siditr2q16_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 September, 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 - June 30, 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

 

01/01/2016 to 06/30/2016

8

01/01/2015 to 06/30/2015

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

 

01/01/2016 to 06/30/2016

17

01/01/2015 to 06/30/2015

18

Statement of Value Added

19

Notes to the quarterly financial information

20

Reports and Statements

 

Unqualified Independent Auditors’ Review Report

66

 


 
 

 

 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE


ITR –– Quarterly Financial Information - June 30, 2016 – CIA SIDERURGICA NACIONAL

Version: 1
 

 

Company Information / Capital Breakdown

 

Number of Shares

(Units)

Current Quarter

06/30/2016

 

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

 

 
 
 
 
 
 

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ITR –– Quarterly Financial Information - June 30, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Statements / Balance Sheet - Assets

 

(R$ thousand)

   
       

Code

Description

Current Quarter

Previous Year

06/30/2016

12/31/2015

1

Total assets

41,399,607

45,605,526

1.01

Current assets

7,745,548

8,842,440

1.01.01

Cash and cash equivalents

2,596,560

1,885,199

1.01.02

Financial investments

0

763,599

1.01.02.02

Financial investments measured at amortized cost

0

763,599

1.01.03

Trade receivables

2,245,449

2,467,523

1.01.04

Inventories

2,233,580

2,850,744

1.01.08

Other current assets

669,959

875,375

1.02

Non-current assets

33,654,059

36,763,086

1.02.01

Long-term receivables

4,330,913

4,510,431

1.02.01.06

Deferred taxes

3,105,030

3,228,961

1.02.01.09

Other non-current assets

1,225,883

1,281,470

1.02.02

Investments

20,018,260

23,323,565

1.02.03

Property, plant and equipment

9,245,398

8,866,348

1.02.04

Intangible assets

59,488

62,742

 
 

 

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ITR –– Quarterly Financial Information - June 30, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

Parent Company Statements / Balance Sheet – Liabilities

 

(R$ thousand)

   
       

Code

Description

Current Quarter

Previous Year

06/30/2016

12/31/2015

2

Total liabilities

41,399,607

45,605,526

2.01

Current liabilities

3,533,932

4,272,372

2.01.01

Payroll and related taxes

142,050

141,496

2.01.02

Trade payables

748,094

742,364

2.01.03

Taxes payable

57,989

5,814

2.01.04

Borrowings and financing

2,174,927

2,879,073

2.01.05

Other payables

325,240

411,699

2.01.06

Provisions

85,632

91,926

2.01.06.01

Provision for tax, social security, labor and civil risks

85,632

91,926

2.02

Non-current liabilities

30,286,578

33,668,407

2.02.01

Borrowings and financing

27,903,434

31,109,017

2.02.02

Other payables

88,404

126,450

2.02.04

Provisions

2,294,740

2,432,940

2.02.04.01

Provision for tax, social security, labor and civil risks

544,323

564,372

2.02.04.02

Other provisions

1,750,417

1,868,568

2.02.04.02.03

Provision for environmental liabilities and decommissioning of assets

249,486

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

986,564

1,095,086

2.03

Consolidated Shareholders’ equity

7,579,097

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

-893,927

0

2.03.08

Other comprehensive income

1,828,190

1,019,913

 

 

                                                                                                                                                                                          

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ITR –– Quarterly Financial Information - June 30, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

Parent Company Statements / Statements of income

     

(R$ thousand)

       

Code

Description

Current Quarter

Year To Date

Same Quarter Previous Year

YTD Previous Year

04/01/2016 to 06/30/2016

01/01/2016 to 06/30/2016

04/01/2015 to 06/30/2015

01/01/2015 to 06/30/2015

3.01

Net revenue from sales and/or services

2,191,674

4,169,314

2,870,847

5,928,879

3.02

Cost of sales and/or services

-1,906,666

-3,545,062

-2,267,849

-4,457,281

3.03

Gross profit

285,008

624,252

602,998

1,471,598

3.04

Operating expenses/income

-641,816

-1,520,490

-760,491

253,539

3.04.01

Selling expenses

-137,596

-306,229

-148,232

-294,150

3.04.02

General and administrative expenses

-72,367

-195,627

-90,806

-175,370

3.04.04

Other operating income

1,730

4,570

8,547

12,269

3.04.05

Other operating expenses

-86,926

-189,468

-204,927

-406,687

3.04.06

Equity in income of affiliates

-346,657

-833,736

-325,073

1,117,477

3.05

Profit before finance income (costs) and taxes

-356,808

-896,238

-157,493

1,725,137

3.06

Finance income (costs)

380,363

112,485

-555,237

-2,583,592

3.06.01

Finance income

68,242

86,671

-87,637

407,056

3.06.02

Finance expenses

312,121

25,814

-467,600

-2,990,648

3.06.02.01

Net exchange difference on financial instruments

1,091,248

2,134,372

310,866

-1,349,106

3.06.02.02

Finance expenses

-779,127

-2,108,558

-778,466

-1,641,542

3.07

Profit (loss) before taxes on income

23,555

-783,753

-712,730

-858,455

3.08

Income tax and social contribution

-80,792

-110,174

98,462

636,243

3.09

Profit (loss) from continuing operations

-57,237

-893,927

-614,268

-222,212

3.11

Profit (loss) for the year

-57,237

-893,927

-614,268

-222,212

3.99

Earnings per share - (R$/share)

       

3.99.01

Basic earnings per share

       

3.99.01.01

Common shares

-0.04217

-0.65869

-0.45262

-0.16373

 

                                                                                                                                                                                          

Page 4 of 66


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE


ITR –– Quarterly Financial Information - June 30, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Statements / Statement of Comprehensive Income

   

(R$ thousand)

     
   

Current Quarter

Year to date

Same Quarter Previous Year

YTD Previous Year

Code

Description

04/1/2016 to 06/30/2016

1/1/2016 to 06/30/2016

4/1/2015 to 06/30/2015

1/1/2015 to 06/30/2015

4.01

Profit for the year

-57,237

-893,927

-614,268

-222,212

4.02

Other comprehensive income

393,141

808,277

-377,048

-14,035

4.02.01

Actuarial (losses) gains on defined benefit plan from investments in subsidiaries, net of taxes

29

114

-221

-96

4.02.02

Actuarial (losses) gains on defined benefit

0

0

348

348

4.02.03

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

0

0

-118

-118

4.02.04

Cumulative translation adjustments for the year

-284,651

-467,937

-7,815

168,956

4.02.05

Available-for-sale assets

95,500

127,853

-594,881

2,254

4.02.06

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

0

0

202,259

-767

4.02.07

Available-for-sale assets from investments in subsidiaries, net of taxes

0

0

-89,516

-20,817

4.02.08

Impairment of available-for-sale assets

0

0

89,434

97,851

4.02.09

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

0

0

-30,407

-33,269

4.02.10

(Loss) / gain on the percentage change in investments

584

584

-43

-43

4.02.11

(Loss) gain on cash flow hedge accounting

538,461

1,072,884

81,685

-345,960

4.02.12

Income tax and social contribution on cash flow hedge accounting

-13,808

-13,808

-27,773

117,626

4.02.13

Realization of cash flow hedge reclassified to the income statement

7,826

20,523

0

0

4.02.14

(Loss) gain on net investment hedge

49,200

68,064

0

0

4.03

Comprehensive income for the year

335,904

-85,650

-991,316

-236,247

 

                                                                                                                                                                                          

Page 5 of 66


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE


ITR –– Quarterly Financial Information - June 30, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Statements / Statement of Cash Flows – Indirect Method

(R$ thousand)

   

Code

Description

Year To Date

YTD Previous Year

01/01/2016 to 06/30/2016

01/01/2015 to 6/30/2015

6.01

Net cash generated by operating activities

1,096,182

330,933

6.01.01

Cash generated from operations

-871,793

1,998,343

6.01.01.01

Profit (loss) for the year

-893,927

-222,212

6.01.01.02

Charges on borrowings and financing

1,257,102

1,575,442

6.01.01.03

Charges on loans and financing granted

-17,550

-9,535

6.01.01.04

Depreciation, depletion and amortization

275,222

424,556

6.01.01.05

Equity in income (losses) of affiliates

833,736

-1,117,477

6.01.01.06

Deferred income tax and social contribution

110,123

-642,283

6.01.01.08

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

-26,343

146,453

6.01.01.09

Inflation adjustment and exchange differences, net

-2,436,646

1,720,814

6.01.01.11

Impairment of available-for-sale assets

0

97,851

6.01.01.12

Residual value of permanent assets written off

20,729

3,907

6.01.01.14

Other provisions

5,761

20,827

6.01.02

Changes in assets and liabilities

1,967,975

-1,667,410

6.01.02.01

Trade receivables - third parties

-66,349

-172,718

6.01.02.02

Trade receivables - related parties

272,198

-158,525

6.01.02.03

Inventories

617,162

-328,120

6.01.02.04

Receivables - related parties / Dividends

-7,350

-1,550

6.01.02.05

Recoverable taxes

199,099

-59,206

6.01.02.06

Judicial deposits

32,595

-13,396

6.01.02.07

Dividends received - related parties

2,300,090

0

6.01.02.10

Trade payables

5,618

277,095

6.01.02.11

Payroll and related taxes

-135

-24,717

6.01.02.12

Taxes in installments - REFIS

55,379

-27,922

6.01.02.14

Payables to related parties

-22,840

41,557

6.01.02.16

Interest paid

-1,324,899

-1,205,227

6.01.02.17

Interest received

0

651

6.01.02.19

Other

-92,593

4,668

6.02

Net cash used in investing activities

27,083

-51,015

6.02.01

Investments / Advances for future capital increase

-212,939

-18,452

6.02.02

Purchase of property, plant and equipment

-608,265

-828,458

6.02.03

Cash reduction of subsidiaries and joint ventures

0

129,745

6.02.04

Capital reduction in subsidiary and joint venture

0

486,758

6.02.08

Intercompany loans granted

0

-25,143

6.02.09

Intercompany loans received

0

5,546

6.02.10

Exclusive funds

84,688

198,989

6.02.11

Financial Investments, net of redemption

763,599

0

6.03

Net cash used in financing activities

-389,838

-1,184,399

6.03.01

Borrowings and financing, net of transaction cost

-26,018

595,000

6.03.02

Borrowings and financing - related parties

40,239

0

6.03.03

Forfaiting capitalization / drawee Risk

78,240

386,143

6.03.04

Forfaiting amortization / drawee Risk

-257,631

-562,948

6.03.05

Amortization of principal on borrowings and financing

-184,429

-585,436

6.03.06

Amortization of principal on borrowings and financing - related parties

-40,239

-457,936

6.03.07

Payments of dividends and interests on shareholder´s equity

0

-549,832

6.03.08

Treasury shares

0

-9,390

6.04

Exchange differences on translating cash and cash equivalents

-22,066

0

6.05

Increase (decrease) in cash and cash equivalents

711,361

-904,481

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

2,596,560

2,241,912

 

                                                                                                                                                                                          

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ITR –– Quarterly Financial Information - June 30, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Statement of Changes in Equity - 01/01/2016 to 06/30/2016

(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

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

-893,927

808,277

-85,650

5.05.01

Profit for the year

0

0

0

-893,927

0

-893,927

5.05.02

Other comprehensive income

0

0

0

0

808,277

808,277

5.05.02.04

Translation adjustments for the year

0

0

0

0

-467,937

-467,937

5.05.02.08

Actuarial gains on defined benefit pension plan, net of taxes

0

0

0

0

114

114

5.05.02.09

Available-for-sale assets, net of taxes

0

0

0

0

127,853

127,853

5.05.02.10

(Loss) / gain on the percentage change in investments

0

0

0

0

584

584

5.05.02.11

(Loss) / gain on hedge accounting, net of taxes

0

0

0

0

1,079,599

1,079,599

5.05.02.12

(Loss) / gain on net investment hedge, net of taxes

0

0

0

0

68,064

68,064

5.07

Closing balance

4,540,000

30

2,104,804

-893,927

1,828,190

7,579,097

 

                                                                                                                                                                                          

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CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE


ITR –– Quarterly Financial Information - June 30, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Statement of Changes in Equity - 01/01/2015 to 06/30/2015

(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

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

-222,212

-14,035

-236,247

5.05.01

Profit for the year

0

0

0

-222,212

0

-222,212

5.05.02

Other comprehensive income

0

0

0

0

-14,035

-14,035

5.05.02.04

Translation adjustments for the year

0

0

0

0

168,956

168,956

5.05.02.08

Actuarial gains on defined benefit pension plan, net of taxes

0

0

0

0

134

134

5.05.02.09

Available-for-sale assets, net of taxes

0

0

0

0

45,252

45,252

5.05.02.10

(Loss) / gain on the percentage change in investments

0

0

0

0

-43

-43

5.05.02.11

(Loss) / gain on hedge accounting, net of taxes

0

0

0

0

-228,334

-228,334

5.07

Closing balance

4,540,000

30

846,908

-222,212

11,105

5,175,831

 

 

                                                                                                                                                                                          

Page 8 of 66


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE


ITR –– Quarterly Financial Information - June 30, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Statements / Statement of Value Added

   

(R$ thousand)

     
       

Code

Description

Year To Date

YTD Prior Year

01/01/2016 to 06/30/2016

01/01/2015 to 06/30/2015

7.01

Revenues

5,137,596

7,173,036

7.01.01

Sales of products and services

5,161,434

7,128,823

7.01.02

Other revenues

-14,507

62,125

7.01.04

Allowance for (reversal of) doubtful debts

-9,331

-17,912

7.02

Raw materials acquired from third parties

-4,128,170

-5,054,210

7.02.01

Cost of sales and services

-3,658,296

-3,996,450

7.02.02

Materials, electric power, outside services and other

-467,883

-954,824

7.02.03

Impairment/recovery of assets

-1,991

-5,085

7.02.04

Other

0

-97,851

7.02.04.01

Impairment of available-for-sale assets

0

-97,851

7.03

Gross value added

1,009,426

2,118,826

7.04

Retentions

-275,222

-424,556

7.04.01

Depreciation, amortization and depletion

-275,222

-424,556

7.05

Wealth created

734,204

1,694,270

7.06

Value added received as transfer

-1,065,919

2,126,557

7.06.01

Equity in income of affiliates

-833,736

1,117,477

7.06.02

Finance income

86,671

407,056

7.06.03

Other

-318,854

602,024

7.06.03.01

Other and exchange gains

-318,854

602,024

7.07

Wealth for distribution

-331,715

3,820,827

7.08

Wealth distributed

-331,715

3,820,827

7.08.01

Personnel

562,304

679,471

7.08.01.01

Salaries and wages

429,873

518,615

7.08.01.02

Benefits

99,496

127,447

7.08.01.03

Severance pay fund (FGTS)

32,935

33,409

7.08.02

Taxes, fees and contributions

340,260

-226,792

7.08.02.01

Federal

290,835

-293,008

7.08.02.02

State

49,425

62,039

7.08.02.03

Municipal

0

4,177

7.08.03

Remuneration on third-party capital

-340,352

3,590,360

7.08.03.01

Interest

2,108,926

1,641,127

7.08.03.02

Leases

5,215

4,874

7.08.03.03

Other

-2,454,493

1,944,359

7.08.03.03.01

Other and exchange losses

-2,454,493

1,944,359

7.08.04

Remuneration on Shareholders capital

-893,927

-222,212

7.08.04.03

Retained earnings (accumulated losses)

-893,927

-222,212

 

                                                                                                                                                                                          

Page 9 of 66


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE


ITR –– Quarterly Financial Information - June 30, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Balance Sheet - Assets

 

(R$ thousand)

   
       

Code

Description

Current Quarter

Previous Year

06/30/2016

12/31/2015

1

Total assets

44,329,737

48,649,974

1.01

Current assets

11,925,609

16,430,691

1.01.01

Cash and cash equivalents

5,249,156

7,861,052

1.01.02

Financial investments

212,810

763,599

1.01.02.02

Financial investments measured at amortized cost

212,810

763,599

1.01.03

Trade receivables

1,688,377

1,578,277

1.01.04

Inventories

3,834,048

4,941,314

1.01.08

Other current assets

941,218

1,286,449

1.02

Non-current assets

32,404,128

32,219,283

1.02.01

Long-term receivables

4,708,126

4,890,948

1.02.01.06

Deferred taxes

3,175,554

3,307,027

1.02.01.09

Other non-current assets

1,532,572

1,583,921

1.02.02

Investments

4,400,282

3,998,227

1.02.03

Property, plant and equipment

17,953,537

17,871,599

1.02.04

Intangible assets

5,342,183

5,458,509

 

                                                                                                                                                                                          

Page 10 of 66


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE


ITR –– Quarterly Financial Information - June 30, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Balance Sheet – Liabilities

 

(R$ thousand)

   

Code

Description

Current Quarter

Previous Year

06/30/2016

12/31/2015

2

Total liabilities

44,329,737

48,649,974

2.01

Current liabilities

4,511,055

5,325,571

2.01.01

Payroll and related taxes

261,743

256,840

2.01.02

Trade payables

1,194,942

1,293,008

2.01.03

Taxes payable

727,095

700,763

2.01.04

Borrowings and financing

1,337,872

1,874,681

2.01.05

Other payables

865,285

1,073,017

2.01.06

Provisions

124,118

127,262

2.01.06.01

Provision for tax, social security, labor and civil risks

124,118

127,262

2.02

Non-current liabilities

31,149,356

34,588,740

2.02.01

Borrowings and financing

29,004,967

32,407,834

2.02.02

Other payables

137,032

131,284

2.02.03

Deferred taxes

478,257

494,851

2.02.04

Provisions

1,529,100

1,554,771

2.02.04.01

Provision for tax, social security, labor and civil risks

690,707

711,472

2.02.04.02

Other provisions

838,393

843,299

2.02.04.02.03

Provision for environmental liabilities and asset retirement obligations

324,025

328,931

2.02.04.02.04

Pension and healthcare plan

514,368

514,368

2.03

Consolidated Shareholders’ equity

8,669,326

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

-893,927

0

2.03.08

Other comprehensive income

1,828,190

1,019,913

2.03.09

Non-controlling interests

1,090,229

1,070,916

 

                                                                                                                                                                                          

Page 11 of 66


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE


ITR –– Quarterly Financial Information - June 30, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Statements of Income

     

(R$ thousand)

       

Code

Description

Current Quarter

Year To Date

Same Quarter Previous Year

YTD Previous Year

04/01/2016 to 06/30/2016

01/01/2016 to 06/30/2016

04/01/2015 to 06/30/2015

01/01/2015 to 06/30/2015

3.01

Net revenue from sales and/or services

4,349,346

8,193,149

3,687,140

7,697,392

3.02

Cost of sales and/or services

-3,426,907

-6,344,665

-2,847,095

-5,872,628

3.03

Gross profit

922,439

1,848,484

840,045

1,824,764

3.04

Operating expenses/income

-651,166

-1,343,279

-688,079

-913,813

3.04.01

Selling expenses

-394,183

-844,604

-311,344

-612,174

3.04.02

General and administrative expenses

-104,230

-264,341

-109,897

-219,742

3.04.04

Other operating income

11,746

34,018

12,562

18,524

3.04.05

Other operating expenses

-182,927

-331,759

-235,578

-455,077

3.04.06

Equity in income of affiliates

18,428

63,407

-43,822

354,656

3.05

Profit before finance income (costs) and taxes

271,273

505,205

151,966

910,951

3.06

Finance income (costs)

-204,483

-1,147,497

-771,695

-1,641,395

3.06.01

Finance income

140,729

383,883

43,477

99,613

3.06.02

Finance Expenses

-345,212

-1,531,380

-815,172

-1,741,008

3.06.02.01

Net exchange difference on financial instruments

487,675

169,435

-7,223

-72,466

3.06.02.02

Finance E

-832,887

-1,700,815

-807,949

-1,668,542

3.07

Profit (loss) before taxes on income

66,790

-642,292

-619,729

-730,444

3.08

Income tax and social contribution

-109,505

-231,715

5,136

507,653

3.09

Profit (loss) from continuing operations

-42,715

-874,007

-614,593

-222,791

3.11

Consolidated profit (loss) for the year

-42,715

-874,007

-614,593

-222,791

3.11.01

Attributed to controlling Shareholders

-57,237

-893,927

-614,268

-222,212

3.11.02

Attributed to non-controlling Shareholders

14,522

19,920

-325

-579

3.99

Earnings per share - (R$/share)

       

3.99.01

Basic earnings per share

       

3.99.01.01

Common shares

-0.04217

-0.65869

-0.45262

-0.16373

 

                                                                                                                                                                                          

Page 12 of 66


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE


ITR –– Quarterly Financial Information - June 30, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Statement of Comprehensive Income

   

(R$ thousand)

     
   

Current Quarter

Year to date

Same Quarter Previous Year

YTD Previous Year

Code

Description

04/01/2016 to 06/30/2016

01/01/2016 to 06/30/2016

04/01/2015 to 06/30/2015

01/01/2015 to 06/30/2015

4.01

Consolidated profit for the year

-42,715

-874,007

-614,593

-222,791

4.02

Other comprehensive income

393,141

808,277

-377,048

-14,035

4.02.01

Actuarial gains on defined benefit plan from investments in subsidiaries

29

114

0

0

4.02.02

Actuarial gains (losses) on defined benefit pension plan

0

0

0

202

4.02.03

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

0

0

9

-68

4.02.04

Cumulative translation adjustments for the year

-284,651

-467,937

-7,815

168,956

4.02.05

Available-for-sale assets

95,500

127,853

-677,690

-29,287

4.02.06

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

0

0

195,552

9,957

4.02.07

Impairment of available-for-sale assets

0

0

89,434

97,851

4.02.08

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

0

0

-30,407

-33,269

4.02.09

(Loss) / gain on the percentage change in investments

584

584

-43

-43

4.02.10

Gain (loss) on cash flow hedge accounting

538,461

1,072,884

81,685

-345,960

4.02.11

Income tax and social contribution on cash flow hedge accounting

-13,808

-13,808

-27,773

117,626

4.02.12

Realization of cash flow hedge accounting reclassified to income statement

7,826

20,523

0

0

4.02.13

Gain (Loss) on net investment hedge

49,200

68,064

0

0

4.03

Consolidated comprehensive income for the year

350,426

-65,730

-991,641

-236,826

4.03.01

Attributed to controlling Shareholders

335,904

-85,650

-991,316

-236,247

4.03.02

Attributed to non-controlling Shareholders

14,522

19,920

-325

-579

 

                                                                                                                                                                                          

Page 13 of 66


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE


ITR –– Quarterly Financial Information - June 30, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Statement of Cash Flows – Indirect Method

(R$ thousand)

   

Code

Description

Year to Date

YTD Previous Year

01/01/2016 to 06/30/2016

01/01/2015 to 06/30/2015

6.01

Net cash generated by operating activities

-730,946

1,178,068

6.01.01

Cash generated from operations

-205,285

2,958,173

6.01.01.01

Profit (loss) for the year

-893,927

-222,212

6.01.01.02

Charges on borrowings and financing

19,920

-579

6.01.01.03

Charges on loans and financing granted

1,485,733

1,583,962

6.01.01.04

Depreciation, depletion and amortization

-26,838

-8,659

6.01.01.05

Equity in income (losses) of affiliates

637,392

561,655

6.01.01.06

Deferred income tax and social contribution

-63,407

-354,656

6.01.01.07

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

144,589

-599,697

6.01.01.08

Inflation adjustment and exchange differences, net

-23,909

183,442

6.01.01.09

Impairment of available-for-sale assets

-1,359,310

1,633,246

6.01.01.10

Residual value of permanent assets written off

362

2,658

6.01.01.11

Other provisions

0

97,851

6.01.01.16

Changes in assets and liabilities

26,988

4,553

6.01.01.17

Trade receivables - third parties

-146,214

0

6.01.01.20

Trade receivables - related parties

-6,664

76,609

6.01.02

Inventories

-525,661

-1,780,105

6.01.02.01

Receivables - related parties / Dividends

-112,548

-262,503

6.01.02.02

Recoverable taxes

-8,526

-29,283

6.01.02.03

Judicial deposits

1,107,265

-253,368

6.01.02.05

Dividends received - related parties

235,524

19,757

6.01.02.06

Trade payables

24,624

-23,068

6.01.02.08

Payroll and related taxes

-96,459

267,110

6.01.02.09

Taxes in installments - REFIS

4,580

-17,311

6.01.02.10

Payables to related parties

41,413

-128,492

6.01.02.12

Interest paid

4,212

13,657

6.01.02.14

Interest received

-1,583,668

-1,362,278

6.01.02.15

Other

0

651

6.01.02.17

Net cash used in investing activities

-142,078

-4,977

6.02

Investments / Advances for future capital increase

-1,177,389

185,918

6.02.02

Purchase of property, plant and equipment

-190,435

0

6.02.03

Cash reduction of subsidiaries and joint ventures

-797,054

-900,637

6.02.07

Capital reduction in subsidiary and joint venture

0

466,758

6.02.09

Intercompany loans granted

-715,547

551,882

6.02.10

Intercompany loans received

-6

-201

6.02.11

Exclusive funds

0

-25,143

6.02.12

Financial Investments, net of redemption

0

58,385

6.02.13

Net cash used in financing activities

525,653

34,874

6.03

Borrowings and financing, net of transaction cost

-671,439

-2,199,780

6.03.01

Borrowings and financing - related parties

-26,950

599,071

6.03.03

Forfaiting capitalization / drawee Risk

78,240

386,143

6.03.04

Forfaiting amortization / drawee Risk

-257,631

-562,948

6.03.05

Amortization of principal on borrowings and financing

-307,395

-1,969,314

6.03.06

Amortization of principal on borrowings and financing - related parties

0

-52,839

6.03.07

Payments of dividends and interests on shareholder´s equity

0

-549,832

6.03.08

Treasury shares

0

-9,390

6.03.09

Buyback of debt securities

-157,703

-40,671

6.04

Exchange differences on translating cash and cash equivalents

-32,122

-5,799

6.05

Increase (decrease) in cash and cash equivalents

-2,611,896

-841,593

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

5,249,156

7,844,428

 

                                                                                                                                                                                          

Page 14 of 66


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE


ITR –– Quarterly Financial Information - June 30, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Statement of Changes in Equity - 1/1/2016 to 06/30/2016

 

(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

-893,927

808,277

-85,650

19,920

-65,730

5.05.01

Profit for the year

0

0

0

-893,927

0

-893,927

19,920

-874,007

5.05.02

Other comprehensive income

0

0

0

0

808,277

808,277

0

808,277

5.05.02.04

Translation adjustments for the year

0

0

0

0

-467,937

-467,937

0

-467,937

5.05.02.08

Actuarial gains on defined benefit pension plan, net of taxes

0

0

0

0

114

114

0

114

5.05.02.09

Available-for-sale assets, net of taxes

0

0

0

0

127,853

127,853

0

127,853

5.05.02.10

(Loss) / gain on the percentage change in investments

0

0

0

0

584

584

0

584

5.05.02.11

(Loss) / gain on hedge accounting, net of taxes

0

0

0

0

1,079,599

1,079,599

0

1,079,599

5.05.02.12

(Loss) / gain on net investment hedge, net of taxes

0

0

0

0

68,064

68,064

0

68,064

5.06

Internal changes in shareholders’ equity

0

0

0

0

0

0

-607

-607

5.06.04

Non-controlling interests in subsidiaries

0

0

0

0

0

0

-607

-607

5.07

Closing balance

4,540,000

30

2,104,804

-893,927

1,828,190

7,579,097

1,090,229

8,669,326

 

 

Page 15 of 66


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE


ITR –– Quarterly Financial Information - June 30, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

Consolidated Financial Statements / Statement of Changes in Equity - 1/1/2015 to 06/30/2015

 

(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

-222,212

-14,035

-236,247

-579

-236,826

5.05.01

Profit for the period

0

0

0

-222,212

0

-222,212

-579

-222,791

5.05.02

Other comprehensive income

0

0

0

0

-14,035

-14,035

0

-14,035

5.05.02.04

Translation adjustments for the period

0

0

0

0

168,956

168,956

0

168,956

5.05.02.08

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

0

0

0

0

134

134

0

134

5.05.02.09

Available-for-sale assets, net of taxes

0

0

0

0

45,252

45,252

0

45,252

5.05.02.10

(Loss) / gain on the percentage change in investments

0

0

0

0

-43

-43

0

-43

5.05.02.11

(Loss) gain on hedge accounting, net of taxes

0

0

0

0

-228,334

-228,334

0

-228,334

5.06

Internal changes in shareholders’ equity

0

0

0

0

0

0

36

36

5.06.04

Non-controlling interests in subsidiaries

0

0

0

0

0

0

36

36

5.07

Closing balances

4,540,000

30

846,908

-222,212

11,105

5,175,831

37,964

5,213,795

 

 

Page 16 of 66


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE


ITR –– Quarterly Financial Information - June 30, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Statement of Value Added

 

(R$thousand)

     
       

Code

Description

Year to Date

Previous Year

1/1/2016 to 6/30/2016

01/01/2015 to 6/30/2015

7.01

Revenues

9,298,317

9,068,252

7.01.01

Sales of products and services

9,322,360

9,025,572

7.01.02

Other revenues

-14,552

62,929

7.01.04

Allowance for (reversal of) doubtful debts

-9,491

-20,249

7.02

Raw materials acquired from third parties

-6,694,416

-6,401,935

7.02.01

Cost of sales and services

-5,434,217

-5,019,457

7.02.02

Materials, electric power, outside services and other

-1,259,658

-1,278,681

7.02.03

Impairment/recovery of assets

-541

-5,946

7.02.04

Other

0

-97,851

7.02.04.01

Impairment of available-for-sale assets

0

-97,851

7.03

Gross value added

2,603,901

2,666,317

7.04

Retentions

-637,392

-561,655

7.04.01

Depreciation, amortization and depletion

-637,392

-561,655

7.05

Wealth created

1,966,509

2,104,662

7.06

Value added received as transfer

-748,600

5,022,318

7.06.01

Equity in income of affiliates

63,407

354,656

7.06.02

Finance income

383,883

99,613

7.06.03

Other

-1,195,890

4,568,049

7.06.03.01

Other and exchange gains

-1,195,890

4,568,049

7.07

Wealth for distribution

1,217,909

7,126,980

7.08

Wealth distributed

1,217,909

7,126,980

7.08.01

Personnel

1,024,077

958,691

7.08.01.01

Salaries and wages

818,711

752,281

7.08.01.02

Benefits

155,793

163,045

7.08.01.03

Severance pay fund (FGTS)

49,573

43,365

7.08.02

Taxes, fees and contributions

723,217

81,827

7.08.02.01

Federal

612,055

-64,711

7.08.02.02

State

101,022

136,130

7.08.02.03

Municipal

10,140

10,408

7.08.03

Remuneration on third-party capital

344,622

6,309,253

7.08.03.01

Interest

1,701,183

1,314,562

7.08.03.02

Leases

10,041

7,373

7.08.03.03

Other

-1,366,602

4,987,318

7.08.03.03.01

Other and exchange losses

-1,366,602

4,987,318

7.08.04

Remuneration on Shareholders capital

-874,007

-222,791

7.08.04.03

Retained earnings (accumulated losses)

-893,927

-222,212

7.08.04.04

Non-controlling interests in retained earnings

19,920

-579

 

                                                                                                                                                                                          

Page 17 of 66


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE


ITR –– Quarterly Financial Information - June 30, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

                                                                                     (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 18 of 66


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE


ITR –– Quarterly Financial Information - June 30, 2016 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

· 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 quarterly 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 fully 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 19 of 66


 
 
 

 

 

 

The consolidated and parent company interim financial statements were approved by the Board of Directors on August 15, 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 June 30, 2016, US$1 is equivalent to R$3.2098 (R$3.9048 as of December 31, 2015), €1 is equivalent to R$3.5414 (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 June 30, 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 20 of 66


 
 

 

· Companies

 

 

   

Equity interests (%)

 

Companies

 

06/30/2016

 

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

Minérios Nacional S.A. (1)

 

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. (2)

 

 

100.00

 

Financial transactions and Equity interests

CSN Resources S.A.

 

100.00

 

100.00

 

Financial transactions and Equity interests

CSN Holdings (UK) Ltd (2)

 

 

100.00

 

Financial transactions and Equity interests

CSN Handel GmbH (3)

 

-

 

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 (4)

 

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.

 

51.81

 

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)New corporate name of Mineração Nacional, amended in March 2016;

(2)Company liquidated in January 2016;

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

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

 

 

 

Page 21 of 66


 
 

 

· Exclusive funds

 

   

Equity interests (%)

 

Exclusive funds

 

06/30/2016

 

12/31/2015

 

Core business

Direct interest: full consolidation

 

 

 

 

 

 

Diplic II - Private credit balanced mutual fund

 

100.00

 

 

Investment fund

Caixa Vértice - Private credit balanced mutual fund

 

100.00

 

100.00

 

Investment fund

VR1 - Private credit balanced mutual fund

 

100.00

 

100.00

 

Investment fund

Diplic - Private credit balanced mutual fund (1)

 

 

100.00

 

Investment fund

BB Steel - Private credit balanced mutual fund (1)

 

 

100.00

 

Investment fund

 

(1) Multimarket investment fund fully redeemed.

 

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 June 2015, as follows:

 

 

 

Page 22 of 66


 
 

 

a) Statements of cash flows at June 30, 2015

 

           

Consolidated

 

 

 

 

 

 

06/30/2015

 

 

Published

Balances

 

Reclassifications

 

Restated Cash flows

Cash generated by operating activities

 

 

 

 

 

 

Profit for the year attributable to the controlling shareholders

 

(222,212)

 

 

(222,212)

Trade payables

 

86,589

 

180,521

 

267,110

Paid Interests

 

(1,358,562)

 

(3,716)

 

(1,362,278)

Others

 

2,495,448

 

 

2,495,448

Net cash generated by operating activities

 

1,001,263

 

176,805

 

1,178,068

 

 

 

 

 

 

 

Cash used in investing activities

 

185,918

 

 

185,918

 

 

 

 

 

 

 

Cash generated by financing activities

           

Forfaiting funding / drawee risk

 

 

386,143

 

386,143

Forfaiting amortization / drawee risk

 

 

(562,948)

 

(562,948)

Others

 

(2,022,975)

 

 

(2,022,975)

Net cash used in financing activities

 

(2,022,975)

 

(176,805)

 

(2,199,780)

 

 

 

 

 

 

 

Exchange rate changes on cash and cash equivalents

 

(5,799)

 

 

(5,799)

 

 

 

 

 

 

 

Increase in cash and cash equivalents

 

(841,593)

 

 

(841,593)

 

 

           

Parent Company

 

 

 

 

 

 

06/30/2015

 

 

Published balances

 

Reclassifications

 

Restated Cash flows

Cash generated by operating activities

 

 

 

 

 

 

Profit for the year attributable to the controlling shareholders

 

(222,212)

 

 

(222,212)

Trade payables

 

96,574

 

180,521

 

277,095

Paid Interests

 

(1,201,511)

 

(3,716)

 

(1,205,227)

Others

 

1,481,277

 

 

1,481,277

Net cash generated by operating activities

 

154,128

 

176,805

 

330,933

 

 

 

 

 

 

 

Cash used in investing activities

 

(51,015)

 

 

(51,015)

 

 

 

 

 

 

 

Cash generated by financing activities

           

Forfaiting funding / drawee risk

 

 

386,143

 

386,143

Forfaiting amortization / drawee risk

 

 

(562,948)

 

(562,948)

Others

 

(1,007,594)

 

 

(1,007,594)

Net cash used in financing activities

 

(1,007,594)

 

(176,805)

 

(1,184,399)

 

 

 

 

 

 

 

Exchange rate changes on cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

Increase in cash and cash equivalents

 

(904,481)

 

 

(904,481)

 

 

 

 

Page 23 of 66


 
 

 

 

b) Statement of income and statement of comprehensive income at June 30, 2015

 

The Company has not restated the others statements of June 30, 2015 since the changes in those tables were not material.

 

3.     CASH AND CASH EQUIVALENTS         

 

 

 

 

Consolidated

 

 

 

Parent Company

 

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

Current

 

 

 

 

 

 

 

Cash and cash equivalents

             

Cash and banks

678,446

 

434,014

 

34,050

 

37,003

               

Short-term investments

 

 

 

 

 

 

 

In Brazil:

             

Government securities

370,365

 

165,520

 

368,807

 

164,311

Private securities

1,926,191

 

945,420

 

1,729,034

 

570,284

 

2,296,556

 

1,110,940

 

2,097,841

 

734,595

Abroad:

             

Time deposits

2,274,154

 

6,316,098

 

464,669

 

1,113,601

Total short-term investments

4,570,710

 

7,427,038

 

2,562,510

 

1,848,196

Cash and cash equivalents

5,249,156

 

7,861,052

 

2,596,560

 

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 DTVM S.A., BB Gestão de Recursos DVTM and Caixa Econômica Federal (CEF) and their assets collateralize possible losses on investments and transactions carried out. The investment in those funds were consolidated.

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

 

Financial investments that guarantee letters of credit issued by Banco do Brazil; those credits have been applied in the acquisition of the northeast and the south cement plants. The carrying amount of these investments on June 30, 2016 is R$212,810.

 

The Company used to have investments in public and private securities managed by its exclusive funds that had been qualified as guarantees for the forward dollar contracts traded at BM&F Bovespa, the details are disclosed in note 12 (b). The mentioned derivative operations were fully settled in April 2016 and the respective financial investments used as guarantees were reclassified to cash and cash equivalents. The carrying amounts of these financial investments on December 31, 2015 totaled to 763,599.

 

 

 

Page 24 of 66


 
 

 

 

5.     TRADE RECEIVABLES

 

     

Consolidated

 

   

Parent Company

 

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

Trade receivables

 

 

 

 

 

 

 

Third parties

 

 

 

 

 

 

 

Domestic market

922,521

 

772,617

 

540,766

 

425,108

Foreign market

784,429

 

818,562

 

143,782

 

250,588

 

1,706,950

 

1,591,179

 

684,548

 

675,696

Allowance for doubtful debts

(167,066)

 

(151,733)

 

(121,833)

 

(112,502)

 

1,539,884

 

1,439,446

 

562,715

 

563,194

Related parties (Note 17 b)

82,602

 

61,366

 

933,505

 

1,140,172

 

1,622,486

 

1,500,812

 

1,496,220

 

1,703,366

               

Other receivables

             

Dividends receivable (Note 17 b) (*)

26,902

 

27,817

 

730,062

 

737,668

Advances to employees

31,676

 

40,190

 

19,066

 

24,465

Other receivables

7,313

 

9,458

 

101

 

2,024

 

65,891

 

77,465

 

749,229

 

764,157

 

1,688,377

 

1,578,277

 

2,245,449

 

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$280,506 as of June 30, 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

   

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

Current

 

1,263,653

 

1,049,033

 

406,039

 

423,801

Past-due up to 180 days

 

268,173

 

353,443

 

163,173

 

118,488

Past-due over 180 days

 

175,124

 

188,703

 

115,336

 

133,407

 

 

1,706,950

 

1,591,179

 

684,548

 

675,696

 

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

 

       

Consolidated

 

   

Parent Company

   

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

Opening balance

 

(151,733)

 

(127,223)

 

(112,502)

 

(93,536)

Estimated losses

 

(51,578)

 

(35,631)

 

(47,266)

 

(26,288)

Recovery of receivables

 

36,245

 

11,121

 

37,935

 

4,504

Incorporation of CSN Cimentos and assets Spin-off to Congonhas

           

2,818

Closing balance

 

(167,066)

 

(151,733)

 

(121,833)

 

(112,502)

 

 

 

 

 

 

 

Page 25 of 66


 
 

 

6.     INVENTORIES

 

 

 

 

Consolidated

 

 

 

Parent Company

 

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

Finished goods

1,073,932

 

1,912,868

 

704,856

 

1,078,554

Work in progress

744,122

 

1,007,630

 

524,164

 

746,614

Raw materials

850,563

 

1,062,557

 

525,637

 

563,119

Storeroom supplies

947,575

 

962,078

 

506,825

 

489,816

Iron ore

309,313

 

95,461

 

8,741

 

6,912

Advances to suppliers

7,626

 

12,147

 

4,231

 

6,191

Provision for losses

(99,083)

 

(111,427)

 

(40,874)

 

(40,462)

 

3,834,048

 

4,941,314

 

2,233,580

 

2,850,744

 

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

 

       

Consolidated

 

   

Parent Company

   

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

Opening balance

 

(111,427)

 

(112,581)

 

(40,462)

 

(88,056)

Reversal / (losses) for slow-moving and obsolescence(note22)

12,344

 

1,154

 

(412)

 

15,835

Drop down of assets to Congonhas

 

 

 

 

 

 

 

31,759

Closing balance

 

(99,083)

 

(111,427)

 

(40,874)

 

(40,462)

 

7.     OTHER CURRENT AND NON-CURRENT ASSETS

 

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

 

 

 

 

 

 

   

Consolidated

 

   

 

 

   

Parent Company

 

Current

Non-current

Current

Non-current

 

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

Judicial deposits (note 15)

 

 

 

 

346,495

 

328,542

 

 

 

 

 

273,027

 

263,046

Credits with the PGFN (1)

     

 

45,185

 

87,761

 

     

 

45,185

 

87,761

Recoverable taxes (2)

813,021

 

996,679

 

394,060

 

445,926

 

562,131

 

702,722

 

187,325

 

245,833

Prepaid expenses

81,390

 

119,456

 

22,089

 

28,119

 

40,339

 

19,440

     

4,500

Actuarial asset - related party (note 17 b)

 

 

 

 

99,580

 

114,433

 

 

 

 

 

101,305

 

112,660

Derivative financial instruments (note 12 I)

   

118,592

       

 

             

Exclusive funds

 

 

 

 

 

 

 

 

 

 

110,075

 

 

 

 

Securities held for trading (note 12 I)

12,882

 

10,778

         

12,752

 

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)

 

 

 

 

13,311

 

6,877

 

 

 

 

 

1,464

 

1,439

Loans with related parties (note 17 b)

       

400,053

 

373,214

         

257,480

 

239,930

Other receivables from related parties (note 17 b)

9,209

 

9,420

 

32,770

 

29,020

 

54,737

 

32,479

 

328,393

 

303,441

Others

24,716

 

31,524

 

23,642

 

14,642

         

23,252

 

14,408

 

941,218

 

1,286,449

 

1,532,572

 

1,583,921

 

669,959

 

875,375

 

1,225,883

 

1,281,470

 

 

(1) Refers to the excess of judicial deposit originated by the 2009 REFIS (Tax Debt Refinancing Program). After the settlement of the tax debt refinancing program, the amount related to one of the lawsuits was fully redeemed through a judicial authorization.

 

(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 June 30, 2016.

 

 

Page 26 of 66


 
 

 

 

· 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; however, it is not possible to confirm that the sale is highly probable to occur within a period of 12 months for any of the considered assets. 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).

 

· Transnordestina

 

The joint venture Transnordestina is in pre-operational phase and will continue as such until the completion of railway number II (Malha II), Approved construction - schedule stablished the completion of the construction by  January 2017. The said schedule is currently under review and being discussed with the government authorities, however, the Company's management believes that any delay in completion of the project will not cause a substantiall negative impact on the expected return on the investment. After analyzing this matter, Company's management has concluded for proper of use the accounting basis of operational continuity (going concern)  in the preparation of the quarterly financial information as well as to the operational continuity of the project.

 

 

 

Page 27 of 66


 
 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

06/30/2016

             

12/31/2015

 

06/30/2015

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

 

6,310,398

 

6,345,212

 

(34,814)

 

(74,813)

 

100.00

 

7,877,792

 

7,837,793

 

39,999

 

343,307

CSN Islands IX Corp.

3,000,000

 

 

100.00

 

948

 

3

 

945

 

(1,384)

 

100.00

 

2,329

 

 

2,329

 

(68)

CSN Islands X Corp.

(*)

 

 

 

 

 

 

 

 

 

 

 

(11,356)

CSN Islands XI Corp.

50,000

 

 

100.00

 

2,517,658

 

2,466,501

 

51,157

 

29,165

 

100.00

 

3,179,151

 

3,157,160

 

21,991

 

(1,387)

CSN Islands XII Corp.

1,540

 

 

100.00

 

2,262,421

 

3,214,171

 

(951,750)

 

143,336

 

100.00

 

2,815,700

 

3,910,786

 

(1,095,086)

 

(161,566)

CSN Minerals S.L.U.

3,500

 

 

100.00

 

3,926,850

 

11,106

 

3,915,744

 

(835,350)

 

100.00

 

5,644,572

 

1,265

 

5,643,307

 

395,979

CSN Export Europe, S.L.U.

3,500

 

 

100.00

 

713,717

 

93,522

 

620,195

 

(201,146)

 

100.00

 

1,397,512

 

9,373

 

1,388,139

 

167,182

CSN Metals S.L.U.

16,504,020

 

 

100.00

 

625,744

 

24,672

 

601,072

 

(189,903)

 

100.00

 

1,220,413

 

6,620

 

1,213,793

 

144,682

CSN Americas S.L.U.

3,500

 

 

100.00

 

1,627,041

 

163,935

 

1,463,106

 

(234,309)

 

100.00

 

2,139,488

 

2,729

 

2,136,759

 

95,142

CSN Steel S.L.U.

22,042,688

 

 

100.00

 

2,606,050

 

1,581,876

 

1,024,174

 

333,219

 

100.00

 

2,866,164

 

1,856,618

 

1,009,546

 

(187,757)

Sepetiba Tecon S.A.

254,015,052

 

 

99.99

 

397,287

 

130,303

 

266,984

 

9,927

 

99.99

 

391,889

 

130,650

 

261,239

 

9,932

Mineração Nacional S.A.

65,020,211

 

 

99.99

 

498,972

 

165,602

 

333,370

 

(7,460)

 

99.99

 

500,519

 

159,689

 

340,830

 

46

Estanho de Rondônia S.A.

108,655,326

 

 

99.99

 

32,769

 

17,473

 

15,296

 

(6,995)

 

99.99

 

32,028

 

20,565

 

11,463

 

(2,140)

Cia Metalic Nordeste

92,459,582

 

 

99.99

 

163,360

 

33,087

 

130,273

 

198

 

99.99

 

172,283

 

42,207

 

130,076

 

6,737

Companhia Metalúrgica Prada

313,651,399

 

 

99.99

 

758,767

 

578,528

 

180,239

 

(32,694)

 

99.99

 

734,570

 

521,637

 

212,933

 

(58,478)

CSN Cimentos S.A.

(**)

 

 

 

 

 

 

 

 

 

 

 

20,012

Congonhas Minérios S.A.

158,419,480

 

 

87.52

 

12,270,781

 

4,884,453

 

7,386,328

 

136,178

 

87.52

 

13,398,365

 

6,148,268

 

7,250,097

 

(4,255)

CSN Energia S.A.

43,149

 

 

99.99

 

72,774

 

13,684

 

59,090

 

12,879

 

99.99

 

87,316

 

27,471

 

59,845

 

9,886

FTL - Ferrovia Transnordestina Logística S.A.

353,190,644

 

 

89.79

 

522,854

 

192,006

 

330,848

 

904

 

89.79

 

513,711

 

183,767

 

329,944

 

(4,782)

Companhia Florestal do Brasil

35,454,849

 

 

99.99

 

34,878

 

3,600

 

31,278

 

(964)

 

99.99

 

32,242

 

 

32,242

 

(7)

Nordeste Logística

99,999

 

 

99.99

 

100

 

55

 

45

 

(55)

 

99.99

 

100

 

 

100

 

 

 

 

35,343,369

 

19,919,789

 

15,423,580

 

(919,267)

 

 

43,006,144

 

24,016,598

 

18,989,546

 

761,109

Joint-venture e Joint-operation

 

 

 

 

 

 

 

 

 

 

 

Nacional Minérios S.A.

(**)

 

 

 

 

 

 

 

 

 

 

 

347,498

Itá Energética S.A.

253,606,846

 

 

48.75

 

286,475

 

33,732

 

252,743

 

4,639

 

48.75

 

302,956

 

17,470

 

285,486

 

3,827

MRS Logística S.A.

26,611,282

 

2,673,312

 

18.64

 

1,478,595

 

875,810

 

602,785

 

46,531

 

18.64

 

1,502,463

 

945,958

 

556,505

 

38,906

CBSI - Companhia Brasileira de Serviços de Infraestrutura

1,876,146

 

 

50.00

 

12,893

 

11,914

 

979

 

1,417

 

50.00

 

15,593

 

15,091

 

502

 

(2,263)

CGPAR - Construção Pesada S.A.

50,000

 

 

50.00

 

42,636

 

30,944

 

11,692

 

3,091

 

50.00

 

50,574

 

39,972

 

10,602

 

4,441

Transnordestina Logística S.A.

22,761,085

 

1,397,545

 

51.81

 

3,965,311

 

2,704,425

 

1,260,886

 

(10,742)

 

56.92

 

4,229,494

 

2,958,449

 

1,271,045

 

(14,490)

Fair Value alocated to TLSA due to control loss

 

 

 

 

 

659,105

 

 

 

 

 

659,105

 

 

 

 

5,785,910

 

3,656,825

 

2,788,190

 

44,936

 

 

6,101,080

 

3,976,940

 

2,783,245

 

377,919

Associates

 

 

 

 

 

 

 

 

 

 

 

Arvedi Metalfer do Brasil

27,239,971

 

 

20.00

 

52,862

 

49,436

 

3,426

 

(44)

 

20.00

 

54,402

 

53,363

 

1,039

 

(2,386)

 

 

 

52,862

 

49,436

 

3,426

 

(44)

 

 

54,402

 

53,363

 

1,039

 

(2,386)

Classified as available-for-sale

 

 

 

 

 

 

 

 

 

 

 

Usiminas

 

 

 

 

 

769,488

 

 

 

 

 

450,073

 

Panatlântica

 

 

 

 

 

20,474

 

 

 

 

 

21,601

 

 

 

 

 

 

789,962

 

 

 

 

 

471,674

 

Other investments

 

 

 

 

 

 

 

 

 

 

 

Profits on subsidiaries' inventories

 

 

 

 

 

(37,001)

 

45,041

 

 

 

 

(82,042)

 

(20,052)

Others

 

 

 

 

 

63,539

 

(4,402)

 

 

 

 

65,017

 

887

 

 

 

 

 

26,538

 

40,639

 

 

 

 

(17,025)

 

(19,165)

Total investments

 

 

 

 

 

19,031,696

 

(833,736)

 

 

 

 

22,228,479

 

1,117,477

 

 

 

 

 

 

 

 

 

 

 

Classification of investments in the balance sheet

 

 

 

 

 

 

 

 

 

 

Investments in assets

   

 

 

 

 

20,018,260

 

 

 

 

 

23,323,565

 

Investments with negative equity

 

 

 

 

 

 

(986,564)

 

 

 

 

 

(1,095,086)

 

                       

19,031,696

                 

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 28 of 66


 
 

 

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

 

     

Consolidated

     

Parent Company

 

06/30/2016

 

12/31/2015

 

06/30/2016

 

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

190,435

 

3,575

 

201,263

 

490,842

Acquisition of Congonhas Minérios shares - 4,16%

 

 

 

2,732,605

Capital reduction

 

(466,758)

 

 

(546,796)

Dividends (1)

194

 

(54,464)

 

(2,291,507)

 

(3,985,128)

Comprehensive income (2)

128,558

 

(967,447)

 

(271,322)

 

(409,767)

Comprehensive income - Business Combination

 

 

 

1,944,676

Equity pickup (3)

84,344

 

1,192,034

 

(833,736)

 

5,968,872

Incorporation of subsidiary - CSN Cimentos

 

 

 

(1,061,005)

Drop down of MRS assets to Congonhas

 

786,800

 

 

(6,173,113)

Transfer of assets - Casa de Pedra e Tecar

 

 

 

156,723

Others

(1,476)

 

15

 

(1,481)

 

Closing balance of investments

4,400,282

 

3,998,227

 

20,018,260

 

23,323,565

Balance of provision for investments with negative equity

 

 

(986,564)

 

(1,095,086)

Total

4,400,282

 

3,998,227

 

19,031,696

 

22,228,479

 

 

(1) In 2016 refers to the allocation of dividends from subsidiaries CSN Energia, Itá Energética, CGPAR Construção Pesada, CSN Minerals, CSN Export, CSN Steel, CSN Metals and CSN Americas.

 

(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), actuarial gain/loss and gain/loss on net investment hedge from 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

 

06/30/2016

 

06/30/2015

Equity in results of affiliated companies

 

 

 

Nacional Minérios S.A.

 

347,498

MRS Logística S.A.

93,038

 

38,734

CBSI - Companhia Brasileira de Serviços de Infraestrutura

1,417

 

(2,263)

Transnordestina

(10,742)

 

(14,490)

Arvedi Metalfer do Brasil

(44)

 

(1,329)

Others

675

 

 

84,344

 

368,150

Eliminations

 

 

 

To cost of sales

(23,414)

 

(18,258)

To net revenues

 

(2,188)

To taxes

7,961

 

6,952

Others

(5,484)

 

Equity in results

63,407

 

354,656

 

 

 

Page 29 of 66


 
 

 

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:

 

 

                   

06/30/2016

                   

12/31/2015

 

 

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%

 

51.81%

 

48.75%

 

50.00%

   

34.94%

 

50.00%

 

56.92%

 

48.75%

 

50.00%

Balance sheet

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

                                         

Cash and cash equivalents

 

578,179

 

1,500

 

30,793

 

7,769

 

7,784

 

 

671,475

 

3,343

 

75,977

 

36,647

 

10,621

Advances to suppliers

 

10,178

 

958

 

35,992

 

79

 

60

   

6,854

 

289

 

 

215

 

81

Other current assets

 

540,078

 

19,224

 

87,680

 

17,130

 

38,264

 

 

657,000

 

22,726

 

67,540

 

17,137

 

43,358

Total current assets

 

1,128,435

 

21,682

 

154,465

 

24,978

 

46,108

   

1,335,329

 

26,358

 

143,517

 

53,999

 

54,060

Non-current assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advances to suppliers

 

 

 

 

 

   

 

 

 

 

Other non-current assets

 

675,618

 

275

 

260,863

 

45,261

 

17,486

 

 

533,897

 

139

 

280,718

 

32,880

 

13,087

Investments, PP&E and intangible assets

 

6,128,579

 

3,829

 

7,237,600

 

517,402

 

21,677

   

6,191,459

 

4,689

 

7,006,464

 

534,569

 

34,000

Total non-current assets

 

6,804,197

 

4,104

 

7,498,463

 

562,663

 

39,163

 

 

6,725,356

 

4,828

 

7,287,182

 

567,449

 

47,087

Total Assets

 

7,932,632

 

25,786

 

7,652,928

 

587,641

 

85,271

   

8,060,685

 

31,186

 

7,430,699

 

621,448

 

101,147

                                           

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings and financing

 

770,913

 

 

48,237

 

 

9,063

   

844,296

 

 

167,112

 

 

10,849

Other current liabilities

 

772,484

 

23,008

 

190,123

 

66,911

 

44,302

 

 

893,883

 

28,794

 

250,440

 

33,667

 

55,281

Total current liabilities

 

1,543,397

 

23,008

 

238,360

 

66,911

 

53,365

   

1,738,179

 

28,794

 

417,552

 

33,667

 

66,130

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings and financing

 

2,576,007

 

 

4,841,095

 

 

8,522

   

2,772,462

 

 

4,560,078

 

 

12,620

Other non-current liabilities

 

579,298

 

820

 

140,002

 

2,283

 

 

 

564,407

 

1,389

 

220,001

 

2,170

 

1,193

otal non-current liabilities

 

3,155,305

 

820

 

4,981,097

 

2,283

 

8,522

   

3,336,869

 

1,389

 

4,780,079

 

2,170

 

13,813

Shareholders’ equity

 

3,233,930

 

1,958

 

2,433,471

 

518,447

 

23,384

 

 

2,985,637

 

1,003

 

2,233,068

 

585,611

 

21,204

Total liabilities and shareholders’
equity

 

7,932,632

 

25,786

 

7,652,928

 

587,641

 

85,271

   

8,060,685

 

31,186

 

7,430,699

 

621,448

 

101,147

           

 

     

 

                     
                   

01/01/2016 a 06/30/2016

                   

01/01/2015 a 06/30/2015

 

 

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%

 

51.81%

 

48.75%

 

50.00%

   

27.27%

 

50.00%

 

62.70%

 

48.75%

 

50.00%

Statements of Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

1,581,554

 

61,199

 

 

85,757

 

65,570

   

1,470,683

 

76,603

 

 

76,034

 

103,532

Cost of sales and services

 

(1,061,738)

 

(52,815)

 

 

(45,887)

 

(47,683)

 

 

(1,016,883)

 

(75,532)

 

 

(41,003)

 

(78,992)

Gross profit

 

519,816

 

8,384

 

 

39,870

 

17,887

   

453,800

 

1,071

 

 

35,031

 

24,540

Operating (expenses) income

 

(3,613)

 

(4,385)

 

(11,011)

 

(25,964)

 

(7,615)

 

 

(110,658)

 

(5,025)

 

(15,337)

 

(24,283)

 

(9,396)

Finance income (costs), net

 

(129,168)

 

(891)

 

(8,586)

 

494

 

(412)

   

(125,965)

 

(572)

 

(7,788)

 

1,129

 

(957)

Income before income tax and social
contribution

 

387,035

 

3,108

 

(19,597)

 

14,400

 

9,860

 

 

217,177

 

(4,526)

 

(23,125)

 

11,877

 

14,187

Current and deferred income tax
and social contribution

(137,397)

 

(274)

 

 

(4,884)

 

(3,679)

   

(74,503)

 

 

 

(4,026)

 

(5,306)

Profit / (loss) for the period

 

249,638

 

2,834

 

(19,597)

 

9,516

 

6,181

 

 

142,674

 

(4,526)

 

(23,125)

 

7,851

 

8,881

 

 

 

 

 

Page 30 of 66


 
 

 

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

(11,663)

 

(34,354)

 

(137,336)

 

(800)

 

(7,800)

 

(3,149)

 

(195,102)

Acquisitions

4

 

100

 

44,574

 

392

 

735,885

 

23,537

 

804,492

Capitalized interest (notes 23 and 27)

 

 

 

 

110,875

 

 

110,875

Write-offs (note 22)

 

(34)

 

(6,997)

 

(6)

 

(74)

 

(6,786)

 

(13,897)

Depreciation

 

(57,218)

 

(535,721)

 

(2,965)

 

 

(13,568)

 

(609,472)

Transfers to other asset categories

 

80,110

 

454,292

 

61

 

(532,114)

 

(2,349)

 

Transfers to intangible assets

 

 

 

 

(14,353)

 

 

(14,353)

Others

 

 

(542)

 

 

(63)

 

 

(605)

Balance at June 30, 2016

252,630

 

2,684,730

 

10,927,542

 

35,668

 

3,491,742

 

561,225

 

17,953,537

Cost

252,630

 

3,458,982

 

18,814,607

 

178,690

 

3,491,742

 

816,853

 

27,013,504

Accumulated depreciation

 

(774,252)

 

(7,887,065)

 

(143,022)

 

 

(255,628)

 

(9,059,967)

Balance at June 30, 2016

252,630

 

2,684,730

 

10,927,542

 

35,668

 

3,491,742

 

561,225

 

17,953,537

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

25,182

 

165

 

565,284

 

17,634

 

608,265

Capitalized interest (notes 23 and 27)

 

 

 

 

 

62,942

 

 

62,942

Write-offs (note 22)

 

 

(34)

 

(7)

 

(3)

 

 

(7,594)

 

(7,638)

Depreciation

 

 

(12,348)

 

(255,604)

 

(1,463)

 

 

(3,100)

 

(272,515)

Transfers to other asset categories

 

 

49,193

 

185,288

 

 

(234,481)

 

 

Transfers to intangible assets

 

 

 

 

 

(12,544)

 

 

(12,544)

Others

 

 

 

(24)

 

 

566

 

(2)

 

540

Balance at June 30, 2016

 

83,350

 

905,882

 

6,058,555

 

16,378

 

2,105,094

 

76,139

 

9,245,398

Cost

 

83,350

 

1,075,172

 

10,887,384

 

118,056

 

2,105,094

 

176,116

 

14,445,172

Accumulated depreciation

 

 

(169,290)

 

(4,828,829)

 

(101,678)

 

 

(99,977)

 

(5,199,774)

Balance at June 30, 2016

 

83,350

 

905,882

 

6,058,555

 

16,378

 

2,105,094

 

76,139

 

9,245,398

 

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

 

 

 

Page 31 of 66


 
 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

Project description

 

Start date

 

Completion date

 

06/30/2016

 

12/31/2015

Logistics

 

 

 

 

 

 

 

 

 

 

   

Current investments for maintenance of current operations.

 

 

55,213

 

35,457

 

 

 

 

 

55,213

 

35,457

Mining 

           

     

 

 

Expansion of Casa de Pedra Mine capacity production.

 

2007

 

2016/2017

(1)

738,528

 

709,945

   

Expansion of TECAR export capacity.

 

2009

 

2020

(2)

238,453

 

390,920

 

 

Current investments for maintenance of current operations.

 

 

318,350

 

302,764

       

 

1,295,331

 

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)

77

 

14,950

   

Current investments for maintenance of current operations.

 

 

(4)

496,232

 

375,579

 

 

 

 

 

589,802

 

496,226

Cement

           

     

 

 

Construction of cement plants.

 

2011

 

2016

(5)

1,541,785

 

1,254,897

   

Current investments for maintenance of current operations.

 

 

9,611

 

9,177

 

 

 

 

 

1,551,396

 

1,264,074

Construction in progress

         

3,491,742

 

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.The estimated useful lives are as follows:

 

 

The estimated useful lives are as follows:

 

 

     

Consolidated

     

Parent Company

 

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

In Years

 

 

 

 

 

 

 

Buildings

43

 

43

 

43

 

43

Machinery.equipmentand facilities

18

 

18

 

18

 

18

Furnitureand fixtures

11

 

11

 

11

 

11

Others

14

 

14

 

11

 

11

 

 

 

 

Page 32 of 66


 
 

 

 

9.a) Depreciation, amortization and depletion expenses:

 

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

 

     

 

     

Consolidated

 

Six months ended

 

Three months ended

 

06/30/2016

 

06/30/2015

 

06/30/2016

 

06/30/2015

Production costs

602,414

 

531,909

 

298,503

 

273,033

Sales expenses

4,527

 

4,630

 

2,253

 

2,330

General and Administrative Expenses

7,147

 

6,639

 

3,496

 

3,317

 

614,088

 

543,178

 

304,252

 

278,680

Other operating expenses (*)

23,304

 

18,477

 

11,196

 

9,473

 

637,392

 

561,655

 

315,448

 

288,153

               
               
 

 

 

 

 

 

 

 

 

Parent Company

 

Six months ended

 

Three months ended

 

06/30/2016

 

06/30/2015

 

06/30/2016

 

06/30/2015

Production costs

267,168

 

416,685

 

135,700

 

214,273

Sales expenses

3,608

 

3,658

 

1,798

 

1,880

General and Administrative Expenses

4,446

 

4,213

 

2,199

 

2,074

 

275,222

 

424,556

 

139,697

 

218,227

Other operating expenses (*)

 

 

 

 

 

 

 

 

275,222

 

424,556

 

139,697

 

218,227

 

(*) 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 June 30, 2016.

 

 

                         

Consolidated

         

Parent Company

 

Goodwill

 

Customer relationships

 

Software

 

Trademarks
and
patents

 

Rigths 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

 

(65,524)

 

(125)

 

(23,959)

 

 

(66)

 

(89,674)

 

 

 

Acquisitions and expenditures

 

 

6

 

 

 

 

6

 

 

 

Transfer of property. Plant and equipment

 

 

14,353

 

 

 

 

14,353

 

 

12,544

 

12,544

Write-offs (note 22)

(13,091)

 

 

 

 

 

 

(13,091)

 

(13,091)

 

 

(13,091)

Amortization

 

(22,066)

 

(5,854)

 

 

 

 

(27,920)

 

 

(2,707)

 

(2,707)

Balance at June 30, 2016

4,085,374

 

325,797

 

83,616

 

119,677

 

727,390

 

329

 

5,342,183

 

 

59,488

 

59,488

Cost

4,459,370

 

458,022

 

179,464

 

119,677

 

727,390

 

329

 

5,944,252

 

14,135

 

97,096

 

111,231

Accumulated amortization

(264,666)

 

(132,225)

 

(95,848)

 

 

 

 

(492,739)

 

(14,135)

 

(37,608)

 

(51,743)

Adjustment for accumulated recoverable value

(109,330)

 

 

 

 

 

 

(109,330)

 

 

 

Balance at June 30, 2016

4,085,374

 

325,797

 

83,616

 

119,677

 

727,390

 

329

 

5,342,183

 

 

59,488

 

59,488

 

 

(*) Composed mainly by mineral rights with estimated resources of 1,101 million tons. Corresponding amortization is recorded based on production volumes.

 

 

 

Page 33 of 66


 
 

 

 

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

 

     

Consolidated

     

Parent Company

 

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

Software

5

 

5

 

5

 

5

Customer relationships

13

 

13

 

 

 

 

 

 

 

 

 

 

 

 

 

11.   BORROWINGS, FINANCING AND DEBENTURES

 

As of June 30, 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

     

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

FOREIGN CURRENCY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prepayment (*)

 

1% to 3.5%

 

109,231

 

207,657

 

528,547

 

2,633,137

 

109,231

 

207,657

 

528,547

 

2,633,137

Prepayment (*)

 

3.51% to 8%

 

369,012

 

286,487

 

4,289,363

 

3,429,716

 

439,384

 

372,474

 

9,092,431

 

9,272,766

Perpetual bonds

 

7%

 

4,369

 

5,315

 

3,209,800

 

3,904,800

               

Fixed rate notes (*)

 

4.14% to 10%

 

135,052

 

175,768

 

5,445,737

 

6,910,992

 

26,634

 

32,402

 

3,334,373

 

4,056,347

Intercompany bonds

Libor 6M to 3%

                 

1,051,237

 

1,261,861

 

1,757,871

 

2,137,040

Forfaiting (**)

 

Libor + Spread

 

151,079

 

288,772

 

 

 

 

 

151,079

 

288,772

 

 

 

 

Others

 

1.2% to 8%

 

98,528

 

115,594

 

270,368

 

425,635

               

 

 

 

 

867,271

 

1,079,593

 

13,743,815

 

17,304,280

 

1,777,565

 

2,163,166

 

14,713,222

 

18,099,290

LOCAL CURRENCY

                                   

BNDES/FINAME

 

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

 

66,393

 

55,435

 

1,021,819

 

1,018,189

 

39,581

 

27,847

 

944,921

 

928,622

Debentures

 

110.8% to 113.7% CDI

 

156,760

 

60,670

 

1,653,333

 

1,750,000

 

156,760

 

60,670

 

1,653,333

 

1,750,000

Prepayment (*)

 

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

194,418

 

522,418

 

5,460,000

 

5,200,000

 

143,347

 

473,139

 

3,460,000

 

3,200,000

CCB

 

112.5% and 113% CDI

 

91,390

 

92,976

 

7,200,000

 

7,200,000

 

91,390

 

92,976

 

7,200,000

 

7,200,000

Drawee risk (**)

 

 

 

 

 

84,063

 

 

 

 

 

 

 

84,063

 

 

 

 

Others

         

6,229

     

12,107

               

 

 

 

 

508,961

 

821,791

 

15,335,152

 

15,180,296

 

431,078

 

738,695

 

13,258,254

 

13,078,622

Total borrowings and financing

 

1,376,232

 

1,901,384

 

29,078,967

 

32,484,576

 

2,208,643

 

2,901,861

 

27,971,476

 

31,177,912

Transaction costs and issue premiums

 

(38,360)

 

(26,703)

 

(74,000)

 

(76,742)

 

(33,716)

 

(22,788)

 

(68,042)

 

(68,895)

Total borrowings and financing + transaction costs

 

1,337,872

 

1,874,681

 

29,004,967

 

32,407,834

 

2,174,927

 

2,879,073

 

27,903,434

 

31,109,017

 

 

(*) The balances of Pre-export loans, Fixed Rate Notes and Intercompany Bonds from related parties of the parent company totals R$11,043,554 on June 30, 2016 (R$13,416,687 on December 31, 2015), see note 17b.

 

(**) The balances of forfaiting and drawee risk operations totals R$ 151,079 on June 30, 2016 (R$372,835 on December 31, 2015).

 

 

 

Page 34 of 66


 
 

 

 

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

 

As of June 30, 2016, the breakdown of principal plus interest of long-term liabilities as borrowings, financing and debentures by maturity date is presented as follows:

   

 

 

Consolidated

 

 

 

Parent Company

2017

 

1,111,025

 

4%

 

2,668,109

 

10%

2018

 

5,602,570

 

19%

 

4,774,316

 

17%

2019

 

6,896,445

 

24%

 

5,271,913

 

19%

2020

 

7,408,444

 

25%

 

4,621,687

 

17%

2021

 

2,208,657

 

8%

 

2,788,330

 

10%

After 2021

 

2,642,026

 

9%

 

7,847,121

 

27%

Perpetual bonds

 

3,209,800

 

11%

 

 

 

 

 

 

29,078,967

 

100%

 

27,971,476

 

100%

 

· Amortization and new borrowings, financing and debentures

 

 

The table below presents the capitalizations and amortizations during the year:

 

       

Consolidated

     

Parent Company

 

 

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

Opening balance

 

34,282,515

 

30,354,058

 

33,988,090

 

29,560,826

Funding transactions

 

7,437

 

978,206

 

40,239

 

2,694,533

Forfaiting funding / Drawee Risk

 

78,240

 

924,706

 

78,240

 

924,706

Repayment

 

(611,239)

 

(2,850,077)

 

(224,668)

 

(1,542,921)

Charges – payments

 

(257,631)

 

(1,146,306)

 

(257,631)

 

(1,146,306)

Forfaiting payments

 

(1,582,124)

 

(2,957,762)

 

(1,323,355)

 

(2,656,208)

Forfaiting charges

 

(1,544)

 

(7,064)

 

(1,544)

 

(7,064)

Provision of charges

 

1,593,578

 

3,052,164

 

1,317,017

 

2,996,662

Provision charges Forfaiting / Drawee Risk

3,030

 

2,032

 

3,030

 

2,032

Other (1)

 

(3,169,423)

 

5,932,558

 

(3,541,057)

 

3,161,830

Closing balance

 

30,342,839

 

34,282,515

 

30,078,361

 

33,988,090

 

 

(1) Includes interests and unrealized foreign exchange variances.

 

In 2016, the Group capitalized and amortized loans as shown below:

 

· Capitalization

               

Consolidated

Transaction

 

Financial institution

 

Date

 

Amount

 

Maturity

Financing

 

Kreissparkasse Saalfeld-Rudolstadt

 

June/16

 

7,437

 

January 2018

Total

 

 

 

 

 

7,437

 

 

 

· Amortization

       

Consolidated

Transaction

 

Payment of principal

 

Debt charges

Fixed Rate Notes

 

105,178

 

388,450

Debentures

     

130,306

Bank Credit Bill

 

   

539,078

Export Credit Note

 

65,000

 

403,811

Pre - Export Payment

 

116,935

 

103,112

BNDES/FINAME

 

16,326

 

16,589

Pre - Debt Payment

 

303,844

   

Others

 

3,956

 

778

Total

 

611,239

 

1,582,124

 

 

 

 

Page 35 of 66


 
 

 

 

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 June 30, 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 interest rate and foreign exchange rate swaps.

 

· Classification of financial instruments

 

 

Consolidated

     

 

 

06/30/2016

 

 

 

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

 

 

 

 

 

5,249,156

 

 

 

5,249,156

 

 

 

 

 

7,861,052

 

 

 

7,861,052

Short-terminv estments - margin deposit

 

4

         

212,810

     

212,810

         

763,599

     

763,599

Trade receivables

 

5

 

 

 

 

 

1,622,486

 

 

 

1,622,486

 

 

 

 

 

1,500,812

 

 

 

1,500,812

Derivative financial instruments

 

7

                         

118,592

         

118,592

Trading securities

 

7

 

 

 

12,882

 

 

 

 

 

12,882

 

 

 

10,778

 

 

 

 

 

10,778

Total

     

 

 

12,882

 

7,084,452

 

 

 

7,097,334

 

 

 

129,370

 

10,125,463

 

 

 

10,254,833

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current

                     

                 

Other trade receivables

 

7

 

 

 

 

 

13,311

 

 

 

13,311

 

 

 

 

 

6,877

 

 

 

6,877

Investments

 

8

 

789,962

             

789,962

 

471,674

             

471,674

Loans - related parties

 

7

 

 

 

 

 

400,053

 

 

 

400,053

 

 

 

 

 

373,214

 

 

 

373,214

Total

     

789,962

 

 

 

413,364

 

 

 

1,203,326

 

471,674

 

 

 

380,091

 

 

 

851,765

                                             

Total assets

 

 

 

789,962

 

12,882

 

7,497,816

 

 

 

8,300,660

 

471,674

 

129,370

 

10,505,554

 

 

 

11,106,598

                                             

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

                     

                 

Borrowings and financing

 

11

 

 

 

 

 

 

 

1,376,232

 

1,376,232

 

 

 

 

 

 

 

1,901,384

 

1,901,384

Derivative financial instruments

 

13

                         

26,257

         

26,257

Trade payables

 

 

 

 

 

 

 

 

 

1,194,942

 

1,194,942

 

 

 

 

 

 

 

1,293,008

 

1,293,008

Dividends and interest on capital

 

13

             

464,982

 

464,982

             

464,982

 

464,982

Total

 

 

 

 

 

 

 

 

 

3,036,156

 

3,036,156

 

 

 

26,257

 

 

 

3,659,374

 

3,685,631

                                             

Non-current

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings and financing

 

11

             

29,078,967

 

29,078,967

             

32,484,576

 

32,484,576

Total

 

 

 

 

 

 

 

 

 

29,078,967

 

29,078,967

 

 

 

 

 

 

 

32,484,576

 

32,484,576

                                             

Total liabilities

 

 

 

 

 

 

 

 

 

32,115,123

 

32,115,123

 

 

 

26,257

 

 

 

36,143,950

 

36,170,207

 

 

 

 

Page 36 of 66


 
 

 

 

· Fair value measurement

 

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

 

Consolidated

 

     

06/30/2016

           

12/31/2015

 

Level 1

 

 

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

 

12,882

 

 

12,882

 

10,778

 

 

 

 

10,778

Non-current

                       

Available-for-sale financial assets

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

789,962

   

789,962

 

471,674

       

471,674

Total assets

 

802,844

 

 

802,844

 

482,452

 

 

118,592

 

601,044

                         

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Current

                       

Financial liabilities at fair value through profit or loss

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

                 

26,257

 

26,257

Total liabilities

 

 

 

 

 

 

 

 

 

26,257

 

26,257

 

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.

 

During March 2016, the Usiminas’ Board of Directors authorized a capital increase amounting to R$64,882, through the issuance of up to 50,689,310 preferred shares. On April 22, 2016 CSN fully exercised its right of subscription, paying R$11,603 by 9,064,856 preferred shares. The capital increase has been approved by the Usiminas' Board of Directors on June 03, 2016.

 

The Usiminas’ Board of Directors authorized in April 2016 an increase in its share capital in the amount of R$1,000,000, through the issuance of 200,000,000 common shares. Over again, on May 20, 2016 CSN fully exercised its right of subscription, paying R$178,832 by 35,766,351 preferred shares. The capital increase has been approved by the Usiminas' Board of Directors on July 19, 2016.

 

As of June 30, 2016, there was no impairment recorded and the gain from the change in share price in the period was recorded in other comprehensive income (the impairment recorded as of 30 June, 2015 amounted to R$ 89,433):

 

Class of shares

 

Quantity

 

06/30/2016

 

12/31/2015

 

   

Share price

 

Closing Balance

Quantity

Share price

 

Closing Balance

 

Share price

 

Variation in the carrying amount

Common (*)

 

107,156,651

 

5.08

 

544,356

71,390,300

4.02

 

286,989

 

1.06

 

257,367

Preferred

 

114,280,556

 

1.97

 

225,133

105,215,700

1.55

 

163,084

 

0.42

 

62,049

 

 

221,437,207

 

 

 

769,489

 

 

 

450,073

 

 

 

319,416

 

 

(*) The quantity and carrying amount of the common shares already reflect the approval of the capital increase on July 19, 2016.

 

 

 

Page 37 of 66


 
 

 

As of June 30, 2016, the Company's shareholding equity in USIMINAS was 14.13% in the common shares and 20.86% in the preferred shares. Since July 19, 2016, upon approval of the capital increase in common shares, the Company's shareholding equity in USIMINAS is 15.19% of the common shares and 20.86% are preferred shares.

 

As of June 30, 2016 the carrying amounts recorded in other comprehensive income for investments available for sale is R$127,780 (R$ (73) as of December 31, 2015).

 

III - Financial risk management

 

As of June 30, 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.

 

 

 

Page 38 of 66


 
 

 

 

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 June 30, 2016 is as follows:

 

       

06/30/2016

Foreign Exchange Exposure

 

(Amounts in US$’000)

 

(Amounts in €’000)

Cash and cash equivalents overseas

 

802,027

 

56,126

Trade receivables

 

306,844

 

9,423

Other assets

 

9,740

 

15,840

Total assets

 

1,118,611

 

81,389

Borrowings and financing

 

(4,437,097)

 

(97,581)

Trade payables

 

(5,988)

 

(8,840)

Other liabilities

 

(7,216)

 

(81,329)

Total liabilities

 

(4,450,301)

 

(187,750)

Foreing exchange exposure

 

(3,331,690)

 

(106,361)

Cash flow hedge accounting

 

1,541,000

 

Net Investment hedge accounting

 

 

96,000

Net foreign exchange exposure

 

(1,790,690)

 

(10,361)

Bonds Perpetual

 

1,000,000

 

Net currency exposure of the Perpetual Notes

 

(790,690)

 

(10,361)

 

 

During the second quarter of 2016 CSN initiated a process of reviewing its foreign exchange hedging strategy that resulted in the liquidation of the future dollar derivatives portfolio. Consequently, the net foreign exchange exposure on our consolidated balance sheet as of June 30, 2016 was US$1,790,690 thousand, as shown in the table above. It is important to mention that included in the net foreign exchange exposure there is a liability of US$ 1 billion, classified as loans and financing, related to perpetual bonds; which will not require a disbursement to settle its principal in the foreseeable future considering the corresponding nature. The company began to focus its hedging strategy to preserve its cash flow and is analyzing the replacement of the exposure generated by the settlement of derivatives with new designations of hedge accounting, capturing existing natural relations, and may also utilize other derivative instruments with the objective of protecting future cash flows.

 

· Interest rate risk

 

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

 

 

 

 

Page 39 of 66


 
 

 

12.b) 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

 

                                           
             

 

 

 

 

06/30/2016

     

 

 

 

 

12/31/2015

 

06/30/2016

             

Appreciation (R$)

 

Fair value
(market)

     

Appreciation (R$)

 

Fair value
(market)

 

Impact on finance income (cost) in 2016

Counterparties

   

Functional Currency

 

Notional amount

 

Asset
position

 

Liability
position

 

Amounts receivable / (payable)

 

Notional amount

 

Asset
position

 

Liability
position

 

Amounts receivable / (payable)

 

BM&FBovespa

 

 

Dollar

 

 

 

 

 

1,435,000

 

110,075

 

 

110,075

 

(800,621)

Total forward dollar

       

 

 

 

 

1,435,000

 

110,075

 

 

110,075

 

(800,621)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BBVA

   

Dollar

 

 

 

 

 

39,450

 

154,017

 

(147,674)

 

6,343

 

(5,594)

BNPP

 

 

Dollar

 

 

 

 

 

18,700

 

73,007

 

(71,703)

 

1,304

 

(1,304)

Total dollar-to-euro swap

       

 

 

 

 

58,150

 

227,024

 

(219,377)

 

7,647

 

(6,898)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

                                           

 

 

 

 

 

 

 

 

 

939,467

 

(847,132)

 

92,335

 

(807,881)

 

 

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

 

 

 

 

 

 

 

 

 

 

 

06/30/2016

Instruments

 

Assets

 

Liabilities

 

Finance income and expenses, net (Note 23)

 

Current

 

Total

 

Current

 

Total

 

Future Dollar BM&F

 

 

 

 

 

(800,621)

Dollar - to- euro swap

 

 

 

 

 

(6,898)

Fixed rate- to- CDI swap (*)

 

 

 

 

 

(299)

CDI -to- fixed rate swap (*)

 

 

 

 

 

(63)

 

 

 

 

 

 

(807,881)

                     
               

12/31/2015

 

06/30/2015

Instruments

 

Assets

 

Liabilities

 

Finance income and expenses, net (Note 23)

 

Current

 

Total

 

Current

 

Total

 

Dollar - to-CDI swap

 

 

 

 

 

(18)

Dollar- to- real NDF

 

 

 

 

 

316,805

Future Dollar BM&F

 

110,075

 

110,075

 

 

 

Dollar- to- euro NDF

 

 

 

 

 

39,668

Dollar - to- euro swap

 

7,647

 

7,647

 

 

 

(2,884)

Fixed rate- to- CDI swap

 

 

 

26,257

 

26,257

 

(3,596)

CDI -to- fixed rate swap

 

870

 

870

 

 

 

938

   

118,592

 

118,592

 

26,257

 

26,257

 

350,913

 

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

 

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 shall be temporarily recognized in shareholders’ equity and allocated to profit or loss when such exports are carried out, which will allow recognizing the US dollar impact on liabilities and exports concurrently.

 

 

Page 40 of 66


 
 

 

 

 

The table below shows a summary of the hedging relationships as of June 30, 2016:

 

 

                                   

06/30/2016

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

 

 

 

(382,800)

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

 

(25,000)

 

20,523

 

(97,455)

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

 

 

 

(53,175)

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 to March 2021

 

3.1813

 

60,000

 

 

 

(1,710)

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 to March 2021

 

3.2850

 

100,000

 

 

 

7,520

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 to October 2022

 

3.285

 

30,000

 

 

 

2,256

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 to October 2022

 

3.3254

 

100,000

 

 

 

11,560

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 to October 2022

 

3.3557

 

25,000

 

 

 

3,648

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 to October 2022

 

3.3557

 

70,000

 

 

 

10,213

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 to October 2022

 

3.3557

 

30,000

 

 

 

4,377

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 to October 2022

 

3.3815

 

30,000

 

 

 

5,151

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)

 

 

 

(1,658)

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 to October 2022

 

3.3940

 

355,000

 

 

 

65,390

Total

 

 

 

 

 

 

 

 

 

 

 

1,566,000

 

(25,000)

 

20,523

 

(426,683)

 

 

(*) 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.

 

The movements in the hedge accounting amounts recognized in shareholders’ equity as of June 30, 2016 are as follows:

 

 

12/31/2015

 

Movement

 

Realization

 

06/30/2016

Cash flow hedge accounting

1,520,090

 

(1,072,884)

 

(20,523)

 

426,683

Income tax and social contribution on cash flow hedge accounting

(516,831)

 

364,781

 

6,978

 

(145,072)

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

357,951

 

(357,951)

 

 

Cash flow hedge accounting

1,361,210

 

(1,066,054)

 

(13,545)

 

281,611

 

 

As of June 30, 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.

 

 

 

Page 41 of 66


 
 

 

 

· 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 on June 30, 2016 are:

 

                       

06/30/2016

Designation Date

 

Hedging Instrument

 

Hedged item

 

Type of hedged risk

 

Exchange rate on designation

 

Designated amounts (EUR'000)

 

Impact on shareholders' equity

9/1/2015

 

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

 

47,916

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

 

47,916

 

 

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

 

The changes in the amounts related to net investment hedge as of June 30, 2016 are presented below:

 

 

12/31/2015

 

Movement

 

Realization

 

06/30/2016

Net Investment hedge accounting

20,148

 

(68,064)

 

 

(47,916)

Fair value of net investment hedge in foreign operations

20,148

 

(68,064)

 

 

(47,916)

 

 

On June 30, 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 June 30, 2016.

 

 

 

Page 42 of 66


 
 

 

 

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

 

   

 

 

 

 

 

 

06/30/2016

Currency

 

Exchange rate

 

Probable scenario

 

Scenario 1

 

Scenario 2

USD

 

3.2098

 

3.2733

 

4.0123

 

4.8147

EUR

 

3.5414

 

3.6569

 

4.4268

 

5.3121

 

 

 

 

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

 

   

 

 

 

 

 

 

 

 

06/30/2016

Instruments

 

Notional

 

Risk

 

Probable scenario (*)

 

Scenario 1

 

Scenario 2

Hedge accounting of exports

 

1,541,000

 

Dollar

 

97,854

 

1,236,575

 

2,473,151

Currency position

 

(3,331,690)

 

Dollar

 

(211,562)

 

(2,673,515)

 

(5,347,029)

(not including exchange derivatives above)

 

 

 

 

 

 

 

 

 

 

Consolidated exchange position

 

(1,790,690)

 

Dollar

 

(113,708)

 

(1,436,940)

 

(2,873,878)

(including exchange derivatives above)

                   

Net Investment hedge accounting

 

96,000

 

Euro

 

11,088

 

84,992

 

169,985

Currency position

 

(106,361)

 

Euro

 

(12,285)

 

(94,166)

 

(188,332)

Consolidated exchange position

 

(10,361)

 

Euro

 

(1,197)

 

(9,174)

 

(18,347)

(including exchange derivatives above)

 

 

 

 

 

 

 

 

 

 

 

 

(*) The likely scenarios were calculated considering the following changes to the risks: Real x Dollar - Real depreciation of 1.98% / Real x Euro – Real depreciation of 3.26%. Source: Banco Central do Brasil on August 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 June 30, 2016.

 

 

           

Impact on profit or loss

Changes in interest rates

 

% p.a

 

Probable scenario (*)

 

Scenario 1

 

Scenario 2

TJLP

 

7.50

 

(8,751)

 

(20,075)

 

(40,150)

Libor

 

0.92

 

(44,920)

 

(12,132)

 

(24,264)

CDI

 

14.13

 

(308,575)

 

(435,241)

 

(870,482)

 

 

(*) The sensitivity analysis is based on the assumption of maintaining as probable scenario the market values at June 30, 2016 recorded in the Company´s assets and liabilities.

 

 

 

Page 43 of 66


 
 

 

12.d) Liquidity risk

 

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

 

 

 

 

 

 

 

 

 

 

Consolidated

At June 30,2016

Less than one year

 

From one to two years

 

From two to five years

 

Over five years

 

Total

Borrowings, financing and debentures

1,376,232

 

6,713,595

 

16,513,546

 

5,851,826

 

30,455,199

Trade payables

1,194,942

 

 

 

 

1,194,942

Dividends and interest on capital

464,982

 

 

464,982

 

 

· 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:

 

 

 

 

06/30/2016

 

 

 

12/31/2015

 

Closing Balance

 

Fair value

 

Closing Balance

 

Fair value

Perpetual bonds

3,214,169

 

1,280,700

 

3,910,115

 

1,330,685

Fixed Rate Notes

5,580,789

 

3,410,094

 

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
 

06/30/2016

 

12/31/2015

   

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

Payables to related parties (note 17 b)

7,270

 

6,798

 

 

 

 

 

 

127,157

 

110,106

 

79,785

 

118,653

Derivative financial instruments (note 12 I)

 

 

26,257

 

 

 

 

 

 

 

 

 

 

 

 

 

Exclusive funds (1)

 

 

 

 

 

 

 

 

 

 

 

25,387

 

 

 

 

Dividends and interest on capital payable to non-controlling shareholders

464,982

 

464,982

           

2,262

 

2,262

       

Advances from customers

51,049

 

49,505

 

 

 

 

 

 

39,691

 

40,988

 

 

 

 

Taxes in installments

26,600

 

24,237

   

84,702

 

87,890

 

9,388

 

9,207

 

1,559

 

1,476

Profit sharing - employees

89,565

 

171,695

 

 

 

 

 

 

58,471

 

121,423

 

 

 

 

Provision for freight

26,811

 

105,104

           

8,679

 

10,190

       

Provision industrial restructuring

100,244

 

122,854

 

 

 

 

 

 

56,402

 

74,382

 

 

 

 

Taxes payable

         

21,498

 

7,805

         

7,060

 

6,321

Other provisions

35,795

 

30,784

 

 

 

 

 

 

17,397

 

10,289

 

 

 

 

Other payables

62,969

 

70,801

   

30,832

 

35,589

 

5,793

 

7,465

       

 

865,285

 

1,073,017

 

 

137,032

 

131,284

 

325,240

 

411,699

 

88,404

 

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 44 of 66


 
 

 

 

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

 

Six months ended

 

Three months ended

 

06/30/2016

 

06/30/2015

 

06/30/2016

 

06/30/2015

Income tax and social contribution income (expense)

 

 

 

 

 

 

 

Current

(87,126)

 

(92,044)

 

(34,597)

 

121,915

Deferred

(144,589)

 

599,697

 

(74,908)

 

(116,779)

 

(231,715)

 

507,653

 

(109,505)

 

5,136

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

             

Parent Company

 

Six months ended

 

Three months ended

 

06/30/2016

 

06/30/2015

 

06/30/2016

 

06/30/2015

Income tax and social contribution income (expense)

 

 

 

 

 

 

 

Current

(51)

 

(6,040)

 

 

 

150,725

Deferred

(110,123)

 

642,283

 

(80,792)

 

(52,263)

 

(110,174)

 

636,243

 

(80,792)

 

98,462

 

 

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

 

Six months ended

 

Three months ended

 

06/30/2016

 

06/30/2015

 

06/30/2016

 

06/30/2015

Loss before income tax and social contribution

(642,292)

 

(730,444)

 

66,790

 

(619,729)

Tax rate

34%

 

34%

 

34%

 

34%

Income tax and social contribution at combined statutory rate

218,379

 

248,351

 

(22,709)

 

210,708

Adjustment to reflect the effective rate:

             

Equity pickup

21,558

 

120,583

 

6,265

 

(14,900)

Profit with differentiated rates or untaxed

(358,175)

 

195,504

 

(181,723)

 

(145,763)

Transfer pricing adjustment

(13,028)

 

(22,335)

 

31,144

 

(22,094)

Tax loss carryforwards without recognizing deferred taxes

(791,260)

 

(25,194)

 

(343,044)

 

(14,364)

Indebtdness limit

(18,681)

 

(18,712)

 

(9,470)

 

(10,994)

Deferred taxes on temporary differences - non computed(1)

703,320

     

398,329

   

Deferred taxes on foreign profit

 

 

 

 

6,798

 

 

Other permanent deductions (add-backs)

6,172

 

9,456

 

4,905

 

2,543

Income tax and social contribution in profit for the period

(231,715)

 

507,653

 

(109,505)

 

5,136

Effective tax rate

-36%

 

69%

 

-14%

 

1%

               
             

Parent Company

 

Six months ended

 

Three months ended

06/30/2016

 

06/30/2015

 

06/30/2016

 

06/30/2015

Loss before income tax and social contribution

(783,753)

 

(858,455)

 

23,555

 

(712,730)

Tax rate

34%

 

34%

 

34%

 

34%

Income tax and social contribution at combined statutory rate

266,476

 

291,875

 

(8,009)

 

242,328

Adjustment to reflect the effective rate:

 

 

 

       

Equity pickup

(283,470)

 

379,942

 

(117,863)

 

(110,525)

Transfer pricing adjustment

   

(22,335)

     

(22,094)

Indebtdness limit

(18,681)

 

(18,712)

 

(9,470)

 

(10,994)

Tax loss carryforwards without recognizing deferred taxes

(776,690)

     

(342,258)

   

Deferred taxes on temporary differences - non computed (1)

700,146

 

 

 

394,787

 

 

Other permanent deductions (add-backs)

2,045

 

5,473

 

2,021

 

(253)

Income tax and social contribution in profit for the period

(110,174)

 

636,243

 

(80,792)

 

98,462

Effective tax rate

-14%

 

74%

 

343%

 

14%

                 

 

 

 

 

Page 45 of 66


 
 

 

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

 

 

 

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

 

Others

 

06/30/2016

Deferred tax assets

 

 

 

 

 

 

 

 

 

Income tax losses

264,162

 

 

 

576,032

 

 

 

840,194

Social contribution tax losses

106,654

 

 

 

209,032

 

 

 

315,686

Temporary differences

2,936,211

 

(13,808)

 

(902,182)

 

(547)

 

2,019,674

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

231,054

 

 

 

7,707

 

 

 

238,761

- Provision for environmental liabilities

88,501

 

 

 

(2,420)

 

 

 

86,081

- Asset impairment losses

68,710

 

 

 

2,637

 

(3)

 

71,344

- Inventory impairment losses

17,886

 

 

 

2,730

 

(1,168)

 

19,448

- (Gains)/losses on financial instruments

(5,454)

 

 

 

1,610

 

 

 

(3,844)

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

932,016

 

(43,470)

 

15,973

 

 

 

904,519

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

15,973

 

43,470

 

(171,506)

 

 

 

(112,063)

- Actuarial liability (pension and healthcare plan)

163,559

 

 

 

 

 

 

 

163,559

- Accrued supplies and services

49,417

 

 

 

20,826

 

 

 

70,243

- Allowance for doubtful debts

49,395

 

 

 

17,233

 

 

 

66,628

- Unrealized exchange differences (*)

2,427,926

 

 

 

(823,741)

 

 

 

1,604,185

- (Gain) on loss of control over Transnordestina

(224,096)

 

 

 

 

 

 

 

(224,096)

- Cash flow hedge accounting

516,831

 

(371,759)

 

 

 

 

 

145,072

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

(357,951)

 

357,951

 

 

 

 

   

- Deferred taxes non computed

(1,243,228)

 

 

 

86,102

 

 

 

(1,157,126)

- Goodwill on merger

9,211

 

 

 

(8,254)

 

 

 

957

- Other

196,461

 

 

 

(51,079)

 

624

 

146,006

Non-current assets

3,307,027

 

(13,808)

 

(117,118)

 

(547)

 

3,175,554

                   

Deferred tax liabilities

 

 

 

 

 

 

 

 

 

Income tax losses

(385)

     

1,375

 

 

 

990

Social contribution tax losses

(138)

 

 

 

495

 

 

 

357

Temporary differences

495,374

 

(41,483)

 

25,601

 

(2,582)

 

476,910

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

(14,869)

 

 

 

675

 

 

 

(14,194)

- Provision for environmental liabilities

(789)

     

(274)

 

 

 

(1,063)

- Asset impairment losses

(18,441)

 

 

 

324

 

 

 

(18,117)

- Inventory impairment losses

(11,164)

     

(338)

 

(1,168)

 

(12,670)

- Actuarial liability (pension and healthcare plan)

(608)

 

 

 

 

 

 

 

(608)

- Accrued supplies and services

(42,976)

     

4,514

 

 

 

(38,462)

- Allowance for doubtful debts

(1,128)

 

 

 

357

 

 

 

(771)

- Fair value adjustment - SWT Aquisition

252,549

 

(38,851)

 

(17,788)

 

 

 

195,910

- Fair Value adjustment - Mining Business combination

336,443

 

 

 

(1,941)

 

 

 

334,502

- Unrealized exchange differences (*)

       

42,636

 

 

 

42,636

- Deferred taxes non computed

614

 

 

 

(2,536)

 

 

 

(1,922)

- Others

(4,257)

 

(2,632)

 

(28)

 

(1,414)

 

(8,331)

Non-current liabilities

494,851

 

(41,483)

 

27,471

 

(2,582)

 

478,257

 

 

Page 46 of 66


 
 

 

 

             

Parent Company

 

Opening balance

 

Movement

Closing balance

 

12/31/2015

 

Comprehensive
income

 

P&L

 

06/30/2016

Deferred tax assets

 

 

 

 

 

 

 

Income tax losses

226,246

 

 

 

569,884

 

796,130

Social contribution tax losses

93,031

 

 

 

206,806

 

299,837

Temporary differences

2,909,684

 

(13,808)

 

(886,813)

 

2,009,063

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

216,862

 

 

 

4,427

 

221,289

- Provision for environmental liabilities

88,501

     

(2,420)

 

86,081

- Asset impairment losses

67,483

 

 

 

2,902

 

70,385

- Inventory impairment losses

13,757

     

140

 

13,897

(Gain)/loss in financial instruments

(5,454)

 

 

 

1,610

 

(3,844)

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

932,016

 

(43,470)

 

15,973

 

904,519

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

15,973

 

43,470

 

(171,506)

 

(112,063)

- Actuarial liability (pension and healthcare plan)

163,560

         

163,560

- Accrued supplies and services

49,040

 

 

 

32,114

 

81,154

- Allowance for doubtful debts

28,087

     

(481)

 

27,606

- Unrealized exchange differences (*)

2,427,926

 

 

 

(823,741)

 

1,604,185

(Gain) in control loss on Transnorderstina

(224,096)

         

(224,096)

- Cash flow hedge accounting

516,831

 

(371,759)

 

 

 

145,072

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

(357,951)

 

357,951

       

- Deferred taxes non computed

(1,133,091)

 

 

 

94,962

 

(1,038,129)

- Other

110,240

     

(40,793)

 

69,447

Non-current assets

3,228,961

 

(13,808)

 

(110,123)

 

3,105,030

 

 

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

 

The Company has foreign 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 2012 up to the 2nd quarter of 2016 such foreign subsidiaries generated profits amounting to R$1,706,873. If for some reason tax authorities understand that these profits are subject to additional taxation in Brazil in respect of income tax and social contribution, which if due, would total R$459.628.

 

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

 

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

Income tax and social contribution

 

 

 

 

 

 

 

Actuarial gains on defined benefit pension plan

64,603

 

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

145,072

 

158,880

 

145,072

 

158,880

 

(215,797)

 

(202,103)

 

(215,272)

 

(201,463)

 

 

 

 

Page 47 of 66


 
 

 

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

 

On June 30, 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

 

 

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

Tax

 

127,927

 

143,852

 

82,861

 

82,472

 

66,095

 

82,619

 

65,321

 

67,843

Social security

 

73,861

 

70,174

 

46,193

 

46,193

 

72,934

 

69,293

 

46,193

 

46,193

Labor

 

471,607

 

478,611

 

184,412

 

165,027

 

381,763

 

388,763

 

150,931

 

133,686

Civil

 

133,901

 

128,451

 

23,408

 

24,634

 

106,900

 

103,087

 

9,461

 

13,696

Environmental

 

7,529

 

17,646

 

1,190

 

1,697

 

2,263

 

12,536

 

1,121

 

1,628

Judicial deposits

 

 

 

 

8,431

 

8,519

 

 

 

 

 

 

 

 

 

 

814,825

 

838,734

 

346,495

 

328,542

 

629,955

 

656,298

 

273,027

 

263,046

 

The changes in the provision for tax, social security, labor, civil and environmental risks in the year ended June 30, 2015 were as follows:

 

                   

Consolidated

 

 

 

 

 

 

 

 

 

 

Current + Non- current

Nature

 

12/31/2015

 

Additions

 

Net update on amount

 

Net utilization of reversal

 

06/30/2016

Tax

 

143,852

 

 

5,093

 

(21,018)

 

127,927

Social security

 

70,174

 

 

3,687

 

 

73,861

Labor

 

478,611

 

26,297

 

41,758

 

(75,059)

 

471,607

Civil

 

128,451

 

2,188

 

5,157

 

(1,895)

 

133,901

Environmental

 

17,646

 

1,072

 

454

 

(11,643)

 

7,529

   

838,734

 

29,557

 

56,149

 

(109,615)

 

814,825

 

 

 

 

 

 

 

 

 

 

 

Parent Company

 

 

 

 

 

 

 

 

 

 

Current + Non- current

Nature

 

12/31/2015

 

Additions

 

Net update on amount

 

Net utilization of reversal

 

06/30/2016

Tax

 

82,619

 

 

2,651

 

(19,175)

 

66,095

Social security

 

69,293

 

 

3,641

 

 

72,934

Labor

 

388,763

 

17,589

 

38,247

 

(62,836)

 

381,763

Civil

 

103,087

 

2,022

 

3,505

 

(1,714)

 

106,900

Environmental

 

12,536

 

52

 

202

 

(10,527)

 

2,263

   

656,298

 

19,663

 

48,246

 

(94,252)

 

629,955

 

 

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 (Special System for Settlement and Custody interest rates).

 

 

 

Page 48 of 66


 
 

 

·         Other administrative and judicial proceedings

 

The table below shows a summary of the carrying amounts of the main legal matters with possible risk of loss on June 30, 2016 compared to December 31, 2015. The increase in the carrying amounts substantially reflects the monetary update.

 

   

 

 

Consolidated

 

 

06/30/2016

 

12/31/2015

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

 

8,060,222

 

7,743,501

Income tax/ Social contribution - Assesment and Imposition of Fine (AIIM) - Dissallow ance of deductions of goodw ill generated in te reverse incorporation of Big Jump by Namisa

 

2,348,457

 

2,250,833

Assessment Notice and Imposition of Fine (AIIM) - Income tax / Social contribution - gloss of interest on prepayment arising from supply contracts of iron ore and port services

 

1,156,764

 

1,105,793

Tax foreclosures - ICMS - Electricity credits

 

831,640

 

785,043

Installments MP 470 - alleged insufficiency of tax losses

 

618,021

 

587,205

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

 

1,432,359

 

1,015,355

Notices of violation and imposition of fine - Income taxes and social contribution due to profits from foreign subsidiaries (years 2008,2010 and 2011)

 

1,578,471

 

832,183

Disallowance of the ICMS credits - Transfer of iron ore

 

542,356

 

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

 

265,033

 

252,112

Disallowance of the tax losses arising on adjustments to the SAPLI

 

430,964

 

409,323

Assessment Notice - ICMS - shipping and return merchandise for Industrialization

 

572,991

 

541,338

Assessment Notice- Income tax- Capital Gain of CFM vendors located outside

 

177,108

 

170,835

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

 

2,787,313

 

2,537,626

Social security lawsuits

 

302,786

 

289,923

Law suit applied by Brazilian antitrust authorities (CADE)

 

94,659

 

70,423

Other civil lawsuits

 

755,628

 

763,576

Labor and social security lawsuits

 

1,111,944

 

1,032,678

Environmental lawsuits

 

342,375

 

359,046

   

23,409,091

 

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.

 

(1) The increase is due to an assessment notice received in June 2016, related to the Profits from foreign subsidiaries in 2011.

 

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 49 of 66


 
 

 

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 June 30, 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

 

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

Environmental liabilities

253,862

 

262,290

 

249,486

 

259,115

Asset retirement obligations

70,163

 

66,641

 

 

 

 

 

324,025

 

328,931

 

249,486

 

259,115

 

 

 

 

Page 50 of 66


 
 

 

 

 

17.   RELATED-PARTY BALANCES AND TRANSACTIONS

 

On June 30, 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.

 

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

   

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables (note 5)

 

82,602

 

61,366

         

82,602

 

61,366

Dividends receivable (note 5)

 

26,902

 

27,817

 

 

 

 

 

26,902

 

27,817

Actuarial asset (note 7)

         

99,580

 

114,433

 

99,580

 

114,433

Financial investments/ investments

161,084

 

 

 

 

 

 

 

161,084

 

 

Loans (note 7)

         

400,053

 

373,214

 

400,053

 

373,214

Other receivables (note 8)

 

9,209

 

9,420

 

32,770

 

29,020

 

41,979

 

38,440

   

279,797

 

98,603

 

532,403

 

516,667

 

812,200

 

615,270

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Other payables (Note 13)

                       

Accounts payable

 

7,270

 

6,798

 

 

 

 

 

7,270

 

6,798

Trade payables

 

112,863

 

67,443

         

112,863

 

67,443

Actuarial liabilities

 

 

 

 

 

514,368

 

514,368

 

514,368

 

514,368

   

120,133

 

74,241

 

514,368

 

514,368

 

634,501

 

588,609

 

 

 

 

 

 

 

 

 

 

 

 

 

   

06/30/2016

 

06/30/2015

               

P&L

 

 

 

 

               

Revenues

                       

Sales

 

354,660

 

382,528

               

Interest

 

27,474

 

32,119

               

Expenses

 

 

 

 

               

Purchases

 

(517,964)

 

(559,208)

               

Interest

 

 

 

(256,087)

               
   

(135,830)

 

(400,648)

               

 

 

 

 

Page 51 of 66


 
 

 

 

·      By company

 

 

   

 

         

Consolidated

   

Assets

 

Liabilities

 

P&L

 

Current

 

Non-current

 

Total

 

Current

 

Non-current

 

Total

 

Sales

 

Purchases

 

Finance income (costs), net

 

Total

                   

Joint-venture e Joint-operation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Itá Energética S.A.

             

2,652

     

2,652

     

(16,097)

     

(16,097)

CGPAR Construção Pesada S.A.

 

1,301

 

 

 

1,301

 

18,038

 

 

 

18,038

 

 

 

(39,930)

 

 

 

(39,930)

MRS Logística S.A.

 

26,199

     

26,199

 

54,829

     

54,829

     

(418,820)

     

(418,820)

CBSI - Companhia Brasileira de Serviços e Infraestrutura

 

5,298

 

 

 

5,298

 

10,192

 

 

 

10,192

 

9

 

(34,603)

 

 

 

(34,594)

Transnordestina Logística S.A (1)

     

381,932

 

381,932

 

33,610

     

33,610

 

2,312

     

25,413

 

27,725

 

 

32,798

 

381,932

 

414,730

 

119,321

 

 

119,321

 

2,321

 

(509,450)

 

25,413

 

(481,716)

Other related parties

                                       

CBS Previdência

 

 

 

99,580

 

99,580

 

 

 

514,368

 

514,368

 

 

 

 

 

 

 

 

Fundação CSN

 

1,830

     

1,830

 

77

     

77

               

Banco Fibra

 

161,084

 

 

 

161,084

 

 

 

 

 

 

 

 

 

 

 

636

 

636

Usiminas

             

509

     

509

 

17,027

 

(5,338)

     

11,689

Panatlântica

 

83,892

 

3,750

 

87,642

 

 

 

 

 

 

 

320,845

 

 

 

 

 

320,845

Ibis Participações e Serviços

                             

(3,176)

     

(3,176)

Partifib Projetos Imobiliários

 

193

 

 

 

193

 

 

 

 

 

 

 

1,099

 

 

 

 

 

1,099

   

246,999

 

103,330

 

350,329

 

586

 

514,368

 

514,954

 

338,971

 

(8,514)

 

636

 

331,093

Associates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Arvedi Metalfer do Brasil S.A.

     

47,141

 

47,141

 

226

     

226

 

13,368

     

1,425

 

14,793

Total at 06/30/2016

 

279,797

 

532,403

 

812,200

 

120,133

 

514,368

 

634,501

 

354,660

 

(517,964)

 

27,474

 

(135,830)

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 06/30/2015

 

 

 

 

 

 

 

 

 

 

 

 

 

382,528

 

(559,208)

 

(223,968)

 

(400,648)

 

 

 

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 June 30, 2016, the borrowings carrying amounts totaled to R$381,932 (R$222,727 as of December 31, 2015).

 

 

Page 52 of 66


 
 

 

·       By transaction

 

   

 

 

 

 

 

 

 

 

 

 

Parent Company

 

 

Current

Non-current

Total

   

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables (1) (note 5)

 

933,505

 

1,140,172

         

933,505

 

1,140,172

Dividends receivable (note 5)

 

730,062

 

737,668

 

 

 

 

 

730,062

 

737,668

Actuarial asset (note 7)

         

101,305

 

112,660

 

101,305

 

112,660

Loans (note 7)

 

 

 

 

 

257,480

 

239,930

 

257,480

 

239,930

Short-term investments / Investments (2)

 

1,220,999

 

1,412,428

 

46,961

 

28,078

 

1,267,960

 

1,440,506

Exclusive funds (note 7)

 

 

 

110,075

 

 

 

 

 

 

 

110,075

Ohter receivables (3) (note 7)

 

54,737

 

32,479

 

328,393

 

303,441

 

383,130

 

335,920

 

 

2,939,303

 

3,432,822

 

734,139

 

684,109

 

3,673,442

 

4,116,931

Liabilities

                       

Borrowings and financing

 

 

 

 

 

 

 

 

 

 

 

 

Prepayment (note 11)

 

70,371

 

85,987

 

4,803,068

 

5,843,050

 

4,873,439

 

5,929,037

Fixed Rate Notes e Intercompany Bonds (note 11)

26,634

 

32,402

 

3,334,373

 

4,056,347

 

3,361,007

 

4,088,749

Intercompany Loans (note 11)

 

1,051,237

 

1,261,861

 

1,757,871

 

2,137,040

 

2,809,108

 

3,398,901

 

 

1,148,242

 

1,380,250

 

9,895,312

 

12,036,437

 

11,043,554

 

13,416,687

Other payables (Note 13)

                       

Accounts payable

 

127,141

 

110,090

 

79,785

 

118,653

 

206,926

 

228,743

Advances from customers

 

16

 

16

         

16

 

16

Exclusive funds (2) (note 13)

 

 

 

25,387

 

 

 

 

 

 

 

25,387

Trade payables

 

152,787

 

153,559

         

152,787

 

153,559

Actuarial liabilities

 

 

 

 

 

514,367

 

514,367

 

514,367

 

514,367

   

279,944

 

289,052

 

594,152

 

633,020

 

874,096

 

922,072

 

 

 

 

 

               
   

06/30/2016

 

06/30/2015

               

P&L

 

 

 

 

               

Revenues

                       

Sales

 

1,364,264

 

2,750,132

               

Interest

 

17,620

 

10,746

               

Exclusive funds

 

 

 

372,782

               

Expenses

                       

Purchases

 

(665,007)

 

(875,265)

               

Interest

 

(252,806)

 

(713,396)

               

Foreing exchange and monetary variations, net

2,186,217

 

(1,315,934)

               

Exclusive funds

 

(731,130)

                   

 

 

1,919,158

 

229,065

               

 

 

(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$ 1,220,999 as of June 30, 2016 (R$1,412,428 at December 31, 2015) and the interests in Usiminas, recorded in the exclusive funds and classified as investments available for sale, located in non-current assets, amounted to R$46,961 (R$28,078 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).

 

Non-current: Refers mainly to advances for future capital increases, dividends to be received and receivables from acquisition of debentures.

 

 

 

Page 53 of 66


 
 

 

·       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

             

50

     

50

 

23,904

 

(136)

 

(128)

     

23,640

Companhia Metalúrgica Prada (1)

 

222,697

 

121,336

 

344,033

 

12,944

 

196

 

13,140

 

485,731

 

(52,168)

 

 

 

 

 

433,563

Estanho de Rondônia S.A.

 

1,063

 

2,034

 

3,097

                 

(5,128)

 

52

     

(5,076)

Sepetiba Tecon S.A.

 

10,574

 

83,764

 

94,338

 

11,919

 

 

 

11,919

 

 

 

(20,937)

 

(1)

 

 

 

(20,938)

Minérios Nacional S.A.

     

7,196

 

7,196

                     

17

     

17

Congonhas Minérios S.A. (2)

 

733,916

 

 

 

733,916

 

31,555

 

 

 

31,555

 

308

 

(261,677)

 

 

 

 

 

(261,369)

CSN Energia S.A.

             

12,873

     

12,873

     

(118,503)

 

(653)

     

(119,156)

Ferrovia Transnordestina Logística S.A.

 

3,123

 

33,786

 

36,909

 

 

 

79,589

 

79,589

 

4

 

 

 

(6,537)

 

 

 

(6,533)

Companhia Siderúrgica Nacional, LLC (3)

 

432,985

     

432,985

 

123,936

     

123,936

 

374,983

 

(9,965)

     

(109,838)

 

255,180

CSN Europe Lda.

 

 

 

 

 

 

 

10,861

 

98,604

 

109,465

 

 

 

 

 

1,482

 

21,350

 

22,832

CSN Resources S.A. (4)

             

1,127,769

 

7,225,858

 

8,353,627

         

(218,316)

 

1,763,585

 

1,545,269

Lusosider Aços Planos, S.A.

 

187,383

 

 

 

187,383

 

32,201

 

 

 

32,201

 

157,381

 

 

 

 

 

(38,895)

 

118,486

CSN Islands XI Corp. (5)

                 

1,027,136

 

1,027,136

             

222,400

 

222,400

CSN Islands XII Corp. (6)

 

 

 

 

 

 

 

9,613

 

1,457,249

 

1,466,862

 

 

 

 

 

(33,836)

 

315,530

 

281,694

CSN Ibéria Lda.

                 

86,466

 

86,466

         

(1,355)

 

18,623

 

17,268

Companhia de Embalagens Metálicas MMSA

5,404

 

44,859

 

50,263

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Companhia Florestal do Brasil

     

2,648

 

2,648

                               

Stahlwerk Thüringen GmbH

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(22,142)

 

 

 

 

 

(22,142)

   

1,597,145

 

295,623

 

1,892,768

 

1,373,721

 

9,975,098

 

11,348,819

 

1,042,311

 

(490,656)

 

(259,275)

 

2,192,755

 

2,485,135

Joint-venture e Joint-operation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ITA Energética S.A

 

17,063

     

17,063

                               

CGPAR Construção Pesada S.A.

 

4,042

 

 

 

4,042

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MRS Logística S.A.

 

13,111

     

13,111

 

38,998

     

38,998

     

(98,622)

         

(98,622)

CBSI - Companhia Brasileira de Serviços e Infraestrutura

 

1,028

 

 

 

1,028

 

15,436

 

 

 

15,436

 

9

 

(67,365)

 

 

 

 

 

(67,356)

Transnordestina Logística S.A.

     

239,359

 

239,359

 

16

     

16

         

16,125

     

16,125

 

 

35,244

 

239,359

 

274,603

 

54,450

 

 

54,450

 

9

 

(165,987)

 

16,125

 

 

(149,853)

Other related parties

                                           

CBS Previdência

 

 

 

101,305

 

101,305

 

 

 

514,366

 

514,366

 

 

 

 

 

 

 

 

 

 

Fundação CSN

 

1,830

     

1,830

 

15

     

15

     

(590)

         

(590)

Banco Fibra

 

16

 

 

 

16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Usiminas

                             

(4,598)

         

(4,598)

Panatlântica

 

83,892

 

3,750

 

87,642

 

 

 

 

 

 

 

320,845

 

 

 

 

 

 

 

320,845

Ibis Participações e Serviços

                             

(3,176)

         

(3,176)

Partifib Projetos Imobiliários

 

193

 

 

 

193

 

 

 

 

 

 

 

1,099

 

 

 

 

 

 

 

1,099

   

85,931

 

105,055

 

190,986

 

15

 

514,366

 

514,381

 

321,944

 

(8,364)

 

 

 

313,580

Associates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Arvedi Metalfer do Brasil S.A.

     

47,141

 

47,141

                     

1,425

     

1,425

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exclusive Funds

                                           

Diplic, Caixa Vertice, VR1, BB Steel

 

1,220,983

 

46,961

 

1,267,944

 

 

 

 

 

 

 

 

 

 

 

(731,129)

 

 

 

(731,129)

Total at 06/30/2016

 

2,939,303

 

734,139

 

3,673,442

 

1,428,186

 

10,489,464

 

11,917,650

 

1,364,264

 

(665,007)

 

(972,854)

 

2,192,755

 

1,919,158

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 06/30/2015

 

 

 

 

 

 

 

 

 

 

 

 

 

2,750,132

 

(875,265)

 

(329,868)

 

(1,315,934)

 

229,065

 

 

(1)   Companhia Metalurgica Prada refers mainly to accounts receivable and debentures from CBL amounting to R$219,362 and 121,336, respectively, as of June 30, 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 June 30, 2016 the carrying amounts of trade accounts receivable totaled R$432,985 (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 June 30, 2016, the loans amounted to R$8,353,627 (R$10,146,701 on December 31, 2015).

 

(5)   CSN Islands XI Corp.: Contracts in US dollars, without interest, maturing on August 2017. On June 30 2016, the loans amounted to R$1,027,136 (R$1,249,536 as of December 31, 2015).

 

 

 

Page 54 of 66


 
 

 

(6)   CSN Islands XII Corp.: Contracts in US dollars, interest rate of 7.64% and maturing on February 2025. On June 30, 2016, the loans amounted to R$1,466,862 (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 June 30, 2016.

 

   

Six months ended

 

Theree months ended

   

06/30/2016

 

06/30/2015

 

06/30/2016

06/30/2015

   

P&L

 

P&L

Short-term benefits for employees and officers

 

63,136

 

26,297

 

23,327

20,506

Post-employment benefits

 

203

 

117

 

85

87

 

 

63,339

 

26,414

 

23,412

20,593

 

 

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 June 30, 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 June 30, 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.

 

 

 

 

 

 

 

Page 55 of 66


 
 

 

18.d) Ownership structure

 

As of June 30, 2016, the Company’s ownership structure was as follows:

 

 

   

 

 

 

 

06/30/2016

 

 

 

 

 

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)

 

327,284,764

 

23.59%

 

24.12%

 

336,435,464

 

24.25%

 

24.79%

BM&FBovespa

 

244,996,869

 

17.66%

 

18.05%

 

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%

 

 

 

 

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

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

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

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

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

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)

 

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

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

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

9º (*)

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 June 30, 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 06/30/2016 (*)

     
   

Minimum

 

Maximum

 

Average

 

30,391,000

 

R$ 238,976

 

R$ 4.48

 

R$ 10.07

 

R$ 7.86

 

R$ 237,658

 

 

(*) Using the last share quotation on BM&F Bovespa as of June 30, 2016 of R$7.82 per share.

 

 

 

 

 

 

 

 

 

Page 56 of 66


 
 

 

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 period, excluding the common shares purchased and held as treasury shares, as follows:

 

 

             

Parent Company

 

 

Six months ended

 

Three months ended

 

 

06/30/2016

 

06/30/2015

 

06/30/2016

 

06/30/2015

 

Common Shares

   

Common Shares

 

 

 

Net (Loss)/ Gain of the period

 

 

 

 

 

 

 

 

Attributable to owners of the Company

(893,927)

 

(222,212)

 

(57,237)

 

(614,268)

 

Weighted average number of shares

1,357,133,047

 

1,357,167,255

 

1,357,133,047

 

1,357,133,047

 

Basic and diluted EPS

(0.65869)

 

(0.16373)

 

(0.04217)

 

(0.45262)

 

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

   

Six months ended

 

Three months ended

   

06/30/2016

 

06/30/2015

 

06/30/2016

 

06/30/2015

Gross revenue

 

 

 

 

 

 

 

 

Domestic market

 

4,653,263

 

5,644,015

 

2,367,186

 

2,701,384

Foreign market

 

4,771,684

 

3,534,614

 

2,593,574

 

1,740,597

 

 

9,424,947

 

9,178,629

 

4,960,760

 

4,441,981

Deductions

 

 

 

 

 

 

 

 

Cancelled sales and discounts

 

(102,587)

 

(153,057)

 

(33,807)

 

(114,593)

Taxes on sales

 

(1,129,211)

 

(1,328,180)

 

(577,607)

 

(640,248)

 

 

(1,231,798)

 

(1,481,237)

 

(611,414)

 

(754,841)

Net revenue

 

8,193,149

 

7,697,392

 

4,349,346

 

3,687,140

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

     

Parent Company

   

Six months ended

 

Three months ended

   

06/30/2016

 

06/30/2015

 

06/30/2016

 

06/30/2015

Gross revenue

 

 

 

 

 

 

 

 

Domestic market

 

4,292,415

 

5,271,493

 

2,192,875

 

2,558,445

Foreign market

 

960,004

 

1,990,270

 

539,623

 

1,002,322

 

 

5,252,419

 

7,261,763

 

2,732,498

 

3,560,767

Deductions

 

 

 

 

 

 

 

 

Cancelled sales and discounts

 

(90,985)

 

(132,940)

 

(29,928)

 

(100,974)

Taxes on sales

 

(992,120)

 

(1,199,944)

 

(510,896)

 

(588,946)

 

 

(1,083,105)

 

(1,332,884)

 

(540,824)

 

(689,920)

Net revenue

 

4,169,314

 

5,928,879

 

2,191,674

 

2,870,847

 

 

 

Page 57 of 66


 
 

 

21.   EXPENSES BY NATURE

 

   

 

 

 

 

 

 

Consolidated

   

Six months ended

 

Three months ended

   

06/30/2016

 

06/30/2015

 

06/30/2016

 

06/30/2015

Raw materials and inputs

 

(2,136,375)

 

(2,662,845)

 

(1,132,378)

 

(1,215,622)

Labor cost

 

(1,290,751)

 

(881,269)

 

(664,542)

 

(453,190)

Supplies

 

(733,689)

 

(526,761)

 

(403,640)

 

(265,501)

Maintenance cost (services and materials)

 

(651,244)

 

(493,757)

 

(358,538)

 

(252,623)

Outsourcing services

 

(1,758,476)

 

(1,501,228)

 

(965,281)

 

(780,064)

Depreciation, amortization and depletion (note 9 a)

(614,088)

 

(543,178)

 

(304,252)

 

(278,680)

Others

 

(268,987)

 

(95,506)

 

(96,689)

 

(22,656)

   

(7,453,610)

 

(6,704,544)

 

(3,925,320)

 

(3,268,336)

                 

Classified as:

 

 

 

 

 

 

 

 

Cost of sales

 

(6,344,665)

 

(5,872,628)

 

(3,426,907)

 

(2,847,095)

Selling expenses

 

(844,604)

 

(612,174)

 

(394,183)

 

(311,344)

General and administrative expenses

 

(264,341)

 

(219,742)

 

(104,230)

 

(109,897)

 

 

(7,453,610)

 

(6,704,544)

 

(3,925,320)

 

(3,268,336)

                 
                 
   

 

 

 

 

 

 

Parent Company

 

Six months ended

 

Three months ended

   

06/30/2016

 

06/30/2015

 

06/30/2016

 

06/30/2015

Raw materials and inputs

 

(1,533,676)

 

(1,684,969)

 

(750,204)

 

(842,206)

Labor cost

 

(724,201)

 

(731,283)

 

(370,501)

 

(374,119)

Supplies

 

(518,872)

 

(513,235)

 

(291,063)

 

(259,965)

Maintenance cost (services and materials)

 

(390,349)

 

(480,504)

 

(221,246)

 

(245,490)

Outsourcing services

 

(523,290)

 

(980,921)

 

(287,935)

 

(530,062)

Depreciation, amortization and depletion (note 9 a)

(275,222)

 

(424,556)

 

(139,697)

 

(218,227)

Others

 

(81,308)

 

(111,333)

 

(55,983)

 

(36,818)

   

(4,046,918)

 

(4,926,801)

 

(2,116,629)

 

(2,506,887)

                 

Classified as:

 

 

 

 

 

 

 

 

Cost of sales

 

(3,545,062)

 

(4,457,281)

 

(1,906,666)

 

(2,267,849)

Selling expenses

 

(306,229)

 

(294,150)

 

(137,596)

 

(148,232)

General and administrative expenses

 

(195,627)

 

(175,370)

 

(72,367)

 

(90,806)

 

 

(4,046,918)

 

(4,926,801)

 

(2,116,629)

 

(2,506,887)

 

 

 

 

Page 58 of 66


 
 

 

22.   OTHER OPERATING INCOME (EXPANSES)

 

               

Consolidated

   

Six months ended

 

Three months ended

   

06/30/2016

 

06/30/2015

 

06/30/2016

 

06/30/2015

Other operating income

 

 

 

 

 

 

 

 

Indemnities/gains on lawsuits

 

24,960

 

3,068

 

6,284

 

1,340

Rentals and leases

 

578

 

593

 

250

 

308

Dividends received

 

 

5,103

 

 

5,103

Other revenues

 

8,480

 

9,760

 

5,212

 

5,811

   

34,018

 

18,524

 

11,746

 

12,562

   

-

 

-

 

-

 

-

Other operating expenses

 

 

 

 

Taxes and fees

 

(90,299)

 

(13,266)

 

(79,497)

 

(1,399)

Write-off/(Provision) of judicial deposits

 

(17,165)

 

(555)

 

116

 

(503)

Provision for environmental risks

 

(545)

 

2,663

 

597

 

(813)

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

(72,394)

 

(214,783)

 

(30,125)

 

(67,250)

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

(23,304)

 

(18,477)

 

(11,196)

 

(9,473)

Write- off of PPE and intagible assests (notes 9 and 10)

 

(26,988)

 

(4,553)

 

(14,022)

 

(568)

Inventory impairment losses/reversals (note 6)

 

12,344

 

(6,414)

 

(2,275)

 

(4,517)

Losses on spare parts

 

(7,473)

 

(17,093)

 

(894)

 

(11,527)

Studies and project engineering expenses

 

(13,245)

 

(21,991)

 

(7,514)

 

(13,504)

Research and development expenses

 

(1,168)

 

(1,622)

 

(593)

 

(871)

Healthcare plan expenses

 

(33,913)

 

(29,869)

 

(14,824)

 

(14,907)

Impairment of available-for-sale financial assets

 

 

(97,851)

 

 

(89,434)

Other expenses

 

(57,609)

 

(31,266)

 

(22,700)

 

(20,812)

 

 

(331,759)

 

(455,077)

 

(182,927)

 

(235,578)

Other operating expenses, net

 

(297,741)

 

(436,553)

 

(171,181)

 

(223,016)

                 
                 
               

Parent Company

   

Six months ended

 

Three months ended

   

06/30/2016

 

06/30/2015

 

06/30/2016

 

06/30/2015

Other operating income

 

 

 

 

 

 

 

 

Indemnities/gains on lawsuits

 

2,573

 

2,780

 

685

 

1,162

Rentals and leases

 

550

 

571

 

222

 

286

Dividends received

 

 

5,103

 

 

5,103

Other revenues

 

1,447

 

3,815

 

823

 

1,996

   

4,570

 

12,269

 

1,730

 

8,547

   

 

           

Other operating expenses

 

 

 

 

 

 

 

 

Taxes and fees

 

(13,102)

 

(11,332)

 

(12,406)

 

(506)

Write-off/(Provision) of judicial deposits

 

(17,171)

 

(559)

 

110

 

(502)

Provision for environmental risks

 

746

 

2,663

 

1,083

 

(813)

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

(67,158)

 

(204,629)

 

(21,722)

 

(59,846)

Write- off of PPE and intagible assests (notes 9 and 10)

 

(20,729)

 

(3,907)

 

(13,140)

 

(65)

Inventory impairment losses/reversals (note 6)

 

(412)

 

(8,440)

 

2,066

 

(8,047)

Losses on spare parts

 

(1,081)

 

(17,093)

 

(894)

 

(11,527)

Studies and project engineering expenses

 

(12,457)

 

(21,824)

 

(6,886)

 

(13,463)

Research and development expenses

 

(1,168)

 

(1,622)

 

(593)

 

(871)

Healthcare plan expenses

 

(33,915)

 

(29,869)

 

(14,825)

 

(14,907)

Impairment of available-for-sale financial assets

 

 

(97,851)

 

 

(89,434)

Other expenses

 

(23,021)

 

(12,224)

 

(19,719)

 

(4,946)

   

(189,468)

 

(406,687)

 

(86,926)

 

(204,927)

Other operating expenses, net

 

(184,898)

 

(394,418)

 

(85,196)

 

(196,380)

 

 

 

 

Page 59 of 66


 
 

 

23.   FINANCE INCOME (Expenses)

 

   

 

 

 

 

 

 

Consolidated

   

Six months ended

 

Three months ended

   

06/30/2016

 

06/30/2015

 

06/30/2016

 

06/30/2015

Finance income

 

 

 

 

 

 

 

 

Related parties (note 17 b)

 

27,474

 

32,119

 

14,561

 

10,032

Income from short-term investments

 

138,567

 

54,828

 

82,124

 

25,488

Gain from derivative

     

938

     

584

Other income (*)

 

217,842

 

11,728

 

44,044

 

7,373

   

383,883

 

99,613

 

140,729

 

43,477

Finance costs

 

 

 

 

 

 

 

 

Borrowings and financing - foreign currency

 

(487,884)

 

(417,030)

 

(230,051)

 

(199,301)

Borrowings and financing - local currency

 

(1,108,724)

 

(981,328)

 

(561,249)

 

(509,724)

Related parties (note 17 b)

     

(256,087)

     

(117,662)

Capitalized interest (notes 9 and 27)

 

110,875

 

70,483

 

53,214

 

46,158

Losses on derivatives (*)

 

(362)

 

(3,596)

     

(2,117)

Interest, fines and late payment charges

 

(20,188)

 

(12,644)

 

(14,174)

 

(1,630)

Other finance costs

 

(194,532)

 

(68,340)

 

(80,627)

 

(23,673)

 

 

(1,700,815)

 

(1,668,542)

 

(832,887)

 

(807,949)

Inflation adjustment and exchange differences, net

               

Inflation adjustments, net

 

(16,183)

 

7,476

 

(15,043)

 

1,209

Exchange rates, net

 

993,137

 

(433,513)

 

621,555

 

120,601

Exchange gain (losses) on derivatives (*)

 

(807,519)

 

353,571

 

(118,837)

 

(129,033)

   

169,435

 

(72,466)

 

487,675

 

(7,223)

                 

Finance income (costs), net

 

(1,147,497)

 

(1,641,395)

 

(204,483)

 

(771,695)

                 

(*) Statement of gains and (losses) on derivative transactions

 

 

 

 

 

 

Dollar-to-CDI swap

     

(18)

       

Dollar- to- real NDF

 

 

 

316,805

 

 

 

(119,795)

Future dollar BM&F

 

(800,621)

     

(119,445)

   

Dollar- to- euro NDF

 

 

 

39,668

 

 

 

6,214

Dollar - to- euro swap

 

(6,898)

 

(2,884)

 

608

 

(15,452)

 

 

(807,519)

 

353,571

 

(118,837)

 

(129,033)

Fixed rate- to- CDI swap

 

(299)

 

(3,596)

     

(2,117)

CDI -to- fixed rate swap

 

(63)

 

938

 

 

 

584

   

(362)

 

(2,658)

 

 

 

(1,533)

 

 

(807,881)

 

350,913

 

(118,837)

 

(130,566)

 

 

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

 

   

 

 

 

 

 

 

Parent Company

   

Six months ended

 

Three months ended

   

06/30/2016

 

06/30/2015

 

06/30/2016

 

06/30/2015

Finance income

 

 

 

 

 

 

 

 

Related parties (note 17 b)

 

17,620

 

383,528

 

9,121

 

(101,584)

Income from short-term investments

 

35,849

 

12,919

 

31,986

 

7,679

Other income

 

33,202

 

10,609

 

27,135

 

6,268

 

 

86,671

 

407,056

 

68,242

 

(87,637)

Finance costs

               

Borrowings and financing - foreign currency

 

(114,687)

 

(86,020)

 

(54,608)

 

(39,941)

Borrowings and financing - local currency

 

(952,550)

 

(846,509)

 

(482,287)

 

(439,784)

Related parties (note 17 b)

 

(983,936)

 

(713,396)

 

(205,886)

 

(326,482)

Capitalized interest (notes 9 and 27)

 

62,942

 

70,483

 

30,212

 

46,158

Interest, fines and late payment charges

 

(7,196)

 

(8,464)

 

(4,563)

 

(457)

Other finance costs

 

(113,131)

 

(57,636)

 

(61,995)

 

(17,960)

 

 

(2,108,558)

 

(1,641,542)

 

(779,127)

 

(778,466)

Inflation adjustment and exchange differences, net

               

Inflation adjustments, net

 

(10,694)

 

(7,861)

 

(4,914)

 

(4,321)

Exchange rates, net

 

2,145,066

 

(1,341,245)

 

1,096,162

 

315,187

 

 

2,134,372

 

(1,349,106)

 

1,091,248

 

310,866

                 

Finance income (costs), net

 

112,485

 

(2,583,592)

 

380,363

 

(555,237)

 

 

 

Page 60 of 66


 
 

 

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:

 

 

                               

Six months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

06/30/2016

P&L

 

Steel

 

Mining 

 

Logistics

 

Energy

 

Cement

 

Corporate expenses/elimination

 

Consolidated

     

Port

 

Railroads

       

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

 

2,498,700

 

17,562,229

 

 

 

 

1,165,822

 

(1,741,423)

 

Net revenues

 

 

 

 

 

 

 

 

Domestic market

 

3,107,517

 

228,360

 

95,114

 

640,503

 

134,069

 

223,107

 

(926,357)

 

3,502,313

Foreign market

 

2,579,441

 

1,729,237

 

 

 

 

 

382,158

 

4,690,836

Total net revenue (note 20)

 

5,686,958

 

1,957,597

 

95,114

 

640,503

 

134,069

 

223,107

 

(544,199)

 

8,193,149

Cost of sales and services

 

(4,758,814)

 

(1,492,028)

 

(70,194)

 

(440,972)

 

(98,959)

 

(203,435)

 

719,737

 

(6,344,665)

Gross profit

 

928,144

 

465,569

 

24,920

 

199,531

 

35,110

 

19,672

 

175,538

 

1,848,484

General and administrative expenses

 

(469,297)

 

(36,571)

 

(11,610)

 

(50,402)

 

(11,979)

 

(34,726)

 

(494,360)

 

(1,108,945)

Depreciation (note 9 a)

 

330,708

 

219,332

 

6,619

 

112,155

 

8,559

 

30,244

 

(93,529)

 

614,088

Proportionate EBITDA of joint ventures

 

 

 

 

 

 

 

233,686

 

233,686

Adjusted EBITDA

 

789,555

 

648,330

 

19,929

 

261,284

 

31,690

 

15,190

 

(178,665)

 

1,587,313

                                 

Sales by geographic area

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

28,200

 

1,439,498

 

 

 

 

 

382,158

 

1,849,856

North America

 

1,088,419

 

 

 

 

 

 

 

1,088,419

Latin America

 

142,499

 

 

 

 

 

 

 

142,499

Europe

 

1,305,806

 

203,955

 

 

 

 

 

 

1,509,761

Others

 

14,517

 

85,784

 

 

 

 

 

 

100,301

Foreign market

 

2,579,441

 

1,729,237

 

 

 

 

 

382,158

 

4,690,836

Domestic market

 

3,107,517

 

228,360

 

95,114

 

640,503

 

134,069

 

223,107

 

(926,357)

 

3,502,313

Total

 

5,686,958

 

1,957,597

 

95,114

 

640,503

 

134,069

 

223,107

 

(544,199)

 

8,193,149

                                 
                                 
                               

Three months ended

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

06/30/2016

P&L

 

Steel

 

Mining 

 

Logistics

 

Energy

 

Cement

 

Corporate expenses/elimination

 

Consolidated

     

Port

 

Railroads

       

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

 

1,252,565

 

9,267,136

 

 

 

 

594,385

 

(694,698)

 

Net revenues (**)

 

 

 

 

 

 

 

 

Domestic market

 

1,607,150

 

77,287

 

44,691

 

337,362

 

65,920

 

108,903

 

(451,077)

 

1,790,236

Foreign market

 

1,270,667

 

1,103,022

 

 

 

 

 

185,421

 

2,559,110

Total net revenue (note 20)

 

2,877,817

 

1,180,309

 

44,691

 

337,362

 

65,920

 

108,903

 

(265,656)

 

4,349,346

Cost of goods sold and services (**)

 

(2,458,907)

 

(906,911)

 

(34,153)

 

(226,601)

 

(47,845)

 

(102,243)

 

349,753

 

(3,426,907)

Gross profit

 

418,910

 

273,398

 

10,538

 

110,761

 

18,075

 

6,660

 

84,097

 

922,439

General and administrative expenses

 

(213,979)

 

(12,815)

 

(3,332)

 

(26,521)

 

(6,033)

 

(17,069)

 

(218,664)

 

(498,413)

Depreciation (note 9 a)

 

164,480

 

104,898

 

3,326

 

56,460

 

4,279

 

17,432

 

(46,623)

 

304,252

Proportionate EBITDA of joint ventures

 

 

 

 

 

 

 

126,367

 

126,367

Adjusted EBITDA

 

369,411

 

365,481

 

10,532

 

140,700

 

16,321

 

7,023

 

(54,823)

 

854,645

                                 

Sales by geographic area

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

23,531

 

937,896

 

 

 

 

 

185,421

 

1,146,848

North America

 

507,242

 

 

 

 

 

 

 

507,242

Latin America

 

76,455

 

 

 

 

 

 

 

76,455

Europe

 

653,847

 

138,992

 

 

 

 

 

 

792,839

Others

 

9,592

 

26,134

 

 

 

 

 

 

35,726

Foreign market

 

1,270,667

 

1,103,022

 

 

 

 

 

185,421

 

2,559,110

Domestic market

 

1,607,150

 

77,287

 

44,691

 

337,362

 

65,920

 

108,903

 

(451,077)

 

1,790,236

Total

 

2,877,817

 

1,180,309

 

44,691

 

337,362

 

65,920

 

108,903

 

(265,656)

 

4,349,346

 

 

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

 

(**) In the 2nd quarter 2016, there was an elimination adjustment in the amount of R$ 164,268, calculated by the difference between the net sales and the cost of goods sold in the Mining segment for the 1st quarter of 2016, which did not affect the profit/loss of the period.

 

 

 

Page 61 of 66


 
 

 

 

                               

Six months ended

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

06/30/2015

P&L

 

Steel

 

Mining 

 

Logistics

 

Energy

 

Cement

 

Corporate expenses/elimination

 

Consolidated

     

Port

 

Railroads

       

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

 

2,668,458

 

10,760,664

 

 

 

 

1,097,641

 

 

Net revenues

 

 

 

 

 

 

 

 

Domestic market

 

3,745,469

 

72,841

 

90,193

 

531,036

 

124,047

 

215,959

 

(561,246)

 

4,218,299

Foreign market

 

2,141,649

 

1,265,412

 

 

 

 

 

72,032

 

3,479,093

Total net revenue (note 20)

 

5,887,118

 

1,338,253

 

90,193

 

531,036

 

124,047

 

215,959

 

(489,214)

 

7,697,392

Cost of sales and services

 

(4,590,040)

 

(1,101,023)

 

(62,603)

 

(378,885)

 

(94,997)

 

(141,935)

 

496,855

 

(5,872,628)

Gross profit

 

1,297,078

 

237,230

 

27,590

 

152,151

 

29,050

 

74,024

 

7,641

 

1,824,764

General and administrative expenses

 

(438,966)

 

(30,870)

 

(11,592)

 

(43,980)

 

(11,180)

 

(33,437)

 

(261,891)

 

(831,916)

Depreciation (note 9 a)

 

325,108

 

177,357

 

6,345

 

91,001

 

8,517

 

19,573

 

(84,723)

 

543,178

Proportionate EBITDA of joint ventures

 

     

 

 

 

 

179,159

 

179,159

Adjusted EBITDA

 

1,183,220

 

383,717

 

22,343

 

199,172

 

26,387

 

60,160

 

(159,814)

 

1,715,185

                                 

Sales by geographic area

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

10,612

 

1,170,513

 

 

 

 

 

72,032

 

1,253,157

North America

 

843,749

 

 

 

 

 

 

 

843,749

Latin America

 

184,371

 

42,730

 

 

 

 

 

 

227,101

Europe

 

1,085,129

 

52,169

 

 

 

 

 

 

1,137,298

Others

 

17,788

 

 

 

 

 

 

 

17,788

Foreign market

 

2,141,649

 

1,265,412

 

 

 

 

 

72,032

 

3,479,093

Domestic market

 

3,745,469

 

72,841

 

90,193

 

531,036

 

124,047

 

215,959

 

(561,246)

 

4,218,299

Total

 

5,887,118

 

1,338,253

 

90,193

 

531,036

 

124,047

 

215,959

 

(489,214)

 

7,697,392

                                 
                                 
                               

Three months ended

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

06/30/2015

   

Steel

 

Mining 

 

Logistics

 

Energy

 

Cement

 

Corporate expenses/elimination

 

Consolidated

       

Port

 

Railroads

       

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

 

1,261,151

 

5,567,087

 

 

 

 

578,767

 

 

Net revenues

 

 

 

 

 

 

 

 

Domestic market

 

1,734,153

 

35,040

 

43,346

 

279,863

 

60,356

 

115,328

 

(290,568)

 

1,977,518

Foreign market

 

1,029,858

 

645,432

 

 

 

 

 

34,332

 

1,709,622

Total net revenue (note 20)

 

2,764,011

 

680,472

 

43,346

 

279,863

 

60,356

 

115,328

 

(256,236)

 

3,687,140

Cost of sales and services

 

(2,224,484)

 

(534,322)

 

(32,033)

 

(198,553)

 

(48,048)

 

(75,406)

 

265,751

 

(2,847,095)

Gross profit

 

539,527

 

146,150

 

11,313

 

81,310

 

12,308

 

39,922

 

9,515

 

840,045

General and administrative expenses

 

(207,308)

 

(9,773)

 

(5,470)

 

(21,014)

 

(5,637)

 

(18,184)

 

(153,855)

 

(421,241)

Depreciation (note 9 a)

 

167,511

 

91,309

 

3,170

 

46,288

 

4,275

 

10,184

 

(44,057)

 

278,680

Proportionate EBITDA of joint ventures

 

 

 

 

 

 

 

103,550

 

103,550

Adjusted EBITDA

 

499,730

 

227,686

 

9,013

 

106,584

 

10,946

 

31,922

 

(84,847)

 

801,034

                                 

Sales by geographic area

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

8,602

 

629,499

 

 

 

 

 

34,332

 

672,433

North America

 

362,355

 

 

 

 

 

 

 

362,355

Latin America

 

103,623

 

 

 

 

 

 

 

103,623

Europe

 

549,234

 

15,933

 

 

 

 

 

 

565,167

Others

 

6,044

 

 

 

 

 

 

 

6,044

Foreign market

 

1,029,858

 

645,432

 

 

 

 

 

34,332

 

1,709,622

Domestic market

 

1,734,153

 

35,040

 

43,346

 

279,863

 

60,356

 

115,328

 

(290,568)

 

1,977,518

Total

 

2,764,011

 

680,472

 

43,346

 

279,863

 

60,356

 

115,328

 

(256,236)

 

3,687,140

 

 

(*) 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 62 of 66


 
 

 

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

   

Six months ended

 

Three months ended

   

06/30/2016

 

06/30/2015

 

06/30/2016

 

06/30/2015

(Loss)/Profit for the period

 

(874,007)

 

(222,791)

 

(42,715)

 

(614,593)

Depreciation (note 9 a)

 

614,088

 

543,178

 

304,252

 

278,680

Income tax and social contribution (note 14)

 

231,715

 

(507,653)

 

109,505

 

(5,136)

Finance income (cost) (note 23)

 

1,147,497

 

1,641,395

 

204,483

 

771,695

EBITDA

 

1,119,293

 

1,454,129

 

575,525

 

430,646

Other operating income (expenses) (note 22)

 

297,741

 

436,553

 

171,181

 

223,016

Equity in results of affiliated companies

 

(63,407)

 

(354,656)

 

(18,428)

 

43,822

Proportionate EBITDA of joint ventures

 

233,686

 

179,159

 

126,367

 

103,550

Adjusted EBITDA (*)

 

1,587,313

 

1,715,185

 

854,645

 

801,034

 

 

(*) 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

         

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

 

06/30/2016

 

12/31/2015

Transnordestina Logísitca

R$

 

Up to 09/19/2056 and Indefinite

 

2,544,600

 

2,544,600

 

23,007

 

39,559

 

4,866

 

5,991

 

2,572,473

 

2,590,150

FTL - Ferrovia Transnordestina

R$

 

11/15/2020

 

81,700

 

81,700

         

 

450

 

81,700

 

82,150

Sepetiba Tecon

R$

 

Indefinite

 

 

 

 

 

 

 

 

28,914

 

 

 

28,914

 

 

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$

 

09/22/2022

 

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

 

26,169

 

42,721

 

55,640

 

25,781

 

4,709,112

 

4,707,805

CSN Islands XI

US$

 

09/21/2019

 

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$

 

07/21/2020

 

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$

 

 

 

 

9,982,413

 

12,135,468

 

 

 

 

 

 

 

 

 

9,982,413

 

12,135,468

         

14,609,716

 

16,774,771

 

26,169

 

42,721

 

55,640

 

25,781

 

14,691,525

 

16,843,273

 

 

 

 

Page 63 of 66


 
 

 

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

 

06/30/2016

 

06/30/2015

 

06/30/2016

 

06/30/2015

Income tax and social contribution paid

25,943

 

134,094

 

 

120,075

Addition to PP&E with interest capitalization

110,875

 

70,483

 

62,942

 

70,483

Acquisition of fixed assets without adding cash

7,437

 

 

 

Borrowings granted to subisidiaries

 

 

10,828

 

 

144,255

 

204,577

 

73,770

 

190,558

 

 

 

 

Page 64 of 66


 
 

 

28.   COMPREHENSIVE INCOME STATEMENT

 

 

             

Consolidated

             

Parent Company

 

Period of six months ended

 

Period of three months ended

 

Period of six months ended

 

Period of three months ended

 

06/30/2016

 

06/30/2015

 

06/30/2016

 

06/30/2015

 

06/30/2016

 

06/30/2015

 

06/30/2016

 

06/30/2015

Loss (profit) for the period

(874,007)

 

(222,791)

 

(42,715)

 

(614,593)

 

(893,927)

 

(222,212)

 

(57,237)

 

(614,268)

Other comprehensive income

                             

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actuarial of the defined benefit plan from investments in subsidiaries, net of taxes

114

     

29

     

114

 

(96)

 

29

 

(221)

Actuarial (losses) gains on defined benefit pension plan

 

 

202

 

 

 

 

 

 

 

348

 

 

 

348

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

   

(68)

     

9

     

(118)

     

(118)

 

114

 

134

 

29

 

9

 

114

 

134

 

29

 

9

                               

Items that could be subsequently reclassified to the statement of income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cumulative translation adjustments for the period

(467,937)

 

168.956

 

(284,651)

 

(7,851)

 

(467,937)

 

168,956

 

(284,651)

 

(7,815)

Assests avaible for sale

127,853

 

(29,287)

 

95,500

 

(677,690)

 

127,853

 

2,254

 

95,500

 

(594,881)

Income taxes and social contribution available dor sale assests

   

9,957

     

195,552

     

(767)

     

202,259

Available-for-sale assets from investments in subsidiaries, net of taxes

 

 

 

 

 

 

 

(20,871)

 

 

 

(89,516)

Impairment on available-for-sale assets

   

97,851

     

89,434

     

97,851

     

89,434

Income taxes and social contribution impairment of available-for-sale assets

 

 

(33,269)

 

 

 

(30,407)

 

 

 

(33,269)

 

 

 

(30,407)

(Loss) /gain on the percentage change in investments

584

 

(43)

 

584

 

(43)

 

584

 

(43)

 

584

 

(43)

(Loss)/ gain on cash flow hedge accounting

1,072,884

 

(345,960)

 

538,461

 

81.685

 

1,072,884

 

(345,960)

 

538,461

 

81,685

Income taxes and social contribution on (Loss) gain on cash flow hedge accounting

(13,808)

 

117,626

 

(13,808)

 

(27,773)

 

(13,808)

 

117,626

 

(13,808)

 

(27,773)

Realization on cash flow hedge accounting reclassified to income statements

20,523

 

 

 

7,826

 

 

 

20,523

 

 

 

7,826

 

 

(Loss) gain on investments in subsidiaries

               

68,064

     

49,200

   

(Loss) gain on net investment hedge in foreign subsidiaries

68,064

 

 

 

49,200

 

 

 

 

 

 

 

 

 

 

 

808,163

 

(14,169)

 

393,112

 

(377,057)

 

808,163

 

(14,169)

 

392,112

 

(377,057)

 

808,277

 

(14,035)

 

393,141

 

(377,048)

 

808,277

 

(14,035)

 

393,141

 

(377,048)

                               

Total comprehensive income for the period

(65,730)

 

(236,826)

 

350,426

 

(991,641)

 

(85,650)

 

(236,247)

 

335,904

 

(991,316)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

                             

Owners of the company

(85,650)

 

(236,247)

 

335,904

 

(991,316)

 

(85,650)

 

(236,247)

 

335,904

 

(991,316)

Non-controlling interests

19,920

 

(579)

 

14,522

 

(325)

               

 

(65,730)

 

(236,826)

 

350,426

 

(991,641)

 

(85,650)

 

(236,247)

 

335,904

 

(991,316)

 

 

 

Page 65 of 66


 
 

 

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 six-month period ended June 30, 2016, which comprises the balance sheet as of June 30, 2016 and the related statements of income and comprehensive income for the three and six-month period then ended, and statement of changes in equity and cash flows for the six-month period 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 and six-month period ended June 30, 2015 are being restated accordingly to the matter described at note 2.d).

 

Other Matters

 

We have also reviewed the individual and consolidated statements of value added (DVA) for the six-month period ended June 30, 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, August 15, 2016

DELOITTE TOUCHE TOHMATSU                                   Gilberto Grandolpho

Auditores Independentes                                                  Engagement Partner

 

 

Page 66 of 66

 

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: September 5, 2016
 
COMPANHIA SIDERÚRGICA NACIONAL
By:
/S/ Benjamin Steinbruch

 
Benjamin Steinbruch
Chief Executive Officer

 

 
By:
/S/ David Moise Salama

 
David Moise Salama
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.