EXHIBIT 2 - -------------------------------------------------------------------------------- NINE MONTHS GERDAU S.A. RESULTS 2003 CONSOLIDATED - -------------------------------------------------------------------------------- HIGHLIGHTS o Consolidated net profit in the first nine months reached R$ 794.6 million, 27.6% greater than that of the same period in 2002, when net profit was R$ 622.9 million. Net margin is at 8.07% in the period. o Through September 2003, gross revenues reached R$ 11.6 billion, 44.1% more than that of the same period of 2002. Of this amount, 57.7% resulted from operations in Brazil, 38.5% in the North American units and 3.8% in companies in Chile, Uruguay and Argentina. o Exports from Brazil through September this year presented an increase of 78.7% compared to exports in the same period in 2002. This total reached 2.3 million metric tons and generated revenues of US$ 571.1 million, a record high for Gerdau. At this pace, Gerdau should end the year with exports of about 3.2 million metric tons, an increase of 70% over those of the previous year. This volume will account for about 10% of the country's steel output and should contribute with an additional US$ 800 million. o EBITDA reached R$ 2.0 billion in the period from January through September compared to R$ 1.5 billion in the same period in 2002, an increase of 31.9%. EBITDA margin was of 20.53% in 2003 and of 23.25% in 2002. o The crude steel output reached 9.2 million metric tons through September this year, an increase of 40.8% over the same period in 2002. In rolled products, output reached 6.7 million tons in 2003, an increase of 40.7%. - ------------------------------------------------------------------------------------------------------- HIGHLIGHTS 3Q03 3Q02 VARIATION 9M03 9M02 VARIATION - ------------------------------------------------------------------------------------------------------- Production (1,000 t) Crude steel 3,123 2,334 33.8% 9,177 6,519 40.8% Rolled products 2,299 1,688 36.3% 6,680 4,747 40.7% Sales (1,000 t) 3,156 2,314 36.4% 9,022 6,417 40.6% Net sales (R$ million) 3,494 2,959 18.1% 9,851 6,595 49.4% EBITDA (R$ million) 671 682 (1.6%) 2,023 1,534 31.9% EBTDA (R$ million) 431 (48) - 1,532 393 290.4% Net income (R$ million) 245 327 (25.1%) 795 623 27.6% Shareholders' equity (R$ million) 4,949 3,919 26.3% 4,949 3,919 26.3% Total assets (R$ million) 14,698 13,102 12.2% 14,698 13,102 12.2% Gross margin 23.1% 27.8% 24.6% 28.5% EBITDA margin 19.2% 23.1% 20.5% 23.3% Net margin 7.0% 11.1% 8.1% 9.4% Net income / Shareholders' equity 20.0% 20.4% 20.0% 20.4% (ROE)(1) Net Debt / Total net capitalization 52.4% 56.8% 52.4% 56.8% Net Debt / EBITDA(2) 2.1x 2.8x 2.1x 2.8x - ------------------------------------------------------------------------------------------------------ <FN> (1) Net income in the last twelve months over net worth at the end of the period. (2) EBITDA of last twelve months. </FN> o The shareholders of Metalurgica Gerdau S.A. and Gerdau S.A. will be receiving on November 18th R$ 34.1 million and R$ 75.7 million in interest over capital stock for the third quarter and 1 EXHIBIT 2 equivalent to R$ 0.82 and R$ 0.51 per share. So far, the accumulated dividend paid out in 2003 totals R$ 91.7 million at Metalurgica Gerdau S.A., and R$ 200.3 million at Gerdau S.A. o On September 5th, the placement of the first tranche of US$ 105 million of a Exports Receivables Securitization program of US$ 400 million. This is a joint operation of Gerdau S.A. and its subsidiary Aco Minas Gerais S.A. - Acominas. The first tranche was placed with a coupon of 7.37% p.a. and maturity in July 2010. The grace period is of two years and amortization payments are due every three months as of October 2005. o In the first half of October Gerdau also concluded a Euro commercial paper placement of US$ 100 million. Maturity is in October 15th, 2004 and the coupon is of 4.0% p.a. AVAILABLE AT THE WEBSITE: CONFERENCE CALL: OCTOBER 31 This document and the Complementary Information In Portuguese, at 9AM (EST). are available at the website www.gerdau.com.br/ri In English, at 12PM (EST). To call in, please dial: Metalurgica Gerdau S.A. and Gerdau S.A quarterly Portuguese: information (ITR) will be available on October - in Brazil: 0800 770.4544 30. - in the US: 1 866 812.0442/1 888 340.8477 - other countries +55 11 4613.0501 ADDITIONAL INFORMATION: English: More information on the performance of the - in the US: 1 866 812.0442 / 1 888 340.8477 quarter can be obtained with the Investor - in Brazil: 0800 770.4544 Relations Team at +55 (51) 3323.2703 or by - other countries: +55 11 4613.0502 e-mail at inform@gerdau.com.br. The recording of the conference call will be available also on the Internet. To retrieve it please access the website www.gerdau.com.br 2 EXHIBIT 2 PERFORMANCE IN THE THIRD QUARTER OUTPUT AND SALES o The Gerdau companies produced 3.1 million tons of crude steel in the third quarter of this year, an increase of 1.2% compared to the second quarter. In the first nine months of 2003, output reached the mark of 9.2 million metric tons, 40.8% greater than in the same period in 2002. o Contributions from Brazil, North America and the units in South America were 56.2%, 41.0% and 2.8%. Growth in nine months is mostly the consequence of the incorporation of new units in North America in October 2002 and the recovery of Acominas' output. o The volume of rolled products produced in the quarter was 2.3 million metric tons, 2.4% greater than the output of the second quarter. The year-to-date output was of 6.7 million metric tons, 40.7% more than in the same period of 2002. - ------------------------------------------------------------------------------------------------------- PRODUCTION 3Q03 2Q03 VARIATION 9M03 9M02 VARIATION (1,000 tons) 3Q03/2Q03 9M03/9M02 - ------------------------------------------------------------------------------------------------------- CRUDE STEEL Brazil 1,790.3 1,679.1 6.6% 5,157.6 4,307.9 19.7% North America 1,249.6 1,321.2 (5.4%) 3,766.4 1,995.9 88.7% South America 83.3 85.2 (2.2%) 253.2 215.1 17.7% TOTAL 3,123.2 3,085.5 1.2% 9,177.2 6,518.9 40.8% ROLLED PRODUCTS Brazil 1,012.1 940.5 7.6% 2,874.1 2,664.6 7.9% North America 1,196.9 1,215.5 (1.4%) 3,534.6 1,847.2 91.3% South America 90.3 89.5 0.9% 271.3 235.4 15.2% TOTAL 2,299.3 2,245.5 2.4% 6,680.0 4,747.2 40.7% - ------------------------------------------------------------------------------------------------------ o Total sales in the third quarter this year added up to 3.2 million metric tons, 6.0% greater than that of the second quarter. Of this total exports from Brazil accounted for 892.1 thousand metric tons and 1.4 million were shipped out of units abroad. o From January through September, consolidated sales totaled 9.0 million metric tons and presented an increase of 40.6% compared to the same period in 2002. As a consequence of the reduction in sales in the Brazilian domestic market (-12.7%) throughout the year and to more attractive prices in the international markets, exports have been increasing continuously in the last six quarters reaching 2.3 million metric tons (US$ 571.1 million) this year. Shipments increased by 78.7% over those of the first nine months of 2002. - ------------------------------------------------------------------------------------------------------- SALES 3Q03 2Q03 VARIATION 9M03 9M02 VARIATION (1,000 tons) 3Q03/2Q03 9M03/9M02 - ------------------------------------------------------------------------------------------------------- BRAZIL Domestic market 874.8 798.2 9.6% 2,526.5 2,893.9 (12.7%) Exports 892.1 792.9 12.5% 2,342.2 1,310.7 78.7% TOTAL 1,766.9 1,591.1 11.0% 4,868.7 4,204.6 15.8% ABROAD North America 1,290.4 1,284.1 0.5% 3,845.6 1,966.4 95.6% South America 98.7 101.3 (2.6%) 307.3 246.4 24.7% TOTAL 1,389.1 1,385.4 0.3% 4,152.9 2,212.8 87.7% TOTAL CONSOLIDATED 3,156.0 2,976.5 6.0% 9,021.6 6,417.4 40.6% - ------------------------------------------------------------------------------------------------------ 3 RESULTS o Net revenues reached R$ 3.5 billion in the third quarter of 2003, 15.3% greater than in the second quarter due to a 6.0% increase in shipments. An additional factor was the greater revenue (expressed in reais) of the results from operations abroad due to the 1.8% devaluation of the real vis-a-vis the US dollar. The accumulated figure for the year, the increase in prices for steel products in the international markets and the increase in tonnage shipped of 40.6% generated the increase in net revenues to R$ 9.9 billion in 2003 up from R$ 6.6 billion in 2002, a positive variation of 49.4%. - ------------------------------------------------------------------------------------------------------- NET SALES 3Q03 2Q03 VARIATION 9M03 9M02 VARIATION (R$ million) 3Q03/2Q03 9M03/9M02 - ------------------------------------------------------------------------------------------------------- Brazil 1,932.9 1,769.0 9.3% 5,418.8 3,623.3 49.6% North America 1,440.6 1,165.7 23.6% 4,096.3 2,694.1 52.0% South America 120.4 95.6 25.9% 335.8 278.0 20.8% TOTAL 3,493.9 3,030.3 15.3% 9,850.9 6,595.4 49.4% - ------------------------------------------------------------------------------------------------------ o Gross margin in the third quarter reached 23.07% compared to 25.88% in the second quarter due to the increase in the cost of raw materials in the North American operations and the scheduled stoppages for technological updates and refurbishments in units in that region. Gross profit reached R$ 805.9 million in the quarter and R$ 2.4 billion through September this year. o SG&A increased by 5.4% in the third quarter compared to the second quarter. Nonetheless, these expenses fell to 8.33% down from 9.11% net revenues of the corresponding quarters. These expenses totaled R$ 291.0 million in the third quarter and reached R$ 847.4 million in the first nine months of the year. - ------------------------------------------------------------------------------------------------------ EBTDA 3Q03 2Q03 9M03 9M02 (R$ million) - ------------------------------------------------------------------------------------------------------ Gross profit 805.9 784.3 2,421.7 1,877.6 Sales expenses (114.8) (115.6) (322.4) (239.0) General & Administrative expenses (176.2) (160.4) (525.1) (490.4) Depreciation and amortization 156.3 137.6 448.4 385.5 EBITDA 671.2 645.9 2,022.6 1,533.7 Net financial expenses (160.6) (134.7) (413.4) (298.1) Monetary and exchange variations (79.4) (6.0) (76.8) (843.1) EBTDA 431.2 505.2 1,532.4 392.5 - ------------------------------------------------------------------------------------------------------ o The increase in revenues followed by a smaller increase of operating expenses did not offset completely the increase in cost of sales that happened in the third quarter of this year. EBITDA margin fell to 19.21% in the period against 21.31% in the previous quarter. Nonetheless, EBITDA increased by 3.9% compared to the last two quarters reaching R$ 671.2 million in the period from July through September. In the accumulated amount for the year, EBITDA reached R$ 2.0 billion, 31.9% greater than in the same period of 2002. - ------------------------------------------------------------------------------------------------------- EBITDA 3Q03 2Q03 VARIATION 9M03 9M02 VARIATION (R$ million 3Q03/2Q03 9M03/9M02 - ------------------------------------------------------------------------------------------------------- Brazil 584.9 550.6 6.2% 1,749.4 1,134.8 54.2% North America 49.6 65.8 (24.6%) 168.7 316.6 (46.7%) South America 36.7 29.4 24.8% 104.5 82.3 27.0% TOTAL 671.2 645.8 3.9% 2,022.6 1,533.7 31.9% - ------------------------------------------------------------------------------------------------------ o Net financial expenses in the third quarter totaled R$ 240.0 million. This amount includes negative monetary variations of R$ 12.3 million and negative FX variations of R$ 67.0 million. If monetary and FX variations are excluded, net financial expenses of the third quarter is R$ 160.6 4 EXHIBIT 2 million compared to R$ 134.7 million in the second quarter, due to the increase in the cost of debt. o Equity pick up was positive R$ 26.1 million in the third quarter of this year as a result of the FX impact over investments abroad. o Provisions for Income Taxes and Social Contributions in the third quarter were R$ 49.6 million. As a consequence of the full accrual of R$ 198.0 million of deferred fiscal assets based on fiscal losses and a negative social contribution by its subsidiary Acominas in that period, the provision for the second quarter was positive R$ 133.7 million. o Provisions for Income Taxes and Social Contributions in the third quarter were R$ 49.6 million. As a consequence of the full accrual of R$ 198.0 million of deferred fiscal assets based on fiscal losses and a negative social contribution by its subsidiary Acominas in that period, was positive R$ 133.7 million. o Net profit reached R$ 245.3 million in the third quarter of 2003, presenting a net margin of 7.02%. From January through September, net profit reached R$ 794.6 million, an increase of 27.6% over that of the same period in 2002 and a net margin of 8.07%. - ------------------------------------------------------------------------------------------------------- NET INCOME 3Q03 2Q03 VARIATION 9M03 9M02 VARIATION (R$ million) 3Q03/2Q03 9M03/9M02 - ------------------------------------------------------------------------------------------------------- Brazil 253.7 249.9 1.5% 791.0 512.7 54.3% North America (29.4) (5.2) 465.4% (57.0) 101.1 (156.4%) South America 21.0 17.3 21.4% 60.6 9.1 565.9% TOTAL 245.3 262.0 (6.4%) 794.6 622.9 27.6% - ------------------------------------------------------------------------------------------------------ INVESTMENTS o In the third quarter, investments in fixed assets totaled US$ 67.5 million and were destined to the installation of a wire-rod rolling mill at Acominas and for the maintenance and technological upgrade of Gerdau industrial units in Brazil and abroad. The total invested In the period reached US$ 206.2 million. - ------------------------------------------------------------------------------------------------------ INVESTMENTS 3Q03 2Q03 9M03 (US$ million) - ------------------------------------------------------------------------------------------------------ BRAZIL 49.8 55.5 161.0 Gerdau S.A. 29.7 20.7 68.3 Acominas 18.5 33.5 89.3 Other 1.6 1.3 3.4 ABROAD 17.7 14.9 45.2 North America 16.0 13.4 40.5 South America 1.7 1.5 4.7 TOTAL 67.5 70.4 206.2 - ------------------------------------------------------------------------------------------------------ o Companies in Brazil invested in the quarter US$ 49.8 million (73.8% of total), of which US$ 29.8 million in Gerdau S.A., US$ 18.5 million in Acominas and US$ 1.6 million in other Brazilian companies. o In the third quarter, units in North America received investments of US$ 16.0 million and the South American plants an additional US$ 1.7 million. 5 EXHIBIT 2 INDEBTEDNESS o In a joint operation, Gerdau S. A. and its subsidiary Acominas concluded on September 5th, 2003 the placement of the first tranche of US$ 105 million of an Exports Receivables Securitization program for a total of US$ 400 million. This first tranche was placed with a coupon of 7.37% p.a., maturity in July 2010 and a grace period of two years. The amortization will be made on a quarterly basis as of October 2005. o On September 30th, net debt was R$ 5.4 billion, 3.5% less than in June 30th, when it was R$ 5.6 billion. o The balances in cash and equivalents at the end of September totaled R$ 1.5 billion of which 46.7% (R$ 699.7 million) were indexed to the US Dollar. - ---------------------------------------------------------------------------- INDEBTEDNESS 09.30.2003 06.30.2003 (R$ million) - ---------------------------------------------------------------------------- SHORT TERM Domestic currency 735.7 445.4 Foreign currency (1) 1,576.0 1,856.8 Companies abroad 841.5 927.0 TOTAL 3,153.2 3,229.2 LONG TERM Domestic currency 762.9 1,071.1 Foreign currency (1) 1,047.2 689.5 Companies abroad 1,980.4 1,853.0 TOTAL 3,790.5 3,613.6 TOTAL DEBT 6,943.7 6,842.8 Cash and Equivalents 1,497.6 1,198.5 NET DEBT 5,446.1 5,644.3 - ---------------------------------------------------------------------------- (1) - 56% of indebtedness in foreign currency was covered by hedges. o The long term indebtedness payment schedule as of September 30th was as follows: --------------------------------------------------------------------- YEAR R$ MILLION --------------------------------------------------------------------- 2004 145.7 2005 539.3 2006 396.2 2007 373.0 2008 and after 2,336.3 TOTAL 3,790.5 --------------------------------------------------------------------- o the main indicators related to indebtedness at Gerdau at the end of each quarter are as follows: - -------------------------------------------------------------------------------- RATIOS 09.30.2003 06.30.2003 - -------------------------------------------------------------------------------- Net debt / Total net capitalization 52.4% 54.2% EBITDA / Net financial expenses (minus monetary & exchange 4.9x(1) 5.3x(2) rate variation) Total debt / EBITDA3 2.6x 3.2x Net debt / EBITDA3 2.1x 2.1x - -------------------------------------------------------------------------------- (1) - Nine months (2) - Six months (3) - Last twelve months EBITDA. o In the first half of October, Gerdau S.A. concluded the negotiations of a Euro Commercial Paper in the amount of US$ 100 million, due on October 15th, 2004 and with a coupon of 4.0% p.a. 6 EXHIBIT 2 APIMEC MEETING o Gerdau will host a national Apimec meeting at the Ouro Minas Hotel in Belo Horizonte on November 12 and 13. There will be a visit to the operating installations of Acominas in the Ouro Branco location the following day. The results of the third quarter will be discussed on this occasion along with the perspectives for the remainder of 2003, and 2004. 7 EXHIBIT 2 LISTED COMPANIES METALURGICA GERDAU S.A. o Interest over capital stock of the third quarter of 2003 is being paid on November 18th and totaled R$ 34.1 million which is equivalent to R$ 0.82 per share. The accumulated for the period reaches the total of R$ 91.7 million, that is, R$ 2.205 per share issued (EPS issued). If the accrued interest over capital stock is annualized, the interest over capital stock divided by the stock price of R$ 46.30 per share, on October 27th, will yield 6.4%. o At Bovespa, shares of Metalurgica Gerdau S.A. (GOAU) traded R$ 354.9 million throughout the first nine months of 2003, with 14,140 deals in the period. Volumes increased 67.6% throughout the same months in 2002. The number of trades increased 113.4%. Preferred shares appreciated 67.1% and the trading daily average reached R$ 1.8 million. o In the last twelve months, the evolution of prices at the Sao Paulo Stock Exchange was as follows: BOVESPA [OBJECT OMITTED] o In the third quarter Metalurgica Gerdau S.A. had a net profit of R$ 123.8 million, 17.1% more than in the second quarter as a consequence of the greater equity pick up from investments in subsidiaries and other holdings. In the accumulated for the year, net profit reached R$ 357.0 million, presenting an increase of 6.2% over the figures of the same period in 2002. This profit represents R$ 2.98 per share in the quarter and R$ 8.59 per share in the nine months. o On September 30th, net equity was R$ 1.8 billion, representing a net worth of R$ 44.28 per share. 8 EXHIBIT 2 GERDAU S.A. o Interest over capital stock concerning the third quarter of 2003 and to be paid out on November 18th total R$ 75.7 million and are equivalent to R$ 0.51 per share issued. The accumulated for the year reached R$ 200.3 million, that is, R$ 1.350 per share issued. If the accrued interest over capital stock is annualized, the interest over capital stock divided by the stock price of R$ 43.19 per share, on October 27th, will yield 4.2%. o From January through September, Gerdau S.A. (GGBR) shares traded R$ 1.6 billion at Bovespa. This volume represents an increase of 62.4% compared to the same period in 2002. There were 70,026 trades made which were 90.5% greater than those in the first nine months of the previous year. In the period, preferred shares appreciated 66.7% and the average daily trading was of R$ 8.3 million. o The ADRs traded at the NYSE reached the mark of 14.8 million of Gerdau S.A. (GGB) ADRs throughout the first nine months of this year and represented US$ 171.0 million in the period, equivalent to a daily average of US$ 906 thousand. o At the Latibex (Madrid Stock Exchange), Gerdau S.A.'s (XGGB) preferred shares had a daily presence on the board in that market. A total of 254.7 thousand shares were traded in the first nine months of 2003, and traded a total of 2.6 million Euros. o The evolution of preferred shares quotes at the BOVESPA and the NYSE in the last twelve months were as follows: BOVESPA NYSE [OBJECT OMITTED] [OBJECT OMITTED] o In the third quarter of 2003, Gerdau S.A.'s gross revenues reached R$ 1.8 billion, that is, 12.1% greater than that of the second quarter. Net revenues reached R$ 1.4 billion, 12.9% greater than that of the second quarter. From January through September, gross revenues accumulated R$ 4.9 billion and net revenues R$ 3.9 billion, presenting increases of 34.2% and 36.3% respectively. o Net profit at Gerdau S.A. reached R$ 234.4 million in the third quarter. This was 17.9% greater than in the second quarter. In the first nine months of the year, net profit was R$ 679.2 million, 9.0% greater than that of the first nine months of 2002. This profit represents R$ 1.58 per share in the quarter and R$ 4.58 per share in the accumulated for the year. o On September 30th, the net equity of the company was of R$ 3.8 billion, equivalent to a net worth of R$ 25.78 per share. 9 EXHIBIT 2 GERDAU AMERISTEEL CORPORATION o Shares of Gerdau Ameristeel (GNA.TO) traded Cdn$ 80 million at the Toronto Stock Exchange in the first nine months of 2003. The number of shares traded was 36.0 million. The Gerdau Ameristeel shares appreciated 30.3%. o The evolution of stock prices of preferred shares at the Toronto Stock Exchange In the last twelve months was as follows: TORONTO [OBJECT OMITTED] o The net revenue of the Company reached R$ 1.4 billion in the third quarter after adjusted to the Brazilian GAAP. This was 23.6% greater than in the second quarter. Accumulated net revenue through September reached R$ 4.1 billion, an increase of 52.0%. 10 EXHIBIT 2 MANAGEMENT METALURGICA GERDAU S.A. - NON CONSOLIDATED BALANCE SHEET CORPORATE LAW-R$ THOUSAND SEP. 2003 JUN. 2003 SEP. 2002 TOTAL ASSETS 1,977,298 18,876,288 1,726,025 CURRENT ASSETS 87,028 72,831 88,521 Cash and cash equivalents 2 2 4 Temporary cash investments 38,205 35,436 72,911 Dividends 30,919 20,643 - Taxes Recoverable 13,804 12,958 10,334 Inventories - - - Others 4,098 3,792 5,272 LONG-TERM RECEIVABLES 19,900 19,138 12,518 Accounts receivable 4,048 4,170 4,786 A/R with related parties 635 0 116 Others 15,217 14,968 7,616 PERMANENT ASSETS 1,870,370 1,784,319 1,624,986 Investments 1,868,595 1,782,507 1,623,060 Fixed assets 1,775 1,812 1,926 ============================================ ========================== ======================== ===================== CORPORATE LAW-R$ THOUSAND SEP. 2003 JUN. 2003 SEP. 2002 TOTAL LIABILITIES 1,977,298 1,876,288 1,726,025 CURRENT LIABILITIES 44,537 33,101 10,269 Loans and Financing - - - Debentures 601 404 537 Trade accounts payable 3 68 47 Taxes payable 53 125 159 Dividends payable 31,245 21,645 - Reserves - - - A/P with related parties - - - Other accounts payable 12,635 10,859 9,526 LONG-TERM LIABILITIES 91,351 91,437 133,405 Loans and Financing - - - Debentures - 578 53,862 Reserves - - - A/T with related parties - 214 - Other accounts payable 91,351 90,645 79,543 SHAREHOLDERS' EQUITY 1,841,410 1,751,750 1,582,351 Capital stock 1,280,000 1,280,000 640,000 Capital reserves 10,659 10,659 10,865 Revaluation reserve - - - Profit reserves 284,847 284,847 677,281 Retained earning 265,904 176,244 254,205 ============================================ ========================== ======================== ===================== 11 EXHIBIT 2 METALURGICA GERDAU S.A. - NON CONSOLIDATED FINANCIAL STATEMENT CORPORATE LAW-R$ THOUSAND 3Q2003 2Q2003 3Q2002 9M2003 9M2002 GROSS SALES REVENUE - - - - - Deductions of gross revenues - - - - - NET SALES REVENUES - - - - - Cost of sales - - - - - GROSS PROFIT - - - - - OPERATING RESULT 124,009 107,249 173,173 360,116 340,500 Selling expenses - - - - - General and administrative expenses (6,036) (4,456) (2,882) (19,847) (12,150) Financial result 1,211 1,191 (154) 4,834 3,435 Financial revenues 2,503 2,613 3,316 8,643 13,568 Financial expenses (1,292) (1,422) (3,470) (3,809) (10,133) Other operating revenues 17 188 4,379 252 4,404 Other operating expenses - - - - - Equity pick-up 128,817 110,326 171,830 374,877 344,811 OPERATING PROFIT 124,009 107,249 173,173 360,116 340,500 NON-OPERATING RESULT 1,401 2 (96) 1,403 (1,197) Non-operating revenues 1,401 2 - 1,403 - Non-operating expenses - - (96) - (1,197) PROFIT BEFORE TAXES/PARTICIPATION 125,410 107,251 173,077 361,519 339,303 Provision for income tax and social contribution - - - - - Deferred income tax (923) (832) 1,113 (2,337) (1,146) Statutory participation (728) (704) (664) (2,145) (2,012) Reversal of Interest of Equity - - - - - NET PROFIT FOR THE PERIOD 123,759 105,715 173,526 357,037 336,145 - ----------------------------------------------------- ------------- ------------- ------------- ------------- -------------- Profit per share - R$ 2.97612 2.54220 0.00835 8.58592 0.01617 Book value per share - R$ 44.2817 42.1256 0.0761 44.2817 0.0761 Outstanding shares (thousand) 41,584 41,584 20,792,198 41,584 20,792,198 - ----------------------------------------------------- ------------- ------------- ------------- ------------- -------------- METALURGICA GERDAU S.A. - NON CONSOLIDATED CASH FLOW CORPORATE LAW-R$ THOUSAND 3Q2003 2Q2003 3Q2002 9M2003 9M2002 NET INCOME 123,759 105,715 173,526 357,037 336,145 Equity pick up (128,817) (110,326) (171,830) (374,877) (344,811) Gain/Loss in disposal of investment (1,402) (1) 96 (1,403) 1,197 Monetary and exchange variation 1,540 1,534 2,611 4,472 7,395 Depreciation and amortization 37 38 38 113 114 Income tax and social contribution 3,376 297 (352) 4,231 (471) Interest paid 19 (25) 573 3 1,728 Contingencies/legal deposits - (45) (4,468) 15 (4,208) Increase (decrease) in trade account payable (65) (40) (2) (28) - Other operating activities accounts (269) 3,427 (1,727) (1,681) 1,201 Net cash provided by operating activities (1,822) 574 (1,535) (12,118) (1,710) Fixed assets acquisitions/disposals 7,198 (757) (2) 6,441 - Interest on Equity/Distribution of Profit Received 23,366 33,479 34,759 148,989 89,513 Investments acquisitions/disposals 30,564 32,722 34,757 155,430 89,513 WORKING CAPITAL FINANCING (1,778) (1,727) (1,608) (5,187) 49,817 Debentures (404) - (1,051) (423) (2,240) Interest paid for financing - - (28) (0) (81) Inter companies loans (866) 1,382 1,110 253 1,139 Dividend/interest & statutory particip, payment (22,925) (35,346) (34,036) (163,609) (135,123) CASH PROVIDED BY (APPLIED TO) FINANCING ACTIVITIES (25,973) (35,691) (35,613) (168,966) (86,488) Net change in cash 2,769 (2,395) (2,391) (25,654) 1,315 Cash balance At the beginning of the period 35,438 37,833 75,306 63,861 71,600 At the end of the period 38,207 35,438 72,915 38,207 72,915 Cash composition Temporary cash investments 38,205 35,436 72,911 38,205 72,911 Cash 2 2 4 2 4 - ----------------------------------------------------- ------------- ------------ ------------- ------------- ------------ 12 EXHIBIT 2 METALURGICA GERDAU S.A. - CONSOLIDATED BALANCE SHEET CORPORATE LAW - R$ THOUSAND SEP. 2003 JUN. 2003 SEP. 2002 TOTAL ASSETS 14,813,847 14,372,714 13,163,426 CURRENT ASSETS 5,914,167 5,596,554 5,525,080 Cash and cash equivalents 159,368 261,885 152,967 Trade accounts receivable 1,657,031 1,601,089 1,305,582 Taxes recoverable 113,328 96,478 69,688 Temporary cash investments 1,325,648 955,158 1,813,292 Inventories 2,262,359 2,322,606 1,773,620 Others 396,433 359,338 409,931 LONG-TERM RECEIVABLES 805,899 779,207 392,006 Account receivable 11,015 11,306 11,565 A/R with related parties 21,514 14,287 17,000 Others 773,370 753,614 363,441 PERMANENT ASSETS 8,093,781 7,996,953 7,246,340 Investments 443,940 445,142 476,578 Fixed Assets 7,632,041 7,526,406 6,753,572 Deferred 17,800 25,405 16,190 CORPORATE LAW - R$ THOUSAND SEP. 2003 JUN. 2003 SEP. 2002 TOTAL LIABILITIES 14,813,847 14,372,714 13,163,426 CURRENT LIABILITIES 5,914,167 5,596,554 5,525,080 Loans and financing 2,867,933 3,285,942 4,020,466 Debentures 330,764 12,199 537 Trade accounts payable 1,035,354 985,504 737,538 Taxes payable 225,504 174,234 188,126 Dividends payable 66,813 44,982 - Reserves - - - A/P with related parties - - - Other accounts payable 372,783 359,319 342,789 LONG-TERM LIABILITIES 4,968,259 4,748,375 4,022,280 Loans and Financing 3,326,536 2,862,428 2,603,380 Debentures 425,870 716,388 515,411 Reserves - - - A/P with related parties - - - Other accounts payable 1,215,853 1,169,559 903,489 MINORITY SHAREHOLDERS 3,105,027 3,010,409 2,269,339 SHAREHOLDERS' EQUITY 1,841,410 1,751,750 1,582,351 Capital stock 1,280,000 1,280,000 640,000 Capital reserves 10,659 10,659 10,865 Revaluation reserve - - - Profit reserves 284,847 284,847 677,281 Retained earning 265,904 176,244 254,205 13 EXHIBIT 2 METALURGICA GERDAU S.A. - Consolidated FINANCIAL STATEMENT Corporate Law-R$ thousand 3Q2003 2Q2003 3Q2002 9M2003 9M2002 GROSS SALES REVENUE 4,131,602 3,557,706 3,590,854 11,613,823 8,062,461 Deductions of gross revenues (637,844) (527,417) (632,397) (1,762,937) (1,467,107) Net sales revenues 3,493,758 3,030,289 2,958,457 9,850,886 6,595,354 Cost of sales (2,687,894) (2,245,993) (2,137,035) (7,429,158) (4,717,764) Gross Profit 805,864 784,296 821,422 2,421,728 1,877,590 Operating result (500,225) (638,574) (486,011) (1,614,566) (1,173,231) Selling expenses (114,775) (115,656) (93,340) (322,422) (238,986) General and administrative expenses (184,705) (167,439) (213,879) (552,476) (508,805) Financial result (233,947) (134,566) (727,975) (471,110) (1,128,963) Financial revenues 50,427 13,259 166,821 80,431 255,423 Financial expenses (284,374) (147,825) (894,796) (551,541) (1,384,386) Other operating revenues 3,273 - 56,965 719 106,513 Other operating expenses - (3,141) - - - Equity pick-up 29,929 (217,772) 492,218 (269,277) 597,010 Operating profit 305,639 145,722 335,411 807,162 704,359 Non-operating result (2,730) (8,625) (18,029) (12,352) (28,996) Non-operating revenues - - - - - Non-operating expenses (2,730) (8,625) (18,029) (12,352) (28,996) Profit before taxes/participation 302,909 137,097 317,382 794,810 675,363 Provision for income tax and social contribution (59,681) (62,272) 4,687 (195,722) (49,911) Deferred income tax 8,097 194,220 11,195 214,671 10,709 Statutory participation (5,149) (5,192) (4,144) (15,592) (10,679) Reversal of Interest on Equity - - - - - Net Profit for the period 246,176 263,853 329,120 798,167 625,482 - --------------------------------------------------- -------------- ------------- ------------- --------------- --------------- Controlling Shareholders 123,759 105,715 173,526 357,037 336,145 Minority Shareholders 122,417 158,138 155,594 441,130 289,337 METALURGICA GERDAU S.A. - Consolidated CASH FLOW Corporate Law-R$ thousand 3Q2003 2Q2003 3Q2002 9M2003 9M2002 NET INCOME 246,176 263,853 329,120 798,167 625,482 Equity pick up (29,929) 217,772 (492,218) 269,277 (597,010) Provision for credit risk 6,889 7,064 1,284 16,253 2,707 Gain/Loss in fixed asset disposal 8,117 6,243 2,840 15,204 5,963 Gain/Loss in liquidation of investment (1,446) 1,607 7 196 5,286 Monetary and exchange variation 101,504 (4,072) 735,944 92,428 935,189 Depreciation and amortization 156,359 137,614 162,888 448,554 385,656 Income tax and social contribution (29,531) (266,337) (58,449) (244,033) (61,859) Interest paid 137,234 155,544 136,234 436,588 338,620 Contingencies/legal deposits (5,923) 17,231 4,560 10,141 (377) Changes in trade account receivable (32,048) 67,051 (144,630) (304,509) (340,129) Changes in inventories 88,107 (93,045) (27,208) (143,213) (68,707) Other accounts in operating activities 75,323 1,172 (21,421) 23,820 (137,436) Net cash provided by operating activities 757,122 393,786 541,313 1,540,949 1,142,539 Fixed assets acquisitions/disposals (199,886) (147,370 ) (141,803) (625,913) (426,603) Deferred charges (2,210) (3,792) (1,451) (5,259) (6,821) Investments acquisitions/disposals (15,619) 2,331 (907,628) (13,426) (1,010,589) Cash (applied to) investing activities (217,715) (148,831) (1,050,882) (644,598) (1,444,013) Fixed assets suppliers (5,906) (3,970) (7,881) (7,913) (27,146) Working capital financing (127,449) 39,461 364,733 71,875 538,339 Debentures (9,966) (12,356) 309,464 8,650 283,768 Proceeds from fixed assets financing 49,184 98,198 933,725 274,048 1,466,921 Payments of fixed assets financing (74,038) (91,757) (144,098) (351,455) (977,552) Interest paid for financing (76,721) (166,560) (92,144) (310,308) (247,706) Inter companies loans (1,057) (19,311) (21,497) (17,481) (15,755) Dividend/interest & statutory particip, payment (48,168) (82,839) (78,617) (341,001) (257,669) Cash provided by (applied to) financing (294,121) (239,134) 1,263,685 (673,584) 763,200 activities Net change in cash 245,286 5,821 754,116 222,767 461,726 Cash balance At the beginning of the period 1,217,043 1,347,563 845,334 1,420,236 1,003,384 Cash of companies purchased - - - 12,789 - Effect of exchange rate chanted on cash 22,687 (136,341) 366,809 (170,776) 501,149 At the end of the period 1,485,016 1,217,043 1,966,259 1,485,016 1,966,259 Cash composition Temporary cash investments 1,325,648 955,158 1,813,292 1,325,648 1,813,292 Cash 159,368 261,885 152,967 159,368 152,967 14 EXHIBIT 2 GERDAU S.A. - CONSOLIDATED BALANCE SHEET CORPORATE LAW - R$ THOUSAND SEP. 2003 JUN. 2003 SEP. 2002 TOTAL ASSETS 7,590,894 7,236,671 7,489,835 CURRENT ASSETS 1,927,406 1,658,473 1,557,843 Cash and cash equivalents 65,231 52,532 28,688 Trade accounts receivable 622,337 615,233 535,248 Taxes recoverable 38,598 45,274 20,128 Temporary cash investments 381,633 39,427 344,432 Inventories 750,294 841,790 523,200 Others 69,313 64,217 106,147 LONG-TERM RECEIVABLES 125,633 116,003 140,629 Account receivable 8,908 8,908 56,206 A/R with related parties 16,806 11,970 16,251 Others 99,919 95,125 68,172 PERMANENT ASSETS 5,537,855 5,462,195 5,791,363 Investments 3,793,414 3,742,145 4,139,394 Fixed Assets 1,735,698 1,711,981 1,643,980 Deferred 8,743 8,069 7,989 CORPORATE LAW - R$ THOUSAND SEP. 2003 JUN. 2003 SEP. 2002 TOTAL LIABILITIES 7,590,894 7,236,671 7,489,835 CURRENT LIABILITIES 2,139,750 1,982,993 1,219,125 Loans and financing 1,359,408 1,589,460 941,013 Debentures 330,163 11,794 - Trade accounts payable 151,057 133,915 126,325 Taxes payable 136,290 115,803 84,930 Dividends payable 66,581 44,415 - Reserves - - - A/P with related parties - - - Other accounts payable 96,251 87,606 66,857 LONG-TERM LIABILITIES 1,626,068 1,607,849 2,988,332 Domestic financing 302,739 315,522 359,764 Foreign financing 734,330 391,238 759,450 Debentures 250,638 574,394 553,397 Reserves - - - A/P with related parties 174,171 169,367 1,149,265 Other accounts payable 164,190 157,328 166,456 SHAREHOLDERS' EQUITY 3,825,076 3,645,829 3,282,378 Capital stock 1,735,656 1,735,656 1,335,210 Capital reserves 363,307 342,813 288,945 Revaluation reserve - - - Profit reserves 1,247,202 1,247,202 1,110,413 Retained earning 478,911 320,158 547,900 15 Exhibit 2 GERDAU S.A. - NON CONSOLIDATED FINANCIAL STATEMENT CORPORATE LAW - R$ THOUSAND 3Q2003 2Q2003 3Q2002 9M2003 9M2002 GROSS SALES REVENUE 1,771,618 1,580,780 1,419,375 4,879,330 3,636,438 Deductions of gross revenues (345,772) (317,852) (296,844) (977,308) (773,692) NET SALES REVENUES 1,425,846 1,262,928 1,122,531 1,902,022 2,862,746 Cost of sales (898,760) (811,406) (650,497) (2,424,583) (1,691,503) GROSS PROFIT 527,086 451,522 472,034 1,477,439 1,171,243 OPERATING RESULT (239,038) (205,763) (167,624) (618,403) (508,530) Selling expenses (92,815) (87,156) (64,941) (250,993) (176,867) General and administrative expenses (84,575) (81,205) (75,459) (250,107) (209,569) Financial result (144,689) (118,379) (443,603) (311,801) (622,868) Financial revenues 12,966 13,703 53,367 50,534 83,718 Financial expenses (157,655) (132,082) (496,970) (362,335) (706,586) Other operating revenues 2,552 5,227 2,255 9,417 6,084 Other operating expenses - - - - - Equity pick-up 80,489 75,750 414,124 185,081 494,690 OPERATING PROFIT 288,048 245,759 304,410 859,036 662,713 NON-OPERATING RESULT (7,271) (4,663) (13,757) (12,540) (22,846) Non-operating revenues - - - - - Non-operating expenses (7,271) (4,663) (13,757) (12,540) (22,846) PROFIT BEFORE TAXES/PARTICIPATION 280,777 241,096 290,653 846,496 639,867 Provision for income tax and social (41,180) (39,004) (128) (136,802) (48,942) contribution Deferred income tax (762) (1,270) (37,734) (17,058) (40,480) Statutory participation (4,421) (4,488) (3,479) (13,447) (8,155) Reversal of Interest on Equity - - - - - NET PROFIT FOR THE PERIOD 234,414 198,874 324,780 679,189 623,250 - ----------------------------------------------- ------------- --------------- -------------- --------------- ---------------- Profit per share - R$ 1.5801 1.3405 0.0028 4.5782 0.0055 Book value per share - R$ 25.7834 24.5752 0.0288 25.7834 0.0288 Outstanding shares (thousand) 148,354 148,354 114,118,471 148,354 114,118,471 - ----------------------------------------------- ------------- --------------- -------------- --------------- ---------------- GERDAU S.A. - NON CONSOLIDATED CASH FLOW CORPORATE LAW - R$ THOUSAND 3Q2003 2Q2003 3Q2002 9M2003 9M2002 NET INCOME 234,414 198,874 324,780 679,189 623,250 Equity pickup (80,489) (75,750) (414,124) (185,081) (494,690) Provision for credit risk 5,555 3,598 - 11,594 - Gain/Loss in fixed asset disposal 7,272 4,662 584 12,505 4,890 Gain/Loss in disposal of investment - - (90) 35 4,087 Monetary and exchange variation 59,718 11,320 418,582 46,810 526,733 Depreciation and amortization 51,399 49,275 46,494 149,136 137,343 Income tax and social contribution 2,038 (14,928) (55,601) 18,770 (50,903) Interest paid 85,197 66,029 69,537 243,558 157,547 Contingencies/legal deposits 1,028 892 (959) 4,772 (7,536) Changes in trade account receivable (6,272) 15,516 (80,612) (148,606) (139,626) Changes in inventories 92,496 (73,413) 21,435 (130,601) (23,300) Increase (decrease) in trade account payable 19,640 (13,974) 11,589 3,152 24,663 Other operating activities accounts 37,667 61,195 19,013 125,234 59,860 NET CASH PROVIDED BY OPERATING ACTIVITIES 508,663 233,296 360,728 830,467 822,318 Fixed assets acquisitions disposals (82,164) (69,418) (59,359) (223,954) (169,366) Deferred charges (899) (779) (303) (1,917) (1,188) Investments acquisitions/disposals 27,094 (4,078) (1,409,774) (32,107) (1,902,630) Interest on Equity/Distribution of Profit Received 3,220 2,412 2,600 29,960 13,171 INVESTMENTS ACQUISITIONS/DISPOSALS (52,749) (71,863) (1,466,836) (228,018) (2,060,013) Fixed assets suppliers (2,360) (5,003) (1) (42) (10,229) Working capital financing (23,800) (13,564) 340,225 77,884 402,726 Debentures (39,257) (15,137) 311,313 (57,332) 291,579 Proceeds from fixed assets financing 36,034 30,563 78,831 96,428 572,255 Payments of fixed assets financing (35,161) (59,217) (35,644) (179,080) (395,081) Interest paid for financing (30,826) (66,820) (17,229) (125,572) (82,260) Inter companies loans (4,796) (6,759) 791,500 (11,094) 854,461 Dividend/interest & statutory particip, (48,443) (80,494) (80,054) (322,457) (200,036) payment CASH PROVIDED BY (APPLIED TO) FINANCING (101,009) (216,431) 1,388,941 (521,265) 1,433,415 ACTIVITIES NET CHANGE IN CASH 354,905 (54998) 282,833 81,184 195,720 CASH BALANCE At the beginning of the period 91,959 146,957 90,287 365,680 177,400 At the end of the period 446,864 91,959 373,120 446,864 373,120 CASH COMPOSITION Temporary cash investments 381,633 39,427 344,432 381,633 344,432 Cash 65,231 52,532 28,688 65,231 28,688 - ----------------------------------------------- ------------- --------------- -------------- --------------- ---------------- 16 Exhibit 2 GERDAU S.A. - CONSOLIDATED BALANCE SHEET CORPORATE LAW - R$ THOUSAND SEP. 2003 JUN. 2003 SEP. 2002 TOTAL ASSETS 14,698,466 14,240,100 13,102,386 CURRENT ASSETS 5,820,746 5,481,339 5,431,658 Cash and cash equivalents 156,385 258,611 148,551 Trade accounts receivable 1,609,626 1,557,333 1,255,855 Taxes recoverable 98,409 82,816 58,792 Temporary cash investments 1,341,196 939,868 1,814,307 Inventories 2,262,359 2,322,606 1,773,620 Others 352,771 320,105 380,533 LONG-TERM RECEIVABLES 785,468 759,772 379,203 Accounts receivable 10,648 10,938 11,198 A/R with related parties 20,751 14,400 17,234 Others 754,069 734,438 350,771 PERMANENT ASSETS 8,092,252 7,998,989 7,291,525 Investments 442,349 443,340 475,208 Fixed assets 7,632,103 7,530,244 6,800,127 Deferred 17,632,103 7,530,244 6,800,127 CORPORATE LAW - R$ THOUSAND SEP. 2003 JUN. 2003 SEP. 2002 TOTAL LIABILITIES 14,698,466 14,240,100 13,102,386 CURRENT LIABILITIES 4,837,840 4,779,361 5,226,577 Loan and Financing 2,823,010 3,217,383 3,969,646 Debentures 330,163 11,794 - Trade accounts payable 1,036,453 986,409 738,209 Taxes payable 221,869 171,649 185,765 Dividends payable 66,581 44,415 - Reserves - - - A/P with related parties - - - Other accounts payable 359,764 347,711 332,957 LONG-TERM LIABILITIES 4,911,360 4,688,699 3,957,284 Loans and Financing 3,326,536 2,862,428 2,603,380 Debentures 463,995 751,215 534,240 Reserves - - - A/P with related parties - - - Other accounts payable 1,120,829 1,075,056 819,664 MINORITY SHAREHOLDERS 1,124,190 1,12,211 636,147 SHAREHOLDERS' EQUITY 3,825,076 3,645,829 3,282,378 Capital stock 1,735,656 1,735,656 1,335,120 Capital reserves 363,307 342,813 288,945 Revaluation reserve - - - Profit reserves 1,247,202 1,247,202 1,110,413 Retained earning 478,911 320,158 547,900 17 Exhibit 2 GERDAU S.A. - Consolidated FINANCIAL STATEMENT CORPORATE LAW - R$ THOUSAND 3Q2003 2Q2003 3Q2002 9M2003 9M2002 GROSS SALES REVENUE 4,131,602 3,557,706 3,590,854 11,613,823 8,062,461 Reduction of gross revenues (637,844) (527,417) (632,397) (1,762,937) (1,467,107) NET SALES REVENUES 3,493,758 3,030,289 2,958,457 9,850,886 6,595,354 Cost of sales (2,687,894) (2,245,993) (2,137,035) (7,429,158) (4,717,764) GROSS PROFIT 805,864 784,296 821,422 2,421,728 1,877,590 OPERATING RESULT (502,394) (642,838) (487,773) (1,628,036) (1,181,470) Selling expenses (114,757) (115,610) (93,340) (322,364) (238,986) General and administrative expenses (176,216) (160,422) (208,728) (525,069) (490,440) Financial result (240,046) (140,693) (730,077) (490,219) (1,141,182) Financial revenues 41,291 3,535 160,651 52,714 238,523 Financial expenses (281,337) (144,228) (890,728) (542,933) (1,379,705) Other operating expenses - - - - - Other operating expenses 2,495 (3,738) - (1,205) - Equity pick-up 26,130 (222,375) 492,217 (285,179) 588,241 OPERATING PROFIT 303,470 141,458 333,649 797,692 696,120 NON-OPERATING RESULT (4,131) (8,627) (17,933) (13,755) (27,799) Non-operating revenues - - - - - Non-operating expenses (4,131) (8,627) (17,933) (13,755) (27,799) PROFIT BEFORE TAXES/PARTICIPATION 299,339 132,831 315,716 783,937 668,321 Provision for Income tax social (58,606) (61,382) 5,114 (192,889) (48,572) contribution Deferred income tax 9,004 195,073 10,086 217,016 11,804 Statutory participation (4,421) (4,488) (3,479) (13,447) (8,667) Reversal of Interest on Equity - - - - NET PROFIT FOR THE PERIOD 245,316 262,034 327,437 794,617 622,886 - ----------------------------------------- ----------- ------------ ----------- ----------- ----------- Controlling Shareholders 234,414 198,874 324,780 679,189 623,250 Minority Shareholders 10,902 63,160 2,657 115,428 (364) - ----------------------------------------- ----------- ------------ ----------- ----------- -----------