6-K 1 siditr3q16_6k.htm ITR 3Q16 siditr3q16_6k.htm - Generated by SEC Publisher for SEC Filing
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 6-K
 
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
 
For the month of December, 2016
Commission File Number 1-14732
 

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

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

Yes _______ No ___X____

 
 

 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 ITR –– Quarterly Financial Information - September 30, 2016 – CIA SIDERURGICA NACIONAL Version: 1

 

 

Table of Contents

 

Company Information

 

Capital Breakdown

1

Parent Company Financial Statements

 

Balance Sheet – Assets

2

Balance Sheet – Liabilities

3

Statement of Income

4

Statement of Comprehensive Income

5

Statement of Cash Flows

6

Statement of Changes in Shareholders’ Equity

 

01/01/2016 to 09/30/2016

8

01/01/2015 to 09/30/2015

9

Statement of Value Added

10

Consolidated Financial Statements

 

Balance Sheet - Assets

11

Balance Sheet - Liabilities

12

Statement of Income

13

Statement of Comprehensive Income

14

Statement of Cash Flows

15

Statement of Changes in Shareholders’ Equity

 

01/01/2016 to 09/30/2016

17

01/01/2015 to 09/30/2015

18

Statement of Value Added

19

Comments on the Company’s Consolidated Performance

20

Notes to the quarterly financial information

33

Reports and Statements

 

Unqualified Independent Auditors’ Review Report

77

 


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 ITR –– Quarterly Financial Information - September 30, 2016 – CIA SIDERURGICA NACIONAL Version: 1

 

 

Company Information / Capital Breakdown

 

Number of Shares

(Units)

Current Quarter

09/30/2016

Paid-in Capital

 

Common

1,387,524,047

Preferred

0

Total

1,387,524,047

Treasury Shares

 

Common

30,391,000

Preferred

0

Total

30,391,000

                                                                                                                                                                        

1


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 ITR –– Quarterly Financial Information - September 30, 2016 – CIA SIDERURGICA NACIONAL Version: 1

 

 

Parent Company Financial Statements / Balance Sheet - Assets

(R$ thousand)

Code

Description

Current Quarter

Previous Year

09/30/2016

12/31/2015

1

Total Assets

42,525,094

45,605,526

1.01

Current assets

7,686,024

8,842,440

1.01.01

Cash and cash equivalent

2,434,980

1,885,199

1.01.02

Financial investments

90,711

763,599

1.01.02.02

Financial investments at amortized cost

90,711

763,599

1.01.03

Trade receivables

2,147,621

2,467,523

1.01.04

Inventory

2,270,159

2,850,744

1.01.08

Other current assets

742,553

875,375

1.01.08.01

Non-current assets available-for-sale

157,792

-

1.01.08.03

Others

584,761

875,375

1.02

Non-current assets

34,839,070

36,763,086

1.02.01

Long-term assets

4,310,564

4,510,431

1.02.01.06

Deferred tax assets

3,029,672

3,228,961

1.02.01.09

Other non-current assets

1,280,892

1,281,470

1.02.02

Investments in affiliates

21,058,572

23,323,565

1.02.03

Property, plant and equipment

9,411,399

8,866,348

1.02.04

Intangible assets

58,535

62,742

 

 

 

                                                                                                                                                                                          

2


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 ITR –– Quarterly Financial Information - September 30, 2016 – CIA SIDERURGICA NACIONAL Version: 1

 

 

Parent Company Financial Statements / Balance Sheet – Liabilities

(R$ thousand)

Code

Description

Current Quarter

Previous Year

09/30/2016

12/31/2015

2

Total liabilities

42,525,094

45,605,526

2.01

Current liabilities

3,605,010

4,272,372

2.01.01

Payroll and related taxes

156,077

141,496

2.01.02

Trade payables

1,003,260

742,364

2.01.03

Tax payables

74,245

5,814

2.01.04

Borrowings and financing

1,844,487

2,879,073

2.01.05

Other payables

413,812

411,699

2.01.06

Provisions

78,627

91,926

2.01.06.01

Provision for tax, social security, labor and civil risks

78,627

91,926

2.01.07

Liabilities over non-current assets held for sale and discontinued operations

34,502

-

2.01.07.01

Liabilities over non-current assets held for sale

34,502

-

2.02

Non-current liabilities

30,858,103

33,668,407

2.02.01

Long term Borrowings and financing

28,337,424

31,109,017

2.02.02

Other payables

82,699

126,450

2.02.04

Provisions

2,437,980

2,432,940

2.02.04.01

Provision for tax, social security, labor and civil risks

562,644

564,372

2.02.04.02

Other provisions

1,875,336

1,868,568

2.02.04.02.03

Provision for environmental liabilities and decommissioning of assets

252,355

259,115

2.02.04.02.04

Pension and healthcare plan

514,367

514,367

2.02.04.02.05

Provision for losses on investments

1,108,614

1,095,086

2.03

Consolidated Shareholders’ equity

8,061,981

7,664,747

2.03.01

Share Capital

4,540,000

4,540,000

2.03.02

Capital reserves

30

30

2.03.04

Earnings reserves

2,464,701

2,464,701

2.03.04.01

Legal reserve

442,531

442,531

2.03.04.02

Statutory reserve

2,151,920

2,151,920

2.03.04.04

Earnings reserves

109,226

109,226

2.03.04.09

Treasury shares

(238,976)

(238,976)

2.03.05

Accumulated profit/losses

(1,031,122)

-

2.03.08

Other comprehensive income

2,088,372

660,016

 

 

 

                                                                                                                                                                                          

3


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 ITR –– Quarterly Financial Information - September 30, 2016 – CIA SIDERURGICA NACIONAL Version: 1

 

Parent Company Financial Statements / Statements of Income

(R$ thousand)

Code

Description

Current Quarter

07/01/2016 to 09/30/2016

Year to date

01/01/2016 to 09/30/2016

Same quarter previous year

07/01/2015 to 09/30/2015

YTD previous year

01/01/2015 to 09/30/2015

3.01

Revenues from sale of goods and rendering of services

2,288,121

6,457,435

3,118,708

9,047,587

3.02

Costs from sale of goods and rendering of services

(1,825,749)

(5,370,811)

(2,472,690)

(6,929,971)

3.03

Gross profit

462,372

1,086,624

646,018

2,117,616

3.04

Operating expenses/income

149,553

(1,371,135)

2,232,878

2,479,680

3.04.01

Selling expenses

(141,831)

(448,060)

(185,331)

(479,481)

3.04.02

General and administrative expenses

(87,854)

(283,481)

(96,783)

(272,153)

3.04.04

Other operating income

152,150

156,720

16,403

28,672

3.04.05

Other operating expenses

(79,647)

(269,115)

(102,664)

(509,351)

3.04.06

Equity in income of affiliates and join ventures

306,735

(527,199)

2,601,253

3,711,993

3.05

Profit before finance income (expenses) and taxes

611,925

(284,511)

2,878,896

4,597,296

3.06

Finance income (expenses)

(713,121)

(600,636)

(3,287,418)

(5,871,010)

3.06.01

Finance income

65,651

152,322

726,759

1,133,815

3.06.02

Finance expenses

(778,772)

(752,958)

(4,014,177)

(7,004,825)

3.06.02.01

Net exchange differences over financial instruments

(119,842)

2,014,530

(2,985,847)

(4,334,953)

3.06.02.02

Finance expenses

(658,930)

(2,767,488)

(1,028,330)

(2,669,872)

3.07

Profit (loss) before taxes

(101,196)

(885,147)

(408,522)

(1,273,714)

3.08

Income tax and social contribution

(29,015)

(139,189)

(123,263)

512,980

3.09

Profit (loss) from continued operations

(130,211)

(1,024,336)

(531,785)

(760,734)

3.10

Profit (loss) from discontinued operations

(6,984)

(6,786)

(728)

6,009

3.11

Consolidated Profit (loss) for the year

(137,195)

(1,031,122)

(532,513)

(754,725)

3.99.01.01

Common shares

(0.09595)

(0.75478)

(0.39184)

(0.56054)

3.99.02.01

Common shares

(0.09595)

(0.75478)

(0.39184)

(0.56054)

 

 

 

                                                                                                                                                                                          

4


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 ITR –– Quarterly Financial Information - September 30, 2016 – CIA SIDERURGICA NACIONAL Version: 1

 

 

Parent Company Financial Statements / Statement of Comprehensive Income

(R$ thousand)

Code

Description

Current Quarter

07/01/2016 to 09/30/2016

Year to date

01/01/2016 to 09/30/2016

Same quarter previous year

07/01/2015 to 09/30/2015

YTD previous year

01/01/2015 to 09/30/2015

4.01

Consolidated profit for the year

(137,195)

(1,031,122)

(532,513)

(754,725)

4.02

Other comprehensive income

620,079

1,428,356

(1,026,861)

(1,040,896)

4.02.01

Actuarial gains over pension plan of affiliates

-

144

-

(96)

4.02.02

Actuarial gains (losses) on defined benefit pension plan

30

-

-

348

4.02.03

Income tax and social contribution on actuarial gains (losses) in pension plan

-

-

-

(118)

4.02.04

Cumulative translation adjustments for the year

75,140

(392,797)

550,919

719,875

4.02.05

Available-for-sale assets

647,550

775,403

(445,407)

(443,153)

4.02.06

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

(42,734)

(42,734)

-

(767)

4.02.07

Available-for-sale assets from investments in affiliates, net of taxes

-

-

-

(20,817)

4.02.08

Impairment of available-for-sale assets

-

-

81,016

178,867

4.02.09

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

-

-

-

(33,269)

4.02.10

(Loss) / gain on the percentage change in investments

740

1,324

245

202

4.02.11

Gain (loss) on cash flow hedge accounting

(56,324)

1,016,560

(1,171,346)

(1,517,306)

4.02.12

Income tax and social contribution on cash flow hedge accounting

-

(13,808)

-

117,626

4.02.13

Realization of cash flow hedge accounting reclassified to income statement

5,949

26,472

-

-

4.02.14

Gain (Loss) on net investment hedge from investments in affiliates

(10,272)

57,792

(42,288)

(42,288)

4.03

Consolidated comprehensive income for the year

482,884

397,234

(1,559,374)

(1,795,621)

 

 

 

                                                                                                                                                                                          

5


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 ITR –– Quarterly Financial Information - September 30, 2016 – CIA SIDERURGICA NACIONAL Version: 1

 

Parent Company Financial Statements / Statement of Cash Flows – Indirect Method

(R$ thousand)

Code

Description

Year to date

01/01/2016 to 09/30/2016

YTD previous year

01/01/2015 to 09/30/2015

6.01

Net cash from operating activities

1,418,549

282,033

6.01.01

Cash from operations

(393,672)

3,532,689

6.01.01.01

Profit (loss) for the period

(1,031,122)

(754,725)

6.01.01.03

Finance charges in borrowing

1,909,151

2,510,054

6.01.01.04

Finance charges in lending

(27,919)

(15,749)

6.01.01.05

Depreciation, depletion and amortization

418,828

651,952

6.01.01.06

Equity in gain (loss) of affiliates

527,199

(3,718,002)

6.01.01.07

Deferred tax

139,138

(593,287)

6.01.01.08

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

(15,027)

84,671

6.01.01.09

Exchange differences, net

(2,320,143)

5,144,844

6.01.01.11

Impairment of available-for-sale assets

-

178,867

6.01.01.12

Write-off of PPE and Intangible assets

20,751

3,935

6.01.01.13

Provision for environmental liabilities and decommissioning of assets

(6,760)

(2,014)

6.01.01.14

Business combination gains

(28,013)

-

6.01.01.15

Others

20,245

42,143

6.01.02

Changes in assets and liabilities

1,812,221

(3,250,656)

6.01.02.01

Trade receivables - third parties

(118,462)

(19,562)

6.01.02.02

Trade receivables - related parties

430,601

(1,412,278)

6.01.02.03

Inventories

580,585

(94,391)

6.01.02.04

Receivables - related parties

36,264

78,255

6.01.02.05

Tax assets

250,807

(155,883)

6.01.02.06

Judicial deposits

27,745

(27,112)

6.01.02.07

Dividends received - related parties

2,313,552

12,215

6.01.02.09

Trade payables

261,063

220,235

6.01.02.10

Payroll and related taxes

20,000

65,289

6.01.02.11

Taxes in installments - REFIS

71,734

55,410

6.01.02.13

Payables to related parties

(2,986)

74,645

6.01.02.15

Interest paid

(2,023,675)

(2,079,553)

6.01.02.16

Interest received - Related Parties

-

651

6.01.02.18

Others

(35,007)

31,423

6.02

Net cash used in investing activities

(400,203)

(1,453,885)

6.02.01

Advance for future capital increase

(222,374)

(28,083)

6.02.02

Purchase of property, plant and equipment

(878,908)

(1,597,232)

6.02.03

Cash from incorporation of affiliates

-

129,745

6.02.04

Capital reduction in joint venture

-

486,758

6.02.07

Intercompany loans granted

(56,547)

(43,475)

6.02.09

Intercompany loans received

-

5,546

6.02.10

Exclusive funds

84,738

220,274

6.02.11

Financial Investments, net of redemption

672,888

(627,418)

6.03

Net cash used in financing activities

(469,845)

378,601

6.03.01

Borrowings and financing, net of transaction cost

(26,018)

934,396

6.03.02

Borrowings and financing, related parties

40,239

1,725,595

6.03.03

Forfaiting capitalization / drawee Risk

78,240

625,117

6.03.04

Forfaiting amortization / drawee Risk

(300,321)

(861,617)

6.03.05

Amortization of borrowings and financing

(221,693)

(938,239)

6.03.06

Amortization of borrowings and financing - related parties

(40,239)

(547,429)

6.03.07

Payments of dividends and interests on shareholder´s equity

(53)

(549,832)

6.03.08

Treasury shares

-

(9,390)

6.04

Exchange rate on translating cash and cash equivalents

1,280

-

6.05

Increase (decrease) in cash and cash equivalents

549,781

(793,251)

6.05.01

Cash and equivalents at the beginning of the year

1,885,199

3,146,393

6.05.02

Cash and equivalents at the end of the year

2,434,980

2,353,142

 

 

                                                                                                                                                                                          

6


 
 

 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 ITR –– Quarterly Financial Information - September 30, 2016 – CIA SIDERURGICA NACIONAL Version: 1
 

Parent Company Financial Statements / Statement of Changes in Equity - 1/1/2016 to 09/30/2016

(R$ thousand)

Code

Description

Paid-in capital

Capital reserve, granted options and treasury shares

Earnings reserve

Retained earnings (accumulated losses)

Other comprehensive income

Shareholders' equity

5.01

Opening balances

4,540,000

30

2,464,701

-

660,016

7,664,747

5.03

Adjusted opening balances

4,540,000

30

2,464,701

-

660,016

7,664,747

5.05

Total comprehensive income

-

-

-

(1,031,122)

1,428,356

397,234

5.05.01

Profit for the period

-

-

-

(1,031,122)

-

(1,031,122)

5.05.02

Other comprehensive income

-

-

-

-

1,428,356

1,428,356

5.05.02.04

Translation adjustments for the year

-

-

-

-

(392,797)

(392,797)

5.05.02.08

Actuarial gains on pension plan, net of taxes

-

-

-

-

144

144

5.05.02.09

Available-for-sale assets, net of taxes

-

-

-

-

732,669

732,669

5.05.02.10

(Loss) / gain on the percentage change in investments

-

-

-

-

1,324

1,324

5.05.02.11

(Loss) / gain on cash flow hedge accounting, net of taxes

-

-

-

-

1,029,224

1,029,224

5.05.02.12

(Loss) / gain on net investment hedge, net of taxes

-

-

-

-

57,792

57,792

5.07

Closing balance

4,540,000

30

2,464,701

(1,031,122)

2,088,372

8,061,981

 

 

 

                                                                                                                                                                                          

7


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 ITR –– Quarterly Financial Information - September 30, 2016 – CIA SIDERURGICA NACIONAL Version: 1

 

 

Parent Company Financial Statements / Statement of Changes in Equity - 1/1/2015 to 09/30/2015

(R$ thousand)

               

Code

Description

Paid-in capital

Capital reserve, granted options and treasury shares

Earnings reserve

Retained earnings (accumulated losses)

Other comprehensive income

Shareholders' equity

5.01

Opening balances

4,540,000

30

1,131,298

-

25,140

5,696,468

5.03

Adjusted opening balances

4,540,000

30

1,131,298

-

25,140

5,696,468

5.04

Capital transactions with shareholders

-

-

(284,390)

-

-

(284,390)

5.04.04

Treasury shares acquired

-

-

(9,390)

-

-

(9,390)

5.04.06

Dividends

-

-

(275,000)

-

-

(275,000)

5.05

Total comprehensive income

-

-

-

(754,725)

(1,040,896)

(1,795,621)

5.05.01

Profit for the period

-

-

-

(754,725)

-

(754,725)

5.05.02

Other comprehensive income

-

-

-

-

(1,040,896)

(1,040,896)

5.05.02.04

Translation adjustments for the period

-

-

-

-

719,875

719,875

5.05.02.08

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

-

-

-

-

134

134

5.05.02.09

Available-for-sale assets, net of taxes

-

-

-

-

(319,139)

(319,139)

5.05.02.10

(Loss) / gain on the percentage change in investments

-

-

-

-

202

202

5.05.02.11

(Loss) gain on cash flow hedge accounting, net of taxes

-

-

-

-

(1,399,680)

(1,399,680)

5.05.02.12

(Loss) / gain on net investment hedge

-

-

-

-

(42,288)

(42,288)

5.07

Closing balances

4,540,000

30

846,908

(754,725)

(1,015,756)

3,616,457

 

 

                                                                                                                                                                                          

8


 
 

 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 ITR –– Quarterly Financial Information - September 30, 2016 – CIA SIDERURGICA NACIONAL Version: 1

 

Parent Company Financial Statements / Statement of Value Added

(R$thousand)

Code

Description

Year to date

01/01/2016 to 09/30/2016

Previous year

01/01/2015 to 09/30/2015

7.01

Revenues

8,039,004

10,792,661

7.01.01

Sales of products and rendering of services

8,062,255

10,729,818

7.01.02

Other revenues

(14,491)

82,703

7.01.04

Allowance for (reversal of) doubtful debts

(8,760)

(19,860)

7.02

Raw materials acquired from third parties

(6,173,207)

(7,758,535)

7.02.01

Cost of sales and services

(5,584,069)

(6,236,049)

7.02.02

Materials, electric power, outsourcing and other

(575,846)

(1,347,066)

7.02.03

Impairment/recovery of assets

(13,292)

3,447

7.02.04

Others

-

(178,867)

7.02.04.01

Impairment of available-for-sale assets

-

(178,867)

7.03

Gross value added

1,865,797

3,034,126

7.04

Retentions

(418,828)

(651,952)

7.04.01

Depreciation, amortization and depletion

(418,828)

(651,952)

7.05

Wealth created

1,446,969

2,382,174

7.06

Value added received

(670,662)

5,959,392

7.06.01

Equity in income of affiliates

(527,199)

3,711,993

7.06.02

Finance income

152,322

1,133,815

7.06.03

Others

(295,785)

1,113,584

7.06.03.01

Others and exchange gains

(295,785)

1,113,584

7.07

Wealth for distribution

776,307

8,341,566

7.08

Wealth distributed

776,307

8,341,566

7.08.01

Personnel

835,872

1,067,905

7.08.01.01

Salaries and wages

647,165

817,157

7.08.01.02

Benefits

142,510

197,830

7.08.01.03

Severance payment (FGTS)

46,197

52,918

7.08.02

Taxes, fees and contributions

509,349

(82,830)

7.08.02.01

Federal

441,883

(188,833)

7.08.02.02

State

67,465

99,758

7.08.02.03

Municipal

1

6,245

7.08.03

Remuneration on third-party capital

455,422

8,117,225

7.08.03.01

Interest

2,767,491

2,668,737

7.08.03.02

Leases

7,983

7,505

7.08.03.03

Others

(2,320,052)

5,440,983

7.08.03.03.01

Others and exchange losses

(2,320,052)

5,440,983

7.08.04

Remuneration on Shareholders' capital

(1,031,122)

(754,725)

7.08.04.03

Retained earnings (accumulated losses)

(1,031,122)

(754,725)

7.08.05

Others

6,786

(6,009)

7.08.05.01

Gain (loss) on discontinued operations

6,786

(6,009)

 

 

                                                                                                                                                                                          

9


 
 

 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 ITR –– Quarterly Financial Information - September 30, 2016 – CIA SIDERURGICA NACIONAL Version: 1

 

Consolidated Financial Statements / Balance Sheet - Assets

(R$ thousand)

Code

 Description

Current Quarter

09/30/2016

Previous Year

12/31/2015

1

Total Assets

45,261,315

48,649,974

1.01

Current assets

12,127,269

16,430,691

1.01.01

Cash and cash equivalent

5,127,122

7,861,052

1.01.02

Financial investments

305,934

763,599

1.01.02.02

Financial investments at amortized cost

305,934

763,599

1.01.03

Trade receivables

1,859,630

1,578,277

1.01.04

Inventory

3,799,306

4,941,314

1.01.08

Other current assets

1,035,277

1,286,449

1.01.08.01

Non-current assets available for sale

157,792

-

1.01.08.03

Others

877,485

1,286,449

1.02

Non-current assets

33,134,046

32,219,283

1.02.01

Long-term assets

4,652,525

4,890,948

1.02.01.06

Deferred tax assets

3,097,738

3,307,027

1.02.01.09

Other non-current assets

1,554,787

1,583,921

1.02.02

Investments

5,078,276

3,998,227

1.02.03

Property, plant and equipment

18,058,891

17,871,599

1.02.04

Intangible assets

5,344,354

5,458,509

 

 

                                                                                                                                                                                          

10


 
 

 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 ITR –– Quarterly Financial Information - September 30, 2016 – CIA SIDERURGICA NACIONAL Version: 1

 

Consolidated Financial Statements / Balance Sheet – Liabilities

(R$ thousand)

Code

Description

Current Quarter

Previous Year

09/30/2016

12/31/2015

2

Total liabilities

45,261,315

48,649,974

2.01

Current liabilities

5,406,604

5,325,571

2.01.01

Payroll and related taxes

286,640

256,840

2.01.02

Trade payables

1,580,180

1,293,008

2.01.03

Tax payables

593,038

700,763

2.01.04

Borrowings and financing

1,831,210

1,874,681

2.01.05

Other payables

970,386

1,073,017

2.01.06

Provisions

110,648

127,262

2.01.06.01

Provision for tax, social security, labor and civil risks

110,648

127,262

2.01.07

Liabilities over non-current assets held for sale and discontinued operations

34,502

-

2.01.07.01

Liabilities over non-current assets held for sale

34,502

-

2.02

Non-current liabilities

30,671,949

34,588,740

2.02.01

Long term Borrowings and financing

28,497,797

32,407,834

2.02.02

Other payables

131,539

131,284

2.02.03

Deferred tax liabilities

495,365

494,851

2.02.04

Provisions

1,547,248

1,554,771

2.02.04.01

Provision for tax, social security, labor and civil risks

704,087

711,472

2.02.04.02

Other provisions

843,161

843,299

2.02.04.02.03

Provision for environmental liabilities and decommissioning of assets

328,793

328,931

2.02.04.02.04

Pension and healthcare plan

514,368

514,368

2.03

Consolidated Shareholders’ equity

9,182,762

8,735,663

2.03.01

Share Capital

4,540,000

4,540,000

2.03.02

Capital reserves

30

30

2.03.04

Earnings reserves

2,464,701

2,464,701

2.03.04.01

Legal reserve

442,531

442,531

2.03.04.02

Statutory reserve

2,151,920

2,151,920

2.03.04.04

Earnings reserves

109,226

109,226

2.03.04.09

Treasury shares

(238,976)

(238,976)

2.03.05

Accumulated profit/losses

(1,031,122)

-

2.03.08

Other comprehensive income

2,088,372

660,016

2.03.09

Profit attributable to the non-controlling interests

1,120,781

1,070,916

 

 

                                                                                                                                                                                          

11


 
 

 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 ITR –– Quarterly Financial Information - September 30, 2016 – CIA SIDERURGICA NACIONAL Version: 1
 

Consolidated Financial Statements / Statements of Income

(R$ thousand)

Code

Description

Current Quarter

07/01/2016 to 09/30/2016

Year to date

01/01/2016 to 09/30/2016

Same quarter previous year

07/01/2015 to 09/30/2015

YTD previous year

01/01/2015 to 09/30/2015

3.01

Revenues from sale of goods and rendering of services

4,469,240

12,630,353

3,933,604

11,609,223

3.02

Costs from sale of goods and rendering of services

(3,157,057)

(9,470,412)

(2,993,905)

(8,851,521)

3.03

Gross profit

1,312,183

3,159,941

939,699

2,757,702

3.04

Operating expenses/income

(498,861)

(1,840,607)

246,828

(664,836)

3.04.01

Selling expenses

(405,411)

(1,247,971)

(409,430)

(1,018,483)

3.04.02

General and administrative expenses

(117,792)

(382,114)

(120,037)

(339,764)

3.04.04

Other operating income

168,599

202,617

29,602

48,125

3.04.05

Other operating expenses

(170,377)

(501,612)

(114,659)

(569,554)

3.04.06

Equity in income of affiliates and jointly operations

26,120

88,473

861,352

1,214,840

3.05

Profit before finance income (expenses) and taxes

813,322

1,319,334

1,186,527

2,092,866

3.06

Finance income (expenses)

(760,015)

(1,908,517)

(1,549,045)

(3,193,295)

3.06.01

Finance income

140,423

522,995

105,446

202,296

3.06.02

Finance expenses

(900,438)

(2,431,512)

(1,654,491)

(3,395,591)

3.06.02.01

Net exchange differences over financial instruments

(67,202)

102,278

(644,421)

(717,071)

3.06.02.02

Finance expenses

(833,236)

(2,533,790)

(1,010,070)

(2,678,520)

3.07

Profit (loss) before taxes

53,307

(589,183)

(362,518)

(1,100,429)

3.08

Income tax and social contribution

(152,967)

(384,682)

(169,405)

338,978

3.09

Profit (loss) from continued operations

(99,660)

(973,865)

(531,923)

(761,451)

3.10

Profit (loss) from discontinued operations

(6,984)

(6,786)

(728)

6,009

3.11

Consolidated Profit (loss) for the year

(106,644)

(980,651)

(532,651)

(755,442)

3.11.01

Profit attributable to the controlling interests

(137,195)

(1,031,122)

(532,513)

(754,725)

3.11.02

Profit attributable to the non-controlling interests

30,551

50,471

(138)

(717)

3.99.01.01

Common shares

(0.09595)

(0.75478)

(0.39184)

(0.56054)

3.99.02.01

Common shares

(0.09595)

(0.75478)

(0.39184)

(0.56054)

 

 

                                                                                                                                                                                          

12


 
 


 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 ITR –– Quarterly Financial Information - September 30, 2016 – CIA SIDERURGICA NACIONAL Version: 1

 

Consolidated Financial Statements / Statement of Comprehensive Income

(R$ thousand)

Code

Description

Current Quarter

07/01/2016 to 09/30/2016

Year to date

01/01/2016 to 09/30/2016

Same quarter previous year

07/01/2015 to 09/30/2015

YTD previous year

01/01/2015 to 09/30/2015

4.01

Consolidated profit for the year

(106,644)

(980,651)

(532,651)

(755,442)

4.02

Other comprehensive income

620,079

1,428,356

(1,026,861)

(1,040,896)

4.02.02

Actuarial gains (losses) on defined benefit pension plan

30

144

-

202

4.02.03

Income tax and social contribution on actuarial (losses) gains in pension plan

-

-

-

(68)

4.02.04

Cumulative translation adjustments for the year

75,140

(392,797)

550,919

719,875

4.02.05

Available-for-sale assets

647,550

775,403

(445,407)

(474,694)

4.02.06

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

(42,734)

(42,734)

-

9,957

4.02.07

Impairment of available-for-sale assets

-

-

81,016

178,867

4.02.08

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

-

-

-

(33,269)

4.02.09

(Loss) / gain on the percentage change in investments

740

1,324

245

202

4.02.10

Gain (loss) on cash flow hedge accounting

(56,324)

1,016,560

(1,171,346)

(1,517,306)

4.02.11

Income tax and social contribution on cash flow hedge accounting

-

(13,808)

-

117,626

4.02.12

Gain (Loss) on net investment hedge

(10,272)

57,792

(42,288)

(42,288)

4.02.13

Realization of cash flow hedge accounting reclassified to income statement

5,949

26,472

-

-

4.03

Consolidated comprehensive income for the year

513,435

447,705

(1,559,512)

(1,796,338)

4.03.01

Attributed to controlling Shareholders

482,884

397,234

(1,559,374)

(1,795,621)

4.03.02

Attributed to non-controlling Shareholders

30,551

50,471

(138)

(717)

 

 

                                                                                                                                                                                          

13


 
 

 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 ITR –– Quarterly Financial Information - September 30, 2016 – CIA SIDERURGICA NACIONAL Version: 1
 

Consolidated Financial Statements / Statement of Cash Flows – Indirect Method

(R$ thousand)

       

Code

Description

Year to date

01/01/2016 to 09/30/2016

YTD previous year

01/01/2015 to 09/30/2015

6.01

Net cash from operating activities

(225,880)

1,417,451

6.01.01

Cash from operations

980,890

4,834,421

6.01.01.01

Profit attributable to the controlling interests

(1,031,122)

(754,725)

6.01.01.03

Profit attributable to the non-controlling interests

50,471

(717)

6.01.01.04

Finance charges in borrowing

2,230,131

2,489,354

6.01.01.05

Finance charges in lending

(42,379)

(25,168)

6.01.01.06

Depreciation, depletion and amortization

956,715

857,137

6.01.01.07

Equity in gain (loss) of affiliates

(88,473)

(1,215,784)

6.01.01.08

Deferred tax

187,530

(543,095)

6.01.01.09

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

(23,999)

123,438

6.01.01.10

Exchange differences, net

(1,140,319)

3,647,017

6.01.01.11

Gain (loss) of derivative financial instruments

362

3,775

6.01.01.12

Impairment of available-for-sale assets

-

178,867

6.01.01.13

Write-down of PPE and Intangible assets

61,791

4,773

6.01.01.14

Gain on repurchase of debt securities

(146,214)

-

6.01.01.15

Gain resulted from business combination

(28,013)

-

6.01.01.16

Provision for environmental liabilities and decommissioning of assets

(138)

(2,417)

6.01.01.17

Others

(5,453)

71,966

6.01.02

Changes in assets and liabilities

(1,206,770)

(3,416,970)

6.01.02.01

Trade receivables - third parties

(302,616)

(602,122)

6.01.02.02

Trade receivables - related parties

(1,097)

(82,273)

6.01.02.03

Inventories

1,112,678

(530,308)

6.01.02.04

Receivables - related parties

6,449

-

6.01.02.05

Tax assets

330,029

(200,825)

6.01.02.06

Judicial deposits

25,556

(40,980)

6.01.02.08

Trade payables

286,655

342,768

6.01.02.09

Payroll and related taxes

28,739

94,574

6.01.02.10

Taxes in installments - REFIS

(118,462)

32,735

6.01.02.11

Payables to related parties

376

1,032

6.01.02.13

Interest paid

(2,494,408)

(2,472,131)

6.01.02.15

Interest received - Related Parties

-

8,627

6.01.02.17

Others

(80,669)

31,933

6.02

Net cash used in investing activities

(1,697,341)

(213,236)

6.02.02

Advance for future capital increase

(190,435)

-

6.02.03

Purchase of property, plant and equipment

(1,179,636)

(1,703,793)

6.02.04

Capital reduction in joint venture

-

466,758

6.02.05

Receivable/payable from derivative financial instruments

(713,049)

1,216,913

6.02.06

Acquisition of intangible assets

(7)

(440)

6.02.08

Intercompany loans granted

(32,118)

(43,475)

6.02.09

Intercompany loans received

-

443,345

6.02.10

Financial Investments, net of redemption

457,665

(592,544)

6.02.11

Cash and cash equivalents from discontinued operations

(40,702)

-

6.02.12

Cash and cash equivalents in control acquisition (business combination)

941

-

6.03

Net cash used in financing activities

(754,658)

(2,286,202)

6.03.01

Borrowings and financing, net of transaction cost

(27,089)

937,005

6.03.02

Forfaiting capitalization / drawee Risk

78,240

625,117

6.03.03

Forfaiting amortization / drawee Risk

(300,321)

(861,617)

6.03.04

Amortization of borrowings and financing

(354,337)

(2,333,975)

6.03.06

Amortization of borrowings and financing - related parties

-

(52,839)

6.03.07

Payments of dividends and interests on shareholder´s equity

(53)

(549,832)

6.03.08

Treasury shares

-

(9,390)

6.03.09

Buyback of debt securities

(151,098)

(40,671)

6.04

Exchange rate on translating cash and cash equivalents

(56,051)

(4,672)

6.05

Increase (decrease) in cash and cash equivalents

(2,733,930)

(1,086,659)

6.05.01

Cash and equivalents at the beginning of the year

7,861,052

8,686,021

6.05.02

Cash and equivalents at the end of the year

5,127,122

7,599,362

       

 

 

                                                                                                                                                                                          

14


 
 

 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 ITR –– Quarterly Financial Information - September 30, 2016 – CIA SIDERURGICA NACIONAL Version: 1

 

Consolidated Financial Statements / Statement of Changes in Equity - 1/1/2016 to 09/30/2016

(R$ thousand)

Code

Description

Paid-in capital

Capital reserve, granted options and treasury shares

Earnings reserve

Retained earnings (accumulated losses)

Other comprehensive income

Shareholders' equity

Non-controlling interests

Consolidated shareholders' equity

5.01

Opening balances

4,540,000

30

2,464,701

-

660,016

7,664,747

1,070,916

8,735,663

5.03

Adjusted opening balances

4,540,000

30

2,464,701

-

660,016

7,664,747

1,070,916

8,735,663

5.05

Total comprehensive income

-

-

-

(1,031,122)

1,428,356

397,234

50,471

447,705

5.05.01

Profit for the year

-

-

-

(1,031,122)

-

(1,031,122)

50,471

(980,651)

5.05.02

Other comprehensive income

-

-

-

-

1,428,356

1,428,356

-

1,428,356

5.05.02.04

Translation adjustments for the year

-

-

-

-

(392,797)

(392,797)

-

(392,797)

5.05.02.08

Actuarial gains on pension plan, net of taxes

-

-

-

-

144

144

-

144

5.05.02.09

Available-for-sale assets, net of taxes

-

-

-

-

732,669

732,669

-

732,669

5.05.02.10

(Loss) / gain on the percentage change in investments

-

-

-

-

1,324

1,324

-

1,324

5.05.02.11

(Loss) / gain on hedge accounting, net of taxes

-

-

-

-

1,029,224

1,029,224

-

1,029,224

5.05.02.12

(Loss) / gain on net investment hedge, net of taxes

-

-

-

-

57,792

57,792

-

57,792

5.06

Internal changes in shareholders’ equity

-

-

-

-

-

-

(606)

(606)

5.06.04

Non-controlling interests in affiliates

-

-

-

-

-

-

(606)

(606)

5.07

Closing balance

4,540,000

30

2,464,701

(1,031,122)

2,088,372

8,061,981

1,120,781

9,182,762

 

 

                                                                                                                                                                                          

15


 
 

 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 ITR –– Quarterly Financial Information - September 30, 2016 – CIA SIDERURGICA NACIONAL Version: 1

 

Consolidated Financial Statements / Statement of Changes in Equity - 1/1/2015 to 09/30/2015

(R$thousand)

Code

Description

Paid-in capital

Capital reserve, granted options and treasury shares

Earnings reserve

Retained earnings (accumulated losses)

Other comprehensive income

Shareholders' equity

Non-controlling interests

Consolidated shareholders' equity

5.01

Opening balances

4,540,000

30

1,131,298

-

25,140

5,696,468

38,507

5,734,975

5.03

Adjusted opening balances

4,540,000

30

1,131,298

-

25,140

5,696,468

38,507

5,734,975

5.04

Capital transactions with shareholders

-

-

(284,390)

-

-

(284,390)

-

(284,390)

5.04.04

Treasury shares acquired

-

-

(9,390)

-

-

(9,390)

-

(9,390)

5.04.06

Dividends

-

-

(275,000)

-

-

(275,000)

-

(275,000)

5.05

Total comprehensive income

-

-

-

(754,725)

(1,040,896)

(1,795,621)

(717)

(1,796,338)

5.05.01

Profit for the period

-

-

-

(754,725)

-

(754,725)

(717)

(755,442)

5.05.02

Other comprehensive income

-

-

-

-

(1,040,896)

(1,040,896)

-

(1,040,896)

5.05.02.04

Translation adjustments for the period

-

-

-

-

719,875

719,875

-

719,875

5.05.02.08

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

-

-

-

-

134

134

-

134

5.05.02.09

Available-for-sale assets, net of taxes

-

-

-

-

(319,139)

(319,139)

-

(319,139)

5.05.02.10

(Loss) / gain on the percentage change in investments

-

-

-

-

202

202

-

202

5.05.02.11

(Loss) gain on hedge accounting, net of taxes

-

-

-

-

(1,399,680)

(1,399,680)

-

(1,399,680)

5.05.02.12

(Loss) / gain on net investment hedge

-

-

-

-

(42,288)

(42,288)

-

(42,288)

5.06

Internal changes in shareholders’ equity

-

-

-

-

-

-

6

6

5.06.04

Non-controlling interests in subsidiaries

-

-

-

-

-

-

6

6

5.07

Closing balances

4,540,000

30

846,908

(754,725)

(1,015,756)

3,616,457

37,796

3,654,253

 

                                                                                                                                                                                          

16


 

 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 ITR –– Quarterly Financial Information - September 30, 2016 – CIA SIDERURGICA NACIONAL Version: 1

 

Consolidated Financial Statements / Statement of Value Added

(R$thousand)

Code

Description

Year to date

01/01/2016 to 09/30/2016

Previous year

01/01/2015 to 09/30/2015

7.01

Revenues

14,377,707

13,543,497

7.01.01

Sales of products and rendering of services

14,404,107

13,470,385

7.01.02

Other revenues

(13,914)

94,272

7.01.04

Allowance for (reversal of) doubtful debts

(12,486)

(21,160)

7.02

Raw materials acquired from third parties

(9,917,875)

(9,564,670)

7.02.01

Cost of sales and services

(8,108,324)

(7,489,862)

7.02.02

Materials, electric power, outsourcing and other

(1,766,300)

(1,899,244)

7.02.03

Impairment/recovery of assets

(43,251)

3,303

7.02.04

Others

-

(178,867)

7.02.04.01

Impairment of available-for-sale assets

-

(178,867)

7.03

Gross value added

4,459,832

3,978,827

7.04

Retentions

(956,715)

(853,477)

7.04.01

Depreciation, amortization and depletion

(956,715)

(853,477)

7.05

Wealth created

3,503,117

3,125,350

7.06

Value added received

(527,636)

4,681,917

7.06.01

Equity in income of affiliates

88,473

1,214,840

7.06.02

Finance income

522,995

202,296

7.06.03

Others

(1,139,104)

3,264,781

7.06.03.01

Others and exchange gains

(1,139,104)

3,264,781

7.07

Wealth for distribution

2,975,481

7,807,267

7.08

Wealth distributed

2,975,481

7,807,267

7.08.01

Personnel

1,521,714

1,530,257

7.08.01.01

Salaries and wages

1,218,725

1,214,437

7.08.01.02

Benefits

232,519

249,484

7.08.01.03

Severance payment (FGTS)

70,470

66,336

7.08.02

Taxes, fees and contributions

1,128,044

375,547

7.08.02.01

Federal

959,772

150,673

7.08.02.02

State

153,521

208,565

7.08.02.03

Municipal

14,751

16,309

7.08.03

Remuneration on third-party capital

1,299,588

6,662,914

7.08.03.01

Interest

2,533,793

2,677,387

7.08.03.02

Leases

17,214

11,226

7.08.03.03

Others

(1,251,419)

3,974,301

7.08.03.03.01

Others and exchange losses

(1,251,419)

3,974,301

7.08.04

Remuneration on Shareholders' capital

(980,651)

(755,442)

7.08.04.03

Retained earnings (accumulated losses)

(1,031,122)

(754,725)

7.08.04.04

Non-controlling interests in retained earnings

50,471

(717)

7.08.05

Others

6,786

(6,009)

7.08.05.01

Gain (loss) on discontinued operations

6,786

(6,009)

 

 

17


 
 

 

 

 

 

 

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

 

1.     DESCRIPTION OF BUSINESS

 

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

                                                               

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

 

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

 

·       Steel:

 

The Company’s main industrial facility is the Presidente Vargas steelworks (“UPV”), located in the city of Volta Redonda, State of Rio de Janeiro. This segment consolidates production, distribution and sale of flat steel, long steel, metallic containers and galvanized steel. In addition to the facilities in Brazil, CSN has operations in the United States, Portugal and Germany, all of them are in line with the plan to achieve new markets and perform excellent services for final consumers. Its steel has been used in home appliances, civil construction and automobile industries. 

 

·       Mining:

 

The production of iron ore is developed in the city of Congonhas, State of Minas Gerais.

 

Iron ore is sold basically in the international market, especially in Europe and Asia. The prices charged in these markets are historically cyclical and subject to significant fluctuations over short periods of time, driven by several factors related to global demand, strategies adopted by the major steel producers, and the foreign exchange rate. All these factors are beyond the Company’s control. The ore transportation is accomplished by Terminal de Carvão e Minérios do Porto de Itaguai - TECAR, a solid bulk terminal, one of the four terminals that compose the Port of Itaguai, located in Rio de Janeiro. Imports of coal and coke are held through this terminal and directed to the steel industry of CSN.

 

From November 30, 2015 the Company has transferred to its subsidiary Congonhas Minérios the mining assets, the logistical infrastructure, including the mine Casa de Pedra and the right to operate the terminal TECAR, S.A. On the same date, the Company acquired the Asian Consortium 40% stake in Namisa as an exchange for 12,48% stake in Congonhas Minérios S. A.

 

The Company´s mining activities also comprises tin exploitation, which is based in the State of Rondônia, this facility is engaged to supply the needs of UPV, with the excess of raw materials being sold to subsidiaries and third parties.

 

·       Cement:

 

CSN entered in the cement market boosted by the synergy between this new activity and its existing businesses. Next to the Presidente Vargas Steelworks (UPV) in Volta Redonda (RJ) is installed the new business unit CSN Cimentos, which produces CP-III type of cement by using slag produced by the UPV blast furnaces in Volta Redonda. It also explores limestone and dolomite at the Arcos unit, located in the State of Minas Gerais, to satisfy the needs of UPV as of the cement plant.

 

                                                                                                                                                                                          

18


 
 

 

 
 
 
 

·       Logistics

 

Railroads:

 

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

 

Ports:

 

In the State of Rio de Janeiro, by means of its subsidiaries Sepetiba Tecon S.A. and Congonhas Minérios S.A., the Company operates the Container Terminal (Tecon) and the solid bulk terminal (Tecar), respectively, both located at the Itaguaí Port. Established in the harbor of Sepetiba, the mentioned port has a privileged highway, railroad and maritime access.

 

Tecon is responsible for the shipments of CSN´s steel products, movement and storage of containers, consolidation and deconsolidation of cargo; The Tecar´s port terminal is engaged to the iron ore shipment overseas and to the landing of coal, petroleum, coke, sulfur and zinc concentrate for our own operation and for third parties.

 

·       Energy:

 

Since the energy supply is fundamental in CSN´s production process, the Company owns and operates facilities to generate electric power for guaranteeing its self-sufficiency.

 

The note 26 - “Segment Information details the financial information per each of CSN´s business segment.

 

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

2.a) Basis of preparation

 

The consolidated condensed quarterly interim financial statements have been prepared and are being presented in accordance with the International Accounting Standards (IAS 34 – Interim Financial Reporting) issued by the International Accounting Standards Board (IASB), which correlate in Brazil is the CPC 21 (R1) (Interim Financial Statements and Consolidated Interim Financial Statements) issued by the CPC (Accounting Pronouncements Committee) and approved by CVM (Brazilian Securities Commission). All the relevant information required in the financial statements and only these information, are being highlighted and correspond to those used for the Company's management.

 

The significant accounting policies applied in these condensed interim financial statements are consistent with the policies described in Note 2 to the Company's financial statements for the year ended December 31, 2015, filed with the CVM.

 

These condensed interim financial statements do not include all requirements of annual or full financial statements and, accordingly, should be read together with the Company's financial statements for the year ended December 31, 2015.

 

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

 

Note 02 - Summary of significant accounting policies

Note 03 – Business Combination

Note 09 – Investments

Note 27 - Employee benefits

 

                                                                                                                                                                                          

19


 
 

 

 

 

 

 

Note 29 – Commitments

 

The consolidated and parent company interim financial statements were approved by the Board of Directors on November 14, 2016.

 

2.b) Basis of presentation

 

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

 

Transactions in foreign currencies are translated into the functional currency using the exchange rates in effect at the dates of the transactions or valuation on which items are remeasured. The asset and liability balances are translated at the exchange rate in effect at the end of the reporting period. As of September 30, 2016, US$1 is equivalent to R$3.2462 (R$3.9048 as of December 31, 2015), €1 is equivalent to R$3.6484 (R$4.2504 as of December 31, 2015).

 

2.c) Basis of consolidation

 

The accounting practices were treated uniformly in all the consolidated companies. The consolidated condensed interim financial statements for the period ended September 30, 2016 and the year ended December 31, 2015 include the following direct and indirect subsidiaries and jointly controlled entities, as well as the exclusive funds as described below:

 

 

20


 
 

 

 

 

 

 

·                      Companies

 

 

 

 

Equity interests (%)

 

Companies

 

09/30/2016

 

12/31/2015

 

Core business

Direct interest in subsidiaries: full consolidation

CSN Islands VII Corp.

 

100,00

 

100,00

 

Financial transactions

CSN Islands IX Corp.

 

100,00

 

100,00

 

Financial transactions

CSN Islands XI Corp.

 

100,00

 

100,00

 

Financial transactions

CSN Islands XII Corp.

 

100,00

 

100,00

 

Financial transactions

CSN Minerals S.L.U.

 

100,00

 

100,00

 

Equity interests

CSN Export Europe, S.L.U.

100,00

 

100,00

 

Financial transactions and Equity interests

CSN Metals S.L.U.

 

100,00

 

100,00

 

Equity interests and Financial transactions

CSN Americas S.L.U.

 

100,00

 

100,00

 

Equity interests and Financial transactions

CSN Steel S.L.U.

 

100,00

 

100,00

 

Equity interests and Financial transactions

TdBB S.A (*)

 

100,00

 

100,00

 

Equity interests

Sepetiba Tecon S.A.

 

99,99

 

99,99

 

Port services

Minérios Nacional S.A. (1)

 

99,99

 

99,99

 

Mining and Equity interests

Companhia Florestal do Brasil

99,99

 

99,99

 

Reforestation

Estanho de Rondônia S.A.

 

99,99

 

99,99

 

Tin Mining

Cia Metalic Nordeste (2)

 

 

99,99

 

Manufacture of containers and distribution of steel products

Companhia Metalúrgica Prada

99,99

 

99,99

 

Manufacture of containers and distribution of steel products

CSN Gestão de Recursos Financeiros Ltda. (*)

99,99

 

99,99

 

Management of funds and securities portfolio

Congonhas Minérios S.A.

 

87,52

 

87,52

 

Mining and Equity interests

CSN Energia S.A.

 

100,00

 

99,99

 

Sale of electric power

FTL - Ferrovia Transnordestina Logística S.A.

89,79

 

89,79

 

Railroad logistics

Nordeste Logística S.A.

 

99,99

 

99,99

 

Port services

CGPAR - Construção Pesada S.A. (3)

100,00

 

 

Mining support services and Equity interests

 

 

 

 

 

 

 

Indirect interest in subsidiaries: full consolidation

Companhia Siderúrgica Nacional LLC

100,00

 

100,00

 

Steel

CSN Europe Lda.

 

100,00

 

100,00

 

Financial transactions, product sales and Equity interests

CSN Ibéria Lda.

 

100,00

 

100,00

 

Financial transactions, product sales and Equity interests

Lusosider Projectos Siderúrgicos S.A.

99,94

 

99,94

 

Equity interests and product sales

Lusosider Aços Planos, S. A.

99,99

 

99,99

 

Steel and Equity interests

CSN Acquisitions, Ltd. (4)

 

 

100,00

 

Financial transactions and Equity interests

CSN Resources S.A.

 

100,00

 

100,00

 

Financial transactions and Equity interests

CSN Holdings (UK) Ltd (4)

 

 

100,00

 

Financial transactions and Equity interests

CSN Handel GmbH (5)

 

 

87,52

 

Financial transactions, product sales and Equity interests

Companhia Brasileira de Latas

100,00

 

100,00

 

Sale of cans and containers in general and Equity interests

Companhia de Embalagens Metálicas MMSA

99,67

 

99,67

 

Production and sale of cans and related activities

Companhia de Embalagens Metálicas - MTM

99,67

 

99,67

 

Production and sale of cans and related activities

CSN Steel Holdings 1, S.L.U.

100,00

 

100,00

 

Financial transactions, product sales and Equity interests

CSN Productos Siderúrgicos S.L.

100,00

 

100,00

 

Financial transactions, product sales and Equity interests

Stalhwerk Thüringen GmbH

100,00

 

100,00

 

Production and sale of long steel and related activities

CSN Steel Sections UK Limited (*)

100,00

 

100,00

 

Sale of long steel

CSN Steel Sections Polska Sp.Z.o.o

100,00

 

100,00

 

Financial transactions, product sales and Equity interests

CSN Asia Limited

 

100,00

 

100,00

 

Commercial representation

Namisa International Minérios SLU

87,52

 

87,52

 

Financial transactions, product sales and Equity interests

Namisa Europe, Unipessoal Lda.

87,52

 

87,52

 

Equity interests, product and iron ore sales

CSN Mining GmbH (6)

 

87,52

 

87,52

 

Financial transactions, product sales and Equity interests

CSN Mining Asia Limited (7)

87,52

 

87,52

 

Commercial representation

 

 

 

 

 

 

 

Direct interest in joint operations: proportionate consolidation

Itá Energética S.A.

 

48,75

 

48,75

 

Electric power generation

CGPAR - Construção Pesada S.A. (3)

 

50,00

 

Mining support services and Equity interests

Consórcio da Usina Hidrelétrica de Igarapava

17,92

 

17,92

 

Electric power consortium

 

 

 

 

 

 

 

Direct interest in joint ventures: equity method

MRS Logística S.A.

 

18,64

 

18,64

 

Railroad transportation

Aceros Del Orinoco S.A.

 

31,82

 

31,82

 

Dormant company

CBSI - Companhia Brasileira de Serviços de Infraestrutura

50,00

 

50,00

 

Equity interests and product sales and iron ore

Transnordestina Logística S.A.

49,02

 

56,92

 

Railroad logistics

 

 

 

 

 

 

 

Indirect interest in joint ventures: equity method

MRS Logística S.A.

 

16,30

 

16,30

 

Railroad transportation

 

 

 

 

 

 

 

Direct interest in associates: equity method

Arvedi Metalfer do Brasil S.A.

20,00

 

20,00

 

Metallurgy and Equity interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cia Metalic Nordeste (2)

 

100,00

 

 

Manufacture of containers and distribution of steel products

                         

(*) They are dormant (or not active) Companies. Consequently, they are not presented in note 10 where is disclosed the information about companies evaluated by the equity method and classified as available-for-sale.

(1) New corporate name of Mineração Nacional, amended in March 2016;

(2) Company considered as available for sale on September, 2016 as disclosed in note 4;

(3) Control acquired as of September, 2016 as disclose in note 3;

(4) Company liquidated in January 2016;

(5) Company incorporated by CSN Mining Gmbh (subsidiary with indirect interest) on January 2016;

(6) New corporate name of Namisa Handel Gmbh, amended in February 2016;

(7) New corporate name of Namisa Asia Limited amended in August 2016.

 

 

 

21


 
 
 


 

·                      Exclusive funds

 

   

Equity interests (%)

 

Exclusive funds

 

09/30/2016

 

12/31/2015

 

Core business

Direct interest: full consolidation

 

 

 

 

 

 

Diplic II - Private credit balanced mutual fund

 

100.00

 

 

Investment fund

Caixa Vértice - Private credit balanced mutual fund

 

100.00

 

100.00

 

Investment fund

VR1 - Private credit balanced mutual fund

 

100.00

 

100.00

 

Investment fund

Diplic - Private credit balanced mutual fund (1)

 

 

100.00

 

Investment fund

BB Steel - Private credit balanced mutual fund (1)

 

 

100.00

 

Investment fund

(1) Multimarket investment fund fully redeemed.

 

2.d) Restatement of accounting balances

 

· Forfaiting

 

Trough out the financial year 2015 the Company purchased raw materials from its suppliers located abroad through a foreign trade operation called Forfaiting, in which the financial institution makes the payment in cash to exporter by the net values of the securities (discount rate and other possible expenses already deducted), allowing the Company to finance imported goods by a yearly interest rate from 1.25% to 3.28%, maturing in 12 months.

 

· Drawee risk

 

During the financial year 2015 the Company carried out transactions denominated drawee risk, the transaction occurs when the financial institution engaged by the Company anticipates to suppliers the debt securities, so then subsequently receives from the Company on the maturity date those anticipated values

 

The Company reclassified the balances of forfaiting transactions and drawee risk with commercial suppliers originally presented in cash flow on September 2015, as follows:

 

 

 

22


 
 

 

 

 

 

 

a) Statements of cash flows at September 30, 2015

 

           

Consolidated

 

Parent Company

 

 

 

 

 

 

09/30/2015

 

 

 

 

 

09/30/2015

 

 

Published balances

 

Reclassifications

 

Restated Cash Flows

 

Published balances

 

Reclassifications

 

Restated Cash Flows

Cash generated by operating activities

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the year attributable to the controlling shareholders

 

(754.725)

 

 

(754.725)

 

(754.725)

 

 

(754.725)

Trade payables

 

100.868

 

241.900

 

342.768

 

(21.665)

 

241.900

 

220.235

Paid Interests

 

(2.466.731)

 

(5.400)

 

(2.472.131)

 

(2.074.153)

 

(5.400)

 

(2.079.553)

Others

 

4.301.539

 

 

4.301.539

 

2.896.076

 

 

2.896.076

Net cash generated by operating activities

 

1.180.951

 

236.500

 

1.417.451

 

45.533

 

236.500

 

282.033

 

 

 

 

 

 

 

 

 

 

 

 

 

Netc cash used in investing activities

 

(213.236)

 

 

(213.236)

 

(1.453.885)

 

 

(1.453.885)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash generated by financing activities

                       

Forfaiting funding / drawee risk

 

 

625.117

 

625.117

 

 

625.117

 

625.117

Forfaiting amortization / drawee risk

 

 

(861.617)

 

(861.617)

 

 

(861.617)

 

(861.617)

Others

 

(2.049.702)

 

 

(2.049.702)

 

615.101

 

 

615.101

Net cash used in financing activities

 

(2.049.702)

 

(236.500)

 

(2.286.202)

 

615.101

 

(236.500)

 

378.601

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchange rate changes on cash and cash equivalents

 

(4.672)

 

 

(4.672)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase in cash and cash equivalents

 

(1.086.659)

 

 

(1.086.659)

 

(793.251)

 

 

(793.251)

 

 

 

b) Statement of income and statement of comprehensive income at September 30, 2015

 

The Company has not restated the others statements of September 30, 2015 since the changes in those tables were not material.

 

3.     BUSINESS COMBINATION – CONTROL AQUISITION OF CGPAR CONSTRUÇÃO PESADA S.A. (“CGPAR”)

 

On September 30, 2016, CSN acquired 50% shares of CGPAR previously held by GPA Construção Pesada e Mineração Ltda., increasing its participation to 100%. The total amount paid in consideration for the shares was R$ 1.00 (One Real).

 

The consideration paid reflects an agreement to solve a legal dispute involving corporate and commercial issues, as well as to release dividends declared in previous fiscal years.

 

The business combination steps are described as follows:

 

a)   Determination of the purchase price

 

Description

 

R$

 

Ref.

Fair value of the equity interest held by the acquiring company in CGPAR immediately prior to the combination

 

36,621

(i)

Consideration paid in CGPAR acquisition

 

-

(ii)

Purchase price considered for the business combination

 

36,621

 

(i)    Fair value of 50% stake in CGPAR held immediately before the acquisition.

(ii)   Amount related to the consideration paid for the acquiring company R$ 1.00 (One real).

 

CSN held 50% shares of CGPAR immediately before the conclusion of the control acquisition, this investment was measured by the equity method.

 

According to the item 41 of the IFRS 3, those shares are part of the consideration paid and must be measured by their fair value on the acquisition date. The accounting rule determines that a gain or loss must be recorded resulting from the difference between the fair value and the book value before the transaction. Therefore, the CGPAR valuation by its fair value was calculated based in the discounted cash flow method, considering the business plan valid until the transaction date.

 

The results are presented in the following table:

 

 

23


 
 

 

 

 

Premises

 

R$

Fair value as of September 30, 2016 (equity value)

 

73,242

Fair value attributed to 50% equity interest prior acquisition (a)

 

36,621

Accounting Balances

 

 

The equity interest prior acquisition (a) on September 30, 2016

 

8,608

Gain in the valuation of the 50% interest by the fair value of the equity interest prior to the acquisition (a)-(b) (Note 24)

 

28,013

 

b)     Goodwill generated from the control acquisition of CGPAR

 

According to the item 32 of the IFRS 3, the acquirer must recognize the goodwill resulted from the future economic benefits at the acquisition date, measured by the amount in which the purchase price exceeds the fair value of assets acquired and liabilities assumed (Purchase Price Allocation - PPA). The generated and goodwill amounting to R$ 1.784 million.

 

In the following table its presented the fair value allocation for 100% of assets acquired and liabilities assumed on September 30, 2016 which is being analyzed by an independent firm.

 

           

09/30/2016

 

 

Carrying amounts

 

Fair value adjustments

 

Total fair value

Total assets acquired

 

49,750

 

21,231

(a)

70,981

Total liabilities assumed