(Translation of the original in Portuguese)

Transcription

1 (Translation of the original in Portuguese) THE REGISTRATION WITH CVM DOES NOT IMPLY ANY EVALUATION OF THE COMPANY AND ITS MANAGERS ARE RESPONSIBLE FOR THE VERACITY OF THE INFORMATION PROVIDED IDENTIFICATION 1 CVM CODE 2 REGISTERED NAME 3 CGC General Taxpayers Registration 4 REGISTRATION NUMBER NIRE HEAD OFFICE 1 FULL ADDRESS 2 SUBURB OR DISTRICT AV. JOÃO XXXIII, 677 STA. CRUZ 3 ZIP CODE 4 - MUNICIPALITY 5 STATE RIO DE JANEIRO RJ 6 AREA CODE 7 - TELEPHONE 8 - TELEPHONE 9 - TELEPHONE 10 - TELEX AREA CODE 12 - FAX 13 - FAX 14 - FAX DIRECTOR OF MARKET RELATIONS (Address for correspondence with Company) 1 NAME FREDERICO CARLOS GERDAU JOHANNPETER 2 FULL ADDRESS 3 SUBURB OR DISTRICT AV. FARRAPOS, 1811 FLORESTA 4 ZIP CODE 5 MUNICIPALITY 6 - STATE PORTO ALEGRE RS 7 AREA CODE 8 TELEPHONE 9 - TELEPHONE 10 - TELEPHONE 11 - TELEX AREA CODE 13 FAX 14 - FAX 15 - FAX REFERENCE / AUDITOR CURRENT YEAR CURRENT QUARTER PRIOR QUARTER 1 BEGINNING 2 END 3 - QUARTER 4 - BEGINNING 5 - END 6 - QUARTER 7 - BEGINNING 8 -END NAME OF AUDITOR ARTHUR ANDERSEN S/C 10 CVM CODE NAME OF RESPONSIBLE ACCOUNTANT CARLOS BIEDERMANN 12 INDIVIDUAL TAXPAYER NUMBER OF RESPONSIBLE ACCOUNTANT Page 1

2 (Translation of the original in Portuguese) IDENTIFICATION 1 CVM CODE 2 REGISTERED NAME 3 CGC General Taxpayers Registration COMPOSITION OF CAPITAL Number of Shares 1 CURRENT QUARTER 2 PRIOR QUARTER 3 SAME QUARTER OF THE PREVIOUS YEAR (Thousand) Paid-up Capital 1 Common 19,691,010 19,691,010 19,691,010 2 Preferred 37,054,843 37,054,843 37,054, Total 56,745,853 56,745,853 56,745,824 Treasury Stock 4 Common Preferred 0 130, , Total 0 130, , CHARACTERISTICS OF THE COMPANY 1 TYPE OF COMPANY Commercial, industrial and other 2 SITUATION Operational 3 NATURE OF THE CONTROLLING INTEREST Local private 4 ACTIVITY CODE Steel works 5 MAIN ACTIVITY STEEL WORKS 6 TYPE OF CONSOLIDATION Not presented 7 TYPE OF REPORT OF INDEPENDENT ACCOUNTANTS Unqualified COMPANIES EXCLUDED FROM THE CONSOLIDATED FINANCIAL STATEMENTS 1 ITEM 2 CGC General Taxpayers Registration 3 REGISTERED NAME DIVIDENDS APPROVED AND/OR PAID DURING AND AFTER THE QUARTER 1 - ITEM 2 EVENT 3 APPROVAL DATE 4 DIVIDEND 5 DATE OF PAYMENT 01 RCA Interest on Capital RCA Interest on Capital TYPE OF SHARES Registered common Registered preferred 7 EARNINGS PER SHARE Page 2

3 01.01 IDENTIFICATION 1 CVM CODE 2 REGISTERED NAME 3 CGC General Taxpayers Registration SUBSCRIBED CAPITAL AND CHANGES DURING THE CURRENT YEAR 1 ITEM 2 DATE OF CHANGE 3 - CAPITAL AMOUNT (R$ thousand) 4 AMOUNT OF THE CHANGE (R$ thousand) 5 ORIGIN OF THE CHANGE 7 NUMBER OF SHARES ISSUED (THOUSAND) 8 PRICE OF SHARE UPON ISSUANCE (R$) ,316,881 1 Merger DIRECTOR OF MARKET RELATIONS 1 DATE 2 SIGNATURE Page 3

4 01.01 IDENTIFICATION 1 CVM CODE 2 REGISTERED NAME 3 CGC General Taxpayers Registration BALANCE SHEET ASSETS (R$ thousand) 1 - CODE 2 DESCRIPTION Total assets 3,819,473 3,595, Current assets 921, , Cash and cash equivalents 11,798 11, Receivables 562, , Trade accounts receivable 341, , Advances to suppliers 29,573 36, Recoverable taxes 20,903 15, Deferred income and social contribution taxes 21,992 15, Marketable securities 132, , Employees 15,409 25, Inventories 327, , Finished products 69,919 68, Work in process 63,609 57, Raw materials 116,153 90, Supplies 78,089 66, Other 19,222 19, Other receivables 19,222 19, Non current assets 86, , Sundry receivables 20,448 21, Debtors under contract 9,026 10, Eletrobrás loans 11,422 11, Receivables from related parties 0 18, Affiliated companies 0 18, Subsidiaries Other related parties Other 65,651 64, Escrow deposits and other 36,841 37, Deferred income and social contribution taxes 28,810 27, Permanent assets 2,812,195 2,612, Investments 1,216,715 1,059, Investments in affiliated companies Investments in subsidiaries 1,203,552 1,046, Other investments 13,163 13, Property, plant and equipment 1,577,247 1,532, Land, buildings and construction 603, , Machinery, equipment and installations 1,601,529 1,522, Furniture and fixtures 54,519 54, Vehicles 18,157 19, Electronic data processing equipment 47,361 46, Construction in progress 348, , Forestation/reforestation 79,302 78, Accumulated depreciation (1,175,903) (1,148,846) Deferred charges 18,233 19,729 Page 4

5 01.01 IDENTIFICATION 1 CVM CODE 2 REGISTERED NAME 3 CGC General Taxpayers Registration BALANCE SHEET LIABILITIES AND STOCKHOLDERS EQUITY (R$ thousand) 1 - CODE 2 DESCRIPTION Total liabilities 3,819,473 3,595, Current liabilities 611, , Loans and financing 419, , Debentures 4,452 4, Trade accounts payable 75,556 69, Taxes and contributions 47,122 42, Dividends payable Provisions Payables to related parties Other 64,781 61, Salaries payable 37,318 34, Deferred income and social contribution taxes 5,921 6, Statutory profit sharing 1,180 2, Other payables 20,362 19, Long-term liabilities 1,163,309 1,151, Loans and financing 772, , Local loans 180, , Foreign loans 591, , Debentures 169, , Provisions Payables to related parties 39, Other 181, , Reserve for contingencies 135, , Deferred income and social contribution taxes 36,848 41, Other payables 9,389 39, Deferred income STOCKHOLDERS EQUITY 2,045,087 1,962, Paid-in capital 1,316,881 1,316, Capital reserves 175, , Restatement of capital Investment grants 141, , Special reserve Law No. 8,200/91 21,488 21, Other 11,821 9, Revaluation reserves Own assets Subsidiaries/affiliated companies Profit reserves 344, , Legal 30,175 30, Statutory 286, , For contingencies Unrealized profits 27,512 27, Retained profits Special for undistributed dividends Other profit reserves Retained earnings/accumulated deficit 208, ,780 Page 5

6 IDENTIFICATION 1 CVM CODE REGISTERED NAME GERDAU S.A. 3 CGC General Taxpayers Registration / STATEMENT OF INCOME (R$ thousand) 1 - CODE 2 DESCRIPTION to to to to Gross revenue 769,934 2,005, ,240 1,466, Deductions from gross revenue (171,492) (446,763) (113,958) (332,370) Taxes on sales (147,566) (379,381) (90,664) (260,097) Freights and discounts (23,926) (67,382) (23,294) (72,273) 3.03 Net revenue 598,442 1,559, ,282 1,133, Cost of products and/or services sold (376,466) (994,016) (266,643) (784,762) 3.05 Gross profit 221, , , , Operating expenses/income (122,632) (308,859) (61,084) (155,001) Selling (29,957) (80,871) (23,587) (70,183) General and administrative (56,168) (147,979) (30,438) (87,934) Financial (128,501) (387,465) (19,794) (49,995) Financial income 14,657 72,610 18,373 61, Financial expenses (143,158) (460,075) (38,167) (111,663) Other operating income 2,041 6,656 2,223 4, Other operating expenses Equity in earnings of subsidiaries and affiliated companies 89, ,800 10,512 48, Income from operations 99, ,267 64, , Nonoperating income (expenses) (1,086) (4,328) (432) (1,086) Income Expenses (1,086) (4,328) (432) (1,086) 3.09 Income before taxes / management s profit sharing 98, ,939 64, , Provision for income and social contribution taxes (323) (394) (14,630) (32,134) 3.11 Deferred income tax 12,092 31, Management s profit sharing and statutory contributions (1,180) (3,410) (1,095) (3,304) Management s profit sharing (1,180) (3,410) (1,095) (3,304) Contributions Reversal of interest on capital Net income/loss 108, ,007 48, ,466 NUMBER OF SHARES, FORMERLY TREASURY SHARES 56,745,853 56,745,853 56,512,724 56,512,724 (thousand) EARNINGS PER SHARE LOSS PER SHARE Page 6

7 QUARTERLY INFORMATION - ITR Date Corporate Law NOTES NOTE 1 PRESENTATION OF FINANCIAL STATEMENTS The financial statements are presented in accordance with Brazilian corporate law (Law No. 6,404/76, changed by articles 4 and 5 of Law No. 9,249/95) at historical values, pursuant to CVM Instruction No NOTE 2 SIGNIFICANT ACCOUNTING PRACTICES a) Investments in subsidiaries are carried under the equity method. The result of the equity pick-up is recorded in income as an operating item. b) The classification of receivables and payables in current and noncurrent/long-term is in accordance with the realization term or maturity up to September 30, 2000, or after that date, respectively, under the terms of articles 179 and 180 of Law No. 6,404/76. c) The provision for income and social contribution taxes was calculated in conformity with the legislation in effect. Deferred income and social contribution taxes was determined based on CVM Resolution No. 273 of August 20, NOTE 3 DEFERRED CHARGES Deferred charges are composed of: - preoperating expenses on projects for the renovation of the steel mill; and - expenses on research and development and reorganization projects. Amortization is calculated under the straight-line method on restated cost at rates determined based on the production of new units in relation to their installed capacities. NOTE 4 LOANS AND FINANCING Financing in local and foreign currency (mainly U.S. dollar) is repayable until September 15, 2005 and subject to the following charges: a) interest ranging from 7.8% to 12.9% per year plus monetary restatement calculated based on the Brazilian Long-term Interest Rate - TJLP; b) annual interest of 0.5% to 5.8% above LIBOR in addition to exchange variation; and Page 7

8 QUARTERLY INFORMATION - ITR Date Corporate Law NOTES c) annual interest of 3.856% to % in addition to exchange variation. Government Agency for Machinery and Equipment Financing FINAME loans are guaranteed by the assets, object of the financing, in statutory lien. The other financing are guaranteed by sureties of majority stockholders. The long-term portion of financing is repaid as follows: R$ thousand , , , , , ,328 Total 772,226 NOTE 5 - DEBENTURES Approved at the Annual Number Number Meeting issued in portfolio Maturity ,000 22, ,000 42, , ,800 18, ,988 36, ,880 32, ,450 6, ,000 38, Page 8

9 QUARTERLY INFORMATION - ITR Date Corporate Law NOTE 6 - CAPITAL As of September 30, 1999 subscribed and paid-up capital of R$1,316,881 thousand is composed of 19,691,010,193 common shares and 37,054,842,993 preferred shares, all of them without par value. During the quarter the Company sold the remaining treasury shares (130,1000,000 preferred shares) in the amount of R$ 3,910 thousand, and the determined gain was recorded in the account Capital reserve gain on sale of treasury shares. NOTE 7 FINANCIAL INSTRUMENTS Temporary cash investments are recognized at their redemption value at the balance sheet date. The book value of other financial assets and liabilities substantially corresponds to their estimated market value. Loans with affiliated companies are restated at weighed average cost of funding in the financial market. Their maturity dates are undefined; however, they should be settled when there is available cash. The Company does not carry out transactions with derivatives nor has financial instruments which are not recognized in its balance sheet. NOTE 8 ADJUSTMENTS FOR THE YEAR 2000 The Company signed in June 1997 a contract for the purchase of the R/3 software, migrating from a mainframe platform to a client-server platform. This software is already prepared to properly treat the date change at the turn of the century. Its implementation started on January 1, 1999 and its completion was scheduled for October 1, This term was postponed to November 1, 1999 for inclusion of some small manufacturing units in the general project scope. Concurrently, the Company changed all its programs run in mainframe as a contingency plan in case the implementation of the R/3 software is delayed. In October 1998, the Company started the analysis of the systems run in PC network defining those which will be replaced by the new software and those which will be maintained and, among the latter, those which require changes. By October 1999, all these changes will be completed. Page 9

10 QUARTERLY INFORMATION - ITR Date Corporate Law To change the existing programs, the Company spent R$500 thousand in 1997, R$1,500 thousand in 1998 and expects to disburse R$1,500 thousand in The Company does not maintain a relation of dependence on or integration with the systems of its customers and/or suppliers. Accordingly, possible problems in their systems will not impact on the Company s operations, except for electricity and telephony, the suppliers of which have been consulted and confirmed that they are adjusting their equipment, including a contingency plan. The nature of the Company s product line does not pose problems for its customers, and, once the actions above are implemented, possible risks arising from the date change in the turn of the century will be eliminated. The information above was not examined by the independent accountants. NOTE 9 INCOME AND SOCIAL CONTRIBUTION TAXES In thousands of reais Assets Liabilities Current Noncurrent Current Long-term Deferred income tax 12,610 22,667 5,921 36,848 Deferred social contribution 9,382 6, tax The basis for the recognition of deferred taxes is the following: In thousands of reais Tax loss for income tax 50,042 Tax incentive to accelerated depreciation 170,839 Reserve for contingencies 90,185 Social contribution tax loss 77,787 Other 1,120 Page 10

11 QUARTERLY INFORMATION - ITR Date Corporate Law Reconciliation In thousands of reais Income before taxes 248,529 Nominal rate 37% Income and social contribution taxes expenses at nominal rates (91,956) Effect of taxes on: - equity in earnings of subsidiaries and affiliated 111,296 companies - permanent differences (net) 10,483 - other 1,655 Income and social contribution taxes on income 31,478 NOTE 10 EXCHANGE EFFECTS As of September 30, 1999 the Company has R$901,551 thousand in loans and financing denominated in foreign currencies, mainly U.S. dollars. At the same date, the amount of investment in subsidiaries abroad is R$724,997 thousand. The net effect of the real devaluation in the first nine months of 1999 was R$31,142 thousand of expense recorded in income, during the quarter the effect amounts to R$6,269 thousand of expense. Financing and loans in the first 9 months of 1998 totaled R$ million in foreign currencies and the exchange rate on September 30 th on that same year was R$ per 1.00 US$. There was no significant exchange impact at that time. Page 11

12 QUARTERLY INFORMATION - ITR Date Corporate Law The Federal Government economic policies implemented at the beginning of this year generated different reactions of the productive sectors. The less affected ones, as the civil construction sector, presented an increase in the activity level with a considerable growth in the sale of its products, increasing the demand of these sectors, contrary to the estimates that 1999 would be a poor demand year. In this context, the Gerdau companies have surpassed, each quarter, its production and sales volumes. PRODUCTION AND SALES The Gerdau companies (Brazil and abroad) produced 3 million tons of raw steel until September 1999, increasing 6% in relation to the same period of the previous year. Of this volume, 2.5 million tons are derived from Gerdau S.A. (+7%) and 522 thousand tons from its subsidiaries abroad (+0.2%). In the rolled steel segment, 2.3 million tons were produced by the Brazilian units and 508 thousand tons by the units abroad, representing an increase of 11% and 7%, respectively. On a consolidated basis, production reached 2.8 tons, that is, 10% above The 6% increase in volume sold in the first nine months of the year, the favorable exchange in the recording of revenue abroad and a better mix of products resulted in an increase of 23.4% in the consolidated revenue of Gerdau S.A. in 1999, totaling R$ 2.6 billion. The exports and the resale of own products and products from third parties also contributed to such increase. Shipments to foreign countries increased 51%, adding US$68.4 million to the revenue for the period. RESULTS Until September, the consolidated income of Gerdau S.A., before income and social contribution taxes, was R$272 million, 31.5% higher than in the same period of Considering the impact of the real devaluation, which generated a tax credit of R$9 million, net income reached R$281 million, which was 77.8% higher than in the prior year. The main factors which contributed to this result were the growth in sales revenue and the improvement of the gross margin, which increased from 30.57% in 1998 to 34.27% in On the other hand, the exchange variation caused an adverse impact on the consolidated result, since the increase in financial expenses related to the debt in foreign currency was higher than the income obtained on the assets abroad. This impact caused a net loss of R$31.1 million in the nine months of Page 12

13 QUARTERLY INFORMATION - ITR Date Corporate Law The income before financial effects, of taxes, equity pickup and depreciation and amortization (EBITDA) reached R$544.8 million in 1999, that is, 49.5% higher than in The EBITDA margin was 26.34% against 22.15% in the previous year. The generation of consolidated cash before income tax, social contribution tax, depreciation and amortization reached R$395.9 million, a 31.9% growth in relation to the months from January to September Regarding net sales revenue, there was an increase from 18.23% in 1998 to 19.14% in CONSOLIDATED CASH FLOWS (per corporate law in thousands of reais) January to September Net Income 281, ,121 Income and social contribution taxes and nonoperating expenses (4,731) 51,201 Depreciation and amortization 119,493 90,766 Cash generation before income and social contribution taxes, depreciation and amortization 395, ,088 Interest and noncash monetary variations 177,620 57,832 Change in working capital (143,627) (55,972) Cash generation after working capital 429, ,948 Acquisition/sale of property, plant and equipment (389,032) (261,801) Deferred charges (1,872) (1,803) Acquisition/sale of investments (571,569) (53,185) Use of cash in investments (962,473) (316,789) Financing of working capital 111,581 16,446 Long-term funding 820, ,278 Amortization of long-term financing (218,499) (139,988) Treasury shares 6,152 (594) Payment of dividends and management s profit sharing (67,402) (59,062) Net cash from financial activity 652,167 51,080 Change in cash balance 119,588 36,239 Cash balance At beginning of period 421, ,517 At end of period 541, ,756 Gerdau S.A. (company) generated a revenue of R$2 billion (+36.8%). Income before taxes was R$248.5 million which, increased by the recoverable taxes balance of R$31.5 million, resulted in a net income of Page 13

14 QUARTERLY INFORMATION - ITR Date Corporate Law R$280 million, equivalent to R$4.93 per thousand shares. As of September 30, stockholders equity was R$2 bilion, representing a book value of R$36.04 per thousand shares. INVESTMENTS Of the amount of US$ million invested in fixed assets by the Gerdau companies in the first nine months of 1999, US$195.9 million were allocated by Gerdau S.A. and US$53.5 million by the other companies in Brazil and abroad. Among the investments made, we can highlight the construction of a new steel mill of Gerdau Aza, in Chile (inaugurated in June), the construction of the rolling mill of Gerdau Cosigua, in Rio de Janeiro (in final phase), the fabric plant, in Pernambuco (inaugurated in October), and the implementation of the steel cutting and blending unit for the civil construction of Armafer, also in Pernambuco (inaugurated in March). It should be pointed out that the purchase of AmeriSteel, the results of which are not yet consolidated in the quarterly balance sheet, is reflected in the investments account, in permanent assets. The balance of this account increased from R$207.8 million in June 1999 to R$738.2 million in September CAPITAL MARKET The shares issued by Gerdau S.A. presented significant liquidity improvements on the Brazilian stock exchanges. 8,426 businesses were closed, and 11.6 billion securities were traded, involving R$278 million until September Compared with prior year, these tradings represented an increase of 100.2% in the volume of shares and 161.1% in movement of funds. Since March 10, when the Company s shares started to be traded on the New York Stock Exchange (NYSE), thousand American Depositary Receipts (ADRs) representing million preferred shares, have been issued, marking an almost daily presence on that Stock Exchange. Page 14

15 QUARTERLY INFORMATION - ITR Date Corporate Law IDENTIFICATION 1 CVM CODE 2 REGISTERED NAME 3 CGC General Taxpayers Registration INVESTMENTS IN SUBSIDIARIES AND/OR AFFILIATED COMPANIES 1 - ITEM 2 NAME OF THE SUBSIDIARY/AFFILIATED COMPANY 3 CGC General Taxpayers Registration 4 CLASSIFICATION 5 INTEREST IN THE INVESTEE - % 6 NET ASSETS OF THE INVESTOR - % 7 - TYPE OF COMPANY 8 NUMBER OF SHARES HELD IN THE CURRENT QUARTER (THOUSAND) 9 NUMBER OF SHARES HELD IN THE PREVIOUS QUARTER (THOUSAND) 01 GERDAU INTERN. EMPREEND. LTDA / CLOSELY-HELD AFFILIATED COMPANY 251, , ITAGUAÍ COMÉRCIO, IMPORT. E EXPORT. LTDA / CLOSELY-HELD AFFILIATED COMPANY 234,999 71,999 Page 15

16 IDENTIFICATION 1 CVM CODE 2 REGISTERED NAME 3 CGC General Taxpayers Registration CHARACTERISTICS OF THE PUBLIC OR PRIVATE ISSUANCE OF DEBENTURES 1 ITEM 01 2 ORDER NUMBER 03 3 CVM REGISTRATION NUMBER DCA-82/018 4 CVM REGISTRATION DATE ISSUED SERIES A 6 - TYPE OF ISSUANCE SIMPLE 7 NATURE OF ISSUANCE PUBLIC 8 - DATE OF ISSUANCE MATURITY DATE TYPE OF DEBENTURE WITHOUT PREFERENCE 11 CONDITION OF REMUNERATION IN EFFECT 98% OF INTERBANK DEPOSIT CERTIFICATE CDI 12 PREMIUM/NEGATIVE GOODWILL 13 PAR VALUE (reais) ISSUED AMOUNT (thousands of reais) 7, NUMBER OF ISSUED BONDS (UNIT) 24, OUTSTANDING BONDS (UNIT) 16, TREASURY BONDS (UNIT) 7, REDEEMED BONDS (UNIT) 0 19 CONVERTED BONDS (UNIT) 0 20 BONDS TO BE PLACED (UNIT) 0 21 DATE OF THE LAST RENEGOTIATION DATE OF THE NEXT EVENT Page 16

17 IDENTIFICATION 1 CVM CODE 2 REGISTERED NAME 3 CGC General Taxpayers Registration CHARACTERISTICS OF THE PUBLIC OR PRIVATE ISSUANCE OF DEBENTURES 1 ITEM 02 2 ORDER NUMBER 03 3 CVM REGISTRATION NUMBER DCA-82/019 4 CVM REGISTRATION DATE ISSUED SERIES B 6 - TYPE OF ISSUANCE SIMPLE 7 NATURE OF ISSUANCE PUBLIC 8 - DATE OF ISSUANCE MATURITY DATE TYPE OF DEBENTURE WITHOUT PREFERENCE 11 CONDITION OF REMUNERATION IN EFFECT 98% OF CDI 12 PREMIUM/NEGATIVE GOODWILL 13 PAR VALUE (reais) ISSUED AMOUNT (thousands of reais) 7, NUMBER OF ISSUED BONDS (UNIT) 24, OUTSTANDING BONDS (UNIT) 8, TREASURY BONDS (UNIT) 15, REDEEMED BONDS (UNIT) 0 19 CONVERTED BONDS (UNIT) 0 20 BONDS TO BE PLACED (UNIT) 0 21 DATE OF THE LAST RENEGOTIATION DATE OF THE NEXT EVENT Page 17

18 IDENTIFICATION 1 CVM CODE 2 REGISTERED NAME 3 CGC General Taxpayers Registration CHARACTERISTICS OF THE PUBLIC OR PRIVATE ISSUANCE OF DEBENTURES 1 ITEM 03 2 ORDER NUMBER 04 3 CVM REGISTRATION NUMBER DCA-83/043 4 CVM REGISTRATION DATE ISSUED SERIES TYPE OF ISSUANCE SIMPLE 7 NATURE OF ISSUANCE PUBLIC 8 - DATE OF ISSUANCE MATURITY DATE TYPE OF DEBENTURE WITHOUT PREFERENCE 11 CONDITION OF REMUNERATION IN EFFECT 98% OF CDI 12 PREMIUM/NEGATIVE GOODWILL 13 PAR VALUE (reais) ISSUED AMOUNT (thousands of reais) 13, NUMBER OF ISSUED BONDS (UNIT) 42, OUTSTANDING BONDS (UNIT) 0 17 TREASURY BONDS (UNIT) 42, REDEEMED BONDS (UNIT) 0 19 CONVERTED BONDS (UNIT) 0 20 BONDS TO BE PLACED (UNIT) 0 21 DATE OF THE LAST RENEGOTIATION DATE OF THE NEXT EVENT Page 18

19 IDENTIFICATION 1 CVM CODE 2 REGISTERED NAME 3 CGC General Taxpayers Registration CHARACTERISTICS OF THE PUBLIC OR PRIVATE ISSUANCE OF DEBENTURES 1 ITEM 04 2 ORDER NUMBER 05 3 CVM REGISTRATION NUMBER 4 CVM REGISTRATION DATE 5 ISSUED SERIES TYPE OF ISSUANCE SIMPLE 7 NATURE OF ISSUANCE PRIVATE 8 - DATE OF ISSUANCE MATURITY DATE TYPE OF DEBENTURE WITHOUT PREFERENCE 11 CONDITION OF REMUNERATION IN EFFECT REFERENTIAL RATE - TR + 8% P.A. 12 PREMIUM/NEGATIVE GOODWILL 13 PAR VALUE (reais) ISSUED AMOUNT (thousands of reais) 42, NUMBER OF ISSUED BONDS (UNIT) 46, OUTSTANDING BONDS (UNIT) 29, TREASURY BONDS (UNIT) 0 18 REDEEMED BONDS (UNIT) 16, CONVERTED BONDS (UNIT) 0 20 BONDS TO BE PLACED (UNIT) 0 21 DATE OF THE LAST RENEGOTIATION 22 DATE OF THE NEXT EVENT Page 19

20 IDENTIFICATION 1 CVM CODE 2 REGISTERED NAME 3 CGC General Taxpayers Registration CHARACTERISTICS OF THE PUBLIC OR PRIVATE ISSUANCE OF DEBENTURES 1 ITEM 05 2 ORDER NUMBER 7 3 CVM REGISTRATION NUMBER DCA-82/024 4 CVM REGISTRATION DATE ISSUED SERIES TYPE OF ISSUANCE SIMPLE 7 NATURE OF ISSUANCE PUBLIC 8 - DATE OF ISSUANCE MATURITY DATE TYPE OF DEBENTURE WITHOUT PREFERENCE 11 CONDITION OF REMUNERATION IN EFFECT 98% OF CDI 12 PREMIUM/NEGATIVE GOODWILL 13 PAR VALUE (reais) ISSUED AMOUNT (thousands of reais) 7, NUMBER OF ISSUED BONDS (UNIT) 22, OUTSTANDING BONDS (UNIT) 4, TREASURY BONDS (UNIT) 18, REDEEMED BONDS (UNIT) 0 19 CONVERTED BONDS (UNIT) 0 20 BONDS TO BE PLACED (UNIT) 0 21 DATE OF THE LAST RENEGOTIATION DATE OF THE NEXT EVENT Page 20

21 IDENTIFICATION 1 CVM CODE 2 REGISTERED NAME 3 CGC General Taxpayers Registration CHARACTERISTICS OF THE PUBLIC OR PRIVATE ISSUANCE OF DEBENTURES 1 ITEM 06 2 ORDER NUMBER 8 3 CVM REGISTRATION NUMBER DCA-82/004 4 CVM REGISTRATION DATE ISSUED SERIES TYPE OF ISSUANCE SIMPLE 7 NATURE OF ISSUANCE PUBLIC 8 - DATE OF ISSUANCE MATURITY DATE TYPE OF DEBENTURE WITHOUT PREFERENCE 11 CONDITION OF REMUNERATION IN EFFECT 98% OF CDI 12 PREMIUM/NEGATIVE GOODWILL 13 PAR VALUE (reais) ISSUED AMOUNT (thousands of reais) 19, NUMBER OF ISSUED BONDS (UNIT) 60, OUTSTANDING BONDS (UNIT) 23, TREASURY BONDS (UNIT) 36, REDEEMED BONDS (UNIT) 0 19 CONVERTED BONDS (UNIT) BONDS TO BE PLACED (UNIT) 0 21 DATE OF THE LAST RENEGOTIATION DATE OF THE NEXT EVENT Page 21

22 IDENTIFICATION 1 CVM CODE 2 REGISTERED NAME 3 CGC General Taxpayers Registration CHARACTERISTICS OF THE PUBLIC OR PRIVATE ISSUANCE OF DEBENTURES 1 ITEM 07 2 ORDER NUMBER 9 3 CVM REGISTRATION NUMBER DCA-83/044 4 CVM REGISTRATION DATE ISSUED SERIES TYPE OF ISSUANCE SIMPLE 7 NATURE OF ISSUANCE PUBLIC 8 - DATE OF ISSUANCE MATURITY DATE TYPE OF DEBENTURE WITHOUT PREFERENCE 11 CONDITION OF REMUNERATION IN EFFECT 98% OF CDI 12 PREMIUM/NEGATIVE GOODWILL 13 PAR VALUE (reais) ISSUED AMOUNT (thousands of reais) 13, NUMBER OF ISSUED BONDS (UNIT) 42, OUTSTANDING BONDS (UNIT) 9, TREASURY BONDS (UNIT) 32, REDEEMED BONDS (UNIT) CONVERTED BONDS (UNIT) 9 20 BONDS TO BE PLACED (UNIT) 0 21 DATE OF THE LAST RENEGOTIATION DATE OF THE NEXT EVENT Page 22

23 IDENTIFICATION 1 CVM CODE 2 REGISTERED NAME 3 CGC General Taxpayers Registration CHARACTERISTICS OF THE PUBLIC OR PRIVATE ISSUANCE OF DEBENTURES 1 ITEM 08 2 ORDER NUMBER 10 3 CVM REGISTRATION NUMBER DEB-81/017 4 CVM REGISTRATION DATE ISSUED SERIES TYPE OF ISSUANCE SIMPLE 7 NATURE OF ISSUANCE PUBLIC 8 - DATE OF ISSUANCE MATURITY DATE TYPE OF DEBENTURE WITHOUT PREFERENCE 11 CONDITION OF REMUNERATION IN EFFECT 12 PREMIUM/NEGATIVE GOODWILL 13 PAR VALUE (reais) ISSUED AMOUNT (thousands of reais) 6, NUMBER OF ISSUED BONDS (UNIT) 6, OUTSTANDING BONDS (UNIT) 0 17 TREASURY BONDS (UNIT) 6, REDEEMED BONDS (UNIT) 0 19 CONVERTED BONDS (UNIT) 0 20 BONDS TO BE PLACED (UNIT) 0 21 DATE OF THE LAST RENEGOTIATION DATE OF THE NEXT EVENT Page 23

24 IDENTIFICATION 1 CVM CODE 2 REGISTERED NAME 3 CGC General Taxpayers Registration CHARACTERISTICS OF THE PUBLIC OR PRIVATE ISSUANCE OF DEBENTURES 1 ITEM 09 2 ORDER NUMBER 11 3 CVM REGISTRATION NUMBER DEB-90/041 4 CVM REGISTRATION DATE ISSUED SERIES A 6 - TYPE OF ISSUANCE SIMPLE 7 NATURE OF ISSUANCE PUBLIC 8 - DATE OF ISSUANCE MATURITY DATE TYPE OF DEBENTURE WITHOUT PREFERENCE 11 CONDITION OF REMUNERATION IN EFFECT 98% OF CDI 12 PREMIUM/NEGATIVE GOODWILL 13 PAR VALUE (reais) 1, ISSUED AMOUNT (thousands of reais) 30, NUMBER OF ISSUED BONDS (UNIT) 25, OUTSTANDING BONDS (UNIT) 3, TREASURY BONDS (UNIT) 21, REDEEMED BONDS (UNIT) 0 19 CONVERTED BONDS (UNIT) 0 20 BONDS TO BE PLACED (UNIT) 0 21 DATE OF THE LAST RENEGOTIATION DATE OF THE NEXT EVENT Page 24

25 IDENTIFICATION 1 CVM CODE 2 REGISTERED NAME 3 CGC General Taxpayers Registration CHARACTERISTICS OF THE PUBLIC OR PRIVATE ISSUANCE OF DEBENTURES 1 ITEM 10 2 ORDER NUMBER 11 3 CVM REGISTRATION NUMBER DEB-91/004 4 CVM REGISTRATION DATE ISSUED SERIES B 6 - TYPE OF ISSUANCE SIMPLE 7 NATURE OF ISSUANCE PUBLIC 8 - DATE OF ISSUANCE MATURITY DATE TYPE OF DEBENTURE WITHOUT PREFERENCE 11 CONDITION OF REMUNERATION IN EFFECT 98% OF CDI 12 PREMIUM/NEGATIVE GOODWILL 13 PAR VALUE (reais) 1, ISSUED AMOUNT (thousands of reais) 30, NUMBER OF ISSUED BONDS (UNIT) 25, OUTSTANDING BONDS (UNIT) 7, TREASURY BONDS (UNIT) 17, REDEEMED BONDS (UNIT) 0 19 CONVERTED BONDS (UNIT) 0 20 BONDS TO BE PLACED (UNIT) 0 21 DATE OF THE LAST RENEGOTIATION DATE OF THE NEXT EVENT Page 25

26 16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT We present below the assets, liabilities and income and expenses of Consolidated Gerdau S.A. following the same accounting practices as those adopted by the Company: CONSOLIDATED BALANCE SHEETS ASSETS CORPORATE LAW In thousands of reais CURRENT ASSETS Cash and cash equivalents and temporary cash investments 541, ,005 Trade accounts receivable, net of provision 456, ,337 Inventories 490, ,013 Subsidiaries/related companies - - Advances to suppliers 30,362 37,171 Advances to employees 15,868 26,558 Recoverable taxes 40,570 38,926 Deferred income and social contribution taxes 22,044 15,660 Receivables 40,724 31,662 Total current assets 1,638,407 1,413,332 NONCURRENT ASSETS Related companies 14,111 22,040 Debtors under contract 10,015 11,867 Eletrobrás loans 11,423 11,423 Deferred income and social contribution taxes 29,426 28,863 Receivables 41,702 49,199 Total noncurrent assets 106, ,392 PERMANENT ASSETS Investments 738, ,769 Property, plant and equipment 2,412,092 2,283,486 Deferred charges 27,164 26,713 Total permanent assets 3,177,407 2,517,968 Total assets 4,922,491 4,054,692 Page 26

27 16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS EQUITY CORPORATE LAW In thousands of reais CURRENT LIABILITIES Trade accounts payable 150, ,137 Local and foreign loans 748, ,568 Debentures 4,452 4,414 Taxes and contributions 60,696 52,593 Deferred income and social contribution taxes 6,496 6,293 Salaries payable 40,071 38,074 Creditors under contract 6,983 6,579 Related companies - 2,705 Payables 56,673 45,012 Total current liabilities 1,074, ,375 LONG-TERM LIABILITIES Local loans 187, ,897 Foreign loans 1,106, ,741 Creditors under contract 13,097 15,748 Debentures 169, ,422 Related companies 49,917 - Deferred income and social contribution taxes 98,870 99,892 Reserve for contingencies 136, ,744 Payables 16,121 59,494 Total long-term liabilities 1,777,540 1,242,938 MINORITY INTEREST 25,241 22,616 STOCKHOLDERS EQUITY Capital 1,316,881 1,316,881 Capital reserve 175, ,582 Profit reserve 344, ,520 Retained earnings 208, ,780 Interest of majority stockholders 2,045,087 1,962,763 Total stockholders equity including minority interest 2,070,328 1,985,379 Total liabilities and stockholders equity 4,922,491 4,054,692 Page 27

28 16.01 OTHER INFORMATION THE COMPANY CONSIDERS RELEVANT CONSOLIDATED STATEMENTS OF INCOME CORPORATE LAW In thousands of reais Gross revenue 2,577,641 2,088,803 Taxes on sales (413,206) (344,690) Freights and discounts (95,996) (98,125) Net revenue 2,068,439 1,645,988 Cost of sales (1,359,558) (1,142,864) Gross profit 708, ,124 Selling expenses (94,956) (83,216) Financial expenses (486,229) (134,603) Financial income 102,533 73,376 General and administrative expenses (193,076) (153,949) Equity in earnings of subsidiaries and affiliated companies 238, Other operating income 4,497 7,810 Income from operations 279, ,626 Nonoperating income (expenses) (4,128) (2,312) Income before taxes 275, ,314 Provision for income and social contribution taxes 8,859 (48,889) Statutory profit sharing (3,410) (3,304) Net income 281, ,121 Interest of majority stockholders 280, ,466 Minority interest 1, Page 28

29 17.01 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS - UNQUALIFIED REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Management and Stockholders of Gerdau S.A.: (1) We have performed a special review of the quarterly information ITR of GERDAU S.A. (a Brazilian corporation) which includes the balance sheet as of September 30, 1999, the statement of income for the quarter and the nine-month period then ended, the performance report and relevant information, prepared under the responsibility of the Company s management. (2) Our review was conducted in accordance with specific standards established by the Brazilian Institute of Accountants - IBRACON, together with the Federal Accounting Council, and consisted principally of: (a) inquiries of and discussions with management personnel responsible for the accounting, financial and operating areas as to the principal criteria adopted in the preparation of the quarterly information, and (b) review of the information and subsequent events that had or may have had significant effects on the financial position and operations of the Company. (3) Based on our special review, we are not aware of any significant change that should be made to the quarterly information referred to above for it to be in conformity with accounting practices emanating from corporate law in Brazil, and with standards established by the Brazilian Securities Commission - CVM, specifically applicable to the preparation of such quarterly information. (4) We had previously audited the balance sheet as of June 30, 1999, presented for comparative purposes, and our report thereon, dated July 26, 1999, was issued without qualification. The statement of income for the quarter and the nine-month period ended September 30, 1998, presented for comparative purposes, had also been previously audited by us and our report thereon, dated November 11, 1998, was issued without qualification. Porto Alegre, October 26, ARTHUR ANDERSEN S/C Carlos Biedermann Engagement Partner Page 29

30 COMMENT ON THE SUBSIDIARY/AFFILIATED COMPANY PEFORMANCE 1. CVM CODE REGISTERED NAME GERDAU S.A. 3. CGC General Taxpayers Registration / SUBSIDIARY/AFFILIATED COMPANY REGISTERED NAME GERDAU INTERN. EMPREEND. LTDA STATEMENTS OF INCOME OF SUBSIDIARY/AFFILIATED COMPANY (Thousands of reais) 1. CODE 2. DESCRIPTION to to to to Gross revenue Deductions from gross revenue Net revenue Cost of products and/or services Gross profit Operating expenses/income 94, ,244 9,767 40, Selling General and administrative (121) (182) (23) (28) Financial Financial income , Financial expenses (7) (181) (866) (1,268) Other operating income Other operating expenses Equity in earnings of subsidiaries and affiliated companies 94, ,249 9,765 40, Income from operations 94, ,244 9,767 40, Nonoperating income (expenses) 0 0 (1,672) (3,165) Income Expenses 0 0 (1,672) (3,165) 3.09 Income before taxes/management s profit sharing 94, ,244 8,095 37, Provision for income and social contribution taxes Deferred income tax Management s profit sharing /statutory contributions Management s profit sharing Contributions Reversal of interest on capital Net income/loss 94, ,244 8,095 37,657 NUMBER OF SHARES, FORMERLY TREASURY SHARES (thousand) 335, , , ,795 EARNINGS PER SHARE LOSS PER SHARE Page 30

31 COMMENT ON THE SUBSIDIARY/AFFILIATED COMPANY PEFORMANCE Subsidiary/Affiliated Company: GERDAU INTERN. EMPREEND. LTDA. In accordance with the bylaws, the Company is engaged in the management of and participation in undertakings, and its revenues are basically derived from the participation in Gerdau companies in Brazil and abroad. In the period from January to September 1999, the equity in earnings of subsidiaries and affiliated companies, generated by such participation, was R$306.2 million, and net income totaled R$306.2 million. Page 31

32 COMMENT ON THE SUBSIDIARY/AFFILIATED COMPANY PEFORMANCE 1. CVM CODE REGISTERED NAME GERDAU S.A. 3. CGC General Taxpayers Registration / SUBSIDIARY/AFFILIATED COMPANY REGISTERED NAME ITAGUAÍ COMÉRCIO, IMPORT. E EXPORT. LTDA STATEMENTS OF INCOME OF SUBSIDIARY/AFFILIATED COMPANY (Thousands of reais) 1. CODE 2. DESCRIPTION to to to to Gross revenue Deductions from gross revenue Net revenue Cost of products and/or services Gross profit Operating expenses/income 24,423 (4,979) 2,566 10, Selling General and administrative (8) (34) 0 (6) Financial (119) (67) Financial income , Financial expenses (120) (588) (886) (2,543) Other operating income Other operating expenses Equity in earnings of subsidiaries and affiliated companies 24,550 (4,878) 2,566 10, Income from operations 24,423 (4,979) 2,566 10, Nonoperating income (expenses) Income Expenses Income before taxes/management s profit sharing 24,423 (4,979) 2,566 10, Provision for income and social contribution taxes Deferred income tax Management s profit sharing /statutory contributions Management s profit sharing Contributions Reversal of interest on capital Net income/loss 24,465 (4,941) 2,566 10,187 NUMBER OF SHARES, FORMERLY TREASURY SHARES (thousand) 235, ,000 72,000 72,000 EARNINGS PER SHARE LOSS PER SHARE ( ) Page 32 32

33 COMMENT ON THE SUBSIDIARY/AFFILIATED COMPANY PEFORMANCE Subsidiary/Affiliated Company: ITAGUAI COMÉRCIO, IMPORT. E EXPORT. LTDA. In accordance with the bylaws, the Company is engaged in the management of and participation in undertakings, and its revenues are basically derived from the participation in Gerdau companies. In the period from January to September 1999, the equity in subsidiaries and affiliated companies was negative by R$ 4.9 million, generating a net loss of R$ 4.9 million. Page 16

34 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Management and Stockholders of Gerdau S.A.: (1) We have performed a special review of the quarterly information ITR of GERDAU S.A. (a Brazilian corporation) which includes the balance sheet as of September 30, 1999, the statement of income for the quarter and the nine-month period then ended, the performance report and relevant information, prepared under the responsibility of the Company s management. (2) Our review was conducted in accordance with specific standards established by the Brazilian Institute of Accountants - IBRACON, together with the Federal Accounting Council, and consisted principally of: (a) inquiries of and discussions with management personnel responsible for the accounting, financial and operating areas as to the principal criteria adopted in the preparation of the quarterly information, and (b) review of the information and subsequent events that had or may have had significant effects on the financial position and operations of the Company. (3) Based on our special review, we are not aware of any significant change that should be made to the quarterly information referred to above for it to be in conformity with accounting practices emanating from corporate law in Brazil, and with standards established by the Brazilian Securities Commission - CVM, specifically applicable to the preparation of such quarterly information. (4) We had previously audited the balance sheet as of June 30, 1999, presented for comparative purposes, and our report thereon, dated July 26, 1999, was issued without qualification. The statement of income for the quarter and the nine-month period ended September 30, 1998, presented for comparative purposes, had also been previously audited by us and our report thereon, dated November 11, 1998, was issued without qualification. Porto Alegre, October 26, ARTHUR ANDERSEN S/C Carlos Biedermann Engagement Partner Page 17