-----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, FCuW1a4H9IDNHBmrb/NNzb4U3sInOYGl7q7l+8sfmci2nUg7q3XJ7YnOB4Kwf58e KBDOb9aulDFksjDs6LLZuw== 0000911420-04-000066.txt : 20040224 0000911420-04-000066.hdr.sgml : 20040224 20040224153129 ACCESSION NUMBER: 0000911420-04-000066 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040219 FILED AS OF DATE: 20040224 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: 04624812 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 d943314.txt FORM 6K - -------------------------------------------------------------------------------- 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 February 19, 2004 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: February 19, 2004 GERDAU S.A. By:/s/ Osvaldo Burgos Schirmer --------------------------------------- Name: Osvaldo Burgos Schirmer Title: Chief Financial Officer EXHIBIT INDEX Exhibit Description of Exhibit 1 Relevant Fact dated December 19, 2003 2 2003 Year-End Highlights 3 Press release concerning new wire rod rolling mill EX-1 3 e943298.txt RELEVANT FACT EXHIBIT 1 RELEVANT FACT GERDAU S.A. (Bovespa: GGBR, NYSE: GGB and Latibex: XGGB) informs that its subsidiary in North America, Gerdau AmeriSteel Corporation (TSX:GNA.TO), has announced the commencement of exchange offer for senior notes as per the press release divulged today and reproduced below. "GERDAU AMERISTEEL CORPORATION ANNOUNCES COMMENCEMENT OF EXCHANGE OFFER FOR SENIOR NOTES TORONTO, ON, DECEMBER 19, 2003 -- Gerdau Ameristeel Corporation (TSX: GNA.TO) announced today the commencement of an exchange offer to exchange up to US$405,000,000 aggregate principal amount of registered 10 ?% Senior Notes due 2011 (the "Exchange Notes") of Gerdau Ameristeel Corporation ("Gerdau Ameristeel") and GUSAP Partners (together with Gerdau Ameristeel, the "Issuers") for the Issuers' outstanding Notes (the "Existing Notes") which were offered in a private placement in June 2003. The Issuers received receipts for the prospectus relating to the exchange offer from the Ontario Securities Commission dated December 18,2003 and the U.S. registration statement became effective today. The exchange offer is as contemplated in the Registration Rights Agreement dated June 27, 2003, pursuant to which the Issuers agreed to register substantially identical Notes, including unconditional guarantees on the Notes from certain of Gerdau Ameristeel's subsidiaries, and offer to exchange the registered Exchange Notes for the Existing Notes. The Exchange Notes (including the subsidiary guarantees) will have substantially the same form and terms as the outstanding Existing Notes, except that the Exchange Notes will be issued under a prospectus in Ontario and the Exchange Notes and subsidiary guarantees have been registered under the U.S. Securities Act of 1933, as amended, and will not be subject to restrictions on transfer. The Exchange Notes will bear a different CUSIP number from the Existing Notes. Any Existing Note not exchanged will continue to have restrictions on transfer. The Issuers will accept for exchange any and all Existing Notes that are validly tendered and not withdrawn on or before 5:00 p.m., New York City time, January 23, 2004, unless extended. Copies of the prospectus and transmittal materials governing the exchange are in the process of being mailed to noteholders. Additional copies can be obtained from the Exchange Agent, SouthTrust Bank, by calling Woodie Alston at (205) 254-4131 or Candace Miller at (205) 254-5486." The complete Press Release disclosed by Gerdau AmeriSteel Corporation is available in the Company's website at www.gerdauameristeel.com Rio de Janeiro, December 19, 2003 OSVALDO BURGOS SCHIRMER Executive Vice President Investor Relations Director EX-2 4 e939906.txt 2003 YEAR-END HIGHLIGHTS Exhibit 2 - -------------------------------------------------------------------------------- 2003 YEAR-END RESULTS GERDAU S.A. EXERCICIO DE CONSOLIDATED - -------------------------------------------------------------------------------- HIGHLIGHTS o NET PROFIT - The consolidated net profit reached R$ 1.3 billion in 2003. This is 53.4% greater than that of fiscal year 2002 (R$817.9 million), of which exports were the main factor. If the Gerdau Acominas operating restructuring adjustments of R$ 333.7 million were desconsidered, net profit would have been of R$ 920.9 million, 18.0% greater than in 2002. o GROSS REVENUES - Consolidated gross revenues reached R$ 15.8 billion in 2003. This represents an increase of 41.6% over that of 2002. Of this total, 57.2% was contributed by the Brazilian operations, 38.7% by the North American units and 4.1% from companies in Chile, Uruguay and Argentina. o EXPORTS - Brazilian shipments to international markets totaled 3.2 million metric tons in 2003, setting a new record for Gerdau. The strong demand in the international markets with very attractive prices was key in increasing the volume shipped by 69.9% when compared to 2002. Export revenues reached US$ 787.3 million, 125% greater than in 2002, consequence of the 30.9% average increase obtained by Gerdau Acominas. o EBITDA - EBITDA in the period reached R$ 2.7 billion compared to R$ 2.1 billion in 2002, an increase of 25.9%. EBITDA margin reached the mark of 20.08% in 2003 and 23.27% in 2002. o OUTPUT - The output of crude steel reached 12.3 million metric tons in 2003, 30.7% more than in 2002. Rolled products output reached 9.0 million metric tons, presenting an increase of 30.5% when compared to volumes produced in the previous year. o OPERATIONAL RESTRUCTURING - On November 28th, shareholders of Gerdau S.A. and Aco Minas Gerais S.A. - Acominas (now Gerdau Acominas S.A.), approved the integration of the operational units into a single company. With the transfer of all steel operations and complementary assets of Gerdau S.A. in Brazil to Gerdau Acominas, the 10 steel mills will now operate in an integrated manner with the 11 fabrication shops, 6 downstream operations, and Comercial Gerdau's 73 branches and the 5 service centers for flat steel.
- ------------------------------------------------------------------------------------------------------- DATA FISCAL YEAR FISCAL YEAR VARIATION 2003 2002 - ------------------------------------------------------------------------------------------------------- Output (1,000 t) Crude steel1 12,343 9,441 30.7% Rolled products 9,045 6,933 30.5% Sales (1,000 t) 12,144 9,151 32.7% Net sales (R$ million) 13,367 9,162 45.9% EBITDA (R$ million) 2,684 2,132 25.9% EBTDA (R$ million) 2,037 1,049 94.2% Net profit (R$ million) 1,255 818 53.4% Shareholders' equity (R$ million) 4,855 4,421 9.8% Total assets (R$ million) 14,247 14,462 (1.5%) Gross margin 24.61% 28.63% EBITDA margin 20.08% 23.27% Net margin 9.38% 8.93% Net profit / Shareholders' equity (ROE)2 25.8% 18.5% Net debt / total net capitalization 51.9% 56.5% Net debt / EBITDA 2.0x 2.7x - -------------------------------------------------------------------------------------------------------
1 Exhibit 2 1) Includes slabs, blooms and billets. 2) Net profit of the period over final shareholders' equity. 2 Exhibit 2 o INTEREST OVER CAPITAL STOCK - On February 17th, 2004, shareholders of Metalurgica Gerdau S.A. and Gerdau S.A. will receive the interest over capital stock for the forth quarter of 2003. The amount paid is of R$ 80.4 million (R$ 1.94 per share) and R$ 151.0 million (R$ 1.02 per share), respectively. In the period, the outlays to shareholders reached R$ 172.1 million at Metalurgica Gerdau S.A. and R$ 351.2 million at Gerdau S.A. o SHARE BUYBACK - The Boards of Metalurgica Gerdau S.A. and Gerdau S.A., having met on November 17th, authorized the shares buyback program to be held in treasury and for later disposal of or cancellation. This permit is valid for 90 days and is limited to 2% of the free float of each company on October 31st, 2003. o INDEBTEDNESS - A Euro commercial paper placement for US$ 100 million was concluded in the first half of October. Its maturity date is October 15th, 2004 and the coupon is of 4.0% per annum. In North America, Gerdau Ameristeel concluded, on January 23rd, 2004, the exchange of US$ 405 million of the principal of the Senior Notes offered in a private placement in June 2003. The Exchange Notes (including the subsidiary guarantees) have substantially the same form and terms as the outstanding Existing Notes and have been registered under the U.S. Securities Act of 1933, as amended, and are not subject to restrictions on transfer. o ACQUISITION OF PIG IRON PLANT - On December 2nd, Gerdau Acominas S.A. signed a purchase agreement contract to acquire Margusa - Maranhao Gusa S.A., a company with an installed capacity of 200 thousand metric tons of pig iron per annum and located in the city of Bacabeira, state of Maranhao, 50 kilometers from Sao Luis and 48 kilometers from the regional sea port. The price paid for the shares was equivalent to US$ 18 million. o ACQUISITION OF MINING RIGHTS - On December 10th, Gerdau Acominas S.A. signed a real estate and mining rights purchasing pre-contract for Companhia Paraibuna de Metais (Grupo Votorantim) for an amount equivalent to US$ 30 million. The assets include 15 mining concessions in an area totaling 7 thousand hectares with lots located in Miguel Bournier, Varzea do Lopes and Gongo Soco, in the state of Minas Gerais. o NEW ROLLING MILL - Gerdau Acominas is already producing wire-rod in its new rolling mill at the Ouro Branco, Minas Gerais, mill, with an installed capacity of 550 thousand metric tons in which were invested US$ 66 million. The wire-rod is the input for the production of wires for the civil construction, agricultural and industrial sectors.
AVAILABILITY AT THE SITE: CONFERENCE CALL: JANUARY 28TH In Portuguese, at 11:00 AM (EST). This document and complementary information for the quarter In English, at 12:30 PM (EST). are available at www.gerdau.com.br/ri. To participate, dial: In Portuguese: COMPLEMENTARY INFORMATION: - From Brazil: 0800 770.4544 - From the US: 1 866 812.0442 / 1 888 340.8477 Additional data on the performance in the quarter can be - Other countries: +55 11 4613.0501 obtained with the Investor Relations sector which can be reached by phone at In English: +55 51 3323.2703 - From the US: 1 866 812.0442 / 1 888 340.8477 or by e-mail inform@gerdau.com.br. - From Brazil: 0800 770.4544 - Other countries: +55 11 4613.0502 The conference call will also be available on the internet. To listen in access our site www.gerdau.com.br/ri.
3 Exhibit 2 4TH QUARTER'S PERFORMANCE OUTPUT AND SALES o The steel output of the Gerdau companies in the last quarter of the year was of 3.2 million metric tons, 1.4% greater than that of the third quarter. Output in the period totaled 12.3 million metric tons, an increase of 30.7% compared to the volume of 2002, explained in part due to the incorporation of the new North American units on October 2002 and to the resumption of full productive capacity of the Ouro Branco, Minas Gerais, unit of Gerdau Acominas S.A. o Output in Brazil was responsible for 56.5% of the total production in 2003. Units in North America contributed with 40.7% and companies in South America (except Brazil) with the remaining 2.8%. o In rolled products, output in the quarter reached 2.4 million metric tons, 2.9% more than in the previous quarter. For the full year, this volume reached 9.0 million metric tons, an increase of 30.5% compared to that of 2002.
- ---------------------------------------------------------------------------------------------------------------------------- OUTPUT 4Q03 3Q03 VARIATION FULL YEAR FULL YEAR VARIATION (1,000 tons) 4Q03/3Q03 2003 2002 2003/2002 CRUDE STEEL Brazil 1,818.3 1,790.3 1.6% 6,975.9 5,998.9 16.3% North America 1,253.5 1,249.6 0.3% 5,019.9 3,130.2 60.4% South America 93.6 83.3 12.4% 346.8 312.0 11.2% TOTAL 3,165.4 3,123.2 1.4% 12,342.6 9,441.1 30.7% ROLLED PRODUCTS Brazil 1,017.7 1,012.1 0.6% 3,890.6 3,660.3 6.3% North America 1,241.1 1,196.9 3.7% 4,775.7 2,931.6 62.9% South America 107.3 90.3 18.8% 378.6 340.7 11.1% TOTAL 2,366.1 2,299.3 2.9% 9,044.9 6,932.6 30.5% - ----------------------------------------------------------------------------------------------------------------------------
o Total consolidated sales amounted to 3.1 million metric tons in the fourth quarter, 1.1% below the tonnage shipped in the preceding quarter. The highlight of the period was the South American operations which presented a growth of 10.5% in the quarter, a consequence of the good economic performance of those countries. o In fiscal year 2003, sales reached 12.1 million metric tons, 32.7% greater than in the year of 2002. In North America, shipments reached 5.1 million metric tons, 69.4% more than in the previous year. At the plants in Chile, Uruguay and Argentina, shipments reached the mark of 416.3 thousand metric tons, an increase of 18.3%. At Gerdau Acominas, the company that consolidates the operations in Brazil, the spotlight in 2003 went to exports. Total exports accounted for 3.2 million metric tons (US$ 787.3 million) and represent 48.8% of the Company's shipments. This volume was 69.9% greater than that of 2002. The strong demand in international markets - with very attractive prices -, fully compensated the reduction in domestic consumption, 12.9% below the volume shipped in the previous year.
- ---------------------------------------------------------------------------------------------------------------------------- SALES 4Q03 3Q03 VARIATION FULL YEAR FULL YEAR VARIATION (1,000 tons) 4Q03/3Q03 2003 2002 2003/2002 - ---------------------------------------------------------------------------------------------------------------------------- BRAZIL Domestic market 849.5 874.8 (2.9%) 3,376.1 3,874.3 (12.9%) Exports 869.3 892.1 (2.6%) 3,211.4 1,890.7 69.9% TOTAL 1,718.8 1,766.9 (2.7%) 6,587.5 5,765.0 14.3% ABROAD North America 1,294.9 1,290.4 0.4% 5,140.5 3,033.8 69.4% South America 109.0 98.7 10.5% 416.3 351.8 18.3% TOTAL 1,403.9 1,389.1 1.1% 5,556.8 3,385.6 64.1% 4 TOTAL CONSOLIDATED 3,122.7 3,156.0 (1.1%) 12,144.3 9,150.6 32.7% - ----------------------------------------------------------------------------------------------------------------------------
5 Exhibit 2 RESULTS o In the last three months of the year net sales reached R$ 3.5 billion remaining at the same levels of the previous quarter. The great performance of exports in the period as well as the incorporation of the new North American units in October 2002 and the recovery of full productive capacity of Gerdau Acominas allowed for the 45,9% increase in net sales revenues exceeding R$ 9.2 billion, in 2002, up to R$ 13.4 billion in 2003.
- ---------------------------------------------------------------------------------------------------------------------------- NET SALES 4Q03 3Q03 VARIATION FULL YEAR 2003 FULL YEAR 2002 VARIATION (R$ million) 4Q03/3Q03 2003/2002 - ---------------------------------------------------------------------------------------------------------------------------- Brazil 1,888.2 1,932.9 (2.3%) 7,307.0 5,248.0 39.2% North America 1,473.6 1,440.6 2.3% 5,569.9 3,513.3 58.5% South America 154.3 120.4 28.2% 490.1 400.4 22.4% TOTAL 3,516.1 3,493.9 0.6% 13,367.0 9,161.7 45.9% - ----------------------------------------------------------------------------------------------------------------------------
o Gross margin reached 24.70% in the fourth quarter compared to 23.07% in the third quarter and ending the year with an overall margin of 24.61%. Gross profit was R$ 868.5 million in the quarter (+7,8%) and R$ 3.3 billion for the full year (+25.5%). o Operating expenses (SG&A) increased by 25.2% in the fourth quarter and represented 10.36% of net sales revenue, whereas in the previous quarter it was 8.33%. This increase resulted mainly from the greater costs involved in exporting (port services and freight) and the increase in Gerdau Ameristeel's expenses. Expenses with SG&A totaled R$ 364.1 million in the last quarter and accumulated R$ 1.2 billion in the full year of 2003.
- ---------------------------------------------------------------------------------------------------------------------------- EBTDA 4Q03 3Q03 FULL YEAR 2003 FULL YEAR 2002 (R$ million) - ---------------------------------------------------------------------------------------------------------------------------- Gross profit 868.5 805.9 3,290.2 2,622.7 Cost of sales (125.8) (114.8) (448.1) (337.6) SG&A (238.4) (176.2) (763.4) (664.8) Depreciation and amortization 156.5 156.3 604.8 511.8 EBITDA 660.8 671.2 2,683.5 2,132.1 Net financial expenses (118.6) (160.7) (532.0) (375.8) (net of monetary and FX variations) Monetary and foreign exchange variations (37.7) (79.3) (114.5) (707.8) EBTDA 504.5 431.2 2,037.0 1,048.5 - ----------------------------------------------------------------------------------------------------------------------------
o The increase in operating expenses in a bigger proportion than gross profit resulted in a reduction of 1.5% in EBITDA for the fourth quarter and reached R$ 660.8 million. As a consequence, the margin was also lower staying at 18.79% compared to 19.21% in the previous quarter. EBITDA for the year reached R$ 2.7 billion, 25.9% greater than that of 2002.
- ---------------------------------------------------------------------------------------------------------------------------- EBITDA 4Q03 3Q03 VARIATION FULL YEAR FULL YEAR VARIATION (R$ million) 4Q03/3Q03 2003 2002 2003/2002 - ---------------------------------------------------------------------------------------------------------------------------- Brazil 547.8 584.9 (6.3%) 2.297.3 1.674.8 37.2% North America 66.0 49.6 33.1% 234.7 347.3 (32.4%) South America 47.0 36.7 28.1% 151.5 110.0 37.7% TOTAL 660.8 671.2 (1.5%) 2,683.5 2,132.1 25.9% - ----------------------------------------------------------------------------------------------------------------------------
o Net financial expenses in the fourth quarter totaled R$ 156.3 million, 34.8% less than that of the third quarter. This amount includes expenses with monetary variation in a total of R$ 9.3 million and foreign exchange variations of R$ 28.4 million. In 2003, net financial expenses totaled R$ 646.5 million, of which R$ 19.6 million refer to the monetary variations and R$ 94.9 million to FX variations. 6 Exhibit 2 o Equity pick up was negative R$ 14.2 million in the quarter and R$ 299.4 million in the full year as a result of the FX effect on investments abroad. o As a consequence of the integration of the operating assets of Gerdau S. A. into Gerdau Acominas, the latter was able to create a positive income tax and social contribution provision, in the fourth quarter, of R$ 116.8 million based on the recognition of R$ 135.7 million in tax credits resulting from fiscal losses. o Net Profit in the last quarter reached R$ 459.9 million, 87.5% greater than that of the third quarter. Net profit for the full year was R$ 1.3 billion, presenting an increase of 53.4% over the previous year and a net margin of 9.38%. It is noteworthy that this result includes the R$ 333.7 million of tax credits generated by fiscal losses recognized by Gerdau Acominas throughout fiscal year 2003 (R$ 37.8 million in 2002).
- ---------------------------------------------------------------------------------------------------------------------------- NET PROFIT 4Q03 3Q03 VARIATION FULL YEAR FULL YEAR VARIATION (R$ million) 4Q03/3Q03 2003 2002 2003/2002 - ---------------------------------------------------------------------------------------------------------------------------- Brazil 431.4 253.7 70.0% 1.222,4 679.3 79.9% North America (4.3) (29.4) - (61.3) 105.0 - South America 32.8 21.0 56.2% 93.4 33.6 178.0% TOTAL 459.9 245.3 87.5% 1.254.5 817.9 53.4% - ----------------------------------------------------------------------------------------------------------------------------
INVESTMENT o Investments in fixed assets from October to December totaled US$ 88.5 million, destined mostly to the conclusion of the installation of the wire-rod rolling mill at the Ouro Branco, Minas Gerais, mill. Investments for the full year reached US$ 294.7 million. o Companies in Brazil invested US$ 67.6 million in the fourth quarter whereas the units in North America invested US$ 18.9 million and in South America the remaining US$ 2,0 million. o For the full year of 2003, investments in the Brazilian-based units US$ 228.5 million (77.5% of the total), the industrial plants in North America a total of US$ 59.4 million (20.2% of the total) and companies in South America the remaining US$ 6.8 million (2.3% of the total). - ----------------------------------------------------------------------------- INVESTMENTS 4Q03 3Q03 FULL YEAR 2003 (US$ million) - ----------------------------------------------------------------------------- BRAZIL 67.6 49.8 228.5 Gerdau Acominas 63.7 48.2 221.3 Other 3.9 1.6 7.2 ABROAD 20.9 17.7 66.2 North America 18.9 16.0 59.4 South America 2.0 1.7 6.8 TOTAL 88.5 67.5 294.7 - ----------------------------------------------------------------------------- o On December 2nd, Gerdau Acominas S.A. signed a purchase agreement contract to acquire Margusa - Maranhao Gusa S.A., a company with an installed capacity of 200 thousand metric tons of pig iron per annum and located in the city of Bacabeira, state of Maranhao, and distant 50 kilometers from the city of Sao Luis and 48 kilometers from the regional sea port. The price of the stock is equivalent to US$ 18 million. This acquisition envisages the guaranteeing of pig iron supply to the Gerdau mills in the Northeast region and to export the surplus to the North American units. This investment also ensures an important presence in the Carajas area, a strategic source of pig iron with logistics to cater to both the domestic and the export markets. 7 Exhibit 2 o On December 10th Gerdau Acominas S.A. signed a purchase pre-contract agreement for the acquisition of mining rights and real estate for the Companhia Paraibuna de Metais (Grupo Votorantim) for a total amount equivalent to US$ 30 million. The assets include 15 mining concessions in an area totaling 7 thousand hectares. These sites are located at Miguel Bournier, Varzea do Lopes and Gongo Soco, in the state of Minas Gerais. The reserves in these mines as per partial prospecting are enough to guarantee the supply of iron ore to ensure the planed consumption levels for the Ouro Branco mill. The mines have a privileged location within the iron ore quarter in Minas Gerais (quadrilatero ferrifero mineiro) and are nearby the mill and should contribute to consolidate the competitive position of this unit in the long run. This acquisition does not aim to alter the existing supply chain already in place, based on more than 10 different iron ore suppliers in the region. INDEBTEDNESS o On October Gerdau concluded a euro commercial paper placement for US$ 100 million with maturity on October 15th, 2004 and a coupon of 4.0% per annum. o On November 1st, 2003 the Gerdau S.A. 13th outstanding debenture issue were bought back by the Company. o In North America, Gerdau Ameristeel concluded on January 23rd, 2004, the exchange offer for US$ 405 million of the principal of Senior Notes sold through a private placement in June 2003. The Exchange Notes (including the subsidiary guarantees) have substantially the same form and terms as the outstanding Existing Notes and have been registered under the U.S. Securities Act of 1933, as amended, and are not subject to restrictions on transfer. - ----------------------------------------------------------------------------- INDEBTEDNESS DEC 31, 2003 SEPT 30, 2003 DEC 31, 2002 (R$ million) - ----------------------------------------------------------------------------- SHORT TERM Local currency 280.9 735.7 480.7 Foreign currency(1) 1,342.7 1,576.0 1,639.4 Companies abroad 793.8 841.5 1,587.9 TOTAL 2,417.4 3,153.2 3,708.0 LONG TERM Local currency 717.2 762.9 1,096.1 Foreign currency(1) 1,030.7 1,047.2 897.8 Companies abroad 2,097.2 1,980.4 1,465.9 TOTAL 3,845.1 3,790.5 3,459.8 GROSS DEBT 6,262.5 6,943.7 7,167.8 Cash & equivalents 1,017.0 1,497.6 1,430.7 NET DEBT 5,245.5 5,446.1 5,737.1 - ----------------------------------------------------------------------------- (1) - 51% of foreign currency debt was covered by hedge contracts. o On December 31st, 2003, net debt was R$ 5.2 billion, 3.7% lower than that of September 30th. o Of total gross debt, 38.6% were short term (R$ 2.4 billion) and 61.4% long term (R$ 3.8 billion). Approximately 15.9% were contracted in local currency, mostly with the BNDES, and 37.9% are linked to the US dollar, and 46.2% were contracted by companies abroad. o The balance for Cash & Equivalents at the end of the year had R$ 1.0 billion of which 57.7% (R$ 587.1 million) were indexed to the US dollar. o At the end of the period, the main indicators related to indebtedness were as follows: - -------------------------------------------------------------------------------- INDICATORS DEC 31, 2003 SEPT 30, 2003 DEC 31, 2002 - -------------------------------------------------------------------------------- Net debt / Net total capitalization 51.9% 52.4% 56.5% EBITDA / Net financial expenses (net of monetary 5.0x 4.9x1 5.7x 8 Exhibit 2 and FX variations) Gross debt / EBITDA 2.3x 2.6x 3.4x Net debt / EBITDA 2.0x 2.1x 2.7x - -------------------------------------------------------------------------------- 1 - 9 months accumulated. 9 Exhibit 2 APIMEC MEETING o Aiming at enhancing the relationship with the capital markets agents, Gerdau organized a national APIMEC meeting on the 12th and 13th of November in Belo Horizonte, state of Minas Gerais. o The event had more than 220 guests which, in addition to attending the presentation on the 2003 nine months performance of the Gerdau companies, had the opportunity to visit the industrial site of Gerdau Acominas in Ouro Branco. RISK MANAGEMENT o On January 2004, Gerdau started a project aiming at consolidating the Group's risk management process. This project will have the following targets and will be supported by Company executives and outside consultants: - To enhance Corporate governance by applying the world's best practices; - Formally establish the planning and the responsibilities of the risk management, process management, internal auditing and involved parties; - To evaluate the controls and risk environment in each business process; - To implement the integrated risk management system interconnected with the operations processing systems which will allow the risk and auto-evaluation monitoring; o The project is being implemented based on the latest risk management techniques recognized worldwide and that are in compliance with Sarbanes-Oxley's Act, and which must be applied to Brazilian corporations with shares listed in US stock exchanges. More than complying with the Law, Gerdau's strategy is to ensure a constant evolution of the risk management process therefore ensuring reliability and transparence of its operations. NON-CONSOLIDATED FIGURES METALURGICA GERDAU S.A. o On a meeting held by the board of the Company on November 17th, the board members authorized a stock buyback program to hold in treasury and for future reselling or cancellation. This authorization is valid for 90 days. Management is responsible for determining the number of shares to be bought and when. The stock purchases are being conducted with funding of profit reserves and subject to the limit of 550 thousand preferred shares, which represent 2% of the free float on October 31st, 2003. o Shareholders will be credited the interest over capital stock for the fourth quarter on February 17th, 2004, a total amount of R$ 80.4 million (R$ 1.94 per share). The year's accumulated shareholders' payout totaled R$ 172.1 million (R$ 4.145 per existing share), a dividend yield of 6.2%, if considered the stock quote of R$ 66.70 on December 30th, 2003. o At the Sao Paulo Stock Exchange (Bovespa), the Metalurgica Gerdau S.A. (GOAU) shares moved R$ 573.8 million during 2003, 89.4% more than in 2002. There were 21,415 trades in the period and 9,759 in the previous year. The preferred shares appreciated 161.3% and the daily trading average evolved to R$ 1.2 million, in 2002, to R$ 2.2 million in 2003. 10 Exhibit 2 In 2003, the evolution of preferred shares quotes at the Sao Paulo Stock Exchange was as follows: BOVESPA [OBJECT OMITTED] o Metalurgica Gerdau S.A. had a net profit of R$ 218.2 million (R$ 5.26 per share) in the fourth quarter, 76.3% more than in the previous quarter. This profit is due to the greater equity pick up over investments in subsidiaries and affiliated companies in the period. Net profit for the fiscal year was of R$ 575.2 million (R$ 13.88 per share), presenting an increase of 32.5% over that of 2002. o On December 31st, shareholders' equity was R$ 2.0 billion, representing a shareholders' equity per share of R$ 47.58. GERDAU S.A. o On a meeting held by the board of the Company on November 17th, the board members authorized a stock buyback program to hold in treasury and for future reselling or cancellation. This authorization is valid for 90 days. Management is responsible for determining the number of shares to be bought and when. The stock purchases are being conducted with funding of profit reserves and subject to the limit of 1,380,000 preferred shares, which represent 2% of the free float on October 31st, 2003. o Shareholders will be credited the interest over capital stock for the fourth quarter on February 17th, 2004, a total amount of R$ R$ 151.0 million (R$ R$ 1.02 per share). The year's accumulated shareholders' payout totaled R$ 351.3 million (R$ 2.325 per existing share), a dividend yield of 3.8%, if considered the stock quote of R$ 61.00 on December 30th, 2003. o At the Sao Paulo Stock Exchange (Bovespa), the Gerdau S.A. (GGBR4) shares moved R$ 2,5 billion during 2003, an increase of 81.9 % over 2002. There were 103,599 trades in the period presenting an increase of 89.3% over the previous year. The preferred shares appreciated 151.7% and the daily trading average evolved to R$ 9.8 million compared to the R$ 5.5 million in 2002. 11 Exhibit 2 o The ADRs, representative of Gerdau S.A.'s (GGB) preferred shares and traded at the New York Stock Exchange, moved 23.5 million shares in 2003, 67.4% more than in 2002. The resources involved in these transactions totaled US$ 315.3 million in the period, equivalent to a daily average of US$ 1.2 million. o Gerdau S.A.'s (XGGB) preferred shares had daily presence at the Madrid Stock Exchange (Latibex) in 2003. There were 297.7 thousand shares traded and moving financial resources of 3.1 million euros. o In 2003, the evolution of preferred shares quotes at the Sao Paulo Stock Exchange and at the New York Stock Exchange were as follows: BOVESPA NYSE [OBJECT OMITTED] [OBJECT OMITTED] o In the last quarter of the year, Gerdau S.A.'s gross revenues reached R$ 1.2 billion, 31.8% lower than that of the third quarter as a result of the operational reorganization implemented in November, when the operating assets were transferred to its subsidiary Gerdau Acominas S.A. in this manner revenues in the fourth quarter include only revenues generated in October and November. In 2003, gross revenues reached R$ 6.1 billion and net sales R$ 4.9 billion, presenting an increase of 19.5% and of 21.8%, respectively. o The company's net profit was R$ 458.0 million in the fourth quarter, 95.4% superior to that of the third quarter and influenced in part by Gerdau Acominas' recognition of R$ 135.7 million of fiscal credits as a result of the integration with Gerdau S.A.'s operations. The accumulated net profit totaled R$ 1.1 billion, 42.4% more than in 2002. This profit represents R$ 3.09 per share in the quarter and R$ 7.68 per share in the year. o On December 31st, shareholders' equity of Gerdau S.A. was R$ 4.1 billion, equivalent to a shareholders' equity per share of R$ 27.89. GERDAU ACOMINAS S.A. o On November 28th, shareholders of Gerdau S.A. and Aco Minas Gerais S.A. - Acominas (now Gerdau Acominas S.A.) approved the integration of its operations. This operation consisted of the transfer of all Brazilian steel operations and complementary activities of Gerdau S.A. to Gerdau Acominas S.A. with the purpose of better service clients in Brazil and abroad. The 10 steel plants are now operating in an integrated manner with the 11 fabrication shops for long steel, 6 downstream operations and Comercial Gerdau, with its 73 branches and 5 service centers for flat steel. This new structure allows for a better product mix and leads to an optimization of commercial and operational synergies along with administrative processes. In 12 Exhibit 2 addition, the operation will reinforce the cash generation and will generate tax economies both at the federal and state levels. o Gross revenues at Gerdau Acominas reached R$ 1.2 million, 78% greater than that of the third quarter which is explained mainly by the incorporation of Gerdau S.A.'s operations in December. In the period, gross revenues reached R$ 3.2 billion presenting an increase of 99.1% compared to 2002. 13 Exhibit 2 o The Company's net profit reached R$ 312.4 million in the last quarter of the year, 237.7% greater than that of the third quarter. As a result of the integration with Gerdau S.A.'s operations, there was an accrual at Acominas of R$ 135.7 million of tax credits generated by fiscal losses. For the full year, net profit reached R$ 849.8 million (R$ 5.36 per share) compared to R$ 62.7 million in 2002. It is important to notice that this result includes the R$ 333.7 million in tax credits generated by fiscal losses recognized in 2003 (R$ 37.8 million). o Based on the results of the fiscal year, R$ 284 million were provisioned for dividend payments to be decided by the Board. o On December 31st, shareholders' equity was R$ 3.0 billion equivalent to R$ 19.10 per share. GERDAU AMERISTEEL CORPORATION o In 2003, Gerdau Ameristeel's (GNA.TO) moved Cdn$ 114.3 million on the Toronto Stock Exchange and involved 43.8 million shares. In the period, the Company's shares appreciated 101.3% on that Exchange. o Throughout 2003, the evolution of the quotes at the Toronto Stock Exchange were as follows: TORONTO [OBJECT OMITTED] o The Company's net revenues, adjusted for Brazilian GAAP, reached R$ 1.5 billion in the fourth quarter of 2003, 2.3% greater than that of 2002. In the period, net revenues accumulated R$ 5.6 billion, presenting an increase of 58.5%. 14 MANAGEMENT METALURGICA GERDAU S.A. - CONSOLIDATED BALANCE SHEET
CORPORATE LAW - R$ THOUSAND DEC. 2003 SEP. 2003 DEC. 2002 TOTAL ASSETS 14,378,841 14,813,847 14,561,913 CURRENT ASSETS 5,432,827 5,914,167 5,467,714 Cash and equivalents 1,015,726 1,485,016 1,420,236 Trade accounts receivable 1,561,083 1,657,031 1,424,595 Inventories 2,336,598 2,262,359 2,220,055 Other 519,420 509,761 402,828 LONG-TERM RECEIVABLES 1,081,485 805,899 571,035 Others 1,081,485 805,899 517,035 PERMANENT ASSETS 7,864,529 8,093,781 8,523,164 Investments 463,224 443,940 917,751 Fixed assets 7,401,305 7,649,841 7,605,413 - ---------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 14,378,841 14,813,847 14,561,913 CURRENT LIABILITIES 4,424,043 4,899,151 5,475,429 Trade accounts payable 1,191,065 1,035,354 924,330 Loans and financing 2,464,950 3,198,697 3,745,743 Other accounts payable 768,028 665,100 805,356 LONG-TERM LIABILITIES 5,117,878 4,968,259 4,680,929 Loans and financing 3,396,085 3,326,536 2,750,492 Debentures 423,956 425,870 646,463 Other accounts payable 1,297,837 1,215,853 1,283,974 Minority Shareholders 2,864,824 3,105,027 2,829,489 SHAREHOLDERS' EQUITY 4,836,920 4,946,437 4,405,555 Capital stock 1,280,000 1,280,000 640,000 Capital reserves 692,096 561,410 936,066 - ----------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENT CORPORATE LAW - R$ THOUSAND 4Q2003 3Q2003 4Q2002 2003 2002 GROSS SALES REVENUE 4,169,144 4,131,602 3,081,499 15,782,967 11,143,960 Sales taxes (369,409) (378,670) (325,741) (1,427,585) (1,133,490) Freights and discounts (283,660) (259,174) (189,400) (988,421) (848,758) NET SALES REVENUE 3,516,075 3,493,758 2,566,358 13,366,961 9,161,712 Cost of sales (2,647,582) (2,687,894) (1,821,229) (10,076,740) (6,538,993) GROSS PROFIT 868,493 805,864 745,129 3,290,221 2,622,719 OPERATING RESULT (523,474) (500,225) (454,968) (2,138,040) (1,628,199) Selling expenses (125,709) (114,775) (98,623) (448,131) (337,609) Financial result (150,266) (233,947) 63,430 (621,376) (1,065,533) General and administrative (252,025) (184,705) (185,733) (804,501) (694,538) expenses Equity pick-up (11,963) 29,929 (149,527) (281,240) 447,483 Net other operating 16,489 3,273 (84,515) 17,208 21,998 revenue/expenses OPERATING PROFIT 345,019 305,639 290,161 1,152,181 994,520 Net non-operating 6,190 (2,730) (41,101) (6,162) (70,097) revenue/expenses PROFIT BEFORE TAXES/PARTICIPATION 351,209 302,909 249,060 1,146,019 924,423 Provision for income tax and 120,907 (51,584) (47,654) 139,856 (86,856) social contribution Statutory participation (13,409) (5,149) (5,872) (29,001) (16,551) NET PROFIT FOR THE PERIOD 458,707 246,176 195,534 1,256,874) 821,016 - ---------------------------------------------------------------------------------------------------------
CASH FLOW CORPORATE LAW - R$ THOUSAND 4Q2003 3Q2003 4Q2002 2003 2002 NET INCOME 458,707 246,176 195,534 1,256,874 821,016 Equity pick up 11,964 (29,929) 149,527 281,240 (447,483) Provision for credit risk 4,365 6,889 2,745 20,618 5,452 Gain/Loss in fixed asset disposal (5,148) 8,117 2,227 10,056 8,190 Gain/Loss in liquidation of (1,753) (1,446) 22,328 (1,556) 27,614 investment Monetary and exchange variation 43,921 101,504 (173,363) 136,349 761,826 Depreciation and amortization 156,491 156,359 126,273 605,045 511,929 Income tax and social (178,985) (29,531) 72,001 (441,456) 10,142 contribution Interest paid 156,720 137,234 125,640 593,308 464,260 Contingencies/legal deposits (9,579) (5,923) 2,568 562 2,191 Changes in trade account 137,375 (32,048) 178,811 (167,134) (161,318) receivable Changes in inventories (64,053) 88,107 (154,001) (207,267) (222,708) Changes in trade accounts payable 65,151 36,290 (95,294) 187,227 (46,140) Other accounts in operating 32,299 75,323 20,506 74,557 (116,930) activities NET CASH PROVIDED BY OPERATING 807,475 757,122 475,502 2,348,423 1,618,041 ACTIVITIES Fixed assets (247,126) (199,886) (139,248) (873,039) (565,851) acquisitions/disposals Deferred charges (1,987) (2,210) 687 (7,246) (6,134) Investments (53,579) (15,619) 97,578 (67,005) (913,011) acquisitions/disposals CASH (APPLIED TO) INVESTING (302,692) (217,715) (40,983) (947,290) (1,484,996) ACTIVITIES Fixed assets suppliers 10,108 (5,906) 13,697 2,196 (13,449) Working capital financing (406,679) (127,449) 102,175 (334,804) 640,514 Debentures (356,106) (9,966) (41,109) (347,456) 242,659 Proceeds from fixed assets 180,941 49,184 9,458 454,989 1,476,379 financing Payments of fixed assets (189,853) (74,038) (846,274) (541,308) (1,823,826) financing Interest paid for financing (104,101) (76,721) (103,346) (414,409) (351,052) Inter companies loans 544 (1,057) 16,600 (16,937) 845 Capital increase/Treasury stocks (24,151) - - (24,151) - Dividend/interest & statutory (82,398) (48,168) (1,697) (423,399) (259,366) particip, payment CASH PROVIDED BY (APPLIED TO (971,695) (294,121) (850,496) (1,645,279) (87,296) FINANCING ACTIVITIES NET CHANGE IN CASH (466,912) 245,286 (415,977) (244,146) 45,749 CASH BALANCE At the beginning of the period 1,485,017 1,217,043 1,966,259 1,420,236 1,003,384 Effect of exchange rate changes (2,926) 22,687 (182,432) (173,736) 318,717 on cash Cash of companies purchased 583 - 52,386 13,372 52,386 At the end of the period 1,015,726 1,485,016 1,420,236 1,015,726 1,420,236 CASH COMPOSITION Temporary cash investments 890,130 1,325,648 1,345,717 890,130 1,345,717 Cash 125,596 159,368 74,519 125,596 74,519 - -------------------------------------------------------------------------------------------------------------
METALURGICA GERDAU S.A. - NON-CONSOLIDATED BALANCE SHEET
CORPORATE LAW - R$ THOUSAND DEC. 2003 SEP. 2003 DEC. 2002 TOTAL ASSETS 2,156,842 1,977,298 1,773,071 CURRENT ASSETS 107,480 87,028 156,842 Cash and equivalents 25,186 38,207 63,861 Trade accounts receivable - - - Inventories - - - Other 82,294 48,821 92,981 LONG-TERM RECEIVABLES 18,145 19,900 17,568 Accounts receivable 18,145 19,900 17,568 PERMANENT ASSETS 2,031,217 1,870,370 1,597,661 Investments 2,029,479 1,868,595 1,596,773 Fixed assets 1,738 1,775 1,888 - ----------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 2,156,842 1,977,298 1,773,071 CURRENT LIABILITIES 94,090 44,537 108,668 Trade accounts payable 4 3 31 Loans and financing 624 601 18 Other accounts payable 93,462 43,933 108,619 LONG-TERM LIABILITIES 90,656 91,351 88,337 Loans and financing 1,972,096 1,841,410 1,576,066 Debentures 1,280,000 1,280,000 640,000 Other accounts payable 90,656 91,351 87,425 SHAREHOLDERS' EQUITY 1,927,096 1,841,410 1,576,066 Capital stock 1,280,000 1,280,000 640,000 Capital reserves 692,096 561,410 936,066 - -----------------------------------------------------------------------------------------------------
FINANCIAL STATEMENT CORPORATE LAW - R$ THOUSAND 4Q2003 3Q2003 4Q2002 2003 2002 GROSS SALES REVENUE - - - - - Sales taxes - - - - - Freights and discounts - - - - - NET SALES REVENUE - - - - - Cost of sales - - - - - GROSS PROFIT - - - - - OPERATING RESULT 226,543 124,009 121,388 586,659 461,888 Selling expenses - - - - - Financial result 1,450 1,211 1,246 6,284 4,681 General and administrative (10,146) (6,036) (8,495) (29,993) (20,645) expenses Equity pick-up 235,124 128,817 128,635 610,001 473,446 Net other operating 115 17 2 367 4,406 revenue/expenses OPERATING PROFIT 226,543 124,009 121,388 586,659 461,888 Net non-operating 42 1,401 (18,996) 1,445 (20,193) revenue/expenses PROFIT BEFORE 226,585 125,410 102,392 588,104 441,695 TAXES/PARTICIPATION Provision for income tax (7,631) (923) (3,715) (9,968) (4,861) and social contribution Statutory participation (812) (728) (794) (2,957) (2,806) NET PROFIT FOR THE PERIOD 218,142 123,759 97,883 575,179 434,028 - ----------------------------------------------------------------------------------------------------------- Profit per share - R$ 5.26 2.98 4.71 13.88 20.87 Book value per share - R$ 47.58 44.28 75.80 47.58 75.80 Outstanding shares* (thousand) 41,447 41,584 20,792 41,447 20,792 - ----------------------------------------------------------------------------------------------------------- *Per lot of 1,000 shares in the 4Q2002 and 2002
CASH FLOW CORPORATE LAW - R$ THOUSAND 4Q2003 3Q2003 4Q2002 2003 2002 NET INCOME 218,142 123,759 97,883 575,179 434,028 Equity pick up (235,124) (128,817) (128,635) (610,001) (473,446) Gain/Loss in disposal of (42) (1,402) 18,996 (1,445) 20,193 investment Monetary and exchange variation 1,091 1,540 2,525 5,563 9,920 Depreciation and amortization 36 37 37 149 151 Income tax and social 4,189 3,376 2,262 ,8,420 1,791 contribution Interest paid 11 19 524 14 2,252 Contingencies/legal deposits 3 - 17 18 (4,191) Changes in trade accounts payable 1 (65) 30 (27) 30 Other accounts in operating 10,338 (269) 7,284 8,656 8,485 activities NET CASH PROVIDED BY OPERATING (1,355) (1,822) 923 (13,474) (787) ACTIVITIES Fixed assets (1,344) 7,198 (8,661) 5,097 (8,661) acquisitions/disposals Interest on Equity/Distribution 36,119 23,366 4,912 185,108 94,425 of Profit Received INVESTMENTS ACQUISITIONS/DISPOSALS 34,775 30,564 (3,749) 190,205 85,764 Working capital financing (1,829) (1,778) (1,640) (7,015) 48,177 Debentures - (404) (1,041) (423) (3,281) Interest paid for financing - - - - (81) Inter companies loans (2,759) (866) (765) (2,506) 374 Capital increase/Treasury stocks (7,049) - (7,049) - Dividend/interest & statutory (34,804) (22,925) (2,782) (198,413) (137,905) particip, payment CASH PROVIDED BY (APPLIED TO (46,441) (25,973) (6,228) (215,406) (92,716) FINANCING ACTIVITIES NET CHANGE IN CASH (13,021) 2,769 (9,054) (38,675) (7,739) CASH BALANCE At the beginning of the period 38,207 35,438 72,915 63,861 71,600 At the end of the period 25,186 38,207 63,861 25,186 63,861 CASH COMPOSITION Temporary cash investments 25,163 28,205 63,847 25,163 63,847 Cash 23 2 14 23 14 - -----------------------------------------------------------------------------------------------------------
GERDAU S.A. - CONSOLIDATED BALANCE SHEET CORPORATE LAW - R$ THOUSAND DEC. 2003 SEP. 2003 DEC. 2002 TOTAL ASSETS 14,246,741 14,698,466 14,462,008 Current assets 5,334,880 5,820,746 5,371,089 Cash and equivalents 1,017,006 1,497,581 1,430,656 Trade accounts receivable 1,526,176 1,609,626 1,376,029 Inventories 2,336,598 2,262,359 2,219,981 Other 455,100 451,180 344,423 LONG-TERM RECEIVABLES 1,051,257 785,468 553,098 Accounts receivable 1,051,257 785,468 553,098 PERMANENT ASSETS 7,860,604 8,092,252 8,537,821 Investments 461,412 442,349 916,234 Fixed assets 7,399,192 7,649,903 7,621,587 - ---------------------------------------------------------------------------------------- TOTAL LIABILITIES 14,246,741 14,698,466 14,462,008 CURRENT LIABILITIES 4,342,899 4,837,840 5,388,897 Trade accounts payable 1,192,428 1,036,453 925,541 Loans and financing 2,417,403 3,153,173 3,707,916 Other accounts payable 733,068 648,214 755,440 LONG-TERM LIABILITIES 5,048,695 4,911,360 4,652,468 Loans and financing 3,396,085 3,326,536 2,750,492 Debentures 449,039 463,995 709,367 Other accounts payable 1,203,571 1,120,829 1,192,609 Minority shareholders 726,751 1,124,190 1,127,417 SHAREHOLDERS' EQUITY 4,855,147 4,949,266 4,420,643 Capital stock 1,735,656 1,735,656 1,335,120 Capital reserves 2,392,740 2,089,420 1,958,106 - ----------------------------------------------------------------------------------------
FINANCIAL STATEMENT CORPORATE LAW - R$ THOUSAND 4Q2003 3Q2003 3Q2002 2003 2002 GROSS SALES REVENUE 4,169,144 4,131,602 3,081,499 15,782,967 11,143,960 Sales Taxes (369,409) (378,670) (325,741) (1,427,585) (1,113,490) Freights and discounts (283,660) (259,174) (189,400) (988,421) (848,758) NET SALES REVENUES 3,516,075 3,493,758 2,566,358 13,366,961 9,161,712 Cost of sales (2,647,582) (2,687,894) (1,821,229) (10,076,740) (6,538,993) GROSS PROFIT 868,493 805,864 745,129 3,290,221 2,622,719 OPERATING RESULT (518,973) (502,394) (479,771) (2,143,009) (1,661,241) Selling expenses (125,767) (114,757) (98,603) (448,131) (337,589) Financial Result (156,351) (240,046) 57,537 (646,570) (1,083,645) General and administrative Expenses (238,371) (176,216) (174,345) (763,440) (664,785) Equity pick up (14,178) 26,130 (179,511) (299,357) 408,730 Net other operating revenue/expenses 15,694 2,495 (84,849) 14,489 16,048 OPERATING PROFIT 349,520 303,470 265,358 1,147,212 961,478 Net non-operating revenue/expenses 6,147 (4,131) (22,104) (7,608) (49,903) PROFIT BEFORE TAXES/PARTICIPATION 355,667 299,339 243,254 1,139,604 911,575 Provision for income tax And social contribution 116,797 (49,602) (43,123) 140,924 (79,891) Statutory participation (12,596) (4,421) (5,079) (26,043) (13,746) NET PROFIT FOR THE PERIOD 459,868 245,316 195,052 1,254,485 817,938 - --------------------------------------------------------------------------------------------------------------
CASH FLOW CORPORATE LAW - R$ THOUSAND 4Q2003 3Q2003 4Q2002 2003 2002 NET INCOME 459,868 245,316 195,052 1,254,485 817,938 Equity pick up 14,179 (26,130) 179,511 299,357 (408,730) Provision for credit risk 4,415 6,872 3,056 20,705 5,432 Gain/Loss in fixed asset disposal (5,148) 8,117 2,227 10,056 8,190 Gain/Loss in liquidation of investment (1,710) (45) 3,331 (111) 7,420 Monetary and exchange variation 42,830 99,966 (177,532) 130,790 748,573 Depreciation and amortization 156,452 156,320 126,233 604,887 511,771 Income tax and social contribution (189,572) (15,264) 69,058 (438,731) 7,755 Interest paid 155,510 135,432 123,181 587,143 454,651 Contingencies/legal deposits (9,466) (5,960) 2,551 624 6,334 Changes in trade account receivable 124,826 (28,381) 177,340 (180,879) (147,543) Changes in inventories (64,053) 88,107 (154,056) (207,267) (222,708) Changes in trade accounts payable 65,414 7,121 (94,754) 187,378 (46,005) Other accounts in operating activities 31,665 90,834 13,958 84,468 (115,673) NET CASH PROVIDED BY OPERATING ACTIVITIES 785,211 762,305 469,156 2,352,905 1,627,405 Fixed assets acquisitions/deposals (247,126) (199,887) (139,247) (873,039) (565,828) Deferred charges (1,987) (2,211) 685 (7,246) (6,135) Investments acquisitions/deposals (53,621) (20,934) 105,628 (71,603) (906,213) CASH (APPLIED TO) INVESTING ACTIVITIES (302,734) (223,032) (32,934) (951,888) (1,478,176) Fixed assets suppliers 10,107 (5,906) 13,697 2,195 (13,449) Working capital financing (406,850) (102,034) 115,185 (336,901) 618,679 Debentures (370,655) (8,966) (48,942) (394,340) 238,414 Proceeds from fixed assets financing 180,941 49,184 9,458 454,989 1,476,379 Payments of fixed assets financing (189,853) (74,038) (844,634) (541,308) (1,872,003) Interest paid for financing (102,093) (73,388) (101,411) (402,611) (343,614) Inter companies loans 16,013 411 19,306 (11,316) 3,771 Capital increase/Treasury stocks (17,102) - - (17,102) - Dividend/interest & statutory particip, payment (81,182) (48,121) (1,037) (407,910) (210,675) CASH PROVIDED BY (APPLIED TO) FINANCING ACTIVITIES (960,674) (262,858) (838,378) (1,654,304) 102,498) NET CHANGE IN CASH (478,198) 276,415 (402,156 ) (253,287) 46,731 CASH BALANCE At the beginning of the period 1,497,581 1,198,479 1,962,858 1,430,656 1,012,822 Effect of exchange rate changes on cash (2,961) 22,687 (182,432) (173,735) 318,717 Cash of companies purchased 583 - 52,386 13,372 52,386 At the end of the period 1,017,006 1,497,581 1,430,656 1,017,006 1,430,656 CASH COMPOSITION Temporary cash investments 895,391 1,341,196 1,359,288 895,391 1,359,288 Cash 121,615 156,385 71,368 121,615 71,368 - ----------------------------------------------------------------------------------------------------------------------
GERDAU S.A. - NON CONSOLIDATED BALANCE SHEET CORPORATE LAW - R$ THOUSAND DEC. 2003 SEPT. 2003 DEC. 2002 TOTAL ASSETS 4,727,498 7,590,894 7,806,739 CURRENT ASSETS 415,089 1,927,406 1,573,867 Cash and equivalents 177,684 446,864 365,680 Trade accounts receivable - 622,337 476,157 Inventories - 750,294 476,157 Other 237,405 107,911 619,693 LONG-TERM RECEIVABLES 64,097 125,633 112,337 Others 64,097 125,633 141,748 PERMANENT ASSETS 4,248,312 5,537,855 6,091,124 Investments 4,248,312 3,793,414 4,410,913 Fixed assets - 1,744,441 1,680,211 - ------------------------------------------------------------------------------- TOTAL LIABILITIES 4,727,498 7,590,894 7,806,739 CURRENT LIABILITIES 190,261 2,139,750 1,728,521 Trade accounts payable - 151,057 148,328 Loans and financing - 1,689,571 1,237,464 Other accounts payable 190,261 299,122 342,729 LONG-TERM LIABILITIES 408,841 1,626,068 2,784,992 Domestic financing - 1,037,069 1,032,164 Debentures 227,878 250,638 539,922 Provisions for contingencies 180,963 338,361 1,212,906 SHAREHOLDERS' EQUITY 4,128,396 3,825,076 3,293,226 Capital stock 1,735,656 1,735,656 1,335,120 Capital reserves 2,392,740 2,089,420 1,958,106 - -------------------------------------------------------------------------------
FINANCIAL STATEMENT CORPORATE LAW - R$ THOUSAND 4Q2003 3Q2003 4Q2002 2003 2002 GROSS SALES REVENUE 1,208,328 1,771,618 1,456,669 6,087,658 5,093,107 Sales taxes (210,311) (305,100) (271,922) (1,068,692) (946,759) Freights and discounts (29,838) (40,672) (271,922) (1,068,692) (946,759) NET SALES REVENUES 968,179 1,425,846 (47,372) (148,765) (146,227) Costs of sales 617,052 (898,760) 1,137,375 4,870,201 4,000,121 GROSS PROFIT 351,127 527,086 449,801 1,828,566 1,621,044 OPERATING RESULT 104,738 (239,038) (190,352) (513,665) (698,882) Selling expenses (61,880) (92,815) (73,034) (312,873) 249,901 Financial result 81,801) (144,689) 60,637 (393,602) (562,231) General and administrative expenses (71,270) (84,575) (79,023) (321,377) (288,592) Equity pick-up 317,983 80,489 (101,543) 503,064 393,147 Net other operating revenue/expenses 1,706 2,552 2,611 11,123 8,695 OPERATING PROFIT 455,865 288,08 259,449 1,314,901 922,162 Net non-operating revenue/expenses (14,124) (7,271) (18,458) (26,664) (41,304) PROFIT BEFORE TAXES/PARTICIPATION 441,741 280,777 240,991 1,288,237 880,858 Provision for income tax and social 19,162 (41,942) (61,075) (134,698) (69,537) contribution Statutory participation (2,876) (4,421) (4,478) (16,323) (12,633) NET PROFIT FOR THE PERIOD 458,027 234,414 175,438 1,137,216 798,688 - ----------------------------------------------------------------------------------------------------------- Profit per share - R$ 3.09 1.58 1.54 7.68 7.00 Book value per share - R$ 27,89 28.78 28.86 27.89 28.86 Outstanding shares*(thousand) 148,009 148,354 1 14,118 148,009 114,118 - ----------------------------------------------------------------------------------------------------------- *Per lot of 1,000 shares in the 4Q2002 and 2002
CASH FLOW CORPORATE LAW - R$ THOUSAND 4Q2003 3Q2003 4Q2002 2003 2002 NET INCOME 458,027 234,414 175,438 1,137,216 798,688 Equity pick up (317,984) (80,489) 101,543 (503,064) (393,147) Provision for credit risk (0) 5,555 4,911 11,594 4,911 Gain/Loss in fixed asset disposal 3,423 7,272 735 15,928 5,625 Gain/Loss in disposal of investment (1,680) - - (1,645) 4,087 Monetary and exchange variation 35,673 59,718 (98,167) 82,483 428,566 Depreciation and amortization 34,696 51,399 46,780 183,832 184,123 Income tax and social contribution (30,974) 2,028 55,672 (12,204) 4,769 Interest paid 47,904 85,197 69,493 291,462 227,040 Contingencies/legal deposits 225 1,028 3,469 4,997 (4,067) Changes in trade account receivable (11,467) (6,272) 54,810 (160,073) (84,816) Changes in inventories 24,196 91,496 (96,493) (106,405) (119,793) Increase (decrease) in trade account 8,005 19,640 8,646 11,157 33,309 payable Other operating activities accounts 10,085 37,667 (580) 135,319 59,280 NET CASH PROVIDED BY OPERATING 260,129 508,663 326,257 1,090,597 1,148,575 ACTIVITIES Fixed assets acquisitions/disposals (38,933) (82,164) (75,501) (262,887) (244,867) Deferred charges (387) (899) (256) (2,304) (1,444) Investments acquisitions/disposals 6,619 27,094 (404,926) (25,488) (2,307,556) Interest on Equity/Distribution of 8,291 3,220 17,457 38,251 30,628 Profit Received INVESTMENTS ACQUISITIONS/DISPOSALS (24,410) (52,749) (463,226) (252,428) (2,523,239) Fixed assets suppliers 2,478 (2,360) 12,976 2,435 2,747 Working capital financing 34,761 23,800 195,437 112,645 598,163 Debentures (368,822) (39,257) (40,620) (426,154) 250,959 Proceeds from fixed assets financing 15,256 36,034 82,494 111,684 654,749 Payments of fixed assets financing (93,031) (35,161) (77,496) (272,111) (472,577) Interest paid for financing (16,771) (30,826) (42,337) (142,343) (124,597) Inter companies loans 18,668 (4,796) 529 7,574 854,990 Capital increase/Treasury stock (17,102) - - (17,102) - Dividend/interest & statutory (80,336) (48,443) (1,454) (402,793) (201,490) particip. Payment CASH PROVIDED BY (APPLIED TO) FINANCING (504,899) (101,009) 129,529 (1,026,165) 1,562,944 ACTIVITIES NET CHANGE IN CASH (269,180) 354,905 (7,440) (187,996) 188,280 CASH BALANCE At the beginning of the period 446,864 91,959 373,120 365,680 177,400 At the end of the period 177,684 446,864 365,680 177,684 365,680 CASH COMPOSITION Temporary cash investments 177,674 381,633 327,087 177,674 327,087 Cash 10 65,231 38,593 10 38,593 - ------------------------------------------------------------------------------------------------------------
GERDAU ACOMINAS S.A. - Consolidated BALANCE SHEET CORPORATE LAW - R$ THOUSAND DEC. 2003 DEC. 2002 TOTAL ASSETS 7,584,716 3,927,500 CURRENT ASSETS 2,548,754 976,817 Cash and equivalents 258,327 276,444 Trade accounts receivable 762,045 225,756 Inventories 1,179,545 348,569 Other 348,837 126,048 LONG-TERM RECEIVABLES 452,500 125,475 Accounts receivable 452,500 125,475 PERMANENT ASSETS 4,583,462 2,825,208 Investments 66,638 - Fixed assets 4,516,824 2,825,208 - ---------------------------------------------------------------------- TOTAL LIABILITIES 7,584,716 3,927,500 CURRENT LIABILITIES 3,058,502 1,097,152 Trade accounts payable 466,675 172,593 Loan and financing 1,898,976 851,435 Other accounts payable 692,851 73,124 LONG-TERM LIABILITIES 1,495,894 392,867 Loans and financing 1,424,506 334,342 Debentures - - Other accounts payable 71,388 58,525 SHAREHOLDERS' EQUITY 3,030,320 2,437,481 Capital stock 2,340,576 1,699,503 Capital reserves 689,744 737,978 - ---------------------------------------------------------------------- FINANCIAL STATEMENT CORPORATE LAW - R$ THOUSAND 2003 2002 GROSS SALES REVENUE 3,174,613 1,588,968 Sales taxes (292,970) (136,959) Freight and discounts (233,081) (109,520) NET SALES REVENUES 2,647,842 1,342,489 Costs of sales (1,647,875) (886,324) GROSS PROFIT 999,967 456,165 OPERATING RESULT (394,336) (425,568) Selling expenses (94,702) (33,564) Financial Result 123,225) 273,704) General and administrative expenses (174,040) (109,646) Equity pick-up (1,323) 1,849 Net other operating revenue/expenses (1,046) (10,503) OPERATING PROFIT 605,631 30,597 Net non-operating revenue/expenses 49,856 (1,194) PROFIT BEFORE TAXES/PARTICIPATION 655,487 29,403 Provision for income tax and social 203,816 33,295 contribution Statutory participation (9,460) - NET PROFIT FOR THE PERIOD 848,843 62,698 - ---------------------------------------------------------------------- CASH FLOW CORPORATE LAW - R$ THOUSAND 2003 2002 NET INCOME 849,843 62,698 Equity pick up 1,323 (1,849) Provision for credit risk 8,461 172 Gain/Loss in fixed asset disposal 1,537 989 Gain/Loss in disposal of investment - - Monetary and exchange variation 85,398 297,199 Depreciation and amortization 148,450 100,661 Income tax and social contribution (344,086) (28,263) Interest paid 79,356 75,859 Contingencies/legal deposits (4,509) 10,523 Changes in trade account receivable 59,154 (103,587) Changes in inventories (105,083) 36,733 Changes in trade account payable 54,381 (82,957) Other accounts in operating activities (31,452) 56,382) NET CASH PROVIDED BY OPERATING ACTIVITIES 802,773 238,330 Fixed assets acquisitions/disposals (407,342) (187,833) Deferred charges 1,639) - Investments acquisitions/disposals (52,814) 64 CASH (APPLIED TO) INVESTING ACTIVITIES (461,795) (187,769) Fixed assets suppliers 8,511 82,702 Working capital financing (290,395) - Debentures - 54,902 Proceeds from fixed assets financing 268,881 (54,033) Payments of fixed assets financing (175,460) (69,531) Interest paid for financing (104,973) (21) Inter companies loans (10,695) - Dividend/interest & statutory (23,679) (21,970) particip. Payment CASH PROVIDED BY (APPLIED TO) FINANCING ACTIVITIES (327,810) (7,951) NET CHANGE IN CASH 13,167 42,610 CASH BALANCE At the beginning of the period 276,444 234,442 Effect of exchange rate changes on cash (31,895) (608) Cash of companies purchased 610 - At the end of the period 258,327 276,444 CASH COMPOSITION Temporary cash investments 193,358 271,527 Cash 64,969 4,917 - ------------------------------------------------------------------------------- GERDAU ACOMINAS S.A. - NON-CONSOLIDATED BALANCE SHEET Reclassified* CORPORATE LAW - R$ THOUSAND DEC. 2003 SEPT. 2003 TOTAL ASSETS 7,569,500 3,989,359 CURRENT ASSETS 2,524,173 1,017,470 Cash and equivalents 179,266 101,479 Trade accounts receivable 829,542 441,381 Inventories 1,172,964 348,569 Other 342,401 126,041 LONG-TERM RECEIVABLES 440,229 116,811 Others 440,229 116,811 PERMANENT ASSETS 4,605,098 2,855,078 Investments 197,463 29,870 Fixed assets 4,407,635 2,825,208 - ------------------------------------------------------------------ Reclassified* TOTAL LIABILITIES 7,569,500 3,989,359 CURRENT LIABILITIES 3,055,693 1,159,011 Trade accounts payable 464,233 172,593 Loans and financing 1,889,592 904,435 Other accounts payable 701,868 81,983 LONG-TERM LIABILITIES 1,483,487 392,867 Domestic financing 1,412,705 334,342 Debentures - - Reserves 70,782 58,525 SHAREHOLDERS' EQUITY 3,030,320 2,437,481 Capital stock 2,340,576 1,699,503 Capital reserves 689,744 737,978 - ------------------------------------------------------------------ * Reclassified for comparison purposes FINANCIAL STATEMENT Reclassified* CORPORATE LAW - R$ THOUSAND 2003 2002 GROSS SALES REVENUE 3,164,358 1,588,968 Sales taxes (292,972) (136,959) Freights and discounts (233,792) (109,520) NET SALES REVENUES 2,637,594 1,342,489 Costs of sales (1,638,289) (886,324) GROSS PROFIT 999,305 456,165) OPERATING RESULT (386,963) (425,568) Selling expenses (94,133) (33,507) Financial result (124,674) (275,921) General and administrative expenses (173,546) (109,337) Equity pick-up 6,458 3,637 Net other operating revenue/expenses (1,068) (10,440) OPERATING PROFIT 612,342 30,597 Net non-operating revenue/expenses 43,127 (1,194) PROFIT BEFORE TAXES/PARTICIPATION 655,469 29,403 Provision for income tax and social 203,834 33,295 contribution Statutory participation (9,460) - NET PROFIT FOR THE PERIOD 849,843 62,698 - ------------------------------------------------------------------ Profit per share - R$ 5.36 1.06 Book value per share - R$ 19.10 41.24 Outstanding shares*(thousand) 158,652 59,107 - ------------------------------------------------------------------ * Reclassified for comparison purposes CASH FLOW CORPORATE LAW - R$ THOUSAND 2003 2002 NET INCOME 849,843 62,698 Equity pick up (6,458) (3,637) Provision for credit risk 8,841 172 Gain/Loss in fixed asset disposal 1,492 989 Gain/Loss in disposal of investment - - Monetary and exchange variation 85,604 297,199 Depreciation and amortization 147,273 100,661 Income tax and social contribution (343,445) (28,263) Interest paid 79,159 75,859 Contingencies/legal deposits (4,394) 10,523 Changes in trade account receivable 164,479 (223,658) Changes in inventories (106,265) 36,733 Increase (decrease) in trade account 54,742 (100,044) payable Other operating activities accounts (21,756) 56,381) NET CASH PROVIDED BY OPERATING 908,735 99,385 ACTIVITIES Fixed assets acquisitions/disposals (405,273) (187,833) Deferred charges (1,581) - Investments acquisitions/disposals (52,814) - Interest on Equity/Distribution of Profit Received INVESTMENTS ACQUISITIONS /DISPOSALS (459,668) (187,833) Fixed assets suppliers 8,585 - Working capital financing (331,504) 77,618 Debentures - - Proceeds from fixed assets financing 268,753 54,902 Payments of fixed assets financing (175,108) (54,033) Interest paid for financing (104,768) (69,531) Inter companies loans (19,012) 25 Dividend/interest & statutory (18,226) (21,970) particip. Payment CASH PROVIDED BY (APPLIED TO) FINANCING (371,280) (12,989) ACTIVITIES NET CHANGE IN CASH 77,787 (101,437) CASH BALANCE At the beginning of the period 101,479 202,916 At the end of the period 179,266 101,479 CASH COMPOSITION Temporary cash investments 115,156 96,563 Cash 64,110 4,916 - ------------------------------------------------------------------ EX-3 5 e937052.txt PRESS RELEASE Exhibit 3 GERDAU ACOMINAS' NEW WIRE ROD ROLLING MILL BEGINS PRODUCTION IN MINAS GERAIS o It is the most modern equipment in the Americas in the production of wire rod and has a nominal capacity of 550 thousand annual metric tons. o The first wire rod coils were already produced at the rolling mill which is in the testing phase. o Shipments will begin in the first quarter of 2004 and will go to the international markets. The new rolling mill at Gerdau Acominas plant, located in the Ouro Branco (MG), has just produced its first wire rod coils. The most up-to-date equipment for wire rod in the Americas, has an installed capacity of 550 thousand metric tons per year and required an investment of US$ 66 million. Wire rod is the input for wires and these are used in the civil construction, agricultural and industrial sectors. The rolling mill is in the testing phase and will be producing distinct quality wire rod due to the new technology being used. The product will start shipping this first quarter and will be directed to foreign markets in which it is currently in high demand. According to the International Iron and Steel Institute (IISI), the world's crude steel output in 2004 should reach for the first time the one billion ton mark, an increase of 6% over the performance of 2003, a reflex of the increase in international demand, especially China. "We are confronted with a scenario of great demand for steel products throughout the world and wire rod, a prime input for other steel production phases, is also under great demand pressure, especially by Asian countries", states the CEO Mr. Jorge Gerdau Johannpeter. The Gerdau Group ended 2003 with an output over 12 million metric tons of crude steel in the Americas, compared to 9.4 million tons in the previous period. Gerdau Acominas already has four wire rod rolling mills in the country and located at the following mills: Riograndense (RS), Cosigua (RJ), Aconorte (PE) and Usiba (BA). At these units, the wire rod is produced in accordance with the most rigid international and Brazilian norms and supplies the domestic market and the drawing mills in the country - where it is converted into greater value-added products -, in addition to being exported to all continents. -----END PRIVACY-ENHANCED MESSAGE-----