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FORM 6-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 or 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For MARCH 29, 2002
Companhia Vale do Rio Doce
(Exact name of Registrant as specified in its charter)
Valley of the Doce River Company
(Translation of Registrant's name into English)
Federative Republic of Brazil
(Jurisdiction of incorporation or organization)
Avenida Graca Aranha, No. 26
20005-900 Rio de Janeiro, RJ, Brazil
(Address of principal executive offices)
[Indicate by check mark whether the registrant files or will file annual
reports under cover of 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
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[If "Yes " is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b):] Not applicable
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Companhia Vale do Rio Doce
TABLE OF CONTENTS
This Form 6-K contains the following:
Sequential
Page
Item Number
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1. Financial Statements of 2001................................... 3
SIGNATURES
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.
COMPANHIA VALE DO RIO DOCE
By: /s/ Roberto Castello Branco
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Name: Roberto Castello Branco
Title: Head of Investor Relations
Dated: March 29, 2002
[Logo] Companhia Vale do Rio Doce [Logo]
Diretoria de Controle
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Financial Statements of 2001
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1 Management Report
2 Management's Discussion and Analysis
3 Financial Statements
4 Notes to the Financial Statements
Financial Statements filed with the Comissao de
Valores Mobiliarios CVM (Brazilian Securities
Commission) on 03/27/02
Gerencia Geral de Controladoria
1 Management Report
[Logo] Companhia
Vale do Rio Doce
Management Report
COMPANHIA VALE DO RIO DOCE'S PERFORMANCE IN 2001
Despite the global recession, in 2001 Companhia Vale do Rio Doce (CVRD), for
the fifth year running, achieved record net earnings of R$ 3.051 billion. This
was 43.0% higher than that reported in 2000, of R$ 2.133 billion. In the period
between 1997, when CVRD was privatized, and 2001, net profit has grown at an
average annual rate of 41.7%.
Reflecting the earnings achieved, the return on consolidated shareholders'
equity amounted to 25.9% compared to 20.2% in the previous year. Earnings
distribution, in the form of interest on shareholders equity, was also a record
R$ 1.774 billion, the equivalent of R$ 4.61 per share, 38.4% higher than the
figure for 2000 of R$ 1.282 billion.
From January 1997 to December 2001, total shareholder return was, in U.S.
dollar terms, 11.8% per year.
The quality of the Company's assets, as well as the acquisitions and the
divestments carried out, were extremely important in determining the results
for 2001. The depreciation of the Brazilian real against the U.S. dollar was
favorable in that it helped to widen margins and increase cash generation.
However, in the short term, its effect on net earnings was negative due to the
impact on net liabilities in foreign currency (net foreign debt less assets
owned abroad).
In 2001, consolidated gross revenue amounted to R$ 11.015 billion, 21.7% higher
than the previous year, R$ 9.048 billion.
Consolidated cash generation, as measured by EBITDA (earnings before interest,
tax, depreciation and amortization) amounted to R$ 5.128 billion, up 35.4% on
2000. The high ratio of EBITDA/net revenues, of 48.5%, reveals CVRD's
excellent capacity to convert revenue into operating profits. The ferrous
division (iron ore, pellets, manganese and ferro-alloys) was responsible for
74% of the EBITDA generation, aluminum 10%, logistics 7%, steel 5% and non
ferrous 4%.
The Company's consolidated exports amounted to US$ 3.297 billion in 2001
compared to US$ 3.016 billion in 2000. Net exports (exports less imports)
amounted to US$ 2.883 billion, CVRD being the company that contributed the most
to Brazil's trade surplus in 2001.
CVRD invested US$ 1.537 billion in 2001, US$ 911.7 million of which was spent
on acquisitions. 88.5% of capital expenditure was allocated to mining
activities.
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For the fourth quarter of 2001 (4Q01) Parent Company net earnings amounted to R$
639 million, in line with the previous quarters, with the exception of 3Q01,
which showed particularly high earnings due to the profit from the sale of the
stake in Cenibra. EBITDA in the Parent Company in 4Q01 amounted to R$ 804
million, a drop of 18.5% on the previous quarter, but 30.1% higher than the same
period a year earlier. In 2001, EBITDA in the Parent Company totaled R$ 3.254
billion, and the EBITDA margin was 51.0%. The ferrous division was responsible
for 85.6% of the cash generation, logistics 9.6% and non ferrous 4.8%.
In operational terms, a number of significant records were achieved:
o Consolidated sales of iron ore and pellets totaled 143.6 million tons,
beating the record set in 2000 of 118.0 million tons by 21.7%;
o The Carajas Railroad (EFC) and the Vitoria a Minas Railroad (EFVM)
together carried record cargoes of 167.4 million tons, compared to
the record set in 2000 of 164 million tons;
o General cargo (products other than iron ore and pellets) transported
by EFC and EFVM totaled 12.9 billion net ton kilometers (nkt), 4.0%
higher than the record achieved in 2000 of 12.4 billion nkt.
In acquiring Ferteco and 50% of the voting capital of Caemi, CVRD consolidated
its leadership position in the global iron ore market. CVRD purchased the stake
held by Phelps Dodge in the Sossego project becoming the full owner of the
project. This allowed a substantial cut in investment costs, from US$ 431
million to US$ 383 million due to the exploitation of synergies. This
transformed the capex cost of this copper project into one of the lowest in the
world (US$ 2,553 per ton).
CVRD sold several non-core assets - CSN, Bahia Sul, Cenibra, Rio Doce Pasha and
Docenave vessels -obtaining proceeds of approximately US$ 1.3 billion.
During 2001, significant long term contracts were signed for the sale of iron
ore and pellets with the Shanghai Baosteel Iron & Steel Group, China's largest
steelworks, and Acesita, the largest producer of stainless steel in Latin
America, controlled by Arcelor, the world's largest steel company. At the same
time, a memorandum of understanding was signed with Codelco, the world's largest
copper producer, with the aim of forming a joint venture for the combined
exploitation of opportunities in the copper mining segment.
In March 2002, CVRD was involved in two important transactions in the world's
capital markets.
The Company issued US$ 300 million worth of bonds, with a term of five years.
This issue received Moody's risk classification Baa2 and the spread over the
equivalent yield from U.S Treasury bonds, with a similar maturity date, was 455
basis points, the lowest for recent issues by Brazilian companies with the same
maturity. Yield to investor return is 8.75% per year.
The third and final stage of the Company's privatization was successfully
completed with the global offering of common shares held by the National
Treasury and the BNDES (National Bank of Economic and Social Development). In
consequence, the Company's shareholder base widened considerably and the free
float was significantly increased. CVRD's common shares began trading on the New
York Stock Exchange on March 21, 2002 as American Depositary Receipts (ADRs),
identified by ticker symbol RIO. Each ADR corresponds to one common share.
Leading indicators of economic activity are suggesting a synchronized recovery
in the global economy from the middle of this year. Monetary and fiscal stimuli
appear to be bearing fruit in the United States, the European Union has
benefited from de-regulation of its labor market and lower rates of income tax,
emerging Asian exporting economies are returning to growth, the rate of economic
expansion in China continues very high and Brazil is beginning to recover from
the economic shocks of last year. The
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demand outlook has therefore improved for minerals and metals, and for CVRD's
cargo transportation services.
The raising of steel import barriers by the U.S. government will slow the
inevitable restructuring of the steel industry there, threatening to unleash a
global wave of protectionism. But this is not expected to have a significant
effect on CVRD's estimated sales of iron ore and pellets.
CONSOLIDATED RESULTS FOR 2001
Under generally accepted Brazilian accounting practices (BR GAAP) results are
consolidated from those companies that are under effective control, or shared
control as defined by shareholders agreements, independent of the percentage of
capital held by CVRD. Consolidation is in proportion to the stake held by CVRD
in each company.
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FINANCIAL INDICATORS CONSOLIDATED
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R$ million
2000 2001
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Gross Revenues 9,048 11,015
Exports (US$ million) 3,016 3,297
Gross Margin (%) 44.1 47.6
Equity Income 152 102
Net Income 2,133 3,051
Net Income per Share 5.54 7.95
Interest on Shareholders' Equity 1,282 1,774
EBITDA 3,788 5,128
EBITDA Margin (%) 43.1 48.5
ROE (%) 20.2 25.9
Gross Debt (US$ million) 4,042 4,126
Net Debt (US$ million) 2,691 2,916
Gross Debt/EBITDA (x) 2.09 1.87
EBITDA/Financial Expenses (x) 5.36 5.36
Sales: volumes, revenues and margins
CVRD's consolidated sales of iron ore and pellets reached a record 143.6 million
tons 2001, an increase of 21.7% on the previous year. This amount includes sales
by CVRD, the pellet joint ventures (Nibrasco, Itabraso, Kobrasco and
Hispanobras), Ferteco, Samarco and GIIC, eliminating transactions between
companies. Not included, for example, are sales of pellet feed by the Parent
Company to the joint ventures, while on the other hand sales by Samarco are GIIC
are calculated in proportion to the stakes held by CVRD. Of the sales increase
of 25.6 million tons over the previous year, 10.5 million, or 40.4%, of this was
due to the performance of companies acquired in 2000 and 2001.
Sales of iron ore increased by 25.8%, while pellet sales rose by only 9.9%,
reflecting the falling cycle in the demand for this product. Of the total volume
sold, 121.8 million tons - 85% - were exported.
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CONSOLIDATED SALES OF IRON ORE AND PELLETS
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million
tons
Iron Ore 2000 % 2001 %
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Parent Company 79,389 67.3 93,432 65.0
Socoimex 1,151 1.0 -- --
Samitri 6,434 5.5 5,397 3.8
Samarco * 515 0.4 893 0.6
Urucum 591 0.5 627 0.4
Ferteco 10,418 7.3
Total 88,080 74.6 110,767 77.1
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Pellets 2000 % 2001 %
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Parent Company + JVs 25,885 21.9 23,316 16.2
Samarco * 3,687 3.1 4,707 3.3
Ferteco 3,340 2.3
GIIC * 362 0.3 1,526 1.1
Total 29,934 25.4 32,889 22.9
Grand Total 118,014 100.0 143,656 100.0
* sales attributed in proportion to size of stake held by CVRD
Socoimex: acquired on May 11, 2000 and consolidated into CVRD on August 31, 2000
Samitri/Samarco: acquired on May 30, 2000 and consolidated into CVRD on
October 1, 2001
GIIC: acquired on October 9, 2000
Ferteco: acquired on April 27, 2001
CVRD managed to substantially increase its share in the Chinese market, signing
a contract with Baosteel for the annual supply of 6 million tons of iron ore for
20 years, and widening its client base. Sales to China by the Parent Company in
2001 amounted to 14.9 million tons, up 62% on the previous year, and represented
16.1% of China's total iron ore imports, estimated at 92.3 million tons. For
2002, it is expected that sales to China will continue to expand.
Sales of ferro-alloys in 2001 amounted to 362.4 thousand tons, 65% were exported
and 35% sold to the domestic market. Due to the closure of the Almas and Caetes
mines, gold sales fell from 17.4 tons in 2000 to 15.8 tons in 2001. In 2002,
gold sales are likely to show a further decline as mining operations are ceased
at Igarape Bahia. Gold production should recover when the copper mining
operations begin in Carajas.
Due to energy rationing, Albras was forced to cut down its sales by 9.3%,
selling 331.7 thousand tons of primary aluminum. Alunorte sold 1.595 million
tons of alumina, 3.6% less than the previous year.
The railroads wholly owned by CVRD, EFC and EFVM, transported 167.4 million
tons, up 2.1% on 2000. 47.0 million tons were transported for customers, 28.1%
of the total - 18.6 million tons of iron ore and pellets and 28.4 million of
general cargo. In net ton kilometer terms, general cargo carried by EFC and EFVM
in 2001 totaled 12.9 billion. The Centro-Atlantica Railroad (FCA), operated by
CVRD, carried 8.4 billion ntk, compared with 7.7 billion in 2000.
Gross consolidated revenues amounted to R$ 11.015 billion in 2001, 21.7% higher
than in 2000, of R$ 9.048 billion. Some 84% of gross revenues came from Brazil,
while the remaining 16%, R$ 1.803 billion, came from subsidiaries and joint
ventures abroad. Revenue denominated in foreign currency accounted for
approximately 80% of the total.
Gross sales margin amounted to 47.6%, exceeding the figure for the previous year
of 44.1%.
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Sales of iron ore and pellets in 2001 accounted for 54% of gross revenues - R$
5.919 billion, compared to 44% in 2000.
In contrast, transportation revenues fell as a percentage of the total from 17%
to 14%, reflecting the fact that Socoimex, Samitri and Ferteco, being acquired
by CVRD, ceased to be clients of EFVM and the port of Tubarao. At the same time
revenues by Docenave fell due to the sale of part of the fleet. In absolute
terms, gross revenue from transportation services fell, from R$ 1.580 billion in
2000 to R$ 1.490 billion in 2001.
Gross revenues from the aluminum division was down slightly, due to lower
quantities and prices, amounting to R$ 1.118 billion in 2001 compared to R$
1.127 billion in the previous year.
[Graphic Omitted]
Variation in net earnings
Net earnings amounted to R$ 3.051 billion, an increase of R$ 918 million and 43%
higher than reported in 2000 of R$ 2.133 billion.
Two factors contributed significantly to the rise in earnings: the growth in net
operating revenues of R$ 1.792 billion and capital gains from the sale of
shareholdings (Bahia Sul and Cenibra) of some R$ 1.702 billion. On the negative
side, depreciation of the Brazilian Real negatively impacted earnings by R$ 741
million, the cost of goods sold (COGS) rose by R$ 640 million, operational
expenses increased by R$ 618 million and there was a R$ 437 million goodwill
amortization.
The main reason for the increase in COGS was the acquisition of companies such
as Samitri and Ferteco, whose costs were added to those of CVRD. However, on the
other hand, sale from these companies were added to net consolidated revenues.
Expenditure on electricity accounted for 8.1% of COGS, in 2001, compared to 6.7%
in 2000, reflecting the rise in costs due to power rationing.
The growth in operational expenses was mainly due to increases in the following
items: an increase in sales expenses of R$ 90 million, and administrative costs,
R$ 164 million; an increase in fixed assets write offs of R$ 186 million; tax
provisions, R$ 122 million; and loss provisions of R$ 169 million.
CVRD decided to write off all the premiums paid on stakes acquired in 2001. The
premiums were: for FCA, R$ 147 million; PPSA, R$ 83 million; Sibra, R$ 81
million; GIIC, R$ 60 million; and for Usiminas, R$ 55 million.
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[Graphic Omitted]
Cash Flow
EBITDA generated in 2001 of R$ 5.128 billion was R$ 1.340 billion higher than
the figure for the previous year. The main reason behind this increase was the
growth in net operating revenues of R$ 1.792 billion, partially offset by a rise
in COGS of R$ 640 million, and a rise in sales and administrative expenses of R$
254 million.
[Graphic Omitted]
The ferrous division was responsible for 74% of the EBITDA generation, aluminum
10%, logistics 7%, steel 5% and non ferrous 4%.
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[Graphic Omitted]
Debt
CVRD's total consolidated debt, in BR GAAP, amounted to US$ 4.126 billion as of
December 31 2001, slightly higher than the previous years figure of US$ 4.042
billion.
Net consolidated debt represented less than two times EBITDA in 2001. Interest
coverage was at a very comfortable level, EBITDA being 5.36 times financial
expenses.
RESULTS OF THE PARENT COMPANY IN 4Q01
Parent Company gross revenues in the 4Q01 amounted to R$ 1.809 billion. Its
composition by product was as follows: iron ore 59%, pellets 17%, logistics 15%,
gold 5%, potash 2% and others 2%.
Gross margin amounted to 48.9%, approximately the same as the average for the
last seven quarters (49.0%), but lower than that recorded in 3Q01, of 51.5%.
This drop is essentially due to the fall in gross revenue of 1.7% and the 3.2%
rise in COGS.
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FINANCIAL INDICATORS - PARENT COMPANY
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R$ million
4Q00 3Q01 4Q01 2000 2001
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Gross Revenues 1,404 1,840 1,809 5,169 6,617
Gross Margin (%) 47.8 51.5 48.9 49.2 48.9
Net Earnings 532 1,207 639 2,133 3,051
EBITDA 618 986 804 2,403 3,254
EBITDA Margin (%) 45.8 55.4 46.1 48.3 51.0
Net Operating Cash Flow 499 1,169 358 1,848 3,515
ROE annualized (%) 20.2 43.2 25.9 20.2 25.9
Gross Debt (US$ million) 1,825 1,987 2,000 1,825 2,000
Net Debt (US$ million) 1,023 1,473 1,722 1,023 1,722
Investments (US$ million) 375 183 597 1,602 1,537
Net earnings by the Parent Company in 4Q01 amounted to R$ 639 million. This
figure was 20.1% than the same quarter in the previous year. It is clearly much
lower than the third quarter result of R$ 1.207 billion which was boosted
substantially by the sale of Cenibra.
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[Graphic Omitted]
EBITDA in 4Q01 was down R$ 182 million on the previous quarter. There were
various factors that contributed to this: a rise in COGS (R$ 26 million), a
increase in sales, general and administrative expenses of R$ 33 million and a
drop both in net revenues of R$ 32 million, and in dividends received from
subsidiaries and affiliates of R$ 83 million. EBITDA margin, of 46.1%, was also
lower than that achieved in 3Q01, which hit a record level of 55.4%, influenced
by the depreciation in the Real against the U.S. dollar.
[Graphic Omitted]
In 2001, EBITDA amounted to R$ 3.254 billion, 35.4% higher than the previous
year. The EBITDA margin was 51.0%, against 48.3% in 2000. The ferrous division
was responsible for 85.6% of the cash generation, logistics 9.6% and non ferrous
4.8%.
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[Graphic Omitted]
Gross debt at the Parent Company amounted to US$ 2.0 billion at the end of
December 2001, equal to 1.43 times EBITDA for the year. At the same time EBITDA
in 2001 was equal to 6.6 times financial expenses, this indicator being
unchanged from the same period in 2000.
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DEBT LEVERAGE AND COVERAGE
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4Q00 3Q01 4Q01 2000 2001
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Gross Debt/(Gross Debt + Equity) 25.2% 32.2% 28.3% 25.2% 28.3%
Gross Debt/LTM EBITDA 1.48 1.73 1.43 1.49 1.43
EBITDA/Interest Expenses 5.42 4.61 10.18 6.66 6.57
Capital Expenditure in 2001
CVRD invested US$ 1.537 billion in 2001, slightly less than the previous year's
figure of US$ 1.602 billion, the highest in the Company's history. Investment
decisions are based on rigorous analysis, with the central aim of creating
shareholder value. In other words, the minimum return required from each
investment, adjusted for risk, must be higher than the weighted average cost of
capital for the Company.
Expenditure on acquisitions, US$ 911.7 million, accounted for about 60% of
total investment. The main items were the purchase of Ferteco which involved
US$ 566 million, 50% of Caemi's voting capital for US$ 278 million and 50% of
Mineracao Sossego for US$ 42.5 million.
Investments in projects totaled US$ 264.4 million. US$ 84.1 million was
allocated to the construction of the Sao Luis Pelletizing Plant while US$ 55.1
million in the mine-railroad-port infrastructure necessary to its
implementation. This is the CVRD's twelfth pelletizing plant, and will be under
operation on the 2Q02. Its nominal production capacity is 6 million tons of
pellets per year. This pelletizing plant is the most modern in the world and
its capex cost is very low, US$ 31 per ton.
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FINANCIAL STATEMENT - CONSOLIDATED
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R$ million
2000 2001
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Gross Operating Revenues 9,048 11,015
Value Added Tax (266) (441)
Net Operating Revenues 8,782 10,574
Cost of Goods Sold 4,905 (5,545)
Gross Income 3,877 5,029
Gross Margin (%) 44.1% 47.6%
Result of Investment Participation 152 (299)
Equity Income 152 102
Goodwill Amortization - (437)
Provision for Losses - -
Others - 36
Operating Expenses (1,391) (2,009)
Selling (156) (246)
General & Administrative (458) (622)
Research and Development (89) (101)
Others (688) (1,040)
Financial Expenses (707) (957)
Financial Revenues 369 284
Monetary Variation (325) (1,066)
Gross Income 1,975 982
Discontinued Operations 184 1,770
Income Taxes (11) 259
Net Earnings Before Minority Interest 2,148 3,011
Minority Interest (15) 40
Net Earnings 2,133 3,051
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BALANCE SHEET - CONSOLIDATED
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R$ million
2000 2001
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Assets
Current Assets 6,111 7,387
Long Term Assets 2,515 2,672
Permanent Assets 15,204 16,346
Total 23,830 26,405
Liabilities and Stockholders' Equity
Current Liabilities 5,133 5,335
Long Term Liabilities 7,928 9,137
Others 203 166
Shareholders' Equity 10,566 11,767
Capital 3,000 4,000
Reserves 7,566 7,767
Total 23,830 26,405
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FINANCIAL STATEMENT - PARENT
COMPANY
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R$ million
4Q00 3Q01 4Q01 2000 2001
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Gross Operating Revenues 1,404 1,840 1,809 5,169 6,617
Value Added Tax (56) (61) (64) (189) (232)
Net Operating Revenues 1,348 1,779 1,745 4,980 6,385
Cost of Goods Sold (704) (863) (891) (2,531) (3,261)
Gross Income 644 916 854 2,449 3,124
Gross Margin (%) 47.8 51.5 48.9 49.2 48.9
Result of Investment Participation 100 (572) 97 715 37
Equity Income 168 (6) 150 799 708
Goodwill Amortization (11) (296) (89) (27) (437)
Provision for Losses (57) (270) 25 (57) (245)
Others - - 11 - 11
Operating Expenses (284) (430) (469) (1,029) (1,304)
Selling (28) (32) (33) (77) (118)
General & Administrative (66) (90) (123) (222) (338)
Research and Development (28) (30) (30) (87) (101)
Others (162) (278) (283) (643) (747)
Financial Expenses (114) (214) (79) (361) (495)
Financial Revenues 94 30 (3) 185 83
Monetary Variation (102) (471) 467 (159) (521)
Gross Income 338 (741) 867 1,800 924
Discontinued Operations 38 1,472 - 184 1,770
Income Taxes 156 476 (228) 149 357
Net Income 532 1,207 639 2,133 3,051
Net Income per Share (R$) 1.38 3.14 1.66 5.54 7.95
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BALANCE SHEET - PARENT COMPANY
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R$ million
4Q00 3Q01 4Q01 2000 2001
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Assets
Current Assets 4,205 5,281 3,990 4,205 3,990
Long Term Assets 2,116 2,316 2,507 2,116 2,507
Permanent Assets 13,722 15,986 15,928 13,722 15,928
Total 20,043 23,583 22,425 20,043 22,425
Liabilities and Stockholders' Equity
Current Liabilities 3,383 5,074 3,623 3,383 3,623
Long Term Liabilities 6,094 7,336 7,035 6,094 7,035
Shareholders' Equity 10,566 11,174 11,767 10,566 11,767
Capital 3,000 4,000 4,000 3,000 4,000
Reserves 7,566 7,174 7,767 7,566 7,767
Total 20,043 23,584 22,425 20,043 22,425
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EQUITY INCOME - PARENT COMPANY
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R$ million
4Q00 3Q01 4Q01 2000 2001
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Ferrous
Iron Ore and Pellets 20 93 (9) 253 328
Manganese and Ferro-Alloys 9 26 47 19 101
Non-Ferrous - - - - -
Transportation 53 (85) (33) 13 (57)
Shareholding Interests
Steel 38 70 (40) 169 190
Pulp and Paper (6) 12 (58) 8 (34)
Aluminum 49 (125) 239 327 170
Fertilizers 5 4 8 10 14
Others - - (4) - (4)
Total 168 (5) 150 799 708
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CAPITAL EXPENDITURES - 2001
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By business area US$ million % By category US$ million %
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Ferrous Minerals 1,256.5 81.7% Equity Investments 75.5 4.9%
Transportation 86.6 5.6% Maintenance 231.9 15.0%
Non Ferrous Minerals 104.5 6.8% Projects 264.4 17.2%
Energy 52.1 3.4% Mineral Exploration 29.8 1.9%
Others 37.7 2.5% Information Technology 17.5 1.1%
Technological Research 6.6 0.4%
Acquisitions 911.7 59.4%
Total 1,537.4 100.0% Total 1,537.4 100.0%
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SALES VOLUMES - PARENT COMPANY
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thousand tons
IRON ORE AND PELLETS 4Q00 3Q01 4Q01 2000 2001
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Foreign Market 20,755 24,237 24,154 79,643 90,039
Southern System 9,545 13,169 11,548 36,373 43,237
Fines 5,216 9,637 7,672 20,235 28,218
Lump 636 555 843 2,808 2,421
Pellets 3,693 2,977 3,033 13,330 12,598
Northern System 11,210 11,068 12,606 43,270 46,802
Fines 10,193 10,181 11,299 39,735 42,920
Lump 1,017 887 1,307 3,535 3,882
Domestic Marker 9,874 10,532 9,661 37,097 39,909
Southern System 8,943 9,686 8,751 33,770 35,924
Fines 7,559 7,763 6,956 28,952 29,426
Lump 689 1,127 996 2,602 3,711
Pellets 695 796 799 2,216 2,787
Northern System 931 846 910 3,327 3,985
Fines 29 36 117 587 835
Lump 902 810 793 2,740 3,150
Iron Ore 26,241 30,996 29,983 101,194 114,563
Fines 22,997 27,617 26,044 89,509 101,399
Lump 3,244 3,379 3,939 11,685 13,164
Pellets 4,388 3,773 3,832 15,546 15,385
Total 30,629 34,769 33,815 116,740 129,948
---------------------------------------------------------------------------------------------------------
OTHER PRODUCTS AND SERVICES 4Q00 3Q01 4Q01 2000 2001
---------------------------------------------------------------------------------------------------------
Gold (Kg) 4,865 4,488 4,390 17,387 15,815
Foreign Market 4,865 4,488 4,390 17,370 15,815
Domestic Market - - - 17 -
Manganese 322 13 5 1,300 215
Foreign Market 164 - - 876 77
Domestic Market 158 13 5 424 138
Potash 127 124 95 561 503
Transportation Services 26,611 21,306 20,204 107,103 92,089
Railroads 16,046 14,078 13,640 65,945 60,371
Southern System 14,469 12,423 12,078 60,504 54,186
Northern System 1,577 1,655 1,562 5,441 6,185
Port Services 10,565 7,228 6,564 41,158 31,718
Southern System 10,004 6,434 5,974 39,027 29,233
Northern System 561 794 590 2,131 2,485
14
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IRON ORE AND PELLETS SALES - PARENT COMPANY
---------------------------------------------------------------------------------------------------------
million tons
GEOGRAPHICAL DESTINATION
FOREIGN MARKET 4Q00 3Q01 4Q01 2000 2001
---------------------------------------------------------------------------------------------------------
ASIA
China 2.7 5.6 3.4 9.2 14.9
South Korea 1.9 1.6 1.3 7.0 6.0
Philippines 0.4 0.1 0.5 1.4 1.2
Japan 4.0 4.3 4.4 17.5 17.1
Taiwan 0.3 0.6 0.6 1.6 2.2
Others 0.1 0.4 0.6 0.4 1.1
Total 9.4 12.6 10.8 37.1 42.5
EUROPE
Germany 2.3 2.7 2.9 8.2 10.1
Spain 0.8 0.5 1.0 2.9 2.9
France 0.9 0.9 1.1 2.9 3.9
Italy 0.9 1.0 1.4 4.8 5.1
United Kingdom 0.3 0.3 0.5 1.5 1.6
Others 2.4 3.2 3.4 8.2 10.8
Total 7.6 8.6 10.3 28.5 34.4
AMERICAS
Argentina 0.5 0.4 0.5 1.4 1.9
United States 0.6 0.9 0.6 3.5 2.9
Others 0.4 0.5 0.2 2.0 1.5
Total 1.5 1.8 1.3 6.9 6.3
AFRICA/MIDDLE EAST /
AUSTRALASIA
Bahrain 0.5 0.3 0.3 2.0 1.7
Others 1.8 1.0 1.4 5.2 5.1
Total 2.3 1.3 1.7 7.2 6.8
TOTAL 20.8 24.3 24.1 79.7 90.0
---------------------------------------------------------------------------------------------------------
DOMESTIC MARKET 4Q00 3Q01 4Q01 2000 2001
---------------------------------------------------------------------------------------------------------
Steel Mills 4.5 5.2 5.3 15.5 20.2
Affiliated Pelletizing Companies 5.4 5.3 4.4 21.6 19.7
Total 9.9 10.5 9.7 37.1 39.9
TOTAL 30.7 34.8 33.8 116.8 129.9
---------------------------------------------------------------------------------------------------------
ORIGIN 4Q00 3Q01 4Q01 2000 2001
---------------------------------------------------------------------------------------------------------
Northern System 12.1 11.9 13.5 46.6 50.8
Southern System 18.6 22.9 20.3 70.1 79.1
TOTAL 30.7 34.8 33.8 116.8 129.9
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---------------------------------------------------------------------------------------------------
IRON ORE AND PELLETS - FINANCIAL INDICATORS
---------------------------------------------------------------------------------------------------
R$ million
HISPANOBRAS 4Q00 3Q01 4Q01 2000 2001
---------------------------------------------------------------------------------------------------
Sales (thousand tons) 1,080 882 998 3,933 3,608
Foreign Market 480 422 148 1,443 1,218
Domestic Market 600 460 850 2,490 2,390
Average Price (US$/ton) 31.28 32.64 31.12 30.56 31.42
Net Operating Revenues 65 73 79 224 269
Cost of Goods Sold (53) (60) (64) (186) (223)
Financial Results 2 4 (5) 5 2
Net Earnings 8 10 4 21 25
Gross Margin (%) 18.9 17.7 18.5 16.7 17.1
EBITDA 14 17 14 45 53
EBITDA Margin (%) 21.5 23.3 18.2 19.9 19.8
---------------------------------------------------------------------------------------------------
NIBRASCO 4Q00 3Q01 4Q01 2000 2001
---------------------------------------------------------------------------------------------------
Sales (thousand tons) 2,565 1,562 1,252 8,764 6,993
Foreign Market 627 514 432 2,398 2,311
Domestic Market 1,938 1,048 820 6,366 4,682
Average Price (US$/ton) 30.65 29.22 27.90 30.13 29.80
Net Operating Revenues 150 109 99 478 482
Cost of Goods Sold (127) (102) (88) (404) (423)
Financial Results (2) (8) - 6 (7)
Net Earnings 9 (34) 7 34 14
Gross Margin (%) 15.4 6.6 11.1 15.4 12.3
EBITDA 12 24 14 59 69
EBITDA Margin (%) 8.3 22.2 14.0 12.4 14.3
Net Debt (in US$ million) 8 7 6 8 6
- Short Term 2 3 2 2 2
- Long Term 6 5 4 6 4
---------------------------------------------------------------------------------------------------
ITABRASCO 4Q00 3Q01 4Q01 2000 2001
---------------------------------------------------------------------------------------------------
Sales (thousand tons) 752 742 995 3,486 3,287
Foreign Market 539 471 700 2,804 2,247
Domestic Market 213 271 295 682 1,040
Average Price (US$/ton) 31.22 31.69 31.90 30.98 31.72
Net Operating Revenues 46 59 80 198 246
Cost of Goods Sold (35) (52) (60) (171) (203)
Financial Results 3 2 (6) 4 1
Net Earnings 7 4 4 14 29
Gross Margin (%) 24.2 12.0 25.5 14.0 17.5
EBITDA 11 10 16 26 39
EBITDA Margin (%) 24.4 16.3 20.2 13.1 16.0
16
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IRON ORE AND PELLETS - FINANCIAL INDICATORS
----------------------------------------------------------------------------------------------------------
R$ million
KOBRASCO 4Q00 3Q01 4Q01 2000 2001
----------------------------------------------------------------------------------------------------------
Sales (thousand tons) 1,294 1,123 1,068 4,415 4,184
Foreign Market 824 493 558 3,682 2,135
Domestic Market 470 630 510 733 2,049
Average Price (US$/ton) 30.95 31.19 31.20 30.05 30.93
Net Operating Revenues 76 91 85 241 307
Cost of Goods Sold (59) (68) (67) (188) (238)
Financial Results (22) (53) 42 (45) (66)
Net Earnings (2) (72) 53 6 (38)
Gross Margin (%) 22.3 25.3 21.1 21.7 22.5
EBITDA 20 24 19 59 75
EBITDA Margin (%) 25.8 26.4 22.9 24.4 24.4
Net Debt (in US$ million) 122 149 129 122 129
- Short Term - 20 - - -
- Long Term 122 129 129 122 129
----------------------------------------------------------------------------------------------------------
SAMARCO 4Q00 3Q01 4Q01 2000 2001
----------------------------------------------------------------------------------------------------------
Sales Foreign Market (thousand tons) 4,295 2,312 2,571 14,622 11,201
Average Price (US$/ton) 31.03 28.56 32.00 29.40 29.70
Net Operating Revenues 243 167 208 756 764
Cost of Goods Sold (135) (73) (103) (403) (353)
Financial Results (44) (98) 51 (168) (157)
Net Earnings 25 (48) 117 11 106
Gross Margin (%) 44.3 56.0 50.6 46.7 53.8
EBITDA 87 86 89 319 369
EBITDA Margin (%) 35.9 51.8 42.7 42.1 48.3
Net Debt (in US$ million) 316 259 277 316 277
- Short Term 170 140 167 170 167
- Long Term 146 119 110 146 110
----------------------------------------------------------------------------------------------------------
GIIC * 4Q00 3Q01 4Q01 2000 2001
----------------------------------------------------------------------------------------------------------
Sales Foreign Market (thousand tons) n.a. 661 785 3,761 3,052
Net Operating Revenues n.a. 35,151 29,031 151,619 127,168
Cost of Goods Sold n.a. (32,104) (23,004) (136,259) (111,125)
Gross Profit n.a. 3,047 6,027 15,360 16,043
Other Income n.a. 427 244 4,711 1,763
S G & A n.a. (1,144) (1,284) (4,781) (4,772)
Net Income n.a. 2,330 4,987 15,290 13,034
* Financial Indicators according to IASC (International Accounting Standards
Committee).
17
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ITACO 4Q00 3Q01* 4Q01 2000 2001
----------------------------------------------------------------------------------------------------------
Sales (thousand tons)
Iron Ore 8,449 13,796 14,254 41,744 48,028
Pellets 867 1,966 1,727 7,344 8,270
Manganese 151 260 342 1,023 1,245
Bauxite 52 162 283 779 862
Alumina 20 42 57 200 169
Aluminum 30 35 32 163 153
Net Operating Revenues 316,643 384,594 381,037 1,349,761 1,458,434
Cost of Goods Sold (296,840) (348,026) (342,010) (1,252,605) (1,333,644)
Equity Income (1,838) 24,155 19,833 27,008 53,101
Net Income (19,869) 546,832 81,692 71,091 648,696
EBITDA 7,251 571,637 26,799 69,365 657,216
* includes sale disposal of Cenibra
----------------------------------------------------------------------------------------------------------
ALUMINUM - SELECTED FINANCIAL INDICATORS
----------------------------------------------------------------------------------------------------------
R$ million
MRN 4Q00 3Q01 4Q01 2000 2001
----------------------------------------------------------------------------------------------------------
Sales (thousand tons) 2,826 2,760 3,175 11,242 10,952
Foreign Market 811 954 992 3,991 3,413
Domestic Market 2,015 1,806 2,183 7,251 7,539
Average Price (US$/ton) 21.04 20.99 21.67 21.18 20.95
Net Operating Revenues 103 139 154 399 504
Cost of Goods Sold (51) (60) (65) (200) (222)
Financial Results 1 (2) (4) 7 (8)
Net Earnings 40 52 100 186 244
Gross Margin (%) 50.5 56.8 57.8 49.9 56.0
EBITDA 61 88 99 234 319
EBITDA Margin (%) 59.2 63.3 64.3 58.7 63.3
----------------------------------------------------------------------------------------------------------
ALUNORTE 4Q00 3Q01 4Q01 2000 2001
----------------------------------------------------------------------------------------------------------
Sales (thousand tons) 419 365 405 1,596 1,540
Foreign Market 210 205 232 795 819
Domestic Market 209 160 173 801 721
Average Price (US$/ton) 198.83 184.94 167.23 196.63 185.51
Net Operating Revenues 165 177 172 590 687
Cost of Goods Sold (116) (122) (140) (415) (498)
Financial Results (62) (157) 126 (139) (204)
Net Earnings (21) (128) 139 23 (50)
Gross Margin (%) 29.7 31.1 18.6 29.7 27.5
EBITDA 35 64 37 176 217
EBITDA Margin (%) 21.2 36.2 21.5 29.8 31.6
Net Debt (in US$ million) 437 429 425 437 425
- Short Term - - - - -
- Long Term 437 429 425 437 425
18
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Vale do Rio Doce
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ALUMINUM - SELECTED FINANCIAL
INDICATORS
-------------------------------------------------------------------------------------------------------
R$ million
ALBRAS 4Q00 3Q01 4Q01 2000 2001
-------------------------------------------------------------------------------------------------------
Sales (thousand tons) 90 80 70 366 332
Foreign Market 87 76 66 351 317
Domestic Market 3 4 4 15 15
Average Price (US$/ton) 1,484.70 1,390.89 1,282.77 1,508.42 1,428.99
Net Operating Revenues 258 278 232 1,006 1,095
Cost of Goods Sold (144) (161) (147) (584) (646)
Financial Results (80) (252) 222 (174) (263)
Net Earnings 29 (196) 220 244 32
Gross Margin (%) 44.2 42.1 36.7 42.0 41.0
EBITDA 117 89 90 426 438
EBITDA Margin (%) 45.4 32.0 38.8 42.4 40.0
Net Debt (in US$ million) 696 592 591 696 591
- Short Term 160 95 141 160 141
- Long Term 536 497 450 536 450
-------------------------------------------------------------------------------------------------------
VALESUL 4Q00 3Q01 4Q01 2000 2001
-------------------------------------------------------------------------------------------------------
Sales (thousand tons) 25 18 16 86 76
Foreign Market 9 7 5 30 23
Domestic Market 16 11 11 56 53
Average Price (US$/ton) 1,844.00 1,784.68 1,757.16 1,912.41 1,913.54
Net Operating Revenues 78 77 67 271 303
Cost of Goods Sold (59) (55) (50) (199) (214)
Financial Results (1) (9) (1) (4) (9)
Net Earnings 13 12 7 41 43
Gross Margin (%) 24.4 28.6 25.4 26.6 29.4
EBITDA 37 28 14 132 82
EBITDA Margin (%) 47.4 36.4 20.9 48.7 27.1
Net Debt (in US$ million) 29 3 3 29 3
- Short Term 26 - 1 26 1
- Long Term 3 3 2 3 2
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EQUITY INCOME - PARENT COMPANY
-------------------------------------------------------------------------------------------------------
R$ million
COMPANY/PARTICIPATION % 4Q00 3Q01 4Q01 2000 2001
-------------------------------------------------------------------------------------------------------
DOCENAVE 100.00 37.3 (79.0) (29.5) 15.8 (44.1)
DOCEPAR 100.00 (59.0) 0.0 0.0 (38.1) 0.0
ALUVALE 94.74 30.6 (120.7) 222.4 282.8 138.3
FLORESTAS 99.85 (7.6) 4.1 1.4 (3.0) 9.7
RDE (own operations) 99.80 68.9 72.3 (55.1) 147.5 172.0
ITACO 99.99 (5.3) 262.4 (132.3) 173.0 271.5
DOCEGEO 99.99 0.1 0.0 0.2 0.3 0.2
RDI 100.00 1.3 1.8 (1.1) 0.6 1.2
TACUMA (FCA) 100.00 16.8 0.0 0.0 (0.5) 0.0
URUCUM 100.00 1.8 6.3 (4.7) 11.6 7.3
TERM.VILA VELHA 99.89 (0.3) 2.0 1.2 3.2 6.0
VALE ENERGIA 90.00 0.0 0.0 0.0 0.0 0.0
NORPEL 99.90 0.0 (0.7) 0.6 0.2 0.5
M.ANDRIA (SOSSEGO) 99.50 (0.6) (0.4) 0.3 (1.0) (0.6)
PARA PIGMENTOS 75.50 0.0 0.0 0.1 0.0 0.1
SAMITRI 100.00 (7.9) (31.3) 0.0 8.7 0.5
SOCOIMEX(consolidated) 0.0 0.0 0.0 5.6 0.0
MINERACAO MATO GROSSO 100.00 (0.1) 0.0 0.0 (0.1) 0.0
SIBRA 98.16 0.0 5.7 51.5 0.0 71.0
ZAGAIA (FERTECO) 100.00 0.0 (107.5) 50.0 0.0 (60.0)
BELEM 99.99 0.0 0.0 8.8 0.0 8.8
MSE 99.99 0.0 0.0 0.4 0.0 0.4
KSG 99.99 0.0 0.0 0.5 0.0 0.5
BRASAMERICAN LIMITED 99.70 0.0 0.0 (2.2) 0.0 (2.2)
BRASILUX 100.00 0.0 0.0 (2.4) 0.0 (2.4)
CELMAR 85.00 0.0 0.0 (55.4) 0.0 (55.4)
Total from SUBSIDIARIES 76.0 15.0 54.7 606.6 523.3
BAHIA SUL - 0.0 0.0 0.0 0.0 0.0
MSG 51.00 2.3 2.8 (0.3) 7.4 6.0
CENIBRA - 0.0 0.0 0.0 0.0 0.0
CST 22.85 14.7 (0.3) 27.2 51.7 14.2
NIBRASCO 51.00 4.5 (17.3) 1.9 17.5 (7.1)
FOSFERTIL 10.96 4.4 3.5 7.7 10.0 13.6
HISPANOBRAS 50.89 4.0 5.3 1.9 10.5 12.9
ITABRASCO 50.90 3.3 2.3 2.1 7.1 14.5
NOVA ERA SILICON 49.00 0.9 (0.2) 2.0 2.6 2.7
USIMINAS 11.46 12.9 0.2 (2.1) 35.3 0.6
CIA.FERROV.NORDESTE 30.00 (1.1) 0.0 0.0 (1.1) 0.0
KOBRASCO 50.00 (1.2) (16.3) 6.8 2.8 (18.8)
FERROBAN 18.74 (2.8) (0.7) (10.6) (8.8) (20.5)
CSN - 50.1 0.0 0.0 57.8 107.5
SAMARCO 50.00 0.0 0.0 58.7 0.0 58.7
BAOVALE 50.00 0.0 0.0 0.1 0.0 0.1
Total from AFFILIATES 92.0 (20.7) 95.4 192.8 184.4
Total 168.0 (5.7) 150.1 799.4 707.7
20
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EQUITY INCOME - PARENT
COMPANY
--------------------------------------------------------------------------------------------------------
R$ million
PROVISION FOR LOSSES % 4Q00 3Q01 4Q01 2000 2001
--------------------------------------------------------------------------------------------------------
VALEPONTOCOM 100.00 0.0 0.0 (18.0) 0.0 (18.0)
KOBRASCO 50.00 0.0 (19.7) 19.7 0.0 0.0
CIA.FERROV.NORDESTE 30.00 0.0 (32.9) (0.5) 0.0 (33.4)
DOCEPAR 100.00 (56.9) (5.5) 25.6 (56.9) 20.1
FCA 45.65 0.0 (108.0) 11.5 0.0 (96.5)
PARA PIGMENTOS 75.50 0.0 (103.7) 46.1 0.0 (57.6)
MINERACAO MATO GROSSO 100.00 0.0 0.0 (0.4) 0.0 (0.4)
CELMAR 85.00 0.0 0.0 (59.2) 0.0 (59.2)
Total (56.9) (269.8) 24.8 (56.9) (245.0)
--------------------------------------------------------------------------------------------------------
GOODWILL AMORTIZATION % 4Q00 3Q01 4Q01 2000 2001
--------------------------------------------------------------------------------------------------------
FCA 45.65 0.0 (138.6) (8.6) 0.0 (147.2)
GIIC (GULF) 50.00 0.0 (60.1) 0.0 0.0 (60.1)
PARA PIGMENTOS 75.50 (8.0) (74.9) 0.0 (14.0) (83.2)
RDME 100.00 0.0 0.0 (9.1) 0.0 (9.1)
CPFL 91.87 0.0 0.0 (3.2) 0.0 (3.2)
SIBRA 98.16 (1.1) (19.3) (19.3) (4.6) (77.2)
MINERACAO MATO GROSSO 100.00 0.0 0.0 0.0 0.0 (1.6)
USIMINAS 11.46 (2.2) (3.5) (48.8) (8.5) (55.1)
Total (11.3) (296.4) (89.0) (27.1) (436.7)
Gain on assets disposal and 0.0 0.0 11.0 0.0 11.0
dividends
Total 99.8 (571.9) 96.9 715.4 37.0
--------------------------------------------------------------------------------------------------------
EQUITY PARTICIPATION ON % 4Q00 3Q01 4Q01 2000 2001
DOCENAVE
--------------------------------------------------------------------------------------------------------
NAVEDOCE/Seamar 100.00 27.8 0.2 (11.5) 19.2 3.5
Own operations 100.00 (6.6) (157.0) 55.1 (27.6) (106.7)
NAVEDOCE/Seamar (G/L Foreign 100.00 16.4 77.5 (73.1) 24.4 59.1
Exchange)
Total 37.6 (79.3) (29.5) 16.0 (44.1)
--------------------------------------------------------------------------------------------------------
EQUITY PARTICIPATION ON % 4Q00 3Q01 4Q01 2000 2001
DOCEPAR
--------------------------------------------------------------------------------------------------------
Acominas 0.3 0.0 0.0 3.8 0.0
CSN 0.0 0.0 0.0 26.4 0.0
Own operations (steel) (59.6) 0.0 0.0 (68.5) 0.0
Total (59.3) 0.0 0.0 (38.3) 0.0
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EQUITY INCOME - PARENT
COMPANY
--------------------------------------------------------------------------------------------------------
R$ million
EQUITY INCOME ON % 4Q00 3Q01 4Q01 2000 2001
ALUVALE
--------------------------------------------------------------------------------------------------------
ALUNORTE 45.58 (10.9) (59.7) 65.2 11.5 (22.6)
MRN 40.00 16.1 20.9 40.1 74.5 97.8
ALBRAS 51.00 14.5 (99.9) 112.4 124.4 16.5
VALESUL 54.51 7.1 6.7 3.7 22.3 23.4
Equity on Alunorte 0.4 0.0 1.2 25.0 1.2
Own operations 19.1 4.7 12.1 40.8 29.7
Total 46.3 (127.3) 234.7 298.5 146.0
--------------------------------------------------------------------------------------------------------
EQUITY INCOME ON ZAGAIA % 4Q00 3Q01 4Q01 2000 2001
--------------------------------------------------------------------------------------------------------
Ferteco 100.00 0.0 7.6 41.6 0.0 51.5
MRS 10.48 0.0 (13.0) 8.2 0.0 (4.8)
Own operations 0.0 (102.1) 0.2 0.0 (106.7)
Total 0.0 (107.5) 50.0 0.0 (60.0)
--------------------------------------------------------------------------------------------------------
EQUITY INCOME ON % 4Q00 3Q01 4Q01 2000 2001
FLORESTAS RIO DOCE
--------------------------------------------------------------------------------------------------------
BAHIA SUL 0.0 0.0 0.0 0.0 0.0
Own operations (7.6) 4.1 1.4 (3.0) 9.7
Total FRD (7.6) 4.1 1.4 (3.0) 9.7
--------------------------------------------------------------------------------------------------------
EQUITY INCOME ON ITACO % 4Q00 3Q01 4Q01 2000 2001
US$ million
--------------------------------------------------------------------------------------------------------
CSI 50.00 (1.6) (2.2) (0.2) 15.7 (5.2)
Rio Doce Pasha - 1.2 0.7 0.0 2.3 0.7
RDL 100.00 (1.0) 3.2 0.7 1.4 5.0
RDA 100.00 0.2 0.0 0.3 0.4 0.3
RDME 100.00 2.5 (2.0) 3.5 1.4 (0.7)
Kaolin 0.3 0.2 0.0 0.3 0.2
CSN Aceros 62.50 (0.7) 0.0 (0.9) (0.9) (0.9)
Alunorte 0.0 0.0 0.0 0.0 0.0
Samitri (0.1) 0.0 0.0 3.0 0.0
Samitri - foreign exchange losses (4.9) 0.0 0.0 (4.6) 0.0
Aluvale 5.26 8.0 (1.1) 5.1 8.0 3.3
GIIC (GULF) 50.00 1.5 2.2 5.8 1.5 9.2
CVRD Overseas 100.00 0.0 21.5 11.5 0.0 43.9
Quadrem 9.00 0.0 0.0 (1.9) 0.0 (1.9)
Own operations (24.3) 45.0 49.4 43.6 99.6
G/L Exchange 10.7 24.0 (111.4) 16.4 (40.4)
Total Itaco (8.2) 91.5 (38.1) 88.5 113.1
-------------------------------------------------------------------------------
"Some of the statements included in this report are forward-looking statements.
These statements are subject to specific products market changes and general
local and global macroeconomic performance. In addition, they involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of CVRD to be materially different from
any future results, performance or achievements of CVRD expressed or implied by
the forward-looking statements."
CONTENTS
PART I PAGE
1- Management's Discussion and Analysis of the Operating Results
for Year Ended December 31, 2002 Compared with Year Ended
December 31, 2000 03
1.1- General Aspects 03
1.2- Comments on the Parent Company Results 06
1.2.1- Gross Revenues 06
1.2.2- Cost of Products and Services 08
1.2.3- Result of Shareholdings 08
1.2.4- Operating Income (Expenses) 10
1.2.5- Net Financial Result 11
1.2.6- Discontinued Operations 11
1.2.7- Cash Flow 11
1.2.8- Income Tax and Social Contribution 11
1.3- Comments on the Consolidated Gross Margin 11
1.3.1- Consolidated Gross Revenue 11
1.3.2- Cost of Products and Services 12
PART II
FINANCIAL STATEMENT AND NOTES TO THE FINANCIAL STATEMENTS
2- Balance Sheet 13
3- Statement of Income 14
4- Statement of Changes in Stockholders' Equity 15
5- Statement of Changes in Financial Position 16
6- Statement of Cash Flows (Additional Information) 17
7- Statement of Value Added (Additional Information) 18
8- Labor and Social Indicators (Additional Information) 19
9- Notes to the Financial Statements at December 31, 2001 and 2000 20
9.1- Operation 20
9.2- Presentation of Financial Statements 20
9.3- Principles of Consolidation 20
9.4- Significant Accounting Policies 20
9.5- Cash and Cash Equivalents 21
9.6- Accounts Receivable from Customers 21
9.7- Transactions with Related Parties 22
9.8- Inventories 23
9.9- Deferred Income Tax and Social Contribution 23
9.10- Investments 25
CVRD 1
9.11- Property, Plant and Equipment 29
9.12- Loans and Financing 30
9.13- Securitization Program 32
9.14- Contingent Liabilities 32
9.15- Environmental and Site Reclamation and Restoration Costs 34
9.16- Pension Plan - Valia 35
9.17- Capital 36
9.18- American Depositary Receipts (ADR) Program 37
9.19- Treasury Stock 37
9.20- Reserves 38
9.21- Remuneration of stockholders 38
9.22- Financial Results 39
9.23- Financial Instruments - Derivatives 39
9.24- Exchange Rate Exposure 42
9.25- Income Statement Reclassifications - CVRD 43
9.26- Effects of Integral Monetary Restatement on the Result
and Net Equity (unaudited) 43
9.27- Segment and Geographic Information 43
9.28- Insurance 47
9.29- Profit Sharing Plan 47
9.30- Concessions and Leases 47
9.31- Subsequent Events 48
9.32- Shareholding Interests Organizational Chart at 12/31/01 49
PART III
10- Attachment I - Statement of investments in subsidiaries and
jointly controlled companies 50
11- Attachment II - Accounting Information
11.1- Aluminum Area (Adjusted and unaudited) 51
11.2- Pelletizing Affiliates (Adjusted and unaudited) 52
12- Opinion of Independent Accountants 53
13- Members of the Board of Directors, Audit Committee, Chief
Executive Officer and Executive Directors 54
2 CVRD
2 Management's Discussion and Analysis
-------------------------------------------------------------------------------
P A R T I
-------------------------------------------------------------------------------
(Expressed in millions of reais)
1- MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE OPERATING RESULTS FOR YEAR
ENDED DECEMBER 31, 2001 COMPARED WITH YEAR ENDED DECEMBER 31, 2000
1.1- General Aspects
(a) General Aspects
The Company's segments of business are mining, logistics and energy, as
follows:
o Ferrous minerals: includes iron ore and pellets as well as manganese
and ferro-alloys;
o Non-ferrous minerals: includes gold, kaolin, potash and copper;
o Logistics: includes railroads, ports and maritime terminals and
shipping;
o Energy: includes electric power generation; and
o Shareholdings: includes interests in producers of aluminum, steel and
fertilizers.
Ferrous Minerals
Iron Ore and Pellets
The main mining activities involve iron ore, through two world-class
integrated systems for ore production and distribution, each consisting of
mines, railroads and maritime terminals. The Southern System, based in the
states of Minas Gerais and Espirito Santo, has total proven and probable
iron ore reserves of approximately 2.3 billion tons. The Northern System,
based in the states of Para and Maranhao, has total proven and probably
reserves of some 1.2 billion tons. Currently CVRD operates nine
pelletizing plants, six of them in joint ventures with international
partners. The Company also has a 50% interest in Samarco, which owns and
operates two pelletizing plants. The Sao Luis pelletizing plant was
inaugurated on March 26, 2002, with annual capacity of 6 million tons.
Iron ore export sales are generally made pursuant to long-term supply
contracts which provide for annual price negotiations. Cyclical changes in
the world demand for steel products affect sales prices and volumes in the
world iron ore market. Different factors, such as the iron content of
specific ore deposits, the various beneficiation and purifying processes
required to produce the desired final product, particle size, moisture
content, and the type and concentration of contaminants (such as
phosphorus, alumina and manganese) in the ore influence contract prices
for iron ore. Contract prices also depend on transportation costs. Fines,
lump ore and pellets command different prices. Annual price negotiations
generally occur from November to February of each year, with separate
prices established for the Asian and European iron ore markets. In the
Asian market, the renegotiated prices are effective as of April of each
year. In the European market, the renegotiated prices are effective as of
January of each year. Because of the wide variety of iron ore and pellet
quality and physical characteristics, iron ore and pellets are less
commodity-like than other minerals. This factor combined with the
structure of the market has prevented the development of an iron ore
futures market. Nowadays the Company does not hedge its exposure to iron
ore price volatility.
Manganese and Ferro-alloys
This activity is carried out through the subsidiaries Sibra, Urucum and
Rio Doce Manganese (in France). The ore is extracted from the Azul mine in
the Carajas region in the state of Para and the Urucum mine in the
Pantanal region, in the state of Mato Grosso do Sul. Beneficiation is done
on site at both units.
Non Ferrous Minerals
Gold
Gold operations are carried out by the Company itself. These operations
began in 1984 and currently there are three working mines.
Potash
The potash is found in natural deposits and is an important raw material
for making fertilizers. The Company leases a potash mine in the state of
Sergipe from Petroleo Brasileiro S.A. - Petrobras, the Brazilian
state-owned oil company. It is the only mine of its type in the country
and its present capacity is some 600 thousand tons a year.
CVRD 3
Kaolin
Kaolin activities are conducted through the subsidiary Para Pigmentos
S.A., which began operations in August 1996. Kaolin is a fine white
aluminum silicate clay, used in the paper, ceramic and pharmaceutical
industries as a coating and filler. Para Pigmentos has a four-stage
expansion program under way to boost capacity in response to an expected
increase in demand for kaolin.
Copper
CVRD's copper activities are still in the implementation phase. The
Company holds 100% of the Sossego mine project in the Carajas region, with
estimated yearly capacity of 140 thousand tons, as well as participating
in four joint-venture projects in Brazil. These five projects contain
approximately 1.7 billion tons of ore with an average metal content of
1.02%.
Logistics
CVRD is one of the leaders in the Brazilian transportation sector,
providing transport and related services to various clients. Built
originally to serve the Company's iron ore business, the logistics system
includes the Vitoria-Minas Railroad and Tubarao and Praia Mole ports in
the Southern System, and the Carajas Railroad and Ponta da Madeira marine
terminal in the Northern System. In addition, in the last five years the
Company has acquired stakes in three privatized railroads. The principal
cargo of the Vitoria-Minas Railroad is the Company's own iron ore, along
with steel, coal, pig iron, limestone and carried for steel manufacturers
located in the states of Minas Gerais and Espirito Santo. The railroads
charge market rates for third-party cargo, which vary based upon the
distance traveled and the density of the freight in question.
Aluminum Operations
The Company sells aluminum to an active world market in which prices are
determined based on prices for the metal quoted on the London Metals
Exchange or the Commodity Exchange, Inc (COMEX) at the time of delivery.
The wholly owned subsidiary Aluvale conducts aluminum operations basically
through joint ventures. These include mining of bauxite, which is refined
into alumina and then smelted into aluminum for commercialization. Aluvale
operates its bauxite extraction activities through a 40.0% participation
in the joint venture Mineracao Rio do Norte S.A. - MRN, which holds
substantial reserves of bauxite with a low separation index and high
recovery rate. Aluvale has a 50.1% interest in the voting capital of
Alunorte, which refines the bauxite into alumina. The Company also acts in
aluminum smelting through Albras, in which it detains a 51.0% interest,
and through Valesul, of which it owns 54.1%.
Energy
In 2001, the Company decided to make energy one of its main businesses,
even though current energy production does not represent a significant
percentage of activities. At present, CVRD has stakes in nine
hydroelectric projects, two of which have already started operating. These
nine projects have a total projected capacity of 3,364MW. Depending on
market conditions, the electricity generated by these plants will be sold
to the market or used in own operations.
(b) The variations of the main currencies and indexes in 2001 and 2000 in
terms of percentages in relation to the real, which impacted the results
of the Company and its subsidiaries, jointly controlled companies and
affiliates, were as follows:
[delta]% Parity
--------------------- --------------------------------------------------------------
Currencies/Indexes
Year U.S. DOLLAR YEN GOLD IGPM TJLP US$ x R$ US$ x Yen
--------------------- ----------- --- ---- ---- ---- -------- ---------
2001 18.7 3.7 1.2 10.4 9.5 1.9554 131.3
2000 9.3 (2.2) (5.4) 10.0 10.8 2.3204 114.7
1999 48.0 62.6 0.9 20.1 13.2 1.7890 102.4
1998 8.3 25.3 (0.8) 1.8 11.8 1.2087 112.7
About 59% of the Company's gross revenue in 2001, equivalent to US$ 1,656
million, and 63% of the consolidated revenue, equivalent to US$ 2,860
million, is derived from exports and, additionally, part of domestic sales
are denominated in U.S. dollars, while the costs are in mainly incurred in
reais. Consequently, fluctuations in the exchange rate between the two
currencies have a significant impact on the operating cash flows;
Approximately 95% of the short-term and long-term loans of the Company in
2001 (90% consolidated) are denominated in U.S. dollars. As a result,
exchange rate fluctuations have a significant impact on the financial
expenses (Notes 9.12 and 9.22);
4 CVRD
(c) Divestitures
CVRD continues to take steps in mine with its strategy to concentrate on
core Business Activities.
Pulp and paper - in March 2001 CVRD sold its holding in Bahia Sul Celulose
S.A., ( Bahia Sul) for US$ 320. In September 2001, CVRD concluded the sale
of its stake in Celulose Nipo-Brasileira S.A (Cenibra) to Japan Brazil
Paper and Pulp Resources Development Co. for US$ 670.5. The Company
continues to explore the divestitures of Celmar S.A. and Florestas Rio
Doce S.A..
Steel - in December 2000 the 2.3% stake in Acominas was exchanged for US$
10 worth of preferred shares of Gerdau S.A., a publicly listed steel
company, whose shares CVRD intends to sell in the future.
Logistic - the process of divesting the dry bulk cargo shipping assets was
begun. In September 2001, an agreement was reached to sell six bulk
carriers of Docenave, to Spain's Empresa Naviera Elcano S.A, for US$53.
This transaction was concluded in February 2002. Finally, the Company sold
one bulk carrier of the subsidiary Seamar. The intent remains to sell off
the remaining transoceanic shipping assets in the future.
The divestitures already concluded at December 31, 2001, which include
Bahia Sul and Cenibra (pulp and paper) and Acominas and CSN (steel)
generated an equity result of R$ 176 (R$ 272 in 2000) and dividends /
interest on stockholders' equity of R$ 82 (R$ 16 in 2000).
In line with our strategy to consolidate and focus on mining, logistics
and energy, in the first quarter of 2001, we implemented a program to
unwind our cross-holding relationships with Companhia Siderurgica Nacional
- CSN.
In March 2001, CSN concluded the sale of its shares in Valepar to Litel
Participacoes S.A., Bradesplan Participacoes S.A. and Bradespar S.A..
Bradesplan and Bradespar subsequently transferred their shares in Valepar
to Babie Participacoes S.A.. Babie is a holding company owned by
Bradesplan and Bradespar.
The Company disposed of its 10.3% stake in CSN, transferring its interest,
valued at US$ 249 million, to Fundacao Vale do Rio Doce de Seguridade
Social - VALIA, the employee pension fund, in order to satisfy a funding
obligation it had to VALIA. The transfer price was based on the market
value of CSN's shares at the time of the transaction.
As part of the unwinding transaction, CSN granted us the following rights
of first refusal relating to CSN's Casa de Pedra mine, each of which lasts
for a period of 30 years:
o the right to purchase any iron ore produced by the mine beyond CSN's
internal requirements,
o the right to purchase or to rent the mine should CSN decide to sell
or lease it, and,
o the right to become a joint venture partner should CSN decide to form
a pelletizing joint venture with a third party with iron ore produced
by the mine.
In return, we have granted CSN a right of first refusal to participate
with us in the construction of any new steel producing facilities that we
undertake in the next five years.
(d) Investments
In May 2000, CVRD acquired 100% of Mineracao Socoimex, a mining company
located in Minas Gerais, for approximately R$ 102. Upon incorporation of
Socoimex in August 2000, the Company began operating the Gongo Soco iron
ore mine, with proven and probable reserves of 106 million tons and yearly
capacity of 7 million tons.
In May 2000, CVRD acquired control of Samitri, and then raised its stake
to 100%. The total cost of this acquisition was R$ 1,324. In October 2001,
Samitri was incorporated into the Company, and since then CVRD has
operated the Alegria, Agua Limpa and Corrego do Meio mining complexes in
the state of Minas Gerais, with annual capacity of 17.5 million tons and
proven and probable reserves of 709 million tons of high-grade hematite.
The acquisition of Samitri also permitted acquisition of 50% of the
pelletizing operations of Samarco.
In April 2001, Ferteco was purchased entirely from Thyssen Krupp Stahl AG
for approximately R$ 1,167. Ferteco is one of Brazil's largest producers
of iron ore, with yearly capacity of 15 million tons. It has deposits of
263 million tons of hematite and itabirite, with similar quality to CVRD's
Southern System reserves. It operates two open-pit mines, Fabrica and
Feijao, and a pelletizing plant in the Iron Ore Quadrangle region of Minas
Gerais, which has yearly capacity of 4 million tons.
In August 2001, a strategic agreement was reached with Baosteel, a steel
maker located in the Republic of China, to supply approximately 6 million
tons of iron ore over a period of 20 years. Besides this, CVRD and
Baosteel agreed to form the joint venture Baovale Mineracao S.A.. In
October 2001, the Company assigned its mineral rights relative to the Agua
Limpa complex, located in the Southern System, to Baovale, which resulted
in a reduction of 68.8 million tons in its proven and probable reserves.
In counterpart, Baosteel paid R$ 52 for its 50% stake
CVRD 5
in Baovale. In exchange for monthly remuneration, Boavale leases its
rights over the mine, which the Company continues to operate. It is
expected that this deal will increase the presence of CVRD in the Asian
market.
In September 2001, the Company acquired 99.99% of Belem Administracoes e
Participacoes Ltda. (Belem) from Bethlehem Steel Corporation and
Bethlehem Steel International Corporation for approximately R$ 68. Belem
is a non-operating company that holds a 9.9% stake in Empreendimentos
Brasileiros de Mineracao (EBM). EBM is a privately held company controlled
by Caemi, a Brazilian producer of iron ore and pellets, as well as kaolin
and refractory bauxite. In December 2001, CVRD acquired 50% of the voting
capital of Caemi for about R$ 670. At present, the Company holds 50% of
the voting capital and 17% of the total capital of Caemi. Mitsui & Co.
Ltd. detains the other 50% of the voting capital of Caemi.
(e) In 2001, US$ 1,442 million in net foreign exchange was generated by
the Parent Company (US$ 2,494 million consolidated);
(in US$ millions)
---------------------------------
Parent company Consolidated
---------------------------------
2001 2000 2001 2000
------ ------ ------ ------
Trade Balance
Exports 1,963 1,465 3,297 3,016
Imports (272) (132) (414) (291)
----- ----- ----- -----
1,691 1,333 2,883 2,725
Balance of Services
Interest (145) (132) (187) (207)
Profits and dividends (215) (54) (227) (95)
----- ----- ----- -----
(360) (186) (414) (302)
Capital Flows
Investments 19 - 32 188
Loans and financing 375 1,322 511 1,578
Amortization (283) (629) (518) (998)
----- ----- ----- -----
111 693 25 768
----- ----- ----- -----
Net Foreign Exchange Generated 1,442 1,840 2,494 3,191
===== ===== ===== =====
1.2- Comments on the Parent Company Results
The net income of the Company for 2001 was R$ 3,051, a 43% increase over
the R$ 2,133 in 2000, raising the earnings per share to R$ 7.95 in 2001
from R$ 5.54 in 2000.
The gross margin reached 48.9% in 2001, against 49.2% in 2000. The cost of
products and services increased 28.8% (from R$ 2,531 in 2000 to R$ 3,261
in 2001), while gross revenue rose 28.0% (from R$ 5,169 in 2000 to R$
6,617 in 2001).
Stockholder remuneration per outstanding common or preferred share is R$
4.61 (a 38.4% increase over the previous year's R$ 3.33), totaling R$
1,774, which corresponds to 58.1% of the net profit for the year. The
Company paid R$ 989 as the first installment of interest on stockholders'
equity in December 2001, and will pay the remaining balance by April 30,
2002.
In 2001 total capital expenditures reached US$ 1,581 million, 1.3% less
than in 2000 (US$ 1,602 million). The Company has budgeted capital
expenditures of approximately US$ 956 million in 2002.
1.2.1 Gross Revenues
Gross revenues increased 28.0% (from R$ 5,169 in 2000 to R$ 6,617 in
2001). This reflects the strengthening of the U.S. dollar against the real
as well as a growth in iron ore and pellet sales volume, offset in part by
a decrease in the volumes of other products and services sold. The
increase in iron ore sales is due to the assumption of operations of mines
formerly belonging to Socoimex and Samitri in August 2000 and May 2001,
respectively. However, these events also resulted in a decrease in gross
revenue from railroad transport and port services since CVRD ceased to
sell these services to Socoimex and absorbed such costs as lessee of the
Samitri mines. The capital contribution of the Azul manganese mine made in
the subsidiary Sibra in December 2000 caused a drop in manganese revenue
for the Company, offset by an increase in the sales of Sibra.
6 CVRD
The following table shows sales volume and revenues by products and
services:
In thousands of metric
tons (except gold) In millions of reais
---------------------- --------------------
2001 2000 [delta]% 2001 2000 [delta]%
------- ------- -------- ------ ------ --------
External market
Iron ore 77,441 66,313 16.8 2,732 1,847 47.9
Pellets 12,598 13,330 (5.5) 869 717 21.2
------- ------- ------ ------
90,039 79,643 13.1 3,601 2,564 40.4
------- ------- ------ ------
Internal market
Iron ore 37,122 34,881 6.4 1,087 862 26.1
Pellets 2,787 2,216 25.8 278 189 47.1
------- ------- ------ ------
39,909 37,097 7.6 1,365 1,051 29.9
------- ------- ------ ------
Total
Iron ore 114,563 101,194 13.2 3,819 2,709 41.0
Pellets 15,385 15,546 (1.0) 1,147 906 26.6
------- ------- ------ ------
129,948 116,740 11.3 4,966 3,615 37.4
------- ------- ------ ------
Railroad transportation 60,371 65,945 (8.5) 835 762 9.6
Port services 31,718 41,158 (22.9) 232 206 12.6
Gold (kg)
External market 15,815 17,370 (9.0) 331 285 16.1
Internal market - 17 - - - -
------- ------- ------ ------
15,815 17,387 (9.0) 331 285 16.1
------- ------- ------ ------
Manganese
External market 77 876 (91.2) 6 72 (91.7)
Internal market 138 424 (67.5) 16 47 (66.0)
------- ------- ------ ------
215 1,300 (83.5) 22 119 (81.5)
------- ------- ------ ------
Potash 503 561 (10.3) 166 155 7.1
Other products and services - - - 65 27 140.7
------ ------
6,617 5,169 28.0
====== ======
Operating Revenue 2001 - R$6,617
[Graphic Omitted]
(*) Part of sales to the internal market are in U.S. dollars.
CVRD 7
1.2.2- Cost of Products and Services
The increase of 28.8% in the cost of products and services (from R$ 2,531
in 2000 to R$ 3,261 in 2001) resulted from the incorporation of the
Socoimex mines, leasing of the Samitri mines (revision of depreciation
rates (Note 9.4 (g)), as well as increases in fuel oil prices and
consumption, the devaluation of the real against the U.S. dollar and
increased purchase of pellets for resale. The following table shows each
component of the cost of products and services, and the change between
periods:
By Category
Denominated
---------------
R$ US$ 2001 2000 [delta]%
----- ----- ----- ----- --------
Personnel 456 - 456 407 12.0
Material 190 213 403 375 7.5
Oil and gas 213 114 327 256 27.7
Outsourced services 448 7 455 320 42.2
Energy 100 - 100 70 42.9
Others 85 138 223 183 21.9
----- ----- ----- -----
Subtotal 1,492 472 1,964 1,611 21.9
Acquisition of iron ore and pellets 28 794 822 650 26.5
Depreciation and depletion 475 - 475 270 75.9
----- ----- ----- -----
Total 1,995 1,266 3,261 2,531 28.8
===== ===== ===== =====
61% 39% 100%
===== ===== =====
1.2.3- Result of Shareholdings
Equity earnings, decreasing from a gain of R$ 715 in 2000 to R$ 37 in
2001. This variation was due to a combination of the following factors:
o Recognition of the provision for losses and full amortization of the
goodwill on investments with negative equities liability (Note 9.10).
o The positive effects of the 18.7% devaluation of the real against the
U.S. dollar in 2001 (as compared to 9.3% in the same period of 2000)
in the companies operating abroad, offset by the negative effects in
the companies in Brazil with debt denominated in U.S. dollars, as
well as reduction in prices and quantities sold for aluminum and
quantities of pellets sold.
The results of shareholdings by business area are as follows:
Business Area 2001 2000
------------------------------------- ---- ----
Ferrous
. Iron ore and pellets 268 253
. Manganese and ferro-alloys 9 15
Non-ferrous (140) (14)
Logistics (334) 13
Investments
. Steel 165 103
. Pulp and paper (93) 8
. Aluminum 170 327
. Fertilizers 14 10
Others (22) -
---- ----
37 715
==== ====
The numbers reported per area do not necessarily reflect the individual
results of each company, but rather the amounts effectively applicable to
the business area.
8 CVRD
Ferrous
(a) Iron ore and pellets
. ITABRASCO - An improved equity result of R$ 7 (a gain of R$ 14 in
2001 compared to a gain of R$ 7 in 2000) due to the increase in the
average sales price of 2.4% (US$ 31.72 per ton in 2001 against US$
30.98 per ton in 2000) and an increase in the positive effects of
exchange rate variation on assets, offset in part by a 5.7% decrease
in sales volume (3,287 thousand tons in 2001 against 3,486 thousand
tons in 2000).
. ITACO - An improved equity result of R$ 33 (a gain of R$ 86 in 2001
compared to a gain of R$ 53 in 2000), due to the recording of R$ 102
of a positive equity result in CVRD Overseas, (the company was set up
in August 2000 to facilitate the process of securitization of
receivables) and R$ 15 in positive equity result in GIIC, offset in
part by amortization of goodwill in GIIC in the amount of R$ 60. In
operational terms, iron ore sales increased by 15.1% (48,028 thousand
tons in 2001 against 41,744 thousand tons in 2000).
. KOBRASCO - A reduction of R$ 22 in the equity result (a loss of R$
19 in 2001 compared to a gain of R$ 3 in 2000) because of the
negative effects of exchange rate variation on debt, the booking of
R$ 19 as a provision for realization of credits from ICMS (VAT) and
5.2% lower sales volume (4,184 thousand tons in 2001 versus 4,415
thousand tons in 2000), compensated in part by a 2.9% increase in the
average sales price (US$ 30.93 per ton in 2001 against US$ 30.05 per
ton in 2000).
. NIBRASCO - A reduction of R$ 25 in the equity result (a loss of R$ 7
in 2001 compared to a gain of R$ 18 in 2000) due to recording of a R$
15 provision for credits from ICMS, 20.2% lower sales volume (6,993
thousand tons in 2001 against 8,764 thousand tons in 2000) and a
decrease of 1.1% in average sales price (US$ 29.80 in 2001 versus US$
30.13 in 2000).
. RDE - an improved equity result of R$ 25 (a gain of R$ 172 in 2001
compared to a gain of R$ 147 in 2000) basically caused by the
appreciation of the dollar against the real (positive exchange rate
variation of R$ 119 in 2001 against a positive variation of R$ 43 in
2000).
. SAMARCO - A R$ 59 equity result in the fourth quarter of 2001, due to
a reduction in the negative effects of exchange rate variation on
debt. In operational terms the sales volume decreased by (23.4%
11.201 thousand tons in 2001 compared to 14.622 thousand tons in
2000) and the average sales price increased by 1.0% (US$ 29.70 in
2001 against US$ 20.00 in 2000).
. SAMITRI - A reduction of R$ 8 in the equity result (a gain of R$ 1 in
2001 compared to a gain of R$ 9 in 2000) due to the negative effect
of exchange rate variation on the debt of SAMARCO. The company was
acquired in May 2000 and merged into CVRD in October 2001.
. SOCOIMEX - Equity result of R$ 6 in 2000. The company was acquired in
May 2000 and merged into CVRD in August 2000.
. ZAGAIA - A negative equity result of R$ 55 due to the recording of
exchange rate variation on loans indexed in dollars, offset partly by
a positive R$ 52 equity result in Ferteco.
(b) Manganese and ferro-alloys
. RDME - A improved equity result of R$ 6 (again of R$ 11 in 2001
compared with a gain of R$ 5 in 2000) mainly due to the appreciation
of the French franc against the real in 2001, reduced by integral
amortization of goodwill in the amount of R$ 9.
. SIBRA - Recording in 2001 of a positive equity result of R$ 71, more
than offset by R$ 76 of amortization of goodwill (R$ 81 in 2001
against R$ 5 in 2000).
Non-ferrous
. PARA PIGMENTOS - Booking of a provision for losses of R$ 58 arising
from the negative effects of exchange rate variation on debt and R$
83 of amortization of goodwill in 2001, against R$ 14 in 2000.
Logistics
. DOCENAVE - A reduction of R$ 60 in the equity result (a loss of R$ 44
in 2001 compared to a gain of R$ 16 in 2000) due to a 3.7% reduction
in average freight rates (US$ 7.11 per ton carried in 2001 against
US$ 7.38 per ton in 2000), together with a 26.6% drop in volume
transported (25,787 tons in 2001 versus 35,149 tons in 2000), and
loss provisions estimated at R$ 88 on the sale of vessels and R$ 25
from the non-realization of tax credits, offset in part by the
appreciation of the dollar against the real (positive exchange rate
variation of R$ 59 in 2001 against positive variation of R$ 24 in
2000).
. FCA - Recording of a provision for losses of R$ 97 arising from the
negative effects of exchange rate variation on debt and amortization
of goodwill in the amount of R$ 147 in 2001. CVRD's holding in this
company is through its subsidiary Tacuma.
9 CVRD
. MRS - Recording of a negative equity result of R$ 5. This stake is
held through the subsidiary Ferteco Mineracao S.A., which was
acquired by CVRD through its wholly-owned subsidiary Zagaia
Participacoes S.A. in April 2001.
Shareholdings
(a) Steel
. DOCEPAR - An improved equity result of R$ 120 (a loss of R$ 5 in 2001
compared to a loss of R$ 125 in 2000) due mainly to a provision for
loss of tax benefit of R$ 99 in 2000.
. CSI - A reduction in the equity result of R$ 3(a gain of R$ 55 in
2001 compared to a gain of R$ 58 in 2000) caused by a 15% fall in the
average sales price of steel slabs in relation to the previous year,
offset by a 4.2% increase in volume sold (1,828 thousand tons in 2001
versus 1,754 thousand tons in 2000) and by the appreciation of the
dollar against the real (positive exchange rate variation of R$ 67 in
2001 against positive variation of R$ 28 in 2000).
. CSN - Booking of a positive equity result of R$ 108 in 2001 resulting
from the effects of unwinding of the CVRD/CSN cross-holdings, which
were only finalized in March 2001. In 2000, a positive equity result
of R$ 58 was recorded.
. CST - A reduction in the equity result of R$ 38 (a gain of R$ 14 in
2001 compared to a gain exchange rate variation on debt.
. USIMINAS - A reduction in the equity result of R$ 81 (a loss of R$ 54
in 2001 compared to a gain of R$ 27 in 2000) because of the effect of
exchange rate variation on debt and integral amortization of goodwill
in the amount of R$ 55.
(a) Pulp and paper
. CELMAR - Recording in 2001 of a negative equity result of R$ 56 and a
R$ 59 provision for losses, due to the improbability of recovering
the total amount invested.
(c) Aluminum
. ALBRAS - A reduction in the equity result of R$ 108 (a gain of R$ 17
in 2001 compared to a gain of R$ 125 in 2000) resulting from the
negative effects of exchange rate variation on debt. In operational
terms, there was a 5.3% decrease in the average sale price (US$
1,428.99 per ton in 2001 versus US$ 1,508.42 per ton in 2000), while
the volume sold fell by 9.3% (332 thousand tons in 2001 against 366
thousand tons in 2000), due mainly to the effects of electricity
rationing in the second half of the year.
. ALUNORTE - A reduction in the equity result of R$ 35 (a loss of R$ 23
in 2001 compared a gain of R$ 12 in 2000) due to the negative effects
of exchange rate variation on debt. Operationally, the average sale
price fell 5.7% (US$ 185.51 per ton in 2001 against US$ 196.63 per
ton in 2000), while sales volume decreased by 3.5% (1,540 thousand
tons in 2001 against 1,596 thousand tons in 2000).
. MRN - An improved equity result of R$ 24 (a gain of R$ 98 in 2001
compared to a gain of R$ 74 in 2000) due to the positive effects of
exchange rate variation on sales, offset partly by a 2.6% fall in
sales volume (10,952 thousand tons in 2001 compared with 11,242
thousand tons in 2000) and an increase in selling costs.
. VALESUL - An improved equity result of R$ 1 (a gain of R$ 23 in 2001
compared to a gain of R$ 22 in 2000) caused by the positive effects
of exchange rate variation on sales, offset by an increase of
approximately 20% in selling costs and an 11.6% reduction in sales
volume (76 thousand tons in 2001 versus 86 thousand tons in 2000),
the latter factor mainly due to energy rationing in the second half
of 2001. The average sale price did not significantly change in the
period (US$ 1,913.54 per ton in 2001 against US$ 1,912.41 per ton in
2000).
. ALUVALE - A R$ 27 reduction in equity result (own operations) (a gain
of R$ 23 in 2001 compared to a gain of R$ 50 in 2000) in function of
a R$ 25 capital gain booked in January 2000 with the capital increase
with negative goodwill of Hydro in ALUNORTE.
. ITACO - A reduction of R$ 12 in the equity result (a gain of R$ 32 in
2001 compared to a gain of R$ 44 in 2000) because of losses from
shareholdings in aluminum companies.
1.2.4- Operating Income (Expenses)
Net operating expenses increased R$ 275 (R$ 1,029 of net expense in 2000
against R$ 1,034 in 2001), mainly due to the provision for realized
credits of VAT of R$ 142 and provision for payment on profit sharing plan
(note 9.29).
10 CVRD
1.2.5- Net Financial Result
The net financial result increased R$ 598 (R$ 335 in 2000 compared to R$
933 in 2001), mainly due to the exchange rate variations on the net
Company debt (note 9.22).
1.2.6- Discontinued Operations
The result mainly reflects gains on sale of the Company's interests in
Bahia Sul and Cenibra, of R$ 230 and R$ 1,471, respectively, as well as
the equity result from these companies (Note 9.25).
1.2.7- Cash Flow
The operating cash flow measured by EBITDA (earnings before interest,
income tax, depreciation, amortization and depletion) was R$ 3,254 in
2001, an increase of 35.4% over 2000, which was R$ 2,403. (Note 9.27)
1.2.8- Income Tax and Social Contribution
Income tax and social contribution was a credit of R$ 357 (credit of R$
149 in 2000), after recognizing the benefit from paying interest on
stockholders' equity of R$ 603 in 2001 (R$ 436 in 2000) (Note 9.9).
1.3- Comments on the Consolidated Gross Margin
1.3.1- Consolidated Gross Revenue
[Graphic Omitted]
CVRD 11
[Graphic Omitted]
Consolidated gross revenue grew 20.1% influenced mainly by the increase in
revenue from sale of iron ore and pellets (reflecting appreciation of the
dollar against the real) and increased sales volume due to the acquisition
of Samitri and Ferteco).
1.3.2- Cost of Products and Services
By Category
2001 2000 [delta]%
----- ----- --------
Personnel 775 659 17.6
Material 735 739 (0.5)
Oil and gas 622 551 12.9
Outsourced services 550 392 40.3
Energy 451 328 37.5
Others 1,016 1,032 (1.6)
----- -----
Sub total 4,149 3,701 12.1
Acquisition of products 621 582 6.7
Depreciation and depletion 775 622 24.6
----- -----
Total 5,545 4,905 13.0
===== =====
The cost of products and services consolidated grew 10.5% influenced by
the increased sales of iron ore and pellets (from acquisition of Samitri
and Ferteco).
For additional information on the consolidated segments, see the comments
on the result of shareholdings, Item 1.2.3 and Attachment II of the
financial statements.
12 CVRD
3 Financial Statements
-------------------------------------------------------------------------------
PART II
-------------------------------------------------------------------------------
FINANCIAL STATEMENTS AND NOTES TO THE FINANCIAL STATEMENTS
(A free translation of the original in Portuguese relating to the
financial statements prepared in accordance with the requirements
of Brazilian Corporate Law)
2- BALANCE SHEET
December 31 In millions of reais
-------------------------------------------------------------------------------
Parent Company Consolidated
Notes 2001 2000 2001 2000
----- ------ ------ ------ ------
Assets
Current assets
Cash and cash equivalents 9.5 645 1,569 2,808 2,642
Accounts receivable from customers 9.6 920 1,459 1,497 1,266
Related parties 9.7 1,011 200 159 72
Inventories 9.8 448 327 1,326 1,168
Taxes recoverable 96 244 283 392
Deferred income tax and social
contribution 9.9 613 173 628 233
Others 257 233 534 338
------ ------ ------ ------
3,990 4,205 7,235 6,111
------ ------ ------ ------
Long-term receivables
Related parties 9.7 1,356 1,159 894 807
Loans and financing 299 325 316 182
Deferred income tax and social contribution 9.9 297 291 669 787
Judicial deposits 9.14 516 303 625 387
Prepaid leasing expenses - - 84 54
Others 39 38 236 298
------ ------ ------ ------
2,507 2,116 2,824 2,515
------ ------ ------ ------
Permanent assets
Investments 9.10 8,347 7,073 3,113 2,297
Property, plant and equipment 9.11 7,581 6,649 12,791 12,582
Deferred charges - - 442 325
------ ------ ------ ------
15,928 13,722 16,346 15,204
------ ------ ------ ------
22,425 20,043 26,405 23,830
====== ====== ====== ======
Liabilities and stockholders' equity
Current liabilities
Short-term debt 9.12 927 576 1,745 1,273
Current portion of long-term debt 9.12 387 400 1,063 970
Payable to suppliers and contractors 523 425 833 824
Related parties 9.7 716 421 200 141
Provision for interest on stockholders'
equity 9.21 784 1,282 788 1,282
Payroll and related charges 118 89 231 144
Pension Plan - Valia 9.16 65 88 65 88
Others 103 102 410 411
------ ------ ------ ------
3,623 3,383 5,335 5,133
------ ------ ------ ------
Long-term liabilities
Long-term debt 9.12 3,326 2,592 6,765 5,660
Related parties 9.7 2,053 1,820 - 32
Deferred income tax and social contribution 9.9 87 92 297 339
Provisions for contingencies 9.14 894 597 1,217 753
Pension Plan - Valia 9.16 429 853 429 853
Others 246 140 429 291
------ ------ ------ ------
7,035 6,094 9,137 7,928
------ ------ ------ ------
Deferred income - - 159 177
------ ------ ------ ------
Minority interest - - 7 26
------ ------ ------ ------
Stockholders' equity
Paid-up capital 9.17 4,000 3,000 4,000 3,000
Capital reserves 9.20 444 741 444 741
Revenue reserves 9.20 7,323 6,825 7,323 6,825
------ ------ ------ ------
11,767 10,566 11,767 10,566
------ ------ ------ ------
22,425 20,043 26,405 23,830
====== ====== ====== ======
The additional information, notes and attachments I and II are an integral
part of these statements.
CVRD 13
(A free translation of the original in Portuguese relating to the
financial statements in accordance with the requirements of
Brazilian Corporate Law)
3- STATEMENT OF INCOME
Years ended December 31 In millions of reais
--------------------------------------------------------------------------------------------------------------
Parent Company Consolidated
----------------- ----------------
Notes 2001 2000 2001 2000
----- ------ ------ ------ ------
Operating revenues
Sales of ore and metals
Iron ore and pellets 4,966 3,615 5,919 3,944
Gold 331 285 331 285
Manganese and ferro-alloys 22 119 628 586
Others 166 155 249 246
------- ------- ------ ------
5,485 4,174 7,127 5,061
Railroad and port services 1,067 968 1,490 1,580
Sales of aluminum - - 1,118 1,127
Sales of steel products - - 1,147 1,134
Sales of timber, pulp and paper products - - 20 44
Others 65 27 113 102
------- ------- ------ ------
6,617 5,169 11,015 9,048
Value-added taxes (232) (189) (441) (266)
------- ------- ------ ------
Net operating revenues 6,385 4,980 10,574 8,782
------- ------- ------ ------
Cost of products and services
Ore and metals (2,821) (2,195) (2,98) (2,294)
Railroad and port services (396) (318) (946) (1,097)
Aluminum products - - (563) (565)
Steel products - - (931) (819)
Timber, pulp and paper products - - (16) (42)
Others products and services (44) (18) (104) (88)
------- ------- ------ ------
(3,261) (2,531) (5,54) (4,905)
------- ------- ------ ------
Gross profit 3,124 2,449 5,029 3,877
Gross margin 48.9% 49.2% 47.6% 44.1%
Operating income (expenses)
Selling (118) (77) (246) (156)
Administrative (338) (222) (622) (458)
Research and development (101) (87) (101) (89)
Other operating expenses, net (747) (643) (1,04) (688)
------- ------- ------ ------
(1,304) (1,029) (2,00) (1,391)
------- ------- ------ ------
Operating profit before financial result and
result of investment participations 1,820 1,420 3,020 2,486
Result of investment participations 9.10/9.25
Gain on investments accounted for by the
equity method 708 799 102 152
Amortization of goodwill (437) (27) (437) -
Provision for losses (245) (57) - -
Others 11 - 36 -
------- ------- ------ ------
37 715 (299) 152
Financial result, net 9.22 (933) (335) (1,73) (663)
------- ------- ------ ------
Operating profit 924 1,800 982 1,975
Discontinued operations 9.25 1,770 184 1,770 184
------- ------- ------ ------
Income before income tax and social contribution 2,694 1,984 2,752 2,159
Income tax and social contribution 9.9 357 149 259 (11)
------- ------- ------ ------
Income before minority interest 3,051 2,133 3,011 2,148
Minority interest - - 40 (15)
------- ------- ------ ------
Net income for the year 3,051 2,133 3,051 2,133
======= ======= ====== ======
Number of shares outstanding at the end of the year 383,844 384,892
(in thousands) ======= =======
Net earnings per share outstanding at the end of
the year (R$) 7.95 5.54
======= =======
The additional information, notes and attachments I and II are an integral part
of these statements.
14 CVRD
(A free translation of the original in Portuguese relating to the
financial prepared in accordance with the requirements of
Brazilian Corporate Law)
4- STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Years ended December 31 In millions of reais
----------------------------------------------------------------------------------------------------------------
Reva-
Capital luation Revenue Retained
Notes Capital reserves reserves reserves earnings Total
----- ------- -------- -------- -------- -------- ------
At December 31, 1999 3,000 472 744 6,286 - 10,502
------- -------- -------- -------- -------- ------
Reversal of revaluation reserves of
subsidiaries and affiliated companies - - (471) - - (471)
Transfer to special monetary restatement
Law 8,200 9.20 - 273 (273) - - -
Tax incentives - (4) - - - (4)
Provision for pension plan liabilities 9.16 - - - - (312) (312)
Net income for the year - - - - 2,133 2,133
Proposed appropriations
Interest on stockholder's equity - - - - (1,282) (1,282)
Appropriation to revenue reserves - - - 539 (539) -
------- -------- -------- -------- -------- ------
At December 31, 2000 3,000 741 - 6,825 - 10,566
------- -------- -------- -------- -------- ------
Treasury shares 9.19 - - - (58) - (58)
Capitalization of reserves 9.20 1,000 (301) - (699) - -
Provision for pension plan liabilities 9.16 - - - - (22) (22)
Result on exchange of shares - 4 - - - 4
Net income for the period - - - - 3,051 3,051
Proposed appropriations
Interest on stockholder's equity 9.21 - - - - (1,774) (1,774)
Appropriation to revenue reserves - - - 1,255 (1,255) -
------- -------- -------- -------- -------- ------
At December 31, 2001 4,000 444 - 7,323 - 11,767
======= ======== ======== ======== ======== ======
The additional information, notes and attachments I and II are an integral part
of these statements.
CVRD 15
(A free translation of the original in Portuguese relating to the
financial prepared in accordance with the requirements of
Brazilian Corporate Law)
5- STATEMENT OF CHANGES IN FINANCIAL POSITION
Years ended December 31 In millions of reais
--------------------------------------------------------------------------------------------------------------
Parent Company Consoldiated
--------------- ---------------
2001 2000 2001 2000
------ ------ ------ ------
Funds were provided by:
Net income for the year 3,051 2,133 3,051 2,133
Expenses (income) not affecting working capital:
Result of investment participations (37) (715) 299 (152)
Depreciation, amortization and depletion 503 286 827 663
Deferred income tax and social contribution (16) (64) (24) (37)
Provision for contingencies 164 290 244 290
Discontinued operations (1,770) (184) (1,770) (184)
Net monetary and exchange rate variations on long-term assets and 522 173 1,036 335
liabilities
Provision for losses - ICMS 142 - 142 -
Loss on disposal of property, plant and equipment 19 32 30 337
Others 159 184 240 252
------ ------ ------ ------
Total funds from operations 2,737 2,135 4,075 3,637
Loans to related parties, transferred to current assets 642 988 82 66
Long-term debt 547 715 1,121 1,846
Loans from related parties 533 931 - 107
Dividends/interest on stockholders'equity received 291 424 98 19
Sale of investments 802 - 2,274 -
Disposal of permanent assets 20 33 1,109 337
Others 293 116 115 93
------ ------ ------ ------
Total funds provided 5,865 5,342 8,874 6,105
------ ------ ------ ------
Funds were used for:
Long-term debt transferred to current liabilities 810 228 1,242 716
Related parties 571 537 169 277
Additions to permanent assets 1,345 766 2,021 1,212
Capital subscription in subsidiary and affiliated companies 1,538 2,286 2,239 1,893
Interest on stockholders' equity 1,774 1,282 1,774 1,282
Guarantees and deposits 207 173 218 210
Treasury stock 58 - 58 -
Others 17 41 226 201
------ ------ ------ ------
Total funds used 6,320 5,313 7,947 5,791
------ ------ ------ ------
Increase (decrease) in working capital (455) 29 927 314
====== ====== ====== ======
Changes in working capital were as follows:
Initial working capital of investments consolidated - - 5 469
Current assets:
At the end of the year 3,990 4,205 7,235 6,111
At the beginning of the year 4,205 3,943 6,111 5,656
------ ------ ------ ------
(215) 262 1,124 455
------ ------ ------ ------
Current liabilities:
At the end of the year 3,623 3,383 5,335 5,133
At the beginning of the year 3,383 3,150 5,133 4,523
------ ------ ------ ------
240 233 202 610
------ ------ ------ ------
Increase (decrease) in working capital (455) 29 927 314
====== ====== ====== ======
The additional information, notes and attachments I and II are an integral part
of these statements.
16 CVRD
(A free translation of the original in Portuguese)
6- STATEMENT OF CASH FLOWS (ADDITIONAL INFORMATION)
Years ended December 31 In millions of reais
--------------------------------------------------------------------------------------------------------------
Parent Company Consoldiated
--------------- ---------------
2001 2000 2001 2000
------ ------ ------ ------
Cash flows from operating activities:
Net income for the year 3,051 2,133 3,051 2,133
Adjustments to reconcile net income for the year
with cash provided by operating activities:
Result of investment participations (37) (715) 299 (152)
Depreciation, amortization and depletion 503 286 827 663
Deferred income tax and social contribution (357) (149) (356) (50)
Provision for contingencies 164 290 244 290
Discontinued operations (1,770) (184) (1,770) (184)
Net monetary and exchange rate variations on assets and 838 305 1,544 529
liabilities
Provision for losses - ICMS 142 - 142 -
Loss on disposal of property, plant and equipment 19 32 30 337
Dividends/interest on stockholders'equity received 283 122 98 19
Others 222 110 481 557
------ ------ ------ ------
3,058 2,230 4,590 4,142
------ ------ ------ ------
Decrease (increase) in assets:
Accounts receivable 533 (422) (137) (199)
Inventories (154) (13) (100) (250)
Others (60) (132) (82) (21)
------ ------ ------ ------
319 (567) (319) (470)
------ ------ ------ ------
Increase (decrease) in liabilities:
Suppliers and contractors 33 180 (20) 214
Payroll and related charges and others 26 4 82 19
------ ------ ------ ------
Others 31 1 (2) 197
------ ------ ------ ------
90 185 60 430
------ ------ ------ ------
Net cash provided by operating activities 3,467 1,848 4,331 4,102
Cash flows from investing activities:
Loans and advances receivable: (1,185) 20 (215) (154)
Guarantees and deposits (207) (173) (218) (210)
Additions to investments (1,471) (1,480) (19) (152)
Additions to property, plant and equipment (1,304) (744) (1,980) (1,190)
Deferred charges - - (124) (45)
Net cash used to acquire or capitalize subsidiaries - - (1,839) (1,742)
Proceeds from disposal of property, plant and equipment and
investments 1,039 2 2,281 (5)
------ ------ ------ ------
Net cash used in investing activities (3,128) (2,375) (2,114) (3,498)
------ ------ ------ ------
Cash flows from financing activities:
Short-term debt: 373 (420) 117 (838)
Long-term debt: 1,080 1,647 1,121 1,953
Repayments:
Financial institutions (389) (590) (1,331) (1,525)
Interest on stockholders' equity paid (2,269) (450) (2,269) (450)
Treasury shares (58) - (58) -
------ ------ ------ ------
Net cash used in financing activities (1,263) 187 (2,420) (860)
------ ------ ------ ------
Decrease in cash and cash equivalents (924) (340) (203) (256)
Cash and cash equivalents of investments consolidated in 2000 - - 369 39
Cash and cash equivalents, beginning of the year 1,569 1,909 2,642 2,859
------ ------ ------ ------
Cash and cash equivalents, end of the year 645 1,569 2,808 2,642
====== ====== ====== ======
Cash paid during the year for:
Short-term interest (78) (84) (106) (129)
Long-term interest net of capitalization (281) (230) (529) (349)
Income tax and social contribution paid (82) - (146) (80)
Non-cash transactions:
Conversion of loans and others into investments 63 806 63 4
Additions to property, plant and equipment with capitalizations 41 22 41 22
Pension obligation settled by transfer of CSN shares 521 - 521 -
17 CVRD
(A free translation of the original in Portuguese)
7- STATEMENT OF VALUE ADDED (ADDITIONAL INFORMATION)
Years ended December 31 In millions of reais
-----------------------------------------------------------------------------------------------------------------
Parent Company Consoldiated
--------------------------- --------------------------
2001 % 2000 % 2001 % 2000 %
------ --- ------ --- ------ --- ------ ---
Generation of value added
Sales and non-operating revenue 6,617 100 5,169 100 11,015 100 9,048 100
Less: Acquisition of products (823) (12) (650) (13) (429) (4) (391) (4)
Outsourced services (785) (12) (550) (11) (1,544) (14) (1,512) (1)
Materials (410) (6) (378) (7) (735) (7) (730) (8)
Fuel oil and gas (328) (5) (256) (5) (612) (6) (547) (6)
Research and development, commercial and
administrative (251) (4) (181) (4) (681) (6) (383) (4)
Other operating expenses (753) (11) (733) (14) (1,445) (13) (864) (1)
----- ----- ------ -----
Gross value added 3,267 50 2,421 46 5,569 50 4,621 51
Depreciation and depletion (494) (7) (284) (5) (853) (8) (574) (6)
----- ----- ------ -----
Net value added 2,773 43 2,137 41 4,716 42 4,047 45
Received from third parties
Financial revenue 508 8 326 6 574 5 732 8
Equity on investments accounted for by the equity
method 37 1 983 19 (299) (3) 152 2
Discontinued operations 1,770 27 - - 1,770 16 184 2
Pension plan actuarial deficit (*) (22) - (312) (6) (22) - (312) (3)
----- ----- ------ -----
Total value added 5,066 79 3,134 60 6,739 60 4,803 54
===== ===== ===== =====
Distribution of Value Added
Employees 555 11 474 15 981 14 766 16
Government 49 1 186 6 461 7 502 11
Third parties' capital 1,433 28 653 21 2,268 34 1,402 29
Stockholders' remuneration 1,774 35 1,282 41 1,774 26 1,298 27
Retained earnings 1,255 25 539 17 1,255 19 835 17
----- ----- ------ -----
5,066 100 3,134 100 6,739 100 4,803 100
===== ===== ===== =====
(*) Recorded as prior year adjustment directly to stockholders' equity
[Graphic Omitted]
18 CVRD
(A free translation of the original in Portuguese to the
financial statements prepared in with the requirements of
Brazilian Law)
8- LABOR AND SOCIAL INDICATORS (ADDITIONAL INFORMATION)
Years ended December 31 In millions of reais
-------------------------------------------------------------------------------------------------------------------------------
Parent Company Consolidated (unaudited)
------------------------------------------------- --------------------------------------------------
Basis for computation 2001 2000 2001 2000
Gross revenues 6,617 5,169 11,015 9,048
Operating profit 1,820 1,420 3,020 2,486
Gross payroll 375 304 626 573
2001 2000 2001 2000
------------------------ ------------------------ ------------------------ ------------------------
% of % of % of % of
----------------- ----------------- ----------------- -----------------
Gross Operating Gross Operating Gross Operating Gross Operating
Labor indicators Amount payroll profit Amount payroll profit Amount payroll profit Amount payroll profit
------ ------- --------- ------ ------- --------- ------ ------- --------- ------ ------- ---------
Food 17 5 1 13 4 1 31 5 1 29 5 1
Compulsory social 147 39 8 140 46 10 221 35 7 222 39 9
charges
Private pension
plan (*) 45 12 2 41 13 3 51 8 2 48 8 2
Health 24 6 1 23 8 2 38 6 1 39 7 1
Education 21 6 1 15 5 1 32 5 1 25 4 1
Profit sharing 86 23 5 58 19 4 112 18 4 87 15 3
Other benefits 44 12 2 30 10 2 65 10 2 55 10 2
------ ------- --------- ------ ------- --------- ------ ------- --------- ------ ------- ---------
Total - Labor indicators 384 103 20 320 105 23 550 87 18 505 88 19
====== ======= ========= ====== ======= ========= ====== ======= ========= ====== ======= =========
2001 2000 2001 2000
------------------------ ------------------------ ------------------------ ------------------------
% of % of % of % of
----------------- ----------------- ----------------- -----------------
Gross Operating Gross Operating Gross Operating Gross Operating
Social indicators Amount payroll profit Amount payroll profit Amount payroll profit Amount payroll profit
------ ------- --------- ------ ------- --------- ------ ------- --------- ------ ------- ---------
Taxes (**) 305 17 5 254 18 5 718 24 7 444 18 5
Social investments 27 1 - 25 2 - 133 4 1 32 1 -
Social projects and 20 1 - 22 2 - 126 4 1 29 1 -
actions
Indigenous 7 - - 3 - - 7 - - 3 - -
communities
Environmental expenditures 60 3 1 60 4 1 85 3 1 86 3 1
Operational 56 3 1 56 4 1 80 3 1 81 3 1
On outside programs
and/or projects 4 - - 4 - - 5 - - 5 - -
------ ------- --------- ------ ------- --------- ------ ------- --------- ------ ------- ---------
Total - Social indicators 392 21 6 339 24 6 936 31 9 562 22 6
====== ======= ========= ====== ======= ========= ====== ======= ========= ====== ======= =========
Headcount 2001 2000 2001 2000
------------------------ ------------------------ ------------------------ ------------------------
No. of employees at
end of year 13,620 11,442 22,370 22,779
No. of new hires during
year 2,558 1,258 3,122 2,190
Amounts relate to the percentage of participation of Parent Company's
shareholdings.
(*) The contributions to the private pension plan do not include the
transferred shares from CSN to Valia in the amount of R$ 521 (note 9.10
(l)) and the provision for the early-retirement programs of R$ 78.
(**) Excluding social charges and the income tax and social contribution to the
limit of the amount of tax credits.
CVRD 19
4 Notes to the Financial Statements
(A free translation of the original in Portuguese relating to the
financial statements prepared in accordance with the requirements
of Corporate Law)
9- NOTES TO THE FINANCIAL STATEMENTS AT DECEMBER 31, 2001 AND 2000
(Expressed in millions of Reais)
9.1- Operations
Companhia Vale do Rio Doce - CVRD is a publicly traded corporation whose
predominant activities are mining, processing and sale of iron ore, pellets,
gold and potash, as well as port and railroad transportation services and power
generation. In addition, through its direct and indirect subsidiaries and
jointly controlled companies, CVRD operates in logistics, geological studies
and technological research services, steel and aluminum.
9.2- Presentation of Financial Statements
The financial statements have been prepared according to the accounting
principles provided for in Brazilian corporate legislation as well as the rules
and guidelines issued by the Comissao de Valores Mobiliarios - CVM (Brazilian
Securities Commission) and IBRACON - Instituto dos Auditores Independentes do
Brasil (Brazilian Independent Auditors Institute)
In order to provide better information to the market, the Company is presenting
the following additional information regarding the Parent Company and
Consolidated: Statements of Cash Flow, Value Added and the Labor and Social
Indicators (pages 17, 18 and 19). The Statement of Value Added presents
economic information on the wealth created by the Company (aggregate values)
and the distribution of this wealth in accordance with its production factors.
The presentation of this statement is encouraged by the CVM to inform society
of the application of the Company's resources in projects with important social
effects. The labor and Social Indicators, developed from a model suggested by
the CVM, presents information about the Company's application of resources in
social programs.
Certain amounts and classifications in the 2000 financial statements have been
adjusted to the criteria used in 2001 for better comparability (Note 9.25).
9.3- Principles of Consolidation
(a) The consolidated financial the balances of assets and liabilities at
December 31, 2001 and 2000 statements show and the operations of the
Parent Company, its direct and indirect subsidiaries and its jointly
controlled companies;
(b) All significant intercompany the Parent Company's investments in its
direct and indirect balances and subsidiaries and jointly controlled
companies were eliminated in the consolidation. Minority interests
are shown separately on the balance sheet and statement of income;
(c) In the case of investments in which the control is shared with other
stockholders, the components of companies in assets and liabilities
and revenues and expenses are included in the consolidated financial
statements in proportion to the participation of the Parent Company
in the capital of each company in which investments were made;
(d) The principal figures of the companies included in the consolidation
are presented in Attachment I.
9.4- Significant Accounting Policies
(a) The Company adopts the accrual basis of accounting;
(b) Assets and liabilities that are realizable or due more than twelve
months after the balance sheet date are classified as long-term;
(c) Marketable securities classified as cash and cash equivalents are
stated at cost plus accrued income earned through the balance date;
(d) Inventories are stated at average purchase or production cost, and
imports in transit at the cost of each item, not exceeding market or
net realizable value;
(e) Assets and liabilities in foreign currencies are translated at
exchange rates in effect at the balance sheet date, and those in
local currency are restated based on contractual indexes;
(f) Investments in subsidiaries, jointly controlled companies and
affiliated companies are accounted for by the equity method, based on
the stockholders' equity of the investees, and when applicable
increased/decreased by goodwill and negative goodwill to be amortized
and provision for losses. Other investments are recorded at cost,
less provision for unrealized losses when applicable; and
(g) Property, plant and equipment, including interest incurred during the
construction period of large-scale projects, are recorded at historic
cost (increased by monetary restatement up to 1995) and depreciated
by the straight-line method, at rates that take into consideration
the useful lives of the assets. Depletion of mineral reserves is
computed by the unit-of-production method. Since 2001 the Company,
based on technical studies, concluded for the revision of useful
lives (depreciation rates) of certain equipment/installations. The
effects of such revision generated a net reduction of approximately
R$ 135 on the result of 2001;
20 CVRD
(h) Pre-operating costs except for financial charges related to
large-scale projects are deferred and amortized over a period of 10
years. The deferred charges (consolidated) refer basically to the
Sossego and Salobo copper projects.
(i) The financial statements of the Parent Company proposal reflect
management's appropriation of the net income for the year, for the
approval of the Annual General Meeting.
9.5- Cash and Cash Equivalents
Parent Company Consolidated
-------------- ------------
2001 2000 2001 2000
------- ----- ----- -----
Marketable securities (*) 292 1,323 1,952 1,807
Fixed-yield bond investments (funds) 163 128 563 602
Government securities (NBC-E, NTN-D, LFT) 189 117 200 150
Others 1 1 93 83
------- ----- ----- -----
645 1,569 2,808 2,642
======= ===== ===== =====
(*) For part of these investments the Company contracted swap operations with
financial institutions, mainly related to interest rate and/or currency
variations.
9.6- Accounts Receivable from Customers
Parent Company Consolidated
-------------- ------------
2001 2000 2001 2000
------- ----- ----- -----
Domestic 360 401 349 395
Export 600 1,089 1,220 913
960 1,490 1,569 1,308
Allowance for doubtful accounts (22) (19) (53) (30)
Allowance for ore weight credits (18) (12) (19) (12)
------- ----- ----- -----
920 1,459 1,497 1,266
======= ===== ===== =====
CVRD 21
9.7- Transactions with Related Parties
Derived from sales and purchases of products and services or from loans under
normal market conditions, with maturities up to the year 2010, as follows:
Assets Liabilities
------------ ------------
2001 2000 2001 2000
----- ----- ----- -----
Subsidiaries
Rio Doce Internat iona l Finance Ltd. 675 98 1,153 1,241
Itabira Rio Doce Company L imited - ITACO 398 882 235 36
M ineracao Tacuma Ltda 215 48 1 -
CVRD Overseas Ltd. 76 95 838 597
Docepar S.A. 66 5 - 1
Sibra Eletrosiderurgica Brasileira S.A. 58 39 37 4
Brasilux S.A. 56 - 15 18
Vale do Rio Doce Aluminio S.A. - ALUVALE 32 19 123 75
Others 121 140 185 182
----- ----- ----- -----
1,697 1,326 2,587 2,154
----- ----- ----- -----
Jointly controlled companies
Alumina do Norte do Brasil S.A. - ALUNORTE 741 649 176 86
Ferrovia Centro-Atlantica S.A. - FCA 177 185 4 34
Salobo Metais S.A. 164 148 - -
Companhia Coreano-Brasileira de Pelotizacao - KOBRASCO 80 66 58 15
Companhia Hispano-Brasileira de Pelotizacao - HISPANOBRAS 48 41 65 45
Companhia Nipo-Brasileira de Pelotizacao - NIBRASCO 46 57 11 75
Companhia Yta lo-Brasileira de Pelotizacao - ITABRASCO 41 34 40 43
Others 109 80 52 17
----- ----- ----- -----
1,406 1,260 406 315
----- ----- ----- -----
Affiliates 37 14 - -
----- ----- ----- -----
3,140 2,600 2,993 2,469
===== ===== ===== =====
Represented by:
Commercial balances (sales and purchases of products and services) (*) 773 1,241 272 228
Short-term financial balances 1,011 200 716 421
Long-term financial balances 1,356 1,159 2,005 1,820
----- ----- ----- -----
3,140 2,600 2,993 2,469
===== ===== ===== =====
(*) Included in "Accounts receivable from customers" and "Payable to suppliers
and contractors."
The principal results arising from commercial and financial transactions
carried out by the Parent Company with related parties, classified in the
statement of income as revenue and costs from sales and services and financial
income and expenses, are as follows:
Parent Company
---------------------------
Income Expense/cost
------------- ------------
2001 2000 2001 2000
----- ----- ----- -----
Alumina do Norte do Brasil S.A.- ALUNORTE 180 106 20 6
Brasilux S.A. 54 - 111 -
Companhia Coreano-Brasileira de Pelotizacao - KOBRASCO 184 143 156 33
Companhia Hispano-Brasileira de Pelotizacao - HISPANOBRAS 181 138 182 143
Companhia Italo-Brasileira de Pelotizacao - ITABRASCO 166 121 82 44
Companhia Nipo-Brasileira de Pelotizacao - NIBRASCO 333 314 325 376
Companhia Siderurgica de Tubarao - CST 348 290 - -
CVRD Overseas Ltd. 804 187 190 46
Ferteco Mineracao S.A. 105 - 2 -
Itabira Rio Doce Company Limited - ITACO 2,223 1,610 24 17
Rio Doce International Finance Ltd. 72 20 71 65
S.A. Mineracao da Trindade - SAMITRI 72 133 32 2
Usinas Siderurgicas de Minas Gerais S.A. - USIMINAS 133 86 - -
Others 295 124 181 189
----- ----- ----- -----
5,150 3,272 1,376 921
===== ===== ===== =====
22 CVRD
9.8- Inventories
Parent
Company Consolidated
----------- -------------
2001 2000 2001 2000
---- ---- ----- -----
Finished products
. Iron ore and pellets 167 120 361 237
. Manganese 3 12 128 77
. Gold 12 8 12 8
. Aluminum - - 69 59
. Steel products - - 173 234
. Timber, pulp and paper - - - 66
. Others 17 5 46 24
---- ---- ----- -----
Spare parts and maintenance supplies 249 182 537 463
---- ---- ----- -----
448 327 1,326 1,168
==== ==== ===== =====
9.9- Deferred Income Tax and Social Contribution
Income of the Company is subject to the normal tax system. The balances of
deferred assets and liabilities are presented as follows:
Deferred Deferred
assets liabilities
------------ -----------
2001 2000 2001 2000
----- ----- ---- ----
Tax loss carryforward 225 - - -
Temporary differences:
. Pension Plan 168 234 - -
. Contingent liabilities 243 167 - -
. Provision for losses on assets 192 37 - -
. Provision for losses on derivative
financial instruments 26 - - -
. Others 56 26 - -
----- ----- ---- ----
685 464 - -
Inflationary profit - - 13 16
Capital reserve - special monetary
restatement - Law 8,200 - - 19 39
Accelerated depreciation - - 11 -
Long-term sales - - 44 37
----- ----- ---- ----
Total Parent Company 910 464 87 92
Consolidated companies (*) 387 556 256 291
----- ----- ---- ----
Total Consolidated 1,297 1,020 343 383
Parent Company - short-term 613 173 - -
Parent Company - long-term 297 291 87 92
----- ----- ---- ----
910 464 87 92
Consolidated - Short-term (**) 628 233 46 44
Consolidated - Long-term 669 787 297 339
----- ----- ---- ----
1,297 1,020 343 383
===== ===== ==== ====
The realization of tax credits arising from temporary differences occurs at the
time of effective payment of the provisions made, in accordance with tax law.
In addition to the credits recorded, the Company has a lawsuit pending claiming
an additional 51.83% monetary restatement for tax purposes applied to the
months of January and February 1989 ("Plano Verao" monetary plan). It has
already obtained a ruling in favor of compensation of credits corresponding to
42.72% instead of the 51.83% requested. The amount of these credits covered by
the ruling total approximately R$ 405, and the accounting effects have not yet
been recognized in the financial statements.
(*) Includes, basically, tax losses of companies in the aluminum and pulp
areas, as well as temporary differences.
(**) Recorded in the consolidated balance sheet as "Others" under current
liabilities.
CVRD 23
The amounts reported as income tax and social contribution which affected
income for the year are as follows:
2001 2000
------ -----
Income before income tax and social contribution 2,694 1,984
(Less) Equity in results of subsidiaries and
affiliated companies (708) (799)
(Less) Result from discontinued operations,
except for gain on sale of Bahia Sul (1,540) (184)
(Less) Provision for losses 245 57
------ -----
691 1,058
Income tax and social contribution at
combined tax rates 34% 34%
------ -----
Federal income tax and social contribution
at statutory rates (235) (360)
Social contribution rate differential - (4)
------ -----
(235) (364)
Adjustments to net income which modify the
effect on the result for the year:
. Income tax benefit from interest on
stockholders' equity 603 436
. Fiscal incentives 54 60
. Others (65) 17
------ -----
Income tax and social contribution - Parent Company 357 149
Income tax and social contribution - consolidated companies (98) (160)
------ -----
Total consolidated 259 (11)
====== =====
24 CVRD
9.10- Investments
Adjusted Result of invsetment
Adjusted Net income Investments participations
Partici- Stockholders' (loss) for ------------------ --------------------
pation % equity the year 2001 2000 2001 2000
-------- ------------- ----------- -------- -------- ---------- -------
Subsidiaries
CELMAR S.A. - Industria de
Celulose e Papel (c) 85.00 (70) (135) - 56 (56) -
Florestas Rio Doce S.A. (c) 99.85 91 10 91 112 10 (3)
Itabira Internacional Servicos e
Comercio Lda. (a, h) 99.99 759 242 759 517 242 173
Navegacao Vale do Rio Doce S.A. -
DOCENAVE (c) 100.00 351 (44) 351 395 (44) 16
Rio Doce Europa Servicos e Comercio -
RDE (a, i) 99.80 2,222 133 2,218 614 202 147
S.A. Mineracao da Trindade - SAMITRI (d,
k) 100.00 - 1 792 1,327 1 9
SIBRA Eletrosiderurgica Brasileira S.A.
(c, d, e) 98.16 210 69 509 518 71 -
Vale do Rio Doce Aluminio S.A. - ALUVALE
(c, f, j) 94.74 827 146 783 678 138 283
Zagaia Participacoes S.A. (d, o) 100.00 1,218 (60) 1,218 - (60) -
Others (c, n) 314 469 19 (19)
-------- -------- ---------- -------
7,035 4,686 523 606
-------- -------- ---------- -------
Jointly controlled companies
Bahia Sul Celulose S.A. (c, q) - - - - 404 - -
Celulose Nipo-Brasileira S.A. - CENIBRA
(c, m) - - - - 314 - -
Companhia Coreano-Brasileira de
Pelotizacao - KOBRASCO (b, c) 50.00 14 (38) 7 26 (19) 3
Companhia Hispano-Brasileira de
Pelotizacao - HISPANOBRAS (b, c) 50.89 80 25 41 35 13 11
Companhia Italo-Brasileira de
Pelotizacao - ITABRASCO (b, c) 50.90 58 28 30 23 14 7
Companhia Nipo-Brasileira de Pelotizacao
- NIBRASCO (b, c) 51.00 83 (14) 42 61 (7) 18
Companhia Siderurgica de Tubarao - CST
(b, d, e) 22.85 2,857 62 504 505 14 52
Companhia Siderurgica Nacional - CSN (c,
l) - - - - 432 108 58
Minas da Serra Geral S.A. - MSG (b, c) 51.00 51 12 26 30 6 7
Samarco Mineracao S.A. (b) 50.00 452 106 226 - 59 -
Others (b, c) 96 56 3 1
-------- -------- ---------- -------
972 1,886 191 157
-------- -------- ---------- -------
Affiliated companies
Ferroban - Ferrovias Bandeirantes
S.A. (c) 18.74 21 (110) 4 24 (21) (9)
Fertilizantes Fosfatados S.A. -
FOSFERTIL (e) 10.96 512 124 56 49 14 10
Usinas Siderurgicas de Minas Gerais S.A.
- USIMINAS (d, e) 11.46 3,619 5 415 481 1 35
-------- -------- ---------- -------
475 554 (6) 36
-------- -------- ---------- -------
Investments at cost 4 4 - -
-------- -------- ---------- -------
8,486 7,130 708 799
-------- -------- ---------- -------
Provision for losses
CELMAR S.A. - Industria de Celulose e
Papel (c) (59) - (59) -
Companhia Ferroviaria do Nordeste (c) (33) - (33) -
DOCEPAR S.A. (c) (37) (57) 20 (57)
Ferrovia Centro-Atlantica S.A (c, g) - - (97) -
Para Pigmentos S.A. - - (58) -
Others (10) - (18) -
-------- -------- ---------- -------
(139) (57) (245) (57)
-------- -------- ---------- -------
Amortization of goodwill - - (437) (27)
-------- -------- ---------- -------
Others - - 11 -
-------- -------- ---------- -------
Total 8,347 7,073 37 715
======== ======== ========== =======
Notes:
(a) Equity in companies located abroad is converted into local currency at
rates in effect on the financial statements date. The calculation of the
equity method adjustment comprises the difference due to exchange rate
variations, as well as participation in results;
(b) Notwithstanding the stockholdings, the classification as a jointly
controlled company results from the degree of control exercised by the
Company, which is shared with other partners;
(c) Companies whose financial statements were examined by other independent
auditors;
CVRD 25
(d) Goodwill and negative goodwill on investments are as follows:
2001 2000
----- -----
Goodwill
SIBRA Eletrosiderurgica Brasileira S.A (included R$ 29
of goodwill on CPFL) 332 412
Caemi Mineracao e Metalurgia S.A (indirectly through Amazon) 517 -
Ferteco Mineracao S.A (indirectly through Zagaia) 1,028 -
Para Pigmentos S.A. - 83
S.A. Mineracao da Trindade (merged on October 1,2001)
- SAMITRI 792 809
SOCOIMEX (merged on August 31,2000) 60 77
Usinas Siderurgicas de Minas Gerais S.A. - USIMINAS - 55
Others 96 91
----- -----
2,825 1,527
===== =====
Negative goodwill
Bahia Sul Celulose S.A. - (14)
Companhia Siderurgica - (46)
Nacional - CSN
Companhia Siderurgica de Tubarao - CST (149) (149)
----- -----
(149) (209)
===== =====
Goodwill was amortized as follows:
2001 2000
----- -----
Ferrovia Centro-Atlantica S.A (c, g) (147) -
Gulf Industrial Investment Co. - GIIC (a, c, h, i) (60) -
Para Pigmentos S.A. (83) (14)
SIBRA Eletrosiderurgica (81) (5)
Brasileira S.A. (c, e)
Usinas Siderurgicas de Minas Gerais S.A. - USIMINAS (55) (8)
Others (a,c,i) (11) -
----- -----
(437) (27)
===== =====
(e) Investments in companies that were listed on stock exchanges in 2001:
Book Market
Value Value
----- ------
Companhia Siderurgica de Tubarao - CST 504 265
Fertilizantes Fosfatados S.A. - FOSFERTIL 56 96
SIBRA Eletrosiderurgica Brasileira S.A. (preferred shares) 259 93
Usinas Siderurgicas de Minas Gerais S.A. - USIMINAS 415 134
The market value of these investments does not necessarily reflect the
value that could be realized from selling a representative group of
shares. The other investments refer to companies that have no shares
listed on stock exchanges.
(f) Indirect holdings through Aluvale:
Equity
Partici- Adjusted Investments adjustments
pation Stockholders' ------------ ------------
% equity 2001 2000 2001 2000
-------- ------------- ---- ---- ---- ----
ALBRAS - Aluminio Brasileiro S.A (c) 51.00 223 114 97 17 125
ALUNORTE - Alumina do Norte do Brasil S.A. (c) 45.58 526 240 212 (23) 12
Mineracao Rio do Norte S.A. (c) 40.00 605 242 217 98 74
Valesul Aluminio S.A. (c) 54.51 225 123 99 23 22
Own operations 64 53 23 50
--- --- --- ---
783 678 138 283
=== === === ===
(g) The investment of CVRD in Ferrovia Centro-Atlantica S.A. is held through
its subsidiary Mineracao Tacuma Ltda.
26 CVRD
(h) Indirect holdings through Itabira Internacional Servicos e Comercio Lda.:
Equity
Investments adjustments
------------ ------------
2001 2000 2001 2000
---- ---- ---- ----
California Steel Industries, Inc - CSI (a, c) - 226 58 58
CVRD Overseas Ltd. (a) - 60 25 -
Gulf Industrial Investment Co. - GIIC (a, c, d) - 182 3 3
Rio Doce Manganese Europe - RDME (a, c) - 71 8 5
S.A. Mineracao da Trindade - SAMITRI - - - 6
Siderar Sociedad Anonima Industrial y Comercial (a, c) - 29 5 3
Vale do Rio Doce Aluminio S.A. - ALUVALE (c) - 38 2 16
Itabira Rio Doce Company Limited (a) - - 35 72
Other participations (a) - 27 6 10
Own ope rations (a) 759 (116) 100 -
--- --- --- ---
759 517 242 173
=== === === ===
In July 2001, Itabira Rio Doce Company Limited was sold to Rio Doce
International Finance Ltd., a wholly owned subsidiary of Rio Doce Servicos
e Comercio - RDE.
(i) Indirect holdings through Rio Doce Europa Servicos e Comercio - RDE:
Equity
Partici- Adjusted Investments adjustments
pation Stockholders' ------------ ------------
% equity 2001 2000 2001 2000
-------- ------------- ---- ---- ---- ----
Amazon Iron Overseas Co. Ltd. (a, d, p) 100.00 669 669 - - -
California Steel Industries, Inc - CSI (a, c) 50.00 512 256 - (3) -
CVRD Overseas Ltd. (a) 100.00 173 173 - 77 -
Camelback Corporation (a,c) 100.00 116 116 - - -
Gulf Industrial Investment Co. - GIIC (a, c) 50.00 176 88 - 12 -
Itabira Rio Doce Company Limited - ITACO (a, j, m) 99.99 976 976 - (82) -
Rio Doce Manganese Europe - RDME (a, c) 100.00 82 82 - 12 -
Siderar Sociedad Anonima Industrial y Comercial (a, c) 4.85 722 35 - - -
Vale do Rio Doce Aluminio S.A. - ALUVALE (c, j) 5.26 827 44 - 6 -
Other participations (a) 30 - 8 -
Own operations (a) (251) 614 172 147
----- --- --- ---
2,218 614 202 147
Amortization of goodwill - Rio Doce Manganese
Europe - RDME - - (9) -
Amortization of goodwill - Gulf Industrial
Investment Co. - GIIC - - (60) -
----- --- --- ---
2,218 614 133 147
===== === === ===
(j) The consolidated shareholding in Vale do Rio Doce Aluminio S.A. - ALUVALE
is 100.0% (the subsidiary Itabira Rio Doce Company Limited - ITACO owns
5.26% of the capital);
(k) In May 2000, the Company together with its subsidiary Itaco acquired
control of S.A. Mineracao da Trindade - Samitri for a total price of R$
971. This acquisition gave rise to goodwill of R$ 658.
In September 2000, through a public offer on the Sao Paulo Stock Exchange
- BOVESPA, CVRD acquired 36.24% of the capital of Samitri for a price of
R$ 70.42 per lot of 1,000 shares, increasing its shareholding to 99.30% of
the total capital. With these acquisitions the total goodwill increased to
R$ 809.
In February 2001, an Extraordinary General Meeting approved the
incorporation of the Samitri shares. The minority stockholders received
preferred class A shares issued by CVRD, which were in treasury, in the
proportion of 1 CVRD share to 628 Samitri shares. This operation resulted
in additional goodwill of R$ 4, for a total goodwill of R$ 813, which is
being amortized based on the expected future profitability of Samitri.
In October 2001, an Extraordinary General Meeting approved the merger of
Samitri into CVRD.
(l) In March 2001, CVRD withdrew from CSN by unwinding the cross-participation
relationship between the companies. This transaction created the
opportunity to address and resolve the following questions:
CVRD 27
(1) The signing of a contract with CSN which guarantees to the Company certain
preemptive rights, for a period of thirty years, as follows: (a) purchase
of any iron ore surplus produced by the Casa de Pedra mine; (b) the lease
and acquisition of the Casa de Pedra mine; (c) the development of a
pelletizing plant supplied by iron ore produced by that mine, if CSN
decides to enter into a joint venture with third parties. Conversely, CSN
has the right of preference in constructing, in conjunction with the
Company, any greenfield steel making project which the Company decides to
implement under its own control over the next five years;
(2) The transfer to VALIA of its interest in CSN (10.33% of CSN's total
capital), (which will not participate in the CSN shareholders' agreement).
These shares were valued at approximately R$ 521 million, R$ 70.22 per lot
of 1000 shares, based on the weighted average price of the last thirty
trading sessions at BOVESPA in the period ended on Mach 9, 2001. This
transaction generated a gain for the Company, eliminated VALIA's actuarial
deficit and significantly increased the Company's borrowing capacity; and
(3) This operation resulted in a gain on investments accounted for by the
equity method of R$ 108 and a gain of R$ 10 on the sales of shares to
VALIA, which is recorded as "Others - Result of shareholdings".
(m) In September 2001, CVRD concluded the sale of Celulose Nipo-Brasileira S.
A. - Cenibra to Japan Brazil Paper and Pulp Resources Development Co.,
Ltd., which exercised its right to purchase 51.48% of the shares held by
its subsidiary Itabira Rio Doce Company Limited - Itaco for US$ 671. This
transaction resulted in a gain of R$ 1,472 included in discontinued
operations.
(n) In September 2001, CVRD acquired 99.99% of the quotas of Belem -
Administracoes e Participacoes Ltda. for R$ 68, while its wholly- owned
subsidiary Docepar S. A. acquired the remaining 0.01%.
Belem is a non-operational limited liability company that has a 9.9%
holding in Empreendimentos Brasileiros de Mineracao S. A. - EBM, which in
turn owns 51% of Mineracoes Brasileiras Reunidas S. A. - MBR, an unlisted
Brazilian company that produces iron ore.
(o) In September 2001, CVRD converted into capital the advances made for the
future capital increase in Zagaia Participacoes S. A. in the amount of R$
1,278. Zagaia is a non operational company that holds 100% of the social
capital of Ferteco Mineracao S. A..
(p) In December 2001, CVRD, acting through its wholly-owned foreign subsidiary
Itaco, acquired all the shares of Amazon Iron Ore Overseas Co. Ltd.
(Amazon) from Cayman Iron Ore Investment Co., Ltd., a wholly-owned
subsidiary of Japan's Mitsui & Co., Ltd. (Mitsui) for US$ 279.
Amazon holds 659,375,000 common shares of Caemi Mineracao e Metalurgia
S.A. (Caemi), corresponding to 50% of its voting capital. Caemi is a
Brazilian company headquartered in Rio de Janeiro, with stakes in the iron
ore, kaolin, refractory bauxite and railroad sectors.
This acquisition was approved by the European Commission subject to the
commitment to sell the participations of Caemi in Quebec Cartier Mining
Company (QCM), a Canadian producer of iron ore and pellets. The commitment
satisfies the only reservation expressed by the Commission regarding the
antitrust aspects of the deal.
With the conclusion of the transaction, CVRD and Mitsui each hold 50% of
Caemi's common shares.
(q) In April 2001 CVRD sold 32% of the capital of Bahia Sul Celulose S.A. to
Companhia Suzano de Papel for US$ 318 (R$ 687). This transaction resulted
in a gain of R$ 230 included in discontinued operations.
(r) The total of R$ 3,113 (R$ 2,297 in 2000) of investments on the
consolidated balance sheet is represented mainly by investments in
affiliated companies and goodwill in subsidiary and jointly held
companies, presented in Item (d) above.
(s) Attachment II presents additional information about the companies in the
areas of aluminum and pellets.
28 CVRD
9.11-Property, Plant and Equipment
(a) By business area:
Parent Company Consolidated
-------------------------------------- ----------------------------------------
2001 2000 2001 2002
---------------------------- ------ ----------------------------- ------
Accumulated Accumulated
depre- depre-
Cost ciation Net Net Cost ciation Net Net
------ ------- ------ ------ ------ ------- ------ ------
Ferrous - Northern System
Mining 1,537 (737) 800 776 1,537 (737) 800 776
Railroads 2,658 (982) 1,676 1,620 2,658 (982) 1,676 1,620
Ports 514 (241) 273 253 514 (241) 273 253
Construction in progress 385 - 385 232 385 - 385 232
------ ------- ------ ------ ------ ------- ------ ------
5,094 (1,960) 3,134 2,881 5,094 (1,960) 3,134 2,881
------ ------- ------ ------ ------ ------- ------ ------
Ferrous - Southern System
Mining 2,479 (1,466) 1,013 783 3,539 (2,047) 1,492 1,130
Railroads 3,027 (1,837) 1,190 1,104 3,027 (1,837) 1,190 1,104
Ports 559 (429) 130 128 763 (473) 290 128
Construction in progress 386 - 386 343 427 - 427 352
------ ------- ------ ------ ------ ------- ------ ------
6,451 (3,732) 2,719 2,358 7,756 (4,357) 3,399 2,714
------ ------- ------ ------ ------ ------- ------ ------
Pelletizing 605 (436) 169 146 1,625 (1,024) 601 766
Construction in progress 388 - 388 152 412 - 412 187
------ ------- ------ ------ ------ ------- ------ ------
993 (436) 557 298 2,037 (1,024) 1,013 953
------ ------- ------ ------ ------ ------- ------ ------
Energy (*) 190 (15) 175 140 203 (16) 187 140
Construction in progress 149 - 149 58 149 - 149 58
------ ------- ------ ------ ------ ------- ------ ------
339 (15) 324 198 352 (16) 336 198
------ ------- ------ ------ ------ ------- ------ ------
Total Ferrous 12,877 (6,143) 6,734 5,731 15,239 (7,357) 7,882 6,746
------ ------- ------ ------ ------ ------- ------ ------
Non-Ferrous
Potash 110 (35) 75 59 110 (35) 75 59
Gold 615 (418) 197 321 615 (418) 197 321
Research and projects 42 (22) 20 20 164 (25) 139 120
Kaolin - - - - 231 (48) 183 124
Construction in progress 58 - 58 59 86 - 86 84
------ ------- ------ ------ ------ ------- ------ ------
825 (475) 350 459 1,206 (526) 680 708
------ ------- ------ ------ ------ ------- ------ ------
Logistics 901 (515) 386 385 1,756 (847) 909 899
Construction in progress 51 - 51 14 86 - 86 53
------ ------- ------ ------ ------ ------- ------ ------
952 (515) 437 399 1,842 (847) 995 952
------ ------- ------ ------ ------ ------- ------ ------
Holdings
Steel - - - - 1,806 (691) 1,115 1,139
Pulp and paper - - - - 36 (4) 32 1,220
Aluminum - - - - 2,303 (1,188) 1,115 1,208
Ferro-alloys - - - - 638 (326) 312 273
Other participations - - - - 3 - 3 -
Construction in progress - - - - 597 - 597 280
------ ------- ------ ------ ------ ------- ------ ------
- - - - 5,383 (2,209) 3,174 4,120
------ ------- ------ ------ ------ ------- ------ ------
Corporate 88 (41) 47 48 88 (41) 47 48
Construction in progress 13 - 13 8 13 - 13 8
------ ------- ------ ------ ------ ------- ------ ------
101 (41) 60 56 101 (41) 60 56
------ ------- ------ ------ ------ ------- ------ ------
Total 14,755 (7,174) 7,581 6,642 23,771 (10,980) 12,791 12,582
====== ======= ====== ====== ====== ======= ====== ======
(b) By classification of asset:
Parent Company Consolidated
-------------------------------------- ----------------------------------------
2001 2000 2001 2002
---------------------------- ------ ----------------------------- ------
Accumulated Accumulated
depre- depre-
Cost ciation Net Net Cost ciation Net Net
------ ------- ------ ------ ------ ------- ------ ------
Land and buildings 1,484 (626) 858 1,016 2,818 (1,131) 1,687 1,970
Installations 4,165 (2,596) 1,569 1,480 7,781 (4,438) 3,343 3,386
Equipment 893 (534) 359 288 2,473 (1,301) 1,172 1,682
Ships - - - - 500 (249) 251 384
Railroads 5,138 (2,693) 2,445 2,168 5,369 (2,763) 2,606 2,291
Mineral rights 429 (161) 268 255 657 (201) 456 434
Forests - - - - 31 (9) 22 335
Others 1,216 (564) 652 576 1,987 (888) 1,099 846
------ ------- ------ ------ ------ ------- ------ ------
13,325 (7,174) 6,151 5,782 21,616 (10,980) 10,636 11,328
Construction in progress 1,430 - 1,430 866 2,155 - 2,155 1,254
------ ------- ------ ------ ------ ------- ------ ------
Total 14,755 (7,174) 7,581 6,642 23,771 (10,980) 12,791 12,582
====== ======= ====== ====== ====== ======= ====== ======
CVRD 29
(*) The increase in the energy area refers to the recording as a fixed asset
of the investment in the Porto Estrela Hydroelectric Plant. CVRD has an
equal 1/3 interest in this undertaking along with the Companhia Energetica
de Minas Gerais (Cemig) and Coteminas. The project required investments of
R$ 101, with CVRD's initial share of the power output being destined for
the Tubarao Complex in Espirito Santo State. The plant has been in
commercial operation since December 1, 2001.
The average annual depreciation rates are 3% for buildings, from 2% to 10% for
installations, from 10% to 20% for equipment, and from 1% to 4% for railroads.
Mineral reserve depletion is calculated annually as a function of the volume of
ore extracted in relation to the proven and probable reserves.
Depreciation, amortization and depletion of property, plant and equipment have
been allocated to cost of production and services and to administrative
expenses as follows:
Parent Company Consolidated
-------------- -------------
2001 2000 2001 2000
---- ---- ---- ----
Cost of production and services 484 272 799 638
Administrative expenses 19 14 28 25
---- ---- ---- ----
503 286 827 663
==== ==== ==== ====
9.12-Loans and Financing
Short-term
Parent Company Consolidated
-------------- -------------
2001 2000 2001 2000
---- ---- ---- ----
Exports 927 554 1,704 1,219
Imports - 22 9 23
Working capital - - 32 31
---- ---- ---- ----
927 576 1,745 1,273
==== ==== ==== ====
The average annual interest rates on short-term loans and financing in
respectively, 4.96% 2001 and 2000 were, and 6.93%.
Long-term
Parent Company Consolidated
-------------------------- ----------------------------
Curren Long-Term Current Long-Term
Liabilities Liabilities Liabilities Liabilities
----------- ------------ ------------ ------------
2001 2000 2001 2000 2001 2000 2001 2000
----- ----- ----- ----- ----- ----- ----- -----
Foreign operations
Loans and financing maturing up to
2011, in:
U.S. dollars 282 274 1,774 1,495 686 556 3,178 2,544
Yen 19 19 63 8 83 81 191 193
Other currencies 1 1 1 2 4 4 179 155
Notes in U.S. dollars - - 1,160 978 - - 1,160 988
Securitization of exports - - - - 9 - 722 587
Perpetual notes - - - - - - 129 108
Accrued charges 46 64 - - 64 93 - -
----- ----- ----- ----- ----- ----- ----- -----
348 358 2,998 2,483 846 734 5,559 4,575
----- ----- ----- ----- ----- ----- ----- -----
Local operations
Indexed by TJLP, TR(*) and IGP-M 8 7 48 16 137 108 261 486
Basket of currencies 27 23 63 77 35 29 92 156
Loans in U.S. dollars 2 8 210 - 38 89 826 436
Other currencies - - - 9 - - - -
Non-convertible debentures - - 7 7 - - 27 7
Accrued charges 2 4 - - 7 10 - -
----- ----- ----- ----- ----- ----- ----- -----
39 42 328 109 217 236 1,206 1,085
----- ----- ----- ----- ----- ----- ----- -----
387 400 3,326 2,592 1,063 970 6,765 5,660
===== ===== ===== ===== ===== ===== ===== =====
(*) TR - Reference Rate
30 CVRD
(a) Foreign loans and financing were converted into reais at exhcnage rates
effective on the finanical statements date, with US$ 1.00 equal to
R$ 2.3204 at 12/31/01 (R$ 1.9554 at 12/31/00) and 1.00 Yen equal to
R$ 0.017707 at 12/31/01 (R$ 0.017082 at 12/31/00).
(b) Certain loans and financing have specific guarantees. With respect to the
balance payable at 12/31/01 these guarantees include:
Parent
Company Consolidated
------- ------------
- Federal Government guarantees 714 969
- Third-party guarantees 90 90
- Mining rights and mortgaged lands - 35
- Ships - 117
- Other assets - 840
------- ------------
804 2,051
======= ============
The Parent Company's loans and financing with Federal Government
guarantees are subject to full contra-guarantees;
(c) Amortization of principal and finance charges incurred on long-term loans
and financing obtained abroad and domestically mature as follows as of
12/31/01:
Parent
Company Consolidated
------- ------------
2003 1,139 2,015
2004 1,384 2,027
2005 287 819
2006 172 558
2007 onward 344 1,217
Without maturity date
(perpetual notes) (*) - 129
------- ------------
3,326 6,765
======= ============
(*) On January 14, 2000, Itaco issued perpetual notes and sold them to Norsk
Aluminium Brasil Investments B.V., redeemable upon delivery of 48 billion
preferred shares in the affiliated company MRN or, in case of early
termination, for US$ 48 plus the present value of the average annual
dividends declared and paid by MRN over the 3 years immediately prior to
the termination, multiplied by 20 and discounted at a rate of 10% per
year.
(d) Long-term external and domestic loans and financing were subject to annual
interest rates in 12/31/01 as follows:
Parent
Company Consolidated
------- ------------
Up to 7% 2,313 4,580
7.1 to 9% 101 1,586
9.1 to 11% 1,179 1,257
Over 11% 120 276
No stated rate (perpetual notes) - 129
------- ------------
3,713 7,828
======= ============
(e) The estimated market values of long-term loans and financing calculated to
present value based on available interest rates as of 12/31/01 are close
to their market values.
CVRD 31
(f) The Company's loans and financing, by currencies/index in:
[Graphic Omitted]
(g) Consolidated loans and financing, broken down by currencies/index in:
[Graphic Omitted]
9.13-Securitization Program
On September 29, finalized the financial conditions for a US$ 300 securitization
program based on existing and future receivables generated by its subsidiary
CVRD Overseas Ltd. This transaction, relating to exports of iron ore and pellets
to six of CVRD's customers in Europe, the United States and Asia, was
structured by Bank of America Securities LLC, and is divided into three tranches
as follows:
Amount Grace Period Yield to Investor
Tranches (US$ million) Maturity (years) (p.y.)
------------ ----------- ---------- ------------ -----------------
1 25 10/15/2007 2 8.682%
2 (insured) 125 10/15/2007 2 Libor+0.65%
3 150 10/15/2010 3 8.926%
The balance of this operation in 2001 totals R$ 706 (R$ 10 in current
liabilities and R$ 696 in long-term liabilities) and is included in related
party liabilities to the subsidiary CVRD Overseas Ltd. (Note 9.7).
9.14 -Contingent Liabilities
At the financial statement dates the contingent liabilities of the Company
were:
(a) Provisions for contingencies and respective judicial deposits, considered
by management and its legal counsel as sufficient to cover possible losses
from any type of lawsuit, were as follows:
32 CVRD
Judicial Provisions for
deposits contingencies
------------- --------------
2001 2000 2001 2000
----- ----- ----- -----
Tax contingencies 284 90 308 132
Labor claims 109 111 300 214
Civil claims 4 2 273 239
Financial applications 114 98 - -
Others 5 2 13 12
----- ----- ----- -----
Total Parent Company 516 303 894 597
Consolidated companies 112 87 323 156
----- ----- ----- -----
Total consolidated 628 390 1,217 753
===== ===== ===== =====
Consolidated - short term (*) 3 3 - -
Consolidated - long term 625 387 1,217 753
----- ----- ----- -----
628 390 1,217 753
===== ===== ===== =====
(*) Recorded under "others" in current assets.
The Company and its subsidiaries are parties to labor, civil, tax and
other suits have been contesting these matters both administratively and
in the courts. When necessary, these are backed by judicial deposits.
Provisions for eventual losses are estimated and restated monetarily by
management upon the advice of the legal department and outside counsel.
Tax contingencies relate principally to a legal process claiming
unconstitutionality of the change in the calculation basis of PIS and
COFINS social contribution introduced by Law 9718/98.
Labor-related actions principally comprise employee claims for (i) payment
for time commuting to and from work; (ii) additional payments for
allegedly dangerous or unhealthy working conditions; and (iii) various
other matters, often in connection with disputes about the amount of
indemnities paid upon dismissal.
Civil actions principally relate to claims made against the Company by
contractors in connection with losses alleged to have been incurred as a
result of various past government economic plans during which full
indexation of contracts for inflation was not permitted.
Financial applications are related to guarantees of civil claims.
(b) Guarantees given to subsidiary and jointly controlled companies (normally
in proportion to the Company's percentage of participation) are as
follows:
2001 2000
----- -----
ALBRAS - Aluminio Brasileiro S.A. 840 728
ALUNORTE - Alumina do Norte do Brasil S.A. 170 147
Bahia Sul Celulose S.A. - 257
CELMAR S.A. - Industria de Celulose e Papel 88 88
Companhia Coreano-Brasileira de Pelotizacao - KOBRASCO 93 78
FCA - Ferrovia Centro-Atlantica S.A. 271 83
ITACO - Itabira Rio Doce Company Limited 573 240
Para Pigmentos S.A. 118 142
Salobo Metais S.A. 165 141
Seamar Shipping Corporation 88 78
Sepetiba Tecon 59 7
Others 20 93
----- -----
2,485 2,082
===== =====
The breakdown of guarantees by currency is:
2001 2000
----- -----
U.S. Dollar 1,924 1,605
Real 553 463
French Franc 8 14
----- -----
2,485 2,082
===== =====
CVRD 33
(c) Upon privatization of the Company in 1997, debentures were issued to the
then stockholders, including the federal government. The maturity dates of
these debentures were established to guarantee that pre-privatization
stockholders, including the federal government, would share any future
benefits from subsequent mineral discoveries.
At present, the debentures cannot be traded. They may only be traded three
months after the federal government sells its 27.4% share of the CVRD
voting capital, which is currently under way. At this time the Company
will be obliged to register the debentures with the CVM to allow their
negotiation.
According to the regulations of the Brazilian Central Bank, the
pre-privatization stockholders who held their shares through American
Depositary Receipts (ADRs) were not authorized to receive debentures or
any other financial benefits related to same. The Company will present a
new request to the Central Bank, but there is no guarantee that it will be
granted.
The debenture holders are entitled to receive semi-annual payments
equivalent to a percentage of the net revenues from determined mineral
resources held by the Company in May 1997, as per the table below:
Area Mineral Required Payments by CVRD
------------------------------------------ ------------------- ----------------------------------------------------
1.8% of net revenue, after total production
Southern System Iron ore from May 1997 exceeds 1.7 billion tons.
1.8% of net revenue, after total production
Northern System Iron ore from May 1997 exceeds 1.2 billion tons.
2.5% of net revenue from the beginning of
Pojuca, Andorinhas, Liberdade and Sossego Gold and copper commercial production.
2.5% of net revenue, after total production
from the beginning of commercial
Igarape Bahia and Alemao Gold and copper production exceeds 70 tons of gold.
2.5% of net revenue after total production
from the beginning of commercial
Fazenda Brasileiro Gold production exceeds 26 tons.
Other areas, excluding Carajas/Serra Leste Gold 2.5% of net revenue.
1% of net revenue, 4 years after the
Other areas owned as of May 1997 Other minerals beginning of commercial production.
Sale of mineral 1% of the sales price.
All areas rights owned as
of May 1997
Based on current production levels and estimates for new projects, the
forecast is to start payments referring to copper resources in 2004, iron
ore in approximately 2012, and other types of minerals in later years. The
obligation to make payment to the debenture holders will expire when the
pertinent mineral resources are depleted.
The Company has commitments under a "take-or-pay" contract to acquire
approximately 175.950 tons of aluminum per year from ALBRAS at market
prices. This estimate is based on 51% of the estimated output of ALBRAS at
a market price of US$ 1,453.66 per ton on December 31, 2001, representing
an annual commitment of R$ 593. The same applies to 437,214 tons of
alumina per year produced by ALUNORTE, which at a market price of US$
176.08 per ton on December 31, 2001 represents a yearly commitment of R$
179. The effective take of ALBRAS was R$ 510 and R$ 474 in 2001 and 2000,
respectively, and directly from ALUNORTE (net of the take assigned to
ALBRAS), was R$ 84 and R$ 102 in 2001 and 2000, respectively.
9.15-Environmental and Site Reclamation and Restoration Costs
Expenditures relating to ongoing compliance with environmental regulations are
charged to production costs or capitalized as incurred. The Company manages its
environmental policies according to the specifications of ISSO 14,001 and
maintains ongoing programs to minimize the environmental impact of its mining
operations as well as to reduce the costs that will be incurred upon
termination of activities at each mine. In 2001, the provision for
environmental liabilities amounted to R$ 66 (R$ 28 in 2000).
34 CVRD
9.16-Pension Plan - Valia
The Fundacao Vale do Rio Doce de Seguridade Social - Valia is a non-profit
entity, legally separate from the CVRD, founded in 1973 to provide
supplementary social security benefits to the employees of the Company, its
subsidiaries, affiliated companies and other independent firms that participate
or may in the future participate in plans administered by the Foundation.
The Company and various of its subsidiaries and affiliated companies are
sponsors of Valia, in the following benefit plans:
(a) Benefit Plan
Defined Benefit Plan - "BD"
A pure defined benefit plan, now being phased out, instituted in 1973 upon
establishment of Valia. This plan has been closed to new members and is
maintained only for existing retired participants and their beneficiaries
and a few residual active participants.
Mixed-Benefit Plan - "Vale Mais"
On December 28, 1999 the federal government's Secretariat of Complementary
Social Security, through Announcement No. 866-SPC/COJ, approved the new
mixed plan to be instituted by the Foundation, which offers programmable
retirement income benefits of the defined contribution type, independent
of government Social Security. It also includes a deferred severance
benefit (vesting), as well as risk benefits: retirement for disability,
death benefits and sick-leave assistance. This new plan has more modern,
transparent and flexible rules that make it more attractive for employees
and more economical for the sponsors.
"Vale Mais" was established in May 2000 and nearly 98.7% of then active
participants migrated to the new plan.
The contributions of the sponsors are as follows:
o Ordinary contribution - Destined to accrue the resources necessary to
grant income benefits, sponsor contributions are matched equally by
participants, up to 9% of their participation salaries, which may not
exceed 10 "plan reference units" (this limit was R$1,383.86 in
December 2001).
o Extraordinary contribution - This can be made at any time, at the
discretion of the sponsors.
o Normal contribution - To fund the risk plan and administrative
expenses, fixed by the actuary based on actuarial appraisals.
o Special contribution - Destined to cover any special commitment that
may arise.
During 2001, the Company made contributions to VALIA in the amount of R$
45 (R$ 41 in 2000) to fund the benefit plans it sponsors.
(b) Actuarial liability
This provision is the result of the Company's responsibility to provide
supplementary pensions relating to the early retirement programs of 1987
and 1989, in the amount of R$ 461 and an additional amount of R$ 33 as
required by CVM Deliberation 371. These liabilities were calculated by an
independent actuary for the year 2001 and represent the current value of
the benefits and pensions. Part is recorded in "Pension Plan-Valia" in
current liabilities - R$ 65 (R$ 59 in 2000) and part in long-term
liabilities - R$ 429 (R$ 361 in 2000).
CVRD decided to record the actuarial liabilities referring to the plans it
sponsors as set forth in CVM Deliberation 371, issued on December 13,
2000, directly in net assets for December 31, 2001, net of the
corresponding tax effects. The actuarial appraisal of the plans employed
the projected unitary credit method, with the assets from plans positioned
as of December 31, 2001. The parent company intends to amortize the
actuarial gains or losses starting in 2002, in conformity with the
referred Deliberation.
Reconciliation of assets and liabilities recognized on the balance sheet as of
December 31, 2001
Parent
Company
-------
Present value of actuarial assets integrally or partially covered (3,222)
Fair value of plan assets 3,189
-------
Present value of actuarial obligations in excess of fair value
of assets (33)
Fiscal effects 11
-------
(22)
=======
CVRD 35
Projected expenses to recognize in 2002
Parent
Company
----------------------------
Cost of current service 3
Cost of interests 187
Expected gain on plan assets (186)
----------------------------
Total 4
============================
Actuarial premises adopted in calculation
Discount rate of contract obligation 6.0% p.a.
Expected return rate on assets 6.0% p.a.
Estimated salary increase index 1.82% p.a. until 47 years
Estimated benefits increase index 0.0% p.a. since 48 years old
Inflation rate 0.0% p.a.
Economical assumptions
-----------------------------------------------------------------------------
Mortality table GAM 1971
Disabled mortality table IAPC-57
Invalidity entrance table Alvaro Vindas
As already mentioned, the rate of migration and adhesion to the new plan was
above 98% of active employees, thus requiring an actuarial appraisal. This
appraisal, conducted by independent actuaries, found a deficit in the
mathematical reserves of, at December 31, 1999, R$ 312 (net of tax effects),
which was recognized as a liability, and charged to retained earnings . On
March 15, 2001, the Company fully amortized the then-existing shortfall, by
transferring all its interest (10.33%) in Companhia Siderurgica Nacional - CSN,
in the amount of R$ 520, including therein the portion which was the
responsibility of its subsidiaries and affiliated companies.
(c) Subsidiaries and affiliated companies
Some subsidiary and affiliated companies that do not participate in the
social security plan through VALIA also record their actuarial liabilities
referring to the plans they sponsor as set forth in CVM Deliberation 371
of December 13, 2000.
9.17-Capital
The Company's capital is R$ 4 billion, corresponding to 388,559,056 book
shares, of which 249,983,143 are common shares, 138,575,913 are preferred class
"A" shares, the latter including one special preferred share ("Golden Share"),
all with no par value.
Preferred shares have the same rights as common shares, except for the right to
elect the members of the Board of Directors. They have priority to a minimum
annual dividend of 6% on the portion of capital represented by this class of
share.
The special "Golden Share" created during the privatization in 1997 belongs to
the Brazilian Government. This share gives it the right to a permanent veto of
changes in the Company's name, headquarters location, nature as a mining
enterprise, continuous operation of the integrated mining, transportation and
loading systems and other matters determined in the Bylaws.
The Extraordinary General Meeting held on 04/25/01 approved the increase of
capital from R$ 3 billion to R$ 4 billion, without issue of new shares, through
the capitalization of reserves in the amount of R$ 1 billion.
36 CVRD
On 12/31/01 the Company's capital is comprised as follows:
Number of shares
----------------------------------------------------------
Stockholders Commom % Preferred % Total %
----------------------------------------------- ----------- --- ----------- --- ----------- ---
BNDESPar (b) 105,443,070 42 - - 105,443,070 27
Brasilian Government (National Treasury/BNDES/
INSS/FPS) (b) 78,788,839 32 5,075,341 4 83,864,180 22
American Depositary Receipts - ADRs - - 57,754,261 42 57,754,261 15
Litel Participacoes S.A. (a) 25,272,641 10 - - 25,272,641 7
BNDESPar 11,672,271 5 1,251,980 1 12,924,251 3
Clube de Investimentos dos Empregados da
Vale - INVESTVALE 10,362,069 4 269,100 - 10,631,169 3
Foreign institutional investors 4,791,199 2 36,056,429 26 40,847,628 10
Brazil - institutional investors 4,464,276 2 21,244,238 15 25,708,514 7
Brazil - retail investors 4,473,608 2 16,924,473 12 21,398,081 5
Treasury stock 4,715,170 1 91 - 4,715,261 1
----------- --- ----------- --- ----------- ---
Total 249,983,143 100 138,575,913 100 388,559,056 100
=========== === =========== === =========== ===
(a) Litel is the corporate vehicle pursuant to which Previ, Petros, Funcef and
Fundacao CESP, each of which is a Brazilian pension fund, hold common
shares in CVRD and Valepar.
(b) The National Bank for Economic and Social Development (BNDES), in its own
name and on behalf of the Brazilian Government, continued the
privatization process started in 1997, as per the terms of the
Privatization Rules, selling 68,511,164 common shares of CVRD.
As of 12/31/01, the number of holders of record who are residents of Brazil was
21,862. These shareholders owned 288,365,846 shares, representing 74.2% of the
capital stock.
Members of the Board of Directors, as a group, hold 17 common shares and 209
preferred shares.
9.18-American Depositary Receipts (ADR) Program
On 06/20/00, the Company obtained ADR registration (Level 2) from the United
States Securities and Exchange Commission (SEC), beginning a process for its
shares to be traded on the New York Stock Exchange (NYSE). From 03/21/02, after
the sale process of shares of BNDES and the Government, the common shares begun
to be traded on NYSE. Each ADR represents 1 (one) preferred Class "A" or common
share, traded under the code "RIOPR" and "Rio", respectively.
9.19-Treasury Stock
Board of Directors, as per Article 13, XV, of the Bylaws and Article 30 of Law
6404/76 and CVM Instructions 10 of 02/14/80 and 268 of 11/13/97, approved
acquisition by the Company of its own shares to be held in treasury (Notes 9.17
and 9.20) for later sale or cancellation.
An Extraordinary General Meeting held on 10/24/01 authorized acquisition of up
to 19 million nominative book shares, with no par value, with 14 million being
common shares and 5 million preferred shares, to hold in treasury for later
sale or cancellation, with no reduction in company capital. Up to 12/31/01,
4,715,170 common and 91 preferred shares had been so acquired at a cost of R$
131.
Shares
------------------------------------- Average quoted
Class Quantity Unit acquisition cost market price
------------- ---------------------- ----------------------- --------------
2001 2000 Average Low High 2001 2000
--------- --------- ------- ----- ----- ----- -----
Preferred 91 3,659,311 20.03 14.02 52.40 52.44 47.11
Common 4,715,170 7,300 27.80 20.07 52.09 50.21 46.14
--------- ---------
4,715,261 3,666,611
========= =========
On 07/25/01 the Company exchanged on the Sao Paulo Stock Exchange (BOVESPA),
3,519,285 preferred shares, maintained previously in treasury, for 3,520,000
common shares, an operation with Bank of America Liberal S.A. - Corretora de
Cambio e Valores Mobiliarios as intermediary.
CVRD 37
9.20-Reserves
At December 31 these amounts were as follows:
2001 2000
----- -----
Capital reserves
Capital surplus - 264
Special monetary restatement reserve - Law 8,200/91 440 440
Tax incentive investment reserve - 17
Others 4 20
----- -----
444 741
===== =====
Revenue reserves
Expansion 3,869 3,022
Depletion 1,506 1,506
Unrealized income 1,272 1,710
Legal 753 600
Tax incentives 54 60
Treasury stock (131) (73)
----- -----
7,323 6,825
===== =====
The tax incentive investment reserve refers to the amount of tax exemption on
profits of undertakings under the Greater Carajas Program, today administered
by the Amazon Development Agency - ADA, and the gold and potash undertakings
administered by the Northeast Development Agency - ADENE.
In conformity with current applicable corporate legislation, Management has
proposed to retain the remaining accrued profits in the expansion reserve, to
supply the necessary resources to meet the Company's capital spending budget.
In 1983, CVRD carried out a monetary restatement of its assets, with the
increase accounted for as Revaluation Reserve, net of tax effects. CVRD
considers that technically the referred monetary restatement of its assets is
an integral part of special monetary restatement as per Law 8200. This
restatement carried out in 1983 was not a revaluation as such because this
assumes, by definition, an adjustment to market prices instead of an adjustment
to original prices corrected by an index representative of the loss in
purchasing power of Brazilian currency.
Thus, in 2000 the amounts currently stated under the title of "reserve from
revaluation of own assets" were reclassified to "capital reserve -special
monetary restatement - Law No. 8,200". Adoption of this procedure will not have
any effect on the stockholders' equity or results of the Company.
In June 2000, in connection with full adoption of the concept of historic cost
(increased by monetary restatement up to 1995), CVRD reversed the reserve from
revaluation of the assets of affiliated and jointly controlled companies in the
amount of R$ 471, against the equity investments in these companies.
On 12/31/01, the Company had an excess of revenue reserves over capital. In
accordance with Corporate Law (Art. 199 Law No. 6404/76), the Board of
Directors will propose at the stockholders' meeting an increase in the
Company's capital with reserves, in the amount of R$ 1,000, without issuance of
new shares, as follows:
Capital reserves 444
Revenue reserves 556
-----
1,000
-----
9.21-Remuneration of Stockholders
Interest on stockholders' equity proposed by Management of the Company for the
year ended 12/31/01 was R$ 4.61 per outstanding common and preferred share (R$
3.33 in 2000), totaling R$ 1,774 (R$ 1,282 in 2000). Payment is in two equal
installments; the first occurred on December 10, 2001 and the second will be
made by April 30, 2002.
According to the Company's Bylaws, the stockholders are entitled to a mandatory
dividend of 25% of the net income for the year, adjusted under the terms of
corporate law. The preferred shares have the right under the Bylaws to receive
mandatory and non-cumulative dividends corresponding to 6% of the Company
capital.
38 CVRD
Interest on stockholders' equity proposed for 2001 was calculated as follows:
Net income for the year 3,051
Legal reserve (153)
Realization of unrealized income reserve 438
Tax incentives reserve (54)
-----
Net income adjusted 3,282
=====
Mandatory amount - 25% - (R$ 2.14 per share outstanding) 821
=====
Statutory dividend on preferred shares (R$ 0.62 per share outstanding) 86
=====
Interest on stockholders' equity (R$ 4.61 per share outstanding) 1,774
=====
Pursuant to Ruling No. 207/96 of the Brazilian Securities Commission (CVM), the
Company decided, as required by tax regulations, to account for interest on
stockholders' equity under the heading of "Financial expenses" and to reverse
the same amount in a specific account. This, however, does not appear in the
financial statements because it had no effect on the final net income, except
for the tax impact recorded as "Income tax and social contribution".
9.22-Financial Result
The amounts included in the income statement are as follows:
2001 2000
----- ----
Financial expenses
Foreign debt (254) (227)
Local debt (81) (81)
Related parties, net (135) (122)
Others (*) (133) (34)
----- ----
(603) (464)
----- ----
Monetary and exchange rate variation on liabilities (1,201) (478)
----- ----
Financial income
Related Parties 122 114
Marketable securities 67 138
Others 3 36
----- ----
192 288
----- ----
Monetary and exchange rate variation on assets 679 319
----- ----
Financial income (expenses), net - Parent Company (933) (335)
----- ----
Consolidated companies
Financial expenses (354) (243)
Financial revenues 92 81
Monetary and exchange rate variation, net (544) (166)
----- ----
Consolidated financial result, net (1,739) (663)
===== ====
(*) Includes net losses on derivative financial instruments (note 9.23)
9.23-Financial Instruments - Derivatives
The main market risks the Company faces are related to interest rates, exchange
rates and commodities prices. CVRD has a policy of managing risks through the
use of derivatives instruments.
The Company's risk management follows policies and guidelines reviewed and
approved by the Board of Directors and Executive Board. These policies and
guidelines generally prohibit speculative trading and short selling and require
diversification of transactions and counterparties. The policy of the Company
is to settle all contracts financially without physical delivery of the
products. The overall position of the portfolio is assessed
CVRD 39
and monitored daily to measure the financial results and the impact on cash
flow. The credit limits and creditworthiness of counterparties are also
reviewed periodically. The results of hedging are reported monthly to the
Executive Board.
Interest Rate Risk
Interest rate risk derives from floating-rate debt, mainly from trade finance
operations. The portion of floating-rate debt denominated in foreign currency
is mainly subject to fluctuations in the LIBOR (London Interbank Offered Rate).
The portion of floating-rate debt expressed in reais refers basically to the
Brazilian long-term interest rate (TJLP), established by the Brazilian Central
Bank. Since May 1998, CVRD has been using derivatives to limit its exposure to
fluctuations in the LIBOR.
The interest rate derivatives portfolio consists mainly of options trades
aiming to cap exposure to interest rate fluctuations, establishing upper and
lower limits. Some operations are subject to knock-out provisions which, if
triggered, eliminate the protection provided by the cap.
The table below provides information regarding the interest rate derivatives
portfolio for 2001 and 2000.
2001 2000
---------------------------------------------- ----------------------------------------------
Unrealized gain Unrealized gain
Notional value (loss) Final Notional value (loss)
Type (in US$ millions) Rate range (in R$ millions) maturity (in US$ millions) Rate range (in R$ millions)
------- --------------- ---------- --------------- -------- --------------- ---------- ---------------
Cap 1,375 5.0 - 8.0% 5.6 Dec/04 1,200 5.0 - 8.0% 6.0
Floor 1,000 5.0 - 6.5% (66.1) Dec/04 850 5.0 - 6.5% (13.0)
Swap 125 5.5 - 7.5% (22.9) Oct/07 125 5.5 - 7.5% (8.0)
--------------- ---------------
Total (83.4) (15.0)
=============== ===============
Exchange Rate Risk
Exchange rate risk comes from foreign currency debts. On the other hand, a
substantial part of the Company's revenues are denominated or indexed in U.S.
dollars, while the majority o f costs are in reais. This provides a natural
hedge against possible devaluations of Brazilian currency against the dollar.
Events of this nature have an immediate negative impact on foreign currency
debt, offset by the positive effect on future cash flows.
With Brazil's adoption of a floating exchange rate in January 1999, the Company
adopted a strategy of monitoring market fluctuations and if necessary carrying
out derivatives operations to cover risks related to these variations.
The portion of debt denominated in euros and Japanese yen is protected by
derivatives to cover risks of exchange rate movements of these currencies.
The table below shows the exchange rate derivatives portfolio for 2001 and
2000. These operations are structured forwards meant to ensure the purchase
price of the following currencies:
2001
-------------------------------------------------------------
Unrealized gain
Notional value (loss)
Type (in US$ millions) Rate range (in R$ millions)
---------------- --------------- ------------------------- ---------------
Yen purchased 4.72 (yen) 70 - 110 per US$ (4.06)
Euros purchased 8.06E (euro) 1.10 - 1.30 (5.15)
Euros sold 12.41E (euro) 0.90 - 1.2 per US$ (1.88)
---------------
Total (11.09)
===============
2000
-------------------------------------------------------------
Unrealized gain
Final Notional value (loss)
Type maturity (in US$ millions) Rate range (in R$ millions)
---------------- -------- --------------- ------------------------- ---------------
Yen purchased Apr/05 15.00 (yen) 70 - 110 per US$ (2.85)
Euros purchased Apr/05 12.00 (euro) 1.10 - 1.30 (4.01)
Euros sold Mar/02 2.66 (euro) 0.90 - 1.2 per US$ (0.12)
---------------
Total (6.98)
===============
Commodities Price Risk
The prices of iron ore, the Company's main product, are set in annual
negotiations between producers and consumers and are notably stable over time.
The Company does not enter into derivatives operations to hedge iron ore
exposure.
The Company uses hedge instruments to manage its exposure to changes in the
price of gold. These derivatives operations allow establishment of a minimum
profit level for future gold output. The Company actively manages its open
positions, with the results reported monthly to senior management to allow
adjustment of targets and strategies in response to market conditions.
The following table shows the gold derivatives portfolio of the Company in 2001
and 2000.
40 CVRD
2001 2000
------------------------------------- ---------------------------------------
Unrealized gain Unrealized gain
Quantity Price (loss) Final Quantity Price (loss)
Type (oz) range (in R$ millions) maturity (oz) range (in R$ millions)
---------------------- -------- --------- --------------- -------- -------- --------- ----------------
Puts purchased 422,000 270 - 340 24.94 Dec/05 479,500 300 - 375 25.0
Calls sold 718,000 308 - 366 (7.96) Dec/05 999,800 308 - 390 (9.0)
Hybrid instruments (*) 25,000 (0.42) Nov-05 30,000 2.0
--------------- ----------------
Total 16.56 18.0
=============== ================
Similarly, the jointly controlled companies ALBRAS and ALUNORTE manage the
risks associated with variations in the prices of aluminum through derivatives
operations, establishing an average profit for future production and ensuring a
stable cash flow.
The table below provides information on the aluminum derivatives operations of
ALBRAS in 2001 and 2000. CVRD owns 51% of the total voting capital of ALBRAS:
2001 2000
----------------------------------------- ------------------------------------------
Unrealized gain Unrealized gain
Quantity Price (loss) Final Quantity Price (loss)
Type (ton.) range (in R$ millions) maturity (ton.) range (in R$ millions)
---------------------- -------- ------------- --------------- -------- -------- ------------- ----------------
Puts purchased 80,000 1,400 - 1,600 22.2 Dec/01 42,000 1,400 - 1,600 4.0
Forwards sold 57,000 1,400 - 1,600 17.8 Dec/06 67,189 1,500 - 1,700 (2.7)
Calls sold 56,000 1,600 - 1,800 (2.1) Mar/02 123,000 1,500 - 1,700 (10.7)
Hybrid instruments (*) 132,000 (6.2) -
-------------- -----------------
Total 31.7 (9.4)
============== ================
The table below provides information on the aluminum derivatives operations of
ALUNORTE in 2001 and 2000. CVRD owns 50,31 of the voting capital and 45.58% of
the total capital of ALUNORTE:
2001 2000
----------------------------------------- ------------------------------------------
Unrealized gain Unrealized gain
Quantity Price (loss) Final Quantity Price (loss)
Type (ton.) range (in R$ millions) maturity (ton.) range (in R$ millions)
---------------------- -------- ------------- --------------- -------- -------- ------------- ----------------
Puts purchased 15,000 1,400 - 1,600 5.50 Dec/02 96,000 1,400 - 1,600 7.40
Forwards sold 26,000 1,400 - 1,600 10.20 May/03 51,000 1,600 - 1,800 (0.60)
Calls sold 23,000 1,600 - 1,800 (0.07) Dec/02 157,500 1,600 - 1,800 (9.90)
Hybrid instruments (*) 74,000 (3.70) Oct/03 36,000 (0.40)
--------------- ----------------
Total 11.93 (3.50)
=============== ================
(*) The payoff of these instruments depends, at least partly, on the way the
underlying asset behaves during the life of the transaction.
CVRD 41
9.24-Exchange rate Exposure
The exchange rate exposure is predominantly in U.S. dollars.
In millions of reais
--------------------------------------------------------------------------------------------------------
Subsidiaries
and Affiliated
Parent Company Companies (*)
--------------- ---------------
2001 2000 2001 2000
----- ----- ----- -----
Assets
Current
Cash and banks and marketable securities 508 223 86 91
Others 1,709 1,487 821 569
----- ----- ----- -----
2,217 1,710 907 660
Long-term receivables 1,238 1,102 71 118
Investments 2,524 1,444 72 76
----- ----- ----- -----
Total 5,979 4,256 1,050 854
===== ===== ===== =====
Liabilities
Current
Short-term loans and financing 1,304 970 1,191 991
Others 398 268 203 225
----- ----- ----- -----
1,702 1,238 1,394 1,216
Long-term liabilities
Loans and financing 3,271 2,575 1,961 1,922
Others 1,760 1,528 178 129
----- ----- ----- -----
5,031 4,103 2,139 2,051
----- ----- ----- -----
Total 6,733 5,341 3,533 3,267
===== ===== ===== =====
Net Assets (Liabilities) - R$ (754) (1,085) (2,483) (2,413)
===== ===== ===== =====
Net Assets (Liabilities) - US$ (325) (555) (1,070) (1,234)
===== ===== ===== =====
(*) Proportional to the percentage of participation
42 CVRD
9.25-Income Statement Reclassifications - CVRD
To facilitate comparison of the financial statements, the balances from 2000
were reclassified due to the segregation of the accounting lines for the result
of operations with Cenibra and Bahia Sul, which were discontinued by the
Company after sale of the holdings in these companies, and the creation of the
title "Result of shareholdings".
2001 2000
----- -----
Equity result
Equity result 2,247 983
Gain on sale of investments - CENIBRA (1,471) -
Equity result - CENIBRA (14) (115)
Equity result - Bahia Sul (CVRD and Florestas) (54) (69)
----- -----
708 799
===== =====
Discontinued operations
Gain on sale of investments - CENIBRA and Bahia Sul 1,702 -
Equity result - CENIBRA 14 115
Equity result - Bahia Sul (CVRD and Florestas) 54 69
----- -----
1,770 184
===== =====
Other operational expenses (revenues), net
Other operational expenses (revenues), net (1,418) (727)
Amortization of goodwill 437 27
Provision for losses 245 57
Others (11) -
----- -----
(747) (643)
===== =====
Amortization of goodwill (437) (27)
===== =====
Provision for losses (245) (57)
===== =====
The balances related to Bahia Sul and Cenibra were reclassified to discontinued
operations.
9.26-Effects of Integral Monetary Restatement on the Result and Net Equity
(Unaudited)
For better understanding, the table below presents the amounts of Net Equity
and Result for 2001, considering the effects of monetary restatement on the
balance sheet, using the IGP-M general price index published by the Fundacao
Getulio Vargas.
In constant
purchasing power
----------------
2001 2002
------ ------
Stockholders' equity 20,837 19,175
Net income for the year 3,570 2,712
9.27-Segment and Geographic Information
The Company's business areas as follows:
Ferrous - mining of iron ore and manganese and production of pellets, as well
as their commercialization and respective rail transport and port handling
(both for the Northern and Southern Systems).
Non-ferrous - includes gold production, potash, geological prospecting and
other non-ferrous minerals.
Logistics - activities related to railroads and ports together with investments
in the area of maritime and rail transport and port services.
Investments - includes commercialization of aluminum products and investments
in joint ventures and affiliates involved in the production of bauxite, alumina
refining and aluminum smelting, as well as holdings in companies in the pulp
and paper sector and in steel making.
Corporate center - comprises the functional areas of control, finance, legal
affairs, human resources, administration, information technology and investor
relations.
CVRD 43
Information presented to top management with respect to the performance of each
segment is generally derived directly from the accounting records maintained in
accordance with Brazilian corporate law together with certain minor
inter-segment allocations, and is focused primarily on return on capital
employed (ROCE), net operating profit less taxes (NOPLAT) as well as net
income.
CVRD - Parent Company
2001
----------------------------------------------------------------------------------
Holdings
--------------------------------------------------------------
Non Pulp and Corporate
Ferrous Ferrous Logistics paper Aluminum Steel Others Center Total
------- ------- --------- -------- -------- ----- ------ --------- -----
Results
Sales classified by geographic
destination
Export market
Latin America 189 - - - - - - - 189
United States 167 331 - - - - - - 498
Europe 1,334 - - - - - - - 1,334
Middle East 396 - - - - - - - 396
Japan 593 - - - - - - - 593
China 552 - - - - - - - 552
Asia, other than Japan and
China 376 - - - - - - - 376
------- ------- --------- -------- -------- ----- ------ --------- -----
Gross revenues - Export 3,607 331 - - - - - - 3,938
Gross revenues - Domestic 1,908 168 603 - - - - - 2,679
------- ------- --------- -------- -------- ----- ------ --------- -----
Total gross revenues 5,515 499 603 - - - - - 6,617
Value added taxes (166) (15) (51) - - - - - (232)
------- ------- --------- -------- -------- ----- ------ --------- -----
Net profit 5,349 484 552 - - - - - 6,385
------- ------- --------- -------- -------- ----- ------ --------- -----
Cost and expenses (2,714) (302) (245) - - - - - (3,261)
Administrative and selling
expenses (118) - - - - - - (338) (456)
Research and development (22) (79) - - - - - - (101)
Other operating expenses (276) (94) - (65) (18) (48) (6) (240) (747)
------- ------- --------- -------- -------- ----- ------ --------- -----
Operation profit before financial
result and result of investment
participations 2,219 9 307 (65) (18) (48) (6) (578) 1,820
Financial result, net - - - - - - - (933) (933)
Discontinued operations - - - 1,770 - - - - 1,770
Result of investments
participations 277 (140) (335) (93) 170 165 (8) 1 37
Income taxes - - - - - - - 357 357
------- ------- --------- -------- -------- ----- ------ --------- -----
Net income 2,496 (131) (28) 1,612 152 117 (14) (1,153) 3,051
======= ======= ========= ======== ======== ===== ====== ========= =====
EBITDA demonstration:
Operation profit before financial
result and result of investment
participations 2,219 9 307 (65) (18) (48) (6) (578) 1,820
Depreciation, amortization and
depletion 400 63 25 - - - - 15 503
Dividend received 73 - - 138 18 48 6 - 283
Other operating expenses
Adjustments in non-cash itens:
- Provision for contingencies 38 - - - - - - 126 164
- Provision for loss on
ICMS recoverable 139 3 - - - - - - 142
- Write-off of property,
plant and equipment - 91 - - - - - - 91
- Provision for early-retirement
programs - - - - - - - 78 78
- Provision for losses - - - 65 - - - - 65
- Provision for losses of
inventories 61 - - - - - - - 61
- Amortization of goodwill 38 - - - - - - - 38
- Non-operating revenue - - - - - - - 9 9
------- ------- --------- -------- -------- ----- ------ --------- -----
EBITDA 2,968 166 332 138 - - - (350) 3,254
EBITDA % of total 91.2% 5.1% 10.2% 4.2% - - - (10.8% 100.0%
EBITDA margin % 55.5% 34.3% 60.1% - - - - - 51.0%
------- ------- --------- -------- -------- ----- ------ --------- -----
Depreciation, amortization and
depletion (400) (63) (25) - - - - (15) (503)
Dividends received (73) - - (138) (18) (48) (6) - (283)
------- ------- --------- -------- -------- ----- ------ --------- -----
EBIT 2,495 103 307 - (18) (48) (6) (365) 2,468
Income tax and social contribution - - - - - - - 357 357
------- ------- --------- -------- -------- ----- ------ --------- -----
Net operating profit less
taxes (b) 2,495 103 307 - (18) (48) (6) (8) 2,825
Capital employed (a)
- Property, plant and
equipment in operation 5,427 291 386 - - - - 47 6,151
- Inventories 401 47 - - - - - - 448
- Accounts receivable 815 27 42 - - - - 36 920
- Payable to suppliers and
contractors (444) (35) (8) - - - - (36) (523)
- Salaries and social charges (45) (7) (2) - - - - (64) (118)
------- ------- --------- -------- -------- ----- ------ --------- -----
6,154 323 418 - - - - (17) 6,878
Return on capital employed -
ROCE (b/a) 40.5% 31.9% 73.4% - - - - - 41.1%
44 CVRD
The information related to year 2000 are as follows::
2000
------------------------------------------------
Non Corporate
Ferrous ferrous Logistics Center TOTAL
------- ------- --------- ------ -----
EBITDA 2,157 140 319 (213) 2,403
EBITDA % of total 89.8% 5.8% 13.3% (8.9%) 100.0%
EBITDA margin % 53.0% 32.6% 66.3% - 48.3%
EBIT 1,908 85 299 (297) 1,995
Net Operating profit less income tax and social
contribution (b) 1,908 85 299 (148) 2,144
Capital employed (a) 6,166 441 426 22 7,055
Return on capital employed - ROCE (b/a) 30.9% 19.3% 70.2% - 30.4%
CVRD 45
CVRD - Consolidated
2001
-----------------------------------------------------------------------------------------------
Holdings
--------------------------------------------------------------
Non Pulp and Corporate
Ferrous Ferrous Logistics paper Aluminum Steel Others Center Eliminations Total
------- ------- --------- -------- -------- ----- ------ --------- ------------ ------
Results
Sales classified by
geographic destination
Export market
Latin America 585 - 151 - 96 21 - - (257) 596
United States 583 331 48 2 265 953 - - (568) 1,614
Europe 3,816 65 102 - 755 99 - - (1,617) 3,220
Middle East 741 - 9 - 1 - - - (81) 670
Japan 1,318 - 22 - 319 - - - (603) 1,056
China 1,106 4 1 - 26 91 - - (305) 923
Asia, other than Japan
and China 1,222 - 5 - 27 7 - - (603) 658
------- ------- --------- -------- -------- ----- ------ --------- ------------ ------
Gross revenues - Export 9,371 400 338 2 1,489 1,171 - - (4,034) 8,737
Gross revenues - Domestic 2,876 183 991 19 463 48 32 - (2,334) 2,278
------- ------- --------- -------- -------- ----- ------ --------- ------------ ------
Total gross revenues 12,247 583 1,329 21 1,952 1,219 32 - (6,368) 11,015
Value added taxes (269) (20) (84) (1) (56) (9) (2) - - (441)
------- ------- --------- -------- -------- ----- ------ --------- ------------ ------
Net profit 11,978 563 1,245 20 1,896 1,210 30 - (6,368) 10,574
------- ------- --------- -------- -------- ----- ------ --------- ------------ ------
Cost and expenses (8,076) (336) (885) (17) (1,388)(1,078) (30) - 6,265 (5,545)
Administrative and selling
expenses (416) (15) (50) (1) (68) (60) (14) (339) 95 (868)
Research and development (22) (79) - - - - - - - (101)
Other operating expenses 823 (108) (236) (148) (4) (37) (9) (240) (1,081) (1,040)
------- ------- --------- -------- -------- ----- ------ --------- ------------ ------
Operation profit before
financial result and
result of investment
participations 4,287 25 74 (146) 436 35 (23) (579) (1,089) 3,020
Financial result, net (393) (76) (38) 10 (213) (96) - (933) - (1,739)
Discontinued operations - - - 1,770 - - - - - 1,770
Result of investments 1,911 (140) (415) (93) 285 167 (4) 1 (2,011) (299)
participations
Minority interests (4) - - - - (3) - - 47 40
Income taxes (45) - (5) - (65) 19 (1) 356 - 259
------- ------- --------- -------- -------- ----- ------ --------- ------------ ------
Net income 5,756 (191) (384) 1,541 443 122 (28) (1,155) (3,053) 3,051
======= ======= ========= ======== ======== ===== ====== ========= ============ ======
EBITDA demonstration:
Operation profit before
financial result and
result of investment
participations 4,287 25 74 (146) 436 35 (23) (579) (1,089) 3,020
Depreciation, amortization
and depletion 492 71 75 4 84 86 - 15 827
Dividend received - - 52 - - 40 6 - 98
Other operating expenses
Adjustments in non-cash itens:
- Provision for contingenices 73 - 13 - 23 9 - 126 244
- Provision for loss on ICMS
recoverable 139 3 - - - - - - 142
- Write-off of property,
plant and equipment 54 91 - - - - - - 145
- Provision for early-retirement
programs - - - - - - - 78 78
- Provision for losses 32 14 (11) 200 - (10) - - 225
- Provision for losses of
inventories 80 - - - - - - - 80
- Amortization of goodwill 38 - - - - - - - 38
- Non-operating revenue (1,194) - 256 (53) 1 5 - 9 1,207 231
------- ------- --------- -------- -------- ----- ------ --------- ------------ ------
EBITDA 4,001 204 459 5 544 165 (17) (351) 118 5,128
EBITDA % of total 78.0% 4.0% 9.0% 0.1% 10.6% 3.2% (0.3%) (6.8%) 2.3% 100.0%
EBITDA margin % 33.4% 36.2% 36.9% 25.0% 28.7% 13.6% - - - 48.5%
------- ------- --------- -------- -------- ----- ------ --------- ------------ ------
Depreciation, amortization
and depletion (492) (71) (75) (4) (84) (86) - (15) - (827)
Dividends received - - (52) - - (40) (6) - - (98)
------- ------- --------- -------- -------- ----- ------ --------- ------------ ------
EBIT 3,509 133 332 1 460 39 (23) (366) 118 4,203
IR e CSL (45) - (5) - (65) 19 (1) 356 - 259
------- ------- --------- -------- -------- ----- ------ --------- ------------ ------
Net operating profit less
taxes (b) 3,464 133 327 1 395 58 (24) (10) 118 4,462
Capital employed (a)
- Property, plant and
equipment in operation 6,893 559 872 33 1,115 1,114 3 47 10,636
- Inventories 871 70 15 1 148 221 - - 1,326
- Accounts receivable 3,627 54 119 12 119 130 7 1 (2,568) 1,501
- Payable to suppliers
and contractors (2,960) (53) (54) (2) (133) (44) (6) (36) 2,454 (834)
- Salaries and social charges (133) (10) (10) (1) (8) (6) - (64) (232)
------- ------- --------- -------- -------- ----- ------ --------- ------------ ------
8,298 620 942 43 1,241 1,415 4 (52) (114) 12,397
__
Return on capital employed -
ROCE (b/a) 41.7% 21.5% 34.7% 2.3% 31.8% 4.1% - - - 36.0%
46 CVRD
The information related to year 2000 are as follows::
2000
------------------------------------------------------------------------------------------------------------------------------
Holdings
------------------------------------------------------
Non Pulp and Corporate
Ferrous Ferrous Logistics Paper Aluminum Steel Center Eliminations TOTAL
------- ------- --------- -------- -------- ----- --------- ------------ -----
EBITDA 2,582 190 322 48 485 301 (278) 138 3.788
EBITDA % of total 68.2% 5.0% 8.5% 1.3% 12.8% 7.9% (7.3%) 3.6% 100.%
EBITDA margin % 32.4% 36.5% 25.4% 106.7% 26.3% 26.0% - - 43.1%
EBIT 2,296 125 262 (8) 399 191 (297) 138 3,106
Net Operating profit
less income tax (b) 2,265 125 267 (21) 421 48 (148) 138 3,095
Capital employed 7,074 686 945 1,339 1,343 1,454 (10) (37) 12,794
Capital employed in discontinued
operations - - - (1,158) - - - - (1,158)
------- ------- --------- -------- -------- ----- --------- ------------ -----
Capital employed
adjusted (a) 7,074 686 945 181 1,343 1,454 (10) (37) 11,636
Return on capital employed -
ROCE (b/a) 32.0% 18.2% 28.3% (11.6%) 31.3% 3.3% - - 26.6%
9.28-Insurance
Considering the nature of its activities, the international standards applied
to operation and maintenance of its installations, along with its
risk-management policy that follows a security program developed expressly for
the Company by specialized consultants, the Company maintains insurance from
the main Brazilian and international insurance companies covering property and
equipment risk, business interruption and civil liability.
Insurance coverage is obtained based on the sum of all items of the Company's
property. At 12/31/01 the operational assets of the Company were valued at R$
19 billion, and the values at risk for business interruption at R$ 5 billion.
9.29-Profit Sharing Plan
The employee profit sharing plan is linked to the results as measured by
indicators such as ROCE (return on capital employed) and by the meeting of
performance targets for each unit.
In 2001, the Company paid R$ 73 in profit sharing (R$ 66 in 2000), with R$ 31
referring to profit sharing for the year 2000, and constituted a provision to
complement payment for the year ended 12/31/01, in the amount of R$ 44.
9.30-Concessions and Leases
(a) Railroads
The Company and some of its affiliated companies entered into agreements with
the Brazilian government, through the Ministry of Transport, for concession,
exploitation and development of public rail cargo transport services and for
lease of the assets destined to render these services.
The concessions periods are, by railroad:
End of concession
Railroad period
------------------------------ -----------------
Vitoria-Minas (direct) (*) June 2027
Carajas (direct) (*) June 2027
Centro-Atlantica (indirect) August 2026
CFN (indirect) December 2027
Ferroban (direct) December 2027
MRS (indirect) December 2026
The concession will expire in one of the following events: termination of the
contractual term, cancellation, forfeiture, rescission, annulment and
bankruptcy or extinction of the concessionaire.
CVRD 47
(*) In observance of Articles 27 and 28 of Law No. 9074 of July 7, 1995, the
granting authority (the federal government) granted the concessionaire
full and irrevocable settlement, considering the payment of the price for
disposal of the shares of the concessionaire obtained in the auction.
(b) Hydroelectric Projects
Currently, CVRD acts as an agent in the Brazilian energy market at the same
time it is developing projects for electricity generation and its ability to
operate competitively in this market.
Below is a list of the projects underway and the pertinent details:
Start-up of %
Project operations Participation
------------------- -------------- -------------
Igarapava In operation 38
Porto Estrela September 2001 33
Aimores December 2003 51
Candonga November 2003 50
Funil December 2002 51
Capim Branco I e II September 2004 48
Foz do Chapeco July 2006 40
Santa Isabel August 2006 44
(c) Ports
CVRD owns specialized port terminals as listed below:
End of
Terminal Localization concession period
------------------- -------------- -----------------
Tubarao Complex Vitoria - ES 2018
Praia Mole Terminal Vitoria - ES 2020
Various Products Terminal Vitoria - ES 2018
Vila Velha Terminal Vila Velha - ES 2023
Paul Pier Vitoria - ES 2004
Net Bulk Terminal Vitoria - ES 2018
Ponta da Madeira Maritime
Terminal - Pier I Sao Luis - MA 2018
Ponta da Madeira Maritime
Terminal - Pier II Sao Luis - MA 2010
Inacio Barbosa Maritime
Terminal Aracaju - SE 2004
9.31-Subsequent
Issue of Notes
On March 8, 2002, through its subsidiary Vale Overseas Limited, the Company
completed the financial conditions for an operation to raise US$ 300 at 8.625%
per annum, through issuance of Notes maturing on March 8, 2007, extendable to
September 8, 2008.
48 CVRD
9.32 Shareholding Interests (Organizational Chart at 12/31/01)
Companhia | Valepar 27,14% Companies of the CVRD Group
Vale do Rio Doce | Public 72,86% Holding in Total Stock (%)
------------ ----------- -------------
Ferrous Non Ferrous Logistics
----------------- ---------------------- --------------------- -------------------------
Iron Ore and Pellets Manganese and Alloys Precious Metals, Railroads and Ports
Base Metals
and Industry Minerals
----------------------- -------------------------
------------------------ |Urucum Mineracao S.A.| ----------------------- |TVV-Terminal de |
|ZAGAIA Participacoes | |CVRD 100,00 | |Docegeo | |Vila Velha S.A. |
|CVRD 100,000 | ----------------------- |CVRD 99,998| |CVRD 99,887 |
------------------------ |Others 0,002| |Min. Tacuma 0,005 |
----------------------- ----------------------- |Employees 0,108 |
------------------------ |RDME* | ----------------------- -------------------------
|Ferteco | |ITACO 100,00 | |24 Empresas de | -------------------------
|ZAGAIA 100,000 | ----------------------- |Mineracao | |Ferrovia |
------------------------ |CVRD 100,00| |Centro Atlantica S.A. |
----------------------- ----------------------- |Min. Tacuma 45,65|
------------------------ |SIBRA | ----------------------- |VALIA 9,99|
|Ferteco International | |CVRD 98,16| |PPSA | |KRJ 12,31|
|Ferteco 100,000 | |Others 1,84| |CVRD 75,50| |CARMO 9,99|
------------------------ ----------------------- |Mitsubishi 18,88| |CPP 1,03|
------------------------ |IFC 5,62| |CSN 11,95|
|Baovale Mineracao S.A.| ----------------------- ----------------------- |Others 9,08|
|CVRD 50,00| |CPFL | ----------------------- -------------------------
|Baoste 50,00| |SIBRA 93,59| |PPSA Overseas |
------------------------ |Others 6,41| |PPSA 100,00| -------------------------
------------------------ ----------------------- ----------------------- |Companhia |
|Belem-Adm e Part. Ltda| |Ferroviaria do Nordeste|
|CVRD 99,99| ----------------------- ----------------------- |CVRD 30,00|
|Docepar 0,01| |Nova Era Silicon** | |Salobo Metals** | |Taquari 30,00|
------------------------ |CVRD 49,00| |CVRD 50,00| |CSN 30,00|
|Mitsubishi 25,50| |Anglo-American 50,00| |Employees 10,00|
------------------------ |Kawasaki 22,50| ----------------------- -------------------------
|Minas da Serra Geral**| |Mizushima 3,00|
|CVRD 51,00| ----------------------- ------------------------ --------------------------
|Kawasaki 24,50| |Mineracao Sossego | |Ferroban |
|Japanese Group 24,50| |Min. Andira 49,85| |Ferropasa 37,91|
------------------------ |Camelback (Itaco)50,15| |CVRD 18,74|
------------------------ |Capmelissa 6,96|
------------------------ |Dasaiev (LAIF) 6,96|
|CAEMI | |Funcef 6,79|
|Amazon (Itaco) 16,82| |Previ 6,79|
|Mitsui 43,37| |Others 15,85|
|Others 39,81| --------------------------
------------------------
--------------------------
------------------------ |CSN Aceros S.A. * |
|Samarco Mineracao S/A | |ITACO 62,50|
|CVRD 50,00| |CSN Panama 37,50|
|BHP Brasil 50,00| --------------------------
------------------------
------------------------ --------------------------
|Hispanobras** | |Sepetiba Tecon |
|CVRD 50,89| |CSN Aceros S.A. 80,00|
|Aceralia CS 49,11| |CSN 20,00|
------------------------ --------------------------
------------------------
|Itabrasco** |
|CVRD 50,90| ------------------
|Ilva 49,10| Shipping
------------------------
------------------------
|Nibrasco** | -------------------------
|CVRD 51,00| |Docenave |
|Nippon Steel 25,39| |CVRD 100,00|
|Japanese Group 23,61| -------------------------- -------------------------
------------------------ |___ Subsidiary |
------------------------ |___ Affiliated | -------------------------
|Kobrasco** | |___ Other Participations| |Navedoce * |
|CVRD 50,00| |___ Consortium | |Docenave 82,00|
|POSCO 50,00| -------------------------- |Navedoce 18,00|
------------------------ -------------------------
------------------------ -------------------------
Kobin** | |Seamar * |
Kobrasco 100,00| |Navedoce 100,00|
------------------------ -------------------------
------------------------
|GIIC * |
|ITACO 50,00| * Companies with head offices abroad
|Gulf Invest. Co. 50,00| ** Holding linked to a Stockholders Agreement
------------------------
CVRD 49
------------ ----------- -------------
Holdings Energy Others Abroad
----------------- ---------------------- --------------------- -------------------------
Bauxite, Alumina Timber,
and Aluminum Pulp & Paper
-------------------------- -------------------------
------------------------ ----------------------- |Consortium Igarapava | |Rio Doce |
|Aluvale | |Florestas Rio Doce | |Usina Hidreletrica | |International* |
|CVRD 94,74 | |CVRD 99,85| |CVRD 38,15| |CVRD 100,00|
|ITACO 5,26 | |Others 0,15| |Cia Mineira Metais 23,93| -------------------------
------------------------ ----------------------- |CSN 17,92| -------------------------
------------------------ ----------------------- |CEMIG 14,50| |Rio Doce Asia * |
|Albras | |Celmar | |Min. Morro Velho 5,50| |Rio Doce |
|Aluvale 51,00| |CVRD 85,00| -------------------------- |International 100,00|
|NAAC 49,00| |Nissho Iwai 15,00| -------------------------- -------------------------
------------------------ ----------------------- |Consortium | -------------------------
|Valesul** | |Porto Estrela | |Rio Doce Europa |
|Aluvale 54,51| |Usina Hidreletrica | |S. 'a.r.l. * |
|Billiton 45,49| -------------- |CVRD 33,33| |CVRD 99,80|
------------------------ Steel |CEMIG 33,33| |Others 0,20|
------------------------ |Coteminas 33,33| -------------------------
|Alunorte ** | ----------------------- -------------------------- -------------------------
|Aluvale 45,58| |CST** | -------------------------- |Rio Doce |
|Norsk Hydro 32,28| |CVRD 22,85| |Consortium Aimores | |International Finance *|
|MRN 12,62| |Acesita/Usinor 37,29| |Usina Hidreletrica | |Rio Doce Europa 100,00|
|NAAC 4,49| |Kawasaki 7,91| |CVRD 51,00| -------------------------
|CBA 3,62| |Others 31,95| |CEMIG 49,00| -------------------------
|JAIC 1,41| ----------------------- -------------------------- |Itabira Rio Doce |
------------------------ |Company Ltd.- ITACO * |
------------------------ ----------------------- -------------------------- |RDIF 100,00|
|Min. Rio do Norte** | |California Steel* | |Consortium Candonga | -------------------------
|Aluvale 40,00| |Rio Doce Ltd. 50,00| |Usina Hidreletrica |
|Billiton 14,80| |Kawasaki 50,00| |CVRD 50,00| -------------------------
|Alcan 12,00| ----------------------- |EPP 50,00| |Rio Doce America * |
|CBA 10,00| -------------------------- |ITACO 100,00|
|Alcoa 8,58| ----------------------- -------------------------- -------------------------
|Reynolds 5,00| |Usiminas | |Consortium Funil | -------------------------
|Norsk Hydro 5,00| |CVRD 11,46| |Usina Hidreletrica | |Rio Doce Ltd. * |
|Abalco 4,62| |Nippon Usiminas 9,45| |CVRD 51,00| |Rio Doce America 100,00|
------------------------ |Previ 8,02| |CEMIG 49,00| -------------------------
----------------------- |CIU 4,95| -------------------------- -------------------------
|Min. Vera Cruz | |Others 66,12| -------------------------- |CVRD Overseas |
|Aluvale 36,00| ----------------------- |Consortium Capim | |ITACO 100,00|
|Paraibuna 42,88| |Branco I e II - Usina | -------------------------
|Fina Emp. Part. 21,12| ----------------------- |Hidreletrica | -------------------------
------------------------ |Siderar (*) | |CVRD 46,00| |CVRD Finance |
|Itabria Rio Doce 4,85| |CEMIG 20,00| |CVRD Overseas 100,00|
--------------- |Usiminas 5,32| |Suzano 17,00| -------------------------
Fertilizers |Sidertubes S/A 50,21| |Votorantim 12,00| -------------------------
|ISA (employees) 10,21| |Camargo Correa 5,00| |CVRD Europe Trading |
|Others 29,41| -------------------------- |Energy B.V. - CETE |
----------------------- -------------------------- |CVRD 100,00|
|Consortium | -------------------------
----------- |Foz do Chapeco | -------------------------
----------------------- e-Business |Usina Hidreletrica | |Brasilux |
|Fosfertil | |CVRD 40,00| |CVRD 100,00|
|CVRD 10,96| ----------------------- |Serra da Mesa S.A. 40,00| -------------------------
|Fertifos 55,35| |Valepontocom | |CEEE 20,00| -------------------------
|Others 33,69| |CVRD 100,00| -------------------------- |Rio Doce Comercio |
----------------------- ----------------------- -------------------------- |Internacional ApS * |
|Consortium | |CVRD 100,00|
----------------------- |Santa Isabel | -------------------------
|Solostrata S/A | |Usina Hidreletrica | -------------------------
|Valepontocom 100,00| |CVRD 43,85| |Itabira Internacional |
----------------------- |Billiton 20,60| |Servicos e Comercio * |
|Alcoa 20,00| |RDCI Aps 99,99|
----------------------- |Votorantin 10,00| |Others 0,01|
|Multistrata S/A | |C. Correa Cimentos 5,55| -------------------------
|Valepontocom 100,00| --------------------------
-----------------------
-----------------------
|Infostrata S/A |
|Valepontocom 100,00|
-----------------------
-----------------------
|Quadrem Int. Holdings|
|LTD |
|ITACO 9,00|
|Others 91,00|
-----------------------
CVRD 49
Part III
10 Statement of Investments in Subsidiaries and Jointly Controlled Companies
Attachment 1
Years ended December 31, 2001 In millions of reais
---------------------------------------------------------------------------------------------------------------------
Accounting Information
-----------------------------------------------
Participation (%) Assets
----------------- ---------------------------
Long-
Total Voting Current term Permanent
------ ------- ------- ------- ---------
Subsidiaries (a)
Amazon Iron Ore Overseas Co. Ltd. 100.00 100.00 -- -- 669
Brasilux S.A 100.00 100.00 52 54 --
CELMAR S.A. - Industria de Celulose e Papel 85.00 85.00 10 -- 66
Companhia Paulista Ferro-Ligas - CPFL 93.59 99.88 72 68 76
CVRD Overseas Ltd. 100.00 100.00 334 696 --
Docepar S.A 100.00 100.00 4 47 --
Ferteco Mineracao S.A. (c) 100.00 100.00 323 88 359
Florestas Rio Doce S.A 99.85 100.00 67 30 --
Itabira Internacional Servicos e Comercio Lda 99.99 99.99 759 -- --
Itabira Rio Doce Company Limited - ITACO 99.99 99.99 2,055 167 1,770
Mineracao Tacuma Ltda 100.00 100.00 1 123 84
Navegacao Vale do Rio Doce S.A. - DOCENAVE 100.00 100.00 216 119 256
Para Pigmentos S.A 75.50 80.00 61 -- 196
Rio Doce America Inc. 100.00 100.00 50 256 268
Rio Doce Europa Servicos e Comercio - RDE 99.80 99.80 87 -- 2,164
Rio Doce International Finance Ltd. 99.80 99.80 1,863 1,487 2,471
Rio Doce Manganese Europe - RDME 100.00 100.00 149 -- 55
SIBRA - Eletrosiderurgica Brasileira S.A 98.16 99.96 227 61 253
Urucum Mineracao S.A 100.00 100.00 31 4 39
Vale do Rio Doce Aluminio S.A. - ALUVALE 94.74 100.00 143 7 719
Zagaia Participacoes S.A 100.00 100.00 5 -- 1,214
Others 51 53 294
Jointly controlled companies (a)
ALBRAS - Aluminio Brasileiro S.A 51.00 51.00 368 299 1,135
ALUNORTE - Alumina do Norte do Brasil S.A 45.58 50.31 371 142 1,236
Caemi Mineracao e Metalurgia S.A. (b) 16.82 50.00 924 165 1,526
California Steel Industries, Inc. 50.00 50.00 478 9 647
Companhia Coreano-Brasileira de Pelotizacao - KOBRASCO 50.00 50.00 88 40 220
Companhia Ferroviaria do Nordeste S.A 30.00 30.00 6 7 31
Companhia Hispano Brasileira de Pelotizacao - HISPANOBRAS 50.89 51.00 102 26 35
Companhia Italo-Brasileira de Pelotizacao - ITABRASCO 50.90 51.00 94 32 15
Companhia Nipo-Brasileira de Pelotizacao - NIBRASCO 51.00 51.11 76 34 64
Companhia Siderurgica de Tubarao - CST 22.85 20.51 850 459 4,541
Ferrovia Centro - Atlantica S.A 45.65 20.00 90 261 382
Gulf Industrial Investment Co. - GIIC 50.00 50.00 199 -- 97
Minas da Serra Geral S.A. - MSG 51.00 51.00 28 8 34
Mineracao Rio do Norte S.A 40.00 40.00 117 7 738
Nova Era Silicon S.A 49.00 49.00 17 -- 39
Salobo Metais Ltda 50.00 50.00 -- -- 427
Samarco Mineracao S.A 50.00 50.00 366 32 865
Valesul Aluminio S.A 54.51 54.51 117 15 143
Others 43 41 339
Notes:
(a) The balances above represents the amounts presented in the financial
statements of those companies in December 31, 2001 and not only the part
included in the consolidated financial statements of company; (b) The financial
statements of Caemi are consolidated and include R$ 189 of minority interests.
(c) The informed result is related to the year 2001. The company's interest was
acquired in April, 2001.
50 CVRD
10 Statement of Investments in Subsidiaries and Jointly Controlled Companies
Attachment 1 (cont'd)
Years ended December 31, 2001 In millions of reais
----------------------------------------------------------------------------------------
Accounting Information
---------------------------
Liabilities
---------------------------
Adjusted
Long- stockholders'
Current term equity
------- ----- -------------
Subsidiaries (a)
Amazon Iron Ore Overseas Co. Ltd. -- -- 669
Brasilux S.A. 91 -- 15
CELMAR S.A. - Industria de Celulose e Papel 146 -- (70)
Companhia Paulista Ferro-Ligas - CPFL 62 25 129
CVRD Overseas Ltd. 161 696 173
Docepar S.A. 67 21 (37)
Ferteco Mineracao S.A. (c) 320 264 186
Florestas Rio Doce S.A. 2 4 91
Itabira Internacional Servicos e Comercio Lda. -- -- 759
Itabira Rio Doce Company Limited - ITACO 703 819 2,470
Mineracao Tacuma Ltda. 27 190 9
Navegacao Vale do Rio Doce S.A. - DOCENAVE 89 151 351
Para Pigmentos S.A. 163 94 -
Rio Doce America Inc. 80 27 467
Rio Doce Europa Servicos e Comercio - RDE 29 -- 2,222
Rio Doce International Finance Ltd. 2.232 1,425 2,164
Rio Doce Manganese Europe - RDME 118 4 82
SIBRA - Eletrosiderurgica Brasileira S.A. 200 131 210
Urucum Mineracao S.A. 12 18 44
Vale do Rio Doce Aluminio S.A. - ALUVALE 34 8 827
Zagaia Participacoes S.A. 1 -- 1,218
Others 109 21 268
Jointly controlled companies (a)
ALBRAS - Aluminio Brasileiro S.A. 507 1,072 223
ALUNORTE - Alumina do Norte do Brasil S.A. 220 1,003 526
Caemi Mineracao e Metalurgia S.A. (b) 713 991 911
California Steel Industries, Inc. 102 520 512
Companhia Coreano-Brasileira de Pelotizacao - KOBRASCO 270 64 14
Companhia Ferroviaria do Nordeste S.A. 37 118 (111)
Companhia Hispano Brasileira de Pelotizacao - HISPANOBRAS 61 22 80
Companhia Italo-Brasileira de Pelotizacao - ITABRASCO 59 24 58
Companhia Nipo-Brasileira de Pelotizacao - NIBRASCO 65 26 83
Companhia Siderurgica de Tubarao - CST 1,086 1,907 2,857
Ferrovia Centro - Atlantica S.A. 115 832 (214)
Gulf Industrial Investment Co. - GIIC 120 -- 176
Minas da Serra Geral S.A. - MSG 8 11 51
Mineracao Rio do Norte S.A. 121 136 605
Nova Era Silicon S.A. 20 10 26
Salobo Metais Ltda. -- 332 95
Samarco Mineracao S.A. 475 336 452
Valesul Aluminio S.A. 29 21 225
Others 14 154 255
50 CVRD
10 Statement of Investments in Subsidiaries and Jointly Controlled Companies
Attachment 1 (cont'd)
Years ended December 31, 2001 In millions of reais
------------------------------------------------------------------------------------------------------------------------------------
Accounting Information
---------------------------------------------------------------------
Statement of income operations
---------------------------------------------------------------------
Costs
products Operating Non- Income tax
Net and income operating and social Adjusted net
revenues services (expenses) result contribution income (loss)
-------- -------- ---------- --------- ------------ -------------
Subsidiaries (a)
Amazon Iron Ore Overseas Co. Ltd. - - - - - -
Brasilux S.A. 195 (192) (5) - - (2)
CELMAR S.A. - Industria de Celulose e Papel - - (135) - - (135)
Companhia Paulista Ferro-Ligas - CPFL 171 (118) (29) (2) 1 23
CVRD Overseas Ltd. 863 (771) 10 - - 102
Docepar S.A. - - 20 - - 20
Ferteco Mineracao S.A. (c) 538 (372) (127) - 8 47
Florestas Rio Doce S.A. 19 (17) 7 1 - 10
Itabira Internacional Servicos e Comercio Lda. - - 87 - - 87
Itabira Rio Doce Company Limited - ITACO 3,288 (2998) (5) 1,220 - 1,505
Mineracao Tacuma Ltda. - - (272) - 26 (246)
Navegacao Vale do Rio Doce S.A. - DOCENAVE 531 (484) 26 (87) (30) (44)
Para Pigmentos S.A. 78 (33) (122) - - (77)
Rio Doce America Inc. 208 (200) 6 - (7) 7
Rio Doce Europa Servicos e Comercio - RDE - - 1,486 - - 1,486
Rio Doce International Finance Ltd. 142 (72) 1,419 - - 1,489
Rio Doce Manganese Europe - RDME 214 (197) 3 - - 20
SIBRA - Eletrosiderurgica Brasileira S.A. 387 (242) (63) (9) (4) 69
Urucum Mineracao S.A. 43 (23) (12) 3 (4) 7
Vale do Rio Doce Aluminio S.A. - ALUVALE 2 - 144 - - 146
Zagaia Participacoes S.A. - - (60) - - (60)
Others 113 (100) (13) - (2) (2)
Jointly controlled companies (a)
ALBRAS - Aluminio Brasileiro S.A. 1,094 (646) (329) (1) (86) 32
ALUNORTE - Alumina do Norte do Brasil S.A. 687 (498) (227) - (12) (50)
Caemi Mineracao e Metalurgia S.A. (b) - - - - - -
California Steel Industries, Inc. 1,486 (1422) (95) - 8 (23)
Companhia Coreano-Brasileira de Pelotizacao - KOBRASCO 307 (238) (107) - - (38)
Companhia Ferroviaria do Nordeste S.A. 19 (31) (99) - - (111)
Companhia Hispano Brasileira de Pelotizacao - HISPANOBRAS 269 (223) - (8) (13) 25
Companhia Italo-Brasileira de Pelotizacao - ITABRASCO 246 (203) (4) (2) (9) 28
Companhia Nipo-Brasileira de Pelotizacao - NIBRASCO 486 (423) (63) - (14) (14)
Companhia Siderurgica de Tubarao - CST 1,978 (1555) (404) (21) 64 62
Ferrovia Centro - Atlantica S.A. 248 (239) (227) 4 - (214)
Gulf Industrial Investment Co. - GIIC 295 (258) (7) - - 30
Minas da Serra Geral S.A. - MSG 40 (24) (4) - - 12
Mineracao Rio do Norte S.A. 504 (222) (15) - (23) 244
Nova Era Silicon S.A. 58 (37) (14) - (1) 6
Salobo Metais Ltda. - - - - - -
Samarco Mineracao S.A. 764 (353) (258) (20) (27) 106
Valesul Aluminio S.A. 303 (214) (30) (2) (14) 43
Others 11 (8) (12) - (1) (10)
50 CVRD
Attachment II
11.1 - Aluminum Area (Adjusted and Unaudited) In Millions
------------------------------------------------------------------------------------------------------------------------------------
Dados ALBRAS ALUNORTE (cont'd below)
------------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001
-------- -------- ------ ------ --------
Quantity sold - external market MT (thousand) 317 351 819 795 -
Quantity sold - internal market MT (thousand) 15 15 721 801 16
-------- -------- ------ ------ --------
Quantity sold - total MT (thousand) 332 366 1,540 1,596 16
======== ======== ====== ====== ========
Average sales price - external market US$ 1,426.64 1,508.21 179.47 198.04 -
Average sales price - internal market US$ 1,477.68 1,513.79 192.36 195.21 1,843.43
Average sales price - total US$ 1,428.99 1,508.42 185.51 196.63 1,843.43
Long-term indebtedness, gross US$ 450 536 425 451 -
Short-term indebtedness, gross US$ 183 193 46 40 -
-------- -------- ------ ------ --------
Total indebtedness, gross US$ 633 729 471 491 -
======== ======== ====== ====== ========
Long-term indebtedness, net US$ 450 536 425 437 -
Short-term indebtedness, net US$ 141 160 - - -
-------- -------- ------ ------ --------
Total indebtedness, net US$ 591 696 425 437 -
======== ======== ====== ====== ========
Stockholders' equity R$ 223 191 526 430 827
======== ======== ====== ====== ========
Net operating revenues R$ 1,095 1,007 687 590 2
Cost of products R$ (646) (584) (498) (415) -
Other expenses/revenues R$ (79) (64) (23) (51) 11
Depreciation, amortization and depletion R$ 68 68 51 51 -
-------- -------- ------ ------ --------
EBITDA ---------------------------------------> R$ 438 427 217 175 13
Depreciation, amortization and depletion R$ (68) (68) (51) (51) -
-------- -------- ------ ------ --------
EBIT ---------------------------------------> R$ 370 359 166 124 13
Gain on investments accounted for by the equity method R$ - - - - 116
Non-operating result R$ 22 (2) - - -
Net financial result R$ (263) (174) (204) (139) 16
-------- -------- ------ ------ --------
Income before income tax and social contribution R$ 129 183 (38) (15) 145
Income tax and social contribution R$ (97) 61 (11) (39) 1
-------- -------- ------ ------ --------
Net income R$ 32 224 (49) 24 146
======== ======== ====== ====== ========
Property, plant and equipment in operation R$ 959 974 887 918 -
Inventories R$ 103 103 104 73 -
Accounts receivable R$ 38 46 77 69 -
Payable to suppliers and contractors R$ (67) (97) (106) (70) -
Salaries and social charges R$ (7) (8) (3) (3) -
-------- -------- ------ ------ --------
Capital employed -----------------------------> R$ 1,026 1,018 959 987 -
======== ======== ====== ====== ========
ROCE after taxes 26.6% 41.3% 16.2% 16.5% -
-------- -------- ------ ------ --------
ROE 14.3% 127.7% (9.3%) 5.6% 17.7%
-------- -------- ------ ------ --------
CVRD 51
Attachment II (cont'd)
11.1 - Aluminum Area (Adjusted and Unaudited) In Millions
------------------------------------------------------------------------------------------------------------------------------------
Dados ALUVALE MRN VALESUL
------------------------------------------------------------------------------------------------------------------------------------
2000 2001 2000 2001 2000
-------- ------ ------ -------- --------
Quantity sold - external market - 3,413 3,991 23 30
Quantity sold - internal market 3 7,539 7,251 53 56
-------- ------ ------ -------- --------
Quantity sold - total 3 10,952 11,242 76 86
======== ====== ====== ======== ========
Average sales price - external market 1,784.42 22.27 22.48 1,590.39 1,638.44
Average sales price - internal market 2,285.67 20.36 20.30 1,662.01 2,070.21
Average sales price - total 2,244.41 20.95 21.18 1,913.54 1,912.41
Long-term indebtedness, gross - 22 1 2 3
Short-term indebtedness, gross - 1 1 1 26
-------- ------ ------ -------- --------
Total indebtedness, gross - 23 2 3 29
======== ====== ====== ======== ========
Long-term indebtedness, net - - - 2 3
Short-term indebtedness, net - - - 2 26
-------- ------ ------ -------- --------
Total indebtedness, net - - - 4 29
======== ====== ====== ======== ========
Stockholders' equity 716 605 542 225 182
======== ====== ====== ======== ========
Net operating revenues 18 504 399 303 271
Cost of products (12) (222) (200) (214) (199)
Other expenses/revenues 1 (9) (10) (21) (13)
Depreciation, amortization and depletion - 45 45 14 73
-------- ------ ------ -------- --------
EBITDA --------------------------------------> 7 318 234 82 132
Depreciation, amortization and depletion - (45) (45) (14) (73)
-------- ------ ------ -------- --------
EBIT --------------------------------------> 7 273 189 68 59
Gain on investments accounted for by the equity method 258 (1) 2 - -
Non-operating result - - 18 (2) -
Net financial result 43 (8) 7 (9) (3)
-------- ------ ------ -------- --------
Income before income tax and social contribution 308 264 216 57 56
Income tax and social contribution (9) (20) (30) (14) (15)
-------- ------ ------ -------- --------
Net income 299 244 186 43 41
======== ====== ====== ======== ========
Property, plant and equipment in operation - 425 394 94 103
Inventories - 19 21 75 60
Accounts receivable - 83 41 29 50
Payable to suppliers and contractors - (42) (10) (19) (13)
Salaries and social charges - (6) (3) (3) (2)
-------- ------ ------ -------- --------
Capital employed -----------------------------> - 479 443 176 198
======== ====== ====== ======== ========
ROCE after taxes - 52.8% 35.9% 30.7% 22.2%
-------- ------ ------ -------- --------
ROE 41.8% 40.3% 34.3% 191.1% 22.5%
-------- ------ ------ -------- --------
CVRD 51
Attachment II (cont'd)
11.2 - Pelletizing Affiliates (Adjusted and Unaudited) In Millions
-----------------------------------------------------------------------------------------------------------------------------------
Dados HISPANOBRAS ITABRASCO KOBRASCO
-----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001
------ ------ ------ ------ ------- ------ ------
Quantity sold - external market MT (thousand) 1,218 1,443 2,247 2,804 2,135 3,682 2,311
Quantity sold - internal market - CVRD MT (thousand) 2,390 2,490 1,040 682 2,049 733 4,541
Quantity sold - internal market - Others MT (thousand) - - - - - - 141
------ ------ ------ ------ ------- ------ ------
Quantity sold - total MT (thousand) 3,608 3,933 3,287 3,486 4,184 4,415 6,993
====== ====== ====== ====== ======= ====== ======
Average sales price - external market US$ 31.44 30.63 31.63 30.99 30.56 29.92 30.20
Average sales price - internal market US$ 31.41 30.53 31.93 31.34 31.32 30.78 29.70
Average sales price - total US$ 31.42 30.56 31.72 30.98 30.93 30.05 29.80
Long-term indebtedness, gross US$ - - - - 129 126 4
Short-term indebtedness, gross US$ - - - - - 1 2
------ ------ ------ ------ ------- ------ ------
Total indebtedness, gross US$ - - - - 129 127 6
====== ====== ====== ====== ======= ====== ======
Long-term indebtedness, net US$ - - - - 129 122 7
Short-term indebtedness, net US$ - - - - - - -
------ ------ ------ ------ ------- ------ ------
Total indebtedness, net US$ - - - - 129 122 7
====== ====== ====== ====== ======= ====== ======
Stockholders' equity R$ 80 68 58 45 14 51 83
====== ====== ====== ====== ======= ====== ======
Net operating revenues R$ 269 224 246 198 307 241 483
Cost of products R$ (223) (186) (203) (171) (238) (189) (423)
Other expenses/revenues R$ (2) (2) (5) (3) (3) (2) (7)
Depreciation, amortization and depletion R$ 10 9 1 2 9 9 16
------ ------ ------ ------ ------- ------ ------
EBITDA ------------------------------------> R$ 54 45 39 26 75 59 69
Depreciation, amortization and depletion R$ (10) (9) (1) (2) (9) (9) (16)
------ ------ ------ ------ ------- ------ ------
EBIT---------------------------------------> R$ 44 36 38 24 66 50 53
Other expenses - non cash R$ - - - - (38) - (45)
Gain on investments accounted for by the equity method R$ - - - - 1 2 -
Non-operating result R$ (10) (7) (2) (5) - - -
Net financial result R$ 2 4 1 4 (67) (44) (7)
------ ------ ------ ------ ------- ------ ------
Income before income tax and social contribution R$ 36 33 37 23 (38) 8 1
Income tax and social contribution R$ (11) (12) (9) (9) - (2) (15)
------ ------ ------ ------ ------- ------ ------
Net income R$ 25 21 28 14 (38) 6 (14)
====== ====== ====== ====== ======= ====== ======
Property, plant and equipment in operation R$ 29 36 10 8 211 217 47
Inventories R$ 21 13 14 9 17 13 54
Accounts receivable R$ 74 54 56 41 37 19 13
Payable to suppliers and contractors R$ (49) (37) (45) (29) (31) (29) (55)
Salaries and social charges R$ - - - - - - -
------ ------ ------ ------ ------- ------ ------
Capital employed--------------------------> R$ 75 66 35 29 234 220 59
====== ====== ====== ====== ======= ====== ======
ROCE after taxes 44.0% 36.4% 82.9% 51.7% 28.2% 21.8% 64.4%
------ ------ ------ ------ ------- ------ ------
ROE 31.3% 30.9% 48.3% 31.1% (271.4%) 11.8% (16.9%)
------ ------ ------ ------ ------- ------ ------
52 CVRD
Attachment II (cont'd)
11.2 - Pelletizing Affiliates (Adjusted and Unaudited) In Millions
-----------------------------------------------------------------------------------------------------------------------------------
Dados NIBRASCO SAMARCO
-----------------------------------------------------------------------------------------------------------------------------------
2000 2001 2000
------ ------ ------
Quantity sold - external market 2,398 11,201 14,622
Quantity sold - internal market - CVRD 6,197 - -
Quantity sold - internal market - Others 169 - -
------ ------ ------
Quantity sold - total 8,764 11,201 14,622
====== ====== ======
Average sales price - external market 29.52 29.70 29.40
Average sales price - internal market 30.36 - -
Average sales price - total 30.13 29.70 29.40
Long-term indebtedness, gross 6 110 146
Short-term indebtedness, gross 2 171 170
------ ------ ------
Total indebtedness, gross 8 281 316
====== ====== ======
Long-term indebtedness, net - 110 146
Short-term indebtedness, net - 167 170
------ ------ ------
Total indebtedness, net - 277 316
====== ====== ======
Stockholders' equity 119 452 464
====== ====== ======
Net operating revenues 478 764 756
Cost of products (404) (353) (403)
Other expenses/revenues (31) (67) (71)
Depreciation, amortization and depletion 17 26 37
------ ------ ------
EBITDA ------------------------------------------> 60 370 319
Depreciation, amortization and depletion (17) (26) (37)
------ ------ ------
EBIT --------------------------------------------> 43 344 282
Other expenses - non cash - (32) (81)
Gain on investments accounted for by the equity method - (2) (14)
Non-operating result - (20) 2
Net financial result 5 (157) (168)
------ ------ ------
Income before income tax and social contribution 48 133 21
Income tax and social contribution (14) (27) (10)
------ ------ ------
Net income 34 106 11
====== ====== ======
Property, plant and equipment in operation 60 832 831
Inventories 18 91 60
Accounts receivable 49 166 185
Payable to suppliers and contractors (60) (14) (23)
Salaries and social charges - (10) (17)
------ ------ ------
Capital employed--------------------------------> 67 1,065 1,036
====== ====== ======
ROCE after taxes 43.3% 29.8% 26.3%
------ ------ ------
ROE 28.6% 23.5% 2.4%
------ ------ ------
52 CVRD
12- OPINION OF INDEPENDENT ACCOUNTANTS
(A free translation of the original opinion in Portuguese expressed on
financial statements prepared in accordance with the accounting
principles prescribed by Brazilian Corporate Law)
March 22, 2002
To the Board of Directors and
Companhia Vale do Rio Doce
1 We have audited the balance sheets of Companhia Vale do Rio Doce as of
December 31, 2001 and 2000 and the corresponding statements of income, of
changes in stockholders' equity and of changes in financial position for the
years then ended, and the consolidated balance sheets of Companhia Vale do Rio
Doce and its subsidiaries and jointly-controlled companies as of December 31,
2001 and 2000 and the corresponding consolidated statements of income and of
changes in financial position for the years then ended. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements. The
audits of the financial statements of certain subsidiaries, jointly-controlled
companies and affiliates mentioned in Note 9.10, accounted for by the equity
method, were carried out by other independent accountants and our opinion in
regard to these investments, amounting to R$ 2,505 million (2000 - R$ 2,956
million) and the earnings therefrom of R$ 316 million (2000 - earnings of R$ 482
million), is based exclusively on the reports of these independent accountants.
2 We conducted our audits in accordance with approved Brazilian auditing
standards, which require that we perform the audit to obtain reasonable
assurance about whether the financial statements are fairly presented in all
material respects. Accordingly, our work included, among other procedures: (a)
planning our audits taking into consideration the significance of balances, the
volume of transactions and the accounting and internal control systems of the
company, (b) examining, on a test basis, evidence and records supporting the
amounts and disclosures in the financial statements and (c) assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.
3 In our opinion, based upon our audits and on the opinions of the other
independent accountants, the financial statements audited by us present fairly,
in all material respects, the financial position of Companhia Vale do Rio Doce
and of Companhia Vale do Rio Doce and its subsidiaries and jointly-controlled
companies as of December 31, 2001 and 2000 and the results of its operations,
the changes in its stockholders' equity and the changes in its financial
position, as well as the consolidated results of operations and the changes in
consolidated financial position, for the years then ended, in conformity with
the accounting principles prescribed by Brazilian Corporate Law.
4 Our audits were conducted for the purpose of forming an opinion on the
financial statements referred to in the first paragraph, taken as a whole. The
statements of cash flows and of value added of Companhia Vale do Rio Doce and
its subsidiaries and jointly - controlled companies and the labor and social
indicators of Companhia Vale do Rio Doce are presented for purposes of
additional information, and are not a required part of the basic financial
statements. This information has been subjected to the auditing procedures
described in the second paragraph and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
PricewaterhouseCoopers
Auditores Independentes
CRC-SP-160-S-RJ
Douglas H. Woods
Partner
Accountant CRC-SP-101.652/O-0-S-RJ
CVRD 53
13- MEMBERS OF THE BOARD OF DIRECTORS, AUDIT COMMITTEE, CHIEF EXECUTIVE OFFICER
AND EXECUTIVE DIRECTORS
BOARD OF DIRECTORS Executive Director of Human Resources and
Luiz Tarquinio Sardinha Ferro Corporate Services
Chairman Carla Grasso
Erik Persson Executive Director of the Iron Ore Area
Armando Santos
Fabio de Oliveira Barbosa Eduardo Marcos de Barros Faria
Director of Commercialization
Francisco Valadares Povoa Jayme Nicolato Correa
Director of Iron Ore for the Northern
System
Joao Moises Oliveira Joaquim Martino Ferreira
Director of Pelletization and Metallurgy
Jose Marques de Lima Jose Francisco Martins Viveiros
Director of Iron Ore for the Southern
System
Octavio Lopes Castello Branco Neto Marconi Tarbes Vianna
Director of Manganese and Alloys
Renato da Cruz Gomes
Executive Director of Logistics Area
Guilherme Rodolfo Laager
Romeu do Nascimento Teixeira
Elias David Nigri
Director of Development and Shareholdings
AUDIT COMMITTEE
Claudia Torres Teixeira
Executive Director of the Shareholdings
Eliseu Martins Area and Businesses Development and Acting
Executive Director of Non-Ferrous Area
Antonio Miguel Marques
Luiz Carlos Angelotti
Antonio Carlos Varela
Marcos Fabio Coutinho Director of Pulp and Paper
Ronaldo Camillo Dalton Nose
Director of Development
CHIEF EXECUTIVE OFFICER Edward Dias da Silva
Roger Agnelli Director of Energy
Director of Legal Affairs Helcio Roberto Martins Guerra
Paulo Francisco de Almeida Lopes Director of Precious Metals
Executive Director of Control and Paulo Eduardo Libanio
Planning and Acting Executive Director of Basic Metals and Industrial
Director of Finance Minerals
Gabriel Stoliar
Otto de Souza Marques Junior
Director of Control of the
Corporate Center
Eduardo de Carvalho Duarte
Tito Botelho Martins Junior Chief Accountant
Director of Finance CRC-RJ 57439
Otto de Souza Marques Junior
Director of Control of the
Corporate Center
54 CVRD