camaRgo coRRêa cimentos sa anD subsiDiaRies

Transcription

intercement 2010 financial statements
Camargo Corrêa Cimentos
S.A. and Subsidiaries
Individual and Consolidated Financial Statements for
the Year Ended December 31, 2010 and Independent
Auditors’ Report
Deloitte Touche Tohmatsu Auditores Independentes
2
3
intercement 2010 annual report financial statements
INDEPENDENT AUDITORS’ REPORT
To the Shareholders, Directors and Management of
Camargo Corrêa Cimentos S.A. São Paulo - SP
We have audited the accompanying individual and consolidated financial statements
of Camargo Corrêa Cimentos S.A. (“Company”), identified as Parent and Consolidated, respectively, which comprise the balance sheet as of December 31, 2010, and the
statements of income, comprehensive income, changes in shareholders’ equity and cash
flows for the year then ended, and a summary of significant accounting practices and
other explanatory information.
Management’s responsibility
for the financial statements
Management is responsible for the preparation and fair presentation of the individual financial
statements in accordance with accounting practices adopted in Brazil and the consolidated financial statements prepared in accordance with the International Financial Reporting Standards
-IFRSs, issued by the International Accounting Standards Board - IASB, and in accordance with
accounting practices adopted in Brazil, and for such internal control as Management determines as necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with Brazilian and international standards on auditing.
Those standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts
and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the Company’s preparation and fair
presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
Opinion on the individual financial statements
In our opinion, the individual financial statements present fairly, in all material respects, the financial position of Camargo Corrêa Cimentos S.A. as of December 31, 2010, its financial performance and its cash flows for the year then ended, in accordance with accounting practices
adopted in Brazil.
Opinion on the consolidated financial statements
In our opinion, the consolidated financial statements present fairly, in all material respects, the
consolidated financial position of Camargo Corrêa Cimentos S.A. as of December 31, 2010, its
consolidated financial performance and its consolidated cash flows for the year then ended, in
accordance with IFRSs issued by IASB and accounting practices adopted in Brazil.
Emphasis of matter
We draw attention to note 2, which states that the individual financial statements have been prepared in accordance with accounting practices adopted in Brazil. In the case of the Company,
these accounting practices differ from the IFRSs, applicable to separate financial statements,
only with respect to the measurement of investments in subsidiaries, associates and joint ventures by the equity method of accounting, which, for purposes of IFRSs, would be measured at
cost or fair value.
Other matters
Statements of value added
We have also audited the individual and consolidated statements of value added (“DVA”), for the
year ended December 31, 2010, whose presentation is required by the Brazilian Corporate Law
for publicly-traded companies, and as supplemental information for IFRSs, which do not require
the presentation of DVA. These statements were subjected to the same auditing procedures
described above and, in our opinion, are fairly presented, in all material respects, in relation to
the financial statements taken as a whole.
The accompanying financial statements have been translated into English for the convenience of readers outside Brazil.
São Paulo, March 30, 2011
the effectiveness of the Company’s internal control. An audit also includes evaluating
DELOITTE TOUCHE TOHMATSU
José Roberto P. Carneiro
the appropriateness of accounting practices used and the reasonableness of accounting
Auditores Independentes
Engagement Partner
estimates made by Management, as well as evaluating the overall presentation of the
CRC nº 2 SP 011609/O-8
CRC nº 1 SP 109447/O-6
financial statements.
4
5
BALANCE SHEET AS OF DECEMBER 31, 2010
(In thousands of Brazilian reais - R$)
Consolidated
(IFRS and BR GAAP)
Parent (BR GAAP)
ASSETS
Note
12/31/10
12/31/09
01/01/09
12/31/10
12/31/09
Consolidated
(IFRS and BR GAAP)
Parent (BR GAAP)
01/01/09
CURRENT ASSETS
LIABILITIES AND SHAREHOLDERS’ EQUITY
Note
12/31/10
12/31/09
01/01/09
12/31/10
12/31/09
01/01/09
CURRENT LIABILITIES
Cash and cash equivalents
5
48,447
114,921
87,620
173,302
377,661
238,169
Trade accounts payable
83,813
86,992
78,515
206,710
216,841
252,926
Securities
6
102,400
37,380
36,613
105,741
38,995
79,442
Debentures
16
-
-
262,880
2,298
2,483
265,541
Trade accounts receivable
7
131,087
131,811
123,059
212,741
192,708
272,378
Borrowings and financing
15
192,719
95,105
56,216
273,886
187,048
198,466
Allowance for doubtful accounts
7
(19,614)
(17,753)
(16,810)
(29,387)
(28,712)
(35,842)
Taxes payable
14
65,006
63,229
87,394
75,916
115,138
153,961
31,960
32,791
27,803
68,567
64,821
75,424
179
83,232
864
1,217
83,893
3,523
Inventories
8
234,575
155,959
144,582
353,369
266,553
500,839
Recoverable taxes
9
36,799
36,183
18,054
40,338
41,592
43,775
Dividends and interest on capital
21
-
17,906
65,996
-
17,851
53,640
Advances from customers
10,988
1,471
10,736
38,571
20,750
62,936
Related parties
Other liabilities
Other receivables
Held-for-sale assets
10
Total current assets
26,897
-
-
75,157
-
-
571,579
477,878
469,850
969,832
927,398
1,215,337
Salaries and related taxes
Held-for-sale liabilities
NONCURRENT ASSETS
Total current liabilities
NONCURRENT LIABILITIES
Securities
6
-
-
-
2,950
-
-
7
284
3,779
1,861
284
3,779
1,861
Related parties
21
99
18,118
147
99
18,118
147
Inventories
Recoverable taxes
8
9
Escrow deposits
Deferred income tax and social contribution
23
Other receivables
38,755
43,572
16,430
76,445
88,011
76,079
10,306
20,103
11,756
15,885
27,839
29,827
14,358
16,937
16,760
14,557
17,161
25,328
236,668
219,889
113,480
256,204
242,304
162,968
4,032
4,235
4,900
4,015
7,518
8,238
Investments:
21
10
667
597
7,470
18,317
11,130
23,903
45,999
45,468
52,161
-
-
-
13,510
14,784
9,198
22,982
26,863
44,509
-
-
-
48,260
-
-
433,853
422,198
582,501
718,153
708,217
1,018,253
Debentures
16
-
-
-
9,803
8,735
54,514
15
502,844
575,227
445,523
903,650
1,023,360
1,034,648
Reserve for tax, civil and labor contingencies
17
40,857
10,402
6,808
121,651
96,738
165,791
Provision for environmental recovery
18
53,592
50,472
47,468
88,293
82,884
87,897
Taxes payable
14
-
-
-
2,676
2,861
20,797
23
210,222
125,241
10,710
307,650
233,092
181,008
3,256
3,963
5,659
54,520
33,829
99,211
810,771
765,305
516,168
1,488,243
1,481,499
1,643,866
2,102,526
Other liabilities
Total noncurrent liabilities
SHAREHOLDERS' EQUITY
Subsidiaries
11
1,253,924
1,289,900
1,350,882
-
-
-
Capital
22
906,431
525,643
2,102,526
906,431
525,643
Jointly-owned subsidiaries
11
70,104
63,773
690,187
-
-
-
Capital reserve
22
55,670
55,670
55,670
55,670
55,670
55,670
22
1,058,876
1,265,159
880,015
1,058,876
1,265,159
880,015
(4,323)
19,955
212,496
(4,323)
19,955
212,496
Associates
11
-
-
787,587
-
1,652
790,012
Earnings reserve
Other
11
27,876
27,876
27,876
42,883
44,247
149,698
Valuation adjustments to equity
Property, plant and equipment
12
792,504
686,000
538,231
1,606,122
1,504,404
2,081,489
Intangible assets:
Goodwill
13
216,174
216,174
216,174
1,198,261
1,197,056
1,213,219
Other intangible assets
13
24,615
17,231
38,454
45,973
43,042
116,582
Total noncurrent assets
2,689,699
2,627,587
3,814,725
3,263,678
3,195,131
4,655,448
TOTAL ASSETS
3,261,278
3,105,465
4,284,575
4,233,510
4,122,529
5,870,785
The accompanying notes are an integral part of these financial statements.
Retained earnings (accumulated losses)
-
51,535
(64,801)
-
51,535
(64,801)
Shareholders' equity attributable to the
Company's owners
2,016,654
1,917,962
3,185,906
2,016,654
1,917,962
3,185,906
-
-
-
10,460
14,851
22,760
Total shareholders' equity
Noncontrolling interest
2,016,654
1,917,962
3,185,906
2,027,114
1,932,813
3,208,666
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
3,261,278
3,105,465
4,284,575
4,233,510
4,122,529
5,870,785
6
7
STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 2010
(In thousands of Brazilian reais - R$, except per share data)
Parent
(BR GAAP)
Consolidated
(IFRSs and BR GAAP)
Note
12/31/10
12/31/09
12/31/10
12/31/09
REVENUES
24
1,439,050
1,242,875
2,474,446
2,663,464
COST OF SALES
25
(1,064,080)
(885,506)
(1,772,506)
(1,927,889)
374,970
357,369
701,940
735,575
GROSS ´PROFIT
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2010
Selling expenses
25
(24,117)
(24,046)
(52,529)
(58,330)
Administrative expenses
25
(88,746)
(63,002)
(169,556)
(171,322)
Equity in subsidiaries
11
87,682
230,504
-
128,348
Other expenses
25
(24,044)
(16,758)
(38,536)
(23,680)
325,745
484,067
441,319
610,591
BALANCES
ADJUSTED AS OF
JANUARY 1, 2009
INCOME BEFORE FINANCIAL INCOME (EXPENSES)
FINANCIAL INCOME (EXPENSES)
Exchange rate change, net
26
11,735
113,940
2,044
125,621
Financial income
26
34,269
19,464
43,962
33,510
Financial expenses
26
(68,451)
(71,066)
(133,445)
(163,847)
303,298
546,405
353,880
605,875
(7,559)
-
(56,736)
(38,115)
INCOME BEFORE INCOME TAX
AND SOCIAL CONTRIBUTION
INCOME TAX AND SOCIAL CONTRIBUTION
Current
23
Capital
Capital
reserve
Goodwill
on
payment
of shares
Earnings reserve
Legal
Investments
Valuation
adjustments
to
equity
Retained
earnings
(accumulated
losses)
Attributable to
the
Company’s
owners
(BR GAAP)
Noncontrolling
interests
Total
shareholders’
equity
2,102,526
55,670
46,704
833,311
212,496
(64,801)
3,185,906
22,760
3,208,666
Net income
for the year:
-
-
-
-
-
538,282
538,282
2,406
540,688
Exchange
differences in
translation of foreign
transactions
-
-
-
-
(165,902)
-
(165,902)
(7,510)
(173,412)
Realization of
deemed cost of
property, plant and
equipment
-
-
-
-
(10,782)
10,782
-
Deferred
23
(71,215)
(8,123)
(70,740)
(27,072)
NET INCOME
28
224,524
538,282
226,404
540,688
Realization of
adjustment to
equity
-
-
-
-
224,524
538,282
224,524
538,282
-
-
-
-
-
1,880
2,406
Disposal of
jointly-owned
subsidiary
- Usiminas
-
-
Basic/diluted per common share - R$
1.1046
2.6483
1.1139
2.6601
(1,586,689)
-
-
-
Basic/diluted per preferred share - R$
1.1046
2.6483
1.1139
2.6601
9,806
-
-
Recognition of legal
reserve
-
-
Dividends
-
Recognition of
investment reserve
INCOME ATTRIBUTABLE TO
Company's owners
Noncontrolling interests
Earnings per share:
Increase of capital
- tax incentive
reserves
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2010
Parent
(BR GAAP)
Consolidated
(IFRSs and BR GAAP)
2010
2009
2010
2009
224,524
538,282
226,404
540,688
(13,807)
(165,902)
(13,807)
(165,902)
-
-
-
-
(1,062)
-
(1,062)
-
Realization of deemed cost of property, plant and equipment
(9,409)
(10,782)
(9,409)
(10,782)
Reduction of capital - transfers of interests
(15,857)
-
(15,857)
-
Total comprehensive income for the year
184,389
361,598
186,269
364,004
184,389
361,598
184,389
361,598
-
-
1,880
2,406
Net income for the year
Other comprehensive income (loss):
Exchange differences in translation of foreign transactions
Realization of adjustment to equity
Goodwill on acquisition of subsidiary without transfer of control
Comprehensive income attributable to:
Company's owners
Reduction of capital
- transfers of
interests
-
-
-
-
-
-
(2,805)
(2,805)
(15,857)
85,161
(1,517,385)
(1,517,385)
(9,806)
-
-
-
-
25,894
-
-
(25,894)
-
-
-
-
-
-
(122,999)
(122,999)
(122,999)
-
-
-
369,056
-
(369,056)
-
-
-
-
-
-
-
60
60
60
525,643
55,670
72,598
1,192,561
19,955
51,535
1,917,962
Allocation:
OtherExpiration of
dividends in
subsidiaries
BALANCES AS OF
DECEMBER 31,
2009
14,851
1,932,813
8
9
STATEMENT OF CASH FLOWS - INDIRECT METHOD FOR THE YEAR ENDED DECEMBER 31, 2010
Valuation
adjustments
to
equity
Retained
earnings
(accumulated
losses)
Attributable to
the
Company’s
owners
(BR GAAP)
Noncontrolling
interests
Total
shareholders’
equity
Capital
Capital
reserve
Goodwill on
payment
of
shares
Net income for the
year
-
-
-
-
-
224,524
224,524
1,880
226,404
Exchange rate
change on
investments abroad
-
-
-
-
(13,807)
-
(13,807)
(1,340)
(15,147)
Goodwill on
acquisition of
subsidiary without
transfer of control
-
-
-
-
(1,062)
-
(1,062)
-
(1,062)
Realization of
deemed cost of
property, plant and
equipment
-
Acquisition of
noncontrolling
interest
-
Other
-
Earnings reserve
-
-
(9,409)
9,409
-
-
Consolidated
(IFRSs and BR GAAP)
12/31/10
12/31/09
12/31/10
12/31/09
303,298
546,405
353,880
605,875
Depreciation, amortization and depletion
83,840
77,649
136,356
171,189
(87,682)
(230,504)
-
(128,348)
Provision (reversal) of provision for potential losses, net
20,943
(41,037)
28,099
(33,092)
Interest and charges
54,704
(49,570)
120,262
(16,172)
Loss (gain) on the sale of permanent assets
2,208
29,270
7,971
31,142
-
769
-
769
(25,907)
(16,053)
(22,998)
(2,185)
(23,705)
Income before income tax and social contribution
Adjustments to reconcile income before income tax and social contribution to cash
provided by operations:
(Increase) decrease in operating assets:
-
-
-
-
-
-
(2,680)
(2,680)
Related parties
-
-
-
-
-
(2,251)
(2,251)
380,788
-
-
(380,788)
-
-
-
-
Prepaid dividends
-
-
-
(20,326)
-
(91,453)
(111,779)
(111,779)
Recognition of legal
reserve
-
-
13,255
-
-
(13,255)
-
-
Recognition of
investment reserve
-
Allocation:
756
(9,844)
(27,907)
Inventories
(74,657)
(42,764)
(89,993)
5,213
Recoverable taxes
(12,532)
(34,650)
(11,457)
(23,312)
Dividends received
126,252
66,786
-
-
Other receivables
(10,615)
1,417
(13,167)
(800)
Increase (decrease) in operating liabilities:
-
-
181,576
-
(181,576)
-
-
Other
BALANCES AS OF
DECEMBER 31,
2010
CASH FLOW FROM OPERATING ACTIVITIES
Gain in equity interest
Increase of capital
- earnings reserves
Expiration of
dividends in
subsidiaries
Parent
(BR GAAP)
-
906,431
-
55,670
-
85,853
-
973,023
-
(4,323)
816
-
816
2,016,654
816
10,460
2,027,114
Related parties
1,152
(405)
(136)
(13,147)
(1,499)
33,009
11,462
83,272
Salaries and accrued vacation
(4,404)
4,988
2,854
10,843
Other payables
(1,870)
2,077
11,063
(11,911)
Taxes payable
Income tax and social contribution paid
25,733
3,927
(62,538)
(32,593)
399,720
341,470
443,751
623,038
(709)
-
(709)
(31,053)
Interest paid
(43,460)
(60,870)
(82,883)
(121,797)
Cash provided by operating activities
355,551
280,600
360,159
470,188
Investment of securities, net
(61,207)
(772)
(62,605)
2,642
CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment
(178,044)
(149,492)
(286,031)
(321,439)
Additions to intangible assets
(14,997)
(6,473)
(17,715)
(12,633)
Increase of investments
(5,913)
(11,383)
(4,067)
3,913
Acquisition of subsidiary, net of cash acquired
-
-
(1,896)
(14,127)
Write-off of net cash of interest
-
-
-
(83,859)
Dividends received
Cash used in investing activities
-
-
21,549
45,127
(260,161)
(168,120)
(350,765)
(380,376)
10
11
STATEMENT OF VALUE ADDED FOR THE YEAR ENDED DECEMBER 31, 2010
Parent
(BR GAAP)
CASH FLOW FROM FINANCING ACTIVITIES
12/31/10
Consolidated
(IFRSs and BR GAAP)
12/31/09
12/31/10
Parent
(BR GAAP)
12/31/09
Borrowings, financing and debentures
53,810
257,767
140,201
610,398
Payment of borrowings, financing and debentures
(42,547)
(302,315)
(165,817)
(503,512)
REVENUES
(194,060)
(40,631)
(194,060)
(43,843)
Sales of goods, products and services
20,933
-
15,211
-
-
-
-
(5,022)
Cash provided by (used in) financing activities
(161,864)
(85,179)
(204,465)
58,021
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(66,474)
27,301
(195,071)
147,833
INPUTS PURCHASED FROM THIRD PARTIES
Payment of interest on capital and dividends
Related parties
Withdrawal of swap transactions
EXCHANGE RATE CHANGE OF CASH AND CASH EQUIVALENTS
Other revenues
Reversal (recognition) of allowance for doubtful accounts
Consolidated
(IFRSs and BR GAAP)
12/31/10
12/31/09
12/31/10
12/31/09
1,909,974
1,645,467
3,132,190
3,389,340
7,422
(1,608)
7,457
2,220
(1,860)
(943)
(1,860)
(1,079)
1,915,536
1,642,916
3,137,787
3,390,481
-
-
(9,288)
(8,341)
Products, goods and services
(298,740)
(162,157)
(957,529)
(1,074,156)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
114,921
87,620
377,661
238,169
Materials, electric power, outside services and other
(637,114)
(563,578)
(728,665)
(793,399)
CASH AND CASH EQUIVALENTS AT END OF YEAR
48,447
114,921
173,302
377,661
(935,854)
(725,735)
(1,686,194)
(1,867,555)
GROSS VALUE ADDED
979,682
917,181
1,451,593
1,522,926
DEPRECIATION, AMORTIZATION AND DEPLETION
(83,840)
(77,649)
(136,356)
(171,189)
NET VALUE ADDED CREATED BY THE COMPANY
895,842
839,532
1,315,237
1,351,737
VALUE ADDED RECEIVED IN TRANSFER
87,682
230,504
-
128,348
Financial income
46,004
133,404
46,006
159,131
Other income
3,474
113
3,424
113
137,160
364,021
49,430
287,592
VALUE ADDED FOR DISTRIBUTION
1,033,002
1,203,553
1,364,667
1,639,329
VALUE ADDED DISTRIBUTED
1,033,002
1,203,553
1,364,667
1,639,329
Personnel:
Direct compensation
109,684
82,967
262,530
296,369
Benefits
22,085
32,460
27,504
38,555
FGTS
9,030
7,592
9,030
7,592
Taxes, fees and contributions:
Federal
275,530
203,547
379,830
320,396
State
292,585
238,025
292,953
238,025
Municipal
14,241
10,566
14,251
10,566
Interest on financing, debentures and borrowings
68,451
71,066
133,445
163,847
Rentals
16,872
19,048
18,720
23,291
Dividends
111,779
122,999
111,779
122,999
Retained earnings
112,745
415,283
112,745
415,283
-
-
1,880
2,406
Debt capital:
Own capital:
Noncontrolling interest in retained earnings
12
13
said agreement entered into with the Insitec Group. Accordingly, CIMPOR should pay for CINAC
R$26,897, which was calculated using the same criteria used by the Company when it entered into
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2010
the agreement with Insitec in June 2010, except that it was based on the financial statements for
the reporting period ended May 31, 2010.
Therefore, after the transaction under agreement between the Company and CIMPOR
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
is completed, the Company no longer held 51% of CINAC’s capital and was reimbursed
for the investment made and the aforementioned loan agreement, including interest of
1. GENERAL INFORMATION
4% per year.
Camargo Corrêa Cimentos S.A. (“Company” or “Parent”) is headquartered in the city of
On December 23, 2009, the shareholders approved a capital reduction, in the amount of
São Paulo, State of São Paulo, Brazil, and is registered with São Paulo Stock Exchange
R$1,586,689, without changing the number of the Company’s shares, through the transfer of
(“Bovespa”). The Company’s controlling shareholder through December 30, 2010 was
shares held in Itaúsa - Investimentos Itaú S.A. (“Itaúsa”) and Usinas Siderúrgicas de Minas Gerais
Camargo Corrêa S.A. (“CCSA”) and, beginning December 31, 2010, Intercement Partici-
S.A. - Usiminas (“Usiminas”), at book value as of September 30, 2009, to the then controlling share-
pações Ltda. assumed control over the Company, which, in its turn, is a CCSA’s wholly-
holder Camargo Corrêa S.A.
owned subsidiary. The Company and its subsidiaries are primarily engaged in the pro-
Consolidation
duction and sale of cement and its byproducts and the exploitation of mineral resources
The consolidated information includes the following subsidiaries and jointly-owned subsidiaries:
used in the manufacturing process.
The Company’s plants are located in the cities of Apiaí and Jacareí, in the São Paulo
State; Bodoquena, in the State of Mato Grosso do Sul; Pedro Leopoldo, Santana do Paraí-
12/31/10
so and Ijaci, in the State of Minas Gerais, and Cabo de Santo Agostinho, in the State of
Ownership interest
Pernambuco. The subsidiary Loma Negra C.I.A.S.A. (“Loma Negra”) owns nine plants in
Argentina, located in the provinces of Neuquén, San Juan, Catamarca and Buenos Aires,
that concentrates six of the nine plants.
The Company and subsidiary Loma Negra also owns 29 concrete plants, of which 18 are
located in Brazil, mainly in the State of São Paulo, and 11 in Argentina.
Subsidiary Loma Negra holds, through Cofesur S.A., an 80% equity interest in Ferrosur
Roca S.A. (“Ferrosur”). Ferrosur operates railroads in Argentina, interconnecting the main
Loma Negra plants.
In June 2010, the Company entered into an agreement with Insitec Contrói S.A. and Insitec Holding S.A. (“Insitec Group”) for the purchase by the Company of 51% of the total
voting capital of Cinac - Cimentos de Nacala, S.A. (“CINAC”), a company engaged in the
manufacture and sale of cement in Mozambique. The Company has already made a down
payment of US$5 million. In the third quarter of 2010, the shares were transferred to the
Company, and the final purchase and sale price was calculated at US$6.5 million, based on
CINAC’s financial statements issued on May 31, 2010. In addition, on September 30, 2010,
the Company, as holder of 51% of CINAC’s capital, entered into a loan agreement with
CINAC, locally denominated “supply agreement”, amounting to US$9.5 million. The funds
were disbursed on October 1, 2010.
Also in the third quarter of 2010, the Company entered into an agreement with CIMPOR - Cimentos de Portugal, SGPS, S.A., for the transfer to CIMPOR of the rights and obligations under
12/31/09
01/01/09
Ownership interest
Ownership interest
Direct %
Indirect %
Direct %
Indirect %
Direct %
Indirect %
Cauê Finance Limited
100.00
-
100.00
-
100.00
-
CCCimentos Participações Ltda.
98.99
-
98.99
-
98.99
-
Camargo Corrêa Cimentos Portugal, SGPS, S.A.
Subsidiaries:
100.00
-
-
-
-
-
Holdtotal S.A.
97.00
2.99
97.00
2.99
97.00
2.99
Loma Negra C.I.A.S.A.
24.18
73.38
24.18
73.38
24.18
73.38
Betel S.A.
-
97.55
-
97.55
-
97.55
Cofesur S.A.
-
85.52
-
85.52
-
85.52
Compañia Argentina de Cemento Portland S.A.
-
97.55
-
97.55
-
97.55
Compañia de Serviços a la Construcción S.A.
-
97.55
-
97.55
-
97.55
Escofer S.A.I.C.
-
97.55
-
97.55
-
97.55
Recycomb S.A.
-
97.55
-
73.65
-
73.65
9.00
-
9.00
-
9.00
-
Jointly-owned subsidiaries:
BAESA - Energética Barra Grande S.A.
Camargo Corrêa Escom Cement B.V.
50.10
-
50.10
-
-
-
Yguazu Cementos S.A.
35.00
-
-
-
-
-
-
-
-
-
3.95
-
Usinas Siderúrgicas de Minas Gerais S.A. Usiminas and subsidiaries
14
15
The subsidiaries were fully consolidated, including the related calculation of noncontrolling
2. SIGNIFICANT ACCOUNTING POLICIES
interest, if applicable, and jointly-owned subsidiaries, on a proportionate basis, including assets,
2.1. Statement of compliance
liabilities, income and expenses, according to their nature, and the deductions of: (a) balances
The Company’s financial statements comprise:
of investments and shareholders’ equity; and (b) balances of checking accounts and other
• The consolidated financial statements for the years ended December 31, 2010 and
balances, recorded under assets and/or liabilities, jointly held by companies, including unreal-
2009, prepared in accordance with International Financial Reporting Standards - IFRSs is-
ized profit or loss, if any, and (c) intercompany transactions. The balance sheets of foreign
sued by the International Accounting Standards Board - IASB, which comply with the ac-
subsidiaries in a functional currency different from Brazilian real (in US dollar, pesos, euros and
counting practices adopted in Brazil, and comprise those included in Brazilian Corporate
guaranis) were translated into Brazilian reais at the exchange rates on the balance sheet dates
Law and the pronouncements, instructions and interpretations issued by the Accounting
and adjusted to conform with accounting practices adopted in Brazil. The statements of income
Pronouncements Committee (CPC) and approved by the Brazilian Securities and Ex-
of foreign subsidiaries were translated into Brazilian reais at the average annual exchange rates.
change Commission (CVM), identified as Consolidated - IFRS and BR GAAP.
Differences arising from the use of different translation rates are recorded in shareholders’
• The Company’s individual financial statements for the years ended December 31, 2010
equity, under the caption “Valuation adjustments to equity”.
and 2009, prepared in accordance with accounting practices adopted in Brazil, identified
as Parent - BR GAAP. The accounting practices adopted in Brazil (“BR GAAP) comprise
those established by Brazilian Corporate Law and the pronouncements, instructions and
Comparability of financial statements
The Company’s financial statements for the year ended December 31, 2009 include
transactions of the subsidiary Usiminas for the nine-month period ended September
30, 2009 and the 13-month result of the subsidiary Holdtotal and its subsidiaries. To
facilitate understanding the financial statements, the following additional information
was included:
interpretations issued by the Accounting Pronouncements Committee (CPC) and approved by the Brazilian Securities and Exchange Commission (CVM).
The Parent’s consolidated and individual balance sheet for the year ended January 1,
2009 is presented to comply with the comparability criteria since January 1, 2009 was the
date of transition to the International Financial Reporting Standards (IFRSs) and the date
in which the Company fully adopted the pronouncements, instructions and interpretations issued by the Accounting Pronouncements Committee (CPC).
12/31/09
Additionally, the statements of comprehensive income for the years ended December
Holdtotal
Usiminas
(a)
(b)
Net revenue from sales and services
1,126,897
313,751
Cost of sales and services
(795,026)
(281,423)
Gross profit
331,871
32,328
sidiaries and affiliates are stated under the equity method, as required by the legislation
Operating expenses
(118,266)
(21,272)
prevailing in Brazil. Accordingly, these individual financial statements are not considered
Other expenses, net
(3,541)
(3,387)
as being in accordance with IFRSs, which require the measurement of such investments in
Financial income
(86,219)
25,147
the Company’s separate financial statements, at their fair values or at cost.
-
3,266
expenses items that are not recognized in the statement of income as required or per-
Statements of income
31, 2010 and 2009 are presented separately. These new statements present income and
mitted by other pronouncements, instructions and interpretations issued by CPC.
In the individual financial statements, investments in subsidiaries, jointly-owned sub-
As there is no difference between the consolidated shareholders’ equity and the con-
Operating income
123,845
36,082
solidated net income attributable to the owners of the Company, disclosed in the con-
Income tax and social contribution
(42,756)
(11,832)
solidated financial statements prepared in accordance with IFRSs and the accounting
Net income
81,089
24,250
practices adopted in Brazil, and the Company’s shareholders’ equity and net income,
disclosed in the individual financial statements prepared in accordance with accounting
(a) The 13-month net income (loss) of the subsidiary Holdtotal and its indirect subsidiaries, due to the change in the balance sheet date from
November to December 2009.
(b) Profit sharing in proportion to that related to the nine-month period ended September 30, 2009 of the subsidiary Usiminas, due to the
Company’s capital reduction, approved by shareholders on December 23, 2009, as mentioned in note 1.
practices adopted in Brazil, the Company opted for presenting these individual and consolidated financial statements as a single set, side by side.
16
17
2.2. Basis of preparation
of the consideration transferred, noncontrolling interests in the acquiree and the fair value of the
The financial statements have been prepared based on the historical cost, except for
acquirer’s interest previously held in the acquiree (if any), the gain is immediately recognized in
certain financial instruments measured at their fair values, as described in the following
profit or loss.
accounting practices. The historical cost is generally based on the fair value of the consideration given in exchange for an asset.
The noncontrolling interests that correspond to current interests and entitle their holders to a
proportional portion of the entity’s net assets in case of liquidation are initially measured at fair
These consolidated financial statements are the first prepared under IFRSs. When pre-
value or based on the proportional stake of the noncontrolling interests in the acquiree’s iden-
paring the individual financial statements, the Company adopted the changes in ac-
tifiable net asset amounts recognized. The measurement method is selected on a transaction
counting practices adopted in Brazil introduced by CPC accounting pronouncements
by transaction basis.
15 to 40. The effects from adopting IFRSs and new pronouncements issued by CPC are
presented in note 4.
2.3. Basis of consolidation and
investments in subsidiaries
When the consideration transferred by the Company in a business combination includes
assets or liabilities arising from a contingent consideration agreement, the contingent consideration is measured at fair value on the acquisition date and included in the consideration transferred in a business combination. Changes in the fair values of such contingent
consideration classified as measurement period adjustments are retrospectively adjusted,
The consolidated financial statements comprise the financial statements of the Company
with corresponding adjustments to goodwill. Measurement period adjustments refer to
and its subsidiaries and jointly-owned subsidiaries. Control is achieved when the Com-
adjustments resulting from new information obtained over the “measurement period”
pany has the power to govern the financial and operating policies of an entity so as to
(which cannot exceed one year after the acquisition date) about facts and circumstances
obtain benefits from its activities.
that existed as of the acquisition date.
In preparing the financial statements, the income or loss from acquired and sold sub-
If the initial accounting for a business combination is incomplete by the end of the
sidiaries are included in the statement of income after the acquisition date or through
reporting period in which the combination occurs, the Company reports provisional
the sale date.
amounts for the items for which the accounting is incomplete. There is no uncompleted
When necessary, accounting adjustments are made to the subsidiaries’ financial state-
business combination at the reporting date.
ments to conform their accounting policies to those used by the Company. All intercompany transactions and balances included in the consolidated financial statements are fully
Individual financial statements
eliminated.
In the individual financial statements, the Company applies the requirements of technical
2.4. Business combination
interpretation ICPC 09, which requires that any amount in excess of the acquisition cost
on the Company’s interest in the fair value of identifiable assets, liabilities and contingent
In the financial statements, business acquisitions are accounted for using the acquisition
liabilities of the acquired company on the acquisition date is recognized as goodwill. The
method. As prescribed in CPC 37(R1) - First-time Adoption of International Financial Re-
goodwill is added to the carrying amount of the investment only in the individual finan-
porting Standards, the Company has not adopted the optional exemption that allowed the
cial statements. Any amount of the Company’s interest in the fair value of identifiable
non-application of the acquisition method on all acquisitions prior to the transition date
assets, liabilities and contingent liabilities in excess of the acquisition cost is immediately
(January 1, 2009). Consequently, the Company adopted CPC 15 - Business Combination for
recognized as profit or loss.
all business combinations after January 1, 2008 and remeasured the acquisition of subsidiary CIMEC - Cia. Industrial e Mercantil de Cimentos.
2.5. Interests in joint ventures
Goodwill is measured as the excess of the aggregate of the consideration transferred, the
A joint venture is a contractual agreement through which the Company and other parties
values of noncontrolling interests in the acquiree, if applicable, and the fair value of the acquirer’s
exercise an economic activity subject to joint control, where the decisions on financial,
interest previously held in the acquiree, if any, over the net amounts on acquisition date of the
operating and strategic policies relating to the joint venture activities require the ap-
identifiable assets acquired and liabilities assumed. If, after measurement, the net amounts of
proval of all parties sharing control.
identifiable assets acquired and liabilities assumed on acquisition date are higher than the sum
18
19
When a company’s entity undertakes its activities directly through a joint venture, the
allocated are annually tested for impairment or more frequently when there are indica-
company interests in jointly controlled assets and any liabilities incurred in common with
tions that the cash-generating units may be impaired. If the recoverable amount of a cash-
the other controlling shareholders are recognized in the financial statements of such en-
generating unit is lower than its carrying amount, impairment losses are firstly allocated to
tity and classified according to their nature. Incurred liabilities and expenses directly re-
write down the carrying amount of any goodwill allocated to cash-generating units and
lated to the interests in the jointly controlled assets are accounted for on an accrual basis.
subsequently to the other assets of the cash-generating units, prorated to the carrying
Any gain arising from the sale or use of the Company’s interests in the jointly controlled
amount of each of its assets. Impairment losses recognized on goodwill cannot be reversed
assets and its share of any expenses incurred in common are recognized when it is prob-
in a subsequent period. The Company carried out the impairment test as stated in note 13.
able that the economic benefits related to the transactions will be transferred to/from the
Company and its amount can be reliably measured.
Upon the sale of a subsidiary, the goodwill attributable to such subsidiary is included in
the calculation of profit or loss on sale.
Joint ventures that involve the establishment of an entity in which each venturer holds
The goodwill recorded in the Company relating to subsidiary Loma Negra was con-
an interest are called jointly-controlled entities. The Company discloses its interests in
sidered as an asset of the Company rather than of the acquiree. As prescribed in CPC
jointly-controlled entities under the proportionate consolidation method. The interests
43 - First-time Adoption of the Technical Pronouncements CPCs 15 to 41 the goodwill
in the transactions, balances, and profit or loss of jointly-controlled entities are combined
recognized prior to the acquisition date may continue to be recorded as an asset of the
with the related line items of the Company’s consolidated financial statements, on a per
Company, and, consequently, at the Company’s functional currency rather than at the
line item basis.
acquiree’s functional currency, as prescribed in CPC 15 - Business Combination.
In the Company’s individual financial statements, interests in jointly-controlled entities
are recognized under the equity method. The Company’s interests in jointly-controlled
2.7. Investments in associates
entities are stated in note 1.
An associate is an entity over which the Company has significant influence but which is not
2.6. Goodwill
Goodwill on the acquisition of jointly-owned or jointly-controlled entities, prior to the
recognized as a subsidiary or joint venture. Significant influence is the power to participate
in the financial and operating policy decisions of an investee without exercising individual
or joint control over those policies.
date of transition to CPC 15 - Business Combination (January 1, 2008), was calculated
The income, expenses, assets and liabilities of associates are recorded in the financial
based on the positive difference between the amount paid or payable and the net value
statements under the equity method, except when the investment is classified as “held
of the assets and liabilities of the acquired entity, in accordance with the accounting prac-
for sale”, in which case it is recorded in accordance with IFRS 5 - Noncurrent Assets Held
tices prevailing at that date.
for Sale and Discontinued Operations (equivalent to CPC 31). Under the equity method,
Goodwill arising on a business combination is recognized as an asset on the date con-
investments in associates are initially recognized at cost and, thereafter, adjusted to rec-
trol is acquired, i.e., on acquisition date. Goodwill is measured as the excess of the fair
ognize the Company’s share in profit or loss and other comprehensive income or loss of
value of the consideration effectively transferred, the amount of the noncontrolling inter-
the associate. When the Company’s share in the loss of an associate exceeds its interest in
ests, and the fair value of the interest previously held in the acquiree, if any, over the fair
that associate (including any long-term interest that, in essence, is included in the Com-
value of identifiable assets acquired and liabilities assumed on acquisition date.
pany’s net investment in the associate), the Company no longer recognizes its share in
If, after reviewing the valuation criteria, the Company’s interest in the fair value of
identifiable net assets exceeds the sum of the considerations effectively transferred, the
additional losses. Additional losses are recognized only if the Company has incurred legal
or constructive obligations or has made payments on behalf of the associate.
noncontrolling interest in the acquiree and the fair value of the interests previously held
Any amount in excess of the acquisition cost on the Company’s interest in the fair value
in the acquiree, if any, the excess is immediately recognized in income for the year as gain
of identifiable assets, liabilities and contingent liabilities of the acquired company on the
arising from an acquisition opportunity.
acquisition date is recognized as goodwill. The goodwill is added to the carrying amount
Goodwill is not amortized; however, it is annually tested for impairment. For impairment
of the investment. Any amount of the Company’s interest in the fair value of identifiable
test purposes, goodwill is allocated to each one of the cash-generating units which benefit
assets, liabilities and contingent liabilities in excess of the acquisition cost, after revalua-
from the business combination synergies. The cash-generating units to which goodwill was
tion, is immediately recognized as profit or loss.
20
21
The requirements set forth in IAS 39 and CPC 38 are applicable for purposes of deter-
• Revenue can be reliably measured.
mination of the need to recognize impairment losses on the Company’s investment in an
• It is probable that the economic benefits associated with the transaction will flow to the
associate. If necessary, the total carrying amount of the investment (including goodwill)
Company.
is tested for impairment pursuant to IAS 36 - Impairment of Assets (equivalent to CPC
• Incurred or unincurred costs related to the transaction can be reliably measured.
1(R1)), as a single asset, by comparing its recoverable value (the higher of the value in use
The sale of products resulting in the issuance of premium credits to customers, as
and the fair value less costs of sale) with its carrying amount. Any reversal of impairment
points or mileages according to the Company’s loyalty program, is recorded as transac-
loss is added to the carrying amount of the investment. Any reversal of such impairment
tions with multiple-deliverable revenues, and the fair value of the consideration received
loss is recognized pursuant to IAS 36 and CPC 1(R1)) to the extent that the recoverable
or receivable is allocated among the goods delivered and the premium credits granted.
amount of the investment is subsequently increased.
The consideration of premium credits is measured at fair value on the sales date. This
When an entity carries out a transaction with an associate, the related income and loss
are recognized only with respect to interests in associates unrelated to the Company.
2.8. Held-for-sale current assets
consideration is not recognized as revenue on the initial sales date; however, it is deferred
and recognized as revenue when premium credits are collected and the Company’s obligations are met.
Current assets and groups of assets are classified as held for sale if their carrying amount will
2.9.2. Provision of services
be recovered principally through a sale transaction, rather than continuing use. This require-
Revenue from services under a concreting service agreement is recognized under the
ment is met only when it is highly probable that the sale will be completed and the current
percentage-of-completion method.
asset (or group of assets) is available for immediate sale in its present condition. Management
should be committed to selling the asset, and the sale, in the timing of recognition, should be
2.9.3. Interest income
completed or expected to be so within a year from the date of classification.
Interest income is recognized when it is probable that the future economic benefits will
When the Company is committed to a sales plan involving the transfer of control of a
flow to the Company and the amount may be measured reliably. Interest income is rec-
subsidiary, provided that the criteria described in the preceding paragraph are met, all
ognized under the straight-line method based on the time and the effective interest rate
assets and liabilities of such subsidiary are classified as held for sale in the consolidated
on the outstanding principal. The effective interest rate is the rate that discounts exactly
financial statements, even if the Company holds interest in the subsidiary after the sale.
the estimated future cash receipts during the estimated useful life of the financial assets
Current assets (or group of assets) classified as held for sale are stated at the lower be-
in relation to the initial net carrying amount of this asset.
tween their carrying amounts originally reported and their fair values less selling expenses.
2.9. Revenue recognition
2.9.4. Dividend income
The income from the dividends of investments in associates is recognized when the
Revenue is measured at fair value of the consideration received or receivable, less any
shareholder’s right to receive these dividends is established (provided that it is prob-
estimated returns, trade discounts and/or bonuses granted to the buyer and other similar
able that the future economic benefits will flow to the Company and the amount may be
deductions.
measured reliably).
2.9.1. Sale of products
2.10. Leases
Sales revenue is recognized when all of the following conditions are met:
Leases are classified as financial leases when lease agreement terms substantially transfer
• The Company has transferred to the buyer the significant risks and rewards of owner-
all the risks and benefits of assets ownership to the lessee. All other leases are classified
ship of goods.
as “operating”.
• The Company does not continuously participate in the management of the products
Leased assets are initially recognized as the Company’s and its subsidiaries’ assets at their
sold to an extent generally associated with ownership, nor keeps an effective control over
fair values at the commencement of the lease or, if lower, at the present value of the mini-
such products.
mum lease payments. The liability corresponding to the lessor is presented in the statement
22
23
of financial position as a lease obligation.
Lease payments are apportioned between the finance charge and the reduction of the
outstanding liability, so it produces a constant periodic rate of interest on the remaining
balance of the liability. The financial charge is recognized directly in income, unless it can
the acquisition of a transaction abroad are treated as assets and liabilities arising from
such transaction and translated based on the closing exchange rate at the end of each
reporting period. Exchange differences are recognized in shareholders’ equity.
be directly attributable to qualifying assets, and in this case, they are capitalized, in accor-
2.13. Government grants
dance with the Company’s general borrowing costs policy (see note 2.11.). Contingent
Government grants are not recognized until there is reasonable certainty that the Company will
payments are recognized as expense in the periods in which they are incurred.
meet the related conditions and grants will be received.
Operating lease payments are recognized as an expense on a straight-line basis over
Government grants are systematically recognized in the statement of income during
the lease term, except when another systematic basis is more representative of the time
the periods in which the Company recognizes as expenses the related costs to be offset
pattern in which economic benefits from the leased assets are consumed. Contingent
by such grants. More specifically, government grants, whose main condition consists of
operating lease payments are recognized as an expense in the period in which they are
the purchase, construction or acquisition of noncurrent assets by the Company, are rec-
incurred.
ognized as deferred income in the balance sheet and transferred to income on regular
2.11. Borrowing costs
and reasonable basis over the useful lives of the related assets.
Government grants receivable to be offset against expenses or losses incurred or to
Borrowing costs directly attributable to the acquisition, construction or production of a
offer immediate financial support to the Company, without future related costs, are rec-
qualifying asset, which necessarily take a substantial amount of time to be ready for use
ognized in the statement of income for the period they are received.
or sale, are added to the cost of such assets until the date they are ready for the intended
use or sale.
Income earned on the temporary investments of specific borrowings not yet spent on
a qualifying asset is deducted from borrowing costs eligible for capitalization.
All other borrowing costs are recognized in profit or loss for the period they are incurred.
2.12. Foreign and functional currency
Subsidized loans, directly or indirectly granted by the government, at interest rates
below market rates, are recognized as government grant measured by the difference
between the amounts received and the fair value of the loan calculated based on market
interest rates.
2.14. Inventories
Inventories are stated at average acquisition or production cost and, if realizable values
The individual financial statements of the Company and its subsidiaries are prepared us-
are lower, adjusted by a provision for inventory losses. Production costs are determined
ing the functional currency of each one of these companies that represents the currency
based on the total absorption costing method. The provision for obsolescence is re-
of the main economic environment where each company operates.
corded based on an analysis of historical losses and an assessment of risks on realization.
In the consolidated financial statements, the Company’s and its subsidiaries’ income
and expenses, and balance sheet balances are translated into Brazilian reais, which is
2.15. Property, plant and equipment
the Company’s functional currency and also the reporting currency of the consolidated
Property, plant and equipment is stated at cost, less accumulated depreciation and al-
financial statements.
lowance for impairment losses on discontinued assets without expectation of reuse or
Exchange rate changes are recognized in the statement of income over the related period.
realization. Depreciation is calculated under the straight-line method based on the es-
In the consolidated financial statements, the assets and liabilities of the subsidiaries’
timated economic useful lives of the assets, as mentioned in note 3.2. Mines and ore
foreign operations are translated into Brazilian reais at exchange rates prevailing at the
reserves are depleted based on the mine’s exploitation percentage in relation to total
end of the reporting period. Income and expenses are translated based on the average
estimated production over the estimated useful life of the mine. The estimated useful life
exchange rate for the period. Exchange gains or losses arising from translations are clas-
and amortization method are reviewed at the end of each annual reporting period, with
sified under “Other comprehensive income (loss)” and accumulated under “Sharehold-
the effect of any changes in estimate being accounted for on a prospective basis.
ers’ equity”; noncontrolling interests are recognized as applicable.
The adjustments to fair value on identifiable assets and liabilities acquired arising from
The Company opted not to review the historical cost of property, plant and equipment items and use the deemed cost criterion, pursuant to the option prescribed by
24
25
paragraphs 20-29 of ICPC 10 - Clarifications on the First-time Adoption of CPCs 27, 28,
The internal developed intangible asset resulting from development expenses (or of an
37 and 43 to Property, Plant and Equipment and Investment Property, to recognize the
internal project development stage) is recognized if, and only if, all the following condi-
opening balance of property, plant and equipment upon the first-time adoption of CPC
tions are present:
27 - Property, Plant and Equipment and ICPC 10.
• The technical feasibility of completing the intangible asset for use or sale.
The Company’s Management did not remeasure the Parent’s permanent assets since
the production process has experienced a substantial modernization over the last years.
Additionally, as prescribed in CPC 37 (R1) - First-time Adoption of International Finan-
• The intention of completing the intangible asset and use it or sell it.
• The capacity to use or sell the intangible asset.
• The intangible asset is likely to generate future economic benefits.
cial Reporting Standards, the Company adopted the IFRS already presented by its sub-
• The availability of proper technical, financial and other resources to complete the devel-
sidiary Loma Negra C.I.A.S.A. and adjusted the depreciated cost to reflect the changes in
opment of the intangible asset in order to use or sell it.
price indices in Argentina, which corresponds to the deemed cost on the transition date
• Ability to reliably measure the costs of the intangible assets incurred during the devel-
of Loma Negra, i.e., January 1, 2008.
opment phase.
The Company’s Management performed the periodic analysis of the remaining eco2010, no differences in the economic useful lives of the assets comprising the Company’s
2.16.3. Intangible assets acquired
in a business combination
and its subsidiaries’ property, plant and equipment were identified, except for mills, silos
In the consolidated financial statements, the intangible assets acquired in a business
and furnaces, for which the economic useful life was changed from 25 to 30 years in the
combination and recognized separately from the goodwill are recorded at fair value,
Company and from 10 to 30 years in Loma Negra.
which corresponds to its cost on the acquisition date.
nomic useful lives of property, plant and equipment. For the period ended December 31,
Improvements and benefits are only recorded as asset when they effectively increase
the useful lives or efficiency of assets, resulting in the growth of future economic benefits.
2.16.4. Write off of intangible assets
Construction in progress refers to tangible assets under construction/production and
An intangible asset is written off upon disposal or when there are no future economic
is recorded at acquisition or production cost, less potential losses. These assets are de-
benefits resulting from use or disposal. Gain or loss from write-off of an intangible as-
preciated when they are ready to be used for the intended goals.
set, measured as the difference between net revenue from sale and the asset’s carrying
The appreciation and depreciation arising from the sale of tangible fixed assets are determined based on the difference between the sales price and the net carrying amount
on the sale date and are recorded at their net amount in the statement of income under
“Other expenses”.
2.16. Intangible assets
amount, is recognized in the statement of income when the asset is written off.
2.17. Impairment of tangible and
intangible assets excluding goodwill
At the end of each fiscal year, the Company reviews the carrying amount of its tangible
and intangible assets to determine whether there is any indication of impairment loss. If
2.16.1. Separately acquired intangible assets
such an indication exists, the recoverable amount of the asset is estimated to measure
Intangible assets separately acquired are stated at cost less accumulated amortization
the amount of loss. When it is not possible to estimate the recoverable amount of an as-
and impairment losses. Amortization is recognized on a straight-line basis over their es-
set individually, the Company calculates the recoverable amount of the cash-generating
timated useful lives. The estimated useful life and amortization method are reviewed at
unit of the asset. When a reasonable and consistent allocation basis can be identified,
the end of each annual reporting period, with the effect of any changes in estimate being
corporate assets are also allocated to the individual cash-generating unit or the smallest
accounted for on a prospective basis.
group of cash-generating units for which a reasonable and consistent allocation basis
can be identified.
2.16.2. Internally-generated intangible assets - research and development costs
Expenditure on research is recognized as an expense when incurred.
Intangible assets with indefinite useful lives or not yet ready for use are tested for impairment at least annually or when there is any indication that such assets may be impaired.
The recoverable amount is the higher of the fair value less costs to sell or the value in
26
27
use. Estimated future cash flows are discounted to present value to determine the value-in-use at the pretax discount rate that reflects a current market assessment rate of
the time value of money and the specific risks for the asset for which the future cash flow
estimate was not adjusted.
Additionally, the Company and its subsidiaries’ policy is to progressively recuperate
spaces cleared by rockfills by using the reserves recognized.
2.20. Concession right - Public Asset Use (UBP)
If the calculated recoverable value of an asset (or cash-generating unit) is lower than
The jointly-owned subsidiary BAESA has a concession to develop a project granted to
its carrying amount, then the carrying amount is reduced to its recoverable amount. Im-
each one of the consortium members on a shared basis; the consortium members par-
pairment losses are immediately recognized in the statement of income.
ticipate in the project as independent power producers. The power produced by the
When an impairment loss on property, plant and equipment and definite-life intangible
assets is subsequently reversed, the carrying amount of the asset (or cash-generating unit)
increases to match the revised estimate of its recoverable value, provided that it does not
exceed the carrying amount that would have been determined if no impairment loss had
been recognized for the asset (or cash-generating unit) in prior fiscal years. The reversal of
the impairment loss is promptly recognized in the statement of income.
2.18. Provisions
project is allocated to the consortium members in proportion to the respective percentage interests in the Consortium.
The concession contract is effective for 35 years, counted from the initial date, i.e., May
14, 2001.
The concession contract also provides for the payment for the right to use the public
asset, known as UBP, in proportional monthly installments, as onerous concession. The
UBP is adjusted annually based on the General Market Price Index (IGP-M).
The provisions are recognized based on actual obligations (legal or presumed) from past
2.21. Use of estimates
events, based on which the amounts can be reasonably determined and the settlement
Accounting estimates were based on objective and subjective factors, as applicable, ac-
of which is probable.
cording to judgment from the Company’s, subsidiaries’ and jointly-owned subsidiaries’
The amount recognized as a provision is the best estimate of the expenditure required
Management. Significant items subject to these estimates and assumptions include the
to settle the obligation at the end of the reporting period, considering the risks and un-
determination of the useful lives of property, plant and equipment, the provision for loss-
certainties inherent in such obligation. When the provision is measured based on the
es on discontinued assets, the allowance for doubtful accounts, the adjustment to pres-
cash flows estimated to offset the obligations, its carrying amount is equivalent to the
ent value of receivables and payables, the provision for inventory losses and obsoles-
present value of these cash flows.
cence and the reserve for contingencies. Actual results could differ from those estimates.
When some or all of the expenditure required to settle a provision is expected to be
The Company, its subsidiaries and jointly-owned subsidiaries review the estimated and
reimbursed by another party, the asset will be recognized when, and only when, it is
assumptions at least quarterly, except for the useful lives of property, plant and equip-
virtually certain that reimbursement will be received and the amount can be reliably
ment and the provision for inventory losses that are determined annually.
measured.
2.19. Environmental recovery
and plant dismantling
2.22. Taxation
Income tax and social contribution expenses include current and deferred taxes.
In view of legal provisions and practices prevailing in several business sectors, land used
2.22.1. Current taxes
to exploit mines and rockfills is subject to environmental preservation. Additionally, costs
The provision for income tax and social contribution is based on the annual taxable in-
must be incurred for the dismantling of plants.
come. Taxable income differs from net income stated in the consolidated statement of
In such context, whenever determinable, provisions are recognized to cover the esti-
comprehensive income because it excludes income and/or expenses taxable or deduct-
mated costs on the environmental recovery and recuperation of exploited areas. These
ible in other years, as well as permanently nontaxable and/or nondeductible items. The
provisions are recorded together with an increase in the value of the underlying asset,
provision for income tax is calculated individually by each company, based on the rates
based on the conclusions of the landscape recovery studies, and are recognized in profit
effective at yearend and specific legal and tax laws of the countries where each company
or loss as assets are depreciated.
is headquartered.
28
29
2.22.2. Deferred taxes
2.23. Employee benefits
Deferred income tax and social contribution (“deferred taxes”) are recognized on tempo-
Supplementary pension plan - defined benefit
rary differences at the end of each reporting period distributed between asset and liabil-
The liability calculated by independent actuaries relating to defined benefit pension plans
ity balances recognized in the financial statements and the corresponding tax basis used
is the present value of the defined benefit obligation at the balance sheet date, less the
to determine taxable income, including tax losses balance, when applicable. Deferred tax
fair value of plan assets, as adjusted by actuarial gains or losses and unrecognized past
liabilities are usually recognized on all temporary taxable differences and deferred tax
service costs. The defined benefit obligation is calculated annually by independent actu-
assets are recognized on all temporary deductible differences and only when it is prob-
aries based on the projected unit credit method. The present value of the defined benefit
able that the Company will present future taxable income at a sufficient amount so that
obligation is determined by discounting estimated future cash outflows, using interest
these temporary deductible differences can be used. Deferred tax assets or liabilities are
rates consistent with market yields, which are denominated in the currency the benefits
not recognized for temporary differences that arise from goodwill or initial recognition
will be paid and whose maturities are those of the related pension plan obligation.
(except for business combination) of other assets and liabilities in a transaction that affects neither taxable income nor book profit. The breakdown of deferred tax assets and
2.24. Financial instruments
liabilities on temporary differences is stated in note 23.
The financial assets and financial liabilities are recognized when an entity becomes a
The recoverability of the deferred tax asset balance is reviewed at the end of each
party to the underlying contracts.
reporting period and, when it is no longer probable that future taxable income will be
Financial assets and financial liabilities are initially measured at fair value. Fair value
available to allow the recovery of all or part of assets, the asset balance is adjusted based
means the amount for which an asset can be exchanged or a liability can be settled
on the expected recoverable amount.
between a knowledgeable - willing buyer and a knowledgeable - willing seller in an
Deferred tax assets and liabilities are measured using the tax rates applicable for the period
arm’s-length transaction. The fair value of financial assets and financial liabilities is added
in which the liability is expected to be settled or the asset is expected to be realized, set forth
to or deducted from the transaction costs directly attributable to the purchase or issue
in the prevailing tax laws. The measurement of deferred tax assets and liabilities reflects the
of such financial assets and financial liabilities (except for financial assets and financial li-
tax consequences of how the Company expects, at the end of each reporting period, to re-
abilities recognized at fair value in profit or loss) after initial recognition, when applicable.
cover or settle these assets’ and liabilities’ carrying amounts.
Transaction costs directly attributable to the acquisition of financial assets and financial
Deferred tax assets and liabilities are offset only when the current tax asset can be off-
liabilities at fair value through profit or loss are immediately recognized in profit or loss.
set against the current tax liability and when they are related to taxes managed by the
same tax authority and the Company has the intention to settle the net amount of its cur-
2.24.1.Financial assets
rent tax assets and liabilities.
Financial assets are classified in the following specific categories: financial assets at fair value
trough profit or loss, held-to-maturity investments, available-for-sale financial assets, and
2.23.3. Current and deferred income tax for the period
loans and receivables. Such classification depends on the nature and purpose of the financial
Current and deferred income tax are recognized as expenses or income in the statement
assets and is determined upon initial recognition.
of income for the period, except when related to items recognized directly in other comprehensive income (loss) or shareholders’ equity, when taxes are also recognized directly
2.24.1.1. Financial assets at fair value through profit or loss
in other comprehensive income (loss) or shareholders’ equity, or when arising on the ini-
Financial assets are classified at fair value through profit or loss when they are held for
tial recognition of a business combination. In the case of a business combination, the tax
trading or designated at fair value through profit or loss.
effect is considered in accounting for the business combination.
A financial asset is classified as held for trading if it is:
• acquired mainly for being sold in the short term; or
• at initial recognition, part of a portfolio of identified financial instruments jointly managed by the Company and for which there is a recent actual pattern of short-term profittaking; or
30
31
• a derivative that is not designated as an effective hedging instrument.
A financial asset other than those held for trading can be designated at fair value
2.24.4. Effective interest method
The effective interest method is used to calculate the amortized cost of a financial liability
through profit or loss upon initial recognition if:
and allocate its interest expense to the related period. The effective interest rate is the
• this designation eliminates or significantly reduces a measurement or recognition in-
rate that exactly discounts the future cash payments or receipts through the expected life
consistency that would otherwise arise; or
of the financial liability or, when appropriate, a shorter period for the initial recognition of
• the financial asset is part of a managed group of financial assets or liabilities or both; or
the net carrying amount.
• its performance is evaluated based on fair value, according to the documented strategy
of risk management or investment of the Company and its subsidiaries, and when the
Income is recognized based on the effective interest of debt instruments not classified
as financial assets at fair value through profit or loss.
information on the group is provided internally at the same basis; or
• the financial asset is part of a contract containing one or more embedded derivatives,
2.24.5. Cash and cash equivalents
and IAS 39 - Financial Instruments: Recognition and Measurement (equivalent to CPC 38)
Represented by cash fund, banks and short-term investments, with original maturity of
permits that the combined contract as a whole (assets or liabilities) be designated at fair
90 days or less or with repurchase agreements, immediately converted into cash and
value through profit or loss.
subject to an immaterial risk of change in value, being measured at fair value.
Financial assets at fair value through profit or loss are stated at fair value and any gains
or losses are recognized in income or loss.
2.25. Statement of value added (“DVA”)
The purpose of this statement is to disclose the value added created by the Company
2.24.1.2. Available-for-sale financial assets
and its distribution during a certain reporting period and is presented by the Company,
Available-for-sale financial assets correspond to nonderivative financial assets designat-
as required by the Brazilian Corporate Law, as an integral part of its individual financial
ed as “available for sale” or not classified as: (a) loans and receivables; (b) held-
statements, and as additional disclosure of the consolidated financial statements, since
-to-maturity investments; or (c) financial assets at fair value through profit or loss.
this statement is not required by IFRSs.
The DVA was prepared using information obtained in the same accounting records
2.24.1.3. Loans and receivables
used to prepare the financial statements and pursuant to the provisions of CPC 09 -
Loans and receivables and other receivables with fixed or determinable payments that are
Statement of Value Added.
not quoted in an active market are classified as “Loans and receivables”. Loans and receivables are measured at amortized cost using the effective interest method, less the allowance
2.26. Segment reporting
for impairment losses.
Segment is a group of assets and transactions involved in the supply of products and
services in a particular economic environment subject to the risks and rewards different
2.24.2. Financial liabilities classified as “other financial liabilities”
from other segments.
Other financial liabilities, including borrowings, financing and debentures, are initially
The Company presents its assets, liabilities and transactions consolidated by geo-
measured at fair value, net of transaction costs. Subsequently, they are measured at am-
graphic segments similarly to the manner in which Management conducts and monitors
ortized cost under the effective interest method and the financial expense is recognized
business, as described in note 29.
based on effective compensation.
2.27. Interest on capital
2.24.3. Derivative financial instruments
Interest on capital is stated as allocation of net income directly in shareholders’ equity,
Derivatives are initially recognized at fair value on the date they are contracted and sub-
and interest received or receivable from investments in subsidiaries, jointly-owned sub-
sequently stated at their fair value at the end of each reporting period. Possible gains or
sidiaries and associates is recorded as investment credit, if applicable. For tax purposes,
losses are immediately recognized in profit or loss.
interest on capital is treated as financial income or expenses, thus reducing or increasing
the income tax and social contribution tax base.
32
33
under IAS 39 and CPC 38, the total change in the fair value of a financial liability recog2.28. New and revised standards and
nized at fair value through profit or loss was recognized in profit or loss.
interpretations issued and not yet adopted
• IFRS 9 is effective for annual periods beginning on or after January 1, 2013.
The Company and its subsidiaries have not adopted yet the following new and revised
The Company’s Management expects IFRS 9 to be adopted in the Company’s and its
IFRSs, which were already issued, since their application is not required for the year ended
subsidiaries’ consolidated financial statements. The Company has not yet analyzed the im-
December 31, 2010, as follows:
pacts of the application of such standard.
• Amendments to IFRS 7 - Disclosures: Transfer of Financial Assets (equivalent to CPC 40)
Amendments to IFRS 7
Disclosures - Transfer of Financial Assets1
IFRS 9 (as amended in 2010)
Financial Instruments2
Deferred Taxes - recovery of the underlying assets when the asset is
measured under IAS 407 fair value framework
Classification of Rights
Anticipated Payments of Minimum Financing Requirement 3
4
increase disclosure requirements for transactions involving financial asset transfers. The
Company has not yet analyzed the impacts of the application of such standard.
The Company’s and its subsidiaries’ Management does not expect that these amendments to IFRS 7 have a relevant effect on the Company’s and its subsidiaries’ disclosures
related to previous transfers of accounts receivable. However, in case the Company and
its subsidiaries make other types of financial asset transfers in the future, the disclosures
Improvements to IFRSs issued in 20105
1
Effective for annual periods beginning on or after July 1, 2010.
2
Effective for annual periods beginning on or after January 1, 2013.
3
Effective for annual periods beginning on or after January 1, 2011.
4
Effective for annual periods beginning on or after February 1, 2010.
5
Effective for annual periods beginning on or after July 1, 2010 and January 1, 2011, as the case may be.
IFRS 9 - Financial Instruments, issued in November 2009 and amended in October 2010,
introduces new requirements for the classification, measurement, and derecognition of
financial assets and financial liabilities.
• IFRS 9 establishes that all recognized financial assets that are included in the scope of IAS 39
- Financial Instruments: Recognition and Measurement (equivalent to CPC 38) be subsequently
measured at the amortized cost or fair value. Specifically, debt instruments held according to a
business model whose objective is to receive contractual cash flows and that have contractual
cash flows referring exclusively to payments of principal and interest on principal due are generally measured at amortized cost at the end of the subsequent reporting periods.
All other debt instruments and investments in equity securities are measured at fair value
at the end of the subsequent reporting periods.
• The most significant impact of IFRS 9 refers to the accounting of changes in fair
value of a financial liability (designated at fair value through profit or loss) attributable to
changes in such liability’s credit risk. Specifically, under IFRS 9 and with respect to financial liabilities recognized at fair value through profit or loss, the amount of the change
in fair value of a financial liability attributable to changes in such liability’s credit risk is
recognized in “Other comprehensive income (loss)”, unless the recognition of the effects
of changes in the liability credit risk in “Other comprehensive income (loss)” results in or
increases the accounting mismatch in profit or loss. Changes in fair value attributable to
changes in credit risk of a financial liability are not reclassified in profit or loss. Previously,
related to these transfers may be impacted.
• Amendments to IAS 32 - Classification of Rights (equivalent to CPC 39) address the
classification of certain rights denominated in foreign currency as equity instrument or
financial liability. To date, the Company and its subsidiaries did not enter any agreement
which would qualify for the amendments. However, in case the Company and its subsidiaries acquire rights within the scope of the amendments in future accounting periods,
the changes to IAS 32 and CPC 39 will have an effect on the classification of such rights.
• The amendments to IAS 12 on deferred taxes (recovery of underlying assets) - on December 20, 2010, IASB issued the amendment to IAS 12 - Income Taxes, denominated Deferred Tax: Recovery of Underlying Assets. IAS 12 requires that an entity measures deferred
taxes related to an asset depending on whether the entity expects to recover the carrying
amount of the asset through use or sale. When an asset is measured under the fair value
model of IAS 40 - Investment Property, it can be difficult and subjective to assess whether
the asset will be recovered through use or sale. The amendment presents a practical solution to the problem, introducing the presumption that the recovery of the carrying amount
will normally be through sale. As a result of the amendments, SIC 21 - Income Taxes Recovery of Revalued Nondepreciable Assets will no longer be applicable to investment
properties held at fair value. The amendments should become effective for annual periods
beginning on or after January 1, 2012 and earlier adoption is permitted.
The Accounting Pronouncements Committee (“CPC”) has not yet issued the pronouncements and amendments related to the new and revised IFRSs presented above.
Because of the CPC’s and the CVM’s commitment to keep the set of standards issued updated according to the changes made by the International Accounting Standards Board
- IASB, it is expected that such pronouncements and amendments be issued by the CPC
and approved by the CVM by the date they become effective.
34
35
3. CRITICAL ACCOUNTING JUDGMENTS AND KEY
SOURCES OF ESTIMATION UNCERTAINTY
4. EFFECTS OF ADOPTION OF IFRS AND NEW
PRONOUNCEMENTS ISSUED BY CPC
In applying the accounting policies of the Company and its subsidiaries described in
the carrying amounts of assets and liabilities that cannot be easily obtained from other
4.1. Effects of adopting IFRSs on the consolidated financial statements
sources. Estimates and respective assumptions are based on past experience and other
4.1.1. Application of IFRSs
factors deemed relevant. Actual results may differ from these estimates.
The consolidated financial statements (identified as Consolidated) for the year ended
note 2.18., Management is required to make judgments and prepare estimates regarding
Underlying estimates and assumptions are constantly reviewed. The effects from reviews
December 31, 2010 are the first to be presented in conformity with the IFRSs. The Com-
of accounting estimates are recognized in the period the estimates are reviewed, if the review
pany applied the accounting policies set out in note 2 to all periods presented, which
affects only that period, or also in subsequent periods, if the review affects both current and
includes the balance sheet as at the transition date, defined as January 1, 2009. For the
future periods.
measurement of the adjustments of the opening balances and preparation of the transition date of balance sheet, the Company applied the mandatory exceptions and cer-
3.1. Main judgment in applying the accounting policies
tain optional exemptions to the retrospective application prescribed by IFRS 1 and CPC
Below are the main judgments made by Management in the process of applying the
37(R1) - First-time Adoption of International Financial Reporting Standards, as described
Company’s and its subsidiaries’ accounting policies that have a more significant effect on the
in the notes below.
amounts recognized in the financial statements.
3.2. Property, plant and equipment and intangible assets
As described in notes 2.15. and 2.16., the Company and its subsidiaries review the useful lives
of property, plant and equipment and intangible assets on an annual basis, at the end of each
reporting period.
Useful life in years
Buildings
Machinery and IT equipment
25 years
5 to 10 years
Vehicles
5 years
Furniture and fixtures
10 years
Mines and ore reserves
Reservoirs, dams and feeders
*
50 years
Furnaces and mills
30 years
Software licenses
3 to 5 years
* Mines and ore reserves are depleted based on the mine’s exploitation percentage in relation to total estimated production over the estimated
useful life of the mine.
36
37
4.2. Reconciliation of the individual financial statements with
CPC and the consolidated financial statements with IFRS on the
transition date (January 1, 2009) and as of December 31, 2009
Parent
As of January 1, 2009
(transition date)
As of December 31, 2009
(last financial statements
in BR GAAP)
Previous
BR GAAP
Effects of
adoption
of new
CPCs
Restated
BR GAAP
Previous
BR GAAP
Effects of
adoption
of new
CPCs
Restated
BR GAAP
78,515
-
78,515
86,992
-
86,992
Parent
in BR GAAP)
(transition date)
Previous
BR GAAP
Effects of
adoption
of new
CPCs
Restated
BR GAAP
87,620
-
Securities
36,613
-
123,059
(16,810)
ASSETS
Note
(a)
Recoverable taxes
CURRENT LIABILITIES
Previous
BR GAAP
Effects of
adoption
of new
CPCs
Restated
BR GAAP
87,620
114,921
-
114,921
36,613
37,380
-
37,380
Dividends and interests on capital
-
123,059
131,811
-
131,811
Advance from customers
-
(16,810)
(17,753)
-
(17,753)
Related parties
148,821
(4,239)
144,582
159,862
(3,903)
155,959
Other payables
18,054
-
18,054
36,183
-
36,183
-
Debentures
262,880
-
262,880
-
-
-
56,216
-
56,216
95,105
-
95,105
Taxes payable
87,394
-
87,394
63,229
-
63,229
Payroll and related taxes
27,803
-
27,803
32,791
-
32,791
864
-
864
83,232
-
83,232
Deferred income tax and social
contribution
(b)
3,406
(3,406)
-
-
receivable
(c)
75,237
(9,241)
65,996
17,906
-
17,906
Other receivables
10,736
-
10,736
1,471
-
1,471
486,736
469,850
481,781
(3,903)
477,878
1,861
3,779
-
3,779
Related parties
(16,886)
1,861
-
597
-
597
45,468
-
45,468
9,199
(1)
9,198
14,784
-
14,784
580,809
1,692
582,501
422,198
-
422,198
445,523
-
445,523
575,227
-
575,227
6,808
-
6,808
10,401
1
10,402
-
47,468
47,468
-
50,472
50,472
contribution
(b)
-
10,710
10,710
114,617
10,624
125,241
1,693
(1,693)
-
-
-
-
147
-
147
18,118
-
18,118
Other payables
-
16,430
43,572
-
43,572
Recoverable taxes
11,756
-
11,756
20,103
-
20,103
Escrow deposits
16,760
-
16,760
16,937
-
16,937
98,188
15,292
113,480
206,957
12,932
219,889
Other assets
7,470
52,161
(g)
16,430
(b)
1,693
Inventories
Related parties
7,470
50,468
Reserve for contingencies
NONCURRENT ASSETS
contribution
Note
CURRENT ASSETS
Inventories
LIABILITIES AND
SHAREHOLDERS EQUITY
5,661
(2)
5,659
3,971
(7)
3,964
459,685
56,483
516,168
704,216
61,090
765,306
2,102,526
-
2,102,526
525,643
-
525,643
SHAREHOLDERS’ EQUITY
Capital
Capital reserves
Earnings reserves
55,670
-
55,670
55,670
-
55,670
(h)
880,015
147,695
1,027,710
1,265,159
147,695
1,412,854
4,900
-
4,900
4,235
-
4,235
Investments
(d)
1,735,950
1,120,582
2,856,532
267,762
1,113,787
1,381,549
(k)
21,105
(21,105)
-
(55,352)
(41,247)
(96,599)
(e)
504,788
33,443
538,231
647,700
38,300
686,000
(h)
-
-
-
-
20,393
20,393
Intangible assets
(f)
1,222,294
(967,666)
254,628
1,206,590
(973,185)
233,405
Total shareholders’ equity
3,059,316
126,590
3,185,906
1,791,120
126,841
1,917,961
3,613,074
201,651
3,814,725
2,435,753
191,834
2,627,587
4,099,810
184,765
4,284,575
2,917,534
187,931
3,105,465
TOTAL ASSETS
4,099,810
4,284,575
2,917,534
187,931
3,105,465
TOTAL LIABILITIES AND
184,765
38
39
Consolidated
Consolidated
in BR GAAP)
(transition date)
ASSETS
Note
Previous
BR GAAP
Effects of
transition
to IFRS
IFRS
Previous
BR GAAP
Effects of
transition
to IFRS
IFRS
CURRENT ASSETS
238,169
-
238,169
377,661
-
377,661
Securities
79,442
-
79,442
38,995
-
38,995
272,356
22
272,378
171,124
21,584
192,708
(35,842)
-
(35,842)
(28,712)
-
(28,712)
Inventories
(a)
505,079
(4,240)
500,839
270,456
(3,903)
266,553
Recoverable taxes
(l)
33,415
10,360
43,775
41,592
-
41,592
contribution
(b)
7,473
(7,473)
-
-
-
-
receivable
53,640
-
53,640
17,851
-
17,851
Other receivables
62,936
-
62,936
42,335
(21,585)
20,750
Effects of
transition
to IFRS
IFRS
Previous
BR GAAP
Effects of
transition
to IFRS
IFRS
252,926
Debentures
265,541
-
252,926
216,841
-
216,841
-
265,541
2,483
-
2,483
198,466
-
198,466
187,048
-
187,048
143,600
10.361
153,961
115,138
-
115,138
Payroll and related taxes
75,424
-
75,424
64,821
-
64,821
Dividends and interests on capital
3,523
-
3,523
83,232
661
83,893
23,903
23,903
11,130
-
11,130
Note
1,216,668
(1,331)
1,215,337
931,302
(3,904)
927,398
1,861
-
1,861
3,779
-
3,779
147
-
147
18,118
-
18,118
10,398
65,681
76,079
43,572
44,439
88,011
Recoverable taxes
29,827
-
29,827
27,839
-
Escrow deposits
25,328
-
25,328
17,161
-
129,065
33,903
162,968
206,957
35,347
242,304
Taxes payable
Other payables
(i)
( j)
NONCURRENT ASSETS
Related parties
contribution
Previous
BR GAAP
LIABILITIES AND SHAREHOLDERS’
EQUITY
CURRENT LIABILITIES
Inventories
in BR GAAP)
(transition date)
(a)
(b)
50,243
1,013,626
(5,734)
44,509
25,882
981
1,018,253
706,575
1,642
-
54,514
8,735
-
8,735
4,627
26,863
708,217
Debentures
54,514
1,034,648
-
1,034,648
1,023,360
-
1,023,360
Reserve for contingencies
168,373
(2,582)
165,791
99,344
(2,606)
96,738
(g)
-
87,897
87,897
-
82,884
82,884
(b)
2,707
178,301
181,008
115,590
117,502
233,092
27,839
contribution
17,161
Other payables
( j)
115,186
4,822
120,008
20,198
16,493
36,691
1,375,428
268,438
1,643,866
1,267,227
214,273
1,481,500
2,102,526
-
2,102,526
525,643
-
525,643
Other receivables
8,238
-
8,238
7,518
-
7,518
Investments
(d)
1,059,046
(119,336)
939,710
62,401
(16,502)
45,899
(e)
1,666,688
414,801
2,081,489
1,239,446
264,958
1,504,404
Intangible assets
(f)
1,311,729
18,072
1,329,801
1,214,467
25,631
1,240,098
4,242,327
413,121
4,655,448
2,841,258
353,873
3,195,131
TOTAL ASSETS
5,458,995
411,790
5,870,785
3,772,560
349,969
4,122,529
Capital
Capital reserves
55.670
-
55,670
55,670
-
55,670
(h)
880,015
147,695
1,027,710
1,265,159
147,695
1,412,854
(k)
21,105
(21,105)
-
(55,352)
(41,247)
(96,599)
(h)
-
-
-
-
20,393
20,393
3,059,316
126,590
3,185,906
1,791,120
126,841
1,917,961
Earnings reserves
Equity attributable to owners of the
Company
10,625
12,135
22,760
7,638
7,213
Total shareholders’ equity
3,069,941
138,725
3,208,666
1,798,758
134,054
1,932,812
14,851
TOTAL LIABILITIES AND
5,458,995
411,790
5,870,785
3,772,560
349,969
4,122,529
40
41
4.3. Reconciliation of the statement of income for the years ended
December 31, 2010 and 2009
Parent
Note - Effects of adoption of IFRSs and new pronouncements issued by CPC:
a) Reclassification of spare parts, previously classified as inventories, to property, plant and equipment, as prescribed in CPC 27 - Property, Plant and
Equipment.
b) Classification of deferred income tax and social contribution assets in noncurrent assets, as prescribed by CPC 26 - Presentation of Financial Statements, and accounting for the effects of income tax and social contribution on the IFRS transition effect.
c) Reversal of proposed dividends above the minimum mandatory at the transition date by the then jointly-owned subsidiary Usiminas.
d) Recalculation of the equity in subsidiaries and jointly-owned subsidiaries, due to the transition to IFRS in these entities represented mainly by
the review of historical costs of property, plant and equipment and adoption of the deemed cost, as prescribed in ICPC 10.
e) Reclassification of spare parts to property, plant and equipment, as prescribed in CPC 27 - Property, Plant and Equipment, capitalization
of interest expense on borrowings, as prescribed in CPC 20 - Borrowing Costs, recognition of asset related to the environmental recovery
and recuperation of exploited areas, as prescribed in CPC 25 - Provisions, Contingent Liabilities and Contingent Assets, and accounting for
the acquisition of subsidiary under the acquisition method of accounting, in accordance with note 2.4. In the consolidated, in addition to the
above-mentioned issue, the subsidiary Loma Negra has reviewed the historical costs of property, plant and equipment and adopted the deemed cost, as prescribed in ICPC 10. The breakdown by adjustment is as follows:
01/01/2009
Componentization of property, plant and equipment
Reclassification of spare parts
Interest capitalization
Recognition of environmental recovery-related asset
Deemed cost
Business combination - Cia. Industrial e Mercantil de Cimentos
Total
(Statement of income as of
December 31, 2009 in BR GAAP)
Note
REVENUE
COST OF SALES
(a)
GROSS PROFIT (LOSS)
Previous
BR GAAP
Effects of
adoption of
new CPCs
Restated
BR GAAP
1,242,875
-
1,242,875
(877,967)
(7,539)
(885,506)
364,908
(7,539)
357,369
OPERATING INCOME (EXPENSES)
12/31/2009
Parent
Consolidated
Parent
Consolidated
11,322
114,252
9,788
78,936
4,239
(61,442)
3,903
(40,535)
-
-
7,125
10,161
Selling expenses
(24,046)
-
(24,046)
General and administrative expenses
(63,004)
2
(63,002)
Other operating expenses
113,940
(9,254)
1,131
(8,123)
517,889
20,393
538,282
20,691
190,660
5,045
f) In the Parent, refers to the reclassification of goodwill, from intangible assets to investment, as prescribed in ICPC 09, pursuant to note 2.6.
g) The Company and its subsidiaries recognized provisions to cover estimated costs for the environmental recovery and recuperation of exploited areas, as stated in note 2.19.
h) Recognition of adjustments prior to the date of transition to the IFRS, as prescribed in CPC 37 (R1) - First-time Adoption of International Financial Reporting Standards and exchange differences from the translation of the financial statements adjusted to IFRSs.
i) Reclassification of the prepaid income tax and social contribution, previously classified under caption “Taxes payable” to caption “Recoverable taxes”, in the jointly-owned
subsidiary Usiminas.
j) Recognition of the UBP concession of subsidiary BAESA, as stated in note 2.20. Additionally, on January 1, 2009, it also refers to the reclassification of the current portion and adjustment of the actuarial liability balance of subsidiary Usiminas, as stated in note 19.
k) Reclassification of accumulated translation differences through January 1, 2009 to “Earnings reserve”, as prescribed in CPC 37 (R1) - First-time Adoption of International Financial
Reporting Standards.
(71,066)
546,405
-
264,958
19,464
4,206
-
12,439
5,045
-
(75,272)
19,262
25,308
38,300
19,464
(c)
527,143
331,309
5,374
230,504
113,940
-
414,801
(16,758)
22,757
Exchange rate change expenses, net
12,508
5,374
(164)
207,747
Financial income
Financial expenses
INCOME BEFORE INCOME TAX AND SOCIAL
CONTRIBUTION
33,443
(16,594)
(b)
Deferred taxes
NET INCOME FOR THE YEAR
(d)
42
43
4.4. Reconciliation of shareholders’ equity from
previous BR GAAP to restated BR GAAP (Parent) and
IFRS (Consolidated)
Consolidated
(Statement of income as of
December 31, 2009 in BR GAAP)
Parent
Note
2,663,463
1
2,663,464
(a)
(1,879,052)
(48,837)
(1,927,889)
784,411
(48,836)
735,575
REVENUE
COST OF SALES
Effect of
transition
to IFRSs
Previous BR
GAAP
GROSS PROFIT (LOSS)
IFRS
Shareholders’ equity under
previous BR GAAP
Selling expenses
(58,329)
(1)
01/01/2009
(transition date)
1,791,120
3,059,316
9,788
11,322
CPC adjustments:
Effects of componentization
OPERATING INCOME (EXPENSES)
12/31/2009
(58,330)
Depreciation
7,212
-
(11,412)
(5,407)
(e)
(162,907)
(8,415)
(171,322)
Other operating expenses
(g)
(49,840)
26,160
(23,680)
Recuperation of mines
(37,964)
(34,960)
Adjustment to investments in subsidiaries
148,207
145,757
(b)
Financial income
88,288
40,060
128,348
33,510
-
33,510
Financial expenses
(c)
(167,442)
3,595
(163,847)
Exchange rate change expenses, net
(f)
129,572
(3,951)
125,621
597,263
8,612
INCOME BEFORE INCOME TAX AND SOCIAL
CONTRIBUTION
Restated shareholders’
equity under BR GAAP
(38,115)
-
(38,115)
(37,854)
10,782
(27,072)
NET INCOME FOR THE YEAR
521,294
19,394
540,688
THE COMPANY’S OWNERS
517,889
20,393
538,282
3,405
(999)
Deferred taxes
NONCONTROLLING INTERESTS
(d)
9,878
3,185,906
605,875
Consolidated
12/31/2009
01/01/2009
(transition date)
1,791,120
3,059,316
80,094
114,252
Deemed cost
190,660
326,651
Current taxes
11,011
1,917,962
2,406
Note - Effects of adoption of IFRSs and new pronouncements issued by CPC:
(a) Effects of the componentization of assets classified under “property, plant and equipment” to “mills, silos and furnaces” resulting in the change of the economic useful lives from
25 to 30 years, and review of the historical costs of property, plant and equipment and adoption of the deemed cost, as prescribed in ICPC 10.
(b) Recalculation of the equity in subsidiaries and jointly-owned subsidiaries, due to the transition to IFRS in these entities.
(c) Capitalization of interest expense on borrowings, as prescribed in CPC 20 - Borrowing Costs.
(d) Effect of income tax and social contribution on adjustments of transition to IFRSs.
(e) The subsidiary Holdtotal reclassified expenses on labor indemnities, which were classified as “Other operating expenses”, to “General and administrative expenses”.
(f) Exchange differences from the translation of the financial statements adjusted to IFRSs.
(g) Idleness costs of the jointly-owned subsidiary Usinas Siderúrgicas de Minas Gerais S.A. Usiminas, which were classified as “Other operating expenses”, were reclassified to “Cost
of sales”, in conformity with CPC 16 - Inventories.
Shareholders’ equity under
previous BR GAAP
IFRS adjustments:
10,248
-
Inflation adjustment - UBP
(1,128)
-
Depreciation/amortization
(13,250)
(5,407)
UBP concession expenses
1,605
-
(70,069)
(67,461)
-
3,963
Reversal of goodwill amortization
Actuarial liability in the jointly-owned subsidiary
-
14,467
(1,204)
(121,765)
(70,114)
(138,110)
Reclassification from noncontrolling interest to
shareholders’ equity
14,851
22,760
1,932,813
3,208,666
IFRS shareholders’ equity
44
45
4.5. 4.5.Effects of adopting IFRSs
on the statement of cash flows
Consolidated
09/30/2010
06/30/2010
03/31/2010
1,898,257
1,887,101
1,842,946
80,341
82,875
81,573
Deemed cost
167,950
183,563
187,636
Shareholders’ equity under previous BR GAAP
Parent
CPC adjustments:
At 12/31/2009 (date of the last period presented according to previous accounting policies)
Note
Previous BR
GAAP
Effect of
adopting new
CPCs
Cash flow from operating activities
(a)
219,161
61,439
280,600
Cash flow from investing activities
(a)
(106,682)
(61,438)
(168,120)
(85,178)
(1)
(85,179)
Cash flow from financing activities
Restated BR
GAAP
Consolidated
At 12/31/2009 (date of the last period presented according to previous accounting policies)
16,531
14,281
12,014
(3,017)
(2,380)
(1,751)
(18,027)
(16,405)
(14,827)
2,832
2,417
2,009
(73,235)
(75,428)
(72,876)
(1,204)
(1,204)
(1,204)
(59,496)
(65,713)
(68,142)
10,261
10,222
15,485
2,021,193
2,019,329
1,982,863
Reclassification of noncontrolling interests
to shareholders’ equity
Effect of
transition
to IFRSs
IFRS
(6,323)
470,188
Note
Previous BR
GAAP
Cash flow from operating activities
(a)
476,511
Cash flow from investing activities
(a)
(379,625)
(751)
(380,376)
Cash flow from financing activities
(a)
53,939
4,082
58,021
Exchange rate change of cash and cash
equivalents
(b)
(11,333)
2,992
(8,341)
a) Impact of the reclassification of spare parts from “inventories” to “property, plant and equipment”, as prescribed in CPC 27, and capitalization of
interest expense on borrowings, as prescribed in CPC 20.
b) Exchange differences of cash and cash equivalents in the translation of the financial statements adjusted to IFRSs.
Restated shareholders’ equity
4.7. Reconciliation of shareholders’ equity
from previous BR GAAP to restated BR GAAP
(Parent) and IFRS (Consolidated) for the first
three quarters of 2010 and 2009
Parent
Net income for the period
under previous BR GAAP
4.6. Reconciliation of shareholders’ equity from
previous BR GAAP to restated BR GAAP (Parent) and IFRS
(Consolidated) for the first three quarters of 2010
Parent
09/30/2010
06/30/2010
03/31/2010
1,898,257
1,887,101
1,842,946
CPC adjustments:
10,058
9,982
9,892
13,692
11,240
8,967
(14,811)
(13,649)
(12,530)
(40,304)
(39,524)
(38,744)
133,374
143,093
145,825
10,664
10,865
11,023
2,010,930
2,009,108
1,967,379
Restated shareholders’ equity
09/30/09
09/30/10
09/30/09
175,436
435,486
175,436
435,486
271
212
271
212
-
-
(6,397)
(14,203)
6,480
5,465
6,480
8,719
-
(3,541)
-
(3,541)
CPC adjustments:
Deemed cost
Shareholders’ equity under previous BR GAAP
Consolidated
09/30/10
Derecognition of deferred charges
-
-
(1,889)
(751)
(3,399)
(4,873)
(4,778)
(7,168)
-
-
1,226
1,201
(2,340)
(2,253)
(6,170)
(6,999)
Adjustments investment in subsidiaries
(1,929)
26,644
5,408
40,161
-
-
-
(4,587)
(343)
492
4,589
9,109
Reclassification of noncontrolling interests in
net income for the period
-
-
1,468
1,654
174,176
457,632
175,644
459,293
Actuarial liabilities
Restated net income for the period
46
47
Parent
Net income for the period under
previous BR GAAP
Consolidated
06/30/10
06/30/09
06/30/10
06/30/09
103,440
256,703
103,440
256,703
194
112
(4,890)
(9,967)
-
-
-
(304)
4,028
2,873
4,028
4,643
5. CASH AND CASH EQUIVALENTS
The balance of “Cash and cash equivalents” includes cash, bank deposits and highly-liquid
short-term investments as follows:
CPC adjustments:
Deemed cost
Parent (BR GAAP)
-
(3,537)
-
(3,537)
-
-
(1,252)
(468)
(2,236)
(3,185)
(3,155)
(4,672)
-
-
811
798
(1,560)
(1,502)
(4,103)
(5,427)
Valuation adjustment of investments
(5,284)
6,030
-
16,556
-
-
-
(3,579)
(143)
578
3,560
7,326
-
-
538
915
98,439
258,072
98,977
258,987
Reclassification of noncontrolling interests in net income
for the period
12/31/10
Net income for the period
under previous BR GAAP
Consolidated
03/31/10
03/31/09
03/31/10
03/31/09
52,957
69,547
52,957
69,547
Deemed cost
Valuation adjustment of investments
Reclassification of noncontrolling interests in net income
for the period
01/01/09
12/31/10
12/31/09
01/01/09
11,145
8,895
12,681
31,885
26,643
27,349
Short-term investments
37,302
106,026
74,939
141,417
351,018
210,820
Total
48,447
114,921
87,620
173,302
377,661
238,169
Short-term investments are as follows:
Parent (BR GAAP)
Bank certificates of
deposit (CDB)
Debentures linked to
commitments
Consolidated
(IFRS and BR GAAP)
12/31/10
12/31/09
01/01/09
12/31/10
12/31/09
01/01/09
22,279
48,271
57,512
22,279
48,271
57,512
-
35,629
-
-
35,629
-
18
-
626
18
-
616
Exclusive funds:
Bank Certificates of Deposit (CDB)
6,644
9,047
11,612
6,644
9,048
128,791
Fixed-income funds
7,418
11,998
5,189
7,418
11,998
5,189
-
1,081
-
-
1,081
-
943
-
-
943
-
-
-
-
-
104,115
244,991
18,712
37,302
106,026
74,939
141,417
351,018
210,820
Debentures
Other
abroad (*)
CPC adjustments:
12/31/09
Cash and banks
National Treasury Notes (NTN)
Parent
Consolidated (IFRS and BR GAAP)
104
22
(2,626)
(5,436)
-
-
-
(298)
1,755
1,192
1,755
1,683
-
(3,220)
-
(3,220)
(1,117)
(1,523)
(1,577)
(1,344)
(780)
(751)
(2,068)
(2,837)
(2,975)
(5,611)
-
36
Short-term investments are redeemable within up to 90 days or through committed re-
-
-
-
(1,785)
demption by the financial institution. Amounts recorded approximate their fair values and are
15
360
1,518
3,670
classified as “loans and receivables”, and, therefore, are recorded under the “amortized cost”
-
-
591
505
method, i.e., interest is recognized at the effective rate of each instrument, except for exclusi-
49,959
60,016
50,550
60,521
Total short-term
investments
(*) Refers to the subsidiary Loma Negra’s short-term investments denominated in Argentinean pesos, totaling R$85,985 as of December 31,
2010 (R$9,032 as of December 31, 2009 and R$18,710 as of January 1, 2009) and in U.S. dollars, totaling R$18,130 as of December 31, 2010
(R$235,959 as of December 31, 2009 and R$2 as of January 1, 2009). Argentinean peso-denominated short-term investments yield from
10.75% to 11% per year and U.S. dollar-denominated short-term investments yield 0.2% per year.
ve funds classified as financial assets recorded at fair value through profit or loss.
48
49
6. SECURITIES
The average collection period for product sales is 27 days. Interest on receivables is char-
Exclusive funds securities are classified as “financial assets at fair value through profit or loss”
and other securities are classified as “loans and receivables” as follows:
ged beginning the first day past due, at the rate of 1% per month on the balance receivable.
The Company recognized an allowance for doubtful accounts for all trade accounts receivable past due over 181 days since, based on the history of loss, accounts past due over
Parent (BR GAAP)
12/31/10
12/31/09
Consolidated
(IFRS and BR GAAP)
01/01/09
12/31/10
12/31/09
181 days are generally no longer recoverable, except for transactions with related parties.
01/01/09
Exclusive funds:
Federal Treasury Bills (LTFs)
Bank Certificates of Deposit (CDB)
The subsidiary Loma Negra recognizes an allowance for doubtful accounts based on the
estimated or determined uncollectible amounts pursuant to the past default experience and
9,173
31,360
21,504
9,173
31,360
21,504
analysis of the ability to pay of each debtor, also taking into account the collaterals provided
86,734
-
13,211
86,734
-
13,211
by such debtors.
611
-
-
611
-
-
Debentures
4,432
-
-
4,432
-
-
Other
1,450
-
-
1,450
-
-
Bank Certificates
of Deposit (CDB)
-
-
809
3,341
1,615
24,945
-
5,588
-
2,950
5,588
-
-
-
-
-
-
The aging list of trade accounts receivable is as follows:
Parent (BR GAAP)
Falling due
12/31/10
12/31/09
01/01/09
12/31/10
12/31/09
01/01/09
104,039
114,291
92,922
104,038
117,971
158,381
18,693
From 0 to 30 days
5,959
2,503
7,356
47,601
33,001
45,976
-
432
1,089
-
432
1,089
From 31 to 60 days
586
528
1,374
13,483
3,412
2,507
Total
102,400
37,380
36,613
108,691
38,995
79,442
From 61 to 90 days
517
466
1,191
2,472
1,321
2,512
Total - current
102,400
37,380
36,613
105,741
38,995
79,442
From 91 to 180 days
1,057
130
1,785
16,462
11,075
24,319
-
-
-
2,950
-
-
Debentures
Total - noncurrent
Over 181 days
Total
19,213
17,672
20,292
28,969
29,707
40,544
131,371
135,590
124,920
213,025
196,487
274,239
Changes in the allowance for doubtful accounts
7. TRADE ACCOUNTS RECEIVABLE
Parent
(BR GAAP)
Parent (BR GAAP)
12/31/10
12/31/09
01/01/09
Consolidated
(IFRS and BR GAAP
12/31/10
12/31/09
01/01/09
Recognitions
Trade accounts receivable:
Related parties
Domestic market
Foreign market
Total
(-) Noncurrent (*)
Balances at beginning of year
5,914
Amounts written off in the
year as uncollectible
4,348
22,984
5,769
3,998
22,984
127,023
112,591
117,216
129,447
112,370
167,559
Exchange gains or losses
-
15
1,935
79,580
61,133
100,766
Balances at end of year
131,371
135,590
124,920
213,025
196,487
274,239
(284)
(3,779)
(1,861)
(284)
(3,779)
(1,861)
Current
131,087
131,811
123,059
212,741
192,708
272,378
(-) Allowance for doubtful
accounts
(19,614)
(17,753)
(16,810)
(29,387)
(28,712)
(35,842)
111,473
114,058
106,249
183,354
163,996
236,536
(*) The balance recorded under “Noncurrent assets” refers to the renegotiation of past-due securities
with domestic customers and matures through 2012.
Consolidated
(IFRS and BR GAAP)
12/31/10
12/31/09
12/31/10
12/31/09
17,753
16,810
28,712
35,842
3,124
4,364
3,331
4,854
(1,263)
(3,421)
(1,739)
(6,493)
-
-
(917)
(5,491)
19,614
17,753
29,387
28,712
50
51
8. INVENTORIES
Parent (BR GAAP)
31.12.10
31.12.09
01.01.09
31.12.10
31.12.09
Parent
(BR GAAP)
Consolidated
(IFRS and BR GAAP)
2012
7,483
9,883
2013
2,185
2,185
2014
638
638
Year
01.01.09
Current:
Finished products
28,761
15,546
12,119
37,719
26,666
79,388
Work in progress
37,663
33,054
29,382
86,190
78,041
138,331
2015
Raw material
44,535
23,333
26,665
85,025
77,820
143,884
Total
28,813
-
3,179
10,306
15,885
Fuel
32,454
37,163
28,813
53,273
37,163
Storeroom supplies
48,626
29,079
22,820
48,626
29,079
27,059
10. ASSETS CLASSIFIED AS HELD FOR SALE
Advances to suppliers
6,799
13,467
12,339
6,799
13,467
12,339
In June 2010, the Company entered into an agreement with Insitec Contrói S.A. and Insitec Holding
Inventories in transit (a)
27,030
448
8,637
27,030
449
39,887
S.A. (“Insitec Group”) for the purchase by the Company of 51% of the total voting capital of Cinac -
Packaging and other
12,525
8,191
7,625
12,525
8,190
34,956
Allowance for losses
(3,818)
(4,322)
(3,818)
(3,818)
(4,322)
(3,818)
Cimentos de Nacala, S.A. (“CINAC”), a company engaged in the manufacture and sale of cement
234,575
155,959
144,582
353,369
266,553
500,839
Raw materials (slag)
12,618
13,055
15,971
12,618
13,055
15,971
Storeroom supplies
-
-
-
42,871
50,093
74,222
-
(846)
(8,093)
(5,181)
(6,500)
(16,634)
Total
Noncurrent:
Advances to suppliers (b)
26,137
31,363
8,552
26,137
31,363
2,520
Total
38,755
43,572
16,430
76,445
88,011
76,079
in Mozambique. The Company has already made a down payment of US$5 million. In the third
quarter of 2010, the shares were transferred to the Company, and the final purchase and sale price
was calculated at US$6.5 million, based on CINAC’s financial statements issued on May 31, 2010.
In addition, on September 30, 2010, the Company, as holder of 51% of CINAC’s capital, entered
into a loan agreement with CINAC, locally denominated “supply agreement”, amounting to US$9.5
million. The funds were disbursed on October 1, 2010.
Also in the third quarter of 2010, the Company entered into an agreement with CIMPOR - Cimentos de Portugal, SGPS, S.A., for the transfer to CIMPOR of the rights and obligations under said
(a) As of December 31, 2010, the balance consists mainly of inventories of coke in transit received during January 2011.
agreement entered into with the Insitec Group. Accordingly, CIMPOR should pay for CINAC an
(b) Represented mainly by a slag and charcoal railway transportation service agreement effective until October 10, 2018, with straight-line annual use estimate (R$3,461 per year) from 2011 to 2018.
amount calculated using the same criteria used by the Company when it entered into the agree-
9. RECOVERABLE TAXES
ment with Insitec in June 2010, except that it was based on the financial statements for the reporting
Parent (BR GAAP)
Income tax and social contribution
Consolidated
(IFRS and BR GAAP)
12/31/10
12/31/09
01/01/09
12/31/10
12/31/09
01/01/09
620
14,029
16,893
6,407
21,261
38,550
State VAT (ICMS)
10,674
10,724
2,622
10,674
10,724
7,088
Taxes on revenue (PIS and COFINS)
10,829
8,576
3,650
10,872
8,576
8,174
Withholding income tax (IRRF) on short-term investments
1,875
2,163
4,505
1,883
2,163
4,505
-
11,981
2,140
-
11,981
2,140
20,790
7,949
-
20,790
7,949
542
-
Withholding income tax on interest on capital
Federal VAT (IPI) (*)
Value-Added Tax (VAT)
-
-
Prepaid taxes and other
2,317
864
215
2,853
3,840
-
5,382
3,924
8,763
Total
47,105
56,286
29,810
56,223
69,431
73,602
Current
36,799
36,183
18,054
40,338
41,592
43,775
Noncurrent
10,306
20,103
11,756
15,885
27,839
29,827
The reduced federal VAT (IPI) rate (from 4% to 0%) will no longer be applied after December 31, 2010. Beginning 2011, the balance will be offset.
The Company’s and its subsidiaries’ Management estimates that long-term recoverable
taxes will be offset within four years, as follows:
period ended May 31, 2010.
Below are CINAC’s main classes of assets and liabilities held for sale as of May 31, 2010:
9,225
863
Inventories
1,943
Related parties
3,580
Other assets
730
Assets classified as held for sale
16,341
Loans
27,221
343
2,835
Related parties
15,780
Other liabilities
2,081
Liabilities related to assets classified as held for sale
48,260
Net liabilities acquired
(31,919)
Goodwill on acquisition of investments
58,816
Net assets classified as held for sale
26,897
52
53
11. INVESTMENTS - PARENT (BR GAAP)
Equity
interest
Shares
held
Adjusted
shareholders’
equity
12/31/10
12/31/10
12/31/10
Profit
(loss) for
the year
Valuation
adjustments to
equity
Equity in
subsidiaries
Investment
balance
12/31/10
12/31/10
12/31/10
12/31/10
%
a
Subsidiaries:
Holdtotal S.A.
Loma Negra C.I.A.S.A. (c)
97.00
50,534
214,943
65,464
(9,002)
63,501
208,496
24.18
12,210
289,456
89,380
(7,698)
21,606
1,035,556
100.00
1,400
228
(4)
(10)
(3)
228
CCCimentos Participações
Ltda.
98.99
1
9,925
1,883
(1,132)
1,864
9,826
Camargo Corrêa Cimentos
Portugal SGPS S.A. (e)
100.00
550
-
(367)
(1,061)
(367)
(182)
35,854
607,785
39,393
-
3,545
Investment
balance
12/31/09
12/31/09
12/31/09
12/31/09
12/31/09
%
a
Subsidiaries:
Holdtotal S.A.
97.00
50,534
243,136
59,170
(102,545)
57,538
235,842
280,849
24.18
12,210
327,389
80,824
(34,319)
19,588
1,044,725
1,059,456
100.00
1,400
241
(1,910)
(33)
(1,910)
241
98.99
1
9,185
1,757
(3,140)
1,739
84
9,092
10,493
1,289,900
1,350,882
Jointly-owned
subsidiaries:
(46,515)
24,169
-
637,870
BAESA - Energética Barra
Grande S.A.
9.00
35,854
606,393
53,012
-
4,770
54,574
49,859
54,699
CCEscom Cement
50.10
9,018
14,997
(697)
(1,210)
(349)
7,514
-
Camargo Corrêa
Participações Societárias
S.A. (d)
11.93
6
274
-
-
1
33
33
35.00
21
4,719
(840)
(476)
(293)
50.10
9,018
7,504
(6,563)
(591)
(3,288)
3,760
35.00
21
33,273
2,361
4,626
826
11,645
70,104
Associates:
Itaúsa - Investimentos Itaú
S.A. (b)
-
-
-
-
76,250
-
-
Camargo Corrêa Participações Societárias S.A. (d)
-
-
-
-
-
(2)
-
61.382
87.682
-
Other investments:
12/31/09
Investment
balance
710,820
Others
12/31/09
Equity in
subsidiaries
-
CCEscom Cement
Maesa Machadinho
Energética S.A.
12/31/09
Valuation
adjustments to
equity
-
1,253,924
9.00
Shares held
Profit
(loss) for
the year
-
Jointly-owned
subsidiaries:
BAESA - Energética Barra
Grande S.A.
Equity
interest
Adjusted
shareholders’
equity
27,476
838
(438)
27,876
Usinas Siderúrgicas de
Minas Gerais S.A. - Usiminas (b)
1,652
2,425
63,773
690,187
Associate
Itaúsa - Investimentos
Itaú S.A. (b)
-
-
-
3,085,000
6,479
125,251
-
787,587
(181,759)
230,504
-
787,587
27,476
27,476
Other investments
Maesa Machadinho Energética S.A.
Others
838
838
(438)
(438)
27,876
27,876
(a) Represented by exchange rate changes of foreign investments.
(b) On December 23, 2009, the shareholders approved a capital reduction, as stated in note 1. In December 2010, the controlling
shareholder CCSA sold to third parties the investments in Itaúsa and, consequently, the balances of prior adjustments to equity were
recognized in the statement of income.
(c) A substantial portion of the balance of goodwill paid on the acquisition of such company was amortized at the annual rate of 12.5%
up to December 31, 2008. Goodwill is based on expected future earnings. Since January 1, 2009, the balance of R$965,584, pursuant to
OCPC 02, goodwill amortization was fully discontinued.
The result of these analyses indicated that the recoverable value of the cash-generating units, which contain goodwill, exceeds the recorded value of these assets.
(d) At the Extraordinary Shareholders’ Meeting held on June 30, 2010, the shareholders of subsidiary Camargo Corrêa Participações
Societárias S.A. decided to wind up the entity on that date.
(e) On December 3, 2010, the Company acquired interest in Camargo Correa Cimentos Portugal SGPS S.A. through the purchase of
549,996 shares from its controlling shareholder Camargo Corrêa S.A.
54
55
The information on the main subsidiaries and associates as of December 31, 2010 and
2009 is as follows:
Holdtotal S.A. and Loma Negra C.I.A.S.A.: subsidiaries headquartered in Argentina
engaged in producing and selling cement and byproducts and holding interest and inves-
Opening balance as
of January 1, 2009
Loma
Negra
C.IA.S.A.
Cauê
Finance
Limited
CCCimentos
Participações
Ltda
Camargo Corrêa
Cimentos Portugal
SGPS S.A.
280,849
1,059,456
84
10,493
-
-
-
2,100
-
57,538
19,588
(1,910)
1,739
-
(102,545)
(34,319)
(33)
(3,140)
-
The current concession is effective up to 2023 and can be extended for another 10 years.
Balance as of December 31, 2009
235,842
1,044,725
241
9,092
-
On August 24, 2010, Ferrosur entered into an agreement with Vale Logística de Argen-
Purchase of equity interest
-
-
-
-
1,246
tina S.A. (on behalf of a company created and fully controlled by the Vale Group) for the
63,501
21,606
(3)
1,864
(367)
partial transfer of rights and obligations related to this railroad concession. This agree-
(9,002)
(7,698)
(10)
(1,132)
(1,061)
ment refers to the right of using the railroad infrastructure and concession assets related
Dividends
(81,845)
(23,077)
-
-
-
exclusively to the operation of the stretch between the municipalities General Cerri, Bue-
Others
-
-
-
2
-
nos Aires Province and Zapala, Neuquém Province. The transaction also provides for the
208,496
1,035,556
9,826
(182)
ting in other companies.
Ferrosur operates railroads in Argentina, interconnecting the main Loma Negra plants.
Capital increase
Holdtotal
S.A.
228
transfer of certain employment contracts and assets of Ferrosur.
The completion of the transaction will depend on its approval by the antitrust agency
(Comisión Nacional de Defesa de La Competência), and the transfer price of the assigned
stretch will be US$60 million plus applicable taxes. In 2010, the indirect subsidiary Ferrosur received an advance of the transfer price of the assigned stretch, in the amount of
US$5 million.
Opening balance as
of January 1, 2009
BAESA: primarily engaged in the exploitation of the hydraulic energy potential, in the
Capital increase
Usinas
Siderúrgicas de
Minas Gerais
S.A. - Usiminas
BAESA
- Energética
Barra
Grande S.A.
CCEscom
Cement
Camargo
Corrêa
Participações
Societárias S.A.
Yguazu
Cementos S.A.
637,870
49,859
-
33
2,425
-
-
9,073
-
-
construction and maintenance of property of Barra Grande hydropower plant (“UHE Bar-
24,169
4,770
(349)
1
(293)
ra Grande”), and in the trade or utilization of the electricity produced over the concession
(46,515)
-
(1,210)
-
(476)
term. The Company adopts the equity method for this jointly-owned subsidiary based on
(12,718)
(55)
-
-
-
the existence of a shareholders’ agreement.
Sale of jointly-owned subsidiary Usiminas
(602,865)
-
-
-
-
59
-
-
(1)
(4)
Camargo Corrêa Escom Cement B.V.: Dutch company engaged in holding interests,
investing and managing other companies.
Others
-
54,574
7,514
33
1,652
Yguazu Cementos S.A.: Paraguayan company engaged in importing and selling cement.
Purchase of equity interest in subsidiary
-
-
125
-
4,541
Camargo Correa Cimentos Portugal SGPS S.A.: Portuguese company engaged in
-
3,545
(3,288)
(2)
826
holding interest, investing and managing other companies.
-
-
(591)
-
4,626
Dividends
-
(3,420)
-
-
-
Write-off of equity interest
-
-
-
(31)
54,699
3,760
Changes in ownership interest in subsidiaries, stated in the individual financial statements, are as follows:
-
-
11,645
56
57
12. PROPERTY, PLANT AND EQUIPMENT
Land
12/31/10
01/01/09
Parent (BR GAAP)
Parent (BR GAAP)
Cost
Depreciation
Provision
Residual
42,455
-
-
42,455
Buildings
444,297
(241,628)
-
202,669
Machinery and equipment
852,072
(568,852)
(1,248)
281,972
Vehicles
69,811
(45,471)
-
24,340
13,478
(10,053)
-
3,425
34,172
(6,080)
-
28,092
Others
12,115
(1,285)
-
10,830
Spare parts
5,146
-
-
5,146
19,647
-
-
19,647
Construction in progress (*)
Total
173,928
1,667,121
-
-
(873,369)
(1,248)
173,928
792,504
Cost
Depreciation
Provision
Residual
Land
29,128
-
-
29,128
Buildings
408,985
(213,244)
-
195,741
690,509
(474,946)
(32,967)
182,596
Vehicles
63,171
(37,057)
-
26,114
12,005
(8,390)
-
34,147
(5,049)
Others
13,982
(1,268)
-
12,714
Spare parts
4,239
-
-
4,239
13,086
-
Total
-
41,900
1,311,152
3,615
29,098
(739,954)
13,086
-
(32,967)
41,900
538,231
12/31/10
12/31/09
Parent (BR GAAP)
Cost
Depreciation
Provision
Residual
29,136
-
-
29,136
Buildings
415,267
(227,462)
-
187,805
796,557
(517,546)
(1,248)
277,763
Vehicles
63,443
(44,014)
-
19,429
12,693
(9,197)
-
3,496
34,147
(5,512)
-
28,635
Others
11,662
(1,245)
-
10,417
Spare parts
3,903
-
4,343
-
-
4,343
121,073
-
-
121,073
(804,976)
(1,248)
686,000
Land
Total
1,492,224
3,903
Cost
Depreciation
Provision
Land
60,430
-
-
60,430
Buildings
952,947
(525,608)
-
427,339
Residual
1,481,588
(886,943)
(1,248)
593,397
Vehicles
181,011
(98,252)
-
82,759
56,215
(41,450)
-
14,765
90,768
(29,884)
-
60,884
85,479
(11,429)
-
74,050
Others
16,859
(4,378)
-
12,481
Spare parts
13,484
-
23,617
-
Total
13,484
-
23,617
242,916
-
-
242,916
3,205,314
(1,597,944)
(1,248)
1,606,122
58
59
12/31/09
The Company capitalized, during the year ended December 31, 2010, financial charges
in the amount of R$10,493 (R$7,212 in 2009), under caption “Construction in progress”.
Cost
Depreciation
Provision *
Residual
Land
48,442
-
-
48,442
Buildings
952,113
(519,985)
-
432,128
1,377,550
(841,626)
(1,248)
534,676
169,930
(96,340)
-
73,590
ciated on a straight-line basis over the concession term, will be transferred to the Federal
Government at the end of the concession by 2036.
Vehicles
Under the Concession Contract, all assets and facilities linked to UHE Barra Grande, recorded by the jointed-owned subsidiary BAESA - Energética Barra Grande S.A., in the approximate amount of R$112,502, considering the Company’s share in those assets depre-
51,377
(41,442)
-
9,935
95,862
(31,141)
-
64,721
As of December 31, 2010, there are assets recorded in “Machinery and equipment” and
85,479
(8,515)
76,964
“Vehicles” that were purchased for the concrete producing units located in the States of
Others
16,068
(4,142)
Spare parts
10,881
-
7,786
-
233,355
Total
3,048,843
11,926
São Paulo and Pernambuco through financing agreements (Finame) guaranteed by the
10,881
financed assets. The original financing totaled 90% of the total amount of assets, and, as
-
7,786
stated in note 15, the balance payable to Finame totals R$26,842 as of December 31, 2010.
-
-
233,355
(1,543,191)
(1,248)
1,504,404
-
12.1. Impairment losses recognized in profit or loss
Pursuant to CPC 01 - Impairment of Assets, when there are indications that the carrying
amounts of property, plant and equipment are higher than their recoverable values,
01/01/09
these items are tested to determine the need to record an allowance to write down their
carrying amounts to their realizable values.
Cost
Depreciation
Provision
Residual
76,384
-
-
76,384
Buildings
1,265,985
(669,180)
-
596,805
2,012,762
(1,155,052)
(32,967)
824,743
Vehicles
218,609
(106,162)
-
112,447
allowance, in the amount of R$31,719, referring to the Apiaí and Pedro Leopoldo units,
101,105
(69,157)
-
31,948
which resumed part of their activities that had been interrupted.
Land
126,981
(42,818)
-
84,163
85,479
(5,601)
-
79,878
18,890
Others
27,051
(8,161)
-
Spare parts
5,471
-
-
5,471
57,618
-
-
57,618
Total
193,142
-
-
193,142
4,170,587
(2,056,131)
(32,967)
2,081,489
(*) In the Parent, the balances refer mainly to the expansion of Apiaí, Bodoquena and Pedro Leopoldo units, as well as improvements in the production process for the full use of the capacity of the existing units. The modernization of plants is financed by funds arising from the contract entered
into with the National Bank for Economic and Social Development (BNDES), as stated in note 15. The consolidated amounts include expansion and
upgrading costs referring mainly to the Catamarca, L’Amali and Olavarría plants, and the plant of subsidiary Holdtotal and its subsidiaries, totaling
R$62,574, and to the construction of the first plant of subsidiary Yguazu in Paraguay, amounting to R$7,361, on December 31, 2010.
As of December 31, 2010 and 2009, there were no events indicating the need for calculations to assess whether fixed and intangible assets were impaired when lower than
their carrying amounts. On December 31, 2009, the Company reversed a portion of the
Changes in property, plant and equipment for the year ended December 31, 2010 and
2009 is as follows:
60
61
Parent (BR GAAP)
Balances as of January 1, 2009
Parent (BR GAAP)
Land
Buildings
Machinery and
equipment
Vehicles
Mines and ore
reserves
29,128
195,741
182,596
26,114
29,098
Furniture and
fixtures
Others
3,615
12,714
Spare parts
Advances to
suppliers
Property, plant and
equipment
in progress
Total
4,239
13,086
41,900
538,231
Additions
-
245
139
272
-
23
4,132
-
-
191,009
195,820
Write-offs
-
(476)
(1,896)
-
-
(7)
(1,151)
(336)
(8,743)
(86)
(12,695)
Depreciation
-
(14,197)
(42,599)
(6,957)
(463)
(808)
(2,051)
-
-
-
(67,075)
Reversal of allowance for losses
-
-
31,719
-
-
-
-
-
-
-
31,719
Transfers
8
6,492
107,804
-
-
673
(3,227)
-
-
(111,750)
-
Balances as of December 31, 2009
29,136
187,805
277,763
19,429
28,635
3,496
10,417
3,903
4,343
121,073
686,000
Additions
2,809
-
-
-
-
-
20,367
1,243
17,557
142,932
184,908
Write-offs
-
-
(1,100)
(166)
-
(1)
-
-
(910)
-
(2,177)
Depreciation
-
(14,275)
(52,712)
(7,883)
(458)
(856)
(43)
-
-
-
(76,227)
Transfers
10,510
29,139
58,021
12,960
(85)
786
(19,911)
-
(1,343)
(90,077)
-
42,455
202,669
281,972
24,340
28,092
3,425
10,830
5,146
19,647
173,928
792,504
Spare parts
Advances to
suppliers
Property, plant
and equipment
in progress
Reservoirs,
dams and feeders
Total
18,890
5,471
57,618
193,142
79,878
2,081,489
Land
Buildings
Machinery and
equipment
76,384
596,805
824,743
Additions
21
2,060
5,375
452
168
40
4,134
6,523
725
348,269
-
367,767
Write-offs
-
(656)
(481)
(386)
-
(7)
(1,148)
(336)
(26,765)
(1,231)
-
(31,010)
Depreciation
Inflation adjustments and exchange rate changes (*)
Vehicles
Mines and ore
reserves
Furniture and
fixtures
Others
112,447
84,163
31,948
(116)
(36,617)
(95,631)
(17,055)
(1,051)
(2,767)
(2,457)
-
-
-
(2,914)
(158,608)
(8,247)
(125,214)
(117,925)
(28,035)
(18,573)
(3,105)
(561)
(777)
(8,859)
(17,822)
-
(329,118)
Acquisition of subsidiaries’ assets
-
-
-
-
-
-
-
-
-
4,266
-
4,266
Reversal of allowance for losses
-
-
31,719
-
-
-
-
-
-
-
-
31,719
(22,518)
(21,824)
(231,013)
(2,145)
-
(19,582)
(4,821)
-
(2,357)
(157,841)
-
(462,101)
2,918
17,574
117,889
8,312
14
3,408
(2,111)
-
(12,576)
(135,428)
-
-
Sale of jointly-owned subsidiary - Usiminas
Transfers
48,442
432,128
534,676
73,590
64,721
9,935
11,926
10,881
7,786
233,355
76,964
1,504,404
Additions
2,813
6,531
192
28
48
51
20,423
3,187
18,426
241,196
-
292,895
Write-offs
-
(1,725)
(1,122)
(1,174)
(1)
(1)
-
-
(910)
(31)
-
(4,964)
(116)
(30,856)
(74,812)
(15,168)
(906)
(2,780)
(504)
-
-
-
(2,914)
(128,056)
Transfers
10,757
40,722
155,234
30,731
(85)
8,216
(19,203)
-
(1,342)
(225,030)
-
-
Exchange rate change (*)
(1,466)
(19,584)
(20,807)
(5,254)
(2,893)
(667)
(160)
(584)
(343)
(7,994)
-
(59,753)
-
123
36
6
-
11
-
-
-
1,420
-
1,596
60,430
427,339
593,397
82,759
60,884
14,765
12,481
13,484
23,617
242,916
74,050
1,606,122
Depreciation
Addition of subsidiaries
(*) Refer mainly to the effect of exchange rate changes between the beginning and the end of the period on foreign-currency denominated
assets of the subsidiary Holdtotal S.A. and subsidiaries and jointly-owned subsidiary Yguazu Cementos S.A.
62
63
13. INTANGIBLE ASSETS
Parent (BR GAAP)
12/31/10
12/31/09
01/01/09
12/31/10
12/31/09
01/01/09
-
-
-
17,257
17,936
18,615
Software licenses
4,586
3,200
7,833
4,586
3,200
9,707
Project development costs
15,727
9,729
26,316
19,828
9,741
26,337
Concession-related assets
Trademarks, patents and other
Total
4,302
4,302
4,305
4,302
12,165
61,923
24,615
17,231
38,454
45,973
43,042
116,582
CBC - Companhia Brasileira de Cimentos (a)
The cash flow projections for the budgeted period are based on the gross margins expected for the period and expected increase in prices of raw materials for the period. The
cash flows after the five-year period were exceeded based on the estimated 12-year economic useful lives of property, plant and equipment. Management believes that any type
-
-
965,584
965,584
965,584
based would not cause the aggregate carrying amount to exceed the aggregate recove-
102,633
102,633
102,633
102,633
102,633
102,633
rable amount of the cash-generating units.
RA Participações e Investimentos Ltda. (a)
14,882
14,882
14,882
14,882
14,882
14,882
75,801
75,801
75,801
75,801
75,801
75,801
-
-
-
-
-
9,823
Cofesur S.A.
-
-
-
7,944
8,670
21,638
Recycomb S.A.
-
-
-
1,205
-
-
La Preferida de Olavarría S.A.
-
-
-
7,354
6,628
-
Others
financial budget approved by Management.
-
Cia Industrial e Mercantil de Cimentos S.A. (a)
Usinas Siderúrgicas de Minas Gerais S.A. – Usiminas
culation of the fair value in use by using the projected cash flows supported by a five-year
of reasonably possible change in the key assumptions in which the recoverable amount is
Goodwill:
Loma Negra C.I.A.S.A. (a) (b)
The recoverable amount of these cash-generating units is determined based on the cal-
22,858
22,858
22,858
22,858
22,858
22,858
Changes in intangible assets for the years ended December 31, 2010 and 2009 are
as follows:
Parent (BR GAAP)
Goodwill
License
Project
development
costs
216,174
7,833
26,316
4,305
254,628
-
6,473
-
6,473
Total
216,174
216,174
216,174
1,198,261
1,197,056
1,213,219
Balances as of
January 1, 2009
Total
240,789
233,405
254,628
1,244,234
1,240,098
1,329,801
Addition
-
a) Goodwill paid on the acquisition of these companies was amortized at a 12.5% rate (Loma Negra and Holdtotal) and 10% per year
(RA, CBC and CIMEC) through December 31, 2008. Goodwill is based on expected future earnings. Since January 1, 2009, pursuant to
OCPC 02, goodwill amortization was fully completed.
b) Total goodwill paid, segregated by activity, of which R$909,580 relating to cement and byproducts (Loma Negra C.I.A.S.A.) and
R$56,004 relating to the railway concession (Ferrosur Roca S.A.).
Goodwill was allocated, for impairment testing, to the following cash-generating units
and discount rates:
Parent
Consolidated
12/31/10
12/31/09
01/01/09
12/31/10
12/31/09
01/01/09
Production and sale of cement and byproducts in Argentina
-
-
-
918,139
916,208
909,580
Discount rate
-
-
-
15%
15%
13.6%
216,174
216,174
216,174
216,174
216,174
223,136
Production and sale of cement and byproducts in Brazil
12.8%
15%
13.6%
12.8%
15%
13.6%
Railway concession in Argentina
Discount rate
-
-
-
63,948
64,674
80,503
Discount rate
-
-
-
15%
15%
13.6%
Trademarks,
patents and
others
Total
Write-off
-
(2,643)
(14,476)
(3)
(17,122)
Amortization
-
(1,990)
(8,584)
-
(10,574)
Balances as of
December 31, 2009
216,174
3,200
9,729
4,302
233,405
Addition
-
4,257
10,740
-
14,997
Amortization
-
(2,871)
(4,742)
-
(7,613)
Balances as of
December 31, 2010
216,174
4,586
15,727
4,302
240,789
64
65
15. BORROWINGS AND FINANCING
Goodwill
License
Project
development
costs
1,213,219
9,707
26,337
15.1. Parent (BR GAAP)
Trademarks,
patents and
others
Concession-related assets
Total
61,923
18,615
1,329,801
Addition
6,160
-
6,473
-
-
12,633
Write-off
(9,823)
(1,948)
(14,476)
(3)
-
(26,250)
Amortization
-
(2,775)
(8,593)
(534)
(679)
(12,581)
Initial consolidation - Camargo Corrêa
Escom Cement B.V.
-
-
-
8,911
-
8,911
Sale of interest in jointly-owned subsidiary - Usiminas
(8,073)
(1,896)
-
(57,236)
-
(67,205)
Exchange rate change
(4,427)
112
-
(896)
-
(5,211)
Balances as of
December 31, 2009
1,197,056
3,200
9,741
12,165
17,936
1,240,098
Addition
2,718
4,257
10,740
-
-
17,715
Write-off
-
-
-
(3,010)
-
(3,010)
Amortization
-
(2,871)
(4,750)
-
(679)
(8,300)
-
-
4,097
(4,097)
-
-
(1,513)
-
-
(756)
-
(2,269)
Transfers
Balances as of
December 31, 2010
Category - stated at
amortized cost
“Medium-term notes” (a)
4,586
19,828
4,302
17,257
1,244,234
Maturity through
12/31/10
12/31/09
01/01/09
8.875% p.y.
July 2035
259,172
270,838
363,513
FINIMP (e)
6-month Libor + 3.45% p.y.
July 2011
3,395
12,197
30,706
FINIMP (f)
4.52% to 4.56% p.y.
July 2011
12/31/10
12/31/09
01/01/09
12/31/10
12/31/09
01/01/09
Taxes in installments (*)
46,169
43,423
62,461
46,169
43,423
67,089
PIS and COFINS
2,637
5,327
4,803
2,845
5,327
5,163
ICMS
5,950
12,801
12,826
6,011
12,801
14,226
Provision for income tax and social
contribution
1,553
-
-
2,973
16,229
58,966
10,746
Value-Added Tax (VAT)
-
7,058
35,233
Others
8,697
1,678
7,304
13,536
4,986
18,568
Total
65,006
63,229
87,394
78,592
117,999
174,758
Current
65,006
63,229
87,394
75,916
115,138
153,961
-
-
-
2,676
2,861
20,797
Noncurrent
-
-
• In 2009, the Company joined the Debt Installment Payment Program of the National Treasury Attorney General and the Federal Revenue Service (“installment payment”)
created by Provisional Act 470 and Law 11941/09. The installment program permits the settling of interest and fines by using tax loss carryforwards and also permits total
discount of fines and reduction of interest up to 45%, depending on the installment payment option selected. The Company is awaiting the analysis of the debts to be
collected in installments by the Federal Revenue Service.
3,010
-
286,045
394,219
Pro-Invest (d)
Finame (b)
50% IGP-M + 2.5% fee
July 2013
45,764
43,340
29,479
IPCA + 6% p.y.
February 2015
4,547
5,202
3,505
10.735% to 11.699% p.y.
March 2012
42,269
41,732
35,000
URTJLP + 2.5% to 4.04% p.y.
June 2018
26,842
29,026
39,536
BNDES (h)
4.50% p.y.
August 2015
2,913
2,843
-
BNDES (h)
2.03% p.y. + variable rate *
October 2015
8,285
7,575
-
BNDES (i)
TJLP + 4.82% p.y.
November 2012
213,134
202,065
-
BNDES (h)
TJLP + 4.23% p.y.
August 2015
47,435
16,206
-
BNDES (h)
TJLP + 2.03% p.y.
August 2015
26,514
22,679
-
BNDES (h)
TJLP + 3.03% p.y.
August 2015
15,160
13,619
14. TAXES PAYABLE
Parent (BR GAAP)
133
262,700
Local currency:
Pró-Giro (c)
Credit note (g)
1,198,261
Charges
Foreign currency - US$:
-
432,863
384,287
107,520
Total
695,563
670,332
501,739
Current
192,719
95,105
56,216
575,227
445,523
445.523
Noncurrent
502.844
URTJLP: Long-term Interest Rate Reference Unit (annual average rate of 1.97% in 2010 and 2009).
IPCA: Extended Consumer Price Index (annual average rate of 5.4% in 2010 and 5.2% in 2009).
CDI: Interbank Certificate of Deposit (annual average rate of 0.78% p.m. in 2010 and 0.79% p.m. in 2009).
IGP-M: General Market Price Index (annual average rate of 0.9% p.m. in 2010 and -0.14% p.m. in 2009).
TJLP: Long-term Interest Rate (annual average rate of 6% in 2010 and 2009).
LIBOR: annual average rate of 0.52% p.m. in 2010 and 1.12% p.m. in 2009.
(*) UMBNDES currency basket adjusted on a quarterly basis, as published by BNDES in the Official Gazzette (average rate of 0.36% p.m. in 2010 and 0.38% p.m. in 2009).
(a) Semi-annually, the agreement requires the maintenance of certain financial ratios and imposes limits to the Company. On July 21, 2005, this loan was renegotiated and
the final principal payment date was rescheduled for August 2015, which may be extended to 2035; early settlement is not permitted. The financial ratios as of December
31, 2010 have been met.
(b) The financing for the acquisition of property, plant and equipment (Finame) is secured by the own financed assets, in the amount of R$7,698.
(c) These loans, previously called as Pró-Indústria, are secured by pledge from the controlling shareholder. The 2.5% fee is charged automatically when each financing installment is released (the amount of loan released is net of the fee).
(d) These loans, previously called as Proim, are secured by equipment of the Bodoquena industrial unit and second-degree mortgage of the property, in the amount of R$35,845.
(e) Financing for the import of coke, slag, cement clinker and equipment.
(f) Financing for the import of property, plant and equipment items.
(g) Financing mainly for the purchase of cement packaging. The total payment of the principal and interest, scheduled to occur on March 19, 2010, was postponed to March
12, 2012, and interest rates were changed from 97% of the interbank deposit rate (CDI) to fixed rates.
Additionally, on March 23, 2010, a new credit note was issued in the amount of R$4,000, and the total payment of the principal and interest matures on March 12, 2012.
66
67
(h) On August 6, 2009, the Company contracted a credit line with the National Bank for Economic and Social Development (BNDES) totaling
R$123,508, of which R$99,902 had been disbursed through December 31, 2010. Principal will be repaid in 48 monthly installments, beginning
September 15, 2011 and ending October 15, 2015.
The credit facility will be used in the expansion and modernization of Apiaí, Pedro Leopoldo, Ijací and Bodoquena units, acquisition of
machinery and equipment, environmental investments in Pedro Leopoldo units and working capital.
The contract provides for the compliance with certain covenants, of which the main are:
i) use of the total credit within 18 months, counted from the contract execution date;
ii) presentation, within a maximum period of 180 days, counted from the release of the last installment, of the Operating Permits, officially
published, relating to the financed projects;
iii) not to provide collaterals of any kind in transactions with other lenders, without providing them to the BNDES;
iv) semiannual maintenance of “net debt/EBITDA” ratios and “leverage ratio”, as defined below: a) net debt: sum of loans, financing, debentures, financial charges and derivative transactions difference payable, less balance of cash, short-term investments and difference receivable
from derivative transactions of the beneficiary and its consolidated subsidiaries; b) EBITDA: consolidated earnings before income tax and social
contribution on net income, plus net financial income/expense, depreciation, amortization and depletion; and c) leverage: sum of current and
noncurrent liabilities, divided by total assets, calculated based on the Parent’s nonconsolidated financial statements;
v) semiannual presentation of the consolidated financial statements.
As of December 31, 2010 and 2009, the restrictive covenants have been complied with.
(i) On November 10, 2009, the Company contracted a credit line with the National Bank for Economic and Social Development (BNDES), in
the amount of R$200,000, to finance working capital, as part of the Special Credit Program (PEC-BNDES). Principal will be repaid in 48 monthly
installments, beginning September 15, 2011 and ending October 15, 2015.
The contract provides for the compliance with certain covenants, of which the main are:
i) compliance with environmental regulations, during the term of this Agreement;
ii) not to provide collaterals of any kind in transactions with other lenders, without providing them to the BNDES;
iii) semiannual maintenance of “net debt/EBITDA” ratios and “leverage ratio”, as defined below: a) net debt: sum of loans, financing, debentures, financial charges and derivative transactions difference payable, less balance of cash, short-term investments and difference receivable
from derivative transactions of the beneficiary and its consolidated subsidiaries; b) EBITDA: consolidated earnings before income tax and social
contribution on net income, plus net financial income/expense, depreciation, amortization and depletion; and c) leverage: sum of current and
noncurrent liabilities, divided by total assets, calculated based on the Parent’s nonconsolidated financial statements;
iv) semiannual presentation of the consolidated financial statements.
As of December 31, 2010 and 2009, the restrictive covenants have been complied with.
15.2. Subsidiaries and jointly-owned subsidiaries - IFRS and BR GAAP
The balances of loans and financing obtained by the subsidiaries and jointly-owned subsidiaries from financial institutions are as follows:
Foreign currency
Local currency
Total
31/12/10
31/12/09
01/01/09
31/12/10
31/12/09
01/01/09
31/12/10
31/12/09
01/01/09
62,237
94,344
208,759
-
-
-
62,237
94,344
208,759
Subsidiaries and
jointly-owned
subsidiaries:
Holdtotal S.A. and
subsidiaries:
Loans in Argentinean
pesos (a)
Medium term notes (b)
166,541
174,107
233,137
-
-
-
166,541
174,107
233,137
BID - Banco
Interamericano de
Desenvolvimento (c)
194,610
212,562
-
-
-
-
194,610
212,562
-
Yguazu Cementos
6,544
-
-
-
-
-
6,544
-
-
Usinas Siderúrgicas de
Minas Gerais - Usiminas
-
-
182,105
-
-
37,703
-
-
219,808
BAESA - Energética
Barra Grande S.A.
-
-
-
52,041
59,063
69,671
52,041
59,063
69,671
429,932
481,013
624,001
52,041
59,063
107,374
481,973
540,076
731,375
81,167
91,943
142,250
Classified under noncurrent - subsidiaries and jointly-owned subsidiaries
400,806
448,133
589,125
Classified under current - consolidated - IFRS and BR GAAP
273,886
187,048
198,466
Classified under noncurrent - consolidated - IFRS and BR GAAP
903,650
1,023,360
1,034,648
Total
Classified under current - subsidiaries and jointly-owned subsidiaries
Holdtotal and subsidiaries (mainly Loma Negra)
Refer mainly to:
a) loan in Argentinean pesos, with final maturity in 2014 and average interest rate of 14.25% per year. No collateral was pledged and the agreement requires a floor of shareholders’ equity and a net debt to EBTIDA (Earnings Before Interest, Taxes, Depreciation and Amortization) ratio
ceiling, which were met by in the years ended December 31, 2010 and 2009;
b) US$100 million in bonds, issued on March 10, 2006 and maturing on March 15, 2013, which bear interest of 7.25% per year, and are fully
guaranteed by the Parent. The agreement requires a net debt to EBTIDA ratio ceiling (consolidated), which was met by in the years ended
December 31, 2010 and 2009; and
c) Inter-American Development Bank (IADB) loan granted on December 28, 2009, totaling US$125 million, for the modernization and expansion of plants. This borrowing bears interest of 10.75% per year and is divided as follows: (i) US$20 million, maturing in 2017 and repayable in 29
quarterly installments, starting November 15, 2010; and (ii) US$105 million, maturing in 2014 and repayable in 17 quarterly installments, starting November 15, 2010. The loan requires the compliance with the following ratios: (i) “debt/EBITDA”; (ii) “EBITDA/interest”; and (iii) minimum
annual ceiling of pre-defined shareholders’ equity. As of December 31, 2010 and 2009, these financial ratios were met.
BAESA - Energética Barra Grande S.A. - BNDES financing
On the major portion of the debt principal, in the total amount of R$43,315 as of December 31, 2010 (R$48,964 as of December 31, 2009) levy interest
of 3.125% to 4.125% per year above the TJLP, taking into account that, when TJLP is higher than 6% per year, the amount corresponding to the TJLP
portion in excess of such rate will be capitalized with the debt balance and settled based on the principal; such portion will bear the same charges
of the principal.
The remaining principal (subloan E), amounting to R$8,726 as of December 31, 2010 (R$10,099 as of June 30, 2010), is subject to interest of
3.125% per year above a variable quarterly rate based on the weighted-average cost of all rates and expenses incurred by BNDES on foreign
currency-denominated borrowings.
Financing is repaid and interest is paid on a monthly basis and successively, starting September 15, 2006 and ending August 15, 2018, for all
subloans, except subloan E, whose first installment matured on November 15, 2006 and the last installment will mature on October 15, 2018.
The financing agreements mentioned above contain certain debt covenants requiring the maintenance of minimum debt coverage and
debt to equity ratios. As of December 31, 2010, the jointly-owned subsidiary BAESA met these covenants.
68
69
Jointly-owned subsidiary Yguazu Cementos S.A. raised a loan with Banco Itaú S.A. on August 9, 2010, amounting to US$11 million (US$3.85
million - proportionate to the Company’s interest), which bears interest of 4.25% per year and matures in February 2011, to be used in the
construction of the plant in Paraguay. The Company is the guarantor of this borrowing.
15.3. Changes in borrowings and financing
15.4. Other financial liabilities
Parent (BR GAAP)
12/31/10
12/31/09
01/01/09
12/31/10
12/31/09
Interest rate swaps
-
-
-
12,737
-
-
Currency swaps
-
5,629
5,525
12,210
20,290
20,066
The changes in borrowings and financing in the years ended December 31,
16. DEBENTURES
2010 and 2009 are as follows:
a) Parent (BR GAAP) and Consolidated (IFRS and BR GAAP) - liabilities at amortized cost
Parent
(BR GAAP)
Consolidated
(IFRS and BR GAAP)
501,739
1,233,114
304,095
656,726
Series 2
37,801
106,875
Consolidated (IFRS and BR GAAP):
Charges
Effects of inflation adjustment
01/01/09
Annual charges
Maturity through
12/31/10
12/31/09
01/01/09
104.5% of DI rate
December 2009
-
-
262,880
August 2016
6,677
7,798
9,017
Parent (BR GAAP) - classified
under current
(101)
21,840
Series 1 - jointly-owned subsidiary BAESA
100% of DI rate + 0.3% p.y.
Effects of exchange rate change
(97,356)
(293,085)
Series 2 - jointly-owned subsidiary BAESA
100% of DI rate + 0.3% p.y.
August 2016
5,476
3,482
3,549
Payment of interest
(33,531)
(93,146)
-
-
44,609
(42,315)
(242,373)
100% of DI rate + 0.42% to
0.5% p.y.
December 2020
Payment of principal
Series 4 and 5 - jointly-owned subsidiary
Usiminas
-
(179,543)
Issuance costs
Sale of interest in jointly-owned subsidiary - Usiminas*
Charges
(62)
-
11,218
320,055
670,332
1,210,408
60,674
143,700
Current- consolidated
2,298
2,483
265,541
265.541
101,544
Noncurrent - consolidated
9,803
8,735
54,514
54.514
58,995
Effects of inflation adjustment
(52)
12,101
2,596
12,539
Effects of exchange rate change
(11,027)
(45,634)
Payment of interest
(43,460)
(81,693)
(42,547)
(163,328)
695,563
1,177,536
* Refers to the transfer of the investment in the jointly-owned subsidiary Usiminas to the Company’s parent company through capital reduction, as mentioned in note 22.
Jointly-owned subsidiary - BAESA
Jointly-owned subsidiary BAESA - Energética Barra Grande S.A. issued registered, simple, nonconvertible, unsecured and unwarranted subordinated debentures, with a nonjoint collateral pledged by some of its current shareholders.
Debentures were issued in two series, 9,000 debentures in the first series, which have: (a) yield
Maturities
equivalent to 100% of the interbank rate (DI), plus 0.3% per year; and (b) yield effective term of
As of December 31, 2010, the long-term portions mature as follows:
three years beginning August 1, 2007; and 9,000 debentures in the second series which have:
Year
Parent
(BR GAAP)
Consolidated
(IFRS andBR GAAP)
2012
161,356
230,286
2013
43,398
277,201
2014
27,849
87,100
2015
17,967
29,070
2016
915
12,018
After 2016
251,359
267,975
Total
502,844
903,650
(a) yield equivalent to the CDI, plus 0.4% per year; (b) possibility of renegotiation to August 1,
2010; and (c) repayment on August 1, 2010, equivalent to 30% of the unit par value on August
1, 2006.
On June 29, 2010, the jointly-owned subsidiary BAESA published the debenture renegotiation conditions: (a) yield effective term of three years beginning August 1, 2010; (b) yield equivalent to 100% of the DI rate plus 1.3% per year; (c) frequency of payment of principal and yield:
quarterly, on the first day of February, May, August and November of each year through the
70
71
maturity date or accelerated maturity of the related series, as set forth in the Issue Indenture;
17. RESERVE FOR TAX, CIVIL AND LABOR CONTINGENCIES
and (d) financial ratios (covenants).
The Company, its subsidiaries and jointly-owned subsidiaries are subject to tax, legal, labor,
As approved by the debentureholders’ meeting held on July 5, 2010, the renegotiation and
civil and other contingencies. On a periodic basis, Management revises known contingen-
amortization of the principal and interest were advanced from the originally scheduled August
cies, assesses the likelihood of probable losses and adjusts the respective reserves based
1, 2010 to July 8, 2010.
on the legal counsel’s opinion and on any other information available on reporting dates.
On July 8, 2010, 4,864 Series 2 debentures held in treasury were replaced in the finan-
The reserve for contingencies is composed of:
cial market.
The debenture indenture establishes certain restrictive covenants, such as the maintenance
Parent (BR GAAP)
12/31/10
12/31/09
01/01/09
12/31/10
12/31/09
ly-owned subsidiary maintains certain financial ratios, which are being duly met.
Labor and social security
8,875
4,392
4,311
11,451
6,312
17,222
Changes in debentures as of December 31, 2010 and 2009 are as follows:
Tax (a)
13,575
8,745
7,520
13,575
8,745
33,633
Civil and other (b)
21,395
2,786
2,154
99,613
87,202
141,371
192,226
of total maximum indebtedness equivalent to 75% of total assets, which require that the joint-
Parent
(BR GAAP)
Consolidated
(IFRS and BR GAAP)
262,880
320,055
Charges
24,459
25,261
Payment of interest
(27,339)
(28,651)
(260,000)
(261,139)
Write-off of equity interest
-
(44,308)
-
11,218
3,365
Borrowings
-
Charges
-
1,197
Payment of interest
-
(1,190)
-
(2,489)
Balances at December 31, 2010
-
12,101
01/01/09
43,845
15,923
13,985
124,639
102,259
Escrow deposit (c)
(2,988)
(5,521)
(7,177)
(2,988)
(5,521)
(26,435)
Total
40,857
10,402
6,808
121,651
96,738
165,791
(a) In the Parent, refer mainly to tax assessment notices and lawsuits related to: (i) ICMS (state VAT) - discussion on the tax base of ICMS owed
under the reverse charge system, the tax base in transfers of goods between establishments located in the same State, on the State with jurisdiction to collect ICMS due on import transactions (indirect imports), and the issuance of tax assessment notices as a result of alleged undue
utilization of ICMS credits; (ii) COFINS (tax on revenue) - discussion on the regularity in the offset of FINSOCIAL credits against COFINS debts,
authorized by the court; (iii) SUNAB (National Supply Authority) fine - discussion on the assessment of alleged violation of Laws 7784/89,
8035/90 and 8178/91, and (iv) IRPJ (corporate income tax) - discussion on the alleged tax underpayment related to the required inflation adjustment of the compulsory loan to Eletrobrás, in 1982, base year 1981.
(b) As of December 31, 2010, subsidiary Holdtotal recognized a reserve for civil contingencies totaling R$70,124 referring to fine imposed by
Argentina’s National Competition Protection Commission (“CNDC”), due to actions allegedly taken by subsidiary Loma Negra, from July 1,
1981 to August 31, 1999, which resulted in violation of the Consumer Protection Law in Argentina. Additionally, the Company increased the
reserve for civil contingencies mainly due to the loss of profits lawsuit and the supply of products to third parties in the amount of R$120 and
R$9,235, respectively.
(c) The Company maintains on December 31, 2010 escrow deposits tied to reserves for tax, labor and civil contingencies as follows:
Parent (BR GAAP)
12/31/10
12/31/09
01/01/09
12/31/10
12/31/09
01/01/09
Labor and social security
1,278
2,622
3,650
1,278
2,622
6,846
Tax
1,653
2,473
1,764
1,653
2,473
16,614
57
426
1,763
57
426
2,975
2,988
5,521
7,177
2,988
5,521
26,435
Civil and other
On December 31, 2010, the Company and its subsidiaries have total contingencies in the
amount of R$240,599 (R$276,363 on December 31, 2009), of which R$6,056 of labor contingencies, R$136,607 of tax contingencies, R$18,662 of civil contingencies and R$79,274 of administrative proceedings of other nature whose likelihood of loss is possible, according to the
progress of the lawsuits analyzed by the legal counsel, mainly arising discussions of: (i) tax nature
with the federal government and some state governments, such as request for refund and
offset of debt balance of income tax and social contribution; inclusion of freight in the State
72
73
VAT (ICMS) tax base and review of the adjustment for inflation corresponding to the difference
between the OTN-Fiscal and IPC for purposes of calculation of IRPJ and CSLL; and (ii) Financial
Offset on the Exploitation of Mineral Resources (CFEM) also with the federal government.
Labor and social
security
Tax
Civil and
other
Escrow
Total
17,222
33,633
141,371
(26,435)
165,791
-
-
1,811
-
1,811
Recognition
Payment/reversal
Others
The Company and other companies in the sector are parties to administrative proceedings relating to antitrust matters, in progress before the Brazilian Antitrust System, of which
the Economic Defense Department is a part, and for which no reserve was recorded as
of December 31, 2010 due to the likelihood of loss. The possible loss in such lawsuit can
(732)
-
(2,915)
-
(3,647)
Inflation adjustment
104
1,225
632
-
1,961
Increase of interest
30
-
-
-
30
Sale of interest in jointly-owned
subsidiary - Usiminas
(8,984)
(26,113)
(10,030)
19,258
(25,869)
(1,328)
-
(43,667)
-
(44,995)
vary from 1% to 30% of gross revenues, net of taxes, in the year prior to the filing of the
Withdrawal of escrow deposit
-
-
-
1,656
1,656
administrative proceedings, which occurred in 2003, 2005 and 2007. The Company’s le-
Balances as of
December 31, 2009
6,312
8,745
87,202
(5,521)
96,738
gal counsel understands that the likelihood of loss is possible.
Recognition
4,098
10,851
18,893
(856)
32,986
Payment/reversal
(769)
(6,393)
(1,404)
-
(8,566)
1,931
372
2,029
(2,702)
1,630
(121)
-
(7,107)
-
(7,228)
Changes in the reserve for contingencies for the years ended December 31, 2010 and
2009 are as follows:
Parent (BR GAAP)
Balances as
of January 1, 2009
Labor and
social security
Tax
Civil
Escrow
Total
4,311
7,520
2,154
(7,177)
6,808
81
1,225
632
-
-
6,091
6,091
13,575
99,613
(2,988)
121,651
18. PROVISION FOR ENVIRONMENTAL REMEDIATION
1,656
1,656
Changes in the provisions for environmental remediation in the years ended December
-
-
Balances as of
December 31, 2009
4,392
8,745
2,786
(5,521)
10,402
Recognition
4,098
10,851
18,892
(856)
32,985
Payment/reversal
(237)
(6,392)
(739)
-
(7,368)
622
371
456
(2,702)
(1,253)
-
-
-
6,091
6,091
8,875
13,575
21,395
(2,988)
Balances as of
December 31, 2010
11,451
1,938
-
Balances as of
December 31, 2010
40,857
31, 2010 and 2009 are as follows:
Parent
(BR GAAP)
Consolidated
(IFRS and BR GAAP)
47,468
87,897
3,004
Reversal
9,548
-
(14,561)
50,472
82,884
-
(362)
3,120
8,744
-
(2,973)
53,592
88,293
19. ACTUARIAL LIABILITIES
The employees of the jointly-owned subsidiary Usinas Siderúrgicas de Minas Gerais S.A. (Usiminas) and of the indirect jointly-owned subsidiary Cia. Siderúrgica Paulista (Cosipa) have
defined benefit and defined contribution pension plans, managed by Caixa dos Empregados
da Usiminas and Fundação Cosipa de Seguridade Social - Femco, respectively, closed-end
supplementary pension entities.
74
75
Actuarial calculation
b) Other employee benefits
The subsidiary obtained the calculation of actuarial liabilities, prepared by an indepen-
Other benefits are granted to employees, such as: medical care, meal vouchers, group
dent actuary, based on IAS 19 taking into account the exemption set forth in IFRS 1 from
life insurance, occupational accident aid, transportation ticket, training and other. The
recognizing all actuarial gains and losses on a cumulative basis on January 1, 2009. The
amount relating to such benefits as of December 31, 2010 is R$21,434 in the Parent
amounts calculated, based on the actuarial report, are as follows:
(R$17,225 as of December 31, 2009) and R$25,805 in the Consolidated (R$21,117 as of
December 31, 2009).
01/01/09
Present value of actuarial obligation
163,148
Fair value of assets
(142,832)
21. RELATED PARTIES
Net value of unrecognized gains (losses)
(14,467)
Transactions with related parties refer to advances, loans and product and service pur-
Actuarial liability (asset)
chase and sale contracts.
5,849
Asset ceiling
Actuarial liability (asset)
5,849
Additional liability
35,600
Actuarial liability (asset) - pension plan
41,449
Actuarial liability (asset) - health care
1,337
Total actuarial liability (asset)
42,786
Balances as of December 31, 2010 and 2009 are as follows:
12/31/10
Parent (BR GAAP)
Current assets
Receivables
Advances to
suppliers/other
receivables
Usinas Siderúrgicas Minas
Gerais S.A. - Usiminas (b)
-
Related
parties
Advances
to
suppliers
-
-
350
-
Payables
Advance
from
customers
1,198
3,858
-
-
-
-
-
-
-
575
16
-
-
914
-
9
Camargo Corrêa Desenvolvimento Imobiliário S.A. (b)
1,363
-
-
-
-
-
14
Estaleiro Atlântico Sul S.A. (b)
2,057
-
-
-
-
-
-
-
-
-
-
-
1,693
-
-
-
-
-
-
44,306
-
01/01/09
Jointly-owned
subsidiaries:
CAIXA
FEMCO
Discount rate
11.29% p.y.
11.29% p.y.
Expected rate of return on assets - PB1/PBD
12.56% p.y.
11.73% p.y.
Expected rate of return on assets - Usiprev/Cosiprev
12.56% p.y.
11.73% p.y.
Yguazu Cementos S.A. (b)
Jointly-controlled
entities:
7.64% p.y.
7.64% p.y.
Increase in social security benefits
4.50% p.y.
4.50% p.y.
Inflation
4.50% p.y.
4.50% p.y.
Increase in medical service costs
8.68% p.y.
Capacity factor:
Salaries
Benefits
98%
98%
98%
98%
20. EMPLOYEE BENEFITS
Current liabilities
Related
parties
The main actuarial economic assumptions used were as follows:
Future salary increases
Noncurrent assets
Construções e Comércio
Camargo Corrêa S.A. (b)
Subsidiaries:
Controladora final-
a) Pension plan
Camargo Corrêa S.A. (d)
-
4.303
-
-
-
-
-
The Company provides a defined contribution pension plan to its employees, whose
Other
3
-
99
-
334
-
-
costs are determinable and can be controlled and managed. The Company and the em-
Total as of
December 31, 2010
4,348
4,319
1,198
5,106
45,999
23
ployees contribute in the same proportion, up to the limit of 4% of the nominal salary. For
contributions above the established limit, no contribution is made by the Company. In
the year ended December 31, 2010, the Company’s contributions totaled R$666 (R$565
as of December 31, 2009).
99
76
77
12/31/2009
Parent (BR GAAP)
Current assets
12/31/2010
Noncurrent assets
Current liabilities
Current assets
Receivables
Dividends and
interest on
capital
receivable
Advances to
suppliers/
other
receivables
Related
parties
Advances
to
supplierss
Payables
Related
parties
Advance
from
customers
Usinas Siderúrgicas Minas
Gerais S.A. - Usiminas (b)
241
10,127
-
-
4,278
1,738
-
-
482
-
282
-
-
1,566
-
24
-
-
-
-
-
-
1,693
-
1,414
-
-
-
-
-
-
120
-
-
70
18,000
-
107
-
-
19,250
-
-
-
-
-
-
-
BAESA - Energética
Barra Grande S.A. (a)
-
55
-
-
-
3,300
-
-
-
-
-
-
-
-
43,775
-
Itaúsa - Investimentos
Itaú S.A.
-
7,724
-
-
-
-
-
-
1,399
-
-
-
-
-
-
-
198
-
109
118
-
-
-
-
22,984
17,906
461
18,118
4,278
6,711
45,468
144
CCCimentos
Participações Ltda. (d)
Camargo Corrêa
Desenvolvimento
Imobiliário S.A. (b)
Estaleiro Atlântico
Sul S.A. (b)
Yguazu Cementos
S.A. (b)
Other
Total as of
December 31, 2009
Noncurrent assets
Current liabilities
Receivables
Advances to
suppliers/other
receivables
Related
parties
Advances to
suppliers
Payables
Advance from
customers
-
-
-
1,198
3,858
-
Construções e Comércio Camargo
Corrêa S.A. (b)
575
16
-
-
914
9
Camargo Corrêa Desenvolvimento
Imobiliário S.A. (b)
1,363
-
-
-
-
14
2.057
-
-
-
-
-
-
4,303
-
-
-
-
Jointly-owned subsidiary:
Usinas Siderúrgicas Minas Gerais S.A.
- Usiminas (b)
Entidades sob controle comum:
Ultimate parent company
Other
Total as of December 31, 2010
3
-
99
-
334
-
3,998
4,319
99
1,198
5,106
23
12/31/2009
Current assets
Noncurrent assets
Current liabilities
Receivables
Dividends and
interest on
capital
receivable
Advances to
suppliers/
other
receivables
Related
parties
Advances to
suppliers
Usinas Siderúrgicas Minas Gerais
S.A. - Usiminas (b)
241
10,127
-
-
4,278
1,738
-
482
-
282
-
-
1,566
24
1,414
-
-
-
-
-
120
Payables
Advance
from
customers
Itaúsa – Investimentos Itaú S.A.
Yguazu Cimentos S.A. (b)
Other
Total as of
December 31, 2009
19,250
-
-
-
-
-
-
-
7,724
-
-
-
-
-
1,399
-
-
-
-
-
-
198
55
109
118
-
32
-
22,984
17,906
520
18,118
4,278
3,351
144
78
79
Transactions carried out in the years ended December 31, 2010 and 2009 are as follows:
12/31/2010
Parent (BR GAAP)
Sales
Purchases/
expenses
21.1. Management compensation
12/31/2009
Parent (BR GAAP)
Financial
income
(expenses)
Sales
Purchases/
expenses
a) Parent (BR GAAP)
Financial
income
(expenses)
payroll taxes and plus accrued vacation and benefits, was set up by the Annual and Extraordinary Shareholders’ Meeting at up to R$8,900.
Expenses on compensation paid to the Board of Directors and statutory officers in the
Jointly-owned subsidiaries:
Usinas Siderúrgicas Minas Gerais S.A.
- Usiminas (b)
On April 28, 2010, the short-term compensation of management and directors, less
years ended December 31, 2010 and 2009 are as follows:
774
38,462
-
1,065
18,257
-
-
29,888
-
-
31,587
-
2,254
-
-
3,464
-
-
Short-term:
Construções e Comércio Camargo Corrêa S.A. (b)
3,183
-
-
30,340
-
-
Camargo Corrêa Desenvolvimento Imobiliário
S.A. (b)
15,054
-
-
15,012
-
-
Charges
BAESA - Energética Barra Grande S.A. (a)
Yguazu Cementos S.A. (b)
Jointly-controlled entities:
Camargo Correa Geração de Energia S.A.
Serra do Facão Energia S.A.
7,927
-
-
60,063
-
-
-
7,129
-
-
-
-
505
-
-
7,426
-
12/31/09
Wages, variable compensation and other benefits (*)
6,569
4,327
Wages, variable compensation and other benefits (**)
2,304
2,191
1,703
1,939
Long-term (post-employment benefits)
Pension plan
Total
-
138
230
10,714
8,687
(*) Compensation paid to statutory officers.
(**) Compensation paid to the Board of Directors.
Subsidiary
12/31/10
-
-
(2,040)
-
-
(10,892)
-
-
1,735
-
-
-
b) Consolidated (IFRS and BR GAAP)
Others
187
-
4
386
-
-
The amount paid through December 31, 2010 is R$14,401 of which: (i) R$14,166 refers
Total
29,884
75,479
(301)
117,756
49,844
(10,892)
to short-term benefits, such as fees, charges and other benefits; and (ii) R$235 refers to
12/31/2010
12/31/2009
post-employment benefits (long term), mainly related to pension plan (R$9,959 for the
Financial
income
(expenses)
as fees, charges and other benefits; and (ii) R$192 refers to post-employment benefits
year ended December 31, 2009, of which: (i) R$9,767 refers to short-term benefits, such
Sales
Purchases/
expenses
Financial
income
(expenses)
Sales
Purchases/
expenses
774
38,462
-
204
6,458
-
Construções e Comércio Camargo Corrêa S.A. (b)
3,183
-
-
30,340
-
-
Capital as of December 31, 2010 and 2009 is represented by 203,256,241 registered
15,054
-
-
15,012
-
-
shares without par value, of which 112,549,326 are common shares and 90,706,915 are
7,927
-
-
60,063
-
-
preferred shares.
Jointly-owned subsidiary:
Usinas Siderúrgicas Minas Gerais S.A. - Usiminas (b)
22. CAPITAL, DIVIDENDS AND RESERVES
Jointly-controlled entities:
(long term), mainly related to pension plan).
-
7,129
-
-
-
-
Preferred shares are not entitled to voting rights but have priority in the distribution of
505
-
-
7,426
-
-
noncumulative, annual dividends of 6% on the amount of capital corresponding to preferred
-
-
1,735
-
-
-
Others
692
-
-
386
-
-
Total
28,135
45,591
1,735
113,431
6,458
Camargo Correa Geração de Energia S.A.
Serra do Facão Energia S.A.
shares. Dividends on preferred shares cannot be lower than those paid to common shares.
Common shares fully paid-in are entitled to one vote per share and dividends.
At the Extraordinary Shareholders’ Meeting held on December 23, 2009, shareholders
-
(a) Power purchase and sale contract entered into among the BAESA consortium companies.
(b) Purchase and sale of goods and services.
(c) Intercompany loan of US$20 million, bearing interest of 5.73% per year, settled on July 15, 2010. As of July 30, 2010, the Company raised another intercompany loan of US$23.5
million, bearing interest of 4.15% per year, with principal and interest maturing on July 29, 2012.
(d) In the Company, financial income (expenses) refer to an intercompany loan agreement between the Company and its parent company Camargo Corrêa S.A. (CCSA), bearing
interest of 110% of CDI, settled on March 16, 2010. On a consolidated basis, financial income (expenses) refer to an intercompany loan agreement between subsidiary Loma Negra
C.I.A.S.A and CCSA, bearing interest at Libor plus 3% per year, settled on May 3, 2010.
approved the reduction of capital by the amount of R$1,586,689, without changing the
number of shares in the Company’s capital, through the transfer to its parent company,
Camargo Corrêa S.A., of the shares held in Itaúsa and Usiminas, based on their carrying
amounts on September 30, 2009.
80
81
Earnings reserve
On December 13, 2010, the Company approved the payment of interim dividends
Corresponds to the retention of earnings to be used in investment projects, according
totaling R$12,183, or R$0.06 per common and preferred shares, on December 15, 2010,
to the budget to be submitted to the approval of the Annual Shareholders’ Meeting, as
pursuant to article 204 of the Brazilian Corporate Law.
permitted by article 194 of Law 6404, of December 15, 1976.
As of December 31, 2010, the Company recognized an earnings reserve in the amount
of R$194,831 (R$394,950 as of December 31, 2009), which will be subject to the approval
by the Annual Shareholders’ Meeting to be held in April 2011.
23. INCOME TAX AND SOCIAL CONTRIBUTION
Parent
(BR GAAP)
Dividends
Shareholders are entitled to mandatory minimum dividends equivalent to 25% of net income adjusted as provided for by the bylaws and the Brazilian Corporate Law.
Income before income tax and social contribution
Rates (15% for income tax plus 10% surtax and 9% for social contribution)
Income tax and social contribution expense at statutory rate
Parent
12/31/10
Consolidated
(IFRS and BR GAAP)
12/31/10
12/31/09
12/31/10
12/31/09
303,298
546,405
353,880
605,875
34%
34%
34%
34%
(103,121)
(185,778)
(120,319)
(205,997)
Adjustments for the calculation of income tax and social contribution at effective rates:
29,812
78,371
-
43,638
Net income
224,524
Permanent deductions (additions), net
(6,256)
19,387
(5,316)
20,854
Effects of adoption of IFRS in prior years (income/loss)
31,175
Others
8,608
(2,944)
11,240
1,117
-
-
-
(1,745)
Realization of deemed cost of property, plant and equipment
Recognition of legal reserve - 5%
Mandatory minimum dividends - 25%
9,409
Difference in rate for foreign gains/losses
(13,255)
Unrecognized tax credits of investees
251,853
Unclaimed prior years’ income tax and social contribution credits
62,963
Income tax and social contribution expenses
-
-
-
(7)
9,399
76,953
9,399
76,953
(78,774)
(8,123)
(127,476)
(65,187)
Management’s proposal:
Dividends paid - year
91,453
Dividends paid - prior years
20,326
a) Deferred income tax and social contribution
Recognition of investment reserve
181,576
Deferred income tax and social contribution were recognized on tax loss carryforwards and
temporary differences upon recognition of income and expenses in tax and accounting
The Board of Directors’ Meeting held on June 28, 2010 approved the payment of interim
dividends on prior years’ income in the amount of R$20,326, corresponding to R$0.10
per common and preferred shares, for payment on June 30, 2010, pursuant to article 204
of Brazilian Corporate Law.
As of June 30, 2010, the Company wrote off those dividends that remain unclaimed for
three years, in the amount of R$816, pursuant to article 287 of Brazilian Corporate Law.
On August 4, 2010, the Company approved the payment of interim dividends totaling
R$50,814, or R$0.25 per common and preferred shares, on August 9, 2010, pursuant to
article 204 of the Brazilian Corporate Law.
On October 5, 2010, the Company approved the payment of interim dividends totaling
R$28,456, or R$0.14 per common and preferred shares, on October 15, 2010, pursuant
to article 204 of the Brazilian Corporate Law.
books up to the limit considered as likely to be realized by the Company, its subsidiaries and
jointly-owned subsidiaries.
82
83
24. REVENUES
Deferred income tax and social contribution are as follows:
The breakdown of Company’s revenues for the years ended December 31, 2010 and 2009 is as follows:
Parent (BR GAAP)
12/31/10
12/31/09
Consolidated (IFRS and BR
GAAP)
01/01/09
12/31/10
12/31/09
12/31/10
12/31/09
12/31/10
12/31/09
Sale of products
1,539,910
1,253,793
2,698,551
2,899,673
Services provided
370,064
391,674
433,639
489,666
(-) Taxes on sales
(457,737)
(388,934)
(476,902)
(409,529)
In assets:
Tax loss carryforwards
Contingent taxes
163,329
25,124
157,322
14,380
76,164
163,829
21,431
158,781
25,124
14,380
76,374
21,431
13,905
12,697
11,525
26,050
24,041
25,675
PIS and COFINS on financial income and other
nonoperating income
26,277
24,407
-
26,277
24,407
-
Other temporary reserves
8,033
11,083
4,360
14,924
20,695
39,488
Total - noncurrent
236,668
219,889
113,480
256,204
242,304
162,968
In liabilities:
Goodwill amortization (discounted cash flow)
165,691
78,731
-
165,691
78,731
-
Exchange rate change - cash basis
31,762
35,886
-
88,188
102,617
109,912
-
-
-
40,971
40,760
60,240
Other temporary reserves
12,769
10,624
10,710
12,800
10,984
10,856
Total - noncurrent
210,222
125,241
10,710
307,650
233,092
181,008
Deemed cost of property, plant and equipment
As of December 31, 2010, the expected realization of noncurrent portion is as follows:
Parent
(BR GAAP)
Consolidated
(IFRS and BR GAAP)
Parent (BR GAAP)
01/01/09
(-) Rebates/discounts
(13,187)
(13,658)
(180,842)
(316,346)
1,439,050
1,242,875
2,474,446
2,663,464
Taxes on sales are comprised of federal, state and municipal taxes such as Federal VAT (IPI), State VAT (ICMS), Taxes
on Revenues (PIS and COFINS) and Service Tax (ISS).
25. INFORMATION ON THE NATURE OF THE COSTS AND EXPENSES
RECOGNIZED IN THE STATEMENT OF INCOME
The Company’s statement of income is presented based on a classification of the expenses according to their
function. Information on the nature of expenses recognized in the statement of income is as follows:
Consolidated
(IFRS and BR
GAAP)
Parent (BR GAAP)
12/31/10
12/31/09
12/31/10
12/31/09
2011
2,037
2,037
Depreciation and amortization
(83,842)
(77,647)
(136,359)
(171,188)
2012
-
15,300
Wages and employee benefits
(131,770)
(115,427)
(290,034)
(334,924)
Raw material and materials for use and consumption
(525,659)
(450,458)
(572,730)
(665,831)
(20,179)
(21,211)
(62,055)
(54,238)
(179,556)
2013
5,443
7,595
2014
62,520
62,905
Tax expenses
2015
104,100
104,287
Third-party services
(103,297)
(94,462)
(144,359)
62,568
64,080
Rental
(16,872)
(19,048)
(18,720)
(23,291)
256,204
Freight
(115,956)
(95,581)
(192,250)
(149,973)
(47,574)
(34,542)
(116,436)
(107,550)
2016 and thereafter
Total
236,668
This expected realization takes into account the history of profits, the projected future
Maintenance expenses
Fuel
(17,321)
(17,919)
(130,857)
(150,592)
Electricity expenses
(47,200)
(61,533)
(116,839)
(137,030)
of liabilities will be settled after 2016, when the foreign currency-denominated loans will be
Recognition of provision for risks
(26,420)
(160)
(26,420)
(160)
paid, as stated in note 15 and since the realization of goodwill was not previously defined.
Other expenses
(64,987)
(1,324)
(226,068)
(206,888)
(1,200,987)
(989,312)
(2,033,127)
(2,181,221)
(1,064,080)
(885,506)
(1,772,506)
(1,927,889)
Selling expenses
(24,117)
(24,046)
(52,529)
(58,330)
(88,746)
(63,002)
(169,556)
(171,322)
Other operating income (expenses), net
(24,044)
(16,758)
(38,536)
(23,680)
(1,200,987)
(989,312)
(2,033,127)
(2,181,221)
taxable income and the estimated term of reversal of temporary differences. The portion
Total
Cost of sales and services
Total
84
85
26. FINANCIAL INCOME (EXPENSES)
Parent (BR GAAP)
12/31/10
12/31/09
12/31/10
12/31/09
28. EARNINGS PER SHARE
As established by IAS 33 and CPC 41 - Earnings per Share, the reconciliation of net income
to the amounts used to calculate the basic and diluted earnings per share is as follows:
Exchange rate change:
Exchange gain
59,958
128,044
69,448
Exchange loss
(48,223)
(14,104)
(67,404)
161,721
(36,100)
Total
11,735
113,940
2,044
125,621
Parent (BR GAAP)
Financial income:
6,313
3,995
6,317
4,110
Basic and diluted numerator
Financial earnings
16,280
10,749
19,650
20,859
Interest receivable
8,963
3,616
14,378
7,509
Allocation of net income for the periods to
shareholders - R$
Other
2,713
1,104
3,617
1,032
Total
34,269
19,464
43,962
33,510
(10,877)
(9,496)
(13,405)
(11,138)
Interest expense and charges
(50,159)
(58,144)
(95,869)
(111,818)
Fines
(2,340)
(1,149)
(3,214)
(8,249)
Financial expenses:
Other expenses
Total
(5,075)
(2,277)
(20,957)
(32,642)
(68,451)
(71,066)
(133,445)
(163,847)
Consolidated
(IFRS and BR GAAP)
12/31/10
12/31/09
12/31/10
12/31/09
224,524
538,282
226,404
540,688
Basic and diluted denominator
Available shares
203,256,241
203,256,241
203,256,241
203,256,241
Basic earnings per share - R$
1.1046
2.6483
1.1139
2.6601
Diluted earnings per share - R$
1.1046
2.6483
1.1139
2.6601
29. SEGMENT REPORTING
The Company adopted CPC 22 and IFRS 8 - Segment Reporting beginning January 1,
2009, according to which the operating segments are identified based on internal reports
27. COMMITMENTS
related to the Company’s components periodically reviewed by the CEO, the main ope-
a) Lease contracts as lessee
rating decision maker, so that funds may be allocated to segments and their performance
Operating land lease contracts are valid from five to ten years. All contracts valid for more
may be assessed.
than five years contain covenants for the adjustment of the lease fair value at every five
To manage its business taking into consideration its financial and operating activities, the
years. The Group is not eligible to acquire leased land after expiration of the lease term.
Company classified its business into:
Payments recognized as expenses consist of:
i) Cement, Concrete and Byproducts - Brazil.
Parent (BR GAAP)
iii) Railways - Argentina.
iv) Other segments (other operations in Brazil, Portugal, the Netherlands
12/31/10
12/31/09
12/31/10
12/31/09
Up to 1 year
6,935
1,473
7,320
1,900
From one to five years
18,998
1,821
19,184
2,421
Over five years
24,979
-
24,979
-
Total
50,912
3,294
51,483
4,321
As of December 31, 2010, the Company recorded the amount of R$3,016 (R$3,181 as of
December 31, 2009) relating to operating lease expenses.
b) Purchase contracts
The Company entered into a raw slag purchase contract, effective for 10 years, with total
estimated disbursement of R$283,536.
ii) Cement, Concrete and Byproducts - Argentina.
Consolidated (IFRS and BR
GAAP)
and Cayman Islands).
86
87
12/31/2010 (IFRS and BR GAAP)
12/31/2009 (IFRS and BR GAAP)
Cement,
Concrete
and
Byproducts
- Brazil
Cement,
Concrete
and
Byproducts
- Argentina
Railways
- Argentina
496,787
342,353
39,321
91,371
969,832
48,450
109,990
12,503
2,359
173,302
114,924
Inventories
234,575
107,388
11,406
-
353,369
Inventories
155,959
2,207,160
718,450
75,780
262,288
3,263,678
2,109,241
21,501
14,999
-
6,383
42,883
22,310
905,005
626,014
74,948
155
1,606,122
CURRENT ASSETS
NONCURRENT ASSETS
Investments
Other
segments
Total
CURRENT ASSETS
NONCURRENT ASSETS
Investments
Cement,
Concrete
and
Byproducts
- Brazil
Cement,
Concrete
and
Byproducts
- Argentina
Railways
- Argentina
Other
segments
Total
426,370
457,322
27,413
16,293
927,398
259,473
899
2,365
377,661
100,331
10,263
-
266,553
732,400
75,549
277,941
3,195,131
16,369
-
7,220
45,899
802,540
626,315
75,549
-
1,504,404
Intangible assets
1,223,633
16,502
-
4,099
1,244,234
Intangible assets
1,216,937
15,297
-
7,864
1,240,098
CURRENT LIABILITIES
390,812
222,609
41,529
63,203
718,153
CURRENT LIABILITIES
375,191
262,130
54,725
16,171
708,217
Payables
84,220
99,792
16,865
5,833
206,710
Payables
82,422
114,040
14,539
5,840
216,841
190,386
52,862
14,852
15,786
273,886
92,454
54,196
30,739
9,659
187,048
633,505
549,048
55,762
249,928
1,488,243
842,724
610,796
27,979
-
1,481,499
627,283
376,213
19,864
-
1,023,360
1,234,620
992,805
134,091
301,948
2,663,464
(290,937)
(2,157,541)
298,045
314,807
40,868
249,930
903,650
1,462,042
1,005,339
7,065
-
2,474,446
Operating costs and expenses
(1,186,245)
(806,787)
(1,210)
(349)
(1,994,591)
Gross profit
275,797
198,552
5,855
(349)
479,855
Operating costs and expenses
(954,174)
(794,393)
(118,037)
Other operating income (expenses)
(19,580)
(9,285)
(1,890)
(7,781)
(38,536)
Gross profit
280,446
198,412
16,054
11,011
505,923
Financial income
34,903
5,959
569
2,531
43,962
-
-
-
128,348
128,348
(77,216)
(44,862)
(8,834)
(2,533)
(133,445)
Other operating income (expenses)
63,954
(2,868)
(673)
(84,093)
(23,680)
11,949
(9,494)
(411)
-
2,044
Financial income
20,167
1,829
27
11,487
33,510
225,853
140,870
(4,711)
(8,132)
353,880
Financial expenses
(79,235)
(46,916)
(13,560)
(24,136)
(163,847)
Foreign exchange change, net
117,660
(24,092)
(3,507)
35,560
125,621
178,226
94,069
13,735
-
286,030
Net income for the year, net of taxes
402,992
126,365
(1,659)
78,177
605,875
149,509
95,734
16,085
60,111
321,439
Financial expenses
Foreign exchange change, net
Net income for the year, net of taxes
OTHER INFORMATION
Purchase of property, plant and equipment
88,712
39,786
7,855
3
136,356
OTHER INFORMATION
Current taxes
(10,425)
(46,386)
136
(61)
(56,736)
Purchase of property, plant and equipment
Deferred taxes
(70,590)
(1,638)
1,488
-
(70,740)
82,521
51,819
11,147
25,702
171,189
6,864
(35,150)
790
-
(27,496)
Current taxes
(2,870)
(23,180)
(955)
(11,110)
(38,115)
Deferred taxes
(7,729)
(20,143)
1,522
(722)
(27,072)
Other significant items not involving cash
45,776
(15,330)
564
-
31,010
Other significant items not involving cash
30. INSURANCE
The Company, its subsidiaries and jointly-owned subsidiaries contract overall insurance
coverage for property, plant and equipment and inventories subject to fire, theft, property
damage and loss of profits, according to Management.
88
89
Derivatives
31. SURETIES AND PLEDGES
On December 11, 2009, the Company provided a guarantee to the Inter-American Development Bank (IADB) for a loan agreement entered into by subsidiary Loma Negra and IADB,
maturing up to 2017, consisting of a credit facility totaling up to US$125,000 thousand, which will be used to upgrade and expand the plants in Argentina.
Due to the foreign currency-denominated financial obligations assumed by the Company,
its subsidiaries and jointly-owned subsidiaries, pursuant to guidelines established by their
Board of Directors, derivative transactions may be contracted to mitigate currency risks
arising from financial liabilities or accounts payable on the import of production inputs,
observed the exposure limits set for these risks.
As of December 31, 2010, subsidiary Loma Negra has a derivative swap transaction with
32. FINANCIAL INSTRUMENTS
Banco JP Morgan Chase Bank N.A., Buenos Aires branch, whose notional amount is US$7,250
32.1. Capital risk management
The equity structure of the Company and its subsidiaries consists of their net debt (borrowings
detailed in notes 15 and 16, less cash and cash and banks) and the Company’s shareholders’
equity (which includes issued equity, reserves, retained earnings and noncontrolling interests, as
stated in note 22).
The Company and its subsidiaries are not subject to any external requirement on capital.
thousand, equivalent to R$12,287, considering the exchange rate prevailing on contract date,
March 15, 2008, with maturity on March 15, 2013, to hedge against the currency risks of a loan
denominated in U.S. dollar. This swap transaction, which is guaranteed by a promissory note
issued by the Company, consists of swapping U.S. dollar exchange fluctuation (long position) for
a fixed interest rate of 7.25% (short position). As of December 31, 2010, the fair value is R$12,211
and loss for the year ended December 31, 2010 is R$330. Changes in the fair values of these
transactions are recorded in financial expenses.
32.2. Categories of financial instruments
Parent (BR GAAP)
12/31/10
32.4. Objectives of financial risk management
12/31/09
01/01/09
12/31/10
12/31/09
01/01/09
Financial assets
The Corporate Treasury Department of Camargo Corrêa S.A. provides services to the companies, coordinates access to domestic and foreign financial markets and monitors and manages the financial risks related to the Company’s and its subsidiaries’ transactions using in-
Cash and banks
11,145
8,895
12,681
31,885
26,643
27,349
ternal risk reports that analyze exposures by risk level and materiality. These risks include the
Short-term investments - financial
assets
22,279
89,920
59,410
132,685
336,526
120,951
market risk (including the currency, interest rate and other price risks), the credit risk and the
131,371
135,590
124,920
213,025
196,487
274,239
99
18,118
147
99
18,118
147
117,423
53,486
52,142
117,423
53,486
52,142
-
-
262,880
12,101
11, 218
320,055
a) Foreign exchange risk
436,391
405,123
406,331
751,823
765,463
636,464
The Company, its subsidiaries and jointly-owned subsidiaries have significant assets and lia-
Medium-term notes
259,172
270,838
363,513
425,713
444,945
596,650
bilities in foreign currencies, especially U.S. dollar and Argentinean pesos, and their results
Payables
83,813
86,992
78,515
206,710
216,841
252,926
may be materially impacted by exchange rate changes.
Related parties
liquidity risk.
Fair value through profit or loss
Exclusive funds
Financial liabilities
Amortized cost:
Debentures
32.3. Financial assets at fair value through profit or loss
The fair value of derivatives and exclusive funds (held for trading) was obtained based on information disclosed to the public, without any kind of adjustment; accordingly, financial assets
were classified at Level 1, as defined in CPC 39 - Financial Instruments.
The Company and its subsidiaries do not contract or trade financial instruments or derivatives for speculative purposes.
32.5. Foreign exchange exposure and
details on derivative transactions
90
91
The main accounts linked to foreign currency are described below:
Parent (BR GAAP)
Parent (BR GAAP)
12/31/10
12/31/09
01/01/09
12/31/10
12/31/09
01/01/09
Receivables
350
1,414
1,954
70,157
51,588
84,541
Exposed assets
350
1,414
1,954
70,157
51,588
84,541
CDI
286,045
394,219
632,009
693,538
654,706
Intercompany loans
39,833
39,575
50,468
-
-
-
Foreign suppliers
Advances from customers
Exposed liabilities
66,515
7,889
2,723
74,828
38,287
13,668
-
-
-
17,646
10,533
14,590
369,048
333,509
447,410
724,483
742,358
682,964
01/01/09
12/31/10
12/31/09
01/01/09
139,702
143,414
111,552
143,046
143,414
138,431
Liabilities:
IGP-M
Liabilities:
262,700
12/31/09
Assets:
Assets
Interest, borrowings, financing and
debentures
12/31/10
45,764
43,340
29,479
45,764
43,340
29,479
CDI
-
41,732
297,880
12,101
41,732
353,264
IPCA
4,547
5,002
3,505
4,547
5,002
3,505
TJLP
329,084
283,438
39,536
372,398
283,438
69,684
14,727
14,379
-
14,727
14,379
178,885
394,122
387,891
370,400
449,537
387,891
634,817
Others
Total liabilities
32.8. Credit risk
32.6. Fair values
Financial instruments that potentially subject the Company, its subsidiaries and jointly-
In Company and its subsidiaries, borrowings and financing and other financial liabilities at
-owned subsidiaries to concentration of credit risk consist primarily of short-term invest-
amortized cost approximate their fair values, even those recorded under “noncurrent”, ex-
ments and trade accounts receivable. The Company, its subsidiaries and jointly-
cept for medium-term notes, as shown below:
-owned subsidiaries maintain bank accounts and short-term investments with financial institutions approved by Management and make sales strictly in accordance with the credit
Parent (BR GAAP)
12/31/10
Fair value
Balance
recorded
261,359
259,172
12/31/09
12/31/10
Fair value
Balance
recorded
273,614
270,838
12/31/09
Fair value
Balance
recorded
Fair value
Balance
recorded
433,562
429,302
453,537
448,697
32.7. Exposure to interest rate risks
The Company is exposed to floating interest rates and inflation ratios mainly related to
changes in the IGP-M, CDI, Libor, IPCA and TJLP on borrowings and debentures. Interest
rates on short-term investments are mostly pegged to the CDI fluctuation. These positions
are as follows:
approval policy, which minimizes default risks.
32.9. Sensitivity analysis of financial instruments
As of December 31, 2010, the sensitivity analysis of the Company’s, its subsidiaries’ and
jointly-owned subsidiaries’ financial instruments and material assets and liabilities denominated in foreign currency and those exposed to changes in IGP-M, CDI, IPCA and TJLP is
as follows:
92
93
The scenario 1 reflects the financial market estimates for the calculation of future amounts
Scenario (*)
Parent
Transaction
of these transactions. The scenario 2 considers a Brazilian real appreciation or depreciation
Consolidated
Risk
Scenario 1
Scenario 2
Scenario 3
Scenario 1
Scenario 2
Scenario 3
Appreciation of
Brazilian real
-
-
-
832
4,136
7,439
Exposure to
currency risk
Swap
ing on the nature of the risk, of 25%, while scenario 3, of 50% in relation to scenario 1.
Scenario 1 reflects Management’s best estimates of the possible impacts of the abovementioned transactions for the period ending December 31, 2011.
The scenarios presented in the sensitivity analysis were defined based on CVM Instruc-
Assets:
Receivables
over the foreign currency compared in relation to scenario 1, and variable indices, depend-
Appreciation of
Brazilian real
381
285
190
-
(17,452)
(34,903)
Interest, borrowings
and financing
Depreciation of
Brazilian real
22,971
94,388
165,806
32,592
146,587
260,582
Intercompany
loans
Depreciation of
Brazilian real
3,483
9,958
19,916
-
-
-
Foreign suppliers
Depreciation of
Brazilian real
5,816
23,899
41,982
439
30,880
61,321
Liabilities:
tion 475, of December 17, 2008.
33. CASH FLOW SUPPLEMENTAL INFORMATION
a) Cash and cash equivalents
The breakdown of cash and cash equivalents included in the statement of cash
flows is shown in note 5.
b) Investing and financing transactions not involving cash:
Exposure to
variable
indices
Swaps
Increase of
index
-
-
-
(560)
(466)
(302)
12/31/10
Short-term
investments:
CDI
Parent (BR GAAP)
and Consolidated
(IFRS and BR GAAP)
Decrease of
index
16,471
12,353
8,235
16,865
12,649
8,433
Loans and
debentures:
IGP-M
Increase of
index
2,154
2,692
3,230
2,154
2,692
3,230
CDI
Increase of
index
-
-
-
1,427
1,783
2,140
IPCA
Increase of
index
228
285
342
228
285
342
URTJLP
Increase of
index
19,745
24,681
29,618
22,344
27,930
33,516
LIBOR
Increase of
index
91
114
137
91
114
137
Capital decrease in the transfer of investments
Acquisition of investment with credit of interest on capital (Itaúsa)
12/31/09
10,493
7,213
-
1,586,689
-
18,273
Purchase of property, plant and equipment through financing
6,864
46,328
Offset of taxes payable against recoverable taxes
13,601
Expired dividends
816
60
34. EVENTS AFTER THE REPORTING PERIOD
On March 25, 2011, the Company received US$6.4 million from Cimentos de Moçambique,
a subsidiary of CIMPOR - Cimentos de Portugal SGPS S.A., relating to the final price paid
on the purchase and sale of CINAC. Accordingly, the Company completed the transfer to
CIMPOR of the 51% interest in Cinac - Cimentos de Nacala S.A.
On the same date, the Company received US$9.6 million from CINAC relating to the loan
(*) Changes in balances refer to estimated settlement amounts.
contract locally called as “supply contract”.
35. AUTHORIZATION FOR COMPLETION
OF FINANCIAL STATEMENTS
At the meeting held on March 30, 2011, the Board of Directors authorized the completion
of these financial statements, which comprise events subsequent to December 31, 2010, and
approved them for disclosure.
94
95
36. CONSOLIDATED STATEMENT OF INCOME EXCLUDING
THE JOINTLY-OWNED SUBSIDIARY USINAS SIDERÚRGICAS
DE MINAS GERAIS S.A. (UNAUDITED INFORMATION)
2009
NET REVENUE FROM SALES AND SERVICES
COST OF SALES AND SERVICES
GROSS PROFIT
2,362,373
(1,659,126)
703,247
OPERATING EXPENSES
Selling
(50,208)
Administrative
(158,173)
Goodwill amortization
-
149,325
Other operating expenses, net
(20,284)
OPERATING INCOME BEFORE FINANCIAL INCOME (EXPENSES)
623,907
FINANCIAL INCOME (EXPENSES)
Exchange gain, net
Financial income
90,036
22,324
Financial expenses
(142,223)
INCOME FROM OPERATIONS BEFORE INCOME TAX AND SOCIAL CONTRIBUTION
594,044
Current
(27,006)
Deferred
(26,350)
NET INCOME FOR THE YEAR|
540,688
Net income attributable to the Company’s owners
538,282
Net income attributable to noncontrolling interests
2,406
CREDITS
General Coordination
Executive Committee
Coordination of
Internal Communication
Fernanda Guerra
Editorial Production
TV1 Conteúdo
Photos
Futura Press (cover)
Ricardo Correa (page88)

camaRgo coRRêa cimentos sa anD subsiDiaRies

Transcription

Similar documents

Teleplan_GB_2006_Final

Teleplan Annual Report 2007 from website

2013 annual report

Dynamic Range

Punch-a

Slides in Adobe PDF Format

MOLSON COORS BREWING COMPANY GOLDMAN SACHS

mondragon - MyMat Solutions