2004 Gerdau Annual Report

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Financial Indicators 2004 1 2003 Firm value 2 /EBITDA 3 3.3x 5.4x Net debt/EBITDA 0.7x 2.0x Net debt/Total capitalization 34.2% 52.1% EBITDA/Net financial expenses 4 21.8x 5.2x Net income/Net equity 42.5% 26.0% 1. The improvement of indicators is due to the positive performance in 2004 which is reflected, for example, in the increase in EBITDA and net income as well as in the reduction of net debt and net financial expenses. 2. Firm value: market value less net debt (Gerdau S.A. Consolidated). 3. EBITDA: earnings before interest, taxes, depreciation and amortization. 4. Net financial expenses: financial expenses minus financial revenue, excluded foreign exchange effects and monetary variation. Distribution of Value-added Metalúrgica Gerdau S.A. Consolidated Total: R$ 10 billion Distribution of Value-added Metalúrgica Gerdau S.A. Consolidated Governments: R$ 4.1 billion GOVERNMENTS EMPLOYEES FUNDING INSTITUTIONS SHAREHOLDERS REINVESTMENT OF PROFIT 9.6% 4.0% 23.7% 21.8% 40.9% FEDERAL TAXES AND CONTRIBUTIONS FEDERAL SOCIAL OBLIGATIONS STATE TAXES AND CONTRIBUTIONS MUNICIPAL TAXES AND CONTRIBUTIONS 7.1% 0.9% 27.0% 65.0% Distribution of Value-added Metalúrgica Gerdau S.A. Consolidated Employees: R$ 2.2 billion SALARIES BENEFITS TRAINING PROFIT SHARING 1.3% 17.6% 12.9% 68.2% One century of profits For more than 100 years the Gerdau Group has believed that growth and profitability must be balanced. Our results are the ultimate proof that we follow this policy. Throughout its history, the Gerdau Group has always recorded positive results, even in adverse economic scenarios. Ethical values, well trained employees, professional management, financial seriousness, industrial and commercial competitiveness – all have been at the foundation of a solid and safe expansion. Today, the Gerdau Group works to retain its position as one of the most profitable and efficient steelmakers in the world.
22 23 f i n a n c e Consolidated Cash Flow Metalúrgica Gerdau S.A. (in thousand R$) Company Consolidated 2004 2003 2004 2003 NET INCOME FOR YEAR 1,437,075 575,179 3,341,097 1,256,874 EQUITY PICKUP (1,342,842) (610,001) 344,628 281,240 PROVISION FOR CREDIT RISK - - 7,647 20,618 GAIN IN FIXED ASSET DISPOSAL - - 9,058 10,056 GAIN/LOSS IN LIQUIDATION OF INVESTMENTS (170,953) (1,445) (164,058) (1,556) MONETARY AND EXCHANGE VARIATION 5,198 5,563 (94,087) 136,349 DEPRECIATION AND AMORTIZATION 145 149 766,819 605,045 INCOME TAX AND SOCIAL SECURITY CONTRIBUTION 47,393 8,420 505,551 (441,456) INTEREST ON DEBT 778 14 412,152 593,308 CONTINGENCIES/LEGAL ESCROW (940) 18 4,351 562 CHANGES IN TRADE ACCOUNTS RECEIVABLE - - (720,363) (167,134) CHANGES IN INVENTORIES - - (1,402,408) (207,267) CHANGES IN CONTRACTORS 58 (27) 477,292 187,227 OTHER ACCOUNTS IN OPERATING ACTIVITIES (33,737) 8,656 (100,288) 74,557 Net cash provided by operating activities (57,825) (13,474) 3,387,391 2,348,423 FIXED ASSETS ACQUISITION/DISPOSAL - - (1,173,491) (873,039) DEFERRED CHARGES - - (18,006) (7,246) INVESTMENTS ACQUISITION/DISPOSAL 155,144 5,097 362,905 (67,005) ACQUISITION OF ASSETS - - (924,457) - PROCEEDS FROM DIVIDENDS/INTEREST ON CAPITAL STOCK 351,884 185,108 - - Cash applied to investments 507,028 190,205 (1,753,049) (947,290) FIXED ASSETS SUPPLIERS - - 144,573 2,196 WORKING CAPITAL FINANCING (7,778) (7,015) (133,006) (334,804) DEBENTURES (586) (423) 85,305 (347,456) PROCEEDS FROM FIXED ASSETS FINANCING - - 762,766 454,989 PAYMENTS OF FIXED ASSETS FINANCING - - (677,357) (541,308) PAYMENT OF INTEREST ON FINANCING - - (379,801) (414,409) INTER-COMPANY LOANS 2,839 (2,506) 35,944 (16,937) CAPITAL INCREASE/TREASURY STOCK (14,441) (7,049) 451,704 (24,151) PAYMENT OF DIVIDENDS/INTEREST ON CAPITAL STOCK AND STATUTORY PARTICIPATIONS (358,623) (198,413) (853,710) (423,399) Net cash provided by financial activities (378,589) (215,406) (563,582) (1,645,279) Change in cash balance 70,614 (38,675) 1,070,760 (244,146) Cash Balance AT THE BEGINNING OF THE PERIOD 25,186 63,861 1,015,726 1,420,236 UPDATE OF INITIAL CASH BALANCE - - (82,541) (173,736) INITIAL BALANCE OF COMPANIES CONSOLIDATED IN THE YEAR - - - 13,372 AT THE END OF THE PERIOD 95,800 25,186 2,003,945 1,015,726
Page 1 and 2: Steel to shape the world 2004 Annua
Page 3 and 4: Steel Mills - 26 Downstream Operati
Page 5 and 6: 2004 Annual Report Highlights The m
Page 7 and 8: 04 05 h i g h l i g h t s steel fac
Page 9 and 10: 06 07 MESsage Commitment to economi
Page 11 and 12: 08 09 S T R AT e G I C v i s i o n
Page 13 and 14: 10 11 corporate GOVernance they are
Page 15 and 16: 12 13 corporate GOVernance Business
Page 17 and 18: 14 15 corporate GOVernance The shar
Page 19: 16 17 corporate GOVernance Executiv
Page 22 and 23: Finance Impressive performance in 2
Page 26 and 27: Capital Markets Outstanding return
Page 28 and 29: Performance of Gerdau S.A. Shares i
Page 30 and 31: Shareholder Base The geographic dis
Page 32 and 33: Steel Output (thousand metric tons)
Page 34 and 35: Improved efficiency EMPLOYEES GATHE
Page 36 and 37: Sales and Markets Capacity to meet
Page 38 and 39: its delivery volume by 22.6% and de
Page 40 and 41: THE CONSTRUCTION OF THE LEE ROY SEL
Page 42 and 43: Investments Growing profitability a
Page 44 and 45: Investment program for the coming y
Page 47 and 48: Social Commitment to the developmen
Page 49 and 50: 46 47 People and teams The Group al
Page 51 and 52: 48 49 People and teams 3. Investmen
Page 53 and 54: 50 51 c o m m u n i t y JUNIOR ACHI
Page 55 and 56: 52 53 c o m m u n i t y Champions o
Page 57: 54 55 c o m m u n i t y House of ho
Page 60 and 61: Environmental Management System Ger
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Page 66 and 67: Steel Production Find out how steel
Page 68 and 69: Timeline More than 100 years of his
Page 70 and 71: Glossary Definitions for technical
Page 73 and 74: 2004 Financial Statements Detailed
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72 73 METALÚRGICA GERDAU S.A. Liab
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74 75 METALÚRGICA GERDAU S.A. Stat
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76 77 METALÚRGICA GERDAU S.A. Stat
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78 79 METALÚRGICA GERDAU S.A. 4 -
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80 81 METALÚRGICA GERDAU S.A. d) T
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84 85 METALÚRGICA GERDAU S.A. The
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86 87 METALÚRGICA GERDAU S.A. Cons
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90 91 METALÚRGICA GERDAU S.A. Cons
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92 93 METALÚRGICA GERDAU S.A. As g
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100 101 METALÚRGICA GERDAU S.A. 25
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102 103 METALÚRGICA GERDAU S.A. Th
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104 105 METALÚRGICA GERDAU S.A. Bo
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106 107 METALÚRGICA GERDAU S.A. Op
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108 109 GERDAU S.A. Liabilities and
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110 111 GERDAU S.A. Statement of Ch
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112 113 GERDAU S.A. Statement of Ca
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114 115 GERDAU S.A. 4 - Consolidate
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116 117 GERDAU S.A. d) The financia
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118 119 GERDAU S.A. 7 - Inventories
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120 121 GERDAU S.A. The tax benefit
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122 123 GERDAU S.A. Consolidated __
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124 125 GERDAU S.A. a) Events durin
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126 127 GERDAU S.A. The market valu
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128 129 GERDAU S.A. Consolidated __
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130 131 GERDAU S.A. some of its tra
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132 133 GERDAU S.A. b) Commercial t
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134 135 GERDAU S.A. Company Consoli
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136 137 GERDAU S.A. The assumptions
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138 139 GERDAU S.A. b.2) SAR Plan I
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140 141 GERDAU S.A. Information by
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142 143 GERDAU S.A. Report of Indep
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144 145 GERDAU AÇOMINAS S.A. Liabi
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146 147 GERDAU AÇOMINAS S.A. State
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148 149 GERDAU AÇOMINAS S.A. State
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150 151 GERDAU AÇOMINAS S.A. 4 - C
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152 153 GERDAU AÇOMINAS S.A. b) An
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156 157 GERDAU AÇOMINAS S.A. Summa
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158 159 GERDAU AÇOMINAS S.A. Excha
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160 161 GERDAU AÇOMINAS S.A. b.2)
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166 167 GERDAU AÇOMINAS S.A. Repor
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Corporate Communications Av. Farrap
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2004 Gerdau Annual Report

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