNPETER Manager and Beneficiary 25.00
JORGE GERDAU JOHANNPETER Manager and Beneficiary 25.00
FREDERICO CARLOS GERDAU JOAHANNPETTER Manager and Beneficiary 25.00
--------
100.00
In compliance with the Regulation for Differentiated Practices for Corporate
Governance (Level 1), we present below tables showing the number and
characteristics of shares issued by the Company and which are directly or
indirectly held by the Controlling Shareholders, Management, Fiscal Council
Members, and Board of Directors.
- POSITION AS OF MARCH 31, 2004
GERDAU S.A. - CNPJ NO. 33.611.500/0001-19
- - CAPITAL: R$ 1,735,656,174.86
OWNERSHIP
NUMBER OF SHARES
---------------------------------------------------------------------------------
SHAREHOLDER'S NAME COMMON PREFERRED TOTAL
---------------------------------------------------------------------------------
NUMBER OF NUMBER OF NUMBER OF
SHARES % SHARES % SHARES %
---------------------------------------------------------------------------------
Controlling Shareholders 45,809,747 89.01 27,551,323 28.44 73,361,070 49.45
Administrators
Administrative Council - - 1,812 0.00 1,812 0.00
Executive Directors 444 0.00 25,028 0.03 25,472 0.02
Fiscal Council - - 11,396 0.01 11,396 0.01
Treasury shares - - 786,600 0.81 786,600 0.53
Other shareholders 5,658,033 10.99 68,509,628 70.71 74,167,661 49.99
Total 51,468,224 100.00 96,885,787 100.00 148,354,011 100.00
Outstanding shares in the market 5,658,477 10.99 68,547,864 70.75 74,206,341 50.02
68
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
- POSITION AS OF MARCH 31, 2003
GERDAU S.A. - CNPJ NO. 33.611.500/0001-19
- - CAPITAL: R$ 1,335,120,134.51
OWNERSHIP
NUMBER OF SHARES
--------------------------------------------------------------------------------------
SHAREHOLDER COMMON % PREFERRED % TOTAL %
--------------------------------------------------------------------------------------
Controlling Shareholders 35,472,697,273 89.60 21,295,835,049 28.57 56,768,532,322 49.75
Administrators
Administrative Council - - 1,393,078 0.00 1,393,078 0.00
Executive Directors 421,660 0.00 33,339,962 0.04 33,761,622 0.03
Fiscal Council - * 8,766,402 0.01 8,766,402 0.01
Treasury shares - - - - - -
Other shareholders 4,117,822,850 10.40 53,188,194,289 71.37 57,306,017,139 50.22
Total 39,590,941,783 100.00 74,527,528,780 100.00 114,118,470,563 100.00
Outstanding shares in the market 4,118,244,510 10.40 53,231,693,731 71.43 57,349,938,241 50.25
In compliance with the Regulation for Differentiated Practices for Corporate
Governance (Level 1), we present below spreadsheets showing the number of
outstanding shares and their percentage in relation to total shares issued.
69
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
- POSITION AS OF MARCH 31, 2003
GERDAU S.A. - CNPJ NO. 33.611.500/0001-19
- - CAPITAL: R$ 1,735,656,174.86
OWNERSHIP
NUMBER OF SHARES
-------------------------------------------------------------------------------
SHAREHOLDER'S NAME COMMON PREFERRED TOTAL
-------------------------------------------------------------------------------
NUMBER OF NUMBER OF NUMBER OF
SHARES % SHARES % SHARES %
-------------------------------------------------------------------------------
METALURGICA GERDAU S/A 42,897,208 83.35 22,505,852 23.23 65,403,060 44.09
STA. FELICIDADE COM. EXP. DE PRODS SID LTDA 1,218,034 2.37 4,913,618 5.07 6,131,652 4.13
OTHER CONTROLLING SHAREHOLDERS 1,694,505 3.29 131,853 0.14 1,826,358 1.23
------------------------------------------------------------------------------
SUBTOTAL 45,809,747 89.01 27,551,323 28.44 73,361,070 49.45
OUTSTANDING SHARES 5,658,477 10.99 68,547,864 70.75 74,206,341 50.02
------------------------------------------------------------------------------
TOTAL ISSUED 51,468,224 100.00 96,885,787 100.00 148,354,011 100.00
------------------------------------------------------------------------------
GERDAU ACOMINAS S.A.
o Gross sales at Gerdau Acominas S.A. reached R$ 2.6 billion in the
quarter, 21.9% greater than the pro forma results for the first
quarter of 2003 and 9.2% than that of the fourth quarter, also pro
forma.
o Gross margin was 37.4% in the quarter compared to 42.3% and 36.3% in
the first and fourth quarters of 2003, respectively. When compared to
the fourth quarter, the margin resulted better due to high prices in
the international markets. When compared to the fist quarter of 2003,
the increase in costs was greater thus reducing gross margin
throughout the year.
o EBITDA (operating cash generation) reached R$ 614.7 million in the
quarter, presenting an increase of 15.9% over the pro forma for the
fourth quarter of 2003. Compared to the first quarter, EBITDA remained
at the same level. EBITDA margin stayed at 31.0% in the quarter.
o Net profit for the Company reached R$ 312.9 million in the quarter,
that is, R$ 1.97 per share.
o Interest on capital stock and dividends related to the first quarter
and to be paid on May 18th, 2004, totaled R$ 103.2 million. This total
is equivalent to R$ 0.6505 per share issued on March 30th.
o On March 31st, shareholders' equity was R$ 3.3 billion, equivalent to
R$ 20.63 per share.
70
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
GERDAU ACOMINAS S.A. - UNCONSOLIDATED
BALANCE SHEET
Corporate legislation - R$ thousands Mar/2004 Dec/2003
TOTAL ASSETS 7,854,355 7,569,500
Current assets 2,767,307 2,524,173
Cash and banks 73,311 64,110
Trade accounts receivable 1,005,657 829,542
Taxes recoverable 135,028 96,652
Temporary cash investments 81,765 115,156
Inventories 1,232,221 1,172,964
Finished products 365,053 356,825
Work in process 222,612 227,808
Raw materials 323,800 287,478
Warehouse materials 285,000 262,583
Advances to suppliers 35,756 38,270
Other 239,325 245,749
Deferred income tax and social contribution 84,060 98,412
Other accounts receivable 155,265 147,337
Long-term receivables 445,182 440,229
Eletrobras loans 1,304 1,304
Other 443,878 438,925
Deferred income tax and social contribution 372,677 385,423
Judicial deposits and other 71,201 53,502
Permanent assets 4,641,866 4,605,098
Investments 194,738 197,463
In subsidiaries 176,810 179,486
Other investments 17,928 17,977
Fixed assets 4,434,682 4,397,120
Land, buildings and structures 2,516,575 2,508,914
Machinery, equipment and installations 3,960,586 3,889,688
Furniture and fixtures 91,222 91,794
Vehicles 23,005 22,600
Electronic data equipment 485,237 475,790
Construction in progress 340,050 309,864
Forestation/reforestation 101,302 99,272
Accumulated depreciation (3,083,295) 3,000,802)
Deferred charges 12,446 10,515
71
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
GERDAU ACOMINAS S.A. - UNCONSOLIDATED
BALANCE SHEET
Corporate legislation - R$ thousands Mar/2004 Dec/2003
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 7,854,355 7,569,500
Current liabilities 2,896,588 3,055,693
Loans and financing 1,708,604 1,889,592
Trade accounts payable 538,441 464,233
Taxes payable 197,434 105,363
Dividends/interest on capital payable 91,996 283,986
Payables to related companies 184,228 138,309
Other 175,885 174,210
Salaries payable 45,304 64,212
Deferred income tax and social contribution 20,207 19,790
Other accounts payable 110,374 90,208
Long-term liabilities 1,684,569 1,483,487
Loans and financing 1,600,466 1,412,705
Local financing 400,828 424,208
Foreign financing 1,199,638 988,497
Other 84,103 70,782
Provision for contingencies 43,158 31,533
Benefits to employees 6,418 7,794
Other accounts payable 34,527 31,455
Shareholders' equity 3,273,198 3,030,320
Capital stock 2,340,576 2,340,576
Capital reserves 131,989 98,762
Investment subsidies 105,792 72,565
Other 26,197 26,197
Profit reserves 60,222 60,222
Legal 60,222 60,222
Retained earnings 740,411 530,760
72
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
GERDAU ACOMINAS S.A. - Unconsolidated
STATEMENT OF INCOME
Pro forma
Corporate legislation - R$ thousands 1Q/2004 1Q/2003
GROSS SALES AND/OR SERVICES 2,574,020 2,111,935
Deductions (588,811) (410,892)
Taxes on sales (426,495) (316,449)
Freight and discounts (162,316) (94,443)
Net sales and/or services 1,985,209 1,701,043
Cost of sales and/or services rendered 1,242,771) (982,313)
Gross profit 742,438 718,730
Operating expenses (307,706) (279,311)
Selling expenses (87,032) (68,979)
General and administrative expenses (139,403) (109,973)
Financial expenses/income (93,257) (94,157)
Other operating income (expenses), net 12,362 (5,783)
Equity pick-up (376) (419)
Operating profit 434,732 439,419
Non-operating income (expenses), net (5,226) (678)
Income before taxes and participations 429,506 438,741
Provision for income tax and social contribution (81,595) (103,671)
Deferred income tax (27,515) 20,058
Statutory participation (7,542) (4,254)
Net income for the period 312,854 350,874
Net income per lot of shares - R$ 1.9720
Book value per share - R$ 20.6313
Number of outstanding shares (thousands) 158,652
73
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
GERDAU ACOMINAS S.A. - Consolidated
BALANCE SHEET
Corporate legislation - R$ thousands Mar/2004 Dec/2003
TOTAL ASSETS 7,876,853 7,584,716
Current assets 2,800,999 2,548,754
Cash and banks 140,661 64,969
Trade accounts receivable 844,569 762,045
Taxes recoverable 138,432 98,665
Temporary cash investments 165,015 193,358
Inventories 1,267,888 1,179,545
Finished products 367,222 357,180
Work in process 222,612 227,808
Raw materials 327,726 290,470
Warehouse materials 288,427 265,635
Advances to suppliers 61,901 38,452
Other 244,424 250,172
Deferred income tax and social contribution 84,060 98,412
Other accounts receivable 160,374 151,760
Long-term receivables 457,986 452,500
Eletrobras loans 1,304 1,304
Other 456,682 451,196
Deferred income tax and social contribution 376,165 388,373
Judicial deposits and other 80,517 62,823
Permanent assets 4,617,868 4,583,462
Investments 60,382 66,638
Fixed assets 4,542,642 4,504,438
Land, buildings and structures 2,539,670 2,530,624
Machinery, equipment and installations 4,055,028 3,968,682
Furniture and fixtures 64,904 64,921
Vehicles 23,472 22,727
Electronic data equipment 209,637 205,799
Construction in progress 628,976 600,647
Forestation/reforestation 134,542 132,512
Accumulated depreciation (3,113,587) (3,021,474)
Deferred charges 14,844 12,386
74
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
GERDAU ACOMINAS S.A. - Consolidated
BALANCE SHEET
Corporate legislation - R$ thousands Mar/2004 Dec/2003
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 7,876,853 7,584,716
Current liabilities 2,907,814 3,058,502
Loans and financing 1,713,792 1,898,976
Trade accounts payable 540,568 466,675
Taxes payable 199,492 107,126
Dividends/interest on capital payable 91,996 283,986
Payables to related companies 184,020 125,320
Other 177,946 176,419
Salaries payable 46,799 65,454
Deferred income tax and social contribution 20,207 19,790
Other accounts payable 110,940 91,175
Long-term liabilities 1,695,841 1,495,894
Loans and financing 1,611,633 1,424,506
Other 84,208 71,388
Provision for contingencies 43,268 31,645
Benefits to employees 6,418 7,794
Other accounts payable 34,522 31,949
Minority interest - -
Shareholders' equity 3,273,198 3,030,320
Capital stock 2,340,576 2,340,576
Capital reserves 131,989 98,762
Investment subsidies 105,792 72,565
Other 26,197 26,197
Profit reserves 60,222 60,222
Legal 60,222 60,222
Retained earnings 740,411 530,760
75
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
GERDAU ACOMINAS S.A. - Consolidated
STATEMENT OF INCOME
Corporate legislation - R$ thousands 1Q/2004 1Q/2003
Pro Forma
GROSS SALES AND/OR SERVICES 2,596,702 2,118,888
Deductions (589,649) (411,379)
Taxes on sales (427,128) (316,772)
Freight and discounts (162,521) (94,607)
Net sales and/or services 2,007,053 1,707,509
Cost of sales and/or services rendered (1,262,154) (989,399)
Gross profit 744,899 718,110
Operating expenses (310,222) (279,079)
Selling expenses (87,820) (69,037)
General and administrative expenses (140,575) (110,813)
Financial expenses/income (93,628) (93,082)
Other operating income (expenses), net 12,405 (5,777)
Equity pick-up (604) (370)
Operating profit 434,677 439,031
Non-operating income (expenses), net (5,296) (678)
Income before taxes and participations 429,381 438,353
Provision for income tax and social contribution (82,007) (103,671)
Deferred income tax (26,978) 20,446
Statutory participation (7,542) (4,254)
Net income for the period 312,854 350,874
Majority interest 312,854 350,874
Minority interest - -
76
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
NOTE 1 - OPERATIONS
Gerdau Acominas S.A. is a company of the Gerdau Group dedicated mainly to the
production of common and special steel rods and to the selling of general steel
products (flat and rods), through plants located in Brazil, Uruguay, Chile,
Canada, Argentina and the United States of America.
The Gerdau Group has an installed capacity of 14.5 million tons of coarse steel
per year, basically producing steel in electrical furnaces, from scrap and pig
iron acquired, for the most part, in the region near each plant (mini-mill
concept). Gerdau also operates plants which are capable of producing steel from
iron ore (through blast furnaces and direct reduction) and has a unit used
exclusively to produce special steel. It is the largest scrap recycling company
in Latin America and it is among the largest recycling companies in the world.
The industrial sector is the Company's most important market, including
manufacturers of goods, such as vehicles and household and commercial equipment,
which basically use profiled steel in various available specifications. The next
most important market is the civil construction sector, which demands a high
volume of rods and grids for concrete. There are also numerous customers for
nails, staples and wires, commonly used in the agribusiness sector.
NOTE 2 - PRESENTATION OF THE QUARTERLY INFORMATION
The quarterly information has been prepared in conformity with accounting
practices adopted in Brazil, together with the rules established by the
Brazilian Securities Commission (CVM).
NOTE 3 - SIGNIFICANT ACCOUNTING PRACTICES
A) CASH AND BANKS AND FINANCIAL INVESTMENTS - financial investments are
recorded at cost plus income accrued up to the date of the Quarterly
Information, using the interest rates agreed with the financial
institutions, and do not exceed the market value;
B) CUSTOMERS - are stated at realizable values, and trade accounts receivable
from foreign customers are adjusted based on exchange rates effective at
the date of the Quarterly Information. The provision for credit risks was
calculated based on a credit risk analysis, which included the history of
losses, the individual situation of customers and the economic group to
which they belong, the collateral and guarantees and the legal advisors'
opinion, and is considered sufficient to cover eventual losses on amounts
receivable;
77
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
C) INVENTORIES - are stated at the lower of market value and average
production or purchase cost;
D) INVESTMENTS IN SUBSIDIARIES - are accounted for using the equity method.
The result of the equity adjustment is recorded in an operating results
account;
E) FIXED ASSETS - are recorded at cost, net of depreciation. Depreciation is
calculated on the straight-line basis, at rates which take into
consideration the estimated useful lives of assets. Interest on financing
used to finance construction in progress is added to the cost of
construction;
F) DEFERRED CHARGES - amortization is calculated on the straight-line basis,
at rates determined based on the actual production of the implemented
projects in relation to their installed capacities;
G) FINANCING - is stated at the contract value plus the contracted charges,
including interest and monetary or foreign exchange variations. Swap
contracts that are linked to the loan agreements are classified together
with the related loans;
H) INCOME TAX AND SOCIAL CONTRIBUTION - current and deferred income tax and
social contribution are calculated in accordance with the legislation in
force;
I) OTHER CURRENT AND LONG-TERM ASSETS AND LIABILITIES - are recorded at their
realizable amounts (assets) and at their known or estimated amounts plus
accrued charges and indexation readjustments (liabilities), when
applicable;
J) TRANSLATION OF FOREIGN CURRENCY BALANCES - the criterion used for asset
and liability balances in foreign currency is the translation to local
currency (R$) at the foreign exchange rate in effect at the date of the
closing of Quarterly Information (March 31, 2004 - US$ 1.00 = R$ 2.9086
and December 31, 2003 - US$ 1.00 = R$ 2.8892).
78
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
NOTE 4 - CONSOLIDATED QUARTERLY INFORMATION
a) The quarterly information at March 31, 2004 include the accounts of Gerdau
Acominas S.A. and its directly controlled subsidiaries listed below:
Shareholders'
Consolidated company Percentage equity
- ------------------------------------------------- --------------- ------------------
Margusa - Maranhao Gusa S.A. 100 54,682
Armafer Servicos de Construcao Ltda. 100 40,403
Acominas Com. Imp. Exp. S.A.- Acotrading 100 22,589
Acominas Overseas Ltd. 100 7,602
Florestal Itacambira S.A. 100 7,287
g) The more significant accounting practices used in preparing the consolidated
quarterly information are as follows:
I) Gerdau Acominas S.A. and its subsidiaries adopt consistent practices
to record their transactions and value their assets and liabilities.
The financial statements of the subsidiary Acominas Overseas Ltd. were
translated using the exchange rate in effect at the date of the
Quarterly Information and were adjusted to be in conformity with
accounting practices adopted in Brazil;
II) Balance sheet balances arising from transactions between consolidated
companies have been eliminated.
h) Due to the operational integration with Gerdau S.A. on November 28, 2003,
presented below is the pro forma statement of income, showing the results of
the Company if this integration had occurred on January 1, 2003:
79
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
PRO FORMA STATEMENT OF INCOME - GERDAU ACOMINAS S.A.
3/31/2003
Gross sales 2,111,935
Gross sales deductions (410,892)
----------------------
Net sales 1,701,043
Cost of sales (982,313)
----------------------
Gross profit 718,730
Selling expenses (68,979)
General and administrative expenses (109,973)
Financial expenses/income, net (94,157)
Equity in the results (419)
Other operating income (expenses) (5,783)
----------------------
Operating profit 439,419
Non- operating result (678)
Provision for income tax and social contribution (83,613)
Management interest (4,254)
----------------------
Net income for the period 350,874
======================
i) The Company has goodwill, which is amortized upon the realization of future
results, as follows:
AMORTIZATION
period Company Consolidated
-------------- ------------ ----------------
Goodwill in the investment account
Balance at December 31, 2003 43,564 43,564
(-) Reversal of goodwill through adjustment to the purchase price
(Margusa - Maranhao Gusa S.A.) (5,258) (5,258)
(-) Portion amortized in the period 10 years (957) (957)
------------ ----------------
Balance at March 31, 2004 (based on expectation of future 37,349 37,349
profitability )
The goodwill composition by subsidiary is explained in Note 7a
80
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
NOTE 5 - CUSTOMERS
COMPANY CONSOLIDATED
------------------------------- ------------------------------
3/31/2004 12/31/2003 3/31/2004 12/31/2003
--------------- -------------- -------------- --------------
Trade accounts receivable - Brazil 628,970 520,274 631,968 522,985
Trade accounts receivable from Brazilian exports 442,002 372,717 277,916 302,509
Provision for credit risks (65,315) (63,449) (65,315) (63,449)
--------------- -------------- -------------- --------------
1,005,657 829,542 844,569 762,045
=============== ============== ============== ==============
NOTE 6 - INCOME TAX (IR) AND SOCIAL CONTRIBUTION (CS)
a) Adjustments to income tax and social contribution on income:
Company Consolidated
---------------------------------------- --------------------------------------
3/31/2004 3/31/2004
---------------------------------------- --------------------------------------
IR CS Total IR CS Total
------------ ------------ ------------ ------------ ---------- ------------
Income before income tax and social 421,964 421,964 421,964 421,839 421,839
contribution, after statutory
participations 421,839
Nominal rates 25% 9% 34% 25% 9% 34%
Income tax and social contribution expenses
at nominal rates (105,491) (37,977) (143,468) (105,460) (37,966) (143,426)
Tax effect on:
- equity adjustment (94) (34) (128) 88 32 120
- interest on capital 18,979 6,832 25,811 18,979 6,832 25,811
- permanent differences (net) 6,213 2,462 8,675 6,095 2,415 8,510
------------ ------------ ------------ ------------ ---------- ------------
Income tax and social contribution on income (80,393) (28,717) (109,110) (80,298) (28,687)
(108,985)
============ ============ ============ ============ ========== ============
Current (60,122) (21,473) (60,422)
(81,595) (21,585) (82,007)
Deferred
(20,271) (7,244) (27,515) (19,876) (7,102) (26,978)
81
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
b) Composition of deferred income tax and social contribution assets and
liabilities, at nominal rates:
ASSETS
-----------------------------------------------------------------------------------
Company - 3/31/2004 Consolidated - 3/31/2004
----------------------------------------- ----------------------------------------
IR CS IR CS
-------------------- -------------------- ------------------- -------------------
Tax losses 254,947 - 257,130 -
Social contribution losses - 77,014 - 77,951
Provision for contingencies 4,082 1,470 4,441 1,479
Commissions/other 4,683 1,686 4,683 1,686
Provision for losses 82,982 29,873 82,982 29,873
-------------------- -------------------- ------------------- -------------------
Total 346,694 110,043 349,236 110,989
==================== ==================== =================== ===================
Current 61,653 22,407 61,653 22,407
Long term 285,041 87,636 287,583 88,582
LIABILITIES
-----------------------------------------------------------------------------------
Company - 3/31/2004 Consolidated - 3/31/2004
----------------------------------------- ----------------------------------------
IR CS IR CS
-------------------- -------------------- ------------------- -------------------
Inflationary effect 20,207 - 20,207 -
Current 20,207 - 20,207 -
==================== ==================== =================== ===================
The tax benefits recognized on tax losses and social contribution losses, as
well as the provision for losses, both in the Company and consolidated, are
supported by projections of future taxable income at present value, based on
technical studies of feasibility, approved by management. These studies
considered the history of the Company's profitability and the perspective of
maintaining future profitability, permitting estimated realization of these tax
benefits in a period not over ten years.
The deferred taxes on temporary differences, mainly tax contingencies, were
recorded based on the probability of their realization, after the evaluation of
the Company's legal advisors.
c) Estimated recovery of deferred income tax and social contribution assets:
Company - 3/31/2004 Consolidated - 3/31/2004
------------------- ------------------------
2004 84,060 84,060
2005 91,186 91,186
2006 81,483 83,929
2007 81,299 81,707
2008 73,948 74,441
2009 20,377 20,518
2010 to 2012 24,384 24,384
-------------------------- -------------------------------
456,737 460,225
82
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
NOTE 7 - INVESTMENTS IN SUBSIDIARIES, ASSOCIATED AND RELATED COMPANIES
A) INVESTMENT BALANCES COMPANY
----------------------------------------------------------------------------
3/31/2004 12/31/2003
----------------------------------------------------------- ---------------
Deposit for
future capital
Investment increase Goodwill Total Total
------------ --------------- ------------ -------------- ---------------
Subsidiaries:
Acominas Com. Imp. E Export. S.A. - Acotrading 22,589 - - 22,589 22,592
Acominas Overseas Ltd. 7,602 - - 7,602 7,504
Florestal Itacambira S.A. 7,287 - - 7,287 7,211
Armafer Servicos de Construcao Ltda. 40,403 3,000 - 43,403 41,470
MARGUSA - Maranhao Gusa S.A. 54,682 - 37,349 92,031 96,812
------------ --------------- ------------ -------------- ---------------
132,563 3,000 37,349 172,912 175,589
Other investments 20,150 1,676 - 21,826 21,874
------------ ------------ ------------ -------------- ---------------
152,713 4,676 37,349 194,738 197,463
============ =============== ============ ============== ===============
Consolidated
-----------------------------------------------------------
3/31/2004 12/31/2003
------------------------------------------- --------------
Investment Goodwill Total Total
------------ --------------- ------------ --------------
Margusa - Maranhao Gusa S.A. - 37,349 37,349 43,564
MRS Logistica S.A. 4,772 - 4,772 4,772
Joint ventures 9,934 - 9,934 9,984
Other investments 8,327 - 8,327 8,318
------------ --------------- ------------ --------------
23,033 37,349 60,382 66,638
============ =============== ============ ==============
B) CHANGES IN INVESTMENTS
Company
------------------------------------------------------------------------------------
Deposit for
future
Balance Equity in capital Balance
12/31/2003 the results(*) Goodwill increase Dividends 3/31/2004
---------- ---------------- ------------ -------------- ------------ -----------
Subsidiaries:
Acominas Com. Imp. E Export. S.A. -
Acotrading 22,592 (3) - - - 22,589
Acominas Overseas Ltda. 7,504 98 - - - 7,602
Florestal Itacambira S.A. 7,211 76 - - - 7,287
Armafer Servicos de Construcao Ltda. 41,470 (1,067) - 3,000 - 43,403
Margusa - Maranhao Gusa S.A. 96,812 477 (5,258) - - 92,031
Other 21,874 43 - 2 (93) 21,826
------------ ------------- ------------ -------------- ------------ -----------
197,463 (376) (5,258) 3,002 (93) 194,738
============ ============= ============ ============== ============ ===========
(*) Includes amortization of goodwill.
c) INFORMATION ON INVESTMENTS
Company - 3/31/2004
------------------------------------------------------------------------------------
Shareholders' Net income % holding Quotas Shares
Capital equity (loss) in capital held held
------------ ------------- ------------ -------------- ------------ -----------
Subsidiaries:
Acominas Com. Imp. E Export. S.A. -
Acotrading 17,689 22,589 (2) 100% - 400,000
Acominas Overseas Ltda. 145 7,602 47 100% 50,000 -
Florestal Itacambira S.A. 5,790 7,287 75 100% - 158,985
Armafer Servicos de Construcao Ltda. 34,730 40,403 (1,066) 100% 34,730,419 -
Margusa - Maranhao Gusa S.A. 10,702 54,682 1,175 100% - 10,701,559
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
D) COMPOSITION OF LOAN BALANCES
Company Consolidated
------------------------------- -------------------------------
3/31/2004 12/31/2003 3/31/2004 12/31/2003
--------------- -------------- ------------- ----------------
Gerdau S.A. (18,719) 22,606 (18,719) 22,606
Fundacao Gerdau 15,411 16,795 15,408 16,795
Armafer Servicos de Construcao Ltda. 565 652 - -
Seiva S.A. - Florestas e Industrias 444 1,657 444 1,657
GTL Brasil Ltda. (15,317) 5,958 (15,317) 5,958
Florestal Rio Largo Ltda. (6,870) (4,676) (6,870) (4,676)
Metalurgica Gerdau S.A. 7,937 (3,390) 7,937 (3,390)
Acominas Com. Imp. E Export. S.A. - Acotrading (13,918) (13,921) - -
Margusa - Maranhao Gusa S.A. 13,263 - - -
GTL Financial Corp (168,580) (173,885) (168,580) (173,885)
Sipar Aceros S.A. and others 1,556 9,895 1,677 9,615
--------------- -------------- ------------- ----------------
TOTAL (184,228) (138,309) (184,020) (125,320)
--------------- -------------- ------------- ----------------
Financial income (expenses) (2,258) 2,840 (1,818) 2,845
The loan contracts between the companies in Brazil are subject to the average
weighted rate in the market. The contracts with foreign companies are subject to
interest charges (LIBOR + 3% p.a.) plus exchange rate variation.
E) TRANSACTIONS WITH RELATED COMPANIES COMPANY - 3/31/2004
--------------------------------------------------------------
Sales Expenses Accounts receivable
------------------- ------------- --------------------------
Acominas Overseas Ltd. (*) 758,539 - 432,290
Armafer Servicos de Construcao Ltda. 36 - 64
Gerdau Laisa S.A. 51 - 92
Gerdau AZA S.A. 367 - 319
Sipar Aceros S.A. - - 2,013
Indac - Ind. Adm. e Comercio S.A. (**) - 1,267 -
Sale and purchase of inputs and products are carried out at the same conditions
and terms as transactions with unrelated third parties.
(*) Transactions carried out due to securitization arrangements.
(**) Payment of guarantees for sureties in financing contracts.
84
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
NOTE 8 - DEFERRED CHARGES
Deferred charges (Company and consolidated) comprise pre-operating expenses for
reforestation, research, development and restructuring projects.
NOTE 9 - LOCAL AND FOREIGN FINANCING
Financing is as follows:
ANNUAL COMPANY CONSOLIDATED
----------------------------- -------------------------------
charges (%) 3/31/2004 12/31/2003 3/31/2004 12/31/2003
------------------ ------------- -------------- -------------- ---------------
SHORT TERM
Working capital financing (R$) IGPM 1,640 48,173 1,640 48,173
Fixed assets financing (R$) 12.00% 1,106 3,054 1,106 3,054
Investments financing (R$) CDI 4,500 4,500 4,500 4,500
Investments financing (US$) - 16,937 45,649 16,937 45,649
Working capital financing (US$)
1.36% to 11.13% 991,187 921,803 991,187 925,847
Fixed assets financing and other (US$) 3.13% to 6.19% - 2,912 - 5,082
Short-term portion of long-term financing
693,234 863,501 698,422 866,671
------------- -------------- -------------- ---------------
1,708,604 1,889,592 1,713,792 1,898,967
LONG TERM
Working capital financing (R$) 10.48% to 13.64% - 3,812 - 3,812
Fixed assets financing and other (R$)
8.00% to 9.66% 537,685 554,153 552,167 569,124
Investments financing (R$) IGPM +8.5% 33,433 35,019 33,433 35,019
Fixed assets financing and other (US$)
5.73% 619,455 616,837 621,329 616,837
Working capital financing (US$)
7.10% to 9.50% 1,103,127 1,066,385 1,103,126 1,066,385
(-) Short-term portion (693,234) (863,501) (698,422) (866,671)
------------- -------------- -------------- ---------------
1,600,466 1,412,705 1,611,633 1.424.506
------------- -------------- -------------- ---------------
Total financing
3,309,070 3,302,297 3,325,425 3,323,482
============= ============== ============== ===============
SUMMARIZED BY CURRENCY
Company Consolidated
----------------------------- -------------------------------
3/31/2004 12/31/2003 3/31/2004 12/31/2003
------------- -------------- -------------- ---------------
Real (R$) 589.364 648,711 592,846 663,682
US dollar (US$)
2,730,706 2,653,586 2,732,579 2,659,800
------------- -------------- -------------- ---------------
3,309,070 3,302,297 3,325,425 3,323,482
============= ============== ============== ===============
85
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
The schedule for payment of the long-term portion of financing is as follows:
COMPANY CONSOLIDATED
---------------- -----------------
In 2005 478,290 480,948
In 2006 400,472 402,958
In 2007 227,240 228,285
In 2008 206,152 206,540
In 2009 166,947 166,957
After 2009 121,365 125,945
---------------- -----------------
1,600,466 1,611,633
================ =================
A) GUARANTEES
The loans contracted under the FINAME/BNDES program are backed by the financed
assets of the Company. The other loans are backed by sureties from controlling
shareholders, on which the Company pays remuneration of 1% p.a. on the
guaranteed amount.
B) COVENANTS
In the place of the tangible collateral usually required, certain financial
covenants must be observed, as follows:
I) Consolidated Interest Coverage Ratio - measured the debt service payment
capacity in relation to the Earnings before Interest, Taxes, Depreciation and
Amortization (EBITDA);
II) Consolidated Leverage Ratio - measures the debt coverage capacity in
relation to the EBITDA.
All covenants mentioned above are calculated on a consolidated basis at the
Gerdau S.A. level and have been observed. The penalty for non-compliance is the
accelerated maturity of the contracts.
NOTE 10 - FINANCIAL INSTRUMENTS
A) GENERAL COMMENTS - Gerdau Acominas S.A. and its subsidiaries enter into
transactions involving financial instruments, the risks of which are managed
through financial positions and exposure limit controls. All instruments are
fully recognized in the books and restricted to the instruments listed below:
- - FINANCIAL INVESTMENTS - are recognized at their redemption value as of the
date of the Quarterly Information;
- INVESTMENTS AND LOANS AMONG SUBSIDIARIES
AND RELATED PARTIES - are explained and presented in the Note 7;
86
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
- FINANCING - explained and presented in Note 9;
- - FINANCIAL DERIVATIVES -in order to minimize the effects of fluctuations in
foreign exchange rates on its liabilities, Gerdau Acominas S.A. entered into
swap contracts that were converted into Brazilian reais on the contract date and
linked to changes in the Interbank Deposit Rate (CDI). Swap contracts are listed
below:
Company and Consolidated
- --------------------------------------------------------------------------------------------------------------------------------
Contract date Purpose Amount US$ Rate Maturity
thousand
- ----------------------------- -------------------------- ------------- -------------------------- --------------------------
2.12 to .07.18.2001 Eurobonds 130,000 84.5% to 103.70% of CDI 05.20.2004
05.06 to 05.08.2002 Suppliers 85,000 97.00% to 100.00% of CDI 04.01 to 07.01.2004
3.30.2001 to 08.13.2003 Import 8,770 95.00% to 100.00% of CDI 04.01.2004 to 10.06.2004
.07.16.2001 to 05.07.2002 Prepayment 53,708 85.55% to 100.00% of CDI 07.13.2004 to 03.01.2006
2.20.2002 to 05.14.2003 Resolution 2770 74,000 105.00% to 106.00% of CDI 05.10.2004 to 06.20.2005
08.08.2002 to 04.09.2003 Advance on foreign 75,000 89.86% to 100.00% of CDI 04.02.2004 to 07.28.2004
exchange contract (ACC)
87
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
B) MARKET VALUE - the market values of financial instruments are as follows:
COMPANY
-------------------------------------------------------------------------
------------------------------------ -----------------------------------
3/31/2004 12/31/2003
------------------------------------ -----------------------------------
Book Market Book Market
value value value value
----------------- ----------------- ------------------ ---------------
Financial investments 81,765 81,765 115,156 115,156
Eurobonds 389,985 379,337 370,342 370,956
Import financing 622,303 608,135 605,051 611,458
Prepayment financing 835,324 851,880 807,385 818,786
Financing - Resolution 2770 267,803 302,325 365,573 390,235
ACC financing 586,952 625,261 500,118 524,935
Financing - Resolution 4131 14,249 18,087 24,243 24,468
Other financing 592,453 592,454 629,585 648,832
Investments 194,738 194,738 197,463 197,463
Related companies (liabilities) 184,228 184,228 138,309 138,309
Consolidated
-------------------------------------------------------------------------
------------------------------------ -----------------------------------
3/31/2004 12/31/2003
------------------------------------ -----------------------------------
Book Market Book Market
value value value value
----------------- ----------------- ------------------ ---------------
Financial investments 165,015 165,015 193,358 193,358
Eurobonds 389,985 379,337 370,342 370,956
Import financing 624,177 610,009 605,051 611,458
Prepayment financing 835,324 851,880 807,385 818,786
Financing - Resolution 2770 267,803 302,325 365,573 390,235
ACC financing 586,952 625,261 500,118 524,935
Financing - Resolution 4131 14,249 18,087 24,243 24,468
Other financing 606,934 606,935 650,770 670,016
Investments 60,382 60,382 66,638 66,638
Related companies (liabilities) 184,020 184,020 125,320 125,320
The market value of swap contracts was obtained based on future income
projections for each contract, calculated based on the present value of the
forward U.S. dollar + coupon rates (assets) and forward CDI rates (liabilities)
and discounted to current value at the date of the Quarterly Information using
the projected future CDI rate for each maturity. Swap contracts related to
financing contracts are classified together with the related financing, as a
contra entry to the "Financial expenses/income, net" account, and are stated at
cost plus accrued charges up to the date of the Quarterly Information.
The Company believes that the balances of other financial instruments, which are
recognized in the books at net contracted values, are substantially similar to
those that would be obtained if they were negotiated in the market. However,
because the markets for these instruments are not active, differences could
exist if they were settled in advance.
88
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
C) RISK FACTORS THAT COULD AFFECT THE COMPANY'S BUSINESS
Price risk: this risk is related to the possibility of price variations of the
products that the Company sells or in the prices of raw materials and other
inputs used in the production process. Since the Company operates in a commodity
market, its sales revenue and cost of sales may be affected by the changes in
the international prices of its products or materials. In order to minimize this
risk, the Company constantly monitors the price variations in the local and
international markets.
Interest rate risk: this risk arises as a result of the possibility of losses
(or gains) due to fluctuations in interest rates relating to Company assets
(investments) and liabilities. In order to minimize possible impacts resulting
from interest rate fluctuations, the Company has adopted a policy of
diversification, alternating between fixed rates and variable rates (such as
LIBOR and CDI), and periodically renegotiates contracts to adjust them to the
market.
Exchange rate risk: this risk is related to the possibility of fluctuations in
foreign exchange rates affecting financial expenses (or income) and the
liability (or asset) balance of contracts denominated in a foreign currency. In
order to manage the effects of these fluctuations, the Company uses "hedge"
instruments, usually swap contracts, as described in item "a" above.
Credit risk: this risk arises from the possibility of the Company not receiving
amounts arising from sales or credit instruments at financial institutions. In
order to minimize this risk, the Company adopts the procedure of analyzing in
detail the financial and equity position of its customers, establishing a credit
limit and constant monitoring of its balance. In relation to financial
investments, the Company invests solely in institutions with low credit risk, as
assessed by rating agencies. In addition, each institution has a maximum limit
for investment, determined by the Company's credit committee.
89
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
NOTE 11 - FINANCIAL EXPENSES/INCOME, NET
COMPANY CONSOLIDATED
----------------- -------------------
3/31/2004 3/31/2004
----------------- -------------------
Financial expenses
Interest on debt (49,593) (50,041)
Other financial expenses (3,283) (3,394)
----------------- -------------------
(52,876) (53,435)
Financial income
Financial investments 2,665 2,909
Interest received 6,424 6,457
Other financial income 696 727
----------------- -------------------
9,785 10,093
Monetary variations, net (5,580) (5,626)
Foreign exchange variations, net (22,854) (22,928)
Result from swap contracts (21,732) (21,732)
----------------- -------------------
Financial expenses/income, net (93,257) (93,628)
================= ===================
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
NOTE 12 - PROVISION FOR CONTINGENCIES
The Company and its subsidiaries are parties to labor, civil, and tax processes.
Based on the opinion of its legal advisors, management believes that the
provision for contingencies is sufficient to cover probable and reasonably
estimable losses from unfavorable court decisions, and the final decisions will
not have significant effects on the financial position at March 31, 2004.
The balances of contingencies, net of the related judicial deposits, are as
follows:
Company Consolidated
------------------------------- -----------------------------
3/31/2004 12/31/2003 3/31/2004 12/31/2003
-------------- --------------- ------------- --------------
Tax contingencies 14,499 25,731 14,611
25,621
Labor contingencies 11,393 11,810 11,393
11,810
Civil contingencies 5,641 5,641
5,727 5,727
-------------- --------------- ------------- --------------
Total 43,158 31,533 43,268 31,645
============== =============== ============= ==============
90
I) Tax contingencies
a) Contingent liabilities provided
a.1) R$ 135,546 (Company and consolidated) related to Corporate Income Tax and
Social Contribution on Net Income being questioned in an injunction currently in
progress in the Federal Court of Appeals (TRF) of the 1st Region. The Company
claims the recognition of the right to pay the referred taxes after the offset
of tax losses without observing the limit of 30% of the taxable income. The
amounts discussed are being fully paid in court.
a.2) R$ 3,897 (Company) and 3,930 (consolidated), related to the Emergency
Capacity Charge (ECE), and R$ 2,066 (Company) and 2,117 (consolidated), related
to the Extraordinary Tariff Recomposition (RTE), included in the electric energy
bills of the Company's plants. According to the Company, these charges are of a
tax nature and, as such, are incompatible with the National Tax System provided
in the Federal Constitution. For this reason, the constitutionality of this
charge is being challenged in court. The lawsuits are in progress in the Federal
Justice of the First Instance of the states of Pernambuco, Ceara, Minas Gerais,
Rio de Janeiro, Sao Paulo, Parana, and Rio Grande do Sul, as well as in the
Federal Regional Courts of the 1st and 2nd Regions. The Company has fully
deposited in court the amount of the disputed charges.
a.3) R$ 17,008 (Company and consolidated) related to amounts for Value Added Tax
on Sales and Services (ICMS), the majority of which is related to credit rights
involving the Finance Secretariat and the State Courts of the First Instance in
the state of Minas Gerais.
a.4) R$ 1,273 (Company and consolidated) related to a lawsuit regarding the
Government Severance Indemnity Fund for Employees (FGTS) surcharges, which arose
from the changes introduced by the Complementary Law 110/01. Currently, the
corresponding court injunction is awaiting judgment of the extraordinary appeal
filed by the Company. The provided amount is fully deposited in court.
a.5) R$ 12,871 (Company and consolidated) refers to lawsuits questioning the
position of the National Institute of Social Security (INSS) in terms of
charging INSS contributions on profit sharing payments made by the Company, as
well as on payments for services rendered by cooperatives. Part of the provision
also refers to several INSS assessments due to services contracted from third
parties, in which the Institute accrued debts related to the last ten years and
assessed the Company as jointly responsible. The assessments were challenged
administratively and, if sustained, they will be challenged later in annulment
proceedings, since Gerdau Acominas understands that there the right to set up
part of the credits had expired, and that, anyway, the Company is not
responsible.
91
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
a.6) R$ 119 (consolidated) related to contributions for the Social Integration
Program (PIS) in connection with lawsuits questioning the constitutionality of
Law 9718, which changed the calculation basis of this contribution. These suits
are in progress in the Federal Regional Court of the 2nd Region.
a.7) R$ 45 (Company and consolidated) related to other tax claims, most of which
is deposited in courts.
a.8) Judicial deposits, representing restricted assets of the Company, are
related to amounts deposited and maintained in court until the resolution of the
related legal matters. The balances of these deposits, which at March 31, 2004
amounted to R$ 147,085 (Company) and R$ 147,178 (consolidated), are classified
as a reduction of the provision for tax contingencies recorded in the books.
B) REMOTE OR POSSIBLE CONTINGENT LOSSES, INVOLVING GREAT UNCERTAINTIES IN
RELATION TO THEIR REALIZATION, AND WHICH HAVE NOT BEEN PROVIDED FOR:
b.1) Gerdau Acominas S.A. is defendant in tax foreclosures filed by the state of
Minas Gerais, which demand ICMS credits on the export of semi-finished
manufactured products. The total amount demanded is R$ 149,993. The Company did
not set up a provision for contingency in relation to this process since it
considers this tax undue, because the products do not fit the definition of
semi-finished manufactured products defined by the federal complementary law
and, therefore, are not subject to ICMS.
b.2) Also, R$ 54,763 are demanded due to the understanding of the Federal
Revenue Secretariat that the transactions carried out by the Company under the
drawback concession granted by DECEX were not in conformity with the
legislation. The Company filed a preliminary administrative defense of the
legality of the arrangement, which is pending judgment. Since the tax credit has
not been definitely set up, and considering that the arrangement that originated
the mentioned demand conforms with the assumptions required for the drawback
concession, and also that the concession was granted after analysis by the legal
administrative authority, the Company considers an unfavorable outcome to be
remote and, for this reason, did not set up a provision for the contingency.
C) CONTINGENT TAX GAINS:
c.1) The Company is plaintiff in a proceeding related to the correction of the
PIS calculation basis under Complementary Law 07/70, due to the declarations of
unconstitutionality of Decree Laws 2445/88 and 2449/88. The Company expects to
recover the taxes unduly paid. The Company believes that the amount under
discussion totals R$ 62,628.
92
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
c.2) Due to prior favorable decisions by the Courts, the Company expects to
recover IPI premium credits. Gerdau Acominas S.A. has filed an injunction
challenging the return of credits, which is pending decision. The Company
estimates a credit in the amount of R$ 145,786.
II) LABOR CONTINGENCIES
The Company is also defending labor proceedings for which there is a provision
of R$ 13,791 (Company and consolidated) at March 31, 2004. None of these
lawsuits refer to individually significant amounts and the lawsuits mainly
involve claims due to overtime, health hazards and risk premium, among others.
The balances of deposits in court, which, at March 31, 2004, totaled R$ 1,981
(Company and consolidated), are classified as a reduction of the provision for
labor contingencies.
III) CIVIL CONTINGENCIES
A) CONTINGENT LIABILITIES INCLUDED IN THE PROVISION
The Company is also defending in court civil proceedings arising from the normal
course of its operations, including lawsuits arising from workplace accidents,
and, at March 31, 2004, has a provision of R$ 6,989 (Company and consolidated)
for these proceedings.
At March 31, 2004, the balances of deposits in court totaled R$ 1,262 (Company
and consolidated) and are classified as a reduction of the provision for
contingencies.
B) REMOTE OR POSSIBLE CONTINGENT LOSSES, INVOLVING GREAT UNCERTAINTIES IN
RELATION TO THEIR REALIZATION, AND WHICH HAVE NOT BEEN PROVIDED FOR:
b.1) A civil lawsuit filed against Gerdau Acominas S.A., regarding the
termination of a contract for the supply of slag and indemnities for losses and
damages. At March 31, 2004, the lawsuit amounts to approximately R$ 36,366.
Gerdau Acominas S.A. contested all bases for the lawsuit and filed a
counterclaim for termination of the contract and indemnity for breach of
contract.
93
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
The judge declared the contract to be terminated, since such demand was common
to both parties. With regards to the remaining discussion, the judge understood
that both parties were at fault and judged unfounded the requests for indemnity.
This decision was maintained by the Court of Civil Appeals of the state of Minas
Gerais and the process is now with the High Court of Justice, for the judgment
of the appeal.
The Company believes that a loss from the case is remote, since it understands
that a change in the judgment is unlikely.
b.2) A civil lawsuit filed by Sul America Cia. Nacional de Seguros against
Gerdau Acominas S.A. and Banco Westdeustsche Landesbank Girozentrale, New York
Branch (WestLB), for the payment of R$ 34,383, to settle an indemnity claim,
which was deposited in court. The insurance company pleads doubt in relation to
whom payment should be made and alleges that the Company is resisting in
receiving and settling it. The lawsuit was contested both by the bank (which
claimed having no right over the amount deposited, which resolves the doubt
raised by Sul America) and by the Company (which claimed inexistence of doubt
and justification to refuse the payment, since the amount owed by Sul America is
higher than stated). After pleading, Sul America claimed fault in the Bank's
representation, and the lawsuit is in its initial stage. Based on the opinion of
its legal advisors, the Company expects a loss to be remote and that the
sentence will declare the amount due within the amount stated in the pleading.
Also, the Company filed, prior to the above-mentioned lawsuit, a lawsuit for the
collection of the amount recognized by the insurance companies. The lawsuits are
pending. The Company expects favorable outcome to this lawsuit.
The civil lawsuits arise from the accident occurred on March 23, 2002 with the
blast furnace regenerators of the Company's Ouro Branco unit, which resulted in
the stoppage of several activities, material damages to the steel mill equipment
and loss of profits.
Equipment, as well as loss of profits arising from the accident, was covered by
an insurance policy. The report on the event, as well as the loss claim, was
filed with IRB - Brasil Resseguros S.A., and an advance of R$ 62,000 was
received in 2002.
94
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
In 2002, a preliminary and conservative estimate of indemnities related to the
coverage of loss of profits and material damages, in the total amount of
approximately R$ 110,000, was recorded, based on the amount of fixed costs
incurred during the period of partial stoppage of the steel mill activities and
immediate expenses to be incurred to recover the equipment temporarily. This
estimate approximates the advance amount received plus the amount proposed by
the insurance company as a complement to settle the indemnity. Subsequently, new
amounts were added to the discussion, as stated in the Company's plea, although
not yet recorded.
Based on the opinion of its legal advisors, the Company considers that losses
from other contingencies that may affect the results of operations or the
Company's consolidated financial position are remote.
NOTE 13 - POST-EMPLOYMENT BENEFITS
A) PENSION PLAN - DEFINED BENEFIT
The Company and its subsidiary Armafer are the co-sponsors of defined benefit
plans that cover substantially all employees in Brazil ("Acominas Plan" and
"Gerdau Plan").
The Acominas Plan is managed by Fundacao Acominas de Seguridade Social - Acos, a
closed supplementary pension entity to complement the social security benefits
of employees and retired employees of the Ouro Branco unit. The assets of the
Acominas Plan mainly comprise investments in bank deposit certificates, federal
public notes, marketable securities and properties.
The Gerdau Plan is managed by Gerdau - Sociedade de Previdencia Privada, a
closed supplementary pension entity to complement the social security benefits
of employees and retired employees of the other units of Gerdau Acominas S.A.
The assets of the Gerdau Plan comprise investments in bank deposit certificates,
federal public notes and marketable securities.
As a result of the operational integration on November 28, 2003, the assets and
liabilities of the Gerdau Plan relating to the employees transferred to Gerdau
Acominas S.A., were allocated to the new sponsor, the companies filed a request
with the Supplementary Social Security Secretariat to add Gerdau Acominas S.A.
as a sponsor of the Retirement and Supplementary Retirement Plans managed by
Gerdau - Sociedade de Previdencia Privada.
95
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
Current expenses of the defined pension plan are as follows:
COMPANY CONSOLIDATED
-------------------- ---------------------
3/31/2004 3/31/2004
-------------------- ---------------------
Cost of current service 5,091 5,128
Interest cost 16,187 16,303
Expected return of plan assets (26,096) (26,286)
Amortization of (gain) loss (806)
(789)
Expected contributions of employees (1,096) (1,096)
-------------------- ---------------------
Pension plan cost, net (6,703) (6,757)
==================== =====================
B) PENSION PLAN - DEFINED CONTRIBUTION
The Company and its subsidiary Armafer are also the co-sponsors of a defined
contribution pension plan administered by Gerdau - Sociedade de Previdencia
Privada. Contributions are based on a percentage of the compensation of
employees.
C) OTHER POST-EMPLOYMENT BENEFITS
The Company estimates that the balance payable, due to employees' retirement or
discharge, amounts to R$ 6,418 at March 31, 2004 (Company and consolidated).
NOTE 14 - SHAREHOLDERS' EQUITY
A) CAPITAL - capital, authorized at March 31, 2004 comprises 200,000,000 common
shares and 100,000,000 preferred shares, with no par value.
At March 31, 2004, 158,633,709 shares and 17,798 shares were subscribed and
paid-up, totaling R$ 2,340,576. Preferred shares do not have voting rights and
cannot be redeemed, but have the same rights of common shares in terms of profit
distributions.
B) DIVIDENDS AND INTEREST ON CAPITAL - At March 30, 2004, the Company credited
interest on capital (R$ 75,915) and dividends (R$ 27,288) to shareholders,
totaling R$ 103,203 as prepayment of minimum statutory dividend for the current
year. The Company calculated the interest on capital according to the terms
established by Law 9249/95. The related amount was recorded as financial expense
for tax purposes. For effects of presentation this amount was stated as
dividends, not affecting the result.
96
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
NOTE 15 - STATUTORY PROFIT SHARING
The management's profit sharing is limited to 10% of net income for the year,
after income tax and management fees.
NOTE 16 - GUARANTEES GRANTED
The Company is the guarantor of the vendor financing of the associated company
Banco Gerdau S.A., in the amount of R$ 45,578, at March 31, 2004.
NOTE 17 - SUPPLEMENTARY INFORMATION - STATEMENT OF CASH FLOWS
In order to permit additional analysis, the statement of cash flows prepared
using the indirect method is being presented as supplementary information
97
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
COMPANY CONSOLIDATED
-------------------- ------------------------
3/31/2004 3/31/2004
-------------------- ------------------------
NET INCOME FOR THE PERIOD 312,854 312,854
Equity pick-up 376 604
Provision for credit risks 1,888 1,888
Gain and/or loss on diposition of fixed assets 5,248 5,289
Monetary and exchange variations 50,513 50,725
Depreciation and amortization 98,650 100,932
Income tax and social contribution 77,396 75,867
Interest on debt 49,593 50,041
Contingencies / judicial deposits 8,549 8,547
Changes in trade accounts receivable (181,766) (88,663)
Changes in inventory (58,784) (62,186)
Changes in trade accounts payable 70,012 44,089
Other operating activity accounts 17,255 16,094
Net cash provided by operating activities 451,784 516,081
Acquisition/disposal of fixed assets (139,992) (142,957)
Increase in deferred charges (2,111) (2,637)
Acquisition/disposal of investments (3,002) (2)
Interest on capital/profit distribution received 182 -
Net cash used in investing activities (144,923) (145,596)
Suppliers of fixed assets (1,811) (1,813)
Working capital financing 109,585 105,080
Proceeds form fixed asset financing 44,159 44,488
Payment of permanent asset financing (187,660) (188,896)
Payment of interest on financing (45,542) (45,880)
Loans with related companies 43,662 56,324
Payment of dividends/interest on capital and participations (293,444) (292,963)
Net cash used in financing activities (331,051) (323,660)
Change in cash balance (24,190) 46,825
Cash balance
At the beginning of the period 179,266 258,327
Restatement of opening cash - 524
At the end of the period 155,076 305,676
Composition of final cash
Temporary cash investments 81,765 165,015
Cash and banks 73,311 140,661
98
* * *
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2003
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
To the Management and Shareholders
Gerdau S.A.
1 We have carried out limited reviews of the Quarterly Information (ITR) of
Gerdau S.A. and its subsidiaries for the quarters ended March 31, 2004 and
2003. This information is the responsibility of the Company's management.
2 Our reviews were carried out in conformity with specific standards
established by the Institute of Independent Auditors of Brazil (IBRACON),
in conjunction with the Federal Accounting Council (CFC), and mainly
comprised: (a) inquiries of and discussions with management responsible
for the accounting, financial and operating areas of the Company with
regard to the main criteria adopted for the preparation of the quarterly
information and (b) a review of the significant information and of the
subsequent events which have, or could have, significant effects on the
Company's financial position and operations.
3 Based on our limited reviews, we are not aware of any material
modifications that should be made to the quarterly information referred to
above in order that such information be stated in conformity with the
accounting practices adopted in Brazil applicable to the preparation of
quarterly information, consistent with the Brazilian Securities Commission
(CVM) regulations.
4 Our reviews were conducted in order to issue a report on the Quarterly
Information (ITR) referred to in paragraph 1, taken as a whole. The
statement of cash flows, presented to provide additional information on
the Company and its subsidiaries, is not required as an integral part of
the Quarterly Information (ITR). The statement of cash flows was submitted
to the review procedures mentioned in paragraph 2, and, based on our
review, we are not aware of any material modifications that should be made
for it to be properly presented, in all material respects, in relation to
the Quarterly Information (ITR) taken as a whole.
99
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
5 The Quarterly Information (ITR) also includes accounting information for
the quarter ended December 31, 2003. We audited this information upon its
preparation, in connection with the audit of the financial statements at
that date, on which we issued an unqualified opinion dated February 20,
2004.
Porto Alegre, April 26, 2004
PricewaterhouseCoopers Carlos Alberto de Sousa
Auditores Independentes Contador CRC 1RJ056561/O-0
CRC 2SP000160/O-5 "F" RJ
100
(A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT
SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE QUARTERLY INFORMATION -
ITR LEGISLATION COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 3/31/2004
01.01 - IDENTIFICATION
- --------------------------------------------------------------------------------
1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ
00398-0 Gerdau S.A. 33.611.500/0001-19
- --------------------------------------------------------------------------------
16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT
- --------------------------------------------------------------------------------
CONTENTS
GROUP EXHIBIT DESCRIPTION PAGE
01 01 Identification 1
01 02 Head office 1
01 03 Investor relations officer (Company mail address) 1
01 04 General information/Independent accountants 1
01 05 Capital composition 2
01 06 Characteristics of the company 2
01 07 Companies excluded from the consolidated financial statements 2
01 08 Dividends APPROVED AND/OR PAID DURING AND after THE QUARTER 2
01 09 Subscribed capital and alterations DURING the current YEAR 3
01 10 Investor relations officer 3
02 01 Balance sheet - assets 4
02 02 Balance sheet - liabilities and shareholders' equity 5
03 01 Statement of Income 6
04 01 Notes to the Quarterly Information 7
05 01 Comments on the Quarterly Performance 42
06 01 Consolidated balance sheet - assets 44
06 02 Consolidated balance sheet - liabilities and shareholders' equity 45
07 01 Consolidated statement of income 46
08 01 Comments on the CONSOLIDATED Performance 47
09 01 Investments in subsidiary and/or associated companies 53
10 01 Characteristics of public or private debenture issues 54
16 01 Other information the company CONSIDERS relevant 64
17 01 Report on LIMITED reviewS 98
Gerdau Inter. Empreend. Ltda.
Gerdau ACOMINAS S.A.
101