SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the month of May, 2018
Commission File Number 1-14732
COMPANHIA SIDERÚRGICA NACIONAL
(Exact name of registrant as specified in its charter)
National Steel Company
(Translation of Registrant's name into English)
Av. Brigadeiro Faria Lima 3400, 19º e 20º andares
São Paulo, Estado de São Paulo
CEP 04538-132
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F ___X___ Form 40-F _______
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes _______ No ___X____
table of contents
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2
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MANAGEMENT COMMENTS
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3
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INVITATION TO THE MEETING
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4
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SHAREHOLDERS’MEETING – BYLAWS
CSN
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5
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GENERAL PROCEDURES AND INSTRUCTIONS
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6
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CALL NOTICE
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6
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INSTALLATION QUORUM
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6
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PARTICIPATION
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6
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FURTHER CLARIFICATIONS
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10
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MATTERS TO BE RESOLVED ON
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11
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ANNEX A – Call Notice
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12
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ANNEX B – Management’s Proposal
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13
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2
MANAGEMENT COMMENTS
Dear Shareholders
With the purpose to make it easier and encourage the participation of the shareholders in the Company’s decisions, we have developed these Guidelines for the Participation of Shareholders in the Shareholders’ Meeting (“Guidelines”), which is mainly focused in gathering, in a sole document, all information and instructions referring to the Shareholders’ Meeting of CSN.
We hope that these Guidelines assist the shareholders in fully exercising their rights and, on behalf of CSN’s Management, we invite you to attend, participate and state your opinions at the Shareholders’ Meeting of the Company, as shown in these Guidelines.
We count on your presence.
Sincerely.
Benjamin Steinbruch
Chairman of the Board of Directors
3
INVITATION TO THE MEETING
The Company’s Management hereby invites the Shareholders
to attend, participate and state their opinions at the Annual Shareholders’
Meeting (“Meeting”) to be held on June 29, 2018, at 11 a.m., at the Company’s
headquarters located at Avenida Brigadeiro Faria Lima, nº 3.400, 20° andar,
Itaim Bibi, in the City of São Paulo, State of São Paulo, CEP
04538-132.
CSN recommends that those interested in attending the
Shareholders’ Meeting arrive at the venue at least thirty (30) minutes ahead of
schedule for their documents to be duly analyzed, thus avoiding any delay in the
beginning of the Meeting. Shareholders who arrive after the scheduled time, as
well as after the installation of the Meeting and the closure of the attendance
list, may attend the meeting, but will not be able to vote on any of the
resolutions of the company. In addition, their shares will not be included in
the installation quorum or in the total votes assigned to each shareholder,
pursuant to Article 9, Paragraph 2 of the Company’s Bylaws.
4
SHAREHOLDERS’MEETING – BYLAWS
CSN
“
COMPANHIA SIDERÚRGICA NACIONAL
Bylaws
Chapter III
SHAREHOLDERS’ MEETING
Article 8
- The Shareholders’ Meeting has the power to
decide all matters concerning the Company, to take the resolutions deemed
appropriate for its defense and its development, and will be convened, with the
agenda, in compliance with the provisions of the Law.
Article 9
- The Shareholders’ Meeting will be
convened by the Board of Directors and installed and chaired by the Chairman of
the Board of Directors or, in his/her absence, by whomsoever he/she
appoints.
The Chairman of the Presiding Board will choose the
secretary of the Shareholders’ Meeting.
Paragraph One -
Before installing the Shareholders’ Meeting, the shareholders will sign the
Attendance Book, indicating their name, nationality, residence and the number of
shares held.
Paragraph Two - The
list of attending shareholders will be closed by the Chairman of the presiding
board, soon after installation of the Shareholders’ Meeting.
Shareholders who arrive after the closure of the list,
may attend the meeting, but will not be able to vote on any of the resolutions
of the company. In addition, their shares will not be included in the
installation quorum or in the total votes assigned to each
shareholder.
Paragraph Three - The
shareholders will be allowed to attend and vote on the Shareholders’ Meeting
only if they prove their status as shareholders, by showing the certificate
issued by the depositary financial institution of the book-entry shares and
identification documents of the shareholder or, if a proxy, also the due power
of attorney.
If the shareholder is a legal entity or investment fund,
the documents evidencing the powers and the identification document of the
respective representatives who attend the Meeting must also be submitted.
Article 10
- The
Shareholders’ Meeting will be hold, ordinarily, in the first four months after
the end of the fiscal year to resolve on the matters set forth in
Article
132 of Law 6404, of December 15, 1976, and
extraordinarily whenever the corporate interests so require.
Article 11
- Shareholders
who are represented at the Shareholders’ Meetings by proxy must send the power
of attorney to the Company’s headquarters up to 48 (forty-eight) hours before
the time set for the Shareholders’ Meeting
5
GENERAL PROCEDURES AND INSTRUCTIONS
CALL NOTICE
Regarding the deadlines to convene the Shareholders’
Meetings, the Company adopts the practice set forth in the corporate law, i.e.,
the meetings are convened at least 30 (thirty) days before the first call and
eight (08) consecutive days before the second call (Article 124, Paragraph 1,
Item II of Law 6.404/76 and Article 8 of CVMI No. 559/2015).
INSTALLATION QUORUM
For the Meeting to be convened in first call, the quorum
provided for in Article 125 of Law 6.404/76 must be complied with, i.e., the
attending shareholders must represent at least 1/4 (one fourth) of the voting
share capital, except if the purpose of the meeting is to amend the Bylaws, in
which case the quorum required is of 2/3 of the voting share capital. In second
call, the shareholders’ meeting will be installed with any number of attending
shareholders.
PARTICIPATION
All shareholders who own common shares issued by CSN may
participate in the Meeting in one of the two following manners: (i) On-Site: in
person or through an attorney-in-fact; or (ii) Remotely: through the submission
of the Remote Voting Form, when applicable, pursuant to CVM Instruction 481/09,
as amended (“CVMI 481/09”).
Those attending the Meeting must prove that they are
shareholder of the company, by observing the following rules:
(i)
On-Site Participation
The participation at the meeting will be considered
on-site when the shareholder attends the meeting’s venue in person or
represented by a proxy, and states his/her/its vote, according to the matters
listed in the agenda.
6
To this end, in accordance with Article 126 of Law 6.404/76, the shareholder must show the following documents:
a)
Individual Shareholder:
·
Identity document or driver’s license (copy accompanied by the original or certified copy); and
·
Updated statement showing the ownership of the issued shares and his/her shareholding, issued by the depositary financial institution and/or custody agent.
b)
Corporate or Investment Fund Shareholder:
·
Bylaws, articles of Incorporation or fund regulation, as the case may be (copy with the original document or certified copy);
·
Statute or by-laws of the fund administrator or fund manager, as the case may be, subject to the fund's voting policy (copy accompanied by the original or authenticated copy)
·
Document proving that the people attending the meeting are duly invested as legal representatives of the legal entity or of the investment fund (copy with the original document or certified copy);
·
Identity document or driver’s license (original or certified copy) of the people attending the meeting as representative of the legal entity or of the investment fund; and
·
Updated statement showing the ownership of the issued shares and his/her shareholding, issued by the depositary financial institution and/or custody agent.
c)
Attorney-in-Fact
If the shareholder has an attorney-in-fact to act as its representative and exercise its right to attend and vote at the Meeting, the power of attorney
must observe the following requirements:
7
·
The attorney-in-fact must have been appointed less than one year prior;
·
The attorney-in-fact must be a shareholder, manager of the Company, attorney or financial institution, and the fund manager will be responsible for representing the investors;
·
The signature of the power of attorney must be notarized; and,
·
The power of attorney must be presented with the following supporting documents: documents proving the quality of the representative and of the represented person (certified copy of the identity document, if an individual, and certified copy of the bylaws/articles of incorporation and the minutes of the election of the members of the management, if a legal entity) and specific powers to participate in the meeting.
The original document or certified copy of the power of attorney must be send to the Company's headquarters up to 48 (forty-eight) hours before the time set for the Meeting.
For shareholders domiciled abroad, all documents submitted must be translated and legalized by the Brazilian Consulate of their home country or filed at the authorized notary registry with the due Haya Apostille, so that all copies are certified, and all the signatures are notarized.
The proxies of shareholders whose shares are in custody must also present an updated statement provided by the custody agent or depositary financial institution and listing their shareholding.
The Company does not accept powers of attorney granted electronically.
Before joining the meeting, the documents submitted by the shareholder will be analyzed to verify his/her/its identity and to validate the shareholding to
participate at the event. If the requirements stated above are not observed or if there is any inconsistency in the documents presented or even if the shareholding is not proved, the person will not be able to join the Meeting room.
8
After the documents are verified, the shareholders will sign the Attendance Book of Shareholders, which will be filed at the Company’s headquarters and will prove their participation in the respective Meeting.
After the start of the Shareholders’ Meeting, the shareholder may pose any question to the Chairman of the presiding, who will be available to clarify any doubts during the Meeting.
(ii)
Remote Participation (Remote Voting Form)
Pursuant to CVMI 481/09, the Company will adopt for this Meeting the remote voting form, providing to the shareholders another method to participate at the meeting.
As a result, shareholders may opt for exercising their voting rights through a document called the Remote Voting Form (“RVF”), which may be completed with the shareholder’s voting instructions and sent: (i) directly to the Company, to the Investor Relations Officer, at the address of CSN’s headquarters; or (ii) authorized service providers (custody or bookkeeping agents), who will forward the voting statements to the Securities Depository Center of B3 S.A. – Brasil, Bolsa, Balcão.
If the shareholder directs his or her voting orientation directly to the Company, must be following the guidelines established in the BVD.
For shareholders domiciled abroad, all documents submitted must be notarized and legalized by the Brazilian Consulate of their home country or filed at the authorized notary registry with the due Haya Apostille, together with the public
translations and with all copies duly certified.
9
The company has no electronic system to receive the RVF or any other type of remote voting method.
If the RVF is partially or incorrectly completed, the Company will compute only the items that have been correctly completed or rectified in a timely manner, specifically rejecting the items presenting completing problems.
In addition, the RVF will be available together with the other documents that are part of the Meeting, at the headquarters of CSN, as well as on the websites of the Brazilian Securities and Exchange Commission (www.cvm.gov.br), of B3 S.A. – Brasil, Bolsa e Balcão (www.b3.com.br) and of the Company’s Investor Relations (www.csn.com.br/ri), and must be received by the Company with the voting instructions up to seven (7) days before the date of the Shareholders’ Meeting. Any form received after this date will be disregarded.
Finally, further information may be found at the RVF in Annex III of these Guidelines.
FURTHER CLARIFICATIONS
For further information, CSN’s Investor Relations Office is available to provide any additional clarification, by phone (+55 11) 3049-7585 and by email
invrel@csn.com.br
.
10
MATTERS TO BE RESOLVED ON
Pursuant to the Brazilian Corporation Law
and pursuant to the Call Notice (that is part of these Guidelines - Annex I),
the matters to be resolved at the Meeting are as follows:
1.
Assessing the Management’s accounts, examining,
discussing and voting on the Financial Statements for the Fiscal Year ended on
December 2017;
2.
Establish the Management's overall annual compensation
for the year of 2018, pursuant to the Management's Proposal;
The Management’s Proposal, included in Annex B of these
Guidelines, as well as all documents on the matters of the Meeting, are
available on the website of Investor Relations (www.csn.com.br/ri), of B3 S.A.-
Brasil, Bolsa, Balcão (www.b3.com.br) and of the Brazilian Securities and
Exchange Commission (www.cvm.gov.br), and at the Company’s headquarters (located
at the above address).
The Financial Statements were published in the Official
Gazette of the State of São Paulo [
Diário Oficial do Estado de São Paulo
] and in the newspaper Folha de São Paulo - Regional
Edition and filed at the Company’s headquarters (located at the above
address).
11
ANNEX A – Call Notice
CALL NOTICE OF
ORDINARY GENERAL ASSEMBLY
The
shareholders of COMPANHIA SIDERÚRGICA NACIONAL are hereby invited for the Annual
Shareholders' Meeting to be held on June 29, 2018, at 11:00 am, at the Company's
headquarters located at Av. Brigadeiro Faria Lima, 3,400, 20th floor, São Paulo
/ SP, in order to deliberate on the following agenda: (i) To prepare the
management accounts, examine, discuss and vote on the Company's Financial
Statements for the fiscal year ended December 31, 2017, with the allocation of
the respective net income under the terms of article 189, caput of Law 6,404 /
76; (ii) To establish the managers' overall compensation for the 2018 fiscal
year .
Shareholders,
whose shares are in custody, are requested to present updated statements
provided by the custodian body, containing the respective equity
interest.
The
participation of the Shareholder may be (i) in person, (ii) by a duly
constituted attorney-in-fact, or (iii) via electronic ballot through their
respective custodian agents or directly to the Company, pursuant to CVM
Instruction No. 481/09, as amended.
Those who
wish to be represented by a proxy must observe the terms of paragraph 1 of art.
126 of Law No. 6.404/76, and the instruments of power of attorney with special
powers for representation at the General Meeting referred to in this notice must
be deposited at the Company's headquarters, prior to 48 (forty-eight) hours
prior to the date scheduled to be held, in order to expedite the attendance of
shareholders.
Detailed
guidelines on completing and sending the Voting Bulletin, as well as the
documentation related to the matters on the agenda are available at the
company's headquarters, as well as on the websites of the Comissão de Valores
Mobiliários (
www.cvm.gov
) .br), B3 SA -
Brasil, Bolsa, Balcão (
www.b3.com.br
) and the
Company's Investor Relations Department (
www.csn.com.br/ri
).
São Paulo, May 29th 2018.
Benjamin Steinbruch
Chairman of the Board of Directors
12
ANNEX B – Management’s
Proposal
Proposta da
Administração
Assembleia Geral
Ordinária
Below is the Management's proposal of Companhia
Siderúrgica Nacional (“Company”) on the matters to be resolved at the Annual and
Extraordinary Shareholders' Meeting to be convened on June 29, 2018.
1.
Analysis of the management's accounts and examination, discussion and voting of
the financial statements for the fiscal year ended December 31, 2017, with the
allocation of the respective net income pursuant to article 189, caput of Law
6,404 / 76.
We
propose that the Company's shareholders analyze the managers' accounts and
approve the Financial Statements and Management Report for the fiscal year ended
December 31, 2017 ("Financial Statements"), as disclosed on March 26, 2018, on
the websites of CVM (www.cvm.gov.br), B3 SA - Brasil, Bolsa, Balcão
(www.b3.com.br) and of relationsRelations with investorsInvestors of the Company
(www.csn.com.br/ri/).
We
further emphasize that, pursuant to item III of article 9 of CVM Instruction 481
of December 17, 2009 ("ICVM 481/09"), as amended, the information contained in
Annex I to this proposal reflects our comments on the financial situation of the
Company.
We
hereby clarify, as appropriate, that the Company's Audit Committee recommended
the approval of the Financial Statements at a meeting held on March 26, 2018,
whose extract of the minutes was also made available by the Company on the
websites of the CVM and B3, through the Companies System .Net.
In
view of the fact that net income for the fiscal year ended December 31, 2017 was
calculated in the amount of ten million, two hundred and seventy-two thousand,
one hundred and twenty reais and eighty-two centavos (R $ 10,272,120.82) , the
same will be used to offset accumulated losses in prior years, with the
respective amortization of the Accrued Loss Account, according to article 30,
paragraph 1 of the Company's Bylaws and article 189, caput, of Law
6404/76.
13
The proposed allocation above was detailed in Annex II to
this proposal, prepared according to item II of the sole paragraph of art. 9th
of CVM Instruction 481/09.
2. Establish the Management's overall annual
compensation for the year of 2018.
We propose that the compensation of the
Management for the 2018 fiscal year to be fixed in the amount of up to
R$80,000,000.
Please be advised that, concerning the 2017
fiscal year, the Company's Annual Shareholders' Meeting, held on July 03, 2017
("2017 ASM"), approved the amount of R$76.407.910,00 for the annual overall
compensation and, in the said period, the effective amount paid was of
R$39.830.441,00.
The variation between the overall amount
approved at the 2017 ASM and the amount actually paid in that year, was mainly
due to the impact of the global macroeconomic situation, which led the company
to postpone the plans to implement a Variable Compensation Program Based on
Shares.
We clarify that the information necessary for
the proper examination of the proposal for the compensation of the Management,
as provided for by Article 12 of CVM Instruction No. 481/09, are available
at
Attachment III
of this proposal.
Finally, management informs that the
Shareholders' participation in the ASM may be personal, by a duly constituted
proxy or by sending a ballot paper ("BVD"), pursuant to ICVM 481/09, as amended.
The model of the BVD and the general guidelines for the Shareholders that opt
for this type of manifestation of the vote are found in Annex IV of this
proposal.
São Paulo, May 29th 2018
Companhia Siderúrgica Nacional
14
Annex I – COMMENTS OF OFFICERS
(pursuant to item 10 of Attachment 24 of CVMI
480)
Base Date: December 31, 2017
10. COMMENTS OF THE OFFICERS
10.1 - The comments below refer to the
consolidated financial statements of the Company for the year ended on December
31, 2017, December 31, 2016 and December 31, 2015.
a) overall financial and equity
conditions
|
CSN is a diversified industrial group that
operates through business units that integrate and complement each other,
creating synergies and vertical and horizontal integration in its
industrial chains. CSN’s main activities are the exploration and trade of
iron ore, the production of flat and long steel, the manufacture of
cement, among other products, integrated through logistics assets such as
railways, ports and energy assets. The high quality of its assets and
goods, combined with strong cost management and integration of productive
units in Brazil and abroad, allow the generation of a higher value than
the industry competitors and reduce the volatility of its
results.
The information in this item should be read
and analyzed together with our consolidated financial statements available
on our website (www.csn.com.br) and on the website of the Brazilian
Securities and Exchange Commission (
www.cvm.gov.br
).
In December 31, 2017, the Company had a
current ratio of 1.11, compared to 2.26 in December 31, 2016 and 3.23 in
December 31, 2015. There was a decrease in the variation of the liquidity
ratio on December 31, 2017 of 51% due to a cash reduction with
amortization of loans and payment of debt service, and the increase in
short-term debt, part already renegotiated with Banco do Brasil and in
negotiations with Caixa Econômica Federal, as shown in Note 32 of
subsequent events. As of December 31, 2015, the variation was an increase
of 29% explained by the lengthening of terms of part of its
debt.
In December 31, 2017, the Company's net
debt totaled R $ 25.4 billion, compared to R$ 24.8 billion on December 31,
2016, which represented an increase of 2%, mainly due to the depreciation
of the Brazilian real to the US dollar of its loans and financing pegged
to the US dollar, cash reduction due to amortization of principal and
interest in the amount of R$ 4.2 billion, as shown in note 11 Loans and
Financing. As of December 31, 2015, net debt totaled R$ 25.7
billion.
|
15
The following table reflects the Company's
financial condition in the last three years:
*Note: The amount of loans and financing in
the table above includes transaction costs, pursuant to the table in item
10.1 (f).
|
b) capital structure and possibility of
redemption of shares or stocks
|
The Company seeks to optimize its capital
structure in order to reduce its financial costs and maximize the return
to its shareholders. The table below shows the evolution of the capital
structure of the Company in the last three years, with financing by equity
and third-party capital:
|
(In Thousand of R$)
|
2017
|
2016
|
2015
|
Shareholders’ equity (own capital)
|
8.288.229
|
7.384.521
|
7.091.288
|
Borrowings and financing (third party
capital)
|
29.510.844
|
30.441.018
|
34.282.515
|
Gross Debt/Shareholder's equity
|
3,56
|
4,12
|
4,83
|
|
c) payment capacity regarding the financial
commitments undertaken
|
The Company currently has a liquidity
position that allows it to honor its short-term commitments. The Company's
planning for 2018 focuses on reducing disbursements and preserving
cash.
The following graphs show cash and cash
equivalents against maturities of loans and financing as of 12/31/2017,
12/31/2016 and 12/31/2015.
|
|
16
17
*Amounts referring to loans and financing
include transaction costs.
|
d) funding sources used for the working
capital and for investments in non-current assets
|
The funding sources used by the Company for
working capital and for investment in non-current assets were trade
finance lines, development bank lines, debt securities issued in foreign
markets (bonds), debentures, and bank credit notes (CCB), as well as own
resources. These financing sources in the domestic and foreign markets are
described in item 10.1 (f). In 2016, there was no new funding for working
capital, only for capex through Finep (“Financer of Studies and
Projects”).
|
e) funding sources for working capital and
investments in non-current assets that the Company intends to use to cover
the liquidity
shortfalls
|
The Directors believe that if it is
necessary to cover any liquidity deficiency, the Company may contract
special credit lines, financing with banks and negotiate with its
suppliers.
Also has as its main purpose reducing the
Company's financial leverage, therefore the Management is committed to a
plan to sell a set of assets. However, it is not possible to confirm that
the sale, within a 12-month period, is highly likely for any of the assets
included in the plan. The Company considers several sales scenarios that
vary according to different macroeconomic and operational assumptions. In
this context, the Company did not segregate and did not reclassify such
assets as discontinued operations in the financial statements, pursuant to
CPC 31 (IFRS 5).
|
f) levels of indebtedness and
characteristics of debts, also describing:
|
|
18
(i)
Significant loan and financing
agreements
a)
Significant loan and financing
agreements on December 31, 2017
Amounts in R$ thousand
At December 31, 2017, the principal of
interest and monetary restatement of loans, financing and long-term
debentures is as follows:
Amounts in R$ thousand
(*) In February
2018, the Company completed the rollover of the debt with Banco do Brasil,
as well as the issuance of debt securities and repurchase agreements of US
$ 350 million (Tender Offer).
|
|
19
·
Funding of loans and
amortizations, financing and debentures
The table below shows the
amortizations and funding during the fiscal year:
Amounts in R$ thousand
1. Includes unrealized exchange and monetary
variations.
In 2017, the Group contracted and amortized
loans, as shown below:
·
Funding
Amounts in R$ thousand
(*) On February 2, 2018, the operation was
amortized
·
Covenants
|
|
20
The Company's debt contracts provide for
the fulfillment of certain non-financial obligations, as well as the
maintenance of certain parameters and performance indicators, such as
disclosure of its audited financial statements according to regulatory
deadlines or payment of commission for risk assumption if the indicator
net debt over EBITDA reaches the levels established in said contracts,
under penalty of early maturity. To date, the Company has complied with
all financial and non-financial obligations (covenants) of its current
contracts.
On December 31, 2017, the Company has
provisioned R$ 30,843 in the Consolidated and R$ 13,413 in the Parent
Company for risk assumption.
b) Significant loan and financing
agreements on December 31, 2016 and 2015
Amounts in R$ thousand
(*) The balances of
prepayments, Fixed Rate Notes and Intercompany Bonds with related parties
of the parent company totaled R$ 11,230,673 thousand as of December 31,
2016 (R$ 13,416,687 thousand as of December 31, 2015).
Maturities of loans,
financing and debentures presented in noncurrent liabilities
As of December 31, 2016,
the principal updated interest and monetary restatement of loans,
financing and long-term debentures has the following
deadline:
|
|
21
Amounts in R$ thousand
·
Funding of loans and
amortizations, financing and debentures
The table below shows the
amortizations and funding during the year:
Amounts in R$ thousand
1.
Including interest,
exchange rate variations and unrealized monetary variations.
In 2016, CSN Group contracted and amortized
loans as shown below:
·
Funding
Amounts in R$ thousand
1. In 2016, CSN contracted a credit line
with FINEP in the amount of R$ 173,822 thousand, of which R$ 22,597
thousand was partially made available. On December 31, 2016, the Company
maintained a financial application linked to CDB to guarantee a letter of
guarantee in the amount of R$ 25,750 thousand.
|
|
22
·
Amortizations
Amounts in R$ thousand
·
Covenants
Some of the Company's debt
agreements include the compliance with certain non-financial obligations,
such as the maintenance of certain performance parameters and indicators,
the disclosure of its audited financial statements according to regulatory
terms and the payment of commission for the assumption of risk if the net
debt indicator over EBITDA reaches the levels established in the said
agreements.
The Company exceptionally has
not disclosed the financial statements for the year ended on December 31,
2016 within the regulatory term, according to the material fact disclosed
on March 27, 2017. Due to this exceptionality, the Company asked to the
debenture holders of its 5th, 7th, 8th and 9th Debentures Issue to grant
an additional term to disclose these financial statements until October
31, 2017. There were no early maturity decrees in any of the Company's
financing due to the delay in the disclosure of these financial
statements, given that they were disclosed on October 28, 2017.
On December 31, 2016, the
Company has provisioned R$30,843 thousand in the Consolidated, and
R$13,413 thousand in the Parent Company, for commission for assumption of
risk.
Debentures issued by the
Company in the last 3 (three) fiscal years
·
Eighth issue
In January 2015, the
Company issued 10,000 debentures in a single series, all unsecured and
non-convertible, for a unit par value of R$10 thousand, totaling R$100
million, with interest of 113.70% per year of the CDI Cetip with final
maturity in January 2022, with option of early redemption.
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|
23
·
Ninth issue
In June 2015, the Company
issued 10,000 debentures in a single series, all unsecured and
non-convertible, for a unit par value of R$10 thousand, totaling R$100
million, with interest of 113.70% per year of the CDI Cetip with final
maturity in March 2022, with option of early redemption.
For all the debentures
issued by the Company, see item 18 of this Reference Form.
Sureties
For the guarantees granted
see item 3.8 of this Reference Form.
(ii) other long-term relationships
with financial institutions;
Not applicable, in view of the
long-term relationships with financial
institutions have already been listed in the previous items.
(iii) degree of subordination between
debts;
The labor and tax obligations,
as well as the financial debts that have collateral, have the preferences
and prerogatives provided for by law in the event of an insolvency of the
Company's creditors.
Considering all Company's
current and non-current liabilities, in December 31, 2017, the amount of
R$ 36,891,434 thousand, or 99.92%, corresponded to obligations of an
unsecured nature, as compared to R$ 30,409,642 thousand, or 99.90% as of
December 31, 2016 and R$ 34,277,733 thousand, or 99.99%, as of December
31, 2015. The obligations of an unsecured nature include: (i) debts with
no collateral; and (ii) debts with personal guarantee.
Unsecured bonds are subject
(observed the preference given by law to labor and tax obligations, in
case of possible creditors' competition) to the preference of the
Company's debts with real guarantees, which, on December 31, 2017, R$
30,308 thousand, or 0.08%, of the sum of current and non-current
liabilities of the Company, compared to the amount of R $31,377 thousand,
or 0.10% of the sum presented on December 31, 2016 and R$4,782 thousand,
or 0.01%, of the sum presented on December 31, 2015.
The loans and financings made
between companies of the Company's economic conglomerate (except those
destined to the transfer of funds arising from the issuance of foreign
debt issued by subsidiaries of the Company) are subordinated to the
priority of payment to the Company's indebtedness to the Bando do
Brasil.
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24
(iv) any restrictions imposed on the
Company, in particular concerning debt limits and contracting new debt,
distribution of dividends, disposal of assets, issuance of new securities
and the sale of corporate control.
The Company's loans and financing have
certain restrictive contractual clauses, which are usual in financial
agreements in general and in transactions of the same type, being
exemplified below:
The financing contracted with BNDES is
subject to the “Provisions Applicable to BNDES Agreements”. Pursuant to
the said Provisions, borrowers, such as the Company, may not, without the
prior consent of the BNDES: (i) contract new debts (except those provided
for in the said Provisions, including loans to cover the regular
management of the Company); (ii) grant preference to other credits; (iii)
amortize shares; (iv) issue debentures or beneficiary parties; (vi) sell
or encumber assets of its permanent assets (except in the cases provided
for in the said Provisions); and (vii) change its effective, direct or
indirect control.
The financing contracted with FINEP
(Financer of Studies and Projects) and certain agreements for the issue of
insurance-guarantees provides that, among other provisions, any change in
the control of the Company without the prior consent of FINEP or the
insurer may lead to the early maturity of the financing or
insurance-guarantee, as the case may be.
Under the terms of the agreements governing
the 5th, 7th, 8th and 9th issues of Debentures of the Company, among other
provisions, the Company may not be merged, incorporated or split, unless
the transaction has previously been approved by debenture holders holding
at least 75% of the outstanding debentures (excluding intra-group
transactions, with express provision in the debentures deed), or if the
holders are assured the redemption of the debentures, for their nominal
value plus a compensation, at least 6 months after the disclosure of the
minutes of the shareholders’ meeting resolving on the
transaction.
Some debt securities issued by subsidiaries
of the Company abroad (“Notes”) provide that, among other provisions, the
Company, as guarantor, may not: (i) merge, be incorporated or sell all or
a substantial part of its assets to third parties, except if the Company
is the entity resulting from this corporate reorganization or if this
entity is a company based in Brazil, in any country of the European Union
or in the United States, that undertakes the guarantor obligations; (ii)
encumber its assets, except as permitted in the issuance documents; and
(iii) to contract new indebtedness, except as permitted in the issuance
documents.
Some export financing (represented by
Export Credit Notes) contains restrictions on the Company in relation to:
(i) the distribution of extraordinary dividends arising from the sale of
the control of the operational assets that it entails in the events
provided for in the financing documents;
(ii) not to split
and/or sell assets of the Company to third parties (not members of the
economic group of which the Company is a member) either through a single
operation or through a series of interrelated operations within the same
fiscal year, representing more than 10% of the net revenues and
consolidated operating results of the Company's group, as determined in
the financial statements of the year in which said operation was carried
out, without prior authorization and expressed by the financier; and (iii)
the change in its control, except if the indirect shareholding control of
the Company is maintained by any "permitted shareholder", as defined in
the transaction documents; (iv) the level of indebtedness (Net Debt /
EBITDA) provided in the financing documents; and (v) the disposal of
control of CSN Mineração S.A.
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25
g) limits of use of the financing already
contracted and percentage already used.
|
In FY 2016, Finep was granted financing to
partially cover expenses incurred in the preparation and execution of the
strategic innovation plan. The financing granted was made available in
installments in accordance with a disbursement schedule. During 2016 13%
of the project was disbursed and in 2017 there was no disbursement. No
funding in 2015
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h) significant changes in each item of the
financial statement
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Income Statement for the Company’s fiscal
year (consolidated) - R$ thousand:
Comparison of the main accounts of the
consolidated income of December 31, 2017, December 31, 2016 and December
31, 2015, prepared in accordance with IFRS and CPC.
Net Revenue from Sales and/or
Services
In the fiscal year ended 12/31/2017, net
revenue reached R$ 18,524 million, 8% higher than in 2016, as a result of
price adjustments of steel products (average steel prices increased by 12%
year on year), while in the mining segment, there was a reduction in the
volume of ore traded, offset by better realized prices.
Cost of goods and services
sold
In the fiscal year ended 12/31/2017, the
consolidated cost of products sold ("COGS") reached R$ 13,596 million,
7.6% more than in 2016, followed by lower sales volume in the mining
segment and higher prices of raw materials on the steel
segment.
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26
Gross Revenue
In the fiscal year ended 12/31/2017, gross
profit totaled R $ 4,928 million, an increase of 9.3% over the amount
obtained in 2016, due to the factors described above
Equity in earnings
Equity Income in 2017 was R $ 109 million,
higher than the R $ 65 million result in 2016. This result is mainly due
to the better results in MRS Logística SA ("MRS") and a strong reduction
in the losses that reflect in the equivalence result the TLSA.
Net Financial Result
In 2017, the Company's net financial result
was a negative R $ 2,464 million, compared to a negative net financial
result in 2016 of R $ 2,522 million, basically due to:
• Reduction of R $ 541 million in financial
expenses, from R $ 3,283 million in 2016 to R $ 2,742 million in 2017 due
to the CDI's fluctuation in relation to loans and financing.
• Reduction of R $ 349 million in financial
revenues, from R $ 644 million in 2016 to R $ 295 million in 2017 due to
the CDI's fluctuation against financial investments, reduction of
available and re-purchase of securities that occurred in 2016.
• R
$ 133 million change in expenses with
exchange variation and net monetary changes, which went from a revenue of
R $ 117 million in 2016, to an expense of R $ 16 million in 2017, mainly
due to the fluctuation of the dollar. In 2016 the operations with Future
Dollar were settled.
Current and deferred income tax and social
contribution
The increase in income tax and social
contribution expenses in the period is due to pre-tax income, which
resulted in an IR and CS expense of R $ 177 million and adjustments to
reflect the effective tax rate. See note 16) of the Consolidated Financial
Statements.
Net Income (Loss)
As a reflection of the explanations
presented in the above items, in 2017 CSN recorded a consolidated net
profit of R $ 111 million. In 2016, the Company recorded a consolidated
net loss of R $ 853 million.
Comparison of Results for the fiscal years
ended on 12/31/2016 and 12/31/2015 (restated):
Net Revenue from Sales and / or
Services
In the fiscal year
ended 12/31/2016, net revenue reached R $ 17,149 million, 12% higher than
in 2015, as a result of the price adjustments of steel products, while in
the mining segment, the increase occurred in the year 2016 due to the
higher volume of ore traded together with the increase in the
international price of ore
.
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27
Cost of goods and services
sold
In the fiscal year
ended 12/31/2016, the consolidated cost of products sold ("COGS") reached
R $ 12,640 million, 8% higher than in 2015, following the higher volume
traded in the mining segment and increase in raw material prices of the
steel segment.
Raw score
In the fiscal year
ended 12/31/2016, gross profit totaled R $ 4,509 million, an increase of
28% over the amount obtained in 2015, due to the factors described
above.
Selling, General and Administrative
Expenses
Selling, general
and administrative expenses totaled R $ 2,215 million in the fiscal year
ended December 31, 2016, 17% higher than in 2015 due to higher freight
costs in the foreign market due to the increase in sales volumes of
Mineração and from 2016, 100% of the mining assets were
consolidated.
Other Income (Expenses),
net
In 2016, the "Other
Operating Revenues and Expenses" account amounted to a negative amount of
R $ 413 million, mainly due to the recording of impairment of the fair
value of Transnordestina Logística SA in the amount of R $ 388 million and
in 2015 the positive value of R $ 2,269 million came from the accounting
gain recorded in the combination of the mining business of CSN and
Nacional Minérios, SA ("Namisa").
Equity in earnings
The Equity in
Equity Result was R $ 65 million, lower than the R $ 1,160 million result
in 2015. This variation is basically due to the non-recognition of
Namisa's equity income in 2016, due to its incorporation by CSN Mineração
SA ("CSN Mineração").
Net Financial Result
In 2016, the
Company's net financial result was a negative R $ 2,522 million compared
to a negative net financial result in 2015 of R $ 3,365 million, basically
due to:
• Increase of R $ 158 million in financial
expenses, from R $ 3,125 million in 2015 to R $ 3,283 million in 2016,
mainly due to the increase in charges on loans in local currency, due to
the increase in the CDI and increased costs with sureties and fees
banking;
• Reduction of R $ 845 million in exchange
and exchange rate net expenses, from an expense of R $ 728 million in
2015, to a revenue of R $ 117 million in 2016, mainly due to the
devaluation of the real from 47% in 2015 to a appreciation of the real of
17% in 2016.
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28
Current and Deferred Income Tax and Social
Contribution
During 2016, after a technical review of
projections of future taxable income for the year 2015 and the existence
of tax losses generated in recent years, the Company restated the deferred
income tax expense of 2015 for the amount of R$ 2,768 million, reflecting
the write-off of deferred income and social contribution tax credits that
were maintained in non-current assets. See note 16) of the Consolidated
Financial Statements. Consolidated Net Loss (Loss)
As a reflection of the explanations set
forth in the above items, in 2016 and 2015, the Company recorded a
consolidated net loss of R$ 853 million and R$ 1,216 million,
respectively.
Balance Sheet of the Company (consolidated)
- R$ thousand:
Comparison of the main consolidated income
statements as of December 31, 2017, December 31, 2016 and December 31,
2015 prepared in accordance with IFRS and CPCs.
Comparison between the balance
sheets of 12/31/2017 and 12/31/2016:
Cash and Cash Equivalents: mainly composed
of financial investments in public and private securities, investments
abroad in Time Deposit, in banks considered by the management as a first
line. The balance of cash and cash equivalents as of December 31, 2017 is
R $ 3,412 million, 30% lower than the R $ 4,871 million recorded on
December 31, 2016. This reduction is mainly due to (i) utilization of the
financial resources of foreign subsidiaries applied to Time Deposits and
private securities, to meet the Company's cash requirements and (ii)
reduction of CDI on investments in local currency
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29
Financial Investments: As of December 31,
2017, the balance of R $ 736 million comprises: (i) government securities
(LFT) managed by exclusive funds, traded on B3 SA - Brasil, Bolsa, Selic
income and immediate liquidity; and (ii) financial application linked to
the Bank Deposit Certificate (CDB) to guarantee letter of guarantee, with
CDI income, immediate liquidity and also recorded in B3 S.A. - Brazil,
Bolsa, Balcão.
Inventories: The variation in the period
basically refers to "products in preparation", due to the increase in the
production of slabs: 3,016 thousand tons in 2016 to 4,216 thousand tons in
2017, an increase of 40% in the period.
Other current assets: The increase of 16.6%
(from R $ 852 million on December 31, 2016 to R$ 994 million on December
31, 2017) is mainly explained by PIS / COFINS and ICMS recoverable and
income tax and social contribution to be offset.
Financial Investments: As of December 31,
2017, the balance of R $ 736 million comprises: (i) government securities
(LFT) managed by exclusive funds, traded on B3 SA - Brasil, Bolsa, Selic
income and immediate liquidity; and (ii) financial application linked to
the Bank Deposit Certificate (CDB) to guarantee letter of guarantee, with
CDI income, immediate liquidity and also recorded in B3 S.A. - Brazil,
Bolsa, Balcão.
Inventories: The variation in the period
basically refers to "products in preparation", due to the increase in the
production of slabs: 3,016 thousand tons in 2016 to 4,216 thousand tons in
2017, an increase of 40% in the period.
Other current assets: The increase of 16.6%
(from R $ 852 million on December 31, 2016 to R $ 994 million on December
31, 2017) is mainly explained by PIS / COFINS and ICMS recoverable and
income tax and social contribution to be offset.
Non-current assets
Deferred income tax: Deferred income tax
and social contribution on non-current assets refer exclusively to tax
losses and negative basis of social contribution and were limited to 30%
of deferred income tax and social contribution recognized in
liabilities.
Other non-current assets: The increase of
50.9% (from R $ 1,676 million on December 31, 2016 to R $ 2,528 million on
December 31, 2017) is mainly explained by the registration in 2017 of the
monetary correction of compulsory loan of Eletrobrás in the amount of R $
755 million. See note 23) of the Consolidated Financial
Statements.
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30
Investments: As of December 31,
2017, the investment account amounts to R $ 5,500 million, 20.4% higher
than the balance recorded on December 31, 2016, of R $ 4,568 million. The
variation in the balance of the investment in the period is mainly due to
the mark-to-market of investments classified as available-for-sale,
translation into the currency of presentation of investments abroad whose
functional currency is not the Real, actuarial gain / loss and gain / loss
on investment hedges reflecting investments accounted for by equity
method.
Property, plant and equipment:
At December 31, 2017, the balance of the property, plant and equipment
account reached R $ 17,965 million, a decrease of 1% compared to 2016.
This variation is mainly due to the acquisitions made in the period in the
approximate amount of R $ 1,063 (R $ 952 million of this amount refers to
acquisitions for projects in progress), partially offset by the
depreciation in the period of R $ 1,380 million.
Intangible assets: on December
31, 2017, the balance of the intangible asset in the amount of R $ 7,272
million, a reduction of R $ 14 million compared to 2016. The balance
basically comprises the goodwill and the fair value of the intangible
assets of the combination CSN and Namisa logistics business in
2015.
Passive
Loans and Financing: The Company's
consolidated gross debt totaled R $ 29,511 million on December 31, 2017, a
decrease of 3% compared to the R $ 30,441 million recorded on December 31,
2016, mainly due to (i) interest amortization two contracts of fixed rated
notes; (ii) amortization of the main prepayment and interest contracts;
(iii) amortization of interest on CCB contracts (iv) appreciation of real
freight to the US dollar during the period and (v) amortization of
principal and interest on debenture contracts.
It should also be noted that in
February 2018 the Company completed the roll-out of the debt with Banco do
Brasil, as well as the issuance of debt securities and repurchase of US $
350 million (Tender Offer). See note 32) of the Consolidated Financial
Statements.
Suppliers: The group of suppliers presented
an increase of 40% (R $ 2,461 million in 2017 compared to R $ 1,763
million in 2016). During 2017, the Company performed a negotiation of the
payment term with suppliers, which resulted in the extension of the
average term in 11 days (4Q16: 51 days for 4Q17: 62 days).
Deferred taxes: as of December 31, 2017,
the deferred tax liability account totaled R $ 1,174 million, which mainly
comprises:
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31
• R $ 1,894 million related to deferred
income tax and social contribution not constituted;
• R $ 3,054 million of estimated losses for
deferred income tax and social contribution credits;
• R $ 1,041 million of deferred income tax
and social contribution related to the combination of mining and logistics
business of CSN and Namisa in 2015;
• partially offset by (i) R $ 1,511 million
related to the taxation of exchange rate variations by cash basis for
calculating income tax and social contribution on net income; (ii) R $
1,022 million arising from losses on available-for-sale financial assets;
and (iii) R $ 1,544 million of tax loss carryforwards.
Pension and health plan:
balance of R$ 909 million as of December
31, 2017 (R$ 719 million as of December 31, 2016). The increase of R$ 189
million basically refers to the post-employment health benefit, impacted
mainly by the reduction of the real discount rate and the increase in the
average medical cost (claim cost).
Shareholders' Equity:
at December 31, 2017, the Company's
shareholders' equity was R$ 8,288 million, higher by R$ 904 million to
shareholders' equity as of December 31, 2016, mainly due to the
appreciation in the common shares (USIM3) and (USIM5) of the investment in
Usiminas, which recorded a gain of R$ 847 million recorded in other
comprehensive income
.
Comparison between the balance
sheets of 12/31/2016 and 12/31/2015:
Cash and Cash Equivalents:
mainly composed of financial investments in
public and private securities and investments in first-tier banks. The
balance of cash and cash equivalents at December 31, 2016 is R $ 4,871
million, 38% lower than the R $ 7,861 million recorded on December 31,
2015. This reduction is mainly due to the use of resources financial
expenses of the subsidiaries abroad applied in time deposits, to meet the
Company's cash requirements.
Financial Investments: As of December 31,
2016, the balance of R $ 760 million comprises: (i) government securities
managed by exclusive funds that were linked as collateral for CDI interest
rate futures contracts, are traded on B3 SA - Brazil , Stock Exchange,
Counter, has Selic income and immediate liquidity; and (ii) financial
application linked to the Bank Deposit Certificate (CDB) to guarantee
letter of guarantee, with CDI income, immediate liquidity and also
recorded in B3 S.A. - Brazil, Bolsa, Balcão.
Accounts receivable: At December 31, 2016,
trade accounts receivable totaled R $ 1,997 million, 26.5% higher than the
value of 2015, mainly due to the effect of the increase in prices in the
domestic market of the steel segment, the expansion of the average
collection period, registering a 6-day increase (35 days in 4Q16 x 29 days
in 4Q15) and the increase in accounts receivable from related parties
arising from the sale of steel products.
Inventories: At December 31, 2016, CSN's
inventories totaled R$ 3,964 million, a reduction of 19.8% compared to
December 31, 2015, with a 32-day reduction in average inventory maturity
(94 days in 4Q16 vs. 126 days in 4Q15), due to the higher volume sold in
the steel segment, reflecting the greater demand in the domestic
market.
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32
Other current assets: A reduction of 33.8%
(from R$ 1,286 million on December 31, 2015 to R$ 852 million on December
31, 2016), mainly explained by variations in the following
groups:
• Taxes recoverable: The reduction of R$
216 million was basically due to IRPJ, CSLL, PIS / Cofins, ICMS recoveries
and extemporaneous credits with other federal taxes;
• Prepaid expenses: The decrease of R$ 92
million is basically due to the reduction of shipments made in the
"floating" condition during the year 2016. The contracts in this
condition, provide for the payment of 90% of the freight value in
approximately 10 days before the end of the shipment. In this way, freight
expenses are recorded in prepaid expenses and when goods are delivered,
this balance is recorded in income.
Derivative financial instruments: reduction
of approximately R$ 116 million.
Non-current assets
Deferred taxes:
In 2016, after a technical review of the
future taxable income projections and the existence of tax losses
generated in recent years, the Company restated the deferred tax asset
balances, limiting its recognition to the limit of 30% of deferred tax
liabilities. As a result, all credits arising from temporary differences
were provisioned and held in stock of credits held in the Company's fiscal
books for subsequent use.
Investments:
on December 31, 2016, the value
of the investment account is R$ 4,568 million, 14.3% higher than the
balance recorded on December 31, 2015, of R$ 3,998 million. The variation
in the balance of the investment in the period is mainly due to the
mark-to-market of investments classified as available-for-sale,
translation into foreign currencies of the investments whose functional
currency is not the Real, actuarial gain reflected by CSN Mineração, a
hedge of investments reflecting the investments accounted for by the
equity method and the recognition of the Impairment of the fair value of
Transnordestina Logística SA in the amount of R $ 387,989 thousand
recorded in other operating income and expenses and R $ 131,916 thousand
in deferred taxes.
Property, plant and equipment:
As of December 31, 2016, the
balance of the property, plant and equipment account reached R $ 18,136
million, an increase of 1.7%, or R $ 310 million, compared to 2015. This
variation is mainly due to acquisitions in the period in the approximate
amount of R $ 1,636 million, of which R $ 1,413 million refers to
acquisitions for projects in progress, partially offset by the
depreciation in the period of R $ 1,254 million.
Intangible assets:
at December 31, 2016, the
balance of the intangible asset account reached R $ 7,258 million, a
reduction of R $ 164 million in relation to 2015. The balance basically
refers to the accounting of goodwill and the fair value of intangible
assets of the mining and logistics business combination of CSN and Namisa
in 2015.
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33
Passive
Loans and Financing:
The Company's consolidated gross debt
totaled R $ 30,441 million on December 31, 2016, a reduction of 11%
compared to the R $ 34,283 million recorded on December 31, 2015, mainly
due to (i) repurchase and payment interest rates on fixed rated notes;
(ii) amortization of prepayment contracts; (iii) liquidation of forfaiting
and risk transactions; and (iiii) appreciation of real freight to the
dollar during the period.
Deferred taxes:
as of December 31, 2016, the deferred tax
liability account totaled R$ 1,047 million, which mainly
comprises:
• R$ 1,324 million related to deferred
income tax and social contribution not constituted;
• R$ 3,014 million of estimated losses for
deferred income tax and social contribution credits;
• R$1,073 million of deferred income tax
and social contribution arising from the combination of mining and related
logistics business of CSN and Namisa in 2015;
• Partially offset by (i) R $ 1,590 million
relating to the taxation of exchange rate variations by cash basis for
calculating income tax and social contribution on net income; (ii) R $ 706
million arising from losses on available-for-sale financial assets; and
(iii) R $ 1,311 million of tax losses and negative basis.
Plano de pensão e saúde
: saldo de R$719 milhões em 31 de dezembro
de 2016 (R$514 milhões em 31 de dezembro de 2015). O aumento de R$ 205
milhões refere-se basicamente ao benefício de saúde pós-emprego, impactado
pela redução da taxa real de desconto e pelo aumento do custo médico médio
(
claim cost
).
Patrimônio Líquido
: em 31 de dezembro de 2016, o patrimônio
líquido da Companhia era de R$7.385 milhões, superior em R$293 milhões ao
patrimônio líquido em 31 de dezembro de 2015, principalmente em função do
ganho de R$ 1.083 milhões do
Hedge Accounting
fluxo de caixa, parcialmente compensado
pelo prejuízo consolidado do período no montante de R$ 853 milhões.
Pension and health plan:
balance of R $ 719 million as of December
31, 2016 (R $ 514 million as of December 31, 2015). The increase of R $
205 million basically refers to the post-employment health benefit,
impacted by the reduction of the real discount rate and the increase in
the average medical cost (claim cost).
Shareholders' Equity
: At December 31, 2016, the Company's
shareholders' equity was R$ 7,385 million, higher by R$ 293 million to
shareholders' equity as of December 31, 2015, mainly due to the R$ 1,083
million gain from the Hedge Accounting flow partially offset by the
consolidated loss for the period of R$ 853 million.
Cash Flow of the
Company
Below is a table comparing the
Company's cash flows from December 31, 2017, December 31, 2016 and
December 31, 2015, in R $ thousand:
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Comparison between cash flows from 2017 and
2016
The Company's free cash flow in 2017 was a
negative R $ 1,460 million, compared to a negative cash flow of R $ 2,990
million in 2016.
Operational
Activities
Operating cash generation was R$ 572
million and R$ 276 million in 2017 and 2016, respectively. The variation
of R$ 296 million in cash from operating activities is due to the R$ 2,781
million increase resulting from the reconciliation of net income (loss) to
non-cash items and an increase of R$ 744 million in working capital from
Company, with special emphasis on:
·
In 2017, there was an improvement in the
Company's results, with consolidated net income of R $ 111 million
compared to the consolidated net loss of R $ 853 million in
2016.
·
Equity in 2016 was positive by R$ 109
million, an increase from R$ 65 million recorded in 2016. This result is
mainly due to the better results in MRS and a strong reduction in the loss
reflected in the result of equivalence in the TLSA.
·
Impact on the line of monetary and exchange
variations, net due, the dollar oscillation.
·
Recognized result of monetary
restatement of Eletrobrás's compulsory loan in the amount of R$ 755
million.
·
The variation in working capital is
highlighted by inventories. In the period, there was an increase in the
production of plaques, an increase of 40% in relation to 2016.
Investment Activities
The cash flow used in investing activities
was R$ 1,049 million in 2017 and R$ 2,305 million in 2016. The variation
of R$ 1,256 million is mainly due to (i) the result of derivative
operations and (ii) acquisition of property, plant and
equipment.
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Financing Activities
The cash flow used in financing activities
was R$ 883 million in 2016 to R$ 994 million in 2017, where we highlight
the funding and amortization of loans and financing. See note 11) of the
Consolidated Financial Statements.
Comparison of cash flows between 2016 and
2015 (restated):
O fluxo de caixa livre da Companhia em 2016
foi negativo em R$2.990 milhões, frente ao fluxo de caixa negativo de
R$825 milhões em 2015.
The Company's free cash flow in 2016 was a
negative R$ 2,990 million, compared to a negative cash flow of R$ 825
million in 2015.
Operational
Activities
Operating cash
generation was R$ 276 million and R$ 5,069 million in 2016 and 2015,
respectively. The reduction of R$ 4,793 million in cash from operating
activities is due to the reduction of R$ 2,781 million resulting from the
reconciliation of net income (loss) to non cash items and the reduction of
R$ 2,012 million in working capital from Company, with special emphasis
on
:
·
In 2016 and 2015, the Company recorded a
consolidated net loss of R $ 853 million and R $ 1,216 million,
respectively, a reduction of R $ 363 million and to the effects mentioned
below:
·
The result of the equivalence in 2016 was
positive in R $ 65 million compared to a positive result of R $ 1,160
million in 2015. This variation is basically due to the non-recognition of
Namisa's equity in 2016, with a view to its incorporation into CSN
Mineração SA (new corporate name of Congonhas Minérios SA).
·
Reduction in the line of
monetary and exchange variations, net mainly due to the devaluation of the
real against the US dollar of 47% in 2015 compared to a 17% appreciation
of the real against the dollar in 2016.
·
In the line Impairment
securities available for sale, in 2015 there was a reduction of R $ 555
million referring to Usiminas shares, which did not occur in
2016.
·
Line gains from the
business combination in 2016 were positive at R $ 66 million compared to a
positive result of R $ 3,297 in 2015 due to the operation of the mining
and logistics business combination of CSN and Namisa in 2015.
·
The variation in assets and liabilities,
especially in the reduction of: (i) inventories, which shows a decrease in
the average term in 32 days (94 days in 4Q16 vs. 126 days in 4Q15); and
(ii) accounts receivable related parties due to the receipt of dividends
from Namisa in the amount of R $ 3,239 million in 2015, which did not
occur in 2016 with a view to its incorporation into CSN
Mineração.
Investment Activities
The cash flow used in investing activities
was R $ 2,305 million in 2016 and R $ 2,865 million in 2015. The variation
of R $ 560 million is mainly due to the payments of derivative operations,
cash received from the sale of Cia Metalic Nordeste ("Metalic") and
effects arising from the combined mining and logistics business operation
of CSN and Namisa in 2015.
Financing Activities
The cash flow used in financing activities
was R $ 3,091 million in 2015 to R $ 883 million in 2016. This variation
occurred mainly due to the reduction in funding and the liquidation of
forfaiting and outright risk agreements.
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10.2
The following comments refer to the consolidated
financial statements of the Company for the year ended 12/31/2017, 12/31/2016
and 12/31/2015.
a) our results of operations, in
particular:
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(i) Description of any important revenue
elements
Our company is a highly integrated business
operating across the entire steel production chain, from extracting iron
ore, to the production and commercialization of reels, metallic sheets for
packaging and steel profiles. We also have holdings in railroads, port
terminals and energy-producing companies, in addition to cement
production.
Our company is constantly seeking to
maximize shareholder returns by concentrating on five key activities: (i)
mining; (ii) steel; (iii) logistics; (iv) cement; and (v)
energy.
1. Mining
1.1. Iron ore
A CSN Mineração, a company resulting from
the combination of CSN’s mining and logistics business by merging Casa de
Pedra, Namisa and the Group’s other mines, is positioned as Brazil’s
second-largest exporter of iron ore, considering total sales of finished
iron ore products, having commercialized around 33 million tons in
2017.
The lion’s shares of our company’s net
income from iron ore sales is derived from exports, primarily to Asia,
especially China.
In 2016, CSN commercialized 37 million tons
of iron ore, with 4.1 million tons channeled to steel
production.
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1.2. Limestone and Dolomite
The Bocaina mine, a limestone mine located
at Arcos/MG, is responsible for supplying calcitic limestone and dolomitic
limestone, raw materials used by us to manufacture steel and
cement.
In 2017, the Bocaina mining operation
produced 5.181 million tons of limestone and dolomite, having supplied (i)
around 1.784 million tons of (limestone and dolomite) steel fluxing agents
to the Presidente Vargas plant; (ii) 2.610 million tons of
non-steel-making limestone for manufacturing clinker at Arcos/MG; (iii) no
non-steel-production limestone was sent for cement production at the
Milling Unit located at the Presidente Vargas plant; and (iv) 0.251
million tons of limestone sub-products were sold as inputs for
agricultural limestone production.
In 2016, the Bocaina mining operation
produced 3.42 million tons of limestone and dolomite, having supplied (i)
around 1.284 million tons of (limestone and dolomite) steel fluxing agents
to the Presidente Vargas Plant; (ii) 1.508 million tons of
non-steel-making limestone for manufacturing clinker at Arcos/MG; (iii)
0.029 million tons of non-steel-production limestone for cement production
at the Milling Unit located at the Presidente Vargas Plant; and (iv) 0.158
million tons of limestone sub-products were sold as inputs for
agricultural limestone production. In addition, 0.247 million tons of
limestone production sub-products were stored for future use in clinker
production following the implementation of the new clinker furnace, which
commenced operations in the second half of 2016.
The clinker plant, the main raw material
for cement production, supplied 0.7 million, 0.4 million and 0.6 million
tons of clinker in 2017, 2016 and 2015, respectively, to the milling unit
in Volta Redonda/RJ.
1.3 Tin
One of the essential raw materials for
manufacturing tin plate, tin is produced by Estanho de Rondônia S.A.
(“ERSA”), a CSN subsidiary, with an installed production capacity of
approximately 3.2 thousand tons or tin per annum. ERSA consists of
Mineração Santa Bárbara, at Itapuã do Oeste, where cassiterite is
extracted, and by a smelter Ariquemes, from which the tin is obtained,
both located in the State of Rondônia.
The tin produced by ERSA is consumed by our
company in manufacturing tin plate at the UPV. In 2017, 360 tons of tin
were transferred to the UPV, and 193 tons and 251 tons, respectively, in
2016 and 2015.
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1.4. Tecar
The Solid Bulk Terminal (Tecar) is
responsible for shipping all iron ore traded by our company on overseas
markets. In addition, Tecar also offloads other products like coal,
petroleum coke, sulfur and zinc concentrate for internal consumption and
for several customers.
In 2017, Tecar shipped 26.8 million tons of
own and third-party iron ore and offloaded 3.3 million tons of coal, coke
and other reductants.
In 2016, Tecar shipped 32 million tons of
own and third-party iron ore and offloaded 2.3 million tons of coal, coke
and other reductants.
In 2015, Tecar shipped 28.2 million tons of
own and third-party iron ore and offloaded 3.1 million tons of coal, coke
and other reductants.
2. Steel
Dominating the entire steel production
chain, our company serves different industry segments with a diversified
range of high value-added products. It produces a wide range of types of
corrosion-resistant galvanized coated materials.
Our company’s major markets are:
automotive; civil construction; major networks (distribution); white goods
(household appliances); OEM (capital goods) and metallic
packaging.
The Presidente Vargas plant, our main steel
plant, has an installed capacity of 5.9 million tons of raw steel per
annum, using two blast furnaces, a steel mill with three oxygen-blowing
converters, three plate casting units and complete facilities for hot- and
cold-rolling, coating and finishing of flat steels.
Our company also produces tin plate at its
Volta Redonda unit, which is used in the packaging industry, and has an
installed production capacity of 1 million tons/annum.
The end of 2013 saw the inauguration of a
long steel production unit at the Presidente Vargas plant in Volta
Redonda, built to attain a production capacity of 500 thousand tons per
annum, including rods/bars and wire rods. The plant has an electric arc
furnace, continuous ingot casting for billets and a hot rolling mill for
long, round cross section products.
Our company has five galvanization lines in
Brazil distributed thus: three at the Presidente Vargas plant in Volta
Redonda, in the state of Rio de Janeiro, one at our company’s branch
located at Porto Real, also in the state of Rio de Janeiro and another at
our company’s branch located at Araucária in the state of Paraná.
Our company’s branch at Porto Real is
located on the axis between the cities of Rio de Janeiro and São Paulo,
primarily serving the automotive industry automotive with an extensive
range of international-standard products and services. It has a hot dip
galvanizing line, a services center cutting and producing blanks and a
modern laser welding center for producing welded
blanks.
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The CSN branch installed at Araucária in
the metropolitan region of Curitiba/PR is unit that provides stripping,
cold rolling, galvanization and pre-painting services, in addition to a
services center for cutting and production of blanks. Its primary products
are 55%Al-Zn alloy-coated steel, which combines gloss and durability, and
pre-painted steel, both with extensive applications in the civil
construction and white goods sectors. Moreover, this unit can produce pure
zinc-coated galvanized steel.
CSN also has three overseas subsidiaries:
(i) Companhia Siderúrgica Nacional, LLC, (“CSN LLC”), located at Terre
Haute, in the State of Indiana, USA, and (ii) Lusosider Aços Planos S.A.,
at Paio Pires, Portugal, which operate in stripping, cold rolling and
galvanization of long steels, and (iii) a Stahlwerk Thüringen GmbH
(“SWT”), located at Unterwellenborn, in Germany, specialized in the
production of steel sections, with an annual capacity of 1.1 million tons
of steel sections. The acquisition of SWT in January 2012 marked our
company’s entry in the long steels segment.
2.1 - Presidente Vargas
plant
Our company’s principal steel-producing
unit, the Presidente Vargas plant, has an installed capacity of 5.6
million tons of raw steel per annum. In 2017, raw steel production stood
at 4.4 million tons of flat steel and 0.2 million tons of long steels, and
production of 3.7 million tons of rolled products. In 2016, raw steel
production stood at 3.0 million tons, while the production of rolled
products reached 3.2 million tons. In 2015, raw steel production stood at
3.3 million tons, while the production of rolled products reached 4.0
million tons.
2.2- Porto Real Branch
Our company’s branch at Porto Real/RJ is
strategically located between the cities of Rio de Janeiro and São Paulo,
primarily serving the automotive industry automotive with an extensive
range of international-standard products and services. It consists of a
hot galvanizing line, cutting services and a modern laser welding center.
Production at the Porto Real branch stood at 293, 329 and 293 thousand
tons in 2017, 2016 and 2015, respectively.
2.3 –Paraná Branch
The CSN Paraná branch produces Galvalume®,
used primarily in open air construction because of its high resistance to
corrosion. It also produces pre-painted flat steels, a high value-added
product used in civil construction and in the production of white goods.
CSN Paraná has a capacity of 100 thousand tons per annum of pre-painted
steels and 220 thousand tons per annum of hot pickled products. Production
at the Paraná branch stood at 616, 491 and 509 thousand tons in 2017, 2016
and 2015, respectively.
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2.4- Companhia Metalúrgica
Prada
Founded in 1936, Companhia Metalúrgica
Prada (“Prada”) was acquired by CSN in 2006. Dedicated to the production
of steel packaging and lithograph services, Prada has two plants located
in São Paulo where its lithographic unit is located, as well as the
manufacture of packaging for chemical products and aerosols; and a units
Uberlândia-MG dedicated to food packaging, representing an important metal
sheeting customer of CSN. Prada also operates in the distribution market
an in services. In the southeastern region, it currently has a services
center and six product distribution centers, including: slabs/plates,
blanks, reels, UDC sections, welded seam piping, steel deck s and metal
roofing for a range of industry segments.
Its lines have the capacity to attend to
the volumes and technical specifications required by the food, chemical
and aerosol industries, as well as services.
Through its distribution segment, Prada
commercialized 176 thousand tons of steel in 2017. In 2016 and 2015, 279
thousand and 311 thousand tons, respectively, were commercialized though
the distribution segment.
2.5- Companhia Siderúrgica Nacional, LLC
Located in the United States, Companhia
Siderúrgica Nacional LLC manages a cold rolling and galvanizing plant
installed Terre Haute, in the State of Indiana. In 2017, CSN LLC produced
306 thousand tons of cold rolled and galvanized reels, while in 2016 and
2015, the unit produced 250 thousand and 247 thousand tons of those
products, respectively.
,2.6- Lusosider
Aços Planos S.A.
Installed at Aldeia de Paio Pires,
Portugal, Lusosider Aços Planos S.A. operates in cold rolling and
galvanization. In 2017, Lusosider produced 376 thousand tons of
galvanized, cold-rolled and pickled/oiled products, while in 2016 and
2015, these volumes reached 333 thousand and 321 thousand tons,
respectively.
2.7- Stahlwerk Thüringen GmbH
(SWT)
In 2012, CSN acquired Stahlwerk Thüringen
GmbH, consolidating its results commencing in February of the same year.
Located at Unterwellenborn, Germany, the plant specializes in
manufacturing steel sections used in construction. In 2017, SWT
commercialized 808 thousand tons of steel sections and, in 2016, this
volume amounted to 782 thousand tons of sections. In 2015, 743 thousand
tons of sections were commercialized.
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3. Logistics
3.1 Ports
Tecon, the container and general cargo
terminal is managed by Sepetiba Tecon S.A., a subsidiary of CSN, having
handled in 2017, 188 thousand containers, consisting of 989 thousand tons
of steel products and 9 thousand tons of general cargo. In 2016, the
terminal handled 140 thousand containers, consisting of 804 thousand tons
of steel de products and 14 thousand tons of general cargo. In 2015, the
terminal handled 152 thousand containers, consisting of 926 thousand tons
of steel de products and 206 thousand tons of general cargo.
3.2 Railroads
CSN has holdings in three railroad
companies: MRS Logística S.A. (“MRS”), FTL – Ferrovia Transnordestina
Logística S.A. (“FTL”) and Transnordestina Logística S.A. (“TLSA”).
MRS
CSN
directly and indirectly holds 34.94% of the capital of MRS Logística,
which operates the former Southeastern Network of Rede Ferroviária Federal
S.A (RFFSA), on the Rio de Janeiro - São Paulo - Belo Horizonte
axis.
The main
segment of operations of MRS are heavy haul customers (ore, coal and coke
cargoes), having transported around 120 million tons in 2017,
equivalent to 70% of the total transported by our
company.
In the
container sector, MRS retained its position as one of the largest
transportation companies in the Brazilian railroad industry,
transporting 1.84 million containers in 2017, against 1.78
million containers in 2016 and 1.53 million in 2015.
The
railroad transportation services provided by MRS are essential for
supplying raw materials and for the distribution of final
products.
All iron ore, coal
and coke consumed by the Presidente Vargas Plant is transported by MRS, as
well as part of the steel produced by CSN.
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FTL
CSN holds 90.78% of the equity of FTL,
which operates the former northeastern network of the RFFSA, covering
seven states: Maranhão, Piauí, Ceará, Rio Grande do Norte, Paraíba,
Pernambuco and Alagoas, with a total extension of 4,534 km and a current
transportation capacity of around 2 million tons/annum, the highlights
being fuel, cement, aluminum and ore, among other products.
In 2017, 2.8 million tons were transported,
worthy of note being fuel, construction material and pulp, among other
products, especially on the stretch between São Luís, Teresina and
Fortaleza. In 2016, 2.7 million tons were transported, 2,4 million tons in
2015 and 2 million tons in 2014.
TLSA
The railroad project provides for the
1,753-km extension of the network that will connect the railroad terminal
at Eliseu Martins (PI) to the Ports of Suape (PE) and Pecém (CE), crossing
several cities in the states do Piauí, Pernambuco and Ceará.
The railroad has a projected operating
capacity of 30 million tons/annum and should play an important role in the
development of the Northeastern region while creating a logistics option
for local economic development in the oil and derivatives, grains, mining
and agriculture sectors among others. At December 31, 2017 the equity
holding of CSN in TLSA was 46.30%, 49.01% at December 31, 2016 e and
56.92% at December 31, 2015
4. Energy
Its assets in this segment are (i) the Itá
hydroelectric plant, in Santa Catarina, in which our company holds an
indirect 29.5% equity stake through an equity interest of 48.75% in Itá
Energética S. A., corresponding to 197 average MW; (ii) the Igarapava
hydroelectric plant, in Minas Gerais, with a participation of 24.37
average MW, in which our company holds 17.9% of the total capital; and
(iii) the Central Thermal Electric Cogeneration Unit at the Presidente
Vargas plant in Volta Redonda/RJ, with an installed capacity of 235.2 MW,
an which uses as fuel the residual gases from steel production.
In 2014,
operations began of a Topo Recuperation Turbine with a 21MW capacity,
installed in blast furnace 3 of the Presidente Vargas plant at Volta
Redonda/RJ, which takes advantage of the gas pressure to generate
energy.
5. Cement
The cement industry and the steel industry
are highly complementary, supplying the entire civil construction segment,
and industry of fundamental importance for Brazil’s economic development.
Last year saw the beginning of the second
clinker production line at Arcos (MG). Our company is currently
self-sufficient in cement production, with an installed capacity of 4.7
million tons per annum. In 2017, 3.3 million tons of cement were produced,
and 2.8 million in 2016.
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CSN currently commercializes CP-II and
CP-III types of cement in the Baixada Fluminense region, the south of the
state of Rio de Janeiro, the Vale do Paraíba region and Greater São Paulo,
in addition to the state of Minas Gerais.
Net Income of the
Company
The tables and charts below illustrate our
company’s consolidated net income:
(ii) Factors that had a material effect on
the results of operations
The major sources of our company’s revenues
come from the production and commercialization of steel products and iron
ore. So, the level of economic activity in Brazil and worldwide has a
strong influence on its results.
Our company mostly sells steel products on
the domestic market. So, one of the factors affecting the results is the
pace of growth of the domestic economy, especially those sectors where the
use of steel is more intensive, such as the automotive industry, white
goods and civil construction. These sectors are directly influenced by the
availability and cost of consumer credit. Macroeconomic policy decisions,
such as interest rate levels or those affecting credit, like taxes and
other mechanisms, are permanently monitored. The impact of infrastructure
works is also an important factor, whether involving special events or the
growth of manufacturing sectors such as oil or civil construction and
Accelerated Growth Program works, among others.
Another influential factor is the balance
of global supply and demand for steel, which determines price levels and
also influences import levels.
In the mining business, the results are
directly affected by the balance of the global supply and demand for iron
ore. The lion’s shares of our company’s net income from iron ore sales is
derived from exports, primarily to Asia, especially China.
On the cost side, the prices for
metallurgical coal, coke, pellets and metals like aluminum, zinc and tin,
as well as currency rates, are important factors for steel production. In
the case of mining and logistics (rail transportation), fuel costs are an
important component.
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b) variances in revenues due to changes in
prices, exchange rates, inflation, changes in volumes and the introduction
of new products and services
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In the steel industry, in addition to
international prices, factors like currency rates, import rates, and
internal supply and demand can affect the prices of our products.
Furthermore, the effect of inflation and foreign exchange rates affects
costs and revenues, and may impact the profitability of the business.
In the case of mining, the great majority
of our sales come from exports of iron ore, and are therefore tied to
international demand. The exchange rate component is a critical factor for
determining cost competitiveness and revenue.
In the case of cement, revenue is
denominated in Reais, and variances in inflation can affect our results.
So, the foreign exchange component is less of an issue in this segment.
As most of our revenues come from the steel
and mining segments, we quantify below the effects of modifications to
volumes and prices on our revenues in these two segments.
In 2017, net income stood at R$18.5
billion, up by 8% over 2016, primarily because of adjustments to the
prices of steel products, while in the mining segment, the increase was a
factor of the higher prices for iron ore. Net income from steel
manufacturing was R$12.9 billion, or 70% of consolidated net income, with
sales of 4.9 million tons of steel, of which 2.8 million on the domestic
market and 2.1 million on the overseas market (bearing in mind exports and
overseas sales through the subsidiaries Lusosider, CSN LLC and SWT). Net
income from mining amounted to R$4.6 billion, accounting for 25% of
consolidated net income, with sales of 33 million tons iron
ore.
In 2016, net income stood at R$17.1
billion, up by 12% over 2015, primarily because of adjustments to the
prices of steel products, while in the mining segment, the increase was a
factor of the higher volumes of iron ore commercialized and the higher ore
prices. Net income from steel manufacturing was R$11.5 billion, or 67% of
consolidated net income, with sales of 4.9 million tons of steel, of which
2.8 million on the domestic market and 2.1 million on the overseas market
(bearing in mind exports and overseas sales through the subsidiaries
Lusosider, CSN LLC and SWT). Net income from mining amounted to R$4,582
billion, accounting for 27% of consolidated net income, with sales of 36,9
million tons iron ore, predominantly on the overseas market.
In 2015, net income reached R$15.3 billion,
5% down against 2014, primarily because of the lower revenue from the
mining segment. Net income from steel manufacturing was R$11.2 billion, or
68.2% of consolidated net income, with sales of 5.0 million tons of steel,
of which 3.0 million on the domestic market and 2.0 million on the
overseas market (bearing in mind exports and overseas sales through the
subsidiaries Lusosider, CSN LLC and SWT). Net income from mining amounted
to R$3,2 billion, accounting for 19,4% of consolidated net income, with
sales of 25,7 million tons iron ore, predominantly on the overseas
market.
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c) impact of inflation, variation in prices
of the principal inputs and products and exchange and interest rates on
our results of operations and financial results
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Part of our costs and expenses are tied to
the Real, with an inflation adjustment clause in the contracts.
As mentioned in sub-section (a), the price
of certain inputs directly affects our results, especially:
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Coal, coke, pellets and metals, in the
case of steel, linked to the US dollar;
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Fuel, in the case of mining and railroad
transportation; and
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Clinker, in the case of cement.
Besides manufacturing inputs, another
important factor is the price of equipment and services, since we have a
substantial portfolio of investment projects in all our business
areas.
Our company is exposed to interest and
currency rate risks on its loans, financing and financial investments.
Readily available financial resources are
channeled to investment funds which include repo transactions whose
underlying securities are private and government bonds with pre-fixed
yields and immediate liquidity. Private securities are financial
investments in bank certificates of deposit (CDB) whose yields are linked
to the variance in the interbank certificate of deposit (CDI) rates, while
government securities basically involve repo transactions backed by
National Treasury Notes. In addition, we also invest a portion of our
financial resources overseas, in time deposits bearing pre-fixed interest
rates.
CSN has foreign and local currency debt
bearing pre- and post-fixed rates
On December 31, 2017, 50% of our debt was
denominated in
Reais
and 50% in other currencies.
On December 31, 2016, 52% of our debt was
denominated in
Reais
and 48% in other currencies.
On December 31, 2015, 47% of our debt was
denominated in
Reais
and 53% in other currencies. On December
31, 2014, 54% of our debt was denominated in
Reais
and 46% in other currencies.
The debt is linked to Libor (London
Interbank Offered Rate), the CDI (Interbank Certificate of Deposit) rate
and the TJLP (Long-Term Interest Rate). On December 31, 2017, around 65.3%
of our debt was tied to floating interest rates (Libor, TJLP, and CDI), in
comparison with 67% on December 31, 2016.
Consolidated net currency exposure on
December 31, 2017 is shown in the following table:
It should be stressed that CSN uses a range
of instruments to hedge against both currency and interest rate risk.
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10.3 Significant effects created or that will
likely create by the following events in the Company's financial statements and
results:
a) introduction or disposal of an operating
segment
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In
2017, there was no introduction or disposal of operating
segment.
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b) creation, acquisition or sale of
shareholding
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There was no change.
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c) unusual events or
transactions
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In
2017, there were no unusual events or transactions that significantly
affected the Company's business.
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10.4
The following comments refer to the consolidated
financial statements of the Company for the year ended 12/31/2017, 12/31/2016
and 12/31/2015.
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a) significant changes in accounting
practices
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The
table below lists the standards and interpretations issued by IASB
(International Accounting Standard Board), but that have not yet come into
effect and have not been adopted in advance by the Company for the year
ended on December 31, 2017, since the adoption is not allowed for entities
that disclose their financial statements in accordance with the accounting
practices adopted in Brazil.
To
date, the impacts of the new standards are under study and evaluation and,
therefore, the Management is unable to establish the qualitative and
quantitative effects of the application of these standards.
In
addition to those listed below, there are no other standards and
interpretations issued and not yet adopted that may, in the Management's
opinion, have a significant impact on the results or equity disclosed by
the Company.
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Standard
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Main points introduced by the
standard
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Comes into effect on
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IFRS 9 - Financial
Instruments
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IFRS 9 maintains, but simplifies, the
combined measurement model and establishes two main categories of
measurement for financial assets: amortized cost and fair value. The
classification depends on the entity's business model and on the
characteristics of the contractual cash flow of the financial asset.
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January 1, 2018
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For financial liabilities, the standard
maintains most of the requirements of IAS 39.
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The main change refers to cases in which
the calculated fair value of the financial liabilities should be
segregated so that the part concerning the fair value related to the
credit risk of the entity itself is accounted in “Other comprehensive
results” and not in the result of the period.
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The guidance in IAS 39 on impairment of
financial assets and hedge accounting remains applicable.
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This new standard provides the principles
that an entity will apply to establish the revenue measurement and when it
should be accounted.
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IFRS15 - Revenue from Agreements with
Customers
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The standard replaces IAS 11 - Construction
agreements, IAS 18 - Revenues and corresponding interpretations.
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January 1, 2018
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This new standard establishes the
principles to account, measure, present and disclose leases and introduces
a single model for the accounting of leases in the balance sheet for the
lessees. A lessee accounts an asset of right of use that represents its
right to use the leased asset and a lease liability that represents its
obligation to pay for the lease. Optional exemptions are available for
short-term leases and low-cost items. For lessors, the accounting
treatment remains basically the same, with the classification of leases as
operating leases or financial leases, and the accounting of these two
types of lease being different. IFRS 16 replaces the current lease
standards, including IAS 17/CPC 06 (R1) - Leasing transactions and ICPC 03
(IFRIC 4, SIC 5 and SIC 27) - Other aspects of leasing
transactions.
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IFRS16 - Leases
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January 1, 2019
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IFRIC 22 - Transaction in Foreign Currency
and Early Payment
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This interpretation deals with transaction
in foreign currency (or part thereof) when the entity recognizes the
non-monetary asset or non-monetary liability arising from the payment or
early receipt before the entity accounting the related asset, expense or
revenue (or part thereof).
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January 1, 2018
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IFRIC 23 - Uncertainties Regarding Tax
Treatments
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It may not be clear how the tax law may be
applied to a particular transaction or circumstance. This interpretation
complements CPC 32/IAS 12 - Taxes on profit, clarifying how to deal with
the effects of uncertainty in the accounting of taxes on
profit.
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January 1, 2019
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The following information are about
possible impacts on the adoption of IFRS 9 / CPC 48 and IFRS 15 / CPC 47
that were available in the preparation of these financial statements.
Therefore, these preliminary assessments and their potential impacts are
subject to change until the initial adoption is disclosed in the 2018
financial statements.
- IFRS 9 / CPC 48 Financial
Instruments
Classification and measurement of financial
assets: Management evaluated the classification and measurement of
financial assets offered by the new pronouncement based on its diagnosis,
business model, cash flow expectations and observing the financial assets
model management. In this way, it concluded that its investment in
Usiminas shares would be appropriately classified in the category of "fair
value through profit and loss" and that loans and receivables would be
classified in the category of measured at amortized cost.
In the classification of the "fair value
through profit or loss" category, the gains or losses arising from the
price quotation of the shares are recorded directly in the result at the
time of adoption and throughout all future periods. In turn, as it was an
initial adoption, the Company evaluated the possible impacts related to
the investment in Usiminas shares and the amount previously determined for
recognition in the income statement would represent a revenue in the group
"Other operating income and expenses" in approximately R $ 1.5 billion
(gross), arising from the recording of the accumulated balance currently
recorded in other comprehensive income.
- IFRS 15 Revenue from Contracts with
Customers
The Company's Management evaluated all
stages of the new standard for the recognition of revenue from contracts
with customers. Based on this analysis, the Company did not identify
material measurement impacts on the application of this
standard.
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49
The observed impacts are related to the
review of internal procedures, with the objective of ensuring that the new
contracts with clients are properly evaluated and accounted in accordance
with the principles of the new standard.
- IFRS 16 Leasing
In regards to leasing, the Company will
evaluate the effects of applying the new standard during 2018, in its main
contracts.
The Company does not expect material
impacts arising from the application of the new standard.
- IFRIC 22 - Foreign currency transaction
and down payment
In relation to IFRIC 22, the Company will
evaluate the effects of applying the new interpretation during 2018 in its
foreign currency operations.
The Company does not expect material
impacts arising from the application of the interpretation.
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b) efeitos significativos das alterações em
práticas contábeis
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Não houve alteração de prática
contábil.
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c) reservations and emphases in the
auditor's opinion:
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Reservation
We inform that there are no qualifications
in the independent auditors' reports for the fiscal years 2017, 2016 and
2015
Emphases
In the last three years the jointly
controlled subsidiary Transnordestina Logística S.A. was mentioned in the
opinion of the independent auditors in the emphasis paragraph. We comment
below the opinion of the independent auditors for the 2017, 2016 and 2015
financial years.
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1. Operational continuity of the
jointly controlled subsidiary Transnordestina Logística
S.A.
The railway network of the jointly-owned
subsidiary Transnordestina Logística S.A. is under construction and the
deadline for conclusion of the work is currently under review and
discussion with the Governmental Agencies. The completion of the work
depends on resources still to be made available, characterizing relevant
uncertainty and, consequently, doubts about the start-up and operational
continuity of TLSA. The opinion of the independent auditors is not
qualified by virtue of this matter.
We comment below the emphasis paragraphs in
the independent auditors' report for the 2016 and 2015 financial
years.
1.
Restatement of the financial statements as
of December 31, 2015
At the end of 2016, the Company decided to
revise the accounting treatment given to the operation performed by the
Company on November 30, 2015 and concluded on December 31, 2015, which
resulted in the combination of mining and related logistics business
involving its subsidiary CSN (Formerly Congonhas Minérios SA) and Nacional
Minérios SA (NAMISA), with no change in its business structure, which
resulted in significant adjustments and, consequently, the need to restate
the financial statements for the year ended December 31, 2007. It should
be noted that these financial statements, in turn, had already been
voluntarily restated on November 14, 2016 due to the change of
interpretation in the application of Technical Pronouncement CPC 15 / IFRS
3 - Business Combination identified during discussions that the Company
with its independent auditors on the l of the presentation of the item of
participation of non-controlling shareholders of CSN Mineração S.A. in the
consolidated financial statements.
The restatement of the financial statements
for the year ended December 31, 2015, originaly detailed review of the
transaction of the aforementioned business combination, as well as a
thorough review of various components and transactions, including studies
that support the recognition and maintenance of amounts of long-lived
assets, such as investments in subsidiaries and affiliates, goodwill,
property, plant and equipment and tax credits.
As a consequence of this review, a
long-lived asset whose realization depends on projections with observable
premises was re-evaluated and, in turn, had its expectation of adjusted
realization. Accordingly, the financial statements for the year ended
December 31, 2015, originally dated March 28, 2016 and resubmitted on
November 14, 2016 due to adjustments in the non-controlling interest, were
restated for the second time in of the detailed reviews mentioned
above.
Operational continuity of the jointly
controlled subsidiary Transnordestina Logística S.A.
Note 10.d) to the financial statements for
the year ended December 31, 2016, describes the stage of completion of the
new railway network of the jointly-owned subsidiary Transnordestina
Logística SA ("TLSA"), currently under construction, and whose deadline
for completion of the project, initially scheduled for January 2017, is
currently under review and discussion with government agencies. The
completion of the project works and the consequent start of operations
depend on the continued availability of resources from its shareholders
and third parties.
Nesse sentido, a TLSA realizou um teste de
recuperabilidade de seus ativos próprios de longa duração utilizando-se do
método do fluxo de caixa descontado. Adicionalmente, a CSN, como
investidora, realizou o seu teste de recuperabilidade da sua participação
na TLSA através da capacidade de distribuição de dividendos pela TLSA,
metodologia conhecida como
Dividend Discount Model
, ou DDM, para remunerar o capital
investido por seus acionistas. Mais detalhes do teste de recuperabilidade
e premissas utilizadas, estão apresentadas na nota explicativa n.10.d) das
demonstrações financeiras do exercício findo em 31 de dezembro de 2016.
Como resultado do teste efetuado, a Companhia reconheceu uma perda na
mais-valia do investimento da TLSA no valor de R$ 387.989 mil
registrada em outras operacionais e R$ 131.916 mil de impostos
diferidos.
In this regard, TLSA conducted a
recoverability test of its own long-lived assets using the discounted cash
flow method. In addition, CSN, as an investor, performed its impairment
test of its stake in TLSA through the dividend distribution capacity of
TLSA, a methodology known as Dividend Discount Model, or DDM, to
remunerate the capital invested by its shareholders. Further details of
the impairment test and assumptions used are presented in note n.10.d) to
the financial statements for the year ended December 31, 2016. As a result
of the test performed, the Company recognized a loss in the investment of
TLSA in the amount of R $ 387,989 thousand recorded in other operating
companies and R $ 131,916 thousand in deferred taxes.
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51
10.5 The officers must appoint and comment on the
Company's key accounting policies, in particular the accounting estimates made
by management on matters that are uncertain and significant to the description
of the financial situation and results that require subjective or complex
evaluation, such as: provisions, contingencies, revenue accounting, tax credits,
long-term assets, useful lives of noncurrent assets, pension plans, exchange
adjustments to foreign currency, costs with environmental recovery, criteria for
the test of assets recovery and financial instruments
Key accounting policies of the
Company:
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The preparation of the financial statements
in accordance with International Financial Reporting Standards (IFRS) and
the standards issued by the Accounting Pronouncements Committee (CPC -
Comitê de Pronunciamentos Contábeis) require the use of certain accounting
estimates and also the evaluation of the management in the application of
the Company's accounting policies.
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52
The estimates are based on the best current
knowledge of each fiscal year. Changes in facts and circumstances may lead
to a review of these estimates. Actual future results may differ from
these estimates.
The significant assumptions and estimates
that, in the evaluation of the Company's management, require deeper
evaluation or are more complex in order to prepare the financial
statements, are as follows:
(a)
Cash and Cash
Equivalents
Cash
and cash equivalents include
cash, bank deposits and other short-term investments of immediate
liquidity, redeemable
within 90 days
after being contracted,
promptly convertible into an amount known as cash and with insignificant
risk of change in its market value. Bank certificates of deposit and
government bonds that do not meet the criteria above are not considered
cash equivalents and are classified as financial investments.
(b)
Fair Value of Business
Combination
The identifiable assets acquired and
liabilities undertaken in a business combination are measured at fair
values at the acquisition date, as required by CPC 15 (R1) “Business
Combination”. Consequently, when establishing the allocation of the
purchase price, the fair values of certain items are adjusted, such as
inventories, property, plant and equipment, mines, actual value of
noncurrent assets and liabilities, among others, which are established by
valuation reports made by independent evaluators. As of acquisition date,
the Company has a maximum term of 12 months (measurement period) to
account other (better) information on the fair value accounted on the
acquisition date. The acquisition method is used to account for each
business combination carried out. The Company accounts the non-controlling
interest in its financial statements, by the proportional percentage of
the fair value of the net assets of the acquiree.
Goodwill is represented by the positive
difference between the amount paid and/or payable for the acquisition of a
business and the net amount of the fair value of the assets and
liabilities of the subsidiary acquired. If there is a gain due to an
advantageous purchase, the Company must immediately account the result for
the period, at the acquisition date.
(c)
Asset’s Useful Life
Depreciation is calculated by the linear
method based on the remaining useful life of the assets as per note 9 and
10 of the consolidated financial statements. The useful lives initially
established by independent experts are reviewed, at least every year, for
all units. If there are parts of a fixed asset with different useful
lives, these parts are accounted separately as items of
immobilized.
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53
(d)
Mineral Reserves and Useful
Life of Mines
Estimates of proven and likely reserves are
periodically evaluated and updated. These reserves are established using
geological assessment techniques generally accepted. The calculation of
reserves requires the use of several assumptions by the mining team and
changes in some of these assumptions may have a significant impact on the
likely and proven reserves recorded and on the useful life of the
mines.
(e)
Impairment Test of Tangible and
Intangible Assets
Assets that have an indefinite useful life,
such as goodwill, are not subject to amortization and are tested annually
to verify the impairment. Assets that are subject to amortization or
depreciation are reviewed for impairment whenever events or changes in
circumstances indicate that the book value may not be recoverable. The
amount accounted in an impairment loss corresponds to the book value of
the asset that exceeds its recoverable value, this being the higher amount
between the asset's fair value less costs to sell and its value in use. To
carry out the impairment evaluation, the assets are grouped at the lowest
levels for which there are separately identifiable cash inflows (Cash
Generating Units - CGUs). Non-financial assets, except goodwill, that have
been impaired are subsequently reviewed to verify a possible reversal of
the impairment at the reporting date.
Until December 31, 2017, the Company
classified the equity instruments (shares) as available-for-sale, where
gains and losses arising from the variation of the share price were
recorded directly in shareholders' equity under other comprehensive income
and at each impairment loss was recognized in profit or loss.
As of January 1, 2018, CPC 48 / IFRS 9,
equity instruments held for trading shall be classified at fair value
through profit or loss (VJR). In this way, changes in fair value will be
recognized directly in the income statement
(f)
Pension and Post-Employment
Benefits
The pension plans granted by the Company
substantially cover all employees. The amounts recorded depend on several
assumptions that are established by actuarial calculations, in accordance
with CPC 33 (R1) - Employee’s benefits. These assumptions are described in
note 26 of the Company's consolidated financial statements and include,
among others, the return rate on investments and nominal salary growth.
When the benefits of a plan are increased, the part of the increased
benefit related to past employees’ service is accounted as profit or loss
by the linear method over the average term until the benefits become
vested. Under the condition of the benefits becoming vested, the expense
is immediately accounted in the result.
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54
The Company opted to immediately account
all actuarial gains and losses resulting from current benefit plans in
other comprehensive results and subsequently transferred to accumulated
profit or loss. In the event of extinction of the plan, the accumulated
actuarial gains and losses are accounted in the result.
The Company and some subsidiaries offered
post-retirement health benefits to their employees. The expected costs of
these benefits were accrued throughout the employment, using the same
accounting methodology that is used for the current pension plan benefits.
These obligations are evaluated annually
with qualified independent actuaries.
(g)
Provisions
Provisions for legal
proceedings are account only when the possibility of loss is considered
likely and the amount can be estimated with reasonable certainty. This
estimation is carried out by the Company's management together with legal
advisors. The estimates are duly recognized in our financial statements in
accordance with CPC 25 - Provisions, Contingent Liabilities and Contingent
Assets.
The Company is also
involved in legal and administrative proceedings in order to obtain or
defend legal rights in tax matters that it deems unconstitutional and
considers that the amounts should not be paid. The amounts accounted for
these tax disputes and other contingencies may be subject to future
changes, due to the developments in each case, such as changes in
legislation or specific final court ruling for the Company. In the
currently uncertain Brazilian legal environment, as well as in other
jurisdictions, require the management to make estimates and evaluations
regarding the results of future events. Other details on provisions can be
found in explanatory note 16 of the Company's consolidated financial
statements.
(h)
Deferred Income Tax and Social
Contribution
The actual and deferred income tax and
social contribution are calculated based on the tax laws enacted on the
date of the balance sheet, including in countries where the Group operates
and generates taxable income. The management periodically evaluates the
positions taken in the ascertainment of income taxes, assessing situations
in which the applicable tax regulations may have different
interpretations. The Company establishes provisions, when appropriate,
based on the estimated amounts of payment to the tax authorities. Actual
and deferred taxes are accounted in the result, unless related to the
business combination, or items accounted directly in the net equity.
The actual tax is the event to be paid or
expected to be received on the taxable profit or loss for the year at
rates decreed on the date of submission of the financial statements and
any adjustment to taxes payable concerning prior years.
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The deferred tax is established for
temporary differences between the book value of assets and liabilities for
accounting purposes and the corresponding amounts used for tax purposes.
The deferred tax is not established for temporary differences from the
initial accounting of assets and liabilities in a transaction that is not
a business combination and does not affect the accounting profit nor loss
or tax loss, and the differences concerning investments in subsidiaries
when it is likely that they will not be reversed in the foreseeable
future.
In addition, the deferred tax liabilities
are not established for temporary tax differences from the initial
accounting of goodwill. The deferred tax is measured by applying the rates
that are expected to be applied to temporary differences when they are
reversed, based on the laws issued up to the date of submission of the
financial statements.
The actual tax income and social
contribution are submitted as net, by the taxpayer, in liabilities when
there are amounts payable, or in assets when the amounts paid in advance
exceed the total amount due at the reporting date.
The deferred tax assets and liabilities are
offset if there is a legal right to offset actual tax liabilities and
assets and they are related to income taxes levied by the same taxing
authority on the same taxable entity.
An asset of deferred income tax and social
contribution is established for tax losses, tax credits and deductible
temporary differences not used, in cases in which is likely that the
future taxable income will be available and against which it will be used.
A review is carried out annually to verify the existence of taxable future
profits and a provision for loss is established when the realization of
these credits is not likely in a period of less than 10 years.
(i)
Provisions for Doubtful
Credits
Estimated losses with doubtful credits were
established in an amount considered enough to withstand possible losses.
To establish these estimated losses the management's assessment considers
the client's background, financial situation and the position of our legal
advisors regarding the receipt of these credits.
(j)
Fair Value of Derivative
Financial Instruments
·
Derivative instruments
The Company accounts in its balance sheet
all derivative financial instruments at fair value. Certain derivative
instruments do not qualify for hedge accounting. The variation in the fair
value of any of these derivative instruments are immediately included in
the income statement under “financial result”.
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Regarding the measurement of the fair
value, we must address factors such as the exchange rate and future
interest rates. For a better understanding of the possible impact of the
exchange and interest rates on the Company's main instruments and
positions, see explanatory note 12 of the Company's consolidated financial
statements.
·
Hedge activities
The Company adopts the hedge accounting and
establishes certain financial liabilities as hedging instruments for
exchange rate risks connected to cash flows from expected and highly
likely exports (cash flow hedge).
At the beginning of the transaction, the
Company documents the relationship between the hedging instruments and
hedged items (expected exports), as well as the purposes of the risk
management and the strategy to carry out several hedging transactions. The
Company also documents its assessment, both at the start of the hedge and
on an ongoing basis, that the hedge transactions are highly effective to
offset variations in the cash flows of hedged items.
The effective part of the changes in the
fair value of the financial liabilities established and classified as cash
flow hedges is accounted in the net equity under “Hedge Accounting”. Gains
or losses related to the non-effective part are accounted as financial
income, when applicable.
The amounts accumulated in the equity are
realized in the income statement for the periods in which the expected
exports affect the result. When a hedge instrument prescribes or is
settled in advance, or the hedge relationship no longer meets the Hedge
Accounting criteria or if the Management decides to discontinue the Hedge
Accounting, any cumulative gain or loss in the equity remains accounted in
the net equity. When the expected transaction is carried out, the gain or
loss will be reclassified as result. When an expected transaction is no
longer expected, the cumulative gain or loss accounted in the net equity
is immediately transferred to the income statement under “Financial
income”.
The transfers of hedged amounts are shown
in note 12.b
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10.6 Relevant items not evidenced in the
Company's financial statements:
a) assets and liabilities held by the Company,
directly or indirectly, that were not included on its balance sheet
(off-balance sheet items), such as:
(i) operating leases, assets and
liabilities;
(ii) wrote-off receivables portfolios on which the
entity has risks and obligations, indicating their respective
liabilities;
(iii) agreements for future purchase and sale of
goods or services;
(iv) agreements for constructions not
completed;
(v) agreements to receive future
financing.
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The Company has the following significant
liabilities that are not included in its financial statements (amounts in
R$ thousand):
Take-or-Pay Agreements
On December 31, 2017 and 2016, the Company
had take-or-pay agreements, as shown in the table below:
Concession and Lease
Agreements
The future minimum payments regarding
government concessions, on December 31, 2017, are as shown in the table
below:
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b) other items not included in the
financial statements:
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Not
applicable.
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58
10.7. Concerning each of the items not evidenced
in the financial statements indicated in item 10.8, comment
on:
a) how these items change or may change the
revenues, expenses, operating results, financial expenses or other items
of the Company's financial statements:
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See item 10.6
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b) nature and purpose of the
transaction:
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See item 10.6
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c) nature and amount of the obligations
undertaken and of the rights generated in favor of the Company as a result
of the transaction:
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See item
10.6
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10.8. Main elements of the Company's business
plan:
(a) investments,
including:
(i) quantitative and qualitative
description of the investments in progress and the investments
planned;
(ii) sources of investment financing;
and
(iii) relevant divestitures in progress and
planned divestitures.
b) already disclosed acquisitions of
plants, equipment, patents or other assets that should materially affect
the productive capacity of the Company;
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Quantitative and qualitative description of
on-going and projected investments
The issuer’s investment budget for 2018
includes conclusion of the on-going capital projects and current
investment projects essential for maintaining the conditions for
operational capability, the environment and safety. New investments will
be evaluated taking into account the marketing conditions, financial
wherewithal and the outlook for additional cash generation of each
project.
Bearing in mind those guidelines, the
projected investments for 2018 are of the order of R$1.1 Bi. We give the
highlights below:
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Steel: R$581 million, especially for
current blast furnace investments, technological modernization projects at
the UPV, operating safety investments at the UPV and maintenance projects
at the other units;
Mining: R$393 million, especially current
investments in dams, treatment and filtering of tailings, on-going
projects for processing of iron ore, projects for increasing the volume
and improving the quality of quality do iron ore and current projects for
investing in maintenance of the units;
Cement: R$60 million, especially
maintenance projects involving the Arcos and Volta Redonda
units;
Other investments: R$54 million for current
investments in the other operations (like FTL and Tecon) and those of a
corporate nature (like TI).
In 2017, the issuer’s investments amounted
to around R$1.065 Bi, the highlight being:
Steel: R$481 million, especially the revamp
of the UPV coke batteries, environmental projects (UPV consent decree),
general repairs to equipment at the UPV, technological modernization
projects at UPV and maintenance projects at the other units;
Mining: R$378 million in projects for
adding pellet feed capacity using tailings deposited at the dams, as well
as current investments in dams, improvements to the quality of the iron
ore and current investment projects de investments at the
units;
Cement: R$118 million, especially the
conclusion of expansion projects at Arcos (a new clinker oven) and unit
maintenance projects;
Other investments: R$96 million for current
investments in the other operations (like FTL and Tecon) and those of a
corporate nature (like TI).
Below is a breakdown of the main
investments planned by the issuer:
Mining (iron ore)
Bearing in mind the marketing conditions,
financial wherewithal and the outlook for additional cash generation from
the project, during the initial phase an evaluation is made of expanding
production capacity to enhance the quality of the iron ore at the Casa de
Pedra mine and the expansion of capacity at the port in Itaguaí/RJ (Tecar)
to accompany the increased capacity of the mine.
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Steel
The investment plan for the years ahead are
giving priority to current investment projects in efficiency gains, such
as the revamp of the coking ovens, sintering, blast furnace, the steel
mill, stripping and continuous casting, in addition to executing
operational safety projects, technological modernization at the UPV and
maintenance projects at the other units.
Cement
In the second half of 2016, CSN commenced
operations at a new clinker production line at Arcos, where a clinker oven
already functioned using limestone from its own mine and two cement mills.
Maintenance projects at these two units are expected to be carried out in
2018.
FTL - Ferrovia Transnordestina Logística
S.A.
A company recently constituted to take over
the spun-off portion of Transnordestina Logística S.A. and to operate the
former Northeastern Network. It has a concession that was granted on
December 31, 1997, renewable for a further 30 years, to develop a public
service for running the railroad system in Brazil’s northeastern region.
The Northeastern railroad system covers 4,238 km of railroad, operating in
the states of Maranhão, Piauí, Ceará, Paraíba, Pernambuco, Alagoas and Rio
Grande do Norte. The investments planned involve current investment
projects and modernization of the mainline infrastructure, rolling stock
and operations to increase the railroads competitiveness and attract fresh
volumes of cargo.
Ports (Tecon)
The container terminal (Tecon) managed by
Sepetiba Tecon S.A., a subsidiary of CSN, is a Hub Port. According to
ABRATEC- the Brazilian Association of Container Terminal for Public Use,
Tecon ranks as the largest container terminal in Rio de Janeiro and one
the largest in its segment in Brazil.
Tecon was expanded by setting up a project
to equalize berth 301, creating a continuous wharf for simultaneous
operation of large ships. This project expanded the terminal’s capacity to
around 440 thousand containers a year.
The planned investments will prioritize
current investment projects intended for operational
modernization.
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Sources of financing for the
investments
The issue expects to finance the
investments using its own funds, financing from public and private sources
and occasional strategic partnerships.
Relevant on-going and projected
divestments
With the primary aim of reducing the
Company’s financial leverage, management is engaged in pursuing a
financial agenda that could include the divestment of a set of assets.
Nevertheless, one cannot confirm that the sale within a 12-month period of
any of the earmarked assets is highly likely. The company is looking at a
range of selling scenarios that vary depending on different macroeconomic
and operating assumptions. Within this context, the company has not
segregated or reclassified those assets in the financial statements as
discontinued operations, in accordance with CPC 31 (IFRS 5).
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c) new products and services,
indicating:
(i) description of the on-going
research already disclosed:
(ii) total expenditures by the
issuer in research for the development of new products or
services;
(iii) projects under
development already disclosed; and
(iv) total expenditures by the issuer in
the development of new products or services.
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CSN invests in research, development and
innovation to enhance its products and processes, in order to meet market
demands and its customers’ expectations. Among the new products developed,
worthy of notice are:
•
Expansion of the dimensional offer of DP600-class Advanced Dual Phase
High-Resistance Galvanized Steel in the Brazilian automotive
market.
•
Consolidation of FB590-class Ferrite-Bainite Advanced High-Resistance
Galvanized Steel, with thicknesses exceeding 2.0mm, with galvanized hot-
and cold-rolled substrates on the Brazilian automotive market.
•
Consolidation, on the Brazilian civil construction market, of G450-class
High-Resistance Structural Galvanized Steel.
•
Consolidation of the supply of Pre-Painted Steel with new colors for
export.
•
Consolidation of IF (Interstitial-Free) High-Resistance steel, IF 210 HSS
Pre-Painted Galvanized (Zn-Fe GA alloy) steel with a thickness of 0.70mm
for use in fuel tanks on the domestic automotive
market.
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62
•
An increase in the portfolio of Stripped High-Resistance Hot-Rolled
Products destined for the manufacture of small-diameter piping submitted
to drawing and thermal treatment processes.
•
Customization of
Extrafino
® Cold-Rolled steels (BFE), specification
CSN LUM 60, for use in the light fittings market.
•
Certification of Hot- and Cold-Rolled products totaling 5 new
specifications, to meet the global requisites of Ford and PSA.
•
Development CSN-LEX TH 390 tin plate, with a thickness of 0.17 mm and a
covering of 2g/m2, for the bodies of expanded metallic
packaging.
•
Application of standard tin plate to the production of metallic packaging
bodies 99 mm in diameter, in the dehydrated milk product’s segment to
enhance the competitiveness with substitute packaging.
Investments in the modernization and
technological upgrading of the PD&I laboratories under the Project for
Innovation in Advanced High-resistance Steel Products for Application on
an Industrial Scale in the Automotive Industry, financed by the FINEP,
totaled R$2.600,00 thousand in 2017.
The following products are in the
development phase:
•
Dual Phase Advanced High-Resistance Galvanized Steel in the DP450, DP500,
DP600HF (High Formability), DP800 and DP1000 classes, for application in
car body panels and structural items.
•
CSN Press Hardening Steel - PHS 1200/1500 GA for Drop Forging, intended
for application in structural components of car bodies.
•
CSN Galvanized steel for application in piping for bus body
structures.
•
High-Resistance Galvanized IF (Interstitial-Free) steel, in the IF 260 and
300 HSS classes, intended for application in structural items for the
automotive segment.
•
Texturized Pre-Painted Material for use in refrigerator cabinets in the
white goods segment.
•
G500 and G550-class High-Resistance Structural Galvanized Steel for the
civil construction segment, with the focus on silo
applications.
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63
•
High-Resistance 55%Al-Zn-coated Structural steel for construction systems
in general.
•
Hot-rolled and hot-rolled stripped steel on the High-resistance and Low
Alloy (ARBL) class, with 650MP-class properties for the auto parts and
agricultural segments.
•
High-Carbon, CSN AC80-specification steel for application in ball bearing
raceway rings for clutches.
•
Development of a new production process for High-resistance and Low-Alloy
Cold-Rolled (HSLA 420) steels for application in the automotive
industry.
•
CSN-SOFT_T3,5,-specification tin plate, via continuous baking for expanded
can bodies, substituting the box annealing route.
Total expenses in 2017 with research,
development and innovation in new products and services were R$15,608
thousand.
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10.9 Other factors with a materially
relevant impact on operating performance that have not be identified or
commented on in the other sub-sections of this
section.
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All material and pertinent information has
been identified or commented on in the other sub-sections of this
section.
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64
ATTACHMENT II
ALLOCATION OF THE NET INCOME
Base Date: December 31, 2017
(as per Exhibit 9-1-II of CVM Instruction No. 481, of
December 17, 2009)
1.
Inform the net income for the fiscal
year
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Net income for the fiscal year of 2017 was R $
10,272,120.82, and was used to offset accumulated losses in prior years,
with the respective amortization of the Accrued Loss Account, pursuant to
article 30, paragraph 1, of the Company's Bylaws. Company and article 189,
caput, of Law 6,404 / 76.
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2.
Inform the overall amount and the
value per share of the dividends, including advance dividends and interest
on own capital already declared
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Not applicable.
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3.
Inform the
percentage of the net income for the fiscal year that was
distributed
|
Not applicable.
|
4.
Inform the overall amount and the
value per share of dividends distributed based on profits of previous
fiscal years
|
There was no distribution of profits from previous
years.
|
5.
Inform, after deduction of anticipated
dividends and interest on own capital already
declared:
|
a)
The gross amount of dividends and
interest on own capital, in a segregated form, per share of each kind and
class.
Not applicable.
b)
The form and the period for
payment of the dividends and interest on own capital.
Not applicable.
c)
Any incidence of updating and interest
and dividends and interest on own capital
Not applicable.
d)
Date of the declaration of payment of
the dividends and interest on own capital considered for identification of
the shareholders that shall have the right to receive them
Not applicable.
|
|
65
6.
If there has been declaration of
dividends or interest on own capital based on profits assessed in
six-monthly balance sheets or in shorter periods
|
a)
Inform the amount of the dividends or
interest on own capital already declared
Not applicable.
b)
Inform the date of the relevant
payments
Not applicable.
|
7.
The comparative table giving the
following values ??per action of each class and
class:
|
a)
Net income for the year and the previous three (3)
years
No
te:
Net income in the amount of R $ 10,272,120.82 was fully absorbed by the
accumulated losses account.
b) Dividend and interest on equity distributed
in the previous three (3) years
|
8.
If there is allocation of profits to
the legal reserve
|
a)
Identify the amount allocated to the
reserve.
Not applicable.
b)
Detail the form of calculation of the legal
reserve.
Not applicable.
|
9.
If the Company has preferred shares
that are entitled to fixed or minimum dividends:
|
The Company does not have preferred shares.
|
|
66
10.
In relation to the mandatory
dividend:
|
a)
Describe the form for calculation provided in the
Bylaws.
Not applicable.
b)
Inform if it is being paid in
full.
Not applicable.
c)
Inform the amount that may eventually the
retained.
Not applicable.
|
11.
If there is retention of the mandatory
dividend payable due to the financial situation of the
Company:
|
a)
Inform the amount of the retention.
Not applicable.
b)
Describe in detail the financial situation of the
Company, including by addressing aspects related to the analysis of
liquidity, to working capital and positive cash flows:
Not applicable.
c)
Justify the retention of the
dividend.
Not applicable.
|
12.
If there is allocation of results to
the reserve for contingencies.
|
a)
Identify the amount to be allocated to the
reserve.
Not applicable.
b)
Identify the loss considered to be probable and
its cause.
Not applicable.
c)
Explain why the loss was considered
probable
Not applicable.
|
13.
If there is allocation of results to
the reserve for unrealized profits
|
a)
Inform the amount allocated to the reserve for
unrealized profits.
Not applicable.
b)
Inform the nature of the unrealized profits that
gave rise to the reserve
Not applicable.
|
|
67
14.
If there is allocation of results to
statutory reserves
|
a)
Describe the statutory clauses that establish the
reserve.
Article 30, Paragraph Three of the Bylaws of the Company:
"The Board of Directors may propose for resolution
by the Shareholders’ Meeting to deduct from the net income for the fiscal
year an amount of at least one percent (1%) for the formation of a reserve
for working capital and investments, which shall observe the following
principles:
I.
its formation shall not impair the
mandatory minimum dividend provided in Article 33;
II.
its balance together with the
other profit reserves, except for the reserves for contingencies and of
unrealized profits, shall not exceed the capital stock, subject to penalty
of capitalization or distribution in cash of the excess, at the discretion
of the Shareholders’ Meeting;
III.
the reserve has the purpose of
ensuring the maintenance and development of the activities that make up
the business purpose of the Company, the conduction of investments in
permanent assets or increases of the working capital including by means of
repayment of Company debts, irrespective of retention of profits that are
entailed to the capital budget;
IV.
its balance may be used (i) in the
absorption of losses, whenever necessary, (ii) in the distribution of
dividends at any time, (iii) in transactions of redemption, reimbursement
or purchase of shares, as authorized by law, and (iv) in incorporation
into the capital stock, including by means of new stock
bonuses.”
b)
Identify the amount allocated to the
reserve
Not applicable.
|
15.
If there is retention of profit
provided in the capital budget
|
a)
Identify the amount of the
retention
Not applicable.
b)
Provide a copy of the capital
budget
Not applicable.
|
16.
If there is allocation of results to
the reserve for tax incentives
|
a)
Inform the amount allocated to the reserve
Not applicable.
b)
Explain the nature of the
allocation
Not applicable.
|
|
68
ATTACHMENT III - Information on the
Compensation for the Management
Base Date: December 31, 2017
(
Pursuant to Item 13 of Attachment 24 of CVM Instruction
No. 480, of December 07, 2009
)
13.1 Policy or practice of compensation
for the board of directors, statutory and non-statutory executive board, fiscal
council, statutory committees and audit, risk, finance and compensation
committees, concerning the following aspects:
The company adopts the following practices:
a. purposes of the compensation policy or
practice:
Board of Directors:
The practice of the Company is to have a compatibility
between the compensation offered and the responsibility required in the
position, considering that the Board of Directors establishes the guidelines for
the Company, controlling their implementation by the company’s
officers.
Statutory Executive Board:
The practice of the Company is to ensure a competitive
compensation in relation to the market of senior executives, compatible with the
responsibility exercised by the position, considering the responsibility and
commitment to meet the strategic goals of the Company, within the increasingly
competitive and globalized scenario in which it operates.
Non-Statutory Executive Board:
The compensation practice of the Company is to provide
an internal (between executives) and external (competitive in relation to the
market) balance, to attract, retain and motivate its executives, for the Company
to meet its strategic goals in the increasingly competitive and globalized
scenario in which it operates.
69
Audit Committee:
The compensation practice of the Company is to have a
compatibility with the responsibility required in the position, considering that
the members of the Audit Committee.
b. structure of the compensation,
indicating:
(i) description of elements of the compensation and the
purposes of each one of them;
Board of Directors:
The members of the Board of Directors are entitled only
to a fixed compensation, that is, monthly payments established at a meeting of
the Board of Directors, to ensure the compatibility of the duties with the
compensation paid. All members receive the same amount, except those that are
part of the Audit Committee, who receive a different amount due to occupying two
positions.
Statutory Executive Board:
Members of the Statutory Board are entitled to an annual
and global compensation including a fixed compensation (monthly payments) and a
variable compensation (bonuses based on targets and other bonuses*) to ensure
the compatibility of the duties with the compensation paid.
*
Other Bonuses: The Company may eventually pay an additional compensation
structured as variable, due to the recognition of specific and unique works,
projects or targets, and connected to such projects. This additional variable
compensation is usually tied to the nominal payment or another type of
compensation compatible with the result expected from the corresponding project
and the targets assigned to the Statutory Officer.
They are also entitled to the following benefits: Health
Insurance, Dental Insurance, Life Insurance, Additional Retirement Plan and
Annual Check Up. The CEO is entitled to a helicopter and two armored
vehicles.
Non-Statutory Executive Board:
Members of the Non-Statutory Board are entitled to fixed
and variable compensations. The fixed compensation includes nominal monthly
salaries, plus vacation and thirteenth salary, as set forth in the labor law, to
ensure the compatibility of the duties with the compensation paid. The variable
compensation offers the opportunity to received more than the nominal salary due
to the results of the company and of the specific area of the officer, as well
as due to their individual performance or to an attraction and retention
strategy. The variable element is paid annually as profit sharing, to ensure the
compatibility of the duties with the compensation paid.
70
They are also entitled to the following benefits: Health Insurance, Dental Insurance, Life Insurance, Additional Retirement Plan, Food Voucher, Meal Voucher, Annual Check Up and Volunteer Vacation Bonus.
Audit Committee:
The members of the Audit Committee are entitled only to a fixed compensation, that is, monthly payments established at a meeting of the Board of Directors, to ensure the compatibility of the duties with the compensation paid.
(ii) the proportion of each element
of the total compensation;
For the Board of Directors and the Audit Committee, the proportion of the fixed compensation is of 100% of the total compensation.
For the Executive Board and the Non-Statutory Board, the global fixed compensation represents 100% of the total compensation and, for some cases, may have 50% fixed and 50% variable compensation, or other ratio that best suits the duties carried out by the executive and the conditions negotiated with him/her by the Company.
(iii) method of calculation and adjustment of each compensation element;
Board of Directors:
The fixed compensation of the Board of Directors is paid in 12 monthly installments, without a prior definition of readjustment.
Statutory Executive Board:
The fixed part of the annual compensation is paid in 12 monthly installments, in addition to the possibility of a variable payment, as mentioned above.
The variable compensation is paid in the calendar year, in a specific month, differently established in the agreement of each Statutory Officer, with greater concentration in April of each year after the assessment of the targets.
The overall compensation (payments + variable) established at the beginning of the term of office is valid for two years and may be re-negotiated in the agreement’s renewal, if it is of interest to both parties.
Non-Statutory Executive Board:
The fixed compensation of the Non-Statutory Board is paid annually in thirteen monthly installments. An additional payment of 33.33% of the nominal salary is made due to the legal vacation bonus, plus 36.67% of
the nominal salary as a bonus on voluntary vacations.
71
The adjustment of the compensation is established based on the variation of the Executive Market's growth or through the inflation of the last 12 months. The adjustment is applied annually. The variable compensation is paid in April of each year, after the assessment of the goals, the executive may realize up to 12 nominal wages.
Audit Committee:
The fixed compensation of the Audit Committee is paid in 12 monthly installments and without a prior definition of readjustment.
(iv) reasons that justify the structure of the compensation
BOARD OF DIRECTORS: fixed compensation based on the market practice.
NON-STATUTORY OFFICER: fixed compensation based on market practice, variable compensation linked to the results of business goals, business, and individual skills assessment.
NON-STATUTORY BOARD: fixed compensation based on market practice, variable compensation linked to the results of business goals, business, and individual skills assessment.
AUDIT COMMITTEE: fixed compensation based on the market practice.
(v) the existence of members unpaid by the issuer and the reason for this fact
None.
c. main performance indicators considered when determining each element of the compensation:
Fixed compensations: responsibilities of the position, through an evaluation based on a specific methodology carried out by external consultants that are experts in compensation.
Variable compensation: considers the results of the targets of the company, business and/or area under the responsibility of the Statutory or Non-Statutory Officer and also the evaluation of individual targets and skills of each Statutory or Non-Statutory Officer. An additional variable payment can also be made, when appropriate, due to the recognition of a specific and unique work, project or target.
d. how the compensation is structured to reflect the evolution of the performance indicators:
Annually, they overall targets of the Company are established. These goals are then segregated, as applicable, into the different operating areas of the Company, so that each of the Statutory Officer or Non-Statutory Officer is able to agree on the specific targets that each of the different operating areas must meet. In addition, the individual targets to be fulfilled during the same fiscal year are agreed upon. The
fulfillment of these targets is periodically monitored
during the year and finally verified at the end of the fiscal year, and this
final result is the basis to calculate the variable compensation, considering
the level of compliance with each indicator. The maximum variable compensation
is established based on the nominal wages units received by the Statutory or
Non-Statutory Officer, so that he/she will ultimately be paid the variable
compensation amount assigned to that level of compliance with the goals
verified, pursuant to the scale agreed with the Statutory or Non-Statutory
Officer.
72
It is worth noting also that all the goals set for each
Statutory or Non-Statutory Officer will have a relative weight in the evaluation
of compliance with the goals mentioned above.
e. how does the policy or practice of compensation
aligns with the short, medium and long-term interests of the
Company:
The compensation practice aligns to the short, medium
and long-term interests of the company through the Strategy Management Cycle in
which takes place the development of the goals established through the strategic
plan, budgeting, performance monitoring and results evaluation, establishing the
compensation according to the performance. This practice is supported by the
following points:
-
Focus on strategic targets, representing actions that
have a significant impact on the continuous improvement of the company’s
performance.
-
Measurement and evaluation of the targets of the
organizational results foreseen in their budget and their change should
reflect the compliance or not with these targets.
-
Establishing from the development of the company's
goals.
-
Clear description, previously defined formulas and
sources, being easy to understand and assess.
-
Comparing the best practices and the standardization
of the evaluation.
These elements focus on the excellence of the company's
outcomes.
f. existence of a compensation supported by
subsidiaries, controlled company or direct or indirect parent
companies
No compensation received by the Management due to the
position they hold in the Company that is supported by subsidiaries, controlled
or direct or indirect controllers of the Company.
g. existence of any compensation or benefit connected to
the occurrence of a certain corporate event, such as the sale of the Company’s
control:
73
There is no compensation or benefit linked to the
occurrence of any corporate event.
h. practices and procedure adopted by the board of
directors to define the individual compensation of the board of directors and
board of executive officers, indicating:
(i) the Company's bodies and committees that participate
in the decision-making process, identifying in which way they
participate.
The compensation of the board of directors and of the
executive board is approved by the Chairman of the Board of Directors, through
documents and presentations on the subject.
(ii) the criteria and methodology used to determine the
individual compensation, indicating whether studies are used to verify market
practices and, if so, the criteria for comparison and the scope of these
studies.
Market practice studies are carried out by consultants
specializing in compensation and the same is taken for the decision-making of
the Chairman of the Board of Directors. The methodology used by the Company is
of the company "Korn Ferry Hay Group", with specific companies as a criterion of
comparison of national scope.
(iii) how often and how the board of directors evaluate
the adequacy of the Company's compensation policy.
Between 2 and 3 years a market practice study is carried
out, which is submitted to the appreciation of the Chairman of the Board of
Directors.
74
13.2 Total compensation of the board of
directors, of the statutory executive board and of the fiscal
council
Total Compensation for the Fiscal
Year ended on December 31, 2015 - Annual Amounts
|
|
Board of
Directors
|
Statutory Board
|
Fiscal Council
|
Total
|
Number of Members¹
|
6.67
|
6.17
|
N/A
|
12.83
|
Number of Paid
Members
|
6.67
|
6.17
|
N/A
|
12.83
|
Fixed Annual
Compensation
|
R$1,585,440
|
R$14,004,454
|
N/A
|
R$15,589,894
|
Salary or
"Pro-Labore"
|
R$961,200
|
R$9,759,385
|
N/A
|
R$10,720,585
|
Direct and Indirect
Benefits
|
N/A
|
R$2,293,192
|
N/A
|
R$2,293,192
|
Participation in
Committees
|
R$360,000
|
RS 0
|
N/A
|
R$360,000
|
Others
|
R$264,240
|
R$1,951,877
|
N/A
|
R$2,216,117
|
Variable
Compensation
|
N/A
|
R$31,987,610
|
N/A
|
R$31,987,610
|
Bonus
|
N/A
|
R$26,656,342
|
N/A
|
R$26,656,342
|
Profit Sharing
|
N/A
|
RS 0
|
N/A
|
RS 0
|
Participation in
Meetings
|
N/A
|
RS 0
|
N/A
|
RS 0
|
Commissions
|
N/A
|
RS 0
|
N/A
|
RS 0
|
Others
|
N/A
|
R$5,331,268
|
N/A
|
R$5,331,268
|
Post-employment
|
N/A
|
R$310,625
|
N/A
|
R$310,625
|
Termination of the
Position
|
N/A
|
RS 0
|
N/A
|
RS 0
|
Based on Shares
|
N/A
|
RS 0
|
N/A
|
RS 0
|
Total
Compensation
|
R$1,585,440
|
R$46,302,689
|
RS 0
|
R$47,888,129
|
¹The number of members of each body corresponds to the
annual average of the number of members of each body calculated monthly with 2
decimals, as provided for in item “10.2.13.b”. Compensation of the management
(section 13)” of the OFFICIAL LETTER/CVM/SEP/No.02/2018.
Number of members of the Board of Directors in 2015:
80/12 months = 6.67 members
Number of members of the Statutory Board in 2015: 74/12
months = 6.17 members
75
Total Compensation for the Fiscal
Year ended on December 31, 2016 - Annual Amounts
|
|
Board of
Directors
|
Statutory Board
|
Fiscal Council
|
Total
|
Number of Members¹
|
6.42
|
5.83
|
N/A
|
12.25
|
Number of Paid
Members
|
6.42
|
5.83
|
N/A
|
12.25
|
Fixed Annual
Compensation
|
R$1,527,840
|
R$18,157,715
|
N/A
|
R$19,685,555
|
Salary or
"Pro-Labore"
|
R$913,200
|
R$13,081,307
|
N/A
|
R$13,994,507
|
Direct and Indirect
Benefits
|
N/A
|
R$2,460,147
|
N/A
|
R$2,460,147
|
Participation in
Committees
|
R$360,000
|
N/A
|
N/A
|
R$360,000
|
Others
|
R$254,640
|
R$2,616,261
|
N/A
|
R$2,870,901
|
Variable
Compensation
|
N/A
|
R$52,166,513
|
N/A
|
R$52,166,513
|
Bonus
|
N/A
|
R$43,472,094
|
N/A
|
R$43,472,094
|
Profit Sharing
|
N/A
|
N/A
|
N/A
|
N/A
|
Participation in
Meetings
|
N/A
|
N/A
|
N/A
|
N/A
|
Commissions
|
N/A
|
N/A
|
N/A
|
N/A
|
Others
|
N/A
|
R$8,694,419
|
N/A
|
R$8,694,419
|
Post-employment
|
N/A
|
R$305,747
|
N/A
|
R$305,747
|
Termination of the
Position
|
N/A
|
N/A
|
N/A
|
N/A
|
Based on Shares
|
N/A
|
N/A
|
N/A
|
N/A
|
Total
Compensation
|
R$1,527,840
|
R$70,629,975
|
RS 0
|
R$72,157,815
|
¹The number of members of each body corresponds to the
annual average of the number of members of each body calculated monthly with 2
decimals, as provided for in item “10.2.13.b”. Compensation of the management
(section 13)” of the OFFICIAL LETTER/CVM/SEP/No.02/2018.
Number of members of the Board of Directors in 2016:
77/12 months = 6.42 members
Number of members of the Statutory Board in 2016: 70/12
months = 5.83 members
76
Total Compensation for the Fiscal
Year ended on December 31, 2017 - Annual Amounts
|
|
Board of
Directors
|
Statutory Board
|
Fiscal Council
|
Total
|
Number of Members¹
|
6.42
|
4.83
|
N/A
|
11.25
|
Number of Paid
Members
|
6.42
|
4.83
|
N/A
|
11.25
|
Fixed Annual
Compensation
|
R$2,309,760
|
R$14,565,789
|
N/A
|
R$16,875,549
|
Salary or
"Pro-Labore"
|
R$1,384,800
|
R$10,259,726
|
N/A
|
R$11,644,526
|
Direct and Indirect
Benefits
|
N/A
|
R$2,254,118
|
N/A
|
R$2,254,118
|
Participation in
Committees
|
R$540,000
|
N/A
|
N/A
|
R$540,000
|
Others
|
R$384,960
|
R$2,053,421
|
N/A
|
R$2,438,381
|
Variable
Compensation
|
N/A
|
R$22,845,106
|
N/A
|
R$22,845,106
|
Bonus
|
N/A
|
R$19,037,589
|
N/A
|
R$19,037,589
|
Profit Sharing
|
N/A
|
N/A
|
N/A
|
N/A
|
Participation in
Meetings
|
N/A
|
N/A
|
N/A
|
N/A
|
Commissions
|
N/A
|
N/A
|
N/A
|
N/A
|
Others
|
N/A
|
R$3,807,518
|
N/A
|
R$3,807,518
|
Post-employment
|
N/A
|
R$109,786
|
N/A
|
R$109,786
|
Termination of the
Position
|
N/A
|
N/A
|
N/A
|
N/A
|
Based on Shares
|
N/A
|
N/A
|
N/A
|
N/A
|
Total
Compensation
|
R$2,309,760
|
R$37,520,681
|
RS 0
|
R$39,830,441
|
¹The number of members of each body corresponds to the
annual average of the number of members of each body calculated monthly with 2
decimals, as provided for in item “10.2.13.b”. Compensation of the management
(section 13)” of the OFFICIAL LETTER/CVM/SEP/No.02/2018.
Number of members of the Board of Directors in 2017:
77/12 months = 6.42 members
Number of members of the Statutory Board in 2017: 58/12
months = 4.83 members
77
Total Compensation Expected for
the Fiscal Year ended on December 31, 2018 - Annual
Amounts
|
|
Board of
Directors
|
Statutory Board
|
Fiscal Council
|
Total
|
Number of Members¹
|
9.75
|
8.00
|
N/A
|
17.75
|
Number of Paid
Members
|
9.75
|
8.00
|
N/A
|
17.75
|
Fixed Annual
Compensation
|
3,175,200
|
23,885,742
|
N/A
|
R$27,060,942
|
Salary or
"Pro-Labore"
|
2,106,000
|
17,788,980
|
N/A
|
R$19,894,980
|
Direct and Indirect
Benefits
|
N/A
|
2,538,966
|
N/A
|
R$2,538,966
|
Participation in
Committees
|
540,000
|
N/A
|
N/A
|
R$540,000
|
Others
|
529,200
|
3,557,796
|
N/A
|
R$4,086,996
|
Variable
Compensation
|
N/A
|
51,274,846
|
N/A
|
R$51,274,846
|
Bonus
|
N/A
|
42,729,038
|
N/A
|
R$42,729,038
|
Profit Sharing
|
N/A
|
N/A
|
N/A
|
N/A
|
Participation in
Meetings
|
N/A
|
N/A
|
N/A
|
N/A
|
Commissions
|
N/A
|
N/A
|
N/A
|
N/A
|
Others
|
N/A
|
8,545,808
|
N/A
|
R$8,545,808
|
Post-employment
|
N/A
|
478,972
|
N/A
|
R$478,972
|
Termination of the
Position
|
N/A
|
N/A
|
N/A
|
N/A
|
Based on Shares
|
N/A
|
N/A
|
N/A
|
N/A
|
Total
Compensation
|
R$3,175,200
|
R$75,639,559
|
RS 0
|
R$80,000,000.00
|
¹The number of members of each body corresponds to the
annual average of the number of members of each body calculated monthly with 2
decimals, as provided for in item “10.2.13.b”. Compensation of the management
(section 13)" of the OFFICIAL LETTER/CVM/SEP/No.02/2018.
Number of members of the Board of Directors in 2018:
117/12 months = 9.75 members
Number of members of the Statutory Board in 2018: 96/12
months = 8 members
78
13.3 Regarding the variable
compensation of the last 3 fiscal years the one expected for the current fiscal
year of the board of directors, statutory board and finance committee:
|
|
|
|
|
Variable compensation - fiscal
year ended on December 31, 2015
|
Board of
Directors
|
Statutory Board
|
Fiscal Council
|
Total
|
Number of
Members
|
N/A
|
6.17
|
N/A
|
6.17
|
Bonus
|
|
|
|
|
Minimum amount estimated in the
compensation plan²
|
N/A
|
RS 0
|
N/A
|
RS 0
|
Maximum amount estimated in the
compensation plan¹
|
N/A
|
R$19,841,154
|
N/A
|
R$19,841,154
|
Value estimated in the
compensation plan, if the established goals were achieved
|
N/A
|
R$19,841,154
|
N/A
|
R$19,841,154
|
Amount effectively recognized in
the income for the fiscal year
|
N/A
|
R$26,656,342
|
N/A
|
R$26,656,342
|
Profit sharing
|
|
|
|
|
Minimum amount estimated in the
compensation plan
|
N/A
|
N/A
|
N/A
|
N/A
|
Maximum amount estimated in the
compensation plan
|
N/A
|
N/A
|
N/A
|
N/A
|
Value estimated in the
compensation plan, if the established goals were achieved
|
N/A
|
N/A
|
N/A
|
N/A
|
Amount effectively recognized in
the income for the fiscal year
|
N/A
|
N/A
|
N/A
|
N/A
|
79
Variable compensation - fiscal
year ended on December 31, 2016
|
Board of
Directors
|
Statutory Board
|
Fiscal Council
|
Total
|
Number of
Members
|
N/A
|
5.83
|
N/A
|
5.83
|
Bonus
|
|
|
|
|
Minimum amount estimated in the
compensation plan²
|
N/A
|
RS 0
|
N/A
|
RS 0
|
Maximum amount estimated in the
compensation plan¹
|
N/A
|
R$53,800,217
|
N/A
|
R$53,800,217
|
Value estimated in the
compensation plan, if the established goals were achieved
|
N/A
|
R$53,800,217
|
N/A
|
R$53,800,217
|
Amount effectively recognized in
the income for the fiscal year
|
N/A
|
R$43,472,094
|
N/A
|
R$43,472,094
|
Profit sharing
|
|
|
|
|
Minimum amount estimated in the
compensation plan
|
N/A
|
N/A
|
N/A
|
N/A
|
Maximum amount estimated in the
compensation plan
|
N/A
|
N/A
|
N/A
|
N/A
|
Value estimated in the
compensation plan, if the established goals were achieved
|
N/A
|
N/A
|
N/A
|
N/A
|
Amount effectively recognized in
the income for the fiscal year
|
N/A
|
N/A
|
N/A
|
N/A
|
Variable compensation - fiscal
year ended on December 31, 2017
|
Board of
Directors
|
Statutory Board
|
Fiscal Council
|
Total
|
Number of
Members
|
N/A
|
4.83
|
N/A
|
4.83
|
Bonus
|
|
|
|
|
Minimum amount estimated in the
compensation plan²
|
N/A
|
RS 0
|
N/A
|
RS 0
|
Maximum amount estimated in the
compensation plan¹
|
N/A
|
R$36,948,031
|
N/A
|
R$36,948,031
|
Value estimated in the
compensation plan, if the established goals were achieved
|
N/A
|
R$36,948,031
|
N/A
|
R$36,948,031
|
Amount effectively recognized in
the income for the fiscal year
|
N/A
|
R$19,037,589
|
N/A
|
R$19,037,589
|
Profit sharing
|
|
|
|
|
Minimum amount estimated in the
compensation plan
|
N/A
|
N/A
|
N/A
|
N/A
|
Maximum amount estimated in the
compensation plan
|
N/A
|
N/A
|
N/A
|
N/A
|
Value estimated in the
compensation plan, if the established goals were achieved
|
N/A
|
N/A
|
N/A
|
N/A
|
Amount effectively recognized in
the income for the fiscal year
|
N/A
|
N/A
|
N/A
|
N/A
|
80
Variable compensation expected
for the fiscal year (2018)
|
Board of
Directors
|
Statutory Board
|
Fiscal Council
|
Total
|
Number of
Members
|
N/A
|
8.00
|
N/A
|
8.00
|
Bonus
|
|
|
|
|
Minimum amount estimated in the
compensation plan²
|
N/A
|
RS 0
|
N/A
|
RS 0
|
Maximum amount estimated in the
compensation plan¹
|
N/A
|
R$56,920,274
|
N/A
|
R$56,920,274
|
Value estimated in the
compensation plan, if the established goals are achieved
|
N/A
|
R$42,729,038
|
N/A
|
R$42,729,038
|
Profit sharing
|
|
|
|
|
Minimum amount estimated in the
compensation plan
|
N/A
|
N/A
|
N/A
|
N/A
|
Maximum amount estimated in the
compensation plan
|
N/A
|
N/A
|
N/A
|
N/A
|
Value estimated in the
compensation plan, if the established goals are achieved
|
N/A
|
N/A
|
N/A
|
N/A
|
¹The maximum amount foreseen for the variable
compensation considers surpassing the outcome of all goals of the company,
business, individual and skills evaluation.
²There is no minimum amount guaranteed.
13.4 Concerning the compensation plan
based on shares of the board of directors and the statutory board, effective in
the last fiscal year and forecasted for the current fiscal
year:
None.
13.5 Concerning the compensation based
on shares recognized in the last 3 fiscal years and the forecast for the current
fiscal year, the board of directors and the statutory board:
None.
13.6 Information concerning the
outstanding options of the board of directors and of the statutory board at the
end of the last fiscal year:
None.
13.7 Concerning the options exercised
and the shares delivered for the compensation based on shares of the board of
directors and the statutory board in the last 3 fiscal years, prepare a table
with the following content:
None.
13.8
Information required for the
understanding of the data disclosed in items 13.5 to 13.7 (including the pricing
method of the number of shares and options):
81
None.
13.9
The
shares or quotas directly or
indirectly held in Brazil or abroad, and other securities convertible into
shares or quotas issued by the Company, its direct or indirect controlling
shareholders, subsidiaries or companies under common control, by members of the
board of directors, executive board or fiscal council, grouped by body, on the
closing date of the last fiscal year:
COMPANY
|
December 31, 2017
|
|
Board of Directors
|
Executive Board
|
Fiscal Council
|
Total
|
Company
|
Type
|
Companhia Siderúrgica
Nacional
|
Common Shares
|
1,526
|
0
|
-
|
1,526
|
PARENT COMPANIES
|
December 31, 2017
|
|
Board of Directors
|
Executive Board
|
Fiscal Council
|
Total
|
Company
|
Category
|
CFL Participações S.A.
|
Common Shares
|
327,838,304
|
0
|
0
|
327,838,304
|
Rio Purus Participações S.A.
|
Common Shares
|
1,000
|
1,000
|
0
|
1,000
|
SUBSIDIARIES
|
December 31, 2017
|
|
Board of Directors
|
Executive Board
|
Fiscal Council
|
Total
|
Company
|
Category
|
CSN Gestão de Recursos Financeiros
Ltda.
|
Quotas of the share capital
|
1
|
1
|
0
|
1
|
13.10 Information on pension plans in
force for the members of the Board of Directors and Statutory
Officers:
The Company sponsors for the Statutory
Officers the pension plan of entity CBS Previdência - "Caixa Beneficente dos
Empregados" of Companhia Siderúrgica Nacional, in which the participants can
contribute 3% to 6% of the nominal salary/fees and the sponsor adds 100% to the
participant's amount.
82
|
CBS Previdência – “
Caixa Beneficente dos Empregados
” of Companhia Siderúrgica Nacional
|
|
Board of Directors
|
Statutory Board
|
Total number of members
(¹)
|
6.42
|
4.83
|
Number of paid members
(2)
|
N/A
|
3
|
Name of the plan
(3)
|
N/A
|
Joint Plan of Supplementary Benefit and CBSPREV Benefit Plan
|
Number of managers who are eligible to retire
|
N/A
|
2
|
Conditions for early retirement
|
N/A
|
(4)
|
Updated cumulative amount of accumulated contributions to the close of the last fiscal year, discounting the instalment concerning the contributions made directly by the administrators
|
N/A
|
R$1,331,032.75
|
Total cumulative amount of the accumulated contributions made during the last fiscal year, discounting the instalment concerning the contributions made directly by the administrators
|
N/A
|
R$68,053.96
|
Possibility of early redemption and conditions
|
N/A
|
Yes, the only condition is no long being connected to the Sponsor and not be receiving the benefits on CBS
|
(1) Board of Directors and Executive Board on December 31, 2017
(2) Corresponds to the number of board members and executive officers connected to the pension plan.
(3) The Joint Plan of Supplementary Benefit is structured according to the type of Variable Contribution, while the CBSPREV Plan is structured according to the type of pure Defined Contribution (no actuarial risk components).
(4) Early Retirement: The benefit of early retirement will be awarded to the participant upon request and will be paid in monthly installments, subject to the conditions provided in the plan's regulation, which is available on the company's Intranet, as well as approved by PREVIC and published
in the Official Gazette, with its initial amount established in accordance with the choice of the payment method, having its initial amount establish according to the option by the type of receipt and the amount accumulated in its respective FGB.
83
13.11
Maximum, minimum and average individual compensation of board of directors, statutory board and fiscal council:
Reasoning for not completing the table:
Information not disclosed, pursuant to the ruling rendered by the MM Judge of the 5th Federal Court/RJ, in the case file 2010.5101002888-5 in favor of IBEF - Rio de Janeiro, institute to which the Company is associated.
13.12
Contractual arrangements, insurance policies or other instruments that structure mechanisms of compensation or indemnifications for managers in case of removal from office or retirement (including financial consequences for the Company):
None.
13.13 Percentage of the total compensation of each body recognized in the income of the Company concerning the members of the board of directors, statutory board or fiscal council that are related parties to the direct or indirect controlling shareholders, pursuant to the accounting rules that address this issue:
|
2015
|
|
Board of Directors
|
Statutory Board
|
Fiscal Council
|
Percentage
|
10.90%
|
56.89%
|
N/A
|
|
2016
|
|
Board of Directors
|
Statutory Board
|
Fiscal Council
|
Percentage
|
11.31%
|
74.72%
|
N/A
|
|
2017
|
|
Board of Directors
|
Statutory Board
|
Fiscal Council
|
Percentage
|
11.22%
|
70.08%
|
N/A
|
84
13.14 Amounts recognized in the
Company's income as compensation for the members of the board of directors,
executive board or fiscal council, grouped by body, for any reason other than
the position they hold, such as commissions and consulting or advisory services
rendered:
None.
13.15 Amounts recognized in the income
of the direct or indirect controlling shareholders of companies under common
control and the subsidiaries of the Company, as compensation for the members of
the board of directors, the executive board or the fiscal council, grouped by
body, specifying why these amounts have been assigned to these individuals:
2015 fiscal year - compensation
received due to the exercise of the position on the issuer
|
Board of Directors
|
Statutory Board
|
Fiscal Council
|
Total
|
Direct and indirect parent
companies
|
N/A
|
N/A
|
N/A
|
N/A
|
Controlled by the issuer
|
R$14,652.00
|
N/A
|
N/A
|
R$14,652.00
|
Companies under common control
|
N/A
|
N/A
|
N/A
|
N/A
|
2015 fiscal year - other
compensation received, specifying the reason they were assigned
|
Board of Directors
|
Statutory Board
|
Fiscal Council
|
Total
|
Direct and indirect parent
companies
|
N/A
|
N/A
|
N/A
|
N/A
|
Controlled by the issuer
|
N/A
|
N/A
|
N/A
|
N/A
|
Companies under common control
|
N/A
|
N/A
|
N/A
|
N/A
|
2016 fiscal year - compensation
received due to the exercise of the position on the issuer
85
|
Board of Directors
|
Statutory Board
|
Fiscal Council
|
Total
|
Direct and indirect parent
companies
|
N/A
|
N/A
|
N/A
|
N/A
|
Controlled by the issuer
|
R$13,712.00
|
N/A
|
N/A
|
R$13,712.00
|
Companies under common control
|
N/A
|
N/A
|
N/A
|
N/A
|
2016 fiscal year - other
compensation received, specifying the reason they were assigned
|
Board of Directors
|
Statutory Board
|
Fiscal Council
|
Total
|
Direct and indirect parent
companies
|
N/A
|
N/A
|
N/A
|
N/A
|
Controlled by the issuer
|
N/A
|
N/A
|
N/A
|
N/A
|
Companies under common control
|
N/A
|
N/A
|
N/A
|
N/A
|
2017 fiscal year - compensation
received due to the exercise of the position on the issuer
|
Board of Directors
|
Statutory Board
|
Fiscal Council
|
Total
|
Direct and indirect parent
companies
|
N/A
|
N/A
|
N/A
|
N/A
|
Controlled by the issuer
|
R$13,712.00
|
N/A
|
N/A
|
R$13,712.00
|
Companies under common control
|
N/A
|
N/A
|
N/A
|
N/A
|
2017 fiscal year - other
compensations received, specifying the reason why they were
assigned
86
|
Board of Directors
|
Statutory Board
|
Fiscal Council
|
Total
|
Direct and indirect parent
companies
|
N/A
|
N/A
|
N/A
|
N/A
|
Controlled by the issuer
|
N/A
|
N/A
|
N/A
|
N/A
|
Companies under common control
|
N/A
|
N/A
|
N/A
|
N/A
|
13.16 Other relevant
information:
None.
87
REMOTE VOTING FORM
ANNUAL AND EXTRAORDINARY SHAREHOLDERS'
MEETING
HELD ON JUNE 29, 2018
Name of the
Shareholder
|
Individual or Corporate Taxpayer's ID
(CPF or CNPJ) of the Shareholder
|
E-mail address to forward a
confirmation of receipt of the form by the Company to the
shareholder
|
Instructions to complete the
form
This Remote Voting Form (“Form”) must
be completed if the shareholder wishes to exercise its remote voting right
at the Annual Shareholders' Meeting of Companhia Siderúrgica Nacional
(“
CSN
” or “
Company
”), convened for June 29, 2018, at 11
a.m. (“ASM”) pursuant to CVM Instruction No. 481/2009 (“
CVMI 481
”), as amended.
The shareholder must complete all the
fields in the Form, indicating its full name (or corporate name, if a
legal entity), with the number of the Individual or Corporate Taxpayer's
ID, as applicable, in addition to an email address for any
contact.
For this Form to be considered valid
and for the votes in it to be cast in the Company's ASM, the following
instructions should be observed:
(i)
All fields must be duly, legibly
completed;
(ii)
All the pages must be initialed by the
shareholder; and
(iii)
At the end, the shareholder (or its
legal representative, as applicable) must sign the form and notarize
it.
The Form will be disregarded if it is
sent directly to the Company without any of the formalities or documents
requested.
If the Form is partially or
incorrectly completed, the Company will compute only the items that have
been correctly completed or rectified in a timely manner, specifically
rejecting the items presenting completing problems.
The Forms will be accepted by the
Company until June 22, 2018 (including this date).
|
Guidance to forward the Remote Voting
Form
Shareholders who choose to exercise
their remote voting right may: (i) complete this form and send it directly
to the Company at the address below, together with the supporting
documentation required by the Company; or (ii) transmit their voting
instructions to the qualified service providers (in accordance with
Article 21b, item II, of CVMI 481), who will forward the voting statements
to the Central Depositary of BM&FBOVESPA.
|
88
If the shareholder chooses for sending
the Form directly to the Company, it must submit the following documents
to the Company's headquarters, to the
Investor Relations Executive
Officer
:
a)
Physical copy of the Form duly
completed, initialed and notarized; and
b)
Certified copies of the identification
and representation documents, as shown below:
|
a) Individual shareholder
• Identity document with photo (Identity document
will be considered RG, RNE, CNH, Passport and identity cards issued by
professional councils).
b) Corporate shareholder or investment
fund
• Last bylaws, articles of incorporation or
consolidated fund regulations, as the case may be;
• By-laws or by-laws of the fund manager or fund
manager, as the case may be, subject to the fund's voting
policy;
• An act that demonstrates that the legal
representation of the shareholder (i.e .: minutes of election of the
directors, terms of possession and / or power of attorney);
If the Remote Voting Form is signed by a proxy,
the formalities set forth in item 12.2 "f" of the Company's Reference Form
must be observed.
If the shareholder is an individual or legal
entity domiciled abroad, all documents submitted must be translated and
legalized before the Brazilian Consulate in his country of domicile or
apostilled in an authorized notary with the appropriate Hague Handbook, so
that all copies are authenticated and all signatures have signature
recognition.
Shareholder who choose to exercise its
remote voting right through the service providers, must transmit their
voting instructions to their custodians or registrar agent of the
Company's shares, provided that the rules established by them are
observed. For this, the shareholders must contact their custody or
registrar agents as stated below and see what procedures were established
by them for the transmission of remote voting
instructions.
|
Postal and e-mail address to send the
Form, if the shareholder wishes to deliver the document directly to the
Company's headquarter
Companhia Siderúrgica
Nacional
Attn. Investor Relations
Officer
Avenida Brigadeiro Faria Lima, nº
3.400, 20º andar, Itaim Bibi
São Paulo/SP
CEP 04538-132
Email:
invrel@csn.com.br
Phone: (55) (11) 3049-7591
|
89
Indication of the institution hired by the Company
to provide the registrar service of securities.
Itaú Corretora de Valores
S.A.
|
Avenida Brigadeiro Faria Lima, 3.500, 3º andar –
São Paulo CEP 04538-132
3003-9285 (capital and metropolitan
areas)
0800 7209285 (other locations)
The service hours are on weekdays from 9 am to 6
pm.
E-mail:
atendimentoescrituracao@itau-unibanco.com.br
|
1.
To take management accounts, examine,
discuss and vote on the Company's Financial Statements for the fiscal year
ended December 31, 2017, with the allocation of the respective net income
under the terms of article 189, caput of the Law 6,404 / 76.
Approve [ ] Reject [ ] Abstain [
]
|
2.
Establish the Management's overall
annual compensation for the year of 2018, pursuant to the Management's
Proposal.
Approve [ ] Reject [ ] Abstain [
]
|
3.
Do you wish to request the
installation of the Fiscal Council, pursuant to Article 161 of Law 6.404
of 1976?
Yes [ ] No [ ]
|
4.
Election of 1 (one) effective candidate and its
respective alternate to the Fiscal Council, if installed, as indicated by
minority shareholders.
4.1. Guillermo Oscar Braunbeck
(effective)/ William Pereira Pinto (alternate)
Approve [ ] Reject [ ] Abstain [
]
4.2.
Susana Hanna Stiphan Jabra (effective)/ Ian Peter
Brandt Searby (alternate)
Approve [ ] Reject [ ] Abstain [
]
|
90
City: ________________________________________________________
Date: _______________________________________________________
Signature: ___________________________________________________
Name/Corporate Name of the shareholder: ______________________
Individual/Corporate Taxpayer's ID (CPF/CNPJ): ___________________
Number of shares _____________________________________________
91
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 30, 2018
COMPANHIA SIDERÚRGICA NACIONAL
|
|
By:
|
/
S
/ Benjamin Steinbruch
|
|
Benjamin Steinbruch
Chief Executive Officer
|
COMPANHIA SIDERÚRGICA NACIONAL
|
|
By:
|
/
S
/ Marcelo Cunha Ribeiro
|
|
Marcelo Cunha Ribeiro
IR Executive Officer
|
FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.
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