-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LO3UFIgAIDbSSO+aQ1UqkFFkS2bERfvCR3XWF05AJyM1ejZT3a5DbV6Ox3g+4f5/ mYXT8zBq0TcLMlYaZqi3EQ== 0000911420-03-000185.txt : 20030903 0000911420-03-000185.hdr.sgml : 20030903 20030903160848 ACCESSION NUMBER: 0000911420-03-000185 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030903 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GERDAU SA CENTRAL INDEX KEY: 0001073404 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES & ROLLING & FINISHING MILLS [3310] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14878 FILM NUMBER: 03879307 BUSINESS ADDRESS: STREET 1: AV FARRAPOS 1811 STREET 2: PORTO ALEGRA CITY: RIO GRANDE DO SOL BR STATE: D5 MAIL ADDRESS: STREET 1: AVENIDA ARRAPOS, 1811 STREET 2: POTE ALGRE, RIO GRANDE DO SUL CITY: BRAZIL STATE: D5 ZIP: 00000 6-K 1 d910649.txt FORM 6-K - -------------------------------------------------------------------------------- FORM 6-K U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 dated September 3, 2003 Commission File Number 1-14878 GERDAU S.A. (Exact Name as Specified in its Charter) N/A (Translation of Registrant's Name) Av. Farrapos 1811 Porto Alegre, Rio Grande do Sul - Brazil CEP 90220-005 (Address of principal executive offices) 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 if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____ Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____ Indicate by check mark whether by furnishing the information contained in this Form, the registrant 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 ---- ------ If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable. - -------------------------------------------------------------------------------- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused the Report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: September 3, 2003 GERDAU S.A. By: /s/ Osvaldo Burgos Schirmer -------------------------------- Name: Osvaldo Burgos Schirmer Title: Chief Financial Officer EXHIBIT INDEX Exhibit Description of Exhibit 1 Report of Independent Accounts on the Limited Review of Quarterly Information (ITR) June 30, 2003 EX-1 3 e910587.txt REPORT OF INDEPENDENT ACCOUNTANTS EXHIBIT 1 (A free translation of the original in Portuguese) GERDAU S.A. REPORT OF INDEPENDENT ACCOUNTANTS ON THE LIMITED REVIEW OF QUARTERLY INFORMATION (ITR) JUNE 30, 2003 (A free translation of the original in Portuguese) REPORT OF INDEPENDENT ACCOUNTANTS ON THE LIMITED REVIEW July 28, 2003 To the Board of Directors and Shareholders Gerdau S.A. 1 We have performed a limited review of the Quarterly Information (ITR) of Gerdau S.A. and of Gerdau S.A. and its subsidiary companies as of and for the quarters and periods ended June 30, 2003 and 2002 and March 31, 2003. This Quarterly Information is the responsibility of the Company's management. 2 Our review was conducted in accordance with specific standards established by the Institute of Independent Auditors of Brazil (IBRACON) in conjunction with the Federal Accounting Council, and consisted primarily of: (a) inquiries of and discussions with management responsible for the accounting, financial and operating areas of the companies as to the main criteria adopted in the preparation of the Quarterly Information, and (b) review of the significant information and of the subsequent events which have or could have significant effects on the financial position and operations of the Company. 3 Based on our limited review, we are not aware of any significant change that should be made to the Quarterly Information for it to be in conformity with accounting practices adopted in Brazil for the preparation of Quarterly Information and the standards established by the Brazilian Securities Commission. 1 July 28, 2003 Gerdau S.A. 4 Our review was conducted with the purpose of issuing a report on the Quarterly Information (ITR) referred to in the first paragraph, taken as a whole. The statement of cash flow is being presented to provide supplementary information on the Company and is not required as an integral part of the Quarterly Information (ITR). The statement of cash flow was submitted to the review procedures described in the second paragraph and, based on our review, we are not aware of any significant change that should be made for it to be fairly presented, in all material respects, in relation to the Quarterly Information (ITR), taken as a whole. PricewaterhouseCoopers Auditores Independentes CRC 2SP000160/O-5 "F" RS Carlos Alberto de Sousa Partner Contador CRC 1RJ056561/S-7 "S" RS 2 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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.
01.01 - IDENTIFICATION 1 - CVM CODE 2 - COMPANY NAME 3 - General Taxpayers' Registration (CNPJ) 00398-0 Gerdau S.A. 33.611.500/0001-19 4 - Register Inscription Number - NIRE 33300032266 01.02 - HEAD OFFICE 1 - FULL ADDRESS 2 - SUBURB OR DISTRICT Av. Joao XXIII, 6777 Sta. Cruz 3 - ZIP CODE 4 - MUNICIPALITY 5 - STATE 23560-900 Rio de Janeiro RJ 6 - AREA CODE 7 - TELEPHONE 8 - TELEPHONE 9 - TELEPHONE 10 - TELEX 021 2414-6000 - - 11- AREA CODE 12 - FAX 13 - FAX 14 - FAX 021 2414-6243 - - 15 - E-MAIL Inform@gerdau.com.br 01.03 - INVESTOR RELATIONS OFFICER (Company Mail Address) 1 - NAME 2 - ADDRESS Osvaldo Burgos Schirmer Av. Farrapos, 1811 3 - SUBURB OR DISTRICT 4 - ZIP CODE 5 - MUNICIPALITY 6 - STATE Floresta 90220-005 Porto Alegre RS 6 - AREA CODE 7 - TELEPHONE 8 - TELEPHONE 9 - TELEPHONE 10 - TELEX 051 3323-2000 - - 11- AREA CODE 12 - FAX 13 - FAX 14 - FAX 051 3323-2281 - - 15 - E-MAIL inform@gerdau.com.br - -------------------- 01.04 - GENERAL INFORMATION / INDEPENDENT ACCOUNTANTS CURRENT YEAR CURRENT QUARTER PRIOR QUARTER 1-BEGINNING 2-END 3-NUMBER 4-BEGINNING 5-END 6-NUMBER 7-BEGINNING 8-END 1/1/2003 12/31/2003 2 4/1/2003 6/30/2003 1 1/1/2003 3/31/2003 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 de Sousa 724.687.697-91
1 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 - ----------------------------------------------------------------------------------------------------- 01.05 - CAPITAL COMPOSITION NUMBER 1 - CURRENT QUARTER 2 - PRIOR QUARTER 3 - SAME QUARTER (THOUSANDS) 6/30/2003 3/31/2003 PRIOR YEAR 6/30/2002 Subscribed Capital 1 - Common 51,468 39,590,942 39,590,942 2 - Preferred 96,886 74,527,529 74,527,529 3 - Total 148,354 114,118,471 114,118,471 Treasury Stock 4 - Common 0 0 0 5 - Preferred 0 0 0 6 - Total 0 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 1140200 - Siderurgy 5 - MAIN ACTIVITY Siderurgy 6 - CONSOLIDATION TYPE Total 7 - TYPE OF REPORT OF INDEPENDENT ACCOUNTANTS Unqualified 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 - EARNINGS APPROVED PAYMENT SHARE PER SHARE 01 RCA 3/31/2003 Interest on capital 5/15/2003 ON 0.0006500000 02 RCA 3/31/2003 Interest on capital 5/15/2003 PN 0.0006500000 03 RCA 6/30/2003 Interest on capital 8/14/2003 ON 0.3400000000 04 RCA 6/30/2003 Interest on capital 8/14/2003 PN 0.3400000000
2 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 QUARTER 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 (Thousands of (Thousand) (Reais) reais) reais ) 01 4/30/2003 1,735,656 400,536 Revenue Reserve 34,235,541 0.0116965010
01.10 - INVESTOR RELATIONS OFFICER 1 - DATE 2 - SIGNATURE 7/29/2003 3 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 - ----------------------------------------------------------------------------------------------------- 02.01 - BALANCE SHEET - ASSETS (R$ THOUSAND) 1 - CODE 2 - DESCRIPTION 3 - 6/30/2003 4 - 3/31/2003 1 Total assets 7,236,671 7,972,479 1.01 Current assets 1,658,473 1,647,924 1.01.01 Available funds 52,532 71,665 1.01.02 Credits 699,934 747,712 1.01.02.01 Trade accounts receivable 615,233 632,831 1.01.02.03 Tax credits 45,274 39,589 1.01.02.05 Marketable securities 39,427 75,292 1.01.03 Inventories 841,790 768,377 1.01.03.01 Finished products 328,341 266,570 1.01.03.02 Work in process 174,584 162,632 1.01.03.03 Raw materials 216,124 210,093 1.01.03.04 Warehouse materials 95,738 98,702 1.01.03.05 Advances to suppliers 27,003 30,380 1.01.04 Other 64,217 60,170 1.01.04.01 Other accounts receivable 62,822 58,467 1.01.04.02 Deferred income tax and social 1,395 1,703 contribution 1.02 Long-term receivables 116,003 150,254 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 11,970 7,742 1.02.02.01 Associated companies 11,970 7,742 1.02.02.02 Subsidiary companies 0 0 1.02.02.03 Other 0 0 1.02.03 Other 95,125 133,604 1.02.03.01 Judicial deposits and other 63,779 57,839 1.02.03.02 Swap transactions 0 45,965 1.02.03.03 Deferred income tax and social 31,346 29,800 contribution 1.03 Permanent assets 5,462,195 6,174,301 1.03.01 Investments 3,742,145 4,470,512 1.03.01.01 In associated companies 0 0 1.03.01.02 In subsidiary companies 3,725,142 4,453,265 1.03.01.03 Other 17,003 17,247 1.03.02 Fixed assets 1,711,981 1,696,266 1.03.02.01 Land, buildings and constructions 711,044 703,537 1.03.02.02 Machinery, equipment and installations 2,097,349 2,061,866 1.03.02.03 Furniture and fixtures 34,717 34,978 1.03.02.04 Vehicles 21,085 20,692 1.03.02.05 Electronic data equipment 163,867 168,138 1.03.02.06 Construction in progress 238,404 225,610 1.03.02.07 Forestation/reforestation 120,465 115,079 1.03.02.08 Accumulated depreciation (1,674,950) (1,633,634) 1.03.03 Deferred charges 8,069 7,523
4 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 - --------------------------------------------------------------------------------
02.02 - BALANCE SHEET - LIABILITIES AND SHAREHOLDERS' EQUITY (R$ THOUSAND) 1 - CODE 2 - DESCRIPTION 3 - 6/30/2003 4 - 3/31/2003 2 Total liabilities and shareholders' 7,236,671 7,972,479 equity 2.01 Current liabilities 1,982,993 1,781,747 2.01.01 Financings 1,589,460 1,353,806 2.01.02 Debentures 11,794 0 2.01.03 Suppliers 133,915 152,953 2.01.04 Taxes, charges and contributions 115,803 140,928 2.01.05 Dividends payable 44,415 65,058 2.01.06 Provisions 0 0 2.01.07 Payables to related companies 0 0 2.01.08 Other 87,606 69,002 2.01.08.01 Salaries payable 48,253 32,137 2.01.08.02 Other payables 32,785 30,383 2.01.08.03 Deferred income tax and social 6,568 6,482 contribution 2.02 Long-term liabilities 1,607,849 2,709,415 2.02.01 Financings 706,760 978,023 2.02.01.01 Local financing 315,522 330,018 2.02.01.02 Foreign financing 391,238 648,005 2.02.02 Debentures 574,394 568,559 2.02.03 Provisions 0 0 2.02.04 Payables to related companies 169,367 1,006,522 2.02.05 Other 157,328 156,311 2.02.05.01 Provision for contingencies 100,767 98,760 2.02.05.02 Deferred income tax and social 28,744 28,864 contribution 2.02.05.03 Other payables 20,023 20,893 2.02.05.04 Benefits to employees 7,794 7,794 2.03 Deferred income 0 0 2.05 Shareholders' equity 3,645,829 3,481,317 2.05.01 Paid-up capital 1,735,656 1,335,120 2.05.02 Capital reserves 342,813 326,734 2.05.02.01 Capital restatement 0 0 2.05.02.02 Investment subsidies 309,051 292,972 2.05.02.03 Special reserve - Law 8200/91 21,487 21,487 2.05.02.04 Other 12,275 12,275 2.05.03 Revaluation reserves 0 0 2.05.03.01 Own assets 0 0 2.05.03.02 Associated/subsidiary companies' 0 0 assets 2.05.04 Revenue reserves 1,247,202 1,647,738 2.05.04.01 Legal 127,569 127,569 2.05.04.02 Statutory 1,119,633 1,520,169 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 320,158 171,725
5 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 - --------------------------------------------------------------------------------
03.01 - STATEMENT OF INCOME (R$ THOUSAND) CODE DESCRIPTION 3 - 4 - 5 - 6 - 4/1/2003 1/1/2003 4/1/2002 TO 1/1/2002 TO TO TO 6/30/2002 6/30/2002 6/30/2003 6/30/2003 3.01 Gross sales and/or services 1,580,780 3,107,712 1,180,897 2,217,063 3.02 Deductions (317,852) (631,536) (249,060) (476,848) 3.02.01 Taxes on sales (279,430) (553,281) (217,169) (417,746) 3.02.02 Freights and discounts (38,422) (78,255) (31,891) (59,102) 3.03 Net sales and/or services 1,262,928 2,476,176 931,837 1,740,215 3.04 Cost of sales and/or services rendered (811,406) (1,525,823) (567,758) (1,041,006) 3.05 Gross profit 451,522 950,353 364,079 699,209 3.06 Operating expenses/income (205,763) (379,365) (149,641) (340,906) 3.06.01 Selling (87,156) (158,178) (58,140) (111,926) 3.06.02 General and administrative (81,205) (165,532) (72,292) (134,110) 3.06.03 Financial, net (118,379) (167,112) (130,722) (179,265) 3.06.03.01 Financial income 13,703 37,568 16,490 30,351 3.06.03.02 Financial expenses (132,082) (204,680) (147,212) (209,616) 3.06.04 Other operating income 5,227 6,865 1,748 3,829 3.06.05 Other operating expenses 0 0 0 0 3.06.06 Equity in the results of subsidiary companies 75,750 104,592 109,765 80,566 3.07 Operating profit 245,759 570,988 214,438 358,303 3.08 Non-operating results (4,663) (5,269) (3,789) (9,089) 3.08.01 Income 0 0 0 0 3.08.02 Expenses (4,663) (5,269) (3,789) (9,089) 3.09 Net income before taxation and participations 241,096 565,719 210,649 349,214 3.10 Provision for income tax and social (39,004) (95,622) (19,597) (48,814) contribution 3.11 Deferred income tax 1,270 (16,296) 567 2,746 3.12 Statutory participations and contributions (4,488) (9,026) (4,676) (4,676) 3.12.01 Participations (4,488) (9,026) (4,676) (4,676) 3.12.02 Contributions 0 0 0 0 3.13 Reversal of interest on capital 0 0 0 0 3.15 Net income/loss for the period 198,874 444,775 186,943 298,470 Number of shares (thousand), excluding 148,354 148,354 114,118,471 114,118,471 treasury stock Net income per share 1.34054 2.99807 0.00164 0.00262 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) 6/30/2003 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 1 - PRESENTATION OF THE QUARTERLY INFORMATION The quarterly information has been prepared in accordance with accounting practices adopted in Brazil and with the rules and standards of the Brazilian Securities Commission (CVM). NOTE 2 - SIGNIFICANT ACCOUNTING PRACTICES a) Available funds and financial investments - the financial investments are recorded at cost plus income accrued up to the date of the Quarterly Information, applying the rates agreed with the financial institutions. b) Allowance for doubtful accounts - is calculated based on the risk rating of receivables, which takes into consideration historical losses, individual situation of customers, and the evaluation of legal advisors, and is considered sufficient to cover possible losses on receivables. c) Inventories - 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 pick-up 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 that take into consideration the estimated useful lives of assets. Interest on financings used to finance construction in progress is added to the cost of constructions. f) Deferred charges - amortizations are calculated on the straight-line basis at rates determined based on the level of production of projects implemented in relation to installed capacities. g) Financings - are stated at contract values, plus accrued charges which include interest, monetary or exchange rate variations. Swap transactions, which are linked to financings contracts, are classified together with the operations that originated them. h) Income tax and social contribution - current and deferred income tax and social contribution were calculated in conformity with current legislation. i) Other current and long-term liabilities - are recorded at known or estimated amounts plus accrued charges and monetary variations, when applicable. j) Translation of foreign currency balances - the criterion for translation of balances of assets and liabilities of foreign currency transactions consist of the translation into local currency (R$) at the exchange rate in effect at the date of the Quarterly Information (06/30/2003 - US$ 1.00 = R$ 2.8720 and 03/31/2003 - US$ 1.00 = R$ 3.3531). 7 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 3 - CONSOLIDATED QUARTERLY INFORMATION a) Include the financial statements of Gerdau S.A. and its directly or indirectly controlled subsidiaries at June 30, 2003, listed below: Florestal Itacambira S.A. (100%), Florestal Rio Largo Ltda. (100%), Itaguai Com. Imp. e Exp. Ltda. (100%), Seiva S.A. - Florestas e Industrias (96%), Armafer Servicos de Construcao Ltda. (100%), Prontofer Servicos de Construcao Ltda. (100%), Laminadora do Sul S.A. (100%), Siderurgica Riograndense S.A. (87%), Gerdau Participacoes Ltda. (100%), CEA Participacoes S.A. (99%), Gerdau Internacional Empreendimentos Ltda. - Grupo Gerdau (100%), Aco Minas Gerais S.A. - - Acominas (79%), Acominas Overseas Ltd. (79%), Aco Minas Com. Imp. Exp. S.A. (79%), Dona Francisca Energetica S.A. (52%), Gerdau Laisa S.A. (99%), Gerdau Aza S.A. (100%), Industria Del Aciero S.A.-Indac (100%), Gerdau Chile Inversiones Ltda. (100%), Aceros Cox S.A. (100%), Axol S.A. (100%), Sipar Aceros S.A. (38%), Siderco S.A. (38%), Sociedad Industrial Puntana S.A. - SIPSA (38%), Gerdau Ameristeel Cambridge Inc. (67%), Gerdau Ameristeel MRM Special Sections Inc. (67%), Gerdau MRM Holdings Inc. (67%), Gerdau USA Inc. (67%), AmeriSteel Bright Bar Inc. (67%), Gerdau AmeriSteel US Inc. (67%), Gerdau Ameristeel Perth Amboy Inc. (67%), Gerdau Ameristeel Sayreville Inc. (67%), Gallatin Steel Company (34%), Gerdau Ameristeel Corporation (67%), Gerdau Steel Inc. (100%), Aramac S.A. (100%), GTL Equity Investments Corp. (100%), GTL Financial Corp. (100%), Gerdau GTL Spain S.L. (100%), GTL Trade Finance Corp. (100%) and GTL Brasil Ltda. (100%). b) The principal accounting practices used in preparing the consolidated financial statements are as follows: I) Gerdau S.A. and its subsidiaries adopt consistent practices to record operations and value their assets and liabilities. The financial statements of foreign companies are adjusted to reflect and translated using the exchange rate in effect on the Quarterly Information date; II) Balance sheet accounts arising from transactions between consolidated companies have been eliminated; III) Interests of minority shareholders in subsidiaries are shown separately. c) Consolidation comprises the financial statements of the jointly-owned subsidiary Dona Francisca Energetica S.A., proportionally to the direct participation and those of the jointly-owned subsidiaries Sipar Aceros S.A. and Gallatin Steel Company, proportionally to the indirect participation of the parent company in their capital. 8 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 amounts of the main groups of assets, liabilities and the results of these companies are as follows:
DONA GALLATIN SIPAR FRANCISCA STEEL (CONSOLIDATED) -------------- -------------- -------------- 5/31/2003 6/30/2003 6/30/2003 -------------- -------------- -------------- Assets Current assets 51,648 178,335 254,437 Long-term receivables 81,765 - 7,234 Permanent assets 197,324 821,726 60,018 -------------- -------------- -------------- Total assets 330,737 1,000,061 321,689 ============== ============== ============== LIABILITIES Current liabilities 30,097 124,072 163,865 Long-term liabilities 310,083 228,576 209 Shareholders' equity (9,443) 647,413 157,615 -------------- -------------- -------------- Total liabilities 330,737 1,000,061 321,689 ============== ============== ============== Dona Gallatin Sipar Francisca Steel (Consolidated) -------------- -------------- -------------- STATEMENT OF INCOME 5/31/2003 6/30/2003 6/30/2003 -------------- -------------- -------------- Gross sales 9,839 601,494 388,079 Deductions (450) (7,589) (86,468) -------------- -------------- -------------- Net sales 9,389 593,905 301,611 Cost of sales (8,386) (563,630) (233,224) -------------- -------------- -------------- Gross profit 1,003 30,275 68,387 Selling expenses - (2,799) (332) General and administrative (1,040) (17,759) (18,756) Financial result 8,763 (11,399) 18,663 Other operating income (expenses) - - (12,598) -------------- -------------- -------------- Operating profit (loss) 8,726 (1,682) 55,364 Non-operating results 168 (1,360) (4,309) Provision for income tax and social (3,108) - (17,626) contribution -------------- -------------- -------------- Net profit (loss) for the year 5,786 (3,042) 33,429 ============== ============== ==============
9 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 d) The Company records goodwill and negative goodwill in its directly or indirectly controlled subsidiary companies which is being amortized as the assets that generated them are realized or based on projections of future results, as follows: AMORTIZATION term Company Consolidated ------------- ------------ ------------- Goodwill in the investment account Balance at March 31, 2003 23,780 484,787 (- ) Exchange rate variation - (57,554) (- ) Amortized portion in the quarter 10 years (610) (11,530) ------------ ------------- Balance at June 30, 2003 based on: 23,170 415,703 - undervaluation of assets - 296,766 - expected future results 23,170 118,937 Goodwill in the fixed assets account Balance at March 31, 2003 - 298,039 (- ) Exchange rate variation (33,581) (- ) Amortized portion in the quarter 10 years (8,602) ------------ ------------- Balance at June 30, 2003 (undervaluation of assets) - 255,856 Negative goodwill in the fixed assets account Balance at March 31, 2003 - (293,083) (- ) Amortized portion in the quarter 30 years 15,800 ------------ ------------- Balance at June 30, 2003 (overvaluation of assets) - (277,283) e) The balance of equity pick-up in the consolidated statement of income refers mainly to the effect of exchange rate variation on foreign investments, which is not eliminated.
10 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 - INCOME TAX AND SOCIAL CONTRIBUTION The effects of income tax and social contribution on the results present the following adjustments: COMPANY - ---------------------------------------------------------------------------------------------------------------------- 6/30/2003 6/30/2002 -------------------------------------- ---------------------------------------- INCOME SOCIAL SOCIAL TAX CONTRIBUTION TOTAL INCOME TAX CONTRIBUTION TOTAL --------- -------------- ------------ ----------- -------------- ----------- Profit before taxes and after profit sharing 556,693 556,693 556,693 344,538 344,538 344,538 Nominal rates 25% 9% 34% 25% 9% 34% Income tax and social contribution expense at nominal rates (139,173) (50,102) (189,275) (86,135) (31,008) (117,143) Adjustments of taxes related to: - equity in results 26,148 9,413 35,561 20,142 7,251 27,393 - interest on own capital 31,154 11,216 42,370 19,971 7,189 27,160 Permanent differences (net) (965) 391 (574) 12,220 4,302 16,522 --------- -------------- ------------ ----------- -------------- ----------- Income tax and social contribution in the results (82,836) (29,082) (111,918) (33,802) (12,266) (46,068) ========= ============== ============ =========== ============== =========== Current (72,927) (22,695) (95,622) (36,547) (12,267) (48,814) Deferred (9,909) (6,387) (16,296) 2,745 1 2,746 CONSOLIDATED - ---------------------------------------------------------------------------------------------------------------------- 6/30/2003 6/30/2002 -------------------------------------- ---------------------------------------- INCOME SOCIAL SOCIAL TAX CONTRIBUTION TOTAL INCOME TAX CONTRIBUTION TOTAL --------- -------------- ------------ ----------- -------------- ----------- Profit before taxation 475,572 475,572 475,572 347,417 347,417 347,417 Nominal rates 25% 9% 34% 25% 9% 34% Income tax and social contribution expense at nominal rates (118,893) (42,801) (161,694) (86,855) (31,268) (118,123) Adjustments of taxes related to: Equity in results (77,827) (28,018) (105,845) 24,006 8,642 32,648 Interest on own capital 31,154 11,216 42,370 19,999 7,200 27,199 Differences in rates of foreign companies 35,696 8,979 44,675 (25,029) (1,994) (27,023) Recovery tax asset Acominas 199,647 63,294 262,941 15,806 5,690 21,496 Permanent differences (net) (5,982) (2,736) (8,718) 9,126 2,709 11,835 --------- -------------- ------------ ----------- -------------- ----------- Income tax and social contribution in the results 63,795 9,934 73,729 (42,947) (9,021) (51,968) ========= ============== ============ =========== ============== =========== Current (94,929) (39,354) (134,283) (40,035) (13,651) (53,686) Deferred 158,724 49,288 208,012 (2,912) 4,630 1,718
11 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 Assets and liabilities of deferred income tax and social contribution were set up at nominal rates and present the following balances: ASSETS -------------------------------------------------------------------------------------------- Company Consolidated -------------------------------------------- ---------------------------------------------- 6/30/2003 3/31/2003 6/30/2003 3/31/2003 --------------------- ---------------------- ---------------------- ---------------------- INCOME SOCIAL INCOME SOCIAL INCOME SOCIAL INCOME SOCIAL TAX CONTRIBUTION TAX CONTRIBUTION TAX CONTRIBUTION TAX CONTRIBUTION ------- ------------ ------- ------------ ------- ------------ ------- -------------- Tax loss 119 - 119 - 374,386 - 221,153 - Negative basis - - - 290 - 88,988 - 42,907 Provision for contingencies 12,727 4,582 11,702 4,213 42,678 15,243 42,009 15,001 Benefits to employees 1,948 701 1,948 701 45,620 701 45,620 701 Commissions/other 1,128 354 1,238 373 32,290 358 32,554 377 Amortized goodwill 305 110 153 55 305 110 153 55 Eletrobras losses 9,776 991 9,720 991 9,790 991 9,734 991 ------- ------------ ---------- ----------- -------- ------------ -------- ------------ 26,003 6,738 24,880 6,623 505,069 106,391 351,223 60,032 ======= ============ ========== =========== ======== ============ ======== ============ Current 1,041 354 1,039 664 100,974 23,908 102,331 13,063 Long-term 24,962 6,384 23,841 5,959 404,095 82,483 248,892 46,969 LIABILITIES --------------------------------------------------------------------------------------------- Company Consolidated ---------------------------------------------- --------------------------------------------- 6/30/2003 3/31/2003 6/30/2003 3/31/2003 ---------------------- ---------------------- --------------------- ---------------------- INCOME SOCIAL INCOME SOCIAL INCOME SOCIAL INCOME SOCIAL TAX CONTRIBUTION TAX CONTRIBUTION TAX CONTRIBUTION TAX CONTRIBUTION ------- ------------ ------- ------------ ------- ------------ ------- -------------- Accelerated 25,605 4,090 25,681 3,678 353,855 9,827 426,696 9,415 depreciation Amortized negative goodwill 857 309 857 309 53,168 15,645 51,809 15,156 Capital gain 3,354 1,097 3,638 1,183 3,354 1,097 3,638 1,183 -------- ------------- --------- ------------ -------- ----------- -------- ------------ 29,816 5,496 30,176 5,170 410,377 26,569 482,143 25,754 ======== ============= ========= ============ ======== =========== ======== ============ Current 6,177 391 6,145 337 32,309 391 36,596 337 Long-term 23,639 5,105 24,031 4,833 378,068 26,178 445,547 25,417
The tax credits recognized on tax losses and negative social contribution, both in the company and consolidated, are supported by projections of future taxable income adjusted to present values, based on technical feasibility studies. The subsidiary Acominas has a balance of tax losses of R$ 1,874,900 and negative social contribution basis to be offset of R$ 1,515,300, which are recognized up to the limit of its capacity of generating taxable income, calculated for the following ten years. This recognition is in conformity with the policy that has already been adopted since 2001 and reinforced by the perspectives of maintenance of future profitability. The assets relating to temporary differences, mainly on tax contingencies, were recognized according to their probability of realization, based on the assessment of our legal advisors, despite being subject to judicial decisions that are difficult to forecast. 12 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 estimated recovery of the assets is as follows: COMPANY CONSOLIDATED ------------------------------ ----------------------------- 6/30/2003 3/31/2003 6/30/2003 3/31/2003 -------------- -------------- -------------- -------------- Up to 2004 15,186 15,674 200,245 202,782 2005 1,207 1,477 82,195 85,315 2006 5,095 5,140 74,772 33,887 2007 8,618 8,768 85,029 47,734 2008 to 2010 1,091 444 149,883 41,537 2011 to 2012 1,544 - 19,336 -------------- -------------- -------------- -------------- 32,741 31,503 611,460 411,255
NOTE 5 - INVESTMENTS IN SUBSIDIARY, ASSOCIATED AND RELATED COMPANIES A) INVESTMENT BALANCES
COMPANY ----------------------------------------------------------------- 6/30/2003 3/31/2003 --------- -------- DEPOSIT GOODWILL TOTAL TOTAL FOR PROVISION FUTURE FOR CAPITAL INVESTMENT LOSSES INCREASE ---------- --------- --------- --------- --------- -------- Subsidiary companies: Gerdau Internacional Empreendimentos Ltda. (*) 1,597,059 701,193 2,298,252 3,204,371 Gerdau Participacoes Ltda. (**) 737,550 441,948 1,179,498 1,030,183 Armafer Servicos de Construcao Ltda. 198,411 11,000 209,411 187,532 Dona Francisca Energetica S.A. (4,893) 6,736 23,170 25,013 19,570 Seiva S.A. - Florestas e Industrias 8,364 8,364 7,357 Other 2,761 1,843 4,604 4,252 --------- --------- 3,725,142 4,453,265 Other investments 17,003 17,247 --------- --------- 3,742,145 4,470,512 ========== =========
(*) Company holding investments in foreign companies (**) Company with interest in the capital of Acominas 13 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 ------------------------------------------------ 6/30/2003 3/31/2003 ----------------------- ---------- ------------ INVESTMENT GOODWILL TOTAL TOTAL ------------ ---------- ---------- ------------ Gerdau AmeriSteel US Inc. 291,896 291,896 347,507 Gerdau AmeriSteel Corporation 95,767 95,767 107,950 MRS Logistica S.A. 4,772 4,772 4,772 Dona Francisca Energetica S.A. 23,170 23,170 23,780 Joint-ventures 10,020 10,020 10,270 Other 12,845 4,870 17,715 18,798 ---------- ------------ 443,340 513,077 ========== ============
b) INFORMATION ON INVESTMENTS
COMPANY - 6/30/2003 -------------------------------------------------------------------------- EQUITY IN INTEREST SHAREHOLDERS NET THE IN QUOTAS SHARES CAPITAL EQUITY INCOME RESULTS CAPITAL HELD HELD --------- ---------- -------- -------- ------- ---------- ---------- Subsidiary companies: Gerdau Internacional Empreendimentos Ltda. 1,505,996 1,599,775 (148,991) (147,369) 99.83% 1,503,439,672 Gerdau Participacoes Ltda. 422,266 819,713 244,349 219,857 89.98% 379,941,045 Armafer Servicos de Construcao Ltda. 146,756 198,411 28,498 28,498 100.00% 146,756,269 Dona Francisca Energetica S.A. 66,600 (9,443) 5,786 1,779 51.82% 345,109,212 Seiva S.A. - Florestas e Industrias 74,280 177,167 32,573 1,537 4.72% 450,000 Other 290 -------- 140,592 ========
14 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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) COMPOSITION OF LOANS BALANCE COMPANY CONSOLIDATED -------------------------- ------------------------ 6/30/2003 3/31/2003 6/30/2003 3/31/2003 ------------- ----------- ---------- ------------- ASSETS Metalurgica Gerdau S.A. 214 (1,159) Fundacao Gerdau S.A. 8,703 4,773 8,703 4,706 Sipar Aceros S.A. 10,052 11,736 6,214 7,256 Seiva S.A. Florestas e Industrias (493) (507) Armafer Servicos de Construcao Ltda. 47 (3,190) Florestal Rio Largo Ltda. (5,164) (4,324) Itaguai Com. Imp. e Exp. Ltda. (1,231) (8) Others (158) 421 (517) (2,137) ------------- ----------- ---------- ------------- TOTAL ASSETS 11,970 7,742 14,400 9,825 ------------- ----------- ---------- ------------- LIABILITIES GTL Equity Investments Corp. (84,561) GTL Financial Corp. (169,367) (921,961) ------------- ----------- ---------- ------------- TOTAL LIABILITIES (169,367) (1,006,522) ------------- ----------- ---------- -------------
The loan contracts between the companies in Brazil are restated by the average rate of funds obtained in the market. The contracts with foreign companies are restated by charges (LIBOR +3% per annum) plus exchange rate variations. In the quarter the Company settled loans assumed upon the merging of operations of Co.Steel Inc. and Gerdau Companies in North America. This operation was affected by a decrease of investment in the holding company of the foreign companies. d) COMMERCIAL OPERATIONS
COMPANY 6/30/2003 ----------------------------------------------- SALES PURCHASE/ ACCOUNTS ACCOUNTS EXPENSES RECEIVABLE PAYABLE --------- ----------- ----------- ---------- Amafer Servicos de Construcao Ltda. 97 10 2 Aco Minas Gerais S.A. - Acominas 2,700 117,416 913 1,419 Gerdau Laisa S.A. 326 80 Gerdau Aza S.A. 5,614 175 Sipar Aceros S.A. 11,577 13,867 Seiva S.A. - Florestas e Industrias 8 Grupo Gerdau Empreendimentos Ltda. (*) 302 Indac Ind. Adm. e Comercio S.A. (**) 3,764
15 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 purchase and sale transactions of supplies and products are carried out on terms and conditions similar to transactions with unrelated third parties. (*) Payment for the use of Gerdau trademark. (**) Payments of guarantees by financing sureties. NOTE 6 - DEFERRED CHARGES Deferred charges (company and consolidated) comprise pre-operating expenses for projects relating to steel mill renovations, reforestations, research, development and reorganization. NOTE 7 - LOCAL AND FOREIGN FINANCINGS Financings are as follows: ANNUAL COMPANY CONSOLIDATED ---------------------------- ------------------------------ CHARGES (%) 6/30/2003 3/31/2003 6/30/2003 3/31/2003 ------------------ ------------- ------------- -------------- -------------- SHORT TERM Working capital financing (R$) TR + 15.63% 233,541 231,518 235,754 234,159 Fixed assets financing (R$) 12.08% to 17.17% - - 579 1,193 Investments financing (R$) CDI 4,500 4,500 4,500 4,500 Working capital financing (US$) 2.34% to 11.13% 556,427 344,462 1,833,426 2,583,450 Fixed assets financing and other 3.47% to 7.00% - - 12,892 4,073 (US$) Working capital financing (Cdn$) 4.50% - - - 66,368 Working capital financing (Clp$) 1.25% to 5.85% - - 39,239 52,914 Working capital financing (Ar$) 8.69% - - 234 576 Fixed assets financing (Ar$) 12.00% - - 41 70 Short-term portion of long-term financings 794,992 773,326 1,090,718 1,614,628 ------------- ------------- -------------- -------------- 1,589,460 1,353,806 3,217,383 4,561,931 LONG TERM Working capital financing (R$) 11.78 to 15.63% - - 43,597 44,821 Fixed assets financing and other (R$) 3.50% to 17.17% 387,097 405,180 605,854 637,217 Investments financing (R$) IGPM +8.5% 39,194 40,573 39,194 40,573 Fixed assets financing and other 3.25% to 9.97% 359,466 402,011 731,134 573,779 (US$) Working capital financing (US$) 2.00% to 10.75% 715,995 903,585 2,437,953 1,943,944 Working capital financing (Cdn$) 2.75% to 4.50% - - - 194,525 Working capital financing (Clp$) 1.25% to 5.85% - - 26,714 29,806 Fixed assets financing (Clp$) 5.80% - - 68,671 87,112 Working capital financing (Ar$) 10.80% - - - - Fixed assets financing and other 5.00% - - 29 30 (Eur$) (-) Short-term portion (794,992) (773,326) (1,090,718) (1,614,628) ------------- -------------- ------------ -------------- 706,760 978,023 2,862,428 1,937,179 ------------- ------------- -------------- -------------- Total financings 2,296,220 2,331,829 6,079,811 6,499,110 ============= ============= ============== ==============
16 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01.01 - IDENTIFICATION - -------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - (CNPJ) 00398-0 Gerdau S.A. 33.611.500/0001-19 - --------------------------------------------------------------------------------
04.01 - NOTES TO THE QUARTERLY INFORMATION Summary by currency: COMPANY CONSOLIDATED ------------------------ ------------------------- 6/30/2003 3/31/2003 6/30/2003 3/31/2003 ----------- ----------- ------------ ------------ Real (R$) 664,332 681,771 929,479 962,463 U.S. dollar (US$) 1,631,888 1,650,058 5,015,404 5,105,246 Canadian dollar (Cdn$) - - - 260,893 Chilean peso (Clp$) - - 134,624 169,832 Argentine peso (Ar$) - - 275 646 Euro (Eur$) - - 29 30 ----------- ----------- ------------ ------------ 2,296,220 2,331,829 6,079,811 6,499,110 =========== =========== ============ ============
The Government Agency for Machinery and Equipment Financing (FINAME) financings are guaranteed by lien on the assets financed. Other financings are guaranteed by collateral signatures of controlling companies on which the company pays a remuneration of 1% p.a., calculated on the guaranteed amount. Eurobonds contracts include covenants limiting financing to four times the cash generation capacity (EBITDA - Earnings before Interest, Taxes, Depreciation, and Amortization). Under the agreement with the National Bank for Economic and Social Development (BNDES), to finance the increase in the holding in Acominas, financing is limited to five times EBITDA. Prepayment transactions include covenants limiting financing to four times EBITDA. For all covenants described above, the penalty for the non-compliance is the accelerated maturity of the contract. Consolidated EBITDA is used for measuring purposes. The subsidiaries in North America have access to revolving credit facilities in the amount of US$ 350,000, equivalent to R$ 1,005,200 at the balance sheet date, with Libor rate plus interest between 2.00% and 3.25% p.a. The distribution of the mentioned credit line for the companies is limited to the working capital of each subsidiary in North America. The subsidiary Gerdau Aza S.A. has access to revolving credit facilities of CLP$ 58,516,344, equivalent to R$ 240,912 at the balance sheet date with interest rate of 3.75% p.a. 17 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 schedule for payment of the long-term portion of financings is as follows: COMPANY CONSOLIDATED ------------- ------------- 2004 72,043 198,914 2005 272,355 487,265 2006 256,059 334,493 2007 29,008 100,356 2008 17,315 51,280 After 2008 59,980 1,690,120 ------------- ------------- 706,760 2,862,428 ============= ============= NOTE 8- DEBENTURES NUMBER ----------------------- ISSUE GENERAL HELD AT MEETING ISSUED TREASURY MATURITY ANNUAL RATE 6/30/2003 3/31/2003 ------------ ---------- ----------- ----------- ------------ ----------- ------------ 3rd - A and B 5.27.1982 48,000 27,820 6.1.2011 CDI 73,880 61.672 4th 6.10.1983 42,000 42,000 2.28.2012 CDI - - 7th 7.14.1982 22,800 14,958 7.1.2012 CDI 35,914 36.292 8th 11.11.1982 59,988 29,533 5.2.2013 CDI 91,127 72.902 9th 6.10.1983 41,880 30,067 9.1.2014 CDI 54,100 51.482 10th 2.27.1981 6,450 6,450 11.30.2015 CDI - - 11th - A and B 6.29.1990 50,000 45,527 6.1.2020 CDI 19,419 17.754 13th 11.23.2001 30,000 - 11.1.2008 CDI + 1% 311,748 328.457 ----------- ------------ Company 586,188 568.559 =========== ============ Short-term portion 11,794 - Long-term portion 574,394 568.559 Seiva S.A. - Florestas e Industrias 11.11.1981 12,000 12,000 11.1.2015 Undetermined - - Gerdau Ameristeel Corporation 4.23.1997 125,000 - 4.30.2007 6.50% 205,302 216.960 Debentures with consolidated subsidiaries (28,481) (25.222) ----------- ------------ Consolidated 763,009 760.297 =========== ============ Short-term portion 11,794 7.726 Long-term portion 751,215 752.571
The debentures of the 13th issue have covenants limiting the consolidated gross debt to 4 times EBITDA, with penalty of accelerated maturity in case of non-compliance. Gerdau Ameristeel Corporation debentures are convertible to common shares of the subsidiary up to the debentures maturity date. Of the outstanding debentures, notes in the amount of R$ 113,637, at June 30, 2003, are directly or indirectly held by controlling shareholders. 18 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 9 - 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 position strategies and exposure limit controls. Operations with financial instruments are as follows: - - Financial investments - are recognized at their redemption value as of the balance sheet date; - - Investments and loans between subsidiary, associated and related companies - are commented on and presented in Note 5. - - Financings - are commented on and presented in Note 7. - - Debentures - are commented on and presented in Note 8. - - Share option clause - presented in Note 15. - - Financial derivatives - in order to minimize the effects of fluctuations in foreign exchange rates on its liabilities, Gerdau S.A., entered into swap transactions that were converted into Brazilian Reais on the contract date and linked to changes in the interbank deposit rate (CDI). The subsidiary Acominas has also entered into swap transactions, linked to CDI variations. Swap contracts by type are listed below: COMPANY - --------------------------------------------------------------------------------------------------- AMOUNT (US$ CDI CONTRACT DATE TYPE THOUSAND PROPORTION MATURITY - --------------------- -------------------------------- ------------------- --------------------- 2.12 to Eurobonds 130,000 84.5% to 103.70% 5.20.2004 7.18.2001 3.30.2001 to Import 38,672 36.00% to 100.00% 8.25.2003 to 6.30.2003 10.4.2004 7.16 to Prepayment 36,769 85.44% to 92.80% 7.14.2003 to 7.18.2001 3.1.2006 2.20 to Resolution 164,000 104.00% to 106.00% 7.28.2003 to 5.28.2003 2770 5.10.2004 9.4.2002 to ACC 80,412 25.00% to 92.87% 7.14.2003 to 4.9.2003 4.2.2004 5 to 2.7.2002 Investments 216,000 67.50% to 70.65% 10.29.2004 CONSOLIDATED - --------------------------------------------------------------------------------------------------- AMOUNT (US$ CDI CONTRACT DATE TYPE THOUSAND PROPORTION MATURITY - --------------------- -------------------------------- ------------------- --------------------- 2.12 to Eurobonds 130,000 84.5% to 103.70% 5.20.2004 7.18.2001 5.6 to 5.8.2002 Suppliers 85,000 97.00% to 100.00% 4.1. to 7.1.2004 3.30.2001 to Import 38,672 36.00% to 100.00% 8.25.2003 to 6.30.2003 10.4.2004 7.16.2001 to Prepayment 76,769 48.00% to 100.00% 7.14.2003 to 8.27.2002 3.1.2006 2.20 to Resolution 164,000 104.00% to 106.00% 7.28.2003 to 5.28.2003 2770 5.10.2004 9.4.2002 to ACC 170,562 10.42% to 92.87% 7.7.2003 to 4.9.2003 4.2.2004 5 to 7.2.2002 Investments 216,000 67.50% to 70.65% 10.29.2004
19 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 value of financial instruments is as follows: COMPANY ------------------------------------------------------- 6/30/2003 3/31/2003 --------------------------- --------------------------- BOOK VALUE MARKET VALUE BOOK VALUE MARKET VALUE ------------- ------------- ------------- ------------ Financial investments 39,427 39,427 75,292 75,292 Swap transactions (assets) - - 45,965 45,965 Swap transactions (liabilities) 4,771 4,771 - - Eurobonds 344,313 322,804 334,361 297,924 Import financings 337,160 340,769 381,441 389,010 Prepayment financing 184,810 194,686 120,544 138,398 Resolution 2770 financing 531,185 550,279 448,678 498,422 ACC financing 212,114 225,347 344,462 368,771 Other financing 686,638 686,638 702,343 702,343 Debentures 586,188 586,188 568,559 568,559 Investments 3,742,145 3,742,145 4,470,512 4,470,512 Related companies (assets) 11,970 11,970 7,742 7,742 Related companies (liabilities) 169,367 169,367 1,006,522 1,006,522 Share option clause (liabilities) - 6,196 - - CONSOLIDATED ------------------------------------------------------- 6/30/2003 3/31/2003 --------------------------- --------------------------- BOOK VALUE MARKET VALUE BOOK VALUE MARKET VALUE ------------- ------------- ------------- ------------ Financial investments 939,868 939,868 1,202,161 1,202,161 Swap transactions (assets) - - 45,965 45,965 Swap transactions (liabilities) 4,771 4,771 - - Eurobonds 58,303 42,515 4,705 4,192 Import financing 337,160 340,769 381,441 389,010 Prepayment financing 394,677 412,889 244,876 278,247 Resolution 2770 financing 531,185 550,279 448,678 498,422 ACC financing 669,080 688,020 936,961 972,964 Other financing 4,089,406 4,098,760 4,482,449 4,452,206 Debentures 763,009 763,009 760,297 760,297 Investments 443,340 443,340 513,077 513,077 Related companies (assets) 14,400 14,400 9,825 9,825 Share option clause (liabilities) - 6,196 - -
The market value of Eurobonds was obtained using the quotation of the securities in the secondary market. The market value of swap transactions was obtained based on projections of future results for each contract, which were calculated based on the present value of forward US dollar + coupon (assets) and forward CDI (liabilities) and discounted to present value using the projected future CDI rate for each maturity. Swap transactions related to financing contracts are classified together with the transactions which originated them. Contracts not linked to such financing have been recorded at their market value under the heading Swap transactions, in long-term receivables, with a contra-entry to financial income. The shares granted at the Extraordinary General Meeting at April 30, 2003 for the "Long-term Incentive Program" were valued by the difference between the market value of the share and the value agreed at the mentioned meeting. 20 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 Company believes that the value of other financial instruments which are recognized in the books at net contracted value 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 it was decided to settle in advance. C) RISK FACTORS THAT COULD AFFECT THE COMPANY'S BUSINESS Price risk of goods: this risk is related to the possibility of fluctuations in the prices of products sold or in the prices of raw materials and other supply materials used in the production process. Because the Company operates in the commodities market, sales and cost of goods sold could be affected by changes in international prices. To minimize this risk, price fluctuations are permanently monitored in the domestic 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 applied to company assets (invested) and liabilities assumed in the market. To minimize possible impacts resulting from interest rate fluctuations, the policy is to use variable rates (such as LIBOR and CDI), and periodically renegotiate contracts to adjust them to the market. It is not the company policy to contract hedges in order to protect against interest rate fluctuations. 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 foreign currency. In order to hedge these fluctuations, a policy of contracting swap operations, as stated in item "a" above is adopted. Credit risk: this arises from the possibility that the Company might not receive amounts from sales transactions or credits with financial institutions involving financial investment transactions. In order to mitigate this risk detailed analyses of the financial situation of customers are made, credit limits established, and balances permanently monitored. With regard to financial investments, they are made only in institutions that have been assigned a low credit risk by rating agencies. Furthermore, each institution has a maximum limit for investment determined by the credit committee. NOTE 10 - TAX RECOVERY PROGRAM (REFIS) On December 6, 2000, the Company enrolled in the Tax Recovery Program (REFIS) to pay overdue balances of PIS and COFINS 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, the payment of which has been divided into 60 installments, of which 23 will still fall due, and are restated by TJLP variation, at June 30, 2003 are as follows: 21 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 ------------------------------------------------------------ 6/30/2003 3/31/2003 ----------------------------- ----------------------------- PRINCIPAL INTEREST TOTAL PRINCIPAL INTEREST TOTAL ---------- -------- -------- --------- -------- --------- PIS 7,226 14,034 21,260 10,704 12,791 23,495 COFINS 1,715 3,332 5,047 2,541 3,037 5,578 ---------- -------- -------- --------- -------- --------- Total 8,941 17,366 26,307 13,245 15,828 29,073 ========== ======== ======== ========= ======== ========= Short-term 4,665 9,061 13,726 6,113 7,306 13,419 Long-term 4,276 8,305 12,581 7,132 8,522 15,654 ---------- -------- -------- --------- -------- --------- Total 8,941 17,366 26,307 13,245 15,828 29,073 ========== ======== ======== ========= ======== =========
Taxes, contributions and other liabilities are paid on their due dates, which is a basic requirement to remain enrolled in the REFIS program. To guarantee this installment payment program, the land and buildings of the Special Steels Piratini Unit located in the municipality of Charqueadas, State of Rio Grande do Sul, amounting to R$ 78,494 thousand were pledged. Income tax and social contribution tax credits of third parties offset against fines and interest on consolidation of debts in the REFIS program as of December 06, 2000, amounted to R$ 57,040, for which R$ 4,351 was paid for these credits. There was no use of own tax credits. NOTE 11 - PROVISION FOR CONTINGENCIES The Company and its subsidiaries are parties in labor, civil and tax processes. These latter relate to certain taxes and contributions. Based on the opinion of the legal advisors, management believes that the provision is sufficient to cover probable and reasonably estimable losses on unfavorable court decisions and that final decision would not have significant effects on the financial position of the Company as of June 30, 2003.
COMPANY CONSOLIDATED ------------------------------- ------------------------ 6/30/2003 3/31/2003 6/30/2003 3/31/2003 ------------- ---------------- ------------ ----------- Tax contingencies 86,564 84,557 169,033 116,801 Labor contingencies 14,203 14,203 26,204 25,568 Civil contingencies - - 45,157 46,137 ------------- --------------- ------------ ----------- Total 100,767 98,760 240,394 188,506 ============= =============== ============ ===========
There is also an antitrust process involving Gerdau S.A., relating to the representation of two civil construction unions of Sao Paulo claiming that Gerdau S.A. and other long steel producers in Brazil share customers among themselves thus violating the antitrust legislation. After investigations carried out by the National Economy Defense Department (SDE) and based on public hearing the Secretariat opinion is that there is a cartel. This conclusion was also supported by an opinion of The Secretariat for Economic Monitoring (SEAE) which was presented later. The process will follow its final stage to the Administrative Council for Economic Defense (CADE) that will decide the case. 22 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 Gerdau denies being involved in any type of anti-competitive behavior and understands, based on available information, including its legal advisors' opinion, that, so far, the administrative process is full of irregularities, some of which are impossible to be resolved. As example: the investigations carried out by SDE did not follow the due legal process and representatives of this secretariat guided some of the witnesses who testified in the process. Moreover, the SDE opinion was issued before Gerdau could answer to the closing arguments which indicates a bias in the judgement of SDE. The same is applicable to the SEAE opinion, which analyzes economic matters and is based exclusively on the witnesses testimonies. The mentioned irregularities which characterize disrespect of related constitutional provisions, will deeply affect a decision in the administrative sphere based on the conclusions so far presented by antitrust authorities. Gerdau has been showing and attempting to fight all these irregularities and, accordingly, will continue proceeding both on the allegation that are being made and on the irregular attitudes practiced in the administrative process believing that it will be successful, if not in the administrative sphere, certainly in the legal sphere. Due to the above reasons, no provision was set up for this case. According to Brazilian legislation applicable, the Company can be assessed with fines of up to 30% of gross revenue of prior fiscal years and, if it is proven that there is a personal responsibility of an executive, this one can be fined in 10% to 50% of the fine applied to the Company. There is no precedent of fines higher than 4% in the country; in a similar case involving flat steel companies, the fine was 1%. NOTE 12 - POST-EMPLOYMENT BENEFITS a) PENSION PLAN - DEFINED BENEFIT The Company and its subsidiaries in Brazil, are the co-sponsors of defined benefit pension plans that cover almost all employees in Brazil (Gerdau Plan and Acominas Plan). Also, the Canadian and the American subsidiaries sponsor defined benefit plans (Canadian Plan and American Plan) that cover almost all their employees. The contributions to the Brazilian and American Plans are based on amounts determined on the actuarial basis. The Gerdau Plan is managed by Gerdau - Sociedade de Previdencia Privada, an entity created by the Gerdau Group for this purpose. Acominas Plan is administered by Fundacao Acominas de Seguridade Social (Acos), a private pension fund created for this specific purpose by Acominas. The Canadian and American plans are managed by Royal Trust/Great West Life and Wells Fargo, respectively. b) PENSION PLAN - DEFINED CONTRIBUTION The Company is also co-sponsor of a pension plan with defined contributions, administered by Gerdau - Sociedade de Previdencia Privada. Contributions are based on a percentage of employees compensation. The foreign subsidiary Gerdau Ameristeel US Inc. has a defined contribution plan, the contributions of which correspond to 50% of the amount paid by employees, limited to 4% of the salary. The other companies do not have this type of pension plan. 23 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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) OTHER POST-EMPLOYMENT BENEFITS The American subsidiaries offer specific health benefits for retired employees, so long as they retire after a certain age and after completing a specific number of years of service. The American subsidiary has the right to modify or eliminate these benefits. Contributions are based on amounts determined on an actuarial basis. The Company estimates that the balance payable, on account of indemnities for the executives at their retirement or separation is of R$ 7,794 (company and consolidated) at June 30, 2003. Considering all types of benefits granted by the Company, the position of assets and liabilities are as follows at June 30, 2003:
COMPANY CONSOLIDATED ----------------------- ----------------------- 6/30/2003 3/31/2003 6/30/2003 3/31/2003 ----------- ---------- ----------- ---------- Actuarial liability with pension plan - defined - - 191,461 240,392 benefit Actuarial liability with health plan - - 89,862 104,915 Liability with retirement benefit and 7,794 7,794 7,794 7,794 separation benefit ----------- ---------- ----------- ---------- Total liabilities 7,794 7,794 289,117 353,101
NOTE 13 - SHAREHOLDERS' EQUITY a) Capital - On April 30, 2003, a capital increase in the amount of R$ 400,536 was approved at an Extraordinary General Meeting through the capitalization of the reserve for investments and working capital, with 30% stock dividend on the position at that date, representing 34,235,541,169 new shares (11,877,282,535 common and 22,358,258,634 preferred shares). At the same meeting the reverse split was approved attributing one new share for each group of thousand shares existing after the stock dividend, observed the type of shares at the Meeting date. Accordingly, each American Depositary Receipt (ADR), represents only one share. At June 30, 2003, subscribed and paid-up capital comprises 51,468,224 common shares and 96,885,787 preferred shares, totaling R$ 1,735,656. Preferred shares have no voting right and cannot be redeemed, but participate in equal conditions with common shares, in profit sharing. Authorized capital comprises 240,000,000,000 common shares and 480,000,000,000 preferred shares with no nominal value. b) Interest on own capital - At June 30, 2003, according to the Board of Directors proposal, interest on capital of R$ 50,440 (R$ 0.34 per share) was credited to shareholders as an anticipation of the statutory minimum dividend for the current year. The Company calculated interest on own capital within the limits established by Law 9249/95. The related amount was recorded as financial expenses for tax purposes. For effects of presentation this amount was stated as dividends, not affecting the results. In the 1st half of 2003, interest on own capital credited as anticipation of the statutory minimum dividend amounted to R$ 124,617. 24 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 14 - SURETIES GRANTED The Company is guarantor of the jointly-owned subsidiary Dona Francisca Energetica S.A., for financing contracts, in the total amount of R$ 102,720, for the part corresponding to 51.82% of the joint guarantee. The Company is also guarantor of vendor operations of the associated company Banco Gerdau S.A., in the total amount of R$ 44,220, at June 30, 2003, and of Credit Agreement operations of the subsidiary GTL Trade Finance Inc., in the amount of US$ 58,000, equivalent to R$ 166,576 at the balance sheet date. NOTE 15 - LONG-TERM INCENTIVE PLAN The Extraordinary General Meeting of April 30, 2003 decided, based on a plan approved by the Meeting and within the limit of the authorized capital, to grant stock options of preferred shares to managers, employees or persons rendering services to the Company or to companies under its control, approving the creation of the mentioned plan which consubstantiates a new manner of compensation of strategic executives of the Company, instituting the Long-term Incentive Plan. The Extraordinary General Meeting also authorized the granting proposed by the Company Management of 683,936 options, at the price of R$ 23.88 per share, of which 280,785 within the regular program, with a grace period of five years and, exceptionally in this first year, 403,151 additional options with a three-year grace period. 25 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 16 - SUPPLEMENTARY INFORMATION - CASH FLOW To permit additional analysis the cash flow prepared under the indirect method is being presented as supplementary information.
Company Consolidated 6/30/2003 6/30/2002 6/30/2003 6/30/2002 ----------- ----------- ----------- ------------ Net income for the year 444,775 298,470 549,301 295,449 Equity in results (104,592) (80,566) 311,309 (96,024) Provision for credit risks 6,039 - 9,417 1,423 Gain and/or loss on sale of fixed assets 5,233 4,306 7,087 3,123 Gain and/or loss on sale of investments 35 4,177 1,644 4,178 Monetary and exchange variations (12,908) 108,151 (12,007) 197,299 Depreciation and amortization 97,737 90,849 292,115 222,689 Income tax and social contribution 16,732 4,698 (233,895) (3,039) Interest on debt 158,361 88,010 296,201 198,092 Contingencies/ judicial deposits 3,744 (6,580) 16,049 (5,245) Changes in trade accounts receivable (142,334) (59,014) (277,324) (190,896) Changes in inventory (222,097) (44,835) (231,320) (41,499) Changes in suppliers (16,488) 13,074 114,844 136,953 Other operating activity accounts 87,567 40,848 (50,030) (116,360) ----------- ----------- ----------- ------------ Net cash from operating activity 321,804 461,588 793,391 606,143 Purchase/sale of fixed assets (141,790) (110,007) (426,026) (284,778) Increase in deferred charges (1,018) (885) (3,048) (5,370) Purchase/sale of investments (59,201) (492,855) 2,952 (104,231) Dividends received 26,740 10,571 - - ----------- ----------- ----------- ------------ Cash used in investment activities (175,269) (593,176) (426,122) (394,379) Suppliers- fixed assets 2,318 (10,228) (2,007) (19,265) Working capital financing 54,084 62,502 171,983 158,216 Debentures (18,075) (19,734) (14,718) (24,507) Increase in financing of permanent assets 60,394 493,424 224,864 533,196 Amortization of financing of permanent assets (143,919) (359,437) (277,417) (889,588) Payment of interest on financing (94,746) (65,031) (227,130) (152,371) Loans with related companies (6,298) 62,961 (15,741) 6,425 Payment of dividends/interest and profit (274,014) (119,982) (278,607) (130,183) sharing ----------- ----------- ----------- ------------ Net cash used in/from financing activities (420,256) 44,475 (418,773) (518,077) Change in cash balance (273,721) (87,113) (51,504) (306,313) Cash and cash equivalents At the beginning of the period 365,680 177,400 1,430,656 1,012,822 Cash adjustment at the beginning of - - (193,462) 134,340 the period Initial balance of consolidated - - 12,789 - companies in the period At the end of the period 91,959 90,287 1,198,479 840,849
26 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 PRODUCTION AND SALES o Gerdau S.A. produced 963.1 thousand tons of crude steel in the second quarter of the year, increasing 2.3% in relation to the first quarter. In the first six months of 2003 the volume produced reached 1.9 million tons, 12.8% higher than the same 2002 period. o In the rolled steel line the volume produced in the quarter reached 855.0 thousand tons, 3.0% higher than the first quarter production. In the first six-month period of this year 1.7 million tons were produced, 8.9% higher than the same 2002 period.
---------------------------------------------------------------------------------------- PRODUCTION 2ND 1ST VARIATION 1ST HALF 1ST HALF VARIATION 1ST (1,000 t) QUARTER QUARTER 2NDQ 03/1ST 2003 2002 H 03/1ST H02 2003 2003 Q 03 ---------------------------------------------------------------------------------------- Crude steel 963.1 941.1 2.3% 1,904.3 1,688.0 12.8% Rolled steel 855.0 830.2 3.0% 1,685.2 1,546.8 8.9% ----------------------------------------------------------------------------------------
o In the second quarter of this year total sales amounted to 1.0 million tons, an increase of 6.9% in relation to the first quarter. Exports, as had already occurred in the first quarter of the year, were responsible for this increase. Shipments amounted to 330.9 thousand tons (US$ 81.8 million) from April to June, 45.2% more than in the prior quarter, more than offsetting the decrease of 5.3% in the domestic market. o In the first six-month period, the increase of 5.4% in consolidated sales is also due to the increase of 113.6% in exports. In the period, 2.0 million tons were sold, of which 28.6% were for foreign customers and the other 71.4% were sold in the domestic market. RESULTS o In the second quarter of 2003, Gerdau S.A. sales reached R$ 1.6 billion, that is, 3.5% more than in the first quarter. Net revenues were R$ 1.3 billion, 4.1% more than in the first quarter of the year. From January to June, sales were R$ 3.1 billion and net revenue R$ 2.5 billion, an increase of 40.2% and 42.3%, respectively. o In the second quarter, gross margin was 35.75% against 41.12% in the first quarter. The higher participation of costs of sales to net revenues was the reason that influenced this margin decrease. Gross profit reached R$ 451.5 million in the quarter and R$ 950.4 million in the accumulated up to June of this year. o With the decrease in gross profit and the increase in selling expenses above the revenue increase, EBITDA in the quarter was R$ 332.4 million against R$ 391.9 million in the first quarter of the year, also influencing the lower EBITDA margin in the period, which was 26.32% against 32.31% in the first quarter. In the six-month period, EBITDA reached R$ 724.4 million, 33.2% higher than the same 2002 period. 27 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 o Net financial expenses totaled R$ 118.4 million in the second quarter. This amount includes negative monetary variations of R$ 2.0 million and negative exchange variation of R$ 8.5 million. o Investments in subsidiary and associated companies resulted in an equity in their results of R$ 75.8 million in the second quarter of this year, 162.6% higher than in the first quarter. o Net income reached R$ 198.9 million in the second quarter, 19.1% lower than the first quarter. In the first six- month period of the year, net income was R$ 444.8 million, 49.0% higher than the same 2002 period. This profit represents R$ 1.34 per share in the quarter and R$ 3.00 per share in the six-month period. o On June 30, the Company net equity was R$ 3.6 billion, equivalent to R$ 24.58 per share. INVESTMENTS o In the first six-month period, investments in fixed assets totaled US$ 48.5 million, for the maintenance and upgrade of technology in the plants. Of this amount, US$ 16.8 million refer to the first quarter and US$ 21.7 million to the second. FINANCIAL DEBT o At the end of June, net debt was R$ 3.0 billion, 21.3% lower than at March 31, when it was R$ 3.8 billion, mainly due to the partial cancellation of loan operations with foreign subsidiaries. 28 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 ------------------------------------------------------------------------ INDEBTEDNESS 6.30.2003 3.31.2003 (R$ million) ------------------------------------------------------------------------ SHORT TERM Local currency 360.6 351.8 Foreign currency1 1,240.6 1,002.1 TOTAL 1,601.2 1,353.9 LONG TERM Local currency 889.9 898.6 Foreign currency1 560.6 1,654.5 TOTAL 1,450.5 2,553.1 GROSS DEBT 3,051.7 3,907.0 Available funds and investments 92.0 147.0 NET DEBT 2,959.7 3,760.0 ------------------------------------------------------------------------ 1 - 69% of foreign currency debt was hedged. o The schedule for payment of long-term debt at June 30 was as follows: ----------------------------------------------------------------------------- YEAR R$ MILLION ----------------------------------------------------------------------------- 2004 72.0 2005 272.4 2006 256.1 2007 29.0 2008 onwards 821.0 TOTAL 1,450.5 ----------------------------------------------------------------------------- CAPITAL MARKET o On August 14, Gerdau S.A. shareholders will receive R$ 50.4 million in interest on own capital related to the second quarter of 2003, equivalent to R$ 0.34 per share. In the six-month period, this amount reaches R$ 124.6 million, that is, R$ 0.84 per share presently issued. On an annualized basis this amount represents a yield of 4.9% on the quotation of R$ 34.44 per share, recorded on July 25, 2003. o On April 30, a stock dividend of 30% and also the reverse split of each thousand shares into a new share were approved. As a consequence, shares will be traded on the stock exchanges by unit and no longer by thousand shares. 29 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 o In the first six-month period of 2003, Gerdau S.A. (GGBR) share activity totaled R$ 912.2 million in Bovespa. This volume represents an increase of 50.0% in relation to the same 2002 period. 43,334 transactions, which exceeded by 85.2% the number in the first six-month period of the prior year, were carried out. In the period, preferred shares increased in value by 33.0% and the daily transaction average was R$ 7.2 million. o In the New York Stock Exchange 8.9 million of Gerdau S.A. (GGB) ADRs were traded in the 1st six-month period of the year, moving US$ 90.5 million, equivalent to a daily average of US$ 726.3 thousand. o In Latibex (Madrid Stock Exchange), Gerdau S.A. (XGGB) preferred shares have been traded daily. 132.0 thousand shares were negotiated in the first six-month period of 2003, moving resources of about 1.1 million euros. RELATIONSHIP WITH INDEPENDENT AUDITORS o To comply with CVM Instruction 381/2003, Gerdau S.A. informs that PricewaterhouseCoopers Auditores Independentes, provider of external audit services for the Company, has not rendered services unrelated to the external auditing during the first six-month period of 2003. 30 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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$ THOUSAND)
1 - CODE 2 - DESCRIPTION 3 - 6/30/2003 4 - 3/31/2003 1 Total assets 14,240,100 14,891,878 1.01 Current assets 5,481,339 5,822,891 1.01.01 Available funds 258,611 142,164 1.01.02 Credits 2,580,017 3,009,123 1.01.02.01 Trade accounts receivable 1,557,333 1,735,708 1.01.02.02 Tax credits 82,816 71,254 1.01.02.03 Marketable securities 939,868 1,202,161 1.01.03 Inventories 2,322,606 2,390,961 1.01.03.01 Finished products 1,184,005 1,201,039 1.01.03.02 Work in process 355,719 341,520 1.01.03.03 Raw materials 338,454 361,390 1.01.03.04 Warehouse materials 404,602 441,972 1.01.03.05 Advances to suppliers 39,826 45,040 1.01.04 Other 320,105 280,643 1.01.04.01 Other receivables 195,223 165,249 1.01.04.02 Deferred income tax and social 124,822 115,394 contribution 1.02 Long-term receivables 759,772 586,642 1.02.01 Sundry credits 10,938 10,938 1.02.01.01 Eletrobras loans 10,938 10,938 1.02.02 Receivables from related companies 14,400 9,825 1.02.02.01 Associated companies 0 0 1.02.02.02 Subsidiary companies 14,400 9,825 1.02.02.03 Other 0 0 1.02.03 Other 734,434 565,879 1.02.03.01 Judicial deposits and other 247,856 270,018 1.02.03.02 Deferred income tax and social 486,578 295,861 contribution 1.03 Permanent assets 7,998,989 8,482,345 1.03.01 Investments 443,340 513,077 1.03.01.01 In associated companies 0 0 1.03.01.02 In subsidiary companies 0 0 1.03.01.03 Other 0 0 1.03.02 Fixed assets 7,530,244 7,946,577 1.03.02.01 Land, buildings and constructions 4,564,252 4,670,389 1.03.02.02 Machinery, equipment and installations 6,404,529 6,685,745 1.03.02.03 Furniture and fixtures 106,703 113,794 1.03.02.04 Vehicles 36,466 37,890 1.03.02.05 Electronic data equipment 182,872 183,411 1.03.02.06 Construction in progress 547,445 477,595 1.03.02.07 Forestation/reforestation 162,996 154,801 1.03.02.08 Accumulated depreciation (4,475,019) (4,377,048) 1.03.03 Deferred charges 25,405 22,691
31 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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$ THOUSAND)
1 - CODE 2 - DESCRIPTION 3 - 6/30/2003 4 - 3/31/2003 2 Total liabilities and shareholders' 14,240,100 14,891,878 equity 2.01 Current liabilities 4,779,361 6,406,050 2.01.01 Financings 3,217,383 4,561,931 2.01.02 Debentures 11,794 7,726 2.01.03 Suppliers 986,409 1,177,648 2.01.04 Taxes, charges and contributions 171,649 239,293 2.01.05 Dividends payable 44,415 65,059 2.01.06 Provisions 0 0 2.01.07 Payables to related companies 0 0 2.01.08 Other 347,711 354,393 2.01.08.01 Salaries payable 138,833 130,175 2.01.08.02 Deferred income tax and social 32,700 36,933 contribution 2.01.08.03 Other payables 176,178 187,285 2.02 Long-term liabilities 4,688,699 3,863,557 2.02.01 Financings 2,862,428 1,937,179 2.02.02 Debentures 751,215 752,571 2.02.03 Provisions 0 0 2.02.04 Payables to related companies 0 0 2.02.05 Other 1,075,056 1,173,807 2.02.05.01 Provision for contingencies 240,394 188,506 2.02.05.02 Deferred income tax and social 404,246 470,964 contribution 2.02.05.03 Other payables 141,299 161,236 2.02.05.04 Benefits to employees 289,117 353,101 2.03 Deferred income 0 0 2.04 Minority interest 1,126,211 1,140,954 2.05 Shareholders' equity 3,645,829 3,481,317 2.05.01 Paid-up capital 1,735,656 1,335,120 2.05.02 Capital reserves 342,813 326,734 2.05.02.01 Investment subsides 309,051 292,972 2.05.02.02 Special reserve - 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 1,247,202 1,647,738 2.05.04.01 Legal 127,569 127,569 2.05.04.02 Statutory 1,119,633 1,520,169 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 320,158 171,725
32 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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$ THOUSAND)
CODE DESCRIPTION 3 - 4 - 5 - 6 - 4/1/2003 1/1/2003 4/1/2002 TO 1/1/2002 TO TO TO 6/30/2002 6/30/2002 6/30/2003 6/30/2003 3.01 Gross sales and/or services 3,557,706 7,482,221 2,418,297 4,471,607 3.02 Deductions (527,417) (1,125,093) (440,293) (834,710) 3.02.01 Taxes on sales (339,765) (679,506) (253,904) (492,784) 3.02.02 Freights and discounts (187,652) (445,587) (186,389) (341,926) 3.03 Net sales and/or services 3,030,289 6,357,128 1,978,004 3,636,897 3.04 Cost of sales and/or services rendered (2,245,993) (4,741,264) (1,419,352) (2,580,729) 3.05 Gross profit 784,296 1,615,864 558,652 1,056,168 3.06 Operating expenses/income (642,838) (1,121,642) (359,577) (693,697) 3.06.01 Selling (115,610) (207,607) (74,315) (145,646) 3.06.02 General and administrative (160,422) (348,853) (158,330) (281,712) 3.06.03 Financial, net (140,693) (250,173) (285,969) (411,105) 3.06.03.01 Financial income 3,535 11,423 54,070 77,872 3.06.03.02 Financial expenses (144,228) (261,596) (340,039) (488,977) 3.06.04 Other operating income 0 0 50,080 48,742 3.06.05 Other operating expenses (3,738) (3,700) 0 0 3.06.06 Equity in the results of associated companies (222,375) (311,309) 108,957 96,024 3.07 Operating profit 141,458 494,222 199,075 362,471 3.08 Non-operating results (8,627) (9,624) 2,546 (9,866) 3.08.01 Income 0 0 2,546 0 3.08.02 Expenses (8,627) (9,624) 0 (9,866) 3.09 Net income before taxation and participations 132,831 484,598 201,621 352,605 3.10 Provision for income tax and social (61,382) (134,283) (18,884) (53,686) contribution 3.11 Deferred income tax 195,073 208,012 (7,448) 1,718 3.12 Statutory participations and contributions (4,488) (9,026) (5,188) (5,188) 3.12.01 Participations (4,488) (9,026) (5,188) (5,188) 3.12.02 Contributions 0 0 0 0 3.13 Reversal of interest on capital 0 0 0 0 3.14 Minority interest (63,160) (104,526) 16,842 3,021 3.15 Net income/loss for the period 198,874 444,775 186,943 298,470 Number of shares (thousand), excluding 148,354 148,354 114,118,471 114,118,471 treasury stock Net income per share 1.34054 2.99807 0.00164 0.00262 Loss per share
33 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 HIGHLIGHTS o Consolidated net income in the six-month period reached R$ 549.3 million, 85.9% higher than the same 2002 period, when it was R$ 295.4 million. Net margin was 8.64% against 8.12% in the prior year. o In the first six months of 2003, consolidated sales reached R$ 7.5 billion, 67.3% more than the first six-month period of 2002. Of this amount, 57.4% relates to operations in Brazil, 38.8% to North America units and 3.8% to the companies of Chile, Uruguay and Argentina. o EBITDA generated up to June of this year was R$ 1.4 billion against R$ 851.5 million in the same 2002 period, an increase of 58.7%. EBITDA margin was 21.26% in 2003 and 23.41% in 2002. o From January to June, crude steel production reached 6.1 million tons, an increase of 44.6% on the same 2002 period. In rolled steel, production reached 4.4 million tons in 2003, an increase of 42.1%.
- ------------------------------------------------------------------------------------------------ MAIN INFORMATION 2ND 2ND VARIATION 1ST HALF 1ST HALF VARIATION QUARTER QUARTER 2003 2002 2003 2002 - ------------------------------------------------------------------------------------------------ Production (1,000 t) Crude steel 3,085 1,958 57.6% 6,054 4,185 44.6% Rolled steel 2,239 1,599 40.1% 4,374 3,079 42.1% Sales (1,000 t) 2,977 1,983 50.1% 5,866 4,104 42.9% Net revenue (R$ million) 3,030 1,978 53.2% 6,357 3,637 74.8% EBITDA (R$ million) 646 439 47.0% 1,352 852 58.7% Net profit (R$ million) 262 170 54.0% 549 295 85.9% Shareholders' equity (R$ 4,772 4,132 15.5% 4,772 4,132 15.5% million) Total assets (R$ million) 14,240 10,620 34.1% 14,240 10,620 34.1% Gross margin 25.9% 28.2% 25.4% 29.0% EBITDA margin 21.3% 22.2% 21.3% 23.4% Net margin 8.7% 8.6% 8.6% 8.1% Net profit / Shareholders' 22.5% 15.0% 22.5% 15.0% equity (ROE)1 Net debt / total net 54.2% 47.8% 54.2% 47.8% capitalization Net debt / EBITDA2 2.1x 2.4x 2.1x 2.4x - -------------------------------------------------------------------------------------------
(1) Net income for the last 12 months on net equity at the end of the period. (2) EBITDA for the last 12 months. o On August 14, Gerdau S.A. shareholders will receive R$ 50.4 million of interest on own capital related to the second quarter of 2003, equivalent to R$ 0.34 per share. 34 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 o The shareholders' meeting held on April 30 approved a stock dividend of 30% in Gerdau S.A. Also, the reverse split of each thousand shares into a new share was approved and, as a consequence, transactions will be carried out by unit and no longer by thousand shares. o Gerdau AmeriSteel Corporation, subsidiary of Gerdau in North America, concluded, on June 27, 2003, the contracting of a Senior Secured Credit Facility (syndicated credit line) in the amount of US$ 350 million for 5 years at the cost of 4.5% per annum, as well as the private placement of Senior Unsecured Notes (bank notes), in the net amount of US$ 389.5 million for 8 years at the cost of 10.375% per annum. The average term of these funds, which total US$ 755 million, is 6.6 years at an average rate of 7.7% per annum. The funds from these operations were used for roll-over of borrowings. PERFORMANCE IN THE QUARTER PRODUCTION AND SALES o Gerdau companies produced 3.1 million tons of crude steel in the second quarter of this year, increasing 3.9% in relation to the first quarter. In the first six months of 2003 the volume produced reached 6.1 million tons, 44.6% higher than the same 2002 period. For the six-month period production, the Brazilian units contributed with 55.6%, the North American with 41.6% and the South American with the other 2.8%.The increase in the six-month period is mainly due to the expansion of the installed capacity, arising from the incorporation of new units in North America in October 2002, and from the recovery of the productive capacity in Acominas. o In the rolled steel line, the volume produced in the quarter reached 2.2 million tons, 4.9% above the first quarter production. In the first six-month period of this year 4.4 million tons were produced, 42.1% more than in the same 2002 period.
- --------------------------------------------------------------------------------------------- PRODUCTION 2ND 1ST VARIATION 2 1ST HALF 1ST HALF VARIATION 1H (1,000 tons) QUARTER QUARTER Q 03/1 Q 03 2003 2002 03/1H 02 2003 2003 - --------------------------------------------------------------------------------------------- CRUDE STEEL Brazil 1,679.2 1,688.1 (0.5%) 3,367.3 2,694.3 25.0% North America 1,321.2 1,195.5 10.5% 2,516.7 1,349.9 86.4% South America 85.1 84.8 0.4% 169.9 141.0 20.5% TOTAL 3,085.5 2,968.4 3.9% 6,053.9 4,185.2 44.6% ROLLED STEEL Brazil 940.5 921.5 2.1% 1,862.0 1,682.5 10.7% North America 1,215.5 1,122.2 8.3% 2,337.7 1,245.3 87.7% South America 83.3 91.5 (8.9%) 174.8 151.7 15.2% TOTAL 2,239.3 2,135.2 4.9% 4,374.5 3,079.5 42.1% - ---------------------------------------------------------------------------------------------
o Total sales in the second quarter of this year amounted to 3.0 million tons, an increase of 3.0% in relation to the first quarter. Exports, as had already occurred in the first quarter of the year, were responsible for this increase. Shipments amounted to 792.9 thousand tons (US$ 204.1 million) from April to June, volume 20.6% higher than the prior period, and which, in turn, more than offset the decrease of 6.5% in the domestic market. 35 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 o In the first six-month period, the increase of 42.9% in consolidated sales is also due to the increase of 77.7% in exports, together with the consolidation of new units in North America and the recovery of production in Acominas. In the period, 5.9 million tons were sold, of which 52.9% by the companies in Brazil, 43.6% by North American units and 3.5% by the companies in Chile, Argentina and Uruguay.
- --------------------------------------------------------------------------------------------- SALES 2ND 1ST VARIATION 2Q 1ST HALF 1ST HALF VARIATION 1H (1,000 tons) QUARTER QUARTER 03/1Q 03 2003 2002 03/1H 02 2003 2003 - --------------------------------------------------------------------------------------------- BRAZIL Domestic market 798.2 853.5 (6.5%) 1,651.7 1,807.5 (8.6%) Exports 792.9 657.2 20.6% 1,450.1 815.9 77.7% TOTAL 1,591.1 1,510.7 5.3% 3,101.8 2,623.4 18.2% FOREIGN North America 1,284.1 1,271.0 1.0% 2,555.1 1,319.8 93.6% South America 101.3 107.4 (5.7%) 208.7 160.4 30.1% TOTAL 1,385.4 1,378.4 0.5% 2,763.8 1,480.2 86.7% TOTAL CONSOLIDATED 2,976.5 2,889.1 3.0% 5,865.6 4,103.6 42.9% - --------------------------------------------------------------------------------------------- RESULTS o In the second quarter of 2003, net sales totaled R$ 3.0 billion, 8.9% lower than the first quarter, which is due to the lower income in reais of operations abroad because of the appreciation of the real in comparison to the U.S. dollar. The same effect occurred in the accumulated for the year; however, the increase in the steel products price in the international market and the increase of physical sales provided an increase in net sales from R$ 3.6 billion, in 2002, to R$ 6.4 billion, in 2003, resulting in an increase of 74.8%. - --------------------------------------------------------------------------------------------- NET INCOME 2ND 1ST VARIATION 1ST HALF 1ST HALF VARIATION (R$ million) QUARTER QUARTER 2Q03/1Q03 2003 2002 1H03/1H02 2003 2003 - --------------------------------------------------------------------------------------------- Brazil 1,769.0 1,717.0 3.0% 3,486.0 2,176.7 60.2% North America 1,165.7 1,490.0 (21.8%) 2,655.7 1,322.1 100.9% South America 95.6 119.8 (20.2%) 215.4 138.1 56.0% TOTAL 3,030.3 3,326.8 (8.9%) 6,357.1 3,636.9 74.8% - --------------------------------------------------------------------------------------------- o In the second quarter, gross margin was 25.88% against 25.00% in the first quarter. The lower participation of cost of sales in net revenue provided this improvement in margin. Gross profit reached R$ 784.3 million in the quarter and R$ 1.6 billion accumulated up to June of this year. o Selling, general and administrative expenses, although reduced by 1.6% in absolute values in the second quarter of this year in relation to the first quarter, represent a slight increase a percentage of net sales. These expenses totaled R$ 276.0 million in the second quarter and represented 9.11% of net revenues. In the first six months of this year, these expenses totaled R$ 556.5 million and represented 8.75% of net revenues for the period against 11.75% in the first half of 2002.
36 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 2ND QUARTER 1ST QUARTER 1ST HALF 2003 1ST HALF 2002 (R$ million) 2003 2003 - ---------------------------------------------------------------------------------------------------- Gross profit 784.3 831.6 1,615.9 1,056.2 Selling expenses (115.6) (92.0) (207.6) (145.6) General and administrative (160.4) (188.4) (348.8) (281.7) Depreciation and amortization 137.6 154.5 292.1 222.7 EBITDA 645.9 705.7 1.351.6 851.6 Net financial expenses (134.7) (118.1) (252.8) (152.1) Foreign exchange and monetary (6.0) 8.6 2.6 (259.0) variations EBTDA 505.2 596.2 1.101.4 440.5 - --------------------------------------------------------------------------------------------- o With less income in reais arising for operations abroad, due to the appreciation of the real in comparison to the U.S. dollar, EBITDA for the quarter was R$ 645.8 million against R$ 705.7 million in the first quarter of this year. However, the margin has been at the same level in these periods, reaching 21.31% in the second quarter. In the six-month period, EBITDA reached R$ 1.4 billion, 58.7% higher than the same 2002 period. - --------------------------------------------------------------------------------------------- EBITDA 2ND 1ST VARIATION 1ST HALF 1ST HALF VARIATION (R$ million) QUARTER QUARTER 2Q03/1Q03 2003 2002 1H03/1H02 2003 2003 - --------------------------------------------------------------------------------------------- Brazil 546.3 620.0 (11.9%) 1,166.3 643.3 81.3% North America 70.1 47.3 48.2% 117.4 165.8 (29.2%) South America 29.4 38.4 (23.4%) 67.8 42.4 59.9% TOTAL 645.8 705.7 (8.5%) 1,351.5 851.5 58.7% - ---------------------------------------------------------------------------------------------
o Net financial expenses amounted to R$ 140.7 million in the second quarter. This amount includes positive monetary variations of R$ 10.1 million and negative exchange variation of R$ 16.2 million. o The exchange effect on investments abroad resulted in a negative equity of R$ 222.4 million in the second quarter of this year, 150.0% higher than the first quarter. o The provision for Income Tax and Social contribution, in the second quarter, was positive in R$ 133.7 million, due to the full recognition, in the period, by the subsidiary Acominas, of R$ 198.0 million of deferred tax assets on tax losses and negative social contribution basis. This recognition is in conformity with the policy that has already been adopted since 2001 and reinforced by the perspectives of maintenance of future profitability. o Net profit reached R$ 262.0 million in the second quarter of 2003, with a net margin of 8.65%. In the six-month period, net profit reached R$ 549.3 million, an increase of 85.9% on the same 2002 period and net margin of 8.64%. 37 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 PROFIT 2ND 1ST VARIATION 1ST HALF 1ST HALF VARIATION (R$ million) QUARTER QUARTER 2Q03/1Q03 2003 2002 1H03/1H02 2003 2003 - ---------------------------------------------------------------------------------------------- Brazil 249.9 287.4 (13.0%) 537.3 248.7 116.0% North America (5.2) (22.4) (76.8%) (27.6) 44.4 (162.2%) South America 17.3 22.3 (22.4%) 39.6 2.3 1.621.7% TOTAL 262.0 287.3 (8.7%) 549.3 295.4 85.9% - ----------------------------------------------------------------------------------------------
INVESTMENTS o In the first six-month period, investments in fixed assets totaled US$ 138.7 million, for the maintenance and upgrade of technology in the industrial plants in Brazil and abroad.
- --------------------------------------------------------------------------------------------- INVESTMENTS 2ND. QUARTER 2003 1ST. QUARTER 2003 1ST. HALF 2003 (US$ million) - --------------------------------------------------------------------------------------------- BRAZIL 56.9 54.2 111.1 Gerdau S.A. 21.7 16.8 38.5 Acominas 33.5 37.3 70.8 Other 1.7 0.1 1.8 FOREIGN 14.9 12.7 27.6 North America 13.4 11.1 24.5 South America 1.5 1.6 3.1 TOTAL 71.8 66.9 138.7 - ---------------------------------------------------------------------------------------------
o The companies in Brazil invested US$ 111.1 million (80.1% of total), of which US$ 48.5 million by Gerdau S.A., US$ 70.8 million by Acominas and US$ 1.8 million by other Brazilian companies. o The units in North America received investments of about US$ 24.5 million and the South American units another US$ 3.1 million. FINANCIAL DEBT o At June 27, 2003 Gerdau AmeriSteel Corporation, subsidiary of Gerdau in North America, concluded the private placement of Senior Unsecured Notes (bank notes) at 10.375% falling due in 2011 at 98.001% of face value, as well as the contracting of a Senior Secured Credit Facility (syndicated credit line) for 5 years and cost of 4.5% per annum. Net sales of bank notes, of US$ 389.5 million, and the initial withdrawal of US$ 142.5 million from the credit line were used by Gerdau AmeriSteel to roll-over its borrowings. The average term of these funds, which totaled US$ 755 million, is 6.6 years at an average rate of 7.7% per annum. o Gerdau S.A. and Acominas, in a joint operation, are developing a program to obtain funds of US$ 400 million, known as Securitization of Export Receivables, the purpose of which is to extend the debt profile of these companies. 38 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 o At the end of June, net debt was R$ 5.6 billion, 4.6% lower than March 31, when it was R$ 5.9 billion. It should be emphasized that, due to the refinancing of Gerdau AmeriSteel debt, the short-term portion decreased by 29.3% in the period. o On June 30, cash and financial investments balances totaled R$ 1.2 billion, of which 66.0% (R$ 791.0 million) was indexed to the U.S. dollar. - ----------------------------------------------------------------------- INDEBTEDNESS(R$ MILLION) 6.30.2003 3.31.2003 - ----------------------------------------------------------------------- SHORT-TERM Local currency 445.4 475.3 Foreign currency1 1,856.8 1,852.4 Foreign companies 927.0 2,242.0 TOTAL 3,229.2 4,569.7 LONG-TERM Local currency 1,071.1 1,120.9 Foreign currency 689.5 812.9 Foreign companies 1,853.0 755.9 TOTAL 3,613.6 2,689.7 GROSS DEBT 6,842.8 7,259.4 Available funds and investments 1,198.5 1,344.3 NET DEBT 5,644.3 5,915.1 - ----------------------------------------------------------------------- 1 - 65% of foreign currency debt was hedged. o The schedule of long-term debt payment at June 30 was as follows: -------------------------------------------------------------------- YEAR R$ MILLION -------------------------------------------------------------------- 2004 198.9 2005 487.3 2006 334.5 2007 305.6 2008 onwards 2,287.3 TOTAL 3,613.6 -------------------------------------------------------------------- 39 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 At the end of the quarter, the main indicators related to Gerdau debt were the following:
- --------------------------------------------------------------------------------------------- INDICATORS 6.30.2003 3.31.2003 - --------------------------------------------------------------------------------------------- Net debt / Total net capitalization 54.2% 56.1% EBITDA / Net financial expenses (excluding exchange 5.3x1 6.0x and monetary variations) Gross debt / EBITDA2 3.2x 3.0x Net debt / EBITDA2 2.1x 2.4x - ---------------------------------------------------------------------------------------------
1 - Accumulated 6 months 2 - EBITDA of the last 12 months ACOMINAS RESTRUCTURING o As disclosed on June 12, 2003, Gerdau S.A. is concluding studies to implement an operating restructuring in the subsidiary Acominas, which will consist of the integration of industrial, commercial and financial operations of the Company. This operating restructuring will permit operating, administrative, financial and tax costs savings, the quantification of which is still being evaluated. In the following weeks Gerdau will disclose a significant event notice about the result of these studies, as well as related actions, to be later submitted to the shareholders of the involved companies for approval. 40 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 - 2 - COMPANY NAME 3 - CNPJ 4 - CLASSIFICATION 5 - % OF INVESTEES 6 - % OF SHARE ITEM CAPITAL HOLDERS' EQUITY OF INVESTOR 7 - TYPE OF COMPANY 8 - NUMBER OF SHARES FOR THE 9 - NUMBER OF SHARES IN THE PRIOR QUARTER (THOUSANDS) QUARTER (THOUSANDS) 01 Gerdau Intern. 87.040.598/00Closed Subsidiary 99.83 90.47 Empreend. Ltda. Commercial, industrial and 1,503,440 1,503,440 other 03 Gerdau Participacoes 02.186.673/00Closed Subsidiary 89.98 32.35 Ltda. Commercial, industrial and 379,941 379,941 other
41 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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) 359.45 14 - ISSUED AMOUNT (thousands of reais) 8,626 15 - NUMBER OF ISSUED DEBENTURES (UNIT) 24,000 16 - OUTSTANDING DEBENTURES (UNIT) 14,315 17 - TREASURY DEBENTURES (UNIT) 9,685 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 42 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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) 359.45 14 - ISSUED AMOUNT (thousands of reais) 8,626 15 - NUMBER OF ISSUED DEBENTURES (UNIT) 24,000 16 - OUTSTANDING DEBENTURES (UNIT) 5,865 17 - TREASURY DEBENTURES (UNIT) 18,135 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 43 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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) 359.45 14 - ISSUED AMOUNT (thousands of reais) 15,906 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 44 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 7 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) 359.45 14 - ISSUED AMOUNT (thousands of reais) 8,195 15 - NUMBER OF ISSUED DEBENTURES (UNIT) 22,800 16 - OUTSTANDING DEBENTURES (UNIT) 7,842 17 - TREASURY DEBENTURES (UNIT) 14,958 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 45 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 8 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) 359.45 14 - ISSUED AMOUNT (thousands of reais) 21,562 15 - NUMBER OF ISSUED DEBENTURES (UNIT) 59,988 16 - OUTSTANDING DEBENTURES (UNIT) 30,455 17 - TREASURY DEBENTURES (UNIT) 29,533 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 46 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 9 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) 359.45 14 - ISSUED AMOUNT (thousands of reais) 15,053 15 - NUMBER OF ISSUED DEBENTURES (UNIT) 41,880 16 - OUTSTANDING DEBENTURES (UNIT) 11,813 17 - TREASURY DEBENTURES (UNIT) 30,067 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 47 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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) 1,078.34 14 - ISSUED AMOUNT (thousands of reais) 6,955 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 48 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 DEB-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) 1,356.40 14 - ISSUED AMOUNT (thousands of reais) 33,910 15 - NUMBER OF ISSUED DEBENTURES (UNIT) 25,000 16 - OUTSTANDING DEBENTURES (UNIT) 3,078 17 - TREASURY DEBENTURES (UNIT) 21,922 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 49 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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) 1,356.40 14 - ISSUED AMOUNT (thousands of reais) 33,910 15 - NUMBER OF ISSUED DEBENTURES (UNIT) 25,000 16 - OUTSTANDING DEBENTURES (UNIT) 1,395 17 - TREASURY DEBENTURES (UNIT) 23,605 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 50 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 CDI + 1% p.a. 12 - PREMIUM/DISCOUNT 13 - NOMINAL VALUE (reais) 10,391.62 14 - ISSUED AMOUNT (thousands of reais) 311,748 15 - NUMBER OF ISSUED DEBENTURES (UNIT) 30,000 16 - OUTSTANDING DEBENTURES (UNIT) 30,000 17 - TREASURY DEBENTURES (UNIT) 0 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 11/1/2003 51 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 - -------------------------------------------------------------------------------- 16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT In compliance with the Differentiated Practices for Corporate Governance Regulation (Level 1) we present below tables showing ownership interests involving all direct and indirect holdings that exceed 5% of voting capital, including individual holdings.
- POSITION AS OF JUNE 30, 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 42,897,212 83.35 23,656,724 24.42 66,553,936 44.86 STA. FELICIDADE COM. EXP. DE PRODS 1,218,034 2.37 3,899,687 4.02 5,117,721 3.45 SID LTDA OTHER CONTROLLING SHAREHOLDERS 2,009,210 3.89 151,436 0.16 2,160,646 1.46 --------- ---- ------- ---- --------- ---- SUBTOTAL 46,124,456 89.62 27,707,847 28.60 73,832,303 49.77 OUTSTANDING SHARES IN THE MARKET 5,343,768 10.38 69,177,940 71.40 74,521,708 50.23 --------- ---- ------- ---- --------- ---- 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 4,477,562 32.30 - - 4,477,562 10.77 GERDAU GROUP EMPREEND. LTDA 3,544,658 25.57 1,623 0.01 3,546,281 8.53 GERSUL EMPREEND. IMOBS. LTDA 1,930,243 13.93 - - 1,930,243 4.64 --------- ----- - - --------- ---- SUBTOTAL 9,952,463 71.81 1,623 0.01 9,954,086 23.95 OTHER 3,909,002 28.19 27,721,307 99.99 31,630,309 76.05 TOTAL 13,861,465 100.00 27,722,930 100.00 41,584,395 100.00
52 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 - -------------------------------------------------------------------------------- 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$ 47,184,416.00 OWNERSHIP TOTAL QUOTAHOLDER'S NAME NUMBER OF % QUOTAS METALURGICA GERDAU S/A 47,184,266 100.00 GRUPO GERDAU EMPREENDIMENTOS LTDA 150 0.00 ------------- ------- SUBTOTAL 47,184,416 100.00 OTHER 0.00 TOTAL 47,184,416 100.00 INDAC - INDUSTRIA, ADMINISTRACAO E COMERCIO S/A - CNPJ NO. 92.690.817/0001-57 - - CAPITAL: R$ 199,596,393.21 OWNERSHIP
NUMBER OF SHARES ------------------------------------------------------------ SHAREHOLDER'S NAME COMMON PREFERRED TOTAL - ------------------------------- ------------------ ------------------ -------------------- NUMBER OF NUMBER OF NUMBER OF SHARES % SHARES % SHARES % CINDAC - EMPREEND. E PART. 436,019,687 100.00 872,039,199 100.00 1,308,058,886 100.00 S/A OTHER - - 175 0.00 175 0.00 TOTAL 436,019,687 100.00 872,039,374 100.00 1,308,059,061 100.00
GRUPO GERDAU EMPREENDIMENTOS LTDA - CNPJ NO. 87.153.730/0001-00 - - CAPITAL: R$ 30,238,616.00 OWNERSHIP TOTAL QUOTAHOLDER'S NAME NUMBER OF % QUOTAS INDAC - INDUSTRIA, ADMINISTRACAO E 26,557,324 87.83 COMERCIO SA OTHER 3,681,292 12.17 TOTAL 30,238,616 100.00 53 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 - -------------------------------------------------------------------------------- 16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT GERSUL EMPREENDIMENTOS IMOBILIARIOS LTDA - CNPJ NO. 89.558.555/0001-67 - - CAPITAL: R$ 19,000,000.00 OWNERSHIP TOTAL QUOTAHOLDER'S NAME NUMBER OF % QUOTAS GRUPO GERDAU EMPREENDIMENTOS LTDA 2,835,236 14.92 ACOTER PARTICIPACOES LTDA 7,135,148 37.56 INDAC - IND. ADM. E COMERCIO S/A 4,423,742 23.28 --------- ----- SUBTOTAL 14,394,126 75.76 OTHER 4,605,874 24.24 TOTAL 19,000,000 100.00 ACOTER PARTICIPACOES S.A. - CNPJ NO. 02.290.525/0001-34 - - CAPITAL: R$ 12,800,000.00 OWNERSHIP TOTAL QUOTAHOLDER'S NAME NUMBER OF % QUOTAS CINDAC - EMPREEND. E PARTICIPACOES S.A. 10,609,500 82.89 GRUPO GERDAU EMPREENDIMENTOS LTDA. 2,190,500 17.11 TOTAL 12,800,000 100.00 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
54 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 - -------------------------------------------------------------------------------- 16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT STICHTING GERDAU JOHANNPETER Dutch NAME PARTICIPATION % GERMANO HUGO GERDAU JOHANNPETER Manager and 25.00 Beneficiary KLAUS GERDAU JOHANNPETER Manager and 25.00 Beneficiary JORGE GERDAU JOHANNPETER Manager and 25.00 Beneficiary FREDERICO CARLOS GERDAU JOAHANNPETTER Manager and 25.00 Beneficiary 100.00 In compliance with the Differentiated Practices for Corporate Governance Regulation (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, Directors, Members of the Audit Committee, and Executive Directors. - POSITION AS OF JUNE 30, 2003 GERDAU S.A. - CNPJ NO. 33.611.500/0001-19 - - CAPITAL: R$ 1,735,656,174.86 OWNERSHIP
NUMBER OF SHARES ------------------------------------------------------------- SHAREHOLDER COMMON % PREFERRED % TOTAL % - -------------------------- -------------------- ----------------- -------------------- Controlling Shareholders 46,124,456 89.62 27,707,847 28.60 73,832,303 49.77 Administrators Administrative Council 1,812 0.00 1,812 0.00 Executive Directors 545 0.00 41,841 0.04 42,386 0.03 Audit Committee 11,396 0.01 11,396 0.01 Treasury shares Other 5,343,223 10.38 69,122,891 71.34 74,466,114 50.19 Total 51,468,224 100.00 96,885,787 100.00 148,354,011 100.00 Outstanding shares in the 5,343,768 10.38 69,177,940 71,40 74,521,708 50.23 market
55 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 - -------------------------------------------------------------------------------- 16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT - POSITION AS OF MARCH 31, 2002 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 35,154,586,268 88.79 23,819,271,271 31.96 58,973,857,539 51.68 Administrators Administrative Council 315,000 0.00 1,689,124 0.00 2,004,124 0.00 Executive Directors 102,898 0.00 14,042,234 0.02 14,145,132 0.01 Audit Committee 8,766,402 0.01 8,766,402 0.01 Treasury shares Other 4,435,937,617 11.20 50,683,759.749 68.01 55,119,697,366 48.30 Total 39.590.941.783 100.00 74,527,528,780 100.00 114,118,470,563 100.00 Outstanding shares in the market 4,436,355,515 11.21 50,708,257,509 68,04 55,144,613,024 48.32 In compliance with the Differentiated Practices for Corporate Governance Regulation (Level 1) we present below spreadsheets showing the number of outstanding shares and their percentage in relation to total shares issued. - POSITION AS OF JUNE 30, 2003 GERDAU S.A. - CNPJ NO. 33.611.500/0001-19 - - CAPITAL: R$ 1,735,656,174.86 OWNERSHIP NUMBER OF SHARES ------------------------------------------------------------------------------------ SHAREHOLDER COMMON PREFERRED TOTAL - ----------------------------------- ----------------------- ----------------------------- -------------------------- NUMBER OF NUMBER OF NUMBER OF SHARES % SHARES % SHARES % ----------------------- ----------------------------- --------------------------- METALURGICA GERDAU S/A 42,897,212 83.35 23,656,724 24.42 66,553,936 44.86 STA. FELICIDADE COM. EXP. DE PRODS SID 1,218,034 2.37 3,899,687 4.03 5,117,721 3.45 LTDA OTHER CONTROLLING SHAREHOLDERS 2,009,210 3.90 151,436 0.16 2,160,646 1.46 --------- ---- ------- ---- --------- ---- SUBTOTAL 46,124,456 89.62 27,707,847 28.60 73,832,303 49.77 OUTSTANDING SHARES IN THE MARKET 5,343,768 10.38 69,177,940 71.40 74,521,708 50.23 TOTAL ISSUED 51,468,224 100.00 96,885,787 100.00 148,354,011 100.00
56 (A free translation of the original in Portuguese) UNAUDITED FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) CORPORATE LEGISLATION QUARTERLY INFORMATION (ITR) 6/30/2003 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 - -------------------------------------------------------------------------------- 17.01 - REPORT ON LIMITED REVIEW - UNQUALIFIED REPORT OF INDEPENDENT ACCOUNTANTS ON THE LIMITED REVIEW OF THE QUARTERLY INFORMATION July 28, 2003 To the Board of Directors and Shareholders Gerdau S.A. 1 We have performed a limited review of the Quarterly Information (ITR) of Gerdau S.A. and of Gerdau S.A. and its subsidiary companies as of and for the quarters and periods ended June 30, 2003 and 2002 and March 31, 2003. This Quarterly Information is the responsibility of the Company's management. 2 Our review was conducted in accordance with specific standards established by the Institute of Independent Auditors of Brazil (IBRACON) in conjunction with the Federal Accounting Council, and consisted primarily of: (a) inquiries of and discussions with management responsible for the accounting, financial and operating areas of the companies as to the main criteria adopted in the preparation of the Quarterly Information, and (b) review of the significant information and of the subsequent events which have or could have significant effects on the financial position and operations of the Company. 3 Based on our limited review, we are not aware of any significant change that should be made to the Quarterly Information for it to be in accordance with accounting practices adopted in Brazil for the preparation of Quarterly Information and the standards established by the Brazilian Securities Commission. 4 Our review was conducted with the purpose of issuing a report on the Quarterly Information (ITR) referred to in the first paragraph, taken as a whole. The statement of cash flow is being presented to provide supplementary information on the Company and is not required as an integral part of the Quarterly Information (ITR). The statement of cash flow was submitted to the review procedures described in the second paragraph and, based on our review, we are not aware of any significant change that should be made for it to be fairly presented, in all material respects, in relation to the Quarterly Information (ITR), taken as a whole. PricewaterhouseCoopers Carlos Alberto de Sousa Auditores Independentes Partner CRC 2SP000160/O-5 "F" RS Contador CRC 1RJ056561/S-7 "S" RS 57
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 QUARTER 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 27 06 01 Consolidated balance sheet - assets 31 06 02 Consolidated balance sheet - liabilities and shareholders' 32 equity 07 01 Consolidated statement of income 33 08 01 Comments on the CONSOLIDATED Performance 34 09 01 Investments in subsidiary and/or associated companies 41 10 01 Characteristics of public or private debenture issues 42 16 01 Other information the company CONSIDERS relevant 52 17 01 Report on LIMITED review 57 Gerdau Inter. Empreend. Ltda. Gerdau Participacoes Ltda.
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