2 - COMPANY NAME GERDAU S.A. 8 - PHONE FAX 9 - PHONE FAX CURRENT YEAR CURRENT QUARTER PRIOR QUARTER

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1 REGISTRATION IN THE CVM DOES NOT IMPLY ANY EVALUATION OF THE COMPANY, AND ITS MANAGERS ARE RESPONSIBLE FOR ENSURING THE AUTHENTICITY OF THE INFORMATION PROVIDED IDENTIFICATION 1 - CVM CODE Register Inscription Number - NIRE COMPANY NAME GERDAU S.A. 3 - Federal Corporate Registration Number (CNPJ) / HEAD OFFICE 1 - ADDRESS Av. João XXIII, ZIP CODE 4 - MUNICIPALITY RIO DE JANEIRO 6 - AREA CODE 7 - PHONE AREA CODE 12 - FAX inform@gerdau.com.br 8 - PHONE FAX SUBURB OR DISTRICT STA. CRUZ 9 - PHONE FAX TELEX 5 - STATE RJ INVESTOR RELATIONS OFFICER (Company Mail Address) 1 - NAME OSVALDO BURGOS SCHIRMER 2 - ADDRESS Av. FARRAPOS, ZIP CODE 5 - MUNICIPALITY PORTO ALEGRE 7 - AREA CODE 8 - PHONE AREA CODE inform@gerdau.com.br FAX PHONE FAX SUBURB OR DISTRICT FLORESTA 10 - PHONE FAX TELEX 6 - STATE RS REFERENCE / AUDITOR CURRENT YEAR CURRENT QUARTER PRIOR QUARTER 1 - BEGINNING 2 - END 3 - NUMBER 4 - BEGINNING 5 - END 6 - NUMBER 7 - BEGINNING 8 - END 1/1/ /31/ /1/2007 6/30/ /1/2007 3/31/ NAME OF INDEPENDENT ACCOUNTANTS DELOITTE TOUCHE TOHMATSU AUDITORES INDEPENDENTES 11 - NAME OF RESPONSIBLE ACCOUNTANT FERNANDO CARRASCO 10 - CVM CODE TAXPAYER ID NO. OF RESP. ACCOUNTANT Page 1

2 IDENTIFICATION 1 - CVM CODE CAPITAL 2 - COMPANY NAME GERDAU S.A. 3 - Federal Corporate Registration Number (CNPJ) / Number 1 - CURRENT QUARTER 2 - PRIOR QUARTER 3 - SAME QUARTER PRIOR YEAR (thousand) 6/30/2007 3/21/2007 6/30/2006 Subscribed Capital 1 - Common 231, , , Preferred 435, , , Total 667, , ,593 Treasury Stock 4 - Common Preferred 5,031 5,070 4, Total 5,031 5,070 4, CHARACTERISTICS OF THE COMPANY 1 - TYPE OF COMPANY Commercial, Industrial and Other 2 - SITUATION Operational 3 - SHARE CONTROL NATURE Private National 4 - ACTIVITY CODE Metal and Steel Manufacturer 5 - MAIN ACTIVITY INVESTMENT AND MANAGEMENT 6 - CONSOLIDATION TYPE Total 7 - TYPE OF REPORT OF INDEPENDENT ACCOUNTANTS Unqualified COMPANIES EXCLUDED FROM THE CONSOLIDATED FINANCIAL STATEMENTS 1 - ITEM 2 - Federal Corporate Registration Number (CNPJ) 3 - COMPANY NAME DIVIDENDS APPROVED AND/OR PAID DURING AND AFTER THE QUARTER 1 - ITEM 2 - EVENT 3 - DATE APPROVED 01 Board of directors meeting 02 Board of directors meeting 03 Board of directors meeting 04 Board of directors meeting 5/3/2007 Interest on capital 5/3/2007 Interest on capital 4 - TYPE 5 - DATE OF PAYMENT 6 - TYPE OF SHARE 5/24/2007 registered common 5/24/2007 registered preferred 8/8/2007 Dividends 8/29/2007 registered common 8/8/2007 Dividends 8/29/2007 registered preferred 7 - AMOUNT PER SHARE Page 2

3 IDENTIFICATION 1 - CVM CODE COMPANY NAME GERDAU S.A. 3 - Federal Corporate Registration Number (CNPJ) / SUBSCRIBED CAPITAL AND ALTERATIONS DURING THE CURRENT YEAR 1 - ITEM 2 - DATE OF CHANGE 3 - SUBSCRIBED CAPITAL (Thousands of reals) 4 - CHANGE AMOUNT (Thousands of reals) 5 - NATURE OF CHANGE 6 - NUMBER OF SHARES ISSUED (Thousand) 7 - SHARE PRICE ON ISSUE DATE (Reals) INVESTOR RELATIONS OFFICER 1 - DATE 8/8/ SIGNATURE Page 3

4 IDENTIFICATION 1 - CVM CODE COMPANY NAME GERDAU S.A. 3 - Federal Corporate Registration Number (CNPJ) / Balance Sheets - Assets (R$ thousand) 1 - CVM CODE 2 - DESCRIPTION 3-6/30/ /31/ Total assets 13,204,985 12,807, Current assets 299, , Cash 1,332 2, Receivables 276, , Trade accounts receivable Sundry receivables 276, , Dividends receivable Tax credits 81,084 74, Marketable securities 195, , Employees Inventories Other 22,444 23, Other accounts receivable Deferred income and social contribution taxes Prepaid expenses 22,113 23, Noncurrent assets 12,905,066 12,289, Long-term receivables 905, , Sundry credits Intercompany receivables 134, , Affiliates Subsidiaries 134, , Other related parties Other 770, , Tax credits 13,249 31, Escrow deposits 13,968 13, Deferred income and social contribution taxes 30,487 25, Other receivables 11,128 11, Deposit For Future Investments in Companies 702, , Prepaid expenses Permanent assets 11,999,808 11,559, Investments 11,999,411 11,559, In affiliates In affiliates - Goodwill In subsidiaries 12,026,870 11,587, In subsidiaries - Goodwill (44,751) (45,720) Other 17,292 17, Property, plant and equipment Intangible assets Deferred charges 0 0 Page 4

5 IDENTIFICATION 1 - CVM CODE COMPANY NAME GERDAU S.A. 3 - Federal Corporate Registration Number (CNPJ) / Balance Sheets - Liabilities and Shareholders' Equity (R$ thousand) 1 - CVM CODE 2 - DESCRIPTION 3-6/30/ /31/ Total liabilities and shareholders' equity 13,204,985 12,807, Current liabilities 19,851 19, Loans and financing 6,779 6, Debentures Trade accounts payable Taxes payable 842 2, Dividends payable Provisions Intercompany payables Other 12,152 10, Other accounts payable 10,359 9, Deferred income and social contribution taxes Profit sharing Salaries payable 1, Noncurrent liabilities 2,099,032 2,133, Long-term liabilities 2,099,032 2,133, Loans and financing 1,155,720 1,230, Debentures 864, , Provisions Intercompany payables Advances for future capital increase Other 79,019 82, Reserve for contingencies 22,667 27, Deferred income and social contribution taxes 56,352 55, Other accounts payable Employee benefits Deferred income Shareholders equity 11,086,102 10,654, Paid-up capital 7,810,453 7,810, Capital reserves 376, , Monetary adjustment of capital Investment grants 342, , Special reserve - Law No. 8200/ Other 33,246 33, Share premium Revaluation reserves Own assets Subsidiaries/Affiliates Profit reserves 1,778,241 1,777, Legal 159, , Statutory 1,619,132 1,618,598 Page 5

6 IDENTIFICATION 1 - CVM CODE COMPANY NAME GERDAU S.A. 3 - Federal Corporate Registration Number (CNPJ) / Balance Sheets - Liabilities and Shareholders' Equity (R$ thousand) 1 - CVM CODE 2 - DESCRIPTION 3-6/30/ /31/ For contingencies Unrealized profits Retention of profits Special reserve for undistributed dividends Other Retained earnings/accumulated deficit 1,120, , Advances for future capital increase 0 0 Page 6

7 IDENTIFICATION 1 - CVM CODE COMPANY NAME GERDAU S.A. 3 - Federal Corporate Registration Number (CNPJ) / Statements of Income (R$ thousand) 1 - CVM CODE 2 - DESCRIPTION 3-4/1/2007 to 6/30/ /1/2007 to 6/30/ /1/2006 to 6/30/ /01/2006 to 6/30/ Gross sales and/or service revenues Deductions Net sales and/or service revenues Cost of sales and/or services Gross profit Operating expenses/income 790, ,781 1,343,610 1,501, Selling expenses General and administrative expenses (23,233) (29,366) (41,816) (30,984) Financial (10,265) 6,942 49,759 85, Financial income 48,902 (14,647) 16, , Financial expenses (59,167) 21,589 33,107 (16,893) Other operating income 17,688 4,693 5,664 19, Other operating expenses 0 0 (3) Equity in subsidiaries and affiliates 806, ,512 1,330,006 1,426, Income from operations 790, ,781 1,343,610 1,501, Nonoperating income (expenses) Income Expenses Income before taxes and profit sharing 790, ,781 1,343,610 1,501, Provision for income and social contribution taxes 0 8,588 1, Deferred income tax 5,810 4,930 1,451 (24,682) 3.12 Profit sharing and contributions (200) (287) (521) (399) Profit sharing 0 (287) (521) Contributions Reversal of interest on capital Net income 796, ,012 1,345,743 1,476,192 Page 7

8 IDENTIFICATION 1 - CVM CODE COMPANY NAME GERDAU S.A. 3 - Federal Corporate Registration Number (CNPJ) / Statements of Income (R$ thousand) 1 - CVM CODE 2 - DESCRIPTION 3-4/1/2007 to 6/30/ /1/2007 to 6/30/ /1/2006 to 6/30/ /1/2006 to 6/30/2006 Number of shares (thousands), excluding 662, , , ,392 treasury stock EARNINGS PER SHARE (Reals) LOSS PER SHARE (Reals) Page 8

9 NOTE 1 - OPERATIONS Gerdau S.A. (the "Company") is a publicly traded corporation with its head office in the city of Rio de Janeiro, and the holding company of the Gerdau Group. The Company is engaged principally in the production and sale of steel and iron products in general, with plants located in Brazil, Argentina, Chile, Colombia, Peru, Uruguay, Venezuela, United States, Canada, Mexico, Dominican Republic, Spain, and India. The Gerdau Group has an installed capacity of 20.1 million tons of crude steel per year, producing steel in electric furnaces using scrap and pig iron that are mostly purchased in the region in which each plant operates (mini-mill concept). Gerdau also produces steel from iron ore (through blast furnaces and direct reduction) and has units engaged exclusively in producing specialty steels. It is the largest scrap recycling group in Latin America and is among the largest in the world. The industrial sector is the most important market, where manufacturers of consumer goods, such as vehicles and equipment for commercial and home use, basically use merchant bars available in various specifications. The next most important market is the civil construction sector, which demands a high volume of rebar and wires for concrete. There are also numerous customers for nails, staples and wires, commonly used in the agribusiness sector. NOTE 2 - PRESENTATION OF INTERIM FINANCIAL STATEMENTS The interim financial statements have been prepared and are presented in accordance with accounting practices established by the Brazilian Corporate Law and standards established by the Brazilian Securities Commission (CVM). NOTE 3 - SIGNIFICANT ACCOUNTING PRACTICES a) Cash and Marketable Securities - marketable securities are recorded at cost plus income earned through the date of the interim financial statements, applying the interest rates agreed with the financial institutions, which does not exceed market value. b) Trade Accounts Receivable - are stated at realizable values, and accounts receivable from foreign customers are adjusted based on the exchange rates in effect at the date of the interim financial statements. The allowance for doubtful accounts is calculated based on a risk assessment, which considers the history of losses, individual situation of each customer and the economic group to which they belong, collateral and guarantees and legal counsel s opinion, and is considered sufficient to cover any losses on uncollectible receivables. c) Inventories - are stated at the lower of market value and average production or acquisition cost. d) Investments - investments in subsidiaries and affiliates are accounted for under the equity method, adjusted for unamortized goodwill/negative goodwill and provision for losses, when applicable, and equity in earnings or losses of subsidiaries and affiliates is recorded in an income statement account. Capital gains or losses resulting from changes in equity interests in subsidiaries are recorded as nonoperating income or expenses. Page 9

10 e) Property, Plant and Equipment - are recorded at cost, net of depreciation. Depreciation is calculated on the straight-line basis at the rates stated in Note 11, based upon the estimated useful lives of the assets. The capitalization of interest, calculated based on the Company's average funding rate, is made over the period of construction of the assets. f) Intangible Assets - are amortized over a period of ten years from the date benefits begin to be earned. g) Deferred Charges - are amortized on the straight-line basis at rates determined based on the production of the implemented projects in relation to their installed capacities. h) Loans and Financing - are stated at the contract values plus interest and monetary or exchange variations. The adjustments receivable or payable on swap transactions linked to financing contracts are classified together with the related financing. i) Income and Social Contribution Taxes - are calculated using the tax rates in effect and take into consideration the offset of tax losses for purposes of determining the tax due. Deferred taxes are recognized on tax loss carryforwards and temporary differences. j) Employee Benefits - the actuarial obligations related to the pension and retirement benefits and the actuarial obligations related to the health care plan are recorded according to CVM Resolution No. 317/2000, based an actuarial calculation made every year by an independent actuary, using the projected unit credit method, net of the assets that fund the plan, when applicable, and the corresponding costs are recognized over the employees' working lives. The projected unit credit method considers each period of service as a triggering event of an additional benefit unit, which is accumulated to calculate the total obligation. Other actuarial assumptions are also used, such as estimates of increase in health care costs, biological and economic hypotheses and, also, historical data of costs incurred and employee contributions. k) Other Current and Noncurrent Assets and Liabilities - are recorded at realizable amounts (assets) and at known or estimated amounts plus accrued charges and monetary variations (liabilities), when applicable. l) Related Parties - loan agreements between Brazilian companies are adjusted at the weighted average interest rate for market funding. The loan agreements with foreign companies are adjusted by charges (LIBOR + 3% per year) plus exchange variation, when applicable. Sales and purchases of inputs and products are made under terms and conditions similar to those for transactions with unrelated parties. Page 10

11 m) Long-Term Incentive Plans - the Company pays its chief officers a portion of the compensation in preferred stock options. Therefore, the Company buys back its own shares and keeps them in treasury for delivery to the officers when they exercise their options and pay the exercise price. Gains and losses related to the difference between the cost of shares and the amount received from the officers are recorded in capital reserves without passing through P&L. n) Results of Operations - are determined on the accrual basis. o) Use of Estimates - the preparation of interim financial statements requires the use of estimates to record certain assets, liabilities and other transactions. The interim financial statements include, therefore, estimates of useful lives of property, plant and equipment, reserve for contingencies, provisions for income taxes and other. Actual results could differ from those estimates. p) Investments in Environmental Protection - expenditures related to compliance with environmental regulations are considered as cost of production or are capitalized when incurred. q) Translation of Foreign Currency Balances - assets and liabilities of transactions in foreign currencies are translated into local currency (Brazilian real) at the exchange rate prevailing at the quarter end. Page 11

12 NOTE 4 - CONSOLIDATED INTERIM FINANCIAL STATEMENTS a) The consolidated interim financial statements as of June 30, 2007 have been prepared in accordance with accounting practices established by the Brazilian Corporate Law and standards established by the Brazilian Securities Commission (CVM) and include the accounts of Gerdau S.A. and its direct or indirect subsidiaries as listed below. Consolidation Consolidated company Country percentage net assets Total capital (*) Voting capital Gerdau GTL Spain S.L. Spain 100 4,160, Gerdau Internacional Empreendimentos Ltda. - Gerdau Group Brazil 100 4,159, Gerdau Ameristeel Corporation and subsidiaries (1) USA/Canada 100 4,151, Gerdau Açominas and subsidiaries (2) Brazil 100 3,581, Gerdau Aços Longos S.A. and subsidiaries (3) Brazil 100 3,569, Gerdau Steel Inc. Canada 100 1,948, Paraopeba - Fixed-rate investment fund (4) Brazil 100 1,724, Corporación Sidenor S.A. and subsidiaries (5) Spain 40 1,423, Gerdau América Latina Participações S.A. Brazil , Axol S.A. Uruguay , Gerdau Aços Especiais S.A. Brazil , Gerdau Chile Inversiones Ltda. and subsidiaries (6) Chile , Gerdau Hungria Holdings Limited Liability Company Hungary , Gerdau Comercial de Aços S.A. Brazil , Aramac S.A. and subsidiaries (7) Uruguay , Empresa Siderúrgica del Perú S.A.A. - Siderperú Peru , Diaco S.A. and subsidiaries (8) Colombia , Feld Group S.A. and subsidiaries (9) Mexico , Seiva S.A. - Florestas e Indústrias Brazil , Itaguaí Com. Imp. e Exp. Ltda. Brazil , Multisteel Business Holdings Corp. and subsidiaries (10) Dominican Rep , Dona Francisca Energética S.A. Brazil , Gerdau Laisa S.A. Uruguay , Sipar Gerdau Inversiones S.A. and subsidiaries (11) Argentina , Siderúrgica del Pacífico S.A. Colombia , Sizuca - Siderúrgica Zuliana, C. A. Venezuela , GTL Financial Corp. Netherlands 100 3, Equity Ownership percentage (*) The equity interest reported represents the ownership percentage directly and indirectly held by the investor in the subsidiary. (1) Subsidiaries: Gerdau Ameristeel MRM Special Sections Inc., Gerdau USA Inc., Ameristeel Bright Bar Inc., Gerdau Ameristeel US Inc., Gerdau Ameristeel Perth Amboy Inc., Sheffield Steel Corporation, Gerdau Ameristeel Sayreville Inc., Pacific Coast Steel and Gallatin Steel Company (50% - proportionately consolidated). (2) Subsidiaries: Gerdau Açominas Overseas Ltd. and Açominas Com. Imp. Exp. S.A. Açotrading. (3) Subsidiaries: Margusa Maranhão Gusa S.A. and Florestal Itacambira S.A.. (4) Fixed-rate investment fund managed by Banco Gerdau S.A., which began to be consolidated in 2006 in accordance with CVM Instruction 408/2004. (5) Subsidiaries: Corporación Sidenor, S.A. y Cía, Sidenor Industrial S.L., Aços Villares S.A. (58.44%), Forjanor S.L., Sidenor y Cía Sociedad Colectiva, Sidenor I+D S.A., Faersa S.A. and GSB Acero, S.A.. (6) Subsidiaries: Indústria del Acero S.A., Industrias del Acero Internacional S.A., Gerdau Aza S.A., Armacero Industrial y Comercial S.A. (50% - proportionately consolidated), Distribuidora Matco S.A., Aceros Cox Comercial S.A, Salomon Sack S.A., and Matco Instalaciones Ltda.. (7) Subsidiaries: GTL Equity Investments Corp., Focus Resources Corp., and Sprint Global Corp. (8) Subsidiaries: Ferrer Ind. Corporation, Laminados Andinos S.A., Laminadora Diaco S.A., Aceros Figurados S.A., and Ferrofigurados Lasa S.A. (55%). Page 12

13 (9) Subsidiaries: Siderúrgica Tultitlán, S.A., Ferrotultitlán, S.A. and Arrendadora Valle de México, S.A.A.. (10) Subsidiaries: Industrias Nacionales C. por A. (Dominican Rep.), Steelchem Trading Corp., NC Trading, and Industrias Nacionales C. x A., S.A. (Costa Rica). (11) Subsidiaries: Sipar Aceros S.A. and Siderco S.A. b) Significant accounting practices used in preparing the consolidated interim financial statements are as follows: Gerdau S.A. and its subsidiaries adopt consistent practices to record their transactions and determine their assets and liabilities. The financial statements of foreign subsidiaries were adjusted to conform to Brazilian accounting practices. II) Asset, liability and income statement balances arising from transactions between consolidated companies have been eliminated; and III) Minority interest in subsidiaries is shown separately. c) The principal transactions for the quarter ended June 30, 2007 are as follows: I) On May 25, 2007 the Gerdau Group formed a strategic alliance with steel products producer Industrias Nacionales, C. por A. (Inca) for US$ 42 million (R$ 81,984 on date of acquisition). This will give it a stake of 30.45% in the holding Multisteel Business Holdings Corp, which owns 98.57% of Inca. Goodwill of US$ 19.7 million (R$ 37,976 on date of acquisition) arose on this acquisition, based on expected future earnings. Inca is a long steel rolling mill, mainly of rebars. It also produces steel mesh, barbed and barbless galvanized wires, fences, nails and clamps, as well as PVC tubes and connections. It also imports flat rolled steel for manufacturing metal roofs, seamed tubes, bent profiles, and is a plate retailer. Its annual sales of steel products stands at 400,000 metric tons. This partnership will give to Inca new investments in steel production, access to technical and managerial assistance, as well as support in distribution, which are all factors that will contribute to the company improving their production and sales performance of steel products II) On June 13, 2007, the subsidiary Gerdau Ameristeel announces that its joint venture with Pacific Coast Steel acquired the assets of Valley Placers, Inc., a company specialized in delivering and assembling steel products located in Las Vegas, Nevada, United States for approximately US$ 8.8 million (R$ 17,109 on date of acquisition). Goodwill of US$ 2.6 million (R$ 5,015 on date of acquisition) arose on this acquisition. III) On June 18, 2007 the Gerdau Group signed a contract to purchase all of the capital stock of Siderúrgica Zuliana, C.A. (Sizuca), the third largest steel producer in Venezuela, for US$ 92.5 million (R$ 176,185 on date of acquisition). Goodwill of US$ 58.7 million (R$ 111,934 on date of acquisition) arose on this acquisition, based on expected future earnings. Page 13

14 Sizuca is located in Ciudad Ojeda, 90 kilometers outside of Maracaibo, and is a mini-mill that produces rebars with an annual installed capacity of 300,000 metric tons of steel and 200,000 metric tons of rolled products. The company, focused largely on the internal market, has 340 associates III) On June 22, 2007, the Gerdau Group and the Kalyani group signed a contract to form the Kalyani Gerdau joint venture with current steelmaking assets of US$ 170 million. The partnership includes the SJK Steel Limited unit located in the city of Tadipatri in the state of Andhra Pradesh, which is close to three large urban centers (Bangalore, Chennai, and Hyderabad) as well as to the main railways in the country. The equipment involved - a mini blast furnace, a melt shop with two converters, a ladle furnace, a continuous casting process, and a plant for producing pig iron - will be used to meet the growing internal demand in the country. The controlling stockholders own the same percentage (approximately 45%) and have the same rights in the joint venture and the other 10% is owned by other investors. The management of the business, therefore, is shared between the Gerdau Group and the Kalyani Group. Gerdau Group's investment to buy this stake will be approximately US$ 71 million (R$ 136,760 on June 30, 2007). The final amount will be determined when the operation is closed, at which time the financial statements of Kalyani Gerdau will be consolidated. According to preliminary studies, in the next years Kalyani Gerdau's annual installed capacity will grow from its current level of 275,000 metric tons of liquid steel to 1.6 million, which will call for US$ 250 million to US$ 300 million in investments. One of the highlights of this investment program is the installation of rolling mills. With this equipment it will be possible to produce steel with higher added-value and supply both the automotive and civil construction industry, as well as a broad range of special bar quality (SBQ) and products for building projects. d) The consolidated financial statements include the accounts of the jointly-owned subsidiaries Dona Francisca Energética S.A., Gallatin Steel Company, Corporación Sidenor S.A. and its subsidiaries, Armacero Industrial y Comercial Ltda., and Multisteel Business Holdings Corp and its subsidiaries, whose assets, liabilities, revenues and expenses were included proportionately to the direct and indirect interest of the parent company in these subsidiaries. Page 14

15 The principal balances of the financial statements of these companies, under the proportionate consolidation, are as follows: Dona Francisca Energética S.A. Gallatin Steel Company Corporación Sidenor S.A. Consolidated Armacero Ind. Com. Ltda. Multisteel Business Holdings Corp. Group 6/30/2007 3/31/2007 6/30/2007 3/31/2007 6/30/2007 3/31/2007 3/30/2007 3/31/2007 6/30/2007 Assets Current 134, , , ,267 2,372,269 2,328,132 36,680 37, ,411 Non-current 229, , , ,125 1,753,746 1,852,575 32,846 31, ,236 Total assets 363, , , ,392 4,126,015 4,180,707 69,526 69, ,647 Liabilities Current 43,760 41, , ,123 1,404,501 1,500,367 42,042 39, ,316 Non-current 184, ,936 44,566 47,540 1,297,642 1,368,836 14,780 15, ,020 Minority ownership , , ,159 Adjusted net assets 135, , , ,729 1,142,043 1,063,785 12,704 13, ,152 Total liability and shareholders equity 363, , , ,392 4,126,015 4,180,707 69,526 69, ,647 6/30/2007 6/30/2006 6/30/2007 6/30/2006 6/30/2007 6/30/2006 6/30/2007 6/30/2006 6/30/2007 (1) Statement of income Net sales revenue 24,295 23, ,833 1,037,248 2,649,106 1,877,305 47,875 35, ,732 Cost of sales (7,834) (9,758) (790,950) (727,285) (1,993,786) (1,352,041) (44,607) (33,464) (125,542) Gross profit 16,461 13, , , , ,264 3,268 2,354 47,190 Sales, general and administrative expenses (669) (744) (10,808) (52,916) (182,085) (143,225) (4,373) (3,775) (9,162) Net income (3,353) (4,098) (1,357) (750) (23,431) (22,161) (563) (613) (1,617) Other operating expenses/revenues - - (6,828) (3,087) (11,924) (9,711) Operating profit (loss) 12,439 8, , , , ,167 (1,393) (1,747) 36,770 Non-operating income 126 (302) (33) 462 5,014 6,124-2 (4) Provision for income tax and social contribution (4,338) (2,921) (71) (225) (138,202) (107,568) (174) - (4,262) Minority ownership (67,664) (55,806) - - (254) Net profit (loss) 8,227 5, , , , ,917 (1,567) (1,745) 32,250 (1) For period from April 1, 2007 to June 30, 2007 e) The Company and its direct and indirect subsidiaries have goodwill and negative goodwill that are amortized as the assets that gave rise to them are realized, based on the average useful lives of the assets or the realization of the projected future profits, limited to ten years, as follows: Page 15

16 Company Consolidated Goodwill included in the investment accounts Balance on March 31, 2007 (based on estimated future income) 14,025 - (-) Portion amortized in the period (609) - Balance on June 30, 2007 (based on estimated future income) 13,416 - Goodwill by subsidiary: Dona Francisca Energética S.A. 13,416 - Negative goodwill included in the investment account Balance on March 31, 2007 (59,745) - (+) Portion amortized in the period 1,578 - Balance on June 30, 2007 (58,167) - Negative goodwill by subsidiary: Empresa Siderúrgica del Perú S.A.A. - Siderperú (*) (58,167) - Goodwill included in the fixed assets accounts Balance on March 31, 2007 (based on undervaluation of assets) - 374,521 (-) Foreign exchange variation - (18,918) (+) Valley Placers, Inc. (note 4c - II) - 5,015 (-) Portion amortized in the period - (11,627) Balance on (based on undervaluation of assets) - 348,991 Goodwill by subsidiaries: Gerdau Ameristeel US Inc. - 63,397 Corporación Sidenor, S.A ,127 GSB Acero, S.A. - 47,894 Aços Villares S.A. - 12,558 Valley Placers, Inc. - 5, ,991 Negative goodwill included in the fixed assets account Balance on March 31, 2007 (based on overvaluation of assets) - (288,360) (+) Foreign exchange variation - 2,777 (+) Portion amortized in the period - 22,374 Balance on (based on overvaluation of assets) - (263,209) Negative goodwill by subsidiaries: Gerdau Açominas S.A. - (161,383) Diaco S.A. - (20,165) Siderúrgica del Pacífico S.A. - (22,289) Empresa Siderúrgica del Perú S.A.A. - Siderperú - (58,167) Other - (1,205) - (263,209) Page16

17 Company Consolidated Goodwill included in the intangible accounts Balance on March 31, 2007 (based on estimated future income) - 579,710 (-) Foreign exchange variation - (33,805) (+) Multisteel Business Holding Corp. (note 4c - I) - 37,976 (+) Siderúrgica Zuliana, C.A. (note 4c - III) - 111,934 (-) Portion amortized in the period - (15,879) Balance on (based on estimated future income) - 679,936 Goodwill by subsidiaries: Dona Francisca Energética S.A. - 13,416 Distribuidora Matco S.A. - 3,697 Sipar Gerdau Inversiones S.A. - 42,454 Sheffield Steel Corporation - 113,454 Pacific Coast Steel, Inc ,142 Feld Group, S.A ,306 Siderúrgica Tultitlán, S.A. - 20,840 Multisteel Business Holding Corp. - 37,659 Siderúrgica Zuliana, C.A , ,936 (*) In this company, the negative goodwill was booked under the caption investments since Gerdau S.A. is a holding company. In the consolidated financial statements the balance was reclassified to property, plant and equipment due to the economic fundamentals of the negative goodwill. The goodwill is a result of the difference between the purchase amount and the shareholders' equity amount and is based on expected future earnings of the acquired business, calculated on the discounted cash flow method for a period of 10 years. f) The equity in subsidiaries in the consolidated statement of income refers basically to the effects of exchange variation on foreign investments and goodwill amortization. Page 17

18 NOTE 5 - CASH AND MARKETABLE SECURITIES Company Consolidated 6/30/2007 3/31/2007 6/30/2007 3/31/2007 Marketable securities Fixed income investments 19 2,787 2,057,790 1,777,932 Investment funds , ,751 Fixed income investments - Banco Gerdau S.A ,782 - Fixed income investments - Paraopeba Fund 195, ,577 1,724,826 2,587,165 Total marketable securities 195, ,364 4,183,181 4,588,848 Cash 1,332 2, , , , ,056 4,953,604 5,238,251 Marketable securities consist primarily of federal government securities and bank certificates of deposit (CDB) at market prices and rates, and are stated at cost plus income earned, recognized proportionately to the quarter end, not in excess of market value. Of the existing balance, R$ 1,283,431 consolidated (R$ consolidated as of March 31, 2007), refer to investments held by companies abroad in foreign currency, principally U.S. dollars. NOTE 6 - TRADE ACCOUNTS RECEIVABLE Consolidated 6/30/2007 3/31/2007 Customer accounts receivable - in Brazil 798, ,922 Trade accounts receivable - exports from Brazil 160, ,716 Customer accounts receivable - foreign companies 1,978,057 2,017,768 (-) Provision for credit risks (60,622) (69,279) 2,876,255 2,865,127 Aging list of trade accounts receivable is as follows: Consolidated 6/30/2007 3/31/2007 Amounts to be paid 2,554,712 2,593,068 Overdue: Up to 30 days 248, ,957 Between 31 and 60 days 72,396 43,725 Between 61 and 90 days 10,271 4,745 Between 91 and 180 days 8,127 5,906 Between 181 and 360 days 11,585 14,998 Over 360 days 31,017 36,007 (-) Provision for credit risks (60,622) (69,279) 2,876,255 2,865,127 Page 18

19 NOTE 7 - INVENTORIES Consolidated 6/30/2007 3/31/2007 Finished products 1,953,486 1,800,503 Products in progress 881, ,562 Raw materials 1,068,099 1,087,811 Storehouse materials 659, ,676 Advances to suppliers 81,528 82,814 Ongoing imports 162, ,618 (-) Provision for obsolescence and market value adjustment (25,282) (30,556) 4,781,501 4,557,428 Inventories are insured against fire and overflow. The insurance coverage is based on the amounts and risks involved. NOTE 8 - TAX CREDITS Company Consolidated 6/30/2007 3/31/2007 6/30/2007 3/31/2007 Short-term ICMS - Tax on Sales and Services , ,678 PIS - Social Integration Program 30 1,722 17,090 20,469 COFINS - Social Contribution on Revenues ,264 99,079 IPI - Excise tax ,349 25,920 IRRF - Income Tax Withheld at Source 81,054 72, , ,696 IVA - Value-added tax - - 7,727 10,821 Other ,255 26,533 81,084 74, , ,196 Long-term ICMS - Tax on Sales and Services , ,631 PIS - Social Integration Program 1,106 19,441 26,406 43,844 COFINS - Social Contribution on Revenues 12,143 11, , ,717 IPI - Excise tax ,869 11,163 IRRF - Income Tax Withheld at Source ,892 33,502 Other ,357 13,249 31, , ,214 94, , , ,410 The estimate of realization of the noncurrent tax credits is as follows: Company Consolidated 6/30/2007 3/31/2007 6/30/2007 3/31/ ,249 31, , , , , , ,373 After ,395 21,689 13,249 31, , ,214 Page 19

20 Page 20

21 NOTE 9 - INCOME AND SOCIAL CONTRIBUTION TAXES a) Reconciliation of income and social contribution taxes: Profit before income tax and social contribution, after statutory ownership Standard rates of tax Expenses for income tax and social contribution at standard rates of tax Tax adjustment with reference to: - equity in the (earnings) losses of subsidiaries - interest on own capital - permanent differences (net) Income tax and social contribution on net income Current Deferred Profit before income tax and social contribution, after statutory ownership Standard rates of tax Expenses for income tax and social contribution at standard rates of tax Tax adjustment with reference to: - rates of tax difference in foreign companies - equity in the (earnings) losses of subsidiaries - interest on own capital - recovery of deferred tax assets - tax incentives - deferred amortization - CVM permanent differences (net) Income tax and social contribution on net income Current Deferred Income Tax Social Contribution Company 6/30/2007 6/30/2006 Total Income Tax Social Contribution Total 1,343,089 1,343,089 1,343,089 1,500,874 1,500,874 1,500,874 25% 9% 34% 25% 9% 34% (335,772) (120,878) (456,650) (375,219) (135,079) (510,298) 332, , , , , ,005 1, ,732 (223) (80) (303) 3,203 2,166 5, ,207 1,447 2,654 (18,175) (6,507) (24,682) 114 1,089 1, , ,451 (18,175) (6,507) (24,682) Income Tax Social Contribution Consolidated 6/30/2007 6/30/2006 Total Income Tax Social Contribution Total 2,280,686 2,280,686 2,280,686 2,362,218 2,362,218 2,362,218 25% 9% 34% 25% 9% 34% (570,172) (205,262) (775,434) (590,555) (212,600) (803,155) (29,427) 116,809 87,382 (30,209) 88,742 58,533 (102,364) (36,851) (139,215) (46,275) (16,659) (62,934) 59,279 21,341 80,620 55,985 20,155 76, ,916 1,050 3,966 26,091-26,091 37,488-37, ,955 37, , ,955 37, ,019 4,798 20,852 25,650 (19,508) 15,627 (3,881) (508,840) (46,047) (554,887) (487,203) (66,621) (553,824) (464,512) (34,390) (498,902) (439,726) (50,022) (489,748) (44,328) (11,657) (55,985) (47,477) (16,599) (64,076) The amortization of deferred charges is recognized under the straight-line method over a period of up to 10 years, in accordance with CVM Instruction No The Company's subsidiaries received R$ 13,443 as of June 30, 2007 (R$ 17,149 as of June 30, 2006) of tax incentives in the form of income tax reduction, related to technological innovation, funds for the rights of children and adolescents, PAT (Workers Meal Program), and cultural and artistic activities. The units of the subsidiaries Gerdau Aços Longos S.A. and Margusa Maranhão Gusa S.A., located in the northeast region of Brazil, will receive until 2013 a 75% reduction in income tax on operating profit, which represented R$ 12,648 as of June 30, 2007 (R$ 20,339 as of June 30, 2006). The respective tax incentives were recorded and directly affected the income tax accounts on the statement of income. Page 21

22 b) Deferred income and social contribution taxes at statutory rates: Assets Company Consolidated 6/30/2007 3/31/2007 6/30/2007= 3/31/2007 Income Tax Social Income Tax Social Income Tax Social Income Social Contribution Total Contribution Total Contribution Total Tax Contribution Total Tax losses 10,029-10,029 6,131-6, , , , ,015 Negative social contribution base - 3,492 3,492-2,130 2,130-7,473 7,473-6,328 6,328 Provision for contingencies 9,475 3,411 12,886 9,475 3,410 12,885 84,301 30, ,105 77,581 27, ,465 Benefits granted to employees , , , ,502 Other temporary differences ,568 46, , ,729 44, ,769 Amortized goodwill 2, ,732 2, ,524 12,320 4,436 16,756 12,167 4,381 16,548 Provision for losses ,507 6, , , ,901 22,509 7,978 30,487 18,460 6,560 25, ,468 94, , ,692 82, ,528 Current ,070 12, , ,491 6, ,650 Long-term 22,509 7,978 30,487 18,460 6,560 25, ,398 82, , ,201 76, ,878 Liabilities Company Consolidated 6/30/2007 3/31/2007 6/30/2007 3/31/2007 Income Tax Social Income Tax Social Income Tax Social Income Social Contribution Total Contribution Total Contribution Total Tax Contribution Total Accelerated depreciation , , ,581 (1,201) 587,380 Amortized negative goodwill 41,435 14,917 56,352 41,042 14,775 55,817 51,579 15,074 66,653 51,185 14,932 66,117 Inflation/foreign exchange effect ,750 35, ,855 85,249 30, ,207 41,435 14,917 56,352 41,042 14,775 55, ,169 50, , ,015 44, ,704 Current ,465 34, ,291 97,492 29, ,555 Long-term 41,435 14,917 56,352 41,042 14,775 55, ,704 15, , ,523 15, ,149 The tax credits arising from tax loss carryforwards (Company and Consolidated) are supported by projections of future taxable income adjusted to present value, based on technical feasibility studies submitted annually to the Board of Directors. These studies consider the history of profitability of the Company and its subsidiaries and the expectation of continuous profitability and estimated the recovery of credits over a period not exceeding ten years. The other tax credits arising from temporary differences, mainly tax contingencies, and provision for losses, were recognized according to their estimate of realization. c) Estimated realization of deferred income and social contribution taxes: Assets Company Consolidated 6/30/2007 3/31/2007 6/30/2007 3/31/ , , ,577 2, ,983 91, ,577 2,577 97, , ,577 2,577 85,150 89, to ,577 2, , , to ,178 14, , ,437 30,487 25, , ,528 Page 22

23 Liabilities Company Consolidated 6/30/2007 3/31/2007 6/30/2007 6/31/ , , ,783 32, ,757 44, to , , to , ,214 from 2015 on 56,352 55, , ,283 56,352 55, , ,704 NOTE 10 - INVESTMENTS Controlled Companies Other Company Total Gerdau Açominas S.A. Gerdau Internacional Empreend. Ltda. (1) Itaguaí Com. Imp. e Export. Ltda. Gerdau Aços Longos S.A. Gerdau Aços Gerdau Comercial Especiais S.A. de Aços S.A. Gerdau América Latina Part. S.A. Dona Francisca Energética S.A. Company Siderúrgica Del Perú S.A.A. Other Investment Investment Investment Investment Investment Investment Investment Investment Goodwill Investment Negative goodwill Investment 2,869,896 2,783, ,627 2,800, , , ,638 65,793 14, ,203 (61,270) 23 Balance on December 31, ,816 10,877,103 Equity (2) 201, ,909 6, ,634 52,057 21,217 31,578 2,255 (605) (401) 1, ,494 Aquisition of investment ,476 12,476 Balance on March 31, ,070,963 2,894, ,885 3,043, , , ,216 68,048 14, ,802 (59,745) 23 17,292 11,559,073 Equity (2) 228, ,397 7, ,559 23,705 25,263 29,188 2,123 (609) 2,590 1,578 (1) - 660,512 Dividends/Interest on own capital (99,640) - - (91,606) (16,071) (12,857) (220,174) Balance on June 30, ,199,913 2,998, ,014 3,189, , , ,404 70,171 13, ,392 (58,167) 22 17,292 11,999,411 Capital 1,654,160 2,663, ,110 2,207, , , ,184 66, ,461 Adjusted net assets 3,581,167 4,159, ,014 3,569, , , , , ,317 Net income for the adjusted period 205, ,446 7, ,596 21,771 25,169 32,666 4,097 22,013 Capital ownership total (%) 89.35% 72.08% % 89.35% 89.35% 89.35% 89.35% 51.82% 83.28% Capital ownership voting (%) 89.36% 72.08% % 89.36% 89.36% 89.36% 89.36% 51.82% 83.28% Common shares / shares of interest owned 160,711,825 1,919,769, ,109, ,711, ,711, ,711, ,711, ,109, ,310,526 Proposed dividentd/interest on own capital 111, ,526 17,986 14, Company holder of the investments in foreign subsidiaries. 2 Includes amortization of goodwill/negative goodwill. Page 23

24 MRS Logística S.A. Eletrobrás Centrais Elétricas Brasileiras S.A. Other Total Investment Investment Investment Consolidado Balance on December 31, ,772-15,937 20,709 Acquisitions/dispositions of investment - 12,574 (372) 12,202 Balance on March 31, ,772 12,574 15,565 32,911 Aquisition/dispositions of investment - - (594) (594) Balance on June 30, ,772 12,574 14,971 32,317 NOTE 11 - PROPERTY, PLANT AND EQUIPMENT Company 6/30/2007 3/31/2007 Annual taxes of Accrued depreciation % Cost depreciation Net Net Data/rights/license electronic equipment 20 to Consolidated 6/30/2007 3/31/2007 Accrued Annual taxes of depreciation depreciation/depletion % Cost and depletion Net Net Lands, buildings and constructions 0 to 10 4,346,197 (1,589,722) 2,756,475 2,782,420 Machines, equipment, and installations 2 to 10 11,664,232 (6,463,592) 5,200,640 5,279,009 Furniture and appliances 5 to ,807 (108,667) 74,140 78,178 Vehicles 5 to ,488 (76,664) 57,824 60,706 Data/rights/license electronic equipment 5 to ,906 (337,135) 144, ,812 Fixed assets under construction - 3,532,309-3,532,309 3,102,818 Foresting/reforesting Cutting plan 355,307 (74,895) 280, ,108 20,697,246 (8,650,675) 12,046,571 11,716,051 a) Insured amounts property, plant and equipment are insured against fire, electrical damage and explosion. The insurance coverage is based on the amounts and risks involved. The plants of the North and South American subsidiaries (except for Brazil) and the subsidiary Gerdau Açominas S.A. are also insured against loss of profits. b) Capitalized interest and financial charges - financial charges for the quarter ended June 30, 2007 were recorded in the amount of R$ 26,518 consolidated (R$ 10,088 consolidated, as of June 30, 2006). c) Guarantees - fixed assets were pledged as collateral for loans and financing in the amount of R$ 1,870,471 consolidated (R$ 1,923,295 - consolidated as of March 31, 2007). Page 24

25 d) Summary of changes in property, plant and equipment: Company Consolidated 6/30/2007 6/30/2007 Balance at the beginning of the quarter ,716,051 ( + ) Acquisitions / dispositions in the quarter 3 644,880 ( - ) Depreciation and depletion in cost of sales - (250,502) ( - ) Administrative depreciation and depletion - (14,415) ( + ) Companies consolidated in the quarter - 101,594 ( - ) Foreign exchange effect on fixed assets abroad - (151,037) Balance at the end of the quarter ,046,571 NOTE 12 - INTANGIBLE ASSETS Intangible assets (Consolidated) refer primarily to goodwill on investments in subsidiaries based on expected future earnings, Carbon Emission Reduction Certificates held by the subsidiary Corporación Sidenor, S.A., and goodwill on acquisition of Pacific Coast Steel: Dona Francisca Energética S.A. Distribuidora Matco S.A. Sipar Gerdau Inversiones S.A. Sheffield Steel Corp. Grupo Feld. S.A. Siderúrgica Tultitlán, S.A. Multisteel Business Holdings Corp. Siderúrgica Zuliana, C. A. Pacific Coast Steel Inc. Goodwill Goodwill Goodwill Goodwill Goodwill Goodwill Goodwill Goodwill Goodwill Goodwill Corporación Sidenor, S.A. Other Total Cert. Carbon Emission Reduction Balance on December 31, ,630 4,278 49, , ,540 17,322 7,459 5, ,410 Exchange rate variation - (223) (2,003) (5,470) (2,206) (733) (215) (131) (10,981) Acquisition ,158 22, , ,999 Amortization (605) (137) (1,415) (3,233) (6,987) (1,205) - (179) (13,761) Balance on March 31, ,025 3,918 46, , ,158 22, ,347 15,384 9,418 5, ,667 Exchange rate variation - (152) (2,820) (7,455) (14,307) (1,115) - - (7,956) (1,038) (453) (127) (35,423) Acquisition , ,934 1, ,064 Low (6,356) (138) (6,494) Amortization (609) (69) (1,287) (3,125) (5,545) (712) (317) (966) (3,249) (243) - (30) (16,152) Balance on June 30, ,416 3,697 42, , ,306 20,840 37, , ,142 15,731 2,609 5, ,662 Consolidated NOTE 13 - DEFERRED CHARGES Consolidated 6/30/2007 3/31/2007 Preoperating Expenses 69,878 69,891 (-) Amortization (9,486) (8,055) 60,392 61,836 Page 25

26 NOTE 14 - LOANS AND FINANCING The obligations from loans are represented as follows: Yearly Company Consolidated Short term financing in reals charges (*) 6/30/2007 3/31/2007 6/30/2007 3/31/2007 Working capital 9.54% , ,689 Short term financing in foreign currency Working capital (US$) 7.83% , ,351 Working capital ( ) 5.15% ,922 74,624 Working capital (Clp$) 7.50% ,479 24,207 Working capital (Cop$) 8.78% - - 5,510 74,308 Working capital (PA$) 9.84% ,270 41,563 Financing of investment (US$) 4.91% ,500 94, ,079, ,861 Plus: long-term financing current portion 6,779 6, , ,579 Short-term financing plus current portion 6,779 6,926 1,942,125 1,675,440 Long-term financing in reals Working capital 10.86% , ,336 Financing of fixed assets 10.86% - - 1,258,781 1,356,106 Financing of investment 9.27% , ,691 Long-term financing in foreign currency Working capital (US$) 6.19% , ,853 Working capital ( ) 5.15% , ,090 Working capital (Clp$) 7.50% ,378 14,203 Bearer bonds (Perpetual bonds and Senior Notes) (US$) 9.75% 1,162,499 1,237,166 1,929,565 2,050,018 Açominas exports notes receivable (US$) 7.37% , ,578 Advances of exports (US$) 6.61% , ,565 Financing of investment (US$) 6.41% ,207 24,704 Financing of fixed assets and other (US$) 7.41% - - 1,709,773 1,923,213 1,162,499 1,237,166 6,752,636 7,146,357 Minus: current portion (6,779) (6,926) (863,019) (938,579) Long-term financing minus current portion 1,155,720 1,230,240 5,889,617 6,207,778 Total financing 1,162,499 1,237,166 7,831,742 7,883,218 (*) Weighted average tax on June 30, Loans and financing denominated in Brazilian reals are indexed to the TJLP (Long-term Interest Rate), established quarterly by the Federal Government for adjusting long-term loans granted by the BNDES (National Bank for Economic and Social Development), or to the IGP-M (General Market Price Index, a Brazilian inflation rate measured by Fundação Getúlio Vargas). Page 26

27 Summary of loans and financing by currency: Company Consolidated 6/30/2007 3/31/2007 6/30/2007 3/31/2007 Real (R$) - - 2,016,263 1,846,822 U.S. Dollar (US$) 1,162,499 1,237,166 5,447,934 5,588,401 Euro ( ) , ,714 Colombian Peso (Cop$) - - 5,510 74,308 Argentine Peso (PA$) ,270 41,563 Chilean Peso (Clp$) ,857 38,410 1,162,499 1,237,166 7,831,742 7,883,218 Maturity of long-term loans: Company Consolidated , ,059, , ,308,610 After ,155,720 2,189,795 1,155,720 5,889,617 a) Guaranteed Perpetual Notes Gerdau S.A. concluded the private issue of Guaranteed Perpetual Notes (Notes) on September 15, 2005 in the total amount of US$ 600 million (R$ 1,155,720 as of June 30, 2007). These Notes are guaranteed by the Brazilian operating companies Gerdau Açominas S.A., Gerdau Aços Longos S.A., Gerdau Aços Especiais S.A. and Gerdau Comercial de Aços S.A. The Notes have no maturity but may become due in certain specific circumstances (as defined in the terms of the Notes), which are not under total control of the Company. The Company has the option of redeeming these Notes after 5 years of their issue, the first option for redemption therefore being in September Interest is payable quarterly and each quarterly payment date after September 2010 is also a redemption option date. b) Guarantees The loans contracted under the FINAME/BNDES program, totaling R$ 1,236,148 as of June 30, 2007, are guaranteed by the financed assets. Other loans are guaranteed by the controlling shareholders collateral signatures, on which the Company pays a rate of 1% per year. c) Covenants As a way of monitoring the financial condition of the Company, the banks involved in the financing agreements use restrictive covenants, as described below: I) Consolidated interest coverage ratio - measures the debt service payment capacity in relation to EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization). Page 27