GERDAU Relevant Information Fiscal Year 2000 Dear Shareholders, The results of the Gerdau companies for fiscal year 2000 reflected the good performance of the Brazilian economy and especially due to growth in the industrial sector. An additional contribution to the Group s performance was the consolidation of Ameristeel in September 1999, and the increase in its stake in Açominas, also in September of that year. PRODUCTION AND SALES The year of 2000 registered a new crude steel and long products output landmark at Gerdau plants. Investments made in productivity enhancements throughout the years, installed capacity increases and the acquisition of plants and stakes contributed to the high levels of output of the Group placing it as the 25 th largest steel producer in the world.! Crude steel output reached 7.1 million metric tons in 2000, 39.5% more than in 1999.! In Brazil, the volume reached the mark of 4.5 million metric tons (+15%) and abroad 2.6 million metric tons (+119.2%).! Of the output produced by the subsidiaries abroad, 2.4 million metric tons were produced in North America where growth was of 134%. 260.2 thousand metric tons was the contribution of the South American operations, an increase of 39.6%.! In rolled products, the output reached 5.8 million metric tons, an evolution of 37%. Of this volume, 3.3 million metric tons came from the units in Brazil (+7.4%) and 2.5 million metric tons from the units abroad (+116.5%).! Gerdau steel units in North America produced 2.2 million metric tons of rolled products, 139.4% more than in 1999, and the South American units contributed with 315.9 thousand metric tons, 30% more than in the preceding year.! Gerdau S.A. (non-consolidated) produced 3.5 million metric tons of crude steel and 3.3 million tons of rolled products presenting growths of 6.8% and 6.9% accordingly. Production (1,000 t)) 2000 1999 2000/1999 (%) Crude Steel - In Brazil 4,455 3,875 15.0 - Foreign 2,611 1,191 119.2 - Total 7,066 5,066 39.5 Rolled Products - In Brazil 3,340 3,112 7.4 - Foreign 2,513 1,161 116.5 - Total 5,853 4,273 37.0 The growth of the industrial sector, in particular due to the great performance of the manufacturing segment, wich is, along with civil construction, one of Gerdau s main markets, had a positive impact on Brazilian operations. The increase in exports was also important for the performance of the Gerdau companies in that year.
! Last year s consolidated sales reached 7.2 million metric tons (+41.5%) of which 4.6 million metric tons were sold by the Gerdau companies in Brazil which presented a growth of 18.9%. Abroad, sales were 2.6 million metric tons with an increase of 115.4% compared to 1999.! In the domestic market sales totaled 3.5 million metric tons, 12.5% more than in 1999. Of this total, 95% are Gerdau S.A. and 5% Açominas s (equivalent to Gerdau s stake in it).! Exports out of Brazil totaled 1.1 million metric tons (+46.2%) and the breakdown is 50.5% for Gerdau S.A. and 49.5% for Açominas. These exports generated US$ 232.5 million in revenues.! Units in North America presented a growth of 143.8% in sales in 2000, with a total of 2.3 million metric tons.! In the subsidiaries in South America (Uruguay, Chile and Argentina), sales totaled 351 thousand metric tons, an increase of 23.2% over 1999. RESULTS The increases in production and sales in 2000 were due to economic growth in Brazil, shareholdings increases along with the already mentioned acquisition of Ameristeel were the mainly factors to support the substantial growth in revenues for the period. However, the lower operating margins of the U.S. based operations resulting from the price reductions that occurred last year as well as the higher production costs when compared to those in Brazil, caused the period s profits not to grow in the same proportion of gross revenues.! Gross revenues in 2000 were 53.8% greater than in 1999 going to R$ 6.2 billion from R$ 4 billion.! Brazilian operations were responsible for 64.4% (R$ 4 billion) of the revenues and the operations abroad for 35.6% (R$ 2.2 billion).! Net revenues reached R$ 5.2 billion, that is 57% greater than that of the previous year.! EBITDA (profit before financial expenses, taxes, equity pick up, depreciation and amortization) reached R$ 1 billion, a growth of 26.6% over that of 1999.! Gross margin was 25.75% and EBITDA margin of 20.03% for the period.! Net profit reached the mark of R$ 406.2 million, 12.8% greater than in 1999. Net margin was 7.82%.! Net Cash & Equivalents generated in 2000, in consolidated terms, was of R$ 545.4 million presenting an increase of 4.3%. Compared to net revenues, this cash generation represents 10.5%. INVESTMENTS As a result of constant investments made in new equipment and in the technological update of its industrial units focused on modernizing and reducing operating costs -, the Gerdau companies have managed to obtain significant gains in productivity and quality. On the other hand, with the purpose of updating its plants to international standards, an important portion of investments have been made in the conservation of the environment with special attention to the treatment of industrial waters and the dust collection systems at the meltshops. In 2000, investments totaled US$ 259.5 million of which US$ 220.5 million in fixed assets and US$ 39 million in shareholdings in Ameristeel, SIPSA and SIPAR. Of the total invested in fixed assets US$ 159 million went to the Brazilian units and the balance US$ 61.5 million in the plants abroad. Investments in environment last year reached the sum of US$ 20.2 million. Within the investment made some initiated in 1999 and others still underway we can list:! Installation of a new rolling mill for wire rod and bars of specialty steel at Aços Finos Piratini RS (inaugurated in March).! Expansion at Cosigua RJ with the installation of a rolling mill for medium sized shapes and profiles, of a new industrial waters treatment and the installation of a mega shredder (inaugurated in May).
! Continuous caster of ingots, ladle furnace, powder carbon injector, top of furnace power generating turbine and oxygen lance at Açominas (inaugurated in June)! New meltshop at the Ameristeel Knoxville plant (inaugurated in October)! New dust collection system at Riograndense RS, Aços Finos Piratini RS and Guaíra PR plants.! Installation of new Armafer units (fabricator shops) in Simões Filho BA (inaugurated in September), and Fortaleza CE, besides the expansion of the installed capacity of the Armafer in Recife PE.! Increase in the installed capacity and technological update of the lattice girders in Cumbica SP and the installation of a new unit in Simões Filho BA (inaugurated in September).! Increase in shareholdings at Ameristeel (USA), SIPSA and SIPAR (Argentina) and Açominas (Minas Gerais, Brazil). FINANCIAL DEBT Investments made in particular in the last two years, have contributed, on the one side, with the improved positioning in the international crude steel producers ranking up to the 25 th position and, on the other side, have contributed to increase the indebtedness of the Group, which is nonetheless still well within international standards.! Consolidated net debt as of December 31 st was US$ 1.3 billion (US$ 1.6 billion gross debt minus US$ 352.4 million in cash and equivalents).! Of the total gross debt, US$ 451.5 million (27.6%) are loans acquired basically from local sources. The balance of US$ 1.2 billion were linked to the U.S. Dollar, of which 59.6% are related to the foreign subsidiaries and 40.4% are linked to the Brazilian operations.! Of the total of US$ 352.4 million registered as financial investments at the end of the period, 59.1% (US$ 208.3million) were linked to the U.S. Dollar.! Net debt as of December was equivalent to US$ 1.3 billion and represented 2.4X of EBITDA of 2000.! The net debt over total capital was 55.2% CAPITAL MARKETS In 2000, Gerdau continued with its commitment to improving our relationship with the capital markets and attempting to better cater to the needs of analysts and investors. Important events were held and several landmark achievements occurred throughout the year as listed below:! Based on the results of the period, Gerdau S.A. and Metalúrgica Gerdau S.A. destined R$ 181.7 million to its shareholders as payment of dividends in the form of interest over capital stock. On August 15 th R$ 65.1 million were paid for the first semester. The balance, R$ 116.6 million relative to the second semester, will be paid in on February 15 th.! On April 28 th, shareholders of Metalúrgica Gerdau S.A. and Gerdau S.A. approved the splitting of its shares (2 for 1).! Throughout the period, the Group organized two national meets of ABAMEC association in São Paulo (May 16 th and November 13 th ), three presentations in the United States and one in Europe in addition to several road shows.! In November, Gerdau started transmitting its conference calls over the Internet.! Last year, Gerdau received an award as the best publicly listed company of 1999 from ABAMEC South Regional (for its disclosure, quality of information and frequency of contacts with the market), the Silver award 2000 from ABAMEC São Paulo Regional (for presenting 5 years in a row with no interruptions). Also this year, the Company was awarded the VI Award ANEFAC-FIPECAFI-SERASA for top ten best financials published in 2000. In 2000, the shares issued by the Gerdau companies presented a significant improvement of liquidity in the main stock exchanges in the country. In the period, there were 35,555 trades that moved 36 billion titles and a financial volume of R$ 1 billion. Compared to the previous year, these trades represented an
increase of 98.3% in the number of trades, and 70.5% in the number of shares traded. It also represented an increase of 53.6% in the financial volumes traded. At Gerdau S.A., shares traded totaled 30.2 billion in 28,910 trades presenting an increase of 69.9% and 136.8% accordingly when compared to 1999. These transactions moved financial resources of R$ 784.8 million, 52.1% more than in 1999. At Metalúrgica Gerdau S.A., the number of shares traded increased by 73.3% and reached 5.8 billion shares in 2000. There were 6,645 trades (+16.2%) that moved R$ 258.5 million against R$ 163.6 million in 1999 (+58.1%). At the New York Stock Exchange (NYSE) there were 3.9 million Gerdau S.A. ADRs traded, representing 3.9 billion preferred shares, an increase of 228.1% over 1999. These trades moved financial volumes of US$ 52.8 million in the period. Management
Fluxo de Caixa Consolidado Janeiro a dezembro Consolidated Cash Flow January to December Metalúrgica Gerdau Gerdau S.A. 2000 1999 2000 1999 Lucro líquido do período Net income 406.152 360.143 398.093 351.655 Imposto de renda e contribuição social Income tax and social contribution 63.423 29.288 59.301 37.786 Depreciações e amortizações Depreciation and amortization 340.239 198.395 340.083 198.199 Juros e variações monetárias não-caixa Interest and non-cash monetary variations (63.173) 140.563 (33.219) 151.950 Variação do capital de giro Working capital variarion (201.228) (205.248) (186.257) (198.965) Caixa líquido da atividade operacional Net operational cash 545.413 523.141 578.001 540.625 Aquisição / alienação de imobilizado Permanent assets purchases / disposals (371.966) (557.022) (371.617) (557.133) Aquisição de diferido Deferred charges - (1.889) - (1.889) Aquisição / alienação de investimentos Investments purchases / disposals (100.665) (571.068) (112.278) (610.949) Aplicação de caixa em investimentos Funds used for investments (472.631) (1.129.979) (483.895) (1.169.971) Financiamento do capital de giro Working capital financing (82.144) 140.249 (98.443) 141.173 Aportes de recursos de longo prazo Long term debt increase 648.820 1.077.156 717.881 1.134.527 Amortização de financiamentos de longo prazo Long term debt repayment (509.298) (290.151) (590.413) (319.366) Ações em tesouraria Shares withheld - 9.021-6.152 Pagamento de dividendos/juros e participações Dividend/Interest and statutory participation payment (114.466) (75.663) (113.825) (69.440) Caixa líquido da atividade financeira Net funds from financial activities (57.088) 860.612 (84.800) 893.046 Variação no saldo do caixa Cash balance variation 15.694 253.774 9.306 263.700 Saldo de caixa / Cash balance No início do período At the begining of the period 673.476 410.401 694.863 421.861 Inicial de empresas no início do período At the beginning of the period for companies being consolidated - 9.301-9.301 No final do período At the end of the period 689.170 673.476 704.169 694.862
METALÚRGICA GERDAU S.A. Demonstrações contábeis resumidas / Financial statements summary CONSOLIDADO EMPRESA CONSOLIDATED COMPANY BALANÇO PATRIMONIAL / BALANCE SHEET 31/12/00 31/12/99 31/12/00 31/12/99 ATIVO / ASSETS CIRCULANTE / CURRENT ASSETS Disponibilidades e aplicações financeiras / Cash and cash equivalents 689.170 673.476 69.536 13 Clientes / Trade accounts receivable 760.387 622.691 - - Estoques / Inventories 979.873 891.519 - - Outros / Others 190.633 153.972 48.467 40.000 Total do circulante / Total current assets 2.620.063 2.341.658 118.003 40.013 REALIZÁVEL A LONGO PRAZO / LONG-TERM RECEIVABLES Depósitos compulsórios e outros / Escrow deposits and other receivables 209.522 206.488 11.898 95.028 Total do realizável a longo prazo / Total long-term receivables 209.522 206.488 11.838 95.028 PERMANENTE / PERMANENT ASSETS Investimentos / Investments 286.556 251.642 1.149.231 976.498 Imobilizado / Fixed assets 3.873.112 3.659.911 2.189 2.341 Total do ativo permanente / Total permanent assets 4.159.668 3.911.553 1.151.420 978.839 TOTAL DO ATIVO / TOTAL ASSETS 6.989.253 6.459.699 1.281.261 1.113.880 PASSIVO / LIABILITIES CIRCULANTE / CURRENT LIABILITIES Fornecedores / Trade accounts payable 312.162 309.556 6 1 Financiamentos / Loans and financing 1.489.895 1.302.747 - - Outros / Others 364.812 308.204 41.330 32.743 Total do circulante / Total current liabilities 2.166.869 1.920.507 41.336 32.744 EXIGÍVEL A LONGO PRAZO / LONG-TERM LIABILITIES Financiamentos / Loans and financing 1.498.594 1.461.237 - - Debêntures / Debentures 206.396 197.850 53.814 51.844 Provisão para contingências e outros / Reserve for contingencies and others 644.505 617.513 27.848 32.397 Total do exigível a longo prazo / Total long-term liabilities 2.349.495 2.276.600 81.662 84.241 RESULTADO DE EXERCÍCIOS FUTUROS / DEFERRED INCOME - 52.247 - - PATRIMÔNIO LÍQUIDO / SHAREHOLDERS EQUITY Capital social / Capital stock 520.280 520.280 Reservas/Lucros acumulados / Capital reserves/retained earnings 637.983 476.615 Total do patrimônio líquido / Total shareholders equity 2.472.889 2.210.345 1.158.263 996.895 TOTAL DO PASSIVO / TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 6.989.253 6.459.699 1.281.261 1.113.880
DEMONSTRAÇÃO DO RESULTADO STATEMENT OF INCOME METALÚRGICA GERDAU S.A. Demonstrações contábeis resumidas / Financial statements summary CONSOLIDADO EMPRESA CONSOLIDATED COMPANY Janeiro a dezembro Janeiro a dezembro January to December January to December 2000 1999 2000 1999 RECEITA BRUTA DE VENDAS / GROSS SALES REVENUE 6.226.479 4.048.519 - - IMPOSTOS SOBRE VENDAS / TAXES ON SALES (745.657) (591.210) - - FRETES E DESCONTOS / FREIGHT AND DISCOUNT (284.724) (147.291) - - Receita líquida de vendas / Net sales revenue 5.196.098 3.310.018 - - CUSTO DAS VENDAS / COST OF SALES (3.857.864) (2.229.744) - - Lucro bruto / Gross profit 1.338.234 1.080.274 - - DESPESAS COM VENDAS / SELLING EXPENSES (219.987) (152.661) - - DESPESAS FINANCEIRAS / FINANCIAL EXPENSES (506.966) (550.986) (10.742) (12.334) RECEITAS FINANCEIRAS / FINANCIAL REVENUE 129.402 141.228 12.434 9.225 DESPESAS GERAIS E ADMINISTRATIVAS / GENERAL AND ADMINISTRATIVE EXPENSES (417.787) (304.124) (13.005) (7.676) RESULTADO DA EQUIVALÊNCIA PATRIMONIAL / EQUITY PICK-UP 69.967 188.220 231.632 217.834 - Antes dos efeitos de imposto de renda e contribuição social Before income tax and social contribution impact - - 250.784 221.103 - Efeitos do imposto de renda e contribuição social Income tax and social contribution impact - - (19.152) (3.269) OUTRAS DESPESAS/RECEITAS OPERACIONAIS / OTHER OPERATING EXPENSES/REVENUE 68.825 13.553 130 28 Lucro operacional / Operating profit 461.688 415.504 220.449 207.077 DESPESAS/RECEITAS NÃO-OPERACIONAIS / NON-OPERATING EXPENSES/REVENUE 18.472 (19.226) 7.678 (6.957) PARTICIPAÇÕES ESTATUTÁRIAS / STATUTORY PARTICIPATION (10.585) (6.847) (2.806) (1.981) Lucro antes de impostos / Profit before income tax and social contribution 469.575 389.431 225.321 198.139 IMPOSTO DE RENDA E CONTRIBUIÇÃO SOCIAL / INCOME TAX AND SOCIAL CONTRIBUTION (63.423) (29.288) (7.354) 8.677 Lucro líquido do período / Net profit for the period 406.152 360.143 217.967 206.816 Lucro por lote de mil ações / Earnings per lot of one thousand shares - R$ - - 10,48 19,89 Valor patrimonial por lote de mil ações / Equity value per lot of one thousand shares - R$ - - 55,71 95,89 Número de ações emitidas (milhões) / Shares outstanding (million) - - 20.792 10.396
GERDAU S.A. Demonstrações contábeis resumidas / Financial statements summary CONSOLIDADO EMPRESA CONSOLIDATED COMPANY BALANÇO PATRIMONIAL / BALANCE SHEET 31/12/00 31/12/99 31/12/00 31/12/99 ATIVO / ASSETS CIRCULANTE / CURRENT ASSETS Disponibilidades e aplicações financeiras / Cash and cash equivalents 704.169 694.862 188.188 216.716 Clientes / Trade accounts receivable 708.920 587.008 389.797 301.795 Estoques / Inventories 979.732 891.358 436.917 405.587 Outros / Others 164.811 122.608 95.292 49.576 Total do circulante / Total current assets 2.557.632 2.295.836 1.110.194 973.674 REALIZÁVEL A LONGO PRAZO / LONG-TERM RECEIVABLES Depósitos compulsórios e outros / Escrow deposits and other receivables 197.135 170.934 116.966 87.322 Total do realizável a longo prazo / Total long-term receivables 197.135 170.934 116.966 87.322 PERMANENTE / PERMANENT ASSETS Investimentos / Investments 280.215 237.392 1.600.614 1.273.266 Imobilizado / Fixed assets 3.870.566 3.657.556 1.642.003 1.621.698 Total do ativo permanente / Total permanent assets 4.150.781 3.894.948 3.242.617 2.894.964 TOTAL DO ATIVO / TOTAL ASSETS 6.905.548 6.361.718 4.469.777 3.955.960 PASSIVO / LIABILITIES CIRCULANTE / CURRENT LIABILITIES Fornecedores / Trade accounts payable 313.444 310.384 92.698 77.987 Financiamentos / Loans and financing 1.465.964 1.295.114 576.256 396.698 Outros / Others 351.836 298.264 198.737 170.294 Total do circulante / Total current liabilities 2.131.244 1.903.762 867.691 644.979 EXIGÍVEL A LONGO PRAZO / LONG-TERM LIABILITIES Financiamentos / Loans and financing 1.498.594 1.454.186 775.354 813.634 Debêntures / Debentures 221.643 146.006 221.643 146.006 Provisão para contingências e outros / Reserve for contingencies and others 606.183 629.724 239.882 288.243 Total do exigível a longo prazo / Total long-term liabilities 2.326.420 2.229.916 1.236.879 1.247.883 RESULTADO DE EXERCÍCIOS FUTUROS / DEFERRED INCOME - 52.247 - - PATRIMÔNIO LÍQUIDO / SHAREHOLDERS EQUITY Capital social / Capital stock 1.320.133 1.316.881 Reservas/Lucros acumulados / Capital reserves/retained earnings 1.045.074 746.217 Total do patrimônio líquido / Total shareholders equity 2.447.884 2.175.793 2.365.207 2.063.098 TOTAL DO PASSIVO / TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 6.905.548 6.361.718 4.469.777 3.955.960
DEMONSTRAÇÃO DO RESULTADO STATEMENT OF INCOME GERDAU S.A. Demonstrações contábeis resumidas / Financial statements summary CONSOLIDADO EMPRESA CONSOLIDATED COMPANY Janeiro a dezembro Janeiro a dezembro January to December January to December 2000 1999 2000 1999 RECEITA BRUTA DE VENDAS / GROSS SALES REVENUE 6.226.479 4.048.519 3.583.840 2.760.000 IMPOSTOS SOBRE VENDAS / TAXES ON SALES (745.657) (591.210) (678.213) (522.344) FRETES E DESCONTOS / FREIGHT AND DISCOUNT (284.724) (147.291) (109.139) (89.069) Receita líquida de vendas / Net sales revenue 5.196.098 3.310.018 2.796.488 2.148.587 CUSTO DAS VENDAS / COST OF SALES (3.857.864) (2.229.744) (1.915.259) (1.366.645) Lucro bruto / Gross profit 1.338.234 1.080.274 881.229 781.942 DESPESAS COM VENDAS / SELLING EXPENSES (219.987) (152.661) (177.226) (118.693) DESPESAS FINANCEIRAS / FINANCIAL EXPENSES (495.260) (543.521) (287.235) (446.065) RECEITAS FINANCEIRAS / FINANCIAL REVENUE 106.291 112.819 51.436 89.773 DESPESAS GERAIS E ADMINISTRATIVAS / GENERAL AND ADMINISTRATIVE EXPENSES (398.224) (290.336) (231.543) (201.719) RESULTADO DA EQUIVALÊNCIA PATRIMONIAL / EQUITY PICK-UP 69.851 185.973 197.817 254.343 OUTRAS DESPESAS/RECEITAS OPERACIONAIS / OTHER OPERATING EXPENSES/REVENUE 57.328 13.428 9.600 10.443 Lucro operacional / Operating profit 458.233 405.976 444.078 370.024 DESPESAS/RECEITAS NÃO-OPERACIONAIS / NON-OPERATING EXPENSES/REVENUE 6.940 (11.669) (6.544) (5.922) PARTICIPAÇÕES ESTATUTÁRIAS / STATUTORY PARTICIPATION (7.779) (4.866) (6.939) (4.866) Lucro antes de impostos / Profit before income tax and social contribution 457.394 389.441 430.595 359.236 IMPOSTO DE RENDA E CONTRIBUIÇÃO SOCIAL / INCOME TAX AND SOCIAL CONTRIBUTION (59.301) (37.786) (37.653) (6.485) Lucro líquido do período / Net profit for the period 398.093 351.655 392.942 352.751 Lucro por lote de mil ações / Earnings per lot of one thousand shares - R$ - - 3,46 6,22 Valor patrimonial por lote de mil ações / Equity value per lot of one thousand shares - R$ - - 20,84 36,36 Número de ações emitidas (milhões) / Shares outstanding (million) - - 113.492 56.746