-----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, WFlilvckTfOk7QO1l4pAWxI7hsAew6FbPPMFLaBo3qMnHxzoIh+gMntEe8zMJP79 58NPhBFqPy5GSel/XbrMkg== 0001104659-07-062971.txt : 20070816 0001104659-07-062971.hdr.sgml : 20070816 20070816090613 ACCESSION NUMBER: 0001104659-07-062971 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 26 CONFORMED PERIOD OF REPORT: 20070815 FILED AS OF DATE: 20070816 DATE AS OF CHANGE: 20070816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GERDAU S.A. CENTRAL INDEX KEY: 0001073404 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES & ROLLING & FINISHING MILLS [3310] IRS NUMBER: 000000000 STATE OF INCORPORATION: D5 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14878 FILM NUMBER: 071061278 BUSINESS ADDRESS: STREET 1: AVENIDA FARRAPOS, 1811 CITY: PORTO ALEGRE, RIO GRANDE DO SU STATE: D5 ZIP: 90220-005 BUSINESS PHONE: 011-55-51-3323-2703 MAIL ADDRESS: STREET 1: AVENIDA FARRAPOS, 1811 CITY: PORTO ALEGRE, RIO GRANDE DO SU STATE: D5 ZIP: 90220-005 FORMER COMPANY: FORMER CONFORMED NAME: GERDAU SA DATE OF NAME CHANGE: 19981112 6-K 1 a07-21981_16k.htm 8-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 August 15, 2007

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 o

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): 
o

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): 
o

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 o  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:  August 15, 2007

 

GERDAU S.A.

 

 

 

 

 

By:

/s/Osvaldo Burgos Schirmer

 

 

Name:  Osvaldo Burgos Schirmer

 

Title:   Chief Financial Officer

 

2




EXHIBIT INDEX

Exhibit

 

Description of Exhibit

 

 

 

99.1

 

Release, August 8, 2007

 

 

 

99.2

 

Gerdau S.A. Condensed consolidated interim financial information at June 30, 2007 and 2006

 

 

 

99.3

 

Notice to Shareholders, August 8, 2007

 

3



EX-99.1 2 a07-21981_1ex99d1.htm EX-99.1

Exhibit 99.1

 

Vision

To be a global steel company and one of the most profitable in the sector.

Mission

Gerdau is an organization focused on the steel business, seeking to satisfy customers’ needs and create shareholder value, committed to the fulfillment of people and to the sustainable development of society.

First half 2007 highlights

(Brazilian corporate law)

Gross Sales Revenue

· Consolidated gross sales revenue from January to June reached R$ 15.3 billion, a year on year growth of 13.7%. The breakdown of this value by region is as follows:

(in R$ million)

 

1H07

 

variation

 

participation

 

Brazil

 

6,851

 

11.4

%

44.7

%

North America

 

6,018

 

3.7

%

39.3

%

Latin America

 

1,752

 

59.3

%

11.4

%

Europe

 

706

 

64.6

%

4.6

%

TOTAL

 

15,327

 

13.7

%

100.0

%

 

· Gross sales revenue from the overseas units in addition to exports from Brazil, represented 64.1% of consolidated gross sales revenue for the first half.

Net Profit

· In the 1st half of 2007, consolidated net profit reached R$ 1.7 billion, 4.6% less than for the same period in 2006. Net margin was 13.1%. The breakdown of this result by region was as follows:

(in R$ million)

 

1H07

 

1H06

 

variation

 

Brazil (exclud. equity pick-up)

 

1,319

 

1,356

 

(2.7

)%

North America

 

537

 

470

 

14.3

%

Latin America

 

214

 

121

 

77.4

%

Europe

 

64

 

46

 

39.3

%

Subtotal

 

2,134

 

1,993

 

7.1

%

Equity pick-up(1)

 

(409

)

(185

)

121.2

%

TOTAL

 

1,725

 

1,808

 

(4.6

)%


(1) - FX effect over investments abroad.

EBITDA

· Operating cash generation, represented by EBITDA, reached R$ 2.8 billion in the 1st half of 2007, an increase of 8.4% compared with the 1st half of 2006. The EBITDA margin was 21.2%.

Exports

· In the first six months of 2007, overseas shipments from Brazil amounted to 1.4 million metric tons, generating revenue of US$ 645.4 million.

Output

· Through June of this year, output of crude steel (slabs, blooms and billets) reached 8.3 million metric tons, 8.2% more than in the first half of 2006.

· Production of rolled products amounted to 7.0 million metric tons, a growth of 11.9% in the period.

 

1




 

 

Selected data

 

1H2007

 

1H2006

 

Variation

 

Output (1,000 t)

 

 

 

 

 

 

 

Crude Steel (slabs/blooms/billets)

 

8,351

 

7,721

 

8.2

%

Rolled Products

 

7,034

 

6,288

 

11.9

%

 

 

 

 

 

 

 

 

Sales volume (1.000 t)

 

8,192

 

7,433

 

10.2

%

 

 

 

 

 

 

 

 

Gross sales revenue (R$ million)

 

15,327

 

13,481

 

13.7

%

Net sales revenue (R$ million)

 

13,201

 

11,515

 

14.6

%

EBITDA (R$ million)

 

2,802

 

2,584

 

8.4

%

Net Profit (R$ million)

 

1,725

 

1,808

 

(4.6

)%

 

 

 

 

 

 

 

 

Shareholders’ equity (R$ million)

 

13,965

 

11,612

 

20.3

%

Total assets (R$ million)

 

27,703

 

24,845

 

11.5

%

 

 

 

 

 

 

 

 

Gross margin

 

25.7

%

27.6

%

 

 

EBITDA margin

 

21.2

%

22.4

%

 

 

Net margin

 

13.1

%

15.7

%

 

 

 

 

 

 

 

 

 

 

Net Profit/Shareholders’ Equity(1)

 

24.4

%

28.9

%

 

 

 

 

 

 

 

 

 

 

Net debt/Net capitalization

 

21.0

%

19.6

%

 

 

Net debt/EBITDA(2)

 

0.7x

 

0.6x

 

 

 


(1) Last 12 months net profit over shareholders’ equity.

(2) EBITDA of last 12 months

Dividends

· 2nd quarter 2007.

· Payout date on August 29 2007.

· Base line date: date of record as of August 17 (ex-dividends on August 20).

· Metalúrgica Gerdau S.A. will pay R$ 90.2 million (R$ 0.49 per share).

· Gerdau S.A. will pay R$ 192.1 million (R$ 0.29 per share).

· Accumulated for the year

· Metalúrgica Gerdau S.A.: R$ 193.2 million, with a dividend yield (dividend per share/share price as at June 30) of 4.4%.

· Gerdau S.A.: R$ 417.4 million, with dividend yield (dividend per share/share price as at June 30) of 2.7%.

Acquisitions during the year

· Chaparral Steel Company – in the United States (to be concluded)

· July 10 2007

· Signature of agreement for the acquisition of the steel company for US$ 4.22 billion (US$ 86.00 per share).

· The company is the second largest producer of structural steel in North America and also a major producer of steel bars. It operates two mini mills located in Midlothian, Texas, and Dinwiddie County, Virginia. Chaparral has an annual installed capacity of 2.5 million metric tons of crude steel.

· The transaction is subject to company shareholder approval and other procedures inherent to the process of concluding the business as well as regulatory sanction, and should be finalized by the end of the year.

· D & R Steel, LLC – in the United States (to be concluded)

· July 2007 (through the Pacific Coast Steel joint venture)

· The company is located in Glendale, Arizona. It is a supplier of fabricated rebars with an installed capacity of about 30 thousand metric tons per year.

· Trefilados de Urbina, S.A.-Trefusa – in Spain (to be concluded)

· July 26 2007 (through Sidenor Industrial, in which Gerdau has 40% stake).

· Trefusa is a producer of special cold drawn steels, located in Vitoria. The transaction should be finalized in October.

· SJK Steel Plant Limited – in India (to be concluded)

· June 22 2007.

· Joint venture with the Kalyani Group for operating a steel mill in Tadipatri, in the south of the state of Andhra Pradesh in India. Gerdau and the Kalyani Group will each have a stake of

 

2




 

 

approximately 45% in the company’s capital stock. Other investors will hold the remaining 10%.

· SJK Steel Plant is a mini mill with an estimated installed capacity of 275 thousand metric tons of liquid steel per year. It operates a blast furnace, melt shop with two converters, a ladle furnace and a continuous caster plant for the production of pig iron. The industrial plant has an infrastructure to expand its installed capacity to 1.6 million metric tons of crude steel per year.

· SIZUCA – Siderúrgica Zuliana – in Venezuela

· June 18 2007

· A concrete reinforcing bars mini-mill with an annual installed capacity of 300 thousand metric tons of crude steel and 200 thousand metric tons of rolled steel.

· Valley Placers, Inc. (VPI) – in the United States

· June 13 2007 (through the Pacific Coast Steel joint venture).

· The company is specialized in the delivery and assembly of steel products. It also operates a fabricated rebars unit and a construction products distribution center.

· Industrias Nacionales (INCA) – in the Dominican Republic

· May 25 2007.

· Strategic alliance, with a shareholding stake, for developing businesses in the steel sector in the Dominican Republic and in the Caribbean region.

· INCA is a long steel rolling mill company and a manufacturer of value added steel products. It also imports flat and long steels as well as being a producer of pipes and PVC connections. The annual sales of steel products totaled approximately 400 thousand metric tons.

· Siderúrgica Tultitlán – in Mexico

· March 28 2007.

· Mini mill situated in the metropolitan area of Mexico City and a producer of concrete reinforcing bars and shapes and profiles with an installed capacity of 350 thousand metric tons of crude steel and 330 thousand metric tons of rolled products. With an investment plan in progress, production capacity will increase to 500 thousand metric tons of steel and 430 thousand metric tons of rolled products before the end of 2007.

Electricity energy generation concession

· On March 06, 2007, ANEEL (the Brazilian Electricity Energy Regulator) has transferred to Gerdau the concession to generate electricity at the Caçu and Barra dos Coqueiros hydroelectric complex, made up of two hydroelectric plants to be built on the Claro River between the municipalities of Caçu and Cachoeira Alta, in the southeast region of the state of Goiás.

· The complex will have an installed capacity of 155 MW (Caçu with 65 MW and Barra dos Coqueiros, 90 MW) and construction should be completed by early 2010.

Sarbanes-Oxley (SOX) Certification

· On April 20, 2007, PriceWaterhouseCoopers Auditores Independentes issued full internal controls structure compliance certification as required under Section 404 of the Sarbanes-Oxley (SOX) act with respect to the processes material to the Company’s fiscal year 2006 financial statements.

· The conclusion of this work and the certification ratify Gerdau’s commitment to high standards of ethics and corporate governance practice and the ongoing concern to ensure the highest standards of controls on processes, transparency and the creation of shareholder value.

Gerdau is now Investment Grade

· On January 23, 2007, Fitch Ratings upgraded its risk rating for Gerdau to Investment Grade for long term domestic and foreign currency corporate credit.

· On June 04 2007, it was Standard & Poor’s turn to attribute an Investment Grade rating for corporate credit with a stable outlook.

· This risk classification will certainly contribute to the Company’s ability to fund itself at a lower cost and enhance its image in the capital markets.

· Following the agreement to acquire the Chaparral Steel Company in the United States, the rating agencies have placed Gerdau’s risk classification on watch until they have full information on the structure of financing to be used and its impact on the consolidated balance sheet.

 

3




 

 

Gerdau Ameristeel signs agreements with labor union

· This year, Gerdau Ameristeel reached an agreement on new labor contracts with the United Steelworkers – USW at various of its North American industrial units:

· In March, the company signed agreements for the units in Beaumont, Texas; St. Paul, Minnesota; and Wilton, Iowa. The new contracts will be effective until March, July and September 2010, respectively.

· In early April, a further contract was signed for the Whitby unit in Canada, the contract for which will be effective until February 2010.

· On May 25, a new agreement was signed for the Manitoba unit in Canada. The new contract will be effective through May 2012.

· On July, a new contract was signed for the Joliet unit in Illinois. The contract will be effective until July 2011.

· Negotiations with the labor union are continuing at the Calvert City, Kentucky, and Sand Springs, Oklahoma units.

Gerdau commemorates 60 years as a participant in the capital markets

· In 1947, when the Brazilian capital markets were still in their infancy, Gerdau took its first steps as a public held company with its shares traded on the Brazilian and overseas stock exchanges, so identifying a major opportunity through this vehicle for financing its growth.

· In that same year, the Company also began the payment of dividends on an uninterrupted basis to its shareholders.

· Its shares are currently traded on the São Paulo, New York, Madrid and Toronto stock exchanges.

·  Shareholder confidence since that time has allowed Gerdau to expand its businesses into thirteen countries, reach annual sales revenue of about US$ 15 billion and increasingly consolidate its position as a global company.

 

4




Second Quarter 2007 Performance
(Brazilian corporate law)

Output and Sales

·      In the 2nd quarter of 2007, Gerdau consolidated three new companies: Siderúrgica Tultitlán in Mexico, Industrias Nacionales (INCA) in the Dominican Republic and SIZUCA – Siderúrgica Zuliana in Venezuela. The first two were consolidated for the full three months and the last one consolidated in the month of June alone.

·      The Gerdau companies total crude steel output amounted to 4.3 million metric tons in the quarter, 8.3% higher than the volume reached in the 1st quarter. The Brazilian units contributed 44.5% to volume for the period, the North American operations (with the exception of Mexico), 41.5%, the Latin American operations (excluding Brazil) with 11.3% and the European businesses with the remaining 2.7%.

Output
(1,000 metric tons)

 

2Q07

 

1Q07

 

Variation
2Q07/1Q07

 

1H07

 

1H06

 

Variation
1H07/1H06

 

Crude Steel (slabs/ blooms/billets)

 

 

 

 

 

 

 

 

 

 

 

 

 

Brazil

 

1,932

 

1,764

 

9.6

%

3,696

 

3,605

 

2.5

%

North America

 

1,803

 

1,758

 

2.6

%

3,561

 

3,461

 

2.9

%

Latin America

 

491

 

371

 

32.4

%

862

 

489

 

76.1

%

Europe

 

115

 

117

 

(1.9

)%

232

 

166

 

39.9

%

Total

 

4,341

 

4,010

 

8.3

%

8,351

 

7,721

 

8.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rolled Products

 

 

 

 

 

 

 

 

 

 

 

 

 

Brazil

 

1,236

 

1,106

 

11.7

%

2,342

 

2,283

 

2.6

%

North America

 

1,756

 

1,761

 

(0.3

)%

3,517

 

3,274

 

7.4

%

Latin America

 

534

 

420

 

27.2

%

954

 

588

 

62.3

%

Europe

 

110

 

111

 

(0.6

)%

221

 

143

 

53.9

%

Total

 

3,636

 

3,398

 

7.0

%

7,034

 

6,288

 

11.9

%

 

·      Output of rolled products reached 3.6 million metric tons, a 7.0% increase in volume over the first quarter 2007.

·      Second quarter 2007 consolidated sales totaled 4.1 million metric tons, the same levels as for the 1st quarter. Overseas operations contributed 60.2% of this volume and the Brazilian units, the remaining 39.8%.

5




 

Consolidated Shipments(1)
(1,000 metric tons)

 

2Q07

 

1Q07

 

Variation
2Q07/1Q07

 

1H07

 

1H06

 

Variation
1H07/1H06

 

Brazil

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic market

 

1,083

 

995

 

8.8

%

2,078

 

1,953

 

6.4

%

Exports

 

547

 

596

 

(8.2

)%

1,143

 

1,130

 

1.1

%

Total

 

1,630

 

1,591

 

2.4

%

3,221

 

3,083

 

4.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Abroad

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

1,759

 

1,933

 

(9.0

)%

3,692

 

3,520

 

4.9

%

Latin America

 

603

 

455

 

32.2

%

1,058

 

681

 

55.2

%

Europe

 

108

 

113

 

(4.0

)%

221

 

149

 

48.2

%

Total

 

2,470

 

2,501

 

(1.3

)%

4,971

 

4,350

 

14.3

%

Consolidated Total

 

4,100

 

4,092

 

0.2

%

8,192

 

7,433

 

10.2

%


(1)            Excluding shipments to subsidiaries.

·      In Brazil, the improved demand during the 2nd quarter, both from the civil construction and also the industrial segments, was responsible for a growth of 8.8% in sales to Brazilian-based consumers as compared with the 1st quarter of 2007.

·      The Company’s Brazilian exports, including shipments to subsidiaries, amounted to 655.5 thousand metric tons in the quarter, generating revenues of US$ 322.9 million.

·      In the United States and Canada, the anticipation of purchases in the first months of 2007 ahead of price increases announced to take effect for the following months, provoked a quarter on quarter reduction of 9.0% in sales volume.

·      Gerdau’s units, eight of them in different countries in Latin America, posted total sales of 602.3 thousand metric tons in the 2nd quarter, 32.2% more than for the 1st quarter. This growth was due in large part to the consolidation of the operations in Mexico, Venezuela and the Dominican Republic.

Consolidated Shipments(1)
(1,000 metric tons)


(1)            Excluding shipments to subsidiaries

·      European sales units totaled 108.3 thousand metric tons in the 2nd quarter, 4.0% less than in the  1st quarter of 2007.

Results

·      Consolidated net revenue reached R$ 6.7 billion in the 2nd quarter 2007, a quarter on quarter increase of 3.5%. The results reported for the period reflect more robust demand for the Company’s products in Brazil and an improvement in international market prices.

Net Sales Revenue

 

 

 

 

 

Variation

 

 

 

 

 

Variation

 

(R$ million)

 

2Q07

 

1Q07

 

2Q07/1Q07

 

1H07

 

1H06

 

1H07/1H06

 

Brazil

 

2,727

 

2,523

 

8.1

%

5,250

 

4,646

 

13.0

%

North America

 

2,748

 

2,937

 

(6.4

)%

5,686

 

5,472

 

3.9

%

Latin America

 

895

 

682

 

31.3

%

1,576

 

980

 

60.8

%

Europe

 

344

 

345

 

(0.5

)%

689

 

417

 

65.1

%

Total

 

6,714

 

6,487

 

3.5

%

13,201

 

11,515

 

14.6

%

 

·      While on the one hand, prices contributed to an

6




 

increase in net sales revenue for the quarter, on the other hand, the increase in costs of some raw materials inhibited a more significant growth in operating margins. The gross margin rose from 25.3% in the 1st quarter to 26.1% in the 2nd quarter of 2007. Gross profit for the period was R$ 1.8 billion in the period, 6.9% higher than for the first three months of the year.

 

 

 

·

 

Selling, general and administrative expenses registered a 10.7% increase in the 2nd quarter in relation to the preceding quarter, amounting to R$ 585.3 million. This increase in expenses is mainly the result of the consolidation of new companies and the booking of PIS/COFINS taxes on Interest on Capital Stock, paid out in the 2nd quarter.

 

Gross Margin

(%)

·

 

EBITDA reached R$ 1.4 billion in the period from April to June, 4.1% more than the value reported in the first three months of 2007. EBITDA margin held stable at 21.3% in the 2nd quarter.

 

EBITDA

 

 

 

 

 

Variation

 

 

 

 

 

Variation

 

(R$ million)

 

2Q07

 

1Q07

 

2Q07/1Q07

 

1H07

 

1H06

 

1H07/1H06

 

Brazil

 

716

 

669

 

7.0

%

1,385

 

1,411

 

(1.9

)%

North America

 

489

 

515

 

(5.0

)%

1,004

 

883

 

13.8

%

Latin America

 

159

 

125

 

28.0

%

284

 

219

 

29.4

%

Europe

 

65

 

64

 

0.7

%

129

 

71

 

81.3

%

Total

 

1,429

 

1,373

 

4.1

%

2,802

 

2,584

 

8.4

%

 

Note: EBITDA of companies abroad is influenced by FX variations in the period.

7




EBITDA Composition

 

 

 

 

 

Variation

 

 

 

 

 

Variation

 

(R$ million)

 

2Q07

 

1Q07

 

2Q07/1Q07

 

1H07

 

1H06

 

1H07/1H06

 

Gross profit

 

1,753

 

1,640

 

6.9

%

3,393

 

3,184

 

6.6

%

Selling expenses

 

(150

)

(133

)

12.5

%

(283

)

(258

)

9.9

%

General/Administ. expenses

 

(435

)

(395

)

10.1

%

(830

)

(834

)

(0.5

)%

Depreciation & amortization

 

261

 

261

 

0.2

%

522

 

492

 

6.0

%

EBITDA

 

1,429

 

1,373

 

4.1

%

2,802

 

2,584

 

8.4

%

 

·

 

In the 2nd quarter of 2007, net financial revenue (financial income less financial expenses) was R$ 195.9 million. Excluding revenue arising mainly from the foreign exchange translation effect on debt denominated in foreign currency (R$ 241.6 million) and monetary restatement (R$ 1.3 million), net financial revenue amounted to R$ 47.0 million in the quarter.

 

8




 

·

 

The foreign exchange translation effect on overseas investments produced a negative equity pick-up of R$ 225.2 million in the 2nd quarter of 2007.

 

 

 

·

 

Second quarter consolidated net profit reached R$ 856.4 million, 1.5% less than the result reported for the 1st quarter, and equivalent to a net margin of 12.8%.

 

Net Profit

 

 

 

 

 

Variation

 

 

 

 

 

Variation

 

(R$ million)

 

2Q07

 

1Q07

 

2Q07/1Q07

 

1H07

 

1H06

 

1H07/1H06

 

Brazil (exclud. equity pick-up)

 

652

 

667

 

(2.2

)%

1.319

 

1,356

 

(2.7

)%

North America

 

260

 

277

 

(6.2

)%

537

 

470

 

14.3

%

Latin America

 

136

 

78

 

74.7

%

214

 

121

 

77.4

%

Europe

 

33

 

31

 

4.8

%

64

 

46

 

39.3

%

Subtotal

 

1,081

 

1,053

 

2.7

%

2,134

 

1,993

 

7.1

%

Equity pick-up

 

(225

)

(184

)

22.2

%

(409

)

(185

)

121.2

%

TOTAL

 

856

 

869

 

(1,5

)%

1,725

 

1,808

 

(4.6

)%

 

Investments

·

 

The investments in fixed assets amounted to US$ 327.2 million in the 2nd quarter 2007, largely allocated to the expansion in installed production capacity of Gerdau Açominas in Ouro Branco (Minas Gerais State).

 

 

 

·

 

Gerdau continued its expansion plan via acquisitions. In the 2nd quarter the acquisitions of companies in the Dominican Republic, Venezuela and the United States were concluded at a total investment of US$ 144.5 million.

 

Investments

 

 

 

 

 

 

 

(US$ million)

 

2Q07

 

1Q07

 

1H07

 

Brazil

 

213.6

 

269.7

 

483.3

 

Abroad

 

113.6

 

112.2

 

225.8

 

North America

 

30.7

 

54.0

 

84.7

 

Latin America

 

77.7

 

23.2

 

100.9

 

Europe

 

5.2

 

35.0

 

40.2

 

Total in fixed assets

 

327.2

 

381.9

 

709.1

 

Concluded acquisitions

 

 

 

 

 

 

 

North America

 

10.0

 

 

10.0

 

Latin America

 

134.5

 

259.0

 

393.5

 

Total in acquisitions

 

144.5

 

259.0

 

403.5

 

Total

 

471.7

 

640.9

 

1,112.6

 

 

·

 

At the end of June and throughout July, investments in acquisitions continued apace with the establishment of a joint venture with the Kalyani Group in India; through the signature of an agreement to acquire Chaparral Steel Company and D & R Steel, LLC in the United States; and Trefilados de Urbina S.A.-Trefusa in Spain.

 

Indebtedness

·

 

Net debt (loans and financing, plus debentures, less cash and cash equivalents), as at June 30 2007, amounted to R$ 3.7 billion. This amount is 7.7% higher than at March 31, due principally to the running down of financial investments in payment of acquisitions concluded during the period.

 

 

 

·

 

If only gross debt is taken into account (loans and financing, plus debentures), 22.5% was short term (R$ 1.9 billion) and 77.5%, long term (R$ 6.7 billion).

 

 

 

·

 

On June 30, gross debt was made up of 32.5% in Reais, 43.4% in foreign currency contracted by the Brazilian operations and 24.1% in different currencies contracted by overseas subsidiaries.

 

 

 

·

 

On June 30, cash and cash equivalents totaled R$ 5.0 billion, of which R$ 2.4 billion (48.5%) was in foreign currency, in large part US dollars.

 

9




 

Indebtedness

 

 

 

 

 

 

 

(R$ million)

 

06.30.2007

 

03.31.2007

 

06.30.2006

 

Short term

 

 

 

 

 

 

 

Domestic Currency (Brazil)

 

828

 

536

 

444

 

Foreign Currency (Brazil)

 

492

 

490

 

629

 

Companies Abroad

 

623

 

651

 

1,281

 

Total

 

1,943

 

1,677

 

2,354

 

Long Term

 

 

 

 

 

 

 

Domestic Currency (Brazil)

 

1,988

 

2,014

 

1,511

 

Foreign Currency (Brazil)

 

3,265

 

3,638

 

3,275

 

Companies Abroad

 

1,458

 

1,346

 

1,521

 

Total

 

6,711

 

6,998

 

6,307

 

Gross Debt

 

8,654

 

8,675

 

8,661

 

Cash & Cash Equivalents

 

4,954

 

5,238

 

5,890

 

Net Debt

 

3,700

 

3,437

 

2,771

 

 

·      On June 30, the long term debt maturity profile, including debentures, was as follows:

Year

 

R$million

 

2008

 

1,031

 

2009

 

960

 

2010

 

761

 

2011

 

1,363

 

2012 and after

 

2,596

 

Total

 

6,711

 

 

·      At the end of June, the leading debt indicators for the Gerdau companies were as follows:

Indicadores

 

06.30.2007

 

03.31.2007

 

06.30.2006

 

Net debt / Total net capitalization

 

21.0

%

20.3

%

19.6

%

Gross Debt / EBITDA(1)

 

1.6

x

1.6

x

1.8

x

Net Debt / EBITDA(1)

 

0.7

x

0.6

x

0.6

x


(1) – Last 12 months

10




GERDAU S.A. - Consolidated
BALANCE SHEET

Corporate Law - R$ thousand

 

Jun. 2007

 

Mar. 2007

 

Jun. 2006

 

TOTAL ASSETS

 

27,702,889

 

27,295,340

 

24,845,189

 

Current assets

 

13,507,105

 

13,557,763

 

13,309,740

 

Cash and cash & equivalents

 

770,423

 

649,403

 

1,328,115

 

Trade accounts receivable

 

2,876,255

 

2,865,127

 

2,644,257

 

Short-term investments

 

4,183,181

 

4,588,848

 

330,227

 

Taxes recoverable

 

463,934

 

426,196

 

4,502,449

 

Inventories

 

4,781,501

 

4,557,428

 

4,073,013

 

Deferred income tax & other

 

431,811

 

470,761

 

431,679

 

Non-current Assets

 

14,195,784

 

13,737,577

 

11,535,449

 

Long-term receivables

 

1,352,842

 

1,317,112

 

1,267,760

 

Deferred income tax and Other

 

1,352,842

 

1,317,112

 

1,267,760

 

Permanent assets

 

12,842,942

 

12,420,465

 

10,267,689

 

Investments

 

32,317

 

32,911

 

20,891

 

Fixed assets

 

12,046,571

 

11,716,051

 

9,839,332

 

Intangible

 

703,662

 

609,667

 

335,041

 

Deferred

 

60,392

 

61,836

 

72,425

 

 

Corporate Law - R$ thousand

 

Jun. 2007

 

Mar. 2007

 

Jun. 2006

 

TOTAL LIABILITIES

 

27,702,889

 

27,295,340

 

24,845,189

 

Current liabilities

 

5,527,390

 

5,258,179

 

5,507,658

 

Loans and Financing

 

1,942,125

 

1,675,440

 

2,129,656

 

Debentures

 

1,074

 

1,249

 

224,443

 

Trade accounts payable

 

2,112,989

 

2,240,696

 

1,970,740

 

Taxes payable

 

426,741

 

489,224

 

340,105

 

Deferred income tax & other

 

1,044,461

 

851,570

 

842,714

 

Non-current liabilities

 

8,210,956

 

8,553,964

 

7,725,726

 

Loans and Financing

 

5,889,617

 

6,207,778

 

5,511,051

 

Debentures

 

821,114

 

790,376

 

795,585

 

Deferred income tax & other

 

1,500,225

 

1,555,810

 

1,419,090

 

Minority Shareholders

 

2,878,441

 

2,828,434

 

2,326,706

 

Shareholders’ equity

 

11,086,102

 

10,654,763

 

9,285,099

 

Capital stock

 

7,810,453

 

7,810,453

 

7,810,453

 

Capital reserves

 

376,936

 

376,873

 

376,873

 

Profit reserves

 

1,778,241

 

1,777,707

 

41,029

 

Retained earnings

 

1,120,472

 

689,730

 

1,056,744

 

 

11




GERDAU S.A. - Consolidated
FINANCIAL STATEMENT

Corporate Law - R$ thousand

 

2Q2007

 

1Q2007

 

2Q2006

 

1S2007

 

1S2006

 

GROSS SALES REVENUE

 

7,820,352

 

7,507,101

 

6,864,110

 

15,327,453

 

13,481,057

 

Deductions of gross revenue

 

(1,106,369

)

(1,020,114

)

(962,842

)

(2,126,483

)

(1,965,801

)

Net sales revenue

 

6,713,983

 

6,486,987

 

5,901,268

 

13,200,970

 

11,515,256

 

Cost of sales

 

(4,961,102

)

(4,846,546

)

(4,196,304

)

(9,807,648

)

(8,331,618

)

Gross profit

 

1,752,880

 

1,640,441

 

1,704,964

 

3,393,322

 

3,183,638

 

Selling expenses

 

(149,843

)

(133,241

)

(132,749

)

(283,084

)

(257,536

)

General and administrative expenses

 

(435,424

)

(395,402

)

(397,607

)

(830,826

)

(834,564

)

Financial income

 

153,672

 

243,825

 

186,135

 

397,497

 

484,943

 

Financial expenses

 

42,277

 

(30,631

)

(204,098

)

11,646

 

(128,498

)

Other operating income (expenses), net

 

9,347

 

5,591

 

23,168

 

14,938

 

83,714

 

Equity pick-up

 

(225,178

)

(184,278

)

12,130

 

(409,456

)

(185,098

)

Operating profit

 

1,147,732

 

1,146,305

 

1,191,943

 

2,294,037

 

2,346,599

 

Non-operating income (expenses), net

 

(3,813

)

(1,747

)

14,814

 

(5,560

)

26,660

 

Profit before taxes/participation

 

1,143,919

 

1,144,558

 

1,206,757

 

2,288,477

 

2,373,259

 

Provision for income tax

 

(242,008

)

(256,894

)

(231,380

)

(498,902

)

(489,748

)

Deferred income tax

 

(41,801

)

(14,184

)

6,452

 

(55,985

)

(64,076

)

Statutory participation

 

(3,684

)

(4,107

)

(5,891

)

(7,791

)

(11,041

)

Net Income

 

856,426

 

869,373

 

975,938

 

1,725,799

 

1,808,394

 

Controlling Shareholders

 

656,013

 

689,730

 

796,177

 

1,345,743

 

1,476,192

 

Minority Shareholders

 

200,413

 

179,643

 

179,761

 

380,056

 

332,202

 

 

GERDAU S.A. - Consolidated
CASH FLOW

Corporate Law - R$ thousand

 

2Q2007

 

1Q2007

 

2Q2006

 

1S2007

 

1S2006

 

NET INCOME

 

856,426

 

869,373

 

975,938

 

1,725,799

 

1,808,394

 

Equity pick up

 

225,177

 

184,279

 

(12,130

)

409,456

 

185,098

 

Provision for credit risk

 

3,282

 

3,710

 

4,944

 

6,992

 

12,803

 

Gain/Loss in fixed asset disposal

 

16,854

 

3,034

 

(10,925

)

19,888

 

(22,404

)

Gain/Loss in disposal/incorporation of investment

 

6

 

(75

)

(3,571

)

(69

)

(3,715

)

Intangible amortization

 

721

 

812

 

 

1,533

 

 

Monetary and exchange rate variation (1)

 

(220,164

)

(174,914

)

(3,968

)

(395,078

)

(241,178

)

Depreciation and amortization

 

261,413

 

260,989

 

240,425

 

522,402

 

492,648

 

Income tax

 

61,711

 

44,214

 

12,746

 

105,925

 

116,480

 

Interest paid

 

159,653

 

151,022

 

205,282

 

310,675

 

361,657

 

Contingencies/legal deposits

 

(4,405

)

67,393

 

(11,605

)

62,988

 

10,845

 

Changes in trade account receivable

 

(116,943

)

(425,659

)

(192,221

)

(542,602

)

(526,660

)

Changes in inventories

 

(268,736

)

9,283

 

(164,377

)

(259,453

)

147,889

 

Changes in trade accounts payable

 

(74,678

)

253,034

 

244,007

 

178,356

 

182,288

 

Other accounts in operating activities

 

59,101

 

26,147

 

(116,300

)

85,248

 

(176,015

)

Net cash provided by operating activities

 

959,418

 

1,272,642

 

1,168,245

 

2,232,060

 

2,348,130

 

Fixed assets acquisitons/ disposals

 

(642,088

)

(684,846

)

(576,308

)

(1,326,934

)

(1,074,340

)

Intangible changes

 

3,853

 

(2,123

)

 

1,730

 

 

Deferred changes

 

383

 

(2,712

)

(1,797

)

(2,329

)

(5,140

)

Investments acquisitions/ disposals

 

(260,758

)

(562,915

)

(419,706

)

(823,673

)

(855,672

)

Cash (applied to) investing activities

 

(898,610

)

(1,252,596

)

(997,811

)

(2,151,206

)

(1,935,152

)

Fixed assets suppliers

 

25,351

 

(20,214

)

19,815

 

5,137

 

14,199

 

Debentures

 

3,474

 

9,260

 

(90,224

)

12,734

 

(130,270

)

Proceeds from fixed assets financing

 

942,155

 

462,088

 

361,346

 

1,404,243

 

1,442,843

 

Payments of fixed assets financing

 

(779,881

)

(637,444

)

157,670

 

(1,417,325

)

(613,928

)

Interest paid for financing

 

(152,743

)

(155,745

)

(120,192

)

(308,488

)

(250,857

)

Intercompanies loans

 

(115,868

)

8,329

 

(41,901

)

(107,539

)

(39,520

)

Capital increase/Treasury stock

 

359

 

2,379

 

(7,951

)

2,738

 

9,538

 

Dividend/ interest & statutory particip, payment

 

(264,330

)

(364,060

)

(230,578

)

(628,390

)

(612,721

)

Proceeds from sales of consolidated investment funds

 

(78,582

)

 

 

(78,582

)

 

Accounts payable for the acquisition of companies

 

169,780

 

 

 

169,780

 

 

Cash provided by (applied to) financing activities

 

(250,285

)

(695,407

)

47,985

 

(945,692

)

(180,716

)

Net change in cash

 

(189,477

)

(675,361

)

218,419

 

(864,838

)

232,262

 

Cash balance

 

 

 

 

 

 

 

 

 

 

 

At the beginning of the period

 

5,238,251

 

5,966,823

 

5,480,028

 

5,966,823

 

5,464,694

 

Effect of exchange rate changes on cash

 

(118,361

)

(85,388

)

9,267

 

(203,749

)

(156,325

)

Opening balance of incorporated companies for the year

 

23,191

 

32,177

 

122,850

 

55,368

 

289,933

 

At the end of the period

 

4,953,604

 

5,238,251

 

5,830,564

 

4,953,604

 

5,830,564

 

Cash composition

 

 

 

 

 

 

 

 

 

 

 

Short-term investments

 

4,183,181

 

4,588,848

 

4,502,449

 

4,183,181

 

4,502,449

 

Cash & cash equivalents

 

770,423

 

649,403

 

1,328,115

 

770,423

 

1,328,115

 


(1)    Includes gain/loss on derivative instruments

12




Metalúrgica Gerdau S.A.

·      Second quarter 2007 dividends

·      Payment on August 29 2007 based on date of record as at August 17 (ex-dividends on August 20).

·      Shareholders will be paid R$ 90.2 million (R$ 0.49 per share).

·      Accumulated for the year: R$ 193.2 million, a dividend yield (dividends per share for the last four quarters/preferred share prices as at June 30) of 4.4%.

Period

 

Dividends

 

Per share

 

Quantity of
Shares 

 

Payment date

 

 

 

(R$million)

 

(R$)

 

(million)

 

 

 

1st quarter

 

103.0

 

0.56

 

184.0

 

05/24/07

 

2nd quarter

 

90.2

 

0.49

 

184.0

 

08/29/07

 

Total

 

193.2

 

1.05

 

184.0

 

 

 

·      Share liquidity

·      Turn-over in Metalúrgica Gerdau S.A.’s (GOAU) shares was R$ 2.8 billion on the São Paulo Stock Exchange during the 1st  half of 2007, 25.5% up on the same period in 2006.

·      The 1st half average daily financial trading volume in preferred shares was R$ 22.0 million.

·      During the period, 76,018 trades were transacted in the Company’s shares, 17.7% more than in the 1st half of 2006.

·      The quantity of shares traded reached 39.0 million in the 1st half of 2007 against 36.1 million for the same period in 2006 (+8.2%).

·      In the 1st half of 2007, the preferred shares appreciated 55.2% against 22.3% for the Ibovespa (Bovespa Stock Index).

·      Metalurgica Gerdau S.A.’s second quarter 2007 net profit was R$ 299.2 million, equivalent to R$ 1.63 per share. This profit was largely generated from the equity pick-up on investments in subsidiary/affiliate companies and was 6.2% down on the 1st quarter of 2007. Net profit for the accumulated first half period was R$ 618.4 million, 9.8% less than the equivalent period in 2006.

·      On June 30 2007, the Company’s shareholders’ equity was R$ 5.3 billion, equivalent to a net worth of R$ 28.63 per share.

Gerdau S.A.

·      Second quarter 2007 dividends

·      Payment on August 29 2007 based on date of record as at August 17 (ex-dividends on August 20).

·      Shareholders will be paid R$ 192.1 million (R$ 0.29 per share).

·      Accumulated for the year: R$ 417.4 million, a dividend yield (dividends per shares for the last four quarters/preferred share prices as at June 30) of 2.7%.

Period

 

Dividends

 

Per share

 

Number of
Shares 

 

Payment date

 

 

 

(R$million)

 

(R$)

 

(million)

 

 

 

1st quarter

 

225.3

 

0.34

 

662.6

 

05/24/07

 

2nd quarter

 

192.1

 

0.29

 

662.6

 

08/29/07

 

Total

 

417.4

 

0.63

 

662.6

 

 

 

13




 

·                  Share liquidity

·                  São Paulo Stock Exchange

                        Turnover in Gerdau S.A.(GGBR) shares was R$ 8.2 billion during the 1st half of 2007, 26.7% up on the same period 2006.

                        The average daily financial trading volume in preferred shares was R$ 58.6 million.

                        During the period to the end of June 2007, 389,343 trades were transacted in the company’s shares, 29.3% more than the first six months of 2006.

                        The quantity of shares traded reached 240.4 million in the 1st half of 2007, 27.5% up on the same period 2006.

                        In the 1st half 2007, the preferred shares appreciated 44.2% against 22.3% for the Ibovespa (Bovespa Stock Index).

·                  New York Stock Exchange (NYSE)

                        Turnover in Gerdau S.A. ADRs (GGB) was US$ 4.5 billion during the 1st half of 2007, 26.1% up on the same period in 2006.

                        The average daily financial trading volume in ADRs was US$ 36.3 million against US$ 28.5 million in the 1st half 2006.

                        For the first six months to the end of June 2007, 232.5 million securities were traded (203.1 million in the same period 2006).

                        In the 1st half 2007, the ADRs appreciated 60.8% against 7.6% for the Dow Jones Industrial Average.

·                  Madrid Stock Exchange (Latibex)

                        During the first six months of 2007, Gerdau S.A. (XGGB) saw a turnover of 794.2 thousand in its preferred shares. Financial trading turnover was approximately € 11.6 million in the period.

·              From July 2006 to June 2007, evolution in preferred shares on the Bovespa and the NYSE was as follows:

·      In the 2nd quarter 2007, Gerdau S.A. posted a net profit of R$ 656.0 million, equivalent to R$ 0.99 per share. This profit was largely generated from the equity pick-up on investments in subsidiary/affiliate companies and was 4.9% down on the 1st quarter 2007. Accumulated first half 2007 net profit reached R$ 1.3 billion, 8.8% less than for the same period in 2006.

·      On June 30 2007, the Company’s shareholders’ equity was R$ 11.1 billion, equivalent to a net worth of R$ 16.73 per share.

14




Gerdau Ameristeel Corporation

·      On September 7, the Company’s shareholders will be paid dividends with respect to 2nd quarter 2007 results at US$ 0.02 per share based on a date of record as at August 22.

·      Share liquidity

·                  Toronto Stock Exchange

                        Turnover in Gerdau Ameristeel (GNA.TO) shares was Cnd$ 645.9 million in the first six months of 2007. The Stock Exchange traded 46.3 million of company securities during the period.

                        The average daily financial trading volume was Cnd$ 5.1 million.

·                  New York Stock Exchange (NYSE)

                        Turnover in Gerdau Ameristeel (GNA) shares amounted to US$ 935.5 million in the 1st half of 2007, 78.2% more than the same period for 2006.

                        The average daily financial trading volume was US$ 7.5 million up to June 2007.

                        During the period, 74.3 million of company securities were transacted.

                        In the first half of 2007, the shares appreciated 62.9% against 7.6% for the Dow Jones Industrial Average.

·      From July 2006 to June 2007, evolution in the shares on the Toronto Stock Exchange and the New York Stock Exchange was as follows:

·      Results

·      Net sales revenue adjusted to Brazilian GAAP was R$ 2.7 billion in the 2nd quarter 2007 against R$ 2.9 billion in the 1st quarter.

·      EBITDA reached R$ 489.4 million in the quarter equivalent to an EBITDA 17.8% margin.

·      Net profit reached R$ 260.1 million in the 2nd quarter against R$ 277.3 million in the 1st quarter 2007.

THE MANAGEMENT

This press release may contain statements, which constitute forward-looking statements. Such forward-looking statements are dependent on estimates, data or methods that may be incorrect or imprecise and may be incapable of being realized. These estimates are also subject to risks, uncertainties and suppositions that include, among others: the overall economic, political and commercial environment in Brazil and in the markets where we are present in addition to current and future government regulations. Prospective investors are cautioned that none of these forward-looking statements are guarantees of future performance since they involve risks and uncertainties. The Company does not accept, and specifically disclaims, any liability to update any forward-looking statements, which relate to the date they were made only.

15



EX-99.2 3 a07-21981_1ex99d2.htm EX-99.2

Exhibit 99.2

GERDAU S.A.

Condensed consolidated

interim financial information

at June 30, 2007 and 2006




GERDAU S.A.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands of U.S. Dollars, except number of shares)

ASSETS

 

 

June 30, (Unaudited)

 

December

 

 

 

2007

 

2006

 

31, 2006

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

Cash and cash equivalents

 

492,764

 

732,316

 

485,498

 

Restricted cash

 

13,466

 

9,154

 

13,512

 

Short-term investments

 

 

 

 

 

 

 

Trading

 

1,888,538

 

1,673,147

 

2,221,422

 

Available for sale

 

197,457

 

299,458

 

123,430

 

Held to maturity

 

81,124

 

76,201

 

138,200

 

Trade accounts receivable, net

 

1,702,114

 

1,289,931

 

1,283,420

 

Inventories

 

2,679,823

 

2,028,129

 

2,380,878

 

Unrealized gains on derivatives

 

941

 

395

 

2,660

 

Deferred income taxes

 

39,550

 

55,701

 

51,730

 

Tax credits

 

248,395

 

159,738

 

253,519

 

Prepaid expenses

 

50,607

 

39,592

 

39,301

 

Other current assets

 

103,602

 

79,608

 

90,860

 

Total current assets

 

7,498,381

 

6,443,370

 

7,084,430

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

Property, plant and equipment, net

 

7,078,118

 

5,018,572

 

5,990,629

 

Deferred income taxes

 

148,808

 

227,291

 

187,710

 

Judicial deposits

 

91,974

 

70,320

 

80,103

 

Unrealized gains on derivatives

 

7,569

 

12,627

 

6,623

 

Tax credits

 

243,330

 

129,553

 

192,967

 

Equity investments

 

225,590

 

185,938

 

197,511

 

Investments at cost

 

18,501

 

11,750

 

11,377

 

Goodwill

 

548,443

 

389,274

 

336,768

 

Prepaid pension cost

 

272,754

 

90,153

 

243,558

 

Advance payment for acquisition of investment

 

14,895

 

75,593

 

14,895

 

Other non-current assets

 

250,421

 

171,371

 

142,294

 

Total assets

 

16,398,784

 

12,825,812

 

14,488,865

 

 

F-2




GERDAU S.A.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands of U.S. Dollars, except number of shares)

LIABILITIES

 

 

June 30, (Unaudited)

 

December

 

 

 

2007

 

2006

 

31, 2006

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term debt and current portion of long-term debt

 

1,047,939

 

1,050,567

 

1,065,120

 

Trade accounts payable

 

1,269,231

 

1,007,357

 

1,113,338

 

Income taxes payable

 

38,387

 

54,887

 

41,810

 

Unrealized losses on derivatives

 

1,216

 

 

1,258

 

Deferred income taxes

 

45,294

 

100,960

 

25,230

 

Payroll and related liabilities

 

227,827

 

143,370

 

177,421

 

Dividends and interest on equity payable

 

1,217

 

1,504

 

99,003

 

Taxes payable, other than income taxes

 

241,026

 

118,563

 

182,136

 

Other current liabilities

 

305,141

 

299,899

 

218,987

 

Total current liabilities

 

3,177,278

 

2,777,107

 

2,924,303

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

Long-term debt, less current portion

 

3,224,431

 

2,608,840

 

3,128,868

 

Debentures

 

521,168

 

444,453

 

443,280

 

Deferred income taxes

 

429,463

 

270,642

 

416,046

 

Accrued pension and other post-retirement benefits obligation

 

260,405

 

217,347

 

251,415

 

Provision for contingencies

 

207,760

 

205,446

 

189,725

 

Unrealized losses on derivatives

 

14,329

 

6,658

 

10,489

 

Deferred credit related to acquisition of Corporación Sidenor

 

129,103

 

 

106,899

 

Other non-current liabilities

 

232,766

 

174,096

 

204,710

 

Total non-current liabilities

 

5,019,425

 

3,927,482

 

4,751,432

 

 

 

 

 

 

 

 

 

Total liabilities

 

8,196,703

 

6,704,589

 

7,675,735

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Minority interest

 

2,098,143

 

1,629,450

 

1,882,489

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred shares - no par value - 800,000,000 authorized shares and 435,986,041 shares issued at June 30, 2007 and 2006 and at December 31, 2006.

 

2,253,377

 

2,253,377

 

2,253,377

 

Common shares - no par value - 400,000,000 authorized shares and 231,607,008 shares issued at June 30, 2007 and 2006 and at December 31, 2006.

 

1,179,236

 

1,179,236

 

1,179,236

 

Additional paid-in capital

 

132,786

 

129,949

 

131,546

 

Treasury stock - 5,030,532 and 4,200,596 preferred shares at June 30, 2007 and 2006, respectively, and 5,103,344 at December 31, 2006.

 

(45,354

)

(28,409

)

(46,010

)

 

 

 

 

 

 

 

 

Legal reserve

 

82,603

 

6,960

 

74,420

 

Retained earnings

 

2,117,843

 

1,143,710

 

1,459,818

 

Accumulated other comprehensive income (loss)

 

 

 

 

 

 

 

·   Foreign currency translation adjustment

 

348,963

 

(157,946

)

(151,798

)

·   Unrealized net gains and losses on pension and postretirement benefits, net of tax

 

20,478

 

 

30,052

 

·   Fair value of securities available for sale, net of tax

 

14,006

 

 

 

·   Additional minimum pension liability

 

 

(35,104

)

 

Total shareholders’ equity

 

6,103,938

 

4,491,773

 

4,930,641

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

16,398,784

 

12,825,812

 

14,488,865

 

 

F-3




GERDAU S.A.

CONDENSED CONSOLIDATED INTERIM STATEMENT OF INCOME (Unaudited)

(in thousands of U.S. Dollars, except number of shares and per share amounts)

 

 

Three-month period ended
June 30,

 

Six-month period ended
June 30,

 

 

 

2007

 

2006

 

2007

 

2006

 

 

 

 

 

 

 

 

 

 

 

Sales

 

4,240,712

 

3,306,257

 

8,102,669

 

6,451,293

 

Less: Federal and state taxes on sales

 

(379,624

)

(289,129

)

(693,169

)

(586,258

)

Less: Discounts

 

(69,634

)

(30,503

)

(128,641

)

(71,848

)

 

 

 

 

 

 

 

 

 

 

Net sales

 

3,791,454

 

2,986,625

 

7,280,859

 

5,793,187

 

Cost of sales

 

(2,809,637

)

(2,142,220

)

(5,450,693

)

(4,228,062

)

 

 

 

 

 

 

 

 

 

 

Gross profit

 

981,817

 

844,405

 

1,830,166

 

1,565,125

 

Sales and marketing expenses

 

(84,736

)

(68,054

)

(156,968

)

(127,557

)

General and administrative expenses

 

(250,125

)

(202,765

)

(455,298

)

(414,481

)

Other operating income (expenses), net

 

12,941

 

(11,221

)

39,616

 

62,757

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

659,897

 

562,365

 

1,257,516

 

1,085,844

 

Financial expenses

 

(104,867

)

(72,858

)

(226,459

)

(185,532

)

Financial income

 

85,325

 

91,864

 

209,924

 

224,953

 

Foreign exchange gains and losses, net

 

124,994

 

21,549

 

212,255

 

115,750

 

Gains and losses on derivatives, net

 

(11,843

)

9,898

 

(7,784

)

10,571

 

Equity in earnings of unconsolidated companies, net

 

20,230

 

37,180

 

38,826

 

66,476

 

 

 

 

 

 

 

 

 

 

 

Income before taxes on income and minority interest

 

773,736

 

649,998

 

1,484,278

 

1,318,062

 

 

 

 

 

 

 

 

 

 

 

Provision for taxes on income

 

 

 

 

 

 

 

 

 

Current

 

(137,027

)

(121,282

)

(274,678

)

(247,445

)

Deferred

 

(30,669

)

(7,691

)

(59,672

)

(43,431

)

 

 

(167,696

)

(128,973

)

(334,350

)

(290,876

)

 

 

 

 

 

 

 

 

 

 

Income before minority interest

 

606,040

 

521,025

 

1,149,928

 

1,027,186

 

 

 

 

 

 

 

 

 

 

 

Minority interest

 

(179,722

)

(107,967

)

(298,890

)

(179,547

)

 

 

 

 

 

 

 

 

 

 

Net income

 

426,318

 

413,058

 

851,038

 

847,639

 

 

 

 

 

 

 

 

 

 

 

Per share data (in US$)

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

 

 

 

 

 

 

 

 

Preferred

 

0.64

 

0.62

 

1.28

 

1.28

 

Common

 

0.64

 

0.62

 

1.28

 

1.28

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

 

 

 

 

 

 

 

 

Preferred

 

0.64

 

0.62

 

1.27

 

1.26

 

Common

 

0.64

 

0.62

 

1.27

 

1.26

 

 

 

 

 

 

 

 

 

 

 

Number of weighted-average common shares outstanding – Basic and diluted

 

231,607,008

 

231,607,008

 

231,607,008

 

231,607,008

 

 

 

 

 

 

 

 

 

 

 

Number of weighted-average preferred shares outstanding – Basic

 

432,990,363

 

432,990,363

 

432,620,192

 

432,620,192

 

 

 

 

 

 

 

 

 

 

 

Number of weighted-average preferred shares outstanding – Diluted

 

438,699,588

 

438,699,588

 

437,727,307

 

438,926,281

 

 

F-4




GERDAU S.A.

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS (Unaudited)

(in thousands of U.S. Dollars)

 

 

Three-month period ended
June 30,

 

Six-month period ended
June 30,

 

 

 

2007

 

2006

 

2007

 

2006

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

Net income

 

426,318

 

413,058

 

851,038

 

847,639

 

Adjustments to reconcile net income to cash flows from operating activities:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

135,770

 

118,738

 

287,178

 

242,916

 

Equity in earnings on unconsolidated companies

 

(20,230

)

(37,180

)

(38,826

)

(66,476

)

Foreign exchange loss

 

(124,994

)

(118,143

)

(212,255

)

(115,750

)

Losses (gains) on derivative instruments

 

11,843

 

(9,898

)

7,784

 

(10,571

)

Minority interest

 

179,722

 

107,967

 

298,890

 

179,547

 

Deferred income taxes

 

30,669

 

7,691

 

59,672

 

43,431

 

Loss (gain) on disposal of property, plant and equipment

 

8,046

 

(4,993

)

9,380

 

(10,228

)

Provision (reversal) for doubtful accounts

 

1,343

 

2,378

 

3,482

 

5,830

 

Provision for contingencies

 

435

 

(12,870

)

3,991

 

(4,633

)

Distributions from joint ventures

 

11,257

 

30,750

 

31,661

 

61,153

 

Other

 

 

 

(35

)

 

 

 

 

 

 

 

 

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

Decrease (increase) in accounts receivable

 

(82,312

)

(107,271

)

(340,378

)

(261,091

)

Decrease (increase) in inventories

 

(170,101

)

(100,334

)

(135,082

)

30,425

 

Increase (decrease) in accounts payable and accrued liabilities

 

(7,814

)

267,660

 

92,324

 

214,629

 

Decrease (increase) in other assets

 

217,703

 

(36,529

)

171,743

 

(129,876

)

Increase (decrease) in other liabilities

 

10,774

 

65,952

 

79,258

 

70,289

 

Purchases of short-term investments

 

408,216

 

(216,667

)

(414,128

)

(394,177

)

Proceeds from maturities and sales of short-term investments

 

(154,659

)

16,138

 

941,526

 

598,894

 

Net cash provided by operating activities

 

881,986

 

386,447

 

1,697,223

 

1,301,951

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

Additions to property, plant and equipment

 

(380,892

)

(255,009

)

(743,750

)

(496,386

)

Payment for acquisitions in North America

 

(4,988

)

(107,145

)

(4,988

)

(114,837

)

Payment for acquisition in Argentina

 

 

 

(3,916

)

(3,916

)

Payment for acquisition in Spain

 

 

 

 

(200,082

)

Advance payment for acquisition in Peru

 

 

(60,698

)

 

(60,698

)

Payment for acquisition in Mexico

 

 

 

(258,840

)

 

Payment for acquisition in Dominican Republic

 

(42,900

)

 

(42,900

)

 

Payment for acquisition in Venezuela

 

(4,593

)

 

(4,593

)

 

Cash balance of acquired companies

 

3,414

 

22,371

 

9,652

 

66,442

 

Purchases of available for sale securities

 

(243,969

)

(40,949

)

(461,658

)

(240,515

)

Proceeds from maturities and sales of available for sale securities

 

187,836

 

 

387,631

 

 

Net cash used in investing activities

 

(486,092

)

(441,430

)

(1,123,362

)

(1,049,992

)

 

F-5




 

 

 

Three-month period ended
June 30,

 

Six-month period ended
June 30,

 

 

 

2007

 

2006

 

2007

 

2006

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

Cash dividends and interest on equity paid

 

(126,612

)

(181,347

)

(306,898

)

(312,250

)

Proceeds from exercise of employee stock options

 

596

 

465

 

992

 

4,384

 

Decrease (increase) in restricted cash

 

 

(14

)

(6

)

463

 

Debt issuance

 

475,138

 

253,304

 

666,869

 

728,634

 

Repayment of debt

 

(588,275

)

(67,309

)

(877,830

)

(461,131

)

Net related party debt loans and repayments

 

(78,438

)

(24,526

)

(75,959

)

(16,515

)

Net cash provided by (used in) financing activities

 

(317,591

)

(19,427

)

(592,832

)

(56,415

)

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

21,350

 

(100

)

26,237

 

4,397

 

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

99,653

 

(74,510

)

7,266

 

199,941

 

Cash and cash equivalents at beginning of period

 

393,111

 

806,826

 

485,498

 

532,375

 

Cash and cash equivalents at end of period

 

492,764

 

732,316

 

492,764

 

732,316

 

 

F-6



EX-99.3 4 a07-21981_1ex99d3.htm EX-99.3

Exhibit 99.3

NOTICE TO SHAREHOLDERS

PAYMENT OF DIVIDENDS

We would like to inform our Shareholders that the Boards of the companies listed below, in meetings held on August 8th, 2007, deliberated about the proposals presented by management with regards to the payment of dividends for the second quarter of the current fiscal year, ended on June 30th, 2007. The amounts will be calculated and paid based on the position held by shareholders on August 17th, 2007. The payment date will be August 29th, 2007, and constitute an anticipation of the annual minimum dividend, as stated in the by-laws, as follows:

Company

 

Amount per share
Common and Preferred Shares

 

Metalúrgica Gerdau S.A.

 

R$ 0.49

 

 

 

 

 

Gerdau S.A.

 

R$ 0.29

 

 

Please note that shares acquired on August 20th, 2007, and thereafter, will be traded EX-DIVIDEND.

Additional information can be obtained at our Shareholders Department, located at

Av. Farrapos 1811, 90220-005 Porto Alegre / RS – Brazil

Phone: +55 (51) 3323.2211 – Fax: +55 (51) 3323.2281

E-mail: acionistas@gerdau.com.br

Porto Alegre, August 8th, 2007.

Osvaldo Burgos Schirmer

Vice President

Investor Relations Director



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-----END PRIVACY-ENHANCED MESSAGE-----