siditr1q15_6ka.htm - Generated by SEC Publisher for SEC Filing
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 6-K/A
 
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
 
For the month of May 25, 2015
Commission File Number 1-14732
 

 
COMPANHIA SIDERÚRGICA NACIONAL
(Exact name of registrant as specified in its charter)
 
National Steel Company
(Translation of Registrant's name into English)
 
Av. Brigadeiro Faria Lima 3400, 20º andar
São Paulo, SP, Brazil
04538-132
(Address of principal executive office)
 

Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F. 
Form 20-F ___X___ Form 40-F _______

 Indicate by check mark 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

ITR –– Quarterly Financial Information - March 31, 2015 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

Table of Contents

 

Company Information

 

Capital Breakdown

1

Cash Distribution

2

Parent Company Financial Statements

 

Balance Sheet – Assets

3

Balance Sheet – Liabilities

4

Statement of Income

5

Statement of Comprehensive Income

6

Statement of Cash Flows

7

Statement of Changes in Shareholders’ Equity

 

1/1/2015 to 03/31/2015

9

1/1/2014 to 03/31/2014

10

Statement of Value Added

11

Consolidated Financial Statements

 

Balance Sheet - Assets

12

Balance Sheet - Liabilities

13

Statement of Income

14

Statement of Comprehensive Income

15

Statement of Cash Flows

16

Statement of Changes in Shareholders’ Equity

 

1/1/2015 to 03/31/2015

18

1/1/2014 to 03/31/2014

19

Statement of Value Added

20

Comments on the Company’s Consolidated Performance

21

Notes to the Financial Statements

32

Reports and Statements

 

Unqualified Independent Auditors’ Review Report

76

 

 

 


 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

ITR –– Quarterly Financial Information - March 31, 2015 – CIA SIDERURGICA NACIONAL

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Company Information / Capital Breakdown

 

Number of Shares

(Units)

Current Quarter

03/31/2015

 

Paid-in Capital

 

 

Common

1,387,524,047

 

Preferred

0

 

Total

1,387,524,047

 

Treasury Shares

 

 

Common

30,391,000

 

Preferred

0

 

Total

30,391,000

 

Page 1 of 75


 

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ITR –– Quarterly Financial Information - March 31, 2015 – CIA SIDERURGICA NACIONAL

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Company Information / Cash distribution

         
             

Event

Approval

Dividends

Inition Payment

Type of share

Class of share

Dividends per common share (R$/share)

             

Meeting of Board of Directors

03/11/2015

Dividends

03/19/2015

Ordinary

 

0.20263

 
 
 

 

 

PAGE 2 of 75

 


 

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ITR –– Quarterly Financial Information - March 31, 2015 – CIA SIDERURGICA NACIONAL

Version: 1


 

Parent Company Statements / Balance Sheet - Assets

 

(R$ thousand)

 

 

     

 

Code

Description

Current Quarter
03/31/2015

YTD Previous Year 12/31/2014

1

Total assets

52,244,146

49,599,467

1.01

Current assets

8,992,823

8,692,821

1.01.01

Cash and cash equivalents

3,224,062

3,146,393

1.01.03

Trade receivables

1,800,733

1,604,498

1.01.04

Inventories

2,898,813

3,036,799

1.01.08

Other current assets

1,069,215

905,131

1.02

Non-current assets

43,251,323

40,906,646

1.02.01

Long-term receivables

4,130,590

3,509,307

1.02.01.06

Deferred taxes

3,072,986

2,438,929

1.02.01.09

Other non-current assets

1,057,604

1,070,378

1.02.02

Investments

25,822,983

24,199,129

1.02.03

Property, plant and equipment

13,210,550

13,109,294

1.02.04

Intangible assets

87,200

88,916

 

 

 

PAGE 3 of 75

 


 

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ITR –– Quarterly Financial Information - March 31, 2015 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Statements / Balance Sheet – Liabilities

 

(R$ thousand)

   
       

Code

Description

Current Quarter 03/31/2015

YTD Previous Year 12/31/2014

2

Total liabilities

52,244,146

49,599,467

2.01

Current liabilities

5,994,558

5,630,365

2.01.01

Payroll and related taxes

156,972

165,718

2.01.02

Trade payables

1,296,621

1,390,311

2.01.03

Taxes payable

207,734

86,920

2.01.04

Borrowings and financing

2,964,796

2,720,235

2.01.05

Other payables

824,288

803,597

2.01.06

Provisions

544,147

463,584

2.01.06.01

Provision for tax, social security, labor and civil risks

544,147

463,584

2.02

Non-current liabilities

40,082,441

38,272,634

2.02.01

Borrowings and financing

28,460,278

26,369,912

2.02.02

Other payables

9,668,815

9,818,512

2.02.04

Provisions

1,953,348

2,084,210

2.02.04.01

Provision for tax, social security, labor and civil risks

219,432

174,649

2.02.04.02

Other provisions

1,733,916

1,909,561

2.02.04.02.03

Provisions for environmental liabilities and asset retirement obligations

232,324

233,262

2.02.04.02.04

Pension and healthcare plan

587,740

587,74

2.02.04.02.05

Provision for losses on investments

913,852

1,088,559

2.03

Shareholders’ equity

6,167,147

5,696,468

2.03.01

Paid-in capital

4,540,000

4,540,000

2.03.02

Capital reserves

30

30

2.03.04

Earnings reserves

846,908

1,131,298

2.03.04.01

Legal reserve

361,641

361,641

2.03.04.02

Statutory reserve

742,243

999,243

2.03.04.09

Treasury shares

-238,976

-229,586

2.03.05

Profit /Losses

392,056

0

2.03.08

Other comprehensive income

388,153

25,140

 

 

 

 

 

 

 

 

 

 

PAGE 4 of 75

 


 

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ITR –– Quarterly Financial Information - March 31, 2015 – CIA SIDERURGICA NACIONAL

Version: 1


 

Parent Company Statements / Statements of Income

(R$ thousand)

Code

Description

 

Current Quarter

1/1/2015 to 03/31/2015

YTD Previous Year

1/1/2014 to 03/31/2014

3.01

Net revenue from sales and/or services

 

3,058,032

3,490,453

3.02

Cost of sales and/or services

 

-2,189,432

-2,311,229

3.03

Gross profit

 

868,600

1,179,224

3.04

Operating expenses/income

 

1,014,030

-632,776

3.04.01

Selling expenses

 

-145,918

-97,377

3.04.02

General and administrative expenses

 

-84,564

-82,863

3.04.04

Other operating income

 

3,722

4,646

3.04.05

Other operating expenses

 

-201,760

-166,057

3.04.06

Share of profits (losses) of investees

 

1,442,550

-291,125

3.05

Profit before finance income (costs) and taxes

 

1,882,630

546,448

3.06

Finance income (costs)

 

-2,028,355

-578,827

3.06.01

Finance income

 

494,693

8,569

3.06.02

Finance costs

 

-2,523,048

-587,396

3.06.02.01

Net exchange difference on financial instruments

 

-1,659,972

314,502

3.06.02.02

Finance costs

 

-863,076

-901,898

3.07

Loss before taxes on income

 

-145,725

-32,379

3.08

Income tax and social contribution

 

537,781

87,713

3.09

Profit from continuing operations

 

392,056

55,334

3.11

Profit for the period

 

392,056

55,334

3.99

Earnings per share - (R$/share)

 

 

 

3.99.01

Basic earnings per share

 

 

 

3.99.01.01

Common shares

 

0.28887

0.03796

3.99.02

Diluted earnings per share

 

 

 

3.99.02.01

Common shares

 

0.28887

0.03796

 

 

 

PAGE 5 of 75

 


 

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ITR –– Quarterly Financial Information - March 31, 2015 – CIA SIDERURGICA NACIONAL

Version: 1


 

Parent Company Statements / Statement of Comprehensive Income

   

(R$ thousand)

   

Code

Description

Current Quarter 01/01/2015 to
3/31/2015

YTD Previous Year 01/01/2014 to 3/31/2014

4.01

Profit for the period

392,056

55,334

4.02

Other comprehensive income

363,013

-470,811

4.02.01

Actuarial gains on defined benefit pension plan

125

1,710

4.02.02

Cumulative translation adjustments for the period

176,771

-44,326

4.02.03

Available-for-sale assets

597,135

-631,003

4.02.04

Income tax and social contribution on available-for-sale assets

-203,026

214,541

4.02.05

Available-for-sale assets from investments in subsidiaries

68,699

-11,733

4.02.06

Impairment of available-for-sale assets

8,417

0

4.02.07

Income tax and social contribution on impairment of available-for-sale assets

-2,862

0

4.02.08

Loss on cash flow hedge accounting

-427,645

0

4.02.09

Income tax and social contribution on impairment of available-for-sale assets

145,399

0

4.03

Comprehensive income for the period

755,069

-415,477

 
 

 

PAGE 6 of 75

 


 

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ITR –– Quarterly Financial Information - March 31, 2015 – CIA SIDERURGICA NACIONAL

Version: 1

 

Parent Company Statements / Statement of Cash Flows – Indirect Method

 

(R$ thousand)

   

Code

Description

Current Quarter
01/01/2015 to 3/31/2015

YTD Previous Year
01/01/2014 to 3/31/2014

6.01

Net cash generated by operating activities

1,084,289

362,699

6.01.01

Cash generated from operations

1,498,010

1,033,504

6.01.01.01

Profit for the period

392,056

55,334

6.01.01.02

Charges on borrowings and financing

815,393

756,064

6.01.01.03

Charges on loans and financing granted

-4,970

-3,896

6.01.01.04

Depreciation, depletion and amortization

206,329

234,661

6.01.01.05

Share of profits (losses) of investees

-1,442,550

291,125

6.01.01.06

Deferred income tax and social contribution

-694,546

-99,430

6.01.01.07

Provision for tax, social security, labor, civil and environmental risks

125,346

62,219

6.01.01.08

Inflation adjustment and exchange differences, net

2,084,988

-322,072

6.01.01.09

Gain on derivative transactions

0

636

6.01.01.10

Impairment of available-for-sale assets

8,417

0

6.01.01.11

Residual value of permanent assets written off

3,842

4,288

6.01.01.14

Other provisions

3,705

54,575

6.01.02

Other provisions

-413,721

-670,805

6.01.02.01

Trade receivables - third parties

-66,978

-48,430

6.01.02.02

Trade receivables - third parties

38,075

-109,782

6.01.02.03

Inventories

161,598

-226,215

6.01.02.04

Receivables - related parties

-1,943

0

6.01.02.05

Recoverable taxes

57,644

-690

6.01.02.06

Judicial deposits

-4,310

-2,598

6.01.02.07

Dividends received from related parties

0

205,259

6.01.02.09

Trade payables

-201,233

108,615

6.01.02.10

Payroll and related taxes

23,241

7,920

6.01.02.11

Taxes in installments - REFIS

123,552

-67,415

6.01.02.13

Payables to related parties

9,690

6,488

6.01.02.15

Interest paid

-555,887

-545,210

6.01.02.16

Interest received

12

13,563

6.01.02.18

Interest on swaps paid

0

-633

6.01.02.19

Other

2,818

-11,677

6.02

Net cash used in investing activities

-420

-91,530

6.02.01

Investments

-7,847

-19,818

6.02.02

Purchase of property, plant and equipment

-304,379

-235,967

6.02.03

Capital reduction of the subsidiary and joint venture

486,758

0

6.02.05

Related parties loans

-11,938

-3,860

6.02.06

Receipt of related parties loans

75

168,115

6.02.07

Quotas of exclusive funds

-163,089

0

6.03

Net cash used in financing activities

-1,055,659

-236,819

6.03.01

Borrowings and financing raised

389,540

690,556

6.03.02

Borrowings and financing raised - related parties

0

116,640

6.03.03

Redemption of borrowings

-535,978

-594,833

6.03.04

Redemption of borrowings - related parties

-349,912

-24,312

6.03.05

Dividends and interest on capital paid

-549,829

-424,870

6.03.06

Treasury shares

-9,390

0

6.04

Exchange differences on translating cash and cash equivalents

49,459

0

6.05

Increase in cash and cash equivalents

77,669

34,350

6.05.01

Cash and equivalents at the beginning of the period

3,146,393

206,624

6.05.02

Cash and equivalents at the end of the period

3,224,062

240,974

 

 

PAGE 7 of 75

 


 

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Version: 1


 

 

Parent Company Statements / Statement of Changes in Shareholders´ Equity - 1/1/2015 to 03/31/2015

(R$ thousand)

           

 

 

 

 

Code

Description

Paid-in capital

Capital reserve, granted options and treasury shares

Earnings reserve

Retained earnings 

Other comprehensive income

Shareholders’ equity

5.01

Opening balances

4,540,000

30

1,131,298

0

25,140

5,696,468

5.03

Adjusted opening balances

4,540,000

30

1,131,298

0

25,140

5,696,468

5.04

Capital transactions with shareholders

0

0

-284,390

0

0

-284,390

5.04.04

Treasury shares acquired

0

0

-9,390

0

0

-9,390

5.04.06

Dividends

0

0

-275,000

0

0

-275,000

5.05

Total comprehensive income

0

0

0

392,056

363,013

755,069

5.05.01

Profit for the period

0

0

0

392,056

0

392,056

5.05.02

Other comprehensive income

0

0

0

0

363,013

363,013

5.05.02.04

Translation adjustments for the period

0

0

0

0

176,771

176,771

5.05.02.06

Actuarial gains on defined benefit pension plan, net of taxes

0

0

0

0

125

125

5.05.02.07

Available-for-sale assets, net of taxes

0

0

0

0

468,363

468,363

5.05.02.08

Loss on hedge accounting, net of taxes

0

0

0

0

-282,246

-282,246

5.07

Closing balances

4,540,000

30

846,908

392,056

388,153

6,167,147

 

 

 

PAGE 8 of 75

 


 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

ITR –– Quarterly Financial Information - March 31, 2015 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Statements / Statement of Changes in Shareholders´ Equity - 1/1/2014 to 03/31/2014

 

(R$ thousand)

         

 

Code

Description

Paid-in capital

Capital reserve, granted options and treasury shares

Earnings reserve

Retained earnings

Other comprehensive income

Shareholders´ Equity

5.01

Opening balances

4,540,000

30

2,839,568

0

716,972

8,096,570

5.03

Adjusted opening balances

4,540,000

30

2,839,568

0

716,972

8,096,570

5.04

Capital transactions with shareholders

0

0

-425,000

0

0

-425,000

5.04.06

Dividends

0

0

-425,000

0

0

-425,000

5.05

Total comprehensive income

0

0

0

55,334

-470,811

-415,477

5.05.01

Profit for the period

0

0

0

55,334

0

55,334

5.05.02

Other comprehensive income

0

0

0

0

-470,811

-470,811

5.05.02.04

Translation adjustments for the period

0

0

0

0

-44,326

-44,326

5.05.02.07

Actuarial gains on defined benefit pension plan

0

0

0

0

1,710

1,710

5.05.02.08

Available-for-sale assets, net of taxes

0

0

0

0

-428,195

-428,195

5.07

Closing balances

4,540,000

30

2,414,568

55,334

246,161

7,256,093

               
 

 

PAGE 9 of 75

 


 

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ITR –– Quarterly Financial Information - March 31, 2015 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Statements / Statement of Value Added

 

(R$ thousand)

   

Code

Description

Current Quarter 1/1/2015 to

3/31/2015

YTD Prior Year 01/01/2014 to

3/31/2014

7.01

Revenues

3,723,968

4,265,934

7.01.01

Sales of products and services

3,669,030

4,217,900

7.01.02

Other revenues

61,531

49,773

7.01.04

Allowance for (reversal of) doubtful debts

-6,593

-1,739

7.02

Raw materials acquired from third parties

-2,485,835

-2,601,607

7.02.01

Costs of sales and services

-1,950,754

-2,198,768

7.02.02

Materials, electric power, outside services and other

-525,191

-381,414

7.02.03

Impairment/recovery of assets

-1,473

-21,425

7.02.04

Other

-8,417

0

7.02.04.01

Impairment of available-for-sale assets

-8,417

0

7.03

Gross value added

1,238,133

1,664,327

7.04

Retentions

-206,329

-234,661

7.04.01

Depreciation, amortization and depletion

-206,329

-234,661

7.05

Wealth created

1,031,804

1,429,666

7.06

Value added received as transfer

2,634,817

-292,728

7.06.01

Share of profits (losses) of investees

1,442,550

-291,125

7.06.02

Finance income

494,693

8,569

7.06.03

Other

697,574

-10,172

7.06.03.01

Other and exchange variation - gain

697,574

-10,172

7.07

Wealth for distribution

3,666,621

1,136,938

7.08

Wealth distributed

3,666,621

1,136,938

7.08.01

Personnel

329,522

291,687

7.08.01.01

Salaries and wages

251,291

225,733

7.08.01.02

Benefits

60,889

48,979

7.08.01.03

Severance pay fund (FGTS)

17,342

16,975

7.08.02

Taxes, fees and contributions

-277,119

210,515

7.08.02.01

Federal

-319,590

182,960

7.08.02.02

State

40,155

21,361

7.08.02.03

Municipal

2,316

6,194

7.08.03

Lenders and lessors

3,222,162

579,402

7.08.03.01

Interest

862,664

901,650

7.08.03.02

Leases

2,608

2,715

7.08.03.03

Other

2,356,890

-324,963

7.08.03.03.01

Other and exchange variation - loss

2,356,890

-324,963

7.08.04

Shareholders

392,056

55,334

7.08.04.03

Retained earnings (accumulated losses) for the period

392,056

55,334

       
 

 

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CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

ITR –– Quarterly Financial Information - March 31, 2015 – CIA SIDERURGICA NACIONAL

Version: 1

 

Consolidated Financial Statements / Balance Sheet - Assets

 

(R$ thousand)

   
       

Code

Description

Current Quarter
03/31/2015

YTD Previous Year
12/31/2014

1

Total assets

51,568,445

49,767,100

1.01

Current assets

16,314,338

15,935,502

1.01.01

Cash and cash equivalents

9,070,785

8,686,021

1.01.03

Trade receivables

2,009,697

1,753,056

1.01.04

Inventories

3,958,557

4,122,122

1.01.08

Other current assets

1,275,299

1,374,303

1.02

Non-current assets

35,254,107

33,831,598

1.02.01

Long-term receivables

4,257,164

3,598,352

1.02.01.02

Investments measured at amortized cost

42,549

34,874

1.02.01.06

Deferred taxes

3,285,500

2,616,058

1.02.01.09

Other non-current assets

929,115

947,420

1.02.02

Investments

14,250,403

13,665,453

1.02.03

Property, plant and equipment

15,782,164

15,624,140

1.02.04

Intangible assets

964,376

943,653

       

 

 

 

 

PAGE 11 of 75

 


 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

ITR –– Quarterly Financial Information - March 31, 2015 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

Consolidated Financial Statements / Balance Sheet - Liabilities

 

 

(R$ thousand)

 

 

Code

Description

Current Quarter 3/31/2015

YTD Previous Year 12/31/2014

2

Total liabilities

51,568,445

49,767,100

2.01

Current liabilities

5,522,042

6,362,938

2.01.01

Payroll and related taxes

214,427

219,740

2.01.02

Trade payables

1,555,728

1,638,505

2.01.03

Taxes payable

483,542

318,675

2.01.04

Borrowings and financing

1,745,801

2,790,524

2.01.05

Other payables

890,958

845,109

2.01.06

Provisions

631,586

550,385

2.01.06.01

Provision for tax, social security, labor and civil risks

631,586

550,385

2.02

Non-current liabilities

39,841,003

37,669,187

2.02.01

Borrowings and financing

29,375,089

27,092,855

2.02.02

Other payables

9,154,978

9,315,363

2.02.03

Deferred taxes

246,022

238,892

2.02.04

Provisions

1,064,914

1,022,077

2.02.04.01

Provision for tax, social security, labor and civil risks

239,412

195,783

2.02.04.02

Other provisions

825,502

826,294

2.02.04.02.03

Provision for environmental liabilities and asset retirement obligations

237,735

239,539

2.02.04.02.04

Pension and healthcare plan

587,767

587,755

2.03

Shareholders’ equity

6,205,400

5,734,975

2.03.01

Paid-in capital

4,540,000

4,540,000

2.03.02

Capital reserves

30

30

2.03.04

Earnings reserves

846,908

1,131,298

2.03.04.01

Legal reserve

361,641

361,641

2.03.04.02

Statutory reserve

724,243

999,243

2.03.04.09

Treasury shares

-238,976

-229,586

2.03.05

Profit /Losses

392,056

0

2.03.08

Other comprehensive income

388,153

25,140

2.03.09

Non-controlling interests

38,253

38,507

       

 

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Consolidated Financial Statements / Statements of Income

 

(R$ thousand)

   
     

 

Code

Description

Current Quarter 01/01/2015 to 03/31/2015

YTD PreviousYear 01/01/2014 to 03/31/2014

3.01

Net revenue from sales and/or services

4,010,252

4,370,878

3.02

Cost of sales and/or services

-3,025,533

-3,034,529

3.03

Gross profit

984,719

1,336,349

3.04

Operating expenses/income

-225,734

-515,899

3.04.01

Selling expenses

-300,830

-189,915

3.04.02

General and administrative expenses

-109,845

-103,853

3.04.04

Other operating income

5,962

7,713

3.04.05

Other operating expenses

-219,499

-184,341

3.04.06

Share of profits (losses) of investees

398,478

-45,503

3.05

Profit before finance income (costs) and taxes

758,985

820,450

3.06

Finance income (costs)

-869,700

-741,199

3.06.01

Finance income

56,136

38,052

3.06.02

Finance costs

-925,836

-779,251

3.06.02.01

Net exchange losses on financial instruments

-65,243

-55,216

3.06.02.02

Finance costs

-860,593

-724,035

3.07

Profit (loss) before taxes on income

-110,715

79,251

3.08

Income tax and social contribution

502,517

-27,155

3.09

Profit from continuing operations

391,802

52,096

3.11

Consolidated profit for the period

391,802

52,096

3.11.01

Attributed to owners of the Company

392,056

55,334

3.11.02

Attributed to non-controlling interests

-254

-3,238

3.99

Earnings per share - (R$/share)

   

3.99.01

Basic earnings per share

   

3.99.01.01

Common shares

0.28887

0.03796

3.99.02

Diluted earnings per share

   

3.99.02.01

Common shares

0.28887

0.03796

 

 

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Consolidated Financial Statements / Statement of Comprehensive Income

 

(R$ thousand)

 

 

Code

Description

Current Quarter 01/01/2015 to

03/31/2015

YTD PreviousYear 01/01/2014 to

03/31/2014

4.01

Consolidated profit for the period

391,802

52,096

4.02

Other comprehensive income

363,013

-470,811

4.02.01

Actuarial gains on defined benefit plan from investments in subsidiaries

0

1,710

4.02.02

Actuarial (losses) gains on defined benefit pension plan

202

0

4.02.03

Income tax and social contribution on actuarial (losses) gains on defined benefit pension plan

-77

0

4.02.04

Cumulative translation adjustments for the period

176,771

-44,326

4.02.05

Available-for-sale assets

648,403

-648,780

4.02.06

Income tax and social contribution on available-for-sale assets

-185,595

220,585

4.02.07

Impairment of available-for-sale assets

8,417

0

4.02.08

Income tax and social contribution on impairment of available-for-sale assets

-2,862

0

4.02.09

(Loss) gain on cash flow hedge accounting

-427,645

0

4.02.10

Income tax and social contribution on (loss) gain on cash flow hedge accounting

145,399

0

4.03

Consolidated comprehensive income for the period

754,815

-418,715

4.03.01

Attributed to owners of the Company

755,069

-415,477

4.03.02

Attributed to non-controlling interests

-254

-3,238

       

 

 

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Consolidated Financial Statements / Statement of Cash Flows – Indirect Method

(R$ thousand)

   

 

 

Code

Description

Current Quarter 01/01/2015 to 3/31/2015

YTD Previous Year 01/01/2014 to 3/31/2014

6.01

Net cash generated by operating activities

1,642,006

576,219

6.01.01

Cash generated from operations

2,268,532

1,121,670

6.01.01.01

Profit for the period attributable to owners of the Company

392,056

55,334

6.01.01.02

Loss for the period attributable to non-controlling interests

-254

-3,238

6.01.01.03

Charges on borrowings and financing

803,433

656,367

6.01.01.04

Charges on loans and financing granted

-5,025

-8,850

6.01.01.05

Depreciation, depletion and amortization

273,502

294,406

6.01.01.06

Share of profits (losses) of investees

-398,478

45,503

6.01.01.07

Deferred income tax and social contribution

-716,476

-96,856

6.01.01.08

Provision for tax, social security, labor, civil and environmental risks

124,830

63,089

6.01.01.09

Inflation adjustment and exchange differences, net

1,767,227

68,703

6.01.01.10

Gain on derivative transactions

1,125

3,069

6.01.01.11

Impairment of available-for-sale assets

8,417

0

6.01.01.12

Residual value of permanent assets written off

3,985

4,628

6.01.01.13

Other provisions

14,190

39,515

6.01.02

Changes in assets and liabilities

-626,526

-545,451

6.01.02.01

Trade receivables - third parties

-190,889

114,057

6.01.02.02

Trade receivables - related parties

-9,701

-62,335

6.01.02.03

Inventories

190,195

-220,191

6.01.02.04

Receivables from related parties

0

-17,124

6.01.02.05

Recoverable taxes

33,391

16,329

6.01.02.06

Judicial deposits

-5,535

-2,633

6.01.02.07

Dividends received from related parties

0

202,015

6.01.02.08

Trade payables

-118,373

210,719

6.01.02.09

Payroll and related taxes

33,168

19,989

6.01.02.10

Taxes in installments - REFIS

173,390

-64,240

6.01.02.11

Payables to related parties

1,709

-155

6.01.02.13

Interest paid

-724,617

-731,334

6.01.02.14

Interest received

12

13,563

6.01.02.15

Interest on swaps paid

0

-633

6.01.02.16

Other

-9,276

-23,478

6.02

Net cash generated by (used in) investing activities

413,490

-135,745

6.02.01

Investments

0

-5,846

6.02.02

Purchase of property, plant and equipment

-338,026

-298,490

6.02.03

Capital reduction in subsidiaries

466,758

0

6.02.04

Receipt/payment in derivative transactions

304,401

3,879

6.02.06

Purchase of intangible assets

-105

-257

6.02.07

Intercompany loans

-11,938

-3,860

6.02.08

Receipt of intercompany loans

75

168,115

6.02.09

Short-term investment, net of redeemed amount

-7,675

714

6.03

Net cash used in financing activities

-1,852,855

-104,988

6.03.01

Borrowings and financing raised

391,156

934,146

6.03.02

Redemption of borrowings

-1,597,317

-614,264

6.03.04

Dividends and interest on capital paid

-549,829

-424,870

6.03.05

Capital contribution by non-controlling shareholders

-9,390

0

6.03.06

Buyback of debt securities

-87,475

0

6.04

Exchange differences on translating cash and cash equivalents

182,123

-330,786

6.05

Increase (decrease) in cash and cash equivalents

384,764

4,700

6.05.01

Cash and equivalents at the beginning of the period

8,686,021

9,995,672

6.05.02

Cash and equivalents at the end of the period

9,070,785

10,000,372

       

 

 
 

 

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Consolidated Financial Statements / Statement of Changes in Shareholders´ Equity - 1/1/2015 to 3/31/2015

           

Code

Description

Paid-in capital

Capital reserve, granted options and treasury shares

Earnings reserve

Retained earnings

Other comprehensive income

Shareholders’ equity

Non-controlling interests

Consolidated shareholders’ equity

5.01

Opening balances

4,540,000

30

1,131,298

0

25,140

5,696,468

38,507

5,734,975

5.03

Adjusted opening balances

4,540,000

30

1,131,298

0

25,140

5,696,468

38,507

5,734,975

5.04

Capital transactions with shareholders

0

0

-284,390

0

0

-284,390

0

-284,390

5.04.04

Treasury shares acquired

0

0

-9,390

0

0

-9,390

0

-9,390

5.04.06

Dividend

0

0

-275,000

0

0

-275,000

0

-275,000

5.05

Total comprehensive income

0

0

0

392,056

363,013

755,069

-254

754,815

5.05.01

Profit for the period

0

0

0

392,056

0

392,056

-254

391,802

5.05.02

Other comprehensive income

0

0

0

0

363,013

363,013

0

363,013

5.05.02.04

Translation adjustments for the period

0

0

0

0

176,771

176,771

0

176,771

5.05.02.06

(Actuarial (losses) gains on defined benefit pension plan, net of taxes

0

0

0

0

125

125

0

125

5.05.02.07

Available-for-sale assets, net of taxes

0

0

0

0

468,363

468,363

0

468,363

5.05.02.08

(Loss) gain on hedge accounting, net of taxes

0

0

0

0

-282,246

-282,246

0

-282,246

5.07

Closing balances

4,540,000

30

846,908

392,056

388,153

6,167,147

38,253

6,205,400

 

 

 

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Consolidated Financial Statements / Statement of Changes in Shareholders´ Equity - 1/1/2014 to 03/31/2014

(R$ thousand)

               

Code

Description

Paid-in capital

Capital reserve, granted options and treasury shares

Earnings reserve

Retained earnings

Other comprehensive income

Shareholders´ Equity

Non-controlling interests

Consolidated shareholders' equity

5.01

Opening balances

4,540,000

30

2,839,568

0

716,972

8,096,570

-27,511

8,069,059

5.03

Adjusted opening balances

4,540,000

30

2,839,568

0

716,972

8,096,570

-27,511

8,069,059

5.04

Capital transactions with shareholders

0

0

-425,000

0

0

-425,000

0

-425,000

5.04.06

Dividends

0

0

-425,000

0

0

-425,000

0

-425,000

5.05

Total comprehensive income

0

0

0

55,334

-470,811

-415,477

-3,238

-418,715

5.05.01

Profit for the period

0

0

0

55,334

 

55,334

-3,238

52,096

5.05.02

Other comprehensive income

0

0

0

0

-470,811

-470,811

0

-470,811

5.05.02.04

Translation adjustments for the period

0

0

0

0

-44,326

-44,326

0

-44,326

5.05.02.07

Actuarial (losses) gains on defined benefit pension plan

0

0

0

0

1,710

1,710

0

1,710

5.05.02.08

Available-for-sale assets, net of taxes

0

0

0

0

-428,195

-428,195

0

-428,195

5.07

Closing balances

4,540,000

30

2,414,568

55,334

246,161

7,256,093

-30,749

7,225,344

 

 

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Consolidated Financial Statements / Statement of Value Added

(R$ thousand)

   
       

Code

Description

Current Quarter 01/01/2015 to 3/31/2015

YTD Previous Year 01/01/2014 to 3/31/2014

7.01

Revenues

4,752,234

5,236,997

7.01.01

Sales of products and services

4,698,184

5,189,439

7.01.02

Other revenues

61,898

49,906

7.01.04

Allowance for (reversal of) doubtful debts

-7,848

-2,348

7.02

Raw materials acquired from third parties

-3,325,485

-3,309,802

7.02.01

Costs of sales and services

-2,632,493

-2,805,092

7.02.02

Materials, electric power, outside services and other

-683,759

-481,519

7.02.03

Impairment/recovery of assets

-816

-23,191

7.02.04

Other

-8,417

0

7.02.04.01

Impairment of assets available for sale

-8,417

0

7.03

Gross value added

1,426,749

1,927,195

7.04

Retentions

-273,502

-294,406

7.04.01

Depreciation, amortization and depletion

-273,502

-294,406

7.05

Wealth created

1,153,247

1,632,789

7.06

Value added received as transfer

2,234,942

-942,712

7.06.01

Share of profits (losses) of investees

398,478

-45,503

7.06.02

Finance income

56,136

38,052

7.06.03

Other

1,780,328

-935,261

7.06.03.01

Other and exchange variation - gain

1,780,328

-935,261

7.07

Wealth for distribution

3,388,189

690,077

7.08

Wealth distributed

3,388,189

690,077

7.08.01

Personnel

463,793

393,796

7.08.01.01

Salaries and wages

367,509

311,928

7.08.01.02

Benefits

76,047

62,032

7.08.01.03

Severance pay fund (FGTS)

20,237

19,836

7.08.02

Taxes, fees and contributions

-176,470

396,581

7.08.02.01

Federal

-257,857

340,944

7.08.02.02

State

75,959

45,731

7.08.02.03

Municipal

5,428

9,906

7.08.03

Lenders and lessors

2,709,064

-152,396

7.08.03.01

Interest

377,584

814,965

7.08.03.02

Leases

3,962

4,159

7.08.03.03

Other

2,327,518

-971,520

7.08.03.03.01

Other and exchange variation - loss

2,327,518

-971,520

7.08.04

Shareholders

391,802

52,096

7.08.04.03

Retained earnings (accumulated losses) for the period

392,056

55,334

7.08.04.04

Non-controlling interests in retained earnings

-254

-3,238

 

 

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Economic Scenario

Global economic activity is showing gradual signs of a recovery. The U.S. economy continues to grow moderately, while most of the European countries managed to reverse in 2014, the shrinkage of recent years.  The emerging economies, however, have been presenting a slower growth pace.

 

The global Purchasing Managers Index (PMI) closed March at 53.5 points. The IMF expects global GDP growth of 3.5% this year and 3.7% in 2016.

 

USA

 

The U.S. activity indicators are pointing to a moderate economic growth. GDP growth of 0.2% in 1Q15 was negatively impacted by the rigorous winter and port strikes on the west coast, which jeopardized exports. The FED estimates 2015 GDP growth of between 2.3% and 2.7%.

 

Although industrial production fell by 0.6% in March over February, the 12-month figure moved up by 2.0%, with installed capacity use of 78.4%.

 

Unemployment fell to 5.5% in March, 1.1 p.p. down on the same month last year and within the 5.2% to 5.5% band considered by most of the FOMC (the FED’s Monetary Policy Committee) to be full employment.

 

In the 12 months through March, the Consumer Price Index dipped by 0.2%, well below the FOMC’s target of 2% p.a.

 

Given this scenario, at its last meeting in April the FOMC deemed it appropriate to maintain interest rates at between 0 and 0.25% until the labor market improves and inflation converges towards the 2% p.a. target.

 

Europe

 

The Eurozone is showing signs of a recovery in activity, with the adoption of an expansionist monetary policy by the ECB. The block’s compound PMI reached 54.0 points in March 2015, versus 53.3 points in February, while industrial production increased by 1.1% in February over previous month. 

 

According to Eurostat, unemployment rate was 11.3% in March 2015, flat over the previous month, but below the 11.7% recorded in March of last year. Of the member nations, Germany posted the lowest rate, with 4.7%, while Greece and Spain had the highest, with 25.7% and 23%, respectively.

 

Also according to Eurostat, retail sales fell by 0.2% in February 2015 over January but moved up by 3% year-on-year.  

 

In the UK, manufacturing PMI closed March at 54.4 points, the highest figure for the last eight months. According to the British Treasury, the consensus of estimates points to GDP growth of 2.7% in 2015. The consumer price index edged up by 0.3% in 1Q15 over 1Q14.

 

Asia

 

China has been showing signs of a slowdown in growth. Preliminary figures from the Chinese Bureau of Statistics indicate GDP expansion of 7.0% in 1Q15, versus 7.4% in 1Q14, but still within the target defined by the government. Manufacturing PMI, disclosed by HSBC, has been signaling a deterioration in economic conditions since December 2014 and closed March at 49.6 points.

 

The growth rate of Investments in fixed assets fell from 17.6% in 1Q14 to 13.5% in 1Q15, while industrial production growth of 5.6% in the 12 months through March 2015 was below the average of 7.9% recorded in the previous 12 months.

 

The deceleration in the construction industry was even more apparent. According to the National Bureau of Statistics, sector investments increased by 8.5% in 1Q15, close to half the 16.8% recorded in 1Q14.

 

 

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Given this scenario, the Chinese government once again reduced the reserve requirements rate by 1 p.p. and further monetary and fiscal stimuli are expected ahead.

 

Japan continued to stage a moderate recovery. Manufacturing PMI fell to 50.3 points in March 2015 from 51.6 points in the previous month, while retail sales declined from 1.3% in January 2015 over December 2014. Despite the government measures to stimulate the economy, inflation remained below the target of 2% p.a. determined by the Japanese Central Bank, whose Monetary Policy Committee estimates GDP growth of between 1.5% and 2.1% in 2015.

 

Brazil

 

Against a background of political uncertainty, Brazil’s economy slowed, accompanied by increased inflation, higher interest rates and the depreciation of the currency.

 

GDP in 2014 remained virtually flat over the previous year, while in the 12 months through February 2015, the seasonally-adjusted Central Bank Economic Activity Index (IBC-Br) fell by 0.6%.

 

According to a survey by the CNI (National Confederation of Industry), industrial production fell in March, with the index closing at 48.2 points, under 50 points.

 

The Central Bank’s FOCUS report estimates GDP shrinkage of 1.18% in 2015, followed by growth of 1.0% in 2016.

 

Inflation measured by the IPCA consumer price index increased by 1.32% in March, giving 8.13% in 12 months, above the ceiling of the inflationary target defined by the Monetary Policy Committee (COPOM). As a result, the COPOM has been maintaining a restrictive monetary policy, raising the Selic benchmark interest rate by 0.5 p.p. to 13.25% p.a. at its last meeting in April. The FOCUS report expects 2015 inflation of 8.26%, with a Selic of 13.50% at year-end.

 

On the foreign exchange front, the dollar appreciated by 20.8% against the real in 1Q15, closing March at R$3.208.

 

Macroeconomic Projections

 

 

2015

2016

IPCA (%)

8.26

5.60

Commercial dollar (final) – R$

3.20

3.30

SELIC (final - %)

13.50

11.50

GDP (%)

-1.18

1.00

Industrial Production (%)

-2.50

1.50

Source: FOCUS BACEN                       Base: April 30, 2015

 

Net Revenue

Consolidated net revenue totaled R$4,010 million in 1Q15, 5.0% up on the previous quarter, chiefly due to higher net revenue from the steel segment, which offset the reduction in revenue from the mining segment. 

Cost of Goods Sold (COGS)

In 1Q15, consolidated COGS came to R$3,025 million, 4% more than in 4Q14, mainly due to lower steel product sales volume.

 

 

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Gross Profit

Gross profit totaled R$985 million in 1Q15, 7% up on the previous three months, primarily due to the gross profit from the steel segment.

Selling, General, Administrative and Other Operating Expenses

SG&A expenses totaled R$411 million in 1Q15, 9% down on the R$450 million recorded in 4Q14, mainly due to lower expenses with iron ore freight, given the Company’s sales strategy.

 

Other Operating Expenses (Revenues) amounted to R$214 million in 1Q15, 28% less than the R$295 million posted in quarter before, basically due to the non-recurring negative impact of R$133 million in 4Q14, related to the reclassification of accrued losses from investments in shares recorded as available for sale, partially offset by the addition of tax provisions of R$34 million in 1Q15.

EBITDA

The Company uses Adjusted EBITDA to measure the segments' performance and operating cash flow capacity. It comprises net income before the net financial result, income and social contribution taxes, depreciation and amortization, results from investees and other operating revenue (expenses).

 

Adjusted EBITDA includes the Company’s proportional interest in Namisa, MRS Logística and CBSI.

 

Adjusted EBITDA totaled R$911 million in 1Q15, 10% down on 4Q14, basically due to the EBITDA from the steel and mining segments. The adjusted EBITDA margin EBITDA came to 22%, 3 p.p. down on the previous quarter.

 

Equity Result

The 1Q15 equity result totaled R$398 million, 62%, or R$152 million more than in 4Q14, essentially due to the positive result from the joint controlled entity, Namisa.

Financial Result and Net Debt

The 1Q15 net financial result was negative by R$870 million, chiefly due to the following factors:

 

·         Interest on loans and financing totaling R$803 million;

·         Expenses of R$11 million with the monetary restatement of tax installments;

·         Other financial expenses totaling R$47 million;

·         Monetary and exchange variations amounting to R$65 million;

 

These negative effects were partially offset by consolidated financial revenues of R$56 million.

 

Gross debt, net debt and the net debt/EBITDA ratio presented below reflect the Company’s proportional interest in Namisa, MRS Logística and CBSI, as well as the impact from the partial spin-off of Transnordestina Logística S/A.

 

On March 31, 2015, consolidated net debt came to R$20.0 billion, R$1.1 billion more than the R$18.9 billion recorded at the end of 4Q14, mainly due to:

 

 

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·         Dividend payments of R$0.5 billion;

·         Investments of R$0.4 billion in fixed assets;

·         A R$0.7 billion effect related to the cost of debt;

·         Net foreign exchange variation of R$0.4 billion.

 

These effects were partially offset by 1Q15 EBITDA of R$0.9 billion.

 

The net debt/EBITDA ratio based on LTM adjusted EBITDA closed the first quarter at 4.8x, 0.8x up on the ratio recorded at the end of the previous quarter.


Net Income

CSN posted consolidated net income of R$392 million in 1Q15, R$325 million higher than in 4Q14, primarily due to the upturn in gross profit, reduced operating expenses, the improved equity result and the timing difference between the tax and accounting treatment of the foreign exchange variation.

 

Capex

Investments reflect the Company’s proportional interest in Namisa, MRS Logística and CBSI. The Company has ceased consolidating its interest in Transnordestina Logística S/A, due to the latter’s partial spin-off at the end of 2013, and the consequent entry into effect of the new shareholders’ agreement.

 

CSN invested R$407 million in 1Q15, allocated as follows:

 

ü Mining: R$123 million;

ü Steel: R$121 million;

ü Cement: R$90 million;

ü Logistics: R$73 million.

Working Capital

At the close of 1Q15, working capital allocated to the Company’s businesses totaled R$2.65 billion, very close to the end-of-2014 figure, given that the increase in accounts receivable and the reduction in the suppliers line were virtually offset by the reduction in inventories, due to the sending of finished products to the subsidiaries abroad and the upturn in taxes payable. The inventory turnover period narrowed by 11 days, offsetting the 5-day increase in the average receivables period and the 6-day reduction in the average supplier payment period.

 

 

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WORKING CAPITAL (R$ MM)

1Q14

4Q14

1Q15

Change

1Q15 x 4Q14

Change

1Q15 x 1Q14

Assets

4,126

5,006

5,153

147

1,027

Accounts Receivable

1,621

1,651

1,901

250

280

Inventory (*)

2,415

3,296

3,115

-181

700

Advances to Taxes

89

59

137

78

48

Liabilities

1,616

2,373

2,499

126

883

Suppliers

1,105

1,672

1,589

-83

484

Salaries and Social Contribution

196

340

374

34

178

Taxes Payable

286

338

512

174

226

Advances from Clients

30

23

24

1

(5)

Working Capital

2,510

2,633

2,654

22

145

 

 

 

 

 

 

TURNOVER RATIO
Average Periods

1Q14

4Q14

1Q15

Change

1Q15 x 4Q14

Change

1Q15 x 1Q14

Receivables

28

31

36

5

8

Supplier Payment

33

53

47

-6

14

Inventory Turnover

72

104

93

-11

21

Cash Conversion Cycle

67

82

82

0

15

(*) Inventory - includes "Advances to Suppliers" and does not include "Supplies".

 

 

 

                      

Results by Segment

The Company maintains integrated operations in five business segments: steel, mining, logistics, cement and energy. The main assets and/or companies comprising each segment are presented below:

 

Steel

 

Mining

 

Logistics

 

Cement

 

Energy

                   

Usina Presidente Vargas

 

Casa de Pedra

 

Railways:

 

Volta Redonda

 

CSN Energia

Porto Real

 

Namisa (60%)

 

-MRS

 

Arcos

 

Itasa

Paraná

 

Tecar

 

-FTL

 

 

 

 

LLC

 

ERSA

 

 

 

 

 

 

Lusosider

 

 

 

 

 

 

 

 

Prada (Distribution and

 

 

 

Port:

 

 

 

 

Packaging)

 

 

 

-Sepetiba Tecon

 

 

 

 

Metalic

 

 

 

 

 

 

 

 

Long Steel (UPV)

 

 

 

 

 

 

 

 

SWT

 

 

 

 

 

 

 

 

 

The information on CSN’s five business segments is derived from the accounting data, together with allocations and the apportionment of costs among the segments. Results by segment reflect the Company’s proportional interest in Namisa, MRS Logística and CBSI, as well as the full consolidation of FTL.

 

Net Revenue by Segment – 1Q15 (R$ million)  

 


 

 

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Adjusted EBITDA by Segment – 1Q15 (R$ million)

     

 

 

Results by Segment

 

R$ million

                              

1Q15

Consolidated Results

 

Steel

 

Mining

 

Logistics (Port)

 

Logistics (Railways)

 

Energy

 

Cement

 

Corporate/
Eliminations

 

Consolidated

Net Revenue

 

3,123

 

658

 

47

 

251

 

64

 

101

 

(233)

 

4,010

Domestic Market

  

2,011

 

38

 

47

 

251

 

64

 

101

 

(271)

 

2,241

Foreign Market

  

1,112

 

620

                 

38

 

1,769

Cost of Goods Sold

  

(2,366)

 

(567)

 

(31)

 

(180)

 

(47)

 

(67)

 

231

 

(3,026)

Gross Profit

 

758

 

91

 

16

 

71

 

17

 

34

 

(2)

 

985

Selling, General and Administrative Expenses

 

(232)

 

(21)

 

(6)

 

(23)

 

(6)

 

(15)

 

(108)

 

(411)

Depreciation

 

158

 

86

 

3

 

45

 

4

 

9

 

(41)

 

264

Proportional EBITDA of Jointly Controlled Companies

                         

73

 

73

Adjusted EBITDA

  

683

 

156

 

13

 

93

 

15

 

28

 

(78)

 

911

 

 

R$ million

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4Q14

Consolidated Results

 

Steel

 

Mining

 

Logistics (Port)

 

Logistics (Railways)

 

Energy

 

Cement

 

Corporate/
Eliminations

 

Consolidated

Net Revenue

 

2,734

 

831

 

56

 

267

 

76

 

109

 

(254)

 

3,820

Domestic Market

 

1,971

 

54

 

56

 

267

 

76

 

109

 

(286)

 

2,247

Foreign Market

 

763

 

777

 

-

 

-

 

-

 

-

 

32

 

1,573

Cost of Goods Sold

 

(2,021)

 

(734)

 

(40)

 

(173)

 

(47)

 

(72)

 

187

 

(2,899)

Gross Profit

 

714

 

98

 

16

 

95

 

29

 

37

 

(67)

 

921

Selling, General and Administrative Expenses

 

(192)

 

(12)

 

(6)

 

(38)

 

(5)

 

(17)

 

(181)

 

(450)

Depreciation

 

201

 

113

 

3

 

49

 

4

 

10

 

(43)

 

338

Proportional EBITDA of Jointly Controlled Companies

 

-

 

-

 

-

 

-

 

-

 

-

 

202

 

202

Adjusted EBITDA

 

723

 

199

 

13

 

106

 

28

 

30

 

(89)

 

1,010

 

 

Steel

Scenario

 

According to the World Steel Association (WSA), global crude steel production totaled 400 million tonnes in 1Q15, 1.8% less than in the same period last year, with China, responsible for 200 million tonnes, recording a 1.7% downturn. Existing global capacity use fell by 1 p.p. in March/2015 over the close of 2014 to 71.6%.

 

The WSA expects apparent steel consumption to edge up by 0.5% worldwide in 2015 and dip by 0.5% in China.

 

 

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According to the Brazilian Steel Institute (IABr), domestic crude steel production came to 8.4 million tonnes in 1Q15, 0.7% up on 1Q14, while rolled flat output totaled 6.6 million tonnes, up by 4.4% in the same period last year.

 

Apparent domestic steel product consumption amounted to 6.1 million tonnes in 1Q15, 2.7% less than in 1Q14, while sales of rolled flat and long steel, both produced in the country totaled 5.1 million tonnes, down by 5.1% over 1Q14.

 

On the other hand, imports of long and flat steel came to 1.0 million tonnes in 1Q15, 13% more than in 1Q14, while exports climbed by 39% to 2.8 million tonnes.

 

The IABr estimates domestic sales of 19.1 million tonnes, 8% less than in 2014, accompanied by a 8% decline in apparent consumption to 22.7 million tonnes. On the other hand, imports are expected to fall by 6% to 3.6 million tonnes, with exports increasing by 38% to 13.5 million tonnes.

 

Automotive

 

According to ANFAVEA (the Auto Manufacturers’ Association), vehicle production totaled 663,000 units in 1Q15, 16% down on 1Q14, while domestic sales in 1Q15 came to 674,000 units, down by 17% in the same period last year, reflecting the slowdown in domestic economic activity. Also according to ANFAVEA, exports amounted to 79,000 units in 1Q15, up by 6% over the same quarter last year.

 

FENABRAVE (the Vehicle Distributors’ Association), on the other hand, estimated a 15% year-on-year reduction in sales in 1Q15, led by the truck segment with a decline of 36%.

 

ANFAVEA expects vehicle production and sales to fall by 10% and 13%, respectively, in 2015, accompanied by a 1% upturn in exports.

 

Construction

 

According to SECOVI (the São Paulo Residential Builders’ Association), new residential real estate launches in the city of São Paulo totaled 1,418 units in the first two months of 2015, 4.8% up on the 1,353 units recorded in the same period last year. In the 12 months through February 2015, however, there was a 1% year-on-year reduction to 31,679 units.

 

According to ABRAMAT (the Construction Material Manufacturers’ Association), domestic sales of building materials fell by 8.8% in 1Q15 over 1Q14, reflecting reduced building activity in the real estate and infrastructure areas. The Association expects sales to inch up by 1% in 2015.

 

Home Appliances

 

Production by the home appliance industry fell by 10% in the first two months of 2015 over the same period the year before, due to the reduced pace of economic activity.

 

Eletros (the Home Appliance and Consumer Electronics Manufacturers’ Association) expects a 15% decline in the sale of stoves, automatic washing machines and refrigerators in 1Q15.

 

Distribution

 

According to INDA (the Brazilian Steel Distributors’ Association), flat steel purchases by distributors in 1Q15 totaled 1.0 million tonnes, 6.1% down year-on-year.

 

Domestic sales by the associated network came to 982,000 tonnes, 16% less than in 1Q14. On the other hand, inventories closed March at 1.1 million tonnes, 1.8% up on the previous month and representing 3.2 months of sales.

 

INDA expects domestic flat steel sales by distributors to fall by 5% in 2015.

 

 

 

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Sales Volume

 

CSN sold 1.4 million tonnes of steel in 1Q15, 12% up on 4Q14. Of this total, 63% went to the domestic market, 34% were sold by overseas subsidiaries and 3% went to exports.

Domestic Sales Volume

Domestic steel sales totaled 881,000 tonnes in 1Q15, 2% more than in 4Q14.

 

Foreign Sales Volume       

Foreign steel sales amounted to 526,000 tonnes in 1Q15, 36% up on the previous three months. Of this total, the overseas subsidiaries sold 476,000 tonnes, 212,000 tonnes of which by SWT, 84,000 tonnes by Lusosider and 180,000 tonnes by LLC, continuing with the Company’s strategy begun in 4Q14 of increasing its sales abroad. Direct exports came to 50,000 tonnes in 1Q15.

Prices

Net revenue per tonne averaged R$2,162 in 1Q15, 1% higher than the 4Q14 average.

 

Net Revenue

 

Net revenue from steel operations totaled R$3,123 million, a 14% improvement over 4Q14, chiefly due to the upturn in sales volume.

 

Cost of Goods Sold (COGS)

 

Steel segment COGS came to R$2,366 million in 1Q15, 17% up on the previous quarter, also mainly due to the increase in sales volume.

 

Adjusted EBITDA

 

Adjusted steel segment EBITDA totaled R$683 million in 1Q15, with an adjusted EBITDA margin of 22%.

 

Production (Parent Company)

 

The Presidente Vargas Steelworks (UPV) produced 1.1 million tonnes of crude steel in 1Q15, 5% more than in 4Q14, while consumption of slabs purchased from third parties fell by 29% to 69,000 tonnes.

 

Production of rolled steel came to 1.0 million tonnes, virtually flat over the previous quarter.

 

Flat Steel Production (in Thousand t)

1Q14

4Q14

1Q15

Change

1Q15 x 1Q14

1Q15 x 4Q14

Crude Steel - P. Vargas Mill (flat steel)

1,098

1,063

1,115

2%

5%

Purchased Slabs from Third Parties

102

97

69

-32%

-29%

Total Crude Steel

1,200

1,160

1,184

-1%

2%

Total Rolled Products

1,054

1,051

1,020

-3%

-3%

 

 

 

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Production Costs (Parent Company)

 

In 1Q15, the Presidente Vargas Steelworks’ total production costs came to R$1.55 billion, 3% up on 4Q14, chiefly due the R$84 million rise in expenses with reducing agents as a result of the devaluation of the real, and higher consumption of imported coke due to the revamp of the coke plants, partially offset by the R$42 million reduction in depreciation expenses as a result of the revision of the working life of fixed assets carried out at the end of 2014.  

 

 

 

 

 

STEEL PRODUCTION COSTS (Parent Company)

 

Mining

 

 

Scenario

 

In 1Q15, prices in the seaborne iron ore market continued to fall, reaching their lowest levels since the index was created in mid-2008. On the supply side, high output from the main Australian mining companies and the resilience of the high-cost producers were chiefly responsible for the decline. On the demand side, the slowdown on the real estate sector and the reduced pace of industrial activity in China jeopardized local demand for steel, limiting steel production and iron ore consumption growth.

 

Given this scenario, the Platts Fe62% CFR China index averaged US$62.40/dmt in 1Q15, 16% down on the 4Q14 average. The iron ore quality premium varied between US$1.10/dmt and US$1.30/dmt per 1% of Fe content, while freight costs on the Tubarão/Qingdao route fell by a hefty 44% over 4Q14, averaging US$10.56/wmt.

 

Considering the significant drop in seaborne iron ore prices , CSN is focused on several measures to reduce its production costs , including extraction and processing of seaborne iron ore and port and freight costs, to remain among the most competitive mining companies of the world.

 

Brazil exported 79 million tonnes of iron ore in the first quarter, 17% down on 4Q14.

 

 

 

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Iron Ore Sales

Iron ore sales totaled 5.4 million tonnes1 in 1Q15, 28% less than in the previous quarter, given the optimization of the product mix. Of this total, 4.8 million tonnes came from Casa de Pedra mine and 0.6 million tonnes from Namisa1. The Tecar terminal shipped 6.3 million tonnes, while own consumption came to 1.4 million tonnes.

1 Sales volumes include 100% of the stake in NAMISA.

Net Revenue

Net revenue from mining operations came to R$658 million in 1Q15, 21% down on the quarter before, due to the decline in international iron ore prices and the reduction in sales volume, partially offset by the devaluation of the real and improvement in the product mix.

 

Cost of Goods Sold (COGS)

Mining COGS totaled R$567 million in 1Q15, 23% less than in 4Q14 due to the cost reduction programs implemented by the Company, lower costs with iron ore purchases from third-parties, and the reduction in sales volume.

 

Adjusted EBITDA

Adjusted first-quarter EBITDA came to R$156 million, 22% down on 4Q14, with an adjusted EBITDA margin of 24%, identical to the previous quarter’s figure. 

Logistics

 

Scenario

Port Logistics

 

According to ANTAQ (National Waterway Transport Agency), Brazil’s port installations handled around 969 million tonnes in 2014, 4.3% up on the year before. Bulk solids totaled 590 million tonnes and containers came to 9.3 million TEUs1, 3.7% and 4.7% more, respectively, than in 2013.

1 TEU (Twenty‐Foot Equivalent Unit) – transportation unit equivalent to a standard 20-feet intermodal container

 

Analysis of Results

Railway Logistics

 

Net revenue from railway logistics totaled R$251 million in 1Q15, COGS came to R$180 million and adjusted EBITDA amounted to R$93 million, with an adjusted EBITDA margin of 37%.

 

Port Logistics

In the first quarter, net revenue from port logistics came to R$47 million, COGS totaled R$31 million and adjusted EBITDA amounted to R$13 million, with an adjusted EBITDA margin of 28%.

 

Cement

 

Scenario

 

According to the IBGE’s Monthly Industrial Survey, Brazilian cement production in the first two months of 2015 fell by 8.9% year-on-year, chiefly due to the impacts of the slowdown in economic activity.

 

Analysis of Results

 

In 1Q15, cement sales totaled 525,000 tonnes, 4% down on 4Q14 due to sales seasonality, but 7% up on 1Q14. Net revenue came to R$101 million and COGS amounted to R$66 million, generating adjusted EBITDA of R$28 million and an adjusted EBITDA margin of 28% in 1Q15, a 1 p.p. improvement over 4Q14.

 

 

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Energy

Scenario

 

According to the Energy Research Company (EPE), Brazilian electricity consumption totaled 121 TWh in 1Q15, 0.6% down year-on-year. In 1Q15, the commercial and residential segments posted respective growth of 1.6% and 1.4%, while the industrial segment recorded a 3.9% decline.

 

Analysis of Results

 

In the first quarter, net revenue from the energy segment amounted to R$64 million and COGS totaled R$47 million, generating adjusted EBITDA of R$15 million and an adjusted EBITDA margin of 24%.

Capital Market

 

CSN’s shares appreciated by 5% in 1Q15, while the IBOVESPA moved up by 2% in the same period. Daily traded volume in CSN’s shares on the BM&F Bovespa averaged around R$30 million. On the NYSE, CSN’s ADRs fell by 13%, versus the Dow Jones’ 0.3% decline. On the NYSE, daily traded volume of CSN’s ADRs averaged US$5 million.

 

Capital Markets - CSNA3 / SID
  1Q15 
N# of shares  1,387,524 
Market Capitalization   
Closing price (R$/share)  5.43 
Closing price (US$/ADR)  1.68 
Market Capitalization (R$ million)  7,534 
Market Capitalization (US$ million)  2,331 
Total return including dividends and interest on equity   
CSNA3  5% 
SID  -13% 
Ibovespa  2% 
Dow Jones  -0.3% 
Volume   
Average daily (thousand shares)  5,879 
Average daily (R$ Thousand)  30,397 
Average daily (thousand ADRs)  2,971 
Average daily (US$ Thousand)  5,329 
Source: Economática   

 

 

 

 

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 (Expressed in thousands of reais – R$, unless otherwise stated)

 

1.     DESCRIPTION OF BUSINESS

 

Companhia Siderúrgica Nacional “CSN”, also referred to as the Company or Parent Company, is a publicly-held company incorporated on April 9, 1941, under the laws of the Federative Republic of Brazil (Companhia Siderúrgica Nacional, its subsidiaries, joint ventures, joint operations and associates collectively referred to herein as the "Group”). The Company’s registered office is located in São Paulo, SP, Brazil.

                                                               

CSN has shares listed on the São Paulo Stock Exchange (BM&F BOVESPA) and the New York Stock Exchange (NYSE). Accordingly, it reports its information to the Brazilian Securities Commission (CVM) and the U.S. Securities and Exchange Commission (SEC).

 

The Group's main operating activities are divided into five (5) operating segments as follows:

 

·       Steel:

 

The Company’s main industrial facility is the Presidente Vargas Steel Mill (“UPV”), located in the city of Volta Redonda, State of Rio de Janeiro. This segment consolidates the operations related to the production, distribution and sale of flat steel, long steel, metallic containers and galvanized steel. In addition to the facilities in Brazil, CSN has operations in the United States, Portugal and Germany aimed at gaining markets and performing excellent services for final consumers. Its steels are used in the home appliances, civil construction and automobile industries. CSN holds the concession to operate TECAR a solid bulk terminal, one of the four terminals that form the Port of Itaguai, located in Rio de Janeiro. Imports of coal and coke are made through this terminal.

 

·       Mining:

 

The production of iron ore is developed in the city of Congonhas, in the State of Minas Gerais. It further mines tin in the State of Rondônia to supply the needs of UPV, with the excess of these raw materials being sold to subsidiaries and third parties.

 

Iron ore is substantially sold in the international market, especially in Europe and Asia. The prices in force in these markets are historically cyclical and subject to significant fluctuations over short periods as a result of many factors related to global demand, to the strategies adopted by major steel producers and to the exchange rate. All these factors are beyond the Company's control. The outflow of the ore is done by TECAR.

 

 

·       Cement:

 

CSN entered the cement market boosted by the synergy between this new activity and its already existing businesses. Next to the Presidente Vargas Steel Mill in Volta Redonda (RJ), it installed a new business unit: CSN Cimentos, which produces CP-III type cement by using slag produced by the UPV blast furnaces in Volta Redonda. It also explores limestone and dolomite at the Arches drive in the State of Minas Gerais, to supply the needs of UPV and of the cement plant.

 

·       Logistics

 

Railroads:

 

CSN has equity interests in three railroad companies: MRS Logística S. A., which manages the former Southeast Railway System of Rede Ferroviária Federal S.A., Transnordestina Logística S. A. (“TLSA”) and FTL - Ferrovia Transnordestina Logística S.A. (“FTL”), which operate the Northeast Railway System of RFFSA, in the States of Maranhão, Piauí, Ceará, Rio Grande do Norte, Paraíba, Pernambuco and Alagoas, with TLSA being responsible for the sections of Missão Velha - Salgueiro, Salgueiro - Trindade, Trindade - Eliseu Martins, Salgueiro - Porto de Suape and Missão Velha - Porto de Pecém (Railway System II) and FTL being responsible for the sections of São Luiz - Mucuripe, Arrojado - Recife, Itabaiana - Cabedelo, Paula Cavalcante - Macau and Propriá - Jorge Lins (Railway System I).

 

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Ports:

 

In the State of Rio de Janeiro, by means of its subsidiary Sepetiba Tecon S. A., the Company operates the Container Terminal (Tecon) at the Itaguaí Port.  Located in the Bay of Sepetiba, this port has privileged highway, railroad and maritime access.

 

Tecon handles the shipments of CSN steel products, movement of containers, as well as storage, consolidation and deconsolidation of cargo.

 

·       Energy:

 

As energy is fundamental in its production process, the Company has assets for generation of electric power to guarantee its self-sufficiency.

 

Note 23 - Segment Information provides a breakdown of financial information by business segment of CSN

 

 

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

2.a) Basis of preparation

 

The individual and consolidated condensed interim financial statements have been prepared and are being presented in accordance with the International Accounting Standards (IAS 34 – Interim Financial Reporting) issued by the International Accounting Standards Board (IASB), which correlate in Brazil is the CPC 21 (R1) (Interim Financial Statements and Consolidated Interim Financial Statements) issued by the CPC (Accounting Pronouncements Committee) and approved by CVM (Brazilian Securities Commission).

 

The significant accounting policies applied in these condensed interim financial statements are consistent with the policies described in Note 2 to the Company's financial statements for the year ended December 31, 2014, filed with the CVM.

 

These condensed interim financial statements do not include all requirements of annual or full financial statements and, accordingly, should be read together with the Company's financial statements for the year ended December 31, 2014.

 

Therefore, in these condensed interim financial statements the following notes were not repeated, either due to redundancy or to relevance in relation to those already presented in the annual financial statements:

 

Note 02 – Summary of significant accounting policies

Note 25 – Employee benefits

Note 27 - Commitments

 

The individual and consolidated condensed interim financial statements were approved by the Board of Directors on May 4, 2015.

 

2.b) Basis of presentation

 

The consolidated condensed interim financial statements are presented in Brazilian reais (R$), which is the Company’s functional currency and the Group’s presentation currency.

 

Transactions in foreign currencies are translated into the functional currency using the exchange rates in effect at the dates of the transactions or valuation on which items are remeasured. The asset and liability balances are translated at the exchange rate in effect at the end of the reporting period. As of March 31, 2015, US$1 is equivalent to R$3.2080 (R$2.6562 as of December 31, 2014), €1 is equivalent to R$3.4457 (R$3.2270 as of December 31, 2014).

 

 

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2.c) Basis of consolidation

 

The accounting practices were evenly applied to all consolidated companies. The consolidated condensed interim financial statements for the period ended March 31, 2015 and the year ended December 31, 2014 include the following direct and indirect subsidiaries and jointly controlled entities, as well as the exclusive funds as described below:

 

·           Companies

 

   

Equity interests (%)

   

Companies

 

3/31/2015

 

12/31/2014

 

Core business

             

Direct interest in subsidiaries: full consolidation

           

CSN Islands VII Corp.

 

100.00

 

100.00

 

Financial transactions

CSN Islands IX Corp.

 

100.00

 

100.00

 

Financial transactions

CSN Islands X Corp.

 

100.00

 

100.00

 

Financial transactions

CSN Islands XI Corp.

 

100.00

 

100.00

 

Financial transactions

CSN Islands XII Corp.

 

100.00

 

100.00

 

Financial transactions

CSN Minerals S.L.U.

 

100.00

 

100.00

 

Equity interests

CSN Export Europe, S.L.U.

 

100.00

 

100.00

 

Financial transactions and equity interests

CSN Metals S.L.U.

 

100.00

 

100.00

 

Equity interests and financial transactions

CSN Americas S.L.U.

 

100.00

 

100.00

 

Equity interests and financial transactions

CSN Steel S.L.U.

 

100.00

 

100.00

 

Equity interests and financial transactions

TdBB S.A (*)

 

100.00

 

100.00

 

Dormant company

Sepetiba Tecon S.A.

 

99.99

 

99.99

 

Port services

Mineração Nacional S.A.

 

99.99

 

99.99

 

Mining and equity interests

Companhia Florestal do Brasil

 

99.99

 

99.99

 

Reforestation

Estanho de Rondônia S.A.

 

99.99

 

99.99

 

Tin mining

Cia Metalic Nordeste

 

99.99

 

99.99

 

Manufacture of containers and distribution of steel products

Companhia Metalúrgica Prada

 

99.99

 

99.99

 

Manufacture of containers and distribution of steel products

CSN Cimentos S.A.

 

100.00

 

100.00

 

Cement manufacturing

CSN Gestão de Recursos Financeiros Ltda. (*)

 

99.99

 

99.99

 

Dormant company

Congonhas Minérios S.A.

 

99.99

 

99.99

 

Mining and equity interests

CSN Energia S.A.

 

99.99

 

99.99

 

Sale of electric power

FTL - Ferrovia Transnordestina Logística S.A.

 

88.41

 

88.41

 

Railroad logistics

             

Indirect interest in subsidiaries: full consolidation

 

 

 

 

 

 

Companhia Siderúrgica Nacional LLC

 

100.00

 

100.00

 

Steel

CSN Europe Lda.

 

100.00

 

100.00

 

Financial transactions, product sales and equity interests

CSN Ibéria Lda.

 

100.00

 

100.00

 

Financial transactions, product sales and equity interests

Lusosider Projectos Siderúrgicos S.A.

 

99.94

 

99.94

 

Equity interests and product sales

Lusosider Aços Planos, S. A.

 

99.99

 

99.99

 

Steel and equity interests

CSN Acquisitions, Ltd.

 

100.00

 

100.00

 

Financial transactions and equity interests

CSN Resources S.A.

 

100.00

 

100.00

 

Financial transactions and equity interests

CSN Holdings (UK) Ltd

 

100.00

 

100.00

 

Financial transactions and equity interests

CSN Handel GmbH

 

100.00

 

100.00

 

Financial transactions, product sales and equity interests

Companhia Brasileira de Latas

 

100.00

 

100.00

 

Sale of cans and containers in general and equity interests

Rimet Empreendimentos Industriais e Comerciais S. A.

 

100.00

 

100.00

 

Production and sale of steel containers and forestry

Companhia de Embalagens Metálicas MMSA

 

99.67

 

99.67

 

Production and sale of cans and related activities

Companhia de Embalagens Metálicas - MTM

 

99.67

 

99.67

 

Production and sale of cans and related activities

CSN Steel Holdings 1, S.L.U.

 

100.00

 

100.00

 

Financial transactions, product sales and equity interests

CSN Steel Holdings 2, S.L.U.

 

100.00

 

100.00

 

Financial transactions, product sales and equity interests

Stalhwerk Thüringen GmbH

 

100.00

 

100.00

 

Production and sale of long steel and related activities

CSN Steel Sections UK Limited (*)

 

100.00

 

100.00

 

Dormant company

CSN Steel Sections Polska Sp.Z.o.o

 

100.00

 

100.00

 

Financial transactions, product sales and equity interests

CSN Asia Limited

 

100.00

 

100.00

 

Commercial representation

             

Direct interest in joint operations: proportionate consolidation

 

 

 

 

 

 

Itá Energética S.A.

 

48.75

 

48.75

 

Electric power generation

CGPAR - Construção Pesada S.A.

 

50.00

 

50.00

 

Mining support services and equity interests

Consórcio da Usina Hidrelétrica de Igarapava

 

17.92

 

17.92

 

Electric power consortium

             

Direct interest in joint ventures: equity method

 

 

 

 

 

 

Nacional Minérios S.A.

 

60.00

 

60.00

 

Mining and equity interests

MRS Logística S.A.

 

27.27

 

27.27

 

Railroad transportation

Aceros Del Orinoco S.A.

 

31.82

 

31.82

 

Dormant company

CBSI - Companhia Brasileira de Serviços de Infraestrutura

 

50.00

 

50.00

 

Provision of services

Transnordestina Logística S.A.

 

62.64

 

62.64

 

Railroad logistics

             

Indirect interest in joint ventures: equity method

 

 

 

 

 

 

Namisa International Minérios SLU

 

60.00

 

60.00

 

Financial transactions, product sales and equity interests

Namisa Europe, Unipessoal Lda.

 

60.00

 

60.00

 

Equity interests and sales of products and minerals

Namisa Handel GmbH

 

60.00

 

60.00

 

Financial transactions, product sales and equity interests

MRS Logística S.A.

 

6.00

 

6.00

 

Railroad transportation

Namisa Asia Limited

 

60.00

 

60.00

 

Commercial representation

             

Direct interest in associates: equity method

 

 

 

 

 

 

Arvedi Metalfer do Brasil S.A.

 

20.00

 

20.00

 

Metallurgy and equity interests

(*) Dormant companies. Therefore, they were not presented in the Note 7.a, in which are disclosed only the companies accounted for under the equity method.

 

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·           Exclusive funds

   

Equity interests (%)

   

Exclusive funds

 

3/31/2015

 

12/31/2014

 

Core business

Direct interest: full consolidation

 

 

 

 

 

 

Diplic - Private credit balanced mutual fund

 

100.00

 

100.00

 

Investment fund

Mugen - Private credit balanced mutual fund

 

100.00

 

100.00

 

Investment fund

Caixa Vértice - Private credit balanced mutual fund

 

100.00

 

100.00

 

Investment fund

VR1 - Private credit balanced mutual fund (*)

 

100.00

 

 

 

Investment fund

(*) In March 2015, the Company made a partial spin-off of certain financial assets, from Diplic fund to VR1 fund managed by BTG Pactual Serviços Financeiros S.A. DTVM.

 

3.     CASH AND CASH EQUIVALENTS

 

 

 

 

Consolidated

 

 

 

Parent Company

 

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

Current

 

 

 

 

 

 

 

Cash and cash equivalents

             

Cash and banks

209,220

 

192,595

 

31,330

 

14,638

               

Short-term investments

 

 

 

 

 

 

 

In Brazil:

             

Government securities

210,162

 

246,407

 

150,447

 

205,304

Private securities

472,921

 

486,730

 

245,011

 

264,500

 

683,083

 

733,137

 

395,458

 

469,804

Abroad:

             

Time deposits

8,178,482

 

7,760,289

 

2,797,274

 

2,661,951

Total short-term investments

8,861,565

 

8,493,426

 

3,192,732

 

3,131,755

Cash and cash equivalents

9,070,785

 

8,686,021

 

3,224,062

 

3,146,393

 

The funds available in the Company and subsidiaries set up in Brazil are basically invested in investment funds, classified as exclusive, which were consolidated, with repurchase agreements backed by government and private securities, with fixed rate yield and immediate liquidity.

 

Private securities are short-term investments in Bank Deposit Certificates (CDBs) with yields pegged to the Interbank Deposit Certificate (CDI) fluctuation, and government securities are basically repurchase agreements backed by National Treasury Notes and National Treasury Bills. The funds are managed by BTG Pactual Serviços Financeiros S.A. DTVM and Caixa Econômica Federal and their assets collateralize possible losses on investments and transactions carried out. The funds’ investments were also consolidated in the individual financial statements.

 

A significant part of the funds of the Company and its foreign subsidiaries is invested in time deposits with leading banks, bearing fixed rates. Additionally, in 2015 there were capital reductions in the subsidiaries Nacional Minérios and Cia Metalic, in the amount of R$486,758. (See note 7 (b).)

 

 

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4.     TRADE RECEIVABLES

 

 

Consolidated

 

Parent Company

 

3/31/2015

 

12/31/2014

 

3/31/2015

12/31/2014

Trade receivables

 

 

 

 

 

 

Third parties

 

 

 

 

 

 

Domestic market

946,725

 

861,518

 

554,651

548,417

Foreign market

888,225

 

762,935

 

118,179

87,668

 

1,834,950

 

1,624,453

 

672,830

636,085

Allowance for doubtful debts

(135,071)

 

(127,223)

 

(100,129)

(93,536)

 

1,699,879

 

1,497,230

 

572,701

542,549

Related parties (Note 16 - b)

201,203

 

153,737

 

1,138,092

969,343

 

1,901,082

 

1,650,967

 

1,710,793

1,511,892

             

Other receivables

           

Dividends receivable (Note 16 - b)

59,430

 

59,470

 

67,513

67,553

Advances to employees

29,410

 

32,743

 

20,410

22,977

Other receivables

19,775

 

9,876

 

2,017

2,076

 

108,615

 

102,089

 

89,940

92,606

 

2,009,697

 

1,753,056

 

1,800,733

1,604,498

 

 

In accordance with CSN’ internal sales policy and the maintenance of its short-term receivables (up to 7 days), the Company has transactions relating to assignment of receivables without co-obligation in which, after assigning the customer’s trade notes/bills and receiving the amounts from each transaction closed, CSN settles the trade receivables and becomes entirely free of the credit risk on the transaction. This transaction totals R$331,395 as of March 31, 2015 (R$264,411 as of December 31, 2014), less the trade receivables.

 

 

The breakdown of gross trade receivables from third parties is as follows:

 

   

Consolidated

 

Parent Company

   

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

Not past due

 

1,451,783

 

1,284,824

 

539,106

 

464,322

Past-due up to180 days

 

265,580

 

236,843

 

41,691

 

90,612

Past-due over 180 days

 

117,587

 

102,786

 

92,033

 

81,151

 

 

1,834,950

 

1,624,453

 

672,830

 

636,085

 

 

The changes in the Company’s allowance for doubtful debts are as follows:

 

       

Consolidated

 

 

 

Parent Company

   

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

Opening balance

 

(127,223)

 

(114,172)

 

(93,536)

 

(88,518)

Estimated losses

 

(11,052)

 

(25,305)

 

(9,035)

 

(15,915)

Recovery of receivables

 

3,204

 

12,254

 

2,442

 

10,897

Closing balance

 

(135,071)

 

(127,223)

 

(100,129)

 

(93,536)

 

        

 

 

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5.     INVENTORIES

                                                  

     

Consolidated

 

 

 

Parent Company

 

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

Finished goods

1,270,175

 

1,270,182

 

768,969

 

794,223

Work in progress

932,995

 

858,811

 

810,335

 

733,759

Raw materials

795,330

 

1,006,620

 

465,860

 

621,450

Storeroom supplies

965,960

 

949,062

 

834,323

 

825,983

Iron ore

106,015

 

147,699

 

106,015

 

147,699

Advances to suppliers

2,560

 

2,329

 

1,760

 

1,741

(-) Provision for losses

(114,478)

 

(112,581)

 

(88,449)

 

(88,056)

 

3,958,557

 

4,122,122

 

2,898,813

 

3,036,799

 

Changes in the allowance for inventory losses are as follows:

 

       

Consolidated

 

 

 

Parent Company

   

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

Opening balance

 

(112,581)

 

(102,185)

 

(88,056)

 

(83,426)

Provision for losses/reversals of slow-moving and
obsolete inventories (Note 21)

 

(1,897)

 

(10,396)

 

(393)

 

(4,630)

Closing balance

 

(114,478)

 

(112,581)

 

(88,449)

 

(88,056)

 

 

 

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6.     OTHER CURRENT AND NON-CURRENT ASSETS

 

The group of other current and non-current assets is comprised as follows:

 

 

Consolidated

 

Parent Company

 

Current

Non-current

 

Current

 

Non-current

 

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

Judicial deposits (Note 14)

 

 

 

 

294,339

 

288,804

 

 

 

 

 

244,212

 

239,902

Credits with the PGFN (1)

     

 

83,125

 

81,792

 

     

 

83,125

 

81,792

Recoverable taxes (2)

594,315

 

598,497

 

126,407

 

155,616

 

424,672

 

453,258

 

58,988

 

88,046

Prepaid expenses

60,601

 

36,226

 

31,948

 

33,323

 

48,987

 

24,151

 

14,875

 

15,620

Actuarial asset - related party (Note 16 b)

 

 

 

 

97,188

 

97,173

 

 

 

 

 

96,717

 

96,914

Derivative financial instruments (Note 11 I)

354,650

 

174,611

       

 

             

Exclusive fund quotas (3)

 

 

 

 

 

 

 

 

307,107

 

144,018

 

 

 

 

Securities held for trading (Note 11 I)

10,889

 

13,798

         

7,525

 

9,451

       

Ore inventory (4)

 

 

 

 

144,483

 

144,483

 

 

 

 

 

144,483

 

144,483

Northeast Investment Fund - FINOR

       

8,452

 

8,452

         

8,452

 

8,452

Other receivables (Note 11 I)

 

 

 

 

902

 

1,347

 

 

 

 

 

1,538

 

1,450

Loans with related parties (Note 16 b)

220,414

 

517,493

 

125,730

 

117,357

 

116,349

 

106,218

 

59,309

 

52,619

Other receivables from related parties (Note 16 b)

12,674

 

15,780

 

5,596

 

7,037

 

164,575

 

168,035

 

335,736

 

329,330

Other

21,756

 

17,898

 

10,945

 

12,036

         

10,169

 

11,770

 

1,275,299

 

1,374,303

 

929,115

 

947,420

 

1,069,215

 

905,131

 

1,057,604

 

1,070,378

 

1 Refers to the excess judicial deposit originated by the 2009 REFIS (Tax Debt Refinancing Program).

 

2 Refers mainly to taxes on revenue (PIS/COFINS) and State VAT (ICMS) on the acquisition of fixed assets which will be recovered over a 48-month period, and income tax and social contribution for offset.

 

3. Refers to derivatives transactions managed by exclusive funds.

 

4. Long-term iron ore inventories that will be used after the construction of the processing plant, which will produce pellet feed, expected to start operating in the second half of 2017.

 

 

 

7.     INVESTMENTS

 

The information related to the description of activities of subsidiaries, joint ventures, joint operations, associates and other investments did not have changes in relation to that disclosed in the Company's financial statements as of December 31, 2014 and, accordingly, the Company decided not to repeat it in the condensed interim financial statements as of March 31, 2015.

 

 

 

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7.a) Direct equity interests in subsidiaries, joint ventures, joint operations, associates and other investments

 

 

 

03/31/2015

 

12/31/2014

 

03/31/2014

Companies

 

Number of

                     

 

 

 

 

 

 

 

   
 

shares held by CSN

 

%

             

Profit

 

%

             

Profit

 

in units)

 

Direct equity

         

Shareholders'

 

(loss)

 

Direct equity

         

Shareholders'

 

(loss)

 

Common

 

Preferred

 

interest

 

Assets

 

Liabilities

 

equity

 

for the period

 

interest

 

Assets

 

Liabilities

 

equity

 

for the period

Subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CSN Islands VII Corp.

 

20,001,000

     

100.00

 

7,341,132

 

7,158,885

 

182,247

 

535,768

 

100.00

 

7,214,810

 

7,568,331

 

(353,521)

 

(30,863)

CSN Islands VIII Corp.

(*)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(497)

CSN Islands IX Corp.

 

3,000,000

     

100.00

 

1,918

 

 

1,918

 

(3)

 

100.00

 

1,113,075

 

1,111,155

 

1,920

 

(175)

CSN Islands X Corp.

 

1,000

 

 

 

100.00

 

22

 

74,948

 

(74,926)

 

(13,313)

 

100.00

 

20

 

61,633

 

(61,613)

 

1,426

CSN Islands XI Corp.

 

50,000

     

100.00

 

2,644,817

 

2,635,245

 

9,572

 

1,129

 

100.00

 

2,236,207

 

2,227,764

 

8,443

 

(341)

CSN Islands XII Corp.

 

1,540

 

 

 

100.00

 

2,390,398

 

3,211,448

 

(821,050)

 

(163,227)

 

100.00

 

2,000,851

 

2,658,674

 

(657,823)

 

(16,706)

CSN Minerals S.L.U.

 

3,500

     

100.00

 

4,514,124

 

16,915

 

4,497,209

 

361,209

 

100.00

 

4,151,169

 

15,169

 

4,136,000

 

(166,518)

CSN Export Europe, S.L.U.

 

3,500

 

 

 

100.00

 

1,132,893

 

5,106

 

1,127,787

 

199,939

 

100.00

 

930,973

 

3,125

 

927,848

 

(28,876)

CSN Metals S.L.U.

 

16,504,020

     

100.00

 

1,026,656

 

36,607

 

990,049

 

175,297

 

100.00

 

846,160

 

31,408

 

814,752

 

(48,067)

CSN Americas S.L.U.

 

3,500

 

 

 

100.00

 

1,774,013

 

21,684

 

1,752,329

 

114,374

 

100.00

 

1,588,221

 

23,490

 

1,564,731

 

(60,728)

CSN Steel S.L.U.

 

22,042,688

     

100.00

 

2,321,453

 

1,485,808

 

835,645

 

(145,990)

 

100.00

 

2,152,431

 

1,274,343

 

878,088

 

(43,363)

Sepetiba Tecon S.A.

 

254,015,052

 

 

 

99.99

 

365,854

 

123,588

 

242,266

 

6,723

 

99.99

 

358,321

 

122,778

 

235,543

 

16,760

Mineração Nacional S.A.

 

999,999

     

99.99

 

1,122

 

22

 

1,100

 

25

 

99.99

 

1,097

 

22

 

1,075

 

20

Estanho de Rondônia S.A.

 

51,665,047

 

 

 

99.99

 

36,373

 

16,751

 

19,622

 

(1,456)

 

99.99

 

35,101

 

14,023

 

21,078

 

(3,020)

Cia Metalic Nordeste

 

92,459,582

     

99.99

 

174,446

 

38,328

 

136,118

 

3,397

 

99.99

 

187,571

 

34,849

 

152,722

 

2,464

Companhia Metalúrgica Prada

 

78,283,207

 

 

 

99.99

 

647,227

 

482,956

 

164,271

 

(26,240)

 

99.99

 

618,212

 

427,701

 

190,511

 

(19,114)

CSN Cimentos S.A.

 

3,734,582,665

     

100.00

 

1,177,538

 

67,876

 

1,109,662

 

16,493

 

100.00

 

1,088,997

 

64,652

 

1,024,345

 

15,538

Congonhas Minérios S.A.

 

64,610,862

 

 

 

99.99

 

2,058,032

 

2,075,908

 

(17,876)

 

(2,274)

 

99.99

 

1,996,460

 

2,012,062

 

(15,602)

 

(1,511)

CSN Energia S.A.

 

43,149

     

99.99

 

84,685

 

17,502

 

67,183

 

7,913

 

99.99

 

73,569

 

14,299

 

59,270

 

9,115

FTL - Ferrovia Transnordestina Logística S.A.

306,241,571

 

 

 

88.41

 

554,841

 

263,030

 

291,811

 

(1,935)

 

88.41

 

566,259

 

272,513

 

293,746

 

(1,896)

Companhia Florestal do Brasil

 

21,120,514

     

99.99

 

29,505

 

8,531

 

20,974

 

(1)

 

99.99

 

29,471

 

8,495

 

20,976

 

Joint ventures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nacional Minérios S.A.

(**)

285,040,443

     

60.00

 

9,892,166

 

491,418

 

9,400,748

 

396,481

 

60.00

 

10,113,587

 

642,561

 

9,471,026

 

82,767

Itá Energética S.A.

 

253,606,846

 

 

 

48.75

 

317,913

 

15,255

 

302,658

 

932

 

48.75

 

316,345

 

14,618

 

301,727

 

3,754

MRS Logística S.A.

 

52,414,154

 

40,301,916

 

27.27

 

1,970,813

 

1,179,022

 

791,791

 

15,232

 

27.27

 

1,959,145

 

1,182,454

 

776,691

 

18,271

CBSI - Companhia Brasileira de Serviços de Infraestrutura

1,876,146

 

 

 

50.00

 

15,063

 

13,557

 

1,506

 

(1,975)

 

50.00

 

18,678

 

15,196

 

3,482

 

(110)

CGPAR - Construção Pesada S.A.

50,000

     

50.00

 

57,482

 

48,310

 

9,172

 

2,612

 

50.00

 

61,689

 

55,129

 

6,560

 

2,636

Transnordestina Logística S.A.

 

22,701,071

 

1,397,545

 

62.64

 

4,205,614

 

2,916,246

 

1,289,368

 

(7,569)

 

62.64

 

4,115,120

 

2,818,184

 

1,296,936

 

(7,035)

Fair Value allocated to Transnordestina

                 

659,105

                 

659,105

   

Associates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Arvedi Metalfer do Brasil

 

27,239,971

     

20.00

 

61,870

 

44,930

 

16,940

 

211

 

20.00

 

60,101

 

44,429

 

15,672

 

(2,416)

 

 

 

 

 

 

 

 

44,797,970

 

22,449,876

 

23,007,199

 

1,473,752

 

 

 

43,833,640

 

22,719,057

 

21,773,688

 

(278,485)

Classified as available-for-sale

                                           

Usiminas

 

 

 

 

 

 

 

 

 

 

 

1,938,002

 

 

 

 

 

 

 

 

 

1,340,896

 

 

Panatlântica

                     

31,618

                 

31,589

   

 

 

 

 

 

 

 

 

 

 

 

 

1,969,620

 

 

 

 

 

 

 

 

 

1,372,485

 

 

Other investments

                                               

Profits on subsidiaries' inventories

 

 

 

 

 

 

 

 

 

 

(132,707)

 

(32,085)

 

 

 

 

 

 

 

(100,622)

 

(11,658)

Other

                     

65,019

 

883

             

65,019

 

(982)

 

 

 

 

 

 

 

 

 

 

 

 

(67,688)

 

(31,202)

 

 

 

 

 

 

 

(35,603)

 

(12,640)

Total investments

                     

24,909,131

 

1,442,550

             

23,110,570

 

(291,125)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Classification of investments in the balance sheet

                                       

Investments in assets

 

 

 

 

 

 

 

 

 

 

 

25,822,983

 

 

 

 

 

 

 

 

 

24,199,129

 

 

Investments with negative equity

                     

(913,852)

                 

(1,088,559)

   

 

 

 

 

 

 

 

 

 

 

 

 

24,909,131

 

 

 

 

 

 

 

 

 

23,110,570

 

 

 

The number of shares, the balances of assets, liabilities and shareholders' equity, and the amounts of profit or loss for the period refer to the equity interests held by CSN in those companies.

 

(*) Company extinguished in 2014.

(**) The assets and liabilities refer to the consolidated balance sheet.

 

 

 

PAGE 37 of 75

 


 

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ITR –– Quarterly Financial Information - March 31, 2015 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

7.b) Changes in investments in subsidiaries, joint ventures, joint operations, associates, and other investments

 

     

Consolidated

     

Parent Company

 

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

Opening balance of investments

13,665,453 

 

13,487,023

 

24,199,129

 

27,005,592

Opening balance of provision for impairment loss

 

 

 

 

(1,088,559)

 

(1,231,511)

Capital increase/acquisition of shares

 

 

10,279

 

 

 

93,960

Capital reduction (1)

(466,758)

     

(486,758)

 

(3,120,344)

Dividends

39

 

395,307

 

39

 

275,731

Comprehensive income (2)

648,403

 

(970,266)

 

842,730

 

(1,011,188)

Share of profits of investees (3)

403,264

 

743,119

 

1,442,550

 

1,098,243

Other

2

 

(9)

     

87

Closing balance of investments

14,250,403

 

13,665,453

 

25,822,983

 

24,199,129

Closing balance of provision for impairment loss

 

     

(913,852)

 

(1,088,559)

Total

14,250,403

 

13,665,453

 

24,909,131

 

23,110,570

 

 

1.   Refers to capital reduction in the companies Nacional Minérios S.A. and Cia Metalic Nordeste, in 2015. In 2014, refers to capital reduction in the subsidiaries CSN Steel, CSN Americas, CSN Metals, CSN Minerals and CSN Export.

 

2.   Refers to the mark-to-market of investments classified as available for sale and translation to the reporting currency of the foreign investments, the functional currency of which is not the Brazilian reais.

 

3.   The table below shows the reconciliation of the equity in results of affiliated companies included on investment balance with the amount disclosed in the income statement and it is due to the elimination of the results of the CSN´s transactions with these companies:

 

     

Consolidado

 

3/31/2015

 

12/31/2014

Equity in results of affiliated companies

 

 

 

Nacional Minérios S.A.

396,481

 

673,060

MRS Logística S.A.

15,060

 

102,476

CBSI - Companhia Brasileira de Serviços de Infraestrutura

(1,976)

 

572

Transnordestina

(7,569)

 

(27,465)

Arvedi Metalfer do Brasil

1,268

 

(5,524)

 

403,264

 

743,119

Eliminations

     

To cost of sales

(7,919)

 

(45,812)

To net sales

668

 

50,261

To finance costs (a)

 

 

(628,629)

To income taxes

2,465

 

212,221

Adjusted share of profit of joint ventures

398,478

 

331,160

 

(a)    As disclosed in note 7 (c) and note 16 (b), the Company signed an investment agreement for the new strategic alliance with the Asian Consortium. As a result, Namisa suspended the recognition of interest on the advances made for the operational agreements between CSN and Namisa.

 

 

PAGE 38 of 75

 


 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

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Version: 1

 

 

 

7.c) Investments in joint ventures and joint operations

 

The balances of the balance sheets and income statements of the companies under shared control are stated below:

 

                   

03/31/2015

                 

12/31/2014

 

 

Joint-Venture

 

Joint-Operation

 

Joint-Venture

 

Joint-Operation

Equity interest (%)

 

Nacional Minérios (*)

 

MRS Logística

 

CBSI

 

Transnordestina
Logística

 

Itá Energética

 

CGPAR

 

Nacional Minérios (*)

 

MRS Logística

 

CBSI

 

Transnordestina
Logística

 

Itá Energética

 

CGPAR

 

60.00%

 

27.27%

 

50.00%

 

62.64%

 

48.75%

 

50.00%

 

60.00%

 

27.27%

 

50.00%

 

62.64%

 

48.75%

 

50.00%

Balance sheet

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

                                               

Cash and cash equivalents

 

5,175,151

 

223,929

 

2,534

 

293,119

 

41,662

 

23,774

 

5,499,139

 

266,905

 

925

 

511,586

 

31,436

 

27,253

Advances to suppliers

 

376,559

 

9,628

 

135

     

246

 

215

 

250,469

 

13,994

 

98

     

364

 

337

Other current assets

 

265,491

 

557,882

 

21,574

 

56,595

 

17,974

 

36,494

 

309,054

 

532,016

 

30,164

 

54,196

 

15,859

 

32,146

Total current assets

 

5,817,201

 

791,439

 

24,243

 

349,714

 

59,882

 

60,483

 

6,058,662

 

812,915

 

31,187

 

565,782

 

47,659

 

59,736

Non-current assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advances to suppliers

 

9,098,231

                     

9,236,170

                   

Other non-current assets

 

133,438

 

571,962

 

87

 

278,461

 

32,046

 

312

 

129,504

 

503,849

 

86

 

253,307

 

32,371

 

85

Investments, PP&E and intangible assets

 

1,438,074

 

5,863,795

 

5,795

 

6,085,584

 

560,202

 

54,168

 

1,431,643

 

5,867,645

 

6,083

 

5,750,208

 

568,883

 

63,557

Total non-current assets

 

10,669,743

 

6,435,757

 

5,882

 

6,364,045

 

592,248

 

54,480

 

10,797,317

 

6,371,494

 

6,169

 

6,003,515

 

601,254

 

63,642

Total assets

 

16,486,944

 

7,227,196

 

30,125

 

6,713,759

 

652,130

 

114,963

 

16,855,979

 

7,184,409

 

37,356

 

6,569,297

 

648,913

 

123,378

                                                 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings and financing

 

60,082

 

391,451

     

190,206

     

17,898

 

368,818

 

382,332

     

187,331

     

25,520

Other current liabilities

 

455,382

 

756,666

 

25,897

 

173,452

 

31,293

 

49,545

 

429,345

 

851,850

 

27,718

 

84,594

 

29,986

 

52,744

Total current liabilities

 

515,464

 

1,148,117

 

25,897

 

363,658

 

31,293

 

67,443

 

798,163

 

1,234,182

 

27,718

 

271,925

 

29,986

 

78,264

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings and financing

 

28,386

 

2,728,107

 

 

4,288,552

     

23,443

 

29,541

 

2,657,635

 

 

4,223,796

     

23,443

Other non-current liabilities

 

275,180

 

447,385

 

1,217

 

3,228

 

 

 

5,734

 

243,231

 

444,379

 

2,674

 

3,172

 

 

 

8,551

Total non-current liabilities

 

303,566

 

3,175,492

 

1,217

 

4,291,780

 

 

 

29,177

 

272,772

 

3,102,014

 

2,674

 

4,226,968

 

 

 

31,994

Shareholders’ equity

 

15,667,914

 

2,903,587

 

3,011

 

2,058,321

 

620,837

 

18,343

 

15,785,044

 

2,848,213

 

6,964

 

2,070,404

 

618,927

 

13,120

Total liabilities and shareholders’ equity

 

16,486,944

 

7,227,196

 

30,125

 

6,713,759

 

652,130

 

114,963

 

16,855,979

 

7,184,409

 

37,356

 

6,569,297

 

648,913

 

123,378

 

                   

01/01/2015 a 03/31/2015

                 

01/01/2014 a 03/31/2014

 

 

Joint-Venture

 

Joint-Operation

 

Joint-Venture

 

Joint-Operation

Equity interest (%)

 

Nacional Minérios (*)

 

MRS Logística

 

CBSI

 

Transnordestina
Logística

 

Itá Energética

 

CGPAR

 

Nacional Minérios (*)

 

MRS Logística

 

CBSI

 

Transnordestina
Logística

 

Itá Energética

 

CGPAR

 

60.00%

 

27.27%

 

50.00%

 

62.64%

 

48.75%

 

50.00%

 

60.00%

 

27.27%

 

50.00%

 

77.30%

 

48.75%

 

50.00%

Statements of Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

108,527

 

699,080

 

34,664

     

37,212

 

60,280

 

453,090

 

784,616

 

33,997

 

14

 

41,242

 

56,917

Cost of sales and services

 

(113,934)

 

(485,159)

 

(36,015)

 

 

 

(22,531)

 

(46,456)

 

(322,508)

 

(562,658)

 

(32,486)

 

30

 

(19,344)

 

(47,471)

Gross profit

 

(5,407)

 

213,921

 

(1,351)

     

14,681

 

13,824

 

130,582

 

221,958

 

1,511

 

44

 

21,898

 

9,446

Operating (expenses) income

 

(37,869)

 

(66,892)

 

(2,318)

 

(8,281)

 

(12,063)

 

(5,037)

 

(19,872)

 

(75,802)

 

(1,882)

 

(5,590)

 

(11,085)

 

(863)

Finance income (costs), net

 

866,302

 

(59,282)

 

(281)

 

(3,802)

 

268

 

(495)

 

143,196

 

(38,763)

 

151

 

(3,555)

 

847

 

(276)

Income before income tax and social contribution

 

823,026

 

87,747

 

(3,950)

 

(12,083)

 

2,886

 

8,292

 

253,906

 

107,393

 

(220)

 

(9,101)

 

11,660

 

8,307

Current and deferred income tax and social contribution

 

(162,225)

 

(31,890)

 

 

 

(975)

 

(3,069)

 

(115,961)

 

(40,391)

         

(3,959)

 

(3,036)

Profit for the period

 

660,801

 

55,857

 

(3,950)

 

(12,083)

 

1,911

 

5,223

 

137,945

 

67,002

 

(220)

 

(9,101)

 

7,701

 

5,271

(*) Refer to the consolidated balances and profit or loss of Nacional Minérios S. A.

 

The balance sheet and income statement amounts refer to 100% of the companies’ results.

 

·       NACIONAL MINÉRIOS S.A. - (“Namisa”)

 

New strategic alliance with the Asian Consortium

 

On December 11, 2014, CSN’s Board of Directors approved the formation of a strategic alliance with the Asian Consortium.

 

This transaction consists of creating a joint venture between CSN and the Asian Consortium, under which the Asian Consortium will contribute its 40% stake in Namisa to Congonhas Minérios S.A. (“Congonhas Minérios”), a non-operating subsidiary of CSN, and to which CSN will contribute its Casa de Pedra iron ore mine, its 60% stake in Namisa, its 8.63% stake in MRS, and the assets of and the rights to manage and operate the TECAR Port concession.    

 

As a result of CSN’s and the Asian Consortium’s contributions and the agreements reached during the negotiations between the parties, immediately after the transaction is closed CSN and the Asian Consortium will hold 88.25% and 11.75% of Congonhas Minérios’ capital on a debt free and cash basis, respectively. The final stakes will be determined taking into account the debt and cash adjustments, and the working capital difference on the closing date.

 

The transaction also provides for an earn-out mechanism, under which a qualifying liquidity event occurring within certain valuation parameters and a given period of time agreed after the transaction is closed could dilute the Consortium’s equity interest in Congonhas Minérios from 11.75% up to 8.21%.

 

 

PAGE 39 of 75

 


 

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Version: 1

 

 

The transaction’s primary purpose is to capture synergies among the businesses involved in this reorganization and generate shareholder value to create a world-class company. The main synergies identified are related to procedure optimization, increasing operation efficiencies and cutting operating costs, and capital expansion.

 

Part of Congonhas Minérios’ iron ore production will be sold to members of the Asian Consortium and CSN. These rights are laid down in long-term supply agreements.

 

The transaction closing is subject to the parties reaching a consensus on a business plan, regulatory approvals by antitrust authorities and the governmental authorities responsible for regulating mining rights, and other conditions precedent usual in this type of transaction. The closing date is scheduled for the end of 2015.

 

8.     PROPERTY, PLANT AND EQUIPMENT

 

The information related to property, plant and equipment did not have significant changes in relation to that disclosed in the Company's financial statements as of December 31, 2014.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

Land

 

Buildings

 

Machinery, equipment and facilities

 

Furniture and fixtures

 

Construction in progress

 

Other (*)

 

Total

Balance at December 31, 2014

216,458

 

2,432,450

 

10,499,676

 

36,633

 

2,243,967

 

194,956

 

15,624,140

Cost

216,458

 

3,021,437

 

16,791,750

 

167,410

 

2,243,967

 

414,276

 

22,855,298

Accumulated depreciation

 

 

(588,987)

 

(6,292,074)

 

(130,777)

 

 

 

(219,320)

 

(7,231,158)

Balance at December 31, 2014

216,458

 

2,432,450

 

10,499,676

 

36,633

 

2,243,967

 

194,956

 

15,624,140

Effect of foreign exchange differences

3,523

 

12,221

 

63,992

 

237

 

760

 

2,624

 

83,357

Acquisitions

     

119,698

 

1,008

 

212,975

 

4,345

 

338,026

Capitalized interest (Notes 22 and 26)

 

 

 

 

 

 

 

24,325

 

 

 

24,325

Write-offs

       

(142)

 

(11)

 

(3,827)

 

(5)

 

(3,985)

Depreciation

 

 

(25,129)

 

(231,300)

 

(1,451)

 

 

 

(4,454)

 

(262,334)

Transfers to other asset categories

 

14,457

 

75,493

     

(90,039)

 

89

 

Transfers to intangible assets

 

 

 

 

 

 

 

(1,429)

 

 

 

(1,429)

Other

     

(19,876)

     

(1,183)

 

1,123

 

(19,936)

Balance at March 31, 2015

219,981

 

2,433,999

 

10,507,541

 

36,416

 

2,385,549

 

198,678

 

15,782,164

Cost

219,981

 

3,056,790

 

17,024,089

 

169,811

 

2,385,549

 

427,238

 

23,283,458

Accumulated depreciation

 

 

(622,791)

 

(6,516,548)

 

(133,395)

 

 

 

(228,560)

 

(7,501,294)

Balance at March 31, 2015

219,981

 

2,433,999

 

10,507,541

 

36,416

 

2,385,549

 

198,678

 

15,782,164

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Parent Company

 

 

Land

 

Buildings

 

Machinery, equipment and facilities

 

Furniture and fixtures

 

Construction in progress

 

Other (*)

 

Total

Balance at December 31, 2014

 

110,181

 

1,786,572

 

8,882,070

 

29,036

 

2,118,097

 

183,338

 

13,109,294

Cost

 

110,181

 

2,003,303

 

13,877,027

 

136,041

 

2,118,097

 

301,835

 

18,546,484

Accumulated depreciation

 

 

 

(216,731)

 

(4,994,957)

 

(107,005)

 

 

 

(118,497)

 

(5,437,190)

Balance at December 31, 2014

 

110,181

 

1,786,572

 

8,882,070

 

29,036

 

2,118,097

 

183,338

 

13,109,294

Acquisitions

 

 

 

 

114,792

 

509

 

189,040

 

38

 

304,379

Capitalized interest (Notes 22 and 26)

                 

24,325

     

24,325

Write-offs

 

 

 

 

 

 

 

(11)

 

(3,827)

 

(4)

 

(3,842)

Depreciation

     

(14,064)

 

(185,963)

 

(1,217)

     

(2,862)

 

(204,106)

Transfers to other asset categories

 

 

 

14,457

 

67,603

 

 

 

(82,060)

 

 

 

Transfers to intangible assets

                 

(507)

     

(507)

Other

 

 

 

 

 

(19,066)

 

 

 

(1,159)

 

1,232

 

(18,993)

Balance at March 31, 2015

 

110,181

 

1,786,965

 

8,859,436

 

28,317

 

2,243,909

 

181,742

 

13,210,550

Cost

 

110,181

 

2,017,760

 

13,979,983

 

136,506

 

2,243,909

 

302,282

 

18,790,621

Accumulated depreciation

     

(230,795)

 

(5,120,547)

 

(108,189)

     

(120,540)

 

(5,580,071)

Balance at March 31, 2015

 

110,181

 

1,786,965

 

8,859,436

 

28,317

 

2,243,909

 

181,742

 

13,210,550

(*) Refer basically to railway assets such as courtyards, tracks and railway sleepers, and leasehold improvements, vehicles, hardware, mines and ore deposits, and spare part inventories.

 

 

 

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The breakdown of the projects comprising construction in progress is as follows:

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

Project description

 

Start date

 

Completion date

 

3/31/2015

 

12/31/2014

Logistics

 

 

 

 

 

 

 

 

 

 

 

 

Current investments for maintenance of current operations.

 

 

 

 

 

50,569

 

45,522

   

         

50,569

 

45,522

Mining

 

 

 

 

 

 

 

 

 

 

   

Expansion of Casa de Pedra Mine capacity production.

 

2007

 

2015/2016

(1)

494,027

 

462,075

 

 

Expansion of TECAR export capacity.

 

2009

 

2017

(2)

340,964

 

332,394

   

Current investments for maintenance of current operations.

         

50,818

 

60,236

 

 

 

 

 

 

 

 

885,809

 

854,705

Steel

                   

 

 

Construction of a long steel plant to produce rebar and machine wire.

 

2008

 

2014

(3)

92,381

 

95,991

   

Implementation of the AF#3’s gas pressure recovery.

 

2006

 

2015

     

1,140

 

 

Expansion of the service center/Mogi.

 

2013

 

2015

(4)

51,276

 

46,993

   

Current investments for maintenance of current operations.

         

166,572

 

159,499

 

 

 

 

 

 

 

 

310,229

 

303,623

Cement

                   

 

 

Construction of cement plants.

 

2011

 

2016

(5)

1,137,507

 

1,030,938

   

Current investments for maintenance of current operations.

         

1,435

 

9,179

 

 

 

 

 

 

 

 

1,138,942

 

1,040,117

Total construction in progress

         

2,385,549

 

2,243,967

(1)  Expected date for completion of the Central Plant Stage 1 and Magnetic Separators;

(2)  Expected date for completion of the 60 Mtpa stage;

(3) Startup in the first half of 2014; negotiations in progress with advances for new plants;

(4) Expected date for completion of Service Center/Mogi;

(5) Expected date for completion of Minas Gerais unit.

 

In the last quarter of 2014 the management conducted a review of useful lives for all the Company's units. Due to the current investment maintenance in the industrial facilities equipment, the useful life of machinery and equipment has increased due to this review. Therefore, the estimated useful lives for the current year are as follows:

 

 

     

Consolidated

     

Parent Company

 

3/31/2015

 

3/31/2014

 

3/31/2015

 

3/31/2014

Buildings

43

 

43

 

42

 

41

Machinery, equipment and facilities

18

 

14

 

18

 

13

Furniture and fixtures

10

 

11

 

11

 

11

Other

29

 

26

 

13

 

18

 

 

 

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8.a) Depreciation expense:

 

Additions to depreciation, amortization and depletion for the period were distributed as follows:

 

 

     

Consolidated

 

 

 

Parent Company

 

3/31/2015

 

3/31/2014

 

3/31/2015

 

3/31/2014

Production cost

258,876

 

279,464

 

202,412

 

230,561

Selling expenses

2,300

 

2,217

 

1,778

 

1,687

General and administrative expenses

3,322

 

3,665

 

2,139

 

2,413

 

264,498

 

285,346

 

206,329

 

234,661

Other operating expenses (*)

9,004

 

9,060

 

 

 

 

 

273,502

 

294,406

 

206,329

 

234,661

 

(*) Refers to the depreciation of unused equipment and intangible assets amortization, see note 21.

 

 

9.     INTANGIBLE ASSETS

 

The information related to intangible assets did not have significant changes in relation to that disclosed in the Company's financial statements as of December 31, 2014 and, accordingly, the Company decided not to repeat it fully in the condensed interim financial statements as of March 31, 2015.

 

 

                 

Consolidated

       

Parent Company

 

Goodwill

 

Customer relationships

Software

Trademarks and patents

 

Other

 

Total

 

Goodwill

Software

 

Total

Balance at December 31, 2014

407,434

 

347,115

79,867

109,052

 

185

 

943,653

 

13,091

75,825

 

88,916

Cost

666,768

 

415,964

153,080

109,052

 

185

 

1,345,049

 

14,135

110,241

 

124,376

Accumulated amortization

(150,004)

 

(68,849)

(73,213)

 

 

 

 

(292,066)

 

(1,044)

(34,416)

 

(35,460)

Adjustment for accumulated recoverable value

(109,330)

             

(109,330)

         

Balance at December 31, 2014

407,434

 

347,115

79,867

109,052

 

185

 

943,653

 

13,091

75,825

 

88,916

Effect of foreign exchange differences

   

22,915

39

7,391

 

12

 

30,357

       

Acquisitions and expenditures

 

 

 

105

 

 

 

 

105

 

 

 

 

Transfer of property, plant and equipment

     

507

   

922

 

1,429

   

507

 

507

Amortization

 

 

(8,580)

(2,588)

 

 

 

 

(11,168)

 

 

(2,223)

 

(2,223)

Balance at March 31, 2015

407,434

 

361,450

77,930

116,443

 

1,119

 

964,376

 

13,091

74,109

 

87,200

Cost

666,768

 

444,155

156,138

116,443

 

1,119

 

1,384,623

 

14,135

110,748

 

124,883

Accumulated amortization

(150,004)

 

(82,705)

(78,208)

       

(310,917)

 

(1,044)

(36,639)

 

(37,683)

Adjustment for accumulated recoverable value

(109,330)

 

 

 

 

 

 

 

(109,330)

 

 

 

 

 

Balance at March 31, 2015

407,434

 

361,450

77,930

116,443

 

1,119

 

964,376

 

13,091

74,109

 

87,200

 

10.   BORROWINGS, FINANCING AND DEBENTURES

.

 

The balances of borrowings, financing and debentures, which are carried at amortized cost, are as follows:

 

 

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Consolidated

 

Parent Company

   

Rates p.a. (%)

 

Current liabilities

 

Non-current liabilities

 

Current liabilities

 

Non-current liabilities

     

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

FOREIGN CURRENCY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prepayment

 

1% to 3.5%

 

447,422

 

346,719

 

2,779,197

 

2,338,327

 

125,413

 

76,642

 

2,779,197

 

2,323,290

Prepayment

 

3.51% to 7.5%

 

35,497

 

12,411

 

2,069,160

 

1,713,249

 

132,603

 

158,915

 

7,976,050

 

6,869,730

Perpetual bonds

 

7%

 

4,366

 

3,615

 

3,208,000

 

2,656,200

               

Fixed rate notes

 

4.14% to 10%

 

46,370

 

1,236,634

 

5,986,176

 

4,996,352

 

1,478,233

 

1,187,610

 

1,924,800

 

1,593,720

Intercompany bonds

 

6M Libor + 2.25% and 3%

55,390

             

96,032

 

73,839

 

1,100,748

 

910,983

Other

 

1.2% to 8%

 

89,196

 

51,634

 

347,120

 

387,240

 

 

 

 

 

 

 

 

       

678,241

 

1,651,013

 

14,389,653

 

12,091,368

 

1,832,281

 

1,497,006

 

13,780,795

 

11,697,723

LOCAL CURRENCY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BNDES/FINAME

 

TJLP + 1.5% to 3.2% and fixed rate of 2.5% to 10%

 

46,359

 

85,373

 

996,961

 

965,849

 

14,976

 

48,308

 

915,085

 

879,681

Debentures

 

105.8% to 111.2% of CDI

 

283,388

 

847,411

 

1,650,000

 

1,550,000

 

283,388

 

847,411

 

1,650,000

 

1,550,000

Prepayment

 

106.5% to 110.79% of CDI and fixed rate of 8%

539,091

 

118,870

 

5,200,000

 

5,345,000

 

450,346

 

93,087

 

3,200,000

 

3,345,000

CCB

 

112.5% of CDI

 

113,936

 

101,841

 

7,200,851

 

7,200,499

 

113,937

 

101,841

 

7,200,000

 

7,200,000

Intercompany bonds

 

110.79% of CDI

                 

187,270

 

148,686

 

1,780,629

 

1,759,474

Other

 

 

 

9,049

 

9,422

 

12,028

 

11,549

 

102,291

 

2,258

 

 

 

 

       

1,091,823

 

1,162,917

 

15,059,840

 

15,072,897

 

1,152,208

 

1,241,591

 

14,745,714

 

14,734,155

Total borrowings and financing

 

1,770,064

 

2,813,930

 

29,449,493

 

27,164,265

 

2,984,489

 

2,738,597

 

28,526,509

 

26,431,878

Transaction costs and issue premiums

 

(24,263)

 

(23,406)

 

(74,404)

 

(71,410)

 

(19,693)

 

(18,362)

 

(66,231)

 

(61,966)

Total borrowings and financing + transaction costs

 

1,745,801

 

2,790,524

 

29,375,089

 

27,092,855

 

2,964,796

 

2,720,235

 

28,460,278

 

26,369,912

 

 

The balances of prepaid related parties borrowings total R$6,003,996 as of March 31, 2015 (R$5,302,985 as of December 31, 2014) and the balances of Fixed Rate Notes and related parties Bonds total R$3,403,033 (R$2,781,330 as of December 31, 2014), see note 16b.

 

·       Maturities of borrowings, financing and debentures presented in non-current liabilities

 

As of March 31, 2015, the inflation-adjusted principal of long-term borrowings, financing and debentures by maturity year is as follows:

 

   

 

 

Consolidated

 

 

 

Parent Company

2016

 

2,390,614

 

8%

 

3,913,614

 

14%

2017

 

4,502,739

 

15%

 

4,335,419

 

15%

2018

 

4,762,253

 

16%

 

4,461,247

 

16%

2019

 

6,703,454

 

23%

 

5,090,794

 

18%

2020

 

5,849,970

 

20%

 

3,000,395

 

11%

After 2021

 

2,032,463

 

7%

 

7,725,040

 

26%

Perpetual bonds

 

3,208,000

 

11%

 

 

 

 

 

 

29,449,493

 

100%

 

28,526,509

 

100%

 

 

 

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·       Amortizations and new borrowings, financing and debentures

 

The table below shows the amortizations and new funding in the current period:

 

       

Consolidated

     

Parent Company

 

 

31/3/2015

 

31/12/2014

 

31/3/2015

 

31/12/2014

Opening balance

 

29,883,379

 

27,746,430

 

29,090,147

 

25,249,354

Funding transactions

 

401,706

 

1,907,479

 

400,000

 

3,401,090

Repayment

 

(1,597,317)

 

(1,288,046)

 

(885,890)

 

(1,338,772)

Charges - payments

 

(724,617)

 

(2,401,241)

 

(555,887)

 

(2,084,300)

Charges - provision

 

689,333

 

2,524,849

 

691,137

 

2,309,311

Buyback of debt securities

 

(87,475)

 

(172,432)

       

Other

 

2,555,881

 

1,566,340

 

2,685,567

 

1,553,464

Closing balance

 

31,120,890

 

29,883,379

 

31,425,074

 

29,090,147

(*) Includes interest and unrealized foreign exchange and monetary variations.

 

 

·       Loans raised

 

In the first quarter of 2015, the Company contracted with Banco do Brasil a promissory note in the amount of R$ 100,000 and an export prepayment in the amount of R$200,000, maturing in September 2015 and December 2017, respectively. Also issued 10,000 debentures, in a single, unsecured and non-convertible series at the unit face value of R$10 totaled R$100,000, maturing in January 2022 with early redemption option.

 

 

·       Amortization

 

In the first quarter of 2015, the Company amortized the amount of R$2,321,934 (principal and interest), being basically R$1,101,324 of Fixed Rate Notes, R$570,234 of 6ª issue Debentures.

 

 

·       Guarantees provided

 

Guarantees provided for the borrowings comprise property, plant and equipment items and sureties and do not include guarantees provided for subsidiaries and jointly controlled entities. As of March 31, 2015, the amount of the borrowing is R$2,291 (R$2,256 as of December 31, 2014).

 

The Company’s borrowing and financing agreements with certain financial institutions contain some covenants that are usual in agreements of this nature and the Company is compliant with them as of March 31, 2015.

 

 

11.   FINANCIAL INSTRUMENTS

 

The information related to financial instruments did not have significant changes in relation to that disclosed in the Company's financial statements as of December 31, 2014 and, accordingly, the Company decided not to repeat it fully in the condensed interim financial statements as of March 31, 2015.

 

I - Identification and measurement of financial instruments

 

 

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The Company enters into transactions involving various financial instruments, mainly cash and cash equivalents, including short-term investments, marketable securities, trade receivables, trade payables, and borrowings and financing. Additionally, it also carries out transactions involving derivative financial instruments, especially exchange and interest rate swaps.

 

·           Classification of financial instruments

 

Consolidated

     

 

 

3/31/2015

 

 

 

12/31/2014

 

Notes

 

Available-for-sale

 

Fair value through profit or loss

 

Loans and receivables - effective interest rate

 

Other liabilities - amortized cost method

 

Balances

 

Available-for-sale

 

Fair value through profit or loss

 

Loans and receivables - effective interest rate

 

Other liabilities - amortized cost method

 

Balances

                     

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

                                           

Cash and cash equivalents

 

3

 

 

 

 

 

9,070,785

 

 

 

9,070,785

 

 

 

 

 

8,686,021

 

 

 

8,686,021

Trade receivables, net

 

4

 

 

 

 

 

1,901,082

 

 

 

1,901,082

 

 

 

 

 

1,650,967

 

 

 

1,650,967

Derivative financial instruments

 

6

 

 

 

354,650

 

 

 

 

 

354,650

 

 

 

174,611

 

 

 

 

 

174,611

Trading securities

 

6

     

10,889

         

10,889

     

13,798

         

13,798

Total

 

 

 

 

 

365,539

 

10,971,867

 

 

 

11,337,406

 

 

 

188,409

 

10,336,988

 

 

 

10,525,397

                                           

Non-current assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other trade receivables

 

6

         

902

     

902

         

1,347

     

1,347

Investments

 

 

 

2,089,432

 

 

 

 

 

 

 

2,089,432

 

1,441,032

 

 

 

 

 

 

 

1,441,032

Short-term investments

             

42,549

     

42,549

         

34,874

     

34,874

Total

 

 

 

2,089,432

 

 

 

43,451

 

 

 

2,132,883

 

1,441,032

 

 

 

36,221

 

 

 

1,477,253

                                             

Total assets

 

 

 

2,089,432

 

365,539

 

11,015,318

 

 

 

13,470,289

 

1,441,032

 

188,409

 

10,373,209

 

 

 

12,002,650

                                             

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

                                         

Borrowings and financing

 

10

 

 

 

 

 

 

 

1,770,064

 

1,770,064

 

 

 

 

 

 

 

2,813,930

 

2,813,930

Derivative financial instruments

 

12

     

24,327

         

24,327

     

65

         

65

Trade payables

 

 

 

 

 

 

 

 

 

1,555,728

 

1,555,728

 

 

 

 

 

 

 

1,638,505

 

1,638,505

Dividends and interest on capital

                 

2,269

 

2,269

             

277,097

 

277,097

Total

 

 

 

 

 

24,327

 

 

 

3,328,061

 

3,352,388

 

 

 

65

 

 

 

4,729,532

 

4,729,597

                                             

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings and financing

 

10

             

29,449,493

 

29,449,493

             

27,164,265

 

27,164,265

Derivative financial instruments

 

12

 

 

 

 

 

 

 

 

 

 

 

 

 

21,301

 

 

 

 

 

21,301

Total

     

 

 

 

 

 

 

29,449,493

 

29,449,493

 

 

 

21,301

 

 

 

27,164,265

 

27,185,566

                                             

Total liabilities

 

 

 

 

 

24,327

 

 

 

32,777,554

 

32,801,881

 

 

 

21,366

 

 

 

31,893,797

 

31,915,163

 

·           Fair value measurement

 

The following table shows the financial instruments recognized at fair value through profit or loss using a valuation method:

 

Consolidated

 

 

 

 

 

 

 

3/31/2015

 

 

 

 

 

 

 

12/31/2014

 

Level 1

 

Level 2

 

Level 3

 

Balances

 

Level 1

 

Level 2

 

Level 3

 

Balances

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

                               

Financial assets at fair value through profit or loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

     

354,650

     

354,650

     

174,611

     

174,611

Trading securities

 

10,889

 

 

 

 

 

10,889

 

13,798

 

 

 

 

 

13,798

Non-current assets

                               

Available-for-sale financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

2,089,432

         

2,089,432

 

1,441,032

         

1,441,032

Total assets

 

2,100,321

 

354,650

 

 

 

2,454,971

 

1,454,830

 

174,611

 

 

 

1,629,441

                                 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

                               

Financial liabilities at fair value through profit or loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

     

24,327

     

24,327

     

65

     

65

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities at fair value through profit or loss

                               

Derivative financial instruments

 

 

 

 

 

 

 

 

 

 

 

21,301

 

 

 

21,301

Total liabilities

 

 

 

24,327

 

 

 

24,327

 

 

 

21,366

 

 

 

21,366

 

 

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II – Investments in financial instruments classified as available for sale and measured at fair value through OCI  

 

These consist mainly of investments in shares acquired in Brazil involving top ranked companies, which are recognized in non-current assets, and any gains or losses are recognized in shareholders' equity, where they will remain until actual realization of the securities or when any loss is considered unrecoverable.

 

 Impairment of financial assets classified as available for sale              

 

The Company has investments in common (USIM3) and preferred (USIM5) shares (“Usiminas Shares”), designated as available-for-sale financial assets as they do not meet the criteria to be classified within any of the other categories of financial instruments (loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss). The asset is classified as a non-current asset under line item “investments” and is carried at fair value based on the quoted price on the stock exchange (BM&FBOVESPA).

 

Considering the volatility of the quotations of Usiminas shares, the Company evaluated whether, at the end of the reporting period, there was objective evidence of impairment of these financial assets, i.e., the Company’s management evaluated if the decline in the market value of Usiminas shares should be considered either significant or prolonged. In turn, this valuation requires judgment based on CSN’s policy, prepared according to practices used in the domestic and international markets, and consists of an instrument by instrument analysis based on quantitative and qualitative information available in the market, from the time an instrument shows a drop of 20% or more in its market value or from the time there is a significant drop in its market value as compared to its acquisition price during more than twelve months.

 

As of March 31, 2015, after a new decline in the quoted prices of the common shares (USIM5) as compared with the quoted prices as of December 31, 2014, the Company reclassified the accumulated losses for the quarter recognized in other comprehensive income, amounting to R$5,555, net of income tax and social contribution, to profit (loss) for the period, recognizing R$8,417 in other operating expenses and R$2,862 in deferred taxes

 

Beginning this date, pursuant to a Company's policy, gains and losses arising from the variation of the quotation of shares were recognized in other comprehensive income.

 

The Company’s interest in Usiminas has not changed as compared with the percentage disclosed in the financial statements as of December 31, 2014.

 

·       Share Market risks

 

The Company is exposed to the risk of changes in share prices due to the investments made and classified as available-for-sale.

 

The Company considers as probable scenario the amounts carried at market values as of March 31, 2015, net of tax of R$741,796. Therefore, there is no impact on the financial instruments classified as available-for-sale.

 

According to the Company’s accounting policies, any negative changes in the investment in Usiminas considered significant (impairment) are recognized in profit or loss, and positive changes are recognized in comprehensive income until the investment is realized.

 

 

III -   Financial Instrument Policies:

 

As of March 31, 2015, there were no changes in the financial risk management policies in relation to those disclosed in the Company's financial statements for the year ended December 31, 2014.

 

 

 

 

 

 

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11.a) Foreign exchange risk
 

·           Foreign exchange exposure

 

The consolidated net exposure as of March 31, 2015 is as follows:

 

 

 

 

 

3/31/2015

Foreign Exchange Exposure

 

(Amounts in US$’000)

 

(Amounts in €’000)

Cash and cash equivalents overseas

 

2,566,138

 

5,353

Trade receivables

 

184,704

 

8,039

Related parties loans

 

17,266

 

 

Other assets

 

110

 

11,561

Total assets

 

2,768,218

 

24,953

Borrowings and financing

 

(4,542,062)

 

(120,775)

Trade payables

 

(145,615)

 

(6,301)

Intercompany borrowings

 

(17,266)

   

Other liabilities

 

(11,667)

 

(44,474)

Total liabilities

 

(4,716,610)

 

(171,550)

Foreign exchange exposure

 

(1,948,392)

 

(146,597)

Notional amount of derivatives contracted, net

 

688,000

 

(60,000)

Cash flow hedge accounting

 

775,000

 

 

Net foreign exchange exposure

 

(485,392)

 

(206,597)

 

 

Gains and losses on these transactions are consistent with the policies and strategies defined by management.

 

 

·            Exchange swap transactions

 

 

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Version: 1

 

 

               

3/31/2015

     

12/31/2014

 

3/31/2015

               

Appreciation (R$)

 

Fair value (market)

     

Appreciation (R$)

 

Fair value (market)

 

Impact on finance income (cost) in 2015

Counterparties

 

Functional currency

 

Functional currency

 

Notional amount

 

Asset position

 

Liability position

 

Amounts receivable/ (payable)

 

Notional amount

 

Asset position

 

Liability position

 

Amounts receivable/ (payable)

 

Santander

 

 

 

Dollar

 

 

 

 

 

 

 

 

 

10,000

 

30,414

 

(25,068)

 

5,346

 

(18)

Total dollar x CDI swap

     

 

 

 

 

 

 

 

 

10,000

 

30,414

 

(25,068)

 

5,346

 

(18)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Itaú BBA

 

04/02/2015 à 05/05/2015

 

Dollar

 

150,000

 

479,852

 

(407,962)

 

71,890

 

340,000

 

900,795

 

(845,425)

 

55,370

 

96,491

HSBC

 

04/02/2015 à 05/05/2015

 

Dollar

 

348,000

 

1,113,438

 

(946,586)

 

166,852

 

568,000

 

1,502,936

 

(1,430,394)

 

72,542

 

214,087

HSBC

     

Dollar

                 

10,000

 

26,416

 

(26,481)

 

(65)

 

65

Deutsche Bank

 

04/02/2015 à 04/08/2015

 

Dollar

 

65,000

 

208,045

 

(174,900)

 

33,145

 

140,000

 

370,134

 

(361,327)

 

8,807

 

50,645

Goldman Sachs

 

04/02/2015 à 05/05/2015

 

Dollar

 

95,000

 

303,968

 

(260,362)

 

43,606

 

130,000

 

344,207

 

(329,258)

 

14,949

 

58,954

Santander

 

04/02/15

 

Dollar

 

30,000

 

96,032

 

(80,444)

 

15,588

 

30,000

 

79,224

 

(77,576)

 

1,648

 

16,358

Total dollar x real swap (NDF)

     

688,000

 

2,201,335

 

(1,870,254)

 

331,081

 

1,218,000

 

3,223,712

 

(3,070,461)

 

153,251

 

436,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HSBC

 

4/17/2015

 

Euro

 

60,000

 

206,934

 

(208,481)

 

(1,547)

 

30,000

 

98,688

 

(96,444)

 

2,244

 

27,571

Itaú BBA

 

 

 

Euro

 

 

 

 

 

 

 

 

 

60,000

 

197,366

 

(192,888)

 

4,478

 

5,883

Total dollar x euro swap (NDF)

     

60,000

 

206,934

 

(208,481)

 

(1,547)

 

90,000

 

296,054

 

(289,332)

 

6,722

 

33,454

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BBVA

 

06/29/2015 a 07/18/2015

 

Dollar

 

2,740

 

8,775

 

(8,598)

 

177

                 

177

Banco Novo

 

04/30/2015 a 11/30/2015

 

Dollar

 

75,354

 

241,330

 

(225,255)

 

16,075

 

18,009

 

47,866

 

(46,481)

 

1,385

 

14,690

BNPP

 

04/13/2015 a 07/06/2015

 

Dollar

 

21,723

 

69,570

 

(62,607)

 

6,963

 

31,516

 

83,768

 

(80,215)

 

3,553

 

3,410

DB

 

 

 

Dollar

 

 

 

 

 

 

 

 

 

30,604

 

81,343

 

(77,054)

 

4,289

 

(5,709)

Total dollar-to-euro swap

     

99,817

 

319,675

 

(296,460)

 

23,215

 

80,129

 

212,977

 

(203,750)

 

9,227

 

12,568

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Itaú BBA

 

03/01/16

 

Real

 

150,000

 

172,829

 

(182,241)

 

(9,412)

 

150,000

 

168,496

 

(177,265)

 

(8,769)

 

(643)

HSBC

 

02/05/16 a 03/01/16

 

Real

 

185,000

 

212,189

 

(224,907)

 

(12,718)

 

185,000

 

206,843

 

(218,768)

 

(11,925)

 

(793)

Deutsche Bank

 

03/01/16

 

Real

 

10,000

 

11,454

 

(12,104)

 

(650)

 

10,000

 

11,167

 

(11,774)

 

(607)

 

(43)

Total Fixed rate-to-CDI interest rate swap

 

 

345,000

 

396,472

 

(419,252)

 

(22,780)

 

345,000

 

386,506

 

(407,807)

 

(21,301)

 

(1,479)

                                             

Itaú BBA

 

03/01/16

 

Real

 

30,000

 

30,338

 

(30,277)

 

61

 

 

 

 

 

 

 

 

 

61

HSBC

 

02/05/16 a 03/01/16

 

Real

 

120,000

 

121,282

 

(120,989)

 

293

                 

293

Total interest rate- to-CDI swap

 

 

 

150,000

 

151,620

 

(151,266)

 

354

 

 

 

 

 

 

 

 

 

354

                                             

 

 

 

 

3,276,036

 

(2,945,713)

 

330,323

 

 

 

4,149,663

 

(3,996,418)

 

153,245

 

481,479

 

 

 

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11.b) Transactions with Derivative Financial Instruments:

 

·         Classification of the derivatives in the balance sheet and statement of income

 

                           

3/31/2015

Instruments

 

Assets

 

Liabilities

 

Finance income (costs), net (Note 23)

 

Current

 

Non-current

 

Total

 

Current

 

Non-current

 

Total

 

Dollar-to-CDI swap (*)

 

 

 

 

 

 

 

 

 

 

 

 

 

(18)

Dollar-to-real swap (NDF)

 

331,081

     

331,081

             

436,600

Dollar-to-euro swap (NDF)

 

 

 

 

 

 

 

1,547

 

 

 

1,547

 

33,454

Dollar-to-euro swap

 

23,215

     

23,215

             

12,568

Fixed rate-to-CDI swap

 

 

 

 

 

 

 

 

 

22,780

 

22,780

 

(1,479)

CDI-to-fixed rate swap

 

354

     

354

         

 

354

 

 

354,650

 

 

 

354,650

 

1,547

 

22,780

 

24,327

 

481,479

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/31/2014

 

3/31/2014

Instruments

 

Assets

 

Liabilities

 

Finance income (costs), net (Note 23)

 

Current

 

Non-current

 

Total

 

Current

 

Non-current

 

Total

 

Dollar-to-CDI swap

 

5,346

 

 

 

5,346

 

 

 

 

 

(18,772)

Dollar-to-real swap (NDF)

 

153,316

     

153,316

 

65

     

65

 

(71,363)

Dollar-to-euro swap (NDF)

 

6,722

 

 

 

6,722

 

 

 

 

 

 

(557)

Dollar-to-euro swap

 

9,227

     

9,227

         

 

(485)

Libor-to-CDI swap (**)

 

 

 

 

 

 

 

 

 

 

 

(636)

Fixed rate-to-CDI swap

         

     

21,301

 

21,301

 

(2,433)

 

 

174,611

 

 

 

174,611

 

65

 

21,301

 

21,366

 

(94,246)

 

 

 (*) The positions of the swap transactions were settled in January 2015

 

(**) The positions of the swap transactions were settled in May 2014, together with their guarantee deposit.

 

Fixed rate-to-CDI swap

 

The purpose of this transaction is to peg obligations subject to a post-fixed rate (CDI) to a fixed rate. Basically, the Company contracted swaps for its obligations indexed to CDI, in which it receives interest on the notional amount (long position) and pays a pre-fixed rate on the notional amount of the contract date (short position). The gains and losses on this contract are directly related to CDI fluctuations. In general, these are transactions conducted in the Brazilian over-the-counter market that have as counterparty a prime financial institution.

 

·       Hedge accounting

 

Beginning November 1, 2014, the Company formally designated cash flow hedging relationships to protect highly probable future cash flows against US dollar fluctuations.

 

In order to better reflect the accounting impacts of this foreign exchange hedging strategy on its profit, CSN designated part of its US dollar-denominated liabilities as a hedging instrument of its future exports. As a result, foreign exchange differences arising on translating the designated liabilities will be temporarily recognized in shareholders’ equity and allocated to profit or loss when such exports are carried out, which will allow recognizing the US dollar impact on liabilities and exports concurrently.

 

The table below shows a summary of the hedging relationships:

 

 

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3/31/2015

Designation Date

 

Hedging Instrument

 

Hedged item

 

Type of hedged risk

 

Hedged period

 

Exchange rate on designation

 

Designated amounts (US$’000)

 

Impact on shareholders’ equity

11/3/2014

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

October 2016- September 2019

 

2.4442

 

500,000

 

(381,900)

12/1/2014

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

October 2015-February 2019

 

2.5601

 

175,000

 

(113,383)

12/18/2014

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

May 2020

 

2.6781

 

100,000

 

(52,995)

Total

 

 

 

 

 

 

 

 

 

 

 

775,000

 

(548,278)

 

In the hedging relationships described above, the amounts of the debt instruments were fully designated for equivalent iron ore export portions.

 

The movements in the hedge accounting amounts recognized in shareholders’ equity as of March 31, 2015 are as follows:

 

 

12/31/2014

 

Addition

 

Reversal

 

3/31/2015

Cash flow hedge accounting

120,633

 

427,645

 

 

 

548,278

Income tax and social contribution on cash flow hedge accounting

(41,015)

 

(145,399)

     

(186,414)

Fair value of cash flow hedge, net of taxes

79,618

 

282,246

 

 

 

361,864

 

 

As of March 31, 2015 the hedging relationships established by the Company were effective, according to the prospective tests conducted. Thus, no reversal for hedge accounting ineffectiveness was recognized.

 

·         Sensitivity analysis of Derivative Financial Instruments and Foreign Exchange Exposure

 

The Company considered scenarios 1 and 2 as 25% and 50% of appreciation for volatility of the currency, using as reference the closing exchange rate as of March 31, 2015.

 

The currencies used in the sensitivity analysis and its scenarios are shown below:

   

3/31/2015

Currency

 

Exchange rate

 

Scenario 1

 

Scenario 2

USD

 

3.2080

 

2.4060

 

1.6040

EUR

 

3.4457

 

2.5843

 

1.7229

USD x EUR

 

1.0741

 

0.8056

 

0.5371

 

   

3/31/2015

Interest

 

Interest rate

 

Scenario 1

 

Scenario 2

CDI

 

12.60%

 

9.45%

 

6.30%

 

The effects on income statement, considering both scenarios are shown below:

 

 

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03/31/2015

Instruments

 

Notional amount

 

Risk

 

Probable scenario (*)

 

Scenario 1

 

Scenario 2

 

 

 

 

 

 

 

 

 

 

 

Dollar-to-real swap (NDF)

 

688,000

 

Dollar

 

331,081

 

(550,334)

 

(1,100,668)

 

 

 

 

 

 

 

 

 

 

 

Hedge accounting of exports

 

775,000

 

Dollar

 

548,278

 

(621,550)

 

(1,243,100)

 

 

 

 

 

 

 

 

 

 

 

Exchange position functional currency BRL

 

(1,948,392)

 

Dollar

     

1,562,610

 

3,125,220

(not including exchange derivatives above)

 

 

 

 

 

 

 

 

 

 

                     

Consolidated exchange position

 

(485,392)

 

Dollar

 

879,359

 

390,726

 

781,452

(including exchange derivatives above)

                   

 

 

 

 

 

 

 

 

 

 

 

Dollar-to-euro swap (NDF)

 

(60,000)

 

Euro

 

(1,547)

 

51,734

 

103,468

 

 

 

 

 

 

 

 

 

 

 

Exchange position functional currency BRL

 

(146,597)

 

Euro

     

126,283

 

252,566

(not including exchange derivatives above)

 

 

 

 

 

 

 

 

 

 

                     

Consolidated exchange position

 

(206,597)

 

Euro

 

(1,547)

 

178,017

 

356,034

(including exchange derivatives above)

                   

 

 

 

 

 

 

 

 

 

 

 

Dollar-to-euro swap

 

99,817

 

Dollar

 

23,215

 

106,737

 

320,212

 

(*) The sensitivity analysis is based on the assumption of maintaining, as a probable scenario, the market values as of March 31, 2015 recognized in the company's assets and liabilities.

 

11.c) Interest rate risk

 

·         Sensitivity analysis of interest rate swaps

 

 

   

 

 

 

 

 

 

 

 

3/31/2015

Instruments

 

Notional amount

 

Risk

 

Probable scenario (*)

 

Scenario 1

 

Scenario 2

 

 

 

 

 

 

 

 

 

 

 

Fixed rate-to-CDI interest rate swap

 

345,000

 

CDI

 

(22,780)

 

(11,034)

 

(22,032)

 

 

 

 

 

 

 

 

 

 

 

Dollar-to-CDI interest rate swap

 

150,000

 

CDI

 

354

 

3,376

 

7,450

 

(*) The sensitivity analysis is based on the assumption of maintaining as probable scenario the market values as of March 31, 2015 recognized in the company's assets and liabilities.

 

The Company considered scenarios 1, and 4 as 25% and 50% of appreciation for volatility of the interest as of March 31, 2015.

 

 

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·         Sensitivity analysis of changes in interest rates

 

The Company considers the effects of a 5% increase or decrease in interest rates on its outstanding borrowings, financing and debentures as of March 31, 2015 in the condensed interim financial statements.

 

 

       

Impact on profit or loss

Changes in interest rates

 

% p.a

 

3/31/2015

TJLP

 

5.50

 

2,797

Libor

 

0.40

 

1,056

CDI

 

12.60

 

93,020

 

 

11.d) Liquidity risk

 

Below are the contractual maturities of financial liabilities, including interest.

 

 

 

 

 

 

 

 

 

 

 

Consolidated

At March 31, 2015

Less than one year

 

From one to two years

 

From two to five years

 

Over five years

 

Total

Borrowings, financing and debentures

1,770,064

 

6,893,353

 

17,315,677

 

5,240,463

 

31,219,557

Derivative financial instruments

24,327

 

 

 

 

 

 

 

24,327

Trade payables

1,555,728

 

 

 

 

 

 

 

1,555,728

Dividends and interest on capital

2,269

             

2,269

At December 31, 2014

 

 

 

 

 

 

 

 

 

Borrowings, financing and debentures

2,813,930

 

7,075,910

 

15,650,855

 

4,437,500

 

29,978,195

Derivative financial instruments

65

 

21,301

 

 

 

 

 

21,366

Trade payables

1,638,505

             

1,638,505

Dividends and interest on capital

277,097

 

 

 

 

 

 

 

277,097

 

·               Fair values of assets and liabilities as compared to their carrying amounts

 

The estimated fair values for certain consolidated long-term borrowings and financing were calculated at prevailing market rates, taking into consideration the nature, terms and risks similar to those of the recorded contracts, as compared below:

 

 

 

 

3/31/2015

 

 

 

12/31/2014

 

Carrying amount

 

Fair value

 

Carrying amount

 

Fair value

Perpetual bonds

3,212,366

 

2,179,136

 

2,659,815

 

1,974,031

Fixed rate notes

6,032,546

 

5,631,321

 

6,232,986

 

6,267,272

 

 

 

 

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12.   OTHER PAYABLES

 

The group of other payables classified in current and non-current liabilities is comprised as follows:

 

 

 

 

 

 

Consolidated

 

 

 

 

 

Parent Company

 

Current

Non-current

 

Current

 

Non-current

 

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

Payables to related parties (Note 16 b)

516,931

 

249,758

 

9,098,777

 

9,236,716

 

585,996

 

339,613

 

9,662,498

 

9,810,648

Derivative financial instruments (Note 11 I)

24,327

 

65

 

 

 

21,301

 

 

 

 

 

 

 

 

Dividends and interest on capital payable to Company owners

 

152,966

 

 

 

 

 

 

 

152,966

 

 

 

 

Dividends and interest on capital payable non-controlling interets

2,269

 

124,131

         

2,269

 

124,131

       

Advances from customers

24,398

 

22,905

 

 

 

 

 

16,008

 

14,932

 

 

 

 

Taxes in installments

37,461

 

33,358

 

17,235

 

20,728

 

29,109

 

23,348

     

1,823

Profit sharing - employees

158,938

 

120,278

 

 

 

 

 

141,153

 

108,902

 

 

 

 

Other payables

126,634

 

141,648

 

38,966

 

36,618

 

49,753

 

39,705

 

6,317

 

6,041

 

890,958

 

845,109

 

9,154,978

 

9,315,363

 

824,288

 

803,597

 

9,668,815

 

9,818,512

 

13.   INCOME TAX AND SOCIAL CONTRIBUTION

 

The information related to income tax and social contribution did not have significant changes in relation to that disclosed in the Company's financial statements as of December 31, 2014 and, accordingly, the Company decided not to repeat it fully in the condensed interim financial statements as of March 31, 2015.

 

13.a) Income tax and social contribution recognized in profit or loss:

 

The income tax and social contribution recognized in profit or loss for the period are as follows:

 

     

Consolidated

 

   

Parent Company

 

3/31/2015

 

3/31/2014

 

3/31/2015

 

3/31/2014

Income tax and social contribution (expense) income

 

 

 

 

 

 

 

Current

(213,959)

 

(124,011)

 

(156,765)

 

(11,717)

Deferred

716,476

 

96,856

 

694,546

 

99,430

 

502,517

 

(27,155)

 

537,781

 

87,713

 

 

The reconciliation of Company and consolidated income tax and social contribution expenses and income and the result from applying the effective rate on profit before income tax (IRPJ) and social contribution (CSLL) are as follows:

 

     

Consolidated

 

   

Parent Company

 

3/31/2015

 

3/31/2014

 

3/31/2015

 

3/31/2014

(Loss) profit before income tax and social contribution

(110,715)

 

79,251

 

(145,725)

 

(32,379)

Tax rate

34%

 

34%

 

34%

 

34%

Income tax and social contribution at combined statutory rate

37,643

 

(26,945)

 

49,547

 

11,009

Adjustment to reflect the effective rate:

     

 

     

Share of profit of investees

135,483

 

(15,471)

 

490,467

 

76,733

Profit with differentiated rates or untaxed

341,267

 

20,625

       

Transfer pricing adjustment

(241)

 

(4,926)

 

(241)

 

(4,926)

Tax losses without deferred tax recognized

(10,830)

 

(4,820)

       

Indebtdness limit

(7,718)

 

 

 

(7,718)

 

 

Other permanent deductions (add-backs)

6,913

 

4,382

 

5,726

 

4,897

Income tax and social contribution for the year

502,517

 

(27,155)

 

537,781

 

87,713

Effective tax rate

454%

 

34%

 

369%

 

271%

 

 

 

 

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13.b) Deferred income tax and social contribution:

 

The deferred income tax and social contribution are calculated on income tax and social contribution loss carryforwards and related temporary differences between the tax bases of assets and liabilities and the accounting balances of the financial statements.

 

   

Consolidated

   

Opening balance

 

Movement

Closing balance

   

12/31/2014

 

Comprehensive income

 

Profit or loss

3/31/2015

Deferred tax assets

 

 

 

 

 

 

 

Income tax losses

 

383,185

 

11,113

 

(50,249)

344,049

Social contribution tax losses

 

75,662

 

 

 

(18,087)

57,575

Temporary differences

 

2,157,211

 

(50,163)

 

776,828

2,883,876

- Provision for tax, social security, labor, civil and environmental risks

 

226,741

 

 

 

35,491

262,232

- Provision for environmental liabilities

 

71,925

     

(554)

71,371

- Asset impairment losses

 

68,981

 

 

 

255

69,236

- Inventory impairment losses

 

32,366

     

289

32,655

- (Gains)/losses on financial instruments

 

(6,419)

 

 

 

891

(5,528)

- (Gains)/losses on available-for-sale financial assets

 

618,291

 

(188,457)

 

2,862

432,696

- Actuarial liability (pension and healthcare plan)

 

163,627

 

(77)

 

 

163,550

- Accrued supplies and services

 

68,483

     

13,726

82,209

- Estimated losses on doubtful debts

 

29,852

 

 

 

2,236

32,088

- Goowill on merger

 

(102,659)

       

(102,659)

- Unrealized exchange differences (*)

 

1,011,007

 

 

 

695,431

1,706,438

- (Gain) on loss of control over Transnordestina

 

(224,096)

       

(224,096)

- Cash flow hedge accounting

 

41,015

 

145,399

 

 

186,414

- Other

 

158,097

 

(7,028)

 

26,201

177,270

Non-current assets

 

2,616,058

 

(39,050)

 

708,492

3,285,500

               

Deferred tax liabilities

             

- Fair value adjustment - Acquisition of SWT

 

222,454

 

14,068

 

(7,346)

229,176

- Other

 

16,438

 

1,046

 

(638)

16,846

Non-current liabilities

 

238,892

 

15,114

 

(7,984)

246,022

 

 

 

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Parent company

 

Opening balance

 

Movement

Closing balance

 

12/31/2014

 

Comprehensive income

 

Profit or loss

 

3/31/2015

Deferred tax assets

 

 

 

 

 

 

 

Income tax losses

219,211

 

 

 

(50,249)

 

168,962

Social contribution tax losses

75,662

 

 

 

(18,087)

 

57,575

Temporary differences

2,144,056

 

(60,489)

 

762,882

 

2,846,449

- Provision for tax, social security, labor, civil and environmental risks

218,645

 

 

 

35,054

 

253,699

- Provision for environmental liabilities

71,925

     

(554)

 

71,371

- Asset impairment losses

62,304

 

 

 

573

 

62,877

- Inventory impairment losses

29,939

     

134

 

30,073

- (Gains)/losses on financial instruments

(5,037)

 

 

 

569

 

(4,468)

- (Gains)/losses on available-for-sale financial assets

594,397

 

(205,888)

 

2,862

 

391,371

- Actuarial liability (pension and healthcare plan)

163,763

 

 

 

 

 

163,763

- Accrued supplies and services

66,619

     

13,728

 

80,347

- Estimated losses on doubtful debts

25,987

 

 

 

2,118

 

28,105

- Unrealized exchange differences (*)

1,011,007

     

695,431

 

1,706,438

- (Gain) on loss of control over Transnordestina

(224,096)

 

 

 

 

 

(224,096)

- Cash flow hedge accounting

41,015

 

145,399

     

186,414

- Other

87,588

 

 

 

12,967

 

100,555

Non-current assets

2,438,929

 

(60,489)

 

694,546

 

3,072,986

(*) The Company taxes foreign exchange differences on a cash basis to calculate income tax and social contribution.

 

As of March 31, 2015, the information related to the Group´s income tax and social contribution loss carryforwards did not have significant changes in relation to that disclosed in the Company´s financial statements as of December 31, 2014 (note 13). As a result, the estimated recovery of the deferred tax assets remains the same as previously disclosed by the Company.

 

The Company’s corporate structure includes foreign subsidiaries whose profits are subject to income tax levied by the related countries, recognized at tax rates lower than in Brazil.

 

In the 2011 period to the first quarter of 2015, these subsidiaries generated profits amounting to R$3,870,350, which tax authorities may understand that have already been distributed, hence, it would be subject to  additional taxation in Brazil, in the approximate amount of R$1,315,919. The Company, based on its legal counsel's opinion, assessed the likelihood of loss in a potential challenge by tax authorities as possible and, therefore, no provision was recognized in the condensed interim financial statements.

 

 

·         Law 12.973/14

 

Law 12.973, enacted in May 2014, brought significant changes to tax legislation, which among others, revoked the Transition Tax Regime (RTT).Theses changes directly impact the determination of the income tax and social contribution basis. As from 2015, the application of the Law is mandatory and CSN applied the Law´s requirements to the interim financial statements as of March 31, 2015.

 

 

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13.c) Income tax and social contribution recognized in shareholders' equity:

 

The income tax and social contribution recognized directly in shareholders' equity are as follows:

 

     

Consolidated

   

Parent Company

 

3/31/2015

 

12/31/2014

3/31/2015

 

12/31/2014

Income tax and social contribution

 

 

 

 

 

 

Actuarial gains on defined benefit pension plan

65,295

 

65,372

65,247

 

65,247

Changes in the fair value on available-for-sale financial assets

(329,316)

 

(140,859)

(336,023)

 

(130,135)

Exchange differences on translating foreign operations

(425,510)

 

(425,510)

(425,510)

 

(425,510)

Cash flow hedge accounting

186,414

 

41,015

186,414

 

41,015

 

(503,117)

 

(459,982)

(509,872)

 

(449,383)

 

 

 

14.   PROVISION FOR TAX, SOCIAL SECURITY, LABOR, CIVIL AND ENVIRONMENTAL RISKS AND JUDICIAL DEPOSITS

 

As of March 31, 2015, the information related to judicial deposits and proceedings did not have significant changes in relation to that disclosed in the Company's financial statements as of December 31, 2014. Details of the accrued amounts and related judicial deposits are as follows:

 

 

Consolidated

 

Parent Company

 

Accrued liabilities

Judicial deposits

 

Accrued liabilities

Judicial deposits

 

3/31/2015

12/31/2014

3/31/2015

12/31/2014

 

03/31/2015

12/31/2014

3/31/2015

12/31/2014

Tax

162,119

129,524

79,758

77,836

 

142,922

109,173

67,634

67,483

Social security

63,330

62,277

46,193

46,193

 

62,550

61,498

46,193

46,193

Labor

507,841

444,243

144,822

136,396

 

442,278

377,224

115,139

105,833

Civil

123,745

106,143

17,979

17,897

 

101,869

86,360

13,588

13,588

Environmental

13,963

3,981

1,697

1,697

 

13,960

3,978

1,628

1,628

Judicial deposits

 

 

3,890

8,785

 

 

 

30

5,177

 

870,998

746,168

294,339

288,804

 

763,579

638,233

244,212

239,902

 

 

The changes in the provisions for tax, social security, labor, civil and environmental risks in the period ended March 31, 2015 were as follows:

 

           

Consolidated

 

 

 

 

 

 

Current + Non-current

Nature

12/31/2014

Additions

Net adjustment

Net utilization of reversal

 

3/31/2015

Tax

129,524

32,185

1,667

(1,257)

 

162,119

Social security

62,277

 

1,053

   

63,330

Labor

444,243

66,846

19,515

(22,763)

 

507,841

Civil

106,143

5,046

13,897

(1,341)

 

123,745

Environmental

3,981

11,537

29

(1,584)

 

13,963

 

746,168

115,614

36,161

(26,945)

 

870,998

 

 

 

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Parent Company

 

 

 

 

 

 

Current + Non-current

Nature

 

12/31/2014

Additions

Net adjustment

Net utilization of reversal

3/31/2015

Tax

 

109,173

32,185

1,667

(103)

142,922

Social security

 

61,498

 

1,052

 

62,550

Labor

 

377,224

59,445

11,784

(6,175)

442,278

Civil

 

86,360

2,978

13,190

(659)

101,869

Environmental

 

3,978

11,537

29

(1,584)

13,960

   

638,233

106,145

27,722

(8,521)

763,579

 

 

The provision for tax, social security, labor, civil and environmental liabilities was estimated by management and is mainly based on the legal counsel’s assessment. Only proceedings for which the risk is classified as probable loss are accrued. Moreover, this provision includes tax liabilities resulting from contingencies filed by the Company, subject to SELIC (Central Bank’s policy rate).

 

§  Other administrative and judicial proceedings

 

In the first quarter ended on March 31, 2015, there were no significant changes in the proceeding´s progress classified as possible risk of loss by the external legal counsel. The table below shows a summary of the balance of the main legal matters compared with the balance at December 31, 2014. The increase in the period substantially reflects the monetary adjustment.

 

 

 

3/31/2015

 

12/31/2014

Tax assessment notice issued against the Company for an alleged sale of 40% of the shares of its joint venture NAMISA to a Japanese-Korean consortium,

 

7,159,502

 

7,068,252

Tax foreclosures - ICMS - Electricity credits

 

755,047

 

742,727

Installments MP 470 - alleged insufficiency of tax losses

 

530,218

 

521,340

Offset of taxes that were not approved by the Federal Revenue Service - IRPJ/CSLL, PIS/COFINS e IPI

 

533,217

 

523,171

Assessment notice for an alleged nonpayment of taxes- IRPJ/CSLL - foreign subsidiaries (2010)

 

484,216

 

476,316

Disallowance of the ICMS credits - Transfer of iron ore

 

454,464

 

446,907

Disallowance of the ICMS credits - ICMS - acquisition of subsidiary

 

261,808

 

257,536

ICMS - Refers to the transfer of imported raw material at an amount lower than the price disclosed in the import documentation

 

234,080

 

230,261

Disallowance of the tax losses arising on adjustments to the SAPLI

 

368,869

 

362,489

Other tax (federal, state, and municipal) lawsuits.

 

3,083,279

 

2,870,796

Annulment action filed by CSN against CADE

 

63,463

 

63,463

Other civil lawsuits

 

383,870

 

382,641

Labor and social security lawsuits

 

1,370,240

 

1,369,004

Environmental lawsuits

 

108,045

 

115,024

 

 

15,790,318

 

15,429,927

 

 

The assessments made by the legal counsel define these administrative and judicial proceedings as entailing risk of possible loss and, therefore, no provision was recorded in conformity with Management’s judgment and accounting practices adopted in Brazil.

 

 

 

 

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15.   PROVISION FOR ENVIRONMENTAL LIABILITIES AND ASSET RETIREMENT OBLIGATION - ARO

 

The information related to provisions for environmental liabilities and asset retirement obligation - ARO did not have significant changes in relation to that disclosed in the Company's financial statements as of December 31, 2014.

 

The balance of the provision for environmental liabilities and asset retirement obligation - ARO is as follows:

 

 

 

 

Consolidated

 

 

 

Parent Company

 

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

Environmental liabilities

209,913

 

211,544

 

209,913

 

211,544

Asset retirement obligations

27,822

 

26,995

 

22,411

 

21,718

 

237,735

 

238,539

 

232,324

 

233,262

 

 

 

16.   RELATED-PARTY BALANCES AND TRANSACTIONS

 

The information related to related-party transactions did not have significant changes in relation to that disclosed in the Company's financial statements as of December 31, 2014.

 

16 a) Transactions with Holding Company

 

·  Liabilities

 

Companies

Proposed

Paid

Dividends

Dividends

Vicunha Siderurgia

 

282,571

Rio Iaco

 

23,568

Total at 3/31/2015

 

306,139

Total at 12/31/2014

152,966

220,349

 

 

 

 

 

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Version: 1

 

16 b) Transactions with subsidiaries, jointly controlled entities, associates, exclusive funds and other related parties

 

·           By transaction

 

       

Consolidated

 

 

Current

 

Non-current

 

Total

   

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables (note 4)

 

201,203

 

153,737

         

201,203

 

153,737

Loans (note 6)

 

220,414

 

517,493

 

125,730

 

117,357

 

346,144

 

634,850

Dividends receivable (note 4)

 

59,430

 

59,470

         

59,430

 

59,470

Actuarial asset

 

 

 

 

 

97,188

 

97,173

 

97,188

 

97,173

Other receivables (note 6)

 

12,674

 

15,780

 

5,596

 

7,037

 

18,270

 

22,817

 

 

493,721

 

746,480

 

228,514

 

221,567

 

722,235

 

968,047

Liabilities

                       

Empréstimos e financiamentos

 

 

 

 

 

 

 

 

 

 

 

 

Loans related parties (note 10)

 

55,390

             

55,390

   

Other payables (Note 12)

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

3,165

 

2,681

 

546

 

546

 

3,711

 

3,227

Advances from customers

 

513,766

 

247,077

 

9,098,231

 

9,236,170

 

9,611,997

 

9,483,247

Trade payables

 

22,911

 

63,165

         

22,911

 

63,165

Actuarial liability

 

 

 

 

 

11,287

 

11,275

 

11,287

 

11,275

   

595,232

 

312,923

 

9,110,064

 

9,247,991

 

9,705,296

 

9,560,914

 

 

 

 

 

 

 

 

 

 

 

 

 

   

3/31/2015

 

12/31/2014

               

Statement of Income

 

 

 

 

               

Revenues

                       

Sales

 

209,015

 

351,370

               

Interest

 

22,087

 

11,066

               

Expenses

 

 

 

 

               

Purchases

 

(270,801)

 

(285,052)

               

Interest

 

(138,425)

 

(108,985)

               
   

(178,124)

 

(31,601)

               

 

·           By company

 

   

Consolidated

   

Assets

 

Liabilities

 

Statement of Income

 

Current

 

Non-current

 

Total

 

Current

 

Non-current

 

Total

 

Sales

 

Purchases

 

Finance income and costs, net

 

Total

                   

Subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ferrovia Transnordestina Logística S.A. (1)

 

54,343

 

66,421

 

120,764

                 

(1,103)

 

3,366

 

2,263

 

 

54,343

 

66,421

 

120,764

 

 

 

 

 

 

 

 

 

(1,103)

 

3,366

 

2,263

Joint ventures

                                       

CGPAR Construção Pesada S.A.

 

4,746

 

 

 

4,746

 

17

 

 

 

17

 

 

 

(33,217)

 

 

 

(33,217)

Nacional Minérios S.A. (2)

 

174,751

     

174,751

 

569,735

 

9,098,777

 

9,668,512

 

17,170

 

(42,172)

 

(131,247)

 

(156,249)

MRS Logística S.A.

 

24,579

 

 

 

24,579

 

7,624

 

 

 

7,624

 

 

 

(154,984)

 

 

 

(154,984)

CBSI - Companhia Brasileira de Serviços e Infraestrutura

 

4,775

 

2,368

 

7,143

 

826

     

826

 

13

 

(38,700)

     

(38,687)

Transnordestina Logística S.A (3)

 

110,362

 

47,184

 

157,546

 

16,920

 

 

 

16,920

 

 

 

 

 

4,251

 

4,251

   

319,213

 

49,552

 

368,765

 

595,122

 

9,098,777

 

9,693,899

 

17,183

 

(269,073)

 

(126,996)

 

(378,886)

Other related parties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CBS Previdência

     

97,188

 

97,188

     

11,287

 

11,287

               

Fundação CSN

 

319

 

75

 

394

 

73

 

 

 

73

 

 

 

(495)

 

12

 

(483)

Banco Fibra

                                 

6,741

 

6,741

Usiminas

 

1,187

 

 

 

1,187

 

 

 

 

 

 

 

110

 

 

 

 

 

110

Panatlântica

 

89,635

     

89,635

 

37

     

37

 

190,301

         

190,301

Taquari Participações S.A

                             

(130)

     

(130)

 

 

91,141

 

97,263

 

188,404

 

110

 

11,287

 

11,397

 

190,411

 

(625)

 

6,753

 

196,539

Associates

                                       

Arvedi Metalfer do Brasil S.A.

 

29,024

 

15,278

 

44,302

 

 

 

 

 

 

 

1,421

 

 

 

539

 

1,960

Total at 3/31/2015

 

493,721

 

228,514

 

722,235

 

595,232

 

9,110,064

 

9,705,296

 

209,015

 

(270,801)

 

(116,338)

 

(178,124)

Total at 12/31/2014

 

746,480

 

221,567

 

968,047

 

312,923

 

9,247,991

 

9,560,914

 

 

 

 

 

 

 

 

Total at 3/31/2014

 

 

 

 

 

 

351,370

 

(285,052)

 

(97,919)

(31,601)

 

 

 

 

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ITR –– Quarterly Financial Information - March 31, 2015 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

1.   Refers to loans of the subsidiary FTL - Ferrovia Transnordestina Logística S.A to the joint venture Transnordestina Logística S.A.

 

2.   Nacional Minérios S.A: Asset: Refers mainly to prepayment transactions with the indirect subsidiaries CSN Europe, CSN Export and CSN Ibéria. Contracts in US$: interest equivalent to 5.37% with final maturity in June 2015. As of March 31, 2015, borrowings total R$55,930 (R$364,118 as of December 31, 2014) and accounts receivable in the amount of R$81,300 (R$80,003 as of December 31, 2014 related to iron ore purchases.

 

Liabiliy: Refers mainly to the advance from customer received from jointly controlled entity Nacional Minérios S.A. regarding the contractual obligation of supply of iron ore and port services. The contract is subject to interest rate of 12.5% p.a. and expires in September 2042.

As disclosed in note 7.c), the Company signed an investment agreement for the new strategic alliance formed with the Asian Consortium. During the procedures required to close the transaction, the interest established in the agreements was canceled; however, a resolutive condition was introduced to reinstate the collection of interest retrospectively if the deal is not closed. However, since CSN holds 60% stake in Namisa, the Company began to accrue 40% interest provided for in contracts that would be due to Asian partners, in the case the deal does not occur.

 

3.   Transnordestina Logística S.A: Refers mainly to contracts in R$: interest equivalent to 108.00% of the CDI with final maturity in March 2017. As of March 31, 2015, borrowings total R$154,317 (R$141,358 as of December 31, 2014 classified in short term and R$43,955 classified in long term.

 

·           By transaction

 

   

Parent Company

 

 

Current

 

Current

 

Total

   

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables (1) (note 4)

 

1,138,092

 

969,343

         

1,138,092

 

969,343

Loans (note 6)

 

116,349

 

106,218

 

59,309

 

52,619

 

175,658

 

158,837

Dividends receivable (note 4)

 

67,513

 

67,553

         

67,513

 

67,553

Actuarial asset

 

 

 

 

 

96,717

 

96,914

 

96,717

 

96,914

Short-term investments / Investments (2)

 

190,860

 

252,895

 

133,294

 

87,475

 

324,154

 

340,370

Other receivables (4) (note 6)

 

164,575

 

168,035

 

335,736

 

329,330

 

500,311

 

497,365

   

1,677,389

 

1,564,044

 

625,056

 

566,338

 

2,302,445

 

2,130,382

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings and financing

                       

Prepayment (note10)

 

97,106

 

146,504

 

5,906,890

 

5,156,481

 

6,003,996

 

5,302,985

Fixed rate notes and intercompany bonds (Note 10)

 

1,478,233

 

1,187,610

 

1,924,800

 

1,593,720

 

3,403,033

 

2,781,330

Intercompany borrowings (note10)

 

283,302

 

222,525

 

2,881,377

 

2,670,457

 

3,164,679

 

2,892,982

Other payables (Note 12)

                       

Accounts payable

 

72,227

 

62,536

 

564,267

 

574,478

 

636,494

 

637,014

Advances from customers (3)

 

513,769

 

277,077

 

9,098,231

 

9,236,170

 

9,612,000

 

9,513,247

Trade payables

 

91,796

 

250,104

 

 

 

 

 

91,796

 

250,104

Actuarial liability

         

11,260

 

11,260

 

11,260

 

11,260

 

 

2,536,433

 

2,146,356

 

20,386,825

 

19,242,566

 

22,923,258

 

21,388,922

                         

 

 

3/31/2015

 

12/31/2014

               

Statement of Income

 

 

                   

Revenues

 

 

 

 

               

Sales

 

1,403,347

 

1,572,042

               

Interest

 

4,970

 

3,016

               

Exclusive funds

 

480,142

                   

 

 

 

 

 

               

Expenses

                       

Purchases

 

(398,294)

 

(379,646)

               

Interest

 

(386,914)

 

(407,607)

               

Exchange differences, net

 

(1,640,782)

 

197,169

               

Exclusive funds

     

(88,517)

               

 

 

(537,531)

 

896,457

               

 

 

 

 

 

 

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ITR –– Quarterly Financial Information - March 31, 2015 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

1.   Related parties receivables arise from product sales and service transactions between the parent, subsidiaries and joint ventures.

 

2.   Short-term investments total R$190,860 as of March 31, 2015 (R$396,914 as of December 31, 2014) and investments in Usiminas shares classified as available-for-sale total R$133,294 (R$87,475 as of December 31, 2014).

 

3.   Nacional Minérios S.A.: Advance from customer of the joint venture Nacional Minérios S.A., as mentioned above.

 

4.   Current: refers mainly to the assignment of credits from tax losses with the companies Sepetiba Tecon, CSN Energia, Companhia Metalúrgica Prada, FTL – Ferrovia Transnordestina Logística, Companhia Brasileira de Latas, Rimet, and Companhia de Embalagens Metálicas MMSA.

 

Non-current: refer refers mainly to the advance for future capital increase with the companies Transnordestina Logística, FTL – Ferrovia Transnordestina, CSN Energia, and Companhia Florestal do Brasil.

 

 

 

 

 

 

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ITR –– Quarterly Financial Information - March 31, 2015 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

·           By company

 

   

 

         

Parent Company

   

Assets

 

Liabilities

 

Statement of Income

 

Current

 

Non-current

 

Total

 

Current

 

Non-current

 

Total

 

Sales

 

Purchases

 

Finance income and costs, net

 

Exchange differences, net

 

Total

                     

Subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Companhia Metalic Nordeste

 

834

     

834

 

5,339

     

5,339

 

24,776

 

(348)

         

24,428

Companhia Metalúrgica Prada

 

105,493

 

121,336

 

226,829

 

13,392

 

195

 

13,587

 

252,166

 

(29,313)

 

 

 

 

 

222,853

CSN Cimentos S.A. (1)

 

13,685

     

13,685

 

245

 

399,650

 

399,895

 

47,447

 

(1,193)

 

(10,908)

     

35,346

Estanho de Rondônia S.A.

 

8,207

 

 

 

8,207

 

 

 

 

 

 

 

 

 

(1,384)

 

 

 

 

 

(1,384)

Companhia Florestal do Brasil

     

8,477

 

8,477

                               

Sepetiba Tecon S.A.

 

16,236

 

77,063

 

93,299

 

6,256

 

 

 

6,256

 

663

 

(4,248)

 

167

 

 

 

(3,418)

Mineração Nacional

 

19

     

19

                               

Congonhas Minérios S.A. (2)

 

 

 

 

 

 

 

187,270

 

1,799,976

 

1,987,246

 

 

 

 

 

(60,691)

 

 

 

(60,691)

CSN Energia S.A.

 

885

     

885

 

(486)

     

(486)

     

(65,091)

         

(65,091)

Ferrovia Transnordestina Logística S.A.

 

3,132

 

45,071

 

48,203

 

 

 

144,529

 

144,529

 

26

 

 

 

 

 

 

 

26

ITA Energética S.A

 

501

     

501

                               

Companhia Brasileira de Latas

 

157,784

 

78,193

 

235,977

 

15,965

 

 

 

15,965

 

18,398

 

(547)

 

 

 

 

 

17,851

Companhia Siderúrgica Nacional, LLC

 

585,049

     

585,049

 

42,850

     

42,850

 

254,808

         

80,891

 

335,699

CSN Europe Lda.

 

 

 

 

 

 

 

8,103

 

98,548

 

106,651

 

 

 

 

 

(1,644)

 

(16,951)

 

(18,595)

CSN Resources S.A. (3)

             

1,599,810

 

7,131,855

 

8,731,665

         

(144,398)

 

(1,524,048)

 

(1,668,446)

CSN Export Europe, S.L.

 

 

 

 

 

 

 

35,234

 

 

 

35,234

 

 

 

 

 

(831)

 

(6,633)

 

(7,464)

Lusosider Aços Planos, S.A.

 

121,486

     

121,486

                         

20,472

 

20,472

CSN Handel GmbH (4)

 

77,991

 

 

 

77,991

 

71,648

 

 

 

71,648

 

596,061

 

 

 

 

 

89,619

 

685,680

CSN Islands XII Corp. (5)

             

28,222

 

1,618,436

 

1,646,658

         

(30,300)

 

(278,383)

 

(308,683)

CSN Ibéria Lda.

 

 

 

 

 

 

 

 

 

83,599

 

83,599

 

 

 

 

 

(471)

 

(14,338)

 

(14,809)

Stahlwerk Thüringen GmbH

                             

2,149

         

2,149

   

1,091,302

 

330,140

 

1,421,442

 

2,013,848

 

11,276,788

 

13,290,636

 

1,194,345

 

(99,975)

 

(249,076)

 

(1,649,371)

 

(804,077)

Joint ventures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CGPAR Construção Pesada S.A.

 

15,992

     

15,992

 

35

     

35

     

(66,433)

         

(66,433)

Nacional Minérios S.A.

 

119,362

 

 

 

119,362

 

514,345

 

9,098,777

 

9,613,122

 

17,170

 

(42,172)

 

(137,672)

 

8,589

 

(154,085)

MRS Logística S.A.

 

24,579

     

24,579

 

7,322

     

7,322

     

(152,143)

         

(152,143)

CBSI - Companhia Brasileira de Serviços e Infraestrutura

 

4,767

 

2,368

 

7,135

 

773

 

 

 

773

 

 

 

(36,946)

 

 

 

 

 

(36,946)

Transnordestina Logística S.A.

 

110,362

 

47,184

 

157,546

                     

4,251

     

4,251

 

 

275,062

 

49,552

 

324,614

 

522,475

 

9,098,777

 

9,621,252

 

17,170

 

(297,694)

 

(133,421)

 

8,589

 

(405,356)

Other related parties

                                           

CBS Previdência

 

 

 

96,717

 

96,717

 

 

 

11,260

 

11,260

 

 

 

 

 

 

 

 

 

 

Fundação CSN

 

319

 

75

 

394

 

73

     

73

     

(495)

 

12

     

(483)

Usiminas

 

1,187

 

 

 

1,187

 

 

 

 

 

 

 

110

 

 

 

 

 

 

 

110

Panatlântica

 

89,635

     

89,635

 

37

     

37

 

190,301

             

190,301

Taquari Participações S.A

                             

(130)

         

(130)

 

 

91,141

 

96,792

 

187,933

 

110

 

11,260

 

11,370

 

190,411

 

(625)

 

12

 

 

 

189,798

Associates

                                           

Arvedi Metalfer do Brasil S.A.

 

29,024

 

15,278

 

44,302

 

 

 

 

 

 

 

1,421

 

 

 

539

 

 

 

1,960

                                             

Exclusive funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diplic, Mugen and Vértice

 

190,860

 

133,294

 

324,154

                     

480,144

     

480,144

Total at 3/31/2015

 

1,677,389

 

625,056

 

2,302,445

 

2,536,433

 

20,386,825

 

22,923,258

 

1,403,347

 

(398,294)

 

98,198

 

(1,640,782)

 

(537,531)

Total at 12/31/2014

 

1,564,044

 

566,338

 

2,130,382

 

2,146,356

 

19,242,566

 

21,388,922

 

 

 

 

 

 

 

 

 

 

Total at 3/31/2014

 

 

 

 

 

 

 

 

 

 

 

 

 

1,572,042

 

(379,646)

 

(493,108)

 

197,169

 

896,457

 

1.   CSN Cimentos S.A.: Payables of R$399,650 as of March 31, 2015 (R$418,938 as of December 31, 2014), classified in long term related to the purchase of the clinker plant.

 

2.   Congonhas Minérios S.A.: Refers mainly to borrowings with final maturity in March 2018 and interest of 101.50% of the CDI, total R$1,987,246 (R$1,908,160 as of December 31, 2014).

 

3.   CSN Resources S.A.: Contracts in dollars of Prepayment, Fixed Rate Notes and Intercompany Bonds, interest of 9.13% with final maturity in June 2047. As of March 31, 2015, borrowings total R$8,731,665 (R$7,490,873 as of December 31, 2014).

 

4.   CSN Handel GMBH: Receivables of R$77,991 as of March 31, 2015 (R$122,061 as of December 31, 2014). Refer to sales transactions on mining products.

 

5.   CSN Islands XII Corp: Contracts in US$: interest of 7.64% with final maturity in February 2025. As of March 31, 2015, borrowings total R$1,646,658 (R$1,363,481 as of December 31, 2014).

 

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16 c) Key management personnel

 

The key management personnel, who have authority and responsibility for planning, directing and controlling the Company’s activities, include the members of the Board of Directors and statutory directors. The following is information on the compensation of such personnel and the related balances as of March 31, 2015.

 

   

3/31/2015

 

3/31/2014

   

Statement of Income

Short-term benefits for employees and officers

 

5,791

 

2,261

Post-employment benefits

 

30

 

13

Other long-term benefits

 

n/a

 

n/a

Severance benefits

 

n/a

 

n/a

Share-based compensation

 

n/a

 

n/a

   

5,821

 

2,274

n/a – Not applicable

 

17.   SHAREHOLDERS' EQUITY

 

17.a)  Paid-in capital

 

Fully subscribed and paid-in capital as of March 31, 2015 and December 31, 2014 is R$4,540,000 represented by 1,387,524,047 book-entry common shares (1,387,524,047 as of December 31, 2014), without par value. Each common share entitles its holder to one vote in Shareholders’ Meetings.

 

17.b) Authorized capital

 

The Company’s bylaws in effect as of March 31, 2015 determine that the capital can be raised to up to 2,400,000,000 shares by decision of the Board of Directors.

 

17.c) Legal reserve

 

This reserve is recognized at the rate of 5% of the profit for each period, as provided for by Article 193 of Law 6.404/76, up to the ceiling of 20% of share capital.  

 

17.d) Ownership structure

 

As of March 31, 2015, the Company’s ownership structure was as follows:

 

   

 

 

 

 

3/31/2015

 

 

 

 

12/31/2014

   

Number of common shares

 

% of total shares

 

% of voting capital

 

Number of common shares

 

% of total shares

% of voting capital

Vicunha Siderurgia S.A.

 

697,719,990

 

50.29%

 

51.41%

 

697,719,990

 

50.29%

51.34%

Rio Iaco Participações S.A. (*)

 

58,193,503

 

4.19%

 

4.29%

 

58,193,503

 

4.19%

4.28%

Caixa Beneficente dos Empregados da CSN - CBS

 

12,788,231

 

0.92%

 

0.94%

 

12,788,231

 

0.92%

0.94%

BNDES Participações S.A. - BNDESPAR

 

8,794,890

 

0.63%

 

0.65%

 

8,794,890

 

0.63%

0.65%

NYSE (ADRs)

 

340,985,199

 

24.58%

 

25.13%

 

342,466,899

 

24.68%

25.20%

BM&FBovespa

 

238,651,234

 

17.20%

 

17.58%

 

239,010,634

 

17.23%

17.59%

 

 

1,357,133,047

 

97.81%

 

100.00%

 

1,358,974,147

 

97.94%

100.00%

Treasury shares

 

30,391,000

 

2.19%

 

 

 

28,549,900

 

2.06%

 

Total shares

 

1,387,524,047

 

100.00%

 

 

 

1,387,524,047

 

100.00%

 

 

 (*) Rio Iaco Participação S. A. is a company part of the control group.

 

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17. e) Treasury shares

 

The Board of Directors authorized several programs for repurchase of shares issued by the Company, to be held in treasury for subsequent sale or cancelation in order to maximize the generation of value to the shareholder through an efficient capital structure management, as shown in the table below:

 

Program

 

Board’s Authorization

 

Authorized quantity

 

Program period

 

Average buyback price

 

Minimum and maximum buyback price

 

number bought back

 

Share cancelation

   

Balance in treasury

1st

 

3/13/2014

 

70,205,661

 

3/14/2014-4/14/2014

 

R$ 9.34

 

R$ 9.22 and R$ 9.45

 

2,350,000

 

 

 

 

2,350,000

2nd

 

4/15/2014

 

67,855,661

 

4/16/2014-5/23/2014

 

R$ 8.97

 

R$ 8.70 and R$ 9.48

 

9,529,500

       

11,879,500

3rd

 

5/23/2014

 

58,326,161

 

5/26/2014-6/25/2014

 

R$ 9.21

 

R$ 8.61 and R$ 9.72

 

31,544,500

 

 

 

 

43,424,000

4th

 

6/26/2014

 

26,781,661

 

6/26/2014-7/17/2014

 

R$ 10.42

 

R$ 9.33 and R$ 11.54

 

26,781,661

       

70,205,661

 

 

7/18/2014

 

 

 

 

 

Not applicable

 

Not applicable

 

 

 

60,000,000

(1)

 

10,205,661

5th

 

7/18/2014

 

64,205,661

 

7/18/2014-8/18/2014

 

R$ 11.40

 

R$ 11.40

 

240,400

       

10,446,061

 

 

8/19/2014

 

 

 

 

 

Not applicable

 

Not applicable

 

 

 

10,446,061

(1)

 

6th

 

8/19/2014

 

63,161,055

 

8/19/2014-9/25/2014

 

R$ 9.82

 

R$ 9.47 and R$ 10.07

 

6,791,300

       

6,791,300

7th

 

9/29/2014

 

56,369,755

 

9/29/2014-12/29/2014

 

R$ 7.49

 

R$ 4.48 and R$ 9.16

 

21,758,600

 

 

 

 

28,549,900

8th (*)

 

12/30/2014

 

34,611,155

 

12/31/2014-3/31/2015

 

R$ 5.10

 

R$ 4.90 and R$ 5.39

 

1,841,100

       

30,391,000

9º (*)

 

3/31/2015

 

32,770,055

 

4/01/2015 - 6/30/2015

 

 

 

 

 

 

 

 

 

 

 

(*) There were no share buyback in this program.

 

1.   On July 18, 2014 and August 19, 2014, the Board of Directors approved the cancelation of 60,000,000 and 10,446,061 shares held in treasury, respectively, without any change in the amount of the Company’s capital.

 

As of March 31, 2015, the position of the treasury shares was as follows:

 

 

Bought back

 

Amount

 

Share price

 

Share

number

 

paid for

   

market price

(in units)

 

the shares

 

Minimum

 

Maximum

 

Average

 

as of 03/31/2015 (*)

30,391,000

 

R$ 238,976

 

R$4.48

 

R$ 11.54

 

R$7.86

 

R$ 165,023

(*) The quotation of the shares on the BM&FBovespa as of March 31, 2015, of R$5.43 per share, was used.

 

17.f) Policy on investments and payment of interest on capital and dividends

 

At a meeting held on December 11, 2000, the Board of Directors decided to adopt a profit distribution policy which, after compliance with the provisions in Law 6.404/76, as amended by Law 9.457/97, will entail the distribution of all the profit to the Company’s shareholders, provided that the following priorities are observed, irrespective of their order: (i) carrying out the business strategy; (ii) fulfilling its obligations; (iii) making the required investments; and (iv) maintaining a healthy financial situation of the Company.

 

 

 

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17.g) Earnings/(loss) per share:

 

Basic earnings (loss) per share were calculated based on the profit attributable to the owners of CSN divided by the weighted average number of common shares outstanding during the period, excluding the common shares purchased and held as treasury shares, as follows:

 

     

Consolidated

     

Parent Company

 

3/31/2015

 

3/31/2014

 

3/31/2015

 

3/31/2014

 

Common shares

 

Common shares

Profit for the period

 

 

 

 

 

 

 

Attributable to owners of the Company

392,056

 

55,334

 

392,056

 

55,334

Weighted average number of shares

1,357,202

 

1,457,542

 

1,357,202

 

1,457,542

Basic and diluted EPS

0.28887

 

0.03796

 

0.28887

 

0.03796

 

 

18.   DIVIDENDS AND INTEREST ON CAPITAL

 

On March 11, 2015, the Board of Directors approved the proposal for payment, as advance of mandatory minimum dividend, from the retained earnings reserve (statutory reserve of working capital), the amount of R$275,000 in dividends, corresponding to R$ 0,202633043 per share. The dividends were paid as from March 19, 2015, without inflation adjustment, to shareholders domiciled in Brazil.

 

The tables below show the history of dividends and interest on capital approved and paid:

 

                                     

Year

 

Approval Year

 

Dividends

 

Interest on capital

 

Total

 

Year

 

Payment Year

 

Dividends

 

Interest on capital

 

Total

2013

 

2013

 

610,000

 

190,000

 

800,000

 

2013

 

2013

 

610,503

 

190,000

 

800,503

2014

 

2014

 

700,000

     

700,000

 

2014

 

2014

 

424,939

     

424,939

2015

 

2015

 

275,000

 

 

 

275,000

 

 

 

2015

 

274,917

 

 

 

274,917

Total Approved

 

1,585,000

 

190,000

 

1,775,000

 

2015

 

2015

 

274,912

     

274,912

                   

Total Paid

 

1,585,271

 

190,000

 

1,775,271

 

 

 

 

 

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19.   NET SALES REVENUE

 

Net sales revenue is comprised as follows:

 

       

Consolidated

 

 

 

Parent Company

   

3/31/2015

 

3/31/2014

 

3/31/2015

 

3/31/2014

Gross revenue

 

 

 

 

 

 

 

 

Domestic market

 

2,942,631

 

3,526,857

 

2,713,048

 

3,268,888

Foreign market

 

1,794,017

 

1,691,623

 

987,948

 

972,563

 

 

4,736,648

 

5,218,480

 

3,700,996

 

4,241,451

Deductions

 

 

 

 

 

 

 

 

Cancelled sales and discounts

 

(38,464)

 

(29,041)

 

(31,966)

 

(23,551)

Taxes levied on sales

 

(687,932)

 

(818,561)

 

(610,998)

 

(727,447)

 

 

(726,396)

 

(847,602)

 

(642,964)

 

(750,998)

Net revenue

 

4,010,252

 

4,370,878

 

3,058,032

 

3,490,453

 

 

 

20.   EXPENSES BY NATURE

 

   

 

 

Consolidated

 

 

 

Parent Company

   

3/31/2015

 

3/31/2014

 

3/31/2015

 

3/31/2014

Raw materials and inputs

 

(1,447,223)

 

(1,493,417)

 

(842,763)

 

(941,229)

Labor cost

 

(428,079)

 

(410,300)

 

(357,164)

 

(327,001)

Supplies

 

(261,260)

 

(271,434)

 

(253,270)

 

(258,458)

Maintenance cost (services and materials)

 

(241,135)

 

(320,614)

 

(235,014)

 

(310,483)

Outsourcing services

 

(721,164)

 

(513,224)

 

(450,859)

 

(380,159)

Depreciation, amortization and depletion (Note 8 a)

(264,498)

 

(285,346)

 

(206,329)

 

(234,661)

Other

 

(72,849)

 

(33,962)

 

(74,515)

 

(39,478)

   

(3,436,208)

 

(3,328,297)

 

(2,419,914)

 

(2,491,469)

                 

Classified as:

 

 

 

 

 

 

 

 

Cost of sales

 

(3,025,533)

 

(3,034,529)

 

(2,189,432)

 

(2,311,229)

Selling expenses

 

(300,830)

 

(189,915)

 

(145,918)

 

(97,377)

General and administrative expenses

 

(109,845)

 

(103,853)

 

(84,564)

 

(82,863)

 

 

(3,436,208)

 

(3,328,297)

 

(2,419,914)

 

(2,491,469)

 

 

 

 

 

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21.   OTHER OPERATING INCOME (EXPENSES)

       

Consolidated

     

Parent Company

   

03/31/2015

 

03/31/2014

 

03/31/2015

 

03/31/2014

Other operating income

 

 

 

 

 

 

 

 

Indemnities/gains on lawsuits

 

1,728

 

967

 

1,618

 

553

Rentals and leases

 

285

 

507

 

285

 

252

Reversal of provisions

     

3,136

 

 

3,136

Other revenues

 

3,949

 

3,103

 

1,819

 

705

   

5,962

 

7,713

 

3,722

 

4,646

           

 

   

Other operating expenses

 

 

 

 

 

 

 

 

Taxes and fees

 

(11,867)

 

(3,828)

 

(10,826)

 

(2,168)

Provision for judicial deposits

 

(52)

 

(5,934)

 

(57)

 

(5,522)

Reversal (provision) of environmental liabilities

 

3,476

 

(2,760)

 

3,476

 

(2,760)

Provision for tax, social security, labor, civil and environmental risks,
net of reversals

(147,533)

 

(105,504)

 

(144,783)

 

(102,089)

Nondeductible contractual fines

 

(234)

 

(118)

 

(7)

 

(29)

Depreciation of unused equipment and amortization of intangible assets (Note 8 a)

 

(9,004)

 

(9,060)

 

 

 

 

Residual value of permanent assets written off (Note 8)

 

(3,985)

 

(4,628)

 

(3,842)

 

(4,288)

Inventory impairment losses/reversals (Note 5)

 

(1,897)

 

(16,200)

 

(393)

 

(14,624)

Losses on spare parts

 

(5,566)

     

(5,566)

   

Studies and project engineering expenses

 

(8,487)

 

(9,934)

 

(8,361)

 

(9,762)

Research and development expenses

 

(751)

 

(895)

 

(751)

 

(895)

Healthcare plan expenses

 

(14,962)

 

(13,443)

 

(14,962)

 

(13,443)

Impairment of available-for-sale financial assets

 

(8,417)

     

(8,417)

   

Other expenses

 

(10,220)

 

(12,037)

 

(7,271)

 

(10,477)

   

(219,499)

 

(184,341)

 

(201,760)

 

(166,057)

Other operating income (expenses), net

 

(213,537)

 

(176,628)

 

(198,038)

 

(161,411)

 

 

 

 

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22.   FINANCE INCOME (COSTS)

 

   

 

 

Consolidated

 

 

 

Parent Company

   

3/31/2015

 

3/31/2014

 

3/31/2015

 

3/31/2014

Finance income

 

 

 

 

 

 

 

 

Related parties (Note 16 b)

 

22,087

 

11,066

 

485,112

 

3,016

Income from short-term investments

 

29,340

 

20,000

 

5,240

 

552

Gains on derivatives (*)

 

354

           

Other income

 

4,355

 

6,986

 

4,341

 

5,001

   

56,136

 

38,052

 

494,693

 

8,569

Finance costs

               

Borrowings and financing - foreign currency

 

(217,729)

 

(167,893)

 

(46,079)

 

(24,625)

Borrowings and financing - local currency

 

(471,604)

 

(423,423)

 

(406,725)

 

(367,629)

Related parties (Note 16 b)

 

(138,425)

 

(108,985)

 

(386,914)

 

(496,124)

Capitalized interest (Notes 8 and 26)

 

24,325

 

43,934

 

24,325

 

43,934

Losses on derivatives (*)

 

(1,479)

 

(3,069)

 

 

 

(636)

Interest, fines and late payment charges

 

(11,014)

 

(40,615)

 

(8,007)

 

(38,151)

Other finance costs

 

(44,667)

 

(23,984)

 

(39,676)

 

(18,667)

   

(860,593)

 

(724,035)

 

(863,076)

 

(901,898)

Inflation adjustment and exchange differences, net

               

Inflation adjustments, net

 

6,267

 

5,729

 

(3,540)

 

2,619

Exchange differences, net

 

(554,114)

 

30,232

 

(1,656,432)

 

311,883

Exchange losses on derivatives (*)

 

482,604

 

(91,177)

 

 

 

 

   

(65,243)

 

(55,216)

 

(1,659,972)

 

314,502

                 

Finance costs, net

 

(869,700)

 

(741,199)

 

(2,028,355)

 

(578,827)

                 

(*) Statement of gains and losses on derivative transactions

 

 

 

 

 

 

 

 

Dollar-to-CDI swap

 

(18)

 

(18,772)

       

Dollar-to-real swap (NDF)

 

436,600

 

(71,363)

 

 

 

 

Dollar-to-euro swap (NDF)

 

33,454

 

(557)

       

Dollar-to-euro swap

 

12,568

 

(485)

 

 

 

 

 

 

482,604

 

(91,177)

 

 

 

 

Libor-to-CDI swap

     

(636)

     

(636)

Fixed rate-to-CDI swap

 

(1,479)

 

(2,433)

 

 

 

 

CDI-to-fixed rate swap

 

354

 

 

 

 

 

 

   

(1,125)

 

(3,069)

 

 

 

(636)

 

 

481,479

 

(94,246)

 

 

 

(636)

 

 

 

23.   SEGMENT INFORMATION

 

The information related to segment information did not have changes in relation to that disclosed in the Company's financial statements as of December 31, 2014 and, accordingly, the Company decided not to repeat it in the condensed interim financial statements as of March 31, 2015.

 

According to the Group’s structure, its businesses are distributed into five (5) operating segments.

 

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3/31/2015

Profit or loss

 

Steel

 

Mining

 

Logistics

 

Energy

 

Cement

 

Corporate
expenses/
elimination

 

Consolidated

     

Port

 

Railroads

       

Metric tons (thou.) - (unaudited) (*)

 

1,407,307

 

5,193,577

 

 

 

 

 

 

 

518,874

 

 

 

 

Net revenues

                               

Domestic market

 

2,011,316

 

37,802

 

46,846

 

251,174

 

63,691

 

100,631

 

(270,679)

 

2,240,781

Foreign market

 

1,111,791

 

619,980

 

 

 

 

 

37,700

 

1,769,471

Total net revenue (Note 19)

 

3,123,107

 

657,782

 

46,846

 

251,174

 

63,691

 

100,631

 

(232,979)

 

4,010,252

Cost of sales and services 

 

(2,365,555)

 

(566,701)

 

(30,569)

 

(180,332)

 

(46,949)

 

(66,530)

 

231,103

 

(3,025,533)

Gross profit

 

757,552

 

91,081

 

16,277

 

70,842

 

16,742

 

34,101

 

(1,876)

 

984,719

General and administrative expenses 

 

(231,657)

 

(21,097)

 

(6,123)

 

(22,966)

 

(5,543)

 

(15,252)

 

(108,037)

 

(410,675)

Depreciation (Note 8 a)

 

157,596

 

86,048

 

3,175

 

44,713

 

4,242

 

9,389

 

(40,665)

 

264,498

Proportionate EBITDA of joint ventures

                         

72,608

 

72,608

Adjusted EBITDA

 

683,491

 

156,032

 

13,329

 

92,589

 

15,441

 

28,238

 

(77,970)

 

911,150

                                 

Sales by geographic area

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

2,010

 

541,014

 

 

 

 

 

 

 

 

 

37,700

 

580,724

North America

 

481,394

                         

481,394

Latin America

 

80,748

 

42,730

 

 

 

 

 

 

 

 

 

 

 

123,478

Europe

 

535,895

 

36,236

                     

572,131

Other

 

11,744

 

 

 

 

 

 

 

 

 

 

 

 

 

11,744

Foreign market

 

1,111,791

 

619,980

                 

37,700

 

1,769,471

Domestic market

 

2,011,316

 

37,802

 

46,846

 

251,174

 

63,691

 

100,631

 

(270,679)

 

2,240,781

TOTAL

 

3,123,107

 

657,782

 

46,846

 

251,174

 

63,691

 

100,631

 

(232,979)

 

4,010,252

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3/31/2014

Profit or loss

 

Steel

 

Mining

 

Logistics

 

Energy

 

Cement

 

Corporate
expenses/
elimination

 

Consolidated

     

Port

 

Railroads

       

Metric tons (thou.) - (unaudited) (*)

 

1,388,395

 

5,509,670

 

 

 

 

 

 

 

487,692

 

 

 

 

Net revenues

                               

Domestic market

 

2,355,499

 

99,749

 

60,176

 

277,264

 

65,057

 

98,040

 

(250,079)

 

2,705,706

Foreign market

 

771,405

 

1,147,695

                 

(253,928)

 

1,665,172

Total net revenue (Note 19)

 

3,126,904

 

1,247,444

 

60,176

 

277,264

 

65,057

 

98,040

 

(504,007)

 

4,370,878

Cost of sales and services

 

(2,394,701)

 

(716,093)

 

(34,057)

 

(204,989)

 

(41,987)

 

(65,211)

 

422,509

 

(3,034,529)

Gross profit

 

732,203

 

531,351

 

26,119

 

72,275

 

23,070

 

32,829

 

(81,498)

 

1,336,349

General and administrative expenses

 

(165,719)

 

(15,953)

 

(593)

 

(28,373)

 

(4,701)

 

(14,731)

 

(63,698)

 

(293,768)

Depreciation (Note 8 a)

 

194,729

 

69,763

 

1,966

 

38,919

 

4,272

 

8,572

 

(32,875)

 

285,346

Proportionate EBITDA of joint ventures

                         

111,861

 

111,861

Adjusted EBITDA

 

761,213

 

585,161

 

27,492

 

82,821

 

22,641

 

26,670

 

(66,210)

 

1,439,788

                                 

Sales by geographic area

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

4,433

 

1,099,799

 

 

 

 

 

 

 

 

 

 

 

1,104,232

North America

 

169,338

                         

169,338

Latin America

 

45,244

 

 

 

 

 

 

 

 

 

 

 

 

 

45,244

Europe

 

549,248

 

47,896

                     

597,144

Other

 

3,142

 

 

 

 

 

 

 

 

 

 

 

(253,928)

 

(250,786)

Foreign market

 

771,405

 

1,147,695

                 

(253,928)

 

1,665,172

Domestic market

 

2,355,499

 

99,749

 

60,176

 

277,264

 

65,057

 

98,040

 

(250,079)

 

2,705,706

TOTAL

 

3,126,904

 

1,247,444

 

60,176

 

277,264

 

65,057

 

98,040

 

(504,007)

 

4,370,878

 

(*) The ore sales volumes presented in this note take into consideration Company sales and the interest in its subsidiaries and jointly controlled entities (Namisa 60%).

 

Adjusted EBITDA is the tool based on which the chief operating decision maker measures segment performance and the capacity to generate recurring operating cash, and consists of profit for the year less net finance income (costs), income tax and social contribution, depreciation and amortization, share of profits of investments, and other operating income (expenses), plus the proportional EBITDA of jointly controlled entities.

 

Even though it is an indicator used in segment performance measurements, EBITDA is not a measurement recognized by accounting practices adopted in Brazil or IFRS, does not have a standard definition, and may not be comparable with measurements using similar names provided by other entities.

 

 

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As required by IFRS 8, the table below shows the reconciliation of the measurement used by the chief operating decision maker with the results determined using the accounting practices.

 

   

Consolidated

 

3/31/2015

3/31/2014

Profit for the period

391,802

52,096

Depreciation (Note 8 a)

264,498

285,346

Income tax and social contribution (Note 13)

(502,517)

27,155

Finance income (Note 22)

869,700

741,199

EBITDA

1,023,483

1,105,796

Other operating income (expenses) (Note 21)

213,537

176,628

Share of profit (loss) of investees

(398,478)

45,503

Proportionate EBITDA of joint ventures

72,608

111,861

Adjusted EBITDA (*)

911,150

1,439,788

 

(*) The Company discloses its adjusted EBITDA net of its share of profits of investments and other operating income (expenses) because it understands that these should not be included in the calculation of recurring operating cash generation.

 

24. GUARANTEES

 

The Company is liable for guarantees for its subsidiaries and joint ventures, as follows:

 

 

Currency

 

Maturities

 

Borrowings

 

Tax foreclosure

 

Other

 

Total

         

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

Transnordestina Logísitca

R$

 

Up to 9/19/2056 and indefinite

 

2,530,010

 

2,451,682

 

38,766

 

38,766

 

5,658

 

5,975

 

2,574,434

 

2,496,423

FTL - Ferrovia Transnordestina

R$

 

11/15/2020

 

137,550

 

140,550

             

142

 

137,550

 

140,692

CSN Cimentos

R$

 

Up to 10/25/2015 and indefinite

 

 

 

 

 

26,423

 

26,423

 

39,776

 

39,776

 

66,199

 

66,199

Prada

R$

 

Up to 2/10/2016 and indefinite

         

333

 

10,133

 

19,340

 

19,340

 

19,673

 

29,473

CSN Energia

R$

 

Indefinite

 

 

 

 

 

2,829

 

2,829

 

 

 

 

 

2,829

 

2,829

Congonhas Minérios

R$

 

5/21/2019

 

2,000,000

 

2,000,000

                 

2,000,000

 

2,000,000

Fundação CSN

R$

 

Indefinite

 

1,003

 

1,003

 

 

 

 

 

 

 

 

 

1,003

 

1,003

Estanho de Rondônia

                           

106

     

106

Total in R$

 

 

 

 

4,668,563

 

4,593,235

 

68,351

 

78,151

 

64,774

 

65,339

 

4,801,688

 

4,736,725

CSN Islands IX

           

400,000

                     

400,000

CSN Islands XI

US$

 

9/21/2019

 

750,000

 

750,000

 

 

 

 

 

 

 

 

 

750,000

 

750,000

CSN Islands XII

US$

 

Perpetual

 

1,000,000

 

1,000,000

                 

1,000,000

 

1,000,000

CSN Resources

US$

 

7/21/2020

 

1,200,000

 

1,200,000

 

 

 

 

 

 

 

 

 

1,200,000

 

1,200,000

CSN Handel

US$

 

6/27/2015

 

100,000

 

100,000

                 

100,000

 

100,000

Total in US$

 

 

 

 

3,050,000

 

3,450,000

 

 

 

 

 

 

 

 

 

3,050,000

 

3,450,000

                                       

CSN Steel S.L.

EUR

 

1/31/2020

 

120,000

 

120,000

 

 

 

 

 

 

 

 

 

120,000

 

120,000

Lusosider Aços Planos

EUR

 

Indefinite

 

25,000

 

25,000

                 

25,000

 

25,000

Total in EUR

 

 

 

 

145,000

 

145,000

 

 

 

 

 

 

 

 

 

145,000

 

145,000

Total in R$

       

10,284,027

 

9,631,805

                 

10,284,027

 

9,631,805

 

 

 

 

 

14,952,590

 

14,225,040

 

68,351

 

78,151

 

64,774

 

65,339

 

15,085,715

 

14,368,530

 

 

 

 

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25. INSURANCE

 

Aiming to properly mitigate risk and in view of the nature of its operations, the Company and its subsidiaries have taken out several different types of insurance policies. Such policies are contracted in line with the CSN Risk Management policy and are similar to the insurance taken out by other companies operating in the same lines of business as CSN and its subsidiaries. The risks covered under such policies include the following: Domestic Transportation, International Transportation, Carrier’s Civil Liability, Life and Casualty, Health Coverage, Fleet Vehicles, D&O (Civil Liability Insurance for Directors and Officers),

General Civil Liability, Engineering Risks, Sundry Risks, Export Credit, Performance Bond and Port Operator’s Civil Liability.

 

In 2014, after negotiation with insurers and reinsurers in Brazil and abroad, an Insurance Issue Certificate was issued for the contracting of a policy of Operational Risk of Property Damages and Loss of Profits, with effect from September 30, 2014 to September 30, 2015. Under the insurance policy, the LMI (Maximum Limit of Indemnity) is US$600,000,000 and covers the following units and subsidiaries of the Company:  Usina Presidente Vargas, Mineração Casa de Pedra, CSN Paraná, Terminal de Cargas Tecar, Terminal Tecon, Namisa, CSN Handel and Namisa Handel. CSN takes responsibility for a range of retention of US$375,000,000 in excess of the deductibles for property damages and loss of profits.

 

In view of their nature, the risk assumptions adopted are not part of the scope of an audit of financial statements and, accordingly, were not audited by our independent auditors.

 

 

 

26. ADDITIONAL INFORMATION TO CASH FLOWS

 

The table below shows the additional information about transactions related to the statements of cash flows:

 

     

Consolidated

     

Parent Company

 

3/31/2015

 

12/31/2014

 

3/31/2015

 

12/31/2014

Income tax and social contribution paid

67,970

 

98,040

 

57,400

 

20,470

Addition to PP&E with interest capitalization

24,325

 

165,789

 

24,325

 

165,789

 

92,295

 

263,829

 

81,725

 

186,259

 

 

 

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27. STATEMENT OF COMPREHENSIVE INCOME

 

   

Consolidated

   

Parent Company

 

3/31/2015

3/31/2014

 

3/31/2015

3/31/2014

Profit for the period

391,802

52,096

 

392,056

55,334

           

Other comprehensive income

         
           

Items that will not be subsequently reclassified to the statement of income

 

 

 

 

 

Actuarial gains on the defined benefit plan from investments in subsidiaries

 

1,710

 

125

1,710

Actuarial (losses) gains on defined benefit pension plan

202

 

 

 

 

Income tax and social contribution on actuarial (losses) gains on defined benefit pension plan

(77)

 

 

 

 

 

125

1,710

 

125

1,710

           

Items that could be subsequently reclassified to the statement of income

 

 

 

 

 

Cumulative translation adjustments for the period

176,711

(44,326)

 

176,711

(44,326)

Available-for-sale assets

648,403

(648,780)

 

597,135

(631,003)

Income tax and social contribution on available-for-sale assets

(185,595)

220,585

 

(203,026)

214,541

Available-for-sale assets from investments in subsidiaries

 

 

 

68,699

(11,733)

Impairment of available-for-sale assets

8,417

   

8,417

 

Income tax and social contribution on impairment of available-for-sale assets

(2,862)

 

 

(2,862)

 

(Loss) gain on cash flow hedge accounting

(427,645)

   

(427,645)

 

Income tax and social contribution on (loss) gain on cash flow hedge accounting

145,399

 

 

145,399

 

 

362,828

(472,521)

 

362,828

(472,521)

           

 

363,013

(470,811)

 

363,013

(470,811)

           

Total comprehensive income for the period

754,815

(418,715)

 

755,069

(415,477)

           

Attributable to:

 

 

 

 

 

Owners of the Company

755,069

(415,477)

 

755,069

(415,477)

Non-controlling interests

(254)

(3,238)

 

 

 

 

754,815

(418,715)

 

755,069

(415,477)

 

 

 

 

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28. SUBSEQUENT EVENTS

 

·       CSN Cimentos Merger

 

 

The Ordinary and Extraordinary Shareholders´ Meeting held on April 28, 2015 approved the proposed merger by the Company, of its subsidiary CSN Cimentos S.A. The merger, which will be effective only from May 1st of 2015 will result in the processes optimization and maximize results by focusing on a single organizational structure of all commercial and administrative activities of both companies.

 

 

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(Convenience Translation into English from the Original Previously Issued in Portuguese)

 

REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION

 

To the Board of Directors and Shareholders of

Companhia Siderúrgica Nacional

São Paulo – SP

Introduction

We have reviewed the accompanying individual and consolidated interim financial information of Companhia Siderúrgica Nacional (the “Company”), identified as Parent and Consolidated, respectively, included in the Interim Financial Information Form (ITR), for the three-month period ended March 31, 2015, which comprises the balance sheet as of March 31, 2015 and the related statements of income, comprehensive income, changes in equity and cash flows for the three-month period then ended, including the explanatory notes.

The Company’s Management is responsible for the preparation of the individual and consolidated interim financial information in accordance with technical pronouncement CPC 21 (R1) - Interim Financial Information and international standard IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board - IASB, as well as for the presentation of such information in accordance with the standards issued by the Brazilian Securities and Exchange Commission (CVM), applicable to the preparation of the Interim Financial Information (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of review

We conducted our review in accordance with Brazilian and international standards on review of interim financial information (NBC TR 2410 and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with standards on auditing and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion on interim financial information

Based on our review, nothing has come to our attention that causes us to believe that the accompanying individual and consolidated interim financial information included in the interim financial information referred to above was not prepared, in all material respects, in accordance with CPC 21 (R1) and IAS 34, applicable to the preparation of Interim Financial Information (ITR), and presented in accordance with the standards issued by the CVM.

 

 

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Other matters

Statements of value added

We have also reviewed the individual and consolidated statements of value added (DVA) for the three-month period ended March 31, 2015, prepared under the responsibility of the Company’s Management, the presentation of which is required by the standards issued by the CVM applicable to the preparation of Interim Financial Information (ITR) and considered as supplemental information for International Financial Reporting Standards - IFRSs, which do not require the presentation of DVA. These statements were subject to the same review procedures described above, and, based on our review, nothing has come to our attention that causes us to believe that they were not prepared, in all material respects, consistently with the individual and consolidated interim financial information taken as a whole.

The accompanying individual and consolidated interim financial information has been translated into English for the convenience of readers outside Brazil.

São Paulo, May 04, 2015

DELOITTE TOUCHE TOHMATSU

Roberto Wagner Promenzio

Auditores Independentes

Engagement Partner

 

 

 

 

 

 

PAGE 75 of 75

 

 

 

 

SIGNATURE
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 25, 2015
 
COMPANHIA SIDERÚRGICA NACIONAL
By:
/S/ Benjamin Steinbruch

 
Benjamin Steinbruch
Chief Executive Officer

 

 
By:
/S/ David Moise Salama

 
David Moise Salama
Investor Relations Executive Officer

 
 

 

 
FORWARD-LOOKING STATEMENTS

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.