siditr3q17_6k.htm - Generated by SEC Publisher for SEC Filing
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 6-K
 
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
 
For the month of January, 2018
Commission File Number 1-14732
 

 
COMPANHIA SIDERÚRGICA NACIONAL
(Exact name of registrant as specified in its charter)
 
National Steel Company
(Translation of Registrant's name into English)
 
Av. Brigadeiro Faria Lima 3400, 20º andar
São Paulo, SP, Brazil
04538-132
(Address of principal executive office)
 

Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F. 
Form 20-F ___X___ Form 40-F _______

 Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.  

Yes _______ No ___X____


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Table of Contents

 

Company Information

 

Capital Breakdown

1

Parent Company Financial Statements

 

Balance Sheet – Assets

2

Balance Sheet – Liabilities

3

Statement of Income

4

Statement of Comprehensive Income

5

Statement of Cash Flows

6

Statement of Changes in Shareholders’ Equity

 

01/01/2017 to 09/30/2017

7

01/01/2016 to 09/30/2016

8

Statement of Value Added

9

Consolidated Financial Statements

 

Balance Sheet - Assets

10

Balance Sheet - Liabilities

11

Statement of Income

12

Statement of Comprehensive Income

13

Statement of Cash Flows

14

Statement of Changes in Shareholders’ Equity

 

01/01/2017 to 09/30/2017

15

01/01/2016 to 09/30/2016

16

Statement of Value Added

17

Comments on the Company’s Consolidated Performance

18

Notes to the quarterly financial information

31

Reports and Statements

 

Unqualified Independent Auditors’ Review Report

84

 

 


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

Company Information / Capital Breakdown

 

Number of Shares

(Units)

Current Quarter

09/30/2017

 

Paid-in Capital

 

 

Common

1,387,524,047

 

Preferred

0

 

Total

1,387,524,047

 

Treasury Shares

 

 

Common

30,391,000

 

Preferred

0

 

Total

30,391,000

 

 

 

Page 1


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Balance Sheet - Assets

(R$ thousand)

Code

Description

Current Quarter

Previous Year

09/30/2017

12/31/2016

1

Total Assets

41,160,548

41,716,949

1.01

Current assets

7,609,732

7,989,806

1.01.01

Cash and cash equivalent

668,438

1,466,746

1.01.02

Financial investments

726,741

758,433

1.01.02.02

Financial investments at amortized cost

726,741

758,433

1.01.03

Trade receivables

2,868,348

2,624,853

1.01.04

Inventory

2,748,074

2,504,230

1.01.08

Other current assets

598,131

635,544

1.02

Non-current assets

33,550,816

33,727,143

1.02.01

Long-term assets

1,480,654

1,395,962

1.02.01.09

Other non-current assets

1,480,654

1,395,962

1.02.02

Investments

22,549,492

22,703,508

1.02.03

Property, plant and equipment

9,458,020

9,580,126

1.02.04

Intangible assets

62,650

47,547

 

 

 

 

 

 

Page 2


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Balance Sheet – Liabilities

(R$ thousand)

Code

Description

Current Quarter

Previous Year

09/30/2017

12/31/2016

2

Total liabilities

41,160,548

41,716,949

2.01

Current liabilities

6,704,186

4,108,798

2.01.01

Payroll and related taxes

161,905

135,676

2.01.02

Trade payables

1,657,411

1,312,183

2.01.03

Tax payables

79,728

66,445

2.01.04

Borrowings and financing

4,222,977

2,051,882

2.01.05

Other payables

514,925

464,531

2.01.06

Provisions

67,240

78,081

2.01.06.01

Provision for tax, social security, labor and civil risks

67,240

78,081

2.02

Non-current liabilities

27,760,850

31,413,623

2.02.01

Long term Borrowings and financing

24,454,575

28,196,893

2.02.02

Other payables

56,204

76,499

2.02.03

Deferred Taxes

571,070

587,357

2.02.04

Provisions

2,679,001

2,552,874

2.02.04.01

Provision for tax, social security, labor and civil risks

552,768

548,537

2.02.04.02

Other provisions

2,126,233

2,004,337

2.02.04.02.03

Provision for environmental liabilities and decommissioning of assets

215,858

265,772

2.02.04.02.04

Pension and healthcare plan

719,266

719,266

2.02.04.02.05

Provision for losses on investments

1,191,109

1,019,299

2.03

Shareholders’ equity

6,695,512

6,194,528

2.03.01

Share Capital

4,540,000

4,540,000

2.03.02

Capital reserves

30

30

2.03.04.02

Earnings reserves

238,976

238,976

2.03.04.09

Treasury shares

(238,976)

(238,976)

2.03.05

Accumulated profit/(losses)

(1,649,259)

(1,301,961)

2.03.08

Other comprehensive income

3,804,741

2,956,459

 

 

Page 3


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Statements of Income   

(R$ thousand)

   

Current Quarter

Year to date

Same quarter previous year

YTD previous year

Code

Description

07/01/2017 to 09/30/2017

01/01/2017 to 09/30/2017

07/01/2016 to 09/30/2016

01/01/2016 to 09/30/2016

3.01

Revenues from sale of goods and rendering of services

2,878,254

7,672,028

      2,288,121

     6,457,435

3.02

Costs from sale of goods and rendering of services

(2,432,348)

(6,439,752)

     (1,825,749)

    (5,370,811)

3.03

Gross profit

445,906

1,232,276

         462,372

     1,086,624

3.04

Operating expenses/income

(268,582)

(330,911)

         150,220

    (1,364,026)

3.04.01

Selling expenses

(186,675)

(549,437)

        (141,831)

       (448,060)

3.04.02

General and administrative expenses

(28,212)

(148,272)

          (87,854)

       (283,481)

3.04.04

Other operating income

6,170

11,834

         152,150

        156,720

3.04.05

Other operating expenses

(74,616)

(196,087)

          (85,595)

       (295,588)

3.04.06

Equity in results of affiliated companies

14,751

551,051

         313,350

       (493,617)

3.05

Profit before financial income (expenses) and taxes

177,324

901,365

         612,592

       (277,402)

3.06

Financial income (expenses)

43,410

(1,255,316)

        (707,174)

       (574,164)

3.06.01

Financial income

102,978

235,858

           65,651

        152,322

3.06.02

Financial expenses

(59,568)

(1,491,174)

        (772,825)

       (726,486)

3.06.02.01

Net exchange differences over financial instruments

478,274

332,639

        (113,895)

     2,041,002

3.06.02.02

Financial expenses

(537,842)

(1,823,813)

        (658,930)

    (2,767,488)

3.07

Profit (loss) before taxes

220,734

(353,951)

        (94,582)

       (851,566)

3.08

Income tax and social contribution

5,732

6,653

          3,321

       5,769

3.09

Profit (loss) from continued operations

226,466

(347,298)

        (91,261)

    (845,797)

3.10

Profit (loss) from discontinued operations

-

-

           (6,984)

          (6,786)

3.11

Profit (loss) for the year

226,466

(347,298)

        (98,245)

    (852,583)

 

 

 

 

 

 

3.99.01.01

Common shares

0.16687

(0.25591)

        (0.07240)

       (0.62822)

3.99.02.01

Common shares

0.16687

(0.25591)

        (0.07240)

       (0.62822)

 

 

Page 4


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Statements of Comprehensive Income

(R$ thousand)

   

 

 

Current

Quarter

Year to date

Same quarter previous year

YTD previous year

Code

Description

07/01/2017 to 09/30/2017

01/01/2017 to 09/30/2017

07/01/2016 to 09/30/2016

01/01/2016 to 09/30/2016

4.01

(Loss) profit for the year

226,466

(347,298)

(98,245)

(852,583)

4.02

Other comprehensive income

667,498

848,282

661,630

1,491,560

4.02.01

Actuarial gains over pension plan of affiliates, net of taxes

30

88

29

143

4.02.04

Cumulative translation adjustments for the year

(47,328)

82,130

73,956

(386,136)

4.02.05

Available-for-sale assets

496,044

614,542

647,552

775,405

4.02.10

(Loss) / gain on the percentage change in investments

-

2,814

740

1,324

4.02.11

Gain (loss) on cash flow hedge accounting

200,236

134,374

(56,324)

1,016,560

4.02.13

Realization of cash flow hedge accounting reclassified to income statement

16,212

37,933

5,949

26,472

4.02.14

Gain (Loss) on net investment hedge from investments in affiliates

2,304

(23,599)

(10,272)

57,792

4.03

Comprehensive income for the year

893,964

500,984

563,385

638,977

 

 

 

Page 5


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Statements of Cash Flows – Indirect Method

(R$ thousand)

   

Year to date

YTD previous year

Code

Description

01/01/2017 to 09/30/2017

01/01/2016 to 09/30/2016

6.01

Net cash from operating activities

498,973

     1,418,549

6.01.01

Cash from operations

841,009

       (393,672)

6.01.01.01

Profit (loss) for the period

(347,298)

    (852,583)

6.01.01.03

Financial charges in borrowing and financing raised

1,670,505

     1,909,151

6.01.01.04

Financial charges in borrowing and financing granted

(89,576)

        (27,919)

6.01.01.05

Depreciation, depletion and amortization

497,288

        418,828

6.01.01.06

Equity in results of affiliated companies

(551,051)

493,617

6.01.01.07

Deferred tax

(6,653)

        (5,820)

6.01.01.08

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

(6,610)

        (15,027)

6.01.01.09

Exchange differences, net

(278,230)

    (2,320,143)

6.01.01.12

Write-off of PPE and Intangible assets

(521)

         20,751

6.01.01.13

Provision for environmental liabilities and decommissioning of assets

(49,914)

          (6,760)

6.01.01.14

Gains from business combination

-

        (28,013)

6.01.01.15

Others

3,069

         20,246

6.01.02

Changes in assets and liabilities

(342,036)

     1,812,221

6.01.02.01

Trade receivables - third parties

(229,704)

       (118,462)

6.01.02.02

Trade receivables - related parties

(11,766)

        430,601

6.01.02.03

Inventories

(243,844)

        580,585

6.01.02.04

Receivables - related parties

1,576,325

         2,349,816

6.01.02.05

Tax assets

(86,897)

        250,807

6.01.02.06

Judicial deposits

(19,141)

         27,745

6.01.02.09

Trade payables

345,228

        261,063

6.01.02.10

Payroll and related taxes

26,229

         20,000

6.01.02.11

Taxes in installments – REFIS

13,102

         71,734

6.01.02.13

Payables to related parties

5,533

          (2,986)

6.01.02.15

Interest paid

(1,748,225)

    (2,023,675)

6.01.02.16

Interest received - Related Parties

187

                -  

6.01.02.18

Others

30,937

        (35,007)

6.02

Net cash used in investing activities

(264,740)

       (434,870)

6.02.01

Advance for future capital increase

(30,501)

       (222,374)

6.02.02

Purchase of property, plant and equipment

(355,941)

       (878,908)

6.02.07

Intercompany loans granted

(16,540)

        (56,547)

6.02.09

Intercompany loans received 

7,297

                -  

6.02.10

Exclusive funds

(200)

         84,738

6.02.11

Financial Investments, net of redemption

31,693

        638,221

6.02.12

Cash received from disposal of investment - CGPAR

99,452

-

6.03

Net cash used in financing activities

(1,033,516)

       (469,845)

6.03.01

Borrowings and financing raised, net of transaction cost

171,000

        (26,018)

6.03.02

Borrowings and financing, related parties

-

         40,239

6.03.03

Funding Forfaiting/ Drawee Risk

-

         78,240

6.03.04

Payment Forfaiting / Drawee Risk

-

       (300,321)

6.03.05

Amortization of borrowings and financing

(960,174)

       (221,693)

6.03.06

Amortization of borrowings and financing - related parties

(244,342)

        (40,239)

6.03.07

Payments of dividends and interests on shareholder´s equity

-

               (53)

6.04

Exchange rate on translating cash and cash equivalents

975

           1,280

6.05

Increase (decrease) in cash and cash equivalents

(798,308)

        515,114

6.05.01

Cash and equivalents at the beginning of the year

1,466,746

     1,885,199

6.05.02

Cash and equivalents at the end of the year

668,438

     2,400,313

 

 

 

 

Page 6


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Statement of Changes in Equity - 01/01/2017 to 09/30/2017

(R$ thousand)

Code

Description

Paid-in capital

Capital reserve, granted options and treasury shares

Earnings reserve

Retained earnings (accumulated losses)

Other comprehensive income

Shareholders' equity

 

5.01

Opening balances

4,540,000

30

-

(1,301,961)

2,956,459

6,194,528

 

5.03

Adjusted opening balances

4,540,000

30

-

(1,301,961)

2,956,459

6,194,528

 

5.05

Total comprehensive income

-

-

-

(347,298)

848,282

500,984

 

5.05.01

Profit (loss) for the period

-

-

-

(347,298)

-

(347,298)

 

5.05.02

Other comprehensive income

-

-

-

-

848,282

848,282

 

5.05.02.04

Translation adjustments for the year

-

-

-

-

82,130

82,130

 

5.05.02.08

Actuarial gains/(Losses) on pension plan, net of taxes

-

-

-

-

88

88

 

5.05.02.09

Available-for-sale assets, net of taxes

-

-

-

-

614,542

614,542

 

5.05.02.10

(Loss) / gain on the percentage change in investments

-

-

-

-

2,814

2,814

 

5.05.02.11

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

-

-

-

-

172,307

172,307

 

5.05.02.13

(Loss) / gain on foreign investments

-

-

-

-

(23,599)

(23,599)

 

5.07

Closing balance

4,540,000

30

-

(1,649,259)

3,804,741

6,695,512

 

 

 

 

 

 

Page 7


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Statement of Changes in Equity - 01/01/2016 to 09/30/2016

(R$ thousand)

               

Code

Description

Paid-in capital

Capital reserve, granted options and treasury shares

Earnings reserve

Retained earnings (accumulated losses)

Other comprehensive income

Shareholders' equity

5.01

Opening balances

4,540,000

30

-  

(367,214)  

1,790,693

5,963,509

5.03

Adjusted opening balances

4,540,000

30

-  

(367,214)  

1,790,693

5,963,509

5.05

Total comprehensive income

-  

-  

-  

(852,583)

1,491,560

638,977

5.05.01

Profit (loss) for the period

-  

-  

-  

(852,583)

-  

(852,583)

5.05.02

Other comprehensive income

-  

-  

-  

-  

1,491,560

1,491,560

5.05.02.04

Translation adjustments for the year

-  

-  

-  

-  

(386,136)

(386,136)

5.05.02.08

Actuarial gains on pension plan, net of taxes

-  

-  

-  

-  

143

143

5.05.02.09

Available-for-sale assets, net of taxes

-  

-  

-  

-  

775,405

775,405

5.05.02.10

(Loss) / gain on the percentage change in investments

-  

-  

-  

-  

1,324

1,324

5.05.02.11

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

-  

-  

-  

-  

1,016,560

1,016,560

5.05.02.12

Realization of cash flow hedge reclassified to the income statement

-  

-  

-  

-  

26,472

26,472

5.05.02.13

(Loss) / gain on foreign investments

-  

-  

-  

-  

57,792

57,792

5.07

Closing balance

4,540,000

30

-  

 (1,219,797)

3,282,253

6,602,486

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                                                                                                                                          

Page 8


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Statement of Value Added

(R$ thousand)

   

Year to date

Previous year

Code

Description

01/01/2017 to 09/30/2017

01/01/2016 to 09/30/2016

7.01

Revenues

9,476,920

8,039,004

7.01.01

Sales of products and rendering of services

9,425,899

8,062,255

7.01.02

Other revenues

66,237

(14,491)

7.01.04

Allowance for (reversal of) doubtful accounts

(15,216)

(8,760)

7.02

Raw materials acquired from third parties

(7,343,265)

(6,199,678)

7.02.01

Cost of sales and services

(6,627,795)

(5,584,069)

7.02.02

Materials, electric power, outsourcing and other

(714,074)

(602,317)

7.02.03

Impairment/recovery of assets

(1,396)

(13,292)

7.03

Gross value added

2.133.655

1,839,326

7.04

Retentions

(497,288)

(418,828)

7.04.01

Depreciation, amortization and depletion

(497,288)

(418,828)

7.05

Wealth created

1.636.367

1,420,498

7.06

Value added received

787.809

(637,080)

7.06.01

Equity in income of affiliates

551.051

(493,617)

7.06.02

Financial income

235.858

152,322

7.06.03

Others

900

(295,785)

7.06.03.01

Others and exchange gains

900

(295,785)

7.07

Wealth for distribution

2.424.176

783,418

7.08

Wealth distributed

2.424.176

783,418

7.08.01

Personnel

889.242

835,872

7.08.01.01

Salaries and wages

652.517

647,165

7.08.01.02

Benefits

182.239

142,510

7.08.01.03

Severance payment (FGTS)

54.486

46,197

7.08.02

Taxes, fees and contributions

384.352

364,392

7.08.02.01

Federal

288.265

296,926

7.08.02.02

State

96.071

67,465

7.08.02.03

Municipal

16

1

7.08.03

Remuneration on third-party capital

1.497.880

428,951

7.08.03.01

Interest

1.827.044

2,767,491

7.08.03.02

Leases

8.566

7,983

7.08.03.03

Others

(337,730)

(2,346,523)

7.08.03.03.01

Others and exchange losses

(337,730)

(2,346,523)

7.08.04

Remuneration on Shareholders' capital

(347,298)

(852,583)

7.08.04.03

Retained earnings (accumulated losses)

(347,298)

(852,583)

7.08.05

Others

-

6,786

7.08.05.01

Gain (loss) on discontinued operations

-

6,786

 

 

                                                                                                                                                                                          

Page 9


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Balance Sheet - Assets

(R$ thousand)

       

Code

Description

Current Quarter

Previous Year

09/30/2017

12/31/2016

1

Total Assets

43,873,713

44,153,623

1.01

Current assets

11,653,843

12,444,918

1.01.01

Cash and cash equivalent

3,381,432

4,871,162

1.01.02

Financial investments

757,338

760,391

1.01.02.02

Financial investments measured at amortized cost

757,338

760,391

1.01.03

Trade receivables

2,240,375

1,997,216

1.01.04

Inventory

4,246,458

3,964,136

1.01.08

Other current assets

1,028,240

852,013

1.02

Non-current assets

32,219,870

31,708,705

1.02.01

Long-term assets

1,778,197

1,745,971

1.02.01.06

Deferred tax assets

51,052

70,151

1.02.01.09

Other non-current assets

1,727,145

1,675,820

1.02.02

Investments

5,293,244

4,568,451

1.02.03

Property, plant and equipment

17,875,819

18,135,879

1.02.04

Intangible assets

7,272,610

7,258,404

 

 

                                                                                                                                                                                          

Page 10


 
 

 CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Balance Sheet – Liabilities

(R$ thousand)

Code

Description

Current Quarter

Previous Year

09/30/2017

12/31/2016

2

Total liabilities

43,873,713

44,153,623

2.01

Current liabilities

7,848,924

5,496,683

2.01.01

Payroll and related taxes

296,167

253,837

2.01.02

Trade payables

2,249,151

1,763,206

2.01.03

Tax payables

269,168

231,861

2.01.04

Borrowings and financing

3,983,810

2,117,448

2.01.05

Other payables

950,560

1,021,724

2.01.06

Provisions

100,068

108,607

2.01.06.01

Provision for tax, social security, labor and civil risks

100,068

108,607

2.02

Non-current liabilities

28,058,141

31,272,419

2.02.01

Long term Borrowings and financing

25,020,128

28,323,570

2.02.02

Other payables

129,811

131,137

2.02.03

Deferred tax liabilities

1,167,974

1,046,897

2.02.04

Provisions

1,740,228

1,770,815

2.02.04.01

Provision for tax, social security, labor and civil risks

718,592

        704,485

2.02.04.02

Other provisions

1,021,636

     1,066,330

2.02.04.02.03

Provision for environmental liabilities and decommissioning of assets

302,370

347,064

2.02.04.02.04

Pension and healthcare plan

719,266

            719,266

2.03

Consolidated Shareholders’ equity

7,966,648

7,384,521

2.03.01

Share Capital

4,540,000

4,540,000

2.03.02

Capital reserves

30

30

2.03.04.02

Earnings reserves

238,976

238,976

2.03.04.09

Treasury shares

(238,976)

(238,976)

2.03.05

Accumulated profit/(losses)

(1,649,259)

(1,301,961)

2.03.08

Other comprehensive income

3,804,741

2,956,459

2.03.09

Profit attributable to the non-controlling interests

1,271,136

1,189,993

 

 

                                                                                                                                                                                          

Page 11


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Statements of Income   

(R$ thousand)

   

Current Quarter

Year to date

Same quarter previous year

YTD previous year

Code

Description

07/01/2017 to 09/30/2017

01/01/2017 to 09/30/2017

07/01/2016 to 09/30/2016

01/01/2016 to 09/30/2016

3.01

Revenues from sale of goods and rendering of services

4,809,671

13,531,876

4,469,240

12,630,353

3.02

Costs from sale of goods and rendering of services

(3,596,936)

(10,016,303)

(3,157,057)

(9,470,412)

3.03

Gross profit

1,212,735

3,515,573

1,312,183

3,159,941

3.04

Operating expenses/income

(550,540)

(1,768,200)

(504,809)

(1,867,079)

3.04.01

Selling expenses

(414,544)

(1,263,611)

(405,411)

(1,247,971)

3.04.02

General and administrative expenses

(76,174)

(307,051)

(117,792)

(382,114)

3.04.04

Other operating income

8,956

21,102

168,600

202,617

3.04.05

Other operating expenses

(106,780)

(317,140)

(176,323)

(528,084)

3.04.06

Equity in results of affiliated companies

38,002

98,500

26,117

88,473

3.05

Profit before financial income (expenses) and taxes

662,195

1,747,373

807,374

1,292,862

3.06

Financial income (expenses)

(277,797)

(1,603,640)

(744,345)

(1,818,784)

3.06.01

Financial income

80,841

286,070

140,423

522,995

3.06.02

Financial expenses

(358,638)

(1,889,710)

(884,768)

(2,341,779)

3.06.02.01

Net exchange differences over financial instruments

269,925

208,730

(61,255)

128,750

3.06.02.02

Financial expenses

(628,563)

(2,098,440)

(823,513)

(2,470,529)

3.07

Profit (loss) before taxes

384,398

143,733

63,029

(525,922)

3.08

Income tax and social contribution

(128,214)

(409,890)

(122,796)

(264,617)

3.09

Profit (loss) from continued operations

256,184

(266,157)

(59,767)

(790,539)

3.10

Profit (loss) from discontinued operations

-

-

(6,984)

(6,786)

3.11

Consolidated Profit (loss) for the year

256,184

(266,157)

(66,751)

(797,325)

3.11.01

Profit attributable to the controlling interests

226,466

(347,298)

(98,245)

(852,583)

3.11.02

Profit attributable to the non-controlling interests

29,718

81,141

31,494

55,258

3.99.01.01

Common shares

0.16687

(0.25591)

(0.07240)

(0.62822)

3.99.02.01

Common shares

0.16687

(0.25591)

(0.07240)

(0.62822)

 

 

                                                                                                                                                                                          

Page 12


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Statement of Comprehensive Income

(R$ thousand)

   

Current Quarter

Year to date

Same quarter previous year

YTD previous year

Code

Description

07/01/2017 to 09/30/2017

01/01/2017 to 09/30/2017

07/01/2016 to 09/30/2016

01/01/2016 to 09/30/2016

4.01

Consolidated profit (loss) for the year

256,184

(266,157)

(66,751)

(797,325)

4.02

Other comprehensive income

667,498

848,282

661,630

1,491,560

4.02.01

Actuarial gains over pension plan of affiliates, net of taxes

30

88

29

143

4.02.04

Cumulative translation adjustments for the year

(47,328)

82,130

73,956

(386,136)

4.02.05

Available-for-sale assets

496,044

614,542

647,552

775,405

4.02.09

(Loss) / gain on the percentage change in investments

-

2,814

740

1,324

4.02.10

Gain (loss) on cash flow hedge accounting

200,236

134,374

(56,324)

1,016,560

4.02.12

Gain (Loss) on hedge of net investment in foreign operations.

2,304

(23,599)

(10,272)

57,792

4.02.13

Realization of cash flow hedge accounting reclassified to income statement

16,212

37,933

5,949

26,472

4.03

Consolidated comprehensive income for the year

923,682

582,125

594,879

694,235

4.03.01

Attributed to controlling Shareholders

893,964

500,984

563,385

638,977

4.03.02

Attributed to non-controlling Shareholders

29,718

81,141

31,494

55,258

 

 

                                                                                                                                                                                          

Page 13


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

Consolidated Financial Statements / Statements of Cash Flows – Indirect Method

(R$ thousand)

       
   

Year to date

YTD previous year

Code

Description

01/01/2017 to 09/30/2017

01/01/2016 to 09/30/2016

6.01

Net cash from operating activities

94,171

       (225,880)

6.01.01

Cash from operations

2,420,104

        1,110,102

6.01.01.01

Profit (loss) attributable to the controlling interests

(347,298)

    (852,583)

6.01.01.03

Profit (loss) attributable to the non-controlling interests

81,141

55,258

6.01.01.04

Financial charges in borrowing and financing raised

1,899,125

     2,230,131

6.01.01.05

Financial charges in borrowing and financing granted

(50,815)

        (42,379)

6.01.01.06

Depreciation, depletion and amortization

1,123,076

        956,715

6.01.01.07

Equity in in results of affiliated companies

(98,500)

        (88,473)

6.01.01.08

Deferred tax

132,171

133,416

6.01.01.09

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

4,492

        (23,999)

6.01.01.10

Exchange differences, net

(239,384)

    (1,140,319)

6.01.01.11

Gain (loss) from derivative financial instruments

(28,503)

              362

6.01.01.13

Write-down of PPE and Intangible assets

21.600

         61,791

6.01.01.14

Gain on repurchase of debt securities

-

       (146,214)

6.01.01.15

Gains from business combination

-

        (28,013)

6.01.01.16

Provision for environmental liabilities and decommissioning of assets

(44,694)

             (138)

6.01.01.17

Others

(32,307)

          (5,453)

6.01.02

Changes in assets and liabilities

(2,325,933)

    (1,335,982)

6.01.02.01

Trade receivables - third parties

(219,153)

       (302,616)

6.01.02.02

Trade receivables - related parties

11,141

          (1,097)

6.01.02.03

Inventories

(263,261)

     1,112,678

6.01.02.04

Receivables - related parties

(9,557)

           6,449

6.01.02.05

Tax assets

(110,188)

        330,029

6.01.02.06

Judicial deposits

(32,807)

         25,556

6.01.02.08

Trade payables

480,512

        286,655

6.01.02.09

Payroll and related taxes

41,601

         28,739

6.01.02.10

Taxes in installments – REFIS

31,194

       (247,674)

6.01.02.11

Payables to related parties

(10,356)

              376

6.01.02.13

Interest paid

(2,126,761)

    (2,494,408)

6.01.02.15

Interest received - Related Parties

8,678

                -  

6.01.02.17

Others

(126,976)

        (80,669)

6.02

Net cash used in investing activities

(685,842)

    (1,733,091)

6.02.02

Advance for future capital increase

-

       (190,435)

6.02.03

Purchase of property, plant and equipment

(715,869)

    (1,179,636)

6.02.05

Receivable/payable from derivative financial instruments

30,374

       (713,049)

6.02.06

Acquisition of intangible assets

(329)

                (7)

6.02.08

Intercompany loans granted

(15,188)

        (32,118)

6.02.09

Intercompany loans received 

12,116

                -  

6.02.10

Financial Investments, net of redemption

3,054

        421,915

6.02.11

Cash and cash equivalents from discontinued operations

-

        (40,702)

6.02.12

Cash and cash equivalents in control acquisition (business combination)

-

              941

6.03

Net cash used in financing activities

(899,476)

       (754,658)

6.03.01

Borrowings and financing, net of transaction cost

171,000

        (27,089)

6.03.02

Funding Forfaiting / Drawee Risk

-

         78,240

6.03.03

Payment Forfaiting / Drawee Risk

-

       (300,321)

6.03.04

Amortization of borrowings and financing

(1,070,476)

       (354,337)

6.03.07

Payments of dividends and interests on shareholder´s equity

-

               (53)

6.03.09

Buyback of debt securities

-

       (151,098)

6.04

Exchange rate on translating cash and cash equivalents

1,417

        (56,051)

6.05

Increase (decrease) in cash and cash equivalents

(1,489,730)

    (2,769,680)

6.05.01

Cash and equivalents at the beginning of the year

4,871,162

     7,861,052

6.05.02

Cash and equivalents at the end of the year

3,381,432

     5,091,372

 

Page 14


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

Consolidated Financial Statements / Statements of Changes in Equity - 01/01/2017 to 09/30/2017

(R$ thousand)

Code

Description

Paid-in capital

Capital reserve, granted options and treasury shares

Earnings reserve

Retained earnings (accumulated losses)

Other comprehensive income

Shareholders' equity

Non-controlling interests

Consolidated shareholders' equity

5.01

Opening balances

4,540,000

30

-

(1,301,961)

2,956,459

6,194,528

1,189,993

7,384,521

5.03

Adjusted opening balances

4,540,000

30

-

(1,301,961)

2,956,459

6,194,528

1,189,993

7,384,521

5.05

Total comprehensive income

-

-

-

(347,298)

848,282

500,984

81,141

582,125

5.05.01

Profit (loss) for the year

-

-

-

(347,298)

-

(347,298)

81,141

(266,157)

5.05.02

Other comprehensive income

-

-

-

-

848,282

848,282

-

848,282

5.05.02.04

Translation adjustments for the year

-

-

-

-

82,130

82,130

-

82,130

5.05.02.08

Actuarial gains on pension plan, net of taxes

-

-

-

-

88

88

-

88

5.05.02.09

Available-for-sale assets, net of taxes

-

-

-

-

614,542

614,542

-

614,542

5.05.02.10

(Loss) / gain on the percentage change in investments

-

-

-

-

2,814

2,814

-

2,814

5.05.02.11

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

-

-

-

-

172,307

172,307

-

172,307

5.05.02.13

(Loss) / gain on hedge of net investment in foreign operations

-

-

-

-

(23,599)

(23,599)

-

(23,599)

5.06

Internal changes in shareholders’ equity

-

-

-

-

-

-

2

2

5.06.04

Non-controlling interests in affiliates

-

-

-

-

-

-

2

2

5.07

Closing balance

4,540,000

30

-

(1,649,259)

3,804,741

6,695,512

1,271,136

7,966,648

 

 

 

                                                                                                                                                                                          

Page 15


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

Consolidated Financial Statements / Statements of Changes in Equity - 01/01/2016 to 09/30/2016

(R$ thousand)

                   

Code

Description

Paid-in capital

Capital reserve, granted options and treasury shares

Earnings reserve

Retained earnings (accumulated losses)

Other comprehensive income

Shareholders' equity

Non-controlling interests

Consolidated shareholders' equity

5.01

Opening balances

4,540,000

30

-

(367,214)

1,790,693

5,963,509

1,127,779

7,091,288

5.03

Adjusted opening balances

4,540,000

30

-

(367,214)

1,790,693

5,963,509

1,127,779

7,091,288

5.05

Total comprehensive income

-

-

-

(852,583)

1,491,560

638,977

55,258

694,235

5.05.01

Profit (loss) for the year

-

-

-

(852,583)

-

(852.583)

55,258

(797,325)

5.05.02

Other comprehensive income

-

-

-

-

1,491,560

1,491,560

-

1,491,560

5.05.02.04

Translation adjustments for the year

-

-

-

-

(386,136)

(386,136)

-

(386,136)

5.05.02.08

Actuarial gains on pension plan, net of taxes

-

-

-

-

143

143

-

143

5.05.02.09

Available-for-sale assets, net of taxes

-

-

-

-

775,405

775,405

-

775,405

5.05.02.10

(Loss) / gain on the percentage change in investments

-

-

-

-

1,324

1,324

-

1,324

5.05.02.11

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

-

-

-

-

1,016,560

1,016,560

-

1,016,560

5.05.02.12

Realization of cash flow hedge reclassified to the income statement

-

-

-

 

26,472

26,472

-

26,472

5.05.02.13

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

-

-

-

-

57,792

57,792

-

57,792

5.06

Internal changes in shareholders’ equity

-

-

-

-

-

-

(606)

(606)

5.06.04

Non-controlling interests in affiliates

-

-

-

-

-

-

(606)

(606)

5.07

Closing balance

4,540,000

30

-

(1,219,797)

3,282,253

6,602,486

1,182,431

7,784,917

 

 

 

Page 16


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

Consolidated Financial Statements / Statements of Value Added

(R$ thousand)

   

Year to date

Previous year

Code

Description

01/01/2017 to 09/30/2017

01/01/2016 to

09/30/2016

7.01

Revenues

15,483,245

14,377,707

7.01.01

Sales of products and rendering of services

15,497,404

14,404,107

7.01.02

Other revenues

4,600

(13,914)

7.01.04

Allowance for (reversal of) doubtful debts

(18,759)

(12,486)

7.02

Raw materials acquired from third parties

(10,324,959)

(9,944,347)

7.02.01

Cost of sales and services

(8,503,127)

(8,108,324)

7.02.02

Materials, electric power, outsourcing and other

(1,794,938)

(1,792,772)

7.02.03

Impairment/recovery of assets

(26,894)

(43,251)

7.03

Gross value added

5,158,286

4,433,360

7.04

Retentions

(1,123,076)

(956,715)

7.04.01

Depreciation, amortization and depletion

(1,123,076)

(956,715)

7.05

Wealth created

4,035,210

3,476,645

7.06

Value added received

308,508

(527,636)

7.06.01

Equity in income of affiliates

98,500

88,473

7.06.02

Finance income

286,070

522,995

7.06.03

Others

(76,062)

(1,139,104)

7.06.03.01

Others and exchange gains

(76,062)

(1,139,104)

7.07

Wealth for distribution

4,343,718

2,949,009

7.08

Wealth distributed

4,343,718

2,949,009

7.08.01

Personnel

1,583,499

1,521,714

7.08.01.01

Salaries and wages

1,232,164

1,218,725

7.08.01.02

Benefits

275,415

232,519

7.08.01.03

Severance payment (FGTS)

75,920

70,470

7.08.02

Taxes, fees and contributions

1,194,709

1,007,978

7.08.02.01

Federal

956,805

839,706

7.08.02.02

State

221,413

153,521

7.08.02.03

Municipal

16,491

14,751

7.08.03

Remuneration on third-party capital

1,831,667

1,209,856

7.08.03.01

Interest

2,101,671

2,470,533

7.08.03.02

Leases

21,668

17,214

7.08.03.03

Others

(291,672)

(1,277,891)

7.08.03.03.01

Others and exchange losses

(291,672)

(1,277,891)

7.08.04

Remuneration on Shareholders' capital

(266,157)

(797,325)

7.08.04.03

Retained earnings (accumulated losses)

(347,298)

(852,583)

7.08.04.04

Non-controlling interests in retained earnings

81,141

55,258

7.08.05

Others

-

6,786

7.08.05.01

Gain (loss) on discontinued operations

-

6,786

 

 

Page 17


 
 


  CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

 

 

 

Comments on the Company’s Consolidated Performance

 

 

Restatements of Results for the Third Quarter of 2017

 

Companhia Siderúrgica Nacional (CSN) (B3 S.A. - BRASIL BOLSA BALCÃO : CSNA3) (NYSE: SID) discloses results for the third quarter of 2017 (3Q17). The information disclosed in Brazilian Reais and prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB); and also in accordance with accounting practices adopted in Brazil and fully convergent with international accounting standards, issued by the Accounting Pronouncements Committee (CPC) and referenced by the Brazilian Securities and Exchange Commission (CVM), pursuant to CVM Instruction 485 of 09/01/2010. The below text encompasses the Company's consolidated results for the third quarter of 2017 (3Q17) and comparisons are for the second quarter of 2017 (2Q17) and for the third quarter of 2016 (3Q16) without Metallic, unless otherwise specified. The Real/U.S. Dollar exchange rate was R$3.1674 on September 30, 2017 and R$3.3076 on June 30, 2017.

 

 

Operating and Financial Highlights

 

·         EBITDA totaled R$1,213 million, 35% up on 2Q17, accompanied by an EBITDA margin of 24%, 4.4 p.p. higher than in the same quarter of the previous year.

·         Net revenue stood at R$4,810 million in 3Q17, the highest output quarter since 2014.

·         Iron ore sales reached 7,9 million tonnes, 2% higher than in 2Q17.

·         The net debt/EBITDA ratio closed 3Q17 at 5.5x.

·         Steel lower spending with scheduled maintenance of LTQ2 and AF3.

·          Fall of R$ 662 million in working capital, with a focus on inventories reduction and a longer finance cycle.

 

Highlights

3Q16

2Q17

3Q17

Change

3Q17

x

2Q17

3Q17

x

3Q16

Steel Sales (thousand t)

1,171

1,174

1,301

11%

11%

   - Domestic Market

62%

56%

62%

6%

0%

   - Overseas Subsidiaries

34%

39%

33%

-6%

-1%

   - Exports

4%

5%

5%

0%

1%

Iron Ore Sales (thousand t)1

10,230

7,818

7,953

2%

-22%

   - Domestic Market

11%

17%

17%

0%

6%

   - Exports

89%

83%

83%

0%

-6%

Consolidated Results (R$ Million)

     

 

 

 

 

 

 

Net Revenue

4,469

4,311

4,810

12%

8%

Gross Profit

1,312

985

1,213

23%

-8%

Adjusted EBITDA

1,239

896

1,213

35%

-2%

Adjusted Net Debt

25,842

26,754

25,717

-4%

0%

Adjusted Cash Position

5,663

4,545

4,358

-4%

-23%

Net Debt / Adjusted EBITDA

7.4x

5.7x

5.5x

-0.19x

-1.88x

Adjusted EBITDA is calculated based on net income/loss, plus depreciation and amortization, income tax, net financial result, results from investees and other operating revenue (expenses), and includes the proportionate share of EBITDA of the jointly-owned subsidiaries MRS Logística and CBSI. It has also included the Company’s stakes of 100% in Congonhas Minérios, 37.27% in MRS and 50% in CBSI as of December 2015.

Adjusted Net Debt and Adjusted Cash Position include the stakes of 100% in Congonhas Minérios, 37.27% in MRS and 50% in CBS excluding Forfaiting and drawee risk operations.

 

 

 

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CSN’s Consolidated Results

 

·         Net revenue totaled R$4,810 million in 3Q17, 12% up on 2Q17, due to higher steel product sales volume compared with the immediately previous quarter and the slight upturn in shipped volume in the mining segment, with an increase in ore prices.

 

·         COGS came to R$3,597 million in 3Q17, 8% higher than in the previous quarter, accompanying the increase in sales volume in the steel segment.

 

·         Gross profit totaled R$1,213 million, 23% higher on 2Q17, while the gross margin reached 25,2%, highlight with the strong results in the mining segment.

 

·         Selling, general and administrative expenses amounted to R$491 million in 3Q17, 17% less than in 2Q17, especially due to the lower share of iron ore CIF sales in the mix in the previous quarter.

 

·         Other operating income (expenses) was a net expense of R$98 million in 3Q17, in line with the previous quarter.

 

·         In 3Q17, the net financial result was negative by R$278 million, i) as a result of financial expenses of R$348 million, partial compensated by the financial revenue of R$71 million. The foreign exchange variation of the dollar-denominated debt was positive in R$ 473 million.

 

Financial Result (R$ million)

        3Q16

2Q17

3Q17

Financial Result - IFRS

     (744)

           (829)

           (278)

Financial Revenue

      139

               84

               71

Financial Expenses

     (884)

           (912)

           (348)

Financial Expenses (ex-exchange variation)

     (823)

           (683)

           (629)

Result with Exchange Variation

      (60)

           (229)

           280

Monetary and Exchange Variation

   (131)

           (461)

           473

Hedge Accounting

     68

             227

             (202)

Derivative Result

     3

                  5

                  10

 

 

 

 

 

 

·         CSN’s equity result was a positive R$38 million in 3Q17, versus R$40 million in 2Q17.

 

Share of Profit (Loss) of Investees (R$ million)

3Q16

2Q17

3Q17

Change

3Q17

x

2Q17

3Q17

x

3Q16

MRS Logística

42

54

54

-

29%

CBSI

1

1

1

-

-

TLSA

(6)

(5)

(11)

133%

76%

Arvedi Metalfer BR

2

1

-

-

-

Eliminations

(13)

(12)

(6)

(47%)

(52%)

Unrealized Profit

1

-

-

-

 

Share of Profits (Losses) of Investees

          26

          39

         38

(3%)

45%

 

 

 

 

·          CSN recorded a third-quarter net income of R$256 million, versus net loss of R$640 million in 2Q17. In 3Q17 was reflected by a better operating margin in steel and mining, as well as financial results.

 

 

Adjusted EBITDA (R$ million)

3Q16

2Q17

3Q17

Change

3Q17

x

2Q17

3Q17

x

3Q16

Profit (Loss) for the Period

(67)

(640)

256

-

-

(-) Depreciation

311

356

344

(3%)

11%

(+)  Income Tax and Social Contribution

123

            145            

             128            

(12%)

4%

(-) Net Financial Result

744

829

278

(66%)

(63%)

EBITDA (CVM Instruction 527)

1,118

689

1,006

46%

(10%)

(+) Other Operating Income/Expenses

8

99

98

(1%)

-

(+) Share of Profit (Loss) of Investees

(26)

(39)

(38)

(3%)

46%

(-) Proportionate EBITDA of Jointly-Owned Subsidiaries

138

148

147

(1%)

 7%

Adjusted EBITDA

1,232

896

1,213

35%

(2%)

¹The Company discloses adjusted EBITDA excluding interests in investments and other operating income (expenses) in the belief that these items should not be considered when calculating recurring operating cash flow.

 

 

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·         Adjusted EBITDA amounted to R$1,213 million in 3Q17, versus R$896 million in the previous quarter, 35% up, accompanied by an adjusted EBITDA margin of 24%, due to higher performance of iron and steel.

 

 

 

 

 

¹The adjusted EBITDA margin is calculated as the ratio between adjusted EBITDA and adjusted net revenue, considering the stakes of 100% in Congonhas Minérios, 37.27% in MRS and 50% in CBSI.

 

Debt

 

The adjusted amounts of EBITDA, debt and cash include the stakes of 100% in Congonhas Minérios, 37.27% in MRS and 50% in CBSI, as well as financial investments used as collateral for exchange operations on the B3 S.A. - BRASIL BOLSA BALCÃO . On June 30, 2017, consolidated net debt totaled R$25,717 million, while the net debt/EBITDA ratio, calculated based on LTM adjusted EBITDA, stood at 5.5x.

 

 

 

 

 

 

 

 

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Foreign Exchange Exposure

 

The FX exposure of our consolidated balance sheet on September 30, 2017 was US$742 million, as shown in the table below.

 

The hedge accounting adopted by CSN correlates projected export inflows in dollars with part of the scheduled debt payments in the same currency. Therefore, the exchange variation of the dollar-denominated debt is temporarily booked under shareholders’ equity, being recorded in the income statement when dollar revenues from exports are received.

 

Foreign Exchange Exposure

IFRS

(US$ million)

6/30/2017

9/30/2017

Cash

890

      846

Accounts Receivable

404

      387

Others

2

      3

Total Assets

1,296

      1,236

Borrowings and Financing

(4,324)

       (4,329)

Suppliers

(70)

      (37)

Other Liabilities

(13)

      (5)

Total Liabilities

(4,407)

      (4,370)

Foreign Exchange Exposure

(3,110)

       (3,135)

Notional Amount of Derivatives Contracted, Net

-  

      -  

Cash Flow Hedge Accounting

1,421

      1,393

Net Foreign Exchange Exposure

(1,689)

      (1,742)

Perpetual Bonds

1,000

      1,000

Net Foreign Exchange Exposure excluding Perpetual Bonds

(689)

      (742)

 

 

Capex

 

CSN invested R$293 million in 3Q17. The cumulative amount in 2017 was much lower than 2016.

 

 

 

Capex (R$ million)

3Q16

2Q17

3Q17

Steel

133

102

119

Mining

56

106

115

Cement

157

20

34

Logistics

36

11

19

Other

0

0

6

 Total Capex - IFRS

           382

           239

           293

 

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Working Capital

 

Working capital invested in the Company’s business totaled R$2,935 million in 3Q17, R$662 million less than in 2Q17, chiefly due to the decrease in inventories and accounts receivable R$ 199 million and R$ 174 million respectively. On a same comparison basis, the average receivable period decreased by four days, while inventory turnover fell by nine days and the average payment period moved up by two days.

 

In order to calculate working capital, CSN adjusts its assets and liabilities as shown below:

 

·         Accounts Receivable: Excludes Dividends Receivable, Advances to Employees and Other Credits.

·         Inventories: Includes Estimated Losses and excludes Spare Parts, which is not part of the cash conversion cycle, and will be subsequently booked under Fixed Assets when consumed.

·         Recoverable Taxes: Composed only by the Income (IRPJ) and Social Contribution (CSLL) Taxes amount included in Recoverable Taxes.

·         Taxes Payable: Composed of Taxes Payable under Current Liabilities plus Taxes in Installments.

·         Advances from Clients: Subaccount of Other Liabilities recorded under Current Liabilities.

·         Suppliers: Includes Forfaiting and Drawee Risk.

 

 

Working Capital (R$ million)

3Q16

2Q17

3Q17

 

Change

 

3Q17

x

2Q17

3Q17

x

3Q16

Assets

4,953

6,252

5,868

 

(383)

915

Accounts Receivable

1,789

2,300

2,127

 

(174)

338

Inventories

3,002

3,744

3,545

 

(199)

543

Recoverable Taxes

162

207

196

 

(11)

34

Liabilities

2,287

2,655

2,933

 

278

646

Suppliers

1,690

2,078

2,250

 

172

560

Payroll and Related Charges

287

294

296

 

2

10

Taxes Payable

248

183

279

 

96

31

Advances from Clients

63

100

108

 

9

45

Working Capital

2,666

3,597

2,935

 

(662)

269

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Period (days)

3Q16

2Q17

3Q17

 

Change

 

3Q17

x

2Q17

3Q17

x

3Q16

Receivables

34

41

37

 

(4)

3

Supplier Payment

49

59

61

 

2

12

Inventories

87

106

97

 

(9)

10

Financial Cycle

72

88

73

 

(15)

1

 

 

 

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Results by Segment

 

The Company maintains integrated operations in five business segments: Steel, Mining, Logistics, Cement and Energy.

The main assets and/or companies comprising each segment are presented below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes: As of 2013, the Company ceased the proportional consolidation of its jointly-owned subsidiaries Namisa, MRS and CBSI. For the purpose of preparing and presenting the information by business segment, Management opted to maintain the proportional consolidation of its jointly-owned subsidiaries, in line with historical data. In the reconciliation of CSN’s consolidated results, these companies’ results are eliminated in the “Corporate Expenses/Elimination” column.

³Since the end of 2015 results, after the combination of CSN’s mining assets (Casa de Pedra, Namisa and Tecar), the consolidated result have included all the information related to this new company.

 

 

 

 

 

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Steel

 

According to the World Steel Association (WSA), global crude steel production totaled 1.1 billion tonnes until August 2017, 4.9% more than in the same period last year. According to the Brazilian Steel Institute – IABr, domestic crude steel production came to 22.5 million tonnes, 9.3% up. Apparent steel consumption grew by 4.5%, to 12.6 million tonnes, with domestic sales of 11 million tonnes and imports of 1.6 million tonnes. Exports totaled 9.8 million tonnes, 12.9% more than in the same period last year. According to INDA (the Brazilian Steel Distributors’ Association), in the first eight months, steel purchases by distributors declined by 1.9% year-on-year, totaling 1.9 million tonnes. Inventories stood at 897,500 tonnes at the end of August, 2.7% more than in the previous month, while inventory turnover fell to 3 months.

 

Automotive

According to ANFAVEA (the Auto Manufacturers’ Association), vehicle production totaled 1.9 million units in the first nine months of 2017, 27% up on the same period in 2016. In the same period, new light car, commercial vehicle, truck and bus licensing increased by 11% to 1.4 million units.

 

Construction

 

According to ABRAMAT (the Construction Material Manufacturers’ Association), sales of building materials fell by 6.1% in the year through August 2017 over the same period in 2016.

 

Home Appliances

 

According to IBGE (the Brazilian Institute of Geography and Statistics), home appliance production in the year through August increased by 10.1% over the same period last year.

 

 

 

 

 

Results from CSN’s Steel Operation

 

·         Total sales came to 1,301 tonnes in 3Q17, 11% higher than 2Q17, broken down as follows: 62% from the domestic market, 32% from our subsidiaries abroad and 6% from exports. 

 

·          In 3Q17, CSN’s domestic steel sales came to 802,000 tonnes, 23% higher than in 2Q17. Of this total, 730,000 tonnes corresponded to flat steel and 72,000 tonnes to long steel.

 

 

 

 

 

 

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·         Foreign steel sales amounted to 499,000 tonnes in 3Q17, 4% down on the previous three months. Of this total, exports reached 74,000 tonnes, the overseas subsidiaries sold 425,000 tonnes, 155,000 of which by LLC, 177,000 by SWT and 92,000 by Lusosider.

 

·          In the third quarter, CSN maintained its high share of coated products as a percentage of total sales volume, following the strategy of adding more value to its product mix. Sales of coated products such as galvanized
items and tin plate accounted for 56% of flat steel sales, considering all the markets in which
the Company operates.
The foreign market was one of

the quarter's highlights, with the share of coated

products remaining high, at 88% in 3Q17.

·          Net revenue totaled R$3,399 million in 3Q17, 11% up on 2Q17. Net average revenue per tonne stood at R$2,519,in line with 2Q17.
 
 

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·         The slab production reached 1.1 million tonnes in 3Q17, in line with 2Q17. Flat rolled steel production totaled 903,000 tonnes. 

 

Flat Steel  Production

3Q16

2Q17

3Q17

Change

(thousand tonnes)

3Q17

x

2Q17

3Q17

x

3Q16

Total Slabs (President Vargas Plant + Third Parties)

857

1,108

1,069

(4%)

25%

Slab Production

738

1,070

1,065

0%

44%

Third-Party Slabs

119

38

4

(89%)

(96%)

Total Rolled Flat Steel

835

943

903

(4%)

8%

Total Long Products

90

56

50

(10%)

(44%)

 

·         COGS moved up by 8% over the previous quarter, to R$2,845 million, chiefly due the higher sale volume.

 

·          The production cost amounted to R$1,906 million in 3Q17, 9% more than in 2Q17, particularly due to the better prices in purchase of raw material, especially to ore price, increased own consumption of coke, in addition to the end of maintenance of the blast furnace #3 and the hot strip mill.

 

·         The slab production cost came to R$1,286/t, 9% down on 2Q’s R$1,414.

 

 

·         Adjusted EBITDA amounted to R$465 million in 3Q17, 42% up on the R$327 million recorded in 2Q17, accompanied by a 3 p.p. incline the quarter before. Adjusted EBITDA margin increased to 13.7%, 3p.p. higher than in the previous quarter.

 

 

 

 

 

 

 

 

 

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Mining

 

After the sharp drop in prices in 2Q17, the closure of induction furnaces in China was a result of a decrease in steel supply, raising the utilization levels of the plants’ installed capacity and margins. In this context, the commodity’s price averaged US$70.90/dmt (Platts, Fe62%, N. China) in 3Q17, 13% up on the previous quarter.

 

In 3Q17, seaborne freight charges continued positively impacted by higher export volumes and, additionally, a recovery in oil prices. In this scenario, maritime freight costs on Route CI-C3 (Tubarão-Qingdao) averaged US$15.13/t in 3Q17, 12% up on 2Q17.

 

Results from CSN’s Mining Operations

 

·         In 3Q17, iron ore production totaled 7.7 million tonnes, 3% down on 2Q17, 1.4 million tonnes volume was purchased by third parties.

 

·         Iron ore sales reached 7.9 million tonnes in 3Q17, 2% up on 2Q17. In the quarter, 1.3 million tonnes from CSN Mineração were sold to CSN’s Presidente Vargas Plant.

 

 

 

 

 

 

 

 

 

 

 

 

·        Net revenue from mining operations totaled R$1,204 million, 13% higher than in 2Q17. CFR+FOB unit revenue stood at US$55,7/t, 13% more than in 2Q17, while the iron ore price index (Platts, 62% Fe, N. China) also fell by 13% in the same period.

 

·        Mining COGS came to R$719 million in 3Q17, 3% lower than in 2Q17.

 

·         Adjusted EBITDA totaled R$568 million in 3Q17, 39% up on 2Q17, with an adjusted EBITDA margin of 47%, 8.9 p.p. more than in 2Q17.

 

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(CFR + FOB* - US$/wmt delivered to China)

 

 

 

The table above shows the price of the two modalities, CFR+FOB.

 

Logistics

Railway Logistics: Net revenue stood at R$364 million in 3Q17, generating EBITDA of R$164 million, accompanied by an EBITDA margin of 45%.

 

Port Logistics: Sepetiba Tecon handled nearly 51,000 containers, in addition to 250,000 tonnes of steel products. Net revenue totaled R$60 million, generating EBITDA of R$21 million, accompanied by an EBITDA margin of 35%.

 

 

 

 

 

 

Cement

 

Preliminary figures from SNIC (the Cement Industry Association) indicate domestic cement sales of 40.5 million tonnes from January to September 2017, 7.4% less than in the same period the year before.

 

 

 

 

 

 

 

Results from CSN’s Cement Operations

 

In 3Q17, cement sales totaled 982,000 tonnes, 17% up on 2Q17, while net revenue amounted to R$142 million.

 

 

 

 

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Energy

According to the Energy Research Company (EPE), the trend of stability in the energy market continued in August, with consumption edging down 0.1% year-over-year, to 37,583 GWh. In the year through August, consumption remained in line with the same period last year. Considering the Brazilian regions, the South grew by 4.0% and the North by 3.4%, while the Northeast fell by 2.1%, the Southeast by 1.3% and the Midwest by 0.1%. The captive market of the distribution companies fell by 6.3% in the month, while free consumption increased by 15.3%.

 

Results from CSN’s Energy Operations

 

In 3Q17, net revenue from energy operations totaled R$103 million, EBITDA stood at R$27 million and EBITDA margin was 26.5%.

 

Capital Market

 

CSN’s shares appreciated by 32% in 3Q17, while the IBOVESPA moved up by 17%. Daily traded volume on the B3 S.A. - BRASIL BOLSA BALCÃO averaged R$72.6 million. On the New York Stock Exchange (NYSE), CSN’s American Depositary Receipts (ADRs) appreciated by 17%, versus the Dow Jones’ 4% appreciation. On the NYSE, daily traded volume of CSN’s ADRs averaged US$7.4 million.

 

 

 

 

3Q17

Number of shares in thousands

1,387,524

Market Cap:

 

Closing price (R$/share)

9.61

Closing price (US$/ADR)

                     2.96

Market cap (R$ million)

13,334

Market cap (US$ million)

                   4,107

Total return including dividends and interest on equity

 

CSNA3

32%

SID

32%

Ibovespa

17%

Dow Jones

4%

Volume

 

Daily average (thousand shares)

8,311

Daily average (R$ thousand)

72,650

Daily average (thousand ADRs)

2,684

Daily average (US$ thousand)

7,405

Source: Bloomberg

 
 

 

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 (Expressed in thousands of reais – R$, unless otherwise stated)

 

1.     DESCRIPTION OF BUSINESS

 

Companhia Siderúrgica Nacional “CSN”, also referred to as the Company or Parent Company, is a publicly-held company incorporated on April 9, 1941, under the laws of the Federative Republic of Brazil (Companhia Siderúrgica Nacional, its subsidiaries, associates and joint ventures are collectively referred to herein as the "Group”). The Company’s registered office is located in São Paulo, SP, Brazil.

                                                               

CSN is listed on the São Paulo Stock Exchange (B3 - Brasil, Bolsa, Balcão) and on the New York Stock Exchange (NYSE). Accordingly, the Company reports its information to the Brazilian Securities and Exchange Commission (CVM) and the U.S. Securities and Exchange Commission (SEC).

 

The Group's main operating activities are divided into five (5) segments as follows:

 

·       Steel:

 

The Company’s main industrial facility is the Presidente Vargas steelworks (“UPV”), located in the city of Volta Redonda, State of Rio de Janeiro. This segment consolidates all operations related to the production, distribution and sale of flat steel, long steel, metallic containers and galvanized steel. In addition to the facilities in Brazil, CSN has operations in the United States, Portugal and Germany aimed at gaining markets and providing excellent services to end consumers. Its steel is used in home appliances, civil construction and automobile industries.

 

·       Mining:

 

The production of iron ore is developed in the city of Congonhas, State of Minas Gerais.

 

Iron ore is sold basically in the international market, especially in Europe and Asia. The prices charged in these markets are historically cyclical and subject to significant fluctuations over short periods of time, driven by several factors related to global demand, strategies adopted by the major steel producers, and the foreign exchange rate. All these factors are beyond the Company’s control. The ore transportation is carried out through Terminal de Carvão e Minérios do Porto de Itaguaí - TECAR, a solid bulk terminal, one of the four terminals that comprise the Itaguaí Port, in Rio de Janeiro. Imports of coal and coke are also carried out through this terminal by providing services to CSN’s steel segment.

 

The Company´s mining activities also comprise exploitation of tin in the State of Rondônia, to supply the needs of the UPV. The surplus of these raw materials is sold to subsidiaries and third parties.

 

·       Cement:

 

CSN entered the cement market boosted by the synergy between this activity and its existing businesses. Next to the Presidente Vargas Steelworks (UPV) in Volta Redonda (RJ), the Company installed a new business unit that produces CP-III type cement using slag produced by the UPV’s blast furnaces. It also exploits limestone and dolomite at the Arcos unit in the State of Minas Gerais, to meet the needs of the UPV and of the cement plant.

 

In the second half of 2016, the Company started the operation of a new clinker kiln in Arcos, where it already operates a clinker kiln using limestone from a Company’s mine and two cement mills. With this project, the cement production capacity in the Southeast may reach 4.4 million tons per year. In a later stage, the Company evaluates the implementation of an advanced milling unit, adding another 1 million tons.

 

 

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·       Logistics

 

Railroads:

 

CSN has interests in three railroad companies: MRS Logística S.A., which manages the Southeast Railway System of the former Rede Ferroviária Federal S.A. (“RFFSA”), Transnordestina Logística S.A. (“TLSA”) and FTL - Ferrovia Transnordestina Logística S.A. (“FTL”), which operates the former Northeast Railway System of RFFSA, in the States of Maranhão, Piauí, Ceará, Rio Grande do Norte, Paraíba, Pernambuco and Alagoas, with TLSA being responsible for the rail links of Missão Velha-Salgueiro, Salgueiro-Trindade, Trindade-Eliseu Martins, Salgueiro-Porto de Suape and Missão Velha-Porto de Pecém (Railway System II) and FTL being responsible for the rail links of São Luiz-Mucuripe, Arrojado-Recife, Itabaiana-Cabedelo, Paula Cavalcante-Macau and Propriá-Jorge Lins (Railway System I).

 

Ports:

 

The Company operates in the State of Rio de Janeiro, through its subsidiary Sepetiba Tecon S.A., the Container Terminal (Tecon) and through its subsidiary CSN Mineração S.A., TECAR, both at the Itaguaí Port. Locate in the Bay of Sepetiba, they have privileged highway, railroad and maritime access.

 

At Tecon, shipment of CSN´s steel products, movement of containers, storage, consolidation and deconsolidation of cargo are carried out and, at Tecar, the shipment of iron ore to overseas market and the unloading of coal and other products, such as petroleum coke, sulfur and zinc concentrate for our own use and for several customers.

 

·       Energy:

 

As energy is fundamental to its production process, the Company has electric energy generation assets to guarantee its self-sufficiency.

 

Note 24 - “Segment Information” details the financial information per CSN´s business segment.

 

·       Going Concern

 

In 2017, the Company paid, including principal and interest, approximately R$4 billion of its borrowings and financing. During 2018 the borrowings are expected to be paid and, including interest to be incurred next year, amount to approximately R$7.7 billion. 

 

The financial leverage may adversely affect the businesses, financial conditions and operating results, entailing the following:

 

·         Allocation of a substantial part of the cash generated from operations for repayment of the borrowings and financing.

·         Exposure to (i) fluctuations in interest rates due to the renegotiation of debts and eventual new borrowings taken, and (ii) fluctuations in exchange rates since a significant part of the borrowings and financing is denominated in foreign currency.

·         Increase in economic and financial vulnerability due to adverse conditions of the industry and segment, limiting the funds available in the short term, considering the high financial leverage and the expected cash disbursements;

·         Limitation of the Company’s ability to enter into new businesses (acquisitions) until the financial leverage is reduced;

·         Limitation of the Company’s ability to obtain new credit lines under more favorable interest conditions due to the risks associated to the current financial leverage.

 

 

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The Company’s ability to continue as a going concern depends, therefore, on the achievement of operating targets defined by Management, and on the refinancing of existing debts and/or actions related to financial deleveraging.

 

In addition to the continuous focus on operating income improvement, Management has various initiatives in progress to increase the Company’s liquidity through the extension of payment terms of borrowings and financing.

 

This plan was started in 2015 with the renegotiation of R$ 2.5 billion with Caixa Econômica Federal and R$ 2.2 billion with Banco do Brasil S.A, postponing the maturities from 2016 and 2017 to 2018 through 2022. In 2016, the Company extended the installments of certain NCE contracts amounting to R$ 100 million and prepayments of US$ 66 million with Bradesco, postponing the maturities from 2016 to 2019. For 2017, Management remains committed to the plan to extend it debt payment term, mainly those of short term, seeking the renegotiation of borrowings and financing in the amount of R$ 1.5 billion.

 

Additionally, Management studies financial deleveraging alternatives based on the disposal of non-strategic assets; however, it is not possible to affirm that these assets will occur within a twelve-month period. Thus, the Company did not segregate and did not reclassify any assets in the financial statements as discontinued operations in accordance with CPC 31 (IFRS 5).

 

Based on Management’s cash flow projections that covered the operating period until December 2018, which depend on factors such as the achievement of production targets, sales volumes and prices, as well as on renegotiations of borrowings and financing, Management believes that the Company has the appropriate resources to continue as a going concern in a reasonably foreseeable period of time. Accordingly, the Company’s financial information for the quarter ended September 30, 2017 has been prepared on the assumption that the Company will continue as a going concern.

 

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

2.a) Basis of preparation

 

The Group’s parent company and consolidated condensed interim financial information (“condensed quarterly information”) has been prepared in accordance with International Financial Reporting Standards (“IFRS”), implemented in Brazil through the Accounting Pronouncements Committee (“CPC”), approved by the Brazilian Securities and Exchange Commission (“CVM”) and the Federal Accounting Council (“CFC”). All the relevant information of the interim financial statements, and only this information, is being disclosed and corresponds to the information used by the Company's management in its activities

 

The condensed interim financial information has been prepared and is being presented in accordance with CPC 21 (R1) - “Interim Financial Reporting” and IAS 34 - “Interim Financial Reporting”, consistently with the standards issued by the CVM.

 

The significant accounting policies applied in this condensed interim financial information are consistent with the policies described in Note 2 to the Company’s financial statements for the year ended December 31, 2016, filed with CVM.

 

This condensed interim financial information does not include all requirements of annual or full financial statements and, accordingly, should be read in conjunction with the Company’s financial statements for the year ended December 31, 2016.

 

Therefore, in this condensed interim financial information the following notes are not repeated, either due to redundancy or to the materiality in relation to those already presented in the annual financial statements:

 

Note 02 – Summary of significant accounting policies

Note 03 – Business combination

Note 04 - Noncurrent assets held for sale and results from discontinued operations

 

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Note 10 - Investments

Note 17 - Taxes in installments

Note 18 - Provision for tax, social security, labor, civil and environmental risks and judicial deposits

Note 28 - Employee benefits

Note 30 – Commitments

 

The parent company and consolidated condensed interim financial information was approved by Management on December 22, 2017.

 

2.b) Basis of presentation

 

The consolidated condensed interim financial information is presented in Brazilian reais, which is the Company’s principal functional currency and the Group’s presentation currency.

 

Transactions in foreign currencies are translated into the functional currency using the exchange rates in effect at the dates of the transactions or valuations when items are remeasured. The asset and liability balances are translated at the exchange rates prevailing at the end of the reporting period. As of September 30, 2017, US$1 is equivalent to R$3.1680 (R$3.2591 as of December 31, 2016) and €1 is equivalent to R$3.7430 (R$3.4384 as of December 31, 2016), according to the rates obtained from the Central Bank of Brazil website.

 

2.c) Basis of consolidation

 

The accounting policies have been consistently applied to all consolidated companies. The consolidated condensed interim financial information for the period ended September 30, 2017 and year ended December 31, 2016 includes the following direct and indirect subsidiaries and joint ventures, as well as the exclusive funds, as described below:

 

 

 

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·                      Companies

 

 

   

Equity interests (%)

 

Companies

 

9/30/2017

 

12/31/2016

 

Core business

             

Direct interest in subsidiaries: full consolidation

 

 

 

 

 

 

CSN Islands VII Corp.

 

        100.00

 

        100.00

 

Financial transactions

CSN Islands XI Corp.

 

        100.00

 

        100.00

 

Financial transactions

CSN Islands XII Corp.

 

        100.00

 

        100.00

 

Financial transactions

CSN Minerals S.L.U.

 

        100.00

 

        100.00

 

Equity interests

CSN Export Europe, S.L.U.

 

        100.00

 

        100.00

 

Financial transactions and Equity interests

CSN Metals S.L.U.

 

        100.00

 

        100.00

 

Equity interests and Financial transactions

CSN Americas S.L.U.

 

        100.00

 

        100.00

 

Equity interests and Financial transactions

CSN Steel S.L.U.

 

        100.00

 

        100.00

 

Equity interests and Financial transactions

TdBB S.A (*)

 

        100.00

 

        100.00

 

Equity interests

Sepetiba Tecon S.A.

 

          99.99

 

          99.99

 

Port services

Minérios Nacional  S.A.

 

          99.99

 

          99.99

 

Mining and Equity interests

Companhia Florestal do Brasil

 

          99.99

 

          99.99

 

Reforestation

Estanho de Rondônia S.A.

 

          99.99

 

          99.99

 

Tin Mining

Companhia Metalúrgica Prada

 

          99.99

 

          99.99

 

Manufacture of containers and distribution of steel products

CSN Gestão de Recursos Financeiros Ltda. (*)

 

          99.99

 

          99.99

 

Management of funds and securities portfolio

CSN Mineração S.A.

 

          87.52

 

          87.52

 

Mining and Equity interests

CSN Energia S.A.(1)

 

          99.99

 

        100.00

 

Sale of electric power

FTL - Ferrovia Transnordestina Logística S.A.

 

          90.78

 

          90.78

 

Railroad logistics

Nordeste Logística S.A.

 

          99.99

 

          99.99

 

Port services

CGPAR - Construção Pesada S.A.(2)

 

 

 

        100.00

 

Mining support services and Equity interests

             

Indirect interest in subsidiaries: full consolidation

           

Companhia Siderúrgica Nacional LLC

 

        100.00

 

        100.00

 

Steel

CSN Europe Lda.(3)

     

        100.00

 

Financial transactions, product sales and Equity interests

CSN Ibéria Lda. (3)

 

 

 

        100.00

 

Financial transactions, product sales and Equity interests

Lusosider Projectos Siderúrgicos S.A.

 

          99.94

 

          99.94

 

Equity interests and product sales

Lusosider Aços Planos, S. A.

 

          99.99

 

          99.99

 

Steel and Equity interests

CSN Resources S.A.

 

        100.00

 

        100.00

 

Financial transactions and Equity interests

Companhia Brasileira de Latas

 

        100.00

 

        100.00

 

Sale of cans and containers in general and Equity interests

Companhia de Embalagens Metálicas MMSA

 

          99.67

 

          99.67

 

Production and sale of cans and related activities

Companhia de Embalagens Metálicas - MTM

 

          99.67

 

          99.67

 

Production and sale of cans and related activities

CSN Steel Holdings 1, S.L.U.

 

        100.00

 

        100.00

 

Financial transactions, product sales and Equity interests

CSN Productos Siderúrgicos S.L.

 

        100.00

 

        100.00

 

Financial transactions, product sales and Equity interests

Stalhwerk Thüringen GmbH

 

        100.00

 

        100.00

 

Production and sale of long steel and related activities

CSN Steel Sections UK Limited (*)

 

        100.00

 

        100.00

 

Sale of long steel

CSN Steel Sections Polska Sp.Z.o.o

 

        100.00

 

        100.00

 

Financial transactions, product sales and Equity interests

CSN Asia Limited

 

        100.00

 

        100.00

 

Commercial representation

Namisa International Minérios SLU

 

          87.52

 

          87.52

 

Financial transactions, product sales and Equity interests

CSN Mining GmbH

 

          87.52

 

          87.52

 

Financial transactions, product sales and Equity interests

CSN Mining Asia Limited

 

          87.52

 

          87.52

 

Commercial representation

Aceros México CSN

 

        100.00

 

        100.00

 

Commercial representation,sale of steel and related activities

Lusosider Ibérica S.A. (1)

 

          99.94

     

Steel, industrial and commercial activities and Equity interests

CSN Mining Portugal, Unipessoal Lda. (1)

 

          87.52

 

 

 

Commercial representation

             

Direct interest in joint operations: proportionate consolidation

           

Itá Energética S.A.

 

          48.75

 

          48.75

 

Electric power generation

Consórcio da Usina Hidrelétrica de Igarapava

 

          17.92

 

          17.92

 

Electric power consortium

             

Direct interest in joint ventures: equity method

 

 

 

 

 

 

MRS Logística S.A.

 

          18.64

 

          18.64

 

Railroad transportation

Aceros Del Orinoco S.A.

 

          31.82

 

          31.82

 

Dormant company

CBSI - Companhia Brasileira de Serviços de Infraestrutura

 

          50.00

 

          50.00

 

Equity interests and product sales and iron ore

Transnordestina Logística S.A.

 

          46.30

 

          49.02

 

Railroad logistics

             

Indirect interest in joint ventures: equity method

           

MRS Logística S.A.

 

          16.30

 

          16.30

 

Railroad transportation

             

Direct interest in associates: equity method

           

Arvedi Metalfer do Brasil S.A.

 

          20.00

 

          20.00

 

Metallurgy and Equity interests

 

(*) Dormant companies, therefore, they are presented in note 8.a., where information on companies accounted for under the equity method is disclosed;

(1)   Transfer of shares;

(2)   Company sold to the subsidiary CSN Mineração and subsequently merged in August 2017;

(3)   Companies liquidated in July 2017.

 

 

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·                      Exclusive funds

 

 

   

Equity interests (%)

 

Exclusive funds

 

09/30/2017

 

12/31/2016

 

Core business

Direct interest: full consolidation

 

 

 

 

 

 

Diplic II  - Private credit balanced mutual fund

 

       100.00

 

       100.00

 

Investment fund

Caixa Vértice - Private credit balanced mutual fund

 

       100.00

 

       100.00

 

Investment fund

VR1 - Private credit balanced mutual fund

 

       100.00

 

       100.00

 

Investment fund

 

 

2.d) Restatement of account balances as of September 2016

 

The Company reclassified the cash flow hedge result in the third quarter of 2016 from finance income to other operating expenses in the amount of R$26,472 (in line with the classification used in 2017).

 

The effects of the reclassifications are shown below:

 

 

       

Consolidated

 

Parent Company

 

 

 

 

09/30/2016

 

 

 

09/30/2016

 

 

As originally reported

 

Reclassifications

 

Restated

 

As originally reported

 

Reclassifications

 

Restated

Net Revenue

 

12,630,353

     

12,630,353

 

6,457,435

     

6,457,435

Cost of goods sold

 

(9,470,412)

     

(9,470,412)

 

(5,370,811)

     

(5,370,811)

Operating Income (expenses)

 

(1,840,607)

 

(26,472)

 

(1,867,079)

 

(1,337,554)

 

(26,472)

 

(1,364,026)

Selling Expenses

 

(1,247,971)

     

(1,247,971)

 

(448,060)

     

(448,060)

General and administrative expenses

 

(382,114)

     

(382,114)

 

(283,481)

     

(283,481)

Equity Results

 

88,473

     

88,473

 

(493,617)

     

(493,617)

Other Operating income (expenses), net

 

(298,995)

 

(26,472)

 

(325,467)

 

(112,396)

 

(26,472)

 

(138,868)

Income before financial results

 

1,319,334

 

(26,472)

 

1,292,862

 

(250,930)

 

(26,472)

 

(277,402)

Financial results, net

 

(1,845,256)

 

26,472

 

(1,818,784)

 

(600,636)

 

26,472

 

(574,164)

Income before income tax and social contribution

 

(525,922)

     

(525,922)

 

(851,566)

     

(851,566)

Income tax and social contribution

 

(264,617)

     

(264,617)

 

5,769

     

5,769

Profit (loss) from continued operations

 

(790,539)

     

(790,539)

 

(845,797)

     

(845,797)

Profit (loss) from discontinued operations

 

(6,786)

     

(6,786)

 

(6,786)

     

(6,786)

Net income (loss) for the year

 

(797,325)

     

(797,325)

 

(852,583)

     

(852,583)

                         

Attributable to:

 

(852,583)

     

(852,583)

 

(852,583)

     

(852,583)

Participation of controlling interest

 

55,258

     

55,258

           

Participation of non-controlling interest

 

(797,325)

     

(797,325)

 

(852,583)

     

(852,583)

                         

 

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3.     CASH AND CASH EQUIVALENTS

 

 

 

 

 

Consolidated

 

 

 

Parent Company

 

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

Current

 

 

 

 

 

 

 

Cash and cash equivalents

             

    Cash and banks

          234,663

 

          502,480

 

            39,888

 

            30,308

               

Short-term investments

 

 

 

 

 

 

 

In Brazil:

             

Government securities

            49,636

 

            17,929

 

              2,745

 

            17,178

Private securities

          431,024

 

       1,390,707

 

          286,920

 

       1,216,461

 

          480,660

 

       1,408,636

 

          289,665

 

       1,233,639

Abroad:

             

Time deposits

2,666,109

 

2,960,046

 

338,885

 

202,799

Total short-term investments

3,146,769

 

4,368,682

 

628,550

 

1,436,438

Cash and cash equivalents

3,381,432

 

4,871,162

 

668,438

 

1,466,746

 

 

The funds available at the parent company and subsidiaries established in Brazil are basically invested in investment funds, considered exclusive, and their financial statements were consolidated into the Company’s statements. The funds include repurchase agreements backed by private and government securities, with fixed rate income and immediate liquidity.

 

Private securities are short-term investments in Bank Deposit Certificates (CDBs) with yields pegged to the Interbank Deposit Certificate (CDI) fluctuation, and government securities are basically repurchase agreements backed by National Treasury Notes. The funds are managed by BNY Mellon Serviços Financeiros DTVM S.A. and Caixa Econômica Federal (CEF) and their assets collateralize any losses on investments and transactions carried out. The investments in funds were consolidated.

 

A significant part of the funds is invested abroad in time deposits in banks considered by management as top rated banks and the returns are based on fixed interest rates.

 

4.     SHORT-TERM INVESTMENTS

 

 

     

 

Consolidated

 

 

 

Parent Company

   

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

CDB - Bank certificate of deposit (1)

 

      708,282

 

      658,476

 

      708,282

 

      658,476

Government securities (2)

 

        49,056

 

      101,915

 

        18,459

 

        99,957

 

 

      757,338

 

      760,391

 

      726,741

 

      758,433

 

 

1.    Financial investment linked to Bank Certificate of Deposit to secure a letter of guarantee.

 

2.    In 2017, financial investment in Government Securities managed by its exclusive funds, which secures the CDI interest rate futures contracts in the period as detailed in note 12 (b).

 

 

 

 

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5.     TRADE RECEIVABLES

 

   

 

Consolidated

 

 

 

Parent Company

 

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

Trade receivables

 

 

 

 

 

 

 

Third parties

 

 

 

 

 

 

 

Domestic market

1,191,309

 

1,027,639

 

981,900

 

733,608

Foreign market

1,007,669

 

919,936

 

77,605

 

67,652

 

2,198,978

 

1,947,575

 

1,059,505

 

801,260

Allowance for doubtful accounts

    (190,963)

 

    (172,782)

 

    (139,567)

 

    (124,351)

 

2,008,015

 

1,774,793

 

919,938

 

676,909

Related parties (note 17 a)

118,696

 

129,837

 

1,045,864

 

1,034,098

 

2,126,711

 

1,904,630

 

1,965,802

 

1,711,007

               

Other receivables

             

Dividends receivable (note 17 a) (*)

74,911

 

37,679

 

875,707

 

873,473

Advances to employees

22,258

 

34,607

 

12,432

 

21,953

Other receivables

        16,495

 

        20,300

 

        14,407

 

        18,420

 

      113,664

 

        92,586

 

      902,546

 

      913,846

 

   2,240,375

 

   1,997,216

 

   2,868,348

 

   2,624,853

 

 

 (*) Refers mainly to dividends receivable from CSN Mineração S.A. amounting to R$ 837,084.

 

In accordance with the internal sales policy the Group carries out transactions of assignment of receivables without co-obligation in which, after assigning the customer’s trade notes/bills and receiving the amounts from each transaction closed, CSN settles the receivables and becomes entirely free from the credit risk of the transaction. This transaction totals R$244,738 as of September 30, 2017 (R$263,644 as of December 31, 2016), less the trade receivables.

 

The gross balance of receivables from third parties is comprised as follows:

 

     

 

Consolidated

 

Parent Company

   

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

Current

 

   1,368,035

 

   1,381,255

 

      434,332

 

      404,259

Past-due up to 180 days

 

      304,976

 

      245,012

 

      187,148

 

      139,036

Past-due over 180 days

 

      525,967

 

      321,308

 

      438,025

 

      257,965

 

 

   2,198,978

 

   1,947,575

 

   1,059,505

 

      801,260

 

The movements in the Company’s allowance for doubtful accounts are as follows:

 

     

 

Consolidated

 

 Parent Company

   

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

Opening balance

 

    (172,782)

 

    (151,733)

 

    (124,351)

 

    (112,502)

Estimated losses

 

      (34,323)

 

      (25,474)

 

      (28,651)

 

      (16,347)

Recovery of receivables

 

        16,142

 

          4,425

 

        13,435

 

          4,498

Closing balance

 

    (190,963)

 

    (172,782)

 

    (139,567)

 

    (124,351)

                 

 

 

 

 

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  CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

 

6.     INVENTORIES

 

   

 

Consolidated

 

 

 

Parent Company

 

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

Finished goods

1,154,240

 

1,183,619

 

868,812

 

784,130

Work in progress

1,032,344

 

674,860

 

860,254

 

557,598

Raw materials

1,006,595

 

1,124,158

 

614,359

 

767,020

Spare Parts

823,958

 

824,478

 

434,788

 

412,206

Iron ore

346,294

 

255,029

 

13,640

 

18,899

Advances to suppliers

5,838

 

3,168

 

4,048

 

1,689

(-) Provision for losses

(122,811)

 

(101,176)

 

(47,827)

 

(37,312)

 

       4,246,458

 

       3,964,136

 

       2,748,074

 

       2,504,230

 

 

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

 

   

 

Consolidated

 

 

Parent Company

   

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

Opening balance

 

(101,176)

 

(111,427)

 

(37,312)

 

(40,462)

Reversal / (losses) for slow-moving and obsolescence

 

(21,635)

 

10,251

 

(10,515)

 

3,150

Closing balance

 

(122,811)

 

(101,176)

 

(47,827)

 

(37,312)

 

 

7.     OTHER CURRENT AND NONCURRENT ASSETS

 

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

 

 

 

 

 

 

Consolidated

 

   

 

 

Parent Company

 

Current

Non-current

Current

Non-current

 

09/30/2017

 

12/31/2016

 

09/30/2017

 

12/31/2016

 

09/30/2017

 

12/31/2016

 

09/30/2017

 

12/31/2016

Judicial deposits (note 15)

       

364,884

 

331,258

         

292,179

 

273,038

Credits with the PGFN (1)

       

46,774

 

46,774

         

46,774

 

46,774

Recoverable taxes (2)

878,629

 

780,715

 

399,146

 

386,872

 

519,080

 

471,955

 

218,545

 

178,773

Prepaid expenses

74,038

 

27,011

 

32,786

 

20,421

 

21,074

 

2,785

 

11,899

   

Actuarial asset - related party (note 17 a)

       

95,701

 

119,854

         

90,676

 

109,106

Derivative financial instruments (Note 12 I)

79

 

2,298

                       

Exclusive funds

               

79

           

Securities held for trading (note 12 I)

3,084

 

2,966

         

2,918

 

2,818

       

Iron ore inventory (3)

       

144,499

 

144,499

               

Northeast Investment Fund – FINOR

       

26,598

 

26,598

         

26,598

 

26,598

Other receivables (note 12 I)

       

15,195

 

15,291

         

1,400

 

2,847

Loans with related parties (note 17 a e 12 I)

2,382

     

502,976

 

479,960

 

34,038

 

25,602

 

394,446

 

375,716

Other receivables from related parties (note 17 a)

3,576

 

5,768

 

30,895

 

32,020

 

20,942

 

132,384

 

330,946

 

311,414

Others

66,452

 

33,255

 

67,691

 

72,273

         

67,191

 

71,696

 

1,028,240

 

852,013

 

1,727,145

 

1,675,820

 

598,131

 

635,544

 

1,480,654

 

1,395,962

 

 

1.     Refers to the excess of judicial deposit originated by the 2009 REFIS program (Tax Debt Refinancing Program). After the settlement of the program amount, the balance of one of the lawsuits was withdrawn by the Company with a court authorization.

 

2.     Refers mainly to taxes on revenue (PIS/COFINS) and state VAT (ICMS) recoverable and income tax and social contribution for offset. 

 

3.     Long-term iron ore inventories that will be used after the implementation of the processing plant, generating as final product the pellet feed, expected to start operating in the second half of 2018.

 

 

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Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

 

8.     INVESTMENTS

 

The information on the activities of subsidiaries, joint ventures, joint operations, associates and other investments did not have any changes in relation to that disclosed in the Company's financial statements as of December 31, 2016 and, accordingly, the Company decided not to repeat it in the condensed interim financial information as of September 30, 2017.

 

·       Events Occurred in 2017

 

Disposal of Subsidiary - CGPAR Construção Pesada - “CGPAR”

 

In July 2017, the Company completed the sale of its subsidiary CGPAR CONSTRUÇÃO PESADA S.A. to CSN Mineração, company also under the Company’s control. The transaction price was R$99,452.

 

 

 

 

 

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Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

09/30/2017

             

12/31/2016

 

09/30/2016

Companies

 

Number of shares held by CSN in units

 

% Direct equity interest

 

Participation In

 

 

% Direct equity interest

 

  Participation In

 

 

     

Assets

 

Liabilities

 

Shareholders’ equity

 

Profit (loss) for period

   

Assets

 

Liabilities

 

Shareholders’ equity

 

Profit (loss) for period

                     
                     
 

Common

 

Preferred

                   

Investments under the equity method

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subsidiaries

                                               

CSN Islands VII Corp.

 

  20,001,000

 

 

 

100.00

 

  5,284,720

 

  5,380,335

 

(95,615)

 

(303,381)

 

100.00

 

6,436,140

 

  6,228,374

 

  207,766

 

(159,599)

CSN Islands IX Corp.

(1)

           

 

 

 

 

 

 

 

 

 

 

(1,314)

CSN Islands XI Corp.

 

50,000

 

 

 

100.00

 

  2,384,593

 

  2,409,929

 

  (25,336)

 

  (46,032)

 

100.00

 

  2,530,563

 

  2,509,866

 

  20,697

 

  14,691

CSN Islands XII Corp.

 

1,540

     

100.00

 

  2,102,156

 

  3,172,314

 

  (1,070,158)

 

  (50,859)

 

100.00

 

  2,244,240

 

  3,263,539

 

  (1,019,299)

 

106,072

CSN Minerals S.L.U.

 

  3,500

 

 

 

100.00

 

  3,089,582

 

19,787

 

  3,069,795

 

154,274

 

100.00

 

  3,833,669

 

9,840

 

  3,823,829

 

  (708,925)

CSN Export Europe, S.L.U.

 

  3,500

     

100.00

 

  632,678

 

7,851

 

  624,827

 

  (11,458)

 

100.00

 

666,362

 

  30,077

 

  636,285

 

  (191,685)

CSN Metals S.L.U.

 

  16,504,020

 

 

 

100.00

 

588,812

 

12,770

 

  576,042

 

  (19,128)

 

100.00

 

636,408

 

  20,668

 

615,740

 

  (181,007)

CSN Americas S.L.U.

 

  3,500

     

100.00

 

1,452,870

 

10,080

 

1,442,790

 

134,055

 

100.00

 

1,492,678

 

4,445

 

1,488,233

 

  (157,146)

CSN Steel S.L.U.

 

22,042,688

 

 

 

100.00

 

2,245,818

 

  1,502,031

 

  743,787

 

  44,545

 

100.00

 

2,537,179

 

1,585,977

 

951,202

 

  324,607

Sepetiba Tecon S.A.

 

254,015,052

     

99.99

 

463,519

 

  167,067

 

  296,452

 

19,905

 

99.99

 

441,214

 

  165,172

 

  276,042

 

12,554

Minérios Nacional  S.A.

 

66,393,587

 

 

 

99.99

 

  89,269

 

  44,999

 

  44,270

 

(9,626)

 

99.99

 

  74,738

 

  28,038

 

  46,700

 

(9,808)

Fair Value - Minérios Nacional

                     

2,123,507

     

 

 

 

 

2,123,507

 

Estanho de Rondônia S.A.

 

121,861,697

 

 

 

99.99

 

  43,278

 

  40,093

 

  3,185

 

(8,079)

 

99.99

 

32,816

 

21,552

 

 11,264

 

  (9,120)

Companhia Metalúrgica Prada

 

  313,651,399

 

 

 

99.99

 

714,808

 

  596,512

 

  118,296

 

  (30,532)

 

99.99

 

769,337

 

  620,509

 

148,828

 

  (36,635)

CSN Mineração S.A.

 

  158,419,480

 

 

 

87.52

 

14,035,504

 

5,321,094

 

  8,714,410

 

617,692

 

87.52

 

  13,039,767

 

 4,943,090

 

  8,096,677

 

389,103

CSN Energia S.A.

 

  43,149

 

 

 

99.99

 

130,151

 

  53,306

 

  76,845

 

  42,732

 

100.00

 

  109,290

 

  39,654

 

  69,636

 

19,228

FTL - Ferrovia Transnordestina Logística S.A.

395,302,149

 

 

 

90.78

 

429,212

 

  137,568

 

291,644

 

(66,241)

 

90.78

 

 484,218

 

126,334

 

  357,884

 

(2,047)

Companhia Florestal do Brasil

 

38,364,462

 

 

 

99.99

 

35,111

 

5,815

 

  29,296

 

(3,379)

 

99.99

 

  35,206

 

  5,179.0

 

  30,027

 

  (1,522)

Nordeste Logística

 

99,999

 

 

 

99.99

 

80

 

  55

 

25

 

  (1)

 

99.99

 

81

 

55

 

26

 

(55)

CGPAR - Construção Pesada S.A.

(2)

 

 

 

 

 

 

 

 

 

 

 

 

  723

 

100.00

 

  40,889

 

  27,558

 

  13,331

 

4,552

Fair Value fixed assets - CGPAR

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,940)

 

 

 

 

 

  53,949

 

 

 

 

 

 

 

 

 

 

  33,722,161

 

18,881,606

 

16,964,062

 

461,270

 

 

 

35,404,795

 

19,629,927

 

17,952,324

 

(588,056)

Joint-venture and Joint-operation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Itá Energética S.A.

 

  253,606,846

 

 

 

48.75

 

  267,692

 

15,879

 

  251,813

 

7,793

 

48.75

 

282,383

 

  27,728

 

  254,655

 

7,344

MRS Logística S.A.

 

26,611,282

 

  2,673,312

 

  18.64

 

1,500,161

 

829,665

 

  670,496

 

73,310

 

  18.64

 

1,411,526

 

  795,903

 

615,623

 

  67,757

CBSI - Companhia Brasileira de Serviços de Infraestrutura

1,876,146

 

 

 

50.00

 

18,079

 

14,264

 

  3,815

 

  1,805

 

50.00

 

13,574

 

11,517

 

2,057

 

  1,942

Transnordestina Logística S.A.

 

  24,168,304

 

 

 

46.28

 

3,752,120

 

  2,547,903

 

  1,204,217

 

(19,347)

 

49.02

 

  3,786,556

 

2,566,315

 

  1,220,241

 

  (17,122)

Fair Value allocated to TLSA in loss of control

 

 

 

 

 

 

 

 

 

271,116

 

 

 

 

 

 

 

271,116

 

 

 

 

 

 

 

 

 

  5,538,052

 

3,407,711

 

2,401,457

 

63,561

 

 

 

5,494,039

 

3,401,463

 

  2,363,692

 

59,921

Associates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Arvedi Metalfer do Brasil

 

  46,994,971

 

 

 

20.00

 

  52,802

 

  28,308

 

  24,494

 

  447

 

20.00

 

 53,101

 

  48,258

 

4,843

 

  1,795.0

 

 

 

 

 

 

 

 

52,802

 

28,308

 

24,494

 

  447

 

 

 

  53,101

 

48,258

 

4,843

 

  1,795.0

Classified as available for sale (note 12 I)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Usiminas

 

 

 

 

 

 

 

 

 

 

 

1,966,027

 

 

 

 

 

 

 

 

 

1,353,664

 

 

Panatlântica

 

 

 

 

 

 

 

 

 

 

 

  22,783

 

 

 

 

 

 

 

 

 

  20,604

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  1,988,810

 

 

 

 

 

 

 

 

 

1,374,268

 

 

Others Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from subsidiaries' inventories

 

 

 

 

 

 

 

 

 

 

  (83,982)

 

  25,865

 

 

 

 

 

 

 

  (74,459)

 

  34,966

Others

(3)

 

 

 

 

 

 

 

 

 

 

  63,542

 

(92)

 

 

 

 

 

 

 

63,541

 

(2,243)

 

 

 

 

 

 

 

 

 

 

 

 

  (20,440)

 

25,773

 

 

 

 

 

 

 

(10,918)

 

32,723

Total Investments

 

 

 

 

 

 

 

 

 

 

 

21,358,383

 

  551,051

 

 

 

 

 

 

 

21,684,209

 

  (493,617)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Classification of investments in the balance sheet

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in assets

 

 

 

 

 

 

 

 

 

 

 

  22,549,492

 

 

 

 

 

 

 

 

 

  22,703,508

 

 

Investment with equity deficit

 

 

 

 

 

 

 

 

 

 

 

  (1,191,109)

 

 

 

 

 

 

 

 

 

  (1,019,299)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21,358,383

 

 

 

 

 

 

 

 

 

21,684,209

 

 

 

(1)         Company liquidated in 2016;

(2)         Company sold in July 2017 to the subsidiary CSN Mineração.

(3)         Refers mainly to the goodwill of the subsidiary Cia Metalúrgica Prada amounting to R$63,509.

 

 

Page 41


 
 


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Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

 

 

 

The number of shares, the balances of assets, liabilities and shareholders’ equity, and the amounts of profit (loss) for the period refer to the interests held by CSN in those companies.

 

8.b) Movement in investments in subsidiaries, joint ventures, joint operations, associates and other investments

 

   

 

Consolidated

 

 Parent Company

 

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

Opening balance

4,568,451

 

3,998,239

 

21,684,209

 

24,422,283

Classified in assets - Investiments

4,568,451

 

3,998,239

 

22,703,508

 

25,517,369

Classified in liabilities - Provision for investments with equity deficit

       

(1,019,299)

 

(1,095,086)

Opening balance

4,568,451

 

3,998,239

 

21,684,209

 

24,422,283

Capital increase/acquisition of shares

20,264

 

190,651

 

30,108

 

242,854

Dividends (1)

(36,959)

 

(36,765)

 

(1,497,680)

 

(2,469,827)

Comprehensive income  (2)

617,450

 

713,442

 

690,147

 

314,230

Equity pickup  (3)

129,396

 

108,031

 

551,051

 

(370,343)

Reclassification of Metalic's investment on September 30, 2016 to held for sale

           

(123,290)

Reclassification of Metalic’s result to discontinued operations

           

(6,786)

Acquisition of 50% interest in CGPAR

           

8,608

Fair value of property, plant and equipment - Acquisition of control -  CGPAR

           

57,889

Amortization of fair value - Investment in MRS

(8,810)

 

(11,746)

       

Amortization of fair value - Investment in CGPAR

   

(3,940)

       

Impairment of the Fair Value of Transnordestina

   

(387,989)

     

(387,989)

Sale of investment of CGPAR

       

(99,452)

   

Others

3,452

 

(1,472)

     

(3,420)

Closing balance

5,293,244

 

4,568,451

 

21,358,383

 

21,684,209

Classified in assets - Investiments

5,293,244

 

4,568,451

 

22,549,492

 

22,703,508

Classified in liabilities - Provision for investment with equity

deficit

     

(1,191,109)

 

(1,019,299)

Closing balance

5,293,244

 

4,568,451

 

21,358,383

 

21,684,209

               
               

 

 

1.    In 2017, refers to the allocation of dividends of subsidiaries CSN Minerals, CSN Steel, CSN Americas, CSN Metals, CSN Energia, Itá Energética and MRS Logística.

 

2.    Refers to the mark-to-market of investments classified as available for sale and translation to reporting currency of the foreign investment whose functional currency is not the Real, actuarial gain/loss and gain/loss on investment hedge from investments accounted for under the equity method.

 

3.    The reconciliation of the equity in results of joint ventures and associates and the amount recorded in the statement of income are presented below and derive from the elimination of results of CSN's transactions with these companies:

 

Page 42


 
 


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Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

 

 

     

Consolidated

 

9/30/2017

 

9/30/2016

Equity in results of affiliated companies

 

 

 

MRS Logística S.A.

146,583

 

135,480

CBSI - Companhia Brasileira de Serviços de Infraestrutura

1,805

 

1,942

Transnordestina

(19,347)

 

(17,122)

Arvedi Metalfer do Brasil

447

 

1,795

Others

(92)

 

727

 

129,396

 

122,822

Eliminations

     

To cost of sales

(33,463)

 

(33,712)

To taxes

11,377

 

11,462

Others

     

Amortization of fair value - Investment in MRS

(8,810)

 

(8,810)

Others

   

(3,289)

Adjusted Equity in results

98,500

 

88,473

       

 

 

8.c) Investments in joint ventures and joint operations

 

The balances of the balance sheet and statement of income of joint ventures are presented below and refer to 100% of the companies’ results:

 

               

09/30/2017

             

12/31/2016

 

 

Joint-Venture

 

Joint-Operation

 

 

 

Joint-Operation

 

Joint-Operation

Equity interest (%)

 

MRS Logística

 

CBSI

 

 Transnordestina Logística

 

Itá Energética

 

MRS Logística

 

CBSI

 

 Transnordestina Logística

 

Itá Energética

 

34.94%

 

50.00%

 

46.30%

 

48.75%

 

34.94%

 

50.00%

 

49.02%

 

48.75%

Balance sheet

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

                               

Cash and cash equivalents

 

585,198

 

2,887

 

1,532

 

14,130

 

345,164

 

2,925

 

1,899

 

17,689

Advance to suppliers

 

14,334

 

316

     

94

 

7,452

 

951

     

99

Other current assets

 

536,212

 

29,830

 

51,950

 

15,795

 

406,170

 

19,603

 

54,652

 

16,054

Total current assets

 

1,135,744

 

33,033

 

53,482

 

30,019

 

758,786

 

23,479

 

56,551

 

33,842

Non-current assets

 

                             

Other non-current assets

 

679,044

 

550

 

257,125

 

27,839

 

598,577

 

234

 

261,292

 

29,219

Investments, PP&E and intangible assets

 

6,233,545

 

2,576

 

7,793,342

 

491,253

 

6,215,442

 

3,434

 

7,407,189

 

516,186

Total non-current assets

 

6,912,589

 

3,126

 

8,050,467

 

519,092

 

6,814,019

 

3,668

 

7,668,481

 

545,405

Total Assets

 

8,048,333

 

36,159

 

8,103,949

 

549,111

 

7,572,805

 

27,147

 

7,725,032

 

579,247

                                 

Current liabilities

 

                             

Borrowings and financing

 

760,278

     

50,193

     

653,491

     

76,441

   

Other current liabilities

 

1,172,314

 

28,528

 

127,054

 

29,263

 

740,319

 

23,034

 

134,747

 

53,858

Total current liabilities

 

1,932,592

 

28,528

 

177,247

 

29,263

 

1,393,810

 

23,034

 

211,188

 

53,858

Non-current liabilities

 

                             

Borrowings and financing

 

1,938,117

     

5,325,794

     

2,176,357

     

5,024,404

   

Other non-current liabilities

 

580,425

         

3,309

 

699,830

         

3,020

Total non-current liabilities

 

2,518,542

     

5,325,794

 

3,309

 

2,876,187

     

5,024,404

 

3,020

Shareholders’ equity

 

3,597,199

 

7,631

 

2,600,908

 

516,539

 

3,302,808

 

4,113

 

2,489,440

 

522,369

Total liabilities and shareholders’
equity

8,048,333

 

36,159

 

8,103,949

 

549,111

 

7,572,805

 

27,147

 

7,725,032

 

579,247

 

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Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

 

       

01/01/2017 a 09/30/2017

         

01/01/2016 a 09/30/2016

 

 

Joint-Venture

 

Joint-Operation

 

Joint-Venture

 

Joint-Operation

Equity interest (%)

 

MRS Logística

 

CBSI

 

 Transnordestina Logística

 

Itá Energética

 

MRS Logística

 

CBSI

 

 Transnordestina Logística

 

Itá Energética

 

34.94%

 

50.00%

 

46.30%

 

48.75%

 

34.94%

 

50.00%

 

49.02%

 

48.75%

Statements of Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

2,588,815

 

102,977

 

25

 

124,778

 

2,469,568

 

90,745

     

130,832

Cost of sales and services

 

(1,695,291)

 

(90,550)

     

(57,498)

 

(1,635,014)

 

(78,333)

     

(68,289)

Gross profit

 

893,524

 

12,427

 

25

 

67,280

 

834,554

 

12,412

     

62,543

(Expenses) and operating revenues

 

(145,206)

 

(6,161)

 

(31,704)

 

(43,459)

 

(92,797)

 

(6,399)

 

(19,083)

 

(40,153)

Financial income (expenses), net

 

(147,755)

 

(817)

 

(10,106)

 

372

 

(183,580)

 

(1,339)

 

(13,131)

 

407

Income before income tax and social contribution

600,563

 

5,449

 

(41,785)

 

24,193

 

558,177

 

4,674

 

(32,214)

 

22,797

Current and deferred income tax and social contribution

(207,257)

 

(1,838)

     

(8,208)

 

(194,663)

 

(790)

     

(7,733)

Profit / (loss) for the period

 

393,306

 

3,611

 

(41,785)

 

15,985

 

363,514

 

3,884

 

(32,214)

 

15,064

 

·         TRANSNORDESTINA LOGÍSTICA S.A. (“TLSA”)

 

TLSA is primarily engaged in the public service operation and development of a railroad network in the Northeast of Brazil, comprising the rail links Velha-Salgueiro, Salgueiro-Trindade, Trindade-Eliseu Martins, Salgueiro- Porto de Suape, and Missão Velha-Porto de Pecém (“Railway System II”).

 

It is in pre-operational phase and will continue as such until the completion of Railway System II. The approved schedule, which estimated the completion of the work by January 2017, is currently under review and discussion with the responsible agencies; however, Management believes that new deadlines for project completion will not have material adverse effects on the expected return on the investment. After analyzing this matter, Management considered as appropriate the use of the accounting basis of operational continuity (going concern) of the project in the preparation of its financial statements.

 

During 2017, the other shareholders of TLSA subscribed 5,708,087 shares in the amount of R$723,858, diluting CSN’s interest in TLSA’s capital to 46.30%. As a result of the transactions described above and the change in the shareholders’ interest in TLSA’s capital in 2017, the Company recognized a gain of R$2,814 in shareholders’ equity under other comprehensive income.

 

Even though as of December 31, 2016 the Company reports negative net working capital of R$ 182,339, Management counts on the funds from its shareholders and third parties for completion of the work, which are expected to be available based on agreements previously entered into and recent discussions between the involved parties. After analyzing this matter, Management considered as appropriate the use of the accounting basis of operational continuity (going concern) of the project in the preparation of the financial statements for the year ended December 31, 2016.

 

Accordingly, TLSA conducted an impairment test of its long-lived assets using the discounted cash flow method. In order to perform the test, TLSA adopted the following main assumptions:

 

 

 

 

 

 

 

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Version: 1

 

 

Measurement of recoverable amount:

 

 

Cash flow projection

Until 2057

Gross margin

Estimated based on market study to capture cargo and operating costs according to market trend studies

Cost estimate

Costs based on study and market trends

Growth rate in perpetuity

Growth rate was not considered because the model projection is until the end of the concession.

Discount rate

Ranges from 4.25% to 7.90% in real terms.

 

In addition, CSN, as an investor, conducted an impairment test of its interest in TLSA, based on TLSA’s dividend payment capacity, a methodology known as Dividend Discount Model, or DDM, to remunerate the capital invested by its shareholders. In order to conduct this test, some factors were taken into account, such as:

 

Another important aspect that was considered in the impairment analysis of CSN’s investment in TLSA was the need to apply an additional risk percentage to the discount rate in addition to that already used to determine TLSA”s discounted cash flow. Due to the sharing of investor risks and the fact that the asset that is being tested represents the cash-generating unit, which in turn equals the legal entity, the risk determined by CSN’s management is the same as that applied by TLSA in the evaluation of the investment, and therefore an additional risk factor to the model would not apply.

 

As a result of the test performed, the Company recognized in 2016 a loss on the surplus value of TLSA’s investment in the amount of R$ 387,989 recorded in other operating expenses and R $ 131,916 in deferred taxes.

 

 

 

9.     PROPERTY, PLANT AND EQUIPMENT

 

The information on property, plant and equipment has not changed significantly in relation to that disclosed in the Company's financial statements as of December 31, 2016.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

Land

 

Buildings and Infrastructure

 

Machinery, equipment and facilities

 

Furniture and fixtures

 

Construction
in progress

 

Other (*)

 

Total

Balance at December 31, 2016

264,629

 

2,815,679

 

12,369,630

 

33,163

 

2,260,864

 

391,914

 

18,135,879

Cost

264,629

 

3,637,903

 

20,712,371

 

173,821

 

2,260,864

 

676,529

 

27,726,117

Accumulated depreciation

   

(822,224)

 

(8,342,741)

 

(140,658)

     

(284,615)

 

(9,590,238)

Balance at December 31, 2016

264,629

 

2,815,679

 

12,369,630

 

33,163

 

2,260,864

 

391,914

 

18,135,879

Effect of foreign exchange differences

4,985

 

12,087

 

37,792

 

339

 

1,545

 

(452)

 

56,296

Acquisitions

4,814

 

419

 

66,242

 

518

 

641,330

 

6,811

 

720,134

Capitalized interest (notes 23 and 27)

               

73,955

     

73,955

Write - offs

660

 

31,093

 

(50,067)

 

(38)

 

(2,281)

 

(897)

 

(21,530)

Depreciation

   

(121,230)

 

(913,867)

 

(4,272)

     

(36,433)

 

(1,075,802)

Transfers to other asset categories

2,635

 

66,384

 

542,318

 

2,796

 

(566,782)

 

(47,351)

   

Transfers to intangible assets

               

(22,584)

 

(3,596)

 

(26,180)

Others

       

2,139

     

10,928

     

13,067

Balance at September 30, 2017

277,723

 

2,804,432

 

12,054,187

 

32,506

 

2,396,975

 

309,996

 

17,875,819

Cost

277,723

 

3,782,163

 

21,565,441

 

178,246

 

2,396,975

 

558,928

 

28,759,476

Accumulated depreciation

   

(977,731)

 

(9,511,254)

 

(145,740)

     

(248,932)

 

(10,883,657)

Balance at September 30, 2017

277,723

 

2,804,432

 

12,054,187

 

32,506

 

2,396,975

 

309,996

 

17,875,819

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Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Parent Company

 

 

Land

 

Buildings and Infrastructure

 

Machinery, equipment and facilities

 

Furniture and fixtures

 

Construction
in progress

 

Other (*)

 

Total

Balance at December 31, 2016

 

83,350

 

1,093,806

 

7,447,653

 

15,014

 

934,587

 

5,716

 

9,580,126

Cost

 

83,350

 

1,275,784

 

12,567,114

 

114,141

 

934,587

 

116,987

 

15,091,963

Accumulated depreciation

 

   

(181,978)

 

(5,119,461)

 

(99,127)

     

(111,271)

 

(5,511,837)

Balance at December 31, 2016

 

83,350

 

1,093,806

 

7,447,653

 

15,014

 

934,587

 

5,716

 

9,580,126

Acquisitions

 

4,814

 

419

 

29,937

 

174

 

319,637

 

960

 

355,941

Capitalized interest (notes 23 and 27)

                 

17,800

     

17,800

Write - offs

 

453

 

24,823

 

(22,370)

 

(34)

 

(2,281)

 

(2)

 

589

Depreciation

     

(24,347)

 

(455,676)

 

(2,072)

     

(4,184)

 

(486,279)

Transfers to other assets categories

 

2,449

 

37

 

400,864

 

596

 

(407,730)

 

3,784

   

Transfers to intangible assets

                 

(22,584)

 

(3,596)

 

(26,180)

Others

 

       

4,721

     

11,302

     

16,023

Balance at September 30, 2017

 

91,066

 

1,094,738

 

7,405,129

 

13,678

 

850,731

 

2,678

 

9,458,020

Cost

 

91,066

 

1,319,202

 

13,136,266

 

114,353

 

850,731

 

117,542

 

15,629,160

Accumulated depreciation

     

(224,464)

 

(5,731,137)

 

(100,675)

     

(114,864)

 

(6,171,140)

Balance at September 30, 2017

 

91,066

 

1,094,738

 

7,405,129

 

13,678

 

850,731

 

2,678

 

9,458,020

 

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

 

The assumptions used for the impairment test in December 2016 are still effective and there is not factor that justifies the recognition of impairment in the quarter.

 

The breakdown of the projects comprising construction in progress is as follows:

 

 

 

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Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

Project description

 

Start date

 

Completion date

 

09/30/2017

 

12/31/2016

Logistics

 

 

 

 

 

 

 

 

 

 

   

 Current investments for maintenance of current operations.  

         

129,117

 

      103,284

 

 

 

 

 

 

 

 

129,117

 

      103,284

Mining

                   

 

 

 Expansion of Casa de Pedra Mine capacity production.  

 

2007

 

2018

(1)

740,301

 

      689,160

   

 Expansion of TECAR export capacity.  

 

2009

 

2020

(2)

271,405

 

      253,545

 

 

 Current investments for maintenance of current operations.  

 

 

 

 

 

372,878

 

      261,056

               

1,384,584

 

   1,203,761

Steel

 

 

 

 

 

 

 

 

 

 

   

 Supply of 16 torpedo’s cars for operation in the steel industry.  

 

2008

 

2019

 

98,292

 

        91,779

 

 

 Current investments for maintenance of current operations.  

 

 

 

 

(3)

203,545

 

      307,448

               

301,837

 

      399,227

Cement

 

 

 

 

 

 

 

 

 

 

   

 Construction of cement plants.  

 

2011

 

2020

(4)

548,022

 

      529,631

 

 

 Current investments for maintenance of current operations.  

 

 

 

 

 

33,415

 

        24,961

               

581,437

 

      554,592

Total Construction in Progress

 

 

 

 

 

2,396,975

 

   2,260,864

                     

 

 

(1)   Estimated completion date of the Central Plant Step 1;

(2)   Estimated completion date of phase 60 Mtpa;

(3)   Refers substantially to renovation of coke ovens batteries and reuse of carbo-chemical cooling water;

(4)   Refers substantially to the acquisition of new Integrated Cement Plants.

 

 

The estimated useful lives are as follows:

 

 

   

 

Consolidated

 

 

 

Parent Company

 

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

In Years

 

 

 

 

 

 

 

Buildings

39

 

41

 

41

 

42

Machinery, equipment and facilities

21

 

18

 

23

 

19

Furniture and fixtures

12

 

12

 

12

 

11

Others

15

 

14

 

12

 

11

               

 

 

 

 

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Version: 1

 

 

10.   INTANGIBLE ASSETS

 

 

                         

Consolidated

     

Parent Company

 

Goodwill

 

Customer relationships

 

Software

 

Trademarks
and
patents

 

Rights and licenses (*)

 

Others

 

Total

 

Software

 

Total

Balance at December 31, 2016

3,590,931

 

297,660

 

68,253

 

116,196

 

3,184,924

 

440

 

7,258,404

 

47,547

 

47,547

 Cost

3,834,234

 

444,635

 

183,166

 

116,196

 

3,185,700

 

440

 

7,764,371

 

98,992

 

98,992

 Accumulated amortization

(133,973)

 

(146,975)

 

(114,913)

     

(776)

     

(396,637)

 

(51,445)

 

(51,445)

 Adjustment for accumulated recoverable value

(109,330)

                     

(109,330)

       

Balance at December 31, 2016

3,590,931

 

297,660

 

68,253

 

116,196

 

3,184,924

 

440

 

7,258,404

 

47,547

 

47,547

Effect of foreign exchange differences

   

24,598

 

109

 

10,293

     

41

 

35,041

       

Acquisitions and expenditures

       

329

             

329

       

Transfer of property, plant and equipment

       

26,180

             

26,180

 

26,180

 

26,180

Disposal

       

(70)

             

(70)

       

Write-offs (note 22)

                           

(68)

 

(68)

Amortization

   

(28,471)

 

(16,622)

     

(2,181)

     

(47,274)

 

(11,009)

 

(11,009)

Balance at September 30, 2017

3,590,931

 

293,787

 

78,179

 

126,489

 

3,182,743

 

481

 

7,272,610

 

62,650

 

62,650

 Cost

3,834,234

 

483,897

 

164,206

 

126,489

 

3,185,700

 

481

 

7,795,007

 

126,279

 

126,279

 Accumulated amortization

(133,973)

 

(190,110)

 

(86,027)

     

(2,957)

     

(413,067)

 

(63,629)

 

(63,629)

 Adjustment for accumulated recoverable value

(109,330)

                     

(109,330)

       

Balance at September 30, 2017

3,590,931

 

293,787

 

78,179

 

126,489

 

3,182,743

 

481

 

7,272,610

 

62,650

 

62,650

                                   

 

 

 (*) Composed mainly by mineral rights with potential of 1,101 million tons (Not reviewed by independent auditors). Amortization is based on production volume.

 

The average useful lives by nature are as follows:

 

 

   

 

Consolidated

 

 Parent Company

 

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

In Years

 

 

 

 

 

 

 

Software

8

 

8

 

8

 

8

Customer relationships

13

 

13

 

 

 

 

 

 

 

The assumptions used for the impairment test in December 2016 are still effective and there is not factor that justifies the recognition of impairment in the quarter.

 

 

 

 

 

 

 

 

 

 

 

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Version: 1

 

 

11.   BORROWINGS, FINANCING AND DEBENTURES

 

The balances of borrowings, financing and debentures, which are carried at amortized cost, are as follows:

 

 

               

 

Consolidated

         

 

Parent Company

   

Rates p.a.  (%)

 

Current liabilities

Non-current liabilities

 

Current liabilities

Non-current liabilities

     

09/30/2017

 

12/31/2016

 

09/30/2017

 

12/31/2016

 

09/30/2017

 

12/31/2016

 

09/30/2017

 

12/31/2016

FOREIGN CURRENCY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prepayment

 

1% to 3,5%

 

2,020

 

110,944

 

468,864

 

482,347

 

2,020

 

110,944

 

468,864

 

482,347

Prepayment

 

3,51% to 8%

 

593,571

 

438,802

 

3,885,024

 

4,290,062

 

593,571

 

438,802

 

3,885,024

 

4,290,061

Prepayment - Intercompany

 

3,51% to 8%

                 

47,268

 

72,128

 

4,650,586

 

4,876,840

Perpetual bonds

 

7%

 

4,312

 

4,436

 

3,168,000

 

3,259,100

               

Bonds

 

4,14% to 10%

 

43,943

 

137,126

 

5,374,819

 

5,529,380

               

Bonds Intercompany

 

4,14% to 10%

 

               

69,650

 

27,044

 

3,290,951

 

3,385,587

Intercompany

 

Libor 6M to 3%

                 

1,059,676

 

149,654

 

1,552,322

 

2,719,420

ACC

 

3.14%

 

172,800

             

172,800

           

Others

 

1,2% to 8%

 

97,789

 

95,983

 

185,997

 

259,262

               

 

 

 

 

914,435

 

787,291

 

13,082,704

 

13,820,151

 

1,944,985

 

798,572

 

13,847,747

 

15,754,255

LOCAL CURRENCY

                                   

BNDES/FINAME

 

1,3% + TJLP and Fixed rate 2,5% to 6% + 1,5%

 

         73,321

 

         73,736

 

       974,124

 

    1,012,268

 

         42,978

 

         43,467

 

925,576

 

945,633

Debentures

 

110,8% to 113,7% CDI

 

       521,277

 

       538,003

 

       770,767

 

    1,270,383

 

       521,277

 

       538,003

 

770,767

 

1,270,383

Prepayment

 

109,5% to 116,5% CDI e fixed rate of 8%

    1,646,132

 

       570,778

 

    3,765,000

 

    5,080,000

 

       881,530

 

       519,806

 

2,480,000

 

3,080,000

CCB

 

112,5% and 113% CDI

 

       854,692

 

       181,143

 

    6,467,000

 

    7,200,000

 

       854,694

 

       181,143

 

6,467,000

 

7,200,000

       

3,095,422

 

1,363,660

 

11,976,891

 

14,562,651

 

2,300,479

 

1,282,419

 

10,643,343

 

12,496,016

Total borrowings and financing

 

4,009,857

 

2,150,951

 

25,059,595

 

28,382,802

 

4,245,464

 

2,080,991

 

24,491,090

 

28,250,271

Transaction costs and issue premiums

 

       (26,047)

 

       (33,503)

 

       (39,467)

 

       (59,232)

 

       (22,487)

 

       (29,109)

 

       (36,515)

 

       (53,378)

Total borrowings and financing + transaction costs

 

3,983,810

 

2,117,448

 

25,020,128

 

28,323,570

 

4,222,977

 

2,051,882

 

24,454,575

 

28,196,893

                                     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

 

11.a) Maturities of borrowings, financing and debentures presented in noncurrent liabilities

 

As of September 30, 2017, the principal amount of long-term borrowings, financing and debentures by maturity year, adjusted for interest and inflation, is as follows:

 

   

 

 

Consolidated

 

 

 

Parent Company

2018

 

      2,605,487

 

10%

 

      2,599,694

 

11%

2019

 

      7,069,770

 

28%

 

      6,959,083

 

28%

2020

 

      7,353,336

 

29%

 

      4,593,422

 

19%

2021

 

      2,205,561

 

9%

 

      2,774,382

 

11%

2022

 

      1,834,061

 

7%

 

      2,088,205

 

9%

After 2022

 

         823,380

 

3%

 

      5,476,304

 

22%

Perpetual bonds

 

      3,168,000

 

14%

 

 

 

 

 

 

    25,059,595

 

100%

 

    24,491,090

 

100%

 

 

11.b) Borrowings, financing and debentures raised and paid

 

The table below shows the borrowings, financing and debentures raised and paid during the period:

 

 

     

 

Consolidated

 

 

   Parent Company

 

 

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

Opening balance

 

30,441,018

 

34,282,515

 

30,248,775

 

33,988,090

Raised

 

175,265

 

108,274

 

171,000

 

141,076

Paid

 

(1,070,476)

 

(1,103,093)

 

(1,204,516)

 

(705,170)

Payment of charges

 

(2,126,761)

 

(3,050,036)

 

(1,748,225)

 

(2,571,987)

Provision of charges

 

1,973,080

 

3,160,357

 

1,688,305

 

2,665,327

Others (1)

 

(388,188)

 

(2,956,999)

 

(477,787)

 

(3,268,561)

Opening balance

 

29,003,938

 

30,441,018

 

28,677,552

 

30,248,775

 

 

1. Includes unrealized exchange and monetary variations.

 

Until the 3rd quarter of 2017, the Group raised and paid borrowings as shown below:

 

·       Raised

 

 

           

Consolidated

Transaction

 

Financial institution

 

Date

 

Amount

 

Maturity

CDC

 

 BANCO MERCEDEZ BENS

 

Aug/17

 

                 4,265

 

Oct/21

ACC

 

 BANCO DO BRASIL

 

Sep/17

 

             171,000

 

nov/17

 Total 

 

 

 

 

 

             175,265

 

 

 

 

 

 

·       Paid

 

 

       

Consolidated

Transaction

 

Principal

 

Charges

 Fixed Rate Notes

 

87,701

 

12,663

 Bonds

     

520,367

 Debentures

 

479,617

 

178,069

 Bank Credit Bill 

     

698,679

 Export Credit Note 

 

200,000

 

519,476

 Pre - Export Payment 

 

252,315

 

139,909

 BNDES/FINAME

 

50,843

 

57,085

  Others 

     

513

 Total 

 

1,070,476

 

2,126,761

         

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Version: 1

 

 

 

 

·       Covenants

 

The Company’s borrowing agreements provide for the fulfillment of certain non-financial obligations, as well as the maintenance of certain parameters and performance indicators, such as the publication of its audited financial statements within the regulatory terms or payment of commission on assumption of risks in case the indicator of net debt to EBITDA reaches the levels set out in such agreements.

 

As of September 30, 2017, the Company has provisioned R$38,725 in the Consolidated and R$23,473 in the Parent Company for commission on assumption of risks.

 

12.   FINANCIAL INSTRUMENTS

 

The information on policies applied to financial instruments has not changed significantly in relation to that disclosed in the Company's financial statements as of December 31, 2016 and, accordingly, the Company decided not to repeat it fully in the condensed interim financial information as of September 30, 2017.

 

I - Identification and measurement of financial instruments

 

The Company enters into transactions involving various financial instruments, mainly cash and cash equivalents, including short-term investments, marketable securities, trade receivables, trade payables, and borrowings and financing. The Company also enters into derivative transactions, especially interest rate and foreign exchange rate swaps.

 

 

 

·           Classification of financial instruments

 

Consolidated

     

 

 

09/30/2017

 

 

 

12/31/2016

 

Notes

 

Available for sale

 

Fair value through profit or loss

 

Loans and receivables

 

Other liabilities measured at amortized cost method

 

Balances

 

Available for sale

 

Fair value through profit or loss

 

Loans and receivables 

 

Other liabilities measured at amortized cost method

 

Balances

                     

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

                                           

Cash and cash equivalents

 

3

         

3,381,432

     

3,381,432

         

4,871,162

     

4,871,162

Short-term investments

 

4

         

757,338

     

757,338

         

760,391

     

760,391

Trade receivables

 

5

         

2,126,711

     

2,126,711

         

1,904,630

     

1,904,630

Derivative financial instruments

 

7

     

79

         

79

     

2,298

         

2,298

Trading securities

 

7

     

3,084

         

3,084

     

2,966

         

2,966

Borrowings - related parties

 

7

         

2,382

     

2,382

                   

Dividends receivable

 

               

74,911

 

74,911

             

74,911

 

74,911

Total

         

3,163

 

6,267,863

 

74,911

 

6,345,937

     

5,264

 

7,536,183

 

74,911

 

7,616,358

 

 

                                         

Non-current

                                           

Other trade receivables

 

7

         

15,195

     

15,195

         

15,291

     

15,291

Investments

 

8

 

1,988,810

             

1,988,810

 

1,374,268

             

1,374,268

Borrowings - related parties

 

7

         

502,976

     

502,976

         

479,960

     

479,960

Total

     

1,988,810

     

518,171

     

2,506,981

 

1,374,268

     

495,251

     

1,869,519

                                             

Total Assets

 

   

1,988,810

 

3,163

 

6,786,034

 

74,911

 

8,852,918

 

1,374,268

 

5,264

 

8,031,434

     

9,485,877

                                             

Liabilities

 

                                         

Current

                                           

Borrowings and financing

 

11

             

4,009,857

 

4,009,857

             

2,150,951

 

2,150,951

Derivative financial instruments

 

12

                         

121

         

121

Trade payables

 

               

2,249,151

 

2,249,151

             

1,763,206

 

1,763,206

Dividends and interest on capital

 

13

             

484,706

 

484,706

             

484,570

 

484,570

Total

 

               

6,743,714

 

6,743,714

     

121

     

4,398,727

 

4,398,848

                                             

Non-current

 

                                         

Borrowings and financing

 

11

             

25,059,595

 

25,059,595

             

28,382,802

 

28,382,802

Total

 

               

25,059,595

 

25,059,595

             

28,382,802

 

28,382,802

                                             

Total Liabilities

 

               

31,803,309

 

31,803,309

     

121

     

32,781,529

 

32,781,650

                                             

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Version: 1

 

 

 

·           Fair value measurement

 

The following table shows the financial instruments recognized at fair value through profit or loss classifying them according to the fair value hierarchy:

 

 

Consolidated

 

       

09/30/2017

         

12/31/2016

 

Level 1

 

Level 2

 

Balances

 

Level 1

 

Level 2

 

Balances

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Current

                       

Financial assets at fair value through profit or loss     

 

                     

Derivative financial instruments

     

79

 

79

     

2,298

 

2,298

Trading securities

 

3,084

     

3,084

 

2,966

     

2,966

Non-current

                       

Available-for-sale financial assets

 

                     

Investments

 

1,988,810

     

1,988,810

 

1,374,268

     

1,374,268

Total Assets

 

1,991,894

 

79

 

1,991,973

 

1,377,234

 

2,298

 

1,379,532

                         

Liabilities

 

                     

Current

                       

Financial liabilities at fair value through profit or loss

 

                     

Derivative financial instruments

                 

121

 

121

Total Liabilities

 

               

121

 

121

                         

Page 52


 
 


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Version: 1

 

 

 

II – Investments in securities classified as available-for-sale and measured at fair value through OCI

 

The Company has investments in common (USIM3) and preferred (USIM5) shares of Usiminas (“Usiminas Shares”), designated as available-for-sale financial assets. The Company adopts this designation because the nature of the investment is not included in any other categories of financial instruments (loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss). The asset is classified as a non-current asset in line item “investments” and is carried at fair value based on the quoted price on the stock exchange (B3 - Brasil, Bolsa, Balcão). According to the Company's policy, the gains and losses arising from changes in share prices are recorded directly in shareholders’ equity, as other comprehensive income.

 

The Company's accounting policy requires a quarterly analysis based on quantitative and qualitative information available in the market from the moment the instrument demonstrates a drop of more than 20% in its market value or from a significant drop in market value compared to their acquisition cost for more than 12 months. If the Company concludes that there was a significant drop in the instrument’s price, an impairment loss must be recognized. In 2012, considering the price of Usiminas shares on B3 - Brasil, Bolsa, Balcão, the first impairment of these shares was recognized. Under this policy, whenever the share price reaches a level lower than the last impairment recognized, the Company must recognize new losses in profit or loss, redefining the new minimum level of the share price.

 

During 2016 and until the third quarter of 2017, no impairment was recognized and the gains arising from change in share prices in the period was recognized in other comprehensive income:

 

 

 

 

 

 

Class of shares

 

Quantity

 

09/30/2017

 

Quantity

 

12/31/2016

 

Variation in the period

   

Share price

 

Closing Balance

   

Share price

 

Closing Balance

 

Share price

 

Variation in the carrying amount

Common

 

107,156,651

 

10.05

 

1,076,924

 

107,156,651

 

8.26

 

885,114

 

1.79

 

191,810

Preferred

 

114,280,556

 

7.78

 

889,103

 

114,280,556

 

4.10

 

468,550

 

3.68

 

420,553

 

 

221,437,207

     

1,966,027

 

221,437,207

     

1,353,664

     

612,363

 

 

As of September 30, 2017, and December 31, 2016, the Company's interest in USIMINAS comprised 15.19% in common shares and 20.86% in preferred shares.

 

As of September 30, 2017, the amount recognized in comprehensive income for available-for-sale investments, net of taxes, is R$1,083,693 (R$678,035 as of December 31, 2016).

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III -           Financial risk management:

 

As of September 30, 2017, there were no changes in financial risk policies and management in relation to those disclosed in the Company's financial statements for the year ended December 31, 2016.

 

12.a) Foreign exchange rate and interest rate risks:

 

·           Foreign exchange rate risk:

 

The exposure arises from the existence of assets and liabilities denominated in Dollar or Euro, since the Company's functional currency is substantially the real and is denominated natural currency hedge. The net exposure is the result of offsetting the natural currency exposure by hedging instruments adopted by CSN.

 

The consolidated net exposure as of September 30, 2017 is as follows:

 

   

 

 

09/30/2017

Foreign Exchange Exposure

 

(Amounts in US$’000)

 

(Amounts in €’000)

Cash and cash equivalents overseas

 

845,766

 

3,045

Trade receivables

 

387,127

 

1,273

 Other assets

 

2,658

 

2,203

Total Assets

 

1,235,551

 

6,521

Borrowings and financing

 

(4,328,710)

 

(72,473)

Trade payables

 

(36,673)

 

(1,488)

Other liabilities

 

(4,785)

 

(9,194)

Total Liabilities

 

(4,370,168)

 

(83,155)

Foreign exchange exposure

 

(3,134,617)

 

(76,634)

Cash flow hedge accounting

 

1,392,667

   

Net Investment hedge accounting

 

   

72,000

Net foreign exchange exposure

 

(1,741,950)

 

(4,634)

Perpetual Bonds

 

1,000,000

   

Net foreign exchange exposure excluding perpetual bonds

(741,950)

 

(4,634)

         

 

CSN is currently in process of redefining its currency hedge strategy. The Company began to focus its hedging strategy to preserve its cash flow capturing the existing natural relationships and the use of derivative instruments to hedge CSN” s future cash flows.

 

·           Interest rate risk:

 

The risk arises from short and long-term liabilities with fixed or floating interest rates and inflation indices.

 

In item 12b) we show the derivatives and hedging strategies to hedge foreign exchange and interest rate risks.

 

12.b) Hedging instruments: Derivatives and hedge accounting:

 

CSN uses various instruments to hedge foreign exchange and interest rate risks, as shown in the following topics:

 

 

 

 

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Version: 1

 

 

.               Portfolio of derivative financial instruments

 

               

 

 

 

 

09/30/2017

     

 

 

 

 

12/31/2016

 

09/30/2017

               

Appreciation (R$)

 

Fair Value (market)

     

Appreciation (R$)

 

Fair Value (market)

 

Impact on financial income (expenses) in 2017

Counterparties

 

Maturity

 

Functional Currency

 

Notional amount

 

Asset
position

 

Liability
position

 

Amounts receivable / (payable)

 

Notional amount

 

Asset
position

 

Liability
position

 

Amounts receivable / (payable)

 

BNPP

 

3/9/2017

 

Dollar

 

               

10,250

 

33,435

 

(31,137)

 

2,298

 

(229)

Total swap cambial dólar x euro

                         

10,250

 

33,435

 

(31,137)

 

2,298

 

(229)

 

 

 

 

 

 

                                 

BM&FBovespa

 

9/29/2017

 

Real

             

79

 

1,641,378

         

(121)

 

28,503

Total future DI

 

 

 

           

79

 

1,641,378

         

(121)

 

28,503

                                             

 

 

           

79

     

33,435

 

(31,137)

 

2,177

 

28,274

                                             

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2017

Instruments

 

Assets

 

Liabilities

 

Financial income (expenses), net (Note 23)

 

Current

 

Total

 

Current

 

Total

 

Dollar to euro swap

 

               

(229)

Future DI

 

79

 

79

         

28,503

 

 

79

 

79

         

28,274

 

 

 

 

 

               

12/31/2016

 

9/30/2016

Instruments

 

Assets

 

Liabilities

 

Financial income (expenses), net (Note 23)

 

Current

 

Total

 

Current

 

Total

 

Future Dollar BM&F

 

               

(798,364)

Future DI

         

(121)

 

(121)

   

Dollar to euro swap

 

2,298

 

2,298

         

(6,332)

Fixed rate to CDI swap

                 

(299)

CDI to fixed rate swap

 

               

(63)

   

2,298

 

2,298

 

(121)

 

(121)

 

(805,058)

 

 

 

·       Cash flow hedge accounting

 

Beginning November 1, 2014, the Company formally designated cash flow hedging relationships to hedge highly probable future cash flows against US dollar fluctuations.

 

In order to better reflect the accounting impacts of this foreign exchange hedging strategy on the Company’s results, CSN designated part of its US dollar-denominated liabilities as a hedging instrument of its future exports. As a result, foreign exchange differences arising from designated liabilities will be temporarily recognized in shareholders’ equity and recognized in profit or loss when such exports are carried out, allowing the concurrent recognition of the dollar impact on liabilities and on exports.

The adoption of this hedge accounting does not entail entering into any financial instrument.The adoption of this headge accounting does not entail entering into any financial instrument. As of September 30, 2017, US$1.4 billion in exports to be carried out until October 2022 is designated.

 

Through hedge accounting, the exchange gains and losses on debt instruments will not immediately affect the Company’s profit or loss except to the extent that exports are carried out.

 

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Version: 1

 

The table below shows a summary of the hedging relationships as of September 30, 2017:

 

                                   

09/30/2017

Designation Date

 

Hedging Instrument

 

Hedged item

 

Type of hedged risk

 

Hedged period

 

Exchange rate on designation

 

Designated amounts (US$’000)

 

Amortized part (US$'000)

 

Effect on result (*) (R$'000)

 

Impact on shareholders' equity (R$'000)

3/11/2014

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 October 2016 to September 2019

 

2.4442

 

           500,000

 

         (66,667)

 

              4,996

 

            (313,646)

1/12/2014

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 October 2015 to February  2019 

 

2.5601

 

           175,000

 

       (106,666)

 

            32,937

 

              (41,540)

12/18/2014

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 May 2020

 

2.6781

 

           100,000

 

 

 

 

 

              (48,990)

07/21/2015

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 July 2019 to March 2021

 

3.1813

 

             60,000

         

                    798

07/23/2015

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 July 2019 to March 2021

 

3.2850

 

           100,000

 

 

 

 

 

               11,700

07/23/2015

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 October 2018 to October 2022

 

3.2850

 

             30,000

         

                 3,510

07/24/2015

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 October 2018 to October 2022

 

3.3254

 

           100,000

 

 

 

 

 

               15,740

07/27/2015

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 October 2018 to October 2022

 

3.3557

 

             25,000

         

                 4,693

07/27/2015

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 October 2018 to October 2022

 

3.3557

 

             70,000

 

 

 

 

 

               13,139

07/27/2015

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 October 2018 to October 2022

 

3.3557

 

             30,000

         

                 5,631

07/28/2015

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 October 2018 to October 2022

 

3.3815

 

             30,000

 

 

 

 

 

                 6,405

1/8/2015

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 (1)

 

3.3940

 

             (9,000)

         

                (2,034)

3/8/2015

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 Outubro de 2018 a Outubro de 2022

 

3.3940

 

           355,000

 

 

 

 

 

               80,224

Total

 

 

 

 

 

 

 

 

 

 

 

        1,566,000

 

       (173,333)

 

            37,933

 

            (264,370)

 

 

 (*) The effect on profit or loss was recognized in other operating expenses.

 

 (1) - During the designation in August 2015, we reviewed the future export projections and identified that the amount of US$ 9 million designated previously was no longer probable to be realized due to the decrease of the Platt’s value. Therefore, we discontinued the hedging relationship in August 2015. The exchange rate for the period remains recorded in shareholders’ equity until the settlement of the debt.

 

In the hedging relationships described above, the amounts of the debt instruments were fully designated for equivalent iron ore export portions.

 

 

The movement in hedge accounting amounts recognized in shareholders’ equity as of September 30, 2017 is as follows:

 

 

 

12/31/2016

 

Movement

 

Realization

 

09/30/2017

Cash flow hedge accounting

436,677

 

(134,374)

 

(37,933)

 

264,370

Fair value of cash flow hedge, net of taxes

436,677

 

(134,374)

 

(37,933)

 

264,370

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As of September 30, 2017, the hedging relationships established by the Company were effective, according to the prospective tests conducted. Thus, no reversal for hedge accounting ineffectiveness was recognized.

 

·       Hedge of net investment in foreign operation

 

CSN has a natural currency exposure in Euros substantially arising from a borrowing taken by a foreign subsidiary with functional currency in Reais, for the acquisition of investments abroad where the functional currency is Euro. Such exposure arises from translating the balance sheets of these subsidiaries for consolidation into CSN, where the exchange difference on the borrowings affected the statement of income, in the finance income and costs line item, and the exchange difference on the net assets of the foreign operation directly affected the shareholders equity, in other comprehensive income.

 

As from September 1, 2015, CSN began to adopt the net investment hedge to eliminate such exposure and cover future fluctuations of the Euro on such borrowings. Non-derivative financial liabilities were designated, represented by borrowing agreements with financial institutions in the amount of € 120 million. The account balances as of September 30, 2017 are as follows:

 

 

                       

09/30/2017

Designation Date

 

Hedging Instrument

 

Hedged item

 

Type of hedged risk

 

Exchange rate on designation

 

Designated amounts (EUR'000)

 

Impact on shareholders' equity

9/1/2015

 

Non-derivative financial
liabilities in EUR – Debt contract

 

Investments in subsidiaries which
EUR is the functional currency

 

Foreign exchange -
R$ vs. EUR spot rate

 

4.0825

 

120,000

 

(34,205)

1/31/2016

 

Non-derivative financial liabilities in EUR – Debt contract

 

Investments in subsidiaries which
EUR is the functional currency

 

Foreign exchange -
R$ vs. EUR spot rate

 

(1)

 

(24,000)

   

1/31/2017

       

(1)

 

(24,000)

   

Total

 

 

 

 

 

 

 

   

72,000

 

(34,205)

                         

 

 

1.     In January 201, the portion of a debt designated as hedging instrument was settled.

 

The movement in the amounts related to net investment hedge recognized in shareholders’ equity as of September 30, 2017 is as follows:

 

 

 

12/31/2016

 

Movement

 

Realization

 

9/30/2017

Net investment hedge accounting

(57,804)

 

23,599

     

(34,205)

Fair value of net investment hedge in foreign operations

(57,804)

 

23,599

     

(34,205)

               
               

 

As of September 30, 2017, the hedging relationships established by the Company were effective, according to prospective tests conducted. Therefore, no reversal for hedge ineffectiveness was recognized.

 

12.c) Sensitivity analysis

 

We present below the sensitivity analysis of foreign exchange rate and interest rate risks.

 

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·       Sensitivity analysis of derivative financial instruments and consolidated foreign exchange exposure

 

The Company considered scenarios 1 and 2 as 25% and 50% deterioration for currency volatility using as reference the closing exchange rate as of September 30, 2017.

 

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

 

   

 

 

 

 

 

 

9/30/2017

Currency

 

Exchange rate

 

Probable scenario

 

Scenario 1

 

Scenario 2

USD

 

                    3.1680

 

             3.2909

 

       3.9600

 

           4.7520

EUR

 

                    3.7430

 

             3.9033

 

       4.6788

 

           5.6145

 

             
   

 

 

 

 

9/30/2017

Interest

 

Interest rate

 

Scenario 1

 

Scenario 2

CDI

 

8.14%

 

10.18%

 

12.21%

TJLP

 

7.00%

 

8.75%

 

10.50%

LIBOR

 

1.51%

 

1.88%

 

2.26%

             

 

The effects on profit or loss, considering scenarios 1 and 2, are shown below:

   

 

 

 

 

 

 

 

 

9/30/2017

Instruments

 

Notional

 

Risk

 

Probable scenario (*)

 

Scenario 1

 

Scenario 2

 

 

 

 

 

 

 

 

 

 

 

Hedge accounting of exports

 

1,392,667

 

Dollar

 

171,159

 

1,102,992

 

2,205,984

 

 

                 

Currency position

 

(3,134,617)

 

Dollar

 

(385,244)

 

(2,482,617)

 

(4,965,234)

(not including exchange derivatives above)

 

                 
                     

Consolidated exchange position

 

(1,741,950)

 

Dollar

 

(214,085)

 

(1,379,625)

 

(2,759,250)

(including exchange derivatives above)

                   

 

 

                 

Net Investment hedge accounting

 

72,000

 

Euro

 

11,542

 

67,374

 

134,748

 

 

                 

Currency position

 

(76,634)

 

Euro

 

(12,284)

 

(71,710)

 

(143,420)

 

 

                 

Consolidated exchange position

 

(4,634)

 

Euro

 

(742)

 

(4,336)

 

(8,672)

(including exchange derivatives above)

 

 

 

 

 

 

 

 

 

 

                     

 

 (*) The probable scenarios were calculated considering the following variations for the risks: Real x Dollar – depreciation of Real in 3.88% / Real x Euro – depreciation of Real in 4.28%. Source: quotations from Central Bank of Brazil on 12/20/2017.

 

 

·       Sensitivity analysis of changes in interest rates

 

The Company considered the scenarios 1 and 2 as 25% and 50% for the sensitivity analysis as of September 30, 2017.

 

                   

 

 

Consolidated

                   

Impact on profit or loss

Changes in interest rates

 

% p.a

 

Assets

 

Liabilities

 

Probable scenario (*)

 

Scenario 1

 

Scenario 2

TJLP

 

      7.00

 

   

(1,016,341)

 

(3,042)

 

(17,786)

 

(35,572)

Libor

 

      1.51

     

(4,876,608)

 

(72,871)

 

(18,360)

 

(36,720)

CDI

 

      8.14

 

431,024

 

(13,750,383)

 

(274,486)

 

(271,049)

 

(542,098)

 

 (*) The sensitivity analysis is based on the assumption of maintaining as probable scenario the market values as of September 30, 2017 recorded in the Company´s assets and liabilities.

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12.d) Liquidity risk

 

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

 

 

 

 

 

 

 

 

 

 

 

Consolidated

At September 30, 2017

Less than one year

 

From one to two years

 

From two to five years

 

Over five years

 

Total

Borrowings, financing and debentures

4,009,857

 

9,675,257

 

11,392,958

 

3,991,380

 

29,069,452

Trade payables

2,249,151

             

2,249,151

Dividends and interest on capital (note 13)

484,706

             

484,706

                   

 

 

IV - Fair values of assets and liabilities as compared to their carrying amounts

 

The estimated fair values for certain consolidated long-term borrowings and financing were calculated at prevailing market rates, taking into consideration the nature, terms and risks similar to those of the recorded contracts, as compared below:

 

 

 

 

 

9/30/2017

 

 

 

12/31/2016

 

Carrying amount

 

Fair value (*)

 

Carrying amount

 

Fair value (*)

Perpetual bonds

         3,172,312

 

               2,404,684

 

         3,263,536

 

               1,702,134

Fixed Rate Notes

         5,418,762

 

               5,531,052

 

         5,666,506

 

               4,907,339

               

 (*) Source: Bloomberg

 

 

 

 

 

13.   OTHER PAYABLES

 

The group of other payables classified in current and noncurrent liabilities is comprised as follows:

 

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

Parent Company

 

Current

Non-current

 

Current

 

Non-current

 

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

Payables to related parties  (note 17 a)

571

 

10,927

         

208,436

 

182,810

 

47,847

 

67,940

Derivative financial instruments  (note 12 I)

   

121

                       

Exclusive funds (1)

                   

121

       

Dividends and interest on capital payable  (note 12 I) (2)

484,706

 

484,570

         

2,345

 

2,209

       

Advances from customers

108,414

 

90,720

         

93,977

 

80,652

       

Taxes in installments

21,455

 

24,444

 

80,217

 

83,312

 

9,415

 

9,397

 

1,450

 

1,524

Profit sharing – employees

39,822

 

211,791

         

19,270

 

148,788

       

Freight provision

86,440

 

57,586

         

62,546

 

10,764

       

Provision for industrial restructuring

8,353

 

13,000

                       

Taxes payable

       

8,393

 

8,518

         

6,907

 

7,035

Other provision

26,726

 

23,162

         

7,915

 

6,890

       

Third party materials in our possession

   

288

                       

Other payables

174,073

 

105,115

 

41,201

 

39,307

 

111,021

 

22,900

       
 

950,560

 

1,021,724

 

129,811

 

131,137

 

514,925

 

464,531

 

56,204

 

76,499

                               

 

1. Refers to derivative transactions managed by the exclusive funds.

 

2. Dividends payable by the subsidiary CSN Mineração.

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14.   INCOME TAX AND SOCIAL CONTRIBUTION

 

14.a) Income tax and social contribution recognized in profit or loss:

 

The income tax and social contribution recognized in profit or loss for the year are as follows:

 

 

             

Consolidated

 

Nine months ended

 

Three months ended

 

9/30/2017

 

9/30/2016

 

9/30/2017

 

9/30/2016

Income tax and social contribution income (expense)

 

 

 

 

 

 

 

Current

(277,719)

 

(131,201)

 

(90,905)

 

(77,111)

Deferred

(132,171)

 

(133,416)

 

(37,309)

 

(45,685)

 

(409,890)

 

(264,617)

 

(128,214)

 

(122,796)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

             

Parent Company

 

Nine months ended

 

Three months ended

 

9/30/2017

 

9/30/2016

 

9/30/2017

 

9/30/2016

Income tax and social contribution income (expense)

 

 

 

 

 

 

 

Current

   

(51)

       

Deferred

6,653

 

5,820

 

5,732

 

3,321

 

6,653

 

5,769

 

5,732

 

3,321

               

 

The reconciliation of consolidated and parent company income tax and social contribution expenses and the result from applying the tax rate to profit before income tax and social contribution are as follows:

 

             

Consolidated

 

Nine months ended

 

Three months ended

 

9/30/2017

 

9/30/2016

 

9/30/2017

 

9/30/2016

(Loss)/Profit before income tax and social contribution

143,733

 

(525,922)

 

384,398

 

63,029

'Tax rate

34%

 

34%

 

34%

 

34%

Income tax and social contribution at combined statutory rate

(48,869)

 

178,813

 

(130,695)

 

(21,430)

Adjustment to reflect the effective rate:

             

Equity pickup

37,826

 

33,076

 

13,919

 

11,585

Profit with differentiated rates or untaxed

(44,025)

 

(310,782)

 

(76,006)

 

47,393

Transfer pricing adjustment

(10,652)

 

(25,569)

 

(3,074)

 

(12,541)

Tax loss carryforwards without recognizing deferred taxes

(535,589)

 

(907,806)

 

(151,909)

 

(116,546)

Limit of Indebtedness

(29,209)

 

(27,391)

 

(12,780)

 

(8,710)

Unrecorded deferred taxes on temporary differences 

533,696

 

647,432

 

220,322

 

(55,888)

Reversal of estimated losses for deferred income and social contribution tax credits

(327,319)

 

141,348

 

23,800

 

28,726

Tax incentives

4,977

     

1,267

   

Other permanent deductions (additions)

9,274

 

6,262

 

(13,058)

 

4,615

Income tax and social contribution in profit for the period

(409,890)

 

(264,617)

 

(128,214)

 

(122,796)

Effective tax rate

285%

 

-50%

 

33%

 

195%

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Parent Company

 

Nine months ended

 

Three months ended

 

9/30/2017

 

9/30/2016

 

9/30/2017

 

9/30/2016

(Loss)/Profit before income tax and social contribution

(353,951)

 

(851,566)

 

220,734

 

(94,582)

'Tax rate

34%

 

34%

 

34%

 

34%

Income tax and social contribution at combined statutory rate

120,343

 

289,532

 

(75,050)

 

32,158

Adjustment to reflect the effective rate:

             

Equity pickup

188,697

 

(167,830)

 

5,015

 

106,539

Tax loss carryforwards without recognizing deferred taxes

(493,669)

 

(883,415)

 

(144,214)

 

(106,725)

Limit of Indebtedness

(29,209)

 

(27,391)

 

(12,780)

 

(8,710)

Unrecorded deferred taxes on temporary differences 

532,403

 

637,152

 

222,067

 

(62,994)

Reversal of estimated losses for deferred income and social contribution tax credits

(327,319)

 

141,348

 

23,800

 

28,726

Other permanent deductions (additions)

15,407

 

16,373

 

(13,106)

 

14,327

Income tax and social contribution in profit for the period

6,653

 

5,769

 

5,732

 

3,321

Effective tax rate

2%

 

1%

 

-3%

 

4%

 

 

Currently, there are no sufficiently strong evidences to support the recognition of tax credits. For this reason, we maintained the recognition of tax credits arising from income tax and social contribution losses up to the limit of 30% of the deferred tax liabilities.

 

14.b) Deferred income tax and social contribution:

 

Deferred income tax and social contribution are calculated on income tax and social contribution losses and the corresponding temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements:   

 

         

Consolidated

 

Opening balance

 

Movement

 

Closing balance

 

12/31/2016

 

Comprehensive income

 

P&L

 

Others

 

9/30/2017

Deferred tax assets

 

 

 

 

 

 

 

 

 

Income tax losses

970,800

     

377,942

     

1,348,742

Social contribution tax losses

340,629

     

137,201

     

477,830

Temporary differences

(2,288,175)

 

(7,786)

 

(647,663)

 

130

 

(2,943,494)

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

256,936

     

7,765

     

264,701

- Provision for environmental liabilities

95,048

     

(19,422)

     

75,626

- Assets impairment losses

93,908

     

585

     

94,493

- Inventory impairment losses

35,703

     

976

     

36,679

-(Gain)/loss in financial instruments

(2,300)

     

658

     

(1,642)

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

705,929

 

(208,944)

         

496,985

- Actuarial liability (pension and healthcare plan)

134,578

     

70,806

     

205,384

- Accrued supplies and services

123,101

     

6,941

     

130,042

- Allowance for doubtful accounts

42,008

     

(3,471)

     

38,537

- Goodwill on merger

815

     

(155)

     

660

- Unrealized exchange differences (1)

1,589,651

 

9,634

 

(234,092)

     

1,365,193

- (Gain) in loss of control of the Transnordestina

(92,180)

             

(92,180)

- Cash Flow Hedge Accounting

148,471

 

(58,584)

         

89,887

-  Fair Value acquisition of SWT/CBL

(199,001)

 

(16,214)

 

19,720

     

(195,495)

- Unrecognized deferred taxes

(1,324,437)

 

111,358

 

(38,768)

     

(1,251,847)

- Estimated (losses)/Reversals to deferred tax credits

(3,013,730)

 

156,170

 

(327,318)

     

(3,184,878)

- Business Combination

(1,072,824)

     

27,720

     

(1,045,104)

- Others

190,149

 

(1,206)

 

(159,608)

 

130

 

29,465

Total

(976,746)

 

(7,786)

 

(132,520)

 

130

 

(1,116,922)

                   

Total Deferred Assets

70,151

             

51,052

Total Deferred Liabilities

(1,046,897)

             

(1,167,974)

Total Deferred

(976,746)

             

(1,116,922)

                   

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  CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

 

         

Parent Company

 

Opening balance

 

Movement

 

Closing balance

 

12/31/2016

 

Comprehensive income

 

P&L

 

 

9/30/2017

Deferred tax assets

 

 

 

 

 

 

 

 

Income tax losses

802,813

     

441,889

   

1,244,702

Social contribution tax losses

280,164

     

160,191

   

440,355

Temporary differences

(1,670,334)

 

9,634

 

(595,427)

   

(2,256,127)

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

219,595

     

(10,737)

   

208,858

- Provision for environmental liabilities

92,802

     

(19,721)

   

73,081

- Assets impairment losses

62,398

     

(2,285)

   

60,113

- Inventory impairment losses

12,686

     

169

   

12,855

-(Gain)/loss in financial instruments

(2,300)

     

658

   

(1,642)

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

705,929

 

(208,944)

       

496,985

- Actuarial liability (pension and healthcare plan)

137,023

     

70,806

   

207,829

- Accrued supplies and services

93,760

     

(1,827)

   

91,933

- Allowance for doubtful accounts

27,714

     

(3,380)

   

24,334

- Unrealized exchange differences (1)

1,657,193

 

9,634

 

(210,658)

   

1,456,169

- (Gain) in loss of control of the Transnordestina

(92,180)

           

(92,180)

- Cash Flow Hedge Accounting

148,471

 

(58,584)

       

89,887

- Unrecognized deferred taxes

(1,115,571)

 

111,358

 

(34,333)

   

(1,038,546)

- Estimated (losses)/Reversals to deferred tax credits

(3,013,730)

 

156,170

 

(327,318)

   

(3,184,878)

- Business Combination

(721,993)

           

(721,993)

- Deferred taxes over business combination - CGPAR

(22,609)

     

22,609

     

- Deferred taxes on amortization of surplus value - CGPAR

1,340

     

(1,340)

     

- Others

139,138

     

(78,070)

   

61,068

Total

(587,357)

 

9,634

 

6,653

   

(571,070)

                 

Total Deferred Liabilities

(587,357)

           

(571,070)

Total Deferred

(587,357)

           

(571,070)

                 

 

 

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

 

In its corporate structure, the Company has foreign subsidiaries whose profits are subject to income tax in the countries where they were established at rates lower than those prevailing in Brazil. In the period from 2012 to the 3nd quarter of 2017, these foreign subsidiaries generated profits amounting to R$ 1,963,161. If the tax authorities understand that these profits are subject to additional taxation in Brazil in respect of income tax and social contribution, these, if due, would total approximately R$ 486,440.

 

The Company, based on its legal counsel’s opinion, assessed as possible the likelihood of loss in the event of challenge by the tax authorities and, therefore, no provision was recognized in the financial statements.

 

 

 

 

 

 

 

 

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Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

14.c) Income tax and social contribution recognized in shareholders' equity:

 

The income tax and social contribution recognized directly in shareholders' equity are as follows:

 

 

Consolidated

 

Parent Company

 

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

Income tax and social contribution

 

 

 

 

 

 

 

Actuarial gains on defined benefit pension plan

30,322

 

30,234

 

33,400

 

33,400

Losses estimated for deferred income and social contribution tax credits - actuarial gains

(33,400)

 

(33,400)

 

(33,400)

 

(33,400)

Changes in the fair value on available-for-sale financial assets

(242,681)

 

(33,796)

 

(242,681)

 

(33,796)

Losses estimated for deferred income and social contribution tax assets - available for sale assets

242,681

 

33,796

 

242,681

 

33,796

Exchange differences on translating foreign operations

(415,876)

 

(425,510)

 

(415,876)

 

(425,510)

Cash flow hedge accounting

53,109

 

109,813

 

53,109

 

109,813

Losses estimated for deferred income and social contribution tax credits - cash flow hedge

(53,109)

 

(109,813)

 

(53,109)

 

(109,813)

 

(418,954)

 

(428,676)

 

(415,876)

 

(425,510)

               

 

 

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

 

As of September 30, 2017, the information on judicial deposits and lawsuits has not changed significantly in relation to that disclosed in the Company's financial statements as of December 31, 2016. The details of the provisioned amounts and the related judicial deposits are presented below:

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

Parent Company

 

 

Accrued liabilities

 

Judicial deposits

 

Accrued liabilities

 

Judicial deposits

 

 

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

Tax

 

109,406

 

119,523

 

69,160

 

62,035

 

50,341

 

70,979

 

53,882

 

48,831

Social security

 

73,459

 

62,574

 

48,614

 

48,614

 

71,974

 

61,594

 

48,614

 

48,614

Labor

 

448,506

 

485,422

 

212,024

 

186,823

 

343,425

 

381,255

 

170,704

 

156,978

Civil

 

148,546

 

137,857

 

23,295

 

23,179

 

120,668

 

110,420

 

16,759

 

16,395

Environmental

 

38,743

 

7,716

 

2,220

 

2,220

 

33,600

 

2,370

 

2,220

 

2,220

Deposit of a guarantee

         

9,571

 

8,387

               

 

 

818,660

 

813,092

 

364,884

 

331,258

 

620,008

 

626,618

 

292,179

 

273,038

                                 

 

The movement in the provision for tax, social security, labor, civil and environmental risks in the period ended September 30, 2017 is as follows:

                   

Consolidated

 

 

 

 

 

 

 

 

 Current + Non-current

Nature

 

12/31/2016

 

Additions

 

Accrued charges

 

Net utilization of reversal

 

9/30/2017

Tax

 

119,523

 

10,658

 

6,927

 

(27,702)

 

109,406

Social security

 

62,574

 

8,222

 

2,663

     

73,459

Labor

 

485,422

 

27,107

 

24,923

 

(88,946)

 

448,506

Civil

 

137,857

 

2,050

 

12,060

 

(3,421)

 

148,546

Environmental

 

7,716

 

32,471

 

229

 

(1,673)

 

38,743

   

813,092

 

80,508

 

46,802

 

(121,742)

 

818,660

 

 

 

 

 

 

 

 

 

 

 

Parent Company

 

 

 

 

 

 

 

 

  Current + Non-current

Nature

 

12/31/2016

 

Additions

 

Accrued charges

 

Net utilization of reversal

 

9/30/2017

Tax

 

70,979

 

3,342

 

3,724

 

(27,704)

 

50,341

Social security

 

61,594

 

8,222

 

2,158

     

71,974

Labor

 

381,255

 

18,629

 

17,771

 

(74,230)

 

343,425

Civil

 

110,420

 

594

 

10,128

 

(474)

 

120,668

Environmental

 

2,370

 

31,145

 

110

 

(25)

 

33,600

   

626,618

 

61,932

 

33,891

 

(102,433)

 

620,008

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Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

 

 

 

The provision for tax, social security, labor, civil and environmental risks was estimated by Management and is mainly based on the legal counsel’s assessment. Only lawsuits for which the risk is classified as probable loss are provisioned. Additionally, this provision includes tax liabilities resulting from lawsuits filed by the Company, subject to SELIC (Central Bank’s policy rate).

 

 

§  Other administrative and judicial proceedings

 

The table below shows a summary of the main matters classified as possible risk compared with the balances as of September 30, 2017 and December 31, 2016.

 

       

Consolidated

 

 

9/30/2017

 

12/31/2016

Assesment and imposition of fine (AIIM) - Income tax and social contribution - Capital gain on sale of Namisa's shares

 

8,853,353

 

8,415,142

         

Income tax / Social contribution - Assesment and Imposition of Fine (AIIM) - Disallowance of deductions of goodwill generated in the reverse incorporation of Big Jump by Namisa.

 

2,592,927

 

2,457,855

         

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

 

2,468,930

 

2,327,499

         

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

 

1,835,999

 

1,644,898

         

Tax foreclosures - ICMS - Electricity credits

 

905,280

 

838,192

         

Installments MP 470 - alleged insufficiency of tax losses

 

695,189

 

652,553

         

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

 

1,664,366

 

1,505,079

         

Disallowance of the ICMS credits - Transfer of iron ore

 

491,011

 

570,997

         

ICMS - Refers to the transfer of imported raw material at an amount lower than the price disclosed in the import documentation

 

270,234

 

279,511

         

Disallowance of the tax losses arising on adjustments to the SAPLI

 

485,156

 

455,214

         

Assessment Notice - ICMS - shipping and return merchandise for Industrialization

 

803,992

 

749,492

         

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

 

199,903

 

185,249

         

CFEM – Divergence on the understanding between CSN and DNPM on the calculation basis

 

369,871

 

348,512

         

Other tax (federal, state, and municipal) lawsuits

 

2,914,938

 

2,727,258

         

Social security lawsuits

 

275,990

 

263,951

         

Law suit applied by Brazilian antitrust authorities (CADE)

 

97,700

 

96,316

         

Other civil lawsuits

 

1,348,745

 

814,440

         

Labor and social security lawsuits

 

1,423,687

 

1,138,155

         

Environmental lawsuits

 

396,804

 

375,272

         
   

28,094,074

 

25,845,585

         

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  CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

 

 

 

The assessments made by the legal counsel define these administrative and judicial proceedings as entailing risk of possible loss and, therefore, no provision was recognized in conformity with Management’s judgment and accounting practices adopted in Brazil.

 

 

 

 

16.   PROVISION FOR ENVIRONMENTAL LIABILITIES AND ASSET RETIREMENT OBLIGATIONS

 

The information on provision for environmental liabilities and asset retirement obligations has not changed in relation to that disclosed in the Company's financial statements as of December 31, 2016 and, accordingly, the Company decided not to repeat it in the condensed interim financial information as of September 30, 2017.

 

The balance of the provision for environmental liabilities and asset retirement obligation (ARO) is as follows:

 

 

 

 

Consolidated

 

 

 

Parent Company

 

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

Environmental liabilities

222,769

 

273,475

 

215,260

 

265,772

Asset retirement obligations

79,601

 

73,589

 

598

 

 

 

302,370

 

347,064

 

215,858

 

265,772

 

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Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

 

 

17.   RELATED-PARTY BALANCES AND TRANSACTIONS

 

The information on related-party transactions has not changed significantly in relation to that disclosed in the Company's financial statements as of December 31, 2016.

 

17.a) Transactions with subsidiaries, joint ventures, associates, exclusive funds and other related parties

 

·       By transaction

   

Consolidated

 

 

Current

 

Non current

 

Total

   

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables  (note 5)

 

118,696

 

129,837

         

118,696

 

129,837

Dividends receivable (note 5)

 

74,911

 

37,679

         

74,911

 

37,679

Actuarial asset  (note 7)

         

95,701

 

119,854

 

95,701

 

119,854

Short-term investments/Investments

 

34,595

 

315,319

         

34,595

 

315,319

Loans (note 7)

 

2,382

     

502,976

 

479,960

 

505,358

 

479,960

Other receivables  (note 7)

 

3,576

 

5,768

 

30,895

 

32,020

 

34,471

 

37,788

   

234,160

 

488,603

 

629,572

 

631,834

 

863,732

 

1,120,437

Liabilities

 

                 

 

 

Other payables  (note 13)

                       

 Accounts payable

 

571

 

10,927

         

571

 

10,927

Trade payables

 

93,149

 

50,623

         

93,149

 

50,623

Actuarial liabilities

 

       

28,004

 

28,004

 

28,004

 

28,004

   

93,720

 

61,550

 

28,004

 

28,004

 

121,724

 

89,554

 

 

                     
   

9/30/2017

 

9/30/2016

               

Statement of Income

 

                     

Revenues

                       

 Sales

 

654,103

 

610,287

               

   Interest (note 23)

 

49,319

 

43,700

               

Expenses

 

                     

Purchases

 

(876,582)

 

(748,007)

               

 Interest

 

   

(130)

               

Foreign exchange and monetary variation, net

(4,106)

 

(19,043)

               

 

 

(177,266)

 

(113,193)

               

 

 

 

 

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Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

·       By company

 

 

 

             

Consolidated

 

Assets

 

Liabilities

 

Statement of Income

Current

 

Non current

 

Total

 

Current

 

Non current

 

Total

 

Sales

 

Purchases

Financial income  (expenses), net

 

Foreign exchange and monetary variation, net

 

Total

                 

Joint-venture and Joint-operation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Itá Energética S.A.

       

                    

 

             2,652

     

2,652

     

(24,144)

       

(24,144)

MRS Logística S.A.

        74,653

 

 

 

         74,653

 

           56,835

 

 

 

56,835

 

 

 

(692,985)

 

 

 

 

(692,985)

CBSI - Companhia Brasileira de Serviços e Infraestrutura

                 9

     

                  9

 

           25,237

     

25,237

 

37

 

(114,683)

       

(114,646)

Transnordestina Logística S.A (1)

             247

 

         502,976

 

       503,223

 

             4,147

 

 

 

4,147

 

2,916

 

(6,280)

42,375

 

 

 

39,011

 

        74,909

 

         502,976

 

       577,885

 

           88,871

 

                  

 

88,871

 

2,953

 

(838,092)

42,375

 

                                     

 

(792,764)

Other related parties

 

 

 

 

                    

 

 

 

 

 

                         

 

 

 

 

 

 

 

 

 

CBS Previdência

   

           95,701

 

         95,701

     

28,004

 

28,004

               

                       

Fundação CSN

          1,829

 

 

 

           1,829

 

                252

 

 

 

252

 

13

 

(2,240)

 

 

 

 

(2,227)

Usiminas

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16)

 

 

 

 

(16)

Banco Fibra (2)

        34,595

     

         34,595

         

                         

       

5,005

 

(4,106)

 

899

Panatlântica (3)

      111,816

 

             1,875

 

       113,691

 

             4,597

 

 

 

4,597

 

609,740

 

(31,258)

 

 

 

 

578,482

Ibis Participações e Serviços

       

                    

         

                         

     

(4,756)

       

(4,756)

Partifib Projetos Imobiliários

             213

 

 

 

              213

 

 

 

 

 

                         

 

1,842

 

 

 

 

 

 

1,842

Vicunha Imóveis Ltda.

                   

                         

     

(174)

       

(174)

Vicunha Serviços Ltda.

 

 

 

 

 

 

 

 

 

 

                         

 

 

 

(46)

 

 

 

 

                  (46)

 

      148,453

 

           97,576

 

       246,029

 

             4,849

 

28,004

 

32,853

 

611,595

 

(38,490)

5,005

 

(4,106)

 

574,004

Associates

 

 

 

 

 

 

 

 

 

 

                         

 

 

 

 

 

 

 

 

 

Arvedi Metalfer do Brasil S.A.

        10,798

 

           29,020

 

         39,818

         

                         

 

39,555

   

1,939

     

41,494

Total at 9/30/2017

      234,160

 

         629,572

 

       863,732

 

           93,720

 

28,004

 

121,724

 

654,103

 

(876,582)

49,319

 

(4,106)

 

(177,266)

Total at 12/31/2016

      488,603

 

         631,834

 

    1,120,437

 

           61,550

 

28,004

 

89,554

 

878,992

 

(1,099,851)

57,779

 

(18,398)

 

(181,478)

Total at 9/30/2016

 

 

 

 

 

 

 

 

 

 

 

 

610,287

 

(748,007)

43,570

 

(19,043)

 

(113,193)

 

               

1.    Transnordestina Logística S.A: Assets: Refers mainly to loan agreements in R$: Interest from 102.0% to 115.0% of the CDI. As of September 30, 2017, the loans amounted to R$502,975 (R$459,762 as of December 31, 2016).

 

2.    Banco Fibra S.A: Assets: Refers to financial investments in time deposits.

 

3.    Panatlantica: Receivables from the sale of steel products.

 

 

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Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

 

·       By transaction

 

                       

Parent Company

 

 

Current

 

Non current

 

Total

   

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables (1) (note 5)

 

1,045,864

 

1,034,098

         

1,045,864

 

1,034,098

Dividends receivable (note 5)

 

875,707

 

873,473

         

875,707

 

873,473

Actuarial asset  (note 7)

         

90,676

 

109,106

 

90,676

 

109,106

Empréstimos (note 7)

 

34,038

 

25,602

 

394,446

 

375,716

 

428,484

 

401,318

Short-term investments/Investments (2)

 

55,321

 

811,990

 

114,658

 

81,382

 

169,979

 

893,372

Exclusive funds (note 7)

 

79

             

79

   

Other receivables(3) (note 7)

 

20,942

 

132,384

 

330,946

 

311,414

 

351,888

 

443,798

 

 

2,031,951

 

2,877,547

 

930,726

 

877,618

 

2,962,677

 

3,755,165

Liabilities

                       

Borrowings and Financing

 

                     

Prepayment (note 11)

 

47,268

 

72,128

 

4,650,586

 

4,876,840

 

4,697,854

 

4,948,968

 Intercompany bonds (note 11)

 

69,650

 

27,044

 

3,290,951

 

3,385,587

 

3,360,601

 

3,412,631

Intercompany loans (note 11)

 

1,059,676

 

149,654

 

1,552,322

 

2,719,420

 

2,611,998

 

2,869,074

 

 

1,176,594

 

248,826

 

9,493,859

 

10,981,847

 

10,670,453

 

11,230,673

Other payables (note 13)

                       

Accounts payable (4)

 

208,436

 

182,810

 

47,847

 

67,940

 

256,283

 

250,750

Exclusive funds (2) (note 13)

     

121

             

121

Trade payables

 

264,780

 

141,048

         

264,780

 

141,048

Actuarial liabilities

         

28,004

 

28,004

 

28,004

 

28,004

 

 

473,216

 

323,979

 

75,851

 

95,944

 

549,067

 

419,923

                         

 

 

9/30/2017

 

9/30/2016

               

Statement of income

                       

Revenues

 

                     

Sales/Others

 

2,434,367

 

2,075,902

               

Interest (note 23)

 

41,059

 

27,989

               

Exclusive funds (note 23)

 

47,332

                   

Foreign exchange and monetary variation, net

(4,157)

                   

Expenses

                       

Purchases

 

(1,556,277)

 

(1,021,215)

               

Interests (note 23)

 

(384,908)

 

(387,998)

               

Foreign exchange and monetary variation, net

303,757

 

(2,070,443)

               

Exclusive funds (note 23)

     

(687,971)

               

 

 

881,173

 

(2,063,736)

               
                         
                         

 

 

1.    Receivables from sales of goods and services between the parent company, subsidiaries and joint ventures.

 

2.     Assets: Financial investments classified in current total R$ 55,321 as of September 30, 2017 (R$811,990 as of December 31, 2016) and investments in Usiminas shares classified as available-for-sale investments, in noncurrent, total R$114,658 (R$81,382 as of December 31, 2016).

 

3.    Noncurrent: Refers mainly to advance for future capital increases, dividends receivable and receivables from acquisition of debentures.

 

4.     Current: Refers mainly to commission and logistics expenses related to sales of steel for resale through its subsidiary CSN LLC.

 

 .    Noncurrent: Refers mainly to assignment of credits from income tax and social contribution losses with Ferrovia Transnordestina Logistica

 

 

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Version: 1

 

 

 

·       By company

 

 

 

 

Parent Company

 

Assets

Liabilities

Statement of Income

Current

 

Non current

 

Total

Current

Non current

Total

Sales/Others

Purchases

Financial income(expenses), net

Foreign exchange and monetary variation, net

Total

   

Subsidiaries

 

 

 

 

                      

 

 

 

 

 

 

 

 

Companhia Metalúrgica Prada (1)

227,300

 

121,336

 

348,636

12,683

196

12,879

554,158

(48,203)

   

505,955

Estanho de Rondônia S.A.

8,779

 

1,766

 

10,545

 

 

                      

563

(17,737)

492

 

(16,682)

Sepetiba Tecon S.A.

35,070

 

89,677

 

124,747

23,551

 

23,551

 

(77,446)

2,034

 

(75,412)

Minérios Nacional S.A.

 

 

18,275

 

18,275

 

 

                      

 

 

 

 

                      

CSN Mineração S.A. (2)

1,040,870

     

1,040,870

133,921

 

133,921

80,239

(779,713)

   

(699,474)

CSN Energia S.A.

116

 

 

 

116

                      

 

                      

 

(247,762)

                      

 

(247,762)

Ferrovia Transnordestina Logística S.A.

26

 

21,557

 

21,583

                      

47,653

47,653

132

 

                      

(4,677)

(4,545)

Companhia Siderúrgica Nacional, LLC (3)

374,259

 

 

 

374,259

264,794

 

264,794

726,651

(11,208)

 

(9,552)

705,891

CSN Europe Lda.

       

                      

   

                      

   

(2,157)

3,312

1,155

CSN Resources S.A. (4)

 

 

 

 

 

1,168,755

7,131,759

8,300,514

 

 

(328,233)

231,169

(97,064)

Lusosider Aços Planos, S.A.

130,804

     

130,804

160

 

160

459,335

   

5,395

464,730

CSN Islands XI Corp. (5)

 

 

 

 

                      

 

1,013,760

1,013,760

 

 

 

29,152

29,152

CSN Islands XII Corp. (6)

       

                      

7,840

1,348,338

1,356,178

   

(45,955)

41,837

(4,118)

CSN Ibéria Lda.

 

 

 

 

                      

 

 

                      

 

 

(8,564)

2,964

(5,600)

Companhia de Embalagens Metálicas MMSA

5,404

 

44,859

 

50,263

   

                      

       

                      

Companhia Florestal do Brasil

 

 

2,581

 

2,581

 

 

 

 

 

 

 

 

Stahlwerk Thüringen GmbH

       

                       

18

 

18

       

                      

CGPAR Construção Pesada S.A.

 

 

 

 

                      

 

 

                      

 

(12,209)

 

 

(12,209)

 

1,822,628

 

300,051

 

2,122,679

1,611,722

9,541,706

11,153,428

1,821,078

(1,194,278)

(382,383)

299,600

544,017

Joint-venture and Joint-operation

 

 

 

 

 

 

 

 

 

 

 

 

 

MRS Logística S.A.

37,186

     

37,186

16,550

 

16,550

 

(250,617)

   

(250,617)

CBSI - Companhia Brasileira de Serviços e Infraestrutura

9

 

 

 

9

16,816

 

16,816

37

(74,462)

 

 

(74,425)

Transnordestina Logística S.A.

247

 

394,446

 

394,693

   

                      

   

33,399

 

33,399

 

37,442

 

394,446

 

431,888

33,366

                      

33,366

37

(325,079)

33,399

                      

(291,643)

Other related parties

       

                      

   

                      

         

CBS Previdência

 

 

90,676

 

90,676

 

28,004

28,004

 

 

 

 

                      

Fundação CSN

1,829

     

1,829

125

 

125

13

(686)

   

(673)

Banco Fibra

50

 

 

 

50

                      

 

                      

 

 

3,196

 

3,196

Panatlântica

111,816

 

1,875

 

113,691

4,597

 

4,597

609,740

(31,258)

   

578,482

Ibis Participações e Serviços

 

 

 

 

                      

 

 

                      

 

(4,756)

 

 

(4,756)

Partifib Projetos Imobiliários

213

     

213

   

                      

1,842

     

1,842

Vicunha Imóveis Ltda.

 

 

 

 

 

 

 

                      

 

(174)

 

 

(174)

Vicunha Serviços Ltda.

             

                      

 

(46)

   

(46)

 

113,908

 

92,551

 

206,459

4,722

28,004

32,726

611,595

(36,920)

3,196

                      

577,871

Associates

             

                      

         

Arvedi Metalfer do Brasil S.A.

2,623

 

29,020

 

31,643

 

 

                      

1,657

 

1,939

 

3,596

         

                      

   

                      

         

Exclusive funds

 

 

 

 

                      

 

 

                      

 

 

 

 

 

Diplic II, Caixa Vertice e VR1 (7)

55,350

 

114,658

 

170,008

 

                      

                      

   

47,332

 

47,332

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total at 9/30/2017

2,031,951

 

930,726

 

2,962,677

1,649,810

9,569,710

11,219,520

2,434,367

(1,556,277)

(296,517)

299,600

881,173

Total at 12/31/2016

2,877,547

 

877,618

 

3,755,165

572,805

11,077,791

11,650,596

 

 

 

 

 

Total at 9/30/2016

 

 

 

 

                      

 

 

                      

2,075,902

(1,021,215)

(1,047,980)

(2,070,443)

(2,063,736)

 

 

1.         Companhia Metalúrgica Prada: Refers mainly to receivables in the amount of R$227,300 as of September 30, 2017, and debentures from the indirect subsidiary CBL in the amount of R$121,336.

 

2.         CSN Mineração: Assets: Refers mainly to dividends receivable of R$843,770 and transfer of administrative expenses amounting to R$191,545.

Liabilities: Payables from purchases of iron ore and port services.

 

3.         Companhia Siderurgica Nacional, LLC: Receivables of R$374,259 as of September 30, 2017 (R$479,625 as of December 31, 2016), related to sale of steel for resale.

 

4.      CSN Resources SA: Prepayment, Fixed Rate Notes and Intercompany Bonds contracts in dollar. As of September 30, 2017, loans total R$7,131,759 (R$8,495,912 as of December 31, 2016).

 

5.      CSN Islands XI Corp.: Intercompany contracts in US dollars. As of September 30, 2017, loans total R$1,013,760 (R$1,042,912 as of December 31, 2016).

 

6.    CSN Islands XII Corp.: Refers mainly to prepayment contracts and Intercompany contracts in dollar. As of September 30, 2017, the loans total R$1,356,178 (R$1,489,631 as of December 31, 2016).

 

7.    Exclusive funds: Current assets: Refers mainly to investments in government securities and CDBs, of which R$30,014 million in CDBs at Banco Fibra. Noncurrent assets: Refers to Usiminas S.A. shares. The funds VR1 and Diplic II are managed by Taquari Asset.

 

 

 

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17.b) Key management personnel

 

The key management personnel with authority and responsibility for planning, directing and controlling the Company’s activities, include the members of the Board of Directors and statutory directors. The following is information on the compensation of such personnel and the related balances as of September 30, 2017.

 

   

9/30/2017

 

9/30/2016

   

Statement of Income

Short-term benefits for employees and officers (*)

 

                35,568

 

                 67,797

Post-employment benefits

 

                       85

 

                      256

 

 

                35,653

 

                 68,053

 

 

 (*) The compensation of key management personnel in 2016 includes payments of contracts with executives that were linked to parameters that were achieved mainly in the first quarter 2016.

 

18.   SHAREHOLDERS’ EQUITY

 

18.a) Paid-in capital

 

Fully subscribed and paid-in capital as of September 30, 2017 and December 31, 2016 is R$4,540,000 comprising 1,387,524,047 book-entry common shares without par value. Each common share entitles to one vote in resolutions of the General Meeting.

 

18.b) Authorized capital

 

The Company’s bylaws in effect as of September 30, 2017 determine that the capital can be raised to up to 2,400,000,000 shares by decision of the Board of Directors.

 

18.c) Legal reserve

 

This reserve is recognized at the rate of 5% of the profit for each period, as provided for by Article 193 of Law 6,404/76, up to the ceiling of 20% of the share capital.  

 

 

18.d) Ownership structure

 

As of September 30, 2017, the Company’s ownership structure was as follows:

 

   

 

 

 

 

9/30/2017

 

 

 

 

 

12/31/2016

   

Number of common shares

 

% of total shares

 

% of voting capital

 

Number of common shares

 

% of total shares

 

% of voting capital

Vicunha Aços S.A. (*)

 

682,855,454

 

49.21%

 

50.32%

 

682,855,454

 

49.21%

 

50.32%

Rio Iaco Participações S.A. (*)

 

58,193,503

 

4.19%

 

4.29%

 

58,193,503

 

4.19%

 

4.29%

CFL Participações S.A. (*)   

 

3,977,536

 

0.29%

 

0.29%

 

3,977,536

 

0.29%

 

0.29%

Vicunha Textil S.A. (*)                      

 

4,927,000

 

0.36%

 

0.36%

 

4,927,000

 

0.36%

 

0.36%

Caixa Beneficente dos Empregados da CSN - CBS

 

20,143,031

 

1.45%

 

1.48%

 

20,143,031

 

1.45%

 

1.48%

BNDES Participações S.A. - BNDESPAR

 

8,794,890

 

0.63%

 

0.65%

 

8,794,890

 

0.63%

 

0.65%

NYSE (ADRs)

 

323,546,664

 

23.32%

 

23.84%

 

323,546,664

 

23.32%

 

23.84%

B3 - Brasil, Bolsa, Balcão

 

254,694,969

 

18.36%

 

18.77%

 

254,694,969

 

18.36%

 

18.77%

 

 

1,357,133,047

 

97.81%

 

100.00%

 

1,357,133,047

 

97.81%

 

100.00%

Treasury shares

 

30,391,000

 

2.19%

     

30,391,000

 

2.19%

   

Total shares

 

1,387,524,047

 

100.00%

     

1,387,524,047

 

100.00%

   

 

 (*) Controlling group companies.

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Version: 1

 

 

 

18.e) Treasury shares

 

The Board of Directors authorized various share buyback programs in order to hold shares in treasury for subsequent disposal and/or cancelation with a view to maximizing the generation of value to the shareholder through an efficient capital structure management, as shown in the table below:

 

 

Program

 

Board’s Authorization

 

Authorized quantity

 

Program period

 

Average buyback price

 

Minimum and maximum buyback price

 

Number bought back

 

Share cancelation

   

Balance in treasury

 

3/13/2014

 

70,205,661

 

From 3/14/2014 to 4/14/2014

 

R$ 9.34

 

R$ 9.22 e R$ 9.45

 

2,350,000

       

2,350,000

 

4/15/2014

 

67,855,661

 

From 4/16/2014 to 5/23/2014

 

R$ 8.97

 

R$ 8.70 e R$ 9.48

 

9,529,500

       

11,879,500

 

5/23/2014

 

58,326,161

 

From 5/26/2014 to 6/25/2014

 

R$ 9.21

 

R$ 8.61 e R$ 9.72

 

31,544,500

       

43,424,000

 

6/26/2014

 

26,781,661

 

From 6/26/2014 to 7/17/2014

 

R$ 10.42

 

R$ 9.33 e R$ 11.54

 

26,781,661

       

70,205,661

   

7/18/2014

         

Not applicable

 

Not applicable

     

60,000,000

(1)

 

10,205,661

 

7/18/2014

 

64,205,661

 

From 7/18/2014 to 8/18/2014

 

R$ 11.40

 

R$ 11.40

 

240,400

       

10,446,061

   

8/19/2014

         

Not applicable

 

Not applicable

     

10,446,061

(1)

   

 

8/19/2014

 

63,161,055

 

From 8/19/2014 to 9/25/2014

 

R$ 9.82

 

R$ 9.47 e R$ 10.07

 

6,791,300

       

6,791,300

 

9/29/2014

 

56,369,755

 

From 9/29/2014 to 12/29/2014

 

R$ 7.49

 

R$ 4.48 e R$ 9.16

 

21,758,600

       

28,549,900

 

12/30/2014

 

34,611,155

 

From 12/31/2014 to 3/31/2015

 

R$ 5.10

 

R$ 4.90 e R$ 5.39

 

1,841,100

       

30,391,000

9º (*)

 

03/31/2015

 

32,770,055

 

From 4/01/2015 to 6/30/2015

                     
                                   

 

 (*) There was no share buyback in this program.

 

As of September 30, 2017, the position of the treasury shares was as follows:

 

Quantity purchased

(in units)

 

Amount

 

Share price

 

Share

 

paid for

 

 

 

 

 

 

 

market price

 

the shares

 

Minimum

 

Maximum

 

Average

 

 as of 9/30/2017 (*)

            30,391,000

 

R$ 238,976

 

 R$       4.48

 

 R$ 10.07

 

 R$           7.86

 

R$288,715

 

 (*) The last share average quotation on B3 - Brasil, Bolsa, Balcão as of September 30, 2017 of R$ 9.50 per share was used.

 

18.f) Policy on investments and payment of interest on capital and dividends

 

At a meeting held on December 11, 2000, the Board of Directors decided to adopt a profit distribution policy which, in compliance with the provisions in Law 6,404/76, as amended by Law 9,457/97, will entail the distribution of all the profit to the Company’s shareholders, provided that the following priorities are observed, irrespective of their order: (i) carrying out the business strategy; (ii) fulfilling its obligations; (iii) making the required investments; and (iv) maintaining a healthy financial situation of the Company.

 

 

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Version: 1

 

 

18.g) Earnings/(loss) per share:

 

Basic earnings/(loss) per share were calculated based on the profit/loss attributable to the owners of CSN divided by the weighted average number of common shares outstanding during the year, excluding the common shares purchased and held as treasury shares, as follows:

 

     

 

     

Parent Company

 

Nine months ended

 

Three months ended

 

9/30/2017

 

9/30/2016

 

9/30/2017

 

9/30/2016

 

Common Shares

 

Common Shares

(Loss) profit for the year

 

 

 

 

 

 

 

Continued operations

              (347,298)

 

              (845,797)

 

                226,466

 

                (91,261)

Discontinued operations

 

 

                  (6,786)

 

                             

 

                  (6,984)

 

              (347,298)

 

              (852,583)

 

                226,466

 

                (98,245)

Weighted average number of shares

      1,357,133,047

 

      1,357,133,047

 

      1,357,133,047

 

      1,357,133,047

Basic and diluted EPS

             

Continued operations

              (0.25591)

 

              (0.62322)

 

                0.16687

 

              (0.06725)

Discontinued operations

                             

 

              (0.00500)

 

                             

 

              (0.00515)

 

              (0.25591)

 

              (0.62822)

 

                0.16687

 

              (0.07240)

               

 

 

19.   PAYMENT TO SHAREHOLDERS

 

The following table shows the history of dividends approved and paid:

 

Year

 

Approval Year

 

Dividends

 

Total

 

Year

 

Payment Year

 

Dividends

 

Total

2014

 

2014

 

       700,000

 

       700,000

 

2014

 

2014

 

       424,939

 

       424,939

2015

 

2015

 

       275,000

 

       275,000

     

2015

 

       274,917

 

       274,917

 

 

 

 

 

 

 

 

2015

 

2015

 

       274,918

 

       274,918

                   

2016

 

                53

   

Total approved

 

       975,000

 

       975,000

 

Total Paid

 

       974,827

 

       974,774

 

 

 

 

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20.   NET SALES REVENUE

 

Net sales revenue is comprised as follows:

 

               

 Consolidated

   

Nine months ended

 

Three months ended

   

9/30/2017

 

9/30/2016

 

9/30/2017

 

9/30/2016

Gross revenue

 

 

 

 

 

 

 

 

Domestic market

 

8,354,389

 

7,371,413

 

3,067,989

 

2,759,992

Foreign market

 

7,330,364

 

7,178,900

 

2,472,551

 

2,407,216

 

 

15,684,753

 

14,550,313

 

5,540,540

 

5,167,208

Deductions

 

             

Sales returns and discounts

 

(187,349)

 

(146,206)

 

(48,787)

 

(43,733)

Taxes on sales

 

(1,965,528)

 

(1,773,754)

 

(682,082)

 

(654,235)

 

 

(2,152,877)

 

(1,919,960)

 

(730,869)

 

(697,968)

Net revenue

 

13,531,876

 

12,630,353

 

4,809,671

 

4,469,240

 

   

 

 

 

 

 Parent Company

   

Nine months ended

 

Three months ended

   

9/30/2017

 

9/30/2016

 

9/30/2017

 

9/30/2016

Gross revenue

 

 

 

 

 

 

 

 

Domestic market

 

7,762,003

 

6,945,805

 

2,914,341

 

2,653,390

Foreign market

 

1,849,463

 

1,247,918

 

651,146

 

287,914

 

 

9,611,466

 

8,193,723

 

3,565,487

 

2,941,304

Deductions

 

             

Sales returns and discounts

 

(185,567)

 

(131,468)

 

(56,103)

 

(40,483)

Taxes on sales

 

(1,753,871)

 

(1,604,820)

 

(631,130)

 

(612,700)

 

 

(1,939,438)

 

(1,736,288)

 

(687,233)

 

(653,183)

Net revenue

 

7,672,028

 

6,457,435

 

2,878,254

 

2,288,121

                 

 

 

 

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Version: 1

 

 

21.   EXPENSES BY NATURE

 

   

 

 

 

 

 

 

 Consolidated

   

Nine months ended

 

Three months ended

   

9/30/2017

 

9/30/2016

 

9/30/2017

 

9/30/2016

Raw materials and inputs

 

(4,012,735)

 

(3,292,835)

 

(1,440,117)

 

(1,170,470)

 Labor cost 

 

(1,737,857)

 

(1,861,056)

 

(593,324)

 

(576,707)

 Supplies

 

(1,070,112)

 

(1,047,124)

 

(394,696)

 

(314,546)

 Maintenance cost (services and materials)

 

(870,670)

 

(935,975)

 

(330,235)

 

(287,218)

 Outsourcing services

  

(2,449,525)

 

(2,643,093)

 

(840,666)

 

(889,847)

 Depreciation, amortization and depletion

(1,089,945)

 

(922,985)

 

(344,291)

 

(311,351)

 Other

 

(356,121)

 

(397,429)

 

(144,325)

 

(130,121)

   

(11,586,965)

 

(11,100,497)

 

(4,087,654)

 

(3,680,260)

                 

Classified as:

 

             

 Cost of sales and services

 

(10,016,303)

 

(9,470,412)

 

(3,596,936)

 

(3,157,057)

 Selling expenses

 

(1,263,611)

 

(1,247,971)

 

(414,544)

 

(405,411)

General and administrative expenses

 

(307,051)

 

(382,114)

 

(76,174)

 

(117,792)

 

 

(11,586,965)

 

(11,100,497)

 

(4,087,654)

 

(3,680,260)

                 

 

   

 

 

 

 

 

 

 Parent Company

   

Nine months ended

 

Three months ended

   

9/30/2017

 

9/30/2016

 

9/30/2017

 

9/30/2016

Raw materials and inputs

 

(3,505,045)

 

(2,468,848)

 

(1,306,308)

 

(935,172)

 Labor cost 

 

(895,250)

 

(1,041,077)

 

(312,042)

 

(316,876)

 Supplies

 

(795,107)

 

(746,352)

 

(301,270)

 

(227,480)

 Maintenance cost (services and materials)

 

(519,838)

 

(542,163)

 

(199,009)

 

(151,814)

 Outsourcing services

 

(863,037)

 

(772,395)

 

(340,900)

 

(249,105)

 Depreciation, amortization and depletion

(497,288)

 

(418,828)

 

(157,645)

 

(143,606)

 Other

 

(61,896)

 

(112,689)

 

(30,061)

 

(31,381)

   

(7,137,461)

 

(6,102,352)

 

(2,647,235)

 

(2,055,434)

                 

Classified as:

 

             

 Cost of sales and services

 

(6,439,752)

 

(5,370,811)

 

(2,432,348)

 

(1,825,749)

 Selling expenses

 

(549,437)

 

(448,060)

 

(186,675)

 

(141,831)

General and administrative expenses

 

(148,272)

 

(283,481)

 

(28,212)

 

(87,854)

 

 

(7,137,461)

 

(6,102,352)

 

(2,647,235)

 

(2,055,434)

                 

 

 

 

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Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

 

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

 

 

 

 

 

 

 

 

Consolidated

 

 

Nine months ended

 

Three months ended

 

 

9/30/2017

 

9/30/2016

 

9/30/2017

 

9/30/2016

Production cost

 

1,066,111

 

905,767

 

336,564

 

305,689

Selling expenses

 

6,628

 

6,708

 

2,199

 

2,299

General and administrative expenses

 

17,206

 

10,510

 

5,528

 

3,363

 

 

1,089,945

 

922,985

 

344,291

 

311,351

Other operational (*)

 

33,131

 

33,730

 

11,109

 

10,426

 

 

1,123,076

 

956,715

 

355,400

 

321,777

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Parent Company

 

 

Nine months ended

 

Three months ended

 

 

9/30/2017

 

9/30/2016

 

9/30/2017

 

9/30/2016

Production cost

 

478,665

 

406,700

 

151,546

 

139,532

Selling expenses

 

5,519

 

5,522

 

1,825

 

1,914

General and administrative expenses

 

13,104

 

6,606

 

4,274

 

2,160

 

 

497,288

 

418,828

 

157,645

 

143,606

 

 

 

 

 

 

 

 

 

 

 (*) Refers to the amortization of intangible assets as described in note 22.

 

 

 

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Version: 1

 

 

22.   OTHER OPERATING INCOME (EXPENSES)

 

   

 

 

 

 

 

 Consolidated

   

Nine months ended

 

Three months ended

   

9/30/2017

 

9/30/2016 Adjusted

 

9/30/2017

 

9/30/2016 Adjusted

Other operating income

 

 

 

 

 

 

 

 

Indemnities/gains on lawsuits

 

5,401

 

26,137

 

4,385

 

1,177

Rentals and leases

 

1,380

 

1,059

 

461

 

481

Dividends received

 

993

           

Extemporaneous PIS/COFINS credits

 

   

128,083

     

128,083

Gain on business combination

     

28,013

     

28,013

Other revenues

 

13,328

 

19,325

 

4,110

 

10,846

   

21,102

 

202,617

 

8,956

 

168,600

                 

Other operating expenses

 

             

Taxes and fees

 

(14,217)

 

(94,803)

 

(10,090)

 

(4,630)

Write-off / (Provision) of judicial deposits

 

(4,726)

 

(20,711)

 

(3,386)

 

(3,546)

Reversal/(Provision) of environmental liabilities

 

(1,963)

 

(2,065)

 

(3,187)

 

(1,520)

Expenses from tax, social security, labor, civil and environmental law suits

 

(64,868)

 

(115,428)

 

(12,884)

 

(43,054)

Depreciation of unused equipment and amortization of intangible assets

(33,131)

 

(33,730)

 

(11,109)

 

(10,426)

 Write-off and net reversal losses (notes 9 and 10)

 

(21,600)

 

(61,791)

 

(28,782)

 

(34,803)

 (Losses) /reversals estimated in inventories 

 

(2,684)

 

(27,101)

 

2,069

 

(39,618)

 Losses on spare parts

 

(2,737)

 

(8,760)

 

(1,076)

 

(1,287)

 Studies and project engineering expenses

 

(24,932)

 

(21,539)

 

(8,015)

 

(8,294)

 Research and development expenses

 

(2,909)

 

(1,690)

 

(1,250)

 

(522)

 Advisory expenses

 

(874)

 

(20,079)

 

(835)

 

(775)

 Healthcare plan expenses 

 

(71,521)

 

(59,497)

 

(26,132)

 

(25,584)

Realized cash flow hedge  (note 12 b)

 

(37,933)

 

(26,472)

 

(16,212)

 

(5,949)

 Other expenses

 

(33,045)

 

(34,418)

 

14,109

 

3,685

   

(317,140)

 

(528,084)

 

(106,780)

 

(176,323)

 Other operating income (expenses), net

 

(296,038)

 

(325,467)

 

(97,824)

 

(7,723)

                 

 

 

 

 

 

 

               

 Parent Company

   

Nine months ended

 

Three months ended

   

9/30/2017

 

9/30/2016 Adjusted

 

9/30/2017

 

9/30/2016 Adjusted

Other operating income

 

 

 

 

 

 

 

 

Indemnities/gains on lawsuits

 

4,963

 

3,530

 

4,308

 

957

Rentals and leases

 

1,110

 

992

 

371

 

442

Dividends received

 

476

           

Extemporaneous PIS/COFINS credits

 

   

121,090

     

121,090

Gain on business combination

     

28,013

     

28,013

Other revenues

 

5,285

 

3,095

 

1,491

 

1,648

   

11,834

 

156,720

 

6,170

 

152,150

                 

Other operating expenses

               

Taxes and fees

 

(9,575)

 

(13,975)

 

(7,981)

 

(873)

Write-off / (Provision) of judicial deposits

 

(4,642)

 

(11,885)

 

(3,186)

 

5,286

Expenses with environmental liabilities, net

 

4,034

 

(482)

 

14

 

(1,228)

Expenses from tax, social security, labor, civil and environmental law suits

 

(38,219)

 

(98,569)

 

(2,972)

 

(31,411)

 Write-off and net reversal losses (notes 9 and 10)

 

521

 

(20,751)

 

(3,007)

 

(22)

 Losses /reversals estimated in inventories 

 

752

 

(10,380)

 

(4,517)

 

(9,968)

 Losses on spare parts

 

(2,267)

 

(2,369)

 

(606)

 

(1,288)

 Studies and project engineering expenses

 

(23,899)

 

(20,669)

 

(7,546)

 

(8,212)

 Research and development expenses

 

(2,909)

 

(1,690)

 

(1,250)

 

(522)

 Healthcare plan expenses 

 

(71,323)

 

(59,502)

 

(26,174)

 

(25,587)

Advisory expenses

 

(874)

 

(20,065)

 

(835)

 

(775)

Realized cash flow hedge (note 12 b)

 

(37,933)

 

(26,472)

 

(16,212)

 

(5,949)

 Other expenses

 

(9,753)

 

(8,779)

 

(344)

 

(5,046)

   

(196,087)

 

(295,588)

 

(74,616)

 

(85,595)

 Other operating income (expenses), net

 

(184,253)

 

(138,868)

 

(68,446)

 

66,555

   

 

           

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Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

 

23.   FINANCIAL INCOME (EXPENSES)

 

 

   

 

 

 

 

 

 

 Consolidated

   

Nine months ended

 

Three months ended

   

9/30/2017

 

9/30/2016 Adjusted

 

9/30/2017

 

9/30/2016 Adjusted

Financial income

 

 

 

 

 

 

 

 

    Related parties (note 17 a)

 

49,319

 

43,700

 

14,038

 

16,226

Income from short-term investments 

 

131,563

 

223,609

 

34,457

 

86,345

Gain from derivative

 

28,503

     

10,261

   

Gain on repurchase of debt securities

 

38,861

 

170,275

 

12,116

 

13,946

Other income

 

37,824

 

85,411

 

9,969

 

23,906

 

 

286,070

 

522,995

 

80,841

 

140,423

Financial expenses

               

Borrowings and financing - foreign currency

 

(655,595)

 

(706,611)

 

(220,493)

 

(218,727)

Borrowings and financing - local currency

 

(1,317,485)

 

(1,688,332)

 

(377,250)

 

(579,608)

Related parties  (note 17 a)

 

   

(130)

     

-

Capitalized interest  (notes 09 and 27)

 

73,955

 

164,942

 

22,710

 

54,067

Losses on derivatives

 

   

(362)

       

Interest, fines and late payment charges

 

(14,252)

 

(25,700)

 

(8,480)

 

(5,521)

Commission and bank fees

 

(116,981)

 

(118,239)

 

(38,971)

 

(49,682)

PIS/COFINS over financial income

 

(16,865)

 

(31,936)

 

(3,880)

 

(6,671)

Other financial expenses

 

(51,217)

 

(64,161)

 

(2,199)

 

(17,371)

   

(2,098,440)

 

(2,470,529)

 

(628,563)

 

(823,513)

Foreign exchange and monetary variation, net

 

             

Monetary variation, net

 

1,469

 

(15,974)

 

(2,603)

 

203

Exchange variation, net

 

207,490

 

949,420

 

272,528

 

(64,281)

Exchange variation on derivatives

 

(229)

 

(804,696)

     

2,823

 

 

208,730

 

128,750

 

269,925

 

(61,255)

 

 

             

Financial income (expenses), net

 

(1,603,640)

 

(1,818,784)

 

(277,797)

 

(744,345)

 

 

             

Statement of gains and (losses) on derivative transactions (note 12b)

           

Future Dollar BM&F

 

   

(798,364)

     

2,257

Dollar-to-euro swap

 

(229)

 

(6,332)

     

566

 

 

(229)

 

(804,696)

 

-

 

2,823

Swap Pré x CDI

     

(299)

       

Swap CDI x Pré

 

   

(63)

       

DI Future

 

28,503

     

10,261

   

 

 

28,503

 

(362)

 

10,261

   
   

28,274

 

(805,058)

 

10,261

 

2,823

                 

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Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

 

 

 

 

               

 Parent Company

   

Nine months ended

 

Three months ended

   

9/30/2017

 

9/30/2016

Adjusted

 

9/30/2017

 

9/30/2016

Adjusted

Financial income

 

 

 

 

 

 

 

 

Related parties  (note 17 b)

 

88,391

 

27,989

 

24,331

 

10,369

Income from short-term investments 

 

63,380

 

69,078

 

18,699

 

33,229

Other income

 

84,087

 

55,255

 

59,948

 

22,053

 

 

235,858

 

152,322

 

102,978

 

65,651

Financial expenses

               

Borrowings and financing - foreign currency

 

(170,940)

 

(167,840)

 

(57,827)

 

(53,153)

Borrowings and financing - local currency

 

(1,132,457)

 

(1,450,141)

 

(323,817)

 

(497,591)

Related parties  (note 17 a)

 

(384,908)

 

(1,075,969)

 

(124,419)

 

(92,033)

Capitalized interest  (notes 09 and 27)

 

17,800

 

96,828

 

5,536

 

33,886

Interest, fines and late payment charges

 

(4,130)

 

(7,605)

 

(3,590)

 

(409)

Commission and bank fees

 

(104,277)

 

(95,981)

 

(34,976)

 

(31,796)

PIS/COFINS over financial income

 

(13,551)

 

(25,895)

 

(2,970)

 

(6,219)

Other financial expenses

 

(31,350)

 

(40,885)

 

4,221

 

(11,615)

 

 

(1,823,813)

 

(2,767,488)

 

(537,842)

 

(658,930)

Foreign exchange and monetary variation, net

               

Monetary variation, net

 

(12,198)

 

(14,240)

 

(3,274)

 

(3,546)

Exchange variation, net

 

344,837

 

2,055,242

 

481,548

 

(110,349)

 

 

332,639

 

2,041,002

 

478,274

 

(113,895)

                 

Financial income (expenses), net

 

(1,255,316)

 

(574,164)

 

43,410

 

(707,174)

                 

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Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

 

 

 

24.   SEGMENT INFORMATION

 

The segment information has not changed in relation to that disclosed in the Company's financial statements as of December 31, 2016. Therefore, management decided not to repeat it in this condensed interim financial information.

 

According to the Group´s structure, the businesses are distributed and managed in five operating segments as follows:

 

 

                               

Nine months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2017

P&L

 

Steel

 

Mining 

 

Logistics

 

 

 

Energy

 

Cement

 

Corporate expenses/elimination

 

Consolidated

     

Port

 

Railroads

       

Metric tons (Thou.) (*)

 

  3,668,440

 

  23,015,561

 

 

 

 

  2,651,778

 

(3,975,149)

 

 

Net revenues

                             

Domestic market

 

  5,671,191

 

654,490

 

167,260

 

  1,052,107

 

303,678

 

381,339

 

(1,895,383)

 

  6,334,682

Foreign market

 

  3,853,265

 

 2,791,062

 

 

 

 

 

552,867

 

  7,197,194

Total net revenue  (note 20)

 

  9,524,456

 

  3,445,552

 

167,260

 

  1,052,107

 

303,678

 

381,339

 

(1,342,516)

 

  13,531,876

Cost of sales and services

 

  (7,868,000)

 

  (2,096,787)

 

(111,953)

 

(766,142)

 

(213,731)

 

(406,870)

 

  1,447,180

 

  (10,016,303)

Gross profit

 

  1,656,456

 

  1,348,765

 

55,307

 

285,965

 

89,947

 

(25,531)

 

104,664

 

  3,515,573

General and administrative expenses

 

(759,662)

 

(122,041)

 

(20,136)

 

(68,335)

 

(20,211)

 

(58,921)

 

  (521,356)

 

  (1,570,662)

Depreciation

 

506,023

 

369,610

 

11,786

 

231,500

 

14,992

 

97,074

 

  (141,040)

 

  1,089,945

Proportionate EBITDA of joint ventures

                         

406,247

 

406,247

Adjusted EBITDA

 

  1,402,817

 

  1,596,334

 

46,957

 

449,130

 

84,728

 

12,622

 

  (151,485)

 

  3,441,103

                                 

Sales by geographic area

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

23,297

 

  2,630,181

 

 

 

 

 

 

 

 

 

552,867

 

  3,206,345

North America

 

  1,533,105

 

                 

 

  1,533,105

Latin America

 

378,812

 

 

 

 

 

 

 

 

 

 

 

378,812

Europe

 

  1,891,926

 

159,105

                 

 

  2,051,031

Others

 

26,125

 

1,776

 

 

 

 

 

 

 

 

 

 

27,901

Foreign market

 

  3,853,265

 

  2,791,062

 

 

 

 

 

552,867

 

  7,197,194

Domestic market

 

  5,671,191

 

654,490

 

167,260

 

  1,052,107

 

303,678

 

381,339

 

(1,895,383)

 

  6,334,682

Total

 

  9,524,456

 

  3,445,552

 

167,260

 

  1,052,107

 

303,678

 

381,339

 

(1,342,516)

 

  13,531,876

 

 

 

 

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  CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

 

 

                               

Three months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2017

P&L

 

Steel

 

Mining 

 

Logistics

 

 

 

Energy

 

Cement

 

Corporate expenses/elimination

 

Consolidated

     

Port

 

Railroads

       

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

 

  1,300,689

 

  7,953,856

 

 

 

 

 

 

 

999,973

 

(1,321,184)

 

 

Net revenues

                               

Domestic market

 

  2,133,384

 

217,859

 

59,983

 

364,224

 

102,837

 

141,794

 

  (637,816)

 

  2,382,265

Foreign market

 

  1,265,321

 

986,459

 

 

 

 

 

175,626

 

  2,427,406

Total net revenue  (note 20)

 

  3,398,705

 

  1,204,318

 

59,983

 

364,224

 

102,837

 

141,794

 

  (462,190)

 

  4,809,671

Cost of sales and services

 

  (2,845,261)

 

(718,659)

 

(37,239)

 

(242,107)

 

(73,661)

 

(150,690)

 

470,681

 

  (3,596,936)

Gross profit

 

553,444

 

485,659

 

22,744

 

122,117

 

29,176

 

(8,896)

 

8,491

 

  1,212,735

General and administrative expenses

 

(253,118)

 

(40,044)

 

(5,888)

 

(21,450)

 

(6,894)

 

(20,109)

 

  (143,215)

 

(490,718)

Depreciation

 

164,760

 

122,498

 

3,950

 

63,239

 

4,997

 

29,745

 

  (44,898)

 

344,291

Proportionate EBITDA of joint ventures

                         

146,613

 

146,613

Adjusted EBITDA

 

465,086

 

568,113

 

20,806

 

163,906

 

27,279

 

  740

 

  (33,009)

 

  1,212,921

                                 

Sales by geographic area

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

18,507

 

961,427

 

 

 

 

 

 

 

 

 

175,626

 

  1,155,560

North America

 

528,444

                         

528,444

Latin America

 

129,558

 

 

 

 

 

 

 

 

 

 

 

 

 

129,558

Europe

 

582,712

 

23,255

                     

605,967

Others

 

6,100

 

1,777

 

 

 

 

 

 

 

 

 

 

 

7,877

Foreign market

 

  1,265,321

 

986,459

 

 

 

 

 

175,626

 

  2,427,406

Domestic market

 

  2,133,384

 

217,859

 

59,983

 

364,224

 

102,837

 

141,794

 

  (637,816)

 

  2,382,265

Total

 

  3,398,705

 

  1,204,318

 

59,983

 

364,224

 

102,837

 

141,794

 

  (462,190)

 

  4,809,671

 

                               

Nine months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2016

P&L

 

Steel

 

Mining 

 

Logistics

 

 

 

Energy

 

Cement

 

Corporate expenses/elimination

 

Consolidated

     

Port

 

Railroads

       

Metric tons (Thou.) (*)

 

  3,670,243

 

  27,792,213

 

 

 

 

  2,015,765

 

(2,798,452)

 

 

Net revenues

                             

Domestic market

 

  5,000,882

 

373,769

 

145,405

 

995,997

 

201,713

 

362,816

 

(1,509,933)

 

  5,570,649

Foreign market

 

  3,553,403

 

 2,891,097

 

 

 

 

 

615,204

 

  7,059,704

Total net revenue  (note 20)

 

  8,554,285

 

  3,264,866

 

145,405

 

995,997

 

201,713

 

362,816

 

  (894,729)

 

  12,630,353

Cost of sales and services

 

  (7,059,177)

 

  (2,302,736)

 

(107,331)

 

(677,624)

 

(147,598)

 

(334,320)

 

  1,158,374

 

  (9,470,412)

Gross profit

 

  1,495,108

 

962,130

 

38,074

 

318,373

 

54,115

 

28,496

 

263,645

 

  3,159,941

General and administrative expenses

 

(652,786)

 

(52,068)

 

(19,332)

 

(74,044)

 

(18,568)

 

(54,248)

 

  (759,039)

 

  (1,630,085)

Depreciation

 

499,654

 

337,383

 

9,996

 

169,353

 

12,836

 

45,341

 

  (151,578)

 

922,985

Proportionate EBITDA of joint ventures

 

 

                 

  (151,578)

 

(151,578)

Adjusted EBITDA

 

  1,341,976

 

  1,247,445

 

28,738

 

413,682

 

48,383

 

19,589

 

  (798,550)

 

  2,301,263

                                 

Sales by geographic area

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

30,814

 

  2,487,222

 

 

 

 

 

615,204

 

  3,133,240

North America

 

  1,490,339

 

 

 

 

 

 

 

  1,490,339

Latin America

 

198,366

 

 

 

 

 

 

 

198,366

Europe

 

  1,809,045

 

318,091

 

 

 

 

 

 

  2,127,136

Others

 

24,839

 

85,784

 

 

 

 

 

 

110,623

Foreign market

 

  3,553,403

 

  2,891,097

 

 

 

 

 

615,204

 

  7,059,704

Domestic market

 

  5,000,882

 

373,769

 

145,405

 

995,997

 

201,713

 

362,816

 

(1,509,933)

 

  5,570,649

Total

 

  8,554,285

 

  3,264,866

 

145,405

 

995,997

 

201,713

 

362,816

 

  (894,729)

 

  12,630,353

 

Page 80


 
 


  CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

 

                               

Three months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2016

P&L

 

Steel

 

Mining 

 

Logistics

 

 

 

Energy

 

Cement

 

Corporate expenses/elimination

 

Consolidated

     

Port

 

Railroads

       

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

 

  1,171,543

 

  10,229,984

 

 

 

 

849,943

 

(1,057,030)

 

 

Net revenues

                             

Domestic market

 

  1,893,365

 

145,409

 

50,291

 

355,494

 

67,644

 

139,709

 

  (551,541)

 

  2,100,371

Foreign market

 

973,962

 

 1,161,860

 

 

 

 

 

233,047

 

  2,368,869

Total net revenue  (note 20)

 

  2,867,327

 

  1,307,269

 

50,291

 

355,494

 

67,644

 

139,709

 

  (318,494)

 

  4,469,240

Cost of sales and services

 

  (2,300,364)

 

(810,708)

 

(37,137)

 

(236,653)

 

(48,639)

 

(130,885)

 

407,329

 

  (3,157,057)

Gross profit

 

566,963

 

496,561

 

13,154

 

118,841

 

19,005

 

8,824

 

88,835

 

  1,312,183

General and administrative expenses

 

(183,489)

 

(15,497)

 

(7,723)

 

(23,642)

 

(6,588)

 

(19,522)

 

  (266,742)

 

(523,203)

Depreciation

 

168,946

 

118,051

 

3,378

 

57,198

 

4,277

 

15,097

 

  (55,596)

 

311,351

Proportionate EBITDA of joint ventures

 

 

 

 

 

 

 

138,223

 

138,223

Adjusted EBITDA

 

552,420

 

599,115

 

8,809

 

152,397

 

16,694

 

4,399

 

  (95,280)

 

  1,238,554

                                 

Sales by geographic area

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

2,614

 

  1,047,724

 

 

 

 

 

233,047

 

  1,283,385

North America

 

401,920

 

 

 

 

 

 

 

401,920

Latin America

 

55,867

 

 

 

 

 

 

 

55,867

Europe

 

503,239

 

114,136

 

 

 

 

 

 

617,375

Others

 

10,322

 

 

 

 

 

 

 

10,322

Foreign market

 

973,962

 

  1,161,860

 

 

 

 

 

233,047

 

  2,368,869

Domestic market

 

  1,893,365

 

145,409

 

50,291

 

355,494

 

67,644

 

139,709

 

  (551,541)

 

  2,100,371

Total

 

  2,867,327

 

  1,307,269

 

50,291

 

355,494

 

67,644

 

139,709

 

  (318,494)

 

  4,469,240

 

 (*) The ore sales volumes presented in this note take into consideration Company sales and the interest in its subsidiaries and joint ventures.

 

·       Adjusted EBITDA

 

Adjusted EBITDA is the measurement through which the chief operating decision maker assesses the segment performance and the capacity to generate recurring operating cash, consisting of profit for the year less net finance income (costs), income tax and social contribution, depreciation and amortization, equity in results, results of discontinued operations and other operating income (expenses), plus the proportionate EBITDA of joint ventures.

 

Even though it is an indicator used in segment measurement, EBITDA is not a measurement recognized by accounting practices adopted in Brazil or IFRS, it does not have a standard definition, and may not be comparable with measurements using similar names provided by other companies.

 

As required by IFRS 8, the table below shows the reconciliation of the measurement used by the chief operating decision maker with the results determined using the accounting practices:

 

   

 

 

 

 

 

 

 Consolidated

   

Nine months ended

 

Three months ended

   

9/30/2017

 

9/30/2016

 

9/30/2017

 

9/30/2016

Net income (loss) for the year

 

(266,157)

 

(797,325)

 

256,184

 

(66,751)

Depreciation

 

1,089,945

 

922,985

 

344,291

 

311,351

Income tax and social contribution (note 14)

 

409,890

 

264,617

 

128,214

 

122,796

Financial income (expenses)  (note 23)

 

1,603,640

 

1,818,784

 

277,797

 

744,345

EBITDA

 

2,837,318

 

2,215,847

 

1,006,486

 

1,118,725

Other operating income (expenses) (note 22)

 

296,038

 

325,467

 

97,824

 

7,723

Equity in results of affiliated companies

 

(98,500)

 

(88,473)

 

(38,002)

 

(26,117)

Proportionate EBITDA of joint ventures

 

406,247

 

(151,578)

 

146,613

 

138,223

Adjusted EBITDA (*)

 

3,441,103

 

2,301,263

 

1,212,921

 

1,238,554

 

 (*) The Company discloses its adjusted EBITDA net of its share of investments and other operating income (expenses) because it understands that these should not be considered in the calculation of recurring operating cash generation.

 

 

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Quarterly Financial Information - September 30, 2017 – CIA SIDERURGICA NACIONAL

 

Version: 1

 

25.   GUARANTEES

 

The Company is liable for guarantees of its subsidiaries and joint ventures as follows:

 

 

Currency

 

Maturities

 

Borrowings

Tax foreclosure

Other

Total

         

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

Transnordestina Logísitca

R$

 

Up to 9/19/2056 and indefinite

 

   2,544,173

 

   2,547,937

 

      22,214

 

      23,007

 

           3,866

 

         4,866

 

      2,570,253

 

      2,575,810

                                       

FTL - Ferrovia Transnordestina

R$

 

11/15/2020

 

        69,405

 

        76,700

         

                    

     

           69,405

 

           76,700

                                       

Sepetiba Tecon

R$

 

Indefinite

 

 

 

 

 

 

 

 

 

         36,309

 

       28,914

 

           36,309

 

           28,914

                                       

Cia Metalurgica Prada

R$

 

Indefinite

         

           333

 

           333

 

         18,540

 

       19,340

 

           18,873

 

           19,673

                                       

CSN Energia

R$

 

Indefinite

 

 

 

 

 

        2,829

 

        2,829

 

 

 

 

 

             2,829

 

             2,829

                                       

CSN Mineração

R$

 

9/22/2022

 

   2,000,000

 

   2,000,000

         

           2,520

 

         2,520

 

      2,002,520

 

      2,002,520

                                       
                                       

Estanho de Rondônia

R$

 

7/15/2022

 

          3,153

 

 

 

 

 

 

 

 

 

 

 

             3,153

 

                      

                                       

Total in R$

       

   4,616,731

 

   4,624,637

 

      25,376

 

      26,169

 

         61,235

 

       55,640

 

      4,703,342

 

      4,706,446

                                       

CSN Islands XI

US$

 

9/21/2019

 

      750,000

 

      750,000

 

 

 

 

 

 

 

 

 

         750,000

 

         750,000

                                       

CSN Islands XII

US$

 

Perpetual

 

   1,000,000

 

   1,000,000

                 

      1,000,000

 

      1,000,000

                                       

CSN Resources

US$

 

7/21/2020

 

   1,200,000

 

   1,200,000

 

 

 

 

 

 

 

 

 

      1,200,000

 

      1,200,000

                                       

Total in US$

       

   2,950,000

 

   2,950,000

 

 

 

 

 

 

 

 

 

      2,950,000

 

      2,950,000

                                       

CSN Steel S.L.

EUR

 

1/31/2020

 

      120,000

 

      120,000

 

 

 

 

 

 

 

 

 

         120,000

 

         120,000

                                       

Lusosider Aços Planos

EUR

 

Indefinite

 

        25,000

 

        25,000

                 

           25,000

 

           25,000

                                       

Total in EUR

 

 

 

 

      145,000

 

      145,000

 

 

 

 

 

 

 

 

 

         145,000

 

         145,000

Total in R$

       

   9,838,272

 

 12,135,468

                 

      9,838,272

 

    12,135,468

 

 

 

 

 

 14,455,003

 

 16,760,105

 

      25,376

 

      26,169

 

         61,235

 

       55,640

 

    14,541,614

 

    16,841,914

 

 

26.   INSURANCE

 

Aiming to properly mitigate risk and in view of the nature of its operations, the Company and its subsidiaries have taken out several different types of insurance policies. Such policies are contracted in line with the Risk Management policy and are similar to the insurance taken out by other companies operating in the same lines of business as CSN and its subsidiaries. The risks covered under such policies include the following: Domestic Transportation, International Transportation, Life and Casualty, Health, Vehicles Fleet, D&O (Civil Liability Insurance for Directors and Officers), General Civil Liability, Engineering Risks, Named Peril, Export Credit, Surety Bond and Port Operator’s Civil Liability.

 

In 2016, after negotiation with insurers and reinsurers in Brazil and abroad, an insurance policy was issued for the contracting of a policy of Operational Risk of Property Damages and Loss of Profits, with effect from October 30, 2016 to March 31, 2018. Under the insurance policy, the LMI (Maximum Limit of Indemnity) is US$600 million and covers the following Company’s units and subsidiaries: Presidente Vargas Steelworks, CSN Mineração, Sepetiba Tecon and CSN Mining. CSN is liable for the first range of retention of US$375 million in excess of the deductibles for property damages and loss of profits.

 

In view of their nature, the risk assumptions adopted are not part of the scope of an audit of the financial statements and, accordingly, were not audited by our independent auditors.

 

27.   ADDITIONAL INFORMATION TO CASH FLOWS

 

The following table provides additional information on transactions related to the statement of cash flows:

 

     

Consolidated

     

Parent Company

 

9/30/2017

 

12/31/2016

 

9/30/2017

 

12/31/2016

Income tax and social contribution paid

           236,844

 

           456,227

 

 

 

 

Addition to PP&E with interest capitalization

             73,955

 

           215,794

 

             17,800

 

           127,675

Capital increase with no cash effect

               4,265

 

               7,437

 

 

 

 

Capitalization with advance to future capital increase

       

               9,844

   

Borrowings granted to capitalize subisidiaries

             20,264

 

 

 

             20,264

 

             52,419

 

           335,328

 

           679,458

 

             47,908

 

           180,094

               

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Version: 1

 

 

28.   STATEMENT OF COMPREHENSIVE INCOME

 

 

 

 

 

 

 Consolidated

 

Parent Company

 

 Nine months ended

 Three months ended

 Nine months ended

 Three months ended

 

9/30/2017

9/30/2016

9/30/2017

9/30/2016

9/30/2017

9/30/2016

9/30/2017

9/30/2016

 Profit/(Loss) for the period

(266,157)

(797,325)

              256,184

(66,751)

(347,298)

(852,583)

226,466

(98,245)

                 

 Other comprehensive income

               
                 

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

 

 

 

 

 

 

 

 

 Actuarial (loss) gain the defined benefit plan from investments in subsidiaries, net of taxes  88

143  30  29  88  143 30 29

 

88

143

                       30

29

88

143

30

29

                 

Items that could be subsequently reclassified to the statement of income

 

 

 

 

 

 

 

 

 Cumulative translation adjustments for the period

82,130

(386,136)

              (47,328)

73,956

82,130

(386,136)

(47,328)

73,956

 Assets available for sale

614,542

775,405

              496,044

647,552

614,542

775,405

496,044

647,552

 (Loss) / gain on the percentage change in investments

2,814

1,324

                           

740

2,814

1,324

                           

                     740

 (Loss)/gain on cash flow hedge accounting

134,374

1,016,560

              200,236

(56,324)

134,374

1,016,560

200,236

(56,324)

 Realization of cash flow hedge accounting reclassified to income statements                 37,933

26,472  16,212  5,949  37,933  26,472 16,212 5,949

(Loss)/gain on investments hedge of investments in subsidiaries

 

 

 

(23,599)

57,792

2,304

(10,272)

(Loss)/gain on foreign investment hedge

(23,599)

57,792

                  2,304

(10,272)

 

                            

                           

                           

 

848,194

1,491,417

              667,468

661,601

848,194

1,491,417

667,468

661,601

 

 

 

 

 

 

 

 

 

 

848,282

1,491,560

              667,498

661,630

848,282

1,491,560

667,498

661,630

                 

 Total comprehensive income for the period 

582,125

694,235

              923,682

594,879

500,984

638,977

893,964

563,385

                 
                 

 Attributable to:

 

 

 

 

 

 

 

 

 Participation of controlling interest

500,984

638,977

893,964

563,385

500,984

638,977

893,964

563,385

 Participation of non controlling interest

81,141

55,258

29,718

31,494

 

 

 

 

 

582,125

694,235

923,682

594,879

500,984

638,977

893,964

563,385

 

 

29.   INDEPENDENT INVESTIGATION - CONSTRUCTION OF THE LONG STEEL PLANT 

 

Considering the information from a Company’s officer published in the press in April 2017, based on testimonials made before the Court, the Audit Committee decided to hire a specialized forensic service to conduct an independent external investigation of the contractual relationship related to the construction of CSN’s Long Steel Plant (contract in which there would have been alleged undue payments, as bonus, as a form of reimbursement for payments made to political parties), and to analyze the extent of the business relationships between the contracting parties. The conclusion of the investigation is that nothing from the testimonials referred to above was confirmed, and there are no contingencies deriving from the matters investigated. Consequently, the Company understands that there is no basis to justify the setting up of a provision for losses or the disclosure of a contingency. In October 2017, complying with a determination of the Supreme Federal Court, the Federal Police started an investigation of the facts reported in those testimonials previously mentioned. To date, nothing has been found out in such investigation.

 

30.   EVENTS AFTER THE REPORTING PERIOD

 

·       Environmental notice to suspend the operations of Presidente Vargas Plant (UPV)

 

On December 1, 2017, the Company received an environmental notice from the INEA (State Institute of Environment) to suspend the operations of the Presidente Vargas Plant, in Volta Redonda, State of Rio de Janeiro, from December 10, 2017. The reason stated by INEA was an alleged non-observance and non-compliance by the Company with the Conduct Adjustment Agreement (TAC) signed with the environmental authorities of the State of Rio de Janeiro.

On December 7, 2017, the Company obtained a preliminary authorization to continue with its activities of the UPV for a 180-day term and, during this period, a definitive solution for this matter will be discussed between the Company and the environmental authorities.

 

 

 

 

 

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(Free translation from the original issued in Portuguese. In the event of any discrepancies, the Portuguese language version shall prevail.)

Independent auditor’s report on review of the interim financial information

To:

Companhia Siderúrgica Nacional

São Paulo – SP

We have reviewed the accompanying individual and consolidated interim financial information of Companhia Siderúrgica Nacional (“Company”), identified as Parent and Consolidated, respectively, included in the Interim Financial Information Form (ITR) for the quarter ended September 30, 2017, which comprises the balance sheet as at September 30, 2017 and the related income statement and statement of comprehensive income for the quarter and nine-month periods then ended, and the statement of changes in equity and statement of cash flows for the nine-month period then ended, including a summary of significant accounting policies and other explanatory notes.

Management is responsible for the preparation of the individual and consolidated interim financial information in accordance with Technical Pronouncement CPC 21 (R1) - Interim Financial Reporting and IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), as well as for the presentation of such information in accordance with the standards issued by the Brazilian Securities and Exchange Commission (CVM) applicable to the preparation of Interim Financial Information (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review.

 

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Scope of review

We conducted our review in accordance with Brazilian and international standards on review of interim financial information (NBC TR 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the standards on auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion on the individual and consolidated interim financial information

Based on our review, nothing has come to our attention that causes us to believe that the accompanying individual and consolidated interim financial information included in the Interim Financial Information Form (ITR) referred to above is not prepared, in all material respects, in accordance with CPC 21 (R1) and IAS 34 applicable to the preparation of interim financial information and presented in accordance with the standards issued by the Brazilian Securities and Exchange Commission (CVM).

Emphasis of matter

Ability of the jointly-controlled subsidiary Transnordestina Logística S.A. to continue as a going concern

We draw attention to note 8.c) to the interim financial information, which describes the stage of completion of the new railway network by the jointly-controlled subsidiary Transnordestina Logística S.A. (TLSA), currently under construction and originally scheduled to be completed by January 2017. The construction time frame is being reviewed and discussed by the relevant government bodies. The completion of the works under the project (and the consequent start of operations) is contingent upon receiving ongoing financial contribution from TLSA´s shareholders and third parties. These events and conditions, together with other issues described in said note to the interim financial information, indicate the existence of significant uncertainty that may cast significant doubt as to TLSA’s ability to continue as a going concern. Our conclusion is not qualified regarding this matter.

 

 

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Other matters

Interim statements of value added

We have also reviewed the individual and consolidated statements of value added (DVA) for the nine-month period ended September 30, 2017, prepared under the responsibility of the Company’s management, the presentation of which is required by the standards issued by the Brazilian Securities and Exchange Commission (CVM) applicable to the preparation of interim financial information and considered supplemental information by IFRS, which does not require the presentation of a DVA. This interim financial information was subject to the same review procedures described above and, based on our review, nothing has come to our attention that causes us to believe that it was not fairly presented, in all material respects, in relation to the individual and consolidated interim financial information taken as a whole.

Audit and review of the corresponding figures for the prior year and quarter

The figures corresponding to the year ended December 31, 2016, presented for purposes of comparison, were previously audited by another independent auditor, who issued an opinion thereon on October 27, 2017, containing emphasis-of-matter paragraphs regarding the restatement of the individual and consolidated financial statements as at December 31, 2015 and the ability of Transnordestina Logística S.A. (TLSA) to continue as a going concern, which is also an emphasis of matter in this quarter. The figures corresponding to the nine-month period ended September 30, 2016, also presented for purposes of comparison, were reviewed by other independent auditors, whose report on review of the individual and consolidated interim financial information for the quarter ended September 30, 2016 was originally issued on November 14, 2016 (without modification) and re-issued on October 27, 2017. Both restated reports were issued without modifications, containing emphasis-of-matter paragraphs regarding the restatement of the respective financial statements and TLSA´s ability to continue as a going concern (the later one emphasis is just applicable to the report re-issued on October 27, 2017).

São Paulo, December 22, 2017

 

Nelson Fernandes Barreto Filho

 

Grant Thornton Auditores Independentes

 

 

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SIGNATURE
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: December 24, 2017
 
COMPANHIA SIDERÚRGICA NACIONAL
By:
/S/ Benjamin Steinbruch

 
Benjamin Steinbruch
Chief Executive Officer

 

 
By:
/S/ David Moise Salama

 
David Moise Salama
Executive Officer

 
 

 

 
FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.