siditr1q16_6k.htm - Generated by SEC Publisher for SEC Filing
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 6-K
 
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, 2016
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, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Table of Contents

 

Company Information

 

Capital Breakdown

1

Parent Company Financial Statements

 

Balance Sheet – Assets

2

Balance Sheet – Liabilities

3

Statement of Income

4

Statement of Comprehensive Income

5

Statement of Cash Flows

6

Statement of Changes in Shareholders’ Equity

 

1/1/2016 to 03/31/2016

8

1/1/2015 to 03/31/2015

9

Statement of Value Added

10

Consolidated Financial Statements

 

Balance Sheet - Assets

11

Balance Sheet - Liabilities

12

Statement of Income

13

Statement of Comprehensive Income

14

Statement of Cash Flows

15

Statement of Changes in Shareholders’ Equity

 

1/1/2016 to 03/31/2016

17

1/1/2015 to 03/31/2015

18

Statement of Value Added

19

Comments on the Company’s Consolidated Performance

20

Notes to the quarterly financial information

33

Reports and Statements

 

Unqualified Independent Auditors’ Review Report

77

 


 
 

 

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ITR –– Quarterly Financial Information - March 31, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Company Information / Capital Breakdown

 

Number of Shares

(Units)

Current Quarter

03/31/2016

 

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 77


 
 

 

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ITR –– Quarterly Financial Information - March 31, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Statements / Balance Sheet - Assets

 

(R$ thousand)

 

 

     

 

Code

Description

Current Quarter 03/31/2016

YDT Previous Year
12/31/2015

1

Total assets

43,534,593

45,605,526

1.01

Current assets

7,950,527

8,842,440

1.01.01

Cash and cash equivalents

1,155,182

1,885,199

1.01.02

Financial investments

764,132

763,599

1.01.02.02

Financial investments measured at amortized cost

764,132

763,599

1.01.03

Trade receivables

2,422,426

2,467,523

1.01.04

Inventories

2,834,277

2,850,744

1.01.08

Other current assets

774,510

875,375

1.02

Non-current assets

35,584,066

36,763,086

1.02.01

Long-term receivables

4,484,392

4,510,431

1.02.01.06

Deferred taxes

3,199,630

3,228,961

1.02.01.09

Other non-current assets

1,284,762

1,281,470

1.02.02

Investments

22,042,470

23,323,565

1.02.03

Property, plant and equipment

8,995,809

8,866,348

1.02.04

Intangible assets

61,395

62,742

 

 

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ITR –– Quarterly Financial Information - March 31, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Statements / Balance Sheet – Liabilities

 

(R$ thousand)

 

 

     

 

Code

Description

Current Quarter 03/31/2016

YDT Previous Year
12/31/2015

2

Total liabilities

43,534,593

45,605,526

2.01

Current liabilities

4,016,450

4,272,372

2.01.01

Payroll and related taxes

128,882

141,496

2.01.02

Trade payables

738,848

742,364

2.01.03

Taxes payable

66,023

5,814

2.01.04

Borrowings and financing

2,536,813

2,879,073

2.01.05

Other payables

456,961

411,699

2.01.06

Provisions

88,923

91,926

2.01.06.01

Provision for tax, social security, labor and civil risks

88,923

91,926

2.02

Non-current liabilities

32,274,950

33,668,407

2.02.01

Borrowings and financing

29,552,923

31,109,017

2.02.02

Other payables

109,836

126,450

2.02.04

Provisions

2,612,191

2,432,940

2.02.04.01

Provision for tax, social security, labor and civil risks

589,243

564,372

2.02.04.02

Other provisions

2,022,948

1,868,568

2.02.04.02.03

Provision for environmental liabilities and decommissioning of assets

261,629

259,115

2.02.04.02.04

Pension and healthcare plan

514,367

514,367

2.02.04.02.05

Provision for losses on investments

1,246,952

1,095,086

2.03

Consolidated Shareholders’ equity

7,243,193

7,664,747

2.03.01

Issued capital

4,540,000

4,540,000

2.03.02

Capital reserves

30

30

2.03.04

Earnings reserves

2,104,804

2,104,804

2.03.04.01

Legal reserve

424,536

424,536

2.03.04.02

Statutory reserve

1,895,494

1,895,494

2.03.04.04

Earnings reserves to realize

23,750

23,750

2.03.04.09

Treasury shares

-238,976

-238,976

2.03.05

Profit/Losses

-836,690

0

2.03.08

Other comprehensive income

1,435,049

1,019,913

 

                                                                                                                                                                                          

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ITR –– Quarterly Financial Information - March 31, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Statements / Statements of Income

 

 

(R$ thousand)

   

 

Code

Description

 

Current Quarter

1/1/2016 to 03/31/2016

YTD Previous Year

1/1/2015 to 03/31/2015

3.01

Net revenue from sales and/or services

 

1,977,640

3,058,032

3.02

Cost of sales and/or services

 

-1,638,396

-2,189,432

3.03

Gross profit

 

339,244

868,600

3.04

Operating expenses/income

 

-878,674

1,014,030

3.04.01

Selling expenses

 

-168,633

-145,918

3.04.02

General and administrative expenses

 

-123,260

-84,564

3.04.04

Other operating income

 

2,840

3,722

3.04.05

Other operating expenses

 

-102,542

-201,760

3.04.06

Equity in income of affiliates

 

-487,079

1,442,550

3.05

Profit before finance income (costs) and taxes

 

-539,430

1,882,630

3.06

Finance income (costs)

 

-267,878

-2,028,355

3.06.01

Finance income

 

18,429

494,693

3.06.02

Finance costs

 

-286,307

-2,523,048

3.06.02.01

Net exchange difference on financial instruments

 

1,043,124

-1,659,972

3.06.02.02

Finance costs

 

-1,329,431

-863,076

3.07

Profit (loss) before taxes on income

 

-807,308

-145,725

3.08

Income tax and social contribution

 

-29,382

537,781

3.09

Profit (loss) from continuing operations

 

-836,690

392,056

3.11

Profit (loss) for the year

 

-836,690

392,056

3.99

Earnings per share - (R$/share)

 

 

 

3.99.01

Basic earnings per share

 

 

 

3.99.01.01

Common shares

 

0.61651

0.28887

3.99.02

Diluted earnings per share

 

 

 

3.99.02.01

Common shares

 

0.61651

0.28887

 

 

                                                                                                                                                                                          

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ITR –– Quarterly Financial Information - March 31, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Statements / Statement of Comprehensive Income

(R$ thousand)

   

Code

Description

Current Quarter 01/01/2016 to 3/31/2016

YTD Previous Year 01/01/2015 to 3/31/2015

4.01

Profit for the year

-836,690

392,056

4.02

Other comprehensive income

415,136

363,013

4.02.01

Actuarial (losses) gains on defined benefit plan from investments in subsidiaries

85

125

4.02.02

Cumulative translation adjustments for the year

-183,286

176,771

4.02.03

Available-for-sale assets

32,353

597,135

4.02.04

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

0

-203,026

4.02.05

Available-for-sale assets from investments in subsidiaries

0

68,699

4.02.06

Impairment of available-for-sale assets

0

8,417

4.02.07

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

0

-2,862

4.02.08

(Losses) gains on cash flow hedge accounting

534,423

-427,645

4.02.09

Income tax and social contribution on cash flow hedge accounting

0

145,399

4.02.10

Realization of cash flow hedge reclassified to the income statement

12,697

0

4.02.11

(Losses) gains on net investment hedge

18,864

0

4.03

Comprehensive income for the year

-421,554

755,069

           

 

                                                                                                                                                                                          

Page 5 of 77


 
 

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Version: 1

 

 

Parent Company Statements / Statement of Cash Flows – Indirect Method

(R$ thousand)

   

Code

Description

Current Quarter
01/01/2016 to 3/31/2016

YTD Previous Year
01/01/2015 to 3/31/2015

6.01

Net cash generated by operating activities

-470,360

1,180,407

6.01.01

Cash generated from operations

-744,785

1,498,010

6.01.01.01

Profit (loss) for the year

-836,690

392,056

6.01.01.02

Charges on borrowings and financing

630,953

815,393

6.01.01.03

Charges on loans and financing granted

-8,470

-4,970

6.01.01.04

Depreciation, depletion and amortization

135,525

206,329

6.01.01.05

Equity in income (losses) of affiliates

487,079

-1,442,550

6.01.01.06

Deferred income tax and social contribution

29,331

-694,546

6.01.01.07

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

21,868

125,346

6.01.01.08

Inflation adjustment and exchange differences, net

-1,221,066

2,084,988

6.01.01.10

Impairment of available-for-sale assets

0

8,417

6.01.01.11

Residual value of permanent assets written off

7,590

3,842

6.01.01.12

Other provisions

9,095

3,705

6.01.02

Changes in assets and liabilities

274,425

-317,603

6.01.02.01

Trade receivables - third parties

-23,251

-66,978

6.01.02.02

Trade receivables - related parties

87,172

38,075

6.01.02.03

Inventories

14,092

161,598

6.01.02.04

Receivables - related parties / Dividends

8,748

-1,943

6.01.02.05

Recoverable taxes

14,263

57,644

6.01.02.06

Judicial deposits

9,326

-4,310

6.01.02.07

Dividends received - related parties

815,035

0

6.01.02.09

Trade payables

-21,070

-103,692

6.01.02.10

Payroll and related taxes

1,446

23,241

6.01.02.11

Taxes in installments - REFIS

63,419

123,552

6.01.02.13

Payables to related parties

0

9,690

6.01.02.15

Interest paid

-671,713

-557,310

6.01.02.16

Interest received

0

12

6.01.02.19

Other

-23,042

2,818

6.02

Net cash used in investing activities

-122,169

-420

6.02.01

Investments / Advances for future capital increase

-7,231

-7,847

6.02.02

Purchase of property, plant and equipment

-236,057

-304,379

6.02.03

Cash reduction of subsidiaries and joint ventures

0

486,758

6.02.04

Capital increase in subsidiary

-2,200

0

6.02.05

Intercompany loans granted

0

-11,938

6.02.06

Intercompany loans received

0

75

6.02.07

Exclusive funds

123,852

-163,089

6.02.08

Financial Investments, net of redemption

-533

0

6.03

Net cash used in financing activities

-131,019

-1,151,777

6.03.01

Borrowings and financing, net of transaction cost

-26,006

389,450

6.03.02

Borrowings and financing - related parties

40,239

0

6.03.03

Amortization of principal on borrowings and financing

-100,410

-535,978

6.03.04

Amortization of principal on borrowings and financing - related parties

0

-349,912

6.03.05

Payments of dividends and interests on shareholder´s equity

0

-549,829

6.03.06

Treasury shares

0

-9,390

6.03.07

Forfaiting capitalization / drawee Risk

76,338

15,136

6.03.08

Forfaiting amortization / drawee Risk

-121,180

-111,254

6.04

Exchange differences on translating cash and cash equivalents

-6,469

49,459

6.05

Increase (decrease) in cash and cash equivalents

-730,017

77,669

6.05.01

Cash and equivalents at the beginning of the year

1,885,199

3,146,393

6.05.02

Cash and equivalents at the end of the year

1,155,182

3,224,062

 

 

Page 6 of 77

                                                                                         


 
 

 

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ITR –– Quarterly Financial Information - March 31, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

Parent Company Statements / Statement of Changes in Shareholders´ Equity - 1/1/2016 to 03/31/2016

(R$ thousand)

           

 

Code

Description

Paid-in capital

Capital reserve, granted options and treasury shares

Earnings reserves

Retained earnings (accumulated losses)

Other comprehensive income

Shareholders’ equity

5.01

Opening balances

4,540,000

30

2,104,804

0

1,019,913

7,664,747

5.03

Adjusted opening balances

4,540,000

30

2,104,804

0

1,019,913

7,664,747

5.05

Total comprehensive income

0

0

0

-836,690

415,136

-421,554

5.05.01

Profit for the year

0

0

0

-836,690

0

-836,690

5.05.02

Other comprehensive income

0

0

0

0

415,136

415,136

5.05.02.04

Translation adjustments for the year

0

0

0

0

-183,286

-183,286

5.05.02.06

Actuarial gains on defined benefit pension plan, net of taxes

0

0

0

0

85

85

5.05.02.07

Available-for-sale assets, net of taxes

0

0

0

0

32,353

32,353

5.05.02.08

Loss on Cash Flow Hedge Accounting, net of taxes

0

0

0

0

534,423

534,423

5.05.02.09

Realization on Cash Flow Hedge Accounting, reclassified to statement of income

0

0

0

0

12,697

12,697

5.05.02.10

Loss on net investment hedge accounting

0

0

0

0

18,864

18,864

5.07

Closing balances

4,540,000

30

2,104,804

-836,690

1,435,049

7,243,193

                         

 

                                                                                                                                                                                          

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Version: 1

 

 

Parent Company Statements / Statement of Changes in Shareholders´ Equity - 1/1/2015 to 12/31/2015

 

(R$ thousand)

           

 

Code

Description

Paid-in capital

Capital reserve, granted options and treasury shares

Earnings reserves

Retained earnings or accumulated losses

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 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                         
 

                                                                                                                                                                                          

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Version: 1

 

 

Parent Company Statements / Statement of Value Added

 

 

(R$ thousand)

 

 

 

     

 

Code

Description

Current Quarter

YTD Prior Year

1/1/2016 to 3/31/206

01/01/2015 to 3/31/2015

7.01

Revenues

2,447,647

3,723,968

7.01.01

Sales of products and services

2,458,864

3,669,030

7.01.02

Other revenues

45

61,531

7.01.04

Allowance for (reversal of) doubtful debts

-11,262

-6,593

7.02

Raw materials acquired from third parties

-1,703,711

-2,485,835

7.02.01

Cost of sales and services

-1,446,531

-1,950,754

7.02.02

Materials, electric power, outside services and other

-254,572

-525,191

7.02.03

Impairment/recovery of assets

-2,608

-1,473

7.02.04

Other

0

-8,417

7.02.04.01

Impairment of available-for-sale assets

0

-8,417

7.03

Gross value added

743,936

1,238,133

7.04

Retentions

-135,525

-206,329

7.04.01

Depreciation, amortization and depletion

-135,525

-206,329

7.05

Wealth created

608,411

1,031,804

7.06

Value added received as transfer

-651,339

2,634,817

7.06.01

Equity in income of affiliates

-487,079

1,442,550

7.06.02

Finance income

18,429

494,693

7.06.03

Other

-182,689

697,574

7.06.03.01

Other and exchange gains

-182,689

697,574

7.07

Wealth for distribution

-42,928

3,666,621

7.08

Wealth distributed

-42,928

3,666,621

7.08.01

Personnel

309,192

329,522

7.08.01.01

Salaries and wages

239,994

251,291

7.08.01.02

Benefits

49,640

60,889

7.08.01.03

Severance pay fund (FGTS)

19,558

17,342

7.08.02

Taxes, fees and contributions

379,073

-277,119

7.08.02.01

Federal

358,043

-319,590

7.08.02.02

State

21,030

40,155

7.08.02.03

Municipal

0

2,316

7.08.03

Remuneration on third-party capital

105,497

3,222,162

7.08.03.01

Interest

1,329,594

862,664

7.08.03.02

Leases

2,822

2,608

7.08.03.03

Other

-1,226,919

2,356,890

7.08.03.03.01

Other and exchange losses

-1,226,919

2,356,890

7.08.04

Remuneration on Shareholders capital

-836,690

392,056

7.08.04.03

Retained earnings (accumulated losses)

-836,690

392,056

               

 

                                                                                                                                                                                          

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ITR –– Quarterly Financial Information - March 31, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Balance Sheet - Assets

(R$ thousand)

 

 

     

 

Code

Description

Current Quarter
03/31/2016

YTD Previous Year
12/31/2015

1

Total assets

45,935,024

48,649,974

1.01

Current assets

13,697,372

16,430,691

1.01.01

Cash and cash equivalents

5,540,940

7,861,052

1.01.02

Financial investments

764,132

763,599

1.01.02.02

Financial investments measured at amortized cost

764,132

763,599

1.01.03

Trade receivables

1,816,106

1,578,277

1.01.04

Inventories

4,494,832

4,941,314

1.01.08

Other current assets

1,081,362

1,286,449

1.02

Non-current assets

32,237,652

32,219,283

1.02.01

Long-term receivables

4,853,541

4,890,948

1.02.01.06

Deferred taxes

3,262,494

3,307,027

1.02.01.09

Other non-current assets

1,591,047

1,583,921

1.02.02

Investments

4,084,727

3,998,227

1.02.03

Property, plant and equipment

17,880,257

17,871,599

1.02.04

Intangible assets

5,419,127

5,458,509

 

                                                                                                                                                                                          

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ITR –– Quarterly Financial Information - March 31, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Balance Sheet – Liabilities

(R$ thousand)

 

 

     

 

Code

Description

Current Quarter
03/31/2016

YTD Previous Year
12/31/2015

2

Total liabilities

45,935,024

48,649,974

2.01

Current liabilities

4,819,168

5,325,571

2.01.01

Payroll and related taxes

245,177

256,840

2.01.02

Trade payables

1,235,417

1,293,008

2.01.03

Taxes payable

708,138

700,763

2.01.04

Borrowings and financing

1,459,777

1,874,681

2.01.05

Other payables

1,046,262

1,073,017

2.01.06

Provisions

124,397

127,262

2.01.06.01

Provision for tax, social security, labor and civil risks

124,397

127,262

2.02

Non-current liabilities

32,796,957

34,588,740

2.02.01

Borrowings and financing

30,561,057

32,407,834

2.02.02

Other payables

148,318

131,284

2.02.03

Deferred taxes

508,363

494,851

2.02.04

Provisions

1,579,219

1,554,771

2.02.04.01

Provision for tax, social security, labor and civil risks

730,862

711,472

2.02.04.02

Other provisions

848,357

843,299

2.02.04.02.03

Provision for environmental liabilities and asset retirement obligations

333,989

328,931

2.02.04.02.04

Pension and healthcare plan

514,368

514,368

2.03

Consolidated Shareholders’ equity

8,318,899

8,735,663

2.03.01

Issued capital

4,540,000

4,540,000

2.03.02

Capital reserves

30

30

2.03.04

Earnings reserves

2,104,804

2,104,804

2.03.04.01

Legal reserve

424,536

424,536

2.03.04.02

Statutory reserve

1,895,494

1,895,494

2.03.04.04

Earnings reserves to realize

23,750

23,750

2.03.04.09

Treasury shares

-238,976

-238,976

2.03.05

Profit/Losses

-836,690

0

2.03.08

Other comprehensive income

1,435,049

1,019,913

2.03.09

Non-controlling interests

1,075,706

1,070,916

 

                                                                                                                                                                                          

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ITR –– Quarterly Financial Information - March 31, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Statements of Income

 

(R$ thousand)

   

Code

Description

Current Quarter
01/01/2016 to 03/31/2016

YTD PreviousYear
01/01/2015 to 03/31/2015

3.01

Net revenue from sales and/or services

3,843,803

4,010,252

3.02

Cost of sales and/or services

-2,917,758

-3,025,533

3.03

Gross profit

926,045

984,719

3.04

Operating expenses/income

-692,113

-225,734

3.04.01

Selling expenses

-450,421

-300,830

3.04.02

General and administrative expenses

-160,111

-109,845

3.04.04

Other operating income

22,272

5,962

3.04.05

Other operating expenses

-148,832

-219,499

3.04.06

Equity in income of affiliates

44,979

398,478

3.05

Profit before finance income (costs) and taxes

233,932

758,985

3.06

Finance income (costs)

-943,014

-869,700

3.06.01

Finance income

243,154

56,136

3.06.02

Finance costs

-1,186,168

-925,836

3.06.02.01

Net exchange difference on financial instruments

-318,240

-65,243

3.06.02.02

Finance costs

-867,928

-860,593

3.07

Profit (loss) before taxes on income

-709,082

-110,715

3.08

Income tax and social contribution

-122,210

502,517

3.09

Profit (loss) from continuing operations

-831,292

391,802

3.11

Consolidated profit (loss) for the year

-831,292

391,802

3.11.01

Attributed to controlling Shareholders

-836,690

392,056

3.11.02

Attributed to non-controlling Shareholders

5,398

-254

3.99

Earnings per share - (R$/share)

 

 

3.99.01

Basic earnings per share

 

 

3.99.01.01

Common shares

0,61651

0.28887

3.99.02

Diluted earnings per share

 

 

3.99.02.01

Common shares

0,61651

0.28887

 

 

                                                                                                                                                                                          

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ITR –– Quarterly Financial Information - March 31, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Statement of Comprehensive Income

(R$ thousand)

   

Code

Description

Current Quarter

01/01/2016 to 03/31/2016

YTD PreviousYear

01/01/2015 to 03/31/2015

4.01

Consolidated profit for the year

-831,292

391,802

4.02

Other comprehensive income

415,136

363,013

4.02.01

Actuarial gains on defined benefit plan from investments in subsidiaries

85

0

4.02.02

Actuarial gains (losses) on defined benefit pension plan

0

202

4.02.03

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

0

-77

4.02.04

Cumulative translation adjustments for the year

-183,286

176,771

4.02.05

Available-for-sale assets

32,353

648,403

4.02.06

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

0

-185,595

4.02.07

Impairment of available-for-sale assets

0

8,417

4.02.08

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

0

-2,862

4.02.09

Gain (loss) on cash flow hedge accounting

534,423

-427,645

4.02.10

Income tax and social contribution on cash flow hedge accounting

0

145,399

4.02.11

Realization of cash flow hedge accounting reclassified to income statement

12,697

0

4.02.12

Gain (loss) on net investment hedge

18,864

0

4.03

Consolidated comprehensive income for the year

-416,156

754,815

4.03.01

Attributed to controlling Shareholders

-421,554

755,069

4.03.02

Attributed to non-controlling Shareholders

5,398

-254

       

 

                                                                                                                                                                                          

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ITR –– Quarterly Financial Information - March 31, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

Consolidated Financial Statements / Statement of Cash Flows – Indirect Method

(R$ thousand)

   

Code

Description

Current Quarter
01/01/2016 to 3/31/2016

YTD Previous Year
01/01/2015 to 3/31/2015

6.01

Net cash generated by operating activities

-939,450

1,738,124

6.01.01

Cash generated from operations

-235,161

2,268,532

6.01.01.01

Profit (loss) for the year attributable to controlling Shareholders

-836,690

392,056

6.01.01.02

Profit (loss) for the year attributable to non-controlling Shareholders

5,398

-254

6.01.01.03

Charges on borrowings and financing

747,647

803,433

6.01.01.04

Charges on loans and financing granted

-12,913

-5,025

6.01.01.05

Depreciation, depletion and amortization

321,944

273,502

6.01.01.06

Equity in income (losses) of affiliates

-44,979

-398,478

6.01.01.07

Deferred taxes

69,681

-716,476

6.01.01.08

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

16,525

124,830

6.01.01.09

Inflation adjustments and exchange differences, net

-379,360

1,767,227

6.01.01.10

Gain on derivatives

362

1,125

6.01.01.11

Impairment of available-for-sale assets

0

8,417

6.01.01.12

Residual value of permanent assets written off

12,966

3,985

6.01.01.13

Gain on repurchase of debt securities

-146,214

0

6.01.01.14

Other provisions

10,472

14,190

6.01.02

Changes in assets and liabilities

-704,289

-530,408

6.01.02.01

Trade receivables - third parties

-219,640

-190,889

6.01.02.02

Trade receivables - related parties

-8,407

-9,701

6.01.02.03

Inventories

443,691

190,195

6.01.02.05

Recoverable taxes

62,152

33,391

6.01.02.06

Judicial deposits

4,098

-5,535

6.01.02.08

Trade payables

-59,340

-20,832

6.01.02.09

Payroll and related taxes

14,283

33,168

6.01.02.10

Taxes in installments - REFIS

39,744

173,390

6.01.02.11

Payables to related parties

508

1,709

6.01.02.13

Interest paid

-932,279

-726,040

6.01.02.14

Interest received

0

12

6.01.02.16

Other

-49,099

-9,276

6.02

Net cash used in investing activities

-887,053

413,490

6.02.02

Purchase of property, plant and equipment

-329,832

-338,026

6.02.03

Capital reduction on joint venture

0

466,758

6.02.04

Receipt/payment in derivative transactions

-556,682

304,401

6.02.06

Purchase of intangible assets

-6

-105

6.02.07

Intercompany loans granted

0

-11,938

6.02.08

Intercompany loans received

0

75

6.02.09

Short-term investment, net of redeemed amount

-533

-7,675

6.03

Net cash used in financing activities

-438,466

-1,948,973

 

 

 

 

                                                                                                                                                                                          

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ITR –– Quarterly Financial Information - March 31, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

6.03.01

Capitalization net of transactions cost

-26,770

391,156

6.03.02

Amortization of principal on borrowings and financing - related parties

-215,756

-1,597,317

6.03.04

Payments of dividends and interests on shareholder´s equity

0

-549,829

6.03.05

Treasury shares

0

-9,390

6.03.06

Buyback of debt securities

-151,098

-87,475

6.03.07

Forfaiting capitalization / drawee Risk

76,338

15,136

6.03.08

Forfaiting amortization / drawee Risk

-121,180

-111,254

6.04

Exchange differences on translating cash and cash equivalents

-55,143

182,123

6.05

Decrease in cash and cash equivalents

-2,320,112

384,764

6.05.01

Cash and equivalents at the beginning of the year

7,861,052

8,686,021

6.05.02

Cash and equivalents at the end of the year

5,540,940

9,070,785

 

                                                                                                                                                                                          

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ITR –– Quarterly Financial Information - March 31, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Statement of Changes in Equity - 1/1/2016 to 03/31/2016

(R$ thousand)

           

 

 

Code

Description

Paid-in capital

Capital reserve, granted options and treasury shares

Earnings reserve

Retained earnings (accumulated losses)

Other comprehensive income

Shareholders' equity

Non-controlling interests

Consolidated shareholders' equity

5.01

Opening balances

4,540,000

30

2,104,804

0

1,019,913

7,664,747

1,070,916

8,735,663

5.03

Adjusted opening balances

4,540,000

30

2,104,804

0

1,019,913

7,664,747

1,070,916

8,735,663

5.05

Total comprehensive income

0

0

0

-836,690

415,136

-421,554

5,398

-416,156

5.05.01

Profit for the year

0

0

0

-836,690

0

-836,690

5,398

-831,292

5.05.02

Other comprehensive income

0

0

0

0

415,136

415,136

0

415,136

5.05.02.04

Translation adjustments for the year

0

0

0

0

-183,286

-183,286

0

-183,286

5.05.02.06

Actuarial gains on defined benefit pension plan, net of taxes

0

0

0

0

85

85

0

85

5.05.02.07

Available-for-sale assets, net of taxes

0

0

0

0

32,353

32,353

0

32,353

5.05.02.08

Gain (loss) on Cash Flow Hedge Accounting

0

0

0

0

534,423

534,423

0

534,423

5.05.02.09

Realization of cash flow hedge reclassified to statement of income

0

0

0

0

12,697

12,697

0

12,697

5.05.02.10

Loss on net investment hedge accounting

0

0

0

0

18,864

18,864

0

18,864

5.06

Internal changes in shareholders’ equity

0

0

0

0

0

0

-608

-608

5.06.04

Non-controlling interests in subsidiaries

0

0

0

0

0

0

-608

-608

5.07

Closing balance

4,540,000

30

2,104,804

-836,690

1,435,049

7,243,193

1,075,706

8,318,899

                             

                                                                                                                                                                                          

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ITR –– Quarterly Financial Information - March 31, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

Consolidated Financial Statements / Statement of Changes in 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 (accumulated losses)

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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ITR –– Quarterly Financial Information - March 31, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

Consolidated Financial Statements / Statement of Value Added

(R$ thousand)

 

 

Code

Description

Current Quarter
01/01/2016 to 3/31/2016

YTD Previous Year
01/01/2015 to 3/31/2015

7.01

Revenues

4,382,180

4,752,234

7.01.01

Sales of products and services

4,395,407

4,698,184

7.01.02

Other revenues

260

61,898

7.01.04

Allowance for (reversal of) doubtful debts

-13,487

-7,848

7.02

Raw materials acquired from third parties

-2,866,929

-3,325,485

7.02.01

Cost of sales and services

-2,176,870

-2,632,493

7.02.02

Materials, electric power, outside services and other

-695,249

-683,759

7.02.03

Impairment/recovery of assets

5,190

-816

7.02.04

Other

0

-8,417

7.02.04.01

Impairment of available-for-sale assets

0

-8,417

7.03

Gross value added

1,515,251

1,426,749

7.04

Retentions

-321,944

-273,502

7.04.01

Depreciation, amortization and depletion

-321,944

-273,502

7.05

Wealth created

1,193,307

1,153,247

7.06

Value added received as transfer

-417,837

2,234,942

7.06.01

Equity in income of affiliates

44,979

398,478

7.06.02

Finance income

243,154

56,136

7.06.03

Other

-705,970

1,780,328

7.06.03.01

Other and exchange gains

-705,970

1,780,328

7.07

Wealth for distribution

775,470

3,388,189

7.08

Wealth distributed

775,470

3,388,189

7.08.01

Personnel

550,726

463,793

7.08.01.01

Salaries and wages

442,503

367,509

7.08.01.02

Benefits

78,933

76,047

7.08.01.03

Severance pay fund (FGTS)

29,290

20,237

7.08.02

Taxes, fees and contributions

571,774

-176,470

7.08.02.01

Federal

516,872

-257,857

7.08.02.02

State

49,502

75,959

7.08.02.03

Municipal

5,400

5,428

7.08.03

Remuneration on third-party capital

484,262

2,709,064

7.08.03.01

Interest

868,089

860,186

7.08.03.02

Leases

5,011

3,962

7.08.03.03

Other

-388,838

1,844,916

7.08.03.03.01

Exchange losses

-388,838

1,844,916

7.08.04

Remuneration on Shareholders' capital

-831,292

391,802

7.08.04.03

Retained earnings (accumulated losses)

-836,690

392,056

7.08.04.04

Non-controlling interests in retained earnings

5,398

-254

           

 

                                                                                                                                                                                          

Page 18 of 77


 
 

 

 

1Q16 Earnings Release

 

 

Companhia Siderúrgica Nacional (CSN) (BM&FBOVESPA: CSNA3) (NYSE: SID) announces today its consolidated results for the first quarter of 2016 (1Q16), which are presented in Brazilian Reais and in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), and with Brazilian accounting practices, which are fully convergent with international accounting norms, issued by the Accounting Pronouncements Committee (CPC) and approved by the Brazilian Securities and Exchange Commission (CVM), pursuant to CVM Instruction 485 of September 1, 2010. All comments presented herein refer to the Company’s 1Q16 consolidated results and comparisons refer to the fourth quarter of 2015 (4Q15) and the first quarter of 2015 (1Q15), unless otherwise stated. The Real/U.S. Dollar exchange rate was R$3.5583 on March 31, 2016 and R$3.9048 on December 31, 2015

 

Highlights

1Q15

4Q15

1Q16

 

Change

 

1Q16

x

4Q15

1Q16

x

1Q15

                     

Steel Sales (thousand t)

1,407

1,130

1,246

 

10%

(11%)

- Domestic Market

63%

57%

52%

 

(5%)

(11%)

- Overseas Subsidiaries

34%

37%

42%

 

5%

8%

- Exports

6%

6%

6%

 

0%

0%

         

 

 

 

 

 

 

Iron Ore Sales (thousand t)1

5,442

6,656

8,295

 

25%

52%

- Domestic Market

1%

7%

13%

 

6%

12%

- Exports

99%

93%

87%

 

(6%)

(12%)

         

 

 

 

 

 

 

Consolidated Results (R$ Million)

       

 

 

 

 

 

 

Net Revenue

4,010

3,678

3,844

 

5%

(4%)

Gross Profit

985

767

926

 

21%

(6%)

Adjusted EBITDA2

911

686

733

 

7%

(20%)

         

 

 

 

 

 

 

Adjusted Net Debt3

19,979

26,499

26,654

 

1%

33%

Adjusted Cash Position

12,251

8,862

6,472

 

(27%)

(47%)

Net Debt / Adjusted EBITDA

4.8x

8.2x

8.7x

 

0.5x

3.9x

 

1 Iron ore sales volumes include 100% of the stake in NAMISA until November 2015 and 100% of the stake in Congonhas Minérios as of December 2015.

2 Adjusted EBITDA is calculated based on net income/loss, before depreciation and amortization, income taxes, the net financial result, results from investees, and other operating income (expenses) and includes the proportional share of the EBITDA of the jointly-owned investees MRS Logística and CBSI, as well as the Company’s 60% in Namisa, 33.27% in MRS and 50% in CBSI until November 2015 and stakes of 100% in Congonhas Minérios, 37.27% in MRS and 50% in CBSI as of December 2015.

³ Adjusted Net Debt and Adjusted Cash and Cash Equivalents included 33.27% of the stake in MRS, 60% of the interest in Namisa and 50% of the stake in CBSI until November 2015. As of December 2015, they included 100% of Congonhas Minérios, 32.27% of MRS and 50% of CBSI, excluding Forfaiting and drawee risk operations.

 

 

 

Closing Market Indicators on March 31, 2016

BM&FBovespa (CSNA3): R$7.15/share

Market Cap BM&FBovespa: R$9.92 billion

NYSE (SID): US$1.97/ADR (1 ADR = 1 share)

Market Cap NYSE: US$2.73 billion

Total no. of shares = 1,387,524,047

 

 

  

Page 19 of 77


 
 

 

Macroeconomic Projections

2016

2017E

IPCA (%)

7.00

5.62

Commercial Dollar (EoP - R$)

3.70

3.90

SELIC Target (EoP - %)

13.00

11.75

GDP (%)

(3.86)

0.50

Industrial Production (%)

(5.95)

0.74

         Source: FOCUS BACEN                                                                                                                                                                                                    Base: 05/06/2016

 

CSN’s Consolidated Results

 

·         Net revenue totaled R$3,844 million in 1Q16, 5% up on 4Q15 and 4% down on the same period last year. Regarding 4Q15, the increase was due to the higher sales volume in the steel and mining segments, offsetting the decrease in the average steel and mining prices, which suffered the additional impact of BRL appreciation. Compared with 1Q15, the reduction was a result of lower sales volume in the steel segment.

 

·         COGS amounted to R$2,918 million, in line with the previous quarter and 4% less than in 1Q15. The year-on-year reduction was mainly due to lower steel and mining segments unit costs.

 

·         First-quarter gross profit came to R$926 million, 21% more than in 4Q15, while the gross margin widened by 3p.p. to 24%. In comparison with 1Q15, gross profit fell by 6% and the gross margin narrowed by 1p.p., from 25% to 24%.

 

·         Selling, general and administrative expenses totaled R$611 million in 1Q16, 12% and 49% up on 4Q15 and 1Q15, respectively, chiefly due to higher freight (related to distribution costs), due to the increase in iron sales and the higher CIF sales model, and personnel expenses.

 

·         Other operating income (expenses) was a net expense of R$127 million in 1Q16, versus expense of R$214 million in 1Q15. Most of the amount in question referred to expenses with labor provisions and judicial deposits. The positive result registered in 4Q15 was due to the Business Combination effect in the mining segment.

                                                                                                                                                         

·         The proportional net financial result was negative by R$968 million in 1Q16, due to: i) financial expenses (excluding the exchange variation) of R$890 million; ii) the negative exchange variation result of R$329 million; and iii) financial revenue of R$251 million.  

 

Financial Result (R$ Million)

1Q15

4Q15

1Q16

Financial Result - IFRS

(870)

(183)

(943)

(+) Financial Result of Joint-Venture

500

(48)

(25)

(+) Namisa

520

(34)

-

(+) MRS

(20)

(15)

(25)

(=) Proporcional Financial Result1

(370)

(231)

(968)

Financial Revenues

63

289

251

Financial Expenses

(433)

(531)

(1.219)

Financial Expenses (ex-exchange rates variation)

(878)

(483)

(890)

Result with Exchange Rate Variation

445

(48)

(329)

Monetary and Exchange Rate Variation

(482)

245

949

Hedge Accounting

428

(140)

(566)

Notional Amount of Derivatives Contracted

500

(153)

(713)

Others

-

12

-

¹ The proportional financial result considered stakes of 60% in Namisa, 33.27% in MRS and 50% in CBSI until November 2015 and stakes of

100% in Congonhas Minérios, 37.27% in MRS and 50% in CBSI as of December 2015.

 

 
 

Page 20 of 77


 
 

 

·         CSN’s equity result was a positive R$45 million in 1Q16, versus a negative R$55 million in 4Q15 and a positive R$398 million in 1Q15, chiefly due to MRS’s equity result in the 1Q16 and 4Q15, and Namisa’s equity result in the 1Q15. The table below presents a breakdown of this item:

 

Share of profits (losses) of investees

(R$ Million)

1Q15

4Q15

1Q16

Change

1Q16

x

4Q15

1Q16

x

1Q15

Namisa

396

(58)

-

-

-

MRS Logística

15

29

61

111%

302%

CBSI

(2)

(1)

1

-

-

TLSA

(8)

(8)

(7)

(10%)

(8%)

Arvedi Metalfer BR

-

(8)

-

-

-

Eliminations

(4)

(9)

(11)

18%

173%

Share of profits (losses) of investees

398

(55)

45

-

(89%)

 

·         CSN recorded a first-quarter net loss of R$831 million, versus net income of R$2,371 million in 4Q15 and net income of R$392 million in 1Q15. The worsening in this result, compared with 4Q15, is explained by the gains registered with the conclusion of the mining segment Business Combination last quarter. Regarding 1Q15, the lower result was due to the exchange rate variation result and taxes payment.

 

Adjusted EBITDA

(R$ Million)

1Q15

4Q15

1Q16

Change

1Q16

x

4Q15

1Q16

x

1Q15

Profit (loss) for the Period

392

2,371

(831)

-

-

(-) Depreciation

264

308

310

1%

17%

(+) Income Tax and Social Contribution

(503)

527

122

(77%)

-

(+) Finance Income

870

183

943

416%

8%

EBITDA (ICVM 527)

1,023

3,389

544

(84%)

(47%)

(+) Other Operating Income (Expenses)

214

(2,913)

127

-

(41%)

(+) Share of Profit (Loss) of Investees

(398)

55

(45)

-

(89%)

(-) Proportionate EBITDA of Joint Ventures

73

155

107

(31%)

48%

Adjusted EBITDA

911

686

733

7%

(20%)

 

·         Adjusted EBITDA amounted to R$733 million in 1Q16, 7% up on the previous quarter, but 20% down on 1Q15, accompanied by an adjusted EBITDA margin of 18.1%, 1.1 p.p. more than in 4Q15, but 3.4% less than in 1Q15.

 

 

 

 

 

 

¹ The adjusted EBITDA margin is calculated as the ratio between Adjusted EBITDA and Adjusted Net Income, which considers stakes of 60% in Namisa, 33.27% in MRS and 50% in CBSI until November 2015 and stakes of 100% in Congonhas Minérios, 37.27% in MRS and 50% in CBSI as of December 2015.

 

Page 21 of 77


 
 

 

Debt   

 

The adjusted amounts of EBITDA, Debt and Cash included the stakes of 60% in Namisa, 33.27% in MRS and 50% in CBSI until November 2015 and the stakes of 100% in Congonhas Minérios, 37.27% in MRS and 50% in CBSI, as of December 2015, as well as financial investments used as collateral for exchange operations on the BM&FBovespa. On March 31, 2016, consolidated net debt totaled R$26,654 million, while the net debt/EBITDA ratio, was 8.67x based on LTM adjusted EBITDA.

 

 

 

 

 

Foreign Exchange Exposure

 

Net foreign exchange exposure generated by the difference in dollar-denominated assets and liabilities, contracted derivatives and hedge accounting booked by CSN totaled US$115 million on March 31, 2016. The derivatives contracted form a long USD position achieved through the purchase of NDFs (Non-Deliverable Forwards). The hedge accounting adopted by CSN correlates the projected export flows in dollars with part of the future debt maturities in the same currency. As a result, the exchange variation of part of dollar-denominated debt is temporarily recorded under shareholder’s equity, being transferred to the income statement when the dollar revenue from these exports is received.

 

Foreign Exchange Exposure1,2

12/31/2015

03/31/20163

(US$ Million)

IFRS

Cash and cash equivalents overseas

1,625

1,288

Accounts Receivables

170

321

Total Assets

1,795

1,610

Borrowings and Financing

(4,569)

(4,466)

Accounts Payable

(20)

(7)

Other Liabilities

(25)

(6)

Total Liabilities

(4,615)

(4,479)

     

Foreign Exchange Exposure

(2,820)

(2,870)

     

Notional Amount of Derivatives Contracted, Net

1,435

1,435

Cash Flow Hedge Accounting

1,558

1,549

Net Foreign Exchange Exposure

173

115

¹As of the conclusion of the Business Combination, through asset transfers to Congonhas Minérios, CSN has been consolidating 100% of the new Company’s cash. As a result, a proportional view of foreign exchange exposure is no longer necessary.

²Proportional foreign exchange exposure includes the 60% stake in Namisa and excludes the stake in MRS.

³IFRS foreign exchange exposure on March 31, 2015 includes the 100% stake in Congonhas Minérios and excludes the stake in MRS.

Page 22 of 77


 
 

Capex

 

CSN invested R$330 million in 1Q16 in the following projects:

 

·         Investments in the new clinker kiln in Arcos/MG, which will permit the Cement segment to reach competitive margins and scale gains in the Southeast region as a result of the clinker production self-sufficiency.

 

·         Revamp of the coke batteries, reducing imported coke needs and improving the fuel rate.

 

·         Other projects designed to improve the environmental performance of the Presidente Vargas Plant and current investments in other operations.

 

Of total investments, R$54 million went to spare parts and R$155 million to current investments.

 

Investment (R$ Million)

1Q15

4Q15

1Q16

Steel

121

130

119

Mining

116

97

62

Cement

90

218

139

Logistics

11

19

10

Others

-

-

-

Total Investment IFRS

338

464

330

 

 

Working Capital

 

In order to calculate working capital, CSN adjusts its assets and liabilities as shown below:

 

·         Accounts Receivable: Excludes Dividends Receivable, Advances to Employees and Other Credits (Note 5 of the financial statements).

·         Inventories: Includes Estimated Losses and excludes Spare Parts which is not part of the cash conversion cycle, and will be subsequently booked under Fixed Assets when consumed. (Note 6 of the financial statements);

·         Recoverable Taxes: Composed only of Income (IRPJ) and Social Contribution (CSLL) Taxes included in Recoverable Taxes (Note 7 of the financial statements);

·         Taxes Payable: Composed of Taxes Payable under Current Liabilities plus Taxes in Installments (Note 13 of the financial statements);

·         Advances from Clients: Subaccount of Other Liabilities recorded under Current Liabilities (Note 13 of the financial statements);

·         Suppliers: Includes Forfaiting and Drawee Risk (Note 11 of the financial statements).

 

As a result, working capital applied to the Company’s business totaled R$3,077 million in 1Q16, R$90 million less than in 4Q15, chiefly due to the R$472 million reduction in inventories, while accounts receivable increased by R$245 million. On a same comparison basis, the average receivable period increased by 6 days, while payment periods and inventory turnover fell by 4 and 14 days, respectively.

 

 

 

 

 

Page 23 of 77


 
 

 

Working Capital (R$ Million)

1Q15

4Q15

1Q16

 

Change

 

1Q16

x

4Q15

1Q16

x

1Q15

Assets

5,145

5,869

5,664

 

(205)

519

Accounts Receivable

1,901

1,501

1,746

 

245

(155)

Inventories Turnover

3,107

4,092

3,621

 

(472)

514

Advances to Taxes

137

276

298

 

22

161

Liabilities

2,306

2,703

2,587

 

(115)

281

Suppliers

1,556

1,671

1,542

 

(129)

(14)

Salaries and Social Contribution

214

257

245

 

(12)

31

Taxes Payable

512

725

733

 

8

221

Advances from Clients

24

51

67

 

16

43

Working Capital

2,839

3,166

3,077

 

(90)

238

 

 

 

 

 

 

 

 

 

 

 

Turnover Ratio (days)

1Q15

4Q15

1Q16

 

Change

 

1Q16

x

4Q15

1Q16

X

1Q15

Receivables

36

30

36

 

6

-

Supplier Payment

46

52

48

 

(4)

2

Investory Turnover

92

127

113

 

(14)

21

Cash Conversion Cycle

82

105

101

 

(4)

19

 

 

Results by Segment

 

The Company maintains integrated operations in five business segments: steel, mining3, logistics, cement and energy. The main assets and/or companies comprising each segment are presented below2:

 

    

 

¹ Namisa’s former assets.

² As of 2013, the Company ceased the proportional consolidation of its jointly-owned subsidiaries Namisa, MRS and CBSI. For the purpose of preparing and presenting the information by business segment, Management opted to maintain the proportional consolidation of its jointly-owned subsidiaries, as historically presented. For the reconciliation of CSN’s consolidated results, these companies’ results are eliminated in the "corporate/elimination expenses" column.

³ In order to report the Company’s 2015 results, after the combination of CSN’s mining assets (Casa de Pedra, Namisa and Tecar), the consolidated result includes all this new company’s information.

 

 

Page 24 of 77


 
 

 

 


 

 

 

 

Results 1Q16

Steel

 

Mining

 

Logistics (Port)

 

Logistics (Railways)

 

Cement

 

Energy

 

Corporate/ Eliminations

 

Consolidated

(R$ Million)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Revenue

2,809

 

777

 

50

 

303

 

114

 

68

 

(279)

 

3,844

Domestic Market

1,500

 

151

 

50

 

303

 

114

 

68

 

(475)

 

1,712

Foreign Market

1,309

 

626

 

-

 

-

 

-

 

-

 

196.7

 

2,132

Cost of Goods Sold

(2,300)

 

(585)

 

(36)

 

(214)

 

(101)

 

(51)

 

370

 

(2,918)

Gross Profit

509

 

192

 

14

 

89

 

13

 

17

 

91

 

926

Selling, General and Administrative Expenses

(255)

 

(24)

 

(8)

 

(24)

 

(18)

 

(6)

 

(276)

 

(611)

Depreciation

166

 

114

 

3

 

56

 

13

 

4

 

(47)

 

310

Proportional EBITDA of Jointly Controlled Companies

-

 

-

 

-

 

-

 

-

 

-

 

107

 

107

Adjusted EBITDA

420

 

283

 

9

 

121

 

8

 

15

 

(124)

 

733

 

 

 

Page 25 of 77


 
 

 

Results 4Q15

Steel

 

Mining

 

Logistics (Port)

 

Logistics (Railways)

 

Cement

 

Energy

 

Corporate/

Eliminations

 

Consolidated

(R$ Million)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Revenue

2,579

 

907

 

62

 

331

 

102

 

61

 

(363)

 

3,678

Domestic Market

1,473

 

88

 

62

 

331

 

102

 

61

 

(414)

 

1,703

Foreign Market

1,106

 

819

 

-

 

-

 

-

 

-

 

50.4

 

1,975

Cost of Goods Sold

(2,267)

 

(598)

 

(42)

 

(207)

 

(89)

 

(50)

 

341

 

(2,912)

Gross Profit

312

 

309

 

20

 

124

 

13

 

10

 

(22)

 

767

Selling, General and Administrative Expenses

(267)

 

(22)

 

(5)

 

(23)

 

(21)

 

(6)

 

(199)

 

(544)

Depreciation

178

 

105

 

3

 

50

 

14

 

4

 

(47)

 

308

Proportional EBITDA of Jointly Controlled Companies

-

 

-

 

-

 

-

 

-

 

-

 

155

 

155

Adjusted EBITDA

222

 

392

 

19

 

151

 

6

 

9

 

(113)

 

686

 

 

Steel

According to preliminary figures from the World Steel Association (WSA), global crude steel production totaled 386 million tonnes in 1Q16, 3.5% down on the same period last year, while the Brazilian Steel Institute (IABr) estimates a  12.3% reduction in domestic output to 7.4 million tonnes (also preliminary figures). Domestic production of rolled products came to 5.1 million tonnes, 17.5% less than in 1Q15, while apparent consumption fell by 29.3% to 4.3 million tonnes, with domestic sales of 4.0 million tonnes and imports of 368,000 tonnes. On the other hand, exports increased by 17.1% in the same period, reaching 3.3 million tonnes.

 

In 2016, the IABr estimates an 8.8% decline in apparent consumption to 19.4 million tonnes, with domestic sales of 17.4 million tonnes and imports of 1.1 million tonnes. 

 

According to INDA (the Brazilian Steel Distributors’ Association), 1Q16 steel purchases and sales by distributors fell by 18.3% and 13.0% over 1Q15 to 761,000 and 776,000 tonnes, respectively. Inventories closed the quarter at 906,800 tonnes, in line with the previous month, representing 3.1 months of sales.

 

Automotive

 

According to ANFAVEA (the Auto Manufacturers’ Association), vehicle production totaled 482,000 units in 1Q16, 28% down on 1Q15. In the same period, new car, light commercial vehicle, truck and bus licensing fell by 29% to 481,000 units. The association estimates a reduction in vehicle sales of up to 7.5% in 2016 over 2015, to 2.37 million units, while FENABRAVE (the Vehicle Distributors’ Association) expects a 6% reduction in vehicle sales.

 

Construction

 

According to SECOVI-SP (the São Paulo Residential Builders’ Association), during 1Q16 the residential real estate launches in the city of São Paulo totaled 2,856 units, 30% up on the 1,418 units launched in the 1Q15.

 

According to ABRAMAT (the Construction Material Manufacturers’ Association), sales of building materials in 1Q16 fell by 17.3% over the same period last year. The association revised its 2016 estimate to a real decline of 4.5%.

 

Home Appliances

 

According to the Brazilian Institute of Geography and Statistics (IBGE), home appliance production accumulated until march 2016 fell by 22% over the same period in 2015, while output in the last 12 months dropped by 20% over the same period a year before, reflecting the low level of business and consumer confidence.

 

 

Page 26 of 77


 
 

 

 

Results from CSN’s Steel Operations

 

The parent company’s slab production totaled 836,000 tonnes in 1Q16, 21% and 29% down on 4Q15 and 1Q15, respectively. It is worth noting that no slabs were purchased from third parties in 1Q16, versus 64,000 tonnes acquired in 4Q15. Flat rolled steel production came to 746,000 tonnes, 22% and 27% less than in 4Q15 and 1Q15, respectively.

 

Flat Steel Production (Parent Company)

1Q15

4Q15

1Q16

Change

(Thousand tonnes)

1Q16

x

4Q15

1Q16

x

1Q15

Total Slabs (UPV + Third Parties)

1,184

1,062

836

(21%)

(29%)

Crude Steel Production

1,115

998

835

(16%)

(25%)

Third Parties Slabs

69

64

0

-

-

Total Rolled Products

1,020

952

746

(22%)

(27%)

 

 

·         Total steel product sales volume came to 1,246 thousand tonnes in 1Q16, 10% up on 4Q15. Of this total, 52% went to the domestic market, 42% were sold by our subsidiaries abroad and 6% went to exports.

 

·         First-quarter domestic steel sales totaled 650,000 tonnes, 1% up on 4Q15, 611,000 tonnes of which flat steel and 38,000 tonnes long steel.

 

·         First-quarter foreign sales amounted to 597,000 tonnes, 23% up on 4Q15. Of this total, the overseas subsidiaries sold 520,000 tonnes, 204,000 of which by LLC, 216,000 by SWT and 100,000 by Lusosider, while direct exports came to 78,000 tonnes.  

 

·         In the first quarter, CSN increased its share of coated products as a percentage of total sales volume, following the strategy of adding more value to its product mix. Domestic sales of coated products such as galvanized items and tin plate accounted for 46% of flat steel sales, versus 45% in 4Q15. In the foreign market, the share of coated products moved up from 69% of flat steel sales to 77% in 1Q16.

 

·         Net revenue totaled R$2,809 million in 1Q16, 9% up on 4Q15, chiefly due to the increase in domestic sales volume and sales by subsidiaries abroad. In 1Q16, average net revenue per tonne remained in line with 1Q15, totaling R$2,196.

 

·         COGS came to R$2,300 million in 1Q16, a slight 1% increase over 4Q15.

 

·         The parent company’s production cost reached R$1,343 million in 1Q16, 21% down on 4Q15, chiefly due to the decrease in the consumption of imported raw material as a result of the extinguishing of blast furnace 2 and the startup of coke batteries, thus reducing the fuel rate, in addition to the lower electricity consumption and a downturn in maintenance expenses.

 
 
 

Page 27 of 77


 
 

 

 

·         Slab production costs came to R$1,064/t, in line with 4Q15. In US dollars, however, the cost fell by 1.4%, from US$276/t, in 4Q15, to US$272/t. As a result, CSN maintained its position among those steel companies with the lowest slab costs in the world.

 

·          Adjusted EBITDA amounted to R$420 million in 1Q16, 89% up on the R$222 million recorded in 4Q15, accompanied by an increase of 6p.p. in the margin, which widened from 9%, in 4Q15, to 15%.

 

 

 

 
 
 

Page 28 of 77


 
 

 

Mining

 

In 1Q16, the seaborne iron ore market was positively impacted by the greater availability of credit and the recovery of construction activities in China, led by investments in new real estate projects. The improvement in demand led to higher prices and healthier margins for the local steel producers, as well as encouraging the build-up of inventories. In addition, seasonal factors, such as higher rainfall in Australia and Brazil, as well as the rigorous Chinese winter, played an important role in reducing the iron ore supply base. As a result, iron ore prices moved up by 3.5% over the previous quarter, averaging US$48.30/dmt (Platts, 62% Fe, N. China).

 

Results from CSN’s Mining Operations

 

·         In 1Q16, iron ore production totaled 7,326 thousand tonnes, 2% and 23% up on 4Q15 and 1Q15, respectively.

 

·         First-quarter iron ore purchases came to 617,000 tonnes, 58% down on 4Q15, but 7% up on 1Q15, chiefly due to the reduced availability of iron ore from small and medium-sized producers in this quarter.

 

·         Iron ore sales came to 8,295,000 tonnes1 in 1Q16, 11% and 21% up on 4Q15 and 1Q15, respectively, thanks to an improved sales performance in the domestic market. Shipped iron ore volume totaled 6,988 thousand tonnes, 12% down on 4Q15, but 11% more than in 1Q15. Almost 1,047,000 tonnes from Congonhas Minérios were sold to UPV.

 

Production Volume and Mining Sales2

1Q15

4Q15

1Q16

Change

(thousand t)

1Q16

x

4Q15

1Q16

x

1Q15

Iron Ore Production1

5,938

7,218

7,326

1%

23%

Third Parties Purchase

543

1,481

617

(58%)

14%

Total Production + Purchase

6,481

8,698

7,943

(9%)

23%

                   

UPV Transfer and Sale

1,428

1,257

1,047

(17%)

(27%)

Third Parties Sales Volume

5,442

6,202

7,248

17%

33%

Total Sales + Transfer

6,870

7,459

8,295

11%

21%

 

 

 

 

           

Shipped Volume

6,282

7,939

6,988

(12%)

11%

 

·           Net revenue from mining operations totaled R$777 million in 1Q16, 14% down on 4Q15, but 18% more than in 1Q15. The quarter-on-quarter decline was due to the reduction in the FOB price, which did not occur in 1Q15. FOB unit revenue came to US$28/t in 1Q16, 23% less than in 4Q15.

 

·           In the first quarter, mining segment COGS came to R$585 million, in line with 4Q15 and 3% more than in 1Q15, due to the higher volume of iron ore sold in the quarter. In 1Q16, Casa de Pedra recorded a Chinese delivery cash cost excluding depreciation of US$31.2/wmt, 6% down on 4Q15.

 

·          Adjusted EBITDA stood at R$283 million in 1Q16, 28% down on the R$392 million recorded in 4Q15, while the adjusted EBITDA margin narrowed by 7 p.p., from 43%, in 4Q15, to 36%.

 

 

 

 

1 Production and sales volumes include the 100% stake in NAMISA until November 2015 and the 100% interest in Congonhas in December 2015.

2 As of December 2015, Congonhas Minérios began selling iron ore to the Presidente Vargas Plant.

 

 
 

Page 29 of 77


 
 

 

 

 

    

 

Logistics

 

According to the ANTT (National Ground Transport Agency), the Brazilian rail container transport concessionaires transported 897,000 tonnes in 2016, 1.3% down on 1Q15.

 

Results from CSN’s Logistic Operations

 

Railway Logistics: In 1Q16, net revenue came to R$303 million, generating EBITDA of R$121 million and an EBITDA margin of 40%

 

Port Logistics: In the first quarter, Sepetiba Tecon handled 143,000 tonnes of steel products, in addition to 12,000 tonnes of general cargo and approximately 39,000 containers handled. First-quarter net revenue stood at R$50 million, generating EBITDA of R$9 million, accompanied by an EBITDA margin of 19%.

 

 

Sepetiba TECON Highlights

1Q15

4Q15

1Q16

Change

1Q16

x

4Q15

1Q16

x

1Q15

Containers Volume (thousand units)

39

39

39

-

-

Steel Products Volume (thousand t)

141

261

143

(45%)

2%

General Cargo Volume (thousand t)

73

2

12

368%

(84%)

 

 

Cement

 

According to the IBGE’s Monthly Industrial Survey (PIM-PF), Brazil’s cement production fell by 17.0% in 1Q16 over 1Q15, handling with the construction industry performance.

 

Preliminary figures from SNIC (the Cement Industry Association) indicate domestic cement sales of 13.9 million tonnes in 1Q16, 14.7% less than in the same quarter the year before. For 2016 as a whole SNIC estimates respective annual declines of 12% to 15% in sales and 9% to 11% in apparent consumption.

 

Results of CSN’s Cement Operations

 

In 1Q16, cement sales amounted to 571,000 tonnes, 15% up on 4Q15, while net revenue came to R$114 million. EBITDA totaled R$8 million, accompanied by an EBITDA margin of 7%, due to the ramp-up of the new operations in Arcos, Minas Gerais.

 

 

Page 30 of 77


 
 

 

 

Cement Highlights

1Q15

4Q15

1Q16

Change

(thousand t)

1Q16

x

4Q15

1Q16

x

1Q15

Total Production

493

564

531

(6%)

8%

Total Sales

525

496

571

15%

8%

 

Energy

 

According to the Energy Research Company (EPE), Brazilian electricity consumption totaled 121 TWh until March 2016, 4.2% less than the same period in 2015. Consumption in the industrial and residential segments fell by 7.5% and 2.5%, respectively, when the commercial segment decline 3.2%.

 

Results from CSN’s Energy Operations

 

In 1Q16, net revenue from energy operations totaled R$68 million, EBITDA stood at R$15 million and the EBITDA margin came to 23%.

 

 

Capital Market

 

CSN’s shares appreciated by 78.8% in 1Q16, while the Ibovespa increased by 15.5% in the same period. Daily traded volume on the BM&FBovespa averaged R$41.1 million. On the New York Stock Exchange (NYSE), CSN’s American Depositary Receipts (ADRs) moved up by 101.9%, versus the Dow Jones’ 1.5% appreciation. On the NYSE, daily traded volume of CSN’s ADRs averaged US$2.7 million.

 

 

1Q16

Number of shares in thousand

1,387,524

Market Capitalization

 

Closing price (R$/share)

7.15

Closing price (US$/ADR)

1.97

Market Capitalization (R$ million)

9,921

Market Capitalization (US$ million)

2,733

Total return including dividends and interest on equity

 

CSNA3

78.8%

SID

101.9%

Ibovespa

15.5%

Dow Jones

1.5%

Volume

 

Average daily (thousand shares)

7,251

Average daily (R$ Thousand)

41,089

Average daily (thousand ADRs)

1,791

Average daily (US$ Thousand)

2,725

 

Source: Bloomberg

 

 


 

Page 31 of 77


 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

(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 are collectively referred to herein as the "Group”). The Company’s registered office is located in São Paulo, SP, Brazil.

                                                               

CSN is listed on the São Paulo Stock Exchange (BM&F BOVESPA) and on the New York Stock Exchange (NYSE). Accordingly, the Company 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 steelworks (“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, all of them are in line with the plan to achieve new markets and perform excellent services for final consumers. Its steel has been used in home appliances, civil construction and automobile industries. 

 

·       Mining:

 

The production of iron ore is developed in the city of Congonhas, State of Minas Gerais.

 

Iron ore is sold basically in the international market, especially in Europe and Asia. The prices charged in these markets are historically cyclical and subject to significant fluctuations over short periods of time, driven by several factors related to global demand, strategies adopted by the major steel producers, and the foreign exchange rate. All these factors are beyond the Company’s control. The ore transportation is accomplished by Terminal de Carvão e Minérios do Porto de Itaguai - TECAR, a solid bulk terminal, one of the four terminals that compose the Port of Itaguai, located in Rio de Janeiro. Imports of coal and coke are held through this terminal and directed to the steel industry of CSN.

 

From November 30, 2015 the Company has transferred its mining assets, together with its logistical infrastructure, which includes the mine Casa de Pedra and the right to operate the terminal TECAR, to its subsidiary Congonhas Minérios S.A. In the new structure Congonhas Minérios S.A. has taken control over Nacional Minérios S.A. (NAMISA) through a business combination transaction.

 

The Company´s mining activities also comprises tin exploitation, which is based in the State of Rondônia, this facility is engaged to supply the needs of UPV, with the excess of these raw materials being sold to subsidiaries and third parties.

 

·       Cement:

 

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

 

                                                                                                                                                                                          

Page 32 of 77


 
 

 

 


 

 

 

 

 

·       Logistics

 

Railroads:

 

CSN has interests in three railroad companies: MRS Logística S.A., which manages the former Southeast Railway System of Rede Ferroviária Federal S.A (“RFFSA”)., Transnordestina Logística S.A. (“TLSA”) and FTL - Ferrovia Transnordestina Logística S.A. (“FTL”), which operate the former 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 rail links 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 rail links of São Luiz-Mucuripe, Arrojado-Recife, Itabaiana-Cabedelo, Paula Cavalcante-Macau and Propriá-Jorge Lins (Railway System I).

 

Ports:

 

In the State of Rio de Janeiro, by means of its subsidiaries Sepetiba Tecon S.A. and Congonhas Minérios S.A., the Company operates the Container Terminal (Tecon) and the solid bulk terminal (Tecar), respectively, both located at the Itaguaí Port. Established in the harbor of Sepetiba, the mentioned port has a privileged highway, railroad and maritime access.

 

Tecon is responsible for the shipments of CSN´s steel products, movement and storage of containers, consolidation and deconsolidation of cargo; The Tecar´s port terminal is engaged to the iron ore shipment overseas and to the landing of coal, petroleum, coke, sulfur and zinc concentrate for our own operation and for third parties.

 

·       Energy:

 

Since the energy supply is fundamental in CSN´s production process, the Company owns and operates facilities to generate electric power for guaranteeing its self-sufficiency.

 

The note 24 - Segment Information details the financial information per each of CSN´s business segment.

 

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

2.a) Basis of preparation

 

The 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). All the relevant information required in the financial statements and only these information, are being highlighted and correspond to those used for the Company's management.

 

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, 2015, 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, 2015.

 

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 03 – Business Combination

Note 09 – Investments

Note 27 - Employee benefits

Note 29 - Commitments

 

 

Page 33 of 77


 
 

 

 


 

 

 

 

 

The consolidated and parent company interim financial statements were approved by the Board of Directors on May 11, 2016.

 

2.b) Basis of presentation

 

The consolidated condensed interim financial statements are presented in Brazilian reais (R$), which is the mainly 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, 2016, US$1 is equivalent to R$3.5589 (R$3.9048 as of December 31, 2015), €1 is equivalent to R$4.0539 (R$4.2504 as of December 31, 2015).

 

2.c) Basis of consolidation

 

The accounting practices were treated uniformly in all the consolidated companies. The consolidated condensed interim financial statements for the period ended March 31, 2016 and the year ended December 31, 2015 include the following direct and indirect subsidiaries and jointly controlled entities, as well as the exclusive funds as described below:

 

 

 

Page 34 of 77


 
 

 

 


 

 

 

 

·                     Companies

 

 

 

Equity interests (%)

 

 

Companies

 

03/31/2016

 

12/31/2015

 

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 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

 

Equity interests

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 Gestão de Recursos Financeiros Ltda. (*)

 

99.99

 

99.99

 

Management of funds and securities portfolio

Congonhas Minérios S.A.

 

87.52

 

87.52

 

Mining and Equity interests

CSN Energia S.A.

 

99.99

 

99.99

 

Sale of electric power

FTL - Ferrovia Transnordestina Logística S.A.

 

89.79

 

89.79

 

Railroad logistics

Nordeste Logística S.A.

 

99.99

 

99.99

 

Port services

 

 

 

 

 

 

 

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. (1)

 

 

100.00

 

Financial transactions and Equity interests

CSN Resources S.A.

 

100.00

 

100.00

 

Financial transactions and Equity interests

CSN Holdings (UK) Ltd (1)

 

 

100.00

 

Financial transactions and Equity interests

CSN Handel GmbH (2)

 

-

 

87.52

 

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

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 Productos Siderúrgicos S.L.

 

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

 

Sale of long steel

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

Namisa International Minérios SLU

 

87.52

 

87.52

 

Financial transactions, product sales and Equity interests

Namisa Europe, Unipessoal Lda.

 

87.52

 

87.52

 

Equity interests, product and iron ore sales

CSN Mining GmbH (3)

 

87.52

 

87.52

 

Financial transactions, product sales and Equity interests

Namisa Asia Limited

 

87.52

 

87.52

 

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

 

 

 

 

 

 

MRS Logística S.A.

 

18.64

 

18.64

 

Railroad transportation

Aceros Del Orinoco S.A.

 

31.82

 

31.82

 

Dormant company

CBSI - Companhia Brasileira de Serviços de Infraestrutura

50.00

 

50.00

 

Equity interests and product sales and iron ore

Transnordestina Logística S.A.

 

56.92

 

56.92

 

Railroad logistics

 

 

 

 

 

 

 

Indirect interest in joint ventures: equity method

 

 

 

 

 

 

MRS Logística S.A.

 

16.30

 

16.30

 

Railroad transportation

 

 

 

 

 

 

 

Direct interest in associates: equity method

 

 

 

 

 

 

Arvedi Metalfer do Brasil S.A.

 

20.00

 

20.00

 

Metallurgy and Equity interests

             

 

 

 

(*) They are Dormant Companies therefore they do not appear in the note 9.a, where is disclosed business information under the equity method.

 

(1) Company liquidated in January 2016;

(2) Company incorporated by CSN Mining Gmbh (subsidiary with indirect interest) on January 2016;

(3) New corporate name of Namisa Handel Gmbh, amended in February 2016;

 

 

 

Page 35 of 77


 
 

 

 


 

 

 

 

·                     Exclusive funds

 

   

Equity interests (%)

   

Exclusive funds

 

03/31/2016

 

12/31/2015

 

Core business

Direct interest: full consolidation

 

 

 

 

 

 

Diplic - Private credit balanced mutual fund

 

 

100.00

 

Investment fund

Caixa Vértice - Private credit balanced mutual fund

 

100.00

 

100.00

 

Investment fund

BB Steel - Private credit balanced mutual fund

 

100.00

 

100.00

 

Investment fund

VR1 - Private credit balanced mutual fund

 

100.00

 

100.00

 

Investment fund

 

2.d) Restatement of accounting balances

 

· Forfaiting

 

Trough out the financial year 2015 the Company purchased raw materials from its suppliers located abroad through a foreign trade operation called Forfaiting, in which the financial institution makes the payment in cash to exporter by the net values of the securities (discount rate and other possible expenses already deducted), allowing the Company to finance imported goods by an yearly interest rate from 1.25% to 3.28%, maturing in 12 months.

 

· Drawee risk

 

During the financial year 2015 the Company carried out transactions denominated drawee risk, the transaction occurs when the financial institution engaged by the Company anticipates to suppliers the debt securities, so then subsequently receives from the Company on the maturity date those anticipated values

 

The Company reclassified the balances of forfaiting transactions and drawee risk with commercial suppliers originally presented in cash flow on March 2015, as follows:

 

a) Statements of cash flows at March 31, 2015

 

           

Consolidated

 

 

 

 

 

 

03/31/2015

 

 

Originally Reported

 

Reclassifications

 

Restated cash flows

Cash generated by operating activities

 

 

 

 

 

 

Profit for the year attributable to the controlling shareholders

 

392,056

 

 

392,056

Trade payables

 

(118,373)

 

97,541

 

(20,832)

Paid Interests

 

(724,617)

 

(1,423)

 

(726,040)

Others

 

2,092,940

 

 

2,092,940

Net cash generated by operating activities

 

1,642,006

 

96,118

 

1,738,124

 

 

 

 

 

 

 

Cash used in investing activities

 

413,490

 

 

413,490

 

 

 

 

 

 

 

Cash generated by financing activities

           

Forfaiting funding / drawee risk

 

 

15,136

 

15,136

Forfaiting amortization / drawee risk

 

 

(111,254)

 

(111,254)

Others

 

(1,852,855)

 

 

(1,852,855)

Net cash used in financing activities

 

(1,852,855)

 

(96,118)

 

(1,948,973)

 

 

 

 

 

 

 

Exchange rate changes on cash and cash equivalents

 

182,123

 

 

182,123

 

 

 

 

 

 

 

Increase in cash and cash equivalents

 

384,764

 

 

384,764

 

 

 

 

Page 36 of 77


 
 

 

 


 

 

 

 

 

           

Parent Company

 

 

 

 

 

 

03/31/2015

 

 

Originally Reported

 

Reclassifications

 

Restated cash flows

Cash generated by operating activities

 

 

 

 

 

 

Profit for the year

 

392,056

 

 

392,056

Trade payables

 

(201,233)

 

97,541

 

(103,692)

Paid Interests

 

(555,887)

 

(1,423)

 

(557,310)

Others

 

1,449,353

 

 

1,449,353

Net cash generated by operating activities

 

1,084,289

 

96,118

 

1,180,407

 

 

 

 

 

 

 

Cash used in investing activities

 

(420)

 

 

(420)

 

 

 

 

 

 

 

Cash generated by financing activities

           

Forfaiting funding / drawee risk

 

 

15,136

 

15,136

Forfaiting amortization / drawee risk

 

 

(111,254)

 

(111,254)

Others

 

(1,055,659)

 

 

(1,055,659)

Net cash used in financing activities

 

(1,055,659)

 

(96,118)

 

(1,151,777)

 

 

 

 

 

 

 

Exchange rate changes on cash and cash equivalents

 

49,459

 

 

49,459

 

 

 

 

 

 

 

Increase in cash and cash equivalents

 

77,669

 

 

77,669

 

b) Statement of income and statement of comprehensive income at March 31, 2015

 

The Company has not restated the others statements of March 2015 since the changes in those tables were not material.

 

3.     CASH AND CASH EQUIVALENTS       

 

 

 

Consolidated

 

Parent Company

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

Current

 

 

 

 

 

 

 

Cash and cash equivalents

             

Cash and banks

666,948

 

434,014

 

26,453

 

37,003

               

Short-term investments

 

 

 

 

 

 

 

In Brazil:

             

Government securities

59,915

 

165,520

 

22,921

 

164,311

Private securities

273,750

 

945,420

 

189,108

 

570,284

 

333,665

 

1,110,940

 

212,029

 

734,595

Abroad:

             

Time deposits

4,540,327

 

6,316,098

 

916,700

 

1,113,601

Total short-term investments

4,873,992

 

7,427,038

 

1,128,729

 

1,848,196

Cash and cash equivalents

5,540,940

 

7,861,052

 

1,155,182

 

1,885,199

 

 

The funds available in the Group and parent company set up in Brazil are basically invested in investment funds, classified as exclusive and its financial statements were consolidated within CSN the financial statements, consolidated and parent company. The funds include repurchase agreements backed by private and public securities, with pre-fixed income, with 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 BNY Mellon Serviços Financeiros S.A. DTVM , BB Gestão de Recursos DVTM and Caixa Econômica Federal and their assets collateralize possible losses on investments and transactions carried out. The investment in those funds was consolidated.

 

 

Page 37 of 77


 
 

 

 


 

 

 

 

A significant part of the funds of the Company and its foreign subsidiaries is invested in time deposits in banks considered by the administration as top rated banks and the returns are based on fixed interest rates.

 

4.     SHORT-TERM INVESTMENTS

 

The Company has investments in Public and Private securities managed by its exclusive funds that have been qualified as a margin deposits for the forward dollar contracts traded at BM&F Bovespa in the period and detailed in note 12 (b). The carrying amount of these financial investments totaled R$ 764,132 (R$ 763,599 on December 31, 2015). These investments have pre-fixed yield and immediate liquidity.

 

5.     TRADE RECEIVABLES

 

 

Consolidated

 

Parent Company

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

Trade receivables

 

 

 

 

 

 

 

Third parties

 

 

 

 

 

 

 

Domestic market

946,045

 

772,617

 

512,785

 

425,108

Foreign market

889,451

 

818,562

 

199,576

 

250,588

 

1,835,496

 

1,591,179

 

712,361

 

675,696

Allowance for doubtful debts

(165,188)

 

(151,733)

 

(123,764)

 

(112,502)

 

1,670,308

 

1,439,446

 

588,597

 

563,194

Related parties (Note 17 b)

75,241

 

61,366

 

1,064,915

 

1,140,172

 

1,745,549

 

1,500,812

 

1,653,512

 

1,703,366

               

Other receivables

             

Dividends receivable (Note 17 b) (*)

27,623

 

27,817

 

747,033

 

737,668

Advances to employees

35,229

 

40,190

 

21,606

 

24,465

Other receivables

7,705

 

9,458

 

275

 

2,024

 

70,557

 

77,465

 

768,914

 

764,157

 

1,816,106

 

1,578,277

 

2,422,426

 

2,467,523

 

(*) Refers mainly to dividends receivable from Congonhas Minérios S.A. totaling R$694,080 to be paid on November 30, 2016.

                                                                                          

In accordance with Group’ internal sales policy the Group performs operations 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$299,737 as of March 31, 2016 (R$232,275 as of December 31, 2015), less the trade receivables.

 

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

 

   

Consolidated

 

Parent Company

   

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

Current

 

1,339,503

 

1,049,033

 

428,160

 

423,801

Past-due up to 180 days

 

328,092

 

353,443

 

178,716

 

118,488

Past-due over 180 days

 

167,901

 

188,703

 

105,485

 

133,407

 

 

1,835,496

 

1,591,179

 

712,361

 

675,696

 

 

 

 

 

Page 38 of 77


 
 

 

 


 

 

 

 

The movements in the Group’s allowance for doubtful debts are as follows:

 

   

Consolidated

 

Parent Company

   

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

Opening balance

 

(151,733)

 

(127,223)

 

(112,502)

 

(93,536)

Estimated losses

 

(17,897)

 

(35,631)

 

(14,216)

 

(26,288)

Recovery of receivables

 

4,442

 

11,121

 

2,954

 

4,504

Incorporation of CSN Cimentos and assets' drop down to Congonhas

 

 

 

 

 

 

2,818

Closing balance

 

(165,188)

 

(151,733)

 

(123,764)

 

(112,502)

 

 

6.     INVENTORIES

 

 

 

 

Consolidated

 

 

 

Parent Company

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

Finished goods

1,402,385

 

1,912,868

 

989,852

 

1,078,554

Work in progress

1,023,012

 

1,007,630

 

765,813

 

746,614

Raw materials

926,034

 

1,062,557

 

583,460

 

563,119

Storeroom supplies

973,667

 

962,078

 

516,295

 

489,816

Iron ore

256,229

 

95,461

 

15,411

 

6,912

Advances to suppliers

10,313

 

12,147

 

6,386

 

6,191

Provision for losses

(96,808)

 

(111,427)

 

(42,940)

 

(40,462)

 

4,494,832

 

4,941,314

 

2,834,277

 

2,850,744

               

 

 

The movements in the provision for inventory losses are as follows:

 

   

Consolidated

 

Parent Company

   

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

Opening balance

 

(111,427)

 

(112,581)

 

(40,462)

 

(88,056)

Reversal / (losses) for slow-moving and obsolescence (note 22)

14,619

 

1,154

 

(2,478)

 

15,835

Drop down of assets to Congonhas

 

 

 

 

 

 

 

31,759

Closing balance

 

(96,808)

 

(111,427)

 

(42,940)

 

(40,462)

 

 

 

 

 

Page 39 of 77


 
 

 

 


 

 

 

 

 

7.     OTHER CURRENT AND NON-CURRENT ASSETS

 

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

 

 

Consolidated

 

Parent Company

 

Current

Non-current

Current

Non-current

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

Judicial deposits (note 15)

 

 

 

 

324,444

 

328,542

 

 

 

 

 

253,720

 

263,046

Credits with the PGFN (1)

     

 

88,859

 

87,761

 

     

 

88,859

 

87,761

Recoverable taxes (2)

933,627

 

996,679

 

446,826

 

445,926

 

687,038

 

702,722

 

247,254

 

245,833

Prepaid expenses

82,669

 

119,456

 

22,707

 

28,119

 

49,284

 

19,440

     

4,500

Actuarial asset - related party (note 17 b)

 

 

 

 

107,622

 

114,433

 

 

 

 

 

107,468

 

112,660

Derivative financial instruments (note 12 I)

   

118,592

       

 

             

Exclusive funds

 

 

 

 

 

 

 

 

 

 

110,075

 

 

 

 

Securities held for trading (note 12 I)

10,861

 

10,778

         

10,728

 

10,659

       

Iron ore inventory (3)

 

 

 

 

144,499

 

144,499

 

 

 

 

 

 

 

 

Northeast Investment Fund – FINOR

       

10,888

 

10,888

         

8,452

 

8,452

Other receivables (note 12 I)

 

 

 

 

11,249

 

6,877

 

 

 

 

 

1,370

 

1,439

Loans with related parties (note 17 b)

       

386,128

 

373,214

 

464

     

248,401

 

239,930

Other receivables from related parties (note 17 b)

11,263

 

9,420

 

33,145

 

29,020

 

26,996

 

32,479

 

314,797

 

303,441

Others

42,942

 

31,524

 

14,680

 

14,642

         

14,441

 

14,408

 

1,081,362

 

1,286,449

 

1,591,047

 

1,583,921

 

774,510

 

875,375

 

1,284,762

 

1,281,470

 

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

 

(2) Refers mainly to taxes on revenue (PIS/COFINS) and State VAT (ICMS) recoverable and income tax and social contribution for offset.

 

(3) 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.

 

8.     INVESTMENTS

 

The information related to the description of activities of subsidiaries, jointly controlled entities, associates and other investments did not have changes in relation to that disclosed in the Company's financial statements as of December 31, 2015 and, accordingly, the Company decided not to repeat it in the condensed interim financial statements as of March 31, 2016.

 

·       Reduce of financial leverage

 

With the primary goal of reducing financial leverage, the Company´s Management is focused on a plan of disposal of assets and believes that a portion of these assets will be sold within 12 months as from December 31, 2015; however, it is not possible to confirm that the sale is highly probable for any of the considered assets, within these 12 months period. The Company considers several sales scenarios that vary according to different macroeconomic and operating assumptions. In this context, the Company did not segregate and not reclassified these assets in the financial statements as discontinued operations in accordance with the CPC 31 (IFRS 5).

 

 

 

Page 40 of 77


 
 

 

 


 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

03/31/2016

             

12/31/2015

 

03/31/2015

Companies

 

Number of shares held by CSN in units

 

% Direct equity interest

 

Participation in

 

% Direct equity interest

 

Participation in

 

 

     

Assets

 

Liabilities

 

Shareholders’ equity

 

Profit / (loss) for the period

   

Assets

 

Liabilities

 

Shareholders’ equity

 

Profit / (loss) for the period

                     
                     
 

Common

 

Preferred

                   

Investments under the equity method

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subsidiaries

                                               

CSN Islands VII Corp.

20,001,000

 

 

100.00

 

7,184,904

 

7,405,377

 

(220,473)

 

(260,473)

 

100.00

 

7,877,792

 

7,837,793

 

39,999

 

535,768

CSN Islands IX Corp.

3,000,000

 

 

100.00

 

2,120

 

 

2,120

 

(209)

 

100.00

 

2,329

 

 

2,329

 

(3)

CSN Islands X Corp.

(*)

 

 

 

 

 

 

 

 

 

 

 

(13,313)

CSN Islands XI Corp.

50,000

 

 

100.00

 

2,763,610

 

2,690,617

 

72,993

 

51,002

 

100.00

 

3,179,151

 

3,157,160

 

21,991

 

1,129

CSN Islands XII Corp.

1,540

 

 

100.00

 

2,537,268

 

3,563,746

 

(1,026,478)

 

68,608

 

100.00

 

2,815,700

 

3,910,786

 

(1,095,086)

 

(163,227)

CSN Minerals S.L.U.

3,500

 

 

100.00

 

4,880,911

 

277

 

4,880,634

 

(278,036)

 

100.00

 

5,644,572

 

1,265

 

5,643,307

 

361,209

CSN Export Europe, S.L.U.

3,500

 

 

100.00

 

996,055

 

8,939

 

987,116

 

(111,855)

 

100.00

 

1,397,512

 

9,373

 

1,388,139

 

199,939

CSN Metals S.L.U.

16,504,020

 

 

100.00

 

1,116,163

 

6,265

 

1,109,898

 

(103,895)

 

100.00

 

1,220,413

 

6,620

 

1,213,793

 

175,297

CSN Americas S.L.U.

3,500

 

 

100.00

 

1,943,149

 

1,671

 

1,941,478

 

(118,682)

 

100.00

 

2,139,488

 

2,729

 

2,136,759

 

114,374

CSN Steel S.L.U.

22,042,688

 

 

100.00

 

2,845,517

 

1,748,748

 

1,096,769

 

175,046

 

100.00

 

2,866,164

 

1,856,618

 

1,009,546

 

(145,990)

Sepetiba Tecon S.A.

254,015,052

 

 

99.99

 

395,731

 

130,343

 

265,388

 

4,149

 

99.99

 

391,889

 

130,650

 

261,239

 

6,723

Mineração Nacional S.A.

65,020,211

 

 

99.99

 

500,839

 

164,885

 

335,954

 

(4,876)

 

99.99

 

500,519

 

159,689

 

340,830

 

25

Estanho de Rondônia S.A.

108,655,326

 

 

99.99

 

33,088

 

13,772

 

19,316

 

(2,975)

 

99.99

 

32,028

 

20,565

 

11,463

 

(1,456)

Cia Metalic Nordeste

92,459,582

 

 

99.99

 

176,950

 

46,542

 

130,408

 

333

 

99.99

 

172,283

 

42,207

 

130,076

 

3,397

Companhia Metalúrgica Prada

313,651,399

 

 

99.99

 

758,147

 

568,898

 

189,249

 

(23,684)

 

99.99

 

734,570

 

521,637

 

212,933

 

(26,240)

CSN Cimentos S.A.

(**)

 

 

 

 

 

 

 

 

 

 

 

16,493

Congonhas Minérios S.A.

158,419,480

 

 

87.52

 

12,934,361

 

5,640,853

 

7,293,508

 

43,372

 

87.52

 

13,398,365

 

6,148,268

 

7,250,097

 

(2,274)

CSN Energia S.A.

43,149

 

 

99.99

 

71,419

 

18,968

 

52,451

 

6,241

 

99.99

 

87,316

 

27,471

 

59,845

 

7,913

FTL - Ferrovia Transnordestina Logística S.A.

353,190,644

 

 

89.79

 

513,512

 

184,330

 

329,182

 

(762)

 

89.79

 

513,711

 

183,767

 

329,944

 

(1,935)

Companhia Florestal do Brasil

35,454,849

 

 

99.99

 

32,239

 

476

 

31,763

 

(479)

 

99.99

 

32,242

 

 

32,242

 

(1)

Nordeste Logística

99,999

 

 

99.99

 

100

 

 

100

 

 

100

 

100

 

 

100

 

 

 

 

39,686,083

 

22,194,707

 

17,491,376

 

(557,175)

 

 

43,006,144

 

24,016,598

 

18,989,546

 

1,067,828

Joint-venture e Joint-operation

 

 

 

 

 

 

 

 

 

 

 

Nacional Minérios S.A.

(**)

 

 

 

 

 

 

 

 

 

 

 

396,481

Itá Energética S.A.

253,606,846

 

 

48.75

 

294,923

 

44,530

 

250,393

 

2,289

 

48.75

 

302,956

 

17,470

 

285,486

 

932

MRS Logística S.A.

26,611,282

 

2,673,312

 

18.64

 

1,478,659

 

891,808

 

586,851

 

30,613

 

18.64

 

1,502,463

 

945,958

 

556,505

 

15,232

CBSI - Companhia Brasileira de Serviços de Infraestrutura

1,876,146

 

 

50.00

 

14,414

 

13,454

 

960

 

1,416

 

50.00

 

15,593

 

15,091

 

502

 

(1,975)

CGPAR - Construção Pesada S.A.

50,000

 

 

50.00

 

50,370

 

38,254

 

12,116

 

1,514

 

50.00

 

50,574

 

39,972

 

10,602

 

2,612

Transnordestina Logística S.A.

22,761,085

 

1,397,545

 

56.92

 

4,290,979

 

3,026,922

 

1,264,057

 

(6,987)

 

56.92

 

4,229,494

 

2,958,449

 

1,271,045

 

(7,569)

Fair Value alocated to TLSA due to control loss

 

 

 

 

 

659,105

 

 

 

 

 

659,105

 

 

 

 

6,129,345

 

4,014,968

 

2,773,482

 

28,845

 

 

6,101,080

 

3,976,940

 

2,783,245

 

405,713

Associates

 

 

 

 

 

 

 

 

 

 

 

Arvedi Metalfer do Brasil

27,239,971

 

 

20.00

 

54,402

 

53,363

 

1,039

 

 

20.00

 

54,402

 

53,363

 

1,039

 

211

 

 

 

54,402

 

53,363

 

1,039

 

 

 

54,402

 

53,363

 

1,039

 

211

Classified as available-for-sale

 

 

 

 

 

 

 

 

 

 

 

Usiminas

 

 

 

 

 

482,426

 

 

 

 

 

450,073

 

Panatlântica

 

 

 

 

 

21,601

 

 

 

 

 

21,601

 

 

 

 

 

 

504,027

 

 

 

 

 

471,674

 

Other investments

 

 

 

 

 

 

 

 

 

 

 

Profits on subsidiaries' inventories

 

 

 

 

 

(39,425)

 

42,617

 

 

 

 

(82,042)

 

(32,085)

Others

 

 

 

 

 

65,019

 

(1,366)

 

 

 

 

65,017

 

883

 

 

 

 

 

25,594

 

41,251

 

 

 

 

(17,025)

 

(31,202)

Total investments

 

 

 

 

 

20,795,518

 

(487,079)

 

 

 

 

22,228,479

 

1,442,550

 

 

 

 

 

 

 

 

 

 

 

Classification of investments in the balance sheet

 

 

 

 

 

 

 

 

 

 

Investments in assets

   

 

 

 

 

22,042,470

 

 

 

 

 

23,323,565

 

Investments with negative equity

 

 

 

 

 

 

(1,246,952)

 

 

 

 

 

(1,095,086)

 

                       

20,795,518

                 

22,228,479

 

 

(*) Company extinguished in 2015;

(**) Company incorporated in 2015;

 

The number of shares, the carrying amounts 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.

 

 

 

Page 41 of 77

 
 

 

 


 

 

 

 

8.b) Changes of investments balances in subsidiaries, joint ventures, joint operations, associates and other investments

 

     

Consolidated

     

Parent Company

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

Opening balance of investments

3,998,227

 

13,665,453

 

23,323,565

 

24,199,129

Opening balance of loss provisions

 

 

(1,095,086)

 

(1,088,559)

Investment balance of Namisa 11/30/15

 

(10,160,981)

 

 

Capital increase/acquisition of shares

 

3,575

 

10,828

 

490,842

Acquisition of Congonhas Minérios shares - 4.16%

 

 

 

2,732,605

Capital reduction

 

(466,758)

 

 

(546,796)

Dividends (1)

193

 

(54,464)

 

(824,726)

 

(3,985,128)

Comprehensive income (2)

32,443

 

(967,447)

 

(131,984)

 

(409,767)

Comprehensive income - Business Combination

 

 

 

1,944,676

Equity (3)

53,864

 

1,192,034

 

(487,079)

 

5,968,872

Incorporation of subsidiary - CSN Cimentos

 

 

 

(1,061,005)

Transfer of shares - Namisa and MRS

 

786,800

 

 

(6,173,113)

Transfer of assets - Casa de Pedra and Tecar

 

 

 

156,723

Others

 

15

 

 

Closing balance of investments

4,084,727

 

3,998,227

 

22,042,470

 

23,323,565

Balance of provision for investments

 

 

(1,246,952)

 

(1,095,086)

Total

4,084,727

 

3,998,227

 

20,795,518

 

22,228,479

 

(1) In 2016 refers to the allocation of dividends from subsidiaries CSN Energia, Itá Energética, 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) and actuarial gain/loss reflecting the investments measured by equity method.

 

(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:

 

     

Consolidated

 

03/31/2016

 

03/31/2015

Equity income of affiliates and joint ventures

 

 

 

Nacional Minérios S.A.

   

396,481

MRS Logística S.A.

61,210

 

15,060

CBSI - Companhia Brasileira de Serviços de Infraestrutura

1,416

 

(1,976)

Transnordestina

(6,987)

 

(7,569)

Arvedi Metalfer do Brasil

 

1,268

Others

(1,775)

 

 

53,864

 

403,264

Eliminations

 

 

 

To cost of sales

(13,462)

 

(7,919)

To net revenues

 

 

668

To taxes

4,577

 

2,465

Equity in results

44,979

 

398,478

 

 

 

 

 

Page 42 of 77


 
 

 

 


 

 

 

 

8.c) Joint ventures and joint operations financial information

 

The balances of the balance sheets and income statements of joint venture and joint operation are presented as follows and refer to 100% of the companies´ profit/loss:

 

                   

03/31/2016

                 

12/31/2015

 

 

Joint-Venture

 

Joint-Operation

 

Joint-Venture

 

Joint-Operation

Equity interest (%)

 

MRS Logística

 

CBSI

 

Transnordestina Logística

 

Itá Energética

 

CGPAR

 

MRS Logística

 

CBSI

 

Transnordestina Logística

 

Itá Energética

 

CGPAR

 

34.94%

 

50.00%

 

56.92%

 

48.75%

 

50.00%

 

34.94%

 

50.00%

 

56.92%

 

48.75%

 

50.00%

Balance sheet

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

                                       

Cash and cash equivalents

 

446,584

 

28

 

17,777

 

15,434

 

9,518

 

671,475

 

3,343

 

75,977

 

36,647

 

10,621

Advances to suppliers

 

9,783

 

666

 

75,237

 

313

 

55

 

6,854

 

289

 

 

215

 

81

Other current assets

 

649,104

 

23,720

 

89,490

 

21,770

 

47,844

 

657,000

 

22,726

 

67,540

 

17,137

 

43,358

Total current assets

 

1,105,471

 

24,414

 

182,504

 

37,517

 

57,417

 

1,335,329

 

26,358

 

143,517

 

53,999

 

54,060

Non-current assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advances to suppliers

 

 

 

 

 

 

 

 

 

 

Other non-current assets

 

674,019

 

168

 

256,272

 

41,647

 

15,698

 

533,897

 

139

 

280,718

 

32,880

 

13,087

Investments, PP&E and intangible assets

 

6,153,486

 

4,245

 

7,099,943

 

525,807

 

27,624

 

6,191,459

 

4,689

 

7,006,464

 

534,569

 

34,000

Total non-current assets

 

6,827,505

 

4,413

 

7,356,215

 

567,454

 

43,322

 

6,725,356

 

4,828

 

7,287,182

 

567,449

 

47,087

Total Assets

 

7,932,976

 

28,827

 

7,538,719

 

604,971

 

100,739

 

8,060,685

 

31,186

 

7,430,699

 

621,448

 

101,147

                                         

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings and financing

 

786,707

 

 

43,752

 

 

9,511

 

844,296

 

 

167,112

 

 

10,849

Other current liabilities

 

762,374

 

24,408

 

290,520

 

88,997

 

55,946

 

893,883

 

28,794

 

250,440

 

33,667

 

55,281

Total current liabilities

 

1,549,081

 

24,408

 

334,272

 

88,997

 

65,457

 

1,738,179

 

28,794

 

417,552

 

33,667

 

66,130

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings and financing

 

2,664,076

 

 

4,763,654

 

 

10,571

 

2,772,462

 

 

4,560,078

 

 

12,620

Other non-current liabilities

 

571,375

 

2,500

 

220,001

 

2,347

 

480

 

564,407

 

1,389

 

220,001

 

2,170

 

1,193

otal non-current liabilities

 

3,235,451

 

2,500

 

4,983,655

 

2,347

 

11,051

 

3,336,869

 

1,389

 

4,780,079

 

2,170

 

13,813

Shareholders’ equity

 

3,148,444

 

1,919

 

2,220,792

 

513,627

 

24,231

 

2,985,637

 

1,003

 

2,233,068

 

585,611

 

21,204

Total liabilities and shareholders’
equity

 

7,932,976

 

28,827

 

7,538,719

 

604,971

 

100,739

 

8,060,685

 

31,186

 

7,430,699

 

621,448

 

101,147

           

 

     

 

                   
   

01/01/2016 a 03/31/2016

 

01/01/2015 a 03/31/2015

 

 

Joint-Venture

 

Joint-Operation

 

 

 

Joint-Operation

Equity interest (%)

 

MRS Logística

 

CBSI

 

Transnordestina Logística

 

Itá Energética

 

CGPAR

 

MRS Logística

 

CBSI

 

Transnordestina Logística

 

Itá Energética

 

CGPAR

 

34.94%

 

50.00%

 

56.92%

 

48.75%

 

50.00%

 

27.27%

 

50.00%

 

62.64%

 

48.75%

 

50.00%

Statements of Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

749,218

 

33,017

 

 

42,466

 

32,013

 

699,080

 

34,664

 

 

37,212

 

60,280

Cost of sales and services

 

(514,726)

 

(27,601)

 

 

(23,016)

 

(23,245)

 

(485,159)

 

(36,015)

 

 

(22,531)

 

(46,456)

Gross profit

 

234,492

 

5,416

 

 

19,450

 

8,768

 

213,921

 

(1,351)

 

 

14,681

 

13,824

Operating (expenses) income

 

83,055

 

(2,250)

 

(7,656)

 

(12,895)

 

(3,696)

 

(66,892)

 

(2,318)

 

(8,281)

 

(12,063)

 

(5,037)

Finance income (costs), net

 

(65,690)

 

(334)

 

(4,620)

 

551

 

(281)

 

(59,282)

 

(281)

 

(3,802)

 

268

 

(495)

Profit before income tax and social contribution

 

251,857

 

2,832

 

(12,276)

 

7,106

 

4,791

 

87,747

 

(3,950)

 

(12,083)

 

2,886

 

8,292

Current and deferred income tax
and social contribution

 

(87,621)

 

 

 

(2,410)

 

(1,764)

 

(31,890)

 

 

 

(975)

 

(3,069)

Profit / (loss) for the period

 

164,236

 

2,832

 

(12,276)

 

4,696

 

3,027

 

55,857

 

(3,950)

 

(12,083)

 

1,911

 

5,223

 

 

9.     PROPERTY, PLANT AND EQUIPMENT

 

The information related to property, plant and equipment has not changed significantly compared to the disclosed in the Company's financial statements on December 31, 2015

 

 

Consolidated

 

Land

 

Buildings and Infrastructure

 

Machinery.
equipment
and facilities

 

Furniture
and fixtures

 

Construction
in progress

 

Other (*)

 

Total

Balance at December 31, 2015

264,289

 

2,696,126

 

11,109,272

 

38,986

 

3,199,386

 

563,540

 

17,871,599

Cost

264,289

 

3,436,458

 

18,638,117

 

183,086

 

3,199,386

 

811,535

 

26,532,871

Accumulated depreciation

 

(740,332)

 

(7,528,845)

 

(144,100)

 

 

(247,995)

 

(8,661,272)

Balance at December 31, 2015

264,289

 

2,696,126

 

11,109,272

 

38,986

 

3,199,386

 

563,540

 

17,871,599

Effect of foreign exchange differences

(3,242)

 

(10,389)

 

(44,919)

 

(226)

 

(2,264)

 

(1,496)

 

(62,536)

Acquisitions

 

89

 

22,785

 

237

 

289,441

 

17,280

 

329,832

Capitalized interest (notes 23 and 27)

 

 

 

 

57,661

 

 

57,661

Write-offs (note 22)

 

 

(6,178)

 

(2)

 

 

(6,786)

 

(12,966)

Depreciation

 

(27,946)

 

(268,969)

 

(1,496)

 

 

(9,201)

 

(307,612)

Transfers to other asset categories

 

 

58,831

 

42

 

(57,084)

 

(1,789)

 

Others

 

 

822

 

 

3,457

 

 

4,279

Balance at March 31, 2016

261,047

 

2,657,880

 

10,871,644

 

37,541

 

3,490,597

 

561,548

 

17,880,257

Cost

261,047

 

3,418,499

 

18,608,626

 

181,682

 

3,490,597

 

819,860

 

26,780,311

Accumulated depreciation

 

(760,619)

 

(7,736,982)

 

(144,141)

 

 

(258,312)

 

(8,900,054)

Balance at March 31, 2016

261,047

 

2,657,880

 

10,871,644

 

37,541

 

3,490,597

 

561,548

 

17,880,257

 

 

 

 

 

Page 43 of 77


 
 

 

 


 

 

 

 

 

 

 

Parent Company

 

 

Land

 

Buildings and Infrastructure

 

Machinery.
equipment
and facilities

 

Furniture
and fixtures

 

Construction
in progress

 

Other (*)

 

Total

Balance at December 31, 2015

 

83,350

 

869,071

 

6,103,720

 

17,679

 

1,723,327

 

69,201

 

8,866,348

Cost

 

83,350

 

1,025,848

 

10,677,122

 

118,301

 

1,723,327

 

159,914

 

13,787,862

Accumulated depreciation

 

 

(156,777)

 

(4,573,402)

 

(100,622)

 

 

(90,713)

 

(4,921,514)

Balance at December 31, 2015

 

83,350

 

869,071

 

6,103,720

 

17,679

 

1,723,327

 

69,201

 

8,866,348

Acquisitions

 

 

 

11,372

 

99

 

212,862

 

11,724

 

236,057

Capitalized interest (notes 23 and 27)

 

 

 

 

 

32,730

 

 

32,730

Write-offs (note 22)

 

 

 

(7)

 

(2)

 

 

(7,581)

 

(7,590)

Depreciation

 

 

(6,026)

 

(125,824)

 

(734)

 

 

(1,594)

 

(134,178)

Transfers to other asset categories

 

 

 

27,008

 

 

(27,008)

 

 

Others

 

 

 

(15)

 

 

2,456

 

1

 

2,442

Balance at March 31, 2016

 

83,350

 

863,045

 

6,016,254

 

17,042

 

1,944,367

 

71,751

 

8,995,809

Cost

 

83,350

 

1,025,846

 

10,715,489

 

117,997

 

1,944,367

 

170,778

 

14,057,827

Accumulated depreciation

 

 

(162,801)

 

(4,699,235)

 

(100,955)

 

 

(99,027)

 

(5,062,018)

Balance at March 31, 2016

 

83,350

 

863,045

 

6,016,254

 

17,042

 

1,944,367

 

71,751

 

8,995,809

                             

 

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

 

The breakdown of the projects that make up the work in progress is as follows:

 

 

 

 

 

 

 

 

 

 

 

Consolidado

 

 

Project description

 

Start date

 

Completion date

 

03/31/2016

 

12/31/2015

Logistics

 

 

 

 

 

 

 

 

 

 

   

Current investments for maintenance of current operations.

 

 

43,784

 

35,457

 

 

 

 

 

43,784

 

35,457

Mining 

           

     

 

 

Expansion of Casa de Pedra Mine capacity production.

 

2007

 

2016/2017

(1)

740,149

 

709,945

   

Expansion of TECAR export capacity.

 

2009

 

2020

(2)

403,882

 

390,920

 

 

Current investments for maintenance of current operations.

 

 

311,479

 

302,764

       

 

1,455,510

 

1,403,629

Steel

 

 

 

 

 

 

 

 

 

   

Equipment supply for use in the steel operation.

 

2008

 

2016

 

93,493

 

105,697

 

 

Expansion of the service center/Mogi.

 

2013

 

2015/2016

(3)

15,022

 

14,950

   

Current investments for maintenance of current operations.

 

 

(4)

453,514

 

375,579

 

 

 

 

 

562,029

 

496,226

Cement

           

     

 

 

Construction of cement plants.

 

2011

 

2016

(5)

1,420,913

 

1,254,897

   

Current investments for maintenance of current operations.

 

 

8,361

 

9,177

 

 

 

 

 

1,429,274

 

1,264,074

Total of construction in progress

         

3,490,597

 

3,199,386

 

 

 

(1) Estimated completion date of the Central Plant Step 1;

(2) Estimated completion date of phase 60 Mtpa;

(3) Estimated completion date of Mogi Service Center;

(4) Refers substantially to the reforming of batteries for coke ovens;

(5) Estimated completion date of the unit Arcos / Minas Gerais.

 

 

 

Page 44 of 77


 
 

 

 


 

 

 

 

The estimated useful lives are as follows:

 

     

Consolidated

     

Parent Company

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

In Years

 

 

 

 

 

 

 

Buildings

43

 

43

 

43

 

43

Machinery, equipment and facilities

18

 

18

 

18

 

18

Furniture and fixtures

11

 

11

 

11

 

11

Others

14

 

14

 

11

 

11

 

 

9.a) Depreciation and amortization expense:

 

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

 

     

Consolidated

     

Parent Company

 

03/31/2016

 

03/31/2015

 

03/31/2016

 

03/31/2015

Production costs

303,911

 

258,876

 

131,468

 

202,412

Sales expenses

2,274

 

2,300

 

1,810

 

1,778

General and Administrative Expenses

3,651

 

3,322

 

2,247

 

2,139

 

309,836

 

264,498

 

135,525

 

206,329

Other operating expenses (*)

12,108

 

9,004

 

 

 

 

 

321,944

 

273,502

 

135,525

 

206,329

 

(*) Refers to the depreciation of unused equipment and to the amortization of intangible assets, see note 22.

 

10.   INTANGIBLE ASSETS

 

The information related to intangible assets did not have relevant changes in relation to that disclosed in the Company's financial statements as of December 31, 2015 and, accordingly, the Company decided not to repeat it in the condensed interim financial statements as of March 31, 2016.

 

 

Consolidated

 

Parent Company

 

Goodwill

 

Customer relationships

 

Software

 

Trademarks
and
patents

 

Rights and licenses

 

Others

 

Total

 

Goodwill

 

Software

 

Total

Balance at December 31, 2015

4,098,465

 

413,387

 

75,236

 

143,636

 

727,390

 

395

 

5,458,509

 

13,091

 

49,651

 

62,742

Cost

4,357,799

 

549,413

 

173,154

 

143,636

 

727,390

 

395

 

5,951,787

 

14,135

 

84,552

 

98,687

Accumulated amortization

(150,004)

 

(136,026)

 

(97,918)

 

 

 

 

(383,948)

 

(1,044)

 

(34,901)

 

(35,945)

Adjustment for accumulated recoverable value

(109,330)

 

 

 

 

 

 

(109,330)

 

 

 

Balance at December 31, 2015

4,098,465

 

413,387

 

75,236

 

143,636

 

727,390

 

395

 

5,458,509

 

13,091

 

49,651

 

62,742

Effect of foreign exchange differences

 

(18,361)

 

(37)

 

(6,640)

 

 

(18)

 

(25,056)

 

 

 

Acquisitions and expenditures

 

 

6

 

 

 

 

6

 

 

 

Amortization

 

(11,491)

 

(2,841)

 

 

 

 

(14,332)

 

 

(1,347)

 

(1,347)

Balance at March 31, 2016

4,098,465

 

383,535

 

72,364

 

136,996

 

727,390

 

377

 

5,419,127

 

13,091

 

48,304

 

61,395

Cost

4,357,799

 

524,084

 

170,930

 

136,996

 

727,390

 

377

 

5,917,576

 

14,135

 

84,552

 

98,687

Accumulated amortization

(150,004)

 

(140,549)

 

(98,566)

 

 

 

 

(389,119)

 

(1,044)

 

(36,248)

 

(37,292)

Adjustment for accumulated recoverable value

(109,330)

 

 

 

 

 

 

(109,330)

 

 

 

Balance at March 31, 2016

4,098,465

 

383,535

 

72,364

 

136,996

 

727,390

 

377

 

5,419,127

 

13,091

 

48,304

 

61,395

 

The estimated useful lives for the current year are as follows:

 

     

Consolidated

     

Parent Company

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

Software

5

 

5

 

5

 

5

Customer relationships

13

 

13

 

 

 

 

 

 

 

 

 

Page 45 of 77


 
 

 

 


 

 

 

 

11.   BORROWINGS, FINANCING AND DEBENTURES

 

As of March 31, 2016 the balances of borrowings, financing and debentures, which are carried at amortized cost, are as follows:

 

 

   

Consolidated

 

Parent Company

   

Rates p.a. (%)

 

Current liabilities

Non-current liabilities

Current liabilities

Non-current liabilities

     

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

FOREIGN CURRENCY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prepayment (*)

 

1% to 3.5%

 

258,084

 

207,657

 

2,299,050

 

2,633,137

 

258,084

 

207,657

 

2,299,049

 

2,633,137

Prepayment (*)

 

3.51% to 8%

 

294,991

 

286,487

 

3,125,900

 

3,429,716

 

346,027

 

372,474

 

8,451,354

 

9,272,766

Perpetual bonds

 

7%

 

4,844

 

5,315

 

3,558,900

 

3,904,800

               

Fixed rate notes (*)

 

4.14% to 10%

 

49,305

 

175,768

 

6,038,019

 

6,910,992

 

78,243

 

32,402

 

3,697,023

 

4,056,347

Intercompany (*)

 

Libor 6M to 3%

                 

1,157,877

 

1,261,861

 

1,948,391

 

2,137,040

Forfaiting (**)

 

Libor + Spread

 

264,739

 

288,772

 

 

 

 

 

264,739

 

288,772

 

 

 

 

Others

 

1.2% to 8%

 

104,315

 

115,594

 

305,784

 

425,635

               

 

 

 

 

976,278

 

1,079,593

 

15,327,653

 

17,304,280

 

2,104,970

 

2,163,166

 

16,395,817

 

18,099,290

LOCAL CURRENCY

                                   

BNDES/FINAME

 

1.3% + TJLP and fixed rate 2.5% to 6% + 1.5%

 

63,099

 

55,435

 

1,016,389

 

1,018,189

 

36,118

 

27,847

 

933,138

 

928,622

Debentures

 

110.8% to 113.7% of CDI

 

133,290

 

60,670

 

1,653,333

 

1,750,000

 

133,290

 

60,670

 

1,653,333

 

1,750,000

Prepayment (*)

 

109.5% to 116.5% CDI and fixed rate of 8%

185,725

 

522,418

 

5,460,000

 

5,200,000

 

115,780

 

473,139

 

3,460,000

 

3,200,000

CCB

 

112.5% and 113% CDI

 

88,538

 

92,976

 

7,200,000

 

7,200,000

 

88,538

 

92,976

 

7,200,000

 

7,200,000

Intercompany (*)

 

110.79% CDI

 

 

 

 

 

 

 

 

 

40,623

 

 

 

 

 

 

Drawee risk (**)

     

39,221

 

84,063

         

39,221

 

84,063

       

Others

 

 

 

 

 

6,229

 

 

 

12,107

 

 

 

 

 

 

 

 

       

509,873

 

821,791

 

15,329,722

 

15,180,296

 

453,570

 

738,695

 

13,246,471

 

13,078,622

Total borrowings and financing

 

1,486,151

 

1,901,384

 

30,657,375

 

32,484,576

 

2,558,540

 

2,901,861

 

29,642,288

 

31,177,912

Transaction costs and issue premiums

 

(26,374)

 

(26,703)

 

(96,318)

 

(76,742)

 

(21,727)

 

(22,788)

 

(89,365)

 

(68,895)

Total borrowings and financing + transaction costs

 

1,459,777

 

1,874,681

 

30,561,057

 

32,407,834

 

2,536,813

 

2,879,073

 

29,552,923

 

31,109,017

 

(*) The balances of prepaid related parties borrowings total R$5,376,489 as of March 31, 2016 (R$5,929,037 as of December 31, 2015) and the balances of Fixed Rate Notes and intercompany Bonds total R$3,775,266 (R$4,088,749 as of December 31, 2015), see note 17b.               

 

(**) The balances of forfaiting and drawee risk operations totaled R$ 303,960 at March 31, 2016 (R$372,835 at December 31, 2015).

 

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

 

As of March 31, 2016, the breakdown of principal plus interest of long-term liabilities as borrowings, financing and debentures by its maturity date is presented as follows:          

 

   

 

 

Consolidated

 

 

 

Parent Company

2017

 

1,240,173

 

4%

 

2,963,632

 

10%

2018

 

5,691,969

 

19%

 

4,852,103

 

16%

2019

 

7,295,446

 

24%

 

5,555,468

 

19%

2020

 

7,952,690

 

26%

 

4,886,901

 

16%

2021

 

2,264,963

 

7%

 

2,933,977

 

10%

After 2021

 

2,653,234

 

9%

 

8,450,207

 

29%

Perpetual bonds

 

3,558,900

 

11%

 

 

 

 

 

 

30,657,375

 

100%

 

29,642,288

 

100%

 

 

 

 

Page 46 of 77


 
 

 

 


 

 

 

 

·       Amortization and new borrowings, financing and debentures

 

The table below shows the new funding transactions and redemption during the year:

 

       

Consolidated

     

Parent Company

 

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

Opening balance

 

34,282,515

 

30,354,058

 

33,988,090

 

29,560,826

Funding transactions

 

 

978,206

 

40,239

 

2,694,533

Forfaiting funding / Drawee Risk

 

76,338

 

924,706

 

76,338

 

924,706

Repayment

 

(215,756)

 

(2,850,077)

 

(100,410)

 

(1,542,921)

Charges – payments

 

(121,180)

 

(1,146,306)

 

(121,180)

 

(1,146,306)

Forfaiting payments

 

(932,279)

 

(2,957,762)

 

(671,713)

 

(2,656,208)

Forfaiting charges

 

 

(7,064)

 

 

(7,064)

Provision of charges

 

803,347

 

3,052,164

 

661,722

 

2,996,662

Provision charges Forfaiting / Drawee Risk

 

1,961

 

2,032

 

1,961

 

2,032

Other (1)

 

(1,874,112)

 

5,932,558

 

(1,785,311)

 

3,161,830

Closing balance

 

32,020,834

 

34,282,515

 

32,089,736

 

33,988,090

 

(1) Includes interests, unrealized foreign exchange and monetary gains and losses.

 

In first quarter of 2016, the Group amortized loans as shown below:

 

·       Amortization

 

       

Consolidated

Transaction

 

Payment of principal

 

Debt charges

Fixed Rate Notes

 

105,178

 

329,767

Debentures

 

 

88,118

Bank Credit Bill

 

 

 

268,831

Export Credit Note

 

65,000

 

211,380

Pre - Export Payment

 

34,032

 

25,114

BNDES/FINAME

 

8,517

 

8,310

Others

 

3,029

 

759

Total

 

215,756

 

932,279

 

 

12.   FINANCIAL INSTRUMENTS

 

The information related to financial instruments did not have significant changes compared to what was disclosed in Company's financial statements as of December 31, 2015 and, accordingly, the Company decided not to repeat it fully in the condensed interim financial statements as of March 31, 2016.

 

I - Identification and measurement of financial instruments

 

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. The Company also enters into derivative transactions, especially exchange and interest rate swaps.

 

 

 

Page 47 of 77


 
 

 

 


 

 

 

 

·           Classification of financial instruments

 

Consolidated

     

 

 

03/31/2016

 

 

 

12/31/2015

 

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

                                           

Cash and cash equivalents

 

3

 

 

 

 

 

5,540,940

 

 

 

5,540,940

 

 

 

 

 

7,861,052

 

 

 

7,861,052

Short-term investments - margin deposit (*)

 

4

         

764,132

     

764,132

         

763,599

     

763,599

Trade receivables

 

5

 

 

 

 

 

1,745,549

 

 

 

1,745,549

 

 

 

 

 

1,500,812

 

 

 

1,500,812

Derivative financial instruments

 

7

                         

118,592

         

118,592

Trading securities

 

7

 

 

 

10,861

 

 

 

 

 

10,861

 

 

 

10,778

 

 

 

 

 

10,778

Total

     

 

 

10,861

 

8,050,621

 

 

 

8,061,482

 

 

 

129,370

 

10,125,463

 

 

 

10,254,833

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current

                     

                 

Other trade receivables

 

7

 

 

 

 

 

11,249

 

 

 

11,249

 

 

 

 

 

6,877

 

 

 

6,877

Investments

 

8

 

504,027

             

504,027

 

471,674

             

471,674

Loans - related parties

 

7

 

 

 

 

 

386,128

 

 

 

386,128

 

 

 

 

 

373,214

 

 

 

373,214

Total

     

504,027

 

 

 

397,377

 

 

 

901,404

 

471,674

 

 

 

380,091

 

 

 

851,765

                                             

Total assets

 

 

 

504,027

 

10,861

 

8,447,998

 

 

 

8,962,886

 

471,674

 

129,370

 

10,505,554

 

 

 

11,106,598

                                             

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

                     

                 

Borrowings and financing

 

11

 

 

 

 

 

 

 

1,486,151

 

1,486,151

 

 

 

 

 

 

 

1,901,384

 

1,901,384

Derivative financial instruments

 

13

     

40,027

         

40,027

     

26,257

         

26,257

Trade payables

 

 

 

 

 

 

 

 

 

1,235,417

 

1,235,417

 

 

 

 

 

 

 

1,293,008

 

1,293,008

Dividends and interest on capital

                 

464,793

 

464,793

             

464,982

 

464,982

Total

 

 

 

 

 

40,027

 

 

 

3,186,361

 

3,226,388

 

 

 

26,257

 

 

 

3,659,374

 

3,685,631

                                             

Non-current

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings and financing

 

11

             

30,657,375

 

30,657,375

             

32,484,576

 

32,484,576

Total

 

 

 

 

 

 

 

 

 

30,657,375

 

30,657,375

 

 

 

 

 

 

 

32,484,576

 

32,484,576

                                             

Total liabilities

 

 

 

 

 

40,027

 

 

 

33,843,736

 

33,883,763

 

 

 

26,257

 

 

 

36,143,950

 

36,170,207

(*) Short-term investments as collateral with foreign exchange transactions on the BM & F (derivatives)

·           Fair value measurement

 

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

 

Consolidated

 

       

03/31/2016

         

12/31/2015

 

Level 1

 

Level 2

 

Balances

 

Level 1

 

Level 2

 

Balances

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Current

                       

Financial assets at fair value through profit or loss

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

                 

118,592

 

118,592

Trading securities

 

10,861

 

 

 

10,861

 

10,778

 

 

 

10,778

Non-current

                       

Available-for-sale financial assets

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

504,027

     

504,027

 

471,674

     

471,674

Total assets

 

514,888

 

 

 

514,888

 

482,452

 

118,592

 

601,044

                         

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Current

                       

Financial liabilities at fair value through profit or loss

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

     

40,027

 

40,027

     

26,257

 

26,257

Total liabilities

 

 

 

40,027

 

40,027

 

 

 

26,257

 

26,257

 

 

 

 

 

Page 48 of 77


 
 

 

 


 

 

 

 

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

 

The Company has investments in common (USIM3) and preferred (USIM5) shares of Usiminas (“Usiminas Shares”), designated as available-for-sale financial assets. The Company adopts this designation because the nature of the investment is not comprised in any 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 in line item “investments” and is carried at fair value based on the quoted price on the stock exchange (BM&FBOVESPA). According to the Company's policy, the gains and losses arising from changes in the price of shares are recorded directly in equity, as other comprehensive income.

 

As of March 31, 2016, there was no impairment recorded and the gain from the change in share price of the period was recorded in other comprehensive income (as of March 31, 2015, the impairment recorded amounted to R$ 8,417):

 

                             

Class of shares

 

Quantity

 

03/31/2016

 

12/31/2015

 

Variation in the quarter

   

Share price

 

Closing Balance

 

Share price

 

Closing Balance

 

Share price

 

Variation in the carrying amount

Common

 

71,390,300

 

4.09

 

291,986

 

4.02

 

286,989

 

0.07

 

4,997

Preferred

 

105,215,700

 

1.81

 

190,440

 

1.55

 

163,084

 

0.26

 

27,356

 

 

176,606,000

 

 

 

482,426

 

 

 

450,073

 

 

 

32,353

 

As of March 31, 2016, the Company's shareholding equity in USIMINAS was 14.13% in the common shares and 20.69% in preferred shares.

 

As of March 31, 2016 the carrying amount recorded in other comprehensive income for investments available for sale is R$32,280 (R$ (73) as of December 31, 2015).

 

III - Financial risk management

 

As of March 31, 2016, 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, 2015.

 

12.a) Foreign exchange and interest rate risks

 

·           Exchange rate risk

 

The exchange rate risk arises from the existence of assets and liabilities generated in US dollars or Euros is called natural currency exposure. Net exposure is the result of offsetting the natural currency exposure by hedging instruments adopted by CSN.

 

The consolidated net exposure as of March 31, 2016 is as follows:

 

 

 

Page 49 of 77


 
 

 

 


 

 

 

 

       

03/31/2016

Foreign Exchange Exposure

 

(Amounts in US$’000)

 

(Amounts in €’000)

Cash and cash equivalents overseas

 

1,288,486

 

55,745

Trade receivables

 

314,526

 

10,029

Other assets

 

6,514

 

21,537

Total assets

 

1,609,526

 

87,311

Borrowings and financing

 

(4,465,939)

 

(96,641)

Trade payables

 

(7,435)

 

(6,301)

Other liabilities

 

(5,896)

 

(70,168)

Total liabilities

 

(4,479,270)

 

(173,110)

Foreign exchange exposure

 

(2,869,744)

 

(85,799)

Notional amount of derivatives contracted, net

 

1,435,000

 

Cash flow hedge accounting

 

1,549,333

 

Net Investment hedge accounting

 

 

96,000

Net foreign exchange exposure

 

114,589

 

10,201

 

·           Interest rate risk

 

Risk arises from short and long term liabilities with fixed or post fixed interest rates and inflation rates.

 

Item 12 b) shows the derivatives and hedging strategies to protect exchange and interest rates risks.

 

12.b) Hedging instruments: derivatives and hedge accounting

 

CSN uses several instruments for protection of foreign currency risk and interest rate risk, as shown in the following topics:

 

·       Portfolio of derivative financial instruments

 

               

 

 

 

 

03/31/2016

     

 

 

 

 

12/31/2015

 

03/31/2016

               

Appreciation (R$)

 

Fair value
(market)

     

Appreciation (R$)

 

Fair value
(market)

 

Impact on finance income (cost) in 2016

Counterparties

 

Maturity

 

Functional Currency

 

Notional amount

 

Asset
position

 

Liability
position

 

Amounts receivable / (payable)

 

Notional amount

 

Asset
position

 

Liability
position

 

Amounts receivable / (payable)

 

BM&FBovespa

 

2/5/2016

 

Dollar

 

1,435,000

 

 

(39,164)

 

(39,164)

 

1,435,000

 

110,075

 

 

110,075

 

(681,176)

Total forward dollar

     

1,435,000

 

 

(39,164)

 

(39,164)

 

1,435,000

 

110,075

 

 

110,075

 

(681,176)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BBVA

 

 

Dollar

 

 

 

 

 

39,450

 

154,017

 

(147,674)

 

6,343

 

(5,339)

BNPP

 

04/08/2016 to 06/02/2016

 

Dollar

 

36,550

 

130,145

 

(131,008)

 

(863)

 

18,700

 

73,007

 

(71,703)

 

1,304

 

(2,167)

Total dollar-to-euro swap

     

36,550

 

130,145

 

(131,008)

 

(863)

 

58,150

 

227,024

 

(219,377)

 

7,647

 

(7,506)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Itaú BBA

 

 

Real

 

 

 

 

 

150,000

 

189,760

 

(200,680)

 

(10,920)

 

(137)

HSBC

 

 

Real

 

 

 

 

 

185,000

 

233,125

 

(247,710)

 

(14,585)

 

(153)

Deutsche Bank

 

 

Real

 

 

 

 

 

10,000

 

12,579

 

(13,331)

 

(752)

 

(9)

Total Fixed rate-to-CDI interest rate swap

 

 

 

 

 

 

345,000

 

435,464

 

(461,721)

 

(26,257)

 

(299)

                                             

Itaú BBA

 

 

Real

 

 

 

 

 

30,000

 

33,396

 

(33,232)

 

164

 

(14)

HSBC

 

 

Real

 

 

 

 

 

120,000

 

133,508

 

(132,802)

 

706

 

(49)

Total interest rate- to-CDI swap

 

 

 

 

 

 

 

150,000

 

166,904

 

(166,034)

 

870

 

(63)

                                             

 

 

 

 

130,145

 

(170,172)

 

(40,027)

 

 

 

939,467

 

(847,132)

 

92,335

 

(689,044)

                                             

 

During April 2016 the Company reassessed its hedging strategy to adapt it to the foreign exchange exposure of future payments and receipts to the US dollar. As a result, there was a readjustment of the volume in the portfolio of derivative financial instruments and of future dollar. In this context, the Company decided not to renew the future dollar operations that matured on May 2, 2016.

 

 

 

Page 50 of 77


 
 

 

 


 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

03/31/2016

Instruments

 

Assets

 

Liabilities

 

Finance income and expenses, net (Note 23)

 

Current

 

Non-current

 

Total

 

Current

 

Non-current

 

Total

 

Future Dollar BM&F

 

 

 

 

39,164

 

 

39,164

 

(681,176)

Dollar - to- euro swap

 

 

 

 

863

 

 

863

 

(7,506)

Fixed rate- to- CDI swap (*)

 

 

 

 

 

 

 

(299)

CDI -to- fixed rate swap (*)

 

 

 

 

 

 

 

(63)

 

 

 

 

 

40,027

 

 

40,027

 

(689,044)

                             
                       

12/31/2015

 

03/31/2015

Instruments

 

Assets

 

Liabilities

 

Finance income and expenses, net (Note 23)

 

Current

 

Non-current

 

Total

 

Current

 

Non-current

 

Total

 

Dollar - to-CDI swap

 

 

 

 

 

 

 

(18)

Dollar- to- real NDF

 

 

 

 

 

 

 

436,600

Future Dollar BM&F

 

110,075

 

 

110,075

 

 

 

 

Dollar- to- euro NDF

 

 

 

 

 

 

 

33,454

Dollar - to- euro swap

 

7,647

 

 

7,647

 

 

 

 

12,568

Fixed rate- to- CDI swap

 

 

 

 

26,257

 

 

26,257

 

(1,479)

CDI -to- fixed rate swap

 

870

 

 

870

 

 

 

 

354

   

118,592

 

 

118,592

 

26,257

 

 

26,257

 

481,479

                             

(*) The positions of swap transactions were settled in February and March 2016.

 

 

 

Page 51 of 77


 
 

 

 


 

 

 

 

·       Hedge accounting – cash flow

 

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 has been 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 as of March 31, 2016:

 

                                   

03/31/2016

Designation Date

 

Hedging Instrument

 

Hedged item

 

Type of hedged risk

 

Hedged period

 

Exchange rate on designation

 

Designated amounts (US$’000)

 

Amortizated part (USD'000)

 

Impact on finance income (cost) (*)

 

Impact on shareholders’ equity

3/11/2014

 

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

 

 

 

(557,350)

1/12/2014

 

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

 

(16,667)

 

(12,697)

 

(158,144)

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

 

 

 

(88,085)

07/21/2015

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

July 2019 - March 2021

 

3.1813

 

60,000

 

 

 

(22,656)

07/23/2015

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

July 2019 - March 2021

 

3.2850

 

100,000

 

 

 

(27,390)

07/23/2015

 

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 2018 - October 2022

 

3.2850

 

30,000

 

 

 

(8,217)

07/24/2015

 

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 2018 - October 2022

 

3.3254

 

100,000

 

 

 

(23,350)

07/27/2015

 

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 2018 - October 2022

 

3.3557

 

25,000

 

 

 

(5,080)

07/27/2015

 

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 2018 - October 2022

 

3.3557

 

70,000

 

 

 

(14,224)

07/27/2015

 

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 2018 - October 2022

 

3.3557

 

30,000

 

 

 

(6,096)

07/28/2015

 

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 2018 - October 2022

 

3.3815

 

30,000

 

 

 

(5,322)

1/8/2015

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

(1)

 

3.3940

 

(9,000)

 

 

 

1,484

3/8/2015

 

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 2018 - October 2022

 

3.3940

 

355,000

 

 

 

(58,540)

Total

 

 

 

 

 

 

 

 

 

 

 

1,566,000

 

(16,667)

 

(12,697)

 

(972,970)

 

(*) The effect on the financial result was recorded in net foreign exchange rates.

 

(1) During the designation on August 2015, we reviewed the future export projections and identified that the amount of US$ 9 million designated previously were not highly probable due to Platt’s quotation reduction. Therefore, the hedge relationship was discontinued from August 2015. The exchange rate of the effective period remains recorded in Stockholders' Equity until the time of debt settlement.

 

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

 

 

 

Page 52 of 77


 
 

 

 


 

 

 

 

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

 

               
 

12/31/2015

 

Movement

 

Realization

 

03/31/2016

Cash flow hedge accounting

1,520,090

 

(534,423)

 

(12,697)

 

972,970

Income tax and social contribution on cash flow hedge accounting

(516,831)

 

181,704

 

 

(335,127)

Not recorded Income tax and social contribution on cash flow hedge accounting

357,951

 

(181,704)

 

 

176,247

Cash flow hedge accounting

1,361,210

 

(534,423)

 

(12,697)

 

814,090

 

As of March 31, 2016 the hedging relationships established by the Company were effective, according to the prospective tests conducted. Thus, no reversal for hedge accounting ineffectiveness was recognized.

 

·       Net investment hedge in foreign subsidiaries

 

CSN has foreign exchange exposure in Euros arising from a loan made by a foreign subsidiary with functional currency in Reais, for the acquisition of investments abroad whose functional currency is Euro. Such exposure arises from converting the balance sheets of these subsidiaries for consolidation in CSN, and the exchange rate of the loans affected the income statement in the financial result item and the exchange variation of the net assets of the foreign operation directly affected the equity in other comprehensive income.

 

As from September 1st, 2015 CSN began to adopt hedge of net investment to eliminate exposure in order to cover future fluctuations of the Euro on such loans. Non-derivative financial liabilities have been designated represented by loan agreements with financial institutions in the amount of € 120 million. The carrying amounts as of March 31, 2016 are:

 

                       

03/31/2016

Designation Date

 

Hedging Instrument

 

Hedged item

 

Type of hedged risk

 

Exchange rate on designation

 

Designated amounts (EUR'000)

 

Impact on shareholders' equity

1/9/2015

 

Non-derivative financial liabilities in EUR – Debt contract

 

Investments in subsidiaries which EUR is the functional currency

 

Foreign exchange - R$ vs. EUR spot rate

 

4.0825

 

120,000

 

(1,284)

01/31/2016

 

Non-derivative financial liabilities in EUR – Debt contract

 

Investments in subsidiaries which EUR is the functional currency

 

Foreign exchange - R$ vs. EUR spot rate

 

(1)

 

(24,000)

 

Total

 

 

 

 

 

 

 

 

 

96,000

 

(1,284)

 

(1) In January 2016 it was settled the portion of debt designated as a hedge instrument.

 

Changes in amounts related to net investment hedge as of March 31, 2016 are presented below:

 

 

12/31/2015

 

Movement

 

Realization

 

03/31/2016

Net Investment hedge accounting

20,148

 

(18,864)

 

 

1,284

Fair value of net investment hedge in foreign operations

20,148

 

(18,864)

 

 

1,284

 

On March 31, 2016 hedge relationships established by the Company found to be effective, according to prospective tests. Therefore, no reversal by ineffectiveness of the hedge was recorded.

 

12.c) Sensitivity analysis

 

 We present below the sensitivity analysis for currency risk and interest rate.

 

·       Sensitivity analysis of Derivative Financial Instruments and consolidated Foreign Exchange Exposure

 

The Company considered scenarios 1 and 2 as 25% and 50% of deterioration for volatility of the currency, using as reference the closing exchange rate as of March 31, 2016.

 

 

 

Page 53 of 77


 
 

 

 


 

 

 

 

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

 

   

 

 

 

 

 

 

03/31/2016

Currency

 

Exchange rate

 

Probable scenario

 

Scenario 1

 

Scenario 2

USD

 

3.5589

 

3.5555

 

4.4486

 

5.3384

EUR

 

4.0539

 

4.0914

 

5.0674

 

6.0809

USD x EUR

 

1.1385

 

1.1569

 

1.4231

 

1.7078

 

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

 

   

 

 

 

 

 

 

 

 

03/31/2016

Instruments

 

Notional

 

Risk

 

Probable scenario (*)

 

Scenario 1

 

Scenario 2

 

 

 

 

 

 

 

 

 

 

 

Future dóllar

 

1,435,000

 

Dollar

 

(5,597)

 

1,276,755

 

2,553,511

 

 

 

 

 

 

 

 

 

 

 

Hedge accounting of exports

 

1,549,333

 

Dollar

 

(6,042)

 

1,378,481

 

2,756,961

 

 

 

 

 

 

 

 

 

 

 

Currency position

 

(2,869,744)

 

Dollar

 

11,192

 

(2,553,283)

 

(5,106,566)

(not including exchange derivatives above)

 

 

 

 

 

 

 

 

 

 

                     

Consolidated exchange position

 

114,589

 

Dollar

 

(447)

 

101,953

 

203,906

(including exchange derivatives above)

                   

 

 

 

 

 

 

 

 

 

 

 

Net Investment hedge accounting

 

96,000

 

Euro

 

3,600

 

97,293

 

194,590

 

 

 

 

 

 

 

 

 

 

 

Currency position

 

(85,799)

 

Euro

 

(3,217)

 

(86,955)

 

(173,913)

 

 

 

 

 

 

 

 

 

 

 

Consolidated exchange position

 

10,201

 

Euro

 

383

 

10,338

 

20,677

(including exchange derivatives above)

                   

 

 

 

 

 

 

 

 

 

 

 

Dollar-to-euro swap

 

36,550

 

Dollar

 

(1,979)

 

(7,889)

 

(12,170)

(*) The likely scenarios were calculated considering the following changes to the risks: Real x Dollar - Real apreciation of 0.10% / Real x Euro – Real depreciation of 0.93% / Dollar x Euro - Dollar depreciation of 1.62%. Source: Banco Central do Brasil and Central Bank of Europe on May 03, 2016.

 

·       Sensitivity analysis of changes in interest rates

 

The Company considered the scenarios 1, and  2 as 25% and 50% of evolution for volatility of the interest as of March 31, 2016.

 

           

Impact on profit or loss

Changes in interest rates

 

% p.a

 

Probable scenario (*)

 

Scenario 1

 

Scenario 2

TJLP

 

7.50

 

(51,562)

 

(19,925)

 

(39,850)

Libor

 

0.90

 

(480,451)

 

(13,283)

 

(26,566)

CDI

 

14.13

 

918,879

 

(466,454)

 

(932,908)

 

(*) The sensitivity analysis is based on the assumption of maintaining as probable scenario the market values at March 31, 2016 recorded in the Company´s assets and liabilities.

 

 

 

Page 54 of 77


 
 

 

 


 

 

 

 

12.d) Liquidity risk

 

The following table shows the contractual maturities of financial liabilities, including accrued interest.

 

 

 

 

 

 

 

 

 

 

Consolidated

At March 31, 2016

Less than one year

 

From one to two years

 

From two to five years

 

Over five years

 

Total

Borrowings, financing and debentures

1,486,151

 

6,932,142

 

17,513,099

 

6,212,134

 

32,143,526

Derivative financial instruments

40,027

 

 

 

 

40,027

Trade payables

1,235,417

 

 

 

 

 

 

 

1,235,417

Dividends and interest on capital

464,793

 

 

 

 

464,793

 

·       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:

 

 

 

 

03/31/2016

 

 

 

12/31/2015

 

Closing Balance

 

Fair value

 

Closing Balance

 

Fair value

Perpetual bonds

3,563,744

 

1,451,681

 

3,910,115

 

1,330,685

Fixed Rate Notes

6,087,324

 

3,646,390

 

7,086,760

 

3,915,310

 

 

13.   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

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

Payables to related parties (note 17 b)

6,722

 

6,798

 

240

 

 

 

116,760

 

110,106

 

101,209

 

118,653

Derivative financial instruments (note 12 I)

40,027

 

26,257

 

 

 

 

 

 

 

 

 

 

 

 

Exclusive funds (1)

 

 

 

 

 

 

 

 

39,164

 

25,387

 

 

 

 

Dividends and interest on capital payable to non-controlling shareholders (2)

464,793

 

464,982

         

2,262

 

2,262

       

Advances from customers

66,781

 

49,505

 

 

 

 

 

55,055

 

40,988

 

 

 

 

Taxes in installments

24,675

 

24,237

 

86,533

 

87,890

 

9,385

 

9,207

 

1,575

 

1,476

Profit sharing - employees

218,088

 

171,695

 

 

 

 

 

152,181

 

121,423

 

 

 

 

Provision for freight

25,060

 

105,104

         

10,986

 

10,190

       

Provision industrial restructuring

103,353

 

122,854

 

 

 

 

 

58,639

 

74,382

 

 

 

 

Taxes payable

       

20,530

 

7,805

         

7,052

 

6,321

Other provisions

27,474

 

30,784

 

 

 

 

 

7,106

 

10,289

 

 

 

 

Other payables

69,289

 

70,801

 

41,015

 

35,589

 

5,423

 

7,465

       

 

1,046,262

 

1,073,017

 

148,318

 

131,284

 

456,961

 

411,699

 

109,836

 

126,450

 

(1)   Refers to derivative transactions managed by exclusive funds.

 

(2)   Dividends payable by the subsidiary Congonhas with settlement scheduled for November 30, 2016.

 

 

 

Page 55 of 77


 
 

 

 


 

 

 

 

14.   INCOME TAX AND SOCIAL CONTRIBUTION

 

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

 

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

 

     

Consolidated

     

Parent Company

 

03/31/2016

 

03/31/2015

 

03/31/2016

 

03/31/2015

Income tax and social contribution income (expense)

 

 

 

 

 

 

 

Current

(52,529)

 

(213,959)

 

(51)

 

(156,765)

Deferred

(69,681)

 

716,476

 

(29,331)

 

694,546

 

(122,210)

 

502,517

 

(29,382)

 

537,781

 

The reconciliation of consolidated income tax and social contribution expenses and income and the result from applying the effective rate to profit before income tax and social contribution are as follows:

 

 

     

Consolidated

     

Parent Company

 

03/31/2016

 

03/31/2015

 

03/31/2016

 

03/31/2015

Loss before income tax and social contribution

(709,082)

 

(110,715)

 

(807,308)

 

(145,725)

Tax rate

34%

 

34%

 

34%

 

34%

Income tax and social contribution at combined statutory rate

241,088

 

37,643

 

274,485

 

49,547

Adjustment to reflect the effective rate:

             

Equity

15,293

 

135,483

 

(165,607)

 

490,467

Profit with differentiated rates or untaxed

(176,452)

 

341,267

       

Transfer pricing adjustment

(44,172)

 

(241)

 

 

 

(241)

Tax loss carryforwards without recognizing deferred taxes

(448,216)

 

(10,830)

 

(434,432)

   

Indebtdness limit

(9,211)

 

(7,718)

 

(9,211)

 

(7,718)

Deferred taxes on temporary differences - non computed (1)

304,991

     

305,359

   

Deferred taxes on foreign profit

(6,798)

 

 

 

 

 

 

Other permanent deductions (add-backs)

1,267

 

6,913

 

24

 

5,726

Income tax and social contribution in profit for the period

(122,210)

 

502,517

 

(29,382)

 

537,781

Effective tax rate

-17%

 

454%

 

-4%

 

369%

 

 (1) As from third quarter of 2015 the Company no longer computes income tax and social contribution credits on tax losses and temporary differences.

 

 

 

Page 56 of 77


 
 

 

 


 

 

 

 

14.b) Deferred income tax and social contribution:

                              

The deferred income tax and social contribution are calculated on income tax and social contribution tax losses and the temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements:

 

   

Consolidated

   

Opening balance

 

Movement

Closing balance

   

12/31/2015

 

Comprehensive
income

 

P&L

 

03/31/2016

Deferred tax assets

 

 

 

 

 

 

 

 

Income tax losses

 

226,245

 

 

 

319,435

 

545,680

Social contribution tax losses

 

93,031

 

 

 

114,997

 

208,028

Temporary differences

 

2,987,751

     

(478,965)

 

2,508,786

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

 

219,859

 

 

 

8,815

 

228,674

- Provision for environmental liabilities

 

88,501

 

 

 

345

 

88,846

- Asset impairment losses

 

67,485

 

 

 

6,223

 

73,708

- Inventory impairment losses

 

15,938

 

 

 

819

 

16,757

- (Gains)/losses on financial instruments

 

(5,454)

 

 

 

642

 

(4,812)

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

 

932,016

 

(11,000)

     

921,016

- Income tax and social contribution non computed over available-for-sale financial assets

 

15,973

 

11,000

 

 

 

26,973

- Actuarial liability (pension and healthcare plan)

 

163,559

 

 

     

163,559

- Accrued supplies and services

 

49,040

 

 

 

26,733

 

75,773

- Allowance for doubtful debts

 

31,414

 

 

 

5,649

 

37,063

- Unrealized exchange differences (*)

 

2,427,926

 

 

 

(388,467)

 

2,039,459

- (Gain) on loss of control over Transnordestina

 

(224,096)

 

 

 

 

 

(224,096)

- Cash flow hedge accounting

 

516,831

 

(181,704)

 

 

 

335,127

- Income tax and social contribution non computed over cash flow hedge accounting

 

(357,951)

 

181,704

 

 

 

(176,247)

- Deferred taxes non computed

 

(1,133,091)

 

 

 

(129,069)

 

(1,262,160)

- Other

 

179,801

 

 

 

(10,655)

 

169,146

Non-current assets

 

3,307,027

 

 

 

(44,533)

 

3,262,494

                 

Deferred tax liabilities

               

Temporary differences

 

494,851

 

(11,636)

 

25,148

 

508,363

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

 

(14,869)

     

1,743

 

(13,126)

- Provision for environmental liabilities

 

(789)

 

 

 

(274)

 

(1,063)

- Asset impairment losses

 

(18,441)

     

267

 

(18,174)

- Inventory impairment losses

 

(11,160)

 

 

 

2,644

 

(8,516)

- Actuarial liability (pension and healthcare plan)

 

(608)

         

(608)

- Accrued supplies and services

 

(42,950)

 

 

 

(5,907)

 

(48,857)

- Allowance for doubtful debts

 

(1,128)

     

400

 

(728)

- Fair value adjustment - SWT Aquisition

 

252,549

 

(10,919)

 

(9,238)

 

232,392

- Fair Value adjustment - Mining Business combination

 

336,443

     

(970)

 

335,473

- Unrealized exchange differences (*)

 

 

 

 

 

5,570

 

5,570

Income tax paid abroad

         

(7,742)

 

(7,742)

- Others

 

(4,196)

 

(717)

 

38,655

 

33,742

Non-current liabilities

 

494,851

 

(11,636)

 

25,148

 

508,363

 

 

 

 

 

Page 57 of 77


 
 

 

 


 

 

 

 

 

 

Parent Company

 

Opening balance

 

Movement

Closing balance

 

12/31/2015

 

Comprehensive
income

 

P&L

 

03/31/2016

Deferred tax assets

 

 

 

 

 

 

 

Income tax losses

226,246

 

 

 

319,435

 

545,681

Social contribution tax losses

93,031

 

 

 

114,997

 

208,028

Temporary differences

2,909,684

     

(463,763)

 

2,445,921

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

216,862

 

 

 

8,893

 

225,755

- Provision for environmental liabilities

88,501

 

 

 

345

 

88,846

- Asset impairment losses

67,483

 

 

 

6,226

 

73,709

- Inventory impairment losses

13,757

 

 

 

843

 

14,600

(Gain)/loss in financial instruments

(5,454)

 

 

 

642

 

(4,812)

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

932,016

 

(11,000)

     

921,016

- Income tax and social contribution non computed over available-for-sale financial assets

15,973

 

11,000

 

 

 

26,973

- Actuarial liability (pension and healthcare plan)

163,560

 

 

     

163,560

- Accrued supplies and services

49,040

 

 

 

26,733

 

75,773

- Allowance for doubtful debts

28,087

 

 

 

4,574

 

32,661

- Unrealized exchange differences (*)

2,427,926

 

 

 

(388,467)

 

2,039,459

(Gain) in control loss on Transnorderstina

(224,096)

 

 

     

(224,096)

- Cash flow hedge accounting

516,831

 

(181,704)

 

 

 

335,127

- Income tax and social contribution non computed over cash flow hedge accounting

(357,951)

 

181,704

     

(176,247)

- Deferred taxes non computed

(1,133,091)

 

 

 

(129,069)

 

(1,262,160)

- Other

110,240

 

 

 

5,517

 

115,757

Non-current assets

3,228,961

 

 

 

(29,331)

 

3,199,630

 

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

 

The Company has overseas subsidiaries in its corporate structure, for which profits are taxed at income tax in the countries where they are domiciled by lower rates than those prevailing in Brazil. From 2011 to 1st quarter 2016 some abroad subsidiaries generated profits amounting to R$4,039,308. If for some reason tax authorities understand that these profits have already been distributed, the additional taxation in Brazil would amount approximately to R$1,373,365 in income tax and social contribution.

 

The Company, based on its legal counsel’s opinion, assessed the likelihood of loss in a potential claiming by tax authorities which resulted in a possible risk of loss and, therefore, no provision was recognized in the financial statements.

 

14.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

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

Income tax and social contribution

 

 

 

 

 

 

 

Actuarial gains on defined benefit pension plan

64,573

 

64,489

 

65,128

 

65,247

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

38

 

38

 

38

 

19,269

Actuarial gains and assets available for sale by incorporation

           

(19,349)

Exchange differences on translating foreign operations

(425,510)

 

(425,510)

 

(425,510)

 

(425,510)

Cash flow hedge accounting

158,880

 

158,880

 

158,880

 

158,880

 

(202,019)

 

(202,103)

 

(201,464)

 

(201,463)

 

 

 

 

Page 58 of 77


 
 

 

 


 

 

 

 

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

 

On March 31, 2016, the information related to judicial deposits and processes has not changed significantly compared to the disclosed in the Company's financial statements as of December 31, 2015. The breakdown of the provisioned amounts and its respective judicial deposits are presented as following:

 

 

 

Consolidated

 

Parent Company

 

 

Accrued liabilities

Judicial deposits

 

Accrued liabilities

Judicial deposits

 

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

Tax

 

145,822

 

143,852

 

82,254

 

82,472

 

84,125

 

82,619

 

65,321

 

67,843

Social security

 

71,804

 

70,174

 

46,193

 

46,193

 

70,903

 

69,293

 

46,193

 

46,193

Labor

 

474,861

 

478,611

 

164,211

 

165,027

 

390,950

 

388,763

 

131,663

 

133,686

Civil

 

131,846

 

128,451

 

22,415

 

24,634

 

105,387

 

103,087

 

9,422

 

13,696

Environmental

 

30,926

 

17,646

 

1,190

 

1,697

 

26,801

 

12,536

 

1,121

 

1,628

Judicial deposits

 

 

 

 

 

8,181

 

8,519

 

 

 

 

 

 

 

 

 

 

855,259

 

838,734

 

324,444

 

328,542

 

678,166

 

656,298

 

253,720

 

263,046

 

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

 

                   

Consolidated

 

 

 

 

 

 

 

 

 

 

Current + Non- current

Nature

 

12/31/2015

 

Additions

 

Net update on amount

 

Net utilization of reversal

 

03/31/2016

Tax

 

143,852

 

 

2,716

 

(746)

 

145,822

Social security

 

70,174

 

 

1,630

 

 

71,804

Labor

 

478,611

 

17,464

 

23,725

 

(44,939)

 

474,861

Civil

 

128,451

 

224

 

3,387

 

(216)

 

131,846

Environmental

 

17,646

 

13,020

 

1,399

 

(1,139)

 

30,926

   

838,734

 

30,708

 

32,857

 

(47,040)

 

855,259

 

 

 

 

 

 

 

 

 

 

 

 

Parent Company

 

 

 

 

 

 

 

 

 

 

Current + Non- current

Nature

 

12/31/2015

 

Additions

 

Net update on amount

 

Net utilization of reversal

 

03/31/2016

Tax

 

82,619

 

 

1,636

 

(130)

 

84,125

Social security

 

69,293

 

 

1,610

 

 

70,903

Labor

 

388,763

 

14,305

 

21,845

 

(33,963)

 

390,950

Civil

 

103,087

 

76

 

2,440

 

(216)

 

105,387

Environmental

 

12,536

 

13,020

 

1,260

 

(15)

 

26,801

   

656,298

 

27,401

 

28,791

 

(34,324)

 

678,166

 

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. This provision includes tax liabilities resulting from lawsuits filed by the Company, subject to SELIC (Central Bank’s policy rate).

 

 

 

Page 59 of 77


 
 

 

 


 

 

 

 

Other administrative and judicial proceedings

 

The table below shows a summary of the carrying amounts of the main legal matters on March 31, 2016 compared to December 31, 2015. The increase in the carrying amounts substantially reflects the monetary update.

 

 

 

03/31/2016

 

12/31/2015

Assessment and Imposition of Fine (AIIM) - Income tax and social contribuition - Capital gain on sale of NAMISA's shares.

 

7,883,559

 

7,743,501

Income tax / Social contribution - Assessment and Imposition of Fine (AIIM) - - Disallowance of deductions of goodwill generated in the reverse incorporation of Big Jump by Namisa.

 

2,294,003

 

2,250,833

Assessment and Imposition of Fine (AIIM) - Income tax and social contribuition - Off-set of interest on prepayment arising from supply contracts of iron ore and port services.

 

1,128,333

 

1,105,793

Tax foreclosures - ICMS - Electricity credits.

 

805,649

 

785,043

Installments MP 470 - alleged insufficiency of tax losses.

 

600,832

 

587,205

Offset of taxes that were not approved by the regulator - IRPJ/CSLL, PIS/COFINS and IPI.

 

1,046,254

 

1,015,355

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

 

539,848

 

526,047

Assessment and Imposition of Fine (AIIM) - Income tax / Social contribution - Profits earned abroad 2008.

 

311,386

 

306,136

Disallowance of the ICMS credits - Transfer of iron ore.

 

528,099

 

516,581

Disallowance of the ICMS credits - ICMS - acquisition of subsidiary (*).

 

 

277,389

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

 

257,826

 

252,112

Disallowance of the tax losses arising on adjustments to the SAPLI.

 

418,893

 

409,323

Assessment and imposition - ICMS - shipping and return merchandise for Industrialization.

 

555,335

 

541,338

Assessment and imposition - Income tax- Capital Gain of CFM vendors located abroad.

 

173,609

 

170,835

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

 

2,615,719

 

2,537,626

Social security lawsuits.

 

294,065

 

289,923

Annulment action filed by CSN against CADE.

 

92,736

 

70,423

Other civil lawsuits.

 

726,381

 

763,576

Labor and social security lawsuits.

 

1,054,050

 

1,032,678

Environmental lawsuits.

 

387,461

 

359,046

 

 

21,714,038

 

21,540,763

 

(*) Tax assessments were canceled due to a favorable decision to the Company in the 2nd administrative judicial level, the referred judgment occurred on February 15, 2016.

 

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.

 

 

 

Page 60 of 77


 
 

 

 


 

 

 

 

Environmental lawsuits

 

The environmental processes present high complexity for estimating the amount at risk, should be taken into consideration, among various aspects, procedural development, the extent of damage and the projection of repairing costs.

 

There are other environmental processes for which it is not yet possible to assess the risk and contingency value due to the aforementioned complexity estimation, the peculiarities of the matters involving them and also their procedural steps.

 

16.   PROVISION FOR ENVIRONMENTAL LIABILITIES AND ASSET RETIREMENT OBLIGATIONS

 

On March 31, 2016, the information related to environmental liabilities and asset retirement obligation has not changed significantly compared to the disclosed in the Company's financial statements as of December 31, 2015.

 

The carrying amount of the provision for environmental liabilities and asset retirement obligation (ARO) are as follows:

 

 

 

 

Consolidated

 

 

 

Parent Company

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

Environmental liabilities

265,487

 

262,290

 

261,629

 

259,115

Asset retirement obligations

68,502

 

66,641

 

 

 

 

 

333,989

 

328,931

 

261,629

 

259,115

 

17.   RELATED-PARTY BALANCES AND TRANSACTIONS

 

On March 31, 2016, the information regarding the related party transactions has not changed significantly compared to the disclosed in the Company's financial statements as of December 31, 2015.

 

 

 

Page 61 of 77


 
 

 

 


 

 

 

 

17.a) Transactions with holding companies

 

After payment of dividends in 2015 amounting to R$306,139, there were no transactions with holding companies.

 

17.b) Transactions with subsidiaries, joint ventures, associates, exclusive funds and other related parties

 

·       By transaction

 

       

Consolidated

   

Current

Non-current

Total

   

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables (note 5)

 

75,241

 

61,366

         

75,241

 

61,366

Dividends receivable (note 5)

 

27,623

 

27,817

 

 

 

 

 

27,623

 

27,817

Actuarial asset (note 7)

         

107,622

 

114,433

 

107,622

 

114,433

Loans (note 7)

 

 

 

 

 

386,128

 

373,214

 

386,128

 

373,214

Other receivables (note 7)

 

11,263

 

9,420

 

33,145

 

29,020

 

44,408

 

38,440

 

 

114,127

 

98,603

 

526,895

 

516,667

 

641,022

 

615,270

Liabilities

                       

Other payables (Note 13)

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

6,722

 

6,798

 

240

     

6,962

 

6,798

Trade payables

 

125,187

 

67,443

 

 

 

 

 

125,187

 

67,443

Actuarial liabilities

         

514,368

 

514,368

 

514,368

 

514,368

 

 

131,909

 

74,241

 

514,608

 

514,368

 

646,517

 

588,609

                         

 

 

31/03/2016

 

31/03/2015

               

P&L

                       

Revenues

 

 

 

 

               

Sales

 

168,794

 

209,015

               

Interest

 

12,913

 

22,087

               

Expenses

                       

Purchases

 

(239,934)

 

(270,801)

               

Interest

     

(138,425)

               

 

 

(58,227)

 

(178,124)

               

 

 

 

 

 

Page 62 of 77


 
 

 

 


 

 

 

 

·       By company

 

   

Consolidated

   

Assets

 

Liabilities

 

P&L

 

Current

 

Non-current

 

Total

 

Current

 

Non-current

 

Total

 

Sales

 

Purchases

 

Finance income (costs), net

 

Total

                   

Joint-venture and Joint-operation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Itá Energética S.A.

             

5,309

     

5,309

     

(8,050)

     

(8,050)

CGPAR Construção Pesada S.A.

 

2,195

 

 

 

2,195

 

22,670

 

240

 

22,910

 

 

 

(19,542)

 

 

 

(19,542)

MRS Logística S.A.

 

26,182

     

26,182

 

52,289

     

52,289

     

(187,840)

     

(187,840)

CBSI - Companhia Brasileira de Serviços e Infraestrutura

 

7,179

 

 

 

7,179

 

19,530

 

 

 

19,530

 

5

 

(18,531)

 

 

 

(18,526)

Transnordestina Logística S.A (1)

 

1

 

368,237

 

368,238

 

30,878

     

30,878

     

(498)

 

12,226

 

11,728

 

 

35,557

 

368,237

 

403,794

 

130,676

 

240

 

130,916

 

5

 

(234,461)

 

12,226

 

(222,230)

Other related parties

                                       

CBS Previdência

 

 

 

107,622

 

107,622

 

 

 

514,368

 

514,368

 

 

 

 

 

 

 

 

Fundação CSN

 

1,829

     

1,829

                 

(289)

     

(289)

Usiminas

 

539

 

 

 

539

 

647

 

 

 

647

 

11,626

 

(4,174)

 

 

 

7,452

Panatlântica

 

76,202

 

4,125

 

80,327

             

150,854

         

150,854

Ibis Participações e Serviços

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,010)

 

 

 

(1,010)

   

78,570

 

111,747

 

190,317

 

647

 

514,368

 

515,015

 

162,480

 

(5,473)

 

 

 

157,007

Associates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Arvedi Metalfer do Brasil S.A.

     

46,911

 

46,911

 

586

     

586

 

6,309

     

687

 

6,996

Total at 03/31/2016

 

114,127

 

526,895

 

641,022

 

131,909

 

514,608

 

646,517

 

168,794

 

(239,934)

 

12,913

 

(58,227)

Total at 12/31/2015

 

98,603

 

516,667

 

615,270

 

74,241

 

514,368

 

588,609

 

725,285

 

(1,103,428)

 

63,751

 

(314,392)

Total at 03/31/2015

 

 

 

 

 

 

 

 

 

 

 

 

 

209,015

 

(270,801)

 

(116,338)

 

(178,124)

 

1. Transnordestina Logística S.A: Refers mainly to contracts in R$: interest equivalent to 108.0% and 102.0% of CDI with final maturity in June 2017. As of March 31, 2016, the borrowings carrying amounts totaled to R$326,938 (R$222,727 as of December 31, 2015).

 

 

 

Page 63 of 77


 
 

 

 


 

 

 

 

·       By transaction

 

 

   

Parent Company

 

 

Current

Non-current

Total

   

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables (1) (note 5)

 

1,064,915

 

1,140,172

         

1,064,915

 

1,140,172

Dividends receivable (note 5)

 

747,033

 

737,668

 

 

 

 

 

747,033

 

737,668

Actuarial asset (note 7)

         

107,468

 

112,660

 

107,468

 

112,660

Loans (note 7)

 

464

 

 

 

248,401

 

239,930

 

248,865

 

239,930

Short-term investments / Investments (2)

 

810,197

 

1,412,428

 

29,752

 

28,078

 

839,949

 

1,440,506

Exclusive funds (note 7)

 

 

 

110,075

 

 

 

 

 

 

 

110,075

Ohter receivables (3) (note 7)

 

26,996

 

32,479

 

314,797

 

303,441

 

341,793

 

335,920

 

 

2,649,605

 

3,432,822

 

700,418

 

684,109

 

3,350,023

 

4,116,931

Liabilities

                       

Borrowings and financing

 

 

 

 

 

 

 

 

 

 

 

 

Prepayment (note 11)

 

51,036

 

85,987

 

5,325,453

 

5,843,050

 

5,376,489

 

5,929,037

Fixed Rate Notes and Intercompany Bonds (note 11)

 

78,243

 

32,402

 

3,697,023

 

4,056,347

 

3,775,266

 

4,088,749

Intercompany Loans (note 11)

 

1,198,500

 

1,261,861

 

1,948,391

 

2,137,040

 

3,146,891

 

3,398,901

Other payables (Note 13)

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

116,744

 

110,090

 

101,209

 

118,653

 

217,953

 

228,743

Advances from customers

 

16

 

16

 

 

 

 

 

16

 

16

Exclusive funds (2) (note 13)

 

39,164

 

25,387

         

39,164

 

25,387

Trade payables

 

147,567

 

153,559

 

 

 

 

 

147,567

 

153,559

Actuarial liabilities

         

514,367

 

514,367

 

514,367

 

514,367

 

 

1,631,270

 

1,669,302

 

11,586,443

 

12,669,457

 

13,217,713

 

14,338,759

                         

 

 

03/31/2016

 

03/31/2015

 

             

P&L

 

 

                   

Revenues

 

 

 

 

 

             

Sales

 

614,085

 

1,403,347

               

Interest

 

8,499

 

4,970

 

             

Exclusive funds

     

480,142

               

 

 

 

 

 

 

             

Expenses

                       

Purchases

 

(369,941)

 

(398,294)

 

             

Interest

 

(133,341)

 

(386,914)

               

Exchange rates, net

 

1,085,469

 

(1,640,782)

 

             

Exclusive funds

 

(644,709)

                   

 

 

560,062

 

(537,531)

 

             

 

(1)   Accounts receivable derive from sales operations of goods and services between the parent company, subsidiaries and joint ventures.

 

(2)   Assets: Financial investments classified as current totaled to R$810,197 as of March 31, 2016 (R$1,412,428 at December 31, 2015) and investments in Usiminas shares classified as investments available for sale, located in non-current assets, amounted to R$29,752 (R$28,078 as of December 31, 2015).

 

Liabilities: Derivative transactions in the amount of R$39,164 on March 31, 2016 (R$25,387 as of December 31, 2015).

 

(3)   Current: Refers mainly to assignment of tax loss credits of income tax and social contribution, related to Metallurgical Prada companies, FTL (Ferrovia Transnordestina Logistica) and MMSA (Companhia de Embalagens Metálicas ).

 

 

 

 

Page 64 of 77


 
 

 

 


 

 

 

 

Noncurrent: Refers mainly to advance for future capital increase, dividends receivable and accounts receivable and acquisition of debentures.

 

·       By company

 

   

Parent Company

   

Assets

 

Liabilities

 

P&L

 

Current

 

Non-current

 

Total

 

Current

 

Non-current

 

Total

 

Sales

 

Purchases

 

Finance income (costs), net

 

Exchange rates, net

 

Total

                     

Subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Companhia Metalic Nordeste

 

-

 

-

 

-

 

15,829

 

-

 

15,829

 

18,630

 

(86)

 

(92)

 

-

 

18,452

Companhia Metalúrgica Prada (1)

 

218,549

 

121,336

 

339,885

 

8,047

 

196

 

8,243

 

246,263

 

(20,112)

 

-

 

-

 

226,151

Estanho de Rondônia S.A.

 

1,063

 

-

 

1,063

 

1,493

 

-

 

1,493

 

-

 

(3,025)

 

28

 

-

 

(2,997)

Sepetiba Tecon S.A.

 

10,573

 

85,066

 

95,639

 

9,898

 

-

 

9,898

 

-

 

(3,041)

 

-

 

(1)

 

(3,042)

Mineração Nacional

 

464

 

2,220

 

2,684

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Congonhas Minérios S.A. (2)

 

738,174

 

-

 

738,174

 

81,628

 

-

 

81,628

 

8

 

(174,375)

 

-

 

-

 

(174,367)

CSN Energia S.A.

 

-

 

-

 

-

 

44,890

 

-

 

44,890

 

-

 

(59,757)

 

(292)

 

-

 

(60,049)

Ferrovia Transnordestina Logística S.A.

 

3,121

 

28,171

 

31,292

 

-

 

101,013

 

101,013

 

-

 

-

 

-

 

(3,540)

 

(3,540)

Companhia Siderúrgica Nacional, LLC (3)

 

535,541

 

-

 

535,541

 

113,543

 

-

 

113,543

 

143,713

 

-

 

-

 

(60,917)

 

82,796

CSN Europe Lda.

 

-

 

-

 

-

 

11,697

 

109,328

 

121,025

 

-

 

-

 

646

 

10,625

 

11,271

CSN Resources S.A. (4)

 

-

 

-

 

-

 

1,253,644

 

8,011,748

 

9,265,392

 

-

 

-

 

(115,047)

 

877,732

 

762,685

Lusosider Aços Planos, S.A.

 

196,000

 

-

 

196,000

 

189

 

-

 

189

 

54,612

 

-

 

-

 

(15,546)

 

39,066

CSN Islands XI Corp. (5)

 

-

 

-

 

-

 

-

 

1,138,848

 

1,138,848

 

-

 

-

 

-

 

110,688

 

110,688

CSN Islands XII Corp. (6)

 

-

 

-

 

-

 

21,816

 

1,615,741

 

1,637,557

 

-

 

-

 

(17,842)

 

157,039

 

139,197

CSN Ibéria Lda.

 

-

 

-

 

-

 

-

 

95,202

 

95,202

 

-

 

-

 

(713)

 

9,245

 

8,532

Companhia de Embalagens Metálicas MMSA

 

5,404

 

44,859

 

50,263

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Stahlwerk Thüringen GmbH

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(19,848)

 

-

 

144

 

(19,704)

 

 

1,708,889

 

281,652

 

1,990,541

 

1,562,674

 

11,072,076

 

12,634,750

 

463,226

 

(280,244)

 

(133,312)

 

1,085,469

 

1,135,139

Joint-venture e Joint-operation

                                           

ITA Energética S.A

 

26,813

 

-

 

26,813

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

CGPAR Construção Pesada S.A.

 

10,542

 

-

 

10,542

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

MRS Logística S.A.

 

13,095

 

-

 

13,095

 

17,633

 

-

 

17,633

 

-

 

(52,350)

 

-

 

-

 

(52,350)

CBSI - Companhia Brasileira de Serviços e Infraestrutura

 

1,941

 

-

 

1,941

 

11,261

 

-

 

11,261

 

5

 

(36,194)

 

-

 

-

 

(36,189)

Transnordestina Logística S.A.

 

1

 

230,510

 

230,511

 

-

 

-

 

-

 

-

 

-

 

7,783

 

-

 

7,783

   

52,392

 

230,510

 

282,902

 

28,894

 

-

 

28,894

 

5

 

(88,544)

 

7,783

 

-

 

(80,756)

Other related parties

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

CBS Previdência

 

-

 

107,468

 

107,468

 

-

 

514,367

 

514,367

 

-

 

-

 

-

 

-

 

-

Fundação CSN

 

1,829

 

-

 

1,829

 

-

 

-

 

-

 

-

 

(143)

 

-

 

-

 

(143)

Usiminas

 

-

 

-

 

-

 

538

 

-

 

538

 

-

 

-

 

-

 

-

 

-

Panatlântica

 

76,298

 

4,125

 

80,423

 

-

 

-

 

-

 

150,854

 

-

 

-

 

-

 

150,854

Ibis Participações e Serviços

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(1,010)

 

-

 

-

 

(1,010)

 

 

78,127

 

111,593

 

189,720

 

538

 

514,367

 

514,905

 

150,854

 

(1,153)

 

-

 

-

 

149,701

Associates

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Arvedi Metalfer do Brasil S.A.

 

-

 

46,911

 

46,911

 

-

 

-

 

-

 

-

 

-

 

687

 

-

 

687

   

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Exclusive Funds

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Diplic, Caixa Vertice, VR1, BB Steel

 

810,197

 

29,752

 

839,949

 

39,164

 

-

 

39,164

 

-

 

-

 

(644,709)

 

-

 

(644,709)

Total at 03/31/2016

 

2,649,605

 

700,418

 

3,350,023

 

1,631,270

 

11,586,443

 

13,217,713

 

614,085

 

(369,941)

 

(769,551)

 

1,085,469

 

560,062

Total at 12/31/2015

 

3,432,822

 

684,109

 

4,116,931

 

1,669,302

 

12,669,457

 

14,338,759

 

5,852,639

 

(1,636,308)

 

(145,389)

 

(3,780,650)

 

290,292

Total at 03/31/2015

 

-

 

-

 

-

 

-

 

-

 

-

 

1,403,347

 

(398,294)

 

98,198

 

(1,640,782)

 

(537,531)

 

(1)   Companhia Metalurgica Prada refers mainly to accounts receivable and debentures from CBL amounting to R$215,213 and 121,336, respectively, as of March 31, 2016.

 

(2)   Congonhas Minérios: Refers mainly to dividends declared by Namisa amounting to R$694,080 and posteriorly assumed by Congonhas due to the merger on December 31, 2015. Liabilities: Account payables related to purchases of iron ore.

 

(3)   Companhia Siderurgica Nacional, LLC: On March 31, 2016 the carrying amounts of trade accounts receivable totaled R$535,541 (R$682,875 December 31, 2015), they are related to sale of steel to resellers.

 

(4)   CSN Resources SA: Contracts in US dollars of Prepayment Fixed Rate Notes and Intercompany Bonds, the interest rate under this transaction is 9.13% and its maturity date is June 2047. On March 31, 2016, the loans amounted to R$9,265,392 (R$10,146.701 on December 31, 2015).

 

(5)   CSN Islands XI Corp.: Contracts in US dollars, without interest, maturing on August 2017. On March 31 2016, the loans amounted to R$1,138,848 (R$1,249,536 as of December 31, 2015).

 

 

 

Page 65 of 77


 
 

 

 


 

 

 

 

(6)   CSN Islands XII Corp.: Contracts in US dollars, interest rate of 7.64% and maturing on February 2025. On March 31, 2016, the loans amounted to R$1,637,557 (R$1,784,417 on December 31, 2015).

 

17.c) Key management personnel

 

The key management personnel with 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, 2016.

 

   

03/31/2016

 

03/31/2015

   

P&L

Short-term benefits for employees and officers

 

39,809

 

5,791

Post-employment benefits

 

118

 

30

 

 

39,927

 

5,821

 

The remuneration of key management personnel in 2016 includes payments for contracts with executives that were linked to parameters that were achieved in the first quarter 2016.

 

18.   SHAREHOLDERS' EQUITY

 

18.a) Paid-in capital

 

Fully subscribed and paid-in capital as of March 31, 2016 and December 31, 2015 is R$4,540,000 comprising 1,387,524,047 book-entry common shares without par value. Each common share entitles its holder to one vote in Shareholders’ Meetings.

 

18.b) Authorized capital

 

The Company’s bylaws in effect as of March 31, 2016 determine that the capital can be raised to up to 2,400,000,000 shares by decision of the Board of Directors.

 

18.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.

 

18.d) Ownership structure

 

As of March 31, 2016, the Company’s ownership structure was as follows:

 

   

03/31/2016

 

12/31/2015

   

Number of common shares

 

% of total shares

 

% of voting capital

 

Number of common shares

 

% of total shares

 

% of voting capital

Vicunha Aços S.A.

 

697,719,990

 

50.29%

 

51.41%

 

697,719,990

 

50.29%

 

51.41%

Rio Iaco Participações S.A.

 

58,193,503

 

4.19%

 

4.29%

 

58,193,503

 

4.19%

 

4.29%

Caixa Beneficente dos Empregados da CSN - CBS

 

20,143,031

 

1.45%

 

1.48%

 

20,143,031

 

1.45%

 

1.48%

BNDES Participações S.A. – BNDESPAR

 

8,794,890

 

0.63%

 

0.65%

 

8,794,890

 

0.63%

 

0.65%

NYSE (ADRs)

 

331,462,264

 

23.89%

 

24.42%

 

336,435,464

 

24.25%

 

24.79%

BM&FBovespa

 

240,819,369

 

17.36%

 

17.75%

 

235,846,169

 

17.00%

 

17.38%

 

 

1,357,133,047

 

97.81%

 

100.00%

 

1,357,133,047

 

97.81%

 

100.00%

Treasury shares

 

30,391,000

 

2.19%

 

 

 

30,391,000

 

2.19%

 

 

Total shares

 

1,387,524,047

 

100.00%

 

 

 

1,387,524,047

 

100.00%

 

 

 

 

 

 

 

Page 66 of 77


 
 

 

 


 

 

 

 

18.e) Treasury shares

 

The Board of Directors authorized various share buyback programs in order to hold shares in treasury for subsequent disposal and/or cancelation with a view to maximizing 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

 

From 3/14/2014 to 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

 

From 4/16/2014 to 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

 

From 5/26/2014 to 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

 

From 6/26/2014 to 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

 

From 7/18/2014 to 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

 

From 8/19/2014 to 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

 

From 9/29/2014 to 2/29/2014

 

R$ 7.49

 

R$ 4.48 and R$ 9.16

 

21,758,600

 

 

 

28,549,900

8th

 

12/30/2014

 

34,611,155

 

From 12/31/2014 to 3/31/2015

 

R$ 5.10

 

R$ 4.90 and R$ 5.39

 

1,841,100

 

   

30,391,000

9th (*)

 

03/31/2015

 

32,770,055

 

From 4/01/2015 to 6/30/2015

 

 

 

 

 

 

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

 

(1)   In 2014 the Board of Directors approved the cancelation of 70,446,061 treasury shares without change in the Company’s share capital.

 

As of March 31, 2016, the position of the treasury shares was as follows:

 

Quantity purchased (Units)

 

Amount paid for the shares

 

Share price

 

Market price of the shares on 03/31/2016 (*)

   

Minimum

 

Maximum

 

Average

 

30,391,000

 

R$ 238,976

 

R$ 4.48

 

R$ 10.07

 

R$ 7.86

 

R$ 217,296

 

(*) Using the last share quotation on BM&FBovespa as of March 31, 2016 of R$7.15 per share.

 

18.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.

 

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

 

Basic earnings 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 year, excluding the common shares purchased and held as treasury shares, as follows:

 

     

Parent Company

 

03/31/2016

 

03/31/2015

 

Common Shares

Net Loss/gain of the period

 

 

 

Attributable to owners of the Company

(836,690)

 

392,056

Weighted average number of shares

1,357,133

 

1,357,202

Basic and diluted EPS

(0.61651)

 

0.28887

 

 

 

 

 

Page 67 of 77


 
 

 

 


 

 

 

 

19.   PAYMENT TO SHAREHOLDERS

 

The table below shows the dividends approved and paid for the last years:

 

Year

 

Approval Year

 

Dividends

 

Total

 

Year

 

Payment Year

 

Dividends

 

Total

2014

 

2014

 

700,000

 

700,000

 

2014

 

2014

 

424,939

 

424,939

2015

 

2015

 

275,000

 

275,000

 

 

2015

 

274,917

 

274,917

 

 

 

 

2015

 

2015

 

274,918

 

274,918

Total approved

 

975,000

 

975,000

 

Total paid

 

974,774

 

974,774

 

 

20.   NET SALES REVENUE

 

Net sales revenue is comprised as follows:

 

   

Consolidated

 

Parent Company

   

03/31/2016

 

03/31/2015

 

03/31/2016

 

03/31/2015

Gross revenue

 

 

 

 

 

 

 

 

Domestic market

 

2,286,077

 

2,942,631

 

2,099,540

 

2,713,048

Foreign market

 

2,178,110

 

1,794,017

 

420,381

 

987,948

 

 

4,464,187

 

4,736,648

 

2,519,921

 

3,700,996

Deductions

 

 

 

 

 

 

 

 

Cancelled sales and discounts

 

(68,780)

 

(38,464)

 

(61,057)

 

(31,966)

Taxes on sales

 

(551,604)

 

(687,932)

 

(481,224)

 

(610,998)

 

 

(620,384)

 

(726,396)

 

(542,281)

 

(642,964)

Net revenue

 

3,843,803

 

4,010,252

 

1,977,640

 

3,058,032

 

 

21.   EXPENSES BY NATURE

 

   

Consolidated

 

Parent Company

   

03/31/2016

 

03/31/2015

 

03/31/2016

 

03/31/2015

Raw materials and inputs

 

(1,003,996)

 

(1,447,223)

 

(783,472)

 

(842,763)

Labor cost

 

(627,681)

 

(428,079)

 

(353,700)

 

(357,164)

Supplies

 

(330,795)

 

(261,260)

 

(227,809)

 

(253,270)

Maintenance cost (services and materials)

 

(294,006)

 

(241,135)

 

(169,104)

 

(235,014)

Outsourcing services

 

(794,879)

 

(721,164)

 

(235,355)

 

(450,859)

Depreciation, amortization and depletion (note 9 a)

 

(309,836)

 

(264,498)

 

(135,525)

 

(206,329)

Others

 

(167,097)

 

(72,849)

 

(25,324)

 

(74,515)

   

(3,528,290)

 

(3,436,208)

 

(1,930,289)

 

(2,419,914)

                 

Classified as:

 

 

 

 

 

 

 

 

Cost of sales

 

(2,917,758)

 

(3,025,533)

 

(1,638,396)

 

(2,189,432)

Selling expenses

 

(450,421)

 

(300,830)

 

(168,633)

 

(145,918)

General and administrative expenses

 

(160,111)

 

(109,845)

 

(123,260)

 

(84,564)

 

 

(3,528,290)

 

(3,436,208)

 

(1,930,289)

 

(2,419,914)

 

 

 

 

 

Page 68 of 77


 
 

 

 


 

 

 

 

22.   OTHER OPERATING INCOME (EXPENSES)

 

   

Consolidated

 

Parent Company

   

03/31/2016

 

03/31/2015

 

03/31/2016

 

03/31/2015

Other operating income

 

 

 

 

 

 

 

 

Indemnities/gains on lawsuits

 

18,676

 

1,728

 

1,888

 

1,618

Rentals and leases

 

328

 

285

 

328

 

285

Other revenues

 

3,268

 

3,949

 

624

 

1,819

 

 

22,272

 

5,962

 

2,840

 

3,722

   

-

 

-

 

-

 

-

Other operating expenses

 

 

 

 

Taxes and fees

 

(10,802)

 

(11,640)

 

(696)

 

(10,826)

Write-off/(Provision) of judicial deposits

 

(17,281)

 

(52)

 

(17,281)

 

(57)

Reversal (Provision) for environmental risks

 

(1,142)

 

3,476

 

(337)

 

3,476

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

(42,269)

 

(149,287)

 

(45,436)

 

(144,558)

Depreciation of unused equipment and amortization of intangible assets (note 9 a)

(12,108)

 

(9,004)

 

 

Residual value of PPE written off (note 9)

 

(12,966)

 

(3,985)

 

(7,590)

 

(3,842)

Inventory impairment / (losses) reversals (note 6)

 

14,619

 

(1,897)

 

(2,478)

 

(393)

Losses on spare parts

 

(6,579)

 

(5,566)

 

(187)

 

(5,566)

Studies and project engineering expenses

 

(5,731)

 

(8,487)

 

(5,571)

 

(8,361)

Research and development expenses

 

(575)

 

(751)

 

(575)

 

(751)

Healthcare plan expenses

 

(19,089)

 

(14,962)

 

(19,090)

 

(14,962)

Impairment of available-for-sale financial assets

 

 

(8,417)

 

 

(8,417)

Other expenses

 

(34,909)

 

(8,927)

 

(3,301)

 

(7,503)

   

(148,832)

 

(219,499)

 

(102,542)

 

(201,760)

Other operating expenses, net

 

(126,560)

 

(213,537)

 

(99,702)

 

(198,038)

 

 

 

 

 

Page 69 of 77


 
 

 

 


 

 

 

 

23.   FINANCE INCOME (Expenses)

 

   

 

 

Consolidated

 

 

 

Parent Company

   

03/31/2016

 

03/31/2015

 

03/31/2016

 

03/31/2015

Finance income

 

 

 

 

 

 

 

 

Related parties (note 17 b)

 

12,913

 

22,087

 

8,499

 

485,112

Income from short-term investments

 

56,443

 

29,340

 

3,863

 

5,240

Gain from derivative

     

354

       

Other income (*)

 

173,798

 

4,355

 

6,067

 

4,341

   

243,154

 

56,136

 

18,429

 

494,693

Finance costs

 

 

 

 

 

 

 

 

Borrowings and financing - foreign currency

 

(257,833)

 

(217,729)

 

(60,079)

 

(46,079)

Borrowings and financing - local currency

 

(547,475)

 

(471,604)

 

(470,263)

 

(406,725)

Related parties (note 17 b)

     

(138,425)

 

(778,050)

 

(386,914)

Capitalized interest (notes 9 and 27)

 

57,661

 

24,325

 

32,730

 

24,325

Losses on derivatives

 

(362)

 

(1,479)

       

Interest, fines and late payment charges

 

(6,014)

 

(11,014)

 

(2,633)

 

(8,007)

Other finance costs

 

(113,905)

 

(44,667)

 

(51,136)

 

(39,676)

 

 

(867,928)

 

(860,593)

 

(1,329,431)

 

(863,076)

Inflation adjustment and exchange differences, net

               

Inflation adjustments, net

 

(1,140)

 

6,267

 

(5,780)

 

(3,540)

Exchange rates, net

 

371,582

 

(554,114)

 

1,048,904

 

(1,656,432)

Exchange gain (losses) on derivatives

 

(688,682)

 

482,604

 

 

 

 

   

(318,240)

 

(65,243)

 

1,043,124

 

(1,659,972)

                 

Finance income (costs), net

 

(943,014)

 

(869,700)

 

(267,878)

 

(2,028,355)

                 

Statement of gains and (losses) on derivative transactions

 

 

 

 

 

 

 

 

Dollar-to-CDI swap

     

(18)

       

Dollar- to- real NDF

 

 

 

436,600

 

 

 

 

Future dollar BM&F

 

(681,176)

           

Dollar- to- euro NDF

 

 

 

33,454

 

 

 

 

Dollar - to- euro swap

 

(7,506)

 

12,568

       

 

 

(688,682)

 

482,604

 

 

 

 

Fixed rate- to- CDI swap

 

(299)

 

(1,479)

       

CDI -to- fixed rate swap

 

(63)

 

354

 

 

 

 

   

(362)

 

(1,125)

 

 

 

 

 

 

(689,044)

 

481,479

 

 

 

 

 

(*)It refers mainly to gain on repurchase of debt securities amounting to R$146,214.

 

 

 

Page 70 of 77


 
 

 

 


 

 

 

 

 

24.   SEGMENT INFORMATION

 

The segment information has not changed compared to the disclosed in the Company's financial statements as of December 31, 2015, therefore, the management decided not to repeat them in these condensed interim financial information.

 

According to the Group´s structure, the businesses are distributed and managed in five operating segments as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

03/31/2016

P&L

 

Steel

 

Mining 

 

Logistics

 

 

 

Energy

 

Cement

 

Corporate

expenses/

elimination

 

Consolidated

     

Port

 

Railroads

       

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

 

1,246,135

 

7,248,368

 

 

 

 

571,436

 

 

Net revenues

 

 

 

 

 

 

 

 

Domestic market

 

1,500,366

 

151,073

 

50,423

 

303,141

 

68,149

 

114,204

 

(475,278)

 

1,712,078

Foreign market

 

1,308,774

 

626,215

 

 

 

 

 

196,736

 

2,131,725

Total net revenue (note 20)

 

2,809,140

 

777,288

 

50,423

 

303,141

 

68,149

 

114,204

 

(278,542)

 

3,843,803

Cost of sales and services

 

(2,299,907)

 

(585,117)

 

(36,040)

 

(214,370)

 

(51,113)

 

(101,191)

 

369,980

 

(2,917,758)

Gross profit

 

509,233

 

192,171

 

14,383

 

88,771

 

17,036

 

13,013

 

91,438

 

926,045

General and administrative expenses

 

(255,318)

 

(23,755)

 

(8,278)

 

(23,881)

 

(5,946)

 

(17,657)

 

(275,697)

 

(610,532)

Depreciation (note 9 a)

 

166,229

 

114,434

 

3,293

 

55,695

 

4,279

 

12,812

 

(46,906)

 

309,836

Proportionate EBITDA of joint ventures

 

 

 

 

 

 

 

107,316

 

107,316

Adjusted EBITDA

 

420,144

 

282,850

 

9,398

 

120,585

 

15,369

 

8,168

 

(123,849)

 

732,665

                                 

Sales by geographic area

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

4,669

 

501,603

 

 

 

 

 

196,736

 

703,008

North America

 

581,176

 

 

 

 

 

 

 

581,176

Latin America

 

66,044

 

 

 

 

 

 

 

66,044

Europe

 

651,959

 

64,963

 

 

 

 

 

 

716,922

Others

 

4,926

 

59,649

 

 

 

 

 

 

64,575

Foreign market

 

1,308,774

 

626,215

 

 

 

 

 

196,736

 

2,131,725

Domestic market

 

1,500,366

 

151,073

 

50,423

 

303,141

 

68,149

 

114,204

 

(475,278)

 

1,712,078

Total

 

2,809,140

 

777,288

 

50,423

 

303,141

 

68,149

 

114,204

 

(278,542)

 

3,843,803

                                 
   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

03/31/2015

P&L

 

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 20)

 

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 9 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

Others

 

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

 

 

(*) The iron ore volumes of sales presented in this note considered the company's sales and equity interests in its subsidiaries and jointly ventures. (In 2015, consider 60% interest in Namisa)

 

Adjusted EBITDA is the measurement based on which the chief operating decision maker assesses the segment performance and the capacity to generate recurring operating cash, consisting of profit for the year less net finance income (costs), income tax and social contribution, depreciation and amortization, equity in results of affiliated companies, and other operating income (expenses), plus the proportionate EBITDA of joint ventures.

 

 

 

Page 71 of 77


 
 

 

 


 

 

 

 

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

 

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

   

03/31/2016

 

03/31/2015

(Loss)/Profit for the period

 

(831,292)

 

391,802

Depreciation (note 9 a)

 

309,836

 

264,498

Income tax and social contribution (note 14)

 

122,210

 

(502,517)

Finance income (cost) (note 23)

 

943,014

 

869,700

EBITDA

 

543,768

 

1,023,483

Other operating income (expenses) (note 22)

 

126,560

 

213,537

Equity in results of affiliated companies

 

(44,979)

 

(398,478)

Proportionate EBITDA of joint ventures

 

107,316

 

72,608

Adjusted EBITDA (*)

 

732,665

 

911,150

 

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

 

25.   GUARANTEES

 

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

 

 

Currency

 

Maturities

 

Borrowings

Tax foreclosure

Others

Total

         

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

 

03/31/2016

 

12/31/2015

Transnordestina Logísitca

R$

 

Up to 09/19/2056 and indefinite

2,544,600

 

2,544,600

 

39,559

 

39,559

 

4,866

 

5,991

 

2,589,025

 

2,590,150

FTL - Ferrovia Transnordestina

R$

 

11/15/2020

 

81,700

 

81,700

         

 

450

 

81,700

 

82,150

Cia Metalurgica Prada

R$

 

Up to 02/10/2016 and indefinite

 

 

 

 

333

 

333

 

19,340

 

19,340

 

19,673

 

19,673

CSN Energia

R$

 

Indefinite

         

2,829

 

2,829

         

2,829

 

2,829

Congonhas Minérios

R$

 

9/22/2022

 

2,000,000

 

2,000,000

 

 

 

 

 

2,520

 

 

 

2,002,520

 

2,000,000

Fundação CSN

R$

 

Indefinite

 

1,003

 

1,003

                 

1,003

 

1,003

Others

R$

 

 

 

 

 

12,000

 

 

 

 

 

 

 

 

 

 

 

12,000

Total in R$

       

4,627,303

 

4,639,303

 

42,721

 

42,721

 

26,726

 

25,781

 

4,696,750

 

4,707,805

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

Total in US$

 

 

 

 

2,950,000

 

2,950,000

 

 

 

 

 

 

 

 

 

2,950,000

 

2,950,000

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$

 

 

 

 

11,086,571

 

12,135,468

 

 

 

 

 

 

 

 

 

11,086,571

 

12,135,468

         

15,713,874

 

16,774,771

 

42,721

 

42,721

 

26,726

 

25,781

 

15,783,321

 

16,843,273

 

 

 

 

 

Page 72 of 77


 
 

 

 


 

 

 

 

26.   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, Life and Casualty, Health Coverage, Fleet Vehicles, D&O (Civil Liability Insurance for Directors and Officers), General Civil Liability, Engineering Risks, naming Risks, Export Credit, warranty and Port Operator’s Civil Liability.

 

In 2015, after negotiation with insurers and reinsurers in Brazil and abroad, an insurance policy was issued for the contracting of a policy of Operational Risk of Property Damages and Loss of Profits, with effect from September 30, 2015 to September 30, 2016. Under the insurance policy, the LMI (Maximum Limit of Indemnity) is US$600 million and covers the following units and subsidiaries of the Company: Presidente Vargas steelworks, Congonhas Minérios, Sepetiba Tecon, and CSN Mining. CSN takes responsibility for a range of retention of US$375 million 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 the financial statements and, accordingly, were not audited by our independent auditors.

 

27.   ADDITIONAL INFORMATION TO CASH FLOWS

 

The following table provides additional information on transactions related to the statement of cash flows:

 

     

Consolidated

     

Parent Company

 

03/31/2016

 

03/31/2015

 

03/31/2016

 

03/31/2015

Income tax and social contribution paid

20,166

 

67,970

 

 

57,400

Addition to PP&E with interest capitalization

57,661

 

24,325

 

32,730

 

24,325

Subsidiary capitalization from granted loan

 

 

8,628

 

 

77,827

 

92,295

 

41,358

 

81,725

 

 

 

 

Page 73 of 77


 
 

 

 


 

 

 

 

28.   COMPREHENSIVE INCOME STATEMENT

 

 
    Consolidated    Parent Company 
  03/31/2016  03/31/2015  03/31/2016  03/31/2015 
(Loss) Profit for the period  (831,292)  391,802  (836,690)  392,056 
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, net of taxes 85    85  125 
Actuarial (losses) gains on defined benefit pension plan    202     
Income tax and social contribution on actuarial (losses) gains on defined benefit pension plan   (77)     
  85  125  85  125 
 
Items that could be subsequently reclassified to the statement of income        
Cumulative translation adjustments for the period  (183,286)  176,771  (183,286)  176,771 
Available-for-sale assets  32,353  648,403  32,353  597,135 
Income tax and social contribution on available-for-sale assets    (185,595)    (203,026) 
Available-for-sale assets from investments in subsidiaries, net of taxes       68,699 
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  534,423  (427,645)  534,423  (427,645) 
Income tax and social contribution on (loss) gain on cash flow hedge accounting   145,399    145,399 
Realization on cash flow hedge reclassified to income statement  12,697    12,697   
 
(Loss) gain on hedge of net investments in foreign subsidiaries      18,864   
(Loss) on net investment hedge  18,864       
  415,051  362,888  415,051  362,888 
  415,136  363,013  415,136  363,013 
Total comprehensive income for the period  (416,156)  754,815  (421,554)  755,069 
 
Attributable to:         
Ow ners of the Company  (421,554)  755,069  (421,554)  755,069 
Non-controlling interests  5,398  (254)     
  (416,156)  754,815  (421,554)  755,069 

 

29.   SUBSEQUENT EVENTS

 

Usiminas

 

As of March 2016, the Usiminas’ Board of Directors approved a capital increase amounting to R$64,882, through the issuance of 50,689,310 preferred shares. Consequently on April 22, 2016 CSN exercised its right of subscription, paying R$11,603 by 9,064,856 preferred shares.

 

The Usiminas’ Board of Directors approved in April 2016 an increase in its share capital amounting to R$1,000,000, through the issuance of 200,000,000 new common shares, with a deadline for exercising the preferential right to acquire the said shares up to May 23, 2016. The company continues to evaluate alternatives related to the investment in Usiminas, including additional purchases of shares.

 

On April 28, 2016, CSN elected, for two years term of office, two fixed and two alternate members in the Usiminas’ Board of Directors and, for one year term, one fixed and one alternate member in the Usiminas’ Fiscal Committee. The election was made possible through the flexibility and exceptional decision from CADE (Administrative Council for Economic Defense) in relation to the TCD (Performance Commitment Agreement) signed by CSN and the said Council in 2014. The mentioned decision´s flexibility was approved by the majority of CADE's Board at the meeting on April 27,2016.

 

 

 

Page 74 of 77


 
 

 

 


 

 

 

 

 

• Conduct Adjustment Agreement (UPV)

 

On April 12, 2016 CSN entered into a Conduct Adjustment Agreement with the Environment Department of the State of Rio de Janeiro, the Environment Control Commission of the State of Rio de Janeiro and the Environment Institute of the State of Rio de Janeiro (INEA) comprising the resolution of all pending environmental issues related to the Presidente Vargas Steelworks (UPV), thereby ensuring the continuation of its operations.

 

Under the agreement, CSN has committed to invest, up to September 2017, the amount of R$178 million in improvements on production processes. Besides that, the company has also committed to pay to INEA the amount of R$ 22million, to be used in environmental programs in region of Volta Redonda.

 

These related compensations were substantially recorded as provision for contingencies as of March 31, 2016. The other values do not affect the provision for risks, since these are CSN's commitments to invest in improvements to its operating assets.

 

 

 

Page 75 of 77


 
 

 

 


 

 

 

 

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, 2016, which comprises the balance sheet as of March 31, 2016 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.

 

Emphasis of Matter

 

The individual and consolidated corresponding values, related to the cash flow statement for the three-month period ended march 31, 2015 are being restated accordingly to the matter described at note 2.d).

 

 

Page 76 of 77


 
 

 

 


 

 

 

 

Other Matters

 

We have also reviewed the individual and consolidated statements of value added (DVA) for the three-month period ended March 31, 2016, 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 11, 2016

 

 

DELOITTE TOUCHE TOHMATSU 

Auditores Independentes

Gilberto Grandolpho

Engagement Partner

 

Page 77 of 77

 


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 24, 2016
 
COMPANHIA SIDERÚRGICA NACIONAL
By:
/S/ Benjamin Steinbruch

 
Benjamin Steinbruch
Chief Executive Officer

 

 
By:
/S/ Paulo Rogério Caffarelli

 
Paulo Rogério Caffarelli
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.