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United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant To Rule 13a-16 or 15d-16
of the
Securities Exchange Act of 1934
For the month of
May 2003
Valley of the Rio Doce Company
(Translation of Registrant's name into English)
Avenida Graca Aranha, No. 26
20005-900 Rio de Janeiro, RJ, Brazil
(Address of principal executive office)
(Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.)
(Check One) 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 information to the Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)
(Check One) Yes |_| No |X|
(If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b). 82-___.)
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Table of Contents:
US GAAP Press Release First Quarter 2003
US GAAP Financial Statements
Brazilian GAAP Press Release First Quarter 2003
Brazilian GAAP Financial Statements
US PRESS RELEASE
US GAAP
1Q 03
BOVESPA: VALE3, VALE5
NYSE: RIO, RIOPR
LATIBEX: XVALO, XVALP
www.cvrd.com.br
rio@cvrd.com.br
Investor Relations
Department
Roberto Castello Branco
Barbara Geluda
Daniela Tinoco
Eduardo Mello Franco
Rafael Azevedo
Tel:(5521) 3814-4540
[LOGO OF COMPANHIA VALE DO RIO DOCE]
PERFORMANCE OF COMPANHIA VALE DO RIO DOCE IN THE FIRST QUARTER OF 2003
======================================================================
The financial and operational information contained in this press release,
except whether otherwise indicated, is based on consolidated figures, according
to the United States generally accepted accounting principles ("US GAAP"). This
information, with the exception of that referring to investments and markets, is
based on the quarterly financial statements, which have been reviewed by the
independent accountants. The main subsidiaries of CVRD which form part of these
consolidated figures are: RDME, Sibra, Ferteco, Urucum Mineracao, Para
Pigmentos, Docenave, Aluvale, Alunorte, Florestas Rio Doce, Celmar, Rio Doce
Europa, Itaco, CVRD Overseas and Rio Doce Finance International.
Rio de Janeiro, May 14, 2003 - Companhia Vale do Rio Doce (CVRD) has reported a
net profit of US$ 354 million in the first quarter of 2003 (1Q03), corresponding
to US$ 0.92 per share and 28.7% higher than in 1Q02. Return on equity (ROE), on
an annualized basis, reached 38.9%.
Gross operating revenues amounted to US$ 1.153 billion, up 16.8 % in relation to
1Q02. Cash generation, as measured by EBITDA (earnings before interest, tax,
depreciation and amortization), amounted to US$ 442 million, increasing 11.3%
yoy. EBITDA margin, the ratio between EBITDA and net revenues, amounted to 39.8
%, lower than that in 1Q02, of 41.7 %.
CVRD showed a solid performance, despite a slow global GDP growth and heavy
rainfall which adversely affected the Company's iron ore operations. This result
reflects a good strategy execution and a strong commitment to shareholder value
creation.
The Board of Directors approved the proposal by the Executive Committee,
announced on January 30, 2003, for the payment of interest on shareholders'
equity of R$ 1.62 per share, totalling R$ 621.8 million, equivalent to US$200
million. This payment was made from 30 April onwards and is the first instalment
of the minimum dividend to shareholders referring to the year 2003, of US$ 1.04
per share, publicly announced on January 30, 2003.
The figure of R$ 1.62 per share was obtained through the conversion of the
figure of US$ 0.52 per share into Reais, at R$ 3.1154 per US$, the rate of
exchange offered by Brazilian Central Bank on 15 April 2003, in line with the
procedures announced publicly on January 30, 2003.
The payment made was the first to be set out under the norms of CVRD's Dividend
Policy, approved and publicly announced on November 13, 2002. The
1
US GAAP
1Q 03
definition of this policy, a pioneer initiative in Latin America, had the main
object of reducing uncertainty to the shareholder, guaranteeing a minimum level
of dividend from the first month of the year.
The volume of iron ore and pellets shipped in the quarter amounted was the
second largest in the history of the Company. Shipments amounted to 42.519
million tons, lower than the record of 43.960 million tons achieved in 4Q02, but
15.8% higher than that recorded in 1Q02. Although there is excess demand in the
global seaborne market, iron ore shipments in 1Q03, of 36.380 million tons, were
lower than those in 4Q02, of 37.358 million tons, not only due to seasonal
effects but also temporary logistics problems. Pellet shipments, which amounted
to 6.139 million tons, were up 57.7% in comparison to 1QO2, and down 7.0%
compared to 4Q02.
The heavy rains which fell in the Southeast of Brazil in the first few months of
the year affected logistics operations for several days and caused problems in
the functioning of the Gongo Soco mine in the Southern System, resulting in a
temporary shutdown in its activities. Operations at Gongo Soco have already been
restarted, and production is expected to reach full capacity during this month.
CVRD has been maximizing its efforts to cater to customer demand, increasing
productivity in its mines - production at Carajas in March, of 5.2 million tons,
was the highest since operations there began in 1985 - and purchasing iron ore
from other mining companies.
At the same time, the Company is investing in iron ore mining - developing the
Brucutu and Fabrica Nova mines in the Southern System and enlarging capacity at
Carajas. It has also been making investments in logistics, building Pier III at
the Ponta da Madeira Maritime Terminal and increasing the shiploading speed
capacity at the port of Tubarao. These investments, estimated at some US$ 500
million over the next few years, will replace the capacity that will be lost
through the exhaustion of various mines in the Southern System, and will add the
capacity needed to enable CVRD to meet continued growth in demand.
Despite all these efforts, it is expected that the excess demand in the global
seaborne iron ore market will persist during 2004, given that the greater part
of CVRD's expansion projects and those of its main peers, will only begin
operations by 2005.
Sales of alumina in the quarter amounted to 546,000 tons, up 8.8% in relation to
4Q02. CVRD also sold about 49,000 tons of primary aluminium, being the Company's
take from Albras. Manganese ore sales amounted to 229,000 tons and sales of
ferro-alloys amounted to 141,000 tons.
CVRD's railways - Vitoria a Minas and Carajas - in 1Q03 transported 3.389
billion net ton kilometers (ntk) of general cargo (products other than iron ore
and pellets) for clients, compared to 3.787 billion ntk in 4Q02 and 3.401
billion ntk in 1Q02. Ports and marine terminals handled 5.888 million tons of
general cargo for clients, compared to 6.003 million in 4Q02 and 4.822 million
in 1Q02.
In 1Q03 investments amounted to US$ 222.7 million. Additionally, US$ 17.6
million was spent on purchasing control of Elkem Rana, a Norwegian ferro-alloys
producer, now renamed Rio Doce Manganese Norway.
2
US GAAP
1Q 03
SELECTED FINANCIAL INDICATORS
million US$
1Q02 4Q02 1Q03
---------- ---------- ----------
Gross Operating Revenue 987 1,101 1,153
Gross Margin (%) 43.3 44.4 42.3
Net Earnings 275 569 354
EBITDA 397 438 442
EBITDA Margin (%) 41.7 41.4 39.8
ROE annualized (%) 23.0 69.2 38.9
Investments * 160.9 272.7 240.3
*including acquisitions
[GRAPHIC APPEARS HERE] CHANGES IN PROCEDURES
CVRD's quarterly financial statements, in US GAAP and BR GAAP, are now reviewed
by independent accountants.
The methodology for the calculation of EBITDA has been modified. EBITDA
represents operating income plus depreciation, amortization and depletion plus
impairment plus dividends received from affiliates and joint ventures. EBITDA
will be adjusted by non-recurring factors when they occur.
Non-recurring factors are considered as extraordinary events whose repetition is
not expected, in such a way as to capture the trend of this variable over time,
eliminating sudden fluctuations. We are publishing the quarterly and annual
EBITDA amounts for the year 2002, calculated according to the new methodology,
which are compared with the previous figures derived from the former methodology
used.
CVRD believes that presenting EBITDA figures excluding one-time charges is an
additional measure of performance that investors can use to compare operating
results between reporting periods.
Pursuant to Regulation G issued by the Securities and Exchange Commission (SEC),
some financial measures like EBITDA, EBITDA margin, EBIT, free cash flow,
investments and EBITDA/interest expenses are "non-GAAP". The SEC specifically
states that the definition of non-GAAP financial measures includes any measure
of performance or liquidity that is different from that presented in the
financial statements or cash flows computed in accordance with GAAP.
With the aim of making the effects of certain reclassifications clear, we are
showing the revised quarterly financial statements for 2002. It is important to
emphasize that this does not imply any changes to the quarterly and annual net
earnings figures published in 2002.
The changes performed are intended to augment CVRD's financial transparency,
reinforcing the respect for investors' rights through the adoption of the best
international practices.
[GRAPHIC APPEARS HERE] RELEVANT EVENTS
Strategic moves and value creation
3
US GAAP
1Q 03
Various important strategic moves were made that have significant repercussions
on CVRD's ferrous minerals and logistics businesses, consistent with shareholder
value creation.
On March 31 an agreement was signed with Mitsui & Co. Ltd. for the purchase, for
US$ 426.4 million, of 50% of the common share capital and 40% of the preferred
share capital of Caemi Mineracao e Metalurgia S. A. (Caemi), the world's fourth
largest iron ore producer. This transaction is subject to approval by the
anti-trust authorities and once completed, CVRD will own all the common shares
in Caemi and 40% of the company's preferred shares, representing 60.2% of the
total capital.
CVRD completed the purchase of 5.17% of the total capital of CST for US$ 59.7
million. CVRD has the option, built into the contract, to divest from 2007. The
Board of Directors of CST has approved the construction of a third blast furnace
for its steel plant. The conclusion of this project, scheduled for March 2006,
will increase CVRD's sales of iron ore and pellets to CST by approximately 4
million tons a year.
CVRD and Nucor, the largest steelmaker in North America, have signed a contract
for the construction and operation of a pig iron plant in the north of Brazil,
with an initial production capacity of 380,000 tons a year. The plant will
utilize iron ore from Carajas and charcoal produced from eucalyptus trees
planted in the forests of Celmar, a wholly owned subsidiary of CVRD. Total
investment in this project will amount to US$ 80 million, with 78% of the
capital owned by CVRD and 22% by Nucor.
The creation of this joint venture is part of the Company's strategy of
increasing its penetration into the North American market, boosting the sales of
iron ore through the manufacture and sale of semi-finished iron and steel
products.
CVRD acquired Elkem Rana AS, a producer of alloys located in Mo I Rana in
Norway, for US$ 17.6 million. The plant, which previously produced ferro-
chrome alloys, is to be converted for the production of ferro-manganese alloys,
supplied by manganese ore produced from CVRD's mines in Brazil. The company,
which has been renamed Rio Doce Manganese Norway (RDMN), will increase CVRD's
presence in the global manganese and alloy markets, where it has already become
one of the market leaders. RDMN is scheduled to start ferro manganese alloys
production on 3Q03.
Finally, CVRD has signed a letter of intent to buy and sell various stakes in
the logistics companies - FCA, Sepetiba Tecon and CFN. These transactions, whose
finalisation is subject to various conditions, which include approval by the
regulatory authorities, will permit CVRD to increase its stake in FCA, a railway
that is important to its logistics operations, and divest itself of its stakes
in the marine terminal of Sepetiba Tecon and CFN, a railway line that passes
through several states in the northeast of Brazil. This move will free up
financial and human resources to enable the Company to focus on exploiting its
main logistics assets.
Completion of alumina capacity expansion project
Alunorte's third production line has begun operations which has brought the
company's alumina production capacity up to 2.4 million tons a year. A total of
approximately US$ 300 million was invested in the project, which corresponds to
a cost of US$ 364 per ton of capacity, an extremely competitive rate for a
brownfield project. With this extra capacity, Alunorte has now become one of the
five largest alumina refineries in the world.
4
US GAAP
1Q 03
CVRD's strategic focus for its businesses in the aluminium chain is the
exploitation of its competitive advantages in the areas of bauxite and alumina.
In a few weeks, MRN will commission its capacity expansion, from 11 to 16.3
million tons of bauxite per year. New projects, Paragominas - a bauxite
greenfield project- and Alunorte stages 4 and 5 - a brownfield project - will
start its development this year.
Board of Directors
At the Annual General Meeting held on 16 April 2003, CVRD's new Board of
Directors was elected, consisting of 11 members, with a mandate of two years.
[GRAPHIC APPEARS HERE] SHORT TERM OUTLOOK
In the first quarter of this year, the global economy grew slower than had been
predicted at the end of 2002. Despite the fact that part of this negative
performance was explained by the war in Iraq, the rapid end to the conflict did
not alter macro-economic fundamentals. There are still innumerable
uncertainties, including the question of the US economy's capacity to return to
faster and more vigorous economic growth, against a background of excess supply,
the threat of deflation in Germany, as well as the potential effects of
geopolitical tension and the SARS epidemic.
Despite this scenario, global steel output continued to grow at increasing
rates, with accumulated volume in the first three months of the year being 8.8%
higher yoy. Among the world's major producers, China registered the highest
increase with 18.1%, followed by Japan with 8.2%, the US 6.5 %, and Germany
6.1%, South Korea 3.0% and Brazil 6.9%.
In 1Q03 China imported 34.2 million tons of iron ore, which on an annualized
basis is 136.8 million tons, up 23% on that country's import total for 2002.
Japanese imports in the quarter amounted to 33.4 million tons in the first three
months of the year, up 8.7% compared to 1Q02.
Despite the fact that the main producers are operating at full capacity, the
strong growth in global steel production caused an excess level of demand in the
global seaborne iron ore trade, which is likely to extend into 2004.
The behaviour of freight shipping prices is usually a good indicator for the
iron ore market. Thus, for example at the end of 1998, the freight differential
between Brazil/Japan and Australia/Japan, according to data from Clarksons,
reached a 14-year low, at around US$ 1.60 per ton of iron ore. At that time, the
demand for iron ore was weak due to recessive effect of Southeast Asian
financial crisis, which resulted in an 11% drop in prices in 1999.
In 1989/1990 iron ore experienced double-digit price increases, exactly when the
freight price differential reached its peak in the last 14 years.
Between April 2002 and April 2003, freight prices rose by some US$ 8.0 per ton
for Brazil/Japan shipping freight, with the spread in relation to
Australia/Japan rising in the period from US$ 3.50 to US$ 7.50 per ton,
coinciding with strong expansion in demand for iron ore. Currently it is
estimated that demand in the global seaborne iron ore market for 2003 will total
510 million tons, which would present an increase of around 30 million tons,
compared to the amount shipped last year. But, probably, the supply of iron ore
will not be sufficient to fulfil this demand.
5
US GAAP
1Q 03
The alumina market has undergone a similar pattern to that of iron ore. The
strong increase in aluminium production in China and by other non-integrated
producers, provoked a significant rise in the spot price of alumina, which is
working its way through into contract prices. Similarly to the iron ore market,
we expect this situation to prevail during 2003 and 2004, due to the absence of
new projects in the market, with the exception of Stage 3 of Alunorte's
expansion plan, which is already in full operation. With this expansion, CVRD
will be in a better situation to benefit from the cyclical rise in alumina
prices.
In contrast to the alumina market, there are predictions of excess supply in the
global aluminium market for 2003 and 2004, where prices are likely to fall below
US$ 1,500 per ton.
The disparity in behaviour between the aluminium and alumina market is likely to
be corrected up to 2005. On the one hand, the expected recovery in global
industrial production growth will fuel demand for the metal and the consequent
consumption of existing inventories. On the other hand, the high level of
alumina prices and energy problems in the US Pacific Northwest will restrict
aluminium supply growth.
The significant growth in Brazilian agricultural production, with a record grain
crop, had a favourable impact on demand for potash and CVRD's logistics
services. For logistics, the most significant effect will be in the next two
quarters. Last year, CVRD transported 15% of Brazilian exports of soybeans and
soybean meal. The rise in Brazil's exports is also contributing favourably in
terms of greater demand for logistics services.
CVRD has been signing a number of contracts for the management of clients'
logistics. One example of this is a contract recently signed with Lafarge, a
world leading cement producer, for the logistics management of oil coke
purchases in the United States for the supply of its six factories in Brazil,
which will involve the chartering of the Company's shipping fleet, port
operations at the Praia Mole terminal, rail transport on the Vitoria to Minas
and FCA railroads, road transport by truck and unloading operations at the final
destination.
It should be pointed out that, despite the SARS epidemic, up to now there has
been no sign of any slowdown in Chinese demand for iron ore and alumina.
Nonetheless, CVRD is taking a cautious stance, because in addition to other
sources of uncertainty hovering over the global economy, it is practically
impossible to anticipate the effective impact of this epidemic on China's
macro-economic performance and that of other Asian countries and its
implications on the demand for minerals and metals. In the case of iron ore, an
unexpected slowdown in demand could be, at least partially, absorbed by cutting
purchases from third parties.
The appreciation of the Real (BRL) against the US dollar (USD) has a moderately
negative effect on the Company's cash generation in USD. However, to the extent
that the appreciation of the BRL is being matched by improved perception of
Brazil risk with narrower sovereign debt spreads to US Treasuries, the
counterparty to this is a reduction in the cost of capital for CVRD.
[GRAPHIC APPEARS HERE] SALES VOLUME AND REVENUES
6
US GAAP
1Q 03
Shipments of iron ore and pellets in 1Q03 amounted to 42.519 million tons, up
15.8% in relation to 1Q02 and down 3.3% compared to the volume recorded in 4Q02.
Sales of iron ore amounted to 36.380 million tons and sales of pellets, 6.139
million tons.
CVRD continues to operate at full capacity and the reduction in the volume
shipped in 1Q03 compared to the previous quarter is explained by two factors:
(a) seasonality, statistically the first quarter is the weakest of the year and;
(b) the first few months of the year saw heavy rainfall which caused operational
problems at the Gongo Soco mine and iron ore transportation difficulties.
The Company regularly buys small quantities of iron ore from other mining
companies to mix with its products, with a view to meeting particular client
specifications. The strong increase in such purchases that has taken place
recently is due to higher than expected demand growth.
In the case of pellets, there is a different scenario. Regularly, CVRD sells
about 20 million tons of pellet feed per year to its pelletizing joint ventures
(Nibrasco, Itabrasco, Hispanobras and Kobrasco) and buys from them about 10
million tons of pellets to resell to its clients. Such purchases replaced the
tolling mechanism, used until 1999. Under this mechanism, the Company used to
send pellet feed to the joint ventures to be transformed into pellets. The
pellets were sent back to CVRD in order to be shipped to clients. CVRD paid a
fee to the joint ventures for their services.
The purchase of iron ore from third parties, carried out to meet client
commitments, contributed to reduce margins to the extent that this is a more
expensive alternative than to sell our own iron ore. On the other hand, it
implies an increased return on capital invested, through expansion of cash
generation without increasing the asset base. These purchases act like a
cushion. In moments of demand pressure, purchases can be increased. And on the
other hand, in the event of demand contraction, they can be cut substantially.
The acquisition of pellets from the joint ventures do not put pressure on
margins, as we exchanged the cost of a tolling fee by the cost of pellets
acquisition and a sales revenue. CVRD profits when it sells pellet feed to these
companies and on the returns generated by being a shareholder in the pellet
making business. For instance, in 2002 CVRD received US$ 8 million as dividends,
US$ 36 million in operation fees and equity income of US$ 12 million.
China, with 5.4 million tons, was CVRD's Parent Company principal export market
for iron ore and pellets in 1Q03, up 38.5% on the previous quarter and 22.7% in
relation to 1Q02. Thus, the Parent Company maintained a 16% market share of
China's total imports.
VOLUME SOLD OF IRON ORE AND PELLETS
'000 tons
1Q 02 % 4Q 02 % 1Q 03 %
------ ----- ------ ------- ------ ---------
Iron Ore 32,822 89.4% 37,358 85.0% 36,380 85.6%
Pellets 3,894 10.6% 6,602 15.0% 6,139 14.4%
Total 36,716 100.0% 43,960 100.0% 42,519 100.0%
Sales of manganese ore, of 229,000 tons, were up 9.6% on 1Q02 and 86.2% compared
to 4Q02, while ferro-alloy sales amounted to 140,000 tons in 1Q03 compared to
100,000 in 1Q02 and 153,000 in 4Q02.
7
US GAAP
1Q 03
Alumina shipments totalled 546,000 tons, exceeding the volume shipped in 4Q02 of
502,000 tons. CVRD has been seeking to exploit the Chinese market in a more
efficient way, carrying out swaps with other producers that own smelters in the
Americas and alumina refineries in Australia, minimizing the cost of shipping
freight for the importer. Sales of primary aluminium were almost the same as in
4Q02, around 49,000 tons, compared to 43,000 tons in 1Q02.
Sales of potash amounted to 158,000 tons, with the mine at Taquari - Vassouras
operating at above nominal capacity of 600,000 tons a year. This volume was
39.8% higher than in 1Q02, but lower than the 203,000 tons sold in 4Q02, when
previous accumulated stocks were drawn down. Thus, estimated sales for 2003 are
for 620,000 tons, limited by current production capacity. The project to enlarge
capacity to 850,000 tons a year will be completed by mid - 2005.
Sales of gold amounted to 25,800 ounces in 1Q03 compared to 40,600 ounces in
4Q02 and 115,500 ounces in 1Q02. The drop in sales reflects the closure of the
Igarape Bahia gold mine, in June 2002 and the drop in production from our last
mining operation, Fazenda Brasileiro, which is nearing exhaustion and likely to
see closure in December 2004. Estimated gold production for 2003 is only 112,000
ounces. After the exhaustion of the Fazenda Brasileiro mining, CVRD's gold
production will be in the form of a copper by-product, whose production is
scheduled for mid-2004, with the commissioning of the Sossego mine. In addition
to this, CVRD continues to invest in mineral exploration in search of other gold
deposits.
Kaolin sales increased as a result of marketing efforts by the Company to
strengthen the business in this industrial mineral. Thus the volume sold in 1Q03
amounted to 108,000 tons, compared to 95,000 in 4Q02 and 63,000 in 1Q02.
VOLUME SOLD
'000 tons
1Q02 4Q02 1Q03
------- ------ ------
Gold (ounces) 115,455 40,639 25,753
Manganese 209 123 229
Ferro-alloys 100 153 141
Alumina 33 502 546
Aluminium 43 51 49
Bauxite 140 180 189
Potash 113 203 158
Kaolin 63 95 108
General cargo (other than iron ore and pellets) transported by the Company's
railways, measured in net ton kilometers (ntk), totalled 3.4 billion (Vitoria to
Minas 2.7 billion, Carajas 662 million). Performance was slightly worse than the
previous quarter, which recorded 3.8 billion ntk, and the same as in 1Q02. The
performance of general freight railroad transport was lower than planned due to
delays in receiving locomotives already ordered.
General cargo handled in CVRD's ports and terminals, of 5.888 million tons, was
up 22.1% in relation to 1Q02 and 1.9% lower than in 4Q02.
Part of the general cargo transported is as a result of logistic management
contracts signed with CVRD for clients in the agricultural and construction
segments.
The Vitoria to Minas Railway, the Parent Company's main railway for the
transport of general cargo, continued to report gains in productivity, expressed
8
US GAAP
1Q 03
by the continuous rise in million ntks, per locomotive in service, per day: 0.74
in 1Q02, 0.82 in 2Q02, 0.83 in 3Q02, 0.83 in 4Q02 and 0.90 in 1Q03. Fuel
consumption remained constant compared to previous quarters, at about 300 ntks
per liter.
The Carajas Railway set a new world record in MKBF terms (mean kilometers
between failure), reaching 10,000,616 kilometers of travel between failure,
beating the previous record of 9,300,000 MKBF registered in Australia. MKBF is
the international reliability measure for railways, indicating the average
amount of kilometers travelled between failure, considered to be the undesired
total stoppage of a given train. The record achieved is another indicator of the
world-class quality of CVRD's railway network.
SALES VOLUME - LOGISTICS SERVICES
'000 tons
1Q 02 4Q 02 1Q 03
------- ------ ------
Railways ( million ntk) 3,401 3,787 3,389
Ports 4,822 6,003 5,888
Gross revenues in the first three months of the year amounted to US$ 1.153
billion, up 16.8% in relation to 1Q02 and up 4.7% compared to 4Q02.
Revenues obtained from the sales of iron ore amounted to US$ 549 million, 47.6%
of total revenue, higher than the figure in 1Q02 of US$ 530 million, and sales
in 4Q02 of US$ 528 million. Pellets sales generated US$ 189 million in 1Q03
compared to US$ 127 million in 1Q02 and US$ 200 million in 4Q02.
The average sales price of iron ore in 1Q03 was US$ 15.09 per ton while pellet
price was US$ 30.77.
Operation services for the five pellet plants at Tubarao owned by the joint
ventures contributed approximately US$ 9 million to revenues in the quarter.
Shipments of manganese and ferro-alloys generated revenues of US$ 75 million in
1Q03, compared to US$ 73 million in 1Q02 and US$ 66 million in 4Q02.
Sales of products in the aluminium chain, bauxite, alumina and primary aluminium
produced revenues of US$ 167 million in 1Q03, up 11.3% in relation to 4Q02 and
up 145.6% in relation to 1Q02. It is important to mention that the consolidation
of Alunorte, an alumina refinery, into the US GAAP financial statements, took
place from 3Q02, which has caused a distortion in the comparison of the sales of
these products in previous quarters.
The average aluminum sales price in 1Q03 was US$ 1,374.50 per ton, alumina US$
172.34 and bauxite US$ 23.09.
Logistics services contributed with US$ 115 million to gross revenues in 1Q03,
up 3.6% on 1Q02 and up 17.3% on 4Q02.
Sales revenue from the domestic market amounted to US$ 356 million, representing
30.9% of the Company's total revenues in 1Q03. Sales to Europe amounted to US$
378 million, representing 32.8% of total revenues, and sales to Asia, US$ 235
million, 20.4% of the total.
9
US GAAP
1Q 03
GROSS REVENUES BY PRODUCT
million US$
1Q 02 4Q 02 1Q 03
------- ---------- -----------
Iron Ore 530 528 549
Pellet Plant Operation Services 9 9 8
Pellets 127 200 189
Gold 34 13 9
Logistics Services 111 98 115
Aluminium, Alumina and Bauxite 68 150 167
Manganese and Ferro-alloys 73 66 75
Potash 16 24 21
Kaolin 11 12 16
Others 8 1 4
Total 987 1,101 1,153
GROSS REVENUES BY DESTINATION
million US$
1Q 02 4Q 02 1Q 03
------- ---------- -----------
Domestic Market 293 335 356
Export Market 694 766 797
USA 65 33 57
Europe 342 387 378
Japan 62 79 86
Emerging Asia 135 141 149
Rest of World 90 126 127
Total 987 1,101 1,153
[GRAPHIC APPEARS HERE] NET EARNINGS OF US$ 354 MILLION
1Q03 net earnings of US$ 354 million increased 28.7% yoy. However, it was US$
215 million lower than 4Q02 earnings. The main reason for the decrease was the
reduction of US$ 207 million in monetary variation, determined by the smaller
USD depreciation in this quarter, 5.1%, against 9.3% in 4Q02.
This reflects the impact of the BRL/USD volatility on CVRD's net foreign
currency-denominated liabilities, which in the short term tends to exercise a
significant influence on earnings performance. In 4Q02, monetary variation
contributed US$ 257 million to earnings, compared to only US$50 million in 1Q03.
Cost of goods sold (COGS), of US$ 641.3 million, was US$ 52 million higher than
in 4Q02. The COGS increase is explained by: (a) a US$ 25 million rise in
outsourced services, caused by the BRL appreciation and by Ferteco's increased
expenses; (b) a US$ 28.6 million increase in expenditures with acquisition of
products from third parties (iron ore, pellets, bauxite, alumina and aluminum);
(c) a US$ 9.2 million increase in expenses with material, influenced by higher
fuel costs.
10
US GAAP
1Q 03
COGS COMPOSITION
million US$
1Q 02 4Q 02 1Q 03
------- ---------- -----------
Personnel 58 50 54
Material 102 145 154
Outsourced Services 83 56 81
Acquisition of Iron Ore and Pellets 85 98 120
Acquisition of Other Products 93 128 135
Depreciation and Depletion 65 42 41
Electric Energy 20 20 21
Others 35 50 35
Total 541 589 641
Financial expenses increased US$ 34 million and financial income decreased US$
12 million, contributing for the qoq earnings decrease. The main source of
financial expenses increase was a US$ 8 million provision for losses with
interest rate derivatives against a US$ 18 million gain in 4Q02. US$ 2.4
million, correspondent to the monetary correction of a provision for asset
retirement (SFAS 143) was accrued as financial expense.
Equity income declined US$ 27 million mainly due to the reduction of aluminum
area affiliates results (MRN, Albras and Valesul) of US$ 34 million.
RESULT FROM SHAREHOLDINGS
US$ million
1Q 02 4Q 02 1Q 03
------- ---------- -----------
Steel (5) 15 19
Aluminum, Alumina and Bauxite 25 82 48
Logistics (4) (5) (11)
Pellets 15 39 26
Iron Ore 1 (13) 5
Others 2 3 7
Total 34 121 94
A US$ 10.4 million provision for asset retirement (SFAS 143) contributed to
reduce net earnings.
On the positive side, we saw an increase of US$ 51 million in net operating
revenue and a reduction of US$ 15 million in minority interest.
[GRAPHIC APPEARS HERE] SFAS 143
From January 1, 2003, the Company started to conform to SFAS 143, "Accounting
for Asset Retirement Obligations", a standard issue by the FASB which deals with
the accounting procedures concerning the making of provisions for asset
retirement obligations. SFAS 143 establishes that the expenses incurred after
the closure of mines must be measured in advance and recognised in the financial
statements.
We have carried out a detailed analysis of the useful life of our assets and
have produced estimates of the expenses which will be needed to restore the
11
US GAAP
1Q 03
environment surrounding those mines expected to reach exhaustion in the next 20
years. The figures obtained were discounted at a rate of 10.26% per year, and
the provisions in BRL have been corrected by the IGPM (general market price
index) published by the Fundacao Getulio Vargas. This procedure was based on the
yield of National Treasury Notes series C (NTN - C), securities issued by the
Brazilian National Treasury, which fall due in 2021, established at an auction
held on 28 March 2003. NTN-C's principal is corrected by variation in the IGPM.
Taking a base date of December 31, 2002, a provision of US$ 26.8 million was
made, of which US$ 15.7 million was immediately amortized, as it refers to the
portion in the past. Of the total, US$ 10.4 million had a negative impact on
CVRD's 1Q03 results, registered under the heading "changes in accounting
practices for asset retirement obligations". The other US$ 5.3 million is
accounted for as an asset under the item "deferred income tax".
On March 31, 2003, the amount of the provision was corrected by the variation in
the IGPM in the quarter, so increasing the figure to US$ 30.7 million. A
financial expense of US$ 2.4 million was booked, which corresponded to the
updating of the provision figure, and amortization of the provision, relative to
1Q03, of US$ 360,000.00, will have an impact on COGS.
In this way, the adjustments as a result of adopting SFAS 143 standards produced
a negative effect on the Company's result of US$ 13.1 million. In the next few
months, provision amortization and correction according to the IGPM will
continue to cause a negative effect on CVRD's result.
[GRAPHIC APPEARS HERE] EBITDA AND FREE CASH FLOW
The methodology used for the calculation of EBITDA has been changed, being now
adjusted for non-recurring factors, considered as extraordinary events which do
not alter the trend of this variable over time. Until 4Q02 the Company carried
out the practice of adjusting EBITDA for non-cash items, which is to say items
which did not involve cash disbursement in the quarter.
EBITDA generated in 1Q03 amounted to US$ 442 million, there having been no
adjustment made for non-recurring factors. Dividends received from affiliates
and joint ventures amounted to US$ 36 million. Samarco paid US$ 14 million, GIIC
US$ 5 million, MRN US$ 5 million, CST US$ 5 million, Fosfertil US$ 5 million and
Hispanobras US$ 2 million.
The increase of US$ 4 million in EBITDA in 1Q03, compared to the previous
quarter, was the result of the growth of US$ 51 million in net operating
revenues and US$ 17 million in dividends received, less US$ 18 million in other
operation expenses. COGS in 1Q03 increased by US$ 52 million and in 4Q02 there
was an asset impairment of US$ 35 million, referring to the provision for the
closure of the Fazenda Brasileiro gold mine .
With the change in criteria for the calculation of EBITDA, the figure for 2002
is US$ 1.780 billion.
Ferrous mineral businesses produced EBITDA of US$ 357 million in 1Q03,
representing 80.8% of the Company's EBITDA, which is practically the same as the
figure in 4Q02 of US$ 358 million, and 8.2% higher than in 1Q02. Logistics
services contributed US$ 38 million, 8.6% of the total, and the aluminium
businesses with US$ 32 million, 7.2% of the total.
12
US GAAP
1Q 03
EBITDA generated by the aluminium business is relatively small because Albras, a
producer of primary aluminum, and whose annual cash generation exceeds US$ 230
million, is not consolidated in the US GAAP financial statements. CVRD buys
primary aluminium from Albras at market prices and at a volume in proportion to
its 51% stake in the company, according to the terms of its "take or pay"
agreement, to resell it. CVRD benefits directly from its investment in Albras
through equity income. The EBITDA originated from the aluminum business tends to
grow in line with the expansion of alumina production capacity.
Free cash flow, as defined by cash flow from operating activities less for cash
flow used for investment activities, amounted to US$ 168 million in 1Q03,
compared to US$ 140 million in 1Q02 and US$ 144 million in 4Q02. A quarterly
cash flow statement is shown at the end of this document.
The following table presents the computation of EBITDA according to the new
methodology described on item "Changes in Procedures" and which is being adopted
by the Company.
QUARTERLY EBITDA - NEW METHODOLOGY
million US$
lQ02 2Q02 3Q02 4Q02 1Q03
---- ----- ----- ----- -----------
Net Operating Revenues 953 1,027 1,084 1,059 1,110
COGS (540) (594) (540) (589) (641)
Sales, General and Administrative Expenses (48) (60) (65) (51) (49)
Research and Development (9) (12) (15) (14) (11)
Other Operational Expenses (61) (27) (5) (64) (46)
EBIT (Operating Income) 295 334 459 341 363
Depreciation, Amortization and Depletion 66 61 44 43 43
Dividends received 25 30 17 19 36
Asset Impairment 11 - - 35 -
Adjustment for non-recurring items - - - - -
EBITDA Adjusted 397 425 520 438 442
EBITDA BY BUSINESS AREA
million US$
lQ02 2Q02 3Q02 4Q02 1Q03
---- ----- ----- ----- -----------
Ferrous 330 360 359 358 357
Non-ferrous 12 22 26 5 9
Logistics 35 37 34 44 38
Aluminium 18 6 43 25 32
Others 2 0 58 6 6
Total 397 425 520 438 442
QUARTERLY EBITDA - PREVIOUS METHODOLOGY
million US$
lQ02 2Q02 3Q02 4Q02 1Q03
---- ----- ----- ----- -----------
EBITDA 444 456 483 406 451
13
[GRAPHIC APPEARS HERE] DEBT
The Company's total debt as of March 31, 2003 amounted to US$ 3.314 billion,
slightly lower than the figure at the end of 2002, of US$ 3.331 billion. Net
debt also decreased, dropping from US$ 2.24 billion as of December 31, 2002 to
US$ 2.03 billion the end of the first quarter.
Total debt was the equivalent of 1.82 times EBITDA accumulated in the period
between April 2002 and March 2003 and 24.3% of CVRD's total asset value
(enterprise value). The EBITDA/interest coverage ratio in the quarter was 9
times.
The Company's debt for the most part is denominated in USD (93%), while the
remaining 7 % refers to debt in JPY, Euros and BRL.
The interest figures used here only include that portion of financial expenses
related to the Company's debt, as shown in the table below :
FINANCIAL EXPENSES
million US$
4Q02 1Q03
----- -----------
Financial Expenses from:
Local Debt (7) (5)
External Debt (41) (39)
Related Parties Debt (7) (5)
Total Financial Expenses (55) (49)
Gross Interest from:
Tax and the Labor Contingencies (5) (6)
Tax on Financial Transactions CPMF (5) (4)
Derivatives 18 (8)
Others (1) (15)
Total (48) (82)
Guarantees granted to affiliates and joint ventures amounted to US$ 499 million,
down from the figure at the end of the previous quarter of US$ 516 million.
In the first quarter of 2003, CVRD contracted a loan from Japan Bank for
International Cooperation (JBIC) of US$ 300 million, with a 10 year tenor and a
total cost of Libor plus 1.8% per year. This loan refers to the financing of
investment in logistics for the iron ore business.
DEBT INDICATORS
million US$
1Q02 4Q02 1Q03
----- ----- -----------
Gross Debt 3,935 3,331 3,314
Net Debt 1,927 2,240 2,030
Gross Debt / LTM EBITDA (x) 2.28 1.87 1.82
EBITDA / Interest expenses (x) 7.22 7.96 9.02
Gross Debt / Total Assets (x) 0.27 0.23 0.24
14
[GRAPHIC APPEARS HERE] CAPEX
The investment data are reported on a "non-GAAP" basis. They are different from
the values found in the Company's cash flow statement, as net cash from
investment activities of US$ 188 million in 1Q03.
Capital expenditure in the first quarter of 2003 totalled US$ 240.3 million, US$
17.6 million of which referred to acquisitions. The amount spent on projects was
US$ 142.6 million, 59.3% of the total investment.
Expenditure on iron ore projects amounted to US$ 24.8 million, non-ferrous
mineral projects US$ 48.1 million, aluminium US$ 32.1 million, logistics US$
21.2 million, and power generation, US$ 16.4 million.
The main projects under way are:
Area Project Capex 1Q03 Status
---------------- ---------------------- --------------- -------------------------------------------------------
Ferrous Minerals Enlarging iron ore US$ 6.1 million Completion scheduled for 2005. Project
production capacity implementation is proceeding according to schedule.
in the Northern System Once expansion is complete, production capacity will
increase by 14 million tons a year. Project capital
expenditure is estimated at US$ 144.4 million.
Ferrous Minerals Pier III of the Ponta US$ 2.1 million Completion expected for January 2004. 75% of total
da Madeira Maritime project investment, estimated at US$ 33.3 million, has
Terminal already been completed. Project implementation is
proceeding according to schedule. The new pier will
have a loading capacity of 18 million tons a year,
enlarging the capacity of TMPM to 74 million tons a
year.
Ferrous Minerals Brucutu Mine US$ 3.5 million Completion scheduled for 2008, when the mine will have
production capacity of 12 million tons a year. 1.5% of
the investment has already been made and works are
proceeding according to schedule. Total investment is
estimated at US$ 219.9 million, of which US$ 19.7
million is programmed for 2003.
Ferrous Minerals Fabrica Nova Mine US$ 637,000 Completion estimated for 2005. 1% of the investment
has already been made, refer to landscaping and
earthworks. The Fabrica Nova mine is likely to have a
capacity of 10 million tons a year are by 2005,
reaching 15 million by 2009. Total capital expenditure
is budgeted at US$ 84.4 million, with programmed
spending of US$ 39.6 million for 2003. Works are
proceeding on schedule.
Non-ferrous Sossego Mine US$ 40.5 million Completion estimated for first half 2004. 32.1% of the
Minerals total investment in the project has already been made,
58.4% of the undertaking having been completed. Total
capital expenditure is US$ 383 million, of which US$
253 million is programmed for 2003. The first tests
should begin in June 2003. The project is slightly
ahead of schedule.
Non-ferrous Expansion of US$ 4.0 million Completion estimated for first half 2005. 16% of the
Minerals Taquari -Vassouras investment total of US$ 67 million budgeted for the
Potassium Mine project, has only been carried out. The project is on
schedule. The mine's capacity will be enlarged from
600,000 tons to 850,000 tons a year.
Aluminum Alunorte Stage 3 US$ 32.1 million Project concluded on 1Q03. Stage 3 has a capacity of
825,000 tonnes of alumina per year. Capex = US$ 300
million.
Logistics Purchase of US$ 18.9 million Purchase of 2,782 railcars and 105 locomotives by the
locomotives and end of 2003. 7.5% of total investment (estimated at
railcars US$ 245.6 million) has been realised. Part of equipment
bought will be used for general freight, and part for
iron ore.
Logistics Praia Mole Terminal US$ 707,000 Completion of first phase estimated for 2003, with
(Phases I & II) second phase completion in 2004. Of a total estimated
project investment of US$ 22.6 million, 54% has been
carried out.
Power Generation Aimores US$ 6.4 million Completion estimated for December 2003. 78% of a total
Hydroelectric Power estimated investment of US$94.6 million has already
Plant been completed. The project is proceeding according to
schedule.
Power Generation Candonga US$ 6.7 million Completion estimated for November 2003. 75% of the
Hydroelectric Power investment of US$ 40.9 million has already been made.
Plant Implementation of the project is on schedule.
15
Expenditure on information technology amounted to US$ 12.4 million, of which US$
7 million was spent on the initial installation of an Enterprise Resource
Planning (ERP) system. The ERP system is likely to enter into service by the end
of 2004, allowing greater integration between the areas of the Company and the
rapid retrieval of information, helping to further improve the quality of
management.
The Company is implementing Hyperion, a consolidated accounting system which
will further increase the transparency of financial information to the market,
widening the scope of information and making it available more quickly. With the
help of Hyperion it will be possible to publish consolidated quarterly financial
statements, in accordance with Brazilian GAAP accounting procedures, from 3Q03.
US$ 31.1 million was invested in the maintenance and modernization of equipment
and on environmental protection.
A total of US$ 27.6 million in capital was injected into subsidiaries and
affiliates (Celmar and FCA) for financial restructuring.
Mineracao Rio do Norte (MRN), an affiliate of CVRD, carried out capital
expenditure of US$ 10 million in 1Q03, US$ 8 million of which was spent on the
project to expand capacity from 11 million tons to 16.3 million tons of bauxite
per year. This project is in the completion phase and should be commissioned in
the next few weeks. This amount does not form part of the total invested by the
Company under the US GAAP criteria presented here.
Mineral Exploration and Technological Development
Investment in mineral exploration and technological development amounted to US$
9.0 million, of which US$ 2.9 million referred to prospecting for copper and
gold deposits.
The Carajas region remained as the focus for mineral prospecting activities in
1Q03, with development work aimed at identifying deposits of copper, gold,
nickel and platinum group metals, and preparations made for the carrying out of
pre-feasibility studies for various areas containing copper and nickel.
Targeting campaigns will begin in May.
In the rest of Brazil, prospecting programs continued for copper, gold, nickel,
platinum group metals, bauxite and kaolin in the states of Para, Rondonia,
Maranhao, Piaui, Mato Grosso, Goias and Minas Gerais.
In Peru, in the form of a joint venture with Antofagasta Minerals, areas with
potential have been identified, which will be subject to seismic investigation
in the next few months. Compania Minera Latino Americana, a wholly owned
subsidiary of CVRD, has been carrying out mineral prospecting in Chile.
CVRD has started to use QemSCAN technology, a state-of-the-art system for
mineralogical and metallurgical analysis which allows rapid identification of
ores and improves the efficiency of mining operations. The system involves the
use of a Multi-element Scanning Electron Microscope which will be used to
characterize minerals and optimize processes in the base metal and precious
metal areas.The mineral exploration budget for 2003 amounts to US$ 71.7 million,
of which US$ 5.2 million will be invested in technological development.
16
US GAAP
1Q 03
CAPEX - 1Q 03
-----------------------------------------------------------------------------------------------
By business area US$ million % By category US$ million %
-------------------- ----------- ------ ------------------------ ----------- ------
Ferrous Minerals 67.4 28.0% Capital injections 27.6 11.5%
Logistics 48.7 20.3% Maintenance 31.1 13.0%
Environment
Non-ferrous Minerals 56.2 23.4% Projects 142.6 59.3%
Aluminium 33.2 13.8% Mineral Exploration and 9.0 3.7%
Technological Research
Power Generation 16.4 6.8% Information Technology 12.4 5.2%
Others 18.4 7.6% Acquisitions 17.6 7.3%
----------- ------ ------------------------ ----------- ------
Total 240.3 100% Total 240.3 100%
=========== ====== ======================== =========== ======
17
US GAAP
1Q 03
FINANCIAL STATEMENTS
million US$
-------------------------------------------------------------------------------------------------------------------
1Q 02 2Q 02 3Q 02 4Q 02 1Q 03
----------- ----------- ----------- ----------- -----------
Gross operating revenues 987 1,071 1,123 1,101 1,153
Taxes (34) (44) (39) (42) (43)
Net Operating Revenue 953 1,027 1,084 1,059 1,110
Cost of Goods Sold (540) (594) (540) (589) (641)
Gross Profit 413 433 544 470 469
Gross Margin (%) 43.3 42.2 50.2 44.4 42.3
Sales, General and Administrative Expenses (48) (60) (65) (51) (49)
Research and Development Expenses (9) (12) (15) (14) (11)
Employee Profit-Sharing (9) 3 (14) (18) (12)
Others (52) (30) 9 (46) (34)
Operating Profit 295 334 459 341 363
Financial Revenues 33 44 10 40 28
Financial Expenses (62) (117) (148) (48) (82)
Monetary Variation (5) (326) (506) 257 50
Tax and Social Contribution (Current) (7) 3 - (8) -
Tax and Social Contribution (Deferred) (12) 126 148 (101) (71)
Equity Income 34 (82) (160) 121 94
Accounting Changes for Asset Write-offs - (10)
Minority Shareholding Participation (1) 4 47 (33) (18)
Net Earnings 275 (14) (150) 569 354
Earnings per Share (US$) 0.72 (0.04) (0.39) 1.48 0.92
ASSET BALANCE SHEET
million US$
---------------------------------------------------------------------------------------
1Q 02 4Q 02 1Q 03
----------- ----------- -----------
Assets
Current 3,566 2,589 2,696
Long-term 1,820 1,337 1,407
Fixed 5,100 4,029 4,485
Total 10,486 7,955 8,588
Liabilities
Current 2,364 1,508 1,638
Long Term 3,345 3,160 3,310
Shareholders' Equity 4,777 3,287 3,640
Paid-up Capital 2,709 2,944 2,944
Reserves 2,068 343 696
Total 10,486 7,955 8,588
18
US GAAP
1Q 03
CONSOLIDATED STATEMENTS OF CASH FLOW
US$ million
---------------------------------------------------------------------------------------------------------------------------
1Q 02 1Q 03 4Q 02
---------- ---------- ----------
Cash flows from operating activities:
Net income 569 275 354
Adjustments to reconcile net income with cash provided by operating activities:
Depreciation, depletion and amortization 43 66 43
Dividends received 19 25 36
Equity in results of affiliates and joint ventures and change in provision (121) (34) (94)
for losses on equity investments
Deferred income taxes 101 12 71
Provisions for contingencies (1) 23 (2)
Impairment of property, plant and equipment 35 27 0
Gain in accounting pratice for asset retirement obligations 0 0 10
Pension plan 3 3 3
Foreign exchange and monetary losses (310) (1) (142)
Net unrealized derivative losses 9 6 3
Others (26) (4) 35
Decrease (increase) in assets:
Accounts receivable 3 (66) 64
Inventories (26) 1 24
Others (21) 9 (7)
Increase (decrease) in liabilities:
Suppliers 125 (9) (93)
Payroll and related charges 1 (2) (6)
Others 55 (16) 57
Net cash provided by operating activities 458 315 356
Cash flows from investing activities:
Loans and advances receivable (41) (19) 22
Guarantees and deposits (17) (10) (12)
Additions to investments 0 (1) 0
Additions to property, plant and equipment (258) (145) (198)
Proceeds from disposals of property, plant and equipment 2 0 0
Net cash used in investing activities (314) (175) (188)
Cash flows from financing activities:
Short-term debt, net issuances (repayments) (202) 377 (93)
Loans
Additions 22 12 0
Repayments (46) (15) (16)
Long-term debt
Related parties 6 10 2
Others 37 442 177
Repayments of long-term debt
Related parties 0 (15) 0
Others (85) (61) (101)
Interest attributed to stockholders (273) 0 0
Net cash used in financing activities (541) 750 (31)
Increase (decrease) in cash and cash equivalents (397) 890 137
Effect of exchange rate changes on cash and cash equivalents 86 1 56
Cash and cash equivalents, beginning of period 1402 1117 1091
Cash and cash equivalents, end of period 1,091 2,008 1,284
Cash paid during the period for:
Interest on short-term debt (15) (6) (6)
Interest on long-term debt, net of interest capitalized of $5 in (31) (35) (49)
2003 and $5 in 2002
Income tax (8) 0 0
Non-cash transactions
Conversion of loans receivable to investments 15 20 11
19
US GAAP
1Q 03
IRON ORE AND PELLETS - FINANCIAL INDICATIORS - UNAUDITED
million US$
---------------------------------------------------------------------------------------
HISPANOBRAS 1Q 02 4Q 02 1Q 03
----------- ----------- -----------
Volume Sold ('000 tons) 907 1,139 905
Export Markets 487 313 268
Domestic Market 420 826 637
Average Price (US$/ton) 31.38 25.80 29.75
Operating Profit 4 1 3
Net Financial Result - - (1)
Net Earnings 2 1 1
EBITDA 5 2 3
NIBRASCO 1Q 02 4Q 02 1Q 03
----------- ----------- -----------
Volume Sold ('000 tons) 1,000 2,116 1,800
Export Markets 407 783 469
Domestic Market 593 1,333 1,331
Average Price (US$/ton) 30.39 28.52 27.75
Operating Profit - 6 2
Net Financial Result (1) - -
Net Earnings (1) 4 1
EBITDA 1 7 3
Total Debt
- Short Term 2 2 2
- Long Term 4 1 1
Total 6 3 3
ITABRASCO 1Q 02 4Q 02 1Q 03
----------- ----------- -----------
Volume Sold ('000 tons) 877 913 813
Export Markets 644 431 306
Domestic Market 233 482 507
Average Price (US$/ton) 31.35 30.18 29.54
Operating Profit 2 3 2
Net Financial Result - (2) (1)
Net Earnings 1 2 1
EBITDA 2 3 2
Total Debt
- Short Term - - -
- Long Term 18 - 5
Total 18 - 5
20
US GAAP
1Q 03
IRON ORE AND PELLETS - FINANCIAL INDICATIORS - UNAUDITED
million US$
---------------------------------------------------------------------------------------
KOBRASCO 1Q 02 4Q 02 1Q 03
--------- ----------- ----------- -----------
Volume Sold ('000 tons) 856 1,316 1,134
Export Markets 436 1,074 453
Domestic Market 420 242 681
Average Price (US$/ton) 31.69 29.97 30.39
Operating Profit 6 4 5
Net Financial Result (2) 15 5
Net Earnings 3 12 6
EBITDA 7 5 6
Total Debt
- Short Term - - -
- Long Term 150 114 124
Total 150 114 124
SAMARCO 1Q 02 4Q 02 1Q 03
--------- ----------- ----------- -----------
Sales to External Markets ('000 tons) 3,301 3,834 3,988
Average Price (US$/ton) 28.48 29.22 27.59
Operating Profit 32 61 51
Net Financial Result (6) 12 -
Net Earnings 22 70 38
EBITDA 38 65 61
Total Debt
- Short Term 169 142 123
- Long Term 93 67 56
Total 262 209 179
21
US GAAP
1Q 03
IRON ORE AND PELLETS - FINANCIAL INDICATIORS - UNAUDITED
million US$
---------------------------------------------------------------------------------------
FERTECO 1Q 02 4Q 02 1Q 03
------- ----------- ----------- -----------
Volume Sold Iron Ore ('000 tons) 2,532 3,288 4,879
External Markets 2,020 2,142 3,503
Domestic Market 512 1,146 1,376
Average Price (US$/ton) 14.59 14.86 13.87
Volume Sold Pellet ('000 tons) 725 1.342 856
External Markets 448 645 358
Domestic Market 277 697 498
Average Price (US$/ton) 26.63 24.06 29.62
Operating Profit 18 16 35
Net Financial Result (2) 4 (3)
Net Earnings 12 15 23
EBITDA 22 18 38
Total Debt
- Short Term 55 23 10
- Long Term 94 82 82
Total 149 105 92
'000 US$
---------------------------------------------------------------------------------------
GIIC* 1Q 02 4Q 02 1Q 03
---- ----------- ----------- -----------
Volume Sold ('000 tons) 823 932 772
External Markets 823 932 772
Domestic Market - - -
Average Price (US$/ton) 41.76 40.40 41.00
Operating Profit 4 4 4
Net Financial Result - (1) -
Net Earnings 4 3 4
EBITDA 5 6 5
*Financial indicators calculated according to standards set down by the
International Accounting Standards Committee
22
US GAAP
1Q 03
MANGANESE AND FERRO ALLOYS - FINANCIAL INDICATORS - UNAUDITED
million US$
---------------------------------------------------------------------------------------
SIBRA (Consolidated) 1Q 02 4Q 02 1Q03
-------------------- ----------- ----------- -----------
Volume Sold Alloys ('000 tons) 60 85 67
External Markets 23 35 30
Domestic Market 37 50 37
Average Price (US$/ton) 521.43 425.73 530.70
Volume Sold Manganese ('000 tons) 258 282 279
External Markets 243 192 185
Domestic Market 15 90 94
Average Price (US$/ton) 53.40 45.86 40.34
Operating Profit 16 6 10
Net Financial Result - (11) (3)
Net Earnings 16 (5) 5
EBITDA 17 8 12
Total Debt
- Short Term 30 36 37
- Long Term 21 22 20
Total 51 58 57
23
US GAAP
1Q 03
ALUMINIUM - FINANCIAL INDICATORS - ADJUSTED AND UNAUDITED
million US$
---------------------------------------------------------------------------------------
MRN 1Q 02 4Q 02 1Q 03
-------------------- ----------- ----------- -----------
Volume Sold ('000 tons) 1,781 2,982 2,196
Export Markets 485 601 711
Domestic Market 1,296 2,381 1,485
Average Price (US$/ton) 19.76 20.54 19.23
Operating Profit 12 26 15
Net Financial Result (1) - -
Net Earnings 9 17 10
EBITDA 21 36 25
Total Debt
- Short Term 14 29 44
- Long Term 96 76 69
Total 110 105 113
ALUNORTE 1Q 02 4Q 02 1Q 03
-------------------- ----------- ----------- -----------
Volume Sold ('000 tons) 427 407 490
Export Markets 222 208 289
Domestic Market 205 199 201
Average Price (US$/ton) 161.55 161.79 172.03
Operating Profit 11 13 20
Net Financial Result (3) 57 20
Net Earnings 6 94 36
EBITDA 14 15 23
Total Debt
- Long Term 455 481 482
Total 455 481 482
ALBRAS 1Q 02 4Q 02 1Q 03
-------------------- ----------- ----------- -----------
Volume Sold ('000 tons) 88 104 103
Export Markets 84 100 99
Domestic Market 4 4 4
Average Price (US$/ton) 1,319.81 1,306.47 1,337.98
Operating Profit 41 55 53
Net Financial Result (9) 56 19
Net Earnings 27 121 79
EBITDA 46 58 56
Total Debt
- Short Term 73 20
- Long Term 524 466 451
Total 597 486 451
24
US GAAP
1Q 03
ALUMINIUM - FINANCIAL INDICATORS - ADJUSTED AND UNAUDITED
million US$
---------------------------------------------------------------------------------------
VALESUL 1Q 02 4Q 02 1Q 03
-------------------- ----------- ----------- -----------
Volume Sold ('000 tons) 21 27 19
Export Markets 9 13 9
Domestic Market 12 14 10
Average Price (US$/ton) 1,720.97 1,618.98 1,730.60
Operating Profit 5 13 9
Net Financial Result - (1) -
Net Earnings 3 10 8
EBITDA 6 14 10
Total Debt
- Short Term 1 1 1
- Long Term 2 1 1
Total 3 2 2
[GRAPHIC APPEARS HERE] APPENDIX:
Reconciliation of non-GAAP figures
(%)
---------------------------------------------------------------------------------------
1Q 02 4Q 02 1Q 03
----------- ----------- -----------
EBITDA / Interest expenses adjusted 7.22 7.96 9.02
Difference (2.46) (0.86) 4.62
Operating income / Interest expenses 4.76 7.1 4.4
EBITDA Margin (EBITDA/ Net Revenues) 41.7 41.4 39.8
Difference (10.7) (9.2) (7.1)
Operating income/ Net Revenues 31.0 32.2 32.7
25
US GAAP
1Q 03
This communication may include declarations which represent the expectations of
the Company's Management about future results or events. All such declarations,
when based on future expectations and not on historical facts, involve various
risks and uncertainties. The Company cannot guarantee that such declarations
turn out to be correct. Such risks and uncertainties include factors relative to
the Brazilian economy and capital markets, which are volatile and may be
affected by developments in other countries; factors relative to the iron ore
business and its dependence on the steel industry, which is cyclical in nature;
and factors relative to to the high degree of competitiveness in industries in
which CVRD operates. To obtain additional information on factors which could
cause results to be different from those estimated by the Company, please
consult the reports filed with the Comissao de Valores Mobiliarios (CVM -
Brazilian stock exchange regulatory authority) and the U.S. Securities and
Exchange Commission - SEC, including the most recent Annual Report - CVRD Form
20F."
26
[LOGO APPEARS HERE] [LOGO APPEARS HERE]
Companhia Vale do Rio Doce
Departamento de Controladoria
1st Quarterly Financial Statements
US GAAP
Filed with The Comissao de Valores
Mobiliarios - CVM (Brazilian Securities
Commission) and Security Exchange
Commission - SEC on 05/14/2003
Gerencia Geral de Controladoria - GECOL
COMPANHIA VALE DO RIO DOCE
INDEX TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Page
Report of PricewaterhouseCoopers Auditores Independentes.................................................. F-2
Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002.................................... F-3
Consolidated Statements of Income for the Three-month periods
ended March 31, 2003 and 2002 and December 31, 2002................................................... F-5
Consolidated Statements of Cash Flows for the Three-month periods
ended March 31, 2003 and 2002 and December 31, 2002................................................... F-6
Consolidated Statements of Changes in Stockholders' Equity for the
Three-month periods ended March 31, 2003 and 2002 and December 31, 2002............................... F-7
Notes to the Consolidated Financial Information........................................................... F-8
Supplemental Financial Information........................................................................ S-1
F-1
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of Companhia Vale do Rio Doce
We have reviewed the accompanying unaudited condensed consolidated balance sheet
of Companhia Vale do Rio Doce and subsidiaries as of March 31, 2003, and the
unaudited condensed consolidated statements of income, of cash flows and of
changes in stockholders' equity for the three-month periods ended March 31, 2003
and 2002 and December 31, 2002. These financial statements are the
responsibility of the Company's management. The unaudited financial information
of certain affiliates, the investments in which total US$244 million at March
31, 2003 and equity in earnings which total US$10 million, US$26 million and
US$16 million for the three-month periods ended March 31, 2003 and 2002 and
December 31, 2002, respectively, and that of certain subsidiaries, which
statements reflect total assets of US$216 million at March 31, 2003 and total
revenues of US$34 million, US$71 million and US$25 million consolidated in the
three-month periods ended March 31, 2003 and 2002 and December 31, 2002,
respectively, were reviewed by other independent accountants whose reports
thereon have been furnished to us.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States of
America, the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our reviews and the reports of other accountants, we are not aware of
any material modifications that should be made to the condensed consolidated
interim financial statements referred to above for them to be in conformity with
accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet of
Companhia Vale do Rio Doce and subsidiaries as of December 31, 2002, and the
related consolidated statements of income, shareholders' equity, and cash flows
for the year then ended (not presented herein). In our report dated February 21,
2003, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 2002 is fairly stated in
all material respects, in relation to the consolidated balance sheet from which
it has been derived.
As discussed in Note 4 to the financial statements, the Company changed its
method of accounting for asset retirement obligations, as from January 1, 2003.
PricewaterhouseCoopers
Auditores Independentes
Rio de Janeiro, Brazil
May 12, 2003
F-2
Condensed Consolidated Balance Sheets
Expressed in millions of United States dollars
March 31, December
2003 31, 2002
---------- -----------
Assets (unaudited)
Current assets
Cash and cash equivalents ................................. 1,284 1,091
Accounts receivable
Related parties ........................................ 123 121
Unrelated parties ...................................... 509 539
Loans and advances to related parties ..................... 24 49
Inventories ............................................... 282 292
Deferred income tax ....................................... 171 211
Others .................................................... 303 286
----- -----
2,696 2,589
----- -----
Property, plant and equipment, net ............................. 3,646 3,297
Investments in affiliated companies and joint ventures and other
investments and provision for losses on equity investments.. 839 732
Other assets
Goodwill on acquisition of subsidiaries ................... 434 412
Loans and advances
Related parties ........................................ 112 89
Unrelated parties ...................................... 66 73
Prepaid pension cost ...................................... 80 79
Deferred income tax ....................................... 366 358
Judicial deposits ......................................... 265 239
Unrealized gain on derivative instruments ................. 3 3
Others .................................................... 81 84
----- -----
1,407 1,337
----- -----
TOTAL .......................................................... 8,588 7,955
===== =====
See notes to consolidated financial information.
F-3
Condensed Consolidated Balance Sheets
Expressed in millions of United States dollars (Continued)
March 31, December
2003 31, 2002
---------- ----------
(unaudited)
Liabilities and stockholders' equity
Current liabilities
Suppliers .......................................................... 292 325
Payroll and related charges......................................... 74 76
Interest attributed to stockholders ................................ 188 3
Current portion of long-term debt - unrelated parties .............. 789 717
Short-term debt..................................................... 61 184
Loans from related parties.......................................... 56 64
Others ............................................................. 178 139
------ ------
1,638 1,508
------ ------
Long-term liabilities
Employees post-retirement benefits ................................. 155 141
Long-term debt - unrelated parties ................................. 2,401 2,359
Loans from related parties ......................................... 7 7
Provisions for contingencies (Note 8) .............................. 471 428
Unrealized loss on derivative instruments ........................... 79 76
Others .............................................................. 154 122
------ ------
3,267 3,133
------ ------
Minority interests ...................................................... 43 27
------ ------
Stockholders' equity
Preferred class A stock - 600,000,000
no-par-value shares authorized and 138,575,913 issued ........... 904 904
Common stock - 300,000,000 no-par-value
shares authorized and 249,983,143 issued ........................ 1,630 1,630
Treasury stock - 4,465 (2002 - 4,481) preferred and 4,715,170 common
shares .......................................................... (88) (88)
Additional paid-in capital ......................................... 498 498
Other cumulative comprehensive income............................... (4,976) (5,175)
Appropriated retained earnings ..................................... 2,351 2,230
Unappropriated retained earnings ................................... 3,321 3,288
------ ------
3,640 3,287
------ ------
TOTAL ................................................................... 8,588 7,955
====== ======
See notes to consolidated financial information.
F-4
Condensed Consolidated Statements of Income
Expressed in millions of United States dollars (Unaudited)
(except number of shares and per-share amounts)
Quarter
--------------------------------------
1st 2003 1st 2002 4th 2002
------------ ------------ ------------
Operating revenues, net of discounts, returns and allowances
Sales of ores and metals
Iron ore and pellets ................................................. 746 666 737
Gold ................................................................. 9 34 13
Manganese and ferroalloys ............................................ 75 72 66
Potash ............................................................... 21 16 24
Others ............................................................... 16 12 12
-------- -------- --------
867 800 852
Revenues from logistic services ........................................... 115 111 98
Aluminum products ......................................................... 167 68 150
Other products and services ............................................... 4 8 1
-------- -------- --------
1,153 987 1,101
Value-added tax ........................................................... (43) (34) (42)
-------- -------- --------
Net operating revenues .................................................... 1,110 953 1,059
-------- -------- --------
Operating costs and expenses
Cost of ores and metals sold .............................................. (428) (410) (392)
Cost of logistic services ................................................. (70) (59) (56)
Cost of aluminum products ................................................. (142) (65) (139)
Others .................................................................... (1) (6) (2)
-------- -------- --------
(641) (540) (589)
Selling, general and administrative expenses .............................. (49) (48) (51)
Research and development .................................................. (11) (9) (14)
Employee profit sharing plan .............................................. (12) (9) (18)
Others .................................................................... (34) (52) (46)
-------- -------- --------
(747) (658) (718)
-------- -------- --------
Operating income ............................................................. 363 295 341
-------- -------- --------
Non-operating income (expenses)
Financial income .......................................................... 28 33 40
Financial expenses ........................................................ (82) (62) (48)
Foreign exchange and monetary gains (losses), net ......................... 50 (5) 257
-------- -------- --------
(4) (34) 249
-------- -------- --------
Income before income taxes, equity results and minority interests............. 359 261 590
-------- -------- --------
Income taxes
Current .................................................................... (6) (7) (8)
Deferred ................................................................... (65) (12) (101)
-------- -------- --------
(71) (19) (109)
-------- -------- --------
Equity in results of affiliates and joint ventures and change in provision for
losses on equity investments ............................................. 94 34 121
Change in accounting pratice for asset retirement obligations (note 4) ....... (10) -- --
Minority interests ........................................................... (18) (1) (33)
-------- -------- --------
Net income ................................................................... 354 275 569
======== ======== ========
Basic earnings per Common and Preferred Class A Share........................ 0.92 0.72 1.48
-------- -------- --------
Weighted average number of shares outstanding (thousands of shares)
Common shares ............................................................. 245,268 245,268 245,268
Preferred Class A shares .................................................. 138,571 138,575 138,576
See notes to consolidated financial information.
F-5
Condensed Consolidated Statements of Cash Flows
Expressed in millions of United States dollars (Unaudited)
Quarter
------------------------------------
1st 2003 1st 2002 4th 2002
----------- ----------- ---------
Cash flows from operating activities:
Net income ............................................................................. 354 275 569
Adjustments to reconcile net income with cash provided by operating activities:
Depreciation, depletion and amortization ........................................... 43 66 43
Dividends received ................................................................. 36 25 19
Equity in results of affiliates and joint ventures and change in
provision for losses on equity investments ....................................... (94) (34) (121)
Deferred income taxes .............................................................. 65 12 101
Provisions for contingencies ....................................................... 9 23 --
Impairment of property, plant and equipment ........................................ -- 27 35
Change in accounting pratice for asset retirement obligations (note 4) ............. 10 -- --
Pension plan ....................................................................... 3 3 3
Foreign exchange and monetary losses ............................................... (142) (1) (310)
Net unrealized derivative losses ................................................... 3 6 7
Minority interests ................................................................. 18 1 33
Others ............................................................................. 6 (5) (58)
Decrease (increase) in assets:
Accounts receivable ................................................................ 64 (66) 3
Inventories ........................................................................ 24 1 (26)
Others ............................................................................. (1) 9 (21)
Increase (decrease) in liabilities:
Suppliers .......................................................................... (93) (9) 125
Payroll and related charges ........................................................ (6) (2) 1
Others ............................................................................. 57 (16) 55
------ ------ ------
Net cash provided by operating activities .............................................. 356 315 458
------ ------ ------
Cash flows from investing activities:
Loans and advances receivable
Related parties
Additions ..................................................................... (23) (23) (66)
Repayments .................................................................... 29 3 23
Others ............................................................................ 16 1 2
Guarantees and deposits ................................................................ (12) (10) (17)
Additions to investments ............................................................... -- (1) --
Additions to property, plant and equipment ............................................. (198) (145) (258)
Proceeds from disposals of property, plant and equipment ............................... -- -- 2
------ ------ ------
Net cash used in investing activities .................................................. (188) (175) (314)
------ ------ ------
Cash flows from financing activities:
Short-term debt, net issuances (repayments) ............................................ (93) 377 (202)
Loans
Related parties
Additions ..................................................................... -- 12 22
Repayments .................................................................... (16) (15) (46)
Long-term debt
Related parties ................................................................... 2 10 6
Others ............................................................................ 177 442 37
Repayments of long-term debt
Related parties ................................................................... -- (15) --
Others ............................................................................ (101) (61) (85)
Interest attributed to stockholders .................................................... -- -- (273)
------ ------ ------
Net cash used in financing activities .................................................. (31) 750 (541)
------ ------ ------
Increase (decrease) in cash and cash equivalents ....................................... 137 890 (397)
Effect of exchange rate changes on cash and cash equivalents ........................... 56 1 86
Cash and cash equivalents, beginning of period ......................................... 1,091 1,117 1,402
------ ------ ------
Cash and cash equivalents, end of period ............................................... 1,284 2,008 1,091
====== ====== ======
Cash paid during the period for:
Interest on short-term debt ..................................................... (6) (6) (15)
Interest on long-term debt, net of interest capitalized of $4 in 2003,
$5 in 2002....................................................................... (49) (35) (31)
Income tax ...................................................................... (6) -- (8)
Non-cash transactions
Conversion of loans receivable to investments ................................... 11 20 15
See notes to consolidated financial information.
F-6
Condensed Consolidated Statements of Changes in Stockholders' Equity
Expressed in millions of United States dollars (Unaudited)
(except number of shares and per-share amounts)
Three months ended
March 31
-----------------------------
Shares 2003 2002
----------- ------------ ------------
Preferred class A stock (including one special share)
Balance March 31, 2003 and 2002 ..................................... 138,575,913 904 820
------------ ------------ ------------
Common stock
Balance March 31, 2003 and 2002 ..................................... 249,983,143 1,630 1,479
------------ ------------ ------------
Treasury stock
Balance January 1 ................................................... (4,715,261) (88) (88)
Acquisitions in 2002 ................................................ (4,390) -- --
Sales in 2003 ....................................................... 16 -- --
------------ ------------ ------------
Balance March 31 .................................................... (4,719,635) (88) (88)
------------ ------------ ------------
Additional paid-in capital
Balance March 31 .................................................... 498 498
------------ ------------
Other cumulative comprehensive income
Cumulative translation adjustments
Balance January 1 ................................................... (5,185) (3,475)
Change in the period ................................................. 186 (2)
------------ ------------
Balance March 31 .................................................... (4,999) (3,477)
------------ ------------
Unrealized gain on available-for-sale security
Balance January...................................................... -- --
Change in the period ................................................ 13 --
------------ ------------
Balance March 31 .................................................... 13 --
------------ ------------
Adjustments relating to investments in affiliates
Balance January 1.................................................... 10 10
Change in the period ................................................ -- --
------------ ------------
Balance March 31 .................................................... 10 10
------------ ------------
Total other cumulative comprehensive income ............................. (4,976) (3,467)
------------ ------------
Appropriated retained earnings
Balance January 1.................................................... 2,230 3,212
Transfer to retained earnings ....................................... 121 (5)
------------ ------------
Balance March 31 .................................................... 2,351 3,207
------------ ------------
Retained earnings
Balance January 1.................................................... 3,288 2,184
Net income ....................................................... 354 275
Interest attributed to stockholders
Preferred class A stock ($0.52 and $0.35 per share in
2003 and 2002)............................................... (72) (49)
Common stock ($0.52 and $0.35 per share in 2003 and 2002)...... (128) (87)
Appropriation from reserves ...................................... (121) 5
------------ ------------
Balance March 31 .................................................... 3,321 2,328
------------ ------------
Total stockholders' equity............................................... 383,839,421 3,640 4,777
============ ============ ============
Comprehensive income is comprised as follows:
Net income ....................................................... 354 275
Cumulative translation adjustments .............................. 186 (2)
Unrealized gain on available-for-sale security ................... 13 --
------------ ------------
Total comprehensive income .............................................. 553 273
============ ============
See notes to consolidated financial information.
F-7
Notes to the Consolidated Financial Information
Expressed in millions of United States dollars, unless otherwise
stated (unaudited)
1 The Company and its operations
Companhia Vale do Rio Doce (CVRD) is a limited liability company,
duly organized and existing under the laws of the Federative Republic
of Brazil. Our operations are carried out through CVRD and its
subsidiary companies, joint ventures and affiliates, and mainly
consist of mining, non-ferrous metal production and logistics, as
well as energy, aluminum and steel activities. Further details of our
operations and those of our joint ventures and affiliates are
described in Note 7.
The main operating subsidiaries we consolidate are as follows:
Head office Principal
Subsidiary % ownership location activity
----------------------------------------------------------------- ---------------- ----------------- ------------------------------
Ferteco Mineracao S.A. - FERTECO 100 Brazil Iron ore and pellets
Para Pigmentos S.A. 76 Brazil Kaolin
SIBRA - Eletrosiderurgica Brasileira S.A. 100 Brazil Manganese and Ferroalloys
Navegacao Vale do Rio Doce S.A. - DOCENAVE 100 Brazil Shipping
Vale do Rio Doce Aluminio S.A. - ALUVALE 100 Brazil Aluminum
Itabira Rio Doce Company Ltd. - ITACO 100 Cayman Island Trading
Rio Doce International Finance Ltd. - RDIF 100 Bahamas International finance
CELMAR S.A. - Industria de Celulose e Papel 85 Brazil Forestry
Florestas Rio Doce S.A. 100 Brazil Forestry
Rio Doce Manganese Europe - RDME 100 France Ferroalloys
Urucum Mineracao S.A. 100 Brazil Iron ore and Ferroalloys
Alumina do Norte do Brasil S.A - Alunorte 57 Brazil Aluminum
Salobo Metais S.A. 100 Brazil Copper
Mineracao Serra do Sossego S.A. 100 Brazil Copper
2 Basis of consolidation
All majority-owned subsidiaries where we have both share and
management control are consolidated, with elimination of all
significant intercompany accounts and transactions. Investments in
unconsolidated affiliates and joint ventures are reported at cost
less amortized goodwill plus our equity in undistributed earnings or
losses. Included in this category are certain joint ventures in which
we have majority ownership but, by force of shareholders' agreements,
do not have effective management control. We provide for losses on
equity investments with negative stockholders' equity where
applicable (see Note 7).
We evaluate the carrying value of our listed investments relative to
publicly available quoted market prices. If the quoted market price
is below book value, and such decline is considered other than
temporary, we write-down our equity investments to quoted market
value.
We define joint ventures as businesses in which we and a small group
of other partners each participate actively in the overall entity
management, based on a shareholders agreement. We define affiliates
as businesses in which we participate as a minority stockholder but
with significant influence over the operating and financial policies
of the investee.
3 Summary of significant accounting policies
Our condensed consolidated interim financial information as of March
31, 2003 and for the three month periods ended March 31, 2003 and
2002 and December 31, 2002 is unaudited. However, in our opinion,
such condensed consolidated financial information includes all
adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the results for interim periods.
The results of operations for the three month period ended March 31,
2003 are not necessarily indicative of the results to be expected for
the full fiscal year ending December 31, 2003.
F-8
This condensed interim financial information should be read in
conjunction with our consolidated financial information for the year
ended December 31, 2002.
The provision for losses on equity investments relates to our
investments in affiliates which have reported negative stockholders'
equity in their financial information prepared in accordance with US
GAAP and in circumstances where we have assumed commitments to fund
our share of the accumulated losses, if necessary, through additional
capital contributions or other means. Accordingly we (a) first reduce
the value of the investment to zero and (b) subsequently provide for
our portion of negative equity.
Other current assets includes $21 related to ships held for sale, at
March 31, 2003.
4 Recently-issued accounting pronouncements
In June 2001, the FASB issued SFAS 143 - "Accounting for Asset
Retirement Obligations". We adopted SFAS 143 as from January 1, 2003,
as a consequence an additional $26 for asset retirement obligations
was recorded as "Others - long-term liabilities", a net increase of
$11 in mine development costs was registered within "Property, plant
and equipment" and a resulting change of $10 was registered as
"Change in Accounting Practice for Asset Retirement Obligations" on
the Statement of Income, net of income tax ($15 gross of deferred
income tax). Over time the liabilities will be accreted for the
change in their present value and initial capitalized costs will be
depleted over the useful lives of the related assets.
In June 2002, the FASB has issued SFAS 146 - "Accounting for Costs
Associated with Exit or Disposal Activities". The standard requires
companies to recognize costs associated with exit or disposal
activities when they are incurred rather than at the date of a
commitment to an exit or disposal plan. SFAS 146 is to be applied
prospectively to exit or disposal activities initiated after December
31, 2002. We adopted SFAS 146 as from January 1, 2003. We have not
issued or disposed of any significant activities since adoption.
In November 2002 the FASB issued FIN 45 - "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees
of Indebtedness of Others". The Interpretation elaborates on the
existing disclosure requirements for most guarantees, including loan
guarantees such as standby letters of credit. It also clarifies that
at the time a company issues a guarantee, the company must recognize
an initial liability for the fair value, or market value, of the
obligations it assumes under that guarantee and must disclose that
information in its interim and annual financial information. The
initial recognition and initial measurement provisions apply on a
prospective basis to guarantees issued or modified after December 31,
2002, regardless of the guarantor's fiscal year-end. The disclosure
requirements in the Interpretation, applicable at December 31, 2002
are disclosed in Note 15. We have not issued any material guarantees
since December 31, 2002.
5 Income taxes
Income taxes in Brazil comprise federal income tax and social
contribution, which is an additional federal tax. The statutory
enacted tax rates applicable in the periods presented are as follows:
Three months ended March 31 - %
-------------------------------
2003 2002
------ ------
Federal income tax...................................... 25 25
Social contribution..................................... 9 9
------ ------
Composite tax rate...................................... 34 34
====== ======
F-9
F-10
The amount reported as income tax expense in our consolidated
financial information is reconciled to the statutory rates as
follows:
Quarter
--------------------------
1st 1st 4th
2003 2002 2002
--------------------------
Income before income taxes, equity results and minority interests ............ 359 261 590
==== ==== ====
Federal income tax and social contribution expense at statutory enacted rates (122) (89) (201)
Adjustments to derive effective tax rate:
Tax benefit on interest attributed to stockholders ........................ 63 46 9
Exempt foreign income ..................................................... (16) 17 22
Tax deductible goodwill in business combination............................ -- -- 20
Tax incentives ............................................................ -- 7 2
Valuation allowance........................................................ 9 9 25
Other non-taxable gains.................................................... (5) (3) 14
Adjustment to reflect expected annual effective tax rate................... -- (6) --
---- ---- ----
Federal income tax and social contribution expense in consolidated
statements of income....................................................... (71) (19) (109)
==== ==== ====
We have certain tax incentives relative to our iron ore and manganese
operations in Carajas. The incentives comprise full income tax
exemption on defined production levels up to 2005 and partial
exemption up to 2013. An amount equal to the tax saving must be
appropriated to a reserve account within stockholders' equity and may
not be distributed in the form of cash dividends.
6 Inventories
March 31, December 31,
2003 2002
--------- ------------
Finished products
Iron ore and pellets ................. 80 86
Manganese............................. 18 24
Ferroalloys........................... 28 27
Alumina .............................. 18 15
Others................................ 14 12
Spare parts and maintenance supplies.. 124 128
--------- ------------
282 292
========= ============
F-11
7 Investments
March 31, 2003 Investments Goodwill
-------------------------------------- ------------------ ----------
Net
Participation Net income for March December March
in capital (%) equity the period 31, 2003 31, 2002 31, 2003
---------------- ------- ---------- -------- --------- ----------
Investments in affiliated companies and joint ventures voting total
------ -----
Steel
Usinas Siderurgicas de Minas Gerais S.A - USIMINAS 22.99 11.46 87 87 10 -- --
Companhia Siderurgica de Tubarao - CST 20.51 22.85 127 27 29 27 --
California Steel Industries Inc. - CSI 50.00 50.00 218 5 109 107 --
Aluminum and bauxite
Mineracao Rio do Norte S.A. - MRN 40.00 40.00 402 10 161 162 --
Valesul Aluminio S.A. - VALESUL 54.51 54.51 84 8 46 39 --
Aluminio Brasileiro S.A. - ALBRAS 51.00 51.00 79 79 40 -- --
Alumina do Norte do Brasil S.A. - ALUNORTE
(Consolidated as from June 30, 2002, after
acquisition of control) 62.09 57.03 -- -- -- -- --
Iron ore and pellets
Caemi Mineracao e Metalurgia S.A 50.00 16.85 512 27 86 77 --
Companhia Nipo-Brasileira de Pelotizacao - NIBRASCO 51.11 51.00 25 1 13 12 --
Companhia Hispano-Brasileira de Pelotizacao - HISPANOBRAS 51.00 50.89 27 1 14 14 --
Companhia Coreano-Brasileira de Pelotizacao - KOBRASCO 50.00 50.00 -- -- -- -- --
Companhia Italo-Brasileira de Pelotizacao - ITABRASCO 51.00 50.90 20 -- 10 9 --
Gulf Industrial Investment Company - GIIC 50.00 50.00 67 4 34 37 --
SAMARCO Mineracao S.A. - SAMARCO 50.00 50.00 336 38 168 154 32
Others
Fertilizantes Fosfatados S.A. - FOSFERTIL 10.96 11.12 223 28 25 25 --
Others -- -- -- -- 43 36 --
---- ---- ----
788 699 32
Balance / Change in provision for losses on
equity investments:
Aluminio Brasileiro S.A. - ALBRAS -- (1) --
Companhia Ferroviaria do Nordeste - CFN -- -- --
Companhia Coreano-Brasileira de Pelotizacao - KOBRASCO (14) (16) --
Ferrovia Centro-Atlantica S.A. - FCA -- -- --
MRS Logistica S.A (5) (6) --
CSN Aceros (5) (4) --
---- ---- ----
(24) (27) --
---- ---- ----
764 672 32
---- ---- ----
Available for sale investments
SIDERAR (costs $24) 4.85 4.85 -- -- 43 30 --
---- ---- ----
Total 807 702 32
==== ==== ====
Quoted
Goodwill Equity Adjustments Dividends received market
-------- ---------------------- --------------------- -------
Quarter
December 1st 1st 4th 1st 1st 4th 1st
31, 2002 2003 2002 2002 2003 2002 2002 2003
-------- ---- ---- ------ ----- ----- ----- ------
Investments in affiliated companies and joint ventures
Steel
Usinas Siderurgicas de Minas Gerais S.A - USIMINAS -- 10 3 -- -- 2 -- 55
Companhia Siderurgica de Tubarao - CST -- 6 (7) 8 5 -- 3 148
California Steel Industries Inc. - CSI -- 3 (1) 7 -- -- 3 --
Aluminum and bauxite
Mineracao Rio do Norte S.A. - MRN -- 4 4 7 5 13 -- --
Valesul Aluminio S.A. - VALESUL -- 4 1 6 -- -- 6 --
Aluminio Brasileiro S.A. - ALBRAS -- 39 9 -- -- -- -- --
Alumina do Norte do Brasil S.A. - ALUNORTE
(Consolidated as from June 30, 2002, after
acquisition of control) -- -- 5 -- -- -- -- --
Iron ore and pellets
Caemi Mineracao e Metalurgia S.A -- 5 1 (13) -- -- -- 88
Companhia Nipo-Brasileira de Pelotizacao - NIBRASCO -- 1 (1) 2 -- -- 2 --
Companhia Hispano-Brasileira de Pelotizacao - HISPANOBRAS -- 1 1 -- 2 1 1 --
Companhia Coreano-Brasileira de Pelotizacao - KOBRASCO -- -- 1 -- -- -- -- --
Companhia Italo-Brasileira de Pelotizacao - ITABRASCO -- -- 1 1 -- -- 4 --
Gulf Industrial Investment Company - GIIC -- 2 2 2 5 6 -- --
SAMARCO Mineracao S.A. - SAMARCO 30 19 11 31 14 -- -- --
Others
Fertilizantes Fosfatados S.A. - FOSFERTIL -- 3 2 3 5 2 -- 38
Others -- 4 -- -- -- 1 -- --
---- ---- ---- ---- ---- ---- ----
30 101 32 54 36 25 19
Balance / Change in provision for losses on
equity investments:
Aluminio Brasileiro S.A. - ALBRAS -- 1 6 69 -- -- -- --
Companhia Ferroviaria do Nordeste - CFN -- -- (1) -- -- -- -- --
Companhia Coreano-Brasileira de Pelotizacao - KOBRASCO -- 3 -- 3 -- -- -- --
--
Ferrovia Centro-Atlantica S.A. - FCA -- (11) (3) (10) -- -- -- --
MRS Logistica S.A -- 1 -- 7 -- -- -- --
CSN Aceros -- (1) -- (2) -- -- -- --
---- --- --- --- ---- ---- ---- ----
-- (7) 2 67 -- -- --
---- --- --- --- ---- ---- ---- ----
30 94 34 121 36 25 19
---- ---- ---- ---- ---- ---- ---- ----
Available for sale investments
SIDERAR (costs $24) -- -- -- -- -- -- -- 43
---- ---- ---- ---- ---- ---- ----
Total 30 94 34 121 36 25 19
===== ==== ==== ===== ==== ==== ====
F-12
Information with respect to other major affiliates' financial
position and results of operations is as follows:
ALBRAS MRN
------------------------ -------------------------
March 31, December March 31, December
2003 31, 2002 2003 31, 2002
--------- --------- --------- ---------
Balance Sheet
Current assets ........... 176 158 52 51
Noncurrent assets ........ 399 370 507 504
Current liabilities ...... (182) (197) (58) (45)
Noncurrent liabilities ... (314) (333) (99) (105)
----- ----- ----- -----
Stockholders equity ...... 79 (2) 402 405
===== ===== ===== =====
Our participation............ 51.00% 51.00% 40.00% 40.00%
----- ----- ----- -----
Investments ................. 40 (1) 161 162
==== ==== ==== =====
ALBRAS MRN
----------------------------------- ---------------------------------------
Quarter
----------------------------------- ---------------------------------------
1st 2003 1st 2002 4th 2002 1st 2003 1st 2002 4th 2002
---------- ---------- ---------- ---------- ---------- ----------
Statement of Operations
Net sales ..................... 137 115 136 41 32 55
Costs and expenses ............ (53) (85) (52) (29) (21) (40)
---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes .... 84 30 84 12 11 15
Income taxes .................. (5) -- 52 (2) (1) (3)
Equity in results of affiliates -- -- -- -- (1) 5
---------- ---------- ---------- ---------- ---------- ----------
Net income .................... 79 30 136 10 9 17
========== ========== ========== ========== ========== ==========
Our participation ................ 51.00% 51.00% 51.00% 40.00% 40.00% 40.00%
Participation in results ......... 40 15 69 4 4 7
Change in provision for losses ... (1) (6) (69) -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Equity adjustments ............... 39 9 -- 4 4 7
========== ========== ========== ========== ========== ==========
The financial position and results of operations of our affiliates in
the steel sector (USIMINAS, CST and CSI) are no longer significant to
our consolidated financial information.
8 Commitments and contingencies
(a) At March 31, 2003, we had extended guarantees for borrowings obtained
by affiliates and joint ventures in the amount of $499, of which $383
is denominated in United States dollars and the remaining $116 in
local currency, as follow:
F-13
Amount of Denominated Final Counter
Affiliate or Joint Venture guarantee currency Purpose maturity guarantees
---------------------------------------------- ------------- ----------------- --------------- ---------- --------------
ALBRAS ....................................... 284 US$ guarantee 2007
46 R$ Debt guarantee 2010 None
FCA .......................................... 51 US$ Debt guarantee 2009 None
65 R$ Debt guarantee 2012 None
KOBRASCO ..................................... 13 US$ Debt guarantee 2003 None
SEPETIBA
TECON ........................................ 19 US$ Debt guarantee 2005 None
4 R$ Debt guarantee 2012 None
SAMARCO ...................................... 12 US$ Debt guarantee 2020 None
VALESUL ...................................... 1 R$ Debt guarantee 2006 None
Collateral
NIBRASCO ..................................... 4 US$ Debt guarantee 2004 Pledge
--------
499
========
F-14
We expect no losses to arise as a result of the above guarantees. We
have made no charges for extending these guarantees except in the
case of Albras and Samarco.
(b) CVRD and its subsidiaries are defendants in numerous legal actions in
the normal course of business. Based on the advice of our legal
counsel, management believes that the provision made against
contingent losses is sufficient to cover probable losses in
connection with such actions.
The provision for contingencies and the related judicial deposits are
composed as follows:
March 31, 2003 December 31, 2002
------------------------------- ---------------------------------
Provision for Judicial Provision for Judicial
contingencies deposits contingencies deposits
--------------- -------------- ----------------- -------------
Labor claims .............. 126 57 109 52
Civil claims .............. 107 36 95 32
Tax - related actions...... 232 170 220 153
Others .................... 6 2 4 2
--------------- -------------- ----------------- -------------
471 265 428 239
=============== =============== ================= =============
Labor -related actions principally comprise employee claims for (i)
payment of time spent travelling from their residences to the
work-place, (ii) additional payments for alleged dangerous or
unhealthy working conditions and (iii) various other matters, often
in connection with disputes about the amount of indemnities paid upon
dismissal.
Civil actions principally relate to claims made against us by
contractors in connection with losses alleged to have been incurred
by them as a result of various past government economic plans during
which full indexation of contracts for inflation was not permitted.
Tax-related actions principally comprise our challenges of changes in
basis of calculation and rates of certain revenue taxes and of the
tax on financial movements - CPMF.
We continue to vigorously pursue our interests in all the above
actions but recognize that probably we will incur some losses in the
final instance, for which we have made provisions.
Our judicial deposits are made as required by the courts for us to be
able to enter or continue a legal action. When judgment is favorable
to us, we receive the deposits back; when unfavorable, the deposits
are delivered to the prevailing party.
Contingencies settled in the three-month period ended March 31, 2003,
and 2002 and December 31, 2002 aggregated $21, $19 and $19,
respectively, and additional provisions aggregated $30, $33 and $27,
respectively.
(c) We are defendants in two actions seeking substantial compensatory
damages brought by the Municipality of Itabira, State of Minas
Gerais, which we believe are without merit. Due to the remote
likelihood that any loss will arise therefrom no provision has been
made in the financial information with respect to these two actions.
(d) We are committed under a take-or-pay agreement to take annual
delivery of approximately 207,060 metric tons per year of aluminum
from ALBRAS at market prices. This estimate is based on 51% of ALBRAS
expected production and, at a market price of $1,356.00 per metric
ton at March 31, 2003, represents an annual commitment of $281.
Actual take from Albras was $65, $60 and $65 during the three-month
period ended March 31, 2003 and 2002 and December 31, 2002,
respectively.
(e) We and BNDES entered into a contract, known as the Mineral Risk
Contract, in March 1997, relating to prospecting authorizations for
mining regions where drilling and exploration are still in their
early stages. The Mineral Risk Contract provides for the joint
development of certain unexplored mineral deposits in approximately
two million identified hectares of land in the Carajas region, as
well as proportional participation in any financial benefits earned
from the development of such resources. Iron ore and manganese
deposits already identified and subject to development are
specifically excluded from the Mineral Risk Contract.
F-15
Pursuant to the Mineral Risk Contract, we and BNDES each agreed to
provide $205, which represents half of the $410 in expenditures
estimated as necessary to complete geological exploration and mineral
resource development projects in the region over a period of five
years. This period was extended for an additional two years. We
oversee these projects and BNDES advances us half of our costs on a
quarterly basis. Under the Mineral Risk Contract, as of March 31,
2003, each of us and BNDES had remaining commitments to contribute an
additional $54 toward exploration and development activities. In the
event that either of us wishes to conduct further exploration and
development after having spent such $205, the contract provides that
each party may either choose to match the other party's
contributions, or may choose to have its financial interest
proportionally diluted. If a party's participation in the project is
diluted to an amount lower than 40% of the amount invested in
connection with exploration and development projects, then the
Mineral Risk Contract provides that the diluted party will lose (1)
all the rights and benefits provided for in the Mineral Risk Contract
and (2) any amount previously contributed to the project.
Under the Mineral Risk Contract, BNDES has agreed to compensate us
through a finder's fee production royalty on their share of mineral
resources that are discovered and placed into production. This
finder's fee is equal to 3.5% of the revenues derived from the sale
of gold, silver and platinum group metals and 1.5% of the revenues
derived from the sale of other minerals, including copper, except for
gold and other minerals discovered at Serra Leste, for which the
finder's fee is equal to 6.5% of revenues.
(f) At the time of our privatization in 1997, we issued shareholder
revenue interests known in Brazil as "debentures" to our
then-existing shareholders, including the Brazilian Government. The
terms of the "debentures", were set to ensure that our
pre-privatization shareholders, including the Brazilian Government,
would participate alongside us in potential future financial benefits
that we are able to derive from exploiting our mineral resources.
(g) At March 31, 2003 we have provided $46 for environmental liabilities
and asset retirement obligations.
We use various judgments and assumptions when measuring our
environmental liabilities and asset retirement obligations. Changes
in circumstances, law or technology may affect our estimates and we
periodically review the amounts accrued and adjust them as necessary.
Our accruals do not reflect unasserted claims because we are
currently not aware of any such issues. Also the amounts provided are
not reduced by any potential recoveries under cost sharing, insurance
or indemnification arrangements because such recoveries are
considered uncertain.
9 Segment and geographical information
In 1999 we adopted SFAS 131 "Disclosures about Segments of an
Enterprise and Related Information" with respect to the information
we present about our operating segments. SFAS 131 introduced a
"management approach" concept for reporting segment information,
whereby financial information is required to be reported on the basis
that the top decision-maker uses such information internally for
evaluating segment performance and deciding how to allocate resources
to segments. Our business segments are currently organized as
follows:
Ferrous products - comprises iron ore mining and pellet production,
as well as the Northern and Southern transportation systems,
including railroads, ports and terminals, as they pertain to mining
operations. Manganese mining and ferroalloys are also included in
this segment.
Non-ferrous products - comprises the production of gold and other
non-ferrous minerals.
F-16
Logistics - comprises our transportation systems as they pertain to
operation of our ships, ports and railroads for third-party cargos.
F-17
Holdings - divided into the following sub-groups:
o Aluminum - comprises aluminum trading activities, alumina
refining and investments joint ventures and affiliates engaged
in bauxite mining and aluminum metal smelting.
o Steel - comprises our investments in joint ventures and
affiliates operating in the steel industry.
o Others - comprises our investments in joint ventures and
affiliates engaged in other businesses.
Information presented to top management with respect to the
performance of each segment is generally derived directly from the
accounting records maintained in accordance with Brazilian corporate
law together with certain minor inter-segment allocations.
Consolidated net income and principal assets are reconciled as
follows:
March 31, 2003
-------------------------------------------------------------------------
Combined
-------------------------------------------------------------------------
Holdings
Non -------------------------------------
Ferrous ferrous Logistics Aluminum Steel Others
----------- ---------- ------------ ------------- ---------- ------------
RESULTS
Gross revenues - Export................................. 1,080 23 21 149 -- --
Gross revenues - Domestic............................... 258 24 78 37 -- --
Cost and expenses....................................... (1,001) (38) (61) (159) 1 (3)
Depreciation, depletion and amortization................ (36) (3) (2) (2) -- --
Pension plan............................................ (3) -- -- -- -- --
----------- ---------- ------------ ------------- ---------- ------------
Operating profit........................................ 298 6 36 25 1 (3)
Interest revenue........................................ 45 1 3 3 -- 1
Interest expense........................................ (96) (2) (1) (5) (3) --
Foreign exchange and monetary losses, net............... 25 5 (3) 23 -- --
Equity in earnings...................................... 34 -- (11) 48 19 4
Income taxes............................................ (66) (1) (1) (2) (1) --
Change in accounting pratice for asset retirement
obligations (note 4)................................ (10) -- -- -- -- --
Minority interests...................................... -- (2) -- (16) -- --
----------- ---------- ------------ ------------- ---------- ------------
Net income.............................................. 230 7 23 76 16 2
=========== ========== ============ ============= ========== ============
Sales classified by geographic destination:
Export market
Latin America........................................... 116 -- 14 31 -- --
United States........................................... 101 4 -- 2 -- --
Europe.................................................. 440 17 4 87 -- --
Middle East............................................. 51 -- 3 -- -- --
Japan................................................... 111 1 -- 23 -- --
Asia, other than Japan.................................. 261 1 -- 6 -- --
----------- ---------- ------------ ------------- ---------- ------------
1,080 23 21 149 -- --
Domestic market......................................... 258 24 78 37 -- --
----------- ---------- ------------ ------------- ---------- ------------
1,338 47 99 186 -- --
=========== ========== ============ ============= ========== ============
Assets:
Property, plant and equipment, net...................... 2,563 464 162 430 -- 27
Capital expenditures.................................... 91 51 32 23 -- 1
Investments in affiliated companies and joint ventures
and other investments, net of provision for losses..... 423 -- (7) 247 148 28
=========== ========== ============ ============= ========== ============
Capital employed........................................ 2,521 138 188 405 22 10
March 31, 2003
--------------------------------
Eliminations Consolidated
--------------- ----------------
RESULTS
Gross revenues - Export................................. (476) 797
Gross revenues - Domestic............................... (41) 356
Cost and expenses....................................... 517 (744)
Depreciation, depletion and amortization................ -- (43)
Pension plan............................................ -- (3)
--------------- ----------------
Operating profit........................................ -- 363
Interest revenue........................................ (25) 28
Interest expense........................................ 25 (82)
Foreign exchange and monetary losses, net............... -- 50
Equity in earnings...................................... -- 94
Income taxes............................................ -- (71)
Change in accounting pratice for asset retirement
obligations (note 4)................................ -- (10)
Minority interests...................................... -- (18)
--------------- ----------------
Net income.............................................. -- 354
=============== ================
Sales classified by geographic destination:
Export market
Latin America........................................... (72) 89
United States........................................... (50) 57
Europe.................................................. (170) 378
Middle East............................................. (16) 38
Japan................................................... (49) 86
Asia, other than Japan.................................. (119) 149
--------------- ----------------
(476) 797
Domestic market......................................... (41) 356
--------------- ----------------
(517)
1,153
=============== ================
Assets:
Property, plant and equipment, net...................... -- 3,646
Capital expenditures.................................... -- 198
Investments in affiliated companies and joint ventures
and other investments, net of provision for losses..... -- 839
=============== ================
Capital employed........................................ -- 3,284
F-18
Operating profit by product - after eliminations
March 31, 2003
----------------------------------------------------------------------------------------------
Impairment/
Gain on sale
Revenues (1) of property, Depreciation,
------------------------------------ Cost and plant and depletion and Pension Operating
Export Domestic Total expenses Net equipment amortization plan profit
---------- ------------ ------------ ------------ -------- --------------- ----------------- ---------- -----------
Ferrous
Iron ore ....... 421 126 547 (265) 282 -- (18) (2) 262
Pellets ........ 152 47 199 (167) 32 -- (3) (1) 28
Manganese ...... 13 2 15 (5) 10 -- -- -- 10
Ferroalloys .... 43 17 60 (54) 6 -- (2) -- 4
------ ------ ------ ------ ------ ------ ------ ------ ------
629 192 821 (491) 330 -- (23) (3) 304
Non ferrous
Gold ........... 9 -- 9 (8) 1 -- -- -- 1
Potash ......... -- 21 21 (12) 9 -- (1) -- 8
Kaolin ......... 13 3 16 (10) 6 -- (1) -- 5
------ ------ ------ ------ ------ ------ ------ ------ ------
22 24 46 (30) 16 -- (2) -- 14
Aluminum
Alumina ........ 59 34 93 (73) 20 -- (2) -- 18
Aluminum ....... 70 -- 70 (66) 4 -- -- -- 4
Bauxite ........ 4 -- 4 (4) -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
133 34 167 (143) 24 -- (2) -- 22
Logistics
Railroads ...... -- 66 66 (22) 44 -- (14) -- 30
Ports .......... -- 28 28 (9) 19 -- (2) -- 17
Ships .......... 13 8 21 (39) (18) -- -- -- (18)
------ ------ ------ ------ ------ ------ ------ ------ ------
13 102 115 (70) 45 -- (16) -- 29
Others.......... -- 4 4 (10) (6) -- -- -- (6)
------ ------ ------ ------ ------ ------ ------ ------ ------
797 356 1,153 (744) 409 -- (43) (3) 363
====== ====== ====== ====== ====== ====== ====== ====== ======
(1) Cost and expenses include contingency provisions of $9.
F-19
March 31, 2002
-------------------------------------------------------------------------
Combined
-------------------------------------------------------------------------
Holdings
Non -------------------------------------
Ferrous ferrous Logistics Aluminum Steel Others
----------- ---------- ------------ ------------- ---------- ------------
RESULTS
Gross revenues - Export 949 44 10 68 -- --
Gross revenues - Domestic 216 17 81 -- -- 1
Cost and expenses (856) (49) (55) (62) -- --
Depreciation, depletion and
amortization ........................................... (53) (6) (6) -- -- (1)
Pension plan .......................................... (3) -- -- -- -- --
----------- ---------- ------------ ------------- ---------- ------------
Operating profit ...................................... 253 6 30 6 -- --
Interest revenue 41 -- 3 1 -- --
Interest expense (70) (2) (1) -- (1) --
Foreign exchange/translation gain(loss) (6) 1 -- -- -- --
Equity in earnings ..................................... 16 -- (4) 25 (5) 2
Income taxes ........................................... (17) -- (1) (1) -- --
Minority interests ..................................... (1) -- -- -- -- --
----------- ---------- ------------ ------------- ---------- ------------
Net income ............................................. 216 5 27 31 (6) 2
=========== ========== ============ ============= ========== ============
Sales classified by geographic destination:
Export market
Latin America........................................... 64 -- 5 7 -- --
United States........................................... 89 13 3 -- -- --
Europe.................................................. 393 29 2 61 -- --
Middle East............................................. 43 -- -- -- -- --
Japan................................................... 113 1 -- -- -- --
Asia, other than Japan.................................. 247 1 -- -- -- --
----------- ---------- ------------ ------------- ---------- ------------
949 44 10 68 -- --
Domestic market......................................... 216 17 81 -- -- 1
----------- ---------- ------------ ------------- ---------- ------------
1,165 61 91 68 -- 1
=========== ========== ============ ============= ========== ============
Assets :
Property, plant and equipment, net 3,196 287 280 -- -- 94
Capital expenditures 130 3 9 -- -- 3
Investments in affiliated companies and joint ventures
and other investments, net of provision for loss 718 28 39 306 152 --
=========== ========== ============ ============= ========== ============
Capital employed 3,032 293 285 (13) 24 50
March 31, 2002
-----------------------------
Eliminations Consolidated
------------- ----------------
RESULTS
Gross revenues - Export................................. (377) 694
Gross revenues - Domestic............................... (22) 293
Cost and expenses....................................... 399 (623)
Depreciation, depletion and
amortization ......................................... -- (66)
Pension plan .......................................... -- (3)
------------- ----------------
Operating profit ...................................... -- 295
Interest revenue........................................ (12) 33
Interest expense........................................ 12 (62)
Foreign exchange/translation gain(loss)................. -- (5)
Equity in earnings ..................................... -- 34
Income taxes ........................................... -- (19)
Minority interests ..................................... -- (1)
------------- ----------------
Net income ............................................. -- 275
============= ================
Sales classified by geographic destination:
Export market
Latin America........................................... (25) 51
United States........................................... (40) 65
Europe.................................................. (143) 342
Middle East............................................. (4) 39
Japan................................................... (52) 62
Asia, other than Japan.................................. (113) 135
------------- ----------------
(377) 694
Domestic market......................................... (22) 293
------------- ----------------
(399) 987
============= ================
Assets :
Property, plant and equipment, net...................... -- 3,857
Capital expenditures.................................... -- 145
Investments in affiliated companies and joint ventures
and other investments, net of provision for loss....... -- 1,243
============= ================
Capital employed........................................ -- 3,6710
F-20
Operating profit by product - after eliminations
March 31, 2002
----------------------------------------------------------------------------------------------
Impairment/
Gain on sale
Revenues (1) of property, Depreciation,
------------------------------------ Cost and plant and depletion and Pension Operating
Export Domestic Total expenses Net equipment amortization plan profit
---------- ------------ ------------ ------------ -------- --------------- ----------------- ---------- -----------
Ferrous
Iron ore ....... 410 104 514 (278) 236 -- (26) (2) 208
Pellets ........ 116 36 152 (116) 36 -- (1) (1) 34
Manganese ...... 14 4 18 (10) 8 -- (1) -- 7
Ferroalloys .... 33 21 54 (42) 12 -- (1) -- 11
------ ------ ------ ------ ------ ------ ------ ------ ------
573 165 738 (446) 292 -- (29) (3) 260
Non ferrous
Gold ........... 34 -- 34 (22) 12 -- (10) -- 2
Potash ......... -- 16 16 (11) 5 -- (1) -- 4
Kaolin ......... 10 2 12 (6) 6 -- (1) -- 5
------ ------ ------ ------ ------ ------ ------ ------ ------
44 18 62 (39) 23 -- (12) -- 11
Aluminum
Alumina ........ 6 -- 6 (4) 2 -- -- -- 2
Aluminum ....... 60 -- 60 (57) 3 -- -- -- 3
Bauxite ........ 2 -- 2 (2) -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
68 -- 68 (63) 5 -- -- -- 5
Logistics
Railroads ...... -- 72 72 (7) 65 (20) (20) -- 25
Ports .......... -- 16 16 (11) 5 -- (2) -- 3
Ships .......... 9 14 23 (7) 16 (7) (2) -- 7
------ ------ ------ ------ ------ ------ ------ ------ ------
9 102 111 (25) 86 (27) (24) -- 35
Others ......... -- 8 8 (23) (15) -- (1) -- (16)
------ ------ ------ ------ ------ ------ ------ ------ ------
694 293 987 (596) 391 (27) (66) (3) 295
====== ====== ====== ====== ====== ====== ====== ====== ======
(1) Cost and expenses include contingency provisions of $23.
F-21
4th Quarter 2002
-------------------------------------------------------------------------
Combined
-------------------------------------------------------------------------
Holdings
Non -------------------------------------
Ferrous ferrous Logistics Aluminum Steel Others
----------- ---------- ------------ ------------- ---------- ------------
RESULTS
Gross revenues - Export................................. 1,139 24 11 117 -- --
Gross revenues - Domestic............................... 206 26 138 30 -- (1)
Cost and expenses....................................... (1,022) (101) (69) (108) 2 (15)
Depreciation, depletion and amortization................ (36) (3) (2) (2) -- --
Pension plan ........................................... (2) -- (1) -- -- --
----------- ---------- ------------ ------------- ---------- ------------
Operating profit ....................................... 285 (54) 77 37 2 (16)
Interest revenue........................................ 77 1 3 3 1 --
Interest expense........................................ (83) (1) -- (6) (3) --
Foreign exchange and monetary losses, net............... 246 11 (51) 55 -- 6
Equity in earnings ..................................... 28 -- (3) 82 14 --
Income taxes ........................................... (130) -- (7) 24 -- 4
Minority interests ..................................... 2 (6) -- (29) -- --
----------- ---------- ------------ ------------- ---------- ------------
Net income ............................................. 425 (49) 19 166 14 (6)
=========== ========== ============ ============= ========== ============
Sales classified by geographic destination:
Export market
Latin America........................................... 102 -- 5 10 -- --
United States........................................... 89 1 -- 2 -- --
Europe.................................................. 477 19 5 84 -- --
Middle East............................................. 88 -- -- -- -- --
Japan................................................... 125 1 -- 11 -- --
Asia, other than Japan.................................. 258 3 1 10 -- --
----------- ---------- ------------ ------------- ---------- ------------
1,139 24 11 117 -- --
Domestic market......................................... 206 26 138 30 -- (1)
----------- ---------- ------------ ------------- ---------- ------------
1,345 50 149 147 -- (1)
=========== ========== ============ ============= ========== ============
Assets:
Property, plant and equipment, net...................... 2,346 400 144 383 -- 24
Capital expenditures.................................... 524 132 33 63 -- 14
Investments in affiliated companies and joint ventures
and other investments, net of provision for losses..... 395 -- (27) 201 133 30
=========== ========== ============ ============= ========== ============
Capital employed........................................ 2,340 119 161 209 21 27
4th Quarter 2002
------------------------------
Eliminations Consolidated
------------- ----------------
Gross revenues - Export................................. (525) 766
Gross revenues - Domestic............................... (64) 335
Cost and expenses....................................... 599 (714)
Depreciation, depletion and amortization................ -- (43)
Pension plan ........................................... -- (3)
------ ------
Operating profit ....................................... 10 341
Interest revenue........................................ (45) 40
Interest expense........................................ 45 (48)
Foreign exchange and monetary losses, net............... (10) 257
Equity in earnings ..................................... -- 121
Income taxes ........................................... -- (109)
Minority interests ..................................... -- (33)
------ ------
Net income ............................................. -- 569
====== ======
Sales classified by geographic destination:
Export market
Latin America........................................... (59) 58
United States........................................... (59) 33
Europe.................................................. (198) 387
Middle East............................................. (20) 68
Japan................................................... (58) 79
Asia, other than Japan.................................. (131) 141
------ ------
(525) 766
Domestic market......................................... (64) 335
------ ------
(589) 1,101
====== ======
Assets:
Property, plant and equipment, net...................... -- 3,297
Capital expenditures.................................... -- 766
Investments in affiliated companies and joint ventures
and other investments, net of provision for losses..... -- 732
====== ======
Capital employed........................................ -- 2,877
F-22
Operating profit by product - after eliminations
4th Quarter 2002
-------------------------------------------------------------------------------------------------------------------
Impairment/
Gain on sale
Revenues of property, Depreciation,
------------------------------------ Cost and plant and depletion and Pension Operating
Export Domestic Total expenses Net equipment amortization plan profit
---------- ------------ ------------ ------------ -------- --------------- ----------------- ---------- -----------
Ferrous
Iron ore ....... 406 135 541 (234) 307 -- (27) (2) 278
Pellets ........ 160 36 196 (149) 47 -- 2 -- 49
Manganese ...... 9 (2) 7 3 10 -- (4) -- 6
Ferroalloys .... 46 13 59 (50) 9 -- (1) -- 8
------ ------ ------ ------ ------ ------ ------ ------ ------
621 182 803 (430) 373 -- (30) (2) 341
Non ferrous
Gold ........... 13 -- 13 (32) (19) (35) 1 -- (53)
Potash ......... -- 24 24 (15) 9 -- (1) -- 8
Kaolin ......... 10 2 12 (8) 4 -- -- -- 4
------ ------ ------ ------ ------ ------ ------ ------ ------
23 26 49 (55) (6) (35) -- -- (41)
Aluminum
Alumina ........ 45 28 73 (63) 10 -- (2) -- 8
Aluminum ....... 73 -- 73 (64) 9 -- -- -- 9
Bauxite ........ 4 -- 4 (4) -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
122 28 150 (131) 19 -- (2) -- 17
Logistics
Railroads ...... -- 76 76 (29) 47 -- (11) (1) 35
Ports .......... -- 11 11 (16) (5) -- (1) -- (6)
Ships .......... -- 11 11 (25) (14) -- -- -- (14)
------ ------ ------ ------ ------ ------ ------ ------ ------
-- 98 98 (70) 28 -- (12) (1) 15
Others ......... -- 1 1 7 8 -- 1 -- 9
------ ------ ------ ------ ------ ------ ------ ------ ------
766 335 1,101 (679) 422 (35) (43) (3) 341
====== ====== ====== ====== ====== ====== ====== ====== ======
10 Derivative financial instruments
Volatility of interest rates, exchange rates and commodity prices are
the main market risks to which we are exposed - all three are managed
through derivative operations. These have the exclusive aim of
reducing exposure to risk. We do not use derivatives for speculation
purposes.
We monitor and evaluate our derivative positions on a regular basis
and adjust our strategy in response to market conditions. We also
periodically review the credit limits and credit worthiness of our
counter-parties in these transactions. In view of the policies and
practices established for operations with derivatives, management
considers the occurrence of non-measurable risk situations as
unlikely.
F-23
The asset (liability) balances at March 31, 2003, 2002 and December
31, 2002 and the movement in fair value of derivative financial
instruments is as follows:
Interest
rates
Gold (libor) Currencies Alumina Total
--------- ---------- --------------- ------------ --------
Unrealized gains (losses) at January 1, 2002............... 7 (36) (4) - (33)
Change in the period....................................... (10) 18 (2) - 6
Gains (losses) realized in the period...................... 1 (7) - - (6)
--------- ---------- --------------- ------------ --------
Unrealized gains (losses) at March 31, 2002................ (2) (25) (6) - (33)
========= ========== =============== ============ ========
Unrealized gains (losses) at October 1, 2002............... (4) (65) 2 4 (63)
Financial settlement....................................... - 3 2 (1) 4
Gains (losses) in the period............................... (10) 9 (6) - (7)
Effect of exchange rate changes............................ (1) (7) 1 - (7)
--------- ---------- --------------- ------------ --------
Unrealized gains (losses) at December 31, 2002............. (15) (60) (1) 3 (73)
========= ========== =============== ============ ========
Unrealized gains (losses) at January 1, 2003............... (15) (60) (1) 3 (73)
Financial settlement....................................... - 4 - - 4
Gains (losses) in the period............................... 5 (8) - - (3)
Effect of exchange rate changes............................ - (4) - - (4)
--------- ---------- --------------- ------------ --------
Unrealized gains (losses) at March 31, 2003................ (10) (68) (1) 3 (76)
========= ========== =============== ============ ========
Realized and unrealized gains (losses) are included in our income
statement under the following captions:
Gold - operating costs and expenses;
Interest rates - financial expenses;
Currencies - foreign exchange and monetary losses, net.
Final maturity dates for the above instruments are as follows:
Gold............................................... December 2006
Interest rates (libor)............................. May 2007
Currencies......................................... May 2005
(a) Interest Rate and Exchange Rate Risk
Interest rate risks mainly relate to that part of the debt borrowed
at floating rates. The foreign currency debt is largely subject to
fluctuations in the London Interbank Offered Rate - LIBOR. That
portion of local currency denominated debt that is subject to
floating rates is linked to the Long Term Interest Rate - TJLP, fixed
quarterly by the Brazilian Central Bank. Since May 1998, we have used
derivative instruments to protect ourselves against fluctuations in
the LIBOR rate.
There is an exchange rate risk associated with our foreign currency
denominated debt. On the other hand, 89% of our revenues are
denominated in, or automatically indexed to, the U.S. dollar, while
49% of our costs are expressed in reais. This provides a natural
hedge against any devaluation of the Brazilian real against the U.S.
dollar. When events of this nature occur, the immediate negative
impact on foreign currency denominated debt is offset over time by
the positive effect of devaluation on future cash flows.
F-24
With the advent of a floating exchange rate regime in Brazil in
January 1999, we adopted a strategy of monitoring market
fluctuations, using derivatives to protect against specific risks
from exchange rate variation.
From time to time we enter into foreign exchange derivative swap
transactions seeking to change the characteristics of our
real-denominated cash investments to US dollar-indexed instruments.
The extent of such transactions depends on our perception of market
and currency risk, but is never speculative in nature. All such
operations are marked-to-market at each balance sheet date and the
effect included in financial income or expense. During the three
months ended March 31, 2003 and the year ended December 31, 2002 our
use of such instruments was not significant.
(b) Commodity Price Risk
We also use derivative instruments to manage exposure to changing
gold prices. Derivatives allow the fixing of an average minimum
profit level for future gold production. However, they may also have
the effect of eliminating potential gains on certain price increases
in the spot market for gold. We manage our contract positions
actively, and the results are reviewed at least monthly, allowing
adjustments to targets and strategy to be made in response to
changing market conditions.
In the case of gold derivatives, our policy has been to settle all
contracts through cash payments or receipts, without physical
delivery of product.
Our affiliate Albras manages the risk of fluctuating aluminum prices
using derivatives, allowing an average minimum profit level for
future production and ensuring stable cash generation. However, they
may also have the effect of eliminating potential gains on certain
price increases in the spot market for aluminum. We account for
Albras using the equity method.
11 Subsequent Events
Payment of Interest on Stockholders' Equity
On April 16, 2003, the Board of Directors approved the first
installment of its US$ 1.04 per share minimum dividend for 2003. The
minimum dividend was determined in accordance to the CVRD dividend
policy announced on November 13, 2002.
According the procedures previously annouced on January 30, 2003, the
Company will pay the minimum dividend for 2003 in two equal
installments, on April 30 and October 31, 2003, respectively.
Acquisition of Caemi
On March 31, 2003, CVRD signed an agreement with Mitsui & Co.
(Mitsui) to acquire all its common and preferred shares in Caemi
Mineracao e Metalurgia S. A (Caemi) for US$ 426.4 million. The
acquisition is subject to the review and approval by antitrust
authorities in addition to due diligence procedures. These shares
represent 50% and 40% of the common and preferred shares,
respectively, of that company. After the transaction, CVRD will
detain 100% of the common shares, 40% of the preferred shares and
60.2% of the total capital.
CST Shares Acquisition
On March 27, 2003, CVRD and Arcelor entered an agreement with Acestia
S.A. (Acesita) to buy shares of Companhia Siderurgica de Tubarao
(CST). The shares acquired are not covered by the CST shareholders'
agreement.
Through this agreement CVRD acquired, by April 24, 2003, 4.42% of the
common shares and 5.64% of the preferred shares of CST, representing
5.17% of CST's total capital for $60. Simultaneously, Arcelor
acquired common and preferred shares of CST to arrive at the same
respective share holdings as CVRD. After the transaction, CVRD will
detain 24.93% of the common shares, 29.96% of the preferred shares
and 28.02% of the total capital.
F-25
Acesita owns an additional 14.85% of CST's voting capital, the
acquisition of which is subject to authorization by the other parties
to that shareholders' agreement authorize the transaction until the
expiration of the shareholders' agreement in May 2005.
Restructuring in participation of Logistics Companies
On April 16, 2003, CVRD, Companhia Siderurgica Nacional (CSN) and
other unlisted companies entered into an agreement for the
reorganization of their common interests in logistics companies. The
agreement is subject to approval by regulatory authorities and by
certains creditors of CSN and CVRD, adjustments to commercial
agreements and the waiver by other shareholders of the exercise of
any rights of first refusal.
The agreement involves three transactions:
o The acquisition by CVRD of CSN's 11.95% stake in Ferrovia
Centro-Atlantica (FCA).
o The sale to CSN of CVRD's stake in its equity investees, Sepetiba
Tecon S.A. (STSA), a company that operates Container Terminal 1 at
the Port of Sepetiba (TECON), in Rio de Janeiro State. TECON will
allow CVRD to handle containers through TECON over the next ten
years and guaranteeing maintenance of port conditions for the
handling of containers.
o The sale by CVRD to CSN and Taquari Participacoes S. A. (Taquari)
of 32.4% of the capital of Companhia Ferroviaria do Nordeste (CFN).
The purchase and sale obligations, if the conditions are fulfilled,
will result in a net cash outflow of $6 by CVRD.
Pig Iron Project with NUCOR
On April 24, 2003, CVRD and Nucor Corporation (NUCOR) signed an
agreement to construct and operate an environmentally friendly pig
iron project in Northern Brazil with a capacity of approximately
380,000 metric tons of pig iron per year in its initial phase. Iron
ore will be obtained its Carajas mine and its forestry assets hold by
Celmar S.A..
NUCOR will invest US$10 million in the project while CVRD's
equity contribution will be the land and the forest assets (currently
owned by its wholly owned subsidiary Celmar S.A.). The total capital
of the project will be about US$ 80 million. The ownership will be
split 78% CVRD and 22% NUCOR.
* * *
F-26
Supplemental Financial Information
The following information provides additional details in relation to
the balance sheet and financial performance of equity investees as
well as certain financial ratios. The accounting information
contained therein was subject to certain agreed-upon procedures
performed by our independent accountants.
EBITDA represents operating income plus depreciation, amortization
and depletion plus impairment/gain on sale of property, plant and
equipment plus dividends received from equity investees. EBITDA is
not a US GAAP measurement and does not represent cash flow for the
periods presented and should not be considered as an alternative to
net income (loss), as an indicator of our operating performance or as
an alternative to cash flow as a source of liquidity. Our definition
of EBITDA may not be comparable with EBITDA as defined by other
companies. Although EBITDA, as defined above, does not provide a US
GAAP measure of operating cash flows, our management uses it to
measure our operating performance and it is commonly used by
financial analysts in evaluating our business.
S - 1
Aluminum Area - Valesul (Additional information - Unaudited)
---------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
Information 2003
---------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
--------------------------------------------------------------
Quantity sold - external market MT (thousand) 9 9
Quantity sold - internal market MT (thousand) 10 10
--------------------------------------------------------------
Quantity sold - total MT (thousand) 19 - - - 19
==============================================================
Average sales price - external market US$ 1,505.49 1,505.49
Average sales price - internal market US$ 1,933.02 1,933.02
Average sales price - total US$ 1,730.60 1,730.60
Long-term indebtedness, gross US$
1 1
Short-term indebtedness, gross US$ 1 1
--------------------------------------------------------------
Total indebtedness, gross US$ 2 - - - 2
==============================================================
Stockholders' equity US$ 84 84
==============================================================
EBITDA US$ 10 - - - 10
Depreciation, amortization and depletion US$ (1) - - - (1)
Impairment / gain on sale US$ - - - - -
Dividends received from equity investees US$ - - - - -
--------------------------------------------------------------
Operating income US$ 9 - - - 9
Net financial result US$ - -
--------------------------------------------------------------
Income before income tax and social contribution US$ 9 - - - 9
Income tax and social contribution US$ (1) (1)
--------------------------------------------------------------
Net income US$ 8 - - - 8
---------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Information 2002
-------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
-----------------------------------------------------------
Quantity sold - external market 9 12 8 13 42
Quantity sold - internal market 12 11 11 14 48
-----------------------------------------------------------
Quantity sold - total 21 23 19 27 90
===========================================================
Average sales price - external market 1,467.44 1,481.49 1,485.09 1,413.67 1,459.01
Average sales price - internal market 1,906.21 1,865.52 1,779.65 1,801.29 1,837.32
Average sales price - total 1,720.97 1,663.20 1,654.96 1,618.98 1,661.77
Long-term indebtedness, gross
2 1 1 1 1
Short-term indebtedness, gross 1 1 - 1 1
-----------------------------------------------------------
Total indebtedness, gross 3 2 1 2 2
===========================================================
Stockholders' equity 95 83 66 72 72
===========================================================
EBITDA 6 9 9 14 38
Depreciation, amortization and depletion (1) (1) (1) (1) (4)
Impairment / gain on sale - - - - -
Dividends received from equity investees - - - - -
-----------------------------------------------------------
Operating income 5 8 8 13 34
Net financial result - - - (1) (1)
-----------------------------------------------------------
Income before income tax and social contribution 5 8 8 12 33
Income tax and social contribution (2) (2) (1) (2) (7)
-----------------------------------------------------------
Net income 3 6 7 10 26
-------------------------------------------------------------------------------------------------------------
S-2
Aluminum Area - MRN (Additional information - Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Information 2003 2002
------------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total 1Q 2Q 3Q 4Q Total
---------------------------------------------------------------------------
Quantity sold - external market MT (thousand) 711 711 485 790 740 601 2,616
Quantity sold - internal market MT (thousand) 1,485 1,485 1,296 1,820 1,815 2,381 7,312
---------------------------------------------------------------------------
Quantity sold - total MT (thousand) 2,196 - - - 2,196 1,781 2,610 2,555 2,982 9,928
===========================================================================
Average sales price - external market US$ 21.31 21.31 20.56 19.09 19.21 21.42 19.93
Average sales price - internal market US$ 18.24 18.24 19.46 18.01 18.16 20.32 19.06
Average sales price - total US$ 19.23 19.23 19.76 18.34 18.46 20.54 19.29
Long-term indebtedness, gross US$ 69 69 96 90 78 76 76
Short-term indebtedness, gross US$ 44 44 14 19 23 29 29
---------------------------------------------------------------------------
Total indebtedness, gross US$ 113 - - - 113 110 109 101 105 105
===========================================================================
Stockholders' equity US$ 402 402 364 377 388 405 405
===========================================================================
EBITDA US$ 25 - - - 25 21 17 27 36 101
Depreciation, amortization and depletion US$ (10) - - - (10) (9) (4) (15) (10) (38)
Impairment / gain on sale US$ - - - - - - - - - -
Dividends received from equity investees US$ - - - - - - - - - -
---------------------------------------------------------------------------
Operating income US$ 15 - - - 15 12 13 12 26 63
Gain (loss) on investments accounted
for by the equity method US$ - - (1) 20 - - 19
Non-operating result US$ (3) (3) - 13 17 (6) 24
Net financial result US$ - - (1) - - - (1)
---------------------------------------------------------------------------
Income before income tax and social
contribution US$ 12 - - - 12 10 46 29 20 105
Income tax and social contribution US$ (2) (2) (1) (8) 1 (3) (11)
---------------------------------------------------------------------------
Net income US$ 10 - - - 10 9 38 30 17 94
-----------------------------------------------------------------------------------------------------------------------------------
S-3
Aluminum Area - Albras (Additional information - Unaudited)
----------------------------------------------------------------------------------------------------------------
2003
Information 1Q 2Q 3Q 4Q Total
----------------------------------------------------------------------------------------------------------------
Quantity sold - external market MT (thousand) 99 99
Quantity sold - internal market MT (thousand) 4 4
--------------------------------------
Quantity sold - total MT (thousand) 103 - - - 103
======================================
Average sales price - external market US$ 1,336.40 1,336.40
Average sales price - internal market US$ 1,376.14 1,376.14
Average sales price - total US$ 1,337.98 1,337.98
Long-term indebtedness, gross US$ 451 451
Short-term indebtedness, gross US$ - -
--------------------------------------
Total indebtedness, gross US$ 451 - - - 451
======================================
Stockholders' equity US$ 79 79
======================================
EBITDA US$ 56 - - - 56
Depreciation, amortization and depletion US$ (3) - - - (3)
Impairment / gain on sale US$ - - - - -
Dividends received from equity investees US$ - - - - -
--------------------------------------
Operating income US$ 53 - - - 53
Non-operating result US$ 11 11
Net financial result US$ 19 19
--------------------------------------
Income before income tax and social contribution US$ 83 - - - 83
Income tax and social contribution US$ (4) (4)
--------------------------------------
Net income US$ 79 - - - 79
----------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
2002
Information 1Q 2Q 3Q 4Q Total
-------------------------------------------------------------------------------------------------------------
Quantity sold - external market 84 108 101 100 393
Quantity sold - internal market 4 2 3 4 13
----------------------------------------------------------
Quantity sold - total 88 110 104 104 406
==========================================================
Average sales price - external market 1,318.33 1,409.42 1,288.20 1,304.79 1,304.70
Average sales price - internal market 1,352.12 1,330.47 1,335.69 1,356.26 1,355.55
Average sales price - total 1,319.81 1,332.13 1,289.68 1,306.47 1,306.38
Long-term indebtedness, gross 524 507 499 466 466
Short-term indebtedness, gross 73 49 20 20 20
----------------------------------------------------------
Total indebtedness, gross 597 556 519 486 486
==========================================================
Stockholders' equity 56 (18) (97) (3) (3)
==========================================================
EBITDA 46 57 54 58 215
Depreciation, amortization and depletion (5) (4) (4) (3) (16)
Impairment / gain on sale - - - - -
Dividends received from equity investees - - - - -
----------------------------------------------------------
Operating income 41 53 50 55 199
Non-operating result (3) 1 2 - -
Net financial result (9) (125) (153) 56 (231)
----------------------------------------------------------
Income before income tax and social contribution 29 (71) (101) 111 (32)
Income tax and social contribution (2) 2 - 10 10
----------------------------------------------------------
Net income 27 (69) (101) 121 (22)
-------------------------------------------------------------------------------------------------------------
S-4
11.2 - Aluminum Area - ALUNORTE
--------------------------------------------------------------------------------------------------------------------------------
Information 2003 2002
--------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total 1Q 2Q 3Q 4Q Total
-------------------------------------------------------------------------------------
Quantity sold -
external market MT (thousand) 289 289 222 175 115 208 720
Quantity sold -
internal market MT (thousand) 201 201 205 235 233 199 872
-------------------------------------------------------------------------------------
Quantity sold - total MT (thousand) 490 - - - 490 427 410 348 407 1,592
=====================================================================================
Average sales price -
external market US$ 170.93 170.93 148.20 152.79 162.37 154.43 153.39
Average sales price -
internal market US$ 173.60 173.60 175.94 175.38 173.97 169.51 173.79
Average sales price - total US$ 172.03 172.03 161.55 165.72 170.13 161.79 164.56
Long-term indebtedness, gross US$ 482 482 455 455 473 481 481
-------------------------------------------------------------------------------------
Total indebtedness, gross US$ 482 - - - 482 455 455 473 481 481
=====================================================================================
Stockholders' equity US$ 91 91 180 85 (30) 50 50
=====================================================================================
EBITDA US$ 23 - - - 23 14 18 23 15 70
Depreciation, amortization
and depletion US$ (3) - - - (3) (3) (3) (2) (2) (10)
Impairment / gain on sale US$ - - - - - - - - - -
Dividends received from
equity investees US$ - - - - - - - - - -
-------------------------------------------------------------------------------------
Operating income US$ 20 - - - 20 11 15 21 13 60
Non-operating result US$ - - (2) (1) 3 - -
Net financial result US$ 20 20 (3) (89) (150) 57 (185)
-------------------------------------------------------------------------------------
Income before income tax
and social contribution US$ 40 - - - 40 6 (75) (126) 70 (125)
Income tax and social
contribution US$ (4) - - (4) - - - 24 24
-------------------------------------------------------------------------------------
Net income US$ 36 - - - 36 6 (75) (126) 94 (101)
--------------------------------------------------------------------------------------------------------------------------------
S-5
Aluminum Area - Aluvale (Additional information - Unaudited) -
Consolidated Subsidiary
----------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
Information 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total 1Q 2Q 3Q 4Q Total
----------------------------------------------------------
Stockholders' equity US$ 354 354 365 275 158 282 282
==========================================================
EBITDA US$ 7 - - - 7 14 11 8 6 39
Depreciation, amortization and depletion US$ - - - - - - - - -
Impairment / gain on sale US$ - - - - - - - - - -
Dividends received from equity investees US$ (5) - - - (5) (13) (10) (7) (7) (37)
----------------------------------------------------------
Operating income US$ 2 - - - 2 1 1 1 (1) 2
Gain on investments accounted for by the equity method US$ 66 66 25 (43) (95) 138 25
Net financial result US$ 1 1 2 4 (3) 2 5
----------------------------------------------------------
Income before income tax and social contribution US$ 69 - - - 69 28 (38) (97) 139 32
Income tax and social contribution US$ 2 2 (1) (2) 1 - (2)
----------------------------------------------------------
Net income US$ 71 - - - 71 27 (40) (96) 139 30
---------------------------------------------------------------------------------------------------------------------------------
S-6
Pelletizing Affiliates - Kobrasco (Additional information - Unaudited)
---------------------------------------------------------------------------------------------------------------------------------
Information 2003
1Q 2Q 3Q 4Q Total
---------------------------------------------------------------------------------------------------------------------------------
Quantity sold - external market MT (thousand) 453 453
Quantity sold - internal market MT (thousand) 681 681
----------------------------------------------------------
Quantity sold - total MT (thousand) 1,134 - - - 1,134
==========================================================
Average sales price - external market US$ 29.89 29.89
Average sales price - internal market US$ 30.72 30.72
Average sales price - total US$ 30.39 30.39
Long-term indebtedness, gross US$ 124 124
----------------------------------------------------------
Total indebtedness, gross US$ 124 - - - 124
==========================================================
Stockholders' equity US$ (28) (28)
==========================================================
EBITDA US$ 6 - - - 6
Depreciation, amortization and depletion US$ (1) - - - (1)
Impairment / gain on sale US$ - - - - -
Dividends received from equity investees US$ - - - - -
----------------------------------------------------------
Operating income US$ 5 - - - 5
Net financial result US$ 5 5
----------------------------------------------------------
Income before income tax and social contribution US$ 10 - - - 10
Income tax and social contribution US$ (4) (4)
----------------------------------------------------------
Net income US$ 6 - - - 6
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
2002
Information 1Q 2Q 3Q 4Q Total
---------------------------------------------------------------------------------------------------------------------------------
Quantity sold - external market MT (thousand) 436 534 850 1,074 2,894
Quantity sold - internal market MT (thousand) 420 478 - 242 1,140
----------------------------------------------------------
Quantity sold - total MT (thousand) 856 1,012 850 1,316 4,034
==========================================================
Average sales price - external market US$ 31.31 29.34 29.47 29.89 29.88
Average sales price - internal market US$ 32.08 29.24 - 30.32 30.51
Average sales price - total US$ 31.69 29.30 29.47 29.97 30.09
Long-term indebtedness, gross US$ 150 143 147 114 114
----------------------------------------------------------
Total indebtedness, gross US$ 150 143 147 114 114
==========================================================
Stockholders' equity US$ 23 3 (21) (31) (31)
==========================================================
EBITDA US$ 7 2 5 5 19
Depreciation, amortization and depletion US$ (1) (1) (1) (1) (4)
Impairment / gain on sale US$ - - - - -
Dividends received from equity investees US$ - - - - -
----------------------------------------------------------
Operating income US$ 6 1 4 4 15
Net financial result US$ (2) (27) (46) 15 (60)
----------------------------------------------------------
Income before income tax and social contribution US$ 4 (26) (42) 19 (45)
Income tax and social contribution US$ (1) 9 14 (7) 15
----------------------------------------------------------
Net income US$ 3 (17) (28) 12 (30)
----------------------------------------------------------------------------------------------------------------------------------
S-7
Pelletizing Affiliates - Hispanobras (Additional information - Unaudited)
-------------------------------------------------------------------------------------------------------------------------------
Information 2003 2002
-------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total 1Q 2Q 3Q 4Q Total
-----------------------------------------------------------------------
Quantity sold - external market MT (thousand) 268 268 487 355 166 313 1,321
Quantity sold - internal market MT (thousand) 637 637 420 480 520 826 2,246
-----------------------------------------------------------------------
Quantity sold - total MT (thousand) 905 - - - 905 907 835 686 1,139 3,567
=======================================================================
Average sales price - external market US$ 29.54 29.54 31.33 31.49 31.39 24.28 29.71
Average sales price - internal market US$ 29.95 29.95 31.43 31.63 32.28 27.31 30.15
Average sales price - total US$ 29.75 29.75 31.38 31.56 32.07 25.80 29.77
-----------------------------------------------------------------------
Stockholders' equity US$ 27 27 36 31 25 27 27
=======================================================================
EBITDA US$ 3 - - - 3 5 5 5 2 17
Depreciation, amortization and depletion US$ - - - - - (1) - - (1) (2)
Impairment / gain on sale US$ - - - - - - - - - -
Dividends received from equity investees US$ - - - - - - - - - -
-----------------------------------------------------------------------
Operating income US$ 3 - - - 3 4 5 5 1 15
Net financial result US$ (1) (1) - - 1 - 1
-----------------------------------------------------------------------
Income before income tax and
social contribution US$ 2 - - - 2 4 5 6 1 16
Income tax and social contribution US$ (1) (1) (2) (2) (2) - (6)
-----------------------------------------------------------------------
Net income US$ 1 - - - 1 2 3 4 1 10
-------------------------------------------------------------------------------------------------------------------------------
S-8
Pelletizing Affiliates - Itabrasco (Additional information - Unaudited)
-------------------------------------------------------------------------------------------------------------------------
Information 2003 2002
-------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total 1Q 2Q 3Q 4Q Total
----------------------------------------------------------------
Quantity sold - external market MT (thousand) 306 306 644 533 572 431 2,180
Quantity sold - internal market MT (thousand) 507 507 233 169 243 482 1,127
----------------------------------------------------------------
Quantity sold - total MT (thousand) 813 - - - 813 877 702 815 913 3,307
================================================================
Average sales price - external market US$ 29.97 29.97 31.16 28.46 29.96 30.01 29.71
Average sales price - internal market US$ 29.20 29.20 31.90 27.79 30.33 30.60 29.13
Average sales price - total US$ 29.54 29.54 31.35 28.30 30.06 30.18 29.51
Long-term indebtedness, gross US$ 5 - 5 18 17 16 - -
----------------------------------------------------------------
Total indebtedness, gross US$ 5 - - - 5 18 17 16 - -
================================================================
Stockholders' equity US$ 20 20 27 24 20 17 17
================================================================
EBITDA US$ 2 - - - 2 2 1 1 3 7
Depreciation, amortization and depletion US$ - - - - - - - - - -
Impairment / gain on sale US$ - - - - - - - - - -
Dividends received from equity investees US$ - - - - - - - - - -
----------------------------------------------------------------
Operating income US$ 2 - - - 2 2 1 1 3 7
Non-operating result US$ - - - - - - -
Net financial result US$ (1) (1) - 3 5 (2) 6
----------------------------------------------------------------
Income before income tax and
social contribution US$ 1 - - - 1 2 4 6 1 13
Income tax and social contribution US$ (1) (1) (1) (2) (2) 1 (4)
----------------------------------------------------------------
Net income US$ - - - - - 1 2 4 2 9
-------------------------------------------------------------------------------------------------------------------------
S-9
Pelletizing Affiliates - Nibrasco (Additional information - Unaudited)
------------------------------------------------------------------------------------------------------------------------------
Information 2003 2002
------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total 1Q 2Q 3Q 4Q Total
-------------------------------------------------------------------
Quantity sold - external market MT (thousand) 469 469 407 686 290 783 2,166
Quantity sold - internal market - CVRD MT (thousand) 1,303 1,303 584 1,544 1,520 1,301 4,949
Quantity sold - internal market - Others MT (thousand) 28 28 9 27 32 32 100
-------------------------------------------------------------------
Quantity sold - total MT (thousand) 1,800 - - - 1,800 1,000 2,257 1,842 2,116 7,215
===================================================================
Average sales price - external market US$ 28.76 28.76 30.25 30.88 27.39 28.95 29.60
Average sales price - internal market US$ 27.38 27.38 30.49 31.58 25.69 28.25 28.77
Average sales price - total US$ 27.75 27.75 30.39 31.36 25.96 28.52 29.01
Long-term indebtedness, gross US$ 1 1 4 2 2 1 1
Short-term indebtedness, gross US$ 2 2 2 2 2 2 2
-------------------------------------------------------------------
Total indebtedness, gross US$ 3 - - - 3 6 4 4 3 3
===================================================================
Stockholders' equity US$ 25 25 31 28 21 23 23
===================================================================
EBITDA US$ 3 - - - 3 1 7 4 7 19
Depreciation, amortization and depletion US$ (1) - - - (1) (1) (1) (1) (1) (4)
Impairment / gain on sale US$ - - - - - - - - - -
Dividends received from equity investees US$ - - - - - - - - - -
-------------------------------------------------------------------
Operating income US$ 2 - - - 2 - 6 3 6 15
Net financial result US$ - - (1) (1) - - (2)
-------------------------------------------------------------------
Income before income tax and
social contribution US$ 2 - - - 2 (1) 5 3 6 13
Income tax and social contribution US$ (1) (1) - (2) (1) (2) (5)
-------------------------------------------------------------------
Net income US$ 1 - - - 1 (1) 3 2 4 8
------------------------------------------------------------------------------------------------------------------------------
S-10
Pelletizing Affiliates - Samarco (Additional information - Unaudited)
----------------------------------------------------------------------------------------------------------------------------------
Information 2003 2002
----------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total 1Q 2Q 3Q 4Q Total
--------------------------------------------------------------------------
Quantity sold - total MT (thousand) 3,988 3,988 3,301 3,436 3,871 3,834 14,442
==========================================================================
Average sales price - total US$ 27.59 27.59 28.48 28.78 27.93 29.22 28.60
Long-term indebtedness, gross US$ 56 56 93 87 76 67 67
Short-term indebtedness, gross US$ 123 123 169 181 170 142 142
--------------------------------------------------------------------------
Total indebtedness, gross US$ 179 - - - 179 262 268 246 209 209
==========================================================================
Stockholders' equity US$ 336 336 454 333 231 307 307
==========================================================================
EBITDA US$ 61 - - - 61 38 46 47 65 196
Depreciation, amortization and depletion US$ (10) - - - (10) (6) (6) (5) (4) (21)
Impairment / gain on sale US$ - - - - - - - - - -
Dividends received from equity investees US$ - - - - - - - - - -
--------------------------------------------------------------------------
Operating income US$ 51 - - - 51 32 40 42 61 175
Gain (loss) on investments accounted
for by the equity method US$ (1) (1) 1 (5) (14) 5 (13)
Net financial result US$ - - (6) (37) (52) 12 (83)
--------------------------------------------------------------------------
Income before income tax and
social contribution US$ 50 - - - 50 27 (2) (24) 78 79
Income tax and social contribution US$ (12) (12) (5) (3) - (8) (16)
--------------------------------------------------------------------------
Net income US$ 38 - - - 38 22 (5) (24) 70 63
----------------------------------------------------------------------------------------------------------------------------------
S-11
Iron Ore Subsidiary - Ferteco (Additional information - Unaudited) -
Consolidated Subsidiary
-----------------------------------------------------------------------------------------------------------------------------
Information 2003
-----------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
--------------------------------------------------
Quantity sold - external market - Iron Ore MT (thousand) 3,503 3,503
Quantity sold - internal market - Iron Ore MT (thousand) 1,376 1,376
--------------------------------------------------
Quantity sold - total - Iron Ore MT (thousand) 4,879 - - - 4,879
==================================================
Quantity sold - external market - Pellets MT (thousand) 358 358
Quantity sold - internal market - Pellets MT (thousand) 498 498
--------------------------------------------------
Quantity sold - total - Pellets MT (thousand) 856 - - - 856
==================================================
Average sales price - external market - Iron Ore US$ 16.29 16.29
Average sales price - internal market - Iron Ore US$ 7.73 7.73
Average sales price - total - Iron Ore US$ 13.87 13.87
Average sales price - external market - Pellets US$ 28.51 28.51
Average sales price - internal market - Pellets US$ 30.40 30.40
Average sales price - total - Pellets US$ 29.62 29.62
Long-term indebtedness, gross US$ 82 82
Short-term indebtedness, gross US$ 10 10
--------------------------------------------------
Total indebtedness, gross US$ 92 - - - 92
==================================================
Stockholders' equity US$ 406 406
==================================================
--------------------------------------------------
EBITDA US$ 38 - - - 38
Depreciation, amortization and depletion US$ (3) - - - (3)
Impairment / gain on sale US$ - - - - -
Dividends received from equity investees US$ - - - - -
--------------------------------------------------
Operating income US$ 35 - - - 35
Gain on investments accounted for by the equity method US$ 1 1
Non-operating result US$ - -
Net financial result US$ (3) (3)
--------------------------------------------------
Income before income tax and social contribution US$ 33 - - - 33
Income tax and social contribution US$ (10) (10)
--------------------------------------------------
Net income US$ 23 - - - 23
-----------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Information 2002
---------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
----------------------------------------------------------------
Quantity sold - external market - Iron Ore 2,020 2,699 2,783 2,142 9,644
Quantity sold - internal market - Iron Ore 512 832 1,594 1,146 4,084
----------------------------------------------------------------
Quantity sold - total - Iron Ore 2,532 3,531 4,377 3,288 13,728
================================================================
Quantity sold - external market - Pellets 448 736 554 645 2,383
Quantity sold - internal market - Pellets 277 498 703 697 2,175
----------------------------------------------------------------
Quantity sold - total - Pellets 725 1,234 1,257 1,342 4,558
================================================================
Average sales price - external market - Iron Ore 16.53 17.32 16.38 16.56 16.76
Average sales price - internal market - Iron Ore 3.71 6.20 6.47 5.42 6.02
Average sales price - total - Iron Ore 14.59 14.70 12.66 12.68 13.46
Average sales price - external market - Pellets 28.08 29.68 26.78 28.73 28.45
Average sales price - internal market - Pellets 19.02 23.15 23.38 19.73 21.60
Average sales price - total - Pellets 26.63 27.05 24.88 24.06 25.18
Long-term indebtedness, gross 94 88 74 82 82
Short-term indebtedness, gross 55 58 52 23 23
----------------------------------------------------------------
Total indebtedness, gross 149 146 126 105 105
================================================================
Stockholders' equity 132 429 301 359 359
================================================================
----------------------------------------------------------------
EBITDA 22 25 40 18 105
Depreciation, amortization and depletion (4) (4) (3) (2) (13)
Impairment / gain on sale - - - - -
Dividends received from equity investees - - - - -
----------------------------------------------------------------
Operating income 18 21 37 16 92
Gain on investments accounted for by the equity meth - - (32) 6 (26)
Non-operating result - - - 2 2
Net financial result (2) (17) (19) 4 (34)
----------------------------------------------------------------
Income before income tax and social contribution 16 4 (14) 28 34
Income tax and social contribution (4) (1) 1 (13) (17)
----------------------------------------------------------------
Net income 12 3 (13) 15 17
---------------------------------------------------------------------------------------------------------------------
S-12
Pelletizing Affiliates - GIIC (Additional information - Unaudited)
-----------------------------------------------------------------------------------------------------------------------
Information 2003 2002
------------------------------------------------------------------------------------------------------------------------
1Q (*) 2Q 3Q 4Q Total 1Q 2Q 3Q 4Q Total
--------------------------------------------------------------
Quantity sold - external market MT (thousand) 772 772 823 676 643 932 3,074
--------------------------------------------------------------
Quantity sold - total MT (thousand) 772 772 823 676 643 932 3,074
==============================================================
Average sales price - external market US$ 41.00 41.00 41.76 40.30 41.55 40.40 40.98
Average sales price - total US$ 41.00 41.00 41.76 40.30 41.55 40.40 40.98
--------------------------------------------------------------
Stockholders' equity US$ 67 67 66 68 70 73 73
==============================================================
EBITDA US$ 5 - - - 5 5 2 3 6 16
Depreciation, amortization and depletion US$ (1) - - - (1) (1) (1) (2) (2) (6)
Impairment / gain on sale US$ - - - - - - - - - -
Dividends received from equity investees US$ - - - - - - - - - -
--------------------------------------------------------------
Operating income US$ 4 - - - 4 4 1 1 4 10
Non-operating result US$ - - - - 1 - 1
Net financial result US$ - - - - - (1) (1)
--------------------------------------------------------------
Net income US$ 4 - - - 4 4 1 2 3 10
------------------------------------------------------------------------------------------------------------------------
(*) The figures refers to the statements as of february/03.
S-13
Manganese and Ferroalloys Area - Sibra (Additional information - Unaudited) -
Consolidated Subsidiary
------------------------------------------------------------------------------------------------------------------------------
Information 2003 2002
------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total 1Q 2Q 3Q 4Q Total
-----------------------------------------------------------------------
Quantity sold - external
market - Ferroalloys MT (thousand) 30 30 23 39 63 35 160
Quantity sold - internal
market - Ferroalloys MT (thousand) 37 37 37 39 41 50 167
-----------------------------------------------------------------------
Quantity sold - total MT (thousand) 67 - - - 67 60 78 104 85 327
=======================================================================
Quantity sold - external
market - Manganese MT (thousand) 185 185 243 212 181 192 828
Quantity sold - internal
market - Manganese MT (thousand) 94 94 15 35 58 90 198
-----------------------------------------------------------------------
Quantity sold - total MT (thousand) 279 - - - 279 258 247 239 282 1,026
=======================================================================
Average sales price - external
market - Ferroalloys US$ 582.67 582.67 525.00 384.64 483.67 548.54 479.65
Average sales price - internal
market - Ferroalloys US$ 488.57 488.57 519.19 506.79 379.56 339.76 428.31
Average sales price - total US$ 530.70 530.70 521.43 445.72 442.63 425.73 453.43
Average sales price - external
market - Manganese US$ 42.24 42.24 52.49 44.38 44.91 46.96 46.96
Average sales price - internal
market - Manganese US$ 36.60 36.60 68.27 58.11 50.97 46.47 46.47
Average sales price - total US$ 40.34 40.34 53.40 46.32 46.38 45.86 46.86
Long-term indebtedness, gross US$ 20 20 21 18 20 22 22
Short-term indebtedness, gross US$ 37 37 30 28 25 36 36
-----------------------------------------------------------------------
Total indebtedness, gross US$ 57 - - - 57 51 46 45 58 58
=======================================================================
Stockholders' equity US$ 89 89 97 85 75 79 79
=======================================================================
EBITDA US$ 12 12 17 11 18 8 54
Depreciation, amortization
and depletion US$ (2) (2) (1) (1) (1) (2) (5)
Impairment / gain on sale US$ - - - - - - -
Dividends received from
equity investees US$ - - - - - - -
-----------------------------------------------------------------------
US$ 10 - - - 10 16 10 17 6 49
Operating income
Non-operating result US$ - - (1) - - - (1)
Net financial result US$ (3) (3) - (2) 5 (11) (8)
-----------------------------------------------------------------------
Income before income tax and
social contribution US$ 7 - - - 7 15 8 22 (5) 40
Income tax and social contribution US$ (2) (2) - (1) (6) - (7)
-----------------------------------------------------------------------
Net income US$ 5 - - - 5 15 7 16 (5) 33
--------------------------------------------------------------------------------------
S-14
Indexes on CVRD's Consolidated Debt (Additional information - Unaudited)
-------------------------------------------------------------------------------
1st
Quarter
2003
-------
Current debt
Current portion of long-term debt - unrelated parties.....................789
Short-term debt............................................................61
Loans from related parties.................................................56
-------
906
-------
Long-term debt
Long-term debt - unrelated parties......................................2,401
Loans from related parties..................................................7
-------
2,408
-------
Financial Result, net
Financial expenses
Third party - local debt...................................................(5)
Third party - foreign debt................................................(39)
Related party debt.........................................................(5)
-------
Gross interest (49)
Labor and civil claims and tax-related actions.............................(6)
Tax on financial transactions - CPMF ......................................(4)
Derivatives................................................................(8)
Others....................................................................(15)
-------
(82)
-------
Financial income
Cash and cash equivalents..................................................10
Others.....................................................................18
-------
28
-------
Financial expenses, net...................................................(54)
-------
Foreign exchange and monetary gain (losses) on liabilities................276
Foreign exchange and monetary gain (losses) on assets....................(226)
-------
Foreign exchange and monetary gain (losses), net...........................50
-------
Financial result, net......................................................(4)
=======
Gross debt (current plus long-term debt)................................3,314
Gross interest ............................................................49
EBITDA ...................................................................442
Stockholders' equity....................................................3,640
EBITDA / Gross interest..................................................9.02
Gross Debt / EBITDA .....................................................1.87
Gross debt / Shareholders' equity..........................................48
S-15
Calculation of EBITDA (Additional information - Unaudited)
1st
Quarter
2003
-------
Operating income ....................................... 363
Depreciation ........................................... 43
---
406
Impairment of property, plant and equipment ............ --
Dividends received ..................................... 36
---
EBITDA ................................................. 442
===
Margin EBITDA .......................................... 40%
Contingencies .......................................... 9
---
EBITDA adjusted ........................................ 451
===
S-16
Board of Directors, Fiscal Council and Executive Officers
Board of Directors Executive Officers
Sergio Ricardo Silva Rosa Roger Agnelli
Chairman Chief Executive Officer
Arlindo Magno de Oliveira Antonio Miguel Marques
Executive Officer for Equity Holdings
Claudio Bernardo Guimaraes de Moraes and Business Development
Erik Persson Armando de Oliveira Santos Neto
Executive Officer for Ferrous Minerals
Francisco Valadares Povoa
Carla Grasso
Joao Moises Oliveira Executive Officer for Human Resources
and Corporate Services
Luiz Alexandre Bandeira de Mello
Diego Cristobal Hernandez Cabrera
Mario da Silveira Teixeira Junior Executive Officer for Non-Ferrous
Minerals
Renato da Cruz Gomes Fabio de Oliveira Barbosa
Chief Financial Officer
Ricardo Carvalho Giambroni
Gabriel Stoliar
Romulo de Mello Dias Executive Officer for Planning
Guilherme Rodolfo Laager
Fiscal Council Executive Officer for Logistics
Joaquim Vieira Ferreira Levy
Luiz Octavio Nunes West
Pedro Carlos de Mello
Vicente Barcelos
Wilson Risolia Rodrigues
Eduardo de Carvalho Duarte Otto de Souza Marques Junior
Chief Accountant Head of Control
CRC-RJ 57439 Department
S-17
BR PRESS RELEASE
BR GAAP
BOVESPA: VALE3, VALE5
NYSE: RIO, RIOPR
LATIBEX: XVALO, XVALP
www.cvrd.com.br
rio@cvrd.com.br
Investor Relations
Department
Roberto Castello Branco
Barbara Geluda
Daniela Tinoco
Eduardo Mello Franco
Rafael Azevedo
Tel:(5521)3814-4540
1Q 03
[LOGO OF COMPANHIA VALE DO RIO DOCE]
PERFORMANCE OF COMPANHIA VALE DO RIO DOCE IN THE FIRST QUARTER OF 2003
=======================================================================
The financial and operational information contained in this press release,
except otherwise indicated, refers to the Parent Company and was calculated in
accordance with Brazilian generally accepted accounting principles (Brazilian
GAAP). This information, with the exception of that referring to investments and
markets, is based on the quarterly financial statements, which have been revised
by the independent accountants.
Rio de Janeiro, May 14, 2003 - Companhia Vale do Rio Doce (CVRD) has reported a
net profit of R$ 1.164 billion in the first quarter of 2003 (1Q03),
corresponding to R$ 3.03 per share, which is the third largest quarterly profit
in the Company's history. Net earnings in 1Q03 were 83.8% higher than the
results obtained in 1Q02 and return on equity (ROE), on an annualized basis,
reached 35%.
Gross operating revenues amounted to R$ 2.518 billion, up 57.3% in relation to
1Q02. CVRD's consolidated exports amounted to US$ 800 million in 1Q03, up 12.4%
year over year. The Company's net exports (exports less imports) totalled US$
684 million, which accounted for 18.2% of Brazil's trade surplus in the first
three months of this year.
Equity results of investment in subsidiaries and affiliates amounted to R$ 335
million, compared to R$ 412 million in 4Q02 and R$ 152 million in 1Q02. The main
contribution was from aluminum operations, which contributed R$ 221 million.
Cash generation, as measured by EBITDA (earnings before interest, taxes,
depreciation and amortization), amounted to R$ 1.148 billion, also the third
highest quarterly result, at this line, in the Company's history. EBITDA margin,
the ratio between EBITDA and net revenues, amounted to 47.5%, slightly higher
than that obtained in 1Q02, of 47.0%.
CVRD showed a solid performance in 1Q03, despite an environment of slow global
economic growth and heavy rainfall in the Southeast of Brazil, which affected
its iron ore operations. The performance reflects a good strategic execution and
a strong commitment to shareholder value creation.
The Board of Directors approved the proposal by the Executive Board, announced
on January 30, 2003, for the payment of interest on shareholders equity of R$
1.62 per share, totalling R$ 621.8 million. This payment was made from April 30
onwards and is the first instalment of the minimum dividends to
1
BR GAAP
1Q 03
shareholders referring to the year 2003, of US$ 1.04 per share, publicly
announced on January 30, 2003.
The figure of R$ 1.62 per share was obtained through the conversion of the
figure of US$ 0.52 per share into Reais (BRL), at R$ 3.1154 per USD, the rate of
exchange offered by the Central Bank of Brazil on April 15, 2003, in line with
the procedures announced publicly on January 30, 2003.
The payment made was the first to be set out under the norms of CVRD's Dividend
Policy, approved and publicly announced on November 13, 2002. The definition of
this policy, a pioneer initiative in Latin America, had the main object of
reducing uncertainty to the shareholder, guaranteeing a minimum level of
remuneration from the first month of the year.
The volume of iron ore and pellets shipped in the quarter amounted to 36.391
million tons, 7.7% lower than in 4Q02, but up 8.1% compared to 1Q02. Although
there is excess demand in the global seaborne market, iron ore shipments in
1Q03, of 31.3 million tons, were lower than those in 4Q02, of 34.6 million tons,
not only due to seasonal effects - the first quarter is the weakest in the year
- but also temporary logistics problems. Pellet shipments, which amounted to
5.084 million tons, were up 54.8% in comparison to 1Q02, and up 4.5% compared to
4Q02.
The heavy rains which fell in the Southeast of Brazil in the first few months of
the year affected logistics operations for several days and caused problems in
the functioning of the Gongo Soco mine in the Southern System, resulting in a
temporary shutdown in its activities. Operations at Gongo Soco have already been
restarted, and production is expected to reach full capacity during May.
CVRD has been maximizing its efforts to cater to customer demand, increasing
productivity in its mines - production at Carajas in March, of 5.2 million tons,
was the highest since operations there began in 1985 - and purchasing iron ore
from small mining companies.
At the same time, the Company is investing in iron ore mining - developing the
Brucutu and Fabrica Nova mines in the Southern System and enlarging capacity at
Carajas. It has also been making investments in logistics, building Pier III at
the Ponta da Madeira Maritime Terminal and increasing the shiploading speed
capacity in the port of Tubarao. These investments, estimated at some US$ 500
million over the next few years, will replace the capacity that will be lost
through the exhaustion of various mines in the Southern System and will add
further capacity to enable CVRD to meet continued growth in demand.
Despite all the efforts made, it is expected that the excess demand in the
global seaborne iron ore market will persist during 2004, given that most of
CVRD's expansion projects and those of its main peers, will only begin
operations from 2005.
CVRD's railways - Vitoria a Minas and Carajas - in 1Q03 transported 3.389
billion net ton kilometers (ntk) of general cargo (products other than iron ore
and pellets) compared to 3.787 billion ntk in 4Q02 and 3.401 billion ntk in
1Q02. Ports and marine terminals handled 5,392 million tons of general cargo,
compared to 5,370 million in 4Q02 and 4,473 million in 1Q02.
The Parent Company's capital expenditure budget for 2003 on projects,
maintenance, mineral exploration and technological development, as well as
information technology and environmental protection measures, amounted to US$
1.546 billion. In 1Q03, capital expenditure totalled US$ 180.3 million. In
2
addition, US$ 17.6 million was spent on purchasing control of Elkem Rana, a
Norwegian ferro-alloys producer, now renamed Rio Doce Manganese Norway.
BR GAAP
1Q 03
SELECTED FINANCIAL INDICATORS
million R$
1Q 02 4Q 02 1Q 03
---------- ---------- ----------
Gross Operating Revenue 1,601 2,786 2,518
Gross Margin (%) 44.4 52.1 48.4
Net Earnings 633 1,541 1,164
EBITDA 725 1,359 1,148
EBITDA Margin (%) 47.0 50.9 47.5
ROE annualized (%) 21.0 48.3 35.0
Investments (US$ million) * 158 219 180
*not including acquisitions
[GRAPHIC APPEARS HERE] RELEVANT EVENTS
Strategic moves and value creation
Various important strategic moves were made that have significant repercussions
on CVRD's ferrous minerals and logistics businesses, consistent with shareholder
value creation.
On March 31 an agreement was signed with Mitsui & Co. Ltd. for the purchase, for
US$ 426.4 million, of 50% of the common share capital and 40% of the preferred
share capital of Caemi Mineracao e Metalurgia S.A. (Caemi) the world's fourth
largest iron ore producer. This transaction is subject to approval by the
anti-trust authorities and once completed, CVRD will own all the common shares
in Caemi and 40% of the company's preferred shares, representing 60.2% of the
total capital.
CVRD completed the purchase of 5.17% of the total capital of CST for US$ 59.7
million. CVRD has a put option, built into the contract, to divest from 2007
onwards. The Board of Directors of CST has approved the construction of a third
blast furnace for its steel plant. The conclusion of this project, scheduled for
March 2006, will result in extra sales of iron ore and pellets by CVRD, of
approximately 4 million tons a year.
CVRD and Nucor, the largest steel producer in the US, have signed a contract for
the construction and operation of a pig-iron plant in the north of Brazil, with
an initial production capacity of 380,000 tons a year. The plant will utilize
iron ore from Carajas and charcoal produced from eucalyptus trees planted in the
forests of Celmar, a wholly owned subsidiary of CVRD. Total investment in this
project will amount to US$ 80 million, with 78% of the capital owned by CVRD and
22% by Nucor.
The creation of this joint venture is part of the Company's strategy of
increasing its penetration into the North American market, through the sale of
iron ore contained in metallics and semi-finished steel products.
For US$ 17.6 million, CVRD acquired Elkem Rana AS, a producer of alloys, located
in Mo I Rana, in Norway. The plant, which previously produced ferro- chrome
alloys, is to be converted for the production of ferro-manganese alloys,
supplied by manganese ore produced from CVRD's mines in Brazil. The company,
which has been renamed Rio Doce Manganese Norway (RDMN), will increase CVRD's
presence in the global manganese and alloy markets, where it
3
BR GAAP
1Q 03
has already become one of the market leaders. RDMN is scheduled to start
producing ferro manganese alloys in 3Q03.
Finally, CVRD has signed a letter of intent to buy and sell various stakes in
the logistics companies - FCA, Sepetiba Tecon and CFN. These transactions, whose
finalisation is subject to various conditions, which include approval by the
regulatory authorities, will permit CVRD to increase its stake in FCA, a railway
that is important to its logistics operations, and divest itself of its stakes
in the marine terminal of Sepetiba Tecon and CFN, a railway line that passes
through several states in the Northeast of Brazil. This move will free up
financial and human resources to enable the Company to focus on exploiting its
main logistics assets.
Completion of alumina capacity expansion project
Alunorte's third production line has begun operations which has brought the
company's alumina production up to 2.4 million tons a year. A total of
approximately US$ 300 million was invested in the project, which corresponds to
a cost of US$ 364 per ton of capacity, an extremely competitive cost for a
brownfield project. With this extra capacity, Alunorte has now become one of the
five largest alumina refineries in the world. CVRD's strategic focus for its
businesses in the aluminum chain is the exploitation of its competitive
advantages in the areas of bauxite and alumina.
In a few weeks, MRN will be commissioning the expansion of its production
capacity in Trombetas, from 11 to 16.3 million tons of bauxite per year. New
projects, Paragominas, a bauxite greenfield project, and Alunorte stages 4 and
5, a brownfield project, are scheduled to commence development this year.
Board of Directors
At the General Shareholders Meeting held on April 16, 2003, CVRD's new Board of
Directors was elected, consisting of 11 members, with a mandate of two years.
[GRAPHIC APPEARS HERE] SHORT TERM OUTLOOK
In the first quarter of this year, the global economy grew slower than had been
predicted at the end of 2002. Despite the fact that part of this negative
performance was explained by the war in Iraq, the rapid end to the conflict did
not alter macro-economic fundamentals. There are still innumerable
uncertainties, including the question of the US economy's capacity to return to
faster and more vigorous economic growth, against a background of excess supply,
the threat of deflation in Germany, as well as the potential effects of
geopolitical tension and the severe acute respiratory syndrome (SARS) epidemic.
Despite this scenario, global steel production continued to grow at increasing
rates, with accumulated volume in the first three months of the year being 8.8%
higher than the same period in 2002. Among the world's major producers, China
registered the highest increase with 18.1%, followed by Japan with 8.2%, the US
6.5 %, Germany 6.1%, South Korea 3.0% and Brazil 6.9%.
In 1Q03 China imported 34.2 million tons of iron ore, which on an annualized
basis is 136.8 million tons, up 23% on that country's import total for 2002.
Japanese imports in the quarter amounted to 33.4 million tons in the first three
months of the year, up 8.7% compared to 1Q02. Despite the fact that the main
4
BR GAAP
1Q 03
producers are operating at full capacity, the strong growth in global steel
production caused an excess level of demand in the global seaborne iron ore
trade, which is likely to extend into 2004.
The behaviour of freight shipping prices is usually a good indicator for the
iron ore market. Thus, for example at the end of 1998, the freight differential
between Brazil/Japan and Australia/Japan, according to data from Clarksons,
reached a 14-year low, at around US$ 1.60 per ton of iron ore. At that time, the
demand for ore was very weak due to the recessive effect from the financial
crisis in the economies of Southeast Asia, which resulted in an 11% drop in
prices in 1999.
Two-digit price increases took place in 1989-1990, precisely when the
differential between freight rates reached its 14-year high.
Between April 2002 and April 2003 freight prices rose by some US$ 8.0 per ton
for Brazil/Japan shipping freight, with the spread in relation to
Australia/Japan rising in the period from US$ 3.50 to US$ 7.50 per ton,
coinciding with strong expansion in demand for iron ore. Currently it is
estimated that demand in the global seaborne iron ore market for 2003 will total
510 million tons, which would present an increase of around 30 million tons,
compared to the amount shipped last year.
The alumina market has undergone a similar pattern to that of iron ore. The
strong increase in aluminum production in China and by other non-integrated
producers, provoked a significant rise in the spot price of alumina, which is
working its way through into contract prices. Similarly to the iron ore market,
we expect this situation to prevail during 2003 and 2004, due to the absence of
new projects in the market, with the exception of Stage 3 of Alunorte's
expansion plan, which is already in full operation. With this expansion, CVRD
will be in a better situation to benefit from the rise in alumina prices.
In contrast to the alumina market, there are predictions of excess supply in the
global aluminum market for 2003 and 2004, where prices are likely to fall below
US$ 1,500 per ton.
The disparity in behaviour between the aluminum and alumina market is likely to
be corrected up to 2005. On the one hand, the expected recovery of global
industrial output growth will fuel demand for the metal and the consequent
consumption of existing inventories, and on the other hand, the high alumina
prices and the energy problems in the US Pacific Northwest will constrain
aluminum supply growth.
The significant growth in Brazilian agricultural output, with a record grain
crop, had a favourable impact on demand for potash and CVRD's logistics
services. For logistics, the most intense effect of the harvest will be felt on
the next two quarters. And the rise in Brazil's exports also contributed
favourably in terms of greater demand for logistics services.
It should be pointed out that, despite the SARS epidemic, up to now there has
been no sign of any slowdown in Chinese demand for iron ore and alumina.
Nonetheless, CVRD is taking a cautious stance, because in addition to other
sources of uncertainty hovering over the global economy, it is practically
impossible to anticipate the effective impact of this epidemic on China's
macro-economic performance and that of other Asian countries and its
implications on the demand for minerals and metals. In the case of iron ore, an
unexpected slowdown in demand could be, at least partially, absorbed by cutting
purchases from third parties.
5
BR GAAP
1Q 03
[GRAPHIC APPEARS HERE] SALES VOLUME AND REVENUES
Iron ore and pellet sales volume in 1Q03, of 36.391 million tons, was 8.1%
higher than in the first quarter of last year and down 7.7% in relation to 4Q02.
The rise in relation to 1Q02 can be explained by the strong growth in demand for
iron ore and pellets, generated mainly by increased Chinese imports. CVRD is
operating at full capacity, and even so, there is unfulfilled demand. The drop
in sales in the quarter relative to 4Q02 is explained by two factors: (i)
seasonality, statistically the first quarter is the weakest of the year; and
(ii) the months of January and February were marked by heavy rainfall in the
Southeast of Brazil, causing operational problems in the Gongo Soco mine, and
also iron ore transport problems.
Sales of ore fines were responsible for 77.4% of shipments, lumps for 8.6% and
pellets for 14.0%. It should be pointed out that, with the increased demand for
steel products, there is a need for higher productivity by blast furnaces, which
increases demand for ore with a high iron content and pellets. In this way, the
percentage sales of this last product, as a proportion of CVRD's total sales of
iron ore and pellets, has been increasing in the last few quarters, rising from
9.8% in 1Q02, to 12.3% in 4Q02 and 14.0% in 1Q03.
The Company regularly buys small quantities of iron ore from other mining
companies to mix with its products, with a view to meeting particular client
specifications. The strong increase in third parties purchases that has taken
place recently is due to an unexpected high growth in demand.
For pellets the situation is different. CVRD normally sells about 20 million
tons of pellet feed per year to the pellet joint ventures (Nibrasco, Itabrasco,
Hispanobras and Kobrasco) and purchases around 10 million tons of pellets from
the joint ventures for direct sale to its clients. These purchases replaced the
tolling method previously used up to 1999, by which the Company sent pellet feed
to the pellet plants, which provided a raw material transformation service,
returning the finished pellet product ready for shipment to clients.
The purchases of iron ore from third parties, to meet clients demand,
contributes to reduce margins, once it is a more expensive alternative than our
production. On the other hand, these purchases imply in a higher return on
invested capital (ROIC) due to expansion of cash generation without increasing
the asset base. Also, third party acquisitions of iron ore offers a good
protection against demand volatility, once it can be easily increased during
stronger demand periods as well as reduced in periods of demand slow down.
Pellets acquisition from joint ventures do not generate negative impact on
margins. CVRD gains from the sale of iron ore to these joint ventures as well as
from the profitability of the pellet business, usually appropriated by CVRD as
its shareholder.
Approximately 72% of iron ore and pellet shipments in 1Q03 were directly
destined for export markets.
China, with 5.4 million tons, was CVRD's principal export market for iron ore
and pellets, with 20.6% of the volume sold to external markets. Sales to the
Chinese market were up 38.5% on the previous quarter and 22.7% in relation to
1Q02. Thus, the Parent Company maintained a 16% market share of China's total
imports. This was followed by Japan, with 3.9 million tons, Germany with 3.5
million tons, South Korea with 1.6 million tons and France with 1.4 million
tons. Asia absorbed 44.7% of external sales, Europe 39.7% and the Americas 9.9%.
6
BR GAAP
1Q 03
Of the tranche sold domestically, 50% went to the pellet joint ventures, whose
production is almost entirely dedicated to international markets.
Sales of potash amounted to 158,000 tons, with the Taquari - Vassouras mine
operating at above nominal capacity of 600,000 tons per year. This volume was
39.8% higher than in 1Q02, but lower than the 203,000 tons sold in 4Q02, when
previous accumulated stocks were drawn down. Thus, estimated sales for 2003 are
of 620,000 tons, limited by current production. The project to enlarge capacity
to 850,000 tons a year is likely to see completion by mid 2005.
Sales of gold amounted to 25,800 ounces in 1Q03 compared to 40,600 ounces in
4Q02 and 115,500 ounces in 1Q02. The drop in sales reflects the closure of the
Igarape Bahia gold mine, in June 2002 and the drop in production from our last
mining operation, Fazenda Brasileiro, which is nearing exhaustion and likely to
see closure in December 2004. Estimated gold production for 2003 is only 112,000
ounces. After the exhaustion of the Fazenda Brasileiro mine, CVRD's gold
production will be in the form of a copper by-product, whose production is
scheduled to start in the middle of 2004, with the commissioning of the Sossego
mine. In addition to this, CVRD continues to invest in mineral prospecting in
search of other gold deposits.
General cargo (other than iron ore and pellets) transported by the Company's
railways, measured in net ton kilometers (ntk), totalled 3.4 billion (Vitoria a
Minas 2.7 billion, Carajas 662 million). Performance was slightly worse than the
previous quarter, which recorded 3.8 billion ntk, and the same as in 1Q02.
General cargo handling at CVRD's ports and terminals, which amounted to 5.392
million tons, was 20.6% higher than in 1Q02 and practically the same as in the
previous quarter.
The Vitoria a Minas railway, the Parent Company's main railway for the transport
of general cargo, continued to report gains in productivity, expressed by the
continuous rise in million ntks, per locomotive in service per day: 0.74 in
1Q02, 0.82 in 2Q02, 0.83 in 3Q02, 0.83 in 4Q02 and 0.90 in 1Q03. Fuel
consumption remained constant compared to previous quarters, at about 300 ntks
per liter.
The Carajas Railway beat a new world record in MKBF terms (mean kilometers
between failure), reaching 10,000,616 kilometers of travel between failure,
beating the previous record of 9.3 million MKBF registered in Australia. MKBF is
the international reliability measure for railways, indicating the average
amount of kilometers travelled between failure, considered to be the undesired
stoppage of a given train. The record achieved is another indicator of the
world-class quality of CVRD's railway network.
7
BR GAAP
1Q 03
SALES VOLUME
thousand tons
1Q 02 4Q 02 1Q 03
---------- ---------- ----------
Iron Ore and Pellets 33,663 39,424 36,391
Iron Ore 30,379 34,557 31,307
Fines 27,016 30,977 28,157
Lumps 3,363 3,580 3,150
Pellets 3,284 4,867 5,084
Gold (troy ounce) 115,455 40,639 25,753
Potash 113 203 158
Ports Services 5,517 7,634 5,624
GENERAL CARGO TRANSPORTATION
million ntk
1Q 02 4Q 02 1Q 03
---------- ---------- ----------
Vitoria a Minas Railway 2,737 2,968 2 ,727
Carajas Railway 664 819 662
Total 3,401 3,787 3,389
SALES OF IRON ORE AND PELLETS
million tons
DESTINATION 1Q 02 4Q 02 1Q 03
---------- ---------- ----------
ASIA
China 4.4 3.9 5.4
South Korea 2.1 1.9 1.6
Philippines 0.6 0.8 0.4
Japan 3.7 4.3 3.9
Taiwan 0.4 0.8 0.4
Total 11.2 11.7 11.7
EUROPE
Germany 3.4 4.3 3.5
Spain 0.8 0.7 0.8
France 1.3 1.6 1.4
Italy 1.0 1.2 1.2
United Kingdom 0.7 0.4 0.5
Others 2.9 3.7 3.0
Total 10.1 11.9 10.4
AMERICAS
Argentina 0.4 0.7 0.8
United States 0.9 0.7 1.0
Others 0.3 0.9 0.8
Total 1.6 2.3 2.6
AFRICA/MIDDLE EAST/AUSTRALASIA
Bahrain 0.8 0.5 0.5
Others 0.8 1.6 1.0
Total 1.6 2.1 1.5
TOTAL 24.5 28.0 26.2
DOMESTIC MARKET 1Q 02 4Q 02 1Q 03
---------- ---------- ----------
Steel Mills 5.1 6.2 5.1
Pellet JV's 4.0 5.2 5.0
Total 9.1 11.4 10.1
TOTAL 33.6 39.4 36.3
8
BR GAAP
1Q 03
Gross operating revenue amounted to R$ 2.518 billion, 84% of which was either
denominated in, or indexed to the US$. Revenues obtained from the sales of iron
ore amounted to R$ 1.554 billion, 61.7% of total revenue, having increased by
56.9% in relation to 1Q02, but down 11.9% compared to the previous quarter.
Pellet sales produced gross revenues of R$ 504 million in 1Q03, 20% of the
Parent Company's total revenues compared to R$ 515 million in 4Q02 and R$ 222
million in 1Q02. In addition to this, revenues from operational services
provided to the five joint venture pellet plants amounted to R$ 21 million in
1Q03, compared to R$ 32 million in 4Q02 and R$ 23 million in 1Q02.
In the case of iron ore, the fall in revenues this quarter, compared to that
recorded in 4Q02, of R$ 210 million, was due to a drop in the volume sold and to
the average depreciation of the US dollar against the Brazilian Real of 5.1%,
while the fall in revenues from the sale of pellets, of R$ 11 million, was
caused basically by exchange rate volatility.
Revenue from logistics services remained practically constant: R$ 327 million in
1Q03, 13% of the total revenue of the Parent Company, when compared to R$ 329
million in 4Q02, but significantly higher in relation to 1Q02, which recorded
revenues of R$ 230 million.
The drop in the volume of gold sales provoked a sharp fall in revenues from this
source, from R$ 80 million in 1Q02 to R$ 48 million in 4Q02 and R$ 32 million in
1Q03.
GROSS REVENUE BY PRODUCT
million R$
1Q 02 % 4Q 02 % 1Q 03 %
---------- ---------- ---------- ---------- ---------- ----------
Iron Ore 989 61.8 1,764 63.3 1,554 61.7
Domestic Market 238 463 412
Export Market 751 1,301 1,142
Pellets 222 13.9 515 18.5 504 20.0
Domestic Market 47 77 98
Export Market 175 438 406
Railroad Transportation 188 11.7 250 9.0 259 10.3
Port Services 42 2.6 79 2.8 68 2.7
Potash 38 2.4 90 3.2 73 2.9
Gold 80 5.0 48 1.7 32 1.3
Pelletizing Plant Operations 23 1.4 32 1.1 21 0.8
Others 17 1.1 8 0.3 7 0.3
Total 1,601 100.0 2,786 100.0 2,518 100.0
[GRAPHIC APPEARS HERE] Profit of R$ 1.2 billion
Net earnings in 1Q03 amounted to R$ 1.164 billion, 83.9% higher than in the same
period last year and 24.5% lower than in 4Q02.
When compared to 4Q02 net earnings, 1Q03 results were down 24.5%. This
volatility mainly reflects the impact of exchange rate variation between the
Real and the US dollar on CVRD's net foreign currency-denominated liabilities,
which in the short term tends to exercise a significant influence on earnings
behaviour. In 4Q02, monetary variation contributed R$ 626 million to net
earnings of R$ 1.541 billion, while in 1Q03 it contributed much less: R$ 279.9
million.
The results of investment in subsidiaries and affiliates was down by R$ 77
million in comparison to 4Q02, and R$ 183 million higher than in 1Q02,
9
BR GAAP
1Q 03
contributing R$ 335 million to earnings in the quarter. The business area of
iron ore and pellets contributed R$ 34 million, manganese and ferro-alloys with
R$ 16 million, steel with R$ 65 million and aluminum with R$ 221 million.
MRN shipped 2.2 million tons of bauxite and obtained net earnings of R$ 59.5
million. Alunorte, already operating for part of the quarter with its new extra
production capacity, sold 490,000 tons of alumina at an average price of US$ 172
per ton, compared to US$ 162 in 4Q02. EBITDA generated amounted to R$ 83.5
million and net earnings in the first three months of the year amounted to R$
101.9 million. Albras shipped 103,000 tons of primary aluminum, generating
EBITDA of R$ 198.2 million and earnings of R$ 223.2 million in 1Q03. Valesul
reported net earnings of R$ 27.2 million.
Ferteco sold 4.9 million tons of iron ore and 856,000 tons of pellets, obtaining
a net profit of R$ 88.9 million, and generating EBITDA of R$ 123.3 million.
Samarco recorded net earnings of R$ 139.5 million, having sold 4 million tons of
pellets and pellet feed.
RESULTS OF EQUITY INVESTMENTS - BY BUSINESS AREA
million R$
Business Area 1Q 02 4Q 02 1Q 03
---------- ---------- ----------
Ferrous
Iron Ore and Pellets 151 (143) 34
Manganese and Ferro-alloys 20 91 16
Non-ferrous 5 24 24
Logistics (76) (98) (40)
Steel (8) 120 65
Aluminum 65 458 221
Others (5) (40) 15
Total 152 412 335
The cost of goods sold (COGS), of R$ 1.248 billion, was down R$ 33 million in
relation to 4Q02. The main factor responsible for this drop was the
extraordinary increase in the provision for maintenance, included in the item
"material", made in 4Q02. On the other hand, the Company suffered a 25% increase
in fuel costs caused by the rise in oil prices and an increase of 81% demurrage
costs (the fine paid for the ships' waiting time in port), which amounted to R$
31 million in the quarter. Despite signifying an additional cost, the increase
in demurrage expenses is a clear reflection of the current excess demand for
iron ore and pellets, which means that ships have to form a queue for loading in
the ports of CVRD (Tubarao and Ponta da Madeira).
COGS BREAKDOWN
million R$
1Q 02 % 4Q 02 % 1Q 03 %
---------- ---------- ---------- ---------- ---------- ----------
Personnel 122 14.2 123 9.6 120 9.6
Material 114 13.3 272 21.2 211 16.9
Fuel Oil and Gases 80 9.3 112 8.7 139 11.2
Energy 27 3.1 31 2.4 24 1.9
Contracted Services 135 15.7 131 10.2 123 9.9
Purchase of Products 143 16.7 388 30.4 387 31.0
Depreciation & Exhaustion 165 19.2 152 11.9 151 12.1
Others 73 8.5 72 5.6 93 7.5
Total 859 100 1,281 100 1,248 100
Operational expenses were down R$ 77 million in 1Q03 relative to the previous
quarter. The principal reason for this drop was the provision for the closure of
the Fazenda Brasileiro gold mine in the last quarter of 2002, which negatively
impacted the item "other operational expenses".
10
the Fezenda Brasileiro gold mine in the last quarter of 2002, which negatively
impacted the item "other operational expenses".
[GRAPHIC APPEARS HERE] EBITDA OF R$ 1.1 BILLION
EBITDA in 1Q03 amounted to R$ 1.148 billion, an increase of 58.3% in relation to
1Q02 and down 15.5% in relation to the previous quarter.
The principal reasons for the lower EBITDA, when compared with 4Q02, were the
drop of R$ 255 million in net revenues and the increase of R$ 115 million in the
item "other operating expenses".
The lower quantities sold of iron ore, gold and potash, as well as the
appreciation in the Brazilian Real, explained this drop in net revenues. The
rise in "other operational expenses" was due to an increase of R$ 28 million in
provisions for the loss of ICMS credits, and R$ 21 million in contingency
provisions, added to the fact that a provision of R$ 64 million was reversed in
4Q02.
In addition, EBITDA registered in 4Q02, of R$ 1.359 billion, was impacted by an
adjustment of R$ 147 million, which referred to a provision for the ceasing of
activities at the Fazenda Brasileiro mine, bearing in mind that this was treated
as an extraordinary, non-recurring event. EBITDA calculated in 1Q03 does not
contain adjustments for non-recurring factors.
On the other hand, there was an increase of R$ 69 million in dividends received
from subsidiaries and affiliates, principally due to the payment of R$ 46
million from Samarco.
EBITDA CALCULATION
R$ million
1Q 02 4Q 02 1Q 03
---------- ---------- ----------
Net Operating Revenues 1,544 2,672 2,417
COGS (859) (1,281) (1,248)
Sales Expenses (28) (78) (52)
Administrative Expenses (79) (98) (89)
Research & Development (21) (48) (38)
Other Operational Expenses (39) (138) (106)
Adjustments for Non-Recurring Items 147
EBIT 518 1,176 885
Depreciation/Goodwill 169 150 161
Dividends Received 38 33 102
EBITDA 725 1,359 1,148
11
BR GAAP
1Q 03
FINANCIAL STATEMENTS
million R$
1Q 02 4Q 02 1Q 03
---------- ---------- ----------
Gross Operating Revenues 1,601 2,786 2,518
Taxes (57) (114) (101)
Net Operating Revenues 1,544 2,672 2,417
Cost of Goods Sold (859) (1,281) (1,248)
Gross Profit 685 1,391 1,169
Gross Margin (%) 44.4 52.1 48.4
Result from Shareholdings 152 412 335
Equity Income 285 471 418
Goodwill Amortization (66) (193) (93)
Provsion for Losses (67) 134 10
Operational Expenses (167) (362) (285)
Sales (28) (78) (52)
Administrative (79) (98) (89)
Research and Development (21) (48) (38)
Other Net Operational Expenses (39) (138) (106)
Financial Result (68) 598 145
Financial Expenses (155) (207) (185)
Financial Revenues 67 179 50
Monetary Variation 20 626 280
Operating Profit 602 2,039 1,364
Income Tax and Social Contribution 31 (498) (200)
Net Earnings 633 1,541 1,164
Earnings per share (R$) 1.65 4.01 3.03
BALANCE SHEET
million R$
1Q 02 4Q 02 1Q 03
---------- ---------- ----------
Assets
Current 4,986 4,346 4,787
Long Term 2,562 3,167 3,045
Fixed 16,283 19,321 20,080
Total 23,831 26,834 27,912
Liabilities
Current 4,649 4,218 4,629
Long Term 7,099 9,865 9,991
Shareholders Equity 12,083 12,751 13,292
Paid-up Capital 4,000 5,000 5,000
Reserves 8,083 7,751 8,292
Total 23,831 26,834 27,912
[GRAPHIC APPEARS HERE] INVESTMENTS
Investments carried out in the first quarter of 2003 totalled US$ 197.9 million,
US$ 17.6 million of which referred to acquisitions. The amount spent on projects
was US$ 109.5 million, 55.3% of the total investment.
12
BR GAAP
1Q 03
Expenditure on the ferrous minerals area projects amounted to US$ 23.8 million,
non-ferrous mineral US$ 48.1 million, logistics US$ 21.2 million, and power
generation, US$ 16.4 million.
The main projects under way are:
Area Project Investment Status
realized in 1Q03
----------------- ---------------------- ----------------- ------------------------------------------------------
Ferrous Minerals Enlarging iron ore US$ 6.1 million Completion scheduled for 2005. Project implementation
production capacity is proceeding according to schedule. Once expansion is
in the Northern System complete, production capacity will increase by 14
million tons a year. Project capital expenditure is
estimated at US$ 144.4 million.
Ferrous Minerals Pier III of Ponta da US$ 2.1 million Completion expected for January 2004. 75% of total
Madeira Maritime project investment, estimated at US$ 33.3 million, has
Terminal (TMPM) already been completed. Project implementation is
proceeding according to schedule. The new pier will have a
loading capacity of 18 million tons a year, enlarging the
capacity of TMPM to 74 million tons a year.
Ferrous Minerals Brucutu mine US$ 3.5 million Completion scheduled for 2008, when the mine will have
production capacity of 12 million tons a year. 1.5% of
the investment has already been made and works are
proceeding according to schedule. Total investment is
estimated at US$ 219.9 million, of which US$ 19.7
million is programmed for 2003.
Ferrous Minerals Fabrica Nova mine US$ 637,000 Completion estimated for 2005. 1% of the investment
has already been made, refer to landscaping and
earthworks. The Fabrica Nova mine is likely to have a
capacity of 10 million tons a year by 2005, reaching 15
million by 2009. Total capital expenditure is budgeted
at US$ 84.4 million, with programmed spending of US$
39.6 million for 2003. Works are proceeding on
schedule.
Non-ferrous Sossego mine US$ 40.5 million Completion estimated for first half 2004. 32.1% of the
Minerals total investment in the project has already been made,
58.4% of the undertaking having been completed. Total
capital expenditure is US$ 383 million, of which US$ 253
million is programmed for 2003. The first tests should begin in
June 2003. The project is slightly ahead of schedule.
Non-ferrous Expansion of US$ 4.0 million Completion estimated for first half 2005. 16% of the
Minerals Taquari -Vassouras investment total of US$ 67 million budgeted for the
Potash mine project, has been carried out. The project is on
schedule. The mine capacity will be enlarged from 600,000
tons to 850,000 tons a year.
Logistics Purchase of US$ 18.9 million Purchase of 2,782 wagons and 105 locomotives by the end
locomotives and wagons of 2003. 7.5% of total investment (US$ 245.6 million)
has been realised. Part of equipment bought will be
used for general cargo, and part for iron ore.
Logistics Praia Mole Terminal US$ 707,000 Completion of first phase estimated for 2003, with
(Phases I & II) second phase completion in 2004. Of a total estimated
project investment of US$ 22.6 million, 54% has been
carried out.
Power Generation Aimores US$ 6.4 million Completion estimated for December 2003. 78% of total
Hydroelectric Power estimated investment of US$94.6 million has already
Plant been completed. The project is proceeding according to
schedule.
Power Generation Candonga US$ 6.7 million Completion estimated for November 2003. 75% of the
Hydroelectric Power investment of US$ 40.9 million has already been made.
Plant Implementation of the project is on schedule.
Expenditure on information technology amounted to US$ 12.4 million, of which US$
7 million was spent on the initial installation of an Enterprise Resource
Planning (ERP) system. The ERP system is likely to enter into service by the end
of 2004, allowing greater integration between the areas of the Company and the
rapid retrieval of information, helping to further improve the quality of
management.
13
BR GAAP
1Q 03
The Company is implementing Hyperion, a consolidated accounting system which
will further increase the transparency of financial information to the market,
widening the scope of information and making it available more quickly. With the
help of Hyperion it will be possible to publish consolidated quarterly financial
statements, in accordance with Brazilian GAAP accounting procedures, from 3Q03.
US$ 21.8 million was invested in the maintenance, modernization of equipment and
environmental protection.
A total of US$ 27.6 million in capital was injected into subsidiaries and
affiliates (Celmar and FCA) for financial restructuring.
Mineral Exploration and Technological Development
Investment in mineral exploration and technological development amounted to US$
9.0 million, of which US$ 2.9 million referred to prospecting for copper and
gold deposits.
The Carajas region remained as the focus for mineral exploration activities in
1Q03, with development work aimed at identifying deposits of copper, gold,
nickel and platinum group metals, and preparations made for the carrying out of
pre-feasibility studies for various areas containing copper and nickel.
Targeting campaigns will begin in May.
In the rest of Brazil, prospecting programs continued for copper, gold, nickel,
platinum group metals, bauxite and kaolin in the states of Para, Rondonia,
Maranhao, Piaui, Mato Grosso, Goias and Minas Gerais.
In Peru, in the form of a joint venture with Antofagasta Minerals, areas with
potential have been identified, which will be subject to drilling investigation
in the next few months. Compania Minera Latino Americana, a wholly owned
subsidiary of CVRD, has been carrying out mineral prospecting in Chile.
CVRD has started to use QemSCAN technology, a state-of-the-art system for
mineral and metallurgical analysis which allows rapid identification of minerals
and improves the efficiency of mining operations. The system involves the use of
a Multi-element Scanning Electron Microscope, which will be used to identify
ores and optimize processes in the base metal and precious metal areas.
The mineral exploration budget for 2003 amounts to US$ 71.7 million, of which
US$ 5.2 million will be invested in technological development.
INVESTMENTS - 1Q 03
By business area US$ million % By category US$ million %
------------------------- ----------- ----------- --------------------------- ----------- ----------
Ferrous Minerals 58.2 29.4% Capital Injections 27.6 14.0%
Logistics Maintenance and 21.8 11.0%
48.7 24.6% Environmental Protection
Non-ferrous Minerals 56.2 28.4% Projects 109.5 55.3%
Power Generation 16.4 8.3% Mineral Exploration and 9.0 4.5%
Technological Research
Others 18.4 9.3% Information Technology 12.4 6.3%
Acquisitions 17.6 8.9%
------------------------- ----------- ----------- --------------------------- ----------- ----------
Total 197.9 100% Total 197.9 100%
------------------------- ----------- ----------- --------------------------- ----------- ----------
14
BR GAAP
1Q 03
IRON ORE AND PELLETS - FINANCIAL INDICATORS - REVISED
million R$
HISPANOBRAS 1Q 02 4Q 02 1Q 03
---------------------------------------- ----------- ------------- ------------
Volume Sold ('000 tons) 907 1,139 905
Export Markets 487 313 268
Domestic Market 420 826 637
Average Price (US$/ton) 31.38 25.80 29.75
Net Revenues 67 126 94
Cost of Goods Sold (58) (106) (81)
Net Financial Result 1 (3) (3)
Net Earnings 5 8 4
Gross Margin (%) 13.4 15.9 13.8
EBITDA 11 21 15
EBITDA Margin (%) 16.4 16.7 16.0
NIBRASCO 1Q 02 4Q 02 1Q 03
---------------------------------------- ----------- ------------- ------------
Volume Sold ('000 tons) 1,000 2,116 1,800
Export Markets 407 783 469
Domestic Market 593 1.333 1.331
Average Price (US$/ton) 30.39 28.52 27.75
Net Revenues 71 220 175
Cost of Goods Sold (70) (190) (167)
Net Financial Result (2) 1 1
Net Earnings (4) 14 3
Gross Margin (%) 1.4 13.6 4.6
EBITDA 5 32 13
EBITDA Margin (%) 7.0 14.5 7.4
Total Debt (US$ million)
- Short Term 2 2 2
- Long Term 4 1 1
Total 6 3 4
ITABRASCO 1Q 02 4Q 02 1Q 03
---------------------------------------- ----------- ------------- ------------
Volume Sold ('000 tons) 877 913 813
Export Markets 644 431 306
Domestic Market 233 482 507
Average Price (US$/ton) 31.35 30.18 29.54
Net Revenues 66 94 86
Cost of Goods Sold (56) (89) (73)
Net Financial Result (1) (5) (3)
Net Earnings 2 6 3
Gross Margin (%) 15.2 5.3 15.1
EBITDA 8 9 11
EBITDA Margin (%) 12.1 9.6 12.8
Total Debt (US$ million)
- Short Term 18 - 5
15
BR GAAP
1Q 03
IRON ORE AND PELLETS - FINANCIAL INDICATORS - REVISED
million R$
KOBRASCO 1Q 02 4Q 02 1Q 03
---------------------------------------- ----------- ------------- ------------
Volume Sold ('000 tons) 856 1,316 1,134
Export Markets 436 1,074 453
Domestic Market 420 242 681
Average Price (US$/ton) 31.69 29.97 30.39
Net Revenues 64 143 117
Cost of Goods Sold (50) (112) (94)
Net Financial Result (4) 45 18
Net Earnings 3 18 18
Gross Margin (%) 21.9 21.7 19.7
EBITDA 15 38 24
EBITDA Margin (%) 23.4 26.6 20.5
Total Debt (US$ million)
- Long Term 150 114 124
Total 150 114 124
SAMARCO 1Q 02 4Q 02 1Q 03
---------------------------------------- ----------- ------------- ------------
Volume Sold ('000 tons) 3.301 3.834 3.988
Average Price (US$/ton) 28.48 29.22 27.59
Net Revenues 213 398 361
Cost of Goods Sold (109) (144) (163)
Net Financial Result (15) 27 -
Net Earnings 58 235 139
Gross Margin (%) 48.8 63.8 54.8
EBITDA 93 273 188
EBITDA Margin (%) 43.7 68.6 52.1
Total Debt (US$ million)
- Short Term 169 141 123
- Long Term 93 67 56
Total 262 208 179
16
BR GAAP
1Q 03
IRON ORE AND PELLETS - FINANCIAL INDICATORS - REVISED
million R$
FERTECO 1Q 02 4Q 02 1Q 03
---------------------------------------- ----------- ------------- ------------
Volume Sold ('000 tons) 2,532 3,288 4,879
Export Market - Iron Ore 2,020 2,142 3,503
Domestic Market - Iron Ore 512 1,146 1,376
Average Price (US$/ton) 14.59 12.68 13.87
Volume Sold ('000 tons) 725 1,342 856
Export Market - Pellets 448 645 358
Domestic Market - Pellets 277 697 498
Average Price (US$/ton) 26.63 24.06 29.62
Net Revenues 127 293 311
Cost of Goods Sold (70) (141) (181)
Net Financial Result (5) 7 (8)
Net Earnings 29 50 89
Gross Margin (%) 44.9 51.9 41.8
EBITDA 52 128 123
EBITDA Margin (%) 40.9 43.7 39.5
Total Debt (US$ million)
- Short Term 55 23 10
- Long Term 94 82 82
Total 150 105 92
US$ thousand
GIIC* 1Q 02 4Q 02 1Q 03
---------------------------------------- ----------- ------------- ------------
Volume Sold ('000 tons) 823 932 772
Export Market 823 932 772
Average Price (US$/ton) 41.76 40.40 41.00
Net Revenues 80 133 101
Cost of Goods Sold (69) (109) (78)
Net Financial Result - (2) (1)
Net Earnings 9 13 13
Gross Margin (%) 13.8 18.0 22.8
EBITDA 12 18 16
EBITDA Margin (%) 15.0 13.5 15.8
* Financial indicators calculated according to the standards of the
International Accounting Standards Committee
17
BR GAAP
1Q 03
MANGANESE AND FERRO-ALLOYS - FINANCIAL INDICATORS - REVISED
million R$
SIBRA (Consolidated) 1Q 02 4Q 02 1Q 03
---------------------------------------- ----------- ------------- ------------
Volume Sold - Ferro Alloys ('000 tons) 60 85 67
Export Market 23 35 30
Domestic Market 37 50 37
Average Price (US$/ton) 521.43 425.73 530.70
Volume Sold - Manganese ('000 tons) 258 282 279
Export Market 243 192 185
Domestic Market 15 90 94
Average Price (US$/ton) 53.40 45.86 40.34
Net Revenues 96 153 142
Cost of Goods Sold (51) (86) (84)
Net Financial Result (1) (34) (11)
Net Earnings 34 (20) 18
Gross Margin (%) 46.9 43.8 40.8
EBITDA 42 24 40
EBITDA Margin (%) 43.8 15.7 28.2
Total Debt (US$ million)
- Short Term 30 36 37
- Long Term 21 22 20
Total 51 58 57
18
BR GAAP
1Q 03
ALUMINUM - FINANCIAL INDICATORS - ADJUSTED AND REVISED
million R$
MRN 1Q 02 4Q 02 1Q 03
---------------------------------------- ----------- ------------- ------------
Volume Sold ('000 tons) 1,781 2,982 2,196
Export Markets 485 601 711
Domestic Market 1,296 2,381 1,485
Average Price (US$/ton) 19.76 20.54 19.23
Net Revenues 76 204 140
Cost of Goods Sold (40) (78) (69)
Net Financial Result (2) 102 -
Net Earnings 24 218 59
Gross Margin (%) 47.4 61.8 50.7
EBITDA 46 138 82
EBITDA Margin (%) 60.5 67.6 58.6
Total Debt (US$ million)
- Short Term 14 29 44
- Long Term 96 76 69
Total 110 105 113
ALUNOTE 1Q 02 4Q 02 1Q 03
---------------------------------------- ----------- ------------- ------------
Volume Sold ('000 tons) 427 407 490
Export Market 222 208 289
Domestic Market 205 199 201
Average Price (US$/ton) 161.55 161.79 172.03
Net Revenues 165 250 292
Cost of Goods Sold (136) (174) (218)
Net Financial Result (11) 114 44
Net Earnings 10 256 102
Gross Margin (%) 17.6 30.4 25.3
EBITDA 34 82 83
EBITDA Margin (%) 20.6 32.8 28.4
Total Debt (US$ million)
- Long Term 455 481 482
Total 455 481 482
ALBRAS 1Q 02 4Q 02 1Q 03
---------------------------------------- ----------- ------------- ------------
Volume Sold ('000 tons) 88 104 103
Export Market 84 100 99
Domestic Market 4 4 4
Average Price (US$/ton) 1,319.81 1,306.47 1,337.98
Net Revenues 274 490 480
Cost of Goods Sold (171) (288) (285)
Net Financial Result (11) 176 64
Net Earnings 76 460 223
Gross Margin (%) 37.6 41.2 40.6
EBITDA 106 219 198
EBITDA Margin (%) 38.7 44.7 41.3
Total Debt (US$ million)
- Short Term 73 20 -
- Long Term 524 466 451
Total 597 486 451
19
BR GAAP
1Q 03
ALUMINUM - FINANCIAL INDICATORS - ADJUSTED AND REVISED
million R$
VALESUL 1Q 02 4Q 02 1Q 03
------------------------ -------- -------- --------
Volume Sold ('000 tons) 21 27 19
Export Market 9 13 9
Domestic Market 12 14 10
Average Price (US$/ton) 1,720.97 1,618.98 1,730.60
Net Revenues 78 146 108
Cost of Goods Sold (64) (87) (69)
Net Financial Result (1) (2) -
Net Earnings 6 38 27
Gross Margin (%) 17.9 40.4 36.1
EBITDA 14 49 35
EBITDA Margin (%) 17.9 33.6 32.4
Total Debt (US$ million)
- Short Term 1 1 1
- Long Term 2 1 1
Total 3 2 2
20
BR GAAP
1Q 03
EQUITY INCOME
million R$
Company/Shareholding % 1Q 02 4Q 02 1Q 03
-------------------------------- ------ ------- -------- --------
Iron Ore and Pellets
Caemi 16.86 5,948 (51,804) 9,483
KOBRASCO 50.00 1,524 - -
HISPANOBRAS 50.89 2,552 4,289 2,285
ITABRASCO 50.90 1,253 3,455 1,737
NIBRASCO 51.00 (2,174) 6,966 1,615
CVRD Overseas Ltd. 100.00 23,234 (8,995) 29,454
Ferteco 100.00 29,051 28,431 85,047
GIIC 50.00 4,526 6,646 6,256
ITACO/Rio Doce Europa - S.'a.r.l. 100.00 66,136 (168,089) (139,804)
Minas da Serra Geral S.A. 51.00 1,338 (988) 3,796
Samarco 50.00 29,048 117,546 69,727
Urucum 100.00 - (3,512) -
Others 4,256 (36,491) 5,637
Total Iron Ore and Pellets 166,692 (102,546) 75,233
Manganese and Ferro- alloys
RDME 100.00 (2,277) 12,326 8,007
SIBRA 99.28 33,296 (19,095) 17,870
Urucum Mineracao S.A. 100.00 8,685 5,439 6,893
Others 676 113,033 3,891
Total Manganese and Ferro-alloys 40,380 111,703 36,661
Non-Ferrous
Para Pigmentos S.A. 75.50 5,001 - -
Others (184) (1,119) (4)
Total Non-Ferrous 4,817 (1,119) (4)
Logistics
DOCENAVE 100.00 17,495 (3,295) (1,721)
Sepetiba Tecon S.A. 50.00 - - (2,434)
TVV 99.89 (212) (329) 2,016
Others (3,894) - -
Total Logistics 13,389 (3,624) (2,139)
Steel
CSI 50.00 617 (55,891) (28,649)
CST 22.85 (2,638) 89,099 64,641
USIMINAS 11.46 1,447 94,549 37,000
Total Steel (574) 127,757 72,992
Aluminum
ALBRAS 51.00 38,731 128,403 113,820
ALUNORTE 57.03 4,526 124,523 58,138
ITACO 100.00 186 (10,173) (6,018)
Mineracao Rio do Norte S.A. 40.00 9,776 86,878 23,799
ALUVALE (own operations) 100.00 8,477 1,589 16,439
Valesul 54.51 3,415 20,510 14,806
Total Aluminum 65,111 351,730 220,984
Others
FOSFERTIL 11.12 3,759 11,105 10,971
Florestas Rio Doce S.A. 99.85 2,864 (3,516) 4,236
Valepontocom 100.00 (15,563) - -
Others 3,968 (19,742) (314)
Total Others (4,972) (12,153) 14,893
General Total 284,843 471,748 418,620
21
BR GAAP
1Q 03
PROVISION FOR LOSSES
million R$
Company/Shareholding % 1Q 02 4Q 02 1Q 03
--------------------------------- ------ ------- -------- --------
Iron Ore and Pellets
KOBRASCO 50.00 - 8,821 9,095
Total Iron Ore and Pellets 50.00 - 8,821 9,095
Manganese and Ferro-alloys
Others (59) (201) (81)
Total Manganese and Ferro-alloys (59) (201) (81)
Non-Ferrous
Para Pigmentos S.A. 75.50 - 25,467 23,980
Total Non-Ferrous - 25,467 23,980
Logistics
Companhia Ferroviaria do Nordeste 32.40 (1,729) (3,193) (1,929)
DOCEPAR S.A. 100.00 (50,735) - -
Mineracao Tacuma Ltda ( FCA) 45.65 (6,041) (5,648) (19,399)
MRS Logistica S.A. 17.26 - 33,104 6,072
Sepetiba Tecon S.A. 50.00 - 5,032 -
Logistics Total (58,505) 29,295 (15,256)
Steel
DOCEPAR S.A. 100.00 (8,186) (7,561) (8,106)
Steel Total (8,186) (7,561) (8,106)
Aluminum
ALBRAS 51.00 - 106,614 -
Aluminum Total - 106,614 -
Others
CELMAR S.A 100.00 - (20,161) -
Valepontocom 100.00 - (8,354) -
Total Others - (28,515) -
General Total (66,750) 133,920 9,632
GOODWILL AMORTIZATION
million R$
Company/Shareholding % 1Q 02 4Q 02 1Q 03
--------------------------------- ------ ------- -------- --------
Iron Ore and Pellets
Caemi 16.86 (12,930) (13,019) (12,930)
Ferteco Mineracao S.A. 100.00 - (34,656) (34,656)
Others (2,361) (2,361) (2,361)
Total (15,291) (50,036) (49,947)
Manganese and Ferro-alloys
SIBRA 99.28 (20,130) (20,131) (20,130)
Total (20,130) (20,131) (20,130)
Logistics
Mineracao Tacuma Ltda (FCA) 45.65 (30,767) (123,285) (23,095)
Total (30,767) (123,285) (23,095)
General Total (66,188) (193,452) (93,172)
22
BR GAAP
1Q 03
RESULT FROM SHAREHOLDINGS
million R$
Company/Shareholding % 1Q 02 4Q 02 1Q 03
--------------------------------- ------ ------- -------- --------
Iron Ore and Pellets
Caemi 16.86 (6,982) (64,823) (3,447)
KOBRASCO 50.00 1,524 8,821 9,095
HISPANOBRAS 50.89 2,552 4,289 2,285
ITABRASCO 50.90 1,253 3,455 1,737
NIBRASCO 51.00 (2,174) 6,966 1,615
CVRD Overseas Ltd. 100.00 23,234 (8,995) 29,454
Ferteco Mineracao S.A. 100.00 29,051 (6,225) 50,391
GIIC 50.00 4,526 6,646 6,256
ITACO/Rio Doce Europa - S.'a.r.l. 100.00 66,136 (168,089) (139,804)
Minas da Serra Geral S.A. 51.00 1,338 (988) 3,796
Samarco 50.00 29,048 117,546 69,727
Urucum Mineracao S.A. 100.00 - (3,512) -
Others 1,895 (38,852) 3,276
Total Iron Ore and Pellets 151,401 (143,761) 34,381
Manganese and Ferro-alloys
RDME 100.00 (2,277) 12,326 8,007
SIBRA 99.28 13,166 (39,226) (2,260)
Urucum Mineracao S.A. 100.00 8,685 5,439 6,893
Others 617 112,832 3,810
Total Manganese and Ferro-alloys 20,191 91,371 16,450
Non-ferrous
Para Pigmentos S.A. 75.50 5,001 25,467 23,980
Others (184) (1,119) (4)
Total Non-ferrous 4,817 24,348 23,976
Logistics
Companhia Ferroviaria do Nordeste 32.40 (1,729) (3,193) (1,929)
DOCEPAR S.A. 100.00 (50,735) - -
Mineracao Tacuma Ltda (FCA) 45.65 (36,808) (128,933) (42,494)
MRS Logistica S.A. 17.26 - 33,104 6,072
DOCENAVE 100.00 17,495 (3,295) (1,721)
Sepetiba Tecon S.A. 50.00 - 5,032 (2,434)
TVV 99.89 (212) (329) 2,016
Others (3,894) - -
Total Logistics (75,883) (97,614) (40,490)
Steel
CSI 50.00 617 (55,891) (28,649)
CST 22.85 (2,638) 89,099 64,641
DOCEPAR S.A. 100.00 (8,186) (7,561) (8,106)
USIMINAS 11.46 1,447 94,549 37,000
Total Steel (8,760) 120,196 64,886
Aluminum
ALBRAS 51.00 38,731 235,017 113,820
ALUNORTE 57.03 4,526 124,523 58,138
ITACO 100.00 186 (10,173) (6,018)
Mineracao Rio do Norte S.A. 40.00 9,776 86,878 23,799
Mineracao Vera Cruz S.A. 100.00 - - -
ALUVALE (own operations) 100.00 8,477 1,589 16,439
Valesul 54.51 3,415 20,510 14,806
Total Aluminum 65,111 458,344 220,984
Others
CELMAR 100.00 - (20,161) -
FOSFERTIL 11.12 3,759 11,105 10,971
Florestas Rio Doce S.A. 99.85 2,864 (3,516) 4,236
Valepontocom 100.00 (15,563) (8,354) -
Others 3,968 (19,742) (314)
Total Others (4,972) (40,668) 14,893
General Total 151,905 412,216 335,080
23
BR GAAP
1Q 03
This communication may include declarations which represent the expectations of
the Company's Management about future results or events. All such declarations,
when based on future expectations and not on historical facts, involve various
risks and uncertainties. The Company cannot guarantee that such declarations
turn out to be correct. Such risks and uncertainties include factors relative to
the Brazilian economy and capital markets, which are volatile and may be
affected by developments in other countries; factors relative to the iron ore
business and its dependence on the steel industry, which is cyclical in nature;
and factors relative to to the high degree of competitiveness in industries in
which CVRD operates. To obtain additional information on factors which could
cause results to be different from those estimated by the Company, please
consult the reports filed with the Comissao de Valores Mobiliarios (CVM -
Brazilian stock exchange regulatory authority) and the U.S. Securities and
Exchange Commission - SEC, including the most recent Annual Report - CVRD
Form 20F."
24
[LOGO APPEARS HERE] [LOGO APPEARS HERE]
Companhia Vale do Rio Doce
Departamento de Controladoria
1st Quarterly Financial Statements
BR GAAP
Filed with The Comissao de Valores
Mobiliarios - CVM (Brazilian Securities
Commission) and Security Exchange
Commission - SEC on 05/14/2003
Gerencia Geral de Controladoria - GECOL
CONTENTS
PART I 3
1- MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE OPERATING RESULTS FOR
THE FIRST QUARTER OF 2003 COMPARED WITH THE FIRST QUARTER OF 2002 3
1.1- General Aspects 3
1.2- Comments on the Parent Company Results 4
1.2.1- Gross Revenues 4
1.2.2- Cost of Products and Services 5
1.2.3- Result of Shareholdings by Business Area 6
1.2.4- Operating Expenses 8
1.2.5- Net Financial Result 8
1.2.6- Cash Flow 8
1.2.7- Income Tax and Social Contribution 8
PART II 9
QUARTERLY INFORMATION AND NOTES TO THE QUARTERLY INFORMATION 9
2- BALANCE SHEET 9
3- STATEMENT OF INCOME 10
4- STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY 11
5- STATEMENT OF CASH FLOWS (ADDITIONAL INFORMATION) 12
6- NOTES TO THE QUARTERLY INFORMATION AT MARCH 31, 2003 AND 2002 13
6.1- Operations 13
6.2- Presentation of Quarterly information 13
6.3- Significant Accounting Policies 13
6.4- Cash and Cash Equivalents 13
6.5- Transactions with Related Parties 14
6.6- Inventories 14
6.7- Deferred Income Tax and Social Contribution 15
6.8- Investments 16
6.9- Property, Plant and Equipment 18
6.10- Loans and Financing 19
6.11- Contingent Liabilities 20
6.12- Environmental and Site Reclamation and Restoration Costs 21
6.13- Paid-up Capital 21
6.14- Treasury Stock 21
6.15- Financial Result 22
6.16- Financial Instruments - Derivatives 22
6.17- Exchange Rate Exposure 25
6.18- Administrative and Other Operating Expenses 25
6.19- Subsequent Events 26
PART III 28
7- OTHER INFORMATION THE COMPANY DEEMS RELEVANT 28
7.1- Iron Ore and Pellet Sales (Main Markets) (Unaudited) 28
7.2- Information About FERTECO (Unaudited) 29
7.3- Information About Rio Doce International Finance Ltd. - RDIF (Unaudited) 30
PART IV 31
8- ATTACHMENT I - EQUITY INVESTEE INFORMATION 31
8.1- Aluminum Area - ALBRAS (Adjusted and Unaudited) 31
8.2- Aluminum Area - ALUNORTE (Adjusted and Unaudited) 32
8.3- Aluminum Area - ALUVALE (Adjusted and Unaudited) 33
1
8.4- Aluminum Area - MRN (Adjusted and Unaudited) 34
8.5- Aluminum Area - VALESUL (Adjusted and Unaudited) 35
8.6- Pelletizing Area - HISPANOBRAS (Adjusted and Unaudited) 36
8.7- Pelletizing Area - ITABRASCO (Adjusted and Unaudited) 37
8.8- Pelletizing Area - KOBRASCO (Adjusted and Unaudited) 38
8.9- Pelletizing Area - NIBRASCO (Adjusted and Unaudited) 39
8.10- Pelletizing Area - SAMARCO (Adjusted and Unaudited) 40
8.11- Pelletizing Area - GIIC (Adjusted and Unaudited) 41
8.12- Iron Ore Area - FERTECO (Adjusted and Unaudited) 42
8.13- Manganese and Ferroalloys Area - SIBRA (Adjusted and Unaudited) 43
9- REPORT OF THE INDEPENDENT ACCOUNTANTS 44
10- BOARD OF DIRECTORS, FISCAL COUNCIL AND EXECUTIVE OFFICERS 45
2
Part I
Expressed in millions of reais
1- MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE OPERATING RESULTS FOR THE FIRST
QUARTER OF 2003 COMPARED WITH THE FIRST QUARTER OF 2002
1.1- General Aspects
(a) The Companhia Vale do Rio Doce's segments of business are mining,
logistics and energy, as follows:
- ferrous minerals: iron ore and pellets as well as manganese
and ferroalloys;
- non-ferrous minerals: gold, potash, kaolin and copper;
- logistics: railroads, ports and maritime terminals and
shipping;
- energy: electric power generation; and
- shareholdings: equity holdings in producers of aluminum, steel
and fertilizers.
(b) The variations of the main currencies and indices in terms of
percentages in relation to the real, which impacted the results of the
Company and its subsidiaries, jointly controlled companies and
affiliates, were as follows:
(DELTA)% Currencies / Indice Parity
--------------------------------------------------------------- -----------------------
Period U.S. DOLLAR YEN GOLD IGP-M TJLP US$ x R$ US$ x Yen
--------------------- ------------- ---------- ----------- ----------- ------------ ------------ -----------
1Q/03 (5.1) (4.6) (3.6) 6.3 2.6 3.3531 118.20
12/31/02 52.3 68.2 25.0 25.3 9.9 3.5333 118.87
4Q/02 (9.3) (7.0) 7.3 13.4 2.4 3.5333 118.87
1Q/02 0.1 (1.1) 7.7 0.5 2.4 2.3236 132.85
12/31/01 18.7 3.7 1.2 10.4 9.5 2.3204 131.27
About 63% of the Company's gross revenue for three months ended March
31, 2003 is derived from exports and part of domestic sales is
denominated in U.S. dollars, as well as 40% of total costs.
Consequently, fluctuations in the exchange rate between the two
currencies have a significant impact on the operating cash flows.
Approximately 96% of the short-term and long-term loans of the Company
at 03/31/03 are denominated in U.S. dollars. As a result, exchange rate
fluctuations have a significant impact on the financial expenses (Notes
6.10 and 6.15).
(c) On the first quarter of 2003, the consolidated trade balance of US$ 684
million was generated:
(in US$ millions)
--------------------------------
Consolidated
--------------------------------
1Q/03 1Q/02
---------------- ---------------
Exports 800 712
Imports (116) (117)
---------------- ---------------
684 595
================ ===============
3
Consolidated Trade Balance - US$ Million
[GRAPH APPEARS HERE]
1.2- Comments on the Parent Company Results
The net income of the Company for the three months ended March 31, 2003 was R$
1,163,828 compared with net income of R$ 633,138 in the three months ended March
31, 2002 (the earnings per share corresponds to R$ 3.03 in the three months
ended March 31, 2003 versus R$ 1,65 in the three months ended March 31, 2002).
1.2.1- Gross Revenues
The 57.3% increase in gross revenue (R$ 2,517,618 on 03/31/03 against
R$ 1,600,803 on 03/31/02) is a result of the devaluation of the real against the
United States dollar, affecting 84% of the Company's revenue, and the higher
volumes sold of iron ore, pellets and potash, as shown in the table below. The
increase in iron ore sales was due to growth in the Chinese, North American and
European markets.
Sales volume and revenues by products and services:
In thousands of metric tons (except gold) In millions of reais
------------------------------------------------------------------------------------------------
1Q/03 1Q/02 (DELTA)% 4Q/02 (DELTA)% 1Q/03 1Q/02 (DELTA)% 4Q/02 (DELTA)%
------ ------- ------- -------- -------- ---------- ----------- --------- --------- ----------
External market
Iron ore - fines 20,548 20,154 2.0 22,016 (6.7) 1,053,902 685,546 53.7 1,193,028 (11.7)
Iron ore - lump ore 1,604 1,762 (9.0) 1,967 (18.5) 87,803 65,888 33.3 108,395 (19.0)
Pellets 4,171 2,563 62.7 4,123 1.2 406,061 174,914 132.1 437,669 (7.2)
------ ------- -------- ---------- ----------- ---------
26,323 24,479 7.5 28,106 (6.3) 1,547,766 926,348 67.1 1,739,092 (11.0)
------ ------- -------- ---------- ----------- ---------
Internal market
Iron ore - fines 7,609 6,862 10.9 8,961 (15.1) 357,669 206,518 73.2 414,874 (13.8)
Iron ore - lump ore 1,546 1,601 (3.4) 1,613 (4.2) 53,728 31,369 71.3 47,940 12.1
Pellets (*) 913 721 26.6 744 22.7 118,629 70,540 68.2 108,999 8.8
------ ------- -------- ---------- ----------- ---------
10,068 9,184 9.6 11,318 (11.0) 530,026 308,427 71.8 571,813 (7.3)
------ ------- -------- ---------- ----------- ---------
Total
Iron ore - fines 28,157 27,016 4.2 30,977 (9.1) 1,411,571 892,064 58.2 1,607,902 (12.2)
Iron ore - lump ore 3,150 3,363 (6.3) 3,580 (12.0) 141,531 97,257 45.5 156,335 (9.5)
Pellets 5,084 3,284 54.8 4,867 4.5 524,690 245,454 113.8 546,668 (4.0)
------ ------- -------- ---------- ----------- ---------
36,391 33,663 8.1 39,424 (7.7) 2,077,792 1,234,775 68.3 2,310,905 (10.1)
------ ------- -------- ---------- ----------- ---------
Railroad transportation 12,152 13,258 (8.3) 15,218 (20.1) 258,866 187,918 37.8 250,161 3.5
Port services 5,624 5,517 1.9 7,634 (26.3) 68,298 42,454 60.9 79,091 (13.6)
Gold (kg) 801 3,591 (77.7) 1,264 (36.6) 32,298 79,932 (59.6) 48,017 (32.7)
Potash 158 113 39.8 203 (22.2) 72,530 37,784 92.0 89,948 (19.4)
Other products and services - - - - - 7,834 17,940 (56.3) 7,709 1.6
---------- ----------- ---------
2,517,618 1,600,803 57.3 2,785,831 (9.6)
========== =========== =========
(*) Includes revenues derived from services with joint ventures of pelletizing
in the amount of R$ 20,678, R$ 23,477 and R$ 31,931 on 1Q/03, 1Q/02 and
4Q/02, respectively.
4
Gross Revenue on 1Q/03 - R$ 2,517,618/US$ 721,130
[GRAPH APPEARS HERE]
1.2.2- Cost of Products and Services
The 45.3% increase in the cost of products and services (R$ 1,247,883 on
03/31/03 against R$ 858,623 on 03/31/02) results mainly from the rise in sales
of purchased pellets, the increase in expenses for maintenance of goods and
equipment, higher prices for petroleum derivatives and the effect of exchange
rate variation on the portion of costs denominated in U.S. dollars (40%).
Composition of costs of products and services:
[GRAPH APPEARS HERE]
Components of the cost of products and services and the variation for the
period:
By Nature
Denominated
-----------------------
R$ US$ 1Q/03 % 1Q/02 % (DELTA)% 4Q/02 % (DELTA)%
--------- ------------- ------------ --------- -------- --------- -------- ---------- ----- ------
Personnel 120,262 - 120,262 9.6 122,249 14.2 (1.6) 123,043 9.6 (2.3)
Material 137,639 73,464 211,103 16.9 113,696 13.2 85.7 271,600 21.2 (22.3)
Oil and gas 139,176 - 139,176 11.2 79,840 9.3 74.3 111,538 8.7 24.8
Outsourced services 122,850 493 123,343 9.9 134,921 15.7 (8.6) 131,313 10.3 (6.1)
Energy 24,167 - 24,167 1.9 27,388 3.2 (11.8) 31,108 2.4 (22.3)
Acquisition of iron ore and
pellets 22,306 364,162 386,468 31.0 143,301 16.7 169.7 387,631 30.3 (0.3)
Depreciation and depletion 125,548 - 125,548 10.1 139,456 16.2 (10.0) 128,043 10.0 (1.9)
Amortization of goodwill 24,419 - 24,419 2.0 24,419 2.8 - 24,419 1.9 -
Others 29,957 63,440 93,397 7.4 73,353 8.7 27.3 72,250 5.6 29.3
--------- ------------- ------------ --------- -------- --------- ---------- ----- ------
Total 746,324 501,559 1,247,883 100.0 858,623 100.0 45.3 1,280,945 100.0 (2.6)
========= ============= ============ ========= ======== ========= ========== ===== ======
60% 40% 100%
========= ============= ============
5
1.2.3- Result of Shareholdings by Business Area
The numbers reported per area do not necessarily reflect the individual results
of each company, but rather the amounts effectively applicable to the business
area.
Business Area 1Q/03 1Q/02 4Q/02
------------------------------- ------------- --------------- --------------
Ferrous Minerals
.. Iron ore and pellets 34,381 151,401 (143,761)
.. Manganese and ferroalloys 16,450 20,191 91,371
Non-Ferrous Minerals 23,976 4,817 24,348
Logistics (40,490) (75,883) (97,614)
Investments
.. Steel 64,886 (8,760) 120,196
.. Aluminum 220,984 65,111 458,344
Others 14,893 (4,972) (40,668)
------------- --------------- --------------
335,080 151,905 412,216
============= =============== ==============
Ferrous Minerals
(a) Iron ore and pellets
- Ferteco - An increase of R$ 55,996 in the equity result (a gain of R$
85,047 on 03/31/03 versus a gain of R$ 29,051 on 03/31/02) due to
higher a 92.7% jump in iron ore sales (4,879 thousand tons on 03/31/03
against 2,532 thousand tons on 03/31/02) and an 18.1% rise in pellet
sales (856 thousand tons on 03/31/03 compared with 725 thousand tons on
03/31/02), partly offset by a 4.9% fall in iron ore prices (US$ 13.87
per ton on 03/31/03 against US$ 14.59 per ton on 03/31/02), while the
average pellet price rose 11.2% (US$ 29.62 per ton on 03/31/03 against
US$ 26.63 per ton on 03/31/02). At 03/31/03, R$ 34,656 of amortization
of goodwill was booked, net of income tax and social contribution on
profits.
- Caemi - A rise of R$ 1,878 in the equity result (a gain of R$ 7.826 on
03/31/03 against a gain of R$ 5.948 on 03/31/02) caused by 8.6% higher
sales volume (7,970 thousand tons on 03/31/03 versus 7,336 thousand
tons on 03/31/02) and the positive effects of exchange rate variation
on indebtedness, offset by the 3.5% lower average sale price (US$ 17.88
per ton on 03/31/03 against US$ 18.53 per ton on 03/31/02).
- Itaco/RDE - The equity result fell by R$ 199,720 (a loss of R$ 110,350
on 03/31/03 versus a gain of R$ 89.370 on 03/31/02), due basically to
the effect of the appreciation of the real against the U.S. dollar
during the quarter on stockholders' equity (negative exchange rate
variation of R$ 194,501 on 03/31/03 versus positive variation of R$
5,381 on 03/31/02). In operational terms, iron ore sales volume rose
4.7% (21,124 thousand tons on 03/31/03 against 20,173 thousand tons on
03/31/02), including sales of the subsidiary CVRD Overseas.
- Kobrasco - A R$ 7,571 improvement in the shareholding result (a gain of
R$ 9,095 on 03/31/03 against a gain of R$ 1,524 on 03/31/02), caused by
the positive effects of exchange rate variation on debt. In operational
terms, sales volume increased 32.5% (1,134 thousand tons on 03/31/03
versus 856 thousand tons on 03/31/02) and the average sales price
decreased 4.1% (US$ 30.39 per ton on 03/31/03 against US$ 31.69 per ton
on 03/31/02).
- Nibrasco - An improvement in the equity result of R$ 3,789 (a gain of
R$ 1,615 on 03/31/03 against a loss of R$ 2,174 on 03/31/02), due to an
80.0% increase in the quantity sold (1,800 thousand tons on 03/31/03
versus 1,000 thousand tons on 03/31/02), partly offset by an 8.7% fall
in the average sales price (US$ 27.75 per ton on 03/31/03 against US$
30,39 per ton on 03/31/02).
- Samarco - An improvement in the equity result of R$ 40,679 (a gain of
R$ 69,727 on 03/31/03 against a gain of R$ 29,048 on 03/31/02), caused
by a 20.8% increase in sales volume (3,988 thousand tons on 03/31/03
versus 3,301 thousand tons on 03/31/02) and the positive effects of
exchange rate variation on debt, partly offset by a 3.1% fall in the
average sales price (US$ 27.59 per ton on 03/31/03 against US$ 28.48
per ton on 03/31/02).
(b) Manganese and ferroalloys
- Sibra - A fall in the equity result of R$ 15,426 (a gain of R$ 17.870
on 03/31/03 against a gain of R$ 33.296 on 03/31/02), caused by the
negative effects of exchange rate variation on accounts receivable on
03/31/03, compensated in part by the positive effects of the same
variation on exports. In operational terms, ferroalloy sales jumped
131.0% (67 thousand tons on 03/31/03 against 29 thousand tons on
03/31/02), while the quantity of manganese sold remained stable (279
thousand tons on 03/31/03 versus 278 thousand tons on 03/31/02), the
average ferroalloy price increased 19.1% (US$ 530.70 per ton on
03/31/03 against US$ 445.67 per ton on 03/31/02) and the average price
of manganese fell 26.8% (US$ 40.34 per ton on 03/31/03 versus US$ 55.11
per ton on 03/31/02).
6
Non-ferrous Minerals
- Para Pigmentos - The shareholding result improved by R$ 18,979 (a gain
of R$ 23,980 on 03/31/03 against a gain of R$ 5,001 on 03/31/02) due to
the positive effects on 03/31/03 of exchange rate variation on debt. In
operational terms, sales volume rose 71.4% (108 thousand tons on
03/31/03 against 63 thousand tons on 03/31/02), offset in part by a
15.0% decrease in the average sales price (US$ 152.00 per ton on
03/31/03 against US$ 178,88 per ton on 03/31/02).
Logistics
- Docenave - A reduction in the equity result of R$ 19,216 (a loss of R$
1,721 on 03/31/03 versus a gain of R$ 17,495 on 03/31/02), due to the
rise in the value of the real against the dollar (on assets in dollar)
at 03/31/03, as well as recording of a credit on 03/31/02 of R$ 11,200
in settlement of financing on ships with the BNDES. Operationally, the
volume transported rose 90.5% (3,000 thousand tons on 03/31/03 against
1,575 thousand tons on 03/31/02) and the average freight rate also
increased, by 24.6% (US$ 7.09 per ton carried on 03/31/03 against US$
5.69 per ton on 03/31/02).
- Docepar - At 03/31/02, a provision of R$ 50,735 was recorded for losses
on fiscal credits of doubtful realization in the short-term.
- FCA - At 03/31/03 a negative shareholding result was recorded of R$
42,494 (R$ 19,399 as a provision for losses and R$ 23,095 of
amortization of goodwill) against R$ 36,808 on 03/31/02 (R$ 6,041 of
provision for losses and R$ 30,767 of amortization of goodwill). The
provision for losses arises manly from the booking of a provision for
environmental risks of R$ 9,785. CVRD's interest in FCA is held through
its subsidiary Mineracao Tacuma.
- MRS - At 03/31/03, a provision for losses of R$ 6,072 was reversed due
to the positive effects of exchange rate variation on debt. CVRD's
interest in MRS is held through Ferteco Mineracao S.A. and indirectly
through Mineracoes Brasileiras Reunidas S.A. - MBR.
Shareholdings
(a) Steel
- CSI - A decrease in the equity result of R$ 29,266 (a loss of R$ 28,649
on 03/31/03 against a gain of R$ 617 on 03/31/02), caused by the
strengthening of the real against the U.S. dollar (negative exchange
rate variation of R$ 37,708 on 03/31/03 versus positive variation of R$
617 on 03/31/02). In operational terms, sales volume fell 6.9% (442
thousand tons on 03/31/03 against 475 thousand tons on 03/31/02),
offset by 35.6% higher average sales prices (US$ 445.80 per ton on
03/31/03 against US$ 328.65 per ton on 03/31/02).
- CST - An increase in the equity result of R$ 67,279 (a gain of R$
64,641 on 03/31/03 versus a loss of R$ 2,638 on 03/31/02), due
basically to the positive effects of exchange rate variation on debt.
Operationally, the average sales price increased 48%, offset partly by
10.7% lower sales of steel slabs (1,015 thousand tons on 03/31/03
against 1,136 thousand tons on 03/31/02).
- Usiminas - The equity result increased by R$ 35.553 (a gain of R$
37,000 on 03/31/03 against a gain of R$ 1,447 on 03/31/02), mainly
caused by the reduced negative effects of exchange rate variation on
debt. In operational terms, sales volume rose 5.4% (1,830 thousand tons
on 03/31/03 against 1,736 thousand tons on 03/31/02).
(b) Aluminum
- Albras - The equity result improved by R$ 75,089 (a gain of R$ 113,820
on 03/31/03 versus a gain of R$ 38,731 on 03/31/02), caused by the
positive effects of exchange rate variation on debt. In operational
terms, sales volume went up 17.1% (103 thousand tons on 03/31/03
against 88 thousand tons on 03/31/02), and the average sales price rose
by 1.4% (US$ 1,337.98 per ton on 03/31/03 against US$ 1,319.81 per ton
on 03/31/02).
- Alunorte - An increase in the equity result of R$ 53,612 (a gain of R$
58,138 on 03/31/03 versus a gain of R$ 4,526 on 03/31/02), due to the
positive effects of exchange rate variation on debt. Operationally, the
average sales price of alumina rose 6.5% (US$ 172.03 per ton on
03/31/03 against US$ 161.55 per ton on 03/31/02) and sales volume
increased 14.8% (490 thousand tons on 03/31/03 compared with 427
thousand tons on 03/31/02).
- MRN - The equity result improved by R$ 14,023 (a gain of R$ 23,799 on
03/31/03 against a gain of R$ 9,776 on 03/31/02), caused by a 23.3%
increase in sales volume (2,196 thousand tons on 03/31/03 against 1,781
thousand tons on 03/31/02), partly offset by a 2.7% decrease in the
average sales price of bauxite (US$ 19.23 per ton on 03/31/03 versus
US$ 19.76 per ton on 03/31/02).
- Valesul - An increase in the equity result of R$ 11,391 (a gain of R$
14,806 on 03/31/03 against a gain of R$ 3,415 on 03/31/02), due mainly
to the impact of exchange rate variation on sales and a 0.6% increase
in the average price of aluminum (US$ 1,730.60 per ton on 03/31/03
against US$ 1,720.97 per ton on 03/31/02), partly offset by a 9.5% fall
in the quantity sold (19 thousand tons on 03/31/03 against 21 thousand
tons on 03/31/02).
7
- Aluvale - The equity result (own operations) increased by R$ 7,962 (a
gain of R$ 16,439 on 03/31/03 versus a gain of R$ 8,477 on 03/31/02),
caused basically by the fiscal benefit of interest on stockholders'
equity.
- Itaco - The equity result fell by R$ 6,204 (a loss of R$ 6,018 on
03/31/03 against a gain of R$ 186 on 03/31/02), due to the increase in
financial expenses. In operational terms, the average prices of alumina
rose by 4.0% and the price of aluminum decreased 0.6% while the sales
of aluminum, alumina and bauxite increased respectively by 14%, 339.4%
and 35%.
1.2.4- Operating Expenses
The operating expenses increased R$ 117,290 (R$ 284,557 on 03/31/03 compared to
R$ 167,267 on 03/31/02), due to:
- selling expenses, due to an increase in commissions (in turn caused by
higher export sales);
- expenses for research and studies; and
- other operating expenses (Note 6.18).
1.2.5- Net Financial Result
The net financial result increased R$ 213,401 (R$ 144,895 of revenue on 03/31/03
compared to R$ 68,506 of expense on 03/31/02), mainly due to the positive effect
of exchange rate variation on the Company's net debt on 03/31/03 (Note 6.15).
1.2.6- Cash Flow
The operating cash flow measured by EBITDA (earnings before interest, income tax
and depreciation, amortization and depletion) was R$ 1,148,114 on 03/31/03,
reflecting an increase of 58.3% over 03/31/02, which was R$ 725,390.
In thousand
------------------------------------------------
1Q/03 1Q/02 4Q/02
--------------- -------------- --------------
Net operating revenue 2,416,771 1,544,255 2,671,813
Cost of products (1,247,883) (858,623) (1,280,945)
Operating expenses (284,557) (167,267) (361,800)
--------------- -------------- --------------
Operating profit 884,331 518,365 1,029,068
Depreciation/goodwill 161,396 169,152 149,574
--------------- -------------- --------------
1,045,727 687,517 1,178,642
Dividends received 102,387 37,873 33,439
Write-off - - 147,000
--------------- -------------- --------------
EBITDA R$ 1,148,114 725,390 1,359,081
=============== ============== ==============
US$ average 3.4909 2.3800 3.6773
--------------- -------------- --------------
EBITDA US$ 328,888 304,786 369,587
=============== ============== ==============
1.2.7- Income Tax and Social Contribution
Income tax and social contribution were an expense of R$ 200,478 compared with a
credit of R$ 31,374 on 03/31/02, mainly caused by the increase in the tax basis
(income before income tax and social contribution less the equity method result,
goodwill and provisions for non-deductible losses) from R$ 330,651 on 03/31/02
to R$ 1,017,319 on 03/31/03, partly reduced by the tax benefit of R$ 211,418 on
03/31/03 provided by paying interest on stockholders' equity on (R$ 107,680 on
03/31/02) (Note 6.7).
8
PART II
QUARTERLY INFORMATION AND NOTES TO THE QUARTERLY INFORMATION
(A free translation of the original in Portuguese relating to the quarterly
information prepared in accordance with the requirements of Brazilian Corporate
Law)
2- BALANCE SHEET In thousands of reais
--------------------------------------------------------------------------------------------------------
Notes 03/31/03 03/31/02
-------------- --------------- ---------------
Assets
Current assets
Cash and cash equivalents 6.4 864,949 259,292
Accounts receivable from customers - 1,328,609 1,436,487
Related parties 6.5 1,105,582 985,605
Inventories 6.6 413,857 419,290
Taxes to recover or offset - 127,798 128,615
Deferred income tax and social contribution 6.7 653,327 812,306
Others - 293,327 304,284
--------------- ---------------
4,787,449 4,345,879
--------------- ---------------
Long-term receivables
Related parties 6.5 1,260,130 1,377,158
Loans and financing - 209,308 268,896
Deferred income tax and social contribution 6.7 750,063 790,627
Judicial deposits 6.11 743,542 708,677
Others - 81,825 21,359
--------------- ---------------
3,044,868 3,166,717
--------------- ---------------
Permanent assets
Investments 6.8 11,161,812 10,613,949
Property, plant and equipment 6.9 8,918,520 8,706,860
--------------- ---------------
20,080,332 19,320,809
--------------- ---------------
27,912,649 26,833,405
=============== ===============
Liabilities and stockholders' equity
Current liabilities
Short-term debt 6.10 118,977 397,655
Current portion of long-term debt 6.10 1,889,236 1,827,815
Payable to suppliers and contractors - 661,860 683,861
Related parties 6.5 1,002,996 948,400
Provision for interest on stockholders' equity 6.19 621,820 -
Payroll and related charges - 141,280 168,114
Pension Plan - Valia - 84,122 80,763
Others - 108,710 111,414
--------------- ---------------
4,629,001 4,218,022
--------------- ---------------
Long-term liabilities
Long-term debt 6.10 4,065,741 4,063,553
Related parties 6.5 3,221,881 3,300,003
Deferred income tax and social contribution 6.7 85,941 85,472
Provisions for contingencies 6.11 1,372,419 1,271,688
Pension Plan - Valia - 519,470 498,836
Others - 725,668 645,311
--------------- ---------------
9,991,120 9,864,863
--------------- ---------------
Stockholders' equity
Paid-up capital 6.13 5,000,000 5,000,000
Revenue reserves - 8,292,528 7,750,520
--------------- ---------------
13,292,528 12,750,520
--------------- ---------------
27,912,649 26,833,405
=============== ===============
The additional information, notes and attachment I are an integral part of these
statements.
9
(A free translation of the original in Portuguese relating to the quarterly
information prepared in accordance with the requirements of Brazilian Corporate
Law)
3- STATEMENT OF INCOME In thousands of reais
--------------------------------------------------------------------------------------------------------------------------------
Notes 1Q/03 1Q/02 4Q/02
---------- -------------- --------------- ---------------
Operating revenues
Sales of ore and metals
Iron ore and pellets 1.2.1 2,077,792 1,234,775 2,310,905
Gold 1.2.1 32,298 79,932 48,017
Potash 1.2.1 72,530 37,784 89,948
-------------- --------------- ---------------
2,182,620 1,352,491 2,448,870
Railroad and port services 1.2.1 327,164 230,372 329,252
Others 1.2.1 7,834 17,940 7,709
-------------- --------------- ---------------
2,517,618 1,600,803 2,785,831
Value Added taxes (100,847) (56,548) (114,018)
-------------- --------------- ---------------
Net operating revenues 2,416,771 1,544,255 2,671,813
-------------- --------------- ---------------
Cost of products and services
Ores and metals - (1,142,887) (762,194) (1,158,907)
Railroad and port services - (101,514) (88,192) (115,296)
Others - (3,482) (8,237) (6,742)
-------------- --------------- ---------------
1.2.2 (1,247,883) (858,623) (1,280,945)
-------------- --------------- ---------------
Gross profit 1,168,888 685,632 1,390,868
Gross margin 48.4% 44.4% 52.1%
Operating expenses
Selling - (51,680) (28,172) (77,937)
Administrative 6.18 (88,758) (78,894) (98,002)
Research and development - (38,255) (21,257) (47,854)
Other operating expenses 6.18 (105,864) (38,944) (138,007)
-------------- --------------- ---------------
(284,557) (167,267) (361,800)
-------------- --------------- ---------------
Operating profit before financial result and
result of equity investments 884,331 518,365 1,029,068
Result of equity investments
Gain on investments accounted for by the equity method 6.8 418,620 284,843 471,748
Amortization of goodwill 6.8 (93,172) (66,188) (193,452)
Provision for losses 6.8 9,632 (66,750) 133,920
--------------- --------------- ---------------
335,080 151,905 412,216
Financial result, net
Financial expenses, net 6.15 (135,029) (88,268) (28,196)
Monetary and exchange rate variation, net 6.15 279,924 19,762 626,009
-------------- --------------- ---------------
144,895 (68,506) 597,813
-------------- --------------- ---------------
Operating profit 1,364,306 601,764 2,039,097
Income tax and social contribution 6.7 (200,478) 31,374 (498,055)
-------------- --------------- ---------------
Net income for the period 1,163,828 633,138 1,541,042
============== =============== ===============
Number of shares outstanding at the end of the period (in thousands) 383,839 383,839 383,839
============== =============== ===============
Net earnings per share outstanding at the end of the period (R$) 3.03 1.65 4.01
============== =============== ===============
The additional information, notes and attachment I are an integral part of these
statements.
10
(A free translation of the original in Portuguese relating to the quarterly
information prepared in accordance with the requirements of Brazilian Corporate
Law)
4- STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
In thousands of reais
------------------------------------------------------------------------------------------------------------------------
Capital reserves
--------------------------------------------------------------------------
Result of Price-level
Paid-up share restatement
capital exchange Law 8,200/91 Expansion Depletion
------------- ------------- ---------------- -------------- --------------
On December 31, 2001 4,000,000 3,426 440,258 3,869,083 1,506,513
-------------- ------------- ---------------- -------------- -------------
Capitalization of reserves 1,000,000 (3,426) (440,258) - (502,347)
Realization of revenue reserves - - - - -
Provision for pension plan liabilities - - - - -
Result on exchange of shares - - - - -
Net income for the year - - - - -
Proposed appropriations:
Interest on stockholders' equity - - - - -
Appropriation to revenue reserves - - - 1,408,499 -
-------------- ------------- ---------------- -------------- -------------
On December 31, 2002 5,000,000 - - 5,277,582 1,004,166
-------------- ------------- ---------------- -------------- -------------
Net income for the period - - - - -
Provision for interest on
stockholders' equity - - - - -
-------------- ------------- ---------------- -------------- -------------
On March 31, 2003 5,000,000 - - 5,277,582 1,004,166
============== ============= ================ ============== =============
Revenue reserves
-----------------------------
Unrealized Fiscal Treasury Retained
income Legal incentives stock earnings Total
------------- ----------- ------------ ------------- ------------- -------------
On December 31, 2001 1,271,884 752,535 53,969 (131,105) - 11,766,563
-------------- ---------- ------------ ------------- ------------- -------------
Capitalization of reserves - - (53,969) - - -
Realization of revenue reserves (526,477) - - - 526,477 -
Provision for pension plan liabilities - - - - (30,381) (30,381)
Result on exchange of shares - - - (228) - (228)
Net income for the year - - - - 2,043,254 2,043,254
Proposed appropriations:
Interest on stockholders' equity - - - - (1,028,688) (1,028,688)
Appropriation to revenue reserves - 102,163 - - (1,510,662) -
------------- ----------- ------------ -------------- ------------- -------------
On December 31, 2002 745,407 854,698 - (131,333) - 12,750,520
-------------- ------------ ------------- -------------- -------------- -------------
Net income for the period - - - - 1,163,828 1,163,828
Provision for interest on
stockholders' equity - - - - (621,820) (621,820)
-------------- ------------ ------------- -------------- -------------- -------------
On March 31, 2003 745,407 854,698 - (131,333) 542,008 13,292,528
============== ============ ============= ============== ============== =============
The additional information, notes and attachment I are an integral part of these
statements.
11
(A free translation of the original in Portuguese)
5- STATEMENT OF CASH FLOWS (ADDITIONAL INFORMATION) In thousands of reais
------------------------------------------------------------------------------------------------------------------------------------
1Q/03 1Q/02 4Q/02
--------------- ------------- --------------
Cash flows from operating activities:
Net income for the period 1,163,828 633,138 1,541,042
Adjustments to reconcile net income for the period
with cash provided by operating activities:
Result of equity investments (335,080) (151,905) (412,216)
Depreciation, amortization and depletion 134,676 144,733 134,610
Deferred income tax and social contribution 200,478 (31,374) 498,055
Provision for contingencies 27,141 (16,202) 5,745
Financial expenses and monetary and exchange rate variations
on assets and liabilities, net (312,650) (27,535) (565,844)
Loss on disposal of property, plant and equipment 13,640 2,562 112,376
Amortization of goodwill in the cost of products sold 24,419 24,419 24,419
Net losses on derivatives 11,565 1,708 33,085
Dividends/interest on stockholders' equity received 102,387 37,873 33,439
Others (197) (24,590) (187,613)
--------------- ------------- --------------
1,030,207 592,827 1,217,098
--------------- ------------- --------------
Decrease (increase) in assets:
Accounts receivable 92,303 (41,813) (57,204)
Inventories (497) 32,496 (30,560)
Others 6,623 (2,880) 25,535
--------------- ------------- --------------
98,429 (12,197) (62,229)
--------------- ------------- --------------
Increase (decrease) in liabilities:
Suppliers and contractors (22,001) (76,597) 86,185
Payroll and related charges and others (26,834) (15,724) 12,712
Others 33,419 21,670 174,450
--------------- ------------- --------------
(15,416) (70,651) 273,347
--------------- ------------- --------------
Net cash provided by operating activities 1,113,220 509,979 1,428,216
--------------- ------------- --------------
Cash flows from investing activities:
Loans and advances receivable (187,707) (391,518) 410,108
Guarantees and deposits (34,695) (22,366) (52,487)
Additions to investments (472) (2,153) (9,432)
Additions to property, plant and equipment (385,413) (321,746) (484,146)
Proceeds from disposal of property, plant and equipment/investments 437 623 554
--------------- -------------- --------------
Net cash used in investing activities (607,850) (737,160) (135,403)
--------------- -------------- --------------
Cash flows from financing activities:
Short-term debt (332,251) 856,712 (981,460)
Long-term debt 577,197 171,312 (151,771)
Repayments:
Related parties - (69,087) 39,232
Financial institutions (144,455) (116,320) (120,976)
Interest on stockholders' equity paid (204) (167) (1,029,006)
Treasury shares - (243) 15
--------------- -------------- --------------
Net cash used in financing activities 100,287 842,207 (2,243,966)
--------------- -------------- --------------
Increase (decrease) in cash and cash equivalents 605,657 615,026 (951,153)
Cash and cash equivalents, beginning of the period 259,292 645,346 1,210,445
--------------- -------------- --------------
Cash and cash equivalents, end of the period 864,949 1,260,372 259,292
=============== ============== ==============
Cash paid during the period for:
Short-term interest (16,428) (9,409) (19,425)
Long-term interest net of capitalization (83,607) (72,484) (79,180)
Non-cash transactions:
Conversion of loans into investments 32,494 45,993 235,335
Additions to property, plant and equipment:
With incorporation of Valepontocom - - 26,416
With capitalization of interest (25,099) - 46,215
12
(A free translation of the original in Portuguese relating to the quarterly
information prepared in accordance with the requirements of Brazilian Corporate
Law)
6- NOTES TO THE QUARTERLY INFORMATION AT MARCH 31, 2003 AND 2002
Expressed in millions of reais
6.1- Operations
Companhia Vale do Rio Doce is a publicly traded corporation whose predominant
activities are mining, processing and sale of iron ore, pellets, gold and
potash, as well as port and railroad transportation services and power
generation. In addition, through its direct and indirect subsidiaries and
jointly controlled companies, CVRD operates in manganese and ferroalloys, steel,
aluminum, kaolin, logistics and geological studies and technological research
services.
6.2- Presentation of Quarterly information
The quarterly information has been prepared according to the accounting
principles provided for in Brazilian corporate legislation as well as the rules
and guidelines issued by the Comissao de Valores Mobiliarios - CVM (Brazilian
Securities Commission) and IBRACON - Instituto dos Auditores Independentes do
Brasil (Brazilian Independent Auditors Institute).
In order to provide better information to the market, the Company is presenting
the Statement of Cash Flow. The disclosure of this statement is encouraged by
the CVM according to the Official Instruction 01/00 of 01/31/00.
Certain amounts and classifications in the 2002 quarterly information have been
adjusted to the criteria used on 2003 for better comparability.
6.3- Significant Accounting Policies
(a) The Company adopts the accrual basis of accounting;
(b) Assets and liabilities that are realizable or due more than twelve
months after the quarterly information date are classified as
long-term;
(c) Marketable securities, classified as cash and cash equivalents, are
stated at cost plus accrued income earned to the quarterly information
date;
(d) Inventories are stated at average purchase or production cost, and
imports in transit at the cost of each item, not exceeding market or
realizable value;
(e) Assets and liabilities in foreign currencies are translated at exchange
rates in effect at the quarterly information date, and those in local
currency, when applicable, are restated based on contractual indices;
(f) Investments in subsidiaries, jointly controlled companies and
affiliated companies are accounted for by the equity method, based on
the stockholders' equity of the investees, and when applicable
increased/decreased by goodwill and negative goodwill to be amortized
and provision for losses. Other investments are recorded at cost, less
provision for unrealized losses when applicable; and
(g) Property, plant and equipment, including interest incurred during the
construction period of large-scale projects, are recorded at historic
cost (increased by monetary restatement up to 1995) and depreciated by
the straight-line method, at rates that take into consideration the
useful lives of the assets. Depletion of mineral reserves is based on
the ratio between production and estimated capacity.
6.4- Cash and Cash Equivalents
03/31/03 12/31/02
------------- ------------
Marketable securities related to CDI (*) 759,899 157,261
Fixed-yield bond investments (funds) 25,200 24,087
Government securities (NBC-E, NTN-D, LFT) 77,699 73,521
Others 2,151 4,423
------------- ------------
864,949 259,292
============= ============
(*) For part of these investments the Company contracted swap operations with
financial institutions related to interest rate and/or currency variations.
13
6.5- Transactions with Related Parties
Derived from sales and purchases of products and services or from loans under
normal market conditions, with maturities up to the year 2011, as follows:
Assets Liabilities
----------------------------- ----------------------------
03/31/03 12/31/02 03/31/03 12/31/02
-------------- ------------- -------------- ------------
Subsidiaries
ALUNORTE - Alumina do Norte do Brasil S.A. 954,167 1,055,404 15,383 53,124
CVRD Overseas Ltd. 135,276 162,961 1,358,876 1,374,514
Docepar S.A. 152,358 143,839 142 142
Itabira Rio Doce Company Limited - ITACO 631,781 667,230 582,707 559,237
Mineracao Andira Ltda. (participates in Mineracao Serra do Sossego S.A.) 79,717 79,563 - -
Rio Doce International Finance Ltd. 453,575 326,464 1,845,285 1,854,682
Salobo Metais S.A. 219,196 209,017 - -
SIBRA Eletrosiderurgica Brasileira S.A. 65,035 79,370 1,889 7,437
Vale do Rio Doce Aluninio S.A. - ALUVALE 23,004 417 83,822 57,540
Others 206,767 142,360 316,751 304,338
-------------- ------------- -------------- ------------
2,920,876 2,866,625 4,204,855 4,211,014
-------------- ------------- -------------- ------------
Jointly controlled companies
Companhia Coreano-Brasileira de Pelotizacao - KOBRASCO 169,410 139,462 36,484 23,285
Companhia Hispano-Brasileira de Pelotizacao - HISPANOBRAS 65,534 63,938 73,552 88,803
Companhia Nipo-Brasileira de Pelotizacao - NIBRASCO 79,934 91,487 20,393 61,226
Companhia Italo-Brasileira de Pelotizacao - ITABRASCO 72,055 65,002 49,929 50,176
Others 120,228 281,503 181,955 168,509
-------------- ------------- -------------- ------------
507,161 641,392 362,313 391,999
-------------- ------------- -------------- ------------
Affiliates 33,261 36,017 475 -
-------------- ------------- -------------- ------------
3,461,298 3,544,034 4,567,643 4,603,013
============== ============= ============== ============
Represented by:
Trade balances (sales and purchases of products and services) (*) 1,095,586 1,181,271 342,766 354,610
Short-term financial balances 1,105,582 985,605 1,002,996 948,400
Long-term financial balances 1,260,130 1,377,158 3,221,881 3,300,003
-------------- ------------- -------------- ------------
3,461,298 3,544,034 4,567,643 4,603,013
============== ============= ============== ============
(*) Included in "Accounts receivable from customers" and "Payable to suppliers
and contractors".
6.6- Inventories
03/31/03 12/31/02
------------ -------------
Finished products
. Iron ore and pellets 169,687 157,717
. Others 10,897 10,480
------------ -------------
180,584 168,197
Spare parts and maintenance supplies 233,273 251,093
------------ -------------
413,857 419,290
============ =============
14
6.7- Deferred Income Tax and Social Contribution
Income of the Company is subject to the normal tax system. The balances of
deferred assets and liabilities are presented as follows:
Deferred assets Deferred liabilities
--------------------- ---------------------
03/31/03 12/31/02 03/31/03 12/31/02
--------- --------- --------- ---------
Tax loss carryforward
161,330 396,694 - -
--------- --------- --------- ---------
Temporary differences:
. Pension Plan 216,251 208,094 - -
. Contingent liabilities 367,893 338,797 - -
. Provision for losses on assets 474,241 485,767 - -
. Provision for losses on derivative financial instruments 90,704 91,835 - -
. Others 92,971 81,746 - -
--------- --------- --------- ---------
1,242,060 1,206,239 - -
--------- --------- --------- ---------
Accelerated depreciation - - 9,369 9,521
Long-term sales - - 71,207 68,042
Others - - 5,830 7,909
--------- --------- --------- ---------
Total 1,403,390 1,602,933 86,406 85,472
========= ========= ========= =========
Short-term - liabilities registred in "others" 653,327 812,306 465 -
Long-term 750,063 790,627 85,941 85,472
--------- --------- --------- ---------
1,403,390 1,602,933 86,406 85,472
========= ========= ========= =========
The deferred assets and liabilities regarding income tax and social contribution
arising from tax losses, negative social contribution bases and temporary
differences are recognized from an accounting standpoint considering an analysis
of likely future results, based on economic and financial projections prepared
in light of internal assumptions and macroeconomic, commercial and fiscal
scenarios. These projections can change in the future.
In addition to the credits recorded, the Company has a lawsuit pending claiming
an additional 51.8% monetary restatement for tax purposes applied to the months
of January and February 1989 ("Plano Verao" monetary plan). A favorable ruling
has already been obtained for compensation of credits corresponding to 42.7%
instead of the 51.8% requested. The amount of these credits covered by the
ruling totals approximately R$ 309,225 and the accounting effects have not yet
been recognized in the quarterly information.
Since the income tax and the social contribution are based not only on the net
income before tax but also on the structure of the company's organization, its
non-taxable income, non-deductible expenses, fiscal incentives, and others
factors, there is no direct relation between the net income of the Company and
the income tax and social contribution. Therefore, the projection for the use of
tax credits should not be taken as a indication of CVRD's future net income.
The amounts reported as income tax and social contribution which affected income
for the period are as follows:
1Q/03 1Q/02 4Q/02
--------- ---------- -----------
Income before income tax and social contribution 1,364,306 601,764 2,039,097
(-) Equity in results of subsidiaries and affiliated companies (418,620) (284,843) (471,748)
(+) Non-deductible goodwill and provisions for losses 71,633 13,730 (68,812)
--------- ---------- -----------
1,017,319 330,651 1,498,537
Income tax and social contribution at combined tax rates 34% 34% 34%
--------- ---------- -----------
Federal income tax and social contribution at statutory rates (345,888) (112,421) (509,503)
Adjustments to net income which modify the effect on the result for the period:
. Income tax benefit from interest on stockholders' equity 211,418 107,680 -
. Fiscal incentives - 17,862 -
. Others (66,008) 18,253 11,448
--------- ---------- -----------
Income tax and social contribution (200,478) 31,374 (498,055)
========= ========== ===========
15
6.8- Investments
Investment
Participations
Adjusted
Partici- Adjusted net income
pation stockholders (loss) for Investments
% 'equity the period 03/31/03 12/31/02
-------- ------------ ----------- --------- ----------
Iron ore and pellets
Caemi Mineracao e Metalurgia S.A. (b) 16.86 639,717 66,076 114,668 96,745
Companhia Coreano-Brasileira de Pelotizacao - KOBRASCO (b) 50.00 (89,160) 18,190 (44,580) (53,675)
Companhia Hispano-Brasileira de Pelotizacao - HISPANOBRAS (b) 50.89 90,872 4,490 46,244 43,959
Companhia Italo-Brasileira de Pelotizacao - ITABRASCO (b) 50.90 59,216 3,412 30,142 28,405
Companhia Nipo-Brasileira de Pelotizacao - NIBRASCO (b) 51.00 87,365 3,168 44,556 42,941
CVRD Overseas Ltd. (a, b) 100.00 415,776 29,454 415,776 408,797
Ferteco Mineracao S.A. (b) 100.00 707,540 88,878 452,013 350,015
Gulf Industrial Investment Co. - GIIC (a, b) 50.00 225,520 12,513 112,760 128,613
Itabira Rio Doce (ITACO) /Rio Doce Europa - S.'a.r.l. (a, b) 100.00 2,330,304 (139,804) 2,330,304 2,414,940
Minas da Serra Geral S.A. - MSG (b) 51.00 62,054 7,443 31,647 27,851
Samarco Mineracao S.A. (b) 50.00 627,216 139,453 313,609 246,919
Urucum Mineracao S.A. (b) 100.00 75,737 6,893 - -
Incorporated companies (e) - - - - -
Others 171,780 177,314
--------- ---------
4,018,919 3,912,824
Manganese and ferroalloys
Rio Doce Manganese Europe - RDME (a, b) 100.00 182,750 8,007 182,750 174,743
SIBRA Eletrosiderurgica Brasileira S.A. (b) 99.28 310,314 17,194 283,259 265,385
Urucum Mineracao S.A. (b) 100.00 75,737 6,893 75,737 68,844
Others 11,259 21,491
--------- ---------
553,005 530,463
Non-ferrous
Mineracao Serra do Sossego (b) 100.00 377,284 - 377,284 377,284
Para Pigmentos S.A. (b) 75.50 (50,979) 31,762 (38,489) (62,469)
Salobo Metais S.A. (b) 100.00 106,437 - 106,437 106,437
Others 11,801 (74,579)
--------- ---------
457,033 346,673
Logistics
Companhia Ferroviaria do Nordeste (b) 32.40 (122,223) (5,955) (39,600) (37,929)
DOCEPAR S.A. (b) 100.00 (122,650) (8,106) - -
Mineracao Tacuma Ltda ( Ferrovia Centro-Atlantica S.A. )(b) 45.65 (397,899) (42,494) (397,899) (355,405)
MRS Logistica S.A. (b, d) 17.26 (139,386) 35,180 (24,058) (32,439)
Navegacao Vale do Rio Doce S.A. - DOCENAVE (b) 100.00 452,618 (1,721) 452,618 454,339
Sepetiba Tecon S.A. (b) 50.00 (36,098) (4,868) (18,049) (15,615)
TVV - Terminal de Vila Velha S.A. (b) 99.89 56,704 2,018 56,642 54,626
Others 2,858 2,858
--------- ---------
32,512 70,435
Steel
California Steel Industries, Inc - CSI (a, b) 50.00 768,788 (57,298) 384,394 396,015
Companhia Siderurgica de Tubarao - CST (b, c) 22.85 3,194,183 282,893 729,871 665,676
DOCEPAR S.A. (b) 100.00 (122,650) (8,106) - -
Rio Doce Limited (a, b) 100.00 325,554 - 325,554 343,353
Usinas Siderurgicas de Minas Gerais S.A. - USIMINAS (b, c) 11.46 3,514,124 322,862 402,719 365,719
Others (400) (400)
--------- ---------
1,842,138 1,770,363
Aluminum
ALBRAS - Aluminio Brasileiro S.A. (b) 51.00 479,916 223,177 244,757 128,403
ALUNORTE - Alumina do Norte do Brasil S.A. (b) 57.03 546,444 101,941 311,637 253,499
Itabira Rio Doce (ITACO) (b) - - - - -
Mineracao Rio do Norte S.A. (b) 40.00 731,822 59,499 292,729 268,929
Mineracao Vera Cruz S.A. (b) 100.00 10,003 - 10,003 10,006
Vale do Rio Doce Aluminio S.A. - ALUVALE (own operations) 100.00 49,571 16,439 49,571 63,420
Valesul Aluminio S.A. (b) 54.51 288,362 27,163 157,186 142,379
--------- ---------
1,065,883 866,636
Others
CELMAR S.A. - Industria de Celulose e Papel (b) 100.00 (144,807) - (144,807) (144,807)
DOCEPAR S.A. (b) 100.00 (122,650) (8,106) (122,650) (114,544)
Fertilizantes Fosfatados S.A. - FOSFERTIL (b, c) 11.12 557,169 98,659 61,958 73,408
Florestas Rio Doce S.A. (b) 99.85 171,523 4,243 171,265 177,324
Others 10,804 10,978
--------- ---------
(23,430) 2,359
--------- ---------
7,946,060 7,499,753
========= =========
Investment Participations
Advance for future capital
increase Goodwill and negative goodwill
03/31/03 12/31/02 03/31/03 12/31/02
---------------------------------------------------------------
Iron ore and pellets
Caemi Mineracao e Metalurgia S.A. (b) - - 452,473 465,403
Companhia Coreano-Brasileira de Pelotizacao - KOBRASCO (b) - - - -
Companhia Hispano-Brasileira de Pelotizacao - HISPANOBRAS (b) - - - -
Companhia Italo-Brasileira de Pelotizacao - ITABRASCO (b) - - - -
Companhia Nipo-Brasileira de Pelotizacao - NIBRASCO (b) - - - -
CVRD Overseas Ltd. (a, b) - - - -
Ferteco Mineracao S.A. (b) - - 825,707 877,314
Gulf Industrial Investment Co. - GIIC (a, b) - - - -
Itabira Rio Doce (ITACO) /Rio Doce Europa - S.'a.r.l. (a, b) - - - -
Minas da Serra Geral S.A. - MSG (b) - - - -
Samarco Mineracao S.A. (b) - - - -
Urucum Mineracao S.A. (b) - - - -
Incorporated companies (e) - - 730,276 754,695
Others - - 35,410 37,771
----------- ------------ -------------- -------------
- - 2,043,866 2,135,183
Manganese and ferroalloys
Rio Doce Manganese Europe - RDME (a, b) - - - -
SIBRA Eletrosiderurgica Brasileira S.A. (b) 612 612 231,215 251,344
Urucum Mineracao S.A. (b) - - - -
Others - - - -
----------- ------------ -------------- -------------
612 612 231,215 251,344
Non-ferrous
Mineracao Serra do Sossego (b) - - 57,269 57,269
Para Pigmentos S.A. (b) - - - -
Salobo Metais S.A. (b) 7,824 217 88,473 88,473
Others 55,904 - - -
----------- ------------ -------------- -------------
63,728 217 145,742 145,742
Logistics
Companhia Ferroviaria do Nordeste (b) 38,445 36,945 - -
DOCEPAR S.A. (b) - - - -
Mineracao Tacuma Ltda ( Ferrovia Centro-Atlantica S.A. )(b) 591,368 466,382 - -
MRS Logistica S.A. (b, d) - - - -
Navegacao Vale do Rio Doce S.A. - DOCENAVE (b) - - - -
Sepetiba Tecon S.A. (b) - - - -
TVV - Terminal de Vila Velha S.A. (b) - - - -
Others - - - -
----------- ------------ -------------- -------------
629,813 503,327 - -
Steel
California Steel Industries, Inc - CSI (a, b) - - - -
Companhia Siderurgica de Tubarao - CST (b, c) - - (148,697) (148,697)
DOCEPAR S.A. (b) - - - -
Rio Doce Limited (a, b) - - - -
Usinas Siderurgicas de Minas Gerais S.A. - USIMINAS (b, c) - - - -
Others - - - -
----------- ------------ -------------- -------------
- - (148,697) (148,697)
Aluminum
ALBRAS - Aluminio Brasileiro S.A. (b) - - - -
ALUNORTE - Alumina do Norte do Brasil S.A. (b) - - 49,896 49,896
Itabira Rio Doce (ITACO) (b) - - - -
Mineracao Rio do Norte S.A. (b) - - - -
Mineracao Vera Cruz S.A. (b) - - - -
Vale do Rio Doce Aluminio S.A. - ALUVALE (own operations) - - - -
Valesul Aluminio S.A. (b) - - - -
----------- ------------ -------------- -------------
- - 49,896 49,896
Others
CELMAR S.A. - Industria de Celulose e Papel (b) 191,610 169,493 - -
DOCEPAR S.A. (b) - - - -
Fertilizantes Fosfatados S.A. - FOSFERTIL (b, c) - - - -
Florestas Rio Doce S.A. (b) - - - -
Others 7,967 7,079 - -
----------- ------------ -------------- -------------
199,577 176,572 - -
----------- ------------ -------------- -------------
893,730 680,728 2,322,022 2,433,468
=========== ============ ============== =============
Provisions
Equity / Others For Losses
1Q/03 1Q/02 4Q/02 1Q/03 1Q/02
---------------------------------------------------
Iron ore and pellets
Caemi Mineracao e Metalurgia S.A. (b) 9,483 5,948 (51,804) - -
Companhia Coreano-Brasileira de Pelotizacao - KOBRASCO (b) - 1,524 - 9,095 -
Companhia Hispano-Brasileira de Pelotizacao - HISPANOBRAS (b) 2,285 2,552 4,289 - -
Companhia Italo-Brasileira de Pelotizacao - ITABRASCO (b) 1,737 1,253 3,455 - -
Companhia Nipo-Brasileira de Pelotizacao - NIBRASCO (b) 1,615 (2,174) 6,966 - -
CVRD Overseas Ltd. (a, b) 29,454 23,234 (8,995) - -
Ferteco Mineracao S.A. (b) 85,047 29,051 28,431 - -
Gulf Industrial Investment Co. - GIIC (a, b) 6,256 4,526 6,646 - -
Itabira Rio Doce (ITACO) /Rio Doce Europa - S.'a.r.l. (a, b) (139,804) 66,136 (168,089) - -
Minas da Serra Geral S.A. - MSG (b) 3,796 1,338 (988) - -
Samarco Mineracao S.A. (b) 69,727 29,048 117,546 - -
Urucum Mineracao S.A. (b) - - (3,512) - -
Incorporated companies (e) - - - - -
Others 5,637 4,256 (36,491) - -
--------- ---------- ------- ----- ------
75,233 166,692 (102,546) 9,095 -
Manganese and ferroalloys
Rio Doce Manganese Europe - RDME (a, b) 8,007 (2,277) 12,326 - -
SIBRA Eletrosiderurgica Brasileira S.A. (b) 17,870 33,296 (19,095) - -
Urucum Mineracao S.A. (b) 6,893 8,685 5,439 - -
Others 3,891 676 113,033 (81) (59)
--------- ---------- ------- ----- ------
36,661 40,380 111,703 (81) (59)
Non-ferrous
Mineracao Serra do Sossego (b) - - - - -
Para Pigmentos S.A. (b) - 5,001 - 23,980 -
Salobo Metais S.A. (b) - - - - -
Others (4) (184) (1,119) - -
--------- ---------- ------- ----- ------
(4) 4,817 (1,119) 23,980 -
Logistics
Companhia Ferroviaria do Nordeste (b) - - - (1,929) (1,729)
DOCEPAR S.A. (b) - - - - (50,735)
Mineracao Tacuma Ltda ( Ferrovia Centro-Atlantica S.A. )(b) - - - (19,399) (6,041)
MRS Logistica S.A. (b, d) - - - 6,072 -
Navegacao Vale do Rio Doce S.A. - DOCENAVE (b) (1,721) 17,495 (3,295) - -
Sepetiba Tecon S.A. (b) (2,434) - - - -
TVV - Terminal de Vila Velha S.A. (b) 2,016 (212) (329) - -
Others - (3,894) - - -
--------- ---------- ------- ----- ------
(2,139) 13,389 (3,624)(15,256) (58,505)
Steel
California Steel Industries, Inc - CSI (a, b) (28,649) 617 (55,891) - -
Companhia Siderurgica de Tubarao - CST (b, c) 64,641 (2,638) 89,099 - -
DOCEPAR S.A. (b) - - - (8,106) (8,186)
Rio Doce Limited (a, b) - - - - -
Usinas Siderurgicas de Minas Gerais S.A. - USIMINAS (b, c) 37,000 1,447 94,549 - -
Others - - - - -
--------- ---------- ------- ----- ------
72,992 (574) 127,757 (8,106) (8,186)
Aluminum
ALBRAS - Aluminio Brasileiro S.A. (b) 113,820 38,731 128,403 - -
ALUNORTE - Alumina do Norte do Brasil S.A. (b) 58,138 4,526 124,523 - -
Itabira Rio Doce (ITACO) (b) (6,018) 186 (10,173) - -
Mineracao Rio do Norte S.A. (b) 23,799 9,776 86,878 - -
Mineracao Vera Cruz S.A. (b) - - - - -
Vale do Rio Doce Aluminio S.A. - ALUVALE (own operations) 16,439 8,477 1,589 - -
Valesul Aluminio S.A. (b) 14,806 3,415 20,510 - -
--------- ---------- ------- ----- ------
220,984 65,111 351,730 - -
Others
CELMAR S.A. - Industria de Celulose e Papel (b) - - - - -
DOCEPAR S.A. (b) - - - - -
Fertilizantes Fosfatados S.A. - FOSFERTIL (b, c) 10,971 3,759 11,105 - -
Florestas Rio Doce S.A. (b) 4,236 2,864 (3,516) - -
Others (314) (11,595) (19,742) - -
--------- ---------- ------- ----- ------
14,893 (4,972) (12,153) - -
--------- ---------- ------- ----- ------
418,620 284,843 471,748 9,632 (66,750)
========= ========== ======= ===== ======
Provisions Amortization
For Losses of Goodwill
4Q/02 1Q/03 1Q/02 4Q/02
------------------------------------------
Iron ore and pellets
Caemi Mineracao e Metalurgia S.A. (b) - (12,930) (12,930) (13,019)
Companhia Coreano-Brasileira de Pelotizacao - KOBRASCO (b) 8,821 - - -
Companhia Hispano-Brasileira de Pelotizacao - HISPANOBRAS (b) - - - -
Companhia Italo-Brasileira de Pelotizacao - ITABRASCO (b) - - - -
Companhia Nipo-Brasileira de Pelotizacao - NIBRASCO (b) - - - -
CVRD Overseas Ltd. (a, b) - - - -
Ferteco Mineracao S.A. (b) - (34,656) (34,656)
Gulf Industrial Investment Co. - GIIC (a, b) - - - -
Itabira Rio Doce (ITACO) /Rio Doce Europa - S.'a.r.l. (a, b) - - - -
Minas da Serra Geral S.A. - MSG (b) - - - -
Samarco Mineracao S.A. (b) - - - -
Urucum Mineracao S.A. (b) - - - -
Incorporated companies (e) - - - -
Others - (2,361) (2,361) (2,361)
----- ------- ------ --------
8,821 (49,947) (15,291) (50,036)
Manganese and ferroalloys
Rio Doce Manganese Europe - RDME (a, b) - - - -
SIBRA Eletrosiderurgica Brasileira S.A. (b) - (20,130) (20,130) (20,131)
Urucum Mineracao S.A. (b) - - - -
Others (201) - - -
----- ------- ------ --------
(201) (20,130) (20,130) (20,131)
Non-ferrous
Mineracao Serra do Sossego (b) - - - -
Para Pigmentos S.A. (b) 25,467 - - -
Salobo Metais S.A. (b) - - - -
Others - - - -
----- ------- ------ --------
25,467 - - -
Logistics
Companhia Ferroviaria do Nordeste (b) (3,193) - - -
DOCEPAR S.A. (b) - - - -
Mineracao Tacuma Ltda ( Ferrovia Centro-Atlantica S.A. )(b) (5,648) (23,095) (30,767)(123,285)
MRS Logistica S.A. (b, d) 33,104 - - -
Navegacao Vale do Rio Doce S.A. - DOCENAVE (b) - - - -
Sepetiba Tecon S.A. (b) 5,032 - - -
TVV - Terminal de Vila Velha S.A. (b) - - - -
Others - - - -
----- ------- ------ --------
29,295 (23,095) (30,767)(123,285)
Steel
California Steel Industries, Inc - CSI (a, b) - - - -
Companhia Siderurgica de Tubarao - CST (b, c) - - - -
DOCEPAR S.A. (b) (7,561) - - -
Rio Doce Limited (a, b) - - - -
Usinas Siderurgicas de Minas Gerais S.A. - USIMINAS (b, c) - - - -
Others - - - -
----- ------- ------ --------
(7,561) - - -
Aluminum
ALBRAS - Aluminio Brasileiro S.A. (b) 106,614 - - -
ALUNORTE - Alumina do Norte do Brasil S.A. (b) - - - -
Itabira Rio Doce (ITACO) (b) - - - -
Mineracao Rio do Norte S.A. (b) - - - -
Mineracao Vera Cruz S.A. (b) - - - -
Vale do Rio Doce Aluminio S.A. - ALUVALE (own operations) - - - -
Valesul Aluminio S.A. (b) - - - -
----- ------- ------ --------
106,614 - - -
Others
CELMAR S.A. - Industria de Celulose e Papel (b) (20,161) - - -
DOCEPAR S.A. (b) - - - -
Fertilizantes Fosfatados S.A. - FOSFERTIL (b, c) - - - -
Florestas Rio Doce S.A. (b) - - - -
Others (8,354) - - -
----- ------- ------ --------
(28,515) - - -
----- ------- ------ --------
133,920 (93,172) (66,188)(193,452)
======= ======= ======= ========
Result of investment Dividends received
participation
Total Total
1Q/03 1Q/02 4Q/02 1Q/03 1Q/02 4Q/02
-------- ------- -------- ------- ------ ------
Iron ore and pellets
Caemi Mineracao e Metalurgia S.A. (b) (3,447) (6,982) (64,823) - - -
Companhia Coreano-Brasileira de Pelotizacao - KOBRASCO (b) 9,095 1,524 8,821 - - -
Companhia Hispano-Brasileira de Pelotizacao - HISPANOBRAS (b) 2,285 2,552 4,289 6,995 3,945 952
Companhia Italo-Brasileira de Pelotizacao - ITABRASCO (b) 1,737 1,253 3,455 - 1,376 12,115
Companhia Nipo-Brasileira de Pelotizacao - NIBRASCO (b) 1,615 (2,174) 6,966 8,925 - -
CVRD Overseas Ltd. (a, b) 29,454 23,234 (8,995) - - -
Ferteco Mineracao S.A. (b) 50,391 29,051 (6,225) - - -
Gulf Industrial Investment Co. - GIIC (a, b) 6,256 4,526 6,646 - - -
Itabira Rio Doce (ITACO) /Rio Doce Europa - S.'a.r.l. (a, b) (139,804) 66,136 (168,089) - - -
Minas da Serra Geral S.A. - MSG (b) 3,796 1,338 (988) - 2,454 -
Samarco Mineracao S.A. (b) 69,727 29,048 117,546 45,850 - -
Urucum Mineracao S.A. (b) - - (3,512) - - -
Incorporated companies (e) - - - - - -
Others 3,276 1,895 (38,852) - - -
-------- ------- -------- ------- ------ ------
34,381 151,401 (143,761) 61,770 7,775 13,067
Manganese and ferroalloys
Rio Doce Manganese Europe - RDME (a, b) 8,007 (2,277) 12,326 - - -
SIBRA Eletrosiderurgica Brasileira S.A. (b) (2,260) 13,166 (39,226) - - -
Urucum Mineracao S.A. (b) 6,893 8,685 5,439 - - 2,742
Others 3,810 617 112,832 1,245 - 833
-------- ------- -------- ------- ------ ------
16,450 20,191 91,371 1,245 - 3,575
Non-ferrous
Mineracao Serra do Sossego (b) - - - - - -
Para Pigmentos S.A. (b) 23,980 5,001 25,467 - - -
Salobo Metais S.A. (b) - - - - - -
Others (4) (184) (1,119) - - 192
-------- ------- -------- ------- ------ ------
23,976 4,817 24,348 - - 192
Logistics
Companhia Ferroviaria do Nordeste (b) (1,929) (1,729) (3,193) - - -
DOCEPAR S.A. (b) - (50,735) - - - -
Mineracao Tacuma Ltda ( Ferrovia Centro-Atlantica S.A. )(b) (42,494) (36,808)(128,933) - - 2,694
MRS Logistica S.A. (b, d) 6,072 - 33,104 - - -
Navegacao Vale do Rio Doce S.A. - DOCENAVE (b) (1,721) 17,495 (3,295) - - -
Sepetiba Tecon S.A. (b) (2,434) - 5,032 - - -
TVV - Terminal de Vila Velha S.A. (b) 2,016 (212) (329) - - 2,674
Others - (3,894) - - - -
-------- ------- -------- ------- ------ ------
(40,490) (75,883) (97,614) - - 5,368
Steel
California Steel Industries, Inc - CSI (a, b) (28,649) 617 (55,891) - - -
Companhia Siderurgica de Tubarao - CST (b, c) 64,641 (2,638) 89,099 22,475 14,679 11,237
DOCEPAR S.A. (b) (8,106) (8,186) (7,561) - - -
Rio Doce Limited (a, b) - - - - - -
Usinas Siderurgicas de Minas Gerais S.A. - USIMINAS (b, c) 37,000 1,447 94,549 - - -
Others - - - - - -
-------- ------- -------- ------- ------ ------
64,886 (8,760) 120,196 22,475 14,679 11,237
Aluminum
ALBRAS - Aluminio Brasileiro S.A. (b) 113,820 38,731 235,017 - - -
ALUNORTE - Alumina do Norte do Brasil S.A. (b) 58,138 4,526 124,523 - - -
Itabira Rio Doce (ITACO) (b) (6,018) 186 (10,173) - - -
Mineracao Rio do Norte S.A. (b) 23,799 9,776 86,878 - - -
Mineracao Vera Cruz S.A. (b) - - - - - -
Vale do Rio Doce Aluminio S.A. - ALUVALE (own operations) 16,439 8,477 1,589 - 11,622 -
Valesul Aluminio S.A. (b) 14,806 3,415 20,510 - - -
-------- ------- -------- ------- ------ ------
220,984 65,111 458,344 - 11,622 -
Others
CELMAR S.A. - Industria de Celulose e Papel (b) - - (20,161) - - -
DOCEPAR S.A. (b) - - - - - -
Fertilizantes Fosfatados S.A. - FOSFERTIL (b, c) 10,971 3,759 11,105 16,897 3,797 -
Florestas Rio Doce S.A. (b) 4,236 2,864 (3,516) - - -
Others (314) (11,595) (28,096) - - -
-------- ------- -------- ------- ------ ------
14,893 (4,972) (40,668) 16,897 3,797 -
-------- ------- -------- ------- ------ ------
335,080 151,905 412,216 102,387 37,873 33,439
======== ======= ======== ======= ====== ======
16
a) Equity in companies located abroad is converted into local currency at
rates in effect on the quarterly information date. The calculation of
the equity method adjustment comprises the difference due to exchange
rate variations, as well as participation in results;
(b) Companies whose quarterly information were audited by independent
accountants other than PricewaterhouseCoopers;
(c) Investments in companies that were listed on stock exchanges on
03/31/03. The market value of these investments does not necessarily
reflect the value that could be realized from selling a representative
group of shares;
Book Value Market Value
---------- -------------
Companhia Siderurgica de Tubarao 729,871 496,698
Fertilizantes Fosfatados S.A. - FOSFERTIL 61,958 128,666
Usinas Siderurgicas de Minas Gerais S.A. - USIMINAS 402,719 183,256
(d) CVRD's interest in MRS Logistica S.A. is held through Ferteco Mineracao
S.A., Belem Administracao e Participacao Ltda. and Caemi Mineracao e
Metalurgia S.A.; and
(e) Incorporated companies (Socoimex and Samitri) - amortization of
goodwill recorded on the cost of products sold of the Parent Company.
17
6.9- Property, Plant and Equipment
(a) By business area:
03/31/03 12/31/02
-------------------------------------- -------------------------------------
Accumulated Accumulated
Cost depreciation Net Cost depreciation Net
---------- ------------ --------- ---------- ------------ ----------
Ferrous - Northern System
Mining 1,733,800 (765,322) 968,478 1,681,743 (753,813) 927,930
Railroads 2,694,657 (1,058,675) 1,635,982 2,736,888 (1,077,662) 1,659,226
Ports 535,651 (246,944) 288,707 533,323 (244,262) 289,061
Construction in progress 581,716 - 581,716 546,698 - 546,698
---------- ------------ --------- ---------- ------------ ---------
5,545,824 (2,070,941) 3,474,883 5,498,652 (2,075,737) 3,422,915
---------- ------------ --------- ---------- ------------ ---------
Ferrous - Southern System
Mining 2,504,977 (1,474,235) 1,030,742 2,486,808 (1,445,277) 1,041,531
Railroads 3,149,350 (1,847,559) 1,301,791 3,116,956 (1,824,190) 1,292,766
Ports 586,067 (436,000) 150,067 585,070 (432,907) 152,163
Construction in progress 445,000 - 445,000 393,825 - 393,825
---------- ------------ --------- ---------- ------------ ---------
6,685,394 (3,757,794) 2,927,600 6,582,659 (3,702,374) 2,880,285
---------- ------------ --------- ---------- ------------ ---------
Pelletizing
Southern System 620,775 (448,451) 172,324 619,973 (445,793) 174,180
Northern System 529,686 (9,255) 520,431 521,592 (5,160) 516,432
Construction in progress 181,904 - 181,904 184,590 - 184,590
---------- ------------ --------- ---------- ------------ ---------
1,332,365 (457,706) 874,659 1,326,155 (450,953) 875,202
---------- ------------ --------- ---------- ------------ ---------
Non-Ferrous
Potash 132,014 (49,369) 82,645 130,347 (46,483) 83,864
Gold 426,416 (390,050) 36,366 433,003 (388,759) 44,244
Research and projects 220,019 (183,803) 36,216 211,798 (175,727) 36,071
Construction in progress 95,689 - 95,689 74,839 - 74,839
---------- ------------ --------- ---------- ------------ ---------
874,138 (623,222) 250,916 849,987 (610,969) 239,018
---------- ------------ --------- ---------- ------------ ---------
Logistics 1,041,814 (547,467) 494,347 953,244 (538,838) 414,406
Construction in progress 40,827 - 40,827 84,158 - 84,158
---------- ------------ --------- ---------- ------------ ---------
1,082,641 (547,467) 535,174 1,037,402 (538,838) 498,564
---------- ------------ --------- ---------- ------------ ---------
Energy 319,564 (22,829) 296,735 204,898 (20,171) 184,727
Construction in progress 432,712 - 432,712 476,704 - 476,704
---------- ------------ --------- ---------- ------------ ---------
752,276 (22,829) 729,447 681,602 (20,171) 661,431
---------- ------------ --------- ---------- ------------ ---------
Corporate 154,253 (53,040) 101,213 129,186 (47,467) 81,719
Construction in progress 24,628 - 24,628 47,726 - 47,726
---------- ------------ --------- ---------- ------------ ---------
178,881 (53,040) 125,841 176,912 (47,467) 129,445
---------- ------------ --------- ---------- ------------ ---------
Total 16,451,519 (7,532,999) 8,918,520 16,153,369 (7,446,509) 8,706,860
========== ============ ========= ========== ============ =========
b) By classification of asset:
03/31/03 12/31/02
-------------------------------------- -------------------------------------
Accumulated Accumulated
Cost depreciation Net Cost depreciation Net
---------- ------------ --------- ---------- ------------ ----------
Buildings 1,557,427 (695,530) 861,897 1,547,403 (687,363) 860,040
Installations 4,962,224 (2,671,940) 2,290,284 4,764,039 (2,640,787) 2,123,252
Equipment 997,285 (581,578) 415,707 945,053 (564,502) 380,551
Railroads 5,291,326 (2,770,935) 2,520,391 5,290,848 (2,774,092) 2,516,756
Mineral rights 433,909 (179,091) 254,818 433,826 (176,754) 257,072
Others 1,406,872 (633,925) 772,947 1,363,660 (603,011) 760,649
---------- ------------ ---------- ---------- ------------ ----------
14,649,043 (7,532,999) 7,116,044 14,344,829 (7,446,509) 6,898,320
Construction in progress 1,802,476 - 1,802,476 1,808,540 - 1,808,540
---------- ------------ ---------- ---------- ------------ ----------
Total 16,451,519 (7,532,999) 8,918,520 16,153,369 (7,446,509) 8,706,860
========== ============ ========== ========== ============ ==========
The average annual depreciation rates are 3% for buildings, from 2% to 5% for
installations, from 5% to 20% for equipment, and from 2% to 20% for railroads.
Mineral reserve depletion is calculated as a function of the volume of ore
extracted in relation to the proven and probable reserves.
18
Depreciation, amortization and depletion have been allocated as follows:
1Q/03 1Q/02 4Q/02
------- ------- -------
Cost of production and services 125,548 139,456 128,043
Administrative expenses 9,128 5,277 6,567
------- ------- -------
134,676 144,733 134,610
======= ======= =======
6.10- Loans and Financing
Short-term
Refers to export financing in the amount of R$ 118,977 on 03/31/03 and R$
397,655 on 12/31/02, with an average interest rate of 3.9645% on 03/31/03.
Long-term
Parent Company
-------------------------------------------------
Current liabilities Long-term liabilities
----------------------- ----------------------
03/31/03 12/31/02 03/31/03 12/31/02
---------- ---------- ---------- ----------
Foreign operations
Loans and financing in:
U.S. dollars 1,010,066 998,098 2,651,279 2,460,957
Yen 92,145 1,900 8,160 104,148
Other currencies 968 977 968 1,197
Notes in U.S. dollars 670,620 706,660 1,005,930 1,059,990
Accrued charges 38,729 55,355 - -
--------- --------- --------- ---------
1,812,528 1,762,990 3,666,337 3,626,292
--------- --------- --------- ---------
Local operations
Indexed by TJLP, TR and IGP-M 15,851 15,058 57,402 56,540
Basket of currencies 39,790 41,763 43,106 55,683
Loans in U.S. dollars 12,336 2,692 289,074 315,427
Non-convertible debentures - - 9,822 9,611
Accrued charges 8,731 5,312 - -
--------- --------- --------- ---------
76,708 64,825 399,404 437,261
--------- --------- --------- ---------
1,889,236 1,827,815 4,065,741 4,063,553
========= ========= ========= =========
(a) Foreign currency loans and financing were converted into reais at
exchange rates effective on the quarterly information date, with US$
1.00 = R$ 3.3531 on 03/31/03 (R$ 3.5333 on 12/31/02) and (Y) 1.00 = R$
0.028421 on 03/31/03 (R$ 0.029779 on 12/31/02);
(b) Of the total loans and financing, R$ 769,700 are guaranteed by the
federal government (with full counter-guarantees);
(c) Amortization of principal and finance charges incurred on long-term
loans and financing obtained abroad and domestically mature as follows
as of 03/31/03:
2004 1,731,429 43%
2005 656,725 16%
2006 704,980 17%
2007 256,623 6%
2008 onward 715,984 18%
---------- ----------
4,065,741 100%
========== ==========
19
(d) Long-term foreign and domestic loans and financing were subject to
annual interest rates on 03/31/03 as follows:
Up to 3% 1,718,191 29%
3.1 to 5% 2,014,144 34%
5.1 to 7% 297,914 5%
7.1 to 9% 98,521 2%
9.1 to 11% 1,698,000 28%
Over 11% 128,207 2%
---------- ----------
5,954,977 100%
========== ==========
(e) The estimated market values of long-term loans and financing calculated
to present value based on available interest rates as of 03/31/03 are
close to their book values.
6.11- Contingent Liabilities
At the quarterly information dates the contingent liabilities of the Company
were:
(a) Provisions for contingencies and judicial deposits (booked under
long-term liabilities and long-term assets, respectively), considered
by management and its legal counsel as sufficient to cover possible
losses from any type of lawsuit, were as follows:
Judicial deposits Provisions for contingencies
------------------- ----------------------------
03/31/03 12/31/02 03/31/03 12/31/02
-------- -------- --------- ---------
Tax contingencies 481,936 453,561 647,543 602,799
Labor and social security claims 136,887 138,260 377,865 344,928
Civil claims 119,306 112,665 326,533 303,337
Others 5,413 4,191 20,478 20,624
-------- -------- --------- ---------
Total 743,542 708,677 1,372,419 1,271,688
======== ======== ========= =========
The Company is party to labor, civil, tax and other suits and has been
contesting these matters both administratively and in the courts. When
necessary, these are backed by judicial deposits. Provisions for
eventual losses are estimated and restated monetarily by management
upon the advice of the legal department and outside counsel.
Tax contingencies relate principally to a suit claiming
unconstitutionality of the change in the calculation basis of PIS and
Cofins social contributions introduced by Law 9,718/98, and to CPMF
(tax on bank transactions).
Labor-related actions principally comprise employee claims in
connection with disputes about the amount of indemnities paid upon
dismissal and an one-third of holidays.
Civil actions principally relate to claims made against the Company by
contractors in connection with losses alleged to have been incurred as
a result of various past government economic plans.
(b) Guarantees given to jointly controlled companies (normally in
proportion to the Company's percentage of participation) are as
follows:
03/31/03 12/31/02
--------- ---------
ALBRAS - Aluminio Brasileiro S.A. 1,109,153 1,221,166
Companhia Coreano-Brasileira de Pelotizacao - KOBRASCO 44,708 47,111
Ferrovia Centro-Atlantica S.A. 389,333 397,852
Sepetiba Tecon S.A. 77,699 79,560
Samarco Mineracao S.A. 39,202 49,605
--------- ---------
1,660,095 1,795,294
========= =========
The breakdown of guarantees by currency is:
03/31/03 12/31/02
--------- ---------
U.S. Dollar 1,270,752 1,410,236
Real 389,343 385,058
--------- ---------
1,660,095 1,795,294
========= =========
20
(c) Upon privatization of the Company in 1997, the Brazilian government
stipulated the issuance of non-convertible debentures (Debentures) to
the stockholders of record, including the federal government. The
maturity dates of these Debentures were established to guarantee that
pre-privatization stockholders, including the federal government, would
share any future benefits from mineral resources held by the Company
and its subsidiary and affiliated companies that were not evaluated at
the time of setting the minimum price of CVRD shares at the
privatization auction.
A total of 388,559,056 Debentures were issued at a par value of R$ 0.01
(one centavo), whose value is to be restated in accordance with the
variation in the General Market Price Index (IGP-M), as set forth in
the Issue Deed.
On October 4, 2002, the Comissao de Valores Mobiliarios - CVM
(Brazilian Securities Commission) approved the Company's registration
request, filed on June 28, 2002, for public Debentures trading. As of
October 28, 2002, the Debentures can be traded on the secondary market.
6.12- Environmental and Site Reclamation and Restoration Costs
Expenditures relating to ongoing compliance with environmental regulations are
charged to production costs or capitalized as incurred. The Company manages its
environmental policies according to the specifications of ISO 14,001 and
maintains ongoing programs to minimize the environmental impact of its mining
operations as well as to reduce the costs that will be incurred upon termination
of activities at each mine. On 03/31/03, the provision for environmental
liabilities amounted to R$ 49,901 (R$ 51,929 on 12/31/02), which was accounted
in "Others" in long-term liabilities.
6.13- Paid-up Capital
The Company's capital is R$ 5 billion, corresponding to 388,559,056 book entry
shares, of which 249,983,143 are common shares and 138,575,913 are preferred
class A shares, the latter including one special preferred share ("Golden
Share"), all with no par value.
Preferred shares have the same rights as common shares, except for the right to
elect the members of the Board of Directors. They have priority to a minimum
annual dividend of 6% on the portion of capital represented by this class of
share or 3% of the book value of the share, if greater.
The special "Golden Share" created during the privatization in 1997 belongs to
the Brazilian Government. This share gives it the right to a permanent veto of
changes in the Company's name, headquarters location, nature as a mining
enterprise, continuous operation of the integrated mining, transportation and
loading systems and other matters determined in the Bylaws.
6.14- Treasury Stock
The Board of Directors, under the terms of subparagraph XV of Article 13 of the
Bylaws and based on Article 30 of Law 6,404/76 and CVM Instructions 10 of
02/14/80 and 268 of 11/13/97, approved the acquisition by the Company of its own
shares to be held in treasury for later sale or cancellation.
As of March 31, 2003, 4,715,170 common shares and 4,465 preferred shares were
purchased, which are held in treasury in the amount of R$ 131,333.
Shares
---------
Average
Class Quantity Unit acquisition cost quoted market price
--------- --------------------- ------------------------ -------------------
03/31/03 12/31/02 Average Low High 03/31/03 12/31/02
--------- --------- ------- ----- ----- -------- --------
Preferred 4,465 4,481 51.41 14.02 52.40 87.27 96.99
Common 4,715,170 4,715,170 27.80 20.07 52.09 90.96 102.88
--------- ---------
4,719,635 4,719,651
========= =========
21
6.15- Financial Result
1Q/03 1Q/02
------------------------------------ ------------------------------------
Monetary and Monetary and
exchange rate exchange rate
Financial variation on Financial variation on
expenses liabilities Total expenses liabilities Total
--------- ------------- ------- --------- ------------- --------
Foreign debt (62,925) 246,841 183,916 (41,357) (1,889) (43,246)
Local debt (11,020) 35,158 24,138 (18,178) 18,479 301
Related parties (43,735) 125,188 81,453 (35,808) 3,498 (32,310)
--------- ------------- ------- --------- ------------- --------
(117,680) 407,187 289,507 (95,343) 20,088 (75,255)
Labor, tax and civil contingencies (21,452) (44,593) (66,045) (19,403) (3,093) (22,496)
Derivatives, net of gain/losses (25,967) 14,891 (11,076) (17,272) 81 (17,191)
CPMF / COFINS (13,092) - (13,092) (16,589) - (16,589)
Others (6,455) 30,893 24,438 (7,091) (6,710) (13,801)
--------- ------------- ------- --------- ------------- --------
(184,646) 408,378 223,732 (155,698) 10,366 (145,332)
--------- ------------- ------- --------- ------------- --------
4Q/02
--------- ------------------------
Monetary and
exchange rate
Financial variation on
expenses liabilities Total
--------- ------------- --------
Foreign debt (70,619) 596,498 525,879
Local debt (18,233) 126,801 108,568
Related parties (45,934) 220,699 174,765
--------- ------------- --------
(134,786) 943,998 809,212
Labor, tax and civil contingencies (20,131) (93,464) (113,595)
Derivatives, net of gain/losses (51,135) 23,724 (27,411)
CPMF / COFINS (18,356) - (18,356)
Others 151,132(**) 1,872 153,004
--------- ------------- --------
(73,276) 876,130 802,854
--------- ------------- --------
1Q/03 1Q/02
------------------------------------ ----------------------------------------
Monetary and Monetary and
exchange rate exchange rate
Financial variation on Financial variation on
Income assets Total Income assets Total
--------- ------------- --------- ------------ ------------- ---------
Related parties 40,261 (124,352) (84,091) 21,323 (2,553) 18,770
Marketable securities 1,583 14,280 15,863 37,328 8,021 45,349
Others 7,773 (18,382) (10,609) 8,779 3,928 12,707
--------- ------------- --------- ------------ ------------- ---------
49,617 (128,454) (78,837) 67,430 9,396 76,826
--------- ------------- --------- ------------ ------------- ---------
Financial income (expenses), net (135,029) 279,924(*) 144,895 (88,268) 19,762 (68,506)
========= ============= ========= ============ ============= =========
4Q/02
--------- ----------------------------
Monetary and
exchange rate
Financial variation on
Income assets Total
--------- ------------- ---------
Related parties 31,276 (257,394) (226,118)
Marketable securities 234 33,303 33,537
Others 13,570 (26,030) (12,460)
--------- ------------- ---------
45,080 (250,121) (205,041)
--------- ------------- ---------
Financial income (expenses), net (28,196) 626,009 597,813
========= ============= =========
(*) See item 1.2.5 - Net financial result;
(**) Refers, basically, to the adjustment on the cotation of CSN's shares
granted as guarantee to Valia, in the amount of R$ 134,149.
Indexes on Debt 1Q/03 4Q/02
---------- ----------
Current liabilities
Current portion of long-term debt - unrelated parties 1,889,236 1,827,815
Short-term debt 118,977 397,655
Related parties 1,002,996 948,400
---------- ----------
3,011,209 3,173,870
Long-term liabilities
Long-term debt - unrelated parties 4,065,741 4,063,553
Related parties 3,221,881 3,300,003
---------- ----------
7,287,622 7,363,556
---------- ----------
Gross Debt 10,298,831 10,537,426
========== ==========
Gross interest 117,680 134,786
EBITDA 1,148,114 1,359,081
Stockholders' equity 13,292,528 12,750,520
EBITDA / Gross interest 9.76 10.08
Gross Debt / EBITDA (anualized) 2.24 1.94
Debt / Stockholders' equity 44 45
6.16- Financial Instruments - Derivatives
The main market risks the Company faces are related to interest rates, exchange
rates and commodities prices. CVRD has a policy of managing risks through the
use of derivatives instruments.
The Company's risk management follows policies and guidelines reviewed and
approved by the Board of Directors and Executive Board. These policies and
guidelines prohibit speculative trading and short selling and require
diversification of transactions and counterparts. The
22
policy of the Company is to settle all contracts financially without physical
delivery of the products. The credit limits and creditworthiness of counterparts
are also reviewed periodically and are defined according to the rules approved
by Company's management. The results of hedging are recognized monthly in the
CVRD result.
Interest Rate Risk
Interest rate risk derives from floating-rate debt, mainly from trade finance
operations. The portion of floating-rate debt denominated in foreign currency is
mainly subject to fluctuations in the LIBOR - London Interbank Offered Rate. The
portion of floating-rate debt expressed in reais refers basically to the
Brazilian long-term interest rate (TJLP), established by the Brazilian Central
Bank. Since May 1998, CVRD has been using derivatives to limit its exposure to
fluctuations in the LIBOR.
The interest rate derivatives portfolio consists mainly of options trades aiming
to cap exposure to interest rate fluctuations, establishing upper and lower
limits. Some operations are subject to knock-out provisions which, if triggered,
eliminate the protection provided by the cap.
The table below provides information regarding the interest rate derivatives
portfolio for 03/31/03 and 03/31/02.
03/31/03 03/31/02
--------------------------------------------------------------- ----------------------------------------------------
Unrealized gain Unrealized gain
Notional value (loss) (in R$ Final Notional value (loss) (in R$
Type (in US$ million) Rate range thousand) maturity (in US$ million) Rate range thousand)
------------- ----------------- -------------- ------------------- ---------- ----------------- -------------- -------------------
Cap 500 5.8 - 11.0% 345 May/07 1,350 5.0 - 8.0% 6,866
Floor 500 5.8 - 6.0% (68,222) Nov/06 1,000 5.0 - 6.5% (46,242)
Swap 470 5.9 - 6.7% (162,387) Oct/07 125 5.5 - 7.5% (19,171)
-------- -------
Total (230,264) (58,547)
======== =======
Exchange Rate Risk
Exchange rate risk arises from foreign currency debts. On the other hand, a
substantial part of the Company's revenues are denominated or indexed in U.S.
dollars, while the majority of costs are in reais. This provides a natural hedge
against possible devaluation of Brazilian currency. Events of this nature have
an immediate negative impact on foreign currency debt, offset by the positive
effect on future cash flows.
The Company adopts a strategy of monitoring market fluctuations and, if
necessary, carrying out derivatives operations to cover risks related to these
variations.
The portion of debt denominated in euros and Japanese yen is protected by
derivatives to cover risks of exchange rate movements of these currencies.
The table below shows the exchange rate derivatives portfolio for 03/31/03 and
03/31/02. These operations are forwards and range forwards which were structured
to ensure the purchase price of the following currencies:
03/31/03 03/31/02
---------------------------------------------------------------- ---------------------------------------------------
Unrealized Unrealized
Notional value gain (loss) (in Final Notional value gain (loss) (in
Type (in million) Rate range R$ thousand) maturity (in million) Rate range R$ thousand)
--------------- ----------------- -------------------- ---------------- -------- -------------- -------------------- ---------------
Yen purchased (Y) 3,543 (Y) 79 - 89 per US$ (999) Apr/05 (Y) 3,718 (Y) 70 - 110 per US$ (9,278)
(epsilon) 1.19 - (epsilon) 1.10 -
Euros purchased (epsilon) 5 1.23 per US$ (2,162) Apr/05 (epsilon) 8 1.30 per US$ (5,384)
(epsilon) 1.05 - (epsilon) 0.90 -
Euros sold (epsilon) 3 1.10 per US$ 23 - (epsilon) 9 1.20 per US$ 2
------------ -------------
Total (3,138) (14,660)
============ =============
Commodities Price Risk
The prices of iron ore, the Company's main product, are set in annual
negotiations between producers and consumers and are notably stable over time.
The Company does not enter into derivatives operations to hedge iron ore price
exposure.
The Company uses hedge instruments to manage its exposure to changes in the
price of gold. These derivatives operations allow establishment of a minimum
profit level for future output. The Company actively manages its open positions,
with the results reported monthly to senior management to allow adjustment of
targets and strategies in response to market conditions.
23
The following table shows the gold derivatives portfolio of the Company on
03/31/03 and 03/31/02:
03/31/03 03/31/02
----------------------------------------------------------- ----------------------------------------------
Unrealized gain Unrealized gain
Price range (loss) (in R$ Final Price range (loss) (in R$
Type Quantity (oz) US$/oz thousand) maturity Quantity (oz) US$/oz thousand)
----------------------- --------------- ------------- ------------------- --------- -------------- -------------- ----------------
Puts purchased 428,000 270 - 385 16,819 Dec/07 509,000 270 - 350 18,577
Calls sold 595,000 317 - 440 (49,525) Dec/07 658,500 308 - 390 (23,131)
Hybrid instruments 20,000 - (668) Nov-06 20,000 - (83)
--------------- ---------------
Total (33,374) (4,637)
=============== ===============
Net gain (loss)
------------------------------------------------------------
1Q/03
------------------------------------------------------------
Interest rates
Gold (libor) Currencies Total
-------------- ----------------- ------------ --------------
Gains and losses unrealized on 12/31/02 52,432 213,361 4,309 270,102
Financial settlement (634) (13,390) (378) (14,402)
Financial expenses, net (16,204) 42,764 (593) 25,967
-------------- ----------------- ------------ --------------
(16,838) 29,374 (971) 11,565
Monetary variations, net (2,220) (12,471) (200) (14,891)
-------------- ----------------- ------------ --------------
Gains and losses realized on 03/31/03 33,374 230,264 3,138 266,776
============== ================= ============ ==============
Net gain (loss)
------------------------------------------------------------
1Q/02
------------------------------------------------------------
Interest rates
Gold (libor) Currencies Total
-------------- ----------------- ------------ --------------
Gains and losses unrealized on 12/31/01 (16,575) 83,411 9,381 76,217
Financial settlement 1,710 (17,675) 401 (15,564)
Financial expenses, net 19,782 (7,623) 5,113 17,272
-------------- ----------------- ------------ --------------
21,492 (25,298) 5,514 1,708
Monetary variations, net (280) 434 (235) (81)
-------------- ----------------- ------------ --------------
Gains and losses realized on 03/31/02 4,637 58,547 14,660 77,844
============== ================= ============ ==============
Net gain (loss)
------------------------------------------------------------
4Q/02
------------------------------------------------------------
Interest rates
Gold (libor) Currencies Total
-------------- ----------------- ------------ --------------
Gains and losses unrealized on 09/30/02 15,533 254,770 (9,562) 260,741
Financial settlement (274) (9,782) (7,994) (18,050)
Financial expenses, net 38,652 (9,061) 21,544 51,135
-------------- ----------------- ------------ --------------
38,378 (18,843) 13,550 33,085
Monetary variations, net (1,479) (22,566) 321 (23,724)
-------------- ----------------- ------------ --------------
Gains and losses realized on 12/31/02 52,432 213,361 4,309 270,102
============== ================= ============ ==============
24
6.17- Exchange Rate Exposure
The exchange rate exposure is predominantly in U.S. dollars, as follows:
In millions of reais
------------------------------------------------------------------
Subsidiaries and
Parent Company Affiliated Companies (*)
------------------------------- ---------------------------------
03/31/03 12/31/02 03/31/03 12/31/02
---------------- -------------- ---------------- ----------------
Assets
Current
Cash and cash equivalents 541 189 542 410
Others 1,967 1,953 1,301 1,237
---------------- -------------- ---------------- ----------------
2,508 2,142 1,843 1,647
Long-term receivables 1,116 1,230 86 52
Investments 4,301 4,438 18 26
---------------- -------------- ---------------- ----------------
Total 7,925 7,810 1,947 1,725
================ ============== ================ ================
Liabilities
Current
Short-term loans and financing 1,989 2,210 1,616 1,604
Others 851 921 392 384
---------------- -------------- ---------------- ----------------
2,840 3,131 2,008 1,988
Long-term liabilities
Loans and financing 4,000 4,000 2,520 2,262
Others 2,954 2,999 802 848
---------------- -------------- ---------------- ----------------
6,954 6,999 3,322 3,110
---------------- -------------- ---------------- ----------------
Total 9,794 10,130 5,330 5,098
================ ============== ================ ================
Liabilities - R$ (1,869) (2,320) (3,383) (3,373)
================ ============== ================ ================
Liabilities - US$ (557) (657) (1,009) (955)
================ ============== ================ ================
( * ) Proportional to the percentage of participation
6.18- Administrative and Other Operating Expenses
1Q/03 1Q/02 4Q/02
------------- -------------- -------------
Administrative
Personal 28,283 26,944 42,760
Technical consulting 18,443 22,623 14,662
Advertising and publicity 9,006 7,684 3,496
Depreciation 9,128 5,277 6,567
Travel expenses 4,925 3,716 6,574
Rents and taxes 6,902 4,249 2,646
Others 12,071 8,401 21,297
------------- -------------- -------------
88,758 78,894 98,002
============= ============== =============
1Q/03 1Q/02 4Q/02
-------------- -------------- --------------
Other Operating Expenses
Provision for write-off of property,
plant and equipment - gold mine - - 147,000
Provisions for contingencies 27,141 (16,202) 5,745
Provision for loss on ICMS credits 28,000 20,000 -
Provision for profit sharing 40,000 20,000 37,000
Reversal of provisions (*) - - (60,833)
Others 10,723 15,146 9,095
-------------- -------------- --------------
105,864 38,944 138,007
============== ============== ==============
(*) Refers to monetary variations expense on pension plan - Valia, reclassified
to financial result, on the amount of R$ 29,833 and sale of inventories,
which were considered out of especifications, in the amount of R$ 31,000.
25
6.19- Subsequent Events
Payment of Interest on Stockholders' Equity
On April 16, 2003, the Board of Directors of Companhia Vale do Rio Doce approved
payment of the first installment of shareholder remuneration for 2003, as per
the proposal of the Executive Board disclosed on January 30. This proposal was
based on the Company's shareholder return policy and established a minimum of
US$ 1.04 per share to be distributed in two equal installments on April 30 and
October 31, 2003, respectively, corresponding to a total amount of US$ 400
million. Payment of the first installment of interest on stockholders' equity
will be R$ 621,819,836, equivalent to R$ 1.62 per common or preferred share
outstanding. This value was obtained by converting the amount of US$ 0.52 into
reais by the exchange rate for sale of the U.S. dollar reported by the Brazilian
Central Bank on April 15, 2003 (Ptax - option 5 code, R$ 3.1154 = US$ 1.00),
according to procedures announced publicly on January 30, 2003.
Acquisition of Caemi
On March 31, 2003, CVRD signed an agreement with Mitsui & Co. (Mitsui) to
acquire all its common and preferred shares in Caemi Mineracao e Metalurgia S. A
(Caemi) for US$ 426.4 million. The acquisition is subject to the review and
approval of antitrust authorities. The transaction involves the acquisition by
CVRD, directly or through a wholly owned subsidiary, of 659,375,000 common and
1,040,671,032 preferred shares of Caemi. These shares represent, respectively,
50% and 40% of the common and preferred shares of that company. CVRD will pay
US$ 276.7 million for 50% of the common shares, equal to US$ 419.60 per group of
1,000 shares, as announced publicly on December 7, 2001. CVRD will pay US$ 149.8
million for the 1,040,671,032 preferred shares, corresponding to US$ 143.90 per
group of 1,000 shares. This is equal to the weighted average of preferred shares
of Caemi traded on the Sao Paulo Stock Exchange (BOVESPA) in the 30 days
preceding February 4, 2003. The price of the shares in reais was converted into
U.S. dollars at the average exchange rate in the 30-day period mentioned. Prior
to the acquisition, CVRD held 50% of Caemi's common shares and 16.82% of its
total capital, being a controlling shareholder together with Mitsui. After the
transaction, CVRD will detain 100% of the common shares, 40% of the preferred
shares and 60.2% of the total capital. CVRD does not intend to delist Caemi.
Capital Increase
On April 16, 2003, the Extraordinary Shareholders' Meeting approved a proposal
of the Executive Board for a capital increase without issuing new shares,
through capitalization of part of the Expansion Reserve in the amount of R$ 1.3
billion, increasing its share capital from R$ 5 billion to R$ 6.3 billion.
CVRD Acquires CST Shares
On April 24, 2003, CVRD acquired 4.42% of the common shares and 5.64% of the
preferred shares of CST, representing 5.17% of CST's total capital held by
Acesita S.A. (Acesita). The average price per 1,000 shares paid by CVRD and
Arcelor was US$ 22.66. Therefore, CVRD spent US$ 59,698,128.37 to buy the CST
shares. The acquired shares are not linked to CST's stockholders' argreement.
That brings CVRD's holding to 24.934% of CST's common shares and 29.962% of its
preferred shares, totaling 28.022% of its capital.
The acquisition by CVRD and Arcelor of CST common shares equivalent to 14.85% of
its voting capital, owned by Acesita and covered by the shareholders' agreement,
may take place in the future, if the other parties to that shareholders'
agreement authorize the transaction or after the expiration of the current CST
shareholders' agreement in May 2005.
As stated, the increase in CVRD's holding in CST is temporary, since there is
already an option for CVRD to leave in 2007.
Alunorte Increases Production Capacity
On April 4, 2003, Alunorte, a producer of alumina controlled by its wholly owned
subsidiary Aluvale, commissioned its third production line, with a capacity of
825,000 tons per year. With the third line, Alunorte has a production capacity
of 2,375,000 tons of alumina per year, positioning it among the five largest
alumina refineries in the world. The production increase will be allocated to
overseas markets. The investment in this project was approximately US$ 300
million, a cost of about US$ 364 per ton of additional capacity, which is very
competitive in comparison to the cost of other brownfield projects around the
globe.
Alunorte's plant, located in Barcarena, Para, has room for construction of four
additional production lines. Hence, in the future with new expansion projects,
Alunorte will be able to reach a capacity of 6 million tons per year.
The expansion of Alunorte's capacity is consistent with CVRD's strategy for its
aluminum business, which focuses on shareholder value creation through the
exploitation of profitable growth opportunities in bauxite and alumina, where
its global competitiveness is enhanced by low capital expenditures and
operational costs.
26
CVRD Restructures Stakes in Logistics Companies
On April 16, 2003, CVRD, Companhia Siderurgica Nacional (CSN) and other unlisted
companies signed a contract for the purchase and sale of shares in logistics
companies. The transactions set forth in the contract will take place once
certain conditions are fulfilled. These conditions include, among others, the
approval by regulatory authorities and by creditors of companies whose shares
are being traded, the setting of commercial agreements and the waiver by other
shareholders of the exercise of any rights of first refusal.
The contract involves three transactions:
- The acquisition by CVRD of CSN's 11.95% stake in Ferrovia
Centro-Atlantica (FCA).
- The sale to CSN of CVRD's stake in Sepetiba Tecon S.A. (STSA), a
company that operates Container Terminal 1 at the Port of Sepetiba
(TECON), in Rio de Janeiro State. The transaction includes the sale by
CVRD of 50% of STSA's capital and 18 million STSA convertible
debentures. The Itabira Rio Doce Company Limited - ITACO, a
wholly-owned subsidiary of CVRD, has a capital stake of 62.5% of CSN
Aceros which is the parent company of STSA with a capital stake of 80%.
- The sale by CVRD to CSN and Taquari Participacoes S. A. (Taquari) of
32.4% of the capital of Companhia Ferroviaria do Nordeste (CFN).
The purchase and sale obligations, if the conditions are fulfilled, will result
in a net expenditure of R$ 20 million by CVRD.
CVRD and TECON will sign a commercial agreement allowing CVRD to handle
containers through TECON over the next ten years and guaranteeing maintenance of
port conditions for the handling of containers. This agreement guarantees that
CVRD will continue to get ongoing support for the development of its intermodal
transportation business.
These transactions will free CVRD resources to focus on its core transportation
assets. They are part of a process that began with the unwinding of the cross
shareholdings between CVRD and CSN in March 2001. In addition to the
contribution to simplify the structure of the Brazilian steel industry, this
unwinding allowed the successful implementation by CVRD of a new model of
corporate governance and long-term strategic guidelines.
CVRD and NUCOR Announce Pig Iron Project
On April 24, 2003, CVRD and Nucor Corporation (NUCOR) signed an agreement to
construct and operate an environmentally friendly pig iron project in Northern
Brazil. The project will utilize two conventional mini-blast furnaces to produce
about 380,000 metric tons of pig iron per year in its initial phase, using CVRD
iron ore from its Carajas mines in Northern Brazil. The charcoal source will be
exclusively from eucalyptus trees grown in a cultivated forest of 30,000
hectares with the total project encompassing approximately 80,000 hectares. CVRD
and NUCOR will form a joint venture company to operate the facility. It is
anticipated that NUCOR will purchase all of the production of the plant.
NUCOR will invest US$10 million in the project while CVRD's equity
contribution will be the land and the forest assets (currently owned by its
wholly owned subsidiary Celmar S.A.). The total capital of the project will be
about US$ 80 million. The ownership will be split 78% CVRD and 22% NUCOR.
27
PART III
7- OTHER INFORMATION THE COMPANY DEEMS RELEVANT
7.1- Iron Ore and Pellet Sales (Main Markets) (Unaudited)
(Millons of tons)
--------------------------------------------------------------------------
1999 % 2000 % 2001 % 2002 %
---------- ------- ---------- ------- ---------- ------- --------- -------
FOREIGN MARKET
ASIA
CHINA 7.3 8 9.2 8 14.9 12 17.5 12
KOREA 7.9 8 7 6 6.0 5 7.1 5
PHILIPPINES 1.6 2 1.4 1 1.2 1 2.6 2
JAPAN 16.9 17 17.5 15 17.1 13 16.3 11
TAIWAN 1.8 2 1.6 2 2.2 2 2.1 1
OTHERS 0.6 - 0.4 - 1.1 1 - -
---------- ------- ---------- ------- ---------- ------- --------- -------
36.1 37 37.1 32 42.5 34 45.6 31
---------- ------- ---------- ------- ---------- ------- --------- -------
EUROPE
GERMANY 8 8 8.2 7 10.1 8 14.7 10
SPAIN 3.6 4 2.9 2 2.9 2 2.9 2
FRANCE 2.1 2 2.9 2 3.9 3 5.8 4
ITALY 5 5 4.8 4 5.1 4 5.2 3
UNITED KINGDOM 1.6 2 1.5 2 1.6 1 2.3 2
OTHERS 4.7 5 8.2 7 10.8 8 13.4 9
---------- ------- ---------- ------- ---------- ------- --------- -------
25 26 28.5 24 34.4 26 44.3 30
---------- ------- ---------- ------- ---------- ------- --------- -------
AMERICAS
ARGENTINA 1.6 2 1.4 1 1.9 1 2.3 2
UNITED STATES 3 3 3.5 3 2.9 2 3.8 2
OTHERS 1.8 2 2 2 1.5 1 2.4 2
---------- ------- ---------- ------- ---------- ------- --------- -------
6.4 7 6.9 6 6.3 4 8.5 6
---------- ------- ---------- ------- ---------- ------- --------- -------
AFRICA/MID.EAST/OCEANIA
BAHREIN 1.5 2 2 2 1.7 1 2.4 2
OTHERS 3.6 4 5.2 4 5.1 4 4.3 3
---------- ------- ---------- ------- ---------- ------- --------- -------
5.1 6 7.2 6 6.8 5 6.7 5
---------- ------- ---------- ------- ---------- ------- --------- -------
72.6 76 79.7 68 90 69 105.1 72
========== ======= ========== ======= ========== ======= ========= =======
DOMESTIC MARKET
STEEL MILLS 13.6 14 15.5 13 20.2 16 22.3 15
PELLETING AFFILIATES 10.1 10 21.6 19 19.7 15 18.9 13
---------- ------- ---------- ------- ---------- ------- --------- -------
23.7 24 37.1 32 39.9 31 41.2 28
---------- ------- ---------- ------- ---------- ------- --------- -------
TOTAL 96.3 100 116.8 100 129.9 100 146.3 100
========== ======= ========== ======= ========== ======= ========= =======
(Millons of tons)
-----------------------------------------------------
1Q 4Q 1Q
--------------- ------------------ ------------------
2002 % 2002 % 2003 %
------- ------- ---------- ------- ---------- -------
FOREIGN MARKET
ASIA
CHINA 4.4 13 3.9 10 5.4 15
KOREA 2.1 6 1.9 5 1.6 4
PHILIPPINES 0.6 2 0.8 2 0.4 1
JAPAN 3.7 11 4.3 11 3.9 11
TAIWAN 0.4 1 0.8 2 0.4 1
OTHERS - - - - - -
------- ------- ---------- ------- ---------- -------
11.2 33 11.7 30 11.7 32
------- ------- ---------- ------- ---------- -------
EUROPE
GERMANY 3.4 10 4.3 11 3.5 10
SPAIN 0.8 2 0.7 2 0.8 2
FRANCE 1.3 4 1.6 4 1.4 4
ITALY 1.0 3 1.2 3 1.2 3
UNITED KINGDOM 0.7 2 0.4 1 0.5 1
OTHERS 2.9 9 3.7 9 3.0 9
------- ------- ---------- ------- ---------- -------
10.1 30 11.9 30 10.4 29
------- ------- ---------- ------- ---------- -------
AMERICAS
ARGENTINA 0.4 1 0.7 2 0.8 2
UNITED STATES 0.9 2 0.7 2 1.0 3
OTHERS 0.3 1 0.9 2 0.8 2
------- ------- ---------- ------- ---------- -------
1.6 4 2.3 6 2.6 7
------- ------- ---------- ------- ---------- -------
AFRICA/MID.EAST/OCEANIA
BAHREIN 0.8 3 0.5 1 0.5 1
OTHERS 0.8 3 1.6 4 1.0 3
------- ------- ---------- ------- ---------- -------
1.6 6 2.1 5 1.5 4
------- ------- ---------- ------- ---------- -------
24.5 73 28.0 71 26.2 72
======= ======= ========== ======= ========== =======
DOMESTIC MARKET
STEEL MILLS 5.1 15 6.2 16 5.1 14
PELLETING AFFILIATES 4.0 12 5.2 13 5.0 14
------- ------- ---------- ------- ---------- -------
9.1 27 11.4 29 10.1 28
------- ------- ---------- ------- ---------- -------
TOTAL 33.6 100 39.4 100 36.3 100
======= ======= ========== ======= ========== =======
Exports by System
(Millons of tons)
-------------------------------------------------------------------------
1999 % 2000 % 2001 % 2002 %
--------- ------- ---------- ------- --------- ------- ---------- -------
NORTHERN SYSTEM 42.8 44 46.6 40 50.8 39 53.0 36
SOUTHERN SYSTEM 53.5 56 70.2 60 79.1 61 93.3 64
--------- ------- ---------- ------- --------- ------- ---------- -------
96.3 100 116.8 100 129.9 100 146.3 100
========= ======= ========== ======= ========= ======= ========== =======
(Millons of tons)
------------------------------------------------------
1Q 4Q 1Q
----------------- ------------------ -----------------
2002 % 2002 % 2003 %
--------- ------- ---------- ------- --------- -------
NORTHERN SYSTEM 11.7 35 14.2 36 13.3 37
SOUTHERN SYSTEM 21.9 65 25.2 64 23.0 63
--------- ------- ---------- ------- --------- -------
33.6 100 39.4 100 36.3 100
========= ======= ========== ======= ========= =======
28
7.2- Information About FERTECO (Unaudited)
Statement of Income In thousands of reais
--------------------------------------------------------------------------------------------------------
1Q/03 1Q/02 4Q/02
-------------- ------------- --------------
Operating revenues 331,062 134,668 292,189
Value-added taxes (20,289) (7,816) 910
-------------- ------------- --------------
Net operating revenues 310,773 126,852 293,099
-------------- ------------- --------------
Cost of products and services (181,193) (70,019) (140,851)
-------------- ------------- --------------
Gross profit 129,580 56,833 152,248
Gain on investments accounted for by the equity method 3,830 9 21,852
Operating income (expenses)
Selling and administrative (13,981) (14,227) (31,118)
Financial result, net (8,537) (4,575) 6,631
Operating income (expenses) (8,889) 1,530 (68,621)
-------------- ------------- --------------
(31,407) (17,272) (93,108)
-------------- ------------- --------------
Income before income tax and social contribution 102,003 39,570 80,992
Income tax and social contribution (12,869) (10,519) (30,710)
-------------- ------------- --------------
Net income (Loss) for the period 89,134 29,051 50,282
============== ============= ==============
The better performance is due to the increase of 92.7% in iron ore sales and
18.1% in pellets.
29
7.3- Information About Rio Doce International Finance Ltd. - RDIF (Unaudited)
Statement of Income In thousands of reais
------------------------------------------------------------------------------------------------------
1Q/03 1Q/02 4Q/02
------------- ------------- -------------
Net operating revenues 46,124 26,664 56,411
Cost of products and services - agencying costs (9,746) (5,383) (10,611)
------------- ------------- -------------
Gross profit 36,378 21,281 45,800
Gain on investments accounted for by the equity method - 58,929 (241)
Operating income (expenses)
Other operating expenses, net (271) (190) 1,649
Financial expenses (12,082) (8,521) (10,753)
Financial income 31,538 20,827 38,160
Monetary and exchange rate variation, net (163,915) (546) 4,254
------------- ------------- -------------
Net income (loss) for the period (108,352) 91,780 78,869
============= ============= =============
Operating profit
Special mention should go to the effect of the 5.10% rise in the value of the
real against the U.S. dollar in the first quarter of 2003, over the
stockholders' equity.
30
PART IV
8- ATTACHMENT I - EQUITY INVESTEE INFORMATION
8.1- Aluminum Area - ALBRAS (Adjusted and Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Information 2003
------------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
-------------------------------------------------------------------------
Quantity sold - external market MT (thousand) 99 - - - 99
Quantity sold - internal market MT (thousand) 4 - - - 4
-------------------------------------------------------------------------
Quantity sold - total MT (thousand) 103 - - - 103
=========================================================================
Average sales price - external market US$ 1,336.40 - - - 1,336.40
Average sales price - internal market US$ 1,376.14 - - - 1,376.14
Average sales price - total US$ 1,337.98 - - - 1,337.98
Long-term indebtedness, gross US$ 451,354 - - - 451,354
Short-term indebtedness, gross US$ - - - - -
-------------------------------------------------------------------------
Total indebtedness, gross US$ 451,354 - - - 451,354
=========================================================================
Stockholders' equity R$ 479,916 - - - 479,916
=========================================================================
Net operating revenues R$ 479,659 - - - 479,659
Cost of products R$ (284,827) - - - (284,827)
Other expenses/revenues R$ (14,276) - - - (14,276)
Depreciation, amortization and depletion R$ 17,675 - - - 17,675
-------------------------------------------------------------------------
EBITDA R$ 198,231 - - - 198,231
Depreciation, amortization and depletion R$ (17,675) - - - (17,675)
-------------------------------------------------------------------------
EBIT R$ 180,556 - - - 180,556
Other expenses/revenues - non cash R$ (1,875) - - - (1,875)
Non-operating result R$ (174) - - - (174)
Net financial result R$ 63,862 - - - 63,862
-------------------------------------------------------------------------
Income before income tax and social
contribution R$ 242,369 - - - 242,369
Income tax and social contribution R$ (19,192) - - - (19,192)
-------------------------------------------------------------------------
Net income R$ 223,177 - - - 223,177
------------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------
2002
-------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
-------------------------------------------------------------------------
Quantity sold - external market 84 108 101 100 393
Quantity sold - internal market 4 2 3 4 13
-------------------------------------------------------------------------
Quantity sold - total 88 110 104 104 406
=========================================================================
Average sales price - external market 1,318.33 1,409.42 1,288.20 1,304.79 1,304.70
Average sales price - internal market 1,352.12 1,330.47 1,335.69 1,356.26 1,355.55
Average sales price - total 1,319.81 1,332.13 1,289.68 1,306.47 1,306.38
Long-term indebtedness, gross 524,095 506,633 498,857 465,815 465,815
Short-term indebtedness, gross 72,938 48,840 20,156 20,475 20,475
-------------------------------------------------------------------------
Total indebtedness, gross 597,033 555,473 519,013 486,290 486,290
=========================================================================
Stockholders' equity 299,202 113,162 (209,047) 256,739 256,739
=========================================================================
Net operating revenues 273,853 366,494 414,264 489,744 1,544,355
Cost of products (170,834) (223,590) (248,895) (288,173) (931,492)
Other expenses/revenues (12,562) (9,587) (22,292) (450) (44,891)
Depreciation, amortization and depletion 15,555 17,076 17,423 17,490 67,544
-------------------------------------------------------------------------
EBITDA 106,012 150,393 160,500 218,611 635,516
Depreciation, amortization and depletion (15,555) (17,076) (17,423) (17,490) (67,544)
-------------------------------------------------------------------------
EBIT 90,457 133,317 143,077 201,121 567,972
Other expenses/revenues - non cash - - - (6,000) (6,000)
Non-operating result (746) (467) 82 482 (649)
Net financial result (11,141) (332,532) (505,233) 175,923 (672,983)
-------------------------------------------------------------------------
Income before income tax and social
contribution 78,570 (199,682) (362,074) 371,526 (111,660)
Income tax and social contribution (2,627) 13,645 39,863 88,259 139,140
-------------------------------------------------------------------------
Net income 75,943 (186,037) (322,211) 459,785 27,480
-------------------------------------------------------------------------------------------------------------------
31
8.2- Aluminum Area - ALUNORTE (Adjusted and Unaudited)
-----------------------------------------------------------------------------------------------------------------------------------
Information 2003
-----------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
------------------------------------------------------------------------
Quantity sold - external market MT (thousand) 289 - - - 289
Quantity sold - internal market MT (thousand) 201 - - - 201
------------------------------------------------------------------------
Quantity sold - total MT (thousand) 490 - - - 490
========================================================================
Average sales price - external market US$ 170.93 - - - 170.93
Average sales price - internal market US$ 173.60 - - - 173.60
Average sales price - total US$ 172.03 - - - 172.03
Long-term indebtedness, gross US$ 482,418 - - - 482,418
------------------------------------------------------------------------
Total indebtedness, gross US$ 482,418 - - - 482,418
========================================================================
Stockholders' equity R$ 546,444 - - - 546,444
========================================================================
Net operating revenues R$ 291,962 - - - 291,962
Cost of products R$ (217,680) - - - (217,680)
Other expenses/revenues R$ (5,978) - - - (5,978)
Depreciation, amortization and depletion R$ 15,240 - - - 15,240
------------------------------------------------------------------------
EBITDA R$ 83,544 - - - 83,544
Depreciation, amortization and depletion R$ (15,240) - - - (15,240)
------------------------------------------------------------------------
EBIT R$ 68,304 - - - 68,304
Non-operating result R$ (43) - - - (43)
Net financial result R$ 43,764 - - - 43,764
------------------------------------------------------------------------
Income before income tax and social
contribution R$ 112,025 - - - 112,025
Income tax and social contribution R$ (10,084) - - - (10,084)
------------------------------------------------------------------------
Net income R$ 101,941 - - - 101,941
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------
2002
--------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
--------------------------------------------------------------------------
Quantity sold - external market 222 175 115 208 720
Quantity sold - internal market 205 235 233 199 872
--------------------------------------------------------------------------
Quantity sold - total 427 410 348 407 1,592
==========================================================================
Average sales price - external market 148.20 152.79 162.37 154.43 153.39
Average sales price - internal market 175.94 175.38 173.97 169.51 173.79
Average sales price - total 161.55 165.72 170.13 161.79 164.56
Long-term indebtedness, gross 455,061 455,194 472,590 481,370 481,370
--------------------------------------------------------------------------
Total indebtedness, gross 455,061 455,194 472,590 481,370 481,370
==========================================================================
Stockholders' equity 573,946 451,686 226,155 444,502 444,502
==========================================================================
Net operating revenues 164,875 173,891 196,154 250,025 784,945
Cost of products (135,765) (134,556) (131,291) (174,286) (575,898)
Other expenses/revenues (7,377) (3,787) (4,079) (6,903) (22,146)
Depreciation, amortization and depletion 12,802 13,351 12,853 12,880 51,886
--------------------------------------------------------------------------
EBITDA 34,535 48,899 73,637 81,716 238,787
Depreciation, amortization and depletion (12,802) (13,351) (12,853) (12,880) (51,886)
--------------------------------------------------------------------------
EBIT 21,733 35,548 60,784 68,836 186,901
Non-operating result (4) - - (43) (47)
Net financial result (10,936) (198,404) (374,193) 114,042 (469,491)
--------------------------------------------------------------------------
Income before income tax and social
contribution 10,793 (162,856) (313,409) 182,835 (282,637)
Income tax and social contribution (726) 20,677 6,396 73,270 99,617
--------------------------------------------------------------------------
Net income 10,067 (142,179) (307,013) 256,105 (183,020)
--------------------------------------------------------------------------------------------------------------------
32
8.3- Aluminum Area - ALUVALE (Adjusted and Unaudited)
-----------------------------------------------------------------------------------------------------------------------------------
Information 2003
-----------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
-------------------------------------------------------------------------
Stockholders' equity R$ 1,115,779 - - - 1,115,779
=========================================================================
Net operating revenues R$ 154 - - - 154
Cost of products R$ - - - - -
Other expenses/revenues R$ 7,275 - - - 7,275
Depreciation, amortization and depletion R$ - - - - -
-------------------------------------------------------------------------
EBITDA R$ 7,429 - - - 7,429
Depreciation, amortization and depletion R$ - - - - -
-------------------------------------------------------------------------
EBIT R$ 7,429 - - - 7,429
Other expenses/revenues - non cash R$ (1,218) - - - (1,218)
Result of investments participation R$ 210,564 - - - 210,564
Net financial result R$ 3,682 - - - 3,682
-------------------------------------------------------------------------
Income before income tax and social
contribution R$ 220,457 - - - 220,457
Income tax and social contribution R$ 6,545 - - - 6,545
-------------------------------------------------------------------------
Net income R$ 227,002 - - - 227,002
-----------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
Information 2002
------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
-------------------------------------------------------------------------
Stockholders' equity 891,456 751,522 447,879 916,533 916,533
=========================================================================
Net operating revenues 288 616 354 570 1,828
Cost of products (22) (47) (38) (36) (143)
Other expenses/revenues 4,571 1,361 3,731 6,718 16,381
Depreciation, amortization and depletion - 13 (13) - -
-------------------------------------------------------------------------
EBITDA 4,837 1,943 4,034 7,252 18,066
Depreciation, amortization and depletion - (13) 13 - -
-------------------------------------------------------------------------
EBIT 4,837 1,930 4,047 7,252 18,066
Other expenses/revenues - non cash (645) (650) (730) (9,232) (11,257)
Result of investments participation 57,892 (145,352) (307,027) 471,995 77,508
Net financial result 4,917 5,351 972 2,001 13,241
-------------------------------------------------------------------------
Income before income tax and social
contribution 67,001 (138,721) (302,738) 472,016 97,558
Income tax and social contribution (2,723) (1,862) (1,635) (1,338) (7,558)
-------------------------------------------------------------------------
Net income 64,278 (140,583) (304,373) 470,678 90,000
------------------------------------------------------------------------------------------------------------------------
33
8.4- Aluminum Area - MRN (Adjusted and Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Information 2003
------------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
------------------------------------------------------------------------
Quantity sold - external market MT (thousand) 711 - - - 711
Quantity sold - internal market MT (thousand) 1,485 - - - 1,485
------------------------------------------------------------------------
Quantity sold - total MT (thousand) 2,196 - - - 2,196
========================================================================
Average sales price - external market US$ 21.31 - - - 21.31
Average sales price - internal market US$ 18.24 - - - 18.24
Average sales price - total US$ 19.23 - - - 19.23
Long-term indebtedness, gross US$ 69,222 - - - 69,222
Short-term indebtedness, gross US$ 44,004 - - - 44,004
------------------------------------------------------------------------
Total indebtedness, gross US$ 113,226 - - - 113,226
========================================================================
Stockholders' equity R$ 731,822 - - - 731,822
========================================================================
Net operating revenues R$ 139,951 - - - 139,951
Cost of products R$ (69,487) - - - (69,487)
Other expenses/revenues R$ (2,851) - - - (2,851)
Depreciation, amortization and depletion R$ 14,854 - - - 14,854
------------------------------------------------------------------------
EBITDA R$ 82,467 - - - 82,467
Depreciation, amortization and depletion R$ (14,854) - - - (14,854)
------------------------------------------------------------------------
EBIT R$ 67,613 - - - 67,613
Result of investments participation R$ - - - - -
Non-operating result R$ (2,454) - - - (2,454)
Net financial result R$ (239) - - - (239)
------------------------------------------------------------------------
Income before income tax and social
contribution R$ 64,920 - - - 64,920
Income tax and social contribution R$ (5,421) - - - (5,421)
------------------------------------------------------------------------
Net income R$ 59,499 - - - 59,499
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
Information 2002
------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
-------------------------------------------------------------------------
Quantity sold - external market 485 790 740 601 2,616
Quantity sold - internal market 1,296 1,820 1,815 2,381 7,312
-------------------------------------------------------------------------
Quantity sold - total 1,781 2,610 2,555 2,982 9,928
=========================================================================
Average sales price - external market 20.56 19.09 19.21 21.42 19.93
Average sales price - internal market 19.46 18.01 18.16 20.32 19.06
Average sales price - total 19.76 18.34 18.46 20.54 18.95
Long-term indebtedness, gross 95,892 90,312 77,786 76,120 76,120
Short-term indebtedness, gross 14,436 18,780 23,198 29,265 29,265
-------------------------------------------------------------------------
Total indebtedness, gross 110,328 109,092 100,984 105,385 105,385
=========================================================================
Stockholders' equity 594,895 562,633 498,041 672,322 672,322
=========================================================================
Net operating revenues 76,448 111,452 146,949 204,098 538,947
Cost of products (39,697) (60,627) (72,806) (78,149) (251,279)
Other expenses/revenues (569) (5,271) (1,589) (2,993) (10,422)
Depreciation, amortization and depletion 9,840 13,325 14,617 14,701 52,483
-------------------------------------------------------------------------
EBITDA 46,022 58,879 87,171 137,657 329,729
Depreciation, amortization and depletion (9,840) (13,325) (14,617) (14,701) (52,483)
-------------------------------------------------------------------------
EBIT 36,182 45,554 72,554 122,956 277,246
Result of investments participation (3,403) (1,347) - 2,000 (2,750)
Non-operating result (13) 11 12 17,015 17,025
Net financial result (1,804) (32,286) (73,730) 102,120 (5,700)
-------------------------------------------------------------------------
Income before income tax and social
contribution 30,962 11,932 (1,164) 244,091 285,821
Income tax and social contribution (6,522) (4,139) (5,429) (26,264) (42,354)
-------------------------------------------------------------------------
Net income 24,440 7,793 (6,593) 217,827 243,467
------------------------------------------------------------------------------------------------------------------
34
8.5- Aluminum Area - VALESUL (Adjusted and Unaudited)
----------------------------------------------------------------------------------------------------------------------------------
Information 2003
----------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
--------------------------------------------------------------------
Quantity sold - external market MT (thousand) 9 - - - 9
Quantity sold - internal market MT (thousand) 10 - - - 10
--------------------------------------------------------------------
Quantity sold - total MT (thousand) 19 - - - 19
====================================================================
Average sales price - external market US$ 1,505.49 - - - 1,505.49
Average sales price - internal market US$ 1,933.02 - - - 1,933.02
Average sales price - total US$ 1,730.60 - - - 1,730.60
Long-term indebtedness, gross US$ 1,048 - - - 1,048
Short-term indebtedness, gross US$ 617 - - - 617
--------------------------------------------------------------------
Total indebtedness, gross US$ 1,665 - - - 1,665
====================================================================
Stockholders' equity R$ 288,362 - - - 288,362
====================================================================
Net operating revenues R$ 108,088 - - - 108,088
Cost of products R$ (68,912) - - - (68,912)
Other expenses/revenues R$ (6,868) - - - (6,868)
Depreciation, amortization and depletion R$ 2,816 - - - 2,816
--------------------------------------------------------------------
EBITDA R$ 35,124 - - - 35,124
Depreciation, amortization and depletion R$ (2,816) - - - (2,816)
--------------------------------------------------------------------
EBIT R$ 32,308 - - - 32,308
Non-operating result R$ 255 - - - 255
Net financial result R$ (186) - - - (186)
--------------------------------------------------------------------
Income before income tax and social
contribution R$ 32,377 - - - 32,377
Income tax and social contribution R$ (5,214) - - - (5,214)
--------------------------------------------------------------------
Net income R$ 27,163 - - - 27,163
----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Information 2002
--------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
------------------------------------------------------------------------
Quantity sold - external market 9 12 8 13 42
Quantity sold - internal market 12 11 11 14 48
------------------------------------------------------------------------
Quantity sold - total 21 23 19 27 90
========================================================================
Average sales price - external market 1,467.44 1,481.49 1,485.09 1,413.67 1,459.01
Average sales price - internal market 1,906.21 1,865.52 1,779.65 1,801.29 1,837.32
Average sales price - total 1,720.97 1,663.20 1,654.96 1,618.98 1,661.77
Long-term indebtedness, gross 1,868 1,416 953 1,115 1,115
Short-term indebtedness, gross 685 555 409 579 579
------------------------------------------------------------------------
Total indebtedness, gross 2,553 1,971 1,362 1,694 1,694
========================================================================
Stockholders' equity 231,170 246,030 266,074 261,206 261,206
========================================================================
Net operating revenues 77,727 92,816 93,602 146,180 410,325
Cost of products (63,576) (71,701) (61,711) (86,531) (283,519)
Other expenses/revenues (3,223) (1,164) (7,075) (13,989) (25,451)
Depreciation, amortization and depletion 3,332 3,600 2,826 3,235 12,993
------------------------------------------------------------------------
EBITDA 14,260 23,551 27,642 48,895 114,348
Depreciation, amortization and depletion (3,332) (3,600) (2,826) (3,235) (12,993)
------------------------------------------------------------------------
EBIT 10,928 19,951 24,816 45,660 101,355
Non-operating result 55 (54) 515 (286) 230
Net financial result (597) 621 (945) (1,767) (2,688)
------------------------------------------------------------------------
Income before income tax and social
contribution 10,386 20,518 24,386 43,607 98,897
Income tax and social contribution (4,122) (5,652) (4,344) (5,980) (20,098)
------------------------------------------------------------------------
Net income 6,264 14,866 20,042 37,627 78,799
--------------------------------------------------------------------------------------------------------------------
35
8.6- Pelletizing Area - HISPANOBRAS (Adjusted and Unaudited)
----------------------------------------------------------------------------------------------------------------------------------
Information 2003
----------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
---------------------------------------------------------------------
Quantity sold - external market MT (thousand) 268 - - - 268
Quantity sold - internal market MT (thousand) 637 - - - 637
---------------------------------------------------------------------
Quantity sold - total MT (thousand) 905 - - - 905
=====================================================================
Average sales price - external market US$ 29.54 - - - 29.54
Average sales price - internal market US$ 29.95 - - - 29.95
Average sales price - total US$ 29.75 - - - 29.75
---------------------------------------------------------------------
Stockholders' equity R$ 90,872 - - - 90,872
=====================================================================
Net operating revenues R$ 94,344 - - - 94,344
Cost of products R$ (81,263) - - - (81,263)
Other expenses R$ (886) - - - (886)
Depreciation, amortization and depletion R$ 2,386 - - - 2,386
---------------------------------------------------------------------
EBITDA R$ 14,581 - - - 14,581
Depreciation, amortization and depletion R$ (2,386) - - - (2,386)
---------------------------------------------------------------------
EBIT R$ 12,195 - - - 12,195
Result of investments participation R$ - - - - -
Non-operating result R$ (897) - - - (897)
Net financial result R$ (3,544) - - - (3,544)
---------------------------------------------------------------------
Income before income tax and social
contribution R$ 7,754 - - - 7,754
Income tax and social contribution R$ (3,264) - - - (3,264)
---------------------------------------------------------------------
Net income R$ 4,490 - - - 4,490
----------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
Information 2002
-------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
------------------------------------------------------------------------
Quantity sold - external market 487 355 166 313 1,321
Quantity sold - internal market 420 480 520 826 2,246
------------------------------------------------------------------------
Quantity sold - total 907 835 686 1,139 3,567
========================================================================
Average sales price - external market 31.33 31.49 31.39 24.28 29.71
Average sales price - internal market 31.43 31.63 32.28 27.31 30.15
Average sales price - total 31.38 31.56 32.07 25.80 29.77
------------------------------------------------------------------------
Stockholders' equity 85,476 85,790 93,568 86,381 86,381
========================================================================
Net operating revenues 67,353 59,359 67,336 125,613 319,661
Cost of products (57,628) (55,855) (56,920) (105,712) (276,115)
Other expenses (737) (804) (128) (940) (2,609)
Depreciation, amortization and depletion 2,458 2,458 2,322 2,377 9,615
------------------------------------------------------------------------
EBITDA 11,446 5,158 12,610 21,338 50,552
Depreciation, amortization and depletion (2,458) (2,458) (2,322) (2,377) (9,615)
------------------------------------------------------------------------
EBIT 8,988 2,700 10,288 18,961 40,937
Result of investments participation - - - 1,000 1,000
Non-operating result (1,465) (4,923) (3,232) (3,433) (13,053)
Net financial result 854 5,888 7,899 (3,444) 11,197
------------------------------------------------------------------------
Income before income tax and social
contribution 8,377 3,665 14,955 13,084 40,081
Income tax and social contribution (3,362) (1,480) (5,395) (4,656) (14,893)
------------------------------------------------------------------------
Net income 5,015 2,185 9,560 8,428 25,188
-------------------------------------------------------------------------------------------------------------------
36
8.7- Pelletizing Area - ITABRASCO (Adjusted and Unaudited)
Information 2003
----------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
---------- ---------- ---------- ---------- ----------
Quantity sold - external market MT (thousand) 306 - - - 306
Quantity sold - internal market MT (thousand) 507 - - - 507
---------- ---------- ---------- ---------- ----------
Quantity sold - total MT (thousand) 813 - - - 813
========== ========== ========== ========== ==========
Average sales price - external market US$ 29.97 - - - 29.97
Average sales price - internal market US$ 29.20 - - - 29.20
Average sales price - total US$ 29.54 - - - 29.54
Short-term indebtedness, gross US$ 4,854 - - - 4,854
---------- ---------- ---------- ---------- ----------
Total indebtedness, gross US$ 4,854 - - - 4,854
========== ========== ========== ========== ==========
Stockholders' equity R$ 59,216 - - - 59,216
========== ========== ========== ========== ==========
Net operating revenues R$ 85,607 - - - 85,607
Cost of products R$ (73,246) - - - (73,246)
Other expenses/revenues R$ (907) - - - (907)
Depreciation, amortization and depletion R$ (379) - - - (379)
---------- ---------- ---------- ---------- ----------
EBITDA ----------------------------------------------->R$ 11,075 - - - 11,075
Depreciation, amortization and depletion R$ 379 - - - 379
---------- ---------- ---------- ---------- ----------
EBIT ----------------------------------------------->R$ 11,454 - - - 11,454
Other expenses - non cash R$ (3,955) - - - (3,955)
Non-operating result R$ 2,662 - - - 2,662
Net financial result R$ (3,441) - - - (3,441)
---------- ---------- ---------- ---------- ----------
Income before income tax and social contribution R$ 6,720 - - - 6,720
Income tax and social contribution R$ (3,308) - - - (3,308)
---------- ---------- ---------- ---------- ----------
Net income R$ 3,412 - - - 3,412
---------- ---------- ---------- ---------- ----------
Information 2002
----------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
---------- ---------- ---------- ---------- ----------
Quantity sold - external market MT (thousand) 644 533 572 431 2,180
Quantity sold - internal market MT (thousand) 233 169 243 482 1,127
---------- ---------- ---------- ---------- ----------
Quantity sold - total MT (thousand) 877 702 815 913 3,307
========== ========== ========== ========== ==========
Average sales price - external market US$ 31.16 28.46 29.96 30.01 29.71
Average sales price - internal market US$ 31.90 27.79 30.33 30.60 29.13
Average sales price - total US$ 31.35 28.30 30.06 30.18 29.51
Short-term indebtedness, gross US$ 18,023 17,133 15,504 - -
---------- ---------- ---------- ---------- ----------
Total indebtedness, gross US$ 18,023 17,133 15,504 - -
========== ========== ========== ========== ==========
Stockholders' equity R$ 60,230 65,720 78,454 55,804 55,804
========== ========== ========== ========== ==========
Net operating revenues R$ 65,575 49,920 79,980 94,340 289,815
Cost of products R$ (56,551) (47,528) (66,616) (88,703) (259,398)
Other expenses/revenues R$ (1,290) 376 (3,389) 3,315 (988)
Depreciation, amortization and depletion R$ 327 331 321 412 1,391
---------- ---------- ---------- ---------- ----------
EBITDA ----------------------------------------------->R$ 8,061 3,099 10,296 9,364 30,820
Depreciation, amortization and depletion R$ (327) (331) (321) (412) (1,391)
---------- ---------- ---------- ---------- ----------
EBIT ----------------------------------------------->R$ 7,734 2,768 9,975 8,952 29,429
Other expenses - non cash R$ - - - (4,939) (4,939)
Non-operating result R$ (2,494) (2,600) (2,580) 5,496 (2,178)
Net financial result R$ (636) 9,277 13,004 (5,099) 16,546
---------- ---------- ---------- ---------- ----------
Income before income tax and social contribution R$ 4,604 9,445 20,399 4,410 38,858
Income tax and social contribution R$ (2,143) (3,954) (7,666) 2,019 (11,744)
---------- ---------- ---------- ---------- ----------
Net income R$ 2,461 5,491 12,733 6,429 27,114
---------- ---------- ---------- ---------- ----------
37
8.8- Pelletizing Area - KOBRASCO (Adjusted and Unaudited)
Information 2003
----------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
---------- ---------- ---------- ---------- ----------
Quantity sold - external market MT (thousand) 453 - - - 453
Quantity sold - internal market MT (thousand) 681 - - - 681
---------- ---------- ---------- ---------- ----------
Quantity sold - total MT (thousand) 1,134 - - - 1,134
========== ========== ========== ========== ==========
Average sales price - external market US$ 29.89 - - - 29.89
Average sales price - internal market US$ 30.72 - - - 30.72
Average sales price - total US$ 30.39 - - - 30.39
Long-term indebtedness, gross US$ 123,624 - - - 123,624
---------- ---------- ---------- ---------- ----------
Total indebtedness, gross US$ 123,624 - - - 123,624
========== ========== ========== ========== ==========
Stockholders' equity R$ (89,160) - - - (89,160)
========== ========== ========== ========== ==========
Net operating revenues R$ 116,656 - - - 116,656
Cost of products R$ (94,094) - - - (94,094)
Other expenses/revenues R$ (869) - - - (869)
Depreciation, amortization and depletion R$ 2,262 - - - 2,262
---------- ---------- ---------- ---------- ----------
EBITDA ----------------------------------------------->R$ 23,955 - - - 23,955
Depreciation, amortization and depletion R$ (2,262) - - - (2,262)
---------- ---------- ---------- ---------- ----------
EBIT ----------------------------------------------->R$ 21,693 - - - 21,693
Other expenses - non cash R$ (7,809) - - - (7,809)
Result of investments participation R$ - - - - -
Non-operating result R$ 104 - - - 104
Net financial result R$ 18,296 - - - 18,296
---------- ---------- ---------- ---------- ----------
Income before income tax and social contribution R$ 32,284 - - - 32,284
Income tax and social contribution R$ (14,094) - - - (14,094)
---------- ---------- ---------- ---------- ----------
Net income R$ 18,190 - - - 18,190
---------- ---------- ---------- ---------- ----------
Information 2002
------------------------------------------------------- ---------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
---------- ---------- ---------- ---------- ----------
Quantity sold - external market MT (thousand) 436 534 850 1,074 2,894
Quantity sold - internal market MT (thousand) 420 478 - 242 1,140
---------- ---------- ---------- ---------- ----------
Quantity sold - total MT (thousand) 856 1,012 850 1,316 4,034
========== ========== ========== ========== ==========
Average sales price - external market US$ 31.31 29.34 29.47 29.89 29.88
Average sales price - internal market US$ 32.08 29.24 - 30.32 30.51
Average sales price - total US$ 31.69 29.30 29.47 29.97 30.09
Long-term indebtedness, gross US$ 149,583 143,378 147,150 114,489 114,489
---------- ---------- ---------- ---------- ----------
Total indebtedness, gross US$ 149,583 143,378 147,150 114,489 114,489
========== ========== ========== ========== ==========
Stockholders' equity R$ 16,608 (32,692) (124,990) (107,350) (107,350)
========== ========== ========== ========== ==========
Net operating revenues R$ 63,984 72,449 74,427 143,092 353,952
Cost of products R$ (50,027) (67,075) (60,393) (111,687) (289,182)
Other expenses/revenues R$ (1,109) 1,471 (1,995) 3,990 2,357
Depreciation, amortization and depletion R$ 2,248 2,248 2,250 2,253 8,999
---------- ---------- ---------- ---------- ----------
EBITDA R$ 15,096 9,093 14,289 37,648 76,126
Depreciation, amortization and depletion R$ (2,248) (2,248) (2,250) (2,253) (8,999)
---------- ---------- ---------- ---------- ----------
EBIT R$ 12,848 6,845 12,039 35,395 67,127
Other expenses - non cash R$ (2,984) (3,617) (5,453) (33,487) (45,541)
Result of investments participation R$ 57 939 1,766 (3,097) (335)
Non-operating result R$ 31 27 24 435 517
Net financial result R$ (3,811) (78,006) (147,117) 45,279 (183,655)
---------- ---------- ---------- ---------- ----------
Income before income tax and social contribution R$ 6,141 (73,812) (138,741) 44,525 (161,887)
Income tax and social contribution R$ (3,093) 24,511 46,445 (26,886) 40,977
---------- ---------- ---------- ---------- ----------
Net income R$ 3,048 (49,301) (92,296) 17,639 (120,910)
---------- ---------- ---------- ---------- ----------
38
8.9- Pelletizing Area - NIBRASCO (Adjusted and Unaudited)
Information 2003
----------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
---------- ---------- ---------- ---------- ----------
Quantity sold - external market MT (thousand) 469 - - - 469
Quantity sold - internal market - CVRD MT (thousand) 1,303 - - - 1,303
Quantity sold - internal market - Others MT (thousand) 28 - - - 28
---------- ---------- ---------- ---------- ----------
Quantity sold - total MT (thousand) 1,800 - - - 1,800
========== ========== ========== ========== ==========
Average sales price - external market US$ 28.76 - - - 28.76
Average sales price - internal market US$ 27.38 - - - 27.38
Average sales price - total US$ 27.75 - - - 27.75
Long-term indebtedness, gross US$ 1,200 - - - 1,200
Short-term indebtedness, gross US$ 2,400 - - - 2,400
---------- ---------- ---------- ---------- ----------
Total indebtedness, gross US$ 3,600 - - - 3,600
========== ========== ========== ========== ==========
Stockholders' equity R$ 87,365 - - - 87,365
========== ========== ========== ========== ==========
Net operating revenues R$ 174,765 - - - 174,765
Cost of products R$ (167,405) - - - (167,405)
Other expenses/revenues R$ 1,895 - - - 1,895
Depreciation, amortization and depletion R$ 4,179 - - - 4,179
---------- ---------- ---------- ---------- ----------
EBITDA ------------------------------------------------> R$ 13,434 - - - 13,434
Depreciation, amortization and depletion R$ (4,179) - - - (4,179)
---------- ---------- ---------- ---------- ----------
EBIT ------------------------------------------------> R$ 9,255 - - - 9,255
Other expenses - non cash R$ (3,700) - - - (3,700)
Net financial result R$ 1,341 - - - 1,341
---------- ---------- ---------- ---------- ----------
Income before income tax and social contribution R$ 6,896 - - - 6,896
Income tax and social contribution R$ (3,728) - - - (3,728)
---------- ---------- ---------- ---------- ----------
Net income R$ 3,168 - - - 3,168
---------- ---------- ---------- ---------- ----------
Information 2002
----------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
---------- ---------- ---------- ---------- ----------
Quantity sold - external market MT (thousand) 407 686 290 783 2,166
Quantity sold - internal market - CVRD MT (thousand) 584 1,544 1,520 1,301 4,949
Quantity sold - internal market - Others MT (thousand) 9 27 32 32 100
---------- ---------- ---------- ---------- ----------
Quantity sold - total MT (thousand) 1,000 2,257 1,842 2,116 7,215
========== ========== ========== ========== ==========
Average sales price - external market US$ 30.25 30.88 27.39 28.95 29.60
Average sales price - internal market US$ 30.49 31.58 25.69 28.25 28.77
Average sales price - total US$ 30.39 31.36 25.96 28.52 29.01
Long-term indebtedness, gross US$ 3,600 2,400 2,400 1,200 1,200
Short-term indebtedness, gross US$ 2,484 2,400 2,436 2,400 2,400
---------- ---------- ---------- ---------- ----------
Total indebtedness, gross US$ 6,084 4,800 4,836 3,600 3,600
========== ========== ========== ========== ==========
Stockholders' equity R$ 78,682 84,259 88,040 101,698 101,698
========== ========== ========== ========== ==========
Net operating revenues R$ 70,936 163,815 162,232 220,381 617,364
Cost of products R$ (70,397) (144,430) (148,056) (190,547) (553,430)
Other expenses/revenues R$ 144 2,006 686 (2,268) 568
Depreciation, amortization and depletion R$ 4,217 4,218 4,218 4,206 16,859
---------- ---------- ---------- ---------- ----------
EBITDA R$ 4,900 25,609 19,080 31,772 81,361
Depreciation, amortization and depletion R$ (4,217) (4,218) (4,218) (4,206) (16,859)
---------- ---------- ---------- ---------- ----------
EBIT R$ 683 21,391 14,862 27,566 64,502
Other expenses - non cash R$ (2,548) (7,041) (4,887) (6,058) (20,534)
Net financial result R$ (2,463) (4,034) (2,136) 883 (7,750)
---------- ---------- ---------- ---------- ----------
Income before income tax and social contribution R$ (4,328) 10,316 7,839 22,391 36,218
Income tax and social contribution R$ 66 (4,737) (4,062) (8,732) (17,465)
---------- ---------- ---------- ---------- ----------
Net income R$ (4,262) 5,579 3,777 13,659 18,753
---------- ---------- ---------- ---------- ----------
39
8.10- Pelletizing Area - SAMARCO (Adjusted and Unaudited)
Information 2003
----------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
---------- ---------- ---------- ---------- ----------
Quantity sold - total MT (thousand) 3,988 - - - 3,988
========== ========== ========== ========== ==========
Average sales price - total US$ 27.59 - - - 27.59
Long-term indebtedness, gross US$ 56,240 - - - 56,240
Short-term indebtedness, gross US$ 123,271 - - - 123,271
---------- ---------- ---------- ---------- ----------
Total indebtedness, gross US$ 179,511 - - - 179,511
========== ========== ========== ========== ==========
Stockholders' equity R$ 627,216 - - - 627,216
========== ========== ========== ========== ==========
Net operating revenues R$ 360,773 - - - 360,773
Cost of products R$ (162,899) - - - (162,899)
Other expenses/revenues R$ (19,634) - - - (19,634)
Depreciation, amortization and depletion R$ 9,955 - - - 9,955
---------- ---------- ---------- ---------- ----------
EBITDA ---------------------------------------------> R$ 188,195 - - - 188,195
Depreciation, amortization and depletion R$ (9,955) - - - (9,955)
---------- ---------- ---------- ---------- ----------
EBIT ---------------------------------------------> R$ 178,240 - - - 178,240
Other expenses/revenues - non cash R$ 8,740 - - - 8,740
Result of investments participation R$ (2,699) - - - (2,699)
Non-operating result R$ (46) - - - (46)
Net financial result R$ (499) - - - (499)
---------- ---------- ---------- ---------- ----------
Income before income tax and social contribution R$ 183,736 - - - 183,736
Income tax and social contribution R$ (44,283) - - - (44,283)
---------- ---------- ---------- ---------- ----------
Net income R$ 139,453 - - - 139,453
---------- ---------- ---------- ---------- ----------
Information 2002
----------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
---------- ---------- ---------- ---------- ----------
Quantity sold - total MT (thousand) 3,301 3,436 3,871 3,834 14,442
========== ========== ========== ========== ==========
Average sales price - total US$ 28.48 28.78 27.93 29.22 28.60
Long-term indebtedness, gross US$ 92,788 86,584 76,181 66,644 66,644
Short-term indebtedness, gross US$ 169,170 180,539 169,538 141,754 141,754
---------- ---------- ---------- ---------- ----------
Total indebtedness, gross US$ 261,958 267,123 245,719 208,398 208,398
========== ========== ========== ========== ==========
Stockholders' equity R$ 510,038 417,935 344,369 493,837 493,837
========== ========== ========== ========== ==========
Net operating revenues R$ 212,909 239,124 310,720 397,853 1,160,606
Cost of products R$ (108,837) (114,932) (138,102) (144,512) (506,383)
Other expenses/revenues R$ (18,481) (19,474) (26,770) 11,040 (53,685)
Depreciation, amortization and depletion R$ 7,897 9,358 9,043 8,835 35,133
---------- ---------- ---------- ---------- ----------
EBITDA R$ 93,488 114,076 154,891 273,216 635,671
Depreciation, amortization and depletion R$ (7,897) (9,358) (9,043) (8,835) (35,133)
---------- ---------- ---------- ---------- ----------
EBIT R$ 85,591 104,718 145,848 264,381 600,538
Other expenses/revenues - non cash R$ (1,966) (9,221) (18,322) (27,581) (57,090)
Result of investments participation R$ 2,155 (11,985) (42,146) 17,045 (34,931)
Non-operating result R$ 50 (35) 485 (4,517) (4,017)
Net financial result R$ (15,179) (95,410) (162,908) 27,423 (246,074)
---------- ---------- ---------- ---------- ----------
Income before income tax and social contribution R$ 70,651 (11,933) (77,043) 276,751 258,426
Income tax and social contribution R$ (12,555) (7,431) 3,671 (41,658) (57,973)
---------- ---------- ---------- ---------- ----------
Net income R$ 58,096 (19,364) (73,372) 235,093 200,453
---------- ---------- ---------- ---------- ----------
40
8.11- Pelletizing Area - GIIC (Adjusted and Unaudited)
Information 2003
----------------------------------------------------------------------------------------------------------------------------------
1Q(*) 2Q 3Q 4Q Total
---------- ---------- ---------- ---------- ----------
Quantity sold - external market ton (mil) 772 772
---------- ---------- ---------- ---------- ----------
Quantity sold - total ton (mil) 772 - - - 772
========== ========== ========== ========== ==========
Average sales price - external market US$ 41.00 41.00
Average sales price - total US$ 41.00 41.00
---------- ---------- ---------- ---------- ----------
Stockholders' equity R$ 225,520 225,520
========== ========== ========== ========== ==========
Net operating revenues R$ 100,559 100,559
Cost of products R$ (78,057) (78,057)
Other expenses R$ (9,530) (9,530)
Depreciation, amortization and depletion R$ 3,038 3,038
---------- ---------- ---------- ---------- ----------
EBITDA -------------------------------------------> R$ 16,010 - - - 16,010
Depreciation, amortization and depletion R$ (3,038) (3,038)
---------- ---------- ---------- ---------- ----------
EBIT --------------------------------------------> R$ 12,972 - - - 12,972
Non-operating result R$ 114 114
Ganho na convesao de moedas R$ - -
Net financial result R$ (574) (574)
---------- ---------- ---------- ---------- ----------
Net income R$ 12,512 - - - 12,512
---------- ---------- ---------- ---------- ----------
Information 2002
----------------------------------------------------------------------------------------------------------------------------------
1Q(*) 2Q 3Q 4Q Total
---------- ---------- ---------- ---------- ----------
Quantity sold - external market ton (mil) 823 676 643 932 3,074
---------- ---------- ---------- ---------- ----------
Quantity sold - total ton (mil) 823 676 643 932 3,074
========== ========== ========== ========== ==========
Average sales price - external market US$ 41.76 40.30 41.55 40.40 40.98
Average sales price - total US$ 41.76 40.30 41.55 40.40 40.98
---------- ---------- ---------- ---------- ----------
Stockholders' equity R$ 154,278 193,243 271,537 257,226 257,226
========== ========== ========== ========== ==========
Net operating revenues R$ 79,867 77,447 104,072 133,025 394,411
Cost of products R$ (68,514) (67,518) (97,135) (109,373) (342,540)
Other expenses R$ (2,561) (5,768) (748) (11,352) (20,429)
Depreciation, amortization and depletion R$ (3,365) 4,167 5,761 5,268 18,561
---------- ---------- ---------- ---------- ----------
EBITDA R$ 12,157 8,328 11,950 17,568 50,003
Depreciation, amortization and depletion R$ (3,365) (4,167) (5,761) (5,268) (18,561)
---------- ---------- ---------- ---------- ----------
EBIT R$ 8,792 4,161 6,189 12,300 31,442
Non-operating result R$ 92 114 1,577 233 2,016
Ganho na convesao de moedas R$ - 1,716 1,044 2,376 5,136
Net financial result R$ 167 111 (845) (1,617) (2,184)
---------- ---------- ---------- ---------- ----------
Net income R$ 9,051 6,102 7,965 13,292 36,410
---------- ---------- ---------- ---------- ----------
(*) The figures refers to the statements as of february/03.
41
8.12- Iron Ore Area - FERTECO (Adjusted and Unaudited)
Information 2003
----------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
---------- ---------- ---------- ---------- ----------
Quantity sold - external market - iron ore MT (thousand) 3,503 - - - 3,503
Quantity sold - internal market - iron ore MT (thousand) 1,376 - - - 1,376
---------- ---------- ---------- ---------- ----------
Quantity sold - total - iron ore MT (thousand) 4,879 - - - 4,879
========== ========== ========== ========== ==========
Quantity sold - external market - pellets MT (thousand) 358 - - - 358
Quantity sold - internal market - pellets MT (thousand) 498 - - - 498
---------- ---------- ---------- ---------- ----------
Quantity sold - total - pellets MT (thousand) 856 - - - 856
========== ========== ========== ========== ==========
Average sales price - external market - iron ore US$ 16.29 - - - 16.29
Average sales price - internal market - iron ore US$ 7.73 - - - 7.73
Average sales price - total - iron ore US$ 13.87 - - - 13.87
Average sales price - external market - pellets US$ 28.51 - - - 28.51
Average sales price - internal market - pellets US$ 30.40 - - - 30.40
Average sales price - total - pellets US$ 29.62 - - - 29.62
Long-term indebtedness, gross US$ 82,374 - - - 82,374
Short-term indebtedness, gross US$ 9,567 - - - 9,567
---------- ---------- ---------- ---------- ----------
Total indebtedness, gross US$ 91,941 - - - 91,941
========== ========== ========== ========== ==========
Stockholders' equity R$ 707,540 - - - 707,540
========== ========== ========== ========== ==========
Net operating revenues R$ 310,773 - - - 310,773
Cost of products R$ (181,193) - - - (181,193)
Other expenses R$ (13,981) - - - (13,981)
Depreciation, amortization and depletion R$ 7,692 - - - 7,692
---------- ---------- ---------- ---------- ----------
EBITDA ---------------------------------------------> R$ 123,291 - - - 123,291
Depreciation, amortization and depletion R$ (7,692) - - - (7,692)
---------- ---------- ---------- ---------- ----------
EBIT ---------------------------------------------> R$ 115,599 - - - 115,599
Others expenses/revenues - no cash R$ (9,058) - - - (9,058)
Result of Investments Participation R$ 3,830 - - - 3,830
Non-operating result R$ (87) - - - (87)
Net financial result R$ (8,537) - - - (8,537)
---------- ---------- ---------- ---------- ----------
Income before income tax and social contribution R$ 101,747 - - - 101,747
Income tax and social contribution R$ (12,869) - - - (12,869)
---------- ---------- ---------- ---------- ----------
Net income R$ 88,878 - - - 88,878
---------- ---------- ---------- ---------- ----------
Information 2002
------------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
---------- ---------- ---------- ---------- ----------
Quantity sold - external market - iron ore MT (thousand) 2,020 2,699 2,783 2,142 9,644
Quantity sold - internal market - iron ore MT (thousand) 512 832 1,594 1,146 4,084
---------- ---------- ---------- ---------- ----------
Quantity sold - total - iron ore MT (thousand) 2,532 3,531 4,377 3,288 13,728
========== ========== ========== ========== ==========
Quantity sold - external market - pellets MT (thousand) 448 736 554 645 2,383
Quantity sold - internal market - pellets MT (thousand) 277 498 703 697 2,175
---------- ---------- ---------- ---------- ----------
Quantity sold - total - pellets MT (thousand) 725 1,234 1,257 1,342 4,558
========== ========== ========== ========== ==========
Average sales price - external market - iron ore US$ 16.53 17.32 16.38 16.56 16.76
Average sales price - internal market - iron ore US$ 3.71 6.20 6.47 5.42 6.02
Average sales price - total - iron ore US$ 14.59 14.70 12.66 12.68 13.46
Average sales price - external market - pellets US$ 28.08 29.68 26.78 28.73 28.45
Average sales price - internal market - pellets US$ 19.02 23.15 23.38 19.73 21.60
Average sales price - total - pellets US$ 26.63 27.05 24.88 24.06 25.18
Long-term indebtedness, gross US$ 94,359 88,367 74,490 82,375 82,375
Short-term indebtedness, gross US$ 55,244 58,473 51,922 22,815 22,815
---------- ---------- ---------- ---------- ----------
Total indebtedness, gross US$ 149,603 146,840 126,412 105,190 105,190
========== ========== ========== ========== ==========
Stockholders' equity R$ 215,058 544,020 568,381 618,663 618,663
========== ========== ========== ========== ==========
Net operating revenues R$ 126,852 195,290 302,477 293,099 917,718
Cost of products R$ (70,019) (127,765) (186,549) (140,851) (525,184)
Other expenses R$ (12,481) (12,121) (18,000) (31,028) (73,630)
Depreciation, amortization and depletion R$ 7,273 7,591 6,222 6,945 28,031
---------- ---------- ---------- ---------- ----------
EBITDA ---------------------------------------------> R$ 51,625 62,995 104,150 128,165 346,935
Depreciation, amortization and depletion R$ (7,273) (7,591) (6,222) (6,945) (28,031)
---------- ---------- ---------- ---------- ----------
EBIT ---------------------------------------------> R$ 44,352 55,404 97,928 121,220 318,904
Others expenses/revenues - no cash R$ - (16,951) 2,917 (74,680) (88,714)
Result of Investments Participation R$ 9 (28,710) (20,327) 21,852 (27,176)
Non-operating result R$ (216) 121 194 5,969 6,068
Net financial result R$ (4,575) (44,260) (59,169) 6,631 (101,373)
---------- ---------- ---------- ---------- ----------
Income before income tax and social contribution R$ 39,570 (34,396) 21,543 80,992 107,709
Income tax and social contribution R$ (10,519) 24,344 2,818 (30,710) (14,067)
---------- ---------- ---------- ---------- ----------
Net income R$ 29,051 (10,052) 24,361 50,282 93,642
---------- ---------- ---------- ---------- ----------
42
8.13- Manganese and Ferroalloys Area - SIBRA (Adjusted and Unaudited)
Information 2003
----------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
---------- ---------- ---------- ---------- ----------
Quantity sold - external market - ferroalloys MT (thousand) 30 - - - 30
Quantity sold - internal market - ferroalloys MT (thousand) 37 - - - 37
---------- ---------- ---------- ---------- ----------
Quantity sold - total MT (thousand) 67 - - - 67
========== ========== ========== ========== ==========
Quantity sold - external market - manganese MT (thousand) 185 - - - 185
Quantity sold - internal market - manganese MT (thousand) 94 - - - 94
---------- ---------- ---------- ---------- ----------
Quantity sold - total MT (thousand) 279 - - - 279
========== ========== ========== ========== ==========
Average sales price - external market - ferroalloys US$ 582.67 - - - 582.67
Average sales price - internal market - ferroalloys US$ 488.57 - - - 488.57
Average sales price - total US$ 530.70 - - - 530.70
Average sales price - external market - manganese US$ 42.24 - - - 42.24
Average sales price - internal market - manganese US$ 36.60 - - - 36.60
Average sales price - total US$ 40.34 - - - 40.34
Long-term indebtedness, gross US$ 19,812 - - - 19,812
Short-term indebtedness, gross US$ 36,783 - - - 36,783
---------- ---------- ---------- ---------- ----------
Total indebtedness, gross US$ 56,595 - - - 56,595
========== ========== ========== ========== ==========
Stockholders' equity R$ 310,314 - - - 310,314
========== ========== ========== ========== ==========
Net operating revenues R$ 142,185 - - - 142,185
Cost of products R$ (83,873) - - - (83,873)
Other expenses/revenues R$ (23,291) - - - (23,291)
Depreciation, amortization and depletion R$ 5,456 - - - 5,456
---------- ---------- ---------- ---------- ----------
EBITDA -----------------------------------------------> R$ 40,477 - - - 40,477
Depreciation, amortization and depletion R$ (5,456) - - - (5,456)
---------- ---------- ---------- ---------- ----------
EBIT -----------------------------------------------> R$ 35,021 - - - 35,021
Other revenues - non cash R$ 1,126 - - - 1,126
Non-operating result R$ (404) - - - (404)
Net financial result R$ (11,168) - - - (11,168)
---------- ---------- ---------- ---------- ----------
Income before income tax and social contribution R$ 24,575 - - - 24,575
Income tax and social contribution R$ (6,255) - - - (6,255)
---------- ---------- ---------- ---------- ----------
Net income R$ 18,320 - - - 18,320
---------- ---------- ---------- ---------- ----------
Information 2002
----------------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q Total
---------- ---------- ---------- ---------- ----------
Quantity sold - external market - ferroalloys MT (thousand) 23 39 63 35 160
Quantity sold - internal market - ferroalloys MT (thousand) 37 39 41 50 167
---------- ---------- ---------- ---------- ----------
Quantity sold - total MT (thousand) 60 78 104 85 327
========== ========== ========== ========== ==========
Quantity sold - external market - manganese MT (thousand) 243 212 181 192 828
Quantity sold - internal market - manganese MT (thousand) 15 35 58 90 198
---------- ---------- ---------- ---------- ----------
Quantity sold - total MT (thousand) 258 247 239 282 1,026
========== ========== ========== ========== ==========
Average sales price - external market - ferroalloys US$ 525.00 384.64 483.67 548.54 479.65
Average sales price - internal market - ferroalloys US$ 519.19 506.79 379.56 339.76 428.31
Average sales price - total US$ 521.43 445.72 442.63 425.73 453.43
Average sales price - external market - manganese US$ 52.49 44.38 44.91 46.96 46.96
Average sales price - internal market - manganese US$ 68.27 58.11 50.97 46.47 46.47
Average sales price - total US$ 53.40 46.32 46.38 45.86 46.86
Long-term indebtedness, gross US$ 21,121 17,749 19,990 22,055 22,055
Short-term indebtedness, gross US$ 29,918 28,084 25,351 35,605 35,605
---------- ---------- ---------- ---------- ----------
Total indebtedness, gross US$ 51,039 45,833 45,341 57,660 57,660
========== ========== ========== ========== ==========
Stockholders' equity R$ 245,150 261,854 306,541 293,116 293,116
========== ========== ========== ========== ==========
Net operating revenues R$ 95,931 105,626 168,108 152,924 522,589
Cost of products R$ (50,659) (69,335) (101,297) (85,843) (307,134)
Other expenses/revenues R$ (6,794) (5,428) (16,045) (46,799) (75,066)
Depreciation, amortization and depletion R$ 3,297 3,434 4,503 3,712 14,946
---------- ---------- ---------- ---------- ----------
EBITDA ----------------------------------------------->R$ 41,775 34,297 55,269 23,994 155,335
Depreciation, amortization and depletion R$ (3,297) (3,434) (4,503) (3,712) (14,946)
EBIT ----------------------------------------------->R$ 38,478 30,863 50,766 20,282 140,389
Other revenues - non cash R$ (800) (336) (1,263) (3,518) (5,917)
Non-operating result R$ (1,220) (136) (648) (6,005) (8,009)
Net financial result R$ (720) (4,131) 13,412 (34,107) (25,546)
---------- ---------- ---------- ---------- ----------
Income before income tax and social contribution R$ 35,738 26,260 62,267 (23,348) 100,917
Income tax and social contribution R$ (2,177) (4,332) (16,111) 3,265 (19,355)
---------- ---------- ---------- ---------- ----------
Net income R$ 33,561 21,928 46,156 (20,083) 81,562
---------- ---------- ---------- ---------- ----------
43
9- REPORT OF THE INDEPENDENT ACCOUNTANTS (A free translation of the original
opinion in Portuguese expressed on
quarterly information prepared in
accordance with the accounting
principles prescribed by Brazilian
Corporate Law)
May 09, 2003
To the Board of Directors and Stockholders
Companhia Vale do Rio Doce
1 We have carried out limited reviews of the Quarterly Financial
Information - ITR of Companhia Vale do Rio Doce for the quarters ended
March 31, 2003 and 2002. This financial information is the
responsibility of the Company's management.
2 Except as mentioned in paragraph three, our limited reviews were
carried out in accordance with the specific procedures established by
the Institute of Independent Auditors of Brazil (IBRACON), in
conjunction with the Federal Accounting Board, and consisted mainly of:
(a) inquires and discussion with the officers responsible for the
Company's accounting, financial and operational areas about the
procedures adopted for preparing the Quarterly Financial Information -
ITR, and (b) review of the information and subsequent events which
have, or may have, relevant effects on the Company's financial position
and operations.
3 The financial statements at March 31, 2003 and 2002, of subsidiary,
jointly-owned and associated companies, in which there are relevant
investments, have not been reviewed by independent accountants. Thus,
the conclusions resulting from our reviews do not cover the amounts of
R$ 8,156,541 thousand (2002 - R$ 6,088,805 thousand) of these
investments and R$ 418,620 thousand (2002 - R$ 284,115 thousand) of the
income produced by these investments for quarters then ended.
4 Based on our limited reviews, except for the effects of any adjustments
which might have been required if the financial statements of the
subsidiary, jointly-owned and associated companies mentioned in
paragraph 3 had been reviewed by independent accountants, we are not
aware of any relevant adjustments which should be made to the Quarterly
Financial Information - ITR, referred to in paragraph 1, for it to be
in accordance with the rules issued by the Brazilian Securities
Commission - CVM specifically applicable to the preparation of
obligatory Quarterly Financial Information - ITR.
5 The Quarterly Financial Information - ITR also contains accounting and
financial information relating to the quarter ended December 31, 2002.
We examined this information at the time of its preparation, together
with the audit of the financial statements at that date, on which we
expressed our opinion, without qualification, dated March 21, 2003.
PricewaterhouseCoopers
Auditores Independentes
CRC-SP-000160/O-5 "F" RJ
Douglas H. Woods Ronaldo Matos Valino
Partner Director
Accountant CRC-SP-101.652/O-0-S-RJ Accountant CRC-RJ-069.958/O
44
10- BOARD OF DIRECTORS, FISCAL COUNCIL AND EXECUTIVE OFFICERS
BOARD OF DIRECTORS EXECUTIVE OFFICERS
Sergio Ricardo Silva Rosa Roger Agnelli
Chairman Chief Executive Officer
Arlindo Magno de Oliveira Antonio Miguel Marques
Executive Officer for Equity Holdings and
Claudio Bernardo Guimaraes de Moraes Business Development
Erik Persson Armando de Oliveira Santos Neto
Executive Officer for Ferrous Minerals
Francisco Valadares Povoa
Carla Grasso
Joao Moises Oliveira Executive Officer for Human Resources and
Corporate Services
Luiz Alexandre Bandeira de Mello
Diego Cristobal Hernandez Cabrera
Mario da Silveira Teixeira Junior Executive Officer for Non-Ferrous Minerals
Renato da Cruz Gomes Fabio de Oliveira Barbosa
Chief Financial Officer
Ricardo Carvalho Giambroni
Gabriel Stoliar
Romulo de Mello Dias Executive Officer for Planning
Guilherme Rodolfo Laager
FISCAL COUNCIL Executive Officer for Logistics
Joaquim Vieira Ferreira Levy
Luiz Octavio Nunes West
Pedro Carlos de Mello
Vicente Barcelos
Wilson Risolia Rodrigues
Eduardo de Carvalho Duarte Otto de Souza Marques Junior
Chief Accountant Head of Control Department
CRC-RJ 57439
45
SIGNATURES
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.
COMPANHIA VALE DO RIO DOCE
(Registrant)
By: /s/ Fabio de Oliveira Barbosa
-------------------------------
Fabio de Oliveira Barbosa
Chief Financial Officer
Date: May 16, 2003