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 May 6, 2011
Commission File Number 1-14878
GERDAU S.A.
(Exact Name as Specified in its Charter)
N/A
(Translation of Registrants 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: May 6, 2011
|
GERDAU S.A. | |
|
| |
|
|
|
|
By: |
/s/ Osvaldo Burgos Schirmer |
|
Name: |
Osvaldo Burgos Schirmer |
|
Title: |
Chief Financial Officer |
Exhibit 99.1
GERDAU S.A. and subsidiaries 05/05/11 1Q11 Quarterly Results |
|
|
|
|
|
|
|
|
|
Vision
To be a global steel company and one of the most profitable in the industry.
Mission
Gerdau is a steelmaker that seeks to satisfy the needs of its customers and create value for shareholders and is committed to personal achievement and the sustainable development of society.
Gerdau is the leading producer of long steel in the Americas and one of the largest suppliers of specialty long steel in the world. It has over 40,000 employees and an industrial presence in 14 countries, with operations in the Americas, Europe and Asia, for combined annual installed production capacity of more than 25 million tonnes of steel. Gerdau is the largest recycler in Latin America and the world, transforming millions of tonnes of scrap into steel each year. With nearly 140,000 shareholders, Gerdau is listed on the São Paulo, New York and Madrid stock exchanges.
Highlights in the First Quarter of 2011
|
|
1st Quarter |
|
1st Quarter |
|
Variation |
|
4th Quarter |
|
Variation |
|
Key Information |
|
2011 |
|
2010 |
|
1Q11/1Q10 |
|
2010 |
|
1Q11/4Q10 |
|
Production (1,000 tonnes) |
|
|
|
|
|
|
|
|
|
|
|
Crude Steel (slabs/blooms/billets) |
|
4,749 |
|
4,359 |
|
9 |
% |
4,378 |
|
8 |
% |
Long Steel |
|
4,049 |
|
3,580 |
|
13 |
% |
3,663 |
|
11 |
% |
Shipments (1,000 tonnes) |
|
4,710 |
|
4,053 |
|
16 |
% |
4,513 |
|
4 |
% |
Net Sales (R$ million) |
|
8,364 |
|
7,108 |
|
18 |
% |
7,800 |
|
7 |
% |
EBITDA (R$ million) |
|
1,102 |
|
1,401 |
|
-21 |
% |
815 |
|
35 |
% |
Net Income (R$ million) |
|
409 |
|
573 |
|
-29 |
% |
420 |
(4) |
-3 |
% |
Gross Margin |
|
14 |
% |
20 |
% |
|
|
12 |
% |
|
|
EBITDA Margin |
|
13 |
% |
20 |
% |
|
|
10 |
% |
|
|
Shareholders Equity (R$ million) |
|
20,386 |
|
22,654 |
|
|
|
20,148 |
|
|
|
Total Assets (R$ million) |
|
42,772 |
|
45,636 |
|
|
|
42,891 |
|
|
|
Gross Debt / Total Capitalization (1) |
|
41 |
% |
39 |
% |
|
|
42 |
% |
|
|
Net Debt / Total Capitalization (2) |
|
37 |
% |
31 |
% |
|
|
38 |
% |
|
|
Gross Debt / EBITDA (3) |
|
2.9 |
x |
3.2 |
x |
|
|
2.8 |
x |
|
|
Net Debt / EBITDA (3) |
|
2.4 |
x |
2.2 |
x |
|
|
2.4 |
x |
|
|
(1) Total capitalization = shareholders equity + gross debt
(2) Total capitalization = shareholders equity + net debt
(3) EBITDA in last 12 months
(4) Includes nonrecurring net gain of R$ 289 million
World Steel Market
Steel Industry Production |
|
1st |
|
1st |
|
Variation |
|
4th |
|
Variation |
|
(million tonnes) |
|
2011 |
|
2010 |
|
1Q11/1Q10 |
|
2010 |
|
1Q11/4Q10 |
|
Crude Steel |
|
|
|
|
|
|
|
|
|
|
|
Brazil |
|
8.5 |
|
8.0 |
|
6 |
% |
7.9 |
|
8 |
% |
North America (excluding Mexico) |
|
24.1 |
|
22.8 |
|
6 |
% |
22.8 |
|
6 |
% |
Latin America (excluding Brazil) |
|
7.9 |
|
6.9 |
|
14 |
% |
8.0 |
|
-1 |
% |
China |
|
169.9 |
|
156.3 |
|
9 |
% |
152.0 |
|
12 |
% |
Other |
|
161.1 |
|
147.3 |
|
9 |
% |
157.3 |
|
2 |
% |
Total |
|
371.5 |
|
341.3 |
|
9 |
% |
348.0 |
|
7 |
% |
Source: worldsteel e Gerdau
In 1Q11, world steel output grew in relation to both 1Q10 and 4Q10 (see table above). All regions where Gerdau has operations recorded recoveries in production volume. China remained an important player in the international market, with its production growing in 1Q11 in relation to both 1Q10 and 4Q10, and the country accounting for 46% of world steel output. Average capacity utilization in the world steel industry stood at 82% in March 2011, despite the earthquake that hit Japan and the instability in the Middle East.
On April 18, the World Steel Association presented its outlook for 2011. Worldsteel estimates that apparent steel consumption will grow by 6% in both 2011 and 2012, reaching 1.36 and 1.44 billion tonnes, respectively. This outlook is based on a stable and solid recovery in the world economy. However, uncertainties remain regarding the financial fragility of European nations, the instability in oil-producing countries in the Middle East and the potential impacts from the earthquake in Japan, with this latter factor not yet considered by worldsteels estimates.
Apparent steel consumption in China should grow by 5% in 2011 to 605 million tonnes. The higher growth already observed at the start of this year should be attenuated by measures to curb the overheating of the economy by the Chinese government. In India, apparent consumption is expected to grow 13% in 2011 to 69 million tonnes, driven by the expansion of the domestic economy, the high infrastructure requirements and the growth in industrial production. In the United States, worldsteel estimates growth in apparent consumption of 13% in 2011 to 91 million tonnes, reflecting the second cycle of liquidity injections and fiscal policy initiatives, which are measures that have boosted economic activity and confidence in the energy market and the manufacturing industry. On the other hand, the construction market remains weak. In South and Central America, apparent consumption should grow by 7% to 49 million tonnes. Meanwhile, the Middle East and North Africa should present stability, although there is a high degree of uncertainty regarding the level of steel consumption given the political turmoil observed in the region.
Gerdaus performance in the first quarter of 2011
The Consolidated Financial Statements of Gerdau S.A. are presented in accordance with the international accounting standards issued by the International Accounting Standards Board (IASB) and the accounting practices adopted in Brazil, which are fully aligned with the international standards issued by the Accounting Pronouncement Committee (CPC) and approved by the Securities and Exchange Commission of Brazil (CVM), pursuant to CVM Instruction 485 dated September 1, 2010.
The information in this report does not include data for jointly controlled entities and associate companies, except where stated otherwise.
Business Operations
The information in this report is presented in accordance with Gerdaus corporate governance, as follows:
· Brazil (Brazil BO) includes the Brazil operations, except specialty steel
· North America (North America BO) includes all North American operations, except Mexico and specialty steel
· Latin America (Latin America BO) includes all Latin American operations, except Brazil
· Specialty Steel (Specialty Steel BO) includes the specialty steel operations in Brazil, Spain, the United States and India.
Crude Steel and Long Products Output
Production |
|
1st Quarter |
|
1st Quarter |
|
Variation |
|
4th Quarter |
|
Variation |
|
(1,000 tonnes) |
|
2011 |
|
2010 |
|
1Q11/1Q10 |
|
2010 |
|
1Q11/4Q10 |
|
Crude Steel (slabs, blooms and billets) |
|
|
|
|
|
|
|
|
|
|
|
Brazil |
|
1,722 |
|
1,680 |
|
2 |
% |
1,718 |
|
0 |
% |
North America |
|
1,771 |
|
1,588 |
|
12 |
% |
1,508 |
|
17 |
% |
Latin America |
|
430 |
|
320 |
|
34 |
% |
431 |
|
0 |
% |
Specialty Steel |
|
826 |
|
771 |
|
7 |
% |
721 |
|
15 |
% |
Total |
|
4,749 |
|
4,359 |
|
9 |
% |
4,378 |
|
8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Rolled steel |
|
|
|
|
|
|
|
|
|
|
|
Brazil |
|
1,105 |
|
1,034 |
|
7 |
% |
996 |
|
11 |
% |
North America |
|
1,623 |
|
1,425 |
|
14 |
% |
1,421 |
|
14 |
% |
Latin America |
|
529 |
|
427 |
|
24 |
% |
525 |
|
1 |
% |
Specialty Steel |
|
792 |
|
694 |
|
14 |
% |
721 |
|
10 |
% |
Total |
|
4,049 |
|
3,580 |
|
13 |
% |
3,663 |
|
11 |
% |
· On a consolidated basis, production growth in 1Q11 in relation to 1Q10 was driven by the North America BO (see the table above), reflecting the gradual recovery in demand observed in the comparison period. At the Latin America BO, the increase was due to the recovery observed in Chile, where output had fallen due to the earthquake that hit the country in March 2010, and in Colombia, due to the recovery in demand in the region.
· In relation to 4Q10, consolidated production increased, especially at the North America BO, where 4Q10 output was affected by seasonal impacts associated with winter, while the combination of the recovery in demand and the restocking trend in the production chain supported growth in 1Q11. At the Brazil BO, the difference between crude steel production, which remained stable, and long steel production, which expanded, is due to the scheduled maintenance stoppage at the converters at Açominas mill (Minas Gerais state) in 1Q11.
Crude Steel Output (in thousands of tonnes)
|
Long Steel Output (in thousands of tonnes)
|
Sales
Consolidated Shipments(1) |
|
1st Quarter |
|
1st Quarter |
|
Variation |
|
4th Quarter |
|
Variation |
|
(1,000 tonnes) |
|
2011 |
|
2010 |
|
1Q11/1Q10 |
|
2010 |
|
1Q11/4Q10 |
|
Brazil |
|
1,697 |
|
1,528 |
|
11 |
% |
1,811 |
|
-6 |
% |
Domestic Market |
|
1,171 |
|
1,151 |
|
2 |
% |
1,077 |
|
9 |
% |
Exports |
|
526 |
|
377 |
|
40 |
% |
734 |
|
-28 |
% |
North America |
|
1,643 |
|
1,345 |
|
22 |
% |
1,442 |
|
14 |
% |
Latin America (2) |
|
638 |
|
546 |
|
17 |
% |
565 |
|
13 |
% |
Specialty steels |
|
732 |
|
634 |
|
15 |
% |
695 |
|
5 |
% |
Total |
|
4,710 |
|
4,053 |
|
16 |
% |
4,513 |
|
4 |
% |
(1) - Excludes shipments to subsidiaries
(2) - Excludes coke shipments
· The higher consolidated shipments in 1Q11 in relation to 1Q10 are explained by the recovery in demand in all markets in which Gerdau operates. At the Brazil BO, the exports of semi-finished products were responsible for the higher shipments, driven in particular by the higher demand for slabs from Asia. At the North America BO, the recovery in shipments was fueled by the stronger demand observed in the region, especially from clients in the manufacturing and energy industries. The Institute for Supply Management (ISM), the main indicator of industrial production in North America, reached 61.2 points in March 2011, with a reading above 50 indicating growth. On the other hand, the construction sector remains below historical levels, despite signs of recovery. The number of projects related to energy, roads and basic sanitation has been growing, reflecting the government stimulus package.
· At the Specialty Steel BO, the highlights were the operations located in the United States and Spain. The United States was the main beneficiary of the strong recovery in the auto industry, while Spain benefitted from higher exports to Germany, France and Italy, countries that experienced recoveries in their manufacturing industries. In Brazil, a brief destocking trend began in 4Q10, which reduced shipments in the period. At the Latin America BO, the highlights were the higher sales from Chile and Argentina, with a recovery in demand observed in the construction sectors in these countries.
· In relation to 4Q10, consolidated shipments presented moderate growth, led by North America, due to the reasons explained above. At the Brazil BO, the contraction in shipments is explained by the lower exports, which reached record levels in 4Q10. The domestic market registered growth, accompanying the recovery in the construction sector and manufacturing industry. The production of capital goods grew by 9% in March 2011 in relation to December 2010, according to the Brazilian Geography and Statistics Institute (IBGE). In the construction sector, Brazilian Central Bank estimates growth of 5.2% in construction GDP in 2011.
Consolidated Shipments(1)
(in thousands of tonnes)
(1) - Excludes shipments to subsidiaries.
Operating Results by Business Operation
Net Sales
|
|
1st |
|
1st |
|
Variation |
|
4th |
|
Variation |
|
Net Sales (R$ million) |
|
2011 |
|
2010 |
|
1Q11/1Q10 |
|
2010 |
|
1Q11/4Q10 |
|
Brazil |
|
2,954 |
|
2,871 |
|
3 |
% |
3,048 |
|
-3 |
% |
Domestic Market |
|
2,344 |
|
2,518 |
|
-7 |
% |
2,291 |
|
2 |
% |
Exports |
|
610 |
|
353 |
|
73 |
% |
757 |
|
-19 |
% |
North America |
|
2,628 |
|
1,999 |
|
31 |
% |
2,188 |
|
20 |
% |
Latin America (1) |
|
1,028 |
|
803 |
|
28 |
% |
863 |
|
19 |
% |
Specialty Steel |
|
1,754 |
|
1,435 |
|
22 |
% |
1,701 |
|
3 |
% |
Total |
|
8,364 |
|
7,108 |
|
18 |
% |
7,800 |
|
7 |
% |
(1) - Includes revenue from coke sales.
· In 1Q11, consolidated net sales grew in relation to 1Q10 (see table above), driven by the higher shipments. In absolute terms, with the exception of the Brazil BO, the other business operations recorded significant growth in shipments and an increase in net sales per tonne sold in the period. At the Brazil BO, the higher shipments were virtually offset by the lower net sales per tonne sold, reflecting the discounts granted in the domestic market in the second half of 2010 and the lower share of exports in the sales mix. However, net sales per tonne sold in the domestic market increased in March in relation to January 2011, reflecting the cancelation of a portion of these discounts.
Cost of Goods Sold and Gross Margin
|
|
1st Quarter |
|
1st Quarter |
|
Variation |
|
4th |
|
Variation |
| ||
Net sales, cost and margin |
|
2011 |
|
2010 |
|
1Q11/1Q10 |
|
2010 |
|
1Q11/4Q10 |
| ||
Brazil |
|
Net Sales (R$ million) |
|
2,954 |
|
2,871 |
|
3 |
% |
3,048 |
|
-3 |
% |
|
|
Cost of Goods Sold (R$ million) |
|
(2,486 |
) |
(2,067 |
) |
20 |
% |
(2,602 |
) |
-4 |
% |
|
|
Gross income (R$ million) |
|
468 |
|
804 |
|
-42 |
% |
446 |
|
5 |
% |
|
|
Gross margin (%) |
|
16 |
% |
28 |
% |
|
|
15 |
% |
|
|
North America |
|
Net Sales (R$ million) |
|
2,628 |
|
1,999 |
|
31 |
% |
2,188 |
|
20 |
% |
|
|
Cost of Goods Sold (R$ million) |
|
(2,321 |
) |
(1,807 |
) |
28 |
% |
(2,006 |
) |
16 |
% |
|
|
Gross income (R$ million) |
|
307 |
|
192 |
|
60 |
% |
182 |
|
69 |
% |
|
|
Gross margin (%) |
|
12 |
% |
10 |
% |
|
|
8 |
% |
|
|
Latin America |
|
Net Sales (R$ million) |
|
1,028 |
|
803 |
|
28 |
% |
863 |
|
19 |
% |
|
|
Cost of Goods Sold (R$ million) |
|
(882 |
) |
(688 |
) |
28 |
% |
(793 |
) |
11 |
% |
|
|
Gross income (R$ million) |
|
146 |
|
115 |
|
27 |
% |
70 |
|
109 |
% |
|
|
Gross margin (%) |
|
14 |
% |
14 |
% |
|
|
8 |
% |
|
|
Specialty Steel |
|
Net Sales (R$ million) |
|
1,754 |
|
1,435 |
|
22 |
% |
1,701 |
|
3 |
% |
|
|
Cost of Goods Sold (R$ million) |
|
(1,510 |
) |
(1,139 |
) |
33 |
% |
(1,450 |
) |
4 |
% |
|
|
Gross income (R$ million) |
|
244 |
|
296 |
|
-18 |
% |
251 |
|
-3 |
% |
|
|
Gross margin (%) |
|
14 |
% |
21 |
% |
|
|
15 |
% |
|
|
Consolidated |
|
Net Sales (R$ million) |
|
8,364 |
|
7,108 |
|
18 |
% |
7,800 |
|
7 |
% |
|
|
Cost of Goods Sold (R$ million) |
|
(7,199 |
) |
(5,701 |
) |
26 |
% |
(6,851 |
) |
5 |
% |
|
|
Gross income (R$ million) |
|
1,165 |
|
1,407 |
|
-17 |
% |
949 |
|
23 |
% |
|
|
Gross margin (%) |
|
14 |
% |
20 |
% |
|
|
12 |
% |
|
|
· In 1Q11 in relation to 1Q10, the higher cost of goods sold on a consolidated basis was due to the higher shipments and the impact from the higher raw material prices in the various business operations. The mismatch between higher raw material prices and the passthrough to prices of steel products led to lower consolidated gross margin (see table above). At the Brazil BO, gross margin was impacted by the lower net sales per tonne sold and the higher costs, which were due in particular to the scheduled maintenance stoppage at the converters at Açominas mill (Minas Gerais state). At the Specialty Steel BO, the lower gross margin was mainly due to the contraction in shipments and the higher costs in Brazil, which in part reflected the maintenance stoppage in December 2010. This margin was also impacted by the higher share of the United States and Spain in the shipments of this operation, which typically have lower margins than in Brazil. On the other hand, the North America BO recorded gross margin expansion in relation to 1Q10, with the increases in shipments and net sales per tonne sold outpacing the increase in cost of goods sold.
· In consolidated terms, gross margin expanded by two percentage points in relation to 4Q10, due to the increases in shipments and net sales per tonne sold outpacing the increase in cost of goods sold.
Selling, General and Administrative Expenses
SG&A |
|
1st Quarter |
|
1st Quarter |
|
Variation |
|
4th Quarter |
|
Variation |
|
(R$ million) |
|
2011 |
|
2010 |
|
1Q11/1Q10 |
|
2010 |
|
1Q11/4Q10 |
|
Selling expenses |
|
138 |
|
121 |
|
14 |
% |
157 |
|
-12 |
% |
General and dministrative expenses |
|
441 |
|
382 |
|
15 |
% |
472 |
|
-7 |
% |
Total |
|
579 |
|
503 |
|
15 |
% |
629 |
|
-8 |
% |
Net sales |
|
8,364 |
|
7,108 |
|
18 |
% |
7,800 |
|
7 |
% |
% of net revenue |
|
7 |
% |
7 |
% |
|
|
8 |
% |
|
|
· Selling, general and administrative expenses as a percentage of net sales remained virtually stable in all comparison periods.
Equity Income
· The jointly controlled entities and associate companies, whose results are calculated using the equity method, recorded sales of 303,000 tonnes of steel in 1Q11 (based on their respective equity interests), which was 10% more than in 1Q10, for net sales of R$445 million.
· Based on the results of these companies, equity income was R$34 million in 1Q11, in comparison with equity income of R$15 million in 1Q10.
EBITDA
Consolidated EBITDA Breakdown(1) |
|
1st Quarter |
|
1st Quarter |
|
Variation |
|
4th Quarter |
|
Variation |
|
(R$ million) |
|
2011 |
|
2010 |
|
1Q11/1Q10 |
|
2010 |
|
1Q11/4Q10 |
|
Net Income |
|
409 |
|
573 |
|
-29 |
% |
420 |
|
-3 |
% |
Net Financial Result |
|
171 |
|
247 |
|
-31 |
% |
184 |
|
-7 |
% |
Provision for Income Tax and Social Contribution |
|
74 |
|
122 |
|
-39 |
% |
71 |
|
4 |
% |
Depreciation and Amortization |
|
448 |
|
459 |
|
-2 |
% |
476 |
|
-6 |
% |
Reversal/Losses from asset impairment |
|
|
|
|
|
|
|
(336 |
) |
|
|
EBITDA |
|
1,102 |
|
1,401 |
|
-21 |
% |
815 |
|
35 |
% |
EBITDA margin |
|
13 |
% |
20 |
% |
|
|
10 |
% |
|
|
(1) Includes data from jointly controlled entities and associate companies under the equity income method.
Note: EBITDA is not a measure used in generally accepted accounting practices and does not represent cash flow in the periods presented, and therefore should not be considered an alternative to cash flow as a liquidity indicator. EBITDA is not standardized and thus is not comparable to the EBITDA of other companies.
Reconciliation of consolidated EBITDA |
|
1st Quarter |
|
1st Quarter |
|
4th Quarter |
|
(R$ million) |
|
2011 |
|
2010 |
|
2010 |
|
EBITDA (1) |
|
1,102 |
|
1,401 |
|
815 |
|
Depreciation and Amortization |
|
(448 |
) |
(459 |
) |
(476 |
) |
Reversal/Losses from asset impairment |
|
|
|
|
|
336 |
|
OPERATING INCOME BEFORE THE FINANCIAL RESULT AND TAXES(2) |
|
654 |
|
942 |
|
675 |
|
(1) Non-accounting measure adopted by the Company
(2) Accounting measure published in the consolidated Income Statement
EBITDA (R$ million)
|
EBITDA Margin (%)
|
|
|
|
|
1st Quarter |
|
1st Quarter |
|
Variation |
|
4th Quarter |
|
Variation |
|
EBITDA by Business Operation |
|
|
|
2011 |
|
2010 |
|
1Q11/1Q10 |
|
2010 |
|
1Q11/4Q10 |
|
Brazil |
|
EBITDA (R$ million) |
|
398 |
|
796 |
|
-50 |
% |
383 |
|
4 |
% |
|
|
EBITDA margin (%) |
|
13 |
% |
28 |
% |
|
|
13 |
% |
|
|
North America |
|
EBITDA (R$ million) |
|
332 |
|
207 |
|
60 |
% |
136 |
|
144 |
% |
|
|
EBITDA margin (%) |
|
13 |
% |
10 |
% |
|
|
6 |
% |
|
|
Latin America |
|
EBITDA (R$ million) |
|
128 |
|
108 |
|
19 |
% |
48 |
|
167 |
% |
|
|
EBITDA margin (%) |
|
12 |
% |
13 |
% |
|
|
6 |
% |
|
|
Specialty Steel |
|
EBITDA (R$ million) |
|
244 |
|
290 |
|
-16 |
% |
248 |
|
-2 |
% |
|
|
EBITDA margin (%) |
|
14 |
% |
20 |
% |
|
|
15 |
% |
|
|
Consolidated |
|
EBITDA (R$ million) |
|
1,102 |
|
1,401 |
|
-21 |
% |
815 |
|
35 |
% |
|
|
EBITDA margin (%) |
|
13 |
% |
20 |
% |
|
|
10 |
% |
|
|
· Consolidated EBITDA (earnings before interest, tax, depreciation, amortization and gain/losses from asset impairment), also known as operating cash flow, declined in 1Q11 from 1Q10, consequently reducing EBITDA margin (see tables above), driven by the same factors explained previously (see item Cost of Goods Sold and Gross Margin).
· At the Brazil BO, which accounted for 36% of consolidated EBITDA in the period, the lower net sales per tonne sold and the higher costs were responsible for the compression in EBITDA margin. The North America BO accounted for 30% of consolidated EBITDA and recorded gross margin expansion in relation to 1Q10, with the increases in shipments and net sales per tonne sold exceeding the increase in cost of goods sold. At the Specialty Steel BO, which represented 22% of EBITDA in 1Q11, EBITDA margin was impacted by the lower shipments in Brazil and higher costs, as well as by the higher share of the United States and Spain in the shipments of this operation, which are countries where margins are typically lower than in Brazil.
· In relation to 4Q10, consolidated EBITDA in 1Q11 grew significantly, driven by the performances at the North America and Latin America BOs. As a result, EBITDA margin expanded by three percentage points in the comparison period.
Financial Result
Financial result |
|
1st Quarter |
|
1st Quarter |
|
Variation |
|
4th Quarter |
|
Variation |
|
(R$ million) |
|
2011 |
|
2010 |
|
1Q11/1Q10 |
|
2010 |
|
1Q11/4Q10 |
|
Financial income |
|
58 |
|
76 |
|
-24 |
% |
74 |
|
-22 |
% |
Financial expenses |
|
(255 |
) |
(253 |
) |
1 |
% |
(266 |
) |
-4 |
% |
Currency translation, net |
|
26 |
|
(71 |
) |
-137 |
% |
2 |
|
1200 |
% |
Gains (losses) from hedge operations, net |
|
|
|
1 |
|
|
|
6 |
|
|
|
Financial result |
|
(171 |
) |
(247 |
) |
-31 |
% |
(184 |
) |
-7 |
% |
· In 1Q11, the improvement in the consolidated financial result was basically due to the impact from the appreciation of 2% in the Brazilian real against the U.S. dollar in the quarter (gain of R$26 million), compared with the depreciation of 2% in 1Q10 (loss of R$71 million) on a portion of the loans denominated in foreign currency contracted by the companies in Brazil.
· Note that of the total foreign-currency debt of US$ 3.6 billion contracted by companies in Brazil as of March 31, 2011, US$ 2.6 billion was related to the acquisitions of companies abroad, for which the currency translation gains or losses are recorded directly on the balance sheet, in accordance with IFRS accounting policies. For the remaining US$ 1.0 billion, the currency translation gains or losses are recorded on the income statement.
Net Income
Net income |
|
1st Quarter |
|
1st Quarter |
|
Variation |
|
4th Quarter |
|
Variation |
|
(R$ million) |
|
2011 |
|
2010 |
|
1Q11/1Q10 |
|
2010 |
|
1Q11/4Q10 |
|
Income before taxes (1) |
|
483 |
|
695 |
|
-31 |
% |
491 |
|
-2 |
% |
Income tax and social contribution |
|
(74 |
) |
(122 |
) |
-39 |
% |
(71 |
) |
4 |
% |
Consolidated net income (1) |
|
409 |
|
573 |
|
-29 |
% |
420 |
|
-3 |
% |
(1) Includes data from jointly controlled entities and associate companies under the equity income method.
· Consolidated net income in 1Q11 decreased in relation to 1Q10, reflecting the lower operating income. In relation to 4Q10, net income registered a slight decline. Note that in 4Q10 net income was impacted by the nonrecurring net gain of R$ 289 million related to the reversal from asset impairment.
Dividends
· The companies Metalúrgica Gerdau S.A. and Gerdau S.A. approved, based on the results recorded in 1Q11, the prepayment of the minimum mandatory dividends for fiscal year 2011, as shown below:
· Payment date: May 27, 2011
· Base date: shareholding position on May 19, 2011
· Ex-dividend date: May 20, 2011
· Metalúrgica Gerdau S.A.
· R$ 41 million (R$ 0.10 per share)
· Gerdau S.A.
· R$ 102 million (R$ 0.06 per share)
Investments
· In 1Q11, investments in fixed assets totaled R$ 333 million. Of this total, 73% was allocated to units in Brazil and the remaining 27% to units located abroad.
· The investments in fixed assets planned for the period from 2011 to 2015 are estimated at R$10.8 billion, and include both strategic and maintenance investments (see table below).
Investment Plan - Main Projects |
|
Location |
|
Additional |
|
Start-up |
|
Brazil BO |
|
|
|
|
|
|
|
Flat steel rolling mills (heavy plates and coiled hot-rolled strips) at Açominas mill in Minas Gerais state |
|
Brazil |
|
1,900 |
|
2012 |
|
Expansion of mining operations capacity to 7 million tonnes |
|
Brazil |
|
|
|
2012 |
|
New line of rebars rolls at Araçariguama mill in São Paulo state |
|
Brazil |
|
|
|
2012 |
|
Ready-to-use steel product units |
|
Brazil |
|
|
|
2013 |
|
Rebar and wire rod rolling mill at Cosigua mill in Rio de Janeiro state(1) |
|
Brazil |
|
600 |
|
2013 |
|
North America BO |
|
|
|
|
|
|
|
Reheating furnace at Calvert City mill, Kentucky |
|
USA |
|
|
|
2012 |
|
Latin America BO |
|
|
|
|
|
|
|
Port facilities (for coal and coke shipments) |
|
Colombia |
|
|
|
2012 |
|
Specialty Steel BO |
|
|
|
|
|
|
|
New continuous slab casting with production capacity expansion at Monroe mill |
|
USA |
|
200 |
|
2012 |
|
Capacity expansion in crude steel, rolling mill and finishing (at 4 different mills) |
|
USA |
|
400 |
|
2014 |
|
Specialty steel and rebar rolling mill, sintering, coke oven and power generation(2) |
|
India |
|
300 |
|
2012 |
|
Specialty steel rolling mill at Pindamonhagaba mill in São Paulo state |
|
Brazil |
|
500 |
|
2012 |
|
(1) To meet the capacity of this rolling mill, Gerdau will expand its melt shop crude steel capacity by 600,000 tonnes at Cosigua mill in Rio de Janeiro sate.
(2) This capacity is not included in the consolidated figures, since it is a jointly controlled entity
· In addition to the investment plan already announced, the following new investments are also under analysis:
· Brazil BO
· Installation of two plants, with one in the North-Northeast region and the other in the Midwest region, each with installed capacity of between 500,000 and 700,000 tonnes, targeting the construction and manufacturing industries.
· Installation of a new long products rolling mill in the South region of the country, with installed capacity of 600,000 tonnes.
· Specialty Steel BO
· Construction of a new specialty steel mill in North America with installed capacity of between 700,000 and 800,000 tonnes.
Working Capital and Cash Conversion Cycle
Working Capital and Cash Conversion Cycle
· In March 2011, the cash conversion cycle (working capital divided by daily net sales in the quarter) decreased by 10 days in relation to December 2010, with an increase of 7% in net sales and a reduction of 5% in working capital.
Financial Liabilities
Indebtedness |
|
|
|
|
|
(R$ million) |
|
31.03.2011 |
|
31.12.2010 |
|
Short-term |
|
1,729 |
|
1,693 |
|
Local currency (Brazil) |
|
706 |
|
703 |
|
Foreign currency (Brazil) |
|
200 |
|
169 |
|
Companies abroad |
|
823 |
|
821 |
|
Long-term |
|
12,506 |
|
12,977 |
|
Local currency (Brazil) |
|
2,611 |
|
2,623 |
|
Foreign currency (Brazil) |
|
5,589 |
|
5,656 |
|
Companies abroad |
|
4,306 |
|
4,698 |
|
Gross debt |
|
14,235 |
|
14,670 |
|
Cash, cash equivalents and financial investments |
|
2,446 |
|
2,204 |
|
Net debt |
|
11,789 |
|
12,466 |
|
· Net debt (gross debt less cash) totaled R$ 11.8 billion on March 31, 2011.
· Cash (cash, cash equivalents and financial investments) totaled R$ 2.4 billion on March 31, 2011, of which 29% was held by Gerdaus subsidiaries abroad, mainly in USD.
· Gross debt (loans and financings plus debentures) stood at R$14.2 billion on March 31, 2011, of which 12% was short-term and 88% was long-term.
· On March 31, 2011, the composition of gross debt was 23% in Brazilian real, 41% in foreign currency contracted by companies in Brazil and 36% in a variety of currencies contracted by subsidiaries abroad.
· On March 31, 2011, the weighted average nominal cost of gross debt was 8.3% for the amount denominated in Brazilian real, 5.7% plus currency variation for the amount denominated in USD contracted by companies in Brazil and 4.3% for the amount contracted by the subsidiaries abroad.
Gross Debt
(R$ billion)
· On March 31, 2011, the long-term debt amortization schedule, including debentures, was as follows:
Short-term |
|
R$ million |
|
2nd quarter 2011 |
|
790 |
|
3rd quarter 2011 |
|
199 |
|
4th quarter 2011 |
|
218 |
|
1st quarter 2012 |
|
522 |
|
Total |
|
1,729 |
|
Long-term |
|
R$ million |
|
2012 (April to December) |
|
1,787 |
|
2013 |
|
2,242 |
|
2014 |
|
840 |
|
2015 and after |
|
7,637 |
|
Total |
|
12,506 |
|
· Gerdaus main debt indicators at the close of March was virtually flat when compared to December of 2010, given the stability in the debt position and the growth in operating cash flow (EBITDA) in the last 12 months of the compared periods.
Indicators |
|
31.03.2011 |
|
31.12.2010 |
|
Gross debt / Total capitalization (1) |
|
41 |
% |
42 |
% |
Net debt / Total capitalization (2) |
|
37 |
% |
38 |
% |
Gross debt / EBITDA (3) |
|
2.9 |
x |
2.8 |
x |
Net debt / EBITDA (3) |
|
2.4 |
x |
2.4 |
x |
EBITDA (3) / Financial expenses (3) |
|
4.3 |
x |
4.6 |
x |
EBITDA (3) / Net financial expenses (3) |
|
5.7 |
x |
6.2 |
x |
(1) - Total capitalization = shareholders equity + gross debt
(2) - Total capitalization = shareholders equity + net debt
(3) - Last 12 months
Subsequent Event
Public Stock Offering
· On April 12, 2011, the Board of Directors of Gerdau S.A. approved the issue of 68,026,910 common shares and 134,830,100 preferred shares, for a total capital increase of approximately R$ 3.7 billion, carried out under the scope of the primary public distribution of shares by the Company. On the same date, a secondary public distribution was held that involved 69,000,000 preferred shares issued by Gerdau S.A. and owned by the shareholders of Metalúrgica Gerdau S.A. and Gerdau BG Participações S.A., worth R$ 1.3 billion, which was fully used by the selling shareholders to subscribe and pay in common shares of the primary offering. Under the scope of the Global Offering, which includes the primary and secondary offerings, a total of approximately R$ 5.0 billion was raised, of which roughly R$ 3.7 billion was used for the capital increase at Gerdau S.A. Following said increase, the capital stock now stands at R$ 19.3 billion, divided into 573,627,483 common shares and 1,146,031,245 preferred shares, all of which are registered, book-entry shares with no par value.
· The issue price of the shares established after the book building process was R$ 15.60 per common share and R$ 19.25 per preferred share issued by Gerdau S.A.
· In addition, an over-allotment option (greenshoe) of up to 10,204,036 new common shares and 20,408,072 new preferred shares issued by the Company could be added to the amount of shares initially distributed under the scope of the Global Offering. The over-allotment option may be exercised by the stabilizing agent and lead manager of the Offering, in full or part, within a period of thirty (30) days of the publication date of the Public Offering Commencement Announcement (April 13, 2011), inclusive, under the same conditions and price of the shares or ADSs offered initially, as the case may be.
· As provided for in the final offering prospectus, the funds raised under the offering will be used for investments to improve and expand the Companys installed capacity, to strengthen the Companys cash position and to pre-pay a loan contracted by its wholly owned subsidiaries in the North America.
· On April 18, 2011, the primary and secondary public offerings were settled, with a net injection of R$ 3.6 billion in the Companys cash position. Of this amount, R$ 2.1 billion has already been used for the pre-payment, on April 21, of a loan contracted by its wholly owned subsidiaries in the North America. The remaining balance was incorporated in the Companys cash. Considering these events, the gross debt/EBITDA and net debt/EBITDA ratios would be 2.5x and 1.7x on March 31, 2011, respectively.
THE MANAGEMENT
This document contains forward-looking statements. These statements are dependent on estimates, information or methods that may be incorrect or inaccurate and may not be realized. These estimates are also subject to risk, uncertainties and assumptions that include, among other factors: general economic,
political and commercial conditions in Brazil and in the markets where we operate and existing and future government regulations. Potential investors are cautioned that these forward-looking statements do not constitute guarantees of future performance, given that they involve risks and uncertainties. The company does not assume and expressly waives any obligation to update any of these forward-looking statements, which are only applicable on the date on which they were made.
GERDAU S.A.
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands of Brazilian reais (R$)
|
|
03/31/2011 |
|
12/31/2010 |
|
CURRENT ASSETS |
|
|
|
|
|
Cash and cash equivalents |
|
1,078,466 |
|
1,061,034 |
|
Short-term investments |
|
|
|
|
|
Held for Trading |
|
1,334,046 |
|
1,105,902 |
|
Available for sale |
|
7,165 |
|
9,559 |
|
Trade accounts receivable - net |
|
3,557,188 |
|
3,153,027 |
|
Inventories |
|
6,614,218 |
|
6,797,785 |
|
Tax credits |
|
545,183 |
|
586,056 |
|
Unrealized gains on derivatives |
|
416 |
|
783 |
|
Other current assets |
|
266,622 |
|
231,798 |
|
|
|
13,403,304 |
|
12,945,944 |
|
|
|
|
|
|
|
NON-CURRENT ASSETS |
|
|
|
|
|
Available for sale securities |
|
26,194 |
|
26,797 |
|
Tax credits |
|
410,296 |
|
401,222 |
|
Deferred income taxes |
|
1,256,050 |
|
1,579,011 |
|
Unrealized gains on derivatives |
|
6,415 |
|
5,529 |
|
Judicial deposits |
|
543,976 |
|
493,502 |
|
Other non-current assets |
|
193,669 |
|
212,180 |
|
Prepaid pension cost |
|
401,502 |
|
437,072 |
|
Investments in associates and jointly-controlled entities |
|
1,287,840 |
|
1,264,520 |
|
Other investments |
|
19,224 |
|
19,002 |
|
Goodwill |
|
8,029,956 |
|
8,158,098 |
|
Other Intangibles |
|
1,166,186 |
|
1,176,823 |
|
Property, plant and equipment, net |
|
16,027,040 |
|
16,171,560 |
|
|
|
29,368,348 |
|
29,945,316 |
|
|
|
|
|
|
|
TOTAL ASSETS |
|
42,771,652 |
|
42,891,260 |
|
GERDAU S.A.
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands of Brazilian reais (R$)
|
|
03/31/2011 |
|
12/31/2010 |
|
CURRENT LIABILITIES |
|
|
|
|
|
Trade accounts payable |
|
2,387,699 |
|
1,783,274 |
|
Short-term debt |
|
1,601,285 |
|
1,577,968 |
|
Debentures |
|
127,236 |
|
115,069 |
|
Taxes payable |
|
639,383 |
|
524,967 |
|
Payroll and related liabilities |
|
372,501 |
|
475,237 |
|
Dividends payable |
|
|
|
90,289 |
|
Environmental liabilities |
|
17,389 |
|
29,191 |
|
Put options on minority interest |
|
36,133 |
|
|
|
Other current liabilities |
|
430,017 |
|
425,905 |
|
|
|
5,611,643 |
|
5,021,900 |
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES |
|
|
|
|
|
Long-term debt |
|
11,844,464 |
|
12,360,056 |
|
Debentures |
|
661,837 |
|
616,902 |
|
Deferred income taxes |
|
1,815,582 |
|
2,270,849 |
|
Unrealized losses on derivatives |
|
78,682 |
|
92,476 |
|
Provision for tax, civil and labor liabilities |
|
681,160 |
|
645,375 |
|
Environmental liabilities |
|
52,961 |
|
42,902 |
|
Employee benefits |
|
793,490 |
|
834,471 |
|
Put options on minority interest |
|
508,358 |
|
516,706 |
|
Other non-current liabilities |
|
337,280 |
|
342,008 |
|
|
|
16,773,814 |
|
17,721,745 |
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
EQUITY |
|
20,386,195 |
|
20,147,615 |
|
|
|
|
|
|
|
TOTAL LIABILITIES AND EQUITY |
|
42,771,652 |
|
42,891,260 |
|
GERDAU S.A.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
In thousands of Brazilian reais (R$)
|
|
for the three months period ended |
| ||
|
|
03/31/2011 |
|
03/31/2010 |
|
|
|
|
|
|
|
NET SALES |
|
8,363,791 |
|
7,107,586 |
|
|
|
|
|
|
|
Cost of sales |
|
(7,199,062 |
) |
(5,700,279 |
) |
|
|
|
|
|
|
GROSS PROFIT |
|
1,164,729 |
|
1,407,307 |
|
|
|
|
|
|
|
Selling expenses |
|
(138,224 |
) |
(121,225 |
) |
General and administrative expenses |
|
(441,266 |
) |
(382,061 |
) |
Other operating income |
|
45,329 |
|
38,608 |
|
Other operating expenses |
|
(9,923 |
) |
(16,451 |
) |
Equity in earnings of unconsolidated companies |
|
33,924 |
|
15,302 |
|
|
|
|
|
|
|
INCOME BEFORE FINANCIAL INCOME (EXPENSES) AND TAXES |
|
654,569 |
|
941,480 |
|
|
|
|
|
|
|
Financial income |
|
58,141 |
|
75,802 |
|
Financial expenses |
|
(255,500 |
) |
(253,202 |
) |
Exchange variations, net |
|
25,885 |
|
(70,845 |
) |
Gain and losses on derivatives, net |
|
131 |
|
1,449 |
|
|
|
|
|
|
|
INCOME BEFORE TAXES |
|
483,226 |
|
694,684 |
|
|
|
|
|
|
|
Income and social contribution taxes |
|
|
|
|
|
Current |
|
(123,560 |
) |
(185,964 |
) |
Deferred |
|
49,773 |
|
64,024 |
|
|
|
|
|
|
|
NET INCOME |
|
409,439 |
|
572,744 |
|
|
|
|
|
|
|
ATTRIBUTED TO: |
|
|
|
|
|
Owners of the parent |
|
390,803 |
|
504,265 |
|
Non-controlling interests |
|
18,636 |
|
68,479 |
|
|
|
409,439 |
|
572,744 |
|
|
|
|
|
|
|
Basic earnings per share - preferred and common |
|
0.26 |
|
0.36 |
|
|
|
|
|
|
|
Diluted earnings per share - preferred and common |
|
0.26 |
|
0.35 |
|
GERDAU S.A.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
In thousands of Brazilian reais (R$)
|
|
for the three months period ended |
| ||
|
|
03/31/2011 |
|
03/31/2010 |
|
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
Net income for the period |
|
409,439 |
|
572,744 |
|
Adjustments to reconcile net income for the period to net cash provided by operating activities |
|
|
|
|
|
Depreciation and amortization |
|
447,564 |
|
459,754 |
|
Equity in earnings of unconsolidated companies |
|
(33,924 |
) |
(15,302 |
) |
Exchange variation, net |
|
(25,885 |
) |
70,845 |
|
Gains and losses on derivatives, net |
|
(131 |
) |
(1,449 |
) |
Post-employment benefits |
|
24,074 |
|
(4,506 |
) |
Stock based remuneration |
|
4,299 |
|
4,901 |
|
Income tax |
|
73,787 |
|
121,940 |
|
Gain on disposal of property, plant and equipment and investments |
|
(154 |
) |
(1,275 |
) |
Allowance (Reversal) for doubtful accounts |
|
8,029 |
|
(2 |
) |
Provision for tax, labor and civil claims |
|
35,387 |
|
58,443 |
|
Interest income |
|
(23,183 |
) |
(61,360 |
) |
Interest expense |
|
203,868 |
|
218,657 |
|
Provision for net realisable value adjustment in inventory |
|
18,031 |
|
4,235 |
|
Reversal of net realisable value adjustment in inventory |
|
(56,235 |
) |
(29,952 |
) |
|
|
1,084,966 |
|
1,397,673 |
|
Changes in assets and liabilities: |
|
|
|
|
|
Increase in trade accounts receivable |
|
(432,566 |
) |
(702,852 |
) |
Decrease (Increase) in inventories |
|
172,423 |
|
(396,320 |
) |
Increase in trade accounts payable |
|
605,688 |
|
439,337 |
|
Increase in other receivables |
|
(4,371 |
) |
(99,315 |
) |
Decrease in other payables |
|
(33,323 |
) |
(12,001 |
) |
Distributions from joint-controlled entities |
|
2,690 |
|
28,055 |
|
Purchases of trading securities |
|
(582,293 |
) |
(2,432 |
) |
Proceeds from maturities and sales of trading securities |
|
377,637 |
|
395,831 |
|
Cash provided by operating activities |
|
1,190,851 |
|
1,047,976 |
|
|
|
|
|
|
|
Interest paid on loans and financing |
|
(228,015 |
) |
(145,923 |
) |
Income and social contribution taxes paid |
|
(49,675 |
) |
(126,793 |
) |
Net cash provided by operating activities |
|
913,161 |
|
775,260 |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
Additions to property, plant and equipment |
|
(333,178 |
) |
(233,302 |
) |
Proceeds from sales of property, plant and equipment, investments and other intangibles |
|
1,032 |
|
2,482 |
|
Additions to other intangibles |
|
(47,524 |
) |
(5,250 |
) |
Purchases of available for sale securities |
|
|
|
(300,027 |
) |
Proceeds from sales of available for sale securities |
|
1,290 |
|
54,993 |
|
Net cash used in investing activities |
|
(378,380 |
) |
(481,104 |
) |
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
Purchase of own shares |
|
(66,529 |
) |
(44,620 |
) |
Dividends and interest on capital paid |
|
(90,544 |
) |
(282,464 |
) |
Payment of loans and financing fees |
|
(3,101 |
) |
(2,650 |
) |
Proceeds from loans and financing |
|
361,835 |
|
134,331 |
|
Repayment of loans and financing |
|
(704,428 |
) |
(375,752 |
) |
Intercompany loans, net |
|
360 |
|
4,183 |
|
Net cash used in financing activities |
|
(502,407 |
) |
(566,972 |
) |
|
|
|
|
|
|
Exchange variation on cash and cash equivalents |
|
(14,942 |
) |
24,574 |
|
|
|
|
|
|
|
Increase (Decrease) in cash and cash equivalents |
|
17,432 |
|
(248,242 |
) |
Cash and cash equivalents at beginning of period |
|
1,061,034 |
|
2,091,944 |
|
Cash and cash equivalents at end of period |
|
1,078,466 |
|
1,843,702 |
|
1JH*M67KY`K$BRY,21@UHD&GDRD:"(+`G&+'B2(JV&M$QB
>.V-:'#J0J$"C`KVP9(GEB]*8";XD2)2T)S8%(P<5%3AHI)>M)L,*="60
M5D*/7[!YL6HPZ\)$6&P.BF@V8D2R%&':W&IW;U^+)+6.C"NWE2"U6!E&I9'(
M"Y:H&55BP4*C,C8:@[S`I(%%`9:GE!UCIIQS@$"2%`605(#M<
+EY:!6,&$*W(@%
MVP"40#WN!$KPY,\$-#!BFRB0Z=*!3IUBD]D*B]5!"5HET$B3!M.DB08F4BH6
M:=*("09\(2BU:4-7+`FB=,J38%):&\-B0]G3H%9L-S/>#)NHUT.T(O-E5(LF[&-W;K4RV*(-&A@P?D22Z*>,!,MQI(1
MIF29&A?GM)D1,%*Y60>B#+L1(I:5HH]"?(RSU<1$@^`6ULO45:O"-`31PD:K
M%:U!W??"?=7X^W+FB5A_JN_YY:=;E(\;TES:&^'XJ06'6RR_-T'-ERMAED!\
M_;$DD55>M'`<5H.T\-(7-$5&PQ
N7TXF"*E@
MT$@:21,-*"M000*W36LJ&-!R;8*>B=X.*&ITJ%*W!A.U,LO52T@L/B=B.?ES
MX%&+"5KXQ?9E
#@`
MR\`O%"72$C@@@1>!-`0H*$AC!I89-#X*]$+#8\.#@R1&3/#%BT0:(!/0^")Q
M@,"8.%MU--A1HH!$,R7J;#60J4"G!9U^&:!R*#9!,K$E\,DQ@=.)6A,,:HK-
MILJ!-B&V`EMP;%-7!B6.C:D6P@"W6>D.;"GQ[%ZQ4,-^A4@R$4X:@P9]43QP
MJT">"AX2QC9(`
/($-JE-AP($F!)T6J7,FRI]V&_]QD2''5/(CVQK'QQ&S+O
M$(6OFF(!\[_.]<%Q^(7_\E1Q^)H.$B/4)3NO^'&!^3/A\EZ2^5`2\T#A^!+A
M]!%Q^?PQ]3G!^9`_]A9QI&:_[V+/G%((]K!!^\-^[H#/]ZP/`$NFY::.Z[?.
=)'1/))SR]V>/&)X$)%S>[AO?_,Q_$#N_%@$!`#L_
`
end
LTZU.I=^F:C-HQK]*P>@/?I"KX[$6L<@LK/DEX
M\ M$LNM02JRF0FM'3MUH0JB6KBR4,J-K2>-S@H1
MFCIIH__:DN^J8@VZL8>JAS)!"*\&[WIB[AX>[[`R[O*B[PE`;ON6[>FB[VP.Q/<.[JIN[VG
M*\"D^[T%_+E72[OHR[NXV[]K6[[O:Q(-;+]9B[^O6\'!N[7K2\`<[,!?^[S4
MV[T'/+V2N[_S^[?^Z[W]>[CAV[OP>\(&S+_C6[\@C,$B,<(2C,,Y+,/J:[XQ
M;,$T[+OM&[WL"[Z?V\(^_+]*7+RGV\0V++LA;,(ZG,2<&\$;_+@0',4H3+_Q
M^\$77+@:++_':[K+>\-`[,'MR\0QO,8#K,()_,(\'!)(+,7:"\?=[D!1U)BD*%WDGP4PL<85>MIA5])Y1UW7G8@[5?A
S)XES)X8S-IPS+IJRU
MEJS-AES.?/S)]:S/LJO(QRS-U%S*RTP1=!O,Z8S(\>S-ELRU!XW0^(RYGSS-
M77O0`ST1@,O-ADS)&?W0:3O/H"S-Z!S+`.S1R&S/[:S$OKS0H*OJ]63O=;\W<_`?<,H
M;A`/WL4F7."=C-_9;<<'+MGWK>"W3>-*WMP6+A*;S.`]3A#ZR\A#CMVB7=X:
M+N+?G<,8#N+[C<:!K;OG_=_I[<:QC<=HKM8L/M\P+..SO=Z1'>=)KA#R<^=X
MGN=ZON=\WN=^_N>`'NB"/NB$7NB&?NB`_TX74F(8<['H4:+HCEX7XS+I>E(6
MD4[IF)[IFK[IG-[IGO[IH![JHC[JI%[JIG[JJ$XIU9$9@S$;[8$G-M$HKUX@
M`Y(CYA'K)G(GL3XC=J$4EYX23]+KFV$=6R'LO%XCQYX3O/[K$\$61N(AN)[L
M6W'LUH$
.`C<.9.$QH\F3*%.J7,FRI;,91#,@VV[Q`_\R['GS(1;S'3'R]CNS#&KRTO;N[LXN]
MX:O&MVLH]VY.[SE=]M5C\U3K1W*S=W-#=$W&]UK#_G=U*O=TZ
MT=V2_=W#'=[BO1-)G=;(;=Z2S=ZT+<#&+=SF'=EHO138'=G:[1/Y7=YP3=SS
M3=S@#>"I*Q!'F[1J/-H*#@8&+K0(WN!`(>#Z_=^3O13T7=^:?=^H?>$8KMFN
M[=T=+ML!?MD='MS`3>(EGN$1_MS.3>#,K=P#7N$G+N$4?MPKGM_)W=P;3N-0
MO=^5S=XE7M[A?=9`_M\A#M4:SM_D'>1(KM0_3N+M_=TB/N-&CN'OG=[J#>,3
M;N,]T=\]7N-2/>*I'>.IO>.37>5"[N%F+N%I'N8_/N96[MA)WN4<'N=._N8H
M;N?K+>91KN=8#A-+GN)@_N.ZIG^\2L/\2!_\\]>[!0_\&]M\]B@
M\&4^[4K]\RV?U$F_]-D.]4=?\@L?]:UM\7"^Z^*>Y3*O]"Q?\`40]12?]3V/
MW$YO\V&/\^/MZ6,?\C7_\"./]>^>Y47^\F$/\DEO\.1][G/?UG'_\F6_YTQO
M]7J?]U?>[U%-]B3/]WMO],L>[$U?WA0_\4H_^'R.]6$/U63/\AT?[$6O\C7_
M]IX/\P&_^"4/]V,_]I"/U!:NZ"X_\[)O\W'][8(O^ZD_^I%/Y$V-]YL_^ZM/
M^%.?]T\?^P#/$Z_M^ZE/_&5_\BVAV5@?];]_]<'O^KD.]*R/]T4O\=;_W^K8
MO_E*K_#
^!#/X/`VJX8(NVYX(.8`^[ED/>B*7/WSP=_GX<'=!"ZK?`AJDX/JTO[[[@X""$N1@^@'@`G:G M>Y,'>R@0!/SG?&^7`C/P=@>8@,[W@*J7>B@P!,!'!!(X>2%P>P%``V\7`$/P M@7`W`[17?N8'>":&`>E7@@^H?B&8>JI7`D-0`@$@!`$@`Z%7_X$76'Q#D'E! M(`0[N'UO1X"MUWE%"'M&Z'F=-WJ;%WHP^'9`V(0B.'XBJ`,M@`(P:(1.&'AE M)$:>9X(!8(58^'8D6'Y">()$P%**I(8J6'PY,(9;&(>C%P1=9H8?F(1/^'9B M>(9$^'B\AWTI@($(J'ZA5P(T4`*""('5D(%AJ`.IAXAPEX&/MQ)[]WF06`TZ MX(C8YX%VB(9^MX9M>'>?-X8M"(8*^'8T<'P[('N%&'O%=X!`V(A\^`ZK-P28 MIWG!UWY&N(JVQW[-AXG:1P35-WU$$'X!T(#!%WV3R!*EUX$?.(Q9N(2>^(E\ M5$6H1P1TF(O$%WK&.'H52`0]V(FTA_^,9LA^.0"-`TB+T[B.[-B.D(=^[CAX M?7B"DA>/]JAW]5AW^7B/_)B.[L!Z0BA[ />&/EAZW0=["'F`)BAZ M!LF/\[AW/E")<`>`U4=^QA=W\B>``5!_]X=\M?>!X<=__H>1CS<>>%>#V$B# M,^!_!(F-_4=[*#E^GR<$@ # M..B`%OB!/0B+09B2VX%W,M`",M"$@ZB##OB#8SB%J=>`97B56?F!7,F5#QF4 M[3B1$=:6;MDC7ZB'5\B*IXB-I)&-`DE^9CAZ>QAX#O27<1<$,E!]=ZB%GM>7 M9BB#.XB-@VFFDU28EFJYCD.)=R1BD1^8B729A*E(!#M`C`()B2+H@[&(F50Y M'7A7`HLG!#0XB*`IB+$HBZ%)`RV`C*A)!*I9?*#9FD`9F:PWF8E'?NAHC'7Y MC19(E]AWC*%ICNCH>"IY=_R7>;3G`L,WCGHH?-'9@5MHC)LGD]!9C-70@-0) JF;PIE.HXG@;9G)8I>*UIGN;IF^SYGE,H>`((G^U9GO1YG_B9GX$7"``[ ` end