Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes _______ No ___X____
(Convenience Translation into English from the Original Previously Issued in Portuguese)
Independent Accountants Special Review Report
To the Stockholders and Management of
Companhia Siderúrgica Nacional
Rio de Janeiro - RJ
1. We have conducted a special review on the quarterly report (ITRs) of COMPANHIA SIDERÚRGICA NACIONAL (a Brazilian corporation), which includes the individual (Parent Company) and consolidated balance sheets as of June 30, 2003, the related statements of income for the quarter and semester then ended, the performance report and the relevant information, presented in accordance with the accounting principles generally accepted in Brazil, prepared under the responsibility of the Company’s management.
2. Our review was conducted in accordance with specific standards established by the Brazilian Institute of Accountants - IBRACON, together with the Federal Accounting Council (CFC), and mainly comprised: (a) inquires and discussions with the Company’s management responsible for the accounting, financial and operating areas as to the principal criteria adopted in the preparation of the quarterly information; and (b) review of the information and subsequent events that had or may have significant effects on the Company’s and yours subsidiary financial position and operations.
3. As described in note 13 to the quarterly financial information, the Company, its affiliate MRS Logística S.A. and its subsidiary GalvaSud S.A. elected to defer net losses arising from exchange rate changes in year 2001, in conformity with Provisional Measure No. 3/2001 and Deliberations no. 404/2001 and 409/2001 from Comissão de Valores Mobiliários - CVM. Accounting practices adopted in Brazil, require the recognition in income of the effects of exchange rate changes during the period in which they occurred. As a result, as of June 30, 2003, stockholders’ equity is overstated by approximately R$119,981 thousand (R$134,718 thousand as of March 31, 2003), and the net profit for the quarter and semester ended June 30, 2003 is understated by approximately R$14,737 thousand and R$37,666 thousand respectively, (net loss for the quarter and semester ended on June 30, 2002 was overstated by approximately R$98,468 thousand and R$323,887 thousand, respectively) net of fiscal effects.
4. Based on our special review, except for the effects of the matter mentioned in paragraph (3), we are not aware of any material modification that should be made to the quarterly report referred to in paragraph (1) above for it to be in accordance with the accounting practices adopted in Brazil, applied in compliance with the standards laid down by CVM (Brazilian Securities Commission), specifically applicable to the preparation of the quarterly information.
5. As described in note 21 to the Quarterly Information, as of June 30, the Company and subsidiaries had recorded in current assets, accounts receivable in the amount of R$313,040 thousand, related to the sale of energy in the Wholesale Electric Energy Market - MAE, based on calculation made and disclosed by the MAE and/or on estimates prepared by the Management, when MAE information was not available. Of this amount, R$77,473 thousand refers to the sale of energy to concessionaires or permissionaires holding injunctions for the suspension of payment for the transactions. The financial settlement depends upon the decision on judicial claims in progress, filed by sector companies, and referring to the interpretation of market regulations in force, and the amounts may still be subject to change. The definitive settlement also depends on the financial capacity of the sector companies to pay their obligations.
6. The individual and consolidated financial statements as of March 31, 2003 presented for comparative purposes, were reviewed by us, and our report, dated May 2, 2003 included qualification with respect to the deferral of net negative exchange variations for the year 2001. The individual and consolidated statements of income in the quarter and semester ended June 30, 2002, presented for comparative purposes, were reviewed by us, and our report, dated July 30, 2002, contains qualification with respect to the deferral of net negative exchange variations in the first quarter of 1999 and in the year 2001, and the impacts, if any, of the lack of review of certain affiliates, subsidiaries and joint subsidiaries as of that date, which represented 0.06% of the total assets of the Parent Company, and whose net equity represents, respectively, 5.50% and 4.53% of the loss for the quarter and semester ended that date.
7. Our special review was conducted for the purpose of issuing a report on the quarterly information referred to in paragraph (1) above, taken as a whole. The Supplementary Information related to the Value-added Statement, presented in note 24, to the Statement of Earnings before Interest, Tax, Depreciation and Amortization (Ebitda) in note 25, and to the Statements of Changes in Financial Position and of Cash Flows presented in Attachment 16.01 to the quarterly information are presented for the purposes of allowing additional analyzes and are not required as part of the basic quarterly report. These information were reviewed according with the review procedures mentioned in paragraph (2) above, and based on our special review, are fairly stated, in all material aspects, in relation to the Quarterly Information taken as a whole.
8. The accompanying financial statements have been translated into English for the convenience of readers outside Brazil.
Rio de Janeiro, August 1, 2003
DELOITTE TOUCHE TOHMATSU Amauri Froment Fernandes Auditores Independentes Engagement Partner
(Translation of the report originally issued in Portuguese.
See Note 29 to the financial statements)
FEDERAL PUBLIC SERVICE CORPORATE LAW
CVM - BRAZILIAN SECURITIES COMMISSION
QUARTERLY INFORMATION - ITR
COMMERCIAL, INDUSTRY & OTHER TYPES OF COMPANY DATE - 06/30/2003
01.01 - IDENTIFICATION
--------------------------------------------------------------------------------
1 - CVM CODE 2 - NAME OF COMPANY 3 - TAX PAYER
00403-0 COMPANHIA SIDERÚRGICA NACIONAL 33.042.730/0001-04
--------------------------------------------------------------------------------
02.01 - BALANCE SHEET - ASSETS (IN THOUSANDS OF BRAZILIAN REAIS)
--------------------------------------------------------------------------------------------------------------
1 - CODE 2 - DESCRIPTION 3 -06/30/2003 4 -03/31/2003
--------------------------------------------------------------------------------------------------------------
1 TOTAL ASSETS 21,572,377 17,669,434
--------------------------------------------------------------------------------------------------------------
1.01 CURRENT ASSETS 3,974,601 4,374,028
--------------------------------------------------------------------------------------------------------------
1.01.01 CASH AND BANKS 32,493 46,854
--------------------------------------------------------------------------------------------------------------
1.01.01.01 BANKS 32,493 46,854
--------------------------------------------------------------------------------------------------------------
1.01.02 CREDITS 1,743,744 1,496,633
--------------------------------------------------------------------------------------------------------------
1.01.02.01 TRADE ACCOUNTS RECEIVABLE - DOMESTIC MARKET 862,476 723,819
--------------------------------------------------------------------------------------------------------------
1.01.02.02 TRADE ACCOUNTS RECEIVABLE - EXPORT MARKET 960,793 858,144
--------------------------------------------------------------------------------------------------------------
1.01.02.03 ALLOWANCE FOR DOUBTFUL ACCOUNTS (79,525) (85,330)
--------------------------------------------------------------------------------------------------------------
1.01.03 INVENTORIES 647,173 582,338
--------------------------------------------------------------------------------------------------------------
1.01.03.01 FINISHED PRODUCTS 157,349 149,916
--------------------------------------------------------------------------------------------------------------
1.01.03.02 PRODUCTS IN PROCESS 134,620 105,967
--------------------------------------------------------------------------------------------------------------
1.01.03.03 RAW MATERIAL 168,191 144,943
--------------------------------------------------------------------------------------------------------------
1.01.03.04 SPARE PARTS AND MAINTENANCE SUPPLIES 175,822 169,044
--------------------------------------------------------------------------------------------------------------
1.01.03.05 IMPORTS IN TRANSIT 967 1,772
--------------------------------------------------------------------------------------------------------------
1.01.03.06 MATERIALS IN TRANSIT 10,224 10,696
--------------------------------------------------------------------------------------------------------------
1.01.04 OTHER 1,551,191 2,248,203
--------------------------------------------------------------------------------------------------------------
1.01.04.01 MARKETABLE SECURITIES 872,399 1,513,033
--------------------------------------------------------------------------------------------------------------
1.01.04.02 WITHHOLDING INCOME TAX AND SOCIAL CONTRIBUTION TO OFFSET 112,526 83,561
--------------------------------------------------------------------------------------------------------------
1.01.04.03 DEFERRED INCOME TAX 131,690 220,064
--------------------------------------------------------------------------------------------------------------
1.01.04.04 DEFERRED SOCIAL CONTRIBUTION 19,853 50,334
--------------------------------------------------------------------------------------------------------------
1.01.04.05 DIVIDENDS RECEIVABLE 174,835 174,835
--------------------------------------------------------------------------------------------------------------
1.01.04.06 OTHER 239,888 206,376
--------------------------------------------------------------------------------------------------------------
1.02 LONG-TERM ASSETS 1,977,531 1,426,134
--------------------------------------------------------------------------------------------------------------
1.02.01 CREDITS 55,823 55,054
--------------------------------------------------------------------------------------------------------------
1.02.01.01 COMPULSORY LOANS - ELETROBRÁS 55,823 55,054
--------------------------------------------------------------------------------------------------------------
1.02.02 CREDITS WITH RELATED PARTIES 593,789 93,615
--------------------------------------------------------------------------------------------------------------
1.02.02.01 AFFILIATES 0 0
--------------------------------------------------------------------------------------------------------------
1.02.02.02 SUBSIDIARIES 593,789 93,615
--------------------------------------------------------------------------------------------------------------
1.02.02.03 OTHER RELATED PARTIES 0 0
--------------------------------------------------------------------------------------------------------------
1.02.03 OTHER 1,327,919 1,277,465
--------------------------------------------------------------------------------------------------------------
1.02.03.01 DEFERRED INCOME TAX 244,766 257,586
--------------------------------------------------------------------------------------------------------------
1.02.03.02 DEFERRED SOCIAL CONTRIBUTION 61,265 69,272
--------------------------------------------------------------------------------------------------------------
1.02.03.03 JUDICIAL DEPOSITS 454,317 442,261
--------------------------------------------------------------------------------------------------------------
1.02.03.04 SECURITIES RECEIVABLE 51,990 52,181
--------------------------------------------------------------------------------------------------------------
1.02.03.05 DEBENTURE 107,673 107,673
--------------------------------------------------------------------------------------------------------------
1.02.03.06 RECOVERABLE PIS / PASEP 52,349 50,850
--------------------------------------------------------------------------------------------------------------
1.02.03.07 LEASES 31,942 29,973
--------------------------------------------------------------------------------------------------------------
1.02.03.08 INVESTMENT AVAILABLE FOR SALE 246,917 199,385
--------------------------------------------------------------------------------------------------------------
1.02.03.09 OTHER 76,700 68,284
--------------------------------------------------------------------------------------------------------------
1.03 PERMANENT ASSETS 15,620,245 11,869,272
--------------------------------------------------------------------------------------------------------------
1.03.01 INVESTMENTS 2,704,827 2,893,498
--------------------------------------------------------------------------------------------------------------
FEDERAL PUBLIC SERVICE CORPORATE LAW
CVM - BRAZILIAN SECURITIES COMMISSION
QUARTERLY INFORMATION - ITR
COMMERCIAL, INDUSTRY & OTHER TYPES OF COMPANY DATE - 06/30/2003
01.01 - IDENTIFICATION
--------------------------------------------------------------------------------
1 - CVM CODE 2 - NAME OF COMPANY 3 - TAX PAYER
00403-0 COMPANHIA SIDERÚRGICA NACIONAL 33.042.730/0001-04
--------------------------------------------------------------------------------
02.01 - BALANCE SHEET - ASSETS (IN THOUSANDS OF BRAZILIAN REAIS)
--------------------------------------------------------------------------------------------------------------
1 - CODE 2 - DESCRIPTION 3 -06/30/2003 4 -03/31/2003
--------------------------------------------------------------------------------------------------------------
1.03.01.01 IN AFFILIATES 0 0
--------------------------------------------------------------------------------------------------------------
1.03.01.02 IN SUBSIDIARIES 2,704,827 2,893,498
--------------------------------------------------------------------------------------------------------------
1.03.01.03 OTHER INVESTMENTS 0 0
--------------------------------------------------------------------------------------------------------------
1.03.02 PROPERTY, PLANT AND EQUIPMENT 12,527,589 8,564,578
--------------------------------------------------------------------------------------------------------------
1.03.02.01 IN NET OPERATION 11,868,726 7,954,776
--------------------------------------------------------------------------------------------------------------
1.03.02.02 CONSTRUCTION 543,580 518,183
--------------------------------------------------------------------------------------------------------------
1.03.02.03 LANDS 115,283 91,619
--------------------------------------------------------------------------------------------------------------
1.03.03 DEFERRED CHARGES 387,829 411,196
--------------------------------------------------------------------------------------------------------------
(Translation of the report originally issued in Portuguese.
See Note 29 to the financial statements)
FEDERAL PUBLIC SERVICE CORPORATE LAW
CVM - BRAZILIAN SECURITIES COMMISSION
QUARTERLY INFORMATION - ITR
COMMERCIAL, INDUSTRY & OTHER TYPES OF COMPANY DATE - 06/30/2003
01.01 - IDENTIFICATION
-------------------------------------------------------------------------------------------------------------
1 - CVM CODE 2 - NAME OF COMPANY 3 - TAX PAYER
00403-0 COMPANHIA SIDERÚRGICA NACIONAL 33.042.730/0001-04
-------------------------------------------------------------------------------------------------------------
02.02 - BALANCE SHEET - LIABILITIES (IN THOUSANDS OF BRAZILIAN REAIS)
-------------------------------------------------------------------------------------------------------------
1 - CODE 2 - DESCRIPTION 3 -06/30/2003 4 -03/31/2003
-------------------------------------------------------------------------------------------------------------
2 TOTAL LIABILITIES 21,572,377 17,669,434
-------------------------------------------------------------------------------------------------------------
2.01 CURRENT LIABILITIES 4,304,915 3,965,975
-------------------------------------------------------------------------------------------------------------
2.01.01 LOANS AND FINANCING 2,985,362 2,406,148
-------------------------------------------------------------------------------------------------------------
2.01.02 DEBENTURES 68,287 29,067
-------------------------------------------------------------------------------------------------------------
2.01.03 SUPPLIERS 597,284 586,700
-------------------------------------------------------------------------------------------------------------
2.01.04 TAXES AND CONTRIBUTIONS 401,657 324,732
-------------------------------------------------------------------------------------------------------------
2.01.04.01 SALARIES AND SOCIAL CONTRIBUTIONS 100,368 76,943
-------------------------------------------------------------------------------------------------------------
2.01.04.02 TAXES PAYABLE 207,146 143,136
-------------------------------------------------------------------------------------------------------------
2.01.04.03 DEFERRED INCOME TAX 69,223 76,951
-------------------------------------------------------------------------------------------------------------
2.01.04.04 DEFERRED SOCIAL CONTRIBUTION 24,920 27,702
-------------------------------------------------------------------------------------------------------------
2.01.05 DIVIDENDS PAYABLE 328 293,623
-------------------------------------------------------------------------------------------------------------
2.01.05.01 PROPOSED DIVIDENDS AND INTEREST ON STOCKHOLDERS' EQUITY 328 293,623
-------------------------------------------------------------------------------------------------------------
2.01.06 PROVISIONS 9,358 6,509
-------------------------------------------------------------------------------------------------------------
2.01.06.01 LABOR, CIVIL AND TAX 9,358 6,509
-------------------------------------------------------------------------------------------------------------
2.01.07 DEBT WITH RELATED PARTIES 0 0
-------------------------------------------------------------------------------------------------------------
2.01.08 OTHER 242,639 319,196
-------------------------------------------------------------------------------------------------------------
2.01.08.01 ACCOUNTS PAYBLE- AFFILIATED COMPANY 169,396 189,529
-------------------------------------------------------------------------------------------------------------
2.01.08.02 DERIVATIVES - PAYABLE ACCOUNTS 0 0
-------------------------------------------------------------------------------------------------------------
2.01.08.03 OTHER 73,243 129,667
-------------------------------------------------------------------------------------------------------------
2.02 LONG-TERM LIABILITIES 9,631,242 8,389,198
-------------------------------------------------------------------------------------------------------------
2.02.01 LOANS AND FINANCING 4,552,279 4,559,212
-------------------------------------------------------------------------------------------------------------
2.02.02 DEBENTURES 666,550 666,550
-------------------------------------------------------------------------------------------------------------
2.02.03 PROVISIONS 3,038,067 1,636,824
-------------------------------------------------------------------------------------------------------------
2.02.03.01 LABOR, CIVIL, FISCAL AND ENVIRONMENTAL 79,271 74,091
-------------------------------------------------------------------------------------------------------------
2.02.03.02 FOR INCOME TAX IN JUDGE 59,441 59,866
-------------------------------------------------------------------------------------------------------------
2.02.03.03 FOR SOCIAL CONTRIBUTION IN JUDGE 31,479 44,333
-------------------------------------------------------------------------------------------------------------
2.02.03.04 OTHER TAX IN JUDGE 240,305 206,408
-------------------------------------------------------------------------------------------------------------
2.02.03.05 DEFERRED INCOME TAX 1,932,038 920,681
-------------------------------------------------------------------------------------------------------------
2.02.03.06 DEFERRED SOCIAL CONTRIBUTION 695,533 331,445
-------------------------------------------------------------------------------------------------------------
2.02.04 DEBT WITH RELATED PARTIES 960,895 1,110,842
-------------------------------------------------------------------------------------------------------------
2.02.05 OTHER 413,451 415,770
-------------------------------------------------------------------------------------------------------------
2.02.05.01 PROVISION FOR INVESTMENT DEVALUATION 15,848 44,278
-------------------------------------------------------------------------------------------------------------
2.02.05.02 OTHER 397,603 371,492
-------------------------------------------------------------------------------------------------------------
2.03 DEFERRED INCOME 0 0
-------------------------------------------------------------------------------------------------------------
2.05 STOCKHOLDERS' EQUITY 7,636,220 5,314,261
-------------------------------------------------------------------------------------------------------------
2.05.01 PAID-IN CAPITAL 1,680,947 1,680,947
-------------------------------------------------------------------------------------------------------------
2.05.02 CAPITAL RESERVES 10,485 10,485
-------------------------------------------------------------------------------------------------------------
2.05.03 REVALUATION RESERVES 5,128,243 2,485,361
-------------------------------------------------------------------------------------------------------------
2.05.03.01 OWN ASSETS 5,128,243 2,485,361
-------------------------------------------------------------------------------------------------------------
2.05.03.02 SUBSIDIARIES/AFFILIATES 0 0
-------------------------------------------------------------------------------------------------------------
2.05.04 REVENUE RESERVES 196,449 702,588
-------------------------------------------------------------------------------------------------------------
FEDERAL PUBLIC SERVICE CORPORATE LAW
CVM - BRAZILIAN SECURITIES COMMISSION
QUARTERLY INFORMATION - ITR
COMMERCIAL, INDUSTRY & OTHER TYPES OF COMPANY DATE - 06/30/2003
01.01 - IDENTIFICATION
-------------------------------------------------------------------------------------------------------------
1 - CVM CODE 2 - NAME OF COMPANY 3 - TAX PAYER
00403-0 COMPANHIA SIDERÚRGICA NACIONAL 33.042.730/0001-04
-------------------------------------------------------------------------------------------------------------
02.02 - BALANCE SHEET - LIABILITIES (IN THOUSANDS OF BRAZILIAN REAIS)
-------------------------------------------------------------------------------------------------------------
1 - CODE 2 - DESCRIPTION 3 -06/30/2003 4 -03/31/2003
-------------------------------------------------------------------------------------------------------------
2.05.04.01 LEGAL 196,449 196,449
-------------------------------------------------------------------------------------------------------------
2.05.04.02 STATUTORY 0 0
-------------------------------------------------------------------------------------------------------------
2.05.04.03 FOR CONTINGENCIES 0 0
-------------------------------------------------------------------------------------------------------------
2.05.04.04 UNREALIZED INCOME 0 0
-------------------------------------------------------------------------------------------------------------
2.05.04.05 PROFIT RETENTIONS 0 0
-------------------------------------------------------------------------------------------------------------
2.05.04.06 SPECIAL FOR NON-DISTRIBUTED DIVIDENDS 0 0
-------------------------------------------------------------------------------------------------------------
2.05.04.07 OTHER PROFIT RESERVES 0 506,139
-------------------------------------------------------------------------------------------------------------
2.05.04.07.01 FOR INVESTMENTS 0 506,139
-------------------------------------------------------------------------------------------------------------
2.05.05 RETAINED EARNINGS 620,096 434,880
-------------------------------------------------------------------------------------------------------------
(Translation of the report originally issued in Portuguese.
See Note 29 to the financial statements)
FEDERAL PUBLIC SERVICE CORPORATE LAW
CVM - BRAZILIAN SECURITIES COMMISSION
QUARTERLY INFORMATION - ITR
COMMERCIAL, INDUSTRY & OTHER TYPES OF COMPANY DATE - 06/30/2003
01.01 - IDENTIFICATION
--------------------------------------------------------------------------------------------------------------------------------------------------------------
1 - CVM CODE 2 - NAME OF COMPANY 3 - TAX PAYER
00403-0 COMPANHIA SIDERÚRGICA NACIONAL 33.042.730/0001-04
--------------------------------------------------------------------------------------------------------------------------------------------------------------
03.01 - STATEMENT OF OPERATIONS (IN THOUSANDS OF BRAZILIAN REAIS)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
1 - CODE 2 - DESCRIPTION 3 - 01/04/2003 4 - 01/01/2003 5 - 01/04/2002 6 - 01/01/2002
TO 06/30/2003 TO 06/30/2003 TO 06/30/2002 TO 06/30/2002
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.01 GROSS REVENUE FROM SALES AND SERVICES 1,856,982 3,502,414 1,213,775 2,333,283
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.02 DEDUCTIONS FROM GROSS REVENUE (305,900) (559,298) (204,797) (392,884)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.03 NET REVENUE FROM SALES AND SERVICES 1,551,082 2,943,116 1,008,978 1,940,399
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.04 COST OF GOODS AND SERVICES SOLD (855,692) (1,555,436) (599,523) (1,177,249)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.04.01 DEPRECIATION, DEPLETION AND AMORTIZATION (147,077) (264,729) (115,273) (238,872)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.04.02 OTHER (708,615) (1,290,707) (484,250) (938,377)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.05 GROSS PROFIT 695,390 1,387,680 409,455 763,150
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06 OPERATING INCOME (EXPENSES) (366,755) (509,390) (844,751) (1,493,667)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.01 SELLING (48,313) (95,917) (47,316) (95,474)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.01.01 DEPRECIATION AND AMORTIZATION (1,511) (3,030) (1,086) (2,187)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.01.02 OTHER (46,802) (92,887) (46,230) (93,287)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.02 GENERAL AND ADMINISTRATIVE (61,228) (113,925) (74,420) (135,586)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.02.01 DEPRECIATION AND AMORTIZATION (5,018) (10,588) (7,372) (14,679)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.02.02 OTHER (56,210) (103,337) (67,048) (120,907)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.03 FINANCIAL (107,911) (123,887) (970,699) (1,475,688)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.03.01 FINANCIAL INCOME 70,597 236,954 771,388 531,665
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.03.01.01 EXCHANGE VARIATION AMORTIZATION 0 0 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.03.01.02 FOREIGN EXCHANGE AND MONETARY LOSS, NET 915,951 1,219,590 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.03.01.03 FINANCIAL INCOME (845,354) (982,636) 771,388 531,665
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.03.02 FINANCIAL EXPENSES (178,508) (360,841) (1,742,087) (2,007,353)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.03.02.01 FINANCIAL EXPENSES (178,508) (360,841) (224,141) (382,799)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.03.02.02 FOREIGN EXCHANGE AND MONETARY LOSS, NET 0 0 (1,517,946) (1,624,554)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.04 OTHER OPERATING INCOME 3,018 6,545 3,636 5,328
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.05 OTHER OPERATING EXPENSES (27,069) (5,645) (46,839) (96,738)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.05.01 FOREIGN EXCHANGE AND MONETARY LOSS, NET 0 0 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.05.02 AMORTIZATION OF SPECIAL EXCHANGE VARIATION 0 0 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.05.03 OTHER (27,069) (5,645) (46,839) (96,738)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.06 EQUITY IN RESULTS OF SUBSIDIARIES AND AFFILIATED COMPANIES (125,252) (176,561) 290,887 304,491
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.07 OPERATING INCOME (LOSS) 328,635 878,290 (435,296) (730,517)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.08 NON-OPERATING INCOME (LOSS) (6,758) (12,159) (3,029) (6,575)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
FEDERAL PUBLIC SERVICE CORPORATE LAW
CVM - BRAZILIAN SECURITIES COMMISSION
QUARTERLY INFORMATION - ITR
COMMERCIAL, INDUSTRY & OTHER TYPES OF COMPANY DATE - 06/30/2003
01.01 - IDENTIFICATION
--------------------------------------------------------------------------------
1 - CVM CODE 2 - NAME OF COMPANY 3 - TAX PAYER
00403-0 COMPANHIA SIDERÚRGICA NACIONAL 33.042.730/0001-04
--------------------------------------------------------------------------------
03.01 - STATEMENT OF OPERATIONS (IN THOUSANDS OF BRAZILIAN REAIS)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
1 - CODE 2 - DESCRIPTION 3 - 01/04/2003 4 - 01/01/2003 5 - 01/04/2002 6 - 01/01/2002
TO 06/30/2003 TO 06/30/2003 TO 06/30/2002 TO 06/30/2002
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.08.01 INCOME 6 25 84 1,614
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.08.02 EXPENSES (6,764) (12,184) (3,113) (8,189)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.09 INCOME BEFORE TAXES AND PARTICIPATIONS / CONTRIBUTIONS 321,877 866,131 (438,325) (737,092)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.10 PROVISION FOR INCOME TAX AND SOCIAL CONTRIBUTION (39,959) 4,630 41,692 25,343
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.11 DEFERRED INCOME TAX (146,934) (329,745) 186,826 304,530
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.11.01 DEFERRED INCOME TAX (106,525) (239,516) 141,945 231,882
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.11.02 DEFERRED SOCIAL CONTRIBUTION (40,409) (90,229) 44,881 72,648
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.12 STATUTORY PARTICIPATIONS / CONTRIBUTIONS 0 0 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.12.01 PARTICIPATIONS 0 0 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.12.02 CONTRIBUTIONS 0 0 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.13 REVERSAL OF INTEREST ON STOCKHOLDERS' EQUITY 0 0 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.15 NET INCOME (LOSS) FOR THE PERIOD 134,984 541,016 (209,807) (407,219)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
OUTSTANDING SHARES (THOUSANDS) 71,729,261 71,729,261 71,729,261 71,729,261
--------------------------------------------------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE (R$) 0.00188 0.00754
--------------------------------------------------------------------------------------------------------------------------------------------------------------
LOSS PER SHARE (R$) (0.00292) (0.00568)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
| FEDERAL PUBLIC SERVICE | |
| CVM BRAZILIAN SECURITIES COMMISSION | |
| QUARTERLY INFORMATION ITR | CORPORATE LAW |
| COMMERCIAL, INDUSTRY & OTHER TYPES OF COMPANY | Date 06/30/2003 |
| 00403-0 COMPANHIA SIDERÚRGICA NACIONAL | 33.042.730/0001-04 |
| 04.01 NOTES TO THE QUARTERLY FINANCIAL INFORMATION |
(In thousands of reais, except as otherwise indicated)
1. OPERATING CONTEXT
Companhia Siderúrgica Nacional ("CSN") is engaged in the production of flat steel products, its main industrial complex being the Presidente Vargas Mill in the City of Volta Redonda, State of Rio de Janeiro, Southeastern Brazil and processing unit in the City of Araucaria, State of Paraná.
CSN is engaged in the mining of iron ore, limestone and dolomite in the neighboring State of Minas Gerais to cater for the needs of the Presidente Vargas mill. Aiming to improve these activities, the Company also maintains strategic investments in railroad and electricity transportation, ports, among other companies.
2. PRESENTATION OF THE FINANCIAL STATEMENTS
In compliance with the configuration of the quarterly information form, the Statements of Changes in Financial Position and Cash Flows of the parent company and consolidated, are presented in the table “Other information that the Company considers as relevant”.
3. SIGNIFICANT ACCOUNTING POLICIES
The financial statements were prepared in conformity with the accounting principles adopted in Brazil, as well as with the accounting standards and pronouncements established by the Brazilian Securities Commission ("CVM") and Brazilian Institute of Accountants IBRACON.
(a) Income statement
The results of operations are determined on an annual accrual basis. The Company decided to defer the net exchange variation incurred during fiscal year 2001, as detailed in Note 13.
(b) Marketable securities
Securities are recorded at cost plus yields accrued through the balance sheet date, and do not exceed the market value.
(c) Allowance for doubtful accounts
The allowance for doubtful accounts has been set up in an amount which, in the opinion of Management suffices to absorb any losses that might be incurred in realizing accounts receivable.
(d) Inventories
Inventories are stated at the lower of the average production/purchase cost and net realization value or replacement cost, respectively, except in the case of imports in process, which are stated at their identified cost.
(e) Other current and long-term assets
Other current and long-term assets are stated at their realization value, including, when applicable, yields accrued to the balance sheet date or, in the case of prepaid expenses, at cost.
(f) Investments
Investments in subsidiaries, jointly owned subsidiary companies and associated companies are recorded by the equity accounting method, plus any amortizable goodwill and discount negative goodwill, if applicable. The other permanent investments are recorded at acquisition cost.
(g) Property, plant and equipment
The property, plant and equipment of the Parent Company is presented at market or replacement values, based on appraisal reports (refer to note 12) conducted by independent expert appraisers firms, as permitted by Deliberation No. 288 issued by the Brazilian Securities Commission ("CVM") on December 3, 1998. Depreciation is computed by the straight-line method at the rates shown in Note 12 based on the remaining economic useful lives of the assets after revaluation, according to the technical appraisal report. Iron mines Casa de Pedra depletion is calculated on the basis of the quantity of iron ore extracted. Interest charges related to capital funding for construction in progress are capitalized for as long as the projects remain unconcluded.
(h) Deferred charges
The deferred charges are basically comprised of expenses incurred for development and implantation of projects that should generate a payback to the Company in the next few years. The amortization applied on a straight-line basis will follow the period foreseen for the economic return on the above projects. The charges also include the net foreign exchange variations related to the year 2001.
(i) Current and long-term liabilities
These are stated at their known or estimated values, when applicable, including accrued charges, monetary and foreign exchange variation incurred through the balance sheet date.
(j) Employees’ Benefit
In accordance with Deliberation No. 371, issued by the Brazilian Securities Commission (“CVM”), of December 13, 2000, the Company decided to record the respective actuarial liabilities as from January 1, 2002, in accordance with the above as mentioned in reported deliberation and based on by independent actuarial studies (see note 26 item d).
(k) Income Tax and Social Contribution on Net Income
Income tax and social contribution on net income are calculated based at their effective tax rates and consider the tax loss absorption limited to 30%, to compute the tax liability. Tax credits are set up for deferred taxes on tax losses, negative basis of social contribution on net income and on temporary differences as well as income tax and social contribution on the 2001 deferred exchange variation and other temporary differences.
(l) Derivatives
The derivatives operations are recorded in accordance with the characteristics of the financial instruments. The swaps operations are recorded based on the operations´ net results, which are booked monthly as for the contractual conditions.
The operations of exchange options are monthly adjusted to market value, whenever the position shows a loss, such loss is recognized as a company obligation in counter entry to the financial result, in accordance with the prudence principle.
4. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements for the on June 30, 2003 and March 31, 2003 include the following subsidiaries and joint subsidiaries:
Percentage share of total
and voting capital stock (%)
Companies 06/30/2003 03/31/2003 Main Ativities
------------------------------------------------ -------------- ------------- ----------------------------------------
Fully Consolidated:
CSN Overseas 100.00 100.00 Financial operations
CSN Steel Corp. 100.00 100.00 Participation in other companies throught equity stakes
CSN Islands Corp. 100.00 100.00 Financial operations
CSN Islands II 100.00 100.00 Financial operations
CSN Islands III 100.00 Financial operations
CSN Islands IV 100.00 Financial operations
CSN Islands V 100.00 Financial operations
Cayman II 100.00 Financial operations
CSN Export 100.00 Financial operations
CSN Energy Corp. 100.00 100.00 Participation in other companies throught equity stakes
CSN Steel II, S.A. 100.00 100.00 Participation in other companies throught equity stakes
Cia.Metalic Nordeste 99.99 99.99 Metallurgy
Indústria Nacional de Aços Laminados - Inal S.A. 99.99 Steel products service center
FEM - Projetos , Construções e Montagem S.A. 99.99 99.99 Assembly and maintenance
CSC - Cia. Siderúrgica do Ceará 99.99 99.99 Steel making
CSN Panama, S.A. 99.99 99.99 Participation in other companies throught equity stakes
CSN Energia S.A. 99.90 99.99 Trading of eletric power
CSN Participações Energéticas S.A. 99.70 99.70 Participation in other companies throught equity stakes
CSN I S.A. 99.67 99.67 Steel making
CISA - CSN Indústria de Aços Revestidos S.A. 99.99 Steel products service center
Proportionally Consolidated:
GalvaSud S.A 51.00 51.00 Steel products service center
Lusosider 50.00 Steel making
Sepetiba Tecon S.A (1) 20.00 20.00 Maritime port services
(1) Considering the indirect participation in Sepetiba Tecon S.A., through CSN Panama,S.A., the total participation amounts to 50%.
The financial statements originally prepared in US dollars (CSN Panama, S.A., CSN Islands Corp., CSN Islands II, CSN Islands III, CSN Islands IV, CSN Islands V, CSN Steel Corp., CSN Overseas, CSN Energy Corp. e CSN Steel II, S.A.) and in Euros (Lusosider) were converted to Brazilian reais at the exchange rate in effect on June 30, 2003 R$/EUR 3.3111, R$/US$2.8720 (March 31, 2003 R$/US$3.3531 and June 30, 2002 R$/US$2.8444) and the gains / losses originated by this conversion were accounted for in the income statements of the related years, as a result of equity accounting in the parent company and exchange variation in the consolidated. These financial statements were prepared applying the same accounting principles as those applied by the Parent Company.
All intercompany balances and transactions have been eliminated in the presentation of the consolidated financial statements.
The year-end closing dates for the consolidated subsidiaries and jointly owned subsidiaries coincide with those of the parent company.
Consistent with the financial statements for the year ended December 31, 2002, the Company did not consolidate the following investees due to the fact that they do not represent any relevant change to the consolidated economic unit.
Ownership (%)
-----------------------------
06/30/2003 e 03/31/2003
-----------------------------
Companies Total Voting
------------------------------------------------------------------ ------------- ---------------
Companhia Ferroviária do Nordeste - CFN 32.40 32.40
Ferrovia Centro Atlântica S.A. (FCA) 11.95 11.66
MRS Logística S.A. 32.22 18.72
The consolidated financial statements do not include the subsidiary CSN Aceros, S.A an associated company through the 37.50% interest held by CSN Panama, S.A.
The participation in Itá Energética S.A. (ITASA) is shown as investment available for sale in long-term assets, and, therefore, was not consolidated.
The reconciliation between shareholders’ equity and net income (loss) for the year of the Parent Company and consolidated is as follows:
Shareholder's equity Net profit (loss)
------------------------------- ----------------------------
06/30/2003 03/31/2003 06/30/2003 06/03/2002
--------------- --------------- ------------- --------------
Parent company 7,636,220 5,314,261 541,016 (407,219)
Elimination of gains on inventories (41,126) (9,483) (28,079) (506)
Other adjustments 5 5
--------------- --------------- ------------- --------------
Consolidated 7,595,099 5,304,778 512,942 (407,725)
=============== =============== ============= ==============
Note 19 only shows changed in the parent company’s stockholders’ equity.
5. TRANSACTION WITH RELATED PARTIES
CSN CSN CSN CSN CSN CSN CSN CSN MRS BANK TOTAL
--------------------
OVERSEAS CAYMAN IRON PANAMA ISLANDSII ISLANDSIII ISLANDSIV ISLANDSV LOGÍSTICA GALVASUD FIBRA METALIC OTHERS 06/30/2003 03/31/2003
--------- -------------------------------------------------------------------------------------------------- ------- --------------------
ASSETS
Accounts receivable 391 1,093,671 57 53 73,706 79,012 91 211 1,247,192 1,207,017
Other operations: -
Marketable securities 287,156 287,156 661,276
Mutual/Current accounts(1) 516,558 42,040 35,191 57 4,703 693 15,483 614,725 125,868
Debentures Sepetiba Tecon 18,000 18,000 18,000
Dividends receivable 174,835 174,835 174,835
Advance for future capital -
increase - 10,254 4,593 14,847 4,592
--------- ------------------------ ------- -------- ------- ------ -------- ------- ------- -------- ------- ------- --------------------
TOTAL 516,949 1,135,711 - 35,191 114 - - - 4,756 73,706 79,705 287,156 10,345 213,122 2,356,755 2,191,588
========= ======================================================== ======================== ======== =============== ====================
LIABILITIES
Loans:
Prepayments 533,799 404,374 938,173 998,292
Fixed rate notes(2) 180,533 251,593 219,309 288,512 431,271 1,371,218 492,151
Investees loan 96,307 96,307 98,111
Intercompany bonds(3) 1,736,304 1,736,304 2,073,054
Swap 102,450 102,450 14,826
Loans/Current accounts 1,007,996 75,297 10,372 36,627 1,130,292 1,300,372
Other operations:
Services suppliers - -
Associated Company
inventory 23,214 23,214 23,463
Accounts payable - 32 1,701 106,025 107,758 137,660
--------- ------------------------ ------- -------- ------- ------ -------- ------- ------- -------- ------- ------- --------------------
TOTAL 1,818,635 479,671 1,736,304 251,593 219,309 288,512 431,271 - 32 35,287 102,450 - 142,652 5,505,716 5,137,929
========= ======================== ======= ======== ======= ====== ======== ======= ======= ======== ======= ======= ====================
--------------------
--------------------
06/30/200306/03/2002
--------------------
--------------------
INCOME
Revenue from sales
and services 717,471 - - - - 137,211 263,707 - 8,509 1,126,898 492,380
Interest and
exchange var (30,926) (175,228) - 2,918 - - - - (231,760) 885 (434,111) 101,802
Others - - - - - - - - 72 72 116
--------- ------------------------ ------- -------- ------- ------ -------- --------------- -------- ------- ------- --------------------
TOTAL (30,926) 542,243 - 2,918 - - - - - 137,211 263,707 (231,760) 8,509 957 692,859 594,298
========= ======================== ======= ======== ======= ====== ======== =============== ======== ======= ======= ====================
EXPENSES
Products and services 82,396 1,729 2,935 143,919 230,979 137,707
Interest and
exchange var (383,209) (59,756)(317,247) - (51,098)(10,140) (904) 3,102 102,450 - (716,802) 918,638
--------- ------------------------ ------- -------- ------- ------ -------- --------------- -------- ------- ------- --------------------
TOTAL (383,209) (59,756)(317,247) - (51,098)(10,140) (904) 3,102 82,396 1,729 2,935 102,450 - 143,919 (485,823)1,056,345
========= ======================== ======= ======== ======= ====== ======== =============== ======== ======= ======= ====================
CSN Cayman and CSN Iron Indirect Participation through its
subsidiaries Energy I Corp. and CSN Panama S.A
Others: CFN, FCA, CSC, CSN Foundation,
CBS CSN Employee’s Pension Fund, FEM, Sepetiba Tecon S.A., CSN Energia S.A. and CSN
Participações Energéticas S.A.
These operations were carried out under normal market terms and effective legislation for similar
operations, being the main ones highlighted below:.
(1) Semester Libor + 3% p.y. indeterminate maturity CSN Cayman
IGPM + 6% p.y indeterminate maturity CSN Panama.
(2) Contracts in US$ - Interest of 11% p.y. - maturity 1st tranche: 01/23/2004 and 2nd tranche:
01/29/2004 CSN Overseas.
- Interest of 9.5%p.y. maturity: 03/05/2004 CSN Islands II
- Interest of 9.75%p.y. maturity: 04/22/2005 CSN Islands III
- Interest of 6.85%p.y. maturity: 07/07/2005 CSN Islands IV
- Interest of 7.875%p.y. maturity: 07/07/2005 CSN Islands V
(3) Contracts in US$ - Interest of 9.5% p.y. (1st tranche) and 8.25% p.y. (2nd tranche) - maturity
1st and 2nd tranche:06/01/2007- CSN Iron
6. MARKETABLE SECURITIES AND DERIVATIVES
Parent Company Consolidated
--------------------------------------------------------------------------------------------------------------------------------------
06/30/2003 03/31/2003 06/30/2003 03/31/2003
--------------------------------------------------------------------------------------------------------------------------------------
Short term
Financial investment fund 818,478 1,180,923 887,494 1,180,923
Investments abroad 24,492 201,084 361,807 609,372
Fixed income investments 29,429 28,081 32,753 134,114
--------------------------------------------------------------------------------------------------------------------------------------
872,399 1,410,088 1,282,054 1,924,409
Derivatives 102,945 102,945
--------------------------------------------------------------------------------------------------------------------------------------
872,399 1,513,033 1,282,054 2,027,354
--------------------------------------------------------------------================-===============----==============-===============
Long term
Fixed income investments and debentures (net of probables losses and with 107,673 107,673 103,199 100,667
holding income tax)
--------------------------------------------------------------------================-===============----==============-===============
980,072 1,620,706 1,385,253 2,128,021
--------------------------------------------------------------------================-===============----==============-===============
Company management applies most of the Company’s financial resources in Investment Fund comprised of Brazilian government bonds and fixed income bonds issued in the Brazil, with monetary or foreign exchange variation, and swap contracts and exchange options.
7. ACCOUNTS RECEIVABLE
Parent company Consolidated
----------------------------------- --------------------------------
06/30/2003 03/31/2003 06/30/2003 03/31/2003
---------------- ----------------- --------------- ---------------
Domestic market 862,476 723,819 1,166,288 1,089,258
Subsidiary and Associated Company 153,129 78,844
Other clients 709,347 644,975 1,166,288 1,089,258
Foreign market 960,793 858,144 346,259 315,920
Subsidiary and Associated Company 1,094,063 1,128,173
Other clients 10,330 20,589 346,259 315,920
Exportation Contract Advance (143,600) (290,618)
Allowance for doubtful accounts (79,525) (85,330) (94,394) (102,003)
---------------- ----------------- --------------- ---------------
1,743,744 1,496,633 1,418,153 1,303,175
================ ================= =============== ===============
8. INVENTORIES
Parent company Consolidated
-----------------------------------------------------------------------------------------------
06/30/2003 03/31/2003 06/30/2003 03/31/2003
-----------------------------------------------------------------------------------------------
Finished products 157,349 149,916 222,322 196,535
Products in process 134,620 105,967 146,865 106,311
Rawmaterials 168,191 144,943 233,505 182,011
Spare parts and maintenance supplies 175,822 169,044 202,394 182,070
Imports in progress 967 1,772 1,528 5,891
-----------------------------------------------------------------------------------------------
10,224 10,696 17,973 11,466
-----------------------------------------------------------------------------------------------
Others 647,173 582,338 824,587 684,284
------------------------------------==============--=============--==============--============
9. DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION
------------------------------------------------------------------------------------------------------
Parent company Consolidated
------------------------------------------------------------------------------------------------------
06/30/2003 03/31/2003 06/30/2003 03/31/2003
------------------------------------------------------------------------------------------------------
Current assets
------------------------------------------------------------------------------------------------------
Income tax 131,690 220,064 148,749 229,065
------------------------------------------------------------------------------------------------------
Social contribution 19,853 50,334 25,994 53,574
------------------------------------------------------------------------------------------------------
151,543 270,398 174,743 282,639
---------------------------------------==============---==============---=============---=============
Long-term assets
------------------------------------------------------------------------------------------------------
Income tax 244,766 257,586 273,156 286,186
------------------------------------------------------------------------------------------------------
Social contribution 61,265 69,272 71,423 79,536
------------------------------------------------------------------------------------------------------
306,031 326,858 344,579 365,722
---------------------------------------==============---==============---=============---=============
Current liabilities
------------------------------------------------------------------------------------------------------
Income tax 69,223 76,951 69,890 77,618
------------------------------------------------------------------------------------------------------
Social contribution 24,920 27,702 25,160 27,943
------------------------------------------------------------------------------------------------------
94,143 104,653 95,050 105,561
---------------------------------------==============---==============---=============---=============
Long-term liabilities
------------------------------------------------------------------------------------------------------
Income tax 1,932,038 920,681 1,932,371 921,181
------------------------------------------------------------------------------------------------------
Social contribution 695,533 331,445 695,654 331,625
------------------------------------------------------------------------------------------------------
2,627,571 1,252,126 2,628,025 1,252,806
---------------------------------------==============---==============---=============---=============
Stockholders' equity
------------------------------------------------------------------------------------------------------
Income tax on revaluation reserve (1,913,948) (921,618) (1,913,948) (921,618)
------------------------------------------------------------------------------------------------------
Social contribution on revaluation reserve (689,021) (331,782) (689,021) (331,782)
------------------------------------------------------------------------------------------------------
(2,602,969) (1,253,400) (2,602,969) (1,253,400)
---------------------------------------==============---==============---=============---=============
Parent company Consolidated
------------------------------------------------------------------------------------------------------
06/30/2003 06/30/2002 06/30/2003 06/30/2002
------------------------------------------------------------------------------------------------------
Income statement
------------------------------------------------------------------------------------------------------
Income tax (239,516) 231,882 (223,721) 235,025
------------------------------------------------------------------------------------------------------
Social contribution (90,229) 72,648 (84,515) 73,489
------------------------------------------------------------------------------------------------------
(329,745) 304,530 (308,236) 308,514
---------------------------------------==============---==============---=============---=============
The sources of the deferred social contribution and income tax of the Parent Company are shown as follows:
06/30/2003 03/31/2003
-------------------------------------------------------- --------------------------------------------------
Income Tax Social Contribution Income Tax Social Contribution
--------------------------- ---------------------------- ------------------------ -------------------------
Assets Short term Long term Short term Long term Short term Long term Short term Long term
-------------------------------------------------------------- ------------- ------------- -------------- ---------- ------------- ------------ -----------
Provision for labor, fiscal and civil contigencies 2,340 21,161 842 7,619 1,673 30,627 602 11,026
Allowance for doubtful accounts 4,820 8,618 1,735 3,103 5,034 10,240 1,812 3,686
Provision for interest on stockholders' equity 16 6 73,387 26,419
Provision for losses on marketable securities 31,845 11,464 31,853 11,467
Provision on unsecured liability 3,962 1,426 11,070 3,985
Provision for inventory losses 1,350 486 2,389 860
Provision for profit sharing 4,435 1,597 5,259 1,894
Provision for reform and maintance 4,058 1,461 5,992 2,157
Provision for private pension plan 26,398 9,503 21,597 7,775
Taxes under litigation 91,235 80,623
Taxes losses/ Negative basis 112,906 52,336 12,381 27,120 124,569 65,074 15,955 30,287
Other 1,765 9,211 1,345 1,030 1,761 6,502 635 1,046
------------ ------------- ------------- -------------- ---------- ------------- ------------ -----------
Total 131,690 244,766 19,853 61,265 220,064 257,586 50,334 69,272
============ ============= ============= ============== ========== ============= ============ ===========
Liabilities
--------------------------------------------------
Deferred exchange variation 15,710 25,794 5,656 9,286 24,066 25,794 8,664 9,286
Income tax and social contribution on
revaluation reserve 12,546 1,901,402 4,516 684,505 31,573 890,045 11,366 320,416
Income tax and social contribution on
foreign profit 40,967 14,748 21,311 4,842 7,672
Others 4,842 1,742 1 1,743
------------ ------------- ------------- -------------- ---------- ------------- ------------ -----------
Total 69,223 1,932,038 24,920 695,533 76,951 920,681 27,702 331,445
============ ============= ============= ============== ========== ============= ============ ===========
The deferred assets related to income tax losses and social contribution negative basis were set up based on the historical CSN’s profitability and on the consequent expectation of future profitability, which were approved by Company’s Administration Council. These credits are expected to be completely offset in up to 5 years.
In addition to the credits already recorded, the Company has filed a lawsuit related to the "Plano Verão" claiming the financial and fiscal effects related to the inflationary expurgation of Consumer Price Index (“IPC”) of January 1989, in the calculation of corporate income tax (IRPJ) and social contribution ("CSL") (see Note 18c).
Reconciliation between expenses and income of current income tax (“IRPJ”) and social contribution ("CSL") of the parent company and the application of the effective rate on net income before CSL and IRPJ is as follows:
06/30/2003 06/30/2002
------------------------- -----------------------------
IRPJ CSL IRPJ CSL
------------ ----------- -------------- -------------
Net income (Loss) before CSL and IRPJ 866,131 866,131 (737,092) (737,092)
Rate 25% 9% 25% 9%
------------ ----------- -------------- -------------
Total (216,533) (77,952) 184,273 66,338
Equity (44,937) (16,177) 76,446 27,520
Fiscal incentives of interest on stockholders' equity 12,500 4,500
Portion reversal of Plano Verão Provision 65,829 48,929
Relief of MAE expositions (20,009) (7,203)
Differential Rate (10,250)
Provision for earnings from foreign subsidiary (40,967) (14,748) (18,177) (6,544)
Temporary differences set on deffered 239,516 90,229 (231,882) (72,648)
Other addition (writte off) permanent (1,175) (172) (4,525) (2,208)
------------ ----------- -------------- -------------
Parent Company (257,792) (67,323) 250,517 79,356
============ =========== ============== =============
Consolidated (258,271) (67,815) 245,009 77,001
============ =========== ============== =============
10. RECOVERABLE PIS/PASEP
As a result of a favorable final decision by the Federal Supreme Court and on the basis of Federal Senate Resolution no. 49/95 ruling that Decrees no. 2445/88 and no. 2449/88 were unconstitutional, and based on the opinion which was further supported by CSN’s legal counsel, the Company states the amount of this credit in its balance sheet, which includes principal and legal charges.
11. INVESTMENTS
a) Direct participation in subsidiary and associated company
06/30/2003 03/31/2003
------------------------------------------- ------------------------------------------------------------------------------------ ---------------------------------------------
Number of shares % Net Income Stockholders' % Net Income Stockholders'
Owenership (loss) equity (unsecurred Owenership (loss) equity (unsecurred
Companies Common stock Preferred stock For the liability) For the liability)
quarter quarter
------------------------------------------- ---------------------------------- ------------------------------------------------- ----------- -------------- ------------------
Steel and services
Industria Nacional de Aços Laminados INAL 285,949,997 99.99 5,698 277,268 99.99 14,494 272,806
GalvaSud S.A . 70,655,879 51.00 7,159 537 51.00 10,721 (33,756)
Cia. Metalic do Nordeste 39,999,996 4,424,971 99.99 (609) 36,172 99.99 1,144 34,820
CSC - Cia. Siderúrgica do Ceará 1,099,996 99.99 - (4,588) 99.99 - (4,588)
FEM - Projetos,Construções e Montagem S.A . 376,336 99.99 (397) (2,636) 99.99 (9,588) (13,185)
CSN I S.A . 600 1,194 99.67 - - 99.67 - -
Corporative
CSN Overseas 272,950,962 100.00 79,299 858,352 100.00 14 910
CSN Energy Corp. 200,000,000 100.00 2,431 496,307 100.00 49,982 576,709
CSN Island Corp. 50,000 100.00 - 144 100.00 - 168
CSN Island III, S.A . 50,000 100.00 (25) (508)
CSN Island IV, S.A . 50,000 100.00 (47) (44)
CSN Panama, S.A . 16,870 11,411 99.99 34,737 670,990 99.99 38,913 743,200
CSN Island II Corp. 1,000 100.00 (1,713) 100.00 (2,160) (1,992)
CSN Steel Corp. 1 100.00 (1,684) (1,751) 100.00 1 (78)
Energy and infrastructure
MRS Logistica S.A 24,203,843 11,054,581 32.22 111,410 38,654
Sepetiba Tecon S.A . 7,825,384 20.00 3,465 (23,041) 20.00 (4,869) (36,100)
CSN Energia S.A . 999 99.90 (614) 334,535 99.90 2,311 334,487
CSN Participações Energéticas S.A . 997 99.70 - 1 99.70 - 1,000
-----------------------------------------------------------------------------------------------------------------------------------------------------------------
b) Investment movement
03/31/2003 06/30/2003
--------------------------------------------- ---------------------------------- ------------------------------------------------------------------------------------------
Balance of Balance of Net Consolidated
Investment (provision Addition Equity Investment (provision Goodwill
Companies Balance for loss) result Balance for loss) (Negative Goodwill)
--------------------------------------------- ------------------ --------------- ---------------------------------------- ------------- -------------------- --------------
Steel and services
Industria Nacional de Aços Laminados INAL S.A 272,808 4,456 277,264 1,112 9,521
GalvaSud S.A . (17,215) 17,489 274
Cia. Metalic do Nordeste 34,820 1,348 36,168 118,422 118,422
CSC - Cia. Siderúrgica do Ceará (4,588) (4,588)
FEM - Projetos,Construções e Montagem S.A . (13,184) 11,871 (1,323) (2,636)
------------------ --------------- ---------------------------------------- ------------- -------------------- --------------
307,628 (34,987) 11,871 21,970 313,706 (7,224) 119,534 127,943
Corporative
CSN Overseas 910,002 (51,648) 858,354
CSN Energy Corp. 576,709 (80,402) 496,307
CSN Island Corp. 168 (24) 144
CSN Island III Corp. - 3 (511) (508)
CSN Island IV Corp. - 3 (47) (44)
CSN Panama, S.A . 743,199 (72,210) 670,989
CSN Island II Corp. (1,992) 279 (1,713)
CSN Steel Corp. (78) (1,673) (1,751)
------------------ --------------- ---------------------------------------- ------------- -------------------- --------------
2,230,078 (2,070) 6 (206,236) 2,025,794 (4,016)
Energy and infrastructure
MRS Logistica S.A 12,456 12,456
Sepetiba Tecon S.A . (7,220) 2,612 (4,608)
CSN Energia S.A . 233,113 665 (442) 233,336
CSN Participações Energéticas S.A . 1 1
---------------------------------------------------------------------------- ------------- -------------------- --------------
233,114 (7,220) 665 14,626 245,793 (4,608) -
-------------------------------------------- ------------------- --------------- ---------------------------------------- ------------- -------------------- --------------
Total 2,770,820 (44,277) 12,542 a) (169,640) 2,585,293 (15,848) 119,534 b) 140,399
-------------------------------------------- ------------------- --------------- ---------------------------------------- ------------- -------------------- --------------
a) This total do not contemplate the equity for the quarter ended June 30, 2003 of Itá Energética S.A. (see note 11 - ITASA)
b) This total do not contemplate the investment amounts in indirect investments (see note 11 - Goodwill/Negative Goodwill in indirect investments)
GalvaSud
GalvaSud shares were assigned in guarantee of financing contracted by the Company with Unibanco - União de Bancos Brasileiros S.A. and Kreditanstalt Fur Wiederaulfbau.
ITA
In 2001, the Board of Directors decided to sell the company’s shareholding in Itá Energética S.A. (ITASA). Considering that there is formal evidence that the sale will occur in the near future, the investment balance was transferred to current assets, not being part of this note equity accounting any more, although accounted by the same method, as determined by Instruction CVM No 247/96, art. 7. The assets amounts to R$246,917 as of June 30, 2003 and the equity result for the quarter ended as of June 30, 2003, amounts to R$47,533 (R$5,323 for the semester ended as of June 30, 2003).
Metalic
At the CSN Stockholders´ General Meeting, held on September 26, 2002, it was approved the acquisition by the Company of all Metalic Nordeste “Metalic” issued shares. The acquisition was effected on November 27, 2002 for the price of R$108,500 indexed, as of July 1, 2002, by the General Market Price Index disclosed by Fundação Getúlio Vargas, plus interest of 12% per year, to be paid in 12 monthly and successive installments, as from November 2002.
The goodwill of R$125,759, recorded upon acquisition of the investment is supported by the future ratability of the company’s assets, as Metalic is the only manufacturer of two pieces steel can representing a 5% market share. This material is an alternative to aluminum, because of its lower cost and better performance, both for the filling aspect as for lithography. To June 30, 2003, the company amortized R$7,337 of this goodwill, being R$3,144 in the second quarter of 2003.
In March 2003, the Company decided to capitalize Metalic with credits recorded in its accounts receivable and current accounts balances between the two companies. Such capitalization amounted to R$47,319.
INAL
On December 30, 2002, as a result of a corporate reorganization process of the Company and its activities for unification of similar activities between INAL and CISA, both CSN controlled companies, the Company sold to its subsidiary CISA - CSN Indústria de Aços Revestidos S.A., the 8,457,189 common shares issued by INAL - Indústria Nacional de Aços Laminados S.A., representing 99.9998% of participation, for the book value of R$141,227.
As of April 30, 2003, in continuing the process mentioned above, the merger of INAL into CISA, was approved, and followed by, the change of corporate name from CISA CSN Indústria de Aços Revestidos S.A. to INAL Indústria Nacional de Aços Laminados S.A.
FCA - CFN - TECON
CSN and Companhia Vale do Rio Doce CVRD announced the signing of purchase and sale contracts of equity holdings that, after approval by the regulatory agencies and by the BNDES, will make it possible for the Company and its subsidiaries to hold the whole control of Sepetiba TECON and 50% of CFN, whereas CVRD will have full control of Ferrovia Centro Atlântica.,In this operation, the Company will disburse the amount of R$80 million for the stake in Sepetiba TECON and CVRD will pay R$100 million to transfer the control from CFN to CSN and TAQUARI PARTICIPAÇÕES S.A.
FCA presents an unsecured liability in the amount of R$758,763 on June 30, 2003. Accordingly the Company’s investment in FCA is reduced to zero and the Company did not recognize the corresponding unsecured liability in the proportion of its participation based on the understanding that the investment, currently, is not essential to its business, wish lead the Company to enter into the contract described in the preceding paragraph.
Lusosider
On June 18, 2003, the Company, through its subsidiary CSN Steel Corp, acquired from Banco Espírito Santo de Investimentos S.A. (BESI) 912,500 shares issued by Lusosider Projectos Siderúrgicos S.A., parent Company of Lusosider Aços Planos S.A., Portuguese laminating company that produces galvanized by immersion and metallic blades, equivalent to 50% of Lusosider total capital, in the amount of EUR 10.84 million (US$11.8 million). This acquisition is part of the internationalization strategy of CSN activities.
Goodwill/Negative goodwill in indirect investments
In the first semester 2003, the Company had recorded in the financial statements the amount of (R$66,009) of negative goodwill in indirect investments, being (R$62,730) related to the acquisition of Lusosider Siderurgia S.A., (R$3,520) of Lusosider Aços Planos and R$241 of others.
12. PROPERTY, PLANT AND EQUIPMENT
-----------------------------------------------------------------------------------------------------------
Parent company
-----------------------------------------------------------------------------------------------------------
06/30/2003 03/31/2003
-----------------------------------------------------------------------------------------------------------
Effective rates
for depreciations, Accumulated
depletion and depreciation
amortization depletion and
( % p.a) Cost amortization Net Net
-----------------------------------------------------------------------------------------------------------
Land 115,823 115,823 91,619
-----------------------------------------------------------------------------------------------------------
Machinery and equipment 5.62 10,133,437 (381,257) 9,752,180 6,053,285
-----------------------------------------------------------------------------------------------------------
Buildings 4.00 789,886 (13,058) 776,828 725,004
-----------------------------------------------------------------------------------------------------------
Furnitures and fixtures 10.00 92,453 (77,271) 15,182 21,951
-----------------------------------------------------------------------------------------------------------
Mines and mineral deposits 1.37 1,236,793 (733) 1,236,060 1,065,479
-----------------------------------------------------------------------------------------------------------
Other asset items 20.00 156,901 (68,965) 87,936 89,057
-----------------------------------------------------------------------------------------------------------
12,525,293 (541,284) 11,984,009 8,046,395
-----------------------------------------------------------------------------------------------------------
Construction in progress 543,580 543,580 518,183
-----------------------------------------------------------------------------------------------------------
Parent company 13,068,873 (541,284) 12,527,589 8,564,578
=============== ============= ============= ============
Consolidated 13,673,701 (710,033) 12,963,668 8,908,473
=============== ============= ============= ============
At the Extraordinary General Shareholders’ Meeting held December 19, 2002 the stockholders approved, based on paragraphs 15 and 17 of CVM Deliberation no 183, a revaluation report considering the fixed assets of thermical mill CTE - II, in the City of Volta Redonda, RJ. The report established an increase in the amount of R$508,433 which composes a new amount of R$970,332 for the assets, already net of the depreciation incurred in the first two years of operation.
At the Extraordinary General Shareholders’ Meeting held April 29, 2003 the stockholders approved, based on paragraphs 15 and 17 of CVM Deliberation no183, a revaluation report considering land, equipment, installations and real estate property in the plants of the Presidente Vargas Mill, Itaguaí, Casa de Pedra and Arcos beside the iron ore mine in Casa de Pedra. The report established an increase in the amount of R$4,068,559 which composes a new amount of R$10,493,777 for the assets, already net of the depreciation.
At the end of the first and second quarter of 2003, assets given as guarantee of financial operations amounted to R$2,309,512.
Total depreciation, depletion and amortization for the first semester 2003 was R$268,039 (2002 R$224,595), of which R$254,379 (2002 R$215,084) appropriated to production cost and R$13,660 (2002 R$9,511) to overhead and administrative expenses (amortization of deferred assets is not included).
The portion of the total depreciation and depletion of the revaluated fixed asset items charged to results for each year is transferred in stockholders’ equity in equal proportion from the revaluation reserve to retained earnings. In the first semester, the net amount of income tax and social contribution was R$79,080 (2002 R$53,723).
Construction in progress is mainly represented by a set of investment plans aimed at updating and developing technology to keep the Company competitive, both at the local and international markets. The main plans address environmental protection projects, cost reduction, infrastructure improvement and automation techniques as well as IT. Capitalized financial charges on work in progress in the 1st semester 2003 amounted to R$28,965 (2002 R$9,590).
13. DEFERRED CHARGES
-------------------------------------------------------------------------------------------
Parent company Consolidated
-------------------------------------------------------------------------------------------
06/30/2003 03/31/2003 06/30/2003 03/31/2003
-------------------------------------------------------------------------------------------
Deferred exchange variation 1,390,636 1,360,636 1,398,644 1,398,642
-------------------------------------------------------------------------------------------
Information technology projects 145,944 141,267 150,969 146,293
-------------------------------------------------------------------------------------------
Other projects 167,872 152,120 236,003 219,931
-------------------------------------------------------------------------------------------
1,704,452 1,654,023 1,785,616 1,764,866
-------------------------------------------------------------------------------------------
Accumulated amortization (1,316,623) (1,242,827) (1,344,022) (1,297,699)
-------------------------------------------------------------------------------------------
Total 387,829 411,196 441,594 467,167
=========== =========== =========== ===========
The IT projects are represented by automation projects of operating processes that aim at reducing costs and increase the competitiveness of the Company.
The amortization of the IT projects and of other projects in the first semester 2003 amounted to R$20,011 (2002 R$15,672), of which R$14,520 (2002 R$8,325) appropriated to production cost and R$5,671 (2002 R$7,347) to overhead and administrative expenses.
Based on Provisional Measure no. 3 of September 26, 2001 and CVM Deliberations no. 404 and 409 of September 27and November 1, 2001, respectively the Company and its subsidiaries MRS Logística and GalvaSud have chosen to defer the negative net results arising from the adjustment of the amounts of credits and obligations in foreign currency, as a result of the exchange rate variation which took place in 2001.
The Company deferred the exchange variation in the amounted of R$1,360,636 in September 2001 and until June 2003 amortized R$1,194,615 (R$67,498 in the first semester 2003), the balance will be amortized until 2004, the net movement can be shown as follows:
Accumulated depreciation including
Deferred loan settlement Amortization expectation
exchange ---------------------------------------- -------------------------------
variation in 1st quarter of (April to december)
2001 2001 2002 2003 Balance to amortize 2003 2004
-------------- ----------- ----------- ---------------- --------------------- ------------------- -----------
1,360,636 (615,173) (511,944) (67,498) 166,021 62,841 103,180
14. LOANS AND FINANCING
Parent Company Consolidated
---------------------------------------------------- -------------------------------------------------
06/30/2003 03/31/2003 06/30/2003 03/31/2003
---------------------------------------------------- -------------------------------------------------
Short term Long term Short term Long term Short term Long term Short term Long term
------------ ------------- ------------ ------------ -------------------------------------------------
FOREIGN CURRENCY
Prepayment 627,711 690,357 682,836 783,253 299,479 80,416 434,265 33,531
ACC/ACE 411,072 357,060 554,672 647,678
Euronotes 738,122 2,369,400 553,345 2,011,860 546,218 874,044 295,061 266,011
Prepayment - Cayman 298,095 98,725 192,494 152,870
Commercial paper 230,878 1,109,647
BNDES/Finame 149,123 839,361 147,313 1,026,616 149,123 839,361 147,313 1,026,616
Financed imports 183,101 270,090 347,512 333,791 214,051 448,283 382,485 548,946
Eximbank - Japan 37,481 114,841 44,917 158,258 37,481 114,841 44,917 158,258
Other 96,783 62,077 107,400 76,448 137,525 87,601 97,223 105,828
------------ ------------- ------------ ------------ -------------------------------------------------
2,243,393 4,346,126 2,240,383 4,390,226 2,467,522 2,543,271 3,351,083 2,292,060
------------ ------------- ------------ ------------ -------------------------------------------------
LOCAL CURRENCY
BNDES/Finame 68,578 206,153 120,854 168,986 68,578 206,153 120,854 168,986
Debentures (note 15) 68,287 666,550 29,067 666,550 68,287 666,550 29,067 666,550
Other 50,900 44,911 31,443 102,218 36,902 107,082
------------ ------------- ------------ ------------ -------------------------------------------------
187,765 872,703 194,832 835,536 168,308 974,921 186,823 942,618
------------ ------------- ------------ ------------ -------------------------------------------------
Total 2,431,158 5,218,829 2,435,215 5,225,762 2,635,830 3,518,192 3,537,906 3,234,678
------------ ------------- ------------ ------------ -------------------------------------------------
SWAP 622,491 622,491
------------ ------------- ------------ ------------ -------------------------------------------------
Total + Swap 3,053,649 5,218,829 2,435,215 5,225,762 3,258,321 3,518,192 3,537,906 3,234,678
============ ============= ============ ============ =================================================
On June 30, 2003, the long-term amortization schedule is shown below:
Parent Company Consolidated
-------------------- --------------------
2004 271,443 364,926
2005 1,547,354 1,544,400
2006 492,919 453,809
2007 1,910,427 450,226
2008 604,566 208,319
2009 to 2024 392,120 496,512
---------------------------------- -------------------- --------------------
Total 5,218,829 3,518,192
---------------------------------- -------------------- --------------------
Interest is applied to the external and domestic loans and financing, debentures and SWAP, at the following annual rates as of June 30, 2003:
Parent Company Consolidated
-------------------- --------------------
Up to 7% 3,869,416 4,049,109
Between 7,1to 9% 843,369 809,376
Between 9,1 to 11% 2,661,516 997,837
Above 11% 898,177 920,191
---------------------------------- -------------------- --------------------
Total 8,272,478 6,776,513
---------------------------------- -------------------- --------------------
Breakdown of total debt by currency of origin:
Parent Company Consolidated
----------------------------- -----------------------------
30/06/2003 31/3/2003 30/06/2003 31/3/2003
-------------- ------------- -------------- -------------
U.S. Dollar 81,89 79,44 75,87 75,06
Yen 2,64 2,65 3,53 4,25
Long-term interest rates - TJLP 3,32 3,78 5,90 6,19
CDI 6,91 7,01 8,52 8,03
Basket of currencies 1,84 3,42 2,25 3,00
Other currencies 3,40 3,70 3,93 3,47
-------------- ------------- -------------- -------------
100,00 100,00 100,00 100,00
-------------- ------------- -------------- -------------
The Company carries out derivative operations, in accordance with Note 16, for the purpose of minimizing the risk of relevant oscillation in foreign currency parity.
The guarantees offered for the loans and financing amounted R$4,748,167 on June 30, 2003 (R$5,140,183 on March 31, 2003), and comprised mainly fixed assets items, bank guarantees and promissory notes. This amount does not take into consideration the guarantees provided to subsidiaries, joint subsidiaries and associated companies (see Note 17).
In March 2003, the Company, through its subsidiary CSN Islands II, the Company issued Notes in the amount of US$85 million. The transaction falls due in one year, at an interest rate of 9.5% p.a.
In April 2003, the Company, through its subsidiary CSN Islands III Corp., issued Notes in the amount of US$75 million. The transaction, falling due in 2 years, has a 9.75% coupon and the funds raised in this operation will be used as working capital, thus increasing the Company’s liquidity .
On April 18, 2003, the Company, through its subsidiary, CSN Overseas, settled the US Commercial Papers operation raised in 2001, in the amount of US$250 million. This operation had an approximate cost of 5.9% p.a.
In June 2003, the Company issued, through CSN Islands IV Corp, Notes in the amount of US$100 million, at an interest rate of 6.85% p.a. and maturity in 1 years.
In June 2003, the Company issued, through CSN Islands V Corp, Notes in the amount of US$150 million, at an interest rate of 7.875% p.a. and maturity in 2 years.
15. DEBENTURES
As approved at the Extraordinary Stockholders' General Meeting and at the Administration Council Meeting, held on January 10, 2002 and February 20, 2002, respectively, the Company issued on February 1st, 2002, 69,000 debentures, nominatives and non convertible, with no guarantee or preference, with nominal value of R$10 each. There have been issued 54,000 debentures from the first series and 15,000 from the second series with a total face value of R$ 690,000. However, the credit from negotiation with financial institutions, occurred on March 01, 2002 in the amount of R$699,227. The difference of R$9,277, resulting from the unit price variation between the issued date and the transaction date, is recorded in the stockholders´ equity as capital reserve. The nominal unit value is being monetarily restated, added by the respective remuneration “pro-rata temporis” calculated the first issue was corrected by CDI increased by 2.75% p.y and the second issue by IGPM plus 13.25% interest. The maturity is expected for 02/01/2005 (First Series) and 02/01/2006 (Second Series), with the option of advance redemption (total or partial) by the issuer’s.
In June 30, 2003 and March 31, 2003, the Company repurchased the 4,396 debentures. comprising 2,345 of the first series, and 2,051 of the second.
16 . FINANCIAL INSTRUMENTS
General Considerations
The Company’s business includes flat steel products to supply domestic and foreign market and mining of iron ore, limestone and dolomite to supply the Presidente Vargas Mill needs. The main market risk factors that can affect the Company business are shown as follows:
(a) Exchange Rate Risk
Although most of the revenues of the Company are in Brazilian Reais, as of June 30, 2003, R$7,212,010 of the Company’s total debt were denominated in foreign currency. As a consequence, the Company is subject to changes in exchange rates and manages the risk of these rates fluctuations that affects the value in Brazilian Reais that will be necessary to pay the liabilities in foreign currency, using derivative financial instruments, mainly futures contracts, swaps, forward contracts and option contracts with banks, as well as investing of a great part of its cash and funds available in securities remunerated by exchange variation.
The Management’s objective in keeping these instruments is to equal the investment gains on loans resources to the loss on exchange devaluation of Brazilian Real in relation to U.S. Dollar and Yen. These loan resources were invested in short-term applications in Brazilian Reais, which yield interest at the Brazilian market rates.
(b) Credit Risk
The credit risk exposure is managed through the restriction of subsidiaries in derivative instruments to large financial institutions with a high quality of credit. Thus, management believes that the risk of non-compliance by the counterparts is insignificant. The Company does not maintain or issue financial instruments with commercial aims. The selection of clients as well as the diversification of its accounts receivable and the control on sales financing terms by business segment are procedures that the Company adopts to minimize occasioned problems with its commercial partners.
The financial instruments recorded in balance sheet accounts as of June 30, 2003, in which market value differs from the book value, are as follows:
-------------------------------------------------------------------------------------------------------------
Book Value Market Value
-------------------------------------------------------------------------------------------------------------
Investment and goodwill in jontly owned subsidiary 4,527 869
-------------------------------------------------------------------------------------------------------------
Loans and financing (short and long-term) 8,272,479 8,091,265
-------------------------------------------------------------------------------------------------------------
On June 30, 2003 the consolidated position of derivative agreements outstanding was as follows:
Agreement
--------------------------------------------------------- ----------------
Date Expiration date Reference value Market Value
------------- ------------------------- --------------------------------
Foreign exchange swap Sundry 07/18/2003 a 01/03/2005 US$1,341,396 (R$516,605)
"Cap" Interest Options
(semestral Libor) Sundry 12/30/2003 a 12/31/2004 US$600,000
Exchange options 14/05/03 12/01/2003 US$200,000 R$24,286
Exchange options 14/05/03 12/01/2003 US$200,000 (R$7,112)
Options SWAP Sundry 05/02/2004 e 05/02/2005 US$49,127 R$28,216
(c) Market Value
The amounts presented as “market value” were calculated according to the conditions that were used in local and foreign markets on June 30, 2003, for financial transactions with identical features, such as: volume and term of the transaction and maturity date. Mathematical methods are used presuming there is no arbitrage between the markets and the financial assets. Finally, all transactions carried out in non-organized markets (over-the-counter market) are contracted with financial institutions previously approved by the Company’s Board of Directors.
17. COLLATERAL SIGNATURE AND GUARANTEES
With respect to its wholly owned and joint subsidiaries, the Company has the following responsibilities - expressed in their original currency - for guarantees provided:
In Million
-----------------------------------------------------------
Companies Currency 06/30/2003 03/31/2003 Expiration Date Conditions
----------------------------------- ------------ --------------- ------------- -------------- -----------------------------------------------------
CSN Panama, S.A. US$ 850.0 850.0 12/30/03 Garantee for interest hedge operation
CSN Overseas US$ 230.0 480.0 04/18/03 a 12/30/03 Promissory Note/ Garantee of commercial paper operations/ interest hedge
GalvaSud S.A R$ 199.3 229.0 12/15/2003 Garantee for financing of imported and national equipment
CSN Islands V US$ 150.0 07/07/05 Installment of garantee for the CSN emission of Bonds
CSN Islands IV US$ 100.0 06/04/04 Installment of garantee for the CSN emission of Bonds
CSN Islands II US$ 85.0 02/27/04 Installment of garantee for the CSN emission of Bonds
CSN Iron, S.A. US$ 79.3 79.3 06/01/07 Promissory Note of Eurobond operation
CSN Islands III US$ 75.0 04/21/2005 Installment of garantee for the CSN emission of Bonds
Sepetiba Tecon S.A. US$ 34.9 36.2 09/15/03 e 06/15/09 Garantee for equipment acquisition financing
Sepetiba Tecon S.A. R$ 28.8 29.1 12/15/11 e 01/16/12 Garantee for financing of 60% of construction work and installations
Cia. Metalic Nordeste R$ 24.3 69.6 01/15/06 Garantee given to the BNDES, for contracts re. financing of machinery and equipment
Cia. Metalic Nordeste US$ 21.7 21.7 01/26/05 a 06/30/06 Invoices / garantee given to Eximbank and to HSBC ref. Contracts for financing of machinery and equipment
Companhia Ferroviária do Nordeste - CFN R$ 18.5 18.5 07/11/03 Solidary garantee of BBV for working capital purposes
Cia. Metalic Nordeste R$ 13.6 14.2 04/25/03 a 01/30/06 Invoices / garantee given to Banco Rural, BEC and ABC Brasil re. working capital contracts
Cia. Metalic Nordeste R$ 4.8 4.6 05/15/08 Invoices / garantee given to Banco Santos ref. contracts for the financing of equipment
Indústria Nacional de Aços Laminados - INAL S.A R$ 3.6 3.6 03/15/06 e 04/15/06 Garantee for equipment financing
18. CONTINGENT LIABILITIES AND JUDICIAL DEPOSITS
The Company is currently party to several administrative and court proceedings involving different actions, claims and complaints, as shown below:
06/30/2003 03/31/2003
------------------------------------------------------------------------------
Contigent Contigent
Deposits liability Deposits liability
------------------------------------------------------------------------------
Short term:
------------------------------------------------------------------------------
Labor 5,271 4,976
------------------------------------------------------------------------------
Civil 3,906 1,533
------------------------------------------------------------------------------
Parent Company 9,177 6,509
------------------------------------------------------------------------------
Consolidated 9,177 6,509
------------------------------------------------------------------------------
Long Term:
------------------------------------------------------------------------------
Labor 16,842 42,355 16,436 41,492
------------------------------------------------------------------------------
Civil 6,803 36,514 2,666 32,599
------------------------------------------------------------------------------
Fiscal 212,291 443,773 204,778 398,631
------------------------------------------------------------------------------
Income tax 125,271 59,441 125,271 59,866
------------------------------------------------------------------------------
Social contribution 93,110 31,479 93,110 44,334
------------------------------------------------------------------------------
Parent Company 454,317 613,562 442,261 576,922
------------------------------------------------------------------------------
Consolidated 469,675 687,707 456,695 581,109
------------------------------------------------------------------------------
The contingent liability is recorded in the heading of Provisions (current and long-term) and Taxes Payable.
a) Labor litigation dispute:
As of June 30, 2003, CSN was the defendant in 1,950 labor claims (1,800 claims on March 31, 2003), which required a provision in the amount of R$47,626 (R$46,468 on March 31, 2003). Most of the lawsuits are related to subsidiary responsibility, wages equalization, overtime and additional payment for unhealthy and hazardous activities.
The lawsuits related to subsidiary responsibility represent a great portion of the total labor litigations against the Company and are originated from the non payment by the contracted companies of the employees obligations, which results in CSN inclusion in the lawsuits to honor, at a subsidiary level, the payment of such obligations.
The most recent lawsuits originated from subsidiary responsibility tend to terminate in relation to CSN due to the procedures adopted by the Company in order to inspect and assure the compliance with the wages and social charges payments, by the creation of the Contract Follow-up Centers since 2000.
b) Civil Actions:
These are, mainly, claims for indemnities among the civil judicial processes in, which the Company is involved. Such processes, in general, are originated from work related accident and occupational diseases related to industrial activities of the Company. For all these disputes, as of June 30, 2003 the Company accrued the amount of R$40,420 (R$34,132 on March 31, 2003).
c) Tax Litigation Dispute:
PIS/COFINS - Law 9,718/99
CSN is questioning the legality of Law 9,718/99, which increases the PIS and COFINS calculation basis, including, the financial revenue of the Company. The amount of this provision is R$200,277, as of June 30, 2003 (R$180,008 on March 31, 2003), which includes legal charges.
The Company obtained a favorable sentence in the first instance court and the process is going through compulsory re-examination by the 2nd Regional Federal Court of Appeals. The process has not being judged by the superior courts yet, however, according to the Company’s lawyers favorable outcome is considered possible.
CPMF
The Company is questioning the CPMF (Provisional Contribution on Financial Activities) taxation since the promulgation of the Constitutional Amendment No. 21/99. The amount of this provision on June 30, 2003 is R$150,826 (R$132,179 on March 31, 2003), which includes legal charges.
The sentence in the court first instance was favorable and the process is being judged by the 2nd Regional Federal Court of Appeals. However, we emphasize that the most recent precedent by the courts has not been favorable to the taxpayers.
CIDE - Contribution for Intervention in the economic domain
CSN disputes the legal validity of Law 10,168/00, which established the collection of the intervention contribution in the economic domain over the amounts paid, credited or remitted to beneficiaries that are not permanent residents of the country, as royalties or remuneration of supply contracts, technical assistance, trade mark license agreement and exploration of patents. The Company recorded a judicial deposit in 2002 and its corresponding provision in the amount of R$20,700 on June 30, 2003 (R$20,604 on March 31, 2003), which includes legal charges.
The first instance court decision was unfavorable and the process is currently sub - judice in the 2nd Regional Federal Court of Appeals. However, there is not a legal precedent, since the processes about the subject are still very recent. According to the Company’s lawyers, favorable outcome is considered possible.
Educational Salary
The Company discusses the unconstitutionality of the Educational-Salary and the possible recovery of the amounts paid in the period from 01.05.89 to 10.16.96. The provision on June 30, 2003 amounts to R$27,421 (R$25,911 on March 31, 2003), which include legal charges.
The sentence in the legal court first instance was unfavorable and the process is currently sub - judice in the 2nd Regional Federal Court of Appeals. Recently, the Brazilian Supreme Court judged the subject against the taxpayer, which reduces the favorable outcome expectations in this process.
SAT - Workers’ Compensation Insurance
The Company understands that it must pay the “SAT” at the rate of 1% in all of its establishments, and not 3%, as determined by the current law. The amounts of R$34,909 (R$31,305 on March 31, 2002) are being accrued on June 30, 2003, which include legal charges.
The sentence in the first instance court was unfavorable and the process is currently in TRF of the 2nd Region. Although there was so far no judgment in the Brazilian Supreme Court, according to the Company’s lawyers, favorable outcome is considered possible.
Others
The Company has also numerous legal suits accrued related to FGTS LC 110, Drawback and Additional of Freight for Renewal of the Merchant Navy (AFRMM), in the amount of R$9,640 on June 30, 2003 (R$8,624 on March 31, 2003), which include legal charges.
Income Tax and Social Contribution
The Company claims the recognition of financial and fiscal effects related to the inflationary “expurgation” of the IPC of January 1989, of 51.87%.
In February 2003, the court judged part of the discussion given by the Federal Court of the 1st Region, which recognized CSN right to 42.72% of the tax effects in the computation of the income tax and social contribution related to inflationary expurgation of the 1998 IPC (“Plano Verão”), after deducting the 12.51% of the monetary restatement applied . Consequently, CSN recorded, in the first quarter of 2003, the amount of R$114,758 million as reversal of part of the IR/CSL provision related to this claim.
The Company recorded on June 30, 2003 and March 31, 2003, R$218,381 of court deposit and a provision of R$104,200.
19. STOCKHOLDERS’ EQUITY
Paid-in Capital Reserves Accumulated Stockholder´s equity
Profits /
(loss)
----------------- ---------------- ------------------- ----------------------
BALANCE AT 12/31/2002 1,680,947 3,227,282 - 4,908,229
================= ================ =================== ======================
Reavaluation Reserve Realization, net of
income tax and social contribution (28,848) 28,848
Net income for the period 406,032 406,032
----------------- ---------------- ------------------- ----------------------
BALANCE AT 03/31/2003 1,680,947 3,198,434 434,880 5,314,261
================= ================ =================== ======================
Reavaluation Reserve Realization, net of
income tax and social contribution (50,232) 50,232
Constituition of revaluation reserve 2,693,114 2,693,114
Declared dividend (506,139) (506,139)
Net income for the period 134,984 134,984
----------------- ---------------- ------------------- ----------------------
BALANCE AT 06/30/2003 1,680,947 5,335,177 620,096 7,636,220
================= ================ =================== ======================
(a) Capital stock
The Company’s capital stock on June 30, 2003 and 2002 is comprised of 71,729,261 thousand common shares, all book shares and without par value. Each common share entitles the owner to one vote at the General Meetings of Stockholders.
(b) Revaluation reserve (Parent Company)
This heading covers revaluations of the Company’s fixed assets approved by the Extraordinary General Stockholders’ Meeting held March 31, 1999, December 19, 2002 and April 29, 2003 which were intended for determining adequate amounts for the Company’s fixed assets , in conformity with CVM Deliberation no 288 of December 3, 1998.
Pursuant to the provisions of CVM liberation No. 273 of August 20, 1998, a provision for social contribution and income tax was set up on the balance of revaluation reserve (except land), classified as a long-term liability.
The realized portion of the revaluation reserve, net of income tax and social contribution, is included for purposes of calculating the mandatory minimum dividend.
(c) Capital composition
On June 30, 2003, the main CSN’ stockholders are:
-------------------------------------------------------------------------------------------------
Stock's quantities
-------------------------------------------------------------------------------------------------
Common Stock %
-------------------------------------------------------------------------------------------------
Vicunha Siderguurgia S.A 33,337,091 46.48
-------------------------------------------------------------------------------------------------
CBS - CSN Employee's Pension Fund 2,604,922 6.63
-------------------------------------------------------------------------------------------------
Several (ADR - NYSE) 6,068,953 8.46
-------------------------------------------------------------------------------------------------
Other (Stock approx. 26 thousand) 29,718,295 41.43
-------------------------------------------------------------------------------------------------
Outstanding stocks 71,729,261 100.00
-------------------------------------------------------------------------------------------------
(d) Investment Policy and Payment of Interest on Stockholders´ Equity/Dividends
On December 13, 2000, the Board of Directors decided to adopt a policy of profit distribution, which, by observing the provision of law no. 6,404, altered by law no. 9,457/97 implies the distribution of all net profit to the stockholders, as long as the following priorities are preserved irrespective of their order: (i) corporate strategy of the Company, (ii) compliance with the Company’s obligations, (iii) making the necessary investments and (iv) maintenance of a good financial situation of the Company.
On June 11, 2003, the Company it began the payment the interest on stockholders’ equity and dividends approved by the Board of Directors on April 12, 2003, in the amount of R$293,482 (R$4.091524 per thousand shares) and R$506,138 (R$7.056229 per thousand shares), respectively, both related to prior years.
20. NET REVENUES AND COST OF PRODUCTS SOLD
-------------------------------------------------------------------------------------------------------------------------------------------------------------
06/30/2003 06/30/2002
-------------------------------------------------------------------------------------------------------------------------------------------------------------
Tons Thousand of reais Tons Thousand of reais
-------------------------------------------------------------------------------------------------------------------------------------------------------------
(In thousand) Net revenues Cost of (In thousand) Net revenues Cost of
products sold products sold
-------------------------------------------------------------------------------------------------------------------------------------------------------------
Domestic 1,568 2,035,026 1,058,274 1,761 1,482,336 842,362
-------------------------------------------------------------------------------------------------------------------------------------------------------------
Export 704 737,460 415,598 635 350,518 258,247
-------------------------------------------------------------------------------------------------------------------------------------------------------------
Steel Products 2,272 2,772,486 1,473,872 2,396 1,832,854 1,100,609
-------------------------------------------------------------------------------------------------------------------------------------------------------------
Domestic 160,785 77,355 0 105,386 74,309
-------------------------------------------------------------------------------------------------------------------------------------------------------------
Export 9,845 4,209 0 2,159 2,331
-------------------------------------------------------------------------------------------------------------------------------------------------------------
Other Sales 170,630 81,564 0 107,545 76,640
-------------------------------------------------------------------------------------------------------------------------------------------------------------
Parent Company 2,272 2,943,116 1,555,436 2,396 1,940,399 1,177,249
-------------------------------------------------------------------------------------------------------------------------------------------------------------
Consolidated 2,219 3,173,609 1,608,445 2,424 2,144,509 1,305,352
-------------------------------------------------------------------------------------------------------------------------------------------------------------
21. CONSOLIDATED REVENUES AND INCOME BY SEGMENT OF BUSINESS
The information by business segment is based on the accounting books in accordance with Corporation Law.
The disclosure by business segment followed the concept of IAS14, as suggested by the Brazilian Securities Commission (“CVM”), providing the means to evaluate the performance in all Company’ business segments.
-------------------- -------------------- --------------------------- --------------------
Steel and Services Corporate Center Energy and Infrastructure Consolidated
-------------------- -------------------- --------------------------- --------------------
Net Revenue 3,169,219 4,390 3,173,609
Cost of Products Sold (1,595,154) (13,291) (1,608,445)
-------------------- -------------------- --------------------
Gross Profit 1,574,065 (8,901) 1,565,164
Operacional Income and expenses
Sales Expenses (203,518) (173) (203,691)
Administrative Expenses (134,332) (134,332)
Others Operations Incomes (expenses) (4,503) (466) (415) (5,384)
-------------------- -------------------- -------------------- --------------------
(208,021) (134,798) (588) (343,407)
Net Financial Result (1,244,327) (1,244,327)
Net Exchange Variation 860,503 860,503
Equity Adjustment 10,900 10,900
-------------------- -------------------- -------------------- --------------------
Operating Income (loss) 1,376,944 (518,622) (9,489) 848,833
Non-operating losses (10,936) 1,131 (9,805)
-------------------- -------------------- -------------------- --------------------
Income before income tax and 1,366,008 (518,622) (8,358) 839,028
social contribution
Income Tax and Social Contribution (505,259) 176,331 2,842 (326,086)
-------------------- -------------------- -------------------- --------------------
Net Icome (loss) 860,749 (342,291) (5,516) 512,942
-------------------- -------------------- -------------------- --------------------
MAE
The Company’s subsidiary, CSN Energia, carries a balance receivable in its current assets in respect of the sale and purchase of energy in the Wholesale Electric Energy Market - MAE that, as of June 30, 2003 amounted to R$313,040 (R$312,968 as of March 31, 2003).
Between September 2000 and September 2002, the amount of R$484,185, in respect of amounts determined in accordance with statements provided by MAE, was accounted. In October 2002, CSN terminated the energy supply contract with Light and, since then, has been using all exceeding energy for UVP own consumption, as well as for consumption by the Arcos and Casa de Pedra mines. Accordingly, as from October 2002, the amount receivable/payable from/to MAE is immaterial if compared to the amounts recorded up to September 2002.
Up to July 21, 2003, CSN received the amount of R$309,642, of which R$91,179 in 2002 and R$218,463 in 2003.
Of the balance receivable as of June 30, 2003, the Company has been negotiating directly with the agents the delinquent balance of R$24,419, related to settlements that took place to July 2003. Furthermore, as regards the balance receivable as of June 30, 2003, R$77,473 refer to amounts due by concessionaires and/or by permissionaires holding injunctions for suspending the corresponding payments.
The Company’s management understands that it is not necessary to provide for doubtful debts, having in mind the actions that are been taken by the Company and by the sector official entities.
22. FINANCIAL RESULTS/ NET MONETARY AND FOREIGN EXCHANGE VARIATIONS
Parent Company Consolidated
--------------------------- --------------------------
06/30/2003 06/30/2002 06/30/2003 06/30/2002
------------ ------------- ------------ ------------
Financial expenses:
Loans and financing - foreign currency (48,933) (100,388) (64,648) (152,306)
Loans and financing - Brazilian currency (121,165) (29,487) (137,823) (32,868)
With subsidiaries (101,880) (153,200) (31,445)
Other financial expenses (88,863) (99,724) (101,321) (147,111)
------------ ------------- ------------ ------------
(360,841) (382,799) (335,237) (332,285)
------------ ------------- ------------ ------------
Financial income:
With subsidiaries 2,044 11,156
Yield on financial applications net of provision for losses (196,490) 423,217 (185,229) 440,727
Exchange Swap (804,818) 316,645 (752,310) 316,645
Exchange Variation Amortization(CVM 404/01) (269,622) (269,622)
Other income 16,628 50,269 28,449 55,915
------------ ------------- ------------ ------------
(982,636) 531,665 (909,090) 543,665
------------ ------------- ------------ ------------
Net financial income (1,343,477) 148,866 (1,244,327) 211,380
============ ============= ============ ============
Monetary Variation
- Assets 7,000 1,638 4,456 791
- Liabilities (29,755) (8,699) (32,860) (8,643)
------------ ------------- ------------ ------------
(22,755) (7,061) (28,404) (7,852)
------------ ------------- ------------ ------------
Exchange Variation
- Assets (253,568) 96,863 (213,032) 476,984
- Liabilities 1,563,411 (1,508,625) 1,170,771 (1,642,891)
- Amortization of deferred foreign exchange variation (67,498) (205,731) (68,832) (207,066)
------------ ------------- ------------ ------------
1,242,345 (1,617,493) 888,907 (1,372,973)
------------ ------------- ------------ ------------
Net monetary and exchange variations 1,219,590 (1,624,554) 860,503 (1,380,825)
============ ============= ============ ============
23 . NON-OPERATING INCOME (EXPENSES)
On June 30, 2003, the parent company’s non-operating result, amounted to R$12,159 (R$6,575 in 2002), and consolidated amounted to R$9,805 (R$5,846 in 2002). The most expressive item included in these results is the setting up of a provision for probable loss on investment, mainly related to the write - off of advance for future capital increase of CFN.
24.VALUE-ADDED (PARENT COMPANY)
R$ Million
--------------------------------------------
06/30/2003 06/30/2002
--------------------------------------------
Revenue
Sales of goods, products and services 3,479 2,320
Allowance for doubtful accounts 5 (4)
Non-operating income (12) (7)
--------------------- ---------------------
3,472 2,309
--------------------- ---------------------
Input purchased from third parties
Raw material used up (714) (452)
Cost of products and services (423) (347)
Materials, energy, third-party services and others (131) (218)
--------------------- ---------------------
(1,268) (1,017)
--------------------- ---------------------
Gross value-added 2,204 1,292
===================== =====================
Retention
Depreciation, amortization and depletion (278) (256)
--------------------- ---------------------
Net produced value-added 1,926 1,036
===================== =====================
Value-added transferred
Income from equity stakes (177) 305
Financial income / Exchange Variation (1,229) 630
--------------------- ---------------------
(1,406) 935
--------------------- ---------------------
Total value-added to distribute 520 1,971
===================== =====================
---------------------------------------------------------------------------------------------------------------
VALUE-ADDED DESTINATION
Staff and charges
Taxes, charges and contributions 200 199
Interest of capital stock 905 124
Dividends / Interest of capital stock (1,126) 2,055
Retained earnings 541 (407)
---------------------------------------------------------------------------------------------------------------
25. EBITDA
The Company’s EBITDA (gross profit minus selling, general and administrative expenses, plus depreciation and depletion) is as follows:
--------------------------- ---------------------------
Parent Company Consolidated
--------------------------- ---------------------------
R$ Milion R$ Milion
--------------------------- ---------------------------
06/30/2003 06/30/2002 06/30/2003 06/30/2002
------------- ------------ ------------ ------------
Net Revenue 2,943 1,940 3,173 2,144
------------- ------------ ------------ ------------
Cost of products sold (1,555) (1,177) (1,608) (1,305)
Gross Profit 1,388 763 1,565 839
Operating expenses (sales, general and administrative) (210) (231) (338) (293)
Depreciation (Cost of Products sold and operating expenses) 278 256 295 267
------------- ------------ ------------ ------------
EBITDA 1,456 788 1,522 813
============= ============ ============ ============
EBITDA-MARGIN %
49.5% 40.6% 48.0% 37.9%
============= ============ ============ ============
26. EMPLOYEES’ PENSION FUND
(a) Private Pension Administration
The Company is the principal sponsor of the CSN Employees’ Pension Fund ("CBS"), a private non-profit pension fund established in July 1960, the principal objective of which is to pay benefits complementing those of the official social security. CBS congregates CSN employees, of CSN related companies and entity itself, provided they sign the assent agreement.
(b) Characteristics of the Plans
CBS has three benefit plans:
35% of Average Salary Plan
It is a defined benefit plan, which began on 02/01/1966, with the objective of paying retirements (related to length of service, special, invalidity or old-age) on a life long basis, equivalent to 35% of the participant’s salaries for the 12 last salaries. The plan also guarantees the payment of sickness assistance to the licensed by the Official Pension Plan (Previdência Oficial). It also guarantees the payment of funeral grant and pension. The participants (active and retired) and the sponsors make 13 contributions per year, being the same number of benefits paid per year. This plan is in process of extinction, becoming inactive on 10/31/1977, when the new benefit plan began.
Supplementary Average Salary Plan
It is a defined benefit plan, which began on 11/01/1977. The purpose of this plan is to complement the difference between the 12 last average salaries and the Official Pension Plan (Previdência Oficial) benefit, to the retired, and also on a life long basis. As with the 35% Average Salary Plan, there is sickness assistance, funeral grant and pension coverage. Thirteen contributions and payment of benefits are made per year. It became inactive since 12/26/1995, because of the combined supplementary benefits plan creation.
Combined Supplementary Benefits Plan
This plan began in 12/27/1995. It is a mixed plan, being a defined contribution, related to the retirement and a defined benefit, in relation to other benefits (pension, invalidity and sickness benefit). In this plan, the retirement benefit is calculated based on the sponsor and participants contributions, totaling 13 per year. Upon retirement of the participant, the plan becomes a defined benefit plan and 13 benefits are paid per year.
As of June 30, 2003 and March 31, 2003, the plans are presented as follow:
06/03/2003 03/31/2003
----------------------------------------------- ------------ -------------
Members: 19,239 19,105
----------------------------------------------- ------------ -------------
In activity 7,689 7,493
Retired employees 11,550 11,612
Distribution of members by benefit plan:
-----------------------------------------------
35% of Average Salary Plan 6,171 6,231
Active 44 44
Retired employees 6,127 6,187
Supplementary Average Salary Plan 5,698 5,700
Active 548 549
Retired employees 5,150 5,151
Combined Supplementary Benefits Plan 7,370 7,174
Active 7,097 6,900
Retired employees 273 274
----------------------------------------------- ------------ -------------
Linked beneficiaries: 5,329 5,286
----------------------------------------------- ------------ -------------
35% of average salary plan 4,193 4,164
Supplementary average salary plan 1,106 1,091
Combined supplementary benefits plan 30 31
------------ -------------
Total of Members / Beneficiaries: 24,568 24,391
============ =============
(c) Insufficiency of Reserve Equalization
On January 25, 1996, the Supplementary Social Security Secretariat - SPC (Secretaria de Previdencia Complementar), through letter no. 55 SPC/CGOF/COJ approved a proposal to equalize the insufficiency of reserves based on value determined on September 30, 1995, monetarily update to December 31, 1995.
Through letter no. 1555/SPC/GAB/COA, of August 22, 2002, confirmed by letter no. 1598/SPC/GAB/COA of August 28, 2002 new proposal was approved for refinancing of reserves to amortize, the sponsors´ responsibility in the amount of R$725,820, in 240 monthly and successive installments being the 1st to 12 th installments due in the amount of R$958 and from 13th on R$3,133, monetarily indexed (INPC + 6% p.y.), starting June 28, 2002. The contract also foresees the installments anticipation in case of cash necessity in defined benefit plan and the transfer of occasioned deficits/superavits for which the sponsors are responsible to the updated debtor balance, so as to preserve the plans’ balance without exceeding the maximum period of amortization.
(d) Actuarial Liabilities
As provided by CVM Deliberation No. 371, of December 13, 2000, approving the NPC 26 of IBRACON - “Employee’s Benefit Accounting” that established new calculation and disclosure accounting practices, the management of the Company, with its external actuaries, determined the effects of this new practice.
Actuarial Liability Recognition
The Administration decided to recognize the actuarial liability adjustment in the results for the period of five years, as from January 1, 2002, being appropriated in the first semester of 2003 the amount of R$39,597, in accordance with paragraphs 83 and 84 of NPC 26 of IBRACON and CVM Deliberation No. 371/2000, which added to related contribution private pension fund outlay totaled R$56,614.
The amortizing contribution is related to the part of the participants in the determination of to settle the reserve insufficiency, was reduced by the present value of the total actuarial obligations of the respective plans. Some participants are challenging in court this amortizing contribution; but the Company based on its legal and actuarial advisors, understands that the amortizing contribution was approved by Supplementary Social Security Secretariat “Secretaria da Previdência Complementar - SPC”, and as such the contribution is due by those participants.
In the case of the Millennium Plan (Combined Supplementary Benefit Plan) of defined contribution, where there is a net actuarial asset, and in which the sponsor contributions are the same as the participants’ contribution, our actuarial advisors understand that 50% of the net actuarial asset could be used for reduction of the sponsor’s contribution. Thus, the sponsor chose to recognize 50% of this asset on its books in the amount of R$2,910 in 2003.
Main actuarial assumptions adopted in the actuarial liability calculation
METHODOLOGY USED UNIT METHODS OF PROJECTS CREDITS ---------------------------------------------------------------------------------------------------------- Rate for discount of actuarial obligation 13.4% p.y (8% real and 5% inflation) Rate of expected yield on plan assets 13.4% p.y (8% real and 5% inflation) Index for estimated salary increase INPC + 1% (6.05%) Index for the increase in estimated benefits INPC + 0% (5.00%) Long term estimate rate of inflation INPC + 0% (5.00%) Biometrical mortality table UP84 with 3-year aggravation and segregated by sex Biometrical invalidity table Mercer Table for entering invalidity Rate of expected rotation 1% p.y Probability of entering retirement The first time the participant qualifies for a benefit CSN do not have obligations on other after-employees benefit.
27. BUSINESS INTERNATIONALIZATION
a) CSN LLC
In accordance with CSN´s international business development strategy, on June 19, 2001, CSN obtained the right to acquire assets, with approximate value of US$50 million that belonged to Heartland Steel Inc., a company in Chapter #11, located in Terre Haute, state of Indiana, USA.
As of July 16, 2001, CSN ceded its right to a limited liability corporation LLC (“LLC”), organized according to the Delaware legislation, and controlled by Tangua Incorporated, which is controlled by an unrelated entity. LLC acquired the above mentioned assets for the amount of US$55 million and assumed certain liabilities in the total amount of US$19 million.
CSN is to acquire the quota of LLC in July 2003, as part of a “put” and “call” agreement signed by CSN and the administrative agent of Credit Agreement, related to a Tangua’s loan. The principal amount of the loan signed in July 2001 is US$175 million, subject to Libor plus interest of 1.875% p.a. The price for CSN to exercise this right in the “put and call” agreement is the borrowing balance (plus accrued interest) on the acquisition date (please refer to note 28a).
b) Lusosider
On June 18, 2003, the Company through its subsidiary CSN Steel Corp., acquired from the Banco Espírito Santo de Investimentos S.A. (BESI) 912,500 shares issued by Lusosider Projectos Siderúrgicos S.A., representing 50% participation in the business, amounting to EUR 10.84 million, equivalent to US$11.8 million (please refer to note 11).
28.SUBSEQUENT EVENTS
a)Tangua and CSN LLC :
As disclosed in “Relevant Act” on July 15, 2003, the Company, through its subsidiary CSN Panama S.A., executed the LLC’s call option, as mentioned in note 27a. This acquisition is under approval by North-American regulatory authorities. This transaction involved the disbursement, by CSN Panama, S.A., of US$175 million to repay the loan mentioned in note 27a.
b) Paraná Branch:
On July 17, 2003 the Company commenced producing pre-painted and galvanized steel at the Paraná branch, located in the city of Araucária. This unit has the capacity to produce 420 thousand ton , therein included galvanized and pre-painted in the format of coils, bales, blanks and tapes. The galvanizing line will also manufacture the “galvalume” - steel coated with an aluminum-zync alloy.
c) Securitization Offering:
In July 2003, the Company performed a securitization of receivables through its subsidiary Island VI in the amount of US$141.9 million. The transaction, maturing in 7 years, has coupon of 7.28% p.a. and the funds raised in this transaction will be used as working capital, increasing the liquidity of the Company.
d) MAE : On July 4, 2003, CSN received R$139 million referring to MAE credits determined on the second settlement (please refer to note 21).
29. EXPLANATION ADDED FOR TRANSLATION INTO ENGLISH
The accompanying financial statements have been prepared on the basis of accounting practices laid down by the Corporate Law in Brazil.
Certain accounting practices applied by the Company and its subsidiaries that conform to those accounting practices in Brazil may not conform to generally accept accounting principles in other countries.
Message from Benjamin Steinbruch, Chairman and CEO
“In the second quarter CSN showed once again that is has the flexibility and competitiveness to effectively face any scenario. EBITDA grew 80% when compared to the second quarter of 2002 and we maintained an EBITDA margin of 49% in the first half, with EBITDA of R$1.5 billion in the year to June, despite a less favorable local market and lower revenues from export sales as a result of the recent strengthen of the Real. Our operating results confirm the solid competitiveness of our Company.
“CSN maintained its operating margins and presented a net profit of R$0.5 billion in the first half, an increase of almost R$1 billion when compared to the same period in 2002. In the second half, we believe we will be able to maintain our current levels of operating performance and profitability, and we will seek to reduce our net debt. The equity and debt markets have perceived the solidity of our company. Our shares appreciated by 89% from January to July this year, not including a dividend yield of 15%. We have successfully completed five debt issues since February. Most recently, we issued an export receivables securitization in two tranches, the first with a 7-year term at a coupon of 7.28%, and the second a 3-year term at Libor + 2.75%.
“Throughout the first half we have remained consistent in our globalization strategy, having concluded the purchase of a 50% stake in Lusosider on June 18. Lusosider is a Portuguese steel company with a strong presence in the Iberian Peninsula’s galvanized and tin plate market. Besides that, as has been anticipated over the last two years, we announced in July that we will acquire CSN LLC, which operates the assets of Heartland Steel in the US, as soon as we satisfy the US regulatory requirements.”
Highlights
----------------------------------------------------------------------------------------------------------------------------
Parent Company Consolidated
-----------------------------------------
-----------------------------------------------------------------------------------
2Q 1H 2Q 1H
-----------------------------------------------------------------------------------
2003 2002 2003 2002 2003 2002 2003 2002
-----------------------------------------------------------------------------------
-------------------------------
Crude Steel Production (000 tons) 1,336 1,265 2,608 2,514 1,336 1,265 2,608 2,514
Sales Volume (000 tons)
Domestic Market 837 894 1,568 1,761 753 871 1,484 1,767
Export Market 352 306 704 635 378 314 730 657
Total 1,189 1,200 2,272 2,396 1,131 1,185 2,214 2,424
Steel Prod. Net Revenue (R$/t) 1,234 793 1,220 765 1,337 859 1,343 808
Financial Data (R$ millions)
Net Revenue 1,551 1,009 2,943 1,940 1,588 1,102 3,174 2,145
Gross Profit 695 409 1,388 763 744 447 1,565 839
EBITDA1 739 411 1,456 788 735 423 1,522 813
Net Income (Loss) 135 (210) 541 (407) 116 (210) 513 (408)
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Jun/03 Mar/03 Dec/02
--------------------------------------------------------------
Consolidated Net Debt (R$ millions) 5,328 4,586 5,067
----------------------------------------------------------------------------------------------------------------------------
Production and Production Costs
In the second quarter of 2003, crude steel output increased 6% reaching 1.3 million tons while rolled finished product volume stood at 1.2 million tons, in line with production in 2002. In the first half of 2003, crude steel production reached 2.6 million tons and rolled finished product volume was 2.3 million tons (production measured at the continuous caster for crude steel and at the hot strip mill for rolled finished product - volume differs slightly from inventory deposits due to normal process losses). When compared to the first half of 2002, crude steel production was 4% higher than in 2003. The Company expects production capacity to reach 5.8 million tons per year by the end of 2003.
Production costs (per unit and total) were higher in 2003, principally due to the following factors: raw material – impact of the higher US dollar exchange rate (which was 33% above the average rate that prevailed in the first half of 2002), greater consumption of purchased coke (in 2002 the Company consumed excess coke produced during Blast Furnace #3 repair) and consumption of hot rolled coils purchased in the domestic market at a higher cost; depreciation – increase due to the Presidente Vargas Mill asset revaluation at the end of April 2003, and of the Thermoelectric Power Plant in December 2002; and finally labor – the increase was mainly caused by a wage inflation adjustment of 18% per the collective bargaining agreement effective in May 2003.
Sales Volume
Sales volume of finished products and slabs reached 1.2 million tons in the second quarter of 2003, in line with 2002. In the first half of 2003, 2.27 millions tons were sold, a 5% decline. The decrease was concentrated in slabs that are lower value-added products.
The domestic market represented 69% of 1H 2003 sales, against 73% in the prior year period. Year to date sales to the automotive sector grew 13%, in spite of weak auto sales in the last few months when compared to the beginning of the year (when there had been a favorable effect of higher Brazilian car export demand, which increased auto production). The low growth scenario of domestic manufacturing had a negative impact on the civil construction segment.
Export sales were influenced by higher prices in China in the beginning of the year that motivated the sale of more finished products to markets in Asia as a percentage of total sales. In the second quarter, given weakness in the Chinese market, the Company directed its exports of finished products to more attractive markets, in particular Latin America. Even so, the percentage of our exports of finished products to China in the first half of 2003 was 17%. All of our slab exports were sold on the Asian market in 2003, however those sales were concentrated in the first quarter.
Higher value-added galvanized steel and tin mill products represented 38% of total volume sold this year, compared to 33% registered in the same period last year, when the Company sold nearly 150,000 tons more of slabs.
Consolidated sales volume was 1.1 million tons in the second quarter of 2003, and 2.2 millions tons in the first half. The difference when compared to the Parent Company pertains to higher subsidiary inventory. Exports were 33% of the total in the year to June on a consolidated basis, while coated product sales were 41% of the total. Total sales are greater than the Parent Company due to the sale of galvanized steel products by GalvaSud, produced from cold rolled steel purchased mainly from CSN.
Operating Results
Net Revenue, Cost of Goods Sold and Gross Margin
CSN Parent Company net revenue grew 54% in the second quarter to R$1.6 billion. When compared to the first quarter of 2003, net revenue was 11% higher. In the first half, net revenue reached R$2.9 billion, R$1 billion above the same period in 2002. An adjustment in domestic prices, higher export prices in Real and the higher percentage of coated products more than compensated for the 5% drop in volumes sold in 2003. The drop in volume is explained mainly by lower initial inventories this year and by higher margins practiced by the Company. Domestic sales accounted for 75% of net revenue, against 82% in 2002.
Consolidated net revenue in the second quarter grew 44% to R$1.6 billion, while revenue in the first half of 2003 grew 48% to R$3.2 billion. The difference between the Parent Company and Consolidated figures in the first half of 2003 is explained by a higher value-added sales mix at GalvaSud, Inal and Metalic which sold higher value-added steel, using mostly CSN-produced steel as raw material.
The cost of goods sold (COGS) in the second quarter of 2003 grew 43% to R$856 million. In the first half, COGS grew 32% to R$1.6 billion. COGS rose because of higher raw material costs, and an increase in depreciation, fuel, and labor costs. Some of these factors have already been explained in ‘Production and Production Costs’. Raw material costs were affected by the higher average exchange rate of the Real against the US dollar by R$41 million in the second quarter and R$117 million in the first half. In addition, the Company decided to buy hot rolled coils in the domestic market to meet demand from our customers in 2003. In the first half of the year, we consumed 61,000 tons of purchased Hot Coils (HC) (R$47 million in the COGS), of which 47,000 tons were consumed in the second quarter (R$39 million). We discussed above the rise in imported coke costs in the quarter (increase of R$50 million in this quarter and R$79 million in the first half). Depreciation allocated to the cost of goods sold went up by R$31 million in the second quarter and R$36 million in the first half as a result of the asset revaluation. Fuel costs increased R$13 million in the quarter and R$32 million in the first half, principally due to the higher inflation rate in 2003. Finally, the transfer of costs that had been treated as administrative expenses at the end of 2002 to COGS (an impact of R$10 million in the second quarter and R$21 million in the first half) had an impact principally on labor costs, which were also reflected the 18% wage inflaction adjustment as per the collective bargaining agreement effective in May 2003 (R$11 million impact on COGS).
Consolidated COGS in the second quarter was R$845 million, and R$1.6 billion in the first half 2003. The respective increases of 29% and 23% in the second quarter and the first half are explained by the same effects seen in Parent Company COGS.
Gross margin reached 45% in the second quarter of 2003, compared to 41% in the same period last year. In the fist six months of 2003, the margin increased by 8 percentage points (p.p.). to 47%. Better performance is principally due to higher average prices in the period. The consolidated gross margin of 47% in the second quarter of 2003 was 6 p.p. better. In the first half of 2003, gross margin was 10 p.p. higher at 49%.
Selling Geral and Administrative Expenses
In the second quarter of 2003, selling, general and administrative expenses before depreciation totaled R$103 million, a decline of R$10 million. Up to June, SG&A amounted to R$196 million, R$18 million less than in 2002. It is worth mentioning that the provision for employee profit sharing in the second quarter of 2003, which was R$5 million below the second quarter of 2002, declined as a result of a change in the criteria used to calculate employee profit sharing made in May of this year, partially offsetting the effect of higher labor costs registered in the cost of goods sold.
EBITDA
In the second quarter, EBITDA grew 80% to R$739 million. EBITDA margin (EBITDA divided by net revenue) was 48%, an increase of 7 p.p. This increase is explained by higher average prices obtained by the Company. When compared to the first quarter of 2003, the margin was 4 p.p. lower due to the decline in export prices caused by the stronger Real in the second quarter than in the first quarter. First half EBITDA was R$1.5 billion, 85% more than in 2002, with a 49% margin (an improvement of 9 p.p.).
Consolidated EBITDA rose 74% to R$735 million in the second quarter of 2003, representing a margin of 46%. In the first half of 2003, EBITDA reached R$1.5 billion, similar to the level of the Parent Company, with a 48% margin.
Other operating income/expense
In the second quarter of 2003, the Company booked a net other operating expense of R$24 million, R$19 million below the second quarter of 2002, principally as a result of a lower provision for contingencies. In the first half of 2003 other operating income was R$1 million, compared to an expense of R$91 million in 2002. The change was due to the reversal of a R$35 million provision in the first quarter of 2003 related to the Itasa subsidiary’s MAE (Wholesale Energy Market) liability (since Itasa had made a parcial provision in its balance sheet, now reflected in equity results), and a lower provision for contingencies.
Financial Result
Financial results are comprised of financial income and expense as well as net foreign exchange gains and losses excluding deferral of foreign exchange losses. In the second quarter, CSN booked a net expense of R$74 million. In the first half, net financial expense was R$56 million. Foreign exchange gains of R$750 million and R$944 million, respectively, were due to the stronger Real against the US dollar in 2003, partially offset by the foreign exchange hedge strategy adopted by the Company . The low nominal cost of gross debt in US dollars, associated with the net foreign exchange gains and results obtained from hedge instruments caused consolidated net debt cost in the first half, in Reais, to be around 11% per year, or 41% of the benchmark local interest rate CDI (annualized). For the second half, the Company expects the cost to be about 60% of the CDI.
Deferred Foreign Exchange Losses: In the first half of 2003, the Company amortized a total of R$68 million of the foreign exchange loss incurred in 2001 and deferred, compared to R$475 million in the first half of 2002. During the second half of 2003 an additional R$63 million will be amortized. In 2004, the remaining balance of R$103 million will be amortized.
Equity interest in subsidiaries
Equity in results of subsidiaries amounted to a negative R$125 million in the second quarter of 2003 and a negative R$177 million in the first half. The reductions of R$416 million and R$481 million, respectively, were substantially due to the effect of the appreciation of the Real against the US dollar on shareholders’ equity in dollars in offshore companies in 2003, compared to the depreciation of the Real against the US dollar that took place in 2002.
Income and Social Contribution Tax
CSN registered an income and social contribution tax expense of R$187 million in the second quarter of 2003, versus a credit of R$229 million in the same period last year. In the first half, income and social contribution tax was R$325 million, compared to a credit of R$330 million registered in 2002. In both cases, the change is basically due to higher income before taxes in 2003. Specifically regarding the first half result, a credit of R$114.7 million was booked due to the partial reversal of a provision for the effect of IPC (consumer price index) inflation during 1989 ('Summer Plan'), for which amnesty was granted.
Net Income
Parent Company net income in the second quarter of 2003 was R$135 million (R$1.88 per lot of 1,000 shares), an improvement of R$345 million over the second quarter of 2002. In the first half of 2003, net income reached R$541 million (R$7.54 per lot of 1,000 shares), an increase of R$948 million. Consolidated net income was R$116 million in the quarter, bringing year to date accumulated net income to a total of R$513 million.
Consolidated Net Debt
As of June 30, 2003, the Company’s net debt amounted to R$5,328 million, with a consolidated cash balance of R$1,449 million, substantially comprised of fixed income government paper. When compared to the March 31, 2003 position, a decrease in cash of R$738 million was the main factor which caused a 16% increase in net debt. The main items of this decrease are: shareholder remuneration of R$800 million, paid in June 2003, capital expenditures made in the quarter, payment of employee profit sharing, an increase in working capital and regular cash uses (debt service and taxes). Given that CSN expects to distribute new dividends only in 2004, the trend for FYE 2003 is a reduction in net debt in Reais.
Capital Expenditures
In the first half of 2003, capital expenditures reached R$85 million and were invested in projects related to the maintenance of operating and technological excellence at the Presidente Vargas Mill (UPV). This amount does not include an addition of R$514 million in the Company’s PP&E, in connection with the spin-off of the CISA plant to the Parent Company in February this year.
Recent Events
In June 2003, CSN issued US$100 million of 1-year notes and US$150 million of 2-year notes through its CSN Islands IV Corp. and CSN Islands V Corp. subsidiaries, respectively. The first notes were issued with a 6.85% annual coupon and the second at 7.875%. Standard Bank London Limited and Bear, Stearns & Co, Inc. with BB Securities Ltd coordinated the first and second issues, respectively.
On June 18, 2003, through its CSN Steel Corp subsidiary, CSN concluded the purchase of 50% of Lusosider Projectos Siderúrgicos S.A., the parent company of Lusosider Aços Planos S.A. (Lusosider), for EUR10.84 million (US$11.8 million). Lusosider produces hot-dipped galvanized and tin-plate steel products. Located in Seixal, near Lisbon, Portugal, it has approximately 300 employees and production was around 210,000 tons of galvanized steel and 70,000 tons of tin plate steel in 2002. The Company services the distribution and metal packaging segments, with 86% if its sales directed towards the Iberian Peninsula.
On June 24, in a meeting of the Board of Directors of CSN, the position of Executive Officer of the Corporate Center was extinguished. Also, two new Executive Officers were elected: Lauro Henrique Campos Rezende, Executive Officer - Investments, and Marcos Marinho Lutz, Executive Officer - Infrastructure and Energy. The new Investments department will be responsible for analyzing and following CSN’s investments including mergers, acquisitions and expansion of existing operations. The areas that were managed by the Corporate Center will be the responsibility of Benjamin Steinbruch, Chairman and CEO.
In July, the Company completed a receivables securitization in the amount of US$142 million at a cost of 7.28% and a term of 7 years, with a 2-year grace period for the principal. The coordinator of the issue was BNP Paribas.
On July 4, CSN received R$139 million relating to receivables from MAE (Wholesale Energy Market), as determined in the second liquidation.
On July 15, 2003, the Company announced that when it satisfies the US regulatory requirements it will proceed with the indirect purchase of CSN LLC through its wholly-owned subsidiary, CSN Panama, S.A. (“ Panama”). In July 2001, CSN LLC purchased the assets and liabilities of US steel company, Heartland Steel Inc. This deal involves a cash disbursement of US$175 million, the amount financed in 2001 to purchase the assets, working capital and interest payments.
On August 4, José Paulo de Oliveira Alves, Executive Officer – New Businesses, left CSN in search of new professional challenges. The responsabilities of this departmet will be absorbed by the newly created Investments department. On the same date, the position of Executive Director of Administration and Holdings was created. The Board of Executive Officers has appointed Marcelo Araújo’s name to CSN’s Board of Directors approval. Mr. Araújo is a mechanical engineer who was a Vice President with Natura in the Commercial, Innovation, and Business Development areas prior to joining CSN.
On August 13, CSN issued a 3-year US$125 million export receivables securitization tranche at Libor + 2.75% through a wholly-owned subsidiary.
Companhia Siderúrgica Nacional, located in the State of Rio de Janeiro, Brazil, is a steel complex integrated by investments in infrastructure and logistics, that combines in its operation captive mines, an integrated steel mill, service centers, ports and railways. With a total annual production capacity of 5.4 million tonnes of crude steel and consolidated gross revenues of R$6.1 billion reported in 2002, CSN is also the only tin-plate producer in Brazil and one of the five largest tin-plate producers worldwide.
Certain of the statements contained herein are forward-looking statements, which express or imply results, performance or events that are expected in the future. They include future results that may be implied by historical results and investments, cost of net debt for 2003, the maintenance of our current levels of operating performance and profitability, the distribution of dividends in 2004, net debt reduction in the second half of 2003, the amount of deferral to be amortized in 2003 and 2004 and the satisfaction of regulatory requirements for the acquisition of CSN, LLC. Actual results, performance or events may differ materially from those expressed or implied by the forward-looking statements, as a result of several factors, such as general and economic conditions in Brazil and other countries, failure to collect all the MAE receivables, interest rate and exchange rate levels, future renegotiations or pre-payment of liabilities or credits denominated in foreign currencies, protectionist measures in the US, Brazil and other countries, changes in laws and regulations and general competitive factors (on a global, regional or national basis).
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SALES VOLUME
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Parent Company - thousands of tons
--------------------------------------------------------------------------------------------------------------------------
2Q03 1Q03 2Q02 1H02 1H03
--------------------------------------------------------------------------------------------------------------------------
DOMESTIC MARKET 837 731 894 1,761 1,568
--------------------------------------------------------------------------------------------------------------------------
Hot rolled 306 248 354 692 554
Cold rolled 188 180 213 420 368
Galvanized 162 128 146 301 290
Tin mill products 164 163 168 324 327
Slabs 17 12 13 24 29
--------------------------------------------------------------------------------------------------------------------------
EXPORT MARKET 352 352 306 635 704
--------------------------------------------------------------------------------------------------------------------------
Hot rolled 158 96 67 123 254
Cold rolled 9 21 12 16 30
Galvanized 21 51 12 18 72
Tin mill products 112 64 78 150 176
Slabs 52 120 137 328 172
--------------------------------------------------------------------------------------------------------------------------
TOTAL 1,189 1,083 1,200 2,396 2,272
--------------------------------------------------------------------------------------------------------------------------
Hot rolled 464 344 421 815 808
Cold rolled 197 201 225 436 398
Galvanized 183 179 158 319 362
Tin mill products 276 227 246 474 503
Slabs 69 132 150 352 201
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
NET SALES PER UNIT
--------------------------------------------------------------------------------------------------------------------------
Parent Company - R$/tons
--------------------------------------------------------------------------------------------------------------------------
2Q03 1Q03 2Q02 1H02 1H03
--------------------------------------------------------------------------------------------------------------------------
DOMESTIC MARKET 1,234 1,205 793 765 1,220
--------------------------------------------------------------------------------------------------------------------------
Hot rolled 958 911 610 597 938
Cold rolled 1,127 1,149 753 745 1,138
Galvanized 1,594 1,527 1,120 1,106 1,561
Tin mill products 1,698 1,700 1,170 1,141 1,699
Slabs 583 767 401 364 704
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
CAPITAL EXPENDITURES (FIXED AND DEFERRED ASSETS)
--------------------------------------------------------------------------------------------------------------------------
Parent Company - thousands of R$
--------------------------------------------------------------------------------------------------------------------------
2Q03 1Q03 2Q02 1H02 1H03
--------------------------------------------------------------------------------------------------------------------------
Tecnological improvements 34 8 13 19 42
Environmental 2 3 15 26 5
Deferred 20 15 12 19 35
Other* 7 (4) 29 45 3
--------------------------------------------------------------------------------------------------------------------------
TOTAL 63 22 69 109 85
--------------------------------------------------------------------------------------------------------------------------
* General repairs, spare parts, logistic, information technology, etc.
(Translation of the report originally issued in Portuguese.
See Note 29 to the financial statements)
FEDERAL PUBLIC SERVICE CORPORATE LAW
CVM - BRAZILIAN SECURITIES COMMISSION
QUARTERLY INFORMATION - ITR
COMMERCIAL, INDUSTRY & OTHER TYPES OF COMPANY DATE - 06/30/2003
01.01 - IDENTIFICATION
--------------------------------------------------------------------------------
1 - CVM CODE 2 - NAME OF COMPANY 3 - TAX PAYER
00403-0 COMPANHIA SIDERÚRGICA NACIONAL 33.042.730/0001-04
--------------------------------------------------------------------------------
06.01 - CONSOLIDATED BALANCE SHEET - ASSETS (IN THOUSANDS OF BRAZILIAN REAIS)
----------------------------------------------------------------------------------------------------------
1 - CODE 2 - DESCRIPTION 3 -06/30/2003 4 -03/31/2003
----------------------------------------------------------------------------------------------------------
1 TOTAL ASSETS 19,148,994 15,628,901
----------------------------------------------------------------------------------------------------------
1.01 CURRENT ASSETS 4,197,045 4,692,741
----------------------------------------------------------------------------------------------------------
1.01.01 CASH AND BANKS 63,387 58,800
----------------------------------------------------------------------------------------------------------
1.01.01.01 BANKS 63,387 58,800
----------------------------------------------------------------------------------------------------------
1.01.02 CREDITS 1,418,153 1,303,175
----------------------------------------------------------------------------------------------------------
1.01.02.01 TRADE ACCOUNTS RECEIVABLE - DOMESTIC MARKET 1,166,288 1,089,258
----------------------------------------------------------------------------------------------------------
1.01.02.02 TRADE ACCOUNTS RECEIVABLE - EXPORT MARKET 346,259 315,920
----------------------------------------------------------------------------------------------------------
1.01.02.03 ALLOWANCE FOR DOUBTFUL ACCOUNTS (94,394) (102,003)
----------------------------------------------------------------------------------------------------------
1.01.03 INVENTORIES 824,587 684,284
----------------------------------------------------------------------------------------------------------
1.01.03.01 FINISHED PRODUCTS 222,322 196,535
----------------------------------------------------------------------------------------------------------
1.01.03.02 PRODUCTS IN PROCESS 146,865 106,311
----------------------------------------------------------------------------------------------------------
1.01.03.03 RAW MATERIAL 233,505 182,011
----------------------------------------------------------------------------------------------------------
1.01.03.04 SPARE PARTS AND MAINTENANCE SUPPLIES 202,394 182,070
----------------------------------------------------------------------------------------------------------
1.01.03.05 IMPORTS IN TRANSIT 1,528 5,891
----------------------------------------------------------------------------------------------------------
1.01.03.06 MATERIALS IN TRANSIT 17,973 11,466
----------------------------------------------------------------------------------------------------------
1.01.04 OTHER 1,890,918 2,646,482
----------------------------------------------------------------------------------------------------------
1.01.04.01 MARKETABLE SECURITIES 1,282,054 2,027,354
----------------------------------------------------------------------------------------------------------
1.01.04.02 WITHHOLDING INCOME TAX AND SOCIAL CONTRIBUTION TO OFFSET 115,559 87,818
----------------------------------------------------------------------------------------------------------
1.01.04.03 DEFERRED INCOME TAX 148,749 229,065
----------------------------------------------------------------------------------------------------------
1.01.04.04 DEFERRED SOCIAL CONTRIBUTION 25,994 53,574
----------------------------------------------------------------------------------------------------------
1.01.04.05 OPTION PREMIUM HEDGE 0 0
----------------------------------------------------------------------------------------------------------
1.01.04.06 OTHER 318,562 248,671
----------------------------------------------------------------------------------------------------------
1.02 LONG-TERM ASSETS 1,472,297 1,429,068
----------------------------------------------------------------------------------------------------------
1.02.01 CREDITS 56,164 55,405
----------------------------------------------------------------------------------------------------------
1.02.01.01 COMPULSORY LOANS - ELETROBRÁS 56,164 55,405
----------------------------------------------------------------------------------------------------------
1.02.02 CREDITS WITH RELATED PARTIES 0 0
----------------------------------------------------------------------------------------------------------
1.02.02.01 AFFILIATES 0 0
----------------------------------------------------------------------------------------------------------
1.02.02.02 SUBSIDIARIES 0 0
----------------------------------------------------------------------------------------------------------
1.02.02.03 OTHER RELATED PARTIES 0 0
----------------------------------------------------------------------------------------------------------
1.02.03 OTHER 1,416,133 1,373,663
----------------------------------------------------------------------------------------------------------
1.02.03.01 DEFERRED INCOME TAX 273,156 286,186
----------------------------------------------------------------------------------------------------------
1.02.03.02 DEFERRED SOCIAL CONTRIBUTION 71,423 79,536
----------------------------------------------------------------------------------------------------------
1.02.03.03 JUDICIAL DEPOSITS 469,675 456,695
----------------------------------------------------------------------------------------------------------
1.02.03.04 SECURITIES RECEIVABLE 52,085 52,273
----------------------------------------------------------------------------------------------------------
1.02.03.05 RECOVERABLE PIS / PASEP 52,349 50,850
----------------------------------------------------------------------------------------------------------
1.02.03.06 LEASES 47,703 47,495
----------------------------------------------------------------------------------------------------------
1.02.03.07 INVESTMENT AVAILABLE FOR SALE 251,238 203,706
----------------------------------------------------------------------------------------------------------
1.02.03.08 DEBENTURE 103,199 100,667
----------------------------------------------------------------------------------------------------------
1.02.03.09 OTHER 95,305 96,255
----------------------------------------------------------------------------------------------------------
1.03 PERMANENT ASSETS 13,479,652 9,507,092
----------------------------------------------------------------------------------------------------------
1.03.01 INVESTMENTS 74,390 131,452
----------------------------------------------------------------------------------------------------------
1.03.01.01 IN AFFILIATES 0 0
----------------------------------------------------------------------------------------------------------
FEDERAL PUBLIC SERVICE CORPORATE LAW
CVM - BRAZILIAN SECURITIES COMMISSION
QUARTERLY INFORMATION - ITR
COMMERCIAL, INDUSTRY & OTHER TYPES OF COMPANY DATE - 06/30/2003
01.01 - IDENTIFICATION
--------------------------------------------------------------------------------
1 - CVM CODE 2 - NAME OF COMPANY 3 - TAX PAYER
00403-0 COMPANHIA SIDERÚRGICA NACIONAL 33.042.730/0001-04
--------------------------------------------------------------------------------
06.01 - CONSOLIDATED BALANCE SHEET - ASSETS (IN THOUSANDS OF BRAZILIAN REAIS)
----------------------------------------------------------------------------------------------------------
1 - CODE 2 - DESCRIPTION 3 -06/30/2003 4 -03/31/2003
----------------------------------------------------------------------------------------------------------
1.03.01.02 IN SUBSIDIARIES 74,390 131,452
----------------------------------------------------------------------------------------------------------
1.03.01.03 OTHER INVESTMENTS 0 0
----------------------------------------------------------------------------------------------------------
1.03.02 PROPERTY, PLANT AND EQUIPMENT 12,963,668 8,908,473
----------------------------------------------------------------------------------------------------------
1.03.02.01 IN NET OPERATION 12,291,604 8,303,376
----------------------------------------------------------------------------------------------------------
1.03.02.02 CONSTRUCTION 548,958 523,783
----------------------------------------------------------------------------------------------------------
1.03.02.03 LANDS 123,106 81,314
----------------------------------------------------------------------------------------------------------
1.03.03 DEFERRED CHARGES 441,594 467,167
----------------------------------------------------------------------------------------------------------
(Translation of the report originally issued in Portuguese.
See Note 29 to the financial statements)
FEDERAL PUBLIC SERVICE CORPORATE LAW
CVM - BRAZILIAN SECURITIES COMMISSION
QUARTERLY INFORMATION - ITR
COMMERCIAL, INDUSTRY & OTHER TYPES OF COMPANY DATE - 06/30/2003
01.01 - IDENTIFICATION
--------------------------------------------------------------------------------
1 - CVM CODE 2 - NAME OF COMPANY 3 - TAX PAYER
00403-0 COMPANHIA SIDERÚRGICA NACIONAL 33.042.730/0001-04
--------------------------------------------------------------------------------
06.02 - CONSOLIDATED BALANCE SHEET - LIABILITIES (IN THOUSANDS OF BRAZILIAN REAIS)
---------------------------------------------------------------------------------------------------------- 1 - CODE 2 - DESCRIPTION 3 -06/30/2003 4 -03/31/2003 ---------------------------------------------------------------------------------------------------------- 2 TOTAL LIABILITIES 19,148,994 15,628,941 ---------------------------------------------------------------------------------------------------------- 2.01 CURRENT LIABILITIES 4,506,081 4,992,788 ---------------------------------------------------------------------------------------------------------- 2.01.01 LOANS AND FINANCING 3,190,034 3,508,839 ---------------------------------------------------------------------------------------------------------- 2.01.02 DEBENTURES 68,287 29,067 ---------------------------------------------------------------------------------------------------------- 2.01.03 SUPPLIERS 679,754 617,154 ---------------------------------------------------------------------------------------------------------- 2.01.04 TAXES AND CONTRIBUTIONS 424,376 341,628 ---------------------------------------------------------------------------------------------------------- 2.01.04.01 SALARIES AND SOCIAL CONTRIBUTIONS 108,588 84,304 ---------------------------------------------------------------------------------------------------------- 2.01.04.02 TAXES PAYABLE 220,738 151,763 ---------------------------------------------------------------------------------------------------------- 2.01.04.03 DEFERRED INCOME TAX 69,890 77,618 ---------------------------------------------------------------------------------------------------------- 2.01.04.04 DEFERRED SOCIAL CONTRIBUTION 25,160 27,943 ---------------------------------------------------------------------------------------------------------- 2.01.05 DIVIDENDS PAYABLE 328 293,623 ---------------------------------------------------------------------------------------------------------- 2.01.05.01 DELIBERATED INTEREST ON STOCKHOLDERS' EQUITY 0 216 ---------------------------------------------------------------------------------------------------------- 2.01.05.02 PROPOSED DIVIDENDS AND INTEREST ON STOCKHOLDERS' EQUITY 328 293,407 ---------------------------------------------------------------------------------------------------------- 2.01.06 PROVISIONS 9,358 6,509 ---------------------------------------------------------------------------------------------------------- 2.01.06.01 LABOR, CIVIL AND FISCAL 9,358 6,509 ---------------------------------------------------------------------------------------------------------- 2.01.07 DEBT WITH RELATED PARTIES 0 0 ---------------------------------------------------------------------------------------------------------- 2.01.08 OTHER 133,944 195,968 ---------------------------------------------------------------------------------------------------------- 2.01.08.01 DERIVATIVES -PAYBLE ACCOUNTS 0 0 ---------------------------------------------------------------------------------------------------------- 2.01.08.02 OTHER 133,944 195,968 ---------------------------------------------------------------------------------------------------------- 2.02 LONG-TERM LIABILITIES 7,047,814 5,331,375 ---------------------------------------------------------------------------------------------------------- 2.02.01 LOANS AND FINANCING 2,851,642 2,568,128 ---------------------------------------------------------------------------------------------------------- 2.02.01.01 LOANS AND FINANCING 2,851,642 2,568,128 ---------------------------------------------------------------------------------------------------------- 2.02.02 DEBENTURES 666,550 666,550 ---------------------------------------------------------------------------------------------------------- 2.02.03 PROVISIONS 3,105,514 1,654,968 ---------------------------------------------------------------------------------------------------------- 2.02.03.01 LABOR, CIVIL AND FISCAL 146,264 91,556 ---------------------------------------------------------------------------------------------------------- 2.02.03.02 FOR INCOME TAX IN JUDGE 59,441 59,866 ---------------------------------------------------------------------------------------------------------- 2.02.03.03 FOR SOCIAL CONTRIBUTION IN JUDGE 31,479 44,333 ---------------------------------------------------------------------------------------------------------- 2.02.03.04 OTHER TAX IN JUDGE 240,305 206,407 ---------------------------------------------------------------------------------------------------------- 2.02.03.05 DEFERRED INCOME TAX 1,932,371 921,181 ---------------------------------------------------------------------------------------------------------- 2.02.03.06 DEFERRED SOCIAL CONTRIBUTION 695,654 331,625 ---------------------------------------------------------------------------------------------------------- 2.02.04 DEBT WITH AFFILIATES 0 0 ---------------------------------------------------------------------------------------------------------- 2.02.05 OTHER 424,108 441,729 ---------------------------------------------------------------------------------------------------------- 2.02.05.01 PROVISION FOR INVESTMENT DEVALUATION 0 0 ---------------------------------------------------------------------------------------------------------- 2.02.05.02 OTHER 424,108 441,729 ---------------------------------------------------------------------------------------------------------- 2.03 DEFERRED INCOME 0 0 ---------------------------------------------------------------------------------------------------------- 2.04 MINORITY INTEREST 0 0 ---------------------------------------------------------------------------------------------------------- 2.05 STOCKHOLDERS' EQUITY 7,595,099 5,304,778 ---------------------------------------------------------------------------------------------------------- 2.05.01 PAID-IN CAPITAL 1,680,947 1,680,947 ---------------------------------------------------------------------------------------------------------- 2.05.01.01 COMMON STOCKS 0 0 ---------------------------------------------------------------------------------------------------------- 2.05.02 CAPITAL RESERVES 10,485 10,485 ---------------------------------------------------------------------------------------------------------- 2.05.03 REVALUATION RESERVES 5,128,243 2,485,361 ---------------------------------------------------------------------------------------------------------- 2.05.03.01 OWN ASSETS 5,128,243 2,485,361 ---------------------------------------------------------------------------------------------------------- 2.05.03.02 SUBSIDIARIES/AFFILIATES 0 0 ---------------------------------------------------------------------------------------------------------- FEDERAL PUBLIC SERVICE CORPORATE LAW CVM - BRAZILIAN SECURITIES COMMISSION QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRY & OTHER TYPES OF COMPANY DATE - 06/30/2003 01.01 - IDENTIFICATION -------------------------------------------------------------------------------- 1 - CVM CODE 2 - NAME OF COMPANY 3 - TAX PAYER 00403-0 COMPANHIA SIDERÚRGICA NACIONAL 33.042.730/0001-04 --------------------------------------------------------------------------------
06.02 - CONSOLIDATED BALANCE SHEET - LIABILITIES (IN THOUSANDS OF BRAZILIAN REAIS)
----------------------------------------------------------------------------------------------------------
1 - CODE 2 - DESCRIPTION 3 -06/30/2003 4 -03/31/2003
----------------------------------------------------------------------------------------------------------
2.05.04 REVENUE RESERVES 196,449 702,588
----------------------------------------------------------------------------------------------------------
2.05.04.01 LEGAL 196,449 196,449
----------------------------------------------------------------------------------------------------------
2.05.04.02 STATUTORY 0 0
----------------------------------------------------------------------------------------------------------
2.05.04.03 FOR CONTINGENCIES 0 0
----------------------------------------------------------------------------------------------------------
2.05.04.04 UNREALIZED INCOME 0 0
----------------------------------------------------------------------------------------------------------
2.05.04.05 PROFIT RETENTIONS 0 0
----------------------------------------------------------------------------------------------------------
2.05.04.06 SPECIAL FOR NON-DISTRIBUTED DIVIDENDS 0 0
----------------------------------------------------------------------------------------------------------
2.05.04.07 OTHER PROFIT RESERVES 0 506,139
----------------------------------------------------------------------------------------------------------
2.05.04.07.01 FOR INVESTMENTS 0 506,139
----------------------------------------------------------------------------------------------------------
2.05.05 RETAINED EARNINGS (LOSSES) 578,975 425,397
----------------------------------------------------------------------------------------------------------
FEDERAL PUBLIC SERVICE CORPORATE LAW
CVM - BRAZILIAN SECURITIES COMMISSION
QUARTERLY INFORMATION - ITR
COMMERCIAL, INDUSTRY & OTHER TYPES OF COMPANY DATE - 06/30/2003
01.01 - IDENTIFICATION
--------------------------------------------------------------------------------
1 - CVM CODE 2 - NAME OF COMPANY 3 - TAX PAYER
00403-0 COMPANHIA SIDERÚRGICA NACIONAL 33.042.730/0001-04
--------------------------------------------------------------------------------
07.01 - CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS OF BRAZILIAN REAIS)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
1 - CODE 2 - DESCRIPTION 3 - 04/01/2003 4 - 01/01/2003 5 - 04/01/2002 6 - 01/01/2002
TO 06/30/2003 TO 06/30/2003 TO 06/30/2002 TO 06/30/2002
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.01 GROSS REVENUE FROM SALES AND SERVICES 1,956,400 3,831,735 1,330,715 2,592,233
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.02 DEDUCTIONS FROM GROSS REVENUE (367,962) (658,126) (228,818) (447,724)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.03 NET REVENUE FROM SALES AND SERVICES 1,588,438 3,173,609 1,101,897 2,144,509
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.04 COST OF GOODS AND SERVICES SOLD (844,608) (1,608,445) (654,865) (1,305,352)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.05 GROSS PROFIT 743,830 1,565,164 447,032 839,157
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06 OPERATING INCOME (EXPENSES) (437,015) (716,331) (881,776) (1,563,046)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.01 SELLING (100,063) (203,691) (70,085) (143,510)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.02 GENERAL AND ADMINISTRATIVE (71,096) (134,332) (83,042) (149,851)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.03 FINANCIAL (298,951) (383,824) (680,324) (1,169,445)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.03.01 FINANCIAL INCOME (127,983) (48,587) 783,634 543,665
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.03.01.01 EXCHANGE VARIATION AMORTIZATION 656,452 860,503 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.03.01.02 OTHER (784,435) (909,090) 783,634 543,665
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.03.02 FINANCIAL EXPENSES (170,968) (335,237) (1,463,958) (1,713,110)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.03.02.01 FINANCIAL EXPENSES (170,968) (335,237) (191,992) (332,285)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.03.02.02 FOREIGN EXCHANGE AND MONETARY LOSS, NET 0 0 (1,271,966) (1,380,825)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.04 OTHER OPERATING INCOME 9,575 21,878 3,625 5,299
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.05 OTHER OPERATING EXPENSES (32,949) (27,262) (45,525) (92,214)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.05.01 FOREIGN EXCHANGE AND MONETARY LOSS, NET 0 0 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.05.02 AMORTIZATION OF SPECIAL EXCHANGE VARIATION 0 0 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.05.03 OTHER (32,949) (27,262) (45,525) (92,214)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.06.06 EQUITY IN RESULTS OF SUBSIDIARIES AND AFFILIATED COMPANIES 56,469 10,900 (6,425) (13,325)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.07 OPERATING INCOME/LOSS 306,815 848,833 (434,744) (723,889)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.08 NON-OPERATING INCOME /LOSS (4,485) (9,805) (2,281) (5,846)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
FEDERAL PUBLIC SERVICE CORPORATE LAW
CVM - BRAZILIAN SECURITIES COMMISSION
QUARTERLY INFORMATION - ITR
COMMERCIAL, INDUSTRY & OTHER TYPES OF COMPANY DATE - 06/30/2002
01.01 - IDENTIFICATION
--------------------------------------------------------------------------------
1 - CVM CODE 2 - NAME OF COMPANY 3 - TAX PAYER
00403-0 COMPANHIA SIDERÚRGICA NACIONAL 33.042.730/0001-04
--------------------------------------------------------------------------------
07.01 - CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS OF BRAZILIAN REAIS)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
1 - CODE 2 - DESCRIPTION 3 - 04/01/2003 4 - 01/01/2003 5 - 04/01/2002 6 - 01/01/2002
TO 06/30/2003 TO 06/30/2003 TO 06/30/2002 TO 06/30/2002
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.08.01 INCOME 1,249 1,359 132 1,643
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.08.02 EXPENSES (5,734) (11,164) (2,413) (7,489)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.09 INCOME BEFORE TAXES AND PARTICIPATIONS / CONTRIBUTIONS 302,330 839,028 (437,025) (729,735)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.10 PROVISION FOR INCOME TAX AND SOCIAL CONTRIBUTION (50,872) (17,850) 38,478 13,496
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.11 DEFERRED INCOME TAX (135,065) (308,236) 188,629 308,514
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.11.01 DEFERRED INCOME TAX (97,798) (223,721) 143,175 235,025
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.11.02 DEFERRED SOCIAL CONTRIBUTION (37,267) (84,515) 45,454 73,489
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.12 STATUTORY PARTICIPATIONS / CONTRIBUTIONS 0 0 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.12.01 PARTICIPATIONS 0 0 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.12.02 CONTRIBUTIONS 0 0 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.13 REVERSAL OF INTEREST ON STOCKHOLDERS' EQUITY 0 0 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------------
3.15 NET INCOME (LOSS) FOR THE PERIOD 116,393 512,942 (209,918) (407,725)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
OUTSTANDING SHARES (THOUSANDS) 71,729,261 71,729,261 71,729,261 71,729,261
--------------------------------------------------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE (R$) 0.00162 0.00715
--------------------------------------------------------------------------------------------------------------------------------------------------------------
LOSS PER SHARE (R$) (0.00293) (0.00568)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
(Translation of the report originally issued in Portuguese.
See Note 29 to the financial statements)
FEDERAL PUBLIC SERVICE CORPORATE LAW
CVM - BRAZILIAN SECURITIES COMMISSION
QUARTERLY INFORMATION - ITR
COMMERCIAL, INDUSTRY & OTHER TYPES OF COMPANY DATE - 03/31/2003
------------------------------------------------------------------------------------------------------------------------
00403 - 0 COMPANHIA SIDERÚRGICA NACIONAL 33.042.730/0001-04
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
15.01 - PROJECTS OF INVESTMENT
------------------------------------------------------------------------------------------------------------------------
OPERATIONAL INVESTMENTS
The accumulated expenditures for the main projects of investments underway
as the 1st six-month period of 2003 were as follows:
In thousand of reais
---------------------------------
Pre-painted and Galvanized steel Plant 30,878
Improvement on Hot Band Mill #2 2,298
Sewer System 2,386
Replecement of Convertor´s Frame - B 1,612
Replecement of Steel Pot Frame 1,539
Reform of blast furnace #3 1,016
Thermoelectric Central Station 823
Organic Vapor Taking Process 673
Improvement to coke battery #1, #4 and #5 627
Biological Treatment works 593
Researches and Projects 516
Reform of reheating 1 and 2 of blast furnace #2 490
Other projects 977
Total 44,428
=================
FEDERAL PUBLIC SERVICE (Translation of the report originally issued in Portuguese.
CVM - BRAZILIAN SECURITIES COMMISSION See Note 29 to the financial statements)
QUARTERLY INFORMATION - ITR CORPORATE LAW
COMMERCIAL, INDUSTRY & OTHER TYPES OF COMPANY DATE - 06/30/03
------------------------------------------------------------------------------------------------------------------------
00403 - 0 COMPANHIA SIDERÚRGICA NACIONAL 33.042.730/0001-04
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
16.01 - OTHER INFORMATION THAT THE COMPANY CONSIDERS RELEVANT
------------------------------------------------------------------------------------------------------------------------
Parent Company Consolidated
2003 2002 2003 2002
---------------------- ------------------------
Cash Flow from operating activities
Net income (loss) for the year 541,016 (407,219) 512,942 (407,725)
Adjustments to reconcile the net income for the year
with the resources from operating activities:
-Amortization of special exchange variation 67,498 475,353 68,833 476,688
-Net monetary and exchange variation (1,402,979) 1,423,342 (914,632) 1,218,759
-Provision for loan and financing charges 285,942 301,422 216,906 224,887
-Depreciation / depletion / amortization 278,346 255,738 294,991 267,333
-Write-offs of permanent assets 614 1,684 1,118 2,080
-Equity pick up 176,556 (304,491) (10,901) 13,325
-Deferred income tax and social contribution 329,745 (304,530) 308,236 (308,515)
-Provision swap / forward 1,054,390 1,054,390
-Provision market to market (238,174) (238,174)
-Other provisions 14,832 71,931 116 80,658
----------- ---------- ------------------------
1,107,786 1,513,230 1,293,825 1,567,490
----------- ---------- ------------------------
(Increase) Decrease in assets:
-Accounts receivable - trade (171,515) (168,310) 4,822 (248,312)
-Inventories (162,267) 96,367 (250,338) 97,840
-Judicial deposits (26,089) (13,829) (30,726) (17,168)
-Credits with subsidiary and associated companies (367,332) 680,955 (1,595) 829
-Carryforward taxes (66,690) 31,761 (76,292) 107,893
-Others 58,701 (36,555) 8,050 (110,263)
----------- ---------- ------------------------
(735,192) 590,389 (346,079) (169,181)
----------- ---------- ------------------------
Increase (Decrease) in liabilities:
-Suppliers (14,834) 79,432 24,314 73,363
-Salaries and payroll charges 32,474 14,035 33,285 14,082
-Taxes (16,882) 12,233 (9,485) (32,608)
-Accounts payable - Subsidiary Company (22,910) (68,943)
-Option Hedge premium 186,187 180,812
-Other (55,943) 169,330 (130,266) 194,037
----------- ---------- ------------------------
108,092 206,087 98,660 248,874
----------- ---------- ------------------------
----------- ---------- ------------------------
Net resources from operating activities 480,686 2,309,706 1,046,406 1,647,183
----------- ---------- ------------------------
Cash Flow from investing activities
Investments (43,145) (821,516) 66,250 (7,914)
Property, plant and equipment (562,039) (80,499) (222,675) (220,536)
Deferred assets (65,091) (19,069) (38,272) (26,061)
----------- ---------- ------------------------
Net resources used on investing activities (670,275) (921,084) (194,697) (254,511)
----------- ---------- ------------------------
Cash Flow from financing activities
Financial Funding:
-Loans and financing 2,296,501 572,503 2,042,856 789,410
-Debentures 645,585 645,585
----------- ---------- ------------------------
2,296,501 1,218,088 2,042,856 1,434,995
----------- ---------- ------------------------
Payments:
-Financial institution
-Principal (958,637) (776,976) (1,691,227) (750,110)
-Charges (294,684) (199,548) (245,267) (161,517)
-Interest on stockholders’ equity/dividends (798,977) (139,999) (798,977) (139,999)
----------- ---------- ------------------------
(2,052,298) (1,116,523) (2,735,471) (1,051,626)
----------- ---------- ------------------------
----------- ---------- ------------------------
Net resources from financing activities 244,203 101,565 (692,615) 383,369
----------- ---------- ------------------------
Decrease in cash and cash equivalents 54,614 1,490,187 159,091 1,776,041
Cash and cash equivalents, beginning of year 850,278 378,684 1,186,347 660,438
----------- ---------- ------------------------
904,892 1,868,871 1,345,438 2,436,479
=========== ========== ========================
Cash and cash equivalents, end of the year
Additional cash flow information
Monetary variation and interest capitalized (27,889) 9,365 (21,345) 26,343
(Translation of the report originally issued in Portuguese.
See Note 29 to the financial statements)
FEDERAL PUBLIC SERVICE CORPORATE LAW
CVM - BRAZILIAN SECURITIES COMMISSION
QUARTERLY INFORMATION - ITR
COMMERCIAL, INDUSTRY & OTHER TYPES OF COMPANY DATE - 06/30/2003
----------------------------------------------------------------------------------------------------------------------------------------
00403 - 0 COMPANHIA SIDERÚRGICA NACIONAL 33.042.730/0001-04
----------------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------------
16.01 - OTHER INFORMATION THAT THE COMPANY CONSIDERS RELEVANT
----------------------------------------------------------------------------------------------------------------------------------------
Parent Company Consolidated
------------------------- ------------------------
2003 2002 2003 2002
------------- ----------- ------------------------
SOURCES OF FUNDS
Funds provided by operations
Net income (loss) for the period 541,016 (407,219) 512,942 (407,725)
Expenses (income) not affecting working capital
- Monetary and foreign exchange variation and long term accrued
charges (net) (1,029,658) 859,134 (451,829) 451,396
- Equity pick up 176,556 (304,491) (10,901) 13,325
- Write-offs of permanent assets 614 1,684 1,118 2,080
- Depreciation/depletion/amortization 278,346 255,738 294,991 267,333
- Amortization of deferred foreign exchange Variation 67,498 475,353 68,833 476,688
- Deferred income tax and social contribution 162,585 (219,140) 164,998 (222,388)
- Reversion of income tax and social contribution (114,759) (114,759)
- CPMF Provision 142,911 143,425
- Other 52,902 85,136 60,951 131,096
------------- ----------- ------------------------
278,011 746,195 669,769 711,805
Funds provided by third parties - Long-term
Loans and financing resources 1,061,488 119,889 800,712 143,638
Debentures Issue 645,585 645,585
Decrease in other assets 23,328 899,862 30,335 22,713
Increase in other liabilities 36,337 42,638 5,122 53,930
Subsidiaries Proposed Dividend 2,016
Other (740) 10,062 10,015 (2,310)
------------- ----------- ------------------------
1,120,413 1,720,052 846,184 863,556
------------- ----------- ------------------------
1,398,424 2,466,247 1,515,953 1,575,361
============= =========== ========================
USES OF FUNDS
Funds used in permanent assets
Investments 43,145 821,516 (66,250) 7,914
Property, plant and equipment 534,150 89,864 201,330 246,879
Deferred assets 65,091 19,069 38,272 26,061
------------- ----------- ------------------------
642,386 930,449 173,352 280,854
Other
Interest on stockholders’ equity/dividends 506,138 50,000 506,138 50,000
Transfer of loans and financing to short-term 732,862 175,834 544,744 736,837
Increases in noncurrent assets 580,177 107,148 29,964 (58,230)
Deferred income tax and social contribution 129,324 129,324
Decrease in long-term loans and financing 81,096 14,745 69,238 6,403
Other 5 1,278 (12) 1,310
------------------------- ------------------------
1,900,278 478,329 1,150,072 865,644
------------- ----------- ------------------------
2,542,664 1,408,778 1,323,424 1,146,498
------------- ----------- ------------------------
INCREASE (DECREASE) IN NET WORKING CAPITAL (1,144,240) 1,057,469 192,529 428,863
============= =========== ========================
CHANGES IN NET WORKING CAPITAL
Current assets
- At end of period 3,974,601 3,927,761 4,197,045 4,791,295
- At beginning of period 4,257,340 2,339,564 4,227,070 2,851,555
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(282,739) 1,588,197 (30,025) 1,939,740
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Current liabilities
- At end of period 4,304,915 4,151,883 4,506,081 5,243,242
- At beginning of period 3,443,414 3,621,155 4,728,635 3,732,365
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861,501 530,728 (222,554) 1,510,877
------------- ----------- ------------------------
INCREASE (DECREASE) IN NET WORKING CAPITAL (1,144,240) 1,057,469 192,529 428,863
============= =========== ========================
(Translation of the report originally issued in Portuguese.
See Note 29 to the financial statements)
FEDERAL PUBLIC SERVICE CORPORATE LAW
CVM - BRAZILIAN SECURITIES COMMISSION
QUARTERLY INFORMATION - ITR
COMMERCIAL, INDUSTRY & OTHER TYPES OF COMPANY DATE - 03/31/2003
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00403 - 0 COMPANHIA SIDERÚRGICA NACIONAL 33.042.730/0001-04
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16.01 - OTHER INFORMATION THAT THE COMPANY CONSIDERS RELEVANT
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The Company upstream merger part of the split-up of CISA in february 2003, and such event have impacted the financial
statements as follows:
ACCOUNTING CASH FLOW
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Cash Flow from operating activities
Increase in Assets
Current Assets 883
Long Term Assets 1,225 2,108
----------
Increase in Liabilities
Current Liability (except for loans and financing) (161,883)
Long Term Liability (except for loans and financing) (34,396) (196,279)
----------
Cash Flow from investing activities
Investments (5,409)
Property, plant and equipment 484,252
Deferred assets 30,041 508,884
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Cash Flow from financing activities
Loans and financing
Current Assets (38,943)
Long Term Assets (275,770) (314,713)
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SOURCES OF FUNDS AND RESOURCE APLICATION DEMONSTRATION
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Sources of Funds
Funds provided by third parties - Long-term
Loans and financing resources 275,770
Other 34,396 310,166
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Uses of Funds
Funds used in permanent assets
Investments (5,409)
Property, plant and equipment 484,252
Deferred assets 30,041 508,884
----------
Other
Increase in Long Term Assets 1,225 510,109
----------
----------
Net Current (199,943)
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|
COMPANHIA SIDERÚRGICA NACIONAL
| ||
| By: |
/S/
Otavio de Garcia Lazcano
| |
|
Otavio de Garcia Lazcano
Principal Financial Officer
| ||
This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.