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FORM 6-K/A
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 APRIL 17, 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
--- ---
[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. Amended 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
-------------------------------
Name: Roberto Castello Branco
Title: Head of Investor Relations
Dated: April 17, 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 04/16/02
LOGO Companhia Vale do Rio Doce
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 and Notes
4 Opinion of the Audit Committee
Financial Statements amended at the Comissao
de Valores Mobiliarios - CVM (Brazilian
Securities Commission) on 04/16/02
Gerencia Geral de Controladoria
1
Management Report
MESSAGE TO SHAREHOLDERS
2001 saw intense effort to lay the foundations for transforming Companhia Vale
do Rio Doce into one of the most valuable mining companies in the world. Focus
was on four key areas: business strategy, corporate governance, management
model and organizational structure.
Strategic directives focused on consolidating investments and positioning CVRD
as a global diversified mining company, with associated logistics and power
generation businesses. CVRD's world class assets, capable of producing above
market average returns, its considerable store of knowledge in the mining of
iron ore, manganese, bauxite, gold, potash, kaolin and copper, over the next
few years will allow the Company to exploit growth opportunities with high
potential to create value for shareholders.
The experience acquired over sixty years in the shipment of iron ore, where
efficient logistics are essential to a successful business, together with our
extensive transportation network, combine to add powerful leverage for building
value. The large investments had already been made in the transportation
network, and from now on the focus is to maximize its use and develop the
capacity to offer integrated logistics solutions. The potential demand for such
services in Brazil is considerable. Our great challenge in this area is to
evolve from being operators of a transportation service to becoming providers
of dedicated logistics solutions.
2001 demonstrated the tight balance between electricity supply and demand in
Brazil. At the same time, it served to underline the correctness of the
strategic decision to invest in good hydroelectric power projects to protect
the Company against volatility in electricity prices and supply. Companhia Vale
do Rio Doce, Brazil's largest consumer of electricity, is striving to minimize
its exposure to these risks in such a way as to avoid jeopardizing its ability
to achieve its goals. To that end, we already have two power generation plants
in operation, Igarapava and Porto Estrela, the latter inaugurated last
September, and a further seven under construction.
In all areas of operation, the correct evaluation of opportunities, the
continuous search for lower cost of capital, operational excellence and
customer focus, are key factors for the successful execution of our strategic
plan.
A new corporate governance model has been implemented. Its key characteristics
include clear definition of the roles and responsibilities of the Board of
Directors and the Executive Board in the formulation, approval and
implementation of policies and guidelines concerning the conduct of business.
The Board is now focused on strategic issues, while the Executive Board has
been given the autonomy needed to run the Company's businesses.
By the same token, a new management system is being introduced, focused on the
creation of value. This should be fully operational by the end of this year.
This model, which uses total return to shareholders as its key external
measurement, has profound implications on the operation of the Company. Metrics
of value at all organizational levels are being designed to ensure that all
efforts will be directed to maximizing total shareholder return.
The implementation of this model will introduce a more rigorous analysis of
investment projects, monitoring their performance and that of the business
units; introduce greater transparency in the decision-making process, improve
communication with capital markets and create incentives for value creation.
This last aspect, which involves alignment of compensation policy with
shareholder interests, has important consequences in the development of a
performance-oriented corporate culture.
The organizational structure has been modified to improve focus on the various
businesses and capture existing synergies. The Company is now organized under
seven divisions, headed by highly skilled professionals.
The year 2001 confirmed the correctness of the Company's chosen path of
sustainable and durable growth. The strategic focus, demonstrated by various
acquisitions, divestments and new joint ventures, and the quality of the
Company's assets and human resources, were key factors in producing the record
earnings in 2001 of R$ 3.051 billion, the highest obtained by a private-sector
Brazilian company in the year.
This was achieved without losing sight of the Company's social responsibility -
one of its most cherished values. The commitment to the concept of sustainable
development has led us to invest substantial funds in the rehabilitation and
protection of the environment - some US$ 35 million in 2001. At the same time,
Fundacao Vale do Rio Doce has developed important initiatives in poor
communities, located in areas where the Company operates. These are in the
fields of education, culture and the promoting of citizenship values, with
investment of approximately US$ 20 million during the year.
The successful global offering of common shares belonging to the Federal
Government and the BNDES, probably the largest capital markets transaction of
Latin America in 2002, involved funds of US$ 1.9 billion and is a strong show
of confidence in the Company's future. We welcome our new shareholders - almost
800,000 - who have demonstrated their belief in CVRD's potential.
We thank our shareholders, clients and suppliers for their contribution to our
success, and we give particular thanks to all the employees of the Company who,
through their competence and dedication have made CVRD a company of which we
can all be proud.
2
The future holds great challenges for us, which will only be met and overcome
through hard work and perseverance on the part of all involved in pursuing the
creation of value. This is clearly the way forward for CVRD.
Roger Agnelli
Chief Executive Officer
3
SOCIAL CORPORATE RESPONSIBILITY
ACTION IN THE COMMUNITIES - BUILDING CITIZENSHIP
The Vale do Rio Doce Foundation - (FVRD), an instrument of social action of
CVRD - (Companhia Vale do Rio Doce), promotes the development of communities
under the influence of the company operations, through actions in the fields of
education, social development and culture. In 2001, CVRD invested R$ 20 million
in social programs that brought benefits to thousands of citizens.
Education - A major tool in a globalized world and increasingly competitive,
education is the main target of FVRD. Its initiatives for the improvement of
education are far-reaching and innovative. The Escola que Vale program has been
beneficial for more than 15 thousand students and teachers of 33 schools in the
states of Para, Maranhao, Minas Gerais and Espirito Santo. The Educacao nos
Trilhos project improves the lives of 600 thousand users of Carajas Railway
(EFC) every year. In 2001, the second phase of the program, named Teletrem, was
launched, a train where educational programs produced by Futura Channel are
exhibited. FVRD also supports the Alfabetizacao Solidaria program.
Social Development - FVRD promotes actions that contribute for the reduction of
the social exclusion process, stimulating youth to attend school. In 2001, FVRD
entered into a partnership with the Information Technology Democratization
Commission - (CDI) and donated computers. Vale Informatica/CDI will act, until
December 2002, in 300 Schools of Information Technology and Citizenship,
bringing benefits to approximately 51 thousand people in seven states.
Culture - In 2001, The Vale do Rio Doce Museum hosted many important national
and international exhibits and received more than 60 thousand visitors. The
Vale Memoria program released its Database where testimonies, pictures and
documents that tell the history of CVRD are stored. Vale Memoria was granted
the Aberje Award in the category of Corporate Heritage.
HUMAN RESOURCES - GENERATING OPPORTUNITIES
Citizenship respect and human being valorization are major issues for CVRD, a
company that invests in the quality of life and formation of its employees. Its
growth is a result of planned investments, mainly in high technology, research
and development. By the end of 2000, CVRD had 11,442 employees. The acquisition
of new companies made this figure increase to 13,629 in December 2001.
Including the controlled companies, the CVRD Group employs 21,602 people.
Professional Development - CVRD growth is directly related to the professional
development of its employees and the company offers opportunities for
professional growth to all of them. In 2001, the budget destined to the Human
Resources Development programs was of R$ 6.7 million. CVRD has capacity
building programs for high school and college graduates, besides student
internships. Training for higher education and managerial level employees is
also provided, such as MBA and post-graduation, leadership building, foreign
languages learning and in-company consultant formation.
Relationship with Employees - Besides modern practices of Human
Resources regarding remuneration, benefits, management and development, CVRD
invests in the achievement of a harmonious organizational environment. CVRD
practices the Organizational Environment Management, performing a research to
monitor the company-employee relationship every two years.
CVRD ENVIRONMENTAL QUALITY - ENSURING THE FUTURE
CVRD Environmental Policy expresses the company's commitment with environmental
quality. Legal conformity is the minimum threshold for the operational units,
which still comply with CVRD technical rules and internal standards, with
preventive and proactive approaches. In 2001, the expenditures on environment
amounted to R$ 92,157,000.00.
CVRD is aware of the great influence that environmental issues have on the
market, leading shareholders, investors and consumers to give preference to
environmentally responsible companies, not only due to the ecological awareness
growth, but also for the effects that a bad management of environmental issues
may have on the financial and commercial performance. Since the 70's, CVRD has
been investing in environmental quality and, even though expenditures on
environmental activities were not specified in the accounting structures at
that time, records show that US$ 236 million were applied until 1989.
Environmental Programs - In 1994, CVRD implemented its Environmental Audit
Program, pioneer in Brazil, with a complete environmental diagnosis of its
operations. As a result, it created the First CVRD Environmental Program
1994-2000, involving more than seventy projects, with an investment of
approximately US$ 110 million. At the same time, CVRD accomplished an effective
insertion of environmental aspects into others managerial issues, implementing
its Environmental Quality Management System - SGQA, based on the specifications
of Standard ISO 14001. The two first ISO 14001 Certificates obtained by CVRD
were unprecedented, at a worldwide level, in its fields of activity: the
Mineral Development Center, in the state of Minas Gerais and the Carajas Iron
and Manganese Mines.
CVRD Environmental Quality Management System and the periodical corporate
audits provide up-to-date and objective information on the operational units
environmental performance, avoiding situations that affect its value and act
preventively in the processes of acquisition of new assets, performing
investigations to evaluate their environmental risks.
Environmental Quality of Operations - The initiatives for improvement of the
environmental quality of the operational activities involve all CVRD areas. The
most important actions performed until 12/31/2001, grouped into categories are:
Air Quality, Air Pollution Control in the city of Itabira, Air Pollution
Control in the city of Tubarao, Water and Effluents, Barriers and Barren
Deposits, Solid Waste Management, Rehabilitation of Areas Degraded by Mining
Activities and Forest Areas in Industrial Areas and the Vale do Rio Doce
Natural Reserve.
CVRD environmental management provides its shareholders with consistent and
perennial results, and its clients with products and services of an improved
environmental quality, and its employees and service providers with an
increased awareness of the importance of environmental protection.
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MANAGEMENT REPORT
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The year 2001 can be considered a watershed in the history of Companhia Vale do
Rio Doce (CVRD), not only because of the quality of its financial and
operational results, but more importantly because of the initiatives that will
have a major influence on the Company's future, taken with a view to
transforming CVRD into one of the most valuable mining companies in the world.
Strategic Guidelines, Corporate Governance and Management Model
o A clear definition has been made of the Company's business strategy. CVRD
is a diversified mining company with a global focus, with associated
logistics and electricity generation businesses. It has strategic
resources, world-class assets, core expertise and the organic growth
opportunities needed to satisfy shareholders' value aspirations;
o A corporate governance model has been defined, based on the clear
establishment of the roles and responsibilities of the Board of Directors
and the Executive Board, and transparency in the decision making process;
o A new management model has been defined, focused on shareholder value
creation;
o A new organizational structure has been created, aimed at increasing focus
on the various businesses and capturing the synergies between them;
o Development of value metrics to support the decision-making process and a
new compensation plan with incentives aligned with shareholders
objectives;
o An internal and external communications policy has been developed,
emphasizing transparency for the monitoring of performance and the
fulfillment of targets for each project and business unit.
Strategic Moves
o Sale of non-core assets - Acominas, CSN, Bahia Sul, Cenibra, Rio Doce
Pasha and ships of Docenave - for US$ 1.3 billion;
o CVRD has consolidated its leadership in the global iron ore market, with
the acquisitions of Socoimex, Samitri, Samarco, GIIC, Ferteco and Caemi,
representing total investment of US$ 1.7 billion;
o Full control of the Sossego project has been purchased for US$ 42.5
million. Substantial cost savings have turned Sossego into one of the
lowest capex cost per ton copper projects in the world. The project is
expected to come on stream in mid 2004;
o A Memorandum of Understanding has been signed with Codelco, the world's
largest copper producer, with the aim of forming a joint venture to
explore copper prospecting and mining opportunities.
Financial and Operational Performance in 2001
Despite the difficulties represented by the global recession and the various
shocks suffered by the Brazilian economy, previous records were exceeded for
sales of iron ore and pellets, the transportation of railroad cargo, earnings,
dividend distribution and cash generation.
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CONSOLIDATED GROSS REVENUE BREAKDOWN BY PRODUCT - 2001
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[REPRESENTATION OF CHART]
RS$ 11.015 billion
Minerio de Ferro ............. 37.7
Pelotas....................... 16.1
Logistica .................... 13.5
AlumInio ..................... 10.1
Aco .......................... 10.4
Minerais Industriais ......... 2.3
Ouro ......................... 3
Outros ....................... 1.2
Manganes e Ferro-ligas ....... 5.7
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Exports: US$3.297 billion
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o Consolidated sales of iron ore and pellets amounted to 143.6 million tons,
beating the previous record set in 2000 of 118 million tons by 21.7%.
Important contracts were signed during the year for the sale of iron ore
and pellets with Baosteel, China's largest steelmaker and Acesita, the
largest producer of stainless steel in Latin America, a subsidiary of
Arcelor, the largest steelmaker in the world.;
o Cargo transported by the Carajas (EFC) and Vitoria a Minas (EFVM)
Railroads amounted to 167.4 million tons, compared to the previous record
set in 2000 of 164 million tons. The transportation of general cargo
(products other than iron ore or pellets) by EFC and EFVM totaled 12.9
billion net ton kilometers (ntk), 4% up on the record in the previous year
of 12.4 billion ntk;
o Consolidated gross revenue was R$ 11.015 billion, an increase of 21.7% over
2000 (R$ 9.048 billion);
o The Company's consolidated exports amounted to US$ 3.297 billion in 2001,
compared to US$ 3.016 billion in 2000. Net exports - exports minus imports
- amounted to US$ 2.883 billion. CVRD was the company that contributed
most to Brazil's trade surplus in 2001;
o CVRD registered record net earnings for the fifth consecutive year in 2001
with a net profit of R$ 3.051 billion. This result was 43% higher than the
previous year's figure of R$ 2.133 billion. Between 1997 and 2001, CVRD's
net earnings have grown at an average annual rate of 41.7%;
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Net Earnings
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[REPRESENTATION OF CHART]
R$ million
1997 756
1998 1029
1999 1251
2000 2133
2001 3051
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o Return on shareholders' equity was 25.9%, compared to 20.2% in 2000;
o Profit distribution in 2000, in the form of interest on shareholders'
equity, was a record R$ 1.774 billion, the equivalent of R$ 4.61 per
share;
o Between January 1997 and December 2001, the total return to CVRD
shareholders, including dividends and capital gains, was 11.8% p.a., based
on values expressed in US$;
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Dividends per Share
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R$
1997 1.34
1998 1.9
1999 2.28
2000 3.33
2001 4.61
Profit distribution in the form of interest on shareholders' equity
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o Consolidated cash generation, as measured by EBITDA (earnings before
interest, taxes, depreciation and amortization) amounted to R$ 5.128
billion, up 35.4%. The high EBITDA/sales ratio in 2001 of 48.5% reveals
the Company's ability to convert revenue into operating profit;
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CONSOLIDATED EBITDA BREAKDOWN - 2001
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R$5.128 billion
Ferrosos 74
Nao Ferrosos 4
Logistica 7
Aluminio 10
Siderurgia 5
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o The ferrous minerals area (iron ore, pellets, manganese and ferro-alloys)
was responsible for 74% of cash flow generated, the area of aluminum for
10%, logistics 7%, steel 5% and non-ferrous minerals (gold, potash and
kaolin) 4%.
The quality of the Company's assets and the acquisitions and divestments made
were all extremely important in obtaining these results. The devaluation of the
Brazilian real against the US dollars helped to improve both margins and cash
flow, bearing in mind that more than 80% of revenues are denominated or indexed
in US dollars, while more than 70% of costs are in Brazilian reais.
Nevertheless, the exchange rate variation resulted in a negative effect on net
profit in the short-term, due to the impact on foreign currency denominated net
liabilities (net debt less foreign assets). Over time, this impact is more than
compensated for by the positive effect of cash flow.
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FINANCIAL INDICATORS 1999 2000 2001
Consolidated - R$ billion
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Gross Revenue 7.162 9.048 11.015
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Exports (US$ billion) 2.271 3.016 3.297
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Net Earnings 1.251 2.133 3.051
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Net Earnings Per Share (R$) 3.25 5.54 7.95
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Distribution of Profits * 0.878 1.282 1.774
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EBITDA 3.214 3.788 5.128
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EBITDA Margin (%) 46.1 43.1 48.5
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Return on Equity (%) 11.9 20.2 25.9
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* In the form of interest on shareholders' equity.
Investments
CVRD invested US$ 1.537 billion in 2001, 88.5% of capital expenditure being
allocated to mining. Over the last five years, the Company has carried out
capital expenditure of US$ 4.416 billion, generating jobs and income in Brazil
and launching new platforms for growth and the creation of value.
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Investments
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[REPRESENTATION OF GRAPHIC]
1997 468
1998 466
1999 343
2000 1602
2001 1537
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Total 4416
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Recognition
CVRD won the following awards for recognition for its standards of excellence,
such as:
o Chosen by Global Finance magazine as "Best Mining Company in Latin
America";
o Chosen by Euromoney as "Best Corporate Borrower in Latin America";
o Chosen by the magazine Brasil Mineral as "Mineral Sector Company of the
Year";
o Awarded the ANIMEC (National Association of Capital Market Investors) seal
of quality for good shareholder relations.
Subsequent Events
Investments
In March 2002, the Sao Luis pelletizing plant was inaugurated, in the state of
Maranhao. This plant, the most modern in the world in terms of automation,
energy consumption efficiency and protection of the environment, has a
production capacity of six million tons of pellets a year. This investment is
consistent with the long term growth trend in global
demand for pellets, consolidating CVRD's leadership in the sector and providing
an additional source of export growth in Brazil.
Confidence of Capital Markets
In March 2002, CVRD was involved in two important transactions in the world's
capital markets:
o The Company issued US$ 300 million worth of bonds, with a term of five
years. This issue received Moody's risk classification Baa2. According to
Moody's classification scale, Baa2 corresponds to an investment grade and
is five notches above Brazilian sovereign debt rating. The spread over the
US Treasury Bonds, with a similar maturity date, was 455 basis points, the
lowest for recent issues by Brazilian companies with the same maturity,
since the Russian moratorium in August 1998;
o The third and final stage of the Company's privatization was successfully
completed with the global offering of 78,787,838 common shares held by the
National Treasury and the BNDES (National Economic Development Bank). The
offer was oversubscribed more than three times, the shares being placed
with institutional investors in 17 countries: Brazil, U.S., Canada, U.K.,
Ireland, Germany, Denmark, Spain, France, Holland, Italy, Kuwait,
Luxembourg, Sweden, Switzerland, Australia and China (Hong Kong) - and
792,443 individual shareholders in Brazil. 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.
The success of these transactions demonstrates the strong confidence that
Brazilian and foreign investors have in CVRD's future. The soundness of the
Company's balance sheet and strong cash generation ensures credibility in the
international debt market. A well defined long term strategy, good corporate
governance, operational excellence, unquestioned leadership in the global iron
ore market, and significant growth opportunities in ferrous minerals, copper,
bauxite, alumina and logistics services, were all important factors in
attracting the large and diverse contingent of new shareholders.
Recognition
o Research carried out in February 2002 by the investment bank CLSA among
international investors on the quality of corporate governance, classified
CVRD as among the top twenty best companies in emerging markets (Africa,
Asia, Latin America, and Eastern Europe).
CONTENTS
Part I Page
1- Management's Discussion and Analysis of the Operating
Results for Year Ended December 31, 2001 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 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 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 on December 31, 2001 and 2000 20
9.1- Operations 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 34
9.17- Capital 36
9.18- American Depositary Receipts (ADR) Program 37
9.19- Treasury Stock 37
9.20- Reserves 37
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 on the Statements if Adopted the Monetary
Restatement (unaudited) 43
9.27- Segment and Geographic Information 45
9.28- Insurance 49
9.29- Profit Sharing Plan 49
9.30- Concessions and Leases 49
9.31- Subsequent Events 50
9.32- Shareholding Interests Organizational Chart on 12/31/01 51
Part III
10- Attachment I - Statement of investments in subsidiaries and
jointly controlled companies 52
11- Attachment II - Accounting Information
11.1- Aluminum Area (Adjusted) 53
11.2- Pelletizing Affiliates (Adjusted) 54
12- Opinion of Independent Accountants 55
13- Members of the Board of Directors, Audit Committee,
Chief Executive Officer and Executive Directors 56
2 CVRD
Part I
Expressed in millions
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) 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 six 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 mines in operation.
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. 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% 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% 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% 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 and/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)% Currencies/Indexes Parity
----------------------------------------------------------- ------------------------
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 2.3204 131.3
2000 9.3 (2.2) (5.4) 10.0 10.8 1.9554 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 and 63% of the
consolidated revenue 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% of the 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., for US$ 320. In September 2001, CVRD concluded the sale
of its stake in Celulose Nipo-Brasileira S.A. to Japan Brazil Paper and
Pulp Resources Development Co. for US$ 670.5. The Company continues to
explore the divestitures in 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.
Logistics - the process of divesting the dry bulk cargo shipping assets
has 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$53. This transaction was concluded in February 2002. Finally, the
Company sold one bulk carrier of the subsidiary Seamar.
The divestitures already concluded on December 31, 2001, which include
Bahia Sul and Cenibra (pulp and paper) and Acominas and CSN (steel)
generated an equity result of R$ 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, CVRD
main shareholder, 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 CVRD 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 partner should CSN decide to form a
pelletizing joint venture with a third party with iron ore
produced by the mine.
In return, CVRD has granted CSN a right of first refusal to participate
with CVRD in the construction of any new steel producing facilities
that CVRD undertakes 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,
CVRD 5
Baosteel paid R$ 52 for its 50% stake in Baovale. In exchange for
monthly remuneration, Baovale 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% (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 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% (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
============== ===============
[GRAPHIC OMITTED -- PIE CHART]
(*) 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, 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;
o 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 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% (US$ 29.70 in 2001 against US$ 29.40 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.
.. FERTECO - A negative equity result of R$ 55 due to the recording of
exchange rate variation on loans indexed in dollars contracted for the
acquisition of Ferteco, offset partly by a positive R$ 52 equity result in
own operations.
(b) Manganese and Ferro-alloys
.. RDME - A improved equity result of R$ 6 (a gain 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.
CVRD 9
.. 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 of R$ 52 in 2000) mostly due to the effect of 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.
(b) Pulp and paper
.. CELMAR - Recording in 2001 of a negative equity result of R$ 56 and a R$
59 provision for losses.
(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 to 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 Expenses
The operating expenses increased R$ 275 (R$ 1,029 in 2000 against R$ 1,034 in
2001), mainly due to the provision for losses on realization of credits of ICMS
of R$ 142, increase in iron ore and pellet sales commission of R$ 45 derived
from increase of operating revenues and increase of administrative expenses -
personnel - of R$ 27, due to was an absortion of corporative operating
activities (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), 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
1.3.1- Consolidated Gross Revenue
[GRAPHIC OMITTED -- PIE CHART]
CVRD 11
[GRAPHIC OMITTED -- PIE CHART]
Consolidated gross revenue grew 21.7% 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 13% 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
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 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 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 prepared in accordance with the requirements of Brazilian Corporate
Law)
3- STATEMENT OF INCOME
Year 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) (2,985) (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) (5,545) (4,905)
-------- -------- -------- --------
Gross profit 3,124 2,449 5,029 3,877
Gross margin 48.9% 49.2% 47.6% 44.1%
Operating expenses
Selling (118) (77) (246) (156)
Administrative (338) (222) (622) (458)
Research and development (101) (87) (101) (89)
Other operating expenses, net (747) (643) (1,040) (688)
-------- -------- -------- --------
(1,304) (1,029) (2,009) (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) (1,739) (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 (in thousands) 383,844 384,892
======== ========
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
statements 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
------- --------- -------- -------- -------- -------- -------
On 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) -
--------- -------- -------- -------- -------- -------
On 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 year - - - - 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) -
--------- -------- -------- -------- -------- -------
On 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
statements 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 Consolidated
------------------ -----------------
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 liabilities 522 173 1,036 335
Provision for losses - ICMS 142 - 142 -
Sale of investments 802 - 2,274 -
Loss on disposal of property, plant and equipment 39 65 1,139 674
Others 159 184 240 252
-------- -------- -------- -------
Total funds from operations 3,559 2,168 7,458 3,974
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
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 are as follows:
Initial working capital of investments consolidated from 2000 - - 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 Consolidated
------------------ -----------------
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 liabilities 838 305 1,544 529
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 -
CVRD 17
(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 Consolidated
------------------------------ ------------------------------
2001 % 2000 % 2001 % 2000 %
-------- ---- -------- ---- -------- ---- -------- ----
Generation of Value Added
Sales 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) (17)
Materials (410) (6) (378) (7) (735) (7) (730) (8)
Fuel oil and gas (328) (5) (256) (5) (612) (5) (547) (6)
Research and development, commercial and administrative (251) (4) (181) (3) (681) (6) (383) (4)
Other operating expenses (753) (11) (649) (13) (1,445) (13) (864) (10)
-------- -------- -------- --------
Gross Value Added 3,267 50 2,505 48 5,569 51 4,621 51
Depreciation and depletion (494) (8) (284) (5) (853) (8) (574) (6)
-------- -------- -------- --------
Net Value Added 2,773 42 2,221 43 4,716 43 4,047 45
Received from third parties
Financial revenue 508 8 326 6 574 5 732 8
Result of investment participations 37 - 715 14 (299) (3) 152 2
Discontinued operations 1,770 27 184 4 1,770 16 184 2
Pension plan actuarial deficit (*) (22) - (312) (6) (22) - (312) (4)
-------- -------- -------- --------
Total Value Added 5,066 77 3,134 61 6,739 61 4,803 53
======== ======== ======== ========
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 -- BAR CHART]
18 CVRD
(A free translation of the original in Portuguese relating to the financial
statements prepared in accordance with the requirements of Brazilian Corporate
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 4 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 3 41 13 3 51 8 2 48 8 2
Health 24 6 1 23 8 2 38 6 1 39 7 2
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 11 2 55 10 2
------ ------- --------- ------ ------- --------- ------ ------- --------- ------ ------- ---------
Total - Labor indicators 384 102 21 320 105 23 550 88 18 505 88 20
====== ======= ========= ====== ======= ========= ====== ======= ========= ====== ======= =========
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
actions 20 1 - 22 2 - 126 4 1 29 1 -
Indigenous
communities 7 - - 3 - - 7 - - 3 - -
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
(*) 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.
Amounts relate to the percentage of participation of Parent Company's
shareholdings.
CVRD 19
9- Notes to the Financial Statements on December 31, 2001 and 2000
Expressed in millions
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 statements show the balances of assets and
liabilities on December 31, 2001 and 2000 and the operations of the Parent
Company, its direct and indirect subsidiaries and its jointly controlled
companies;
(b) All significant intercompany balances and the Parent Company's investments
in its direct and indirect 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 companies in which the control is shared
with other stockholders, the components of 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 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;
(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 based on the
relation obtained between production and estimated
20 CVRD
capacity. 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;
(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 reflect management's
proposal for 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 related to CDI (*) 292 1,323 292 1,323
Marketable securities time deposit / overnight - - 1,536 341
Fixed-yield bond investments (funds) 163 128 563 602
Government securities (NBC-E, NTN-D, LFT) 189 117 200 150
Others 1 1 217 226
-------- ------- --------- -------
645 1,569 2,808 2,642
======== ======= ========= =======
(*) For part of these investments the Company, contracted swap operations with
financial institutions, 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 International Finance Ltd. 675 98 1,153 1,241
Itabira Rio Doce Company Limited - ITACO 398 882 235 36
Mineracao 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
ALUNORTE - Alumina do Norte do Brasil S.A. 741 649 176 86
Ferrovia Centro-Atlantica S.A. 177 185 4 34
Salobo Metais S.A. 164 148 - -
Companhia Coreano-Brasileira de Pelotizacao
- KOBSCO 80 66 58 15
Companhia Hispano-Brasileira de Pelotizacao
- HISNOBRAS 48 41 65 45
Companhia Nipo-Brasileira de Pelotizacao
- NIBRAS 46 57 11 75
Companhia Italo-Brasileira de Pelotizacao
- ITABRCO 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 1,241 224 228
Short-term financial balances 1,011 200 716 421
Long-term financial balances 1,356 1,159 2,053 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
------- --------- -------- --------
ALUNORTE - Alumina do Norte do Brasil S.A. 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 Otalo-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
------ -------- -------- -------
199 145 789 705
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 assets Deferred 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:
9.10- Investments
2001 2000
-------- --------
Income before income tax and social contribution 2,694 1,984
(-) Equity in results of subsidiaries and affiliated companies (708) (799)
(-) Result from discontinued operations, except for gain on sale of Bahia Sul (1,540) (184)
(-) 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
Partici- Adjusted net income
pation stockholders' (loss) for
% equity the year
-------- ------------ ----------
Subsidiaries
CELMAR S.A. - Industria de Celulose e Papel (c) 85.00 (70) (135)
Florestas Rio Doce S.A. (c) 99.85 91 10
Itabira Internacional Servicos e Comercio Lda. (a, h) 99.99 759 242
Navegacao Vale do Rio Doce S.A. - DOCENAVE (c) 100.00 351 (44)
Rio Doce Europa Servicos e Comercio - RDE (a, i) 99.80 2,222 133
S.A. Mineracao da Trindade - SAMITRI (d, k) 100.00 - 1
SIBRA Eletrosiderurgica Brasileira S.A. (c, d, e) 98.16 210 69
Vale do Rio Doce Aluminio S.A. - ALUVALE (c, f, j) 94.74 827 146
Ferteco Mineracao S.A. (d, o) 100.00 186 (60)
Others (c, n)
Jointly controlled companies
Bahia Sul Celulose S.A. (c, q) - - -
Celulose Nipo-Brasileira S.A. - CENIBRA (c, m) - - -
Companhia Coreano-Brasileira de Pelotizacao - KOBRASCO (b, c) 50.00 14 (38)
Companhia Hispano-Brasileira de Pelotizacao - HISPANOBRAS (b, c) 50.89 80 25
Companhia Italo-Brasileira de Pelotizacao - ITABRASCO (b, c) 50.90 58 28
Companhia Nipo-Brasileira de Pelotizacao - NIBRASCO (b, c) 51.00 83 (14)
Companhia Siderurgica de Tubarao - CST (b, d, e) 22.85 2,857 62
Companhia Siderurgica Nacional - CSN (c, l) - - -
Minas da Serra Geral S.A. - MSG (b, c) 51.00 51 12
Samarco Mineracao S.A. (b) 50.00 452 106
Others (b, c)
Affiliated companies
Ferroban - Ferrovias Bandeirantes S.A. (c) 18.74 21 (110)
Fertilizantes Fosfatados S.A. - FOSFERTIL (e) 10.96 512 124
Usinas Siderurgicas de Minas Gerais S.A. - USIMINAS (d, e) 11.46 3,619 5
Investments at cost
Provision for losses
CELMAR S.A. - Industria de Celulose e Papel (c)
Companhia Ferroviaria do Nordeste (c)
DOCEPAR S.A. (c)
Ferrovia Centro-Atlantica S.A. (c, g)
Para Pigmentos S.A
Others
Amortization of goodwill
Others
Total
Result of investment
Investments participations
--------------------------------------------
2001 2000 2001 2000
-------- -------- -------- --------
Subsidiaries
CELMAR S.A. - Industria de Celulose e Papel (c) - 56 (56) -
Florestas Rio Doce S.A. (c) 91 112 10 (3)
Itabira Internacional Servicos e Comercio Lda. (a, h) 759 517 242 173
Navegacao Vale do Rio Doce S.A. - DOCENAVE (c) 351 395 (44) 16
Rio Doce Europa Servicos e Comercio - RDE (a, i) 2,218 614 202 147
S.A. Mineracao da Trindade - SAMITRI (d, k) 792 1,327 1 9
SIBRA Eletrosiderurgica Brasileira S.A. (c, d, e) 509 518 71 -
Vale do Rio Doce Aluminio S.A. - ALUVALE (c, f, j) 783 678 138 283
Ferteco Mineracao S.A. (d, o) 1,214 - (60) -
Others (c, n) 318 469 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) 7 26 (19) 3
Companhia Hispano-Brasileira de Pelotizacao - HISPANOBRAS (b, c) 41 35 13 11
Companhia Italo-Brasileira de Pelotizacao - ITABRASCO (b, c) 30 23 14 7
Companhia Nipo-Brasileira de Pelotizacao - NIBRASCO (b, c) 42 61 (7) 18
Companhia Siderurgica de Tubarao - CST (b, d, e) 504 505 14 52
Companhia Siderurgica Nacional - CSN (c, l) - 432 108 58
Minas da Serra Geral S.A. - MSG (b, c) 26 30 6 7
Samarco Mineracao S.A. (b) 226 - 59 -
Others (b, c) 96 56 3 1
-------- -------- -------- --------
972 1,886 191 157
-------- -------- -------- --------
Affiliated companies
Ferroban - Ferrovias Bandeirantes S.A. (c) 4 24 (21) (9)
Fertilizantes Fosfatados S.A. - FOSFERTIL (e) 56 49 14 10
Usinas Siderurgicas de Minas Gerais S.A. - USIMINAS (d, e) 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
======== ======== ======== ========
(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 ITACO) 517 -
Ferteco Mineracao S.A. (indirectly through Zagaia) 1,028 -
Para Pigmentos S.A - 83
S.A. Mineracao da Trindade - SAMITRI (merged on October 1, 2001) 792 809
Mineracao SOCOIMEX S.A. (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 Nacional - CSN - (46)
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 Brasileira S.A. (c, e) (81) (5)
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 Value Market 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:
Result of investment
Partici- Adjusted Investments participations
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 S.A.;
26 CVRD
(h) Indirect holdings through Itabira Internacional Servicos e Comercio Lda.:
Result of investment
Investments participations
--------------------------------------------
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 - ITACO (a) - - 35 72
Other participations (a) - 27 6 10
Itabira Internacional Servicos e Comercio Lda. (a) 759 (116) 100 -
-------- -------- -------- --------
759 517 242 173
======== ======== ======== ========
In July 2001, Itabira Rio Doce Company Limited - ITACO 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:
Result of investment
Partici- Adjusted Investments participations
pation stockholders' --------------------------------------------
% equity 2001 2000 2001 2000
-------- ------------ -------- -------- -------- --------
Caemi Mineracao e Metalurgia S.A. (a, d, p) 16.82 911 670 - - -
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) (252) 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%, 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 one 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 S.A. Mineracao da Trindade - 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
March 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 investment
participants".
(m) In September 2001, CVRD concluded the sale of Celulose Nipo-Brasileira
S.A. - CENIBRA to the Japan Brazil Paper and Pulp Resources Development
Co., 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 April 2001, the CVRD through its wholly-owned subsidiary Zagaia
Participacoes S.A. acquired from Thyssen Krupp Stahl AG (TKS) 100% of the
total capital Ferteco Mineracao S.A. for approximately R$ 1,167;
(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 2000
---------------------------------- -------- ---------------------------------- --------
Accumulated Accumulated
Cost depreciation Net Net Cost depreciation 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 5,735 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 6,649 23,771 (10,980) 12,791 12,582
======== ======== ======== ======== ======== ======== ======== ========
(b) By classification of asset:
Parent Company Consolidated
--------------------------------------------- ---------------------------------------------
2001 2000 2001 2000
---------------------------------- -------- ---------------------------------- --------
Accumulated Accumulated
Cost depreciation Net Net Cost depreciation 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 5,783 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 6,649 23,771 (10,980) 12,791 12,582
======== ======== ======== ======== ======== ======== ======== ========
(*) 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.
CVRD 29
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
------ ------ ------ ------
Trade finance 927 576 1,713 1,242
Working capital - - 32 31
------ ------ ------ ------
927 576 1,745 1,273
====== ====== ====== ======
The average annual interest rates on short-term loans and financing in 2001 and
2000 were, respectively, 4.96% and 6.93%.
Long-term
Parent Company Consolidated
------------------------------------------ ------------------------------------------
Current liabilities Long-term liabilities Current liabilities Long-term 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
(a) Foreign currency loans and financing were converted into reais at exchange
rates effective on the financial statements date, with US$ 1.00 equal to
R$ 2.3204 on 12/31/01 (R$ 1.9554 on 12/31/00) and (Y) 1.00 equal to R$
0.017707 on 12/31/01 (R$ 0.017082 on 12/31/00);
30 CVRD
(b) Certain loans and financing have specific guarantees. Concerning to the
balance payable on 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 1,346
-------------- --------------
3,326 6,765
============== ==============
(d) Long-term external and domestic loans and financing were subject to annual
interest rates on 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% 120 405
-------------- --------------
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;
(f) The Company's loans and financing, by currencies/index in:
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIALS.]
2001
Basket of currencies 2%
Yen 2%
Others 1%
Dollar 95%
R$ 4,640
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIALS.]
2000
Basket of currencies 2%
Others 3%
Dollar 95%
R$ 3,568
(g) Consolidated loans and financing, broken down by currencies/index in:
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIALS.]
2001
TJLP 3%
IGP-M 2%
Basket of currencies 2%
Yen 3%
Dollar 90%
R$ 9,573
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIALS.]
2000
TJLP 5%
IGP-M 3%
Basket of currencies 2%
Yen 3%
Others 2%
Dollar 85%
R$ 7,903
CVRD 31
9.13 - Securitization Program
On September 29, 2000, CVRD 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 major 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:
Judicial deposits Provisions for contingencies
--------------------------- ---------------------------
2001 2000 2001 2000
------------ ------------ ------------ ------------
Tax contingencies 284 90 308 132
Labor claims 109 111 300 214
Civil claims 4 2 273 239
Marketable securities 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.
32 CVRD
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 9,718/98.
Labor-related actions principally comprise employee claims 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.
Marketable securities are related to guarantees of civil claims.
(b) Guarantees given to 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
Companhia Coreano-Brasileira de Pelotizacao - KOBRASCO 93 78
Ferrovia Centro-Atlantica S.A 271 83
Salobo Metais S.A 165 141
Sepetiba Tecon S.A 59 7
Others 5 18
-------- --------
1,603 1,459
======== ========
The breakdown of guarantees by currency is:
2001 2000
-------- --------
U.S. Dollar 1,118 1,104
Real 485 355
-------- --------
1,603 1,459
======== ========
(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:
CVRD 33
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, four years after the
Other areas owned as of May 1997 Other minerals beginning of commercial production.
Sale of mineral rights owned
All areas as of May 1997 1% of the sales price.
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.
(d) 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 ISO 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).
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 others 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
34 CVRD
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 ten "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)
==========
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
==========
CVRD 35
Actuarial premises adopted in calculation
Discount rate of contract obligation 6% p.a.
Expected return rate on assets 6% p.a.
Estimated salary increase index 1.82% p.a. until 47 years
Estimated benefits increase index 0% p.a. since 48 years old
Inflation rate 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, on 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.
On 12/31/01 the Company's capital is comprised as follows:
Number of shares
--------------------------------------------------------------------
Stockholders Commom % Preferred % Total %
------------------------------------------------- ----------- ----- ----------- ----- ----------- -----
Valepar S.A 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
=========== ===== =========== ===== =========== =====
36 CVRD
(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, sold on 03/21/02 78,787,838 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
6,404/76 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
Class Quantity Unit acquisition cost quoted 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.
9.20- Reserves
On 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
========= =========
CVRD 37
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 8,200. 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 "reserves 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. 6,404/76), 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 billion 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.
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".
38 CVRD
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 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.
CVRD 39
The table below provides information regarding the interest rate derivatives
portfolio for 2001 and 2000.
2001
----------------------------------------------------------
Unrealized gain
Notional value (loss) Final
Type (in US$ million) Rate range (in R$ million) maturity
---- ---------------- --------------------- --------------- --------
Cap 1,375 5.0 - 8.0% 6 Dec/04
Floor 1,000 5.0 - 6.5% (66) Dec/04
Swap 125 5.5 - 7.5% (23) Oct/07
--------------
Total (83)
==============
2000
----------------------------------------------------------
Unrealized gain
Notional value (loss)
Type (in US$ million) Rate range (in R$ million)
---- ---------------- --------------------- ---------------
Cap 1,200 5.0 - 8.0% 6
Floor 850 5.0 - 6.5% (13)
Swap 125 5.5 - 7.5% (8)
-------------
Total (15)
=============
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 of 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) Final
Type (in US$ million) Rate range (in R$ million) maturity
---- ---------------- --------------------- --------------- --------
Yen purchased 5 (Y) 70 - 110 per US$ (4) Apr/05
Euros purchased 8 E 1.10 - 1.30 per US$ (5) Apr/05
Euros sold 12 E 0.90 - 1.20 per US$ (2) Mar/02
--------------
Total (11)
==============
2000
----------------------------------------------------------
Unrealized gain
Notional value (loss)
Type (in US$ million) Rate range (in R$ million)
---- ---------------- --------------------- ---------------
Yen purchased 15 (Y) 70 - 110 per US$ (3)
Euros purchased 12 E 1.10 - 1.30 per US$ (4)
Euros sold 3 E 0.90 - 1.20 per US$ -
-------------
Total (7)
=============
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.
2001 2000
----------------------------------------- -----------------------------------------
Price Unrealized gain Price Unrealized gain
Quantity range (loss) Final Quantity range (loss)
Type (oz) US$/oz (in R$ million) maturity (oz) US$/oz (in R$ million)
----------------- -------- ------------- --------------- -------- -------- ------------- ---------------
Puts purchased 422,000 270 - 340 25 Dec/05 479,500 300 - 375 25
Calls sold 718,000 308 - 366 (8) Dec/05 999,800 308 - 390 (9)
Other instruments 25,000 - Nov/05 30,000 2
----------- -----------
Total 17 18
=========== ===========
40 CVRD
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
----------------------------------------- -----------------------------------------
Price Unrealized gain Price Unrealized gain
Quantity range (loss) Final Quantity range (loss)
Type (ton.) US$/ton. (in R$ million) maturity (ton.) US$/ton. (in R$ million)
----------------- -------- ------------- --------------- -------- -------- ------------- ---------------
Puts purchased 80,000 1,400 - 1,600 22 Dec/03 42,000 1,400 - 1,600 4
Forwards sold 57,000 1,400 - 1,600 18 Dec/06 67,189 1,500 - 1,700 (3)
Calls sold 56,000 1,600 - 1,800 (2) Dec/03 123,000 1,500 - 1,700 (11)
Other instruments 132,000 (6) -
----------- -----------
Total 32 (9)
=========== ===========
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
----------------------------------------- -----------------------------------------
Price Unrealized gain Price Unrealized gain
Quantity range (loss) Final Quantity range (loss)
Type (ton.) US$/ton. (in R$ million) maturity (ton.) US$/ton. (in R$ million)
----------------- -------- ------------- --------------- -------- -------- ------------- ---------------
Puts purchased 15,000 1,400 - 1,600 6 Dec/02 96,000 1,400 - 1,600 7
Forwards sold 26,000 1,400 - 1,600 10 May/03 51,000 1,600 - 1,800 (1)
Calls sold 23,000 1,600 - 1,800 - Dec/02 157,500 1,600 - 1,800 (10)
Other instruments 74,000 (4) Oct/03 36,000 -
----------- -----------
Total 12 (4)
=========== ===========
CVRD 41
9.24 - Exchange Rate Exposure
The exchange rate exposure is predominantly in U.S. dollars.
In millions of reais
-------------------------------------------------------
Subsidiaries and
Parent Company Affiliated 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 on the Statements if Adopted the Monetary Restatement (unaudited)
The main difference between the financial statements prepared according to the
bylaws accounting practices and those according to the monetary restatement is
due to no recognition of the net monetary restatement of permanent assets and
stockholders' equity.
Additionally, we inform briefly, the balance sheet and the statement of income
by monetary restatement, according to prices on December 31, 2001 (indexed by
IGP-M from Fundacao Getulio Vargas).
CVRD 43
BALANCE SHEET
December 31
--------------------------------------------------------------------------------
Parent Company Consolidated
-------------------------- --------------------------
2001 2000 2001 2000
---------- ---------- ---------- ----------
Assets
Current assets 3,990 4,642 7,235 6,745
Long-term receivables 2,507 2,336 2,824 2,776
Permanent assets
Investments 12,708 11,488 4,821 3,696
Property, plant and equipment 12,437 11,464 20,013 20,176
Deferred charges - - 729 486
---------- ---------- ---------- ----------
25,145 22,952 25,563 24,358
---------- ---------- ---------- ----------
31,642 29,930 35,622 33,879
========== ========== ========== ==========
Liabilities and stockholders' equity
Current liabilities 3,623 3,734 5,335 5,665
Long-term liabilities 7,182 7,021 9,284 8,815
Deferred income - - 159 195
Minority interest - - 7 29
Stockholders' equity
Paid-up capital 5,916 4,873 5,916 4,873
Capital reserves 1,348 1,658 1,348 1,658
Revenue reserves 13,573 12,644 13,573 12,644
---------- ---------- ---------- ----------
20,837 19,175 20,837 19,175
---------- ---------- ---------- ----------
31,642 29,930 35,622 33,879
========== ========== ========== ==========
STATEMENT OF INCOME
Years ended December 31
--------------------------------------------------------------------------------
Parent Company Consolidated
-------------------------- --------------------------
2001 2000 2001 2000
---------- ---------- ---------- ----------
Net operating revenues 6,661 5,673 11,031 10,001
---------- ---------- ---------- ----------
Cost of products and services (3,402) (2,883) (5,785) (5,584)
---------- ---------- ---------- ----------
Gross profit 3,259 2,790 5,246 4,417
Gross margin 48.9% 49.2% 47.6% 44.2%
Operating expenses (1,761) (392) (3,738) (1,774)
---------- ---------- ---------- ----------
Result of investment participations 1,847 210 1,847 210
---------- ---------- ---------- ----------
Income before income tax and social contribution 3,345 2,608 3,355 2,853
Income tax and social contribution 225 104 175 (124)
---------- ---------- ---------- ----------
Income before minority interest 3,570 2,712 3,530 2,729
Minority interest - - 40 (17)
---------- ---------- ---------- ----------
Net income for the year 3,570 2,712 3,570 2,712
========== ========== ========== ==========
44 CVRD
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.
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 45
Parent Company
-------------------------------------------------------
----------
Non- Pulp and
Ferrous ferrous Logistics paper
---------- ---------- ---------- ----------
Results
Sales classified by geographic destination
External market
Latin America 189 - - -
United States 167 331 - -
Europe 1,334 - - -
Middle East 396 - - -
Japan 593 - - -
China 552 - - -
Asia, other than Japan and China 376 - - -
---------- ---------- ---------- ----------
Operating revenues - external market 3,607 331 - -
Operating revenues - internal market 1,908 168 603 -
---------- ---------- ---------- ----------
Total operating revenues 5,515 499 603 -
Value-added taxes (166) (15) (51) -
---------- ---------- ---------- ----------
Net operating revenues 5,349 484 552 -
---------- ---------- ---------- ----------
Cost of products and services (2,714) (302) (245) -
Selling and administrative expenses (118) - - -
Research and development (22) (79) - -
Other operating expenses, net (276) (94) - (65)
---------- ---------- ---------- ----------
Operation profit before financial result and
result of investment participations 2,219 9 307 (65)
Financial result, net - - - -
Discontinued operations - - - 1,770
Result of investments/participations 277 (140) (335) (93)
Income taxes - - - -
---------- ---------- ---------- ----------
Net income for the year 2,496 (131) (28) 1,612
========== ========== ========== ==========
EBITDA demonstration:
Operation profit before financial result and
result of investment participations 2,219 9 307 (65)
Depreciation, amortization and depletion 400 63 25 -
Dividend received 73 - - 138
Other operating expenses
Adjustments in non-cash itens:
- Provision for contingencies 38 - - -
- Provision for loss on ICMS recoverable 139 3 - -
- Write-off of property, plant and equipment - 91 - -
- Provision for early-retirement programs - - - -
- Provision for losses - - - 65
- Provision for losses of inventories 61 - - -
- Amortization of goodwill 38 - - -
- Others - - - -
---------- ---------- ---------- ----------
EBITDA 2,968 166 332 138
EBITDA % of total 91.2% 5.1% 10.2% 4.2%
EBITDA margin % 55.5% 34.3% 60.1% -
---------- ---------- ---------- ----------
Depreciation, amortization and depletion (400) (63) (25) -
Dividends received (73) - - (138)
---------- ---------- ---------- ----------
EBIT 2,495 103 307 -
Income tax and social contribution - - - -
---------- ---------- ---------- ----------
Net operating profit less taxes (b) 2,495 103 307 -
Capital employed (a)
- Property, plant and equipment in operation 5,427 291 386 -
- Inventories 401 47 - -
- Accounts receivable 815 27 42 -
- Payable to suppliers and contractors (444) (35) (8) -
- Salaries and social charges (45) (7) (2) -
---------- ---------- ---------- ----------
6,154 323 418 -
Return on capital employed - ROCE (b/a) 40.5% 31.9% 73.4% -
2001
------------------------------------------------------------------------
Holdings
-----------------------------------------
Corporate
Aluminum Steel Others Center Total
----------- ----------- ----------- ----------- -----------
Results
Sales classified by geographic destination
External market
Latin America - - - - 189
United States - - - - 498
Europe - - - - 1,334
Middle East - - - - 396
Japan - - - - 593
China - - - - 552
Asia, other than Japan and China - - - - 376
----------- ----------- ----------- ----------- -----------
Operating revenues - external market - - - - 3,938
Operating revenues - internal market - - - - 2,679
----------- ----------- ----------- ----------- -----------
Total operating revenues - - - - 6,617
Value-added taxes - - - - (232)
----------- ----------- ----------- ----------- -----------
Net operating revenues - - - - 6,385
----------- ----------- ----------- ----------- -----------
Cost of products and services - - - - (3,261)
Selling and administrative expenses - - - (338) (456)
Research and development - - - - (101)
Other operating expenses, net (18) (48) (6) (240) (747)
----------- ----------- ----------- ----------- -----------
Operation profit before financial result and
result of investment participations (18) (48) (6) (578) 1,820
Financial result, net - - - (933) (933)
Discontinued operations - - - - 1,770
Result of investments/participations 170 165 (8) 1 37
Income taxes - - - 357 357
----------- ----------- ----------- ----------- -----------
Net income for the year 152 117 (14) (1,153) 3,051
=========== =========== =========== =========== ===========
EBITDA demonstration:
Operation profit before financial result and
result of investment participations (18) (48) (6) (578) 1,820
Depreciation, amortization and depletion - - - 15 503
Dividend received 18 48 6 - 283
Other operating expenses
Adjustments in non-cash itens:
- Provision for contingencies - - - 126 164
- Provision for loss on ICMS recoverable - - - - 142
- Write-off of property, plant and equipment - - - - 91
- Provision for early-retirement programs - - - 78 78
- Provision for losses - - - - 65
- Provision for losses of inventories - - - - 61
- Amortization of goodwill - - - - 38
- Others - - - 9 9
----------- ----------- ----------- ----------- -----------
EBITDA - - - (350) 3,254
EBITDA % of total - - - (10.8%) 100.0%
EBITDA margin % - - - - 51.0%
----------- ----------- ----------- ----------- -----------
Depreciation, amortization and depletion - - - (15) (503)
Dividends received (18) (48) (6) - (283)
----------- ----------- ----------- ----------- -----------
EBIT (18) (48) (6) (365) 2,468
Income tax and social contribution - - - 357 357
----------- ----------- ----------- ----------- -----------
Net operating profit less taxes (b) (18) (48) (6) (8) 2,825
Capital employed (a)
- Property, plant and equipment in operation - - - 47 6,151
- Inventories - - - - 448
- Accounts receivable - - - 36 920
- Payable to suppliers and contractors - - - (36) (523)
- Salaries and social charges - - - (64) (118)
----------- ----------- ----------- ----------- -----------
- - - (17) 6,878
Return on capital employed - ROCE (b/a) - - - - 41.1%
46 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 47
Consolidated
----------------------------------------------------------------------
----------------------------------------------------------------------
Non- Pulp and
Ferrous ferrous Logistics paper Aluminum
---------- ---------- ---------- ---------- ----------
Results
Sales classified by geographic destination
External market
Latin America 585 - 151 - 96
United States 583 331 48 2 265
Europe 3,816 65 102 - 755
Middle East 741 - 9 - 1
Japan 1,318 - 22 - 319
China 1,106 4 1 - 26
Asia, other than Japan and China 1,222 - 5 - 27
---------- ---------- ---------- ---------- ----------
Operating revenues - external market 9,371 400 338 2 1,489
Operating revenues - internal market 2,876 183 991 19 463
---------- ---------- ---------- ---------- ----------
Total operating revenues 12,247 583 1,329 21 1,952
Value-added taxes (269) (20) (84) (1) (56)
---------- ---------- ---------- ---------- ----------
Net operating revenues 11,978 563 1,245 20 1,896
---------- ---------- ---------- ---------- ----------
Cost of products and services (8,076) (336) (885) (17) (1,388)
Selling and administrative expenses (416) (15) (50) (1) (68)
Research and development (22) (79) - - -
Other operating expenses, net 823 (108) (236) (148) (4)
---------- ---------- ---------- ---------- ----------
Operation profit before financial result and
result of investment participations 4,287 25 74 (146) 436
Financial result, net (393) (76) (38) 10 (213)
Discontinued operations - - - 1,770 -
Result of investments participations 1,911 (140) (415) (93) 285
Minority interests (4) - - - -
Income taxes (45) - (5) - (65)
---------- ---------- ---------- ---------- ----------
Net income for the year 5,756 (191) (384) 1,541 443
========== ========== ========== ========== ==========
EBITDA demonstration:
Operation profit before financial result and
result of investment participations 4,287 25 74 (146) 436
Depreciation, amortization and depletion 492 71 75 4 84
Dividend received - - 52 - -
Other operating expenses
Adjustments in non-cash itens:
- Provision for contingencies 73 - 13 - 23
- Provision for loss on ICMS recoverable 139 3 - - -
- Write-off of property, plant and equipment 54 91 - - -
- Provision for early-retirement programs - - - - -
- Provision for losses 32 14 (11) 200 -
- Provision for losses of inventories 80 - - - -
- Amortization of goodwill 38 - - - -
- Others (1,194) - 256 (53) 1
---------- ---------- ---------- ---------- ----------
EBITDA 4,001 204 459 5 544
EBITDA % of total 78.0% 4.0% 9.0% 0.1% 10.6%
EBITDA margin % 33.4% 36.2% 36.9% 25.0% 28.7%
---------- ---------- ---------- ---------- ----------
Depreciation, amortization and depletion (492) (71) (75) (4) (84)
Dividends received - - (52) - -
---------- ---------- ---------- ---------- ----------
EBIT 3,509 133 332 1 460
Income tax and social contribution (45) - (5) - (65)
---------- ---------- ---------- ---------- ----------
Net operating profit less taxes (b) 3,464 133 327 1 395
Capital employed (a)
- Property, plant and equipment in operation 6,893 559 872 33 1,115
- Inventories 871 70 15 1 148
- Accounts receivable 3,627 54 119 12 119
- Payable to suppliers and contractors (2,960) (53) (54) (2) (133)
- Salaries and social charges (133) (10) (10) (1) (8)
---------- ---------- ---------- ---------- ----------
8,298 620 942 43 1,241
Return on capital employed - ROCE (b/a) 41.7% 21.5% 34.7% 2.3% 31.8%
2001
----------------------------------------------------------------------
Holdings
-------------------------
Corporate
Steel Others Center Eliminations Total
---------- ---------- ---------- ------------ ----------
Results
Sales classified by geographic destination
External market
Latin America 21 - - (257) 596
United States 953 - - (568) 1,614
Europe 99 - - (1,617) 3,220
Middle East - - - (81) 670
Japan - - - (603) 1,056
China 91 - - (305) 923
Asia, other than Japan and China 7 - - (603) 658
---------- ---------- ---------- ---------- ----------
Operating revenues - external market 1,171 - - (4,034) 8,737
Operating revenues - internal market 48 32 - (2,334) 2,278
---------- ---------- ---------- ---------- ----------
Total operating revenues 1,219 32 - (6,368) 11,015
Value-added taxes (9) (2) - - (441)
---------- ---------- ---------- ---------- ----------
Net operating revenues 1,210 30 - (6,368) 10,574
---------- ---------- ---------- ---------- ----------
Cost of products and services (1,078) (30) - 6,265 (5,545)
Selling and administrative expenses (60) (14) (339) 95 (868)
Research and development - - - - (101)
Other operating expenses, net (37) (9) (240) (1,081) (1,040)
---------- ---------- ---------- ---------- ----------
Operation profit before financial result and
result of investment participations 35 (23) (579) (1,089) 3,020
Financial result, net (96) - (933) - (1,739)
Discontinued operations - - - - 1,770
Result of investments participations 167 (4) 1 (2,011) (299)
Minority interests (3) - - 47 40
Income taxes 19 (1) 356 - 259
---------- ---------- ---------- ---------- ----------
Net income for the year 122 (28) (1,155) (3,053) 3,051
========== ========== ========== ========== ==========
EBITDA demonstration:
Operation profit before financial result and
result of investment participations 35 (23) (579) (1,089) 3,020
Depreciation, amortization and depletion 86 - 15 827
Dividend received 40 6 - 98
Other operating expenses
Adjustments in non-cash itens:
- Provision for contingencies 9 - 126 244
- Provision for loss on ICMS recoverable - - - 142
- Write-off of property, plant and equipment - - - 145
- Provision for early-retirement programs - - 78 78
- Provision for losses (10) - - 225
- Provision for losses of inventories - - - 80
- Amortization of goodwill - - - 38
- Others 5 - 9 1,207 231
---------- ---------- ---------- ---------- ----------
EBITDA 165 (17) (351) 118 5,128
EBITDA % of total 3.2% (0.3%) (6.8%) 2.3% 100.0%
EBITDA margin % 13.6% - - - 48.5%
---------- ---------- ---------- ---------- ----------
Depreciation, amortization and depletion (86) - (15) - (827)
Dividends received (40) (6) - - (98)
---------- ---------- ---------- ---------- ----------
EBIT 39 (23) (366) 118 4,203
Income tax and social contribution 19 (1) 356 - 259
---------- ---------- ---------- ---------- ----------
Net operating profit less taxes (b) 58 (24) (10) 118 4,462
Capital employed (a)
- Property, plant and equipment in operation 1,114 3 47 10,636
- Inventories 221 - - 1,326
- Accounts receivable 130 7 1 (2,568) 1,501
- Payable to suppliers and contractors (44) (6) (36) 2,454 (834)
- Salaries and social charges (6) - (64) (232)
---------- ---------- ---------- ---------- ----------
1,415 4 (52) (114) 12,397
Return on capital employed - ROCE (b/a) 4.1% - - - 36.0%
48 CVRD
The information related to year 2000 are as follows:
---------------------------------------------------------------------------------
Holdings
---------------------------------------
Non- Pulp and
Ferrous ferrous Logistics Paper Aluminum Steel
---------- ---------- ---------- ---------- ---------- ----------
EBITDA 2,582 190 322 48 485 301
EBITDA % of total 68.2% 5.0% 8.5% 1.3% 12.8% 7.9%
EBITDA margin % 32.4% 36.5% 25.4% 106.7% 26.3% 26.0%
EBIT 2,296 125 262 (8) 399 191
Net Operating profit less income tax (b) 2,265 125 267 (21) 421 48
Capital employed 7,074 686 945 1,339 1,343 1,454
Capital employed in discontinued operations - - - (1,158) - -
---------- ---------- ---------- ---------- ---------- ----------
Capital employed adjusted (a) 7,074 686 945 181 1,343 1,454
Return on capital employed - ROCE (b/a) 32.0% 18.2% 28.3% (11.6%) 31.3% 3.3%
2000
----------------------------------------
Corporate
Center Eliminations TOTAL
---------- ------------ ----------
EBITDA (278) 138 3,788
EBITDA % of total (7.3%) 3.6% 100.0%
EBITDA margin % - - 43.1%
EBIT (297) 138 3,106
Net Operating profit less income tax (b) (148) 138 3,095
Capital employed (10) (37) 12,794
Capital employed in discontinued operations - - (1,158)
---------- ---------- ----------
Capital employed adjusted (a) (10) (37) 11,636
Return on capital employed - ROCE (b/a) - - 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. On 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:
Railroad End of concession 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 49
(*) In observance of Articles 27 and 28 of Law No. 9,074 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:
Project Start-up of operations % Participation
---------------------------------------------- ------------------------- ------------------------
Igarapava In operation 38
Porto Estrela In operation 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:
Terminal Localization End of 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 Events
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.
50 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 51
-------------- -------------- -------------
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 51
Part III
10 Statement of Investments in Subsidiaries and Jointly Controlled Companies
Attachment I
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 -- -- 670
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) 100.00 100.00 328 88 1,573
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
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.
52 CVRD
10 Statement of Investments in Subsidiaries and Jointly Controlled Companies
Attachment I (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. -- -- 670
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 1,404
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
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
52 CVRD
10 Statement of Investments in Subsidiaries and Jointly Controlled Companies
Attachment I (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) (234) - 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 (2,998) (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
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 (1,422) (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 (1,555) (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)
52 CVRD
Attachment II
11.1 - Aluminum Area (Adjusted and Unaudited) In millions
------------------------------------------------------------------------------------------------------------------------------------
Data 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 53
Attachment II (cont'd)
11.1 - Aluminum Area (Adjusted and Unaudited) In Millions
------------------------------------------------------------------------------------------------------------------------------------
Data 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 -- 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 2,285.67 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 53
Attachment II (cont'd)
11.2 - Pelletizing Affiliates (Adjusted and Unaudited) In Millions
-----------------------------------------------------------------------------------------------------------------------------------
Data 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%)
------ ------ ------ ------ ------- ------ ------
53 CVRD
Attachment II (cont'd)
11.2 - Pelletizing Affiliates (Adjusted and Unaudited) In Millions
-----------------------------------------------------------------------------------------------------------------------------------
Data 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%
------ ------ ------
54 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 55
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 de Oliveira Santos Neto
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 Area and
Eliseu Martins 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 Planning and Paulo Eduardo Libanio
Acting Executive Director of Finance Director of Basic Metals and Industrial Minerals
Gabriel Stoliar
Otto de Souza Marques Junior
Director of Control
Eduardo de Carvalho Duarte Otto de Souza Marques Junior
Tito Botelho Martins Junior Chief Accountant Director of Control
Director of Finance CRC-RJ 57439
56 CVRD
4
------------------------------------------------------------------------
Opinion of the Audit Committee
------------------------------------------------------------------------
OPINION OF THE AUDIT COMMITTEE ON THE ANNUAL REPORT AND FINANCIAL STATEMENTS OF
COMPANHIA VALE DO RIO DOCE AT DECEMBER 31, 2001
The Audit Committee of Companhia Vale do Rio Doce, in the exercise of its
statutory and legal duties, after examining the Company's Annual Report,
Balance Sheet, Statement of Operations, Statement of Changes in Stockholders'
Equity, Statement of Changes in Financial Position and the respective Notes to
the Financial Statements relative to the fiscal year ended December 31, 2001,
and based on the opinion of the independent accountants, is of the opinion that
the referred documents, examined in light of applicable corporate legislation,
which does not require information to be stated in currency of constant
purchasing power, should be approved by the Annual General Stockholders'
Meeting.
Rio de Janeiro, March 27, 2002
Antonio Jose da Barbara
Claudia Torres Teixeira
Eliseu Martins
Marcos Fabio Coutinho
Ronaldo Camillo