FORM 6-K
 

United States
Securities and Exchange Commission

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer
Pursuant To Rule 13a-16 or 15d-16
of the
Securities Exchange Act of 1934

For the month of

March 2004

Commission File Number 001-15030

Valley of the Rio Doce Company

(Translation of Registrant’s name into English)

Avenida Graca Aranha, No. 26
20030-900 Rio de Janeiro, RJ, Brazil
(Address of principal executive office)

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

(Check One) Form 20-F [X] Form 40-F [   ]

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1))

(Check One) Yes [   ] No [X]

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7))

(Check One) Yes [   ] No [X]

(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

(Check One) Yes [   ] No [X]

(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b). 82-__.)

 


 

Table of Contents

United States GAAP Financial Statements for 2003 of Companhia Vale do Rio Doce

 


 

This current report on Form 6-K is hereby incorporated by reference into the Registration Statement on Form F-4 of Vale Overseas Limited, File No. 333-109610; the Registration Statement on Form F-4 of Companhia Vale do Rio Doce, File No. 333-109610-01; the Registration Statement on Form F-3 of Vale Overseas Limited, File No. 333-110867-01; and the Registration Statement on Form F-3 of Companhia Vale do Rio Doce, File No. 333-110867.

 


 

     
(COMPANHIA VALE DO RIO DOCE LOGO)
  (ANEFAC LOGO)

Financial Statements US GAAP 2003

 
Filed with The Comissãode Valores
Mobiliários – CVM (Brazilian Securities
Commission) and Security Exchange
Commission — SEC on 03/24/2004

Gerência Geral de Controladoria -GECOL

 


 

COMPANHIA VALE DO RIO DOCE
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

         
    Page
    F-2  
    F-3  
    F-5  
    F-6  
    F-7  
    F-8  

F - 1


 

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of Companhia Vale do Rio Doce

In our opinion, based upon our audits and the reports of other auditors, the accompanying consolidated balance sheets and the related consolidated statements of income, of cash flows and of changes in stockholders’ equity, present fairly, in all material respects, the financial position of Companhia Vale do Rio Doce and its subsidiaries at December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of certain affiliates, the investments in which total US$ 376 million and US$343 million at December 31, 2003 and 2002, respectively, and equity in earnings of US$157 million, US$60 million and US$53 million for 2003, 2002 and 2001, respectively. Also, we did not audit the financial statements of certain majority-owned subsidiaries as at and for the years ended December 31, 2003, 2002 and 2001, which statements reflect total assets of US$1,352 million and US$969 million at December 31, 2003 and 2002, respectively, and total revenues of US$839 million, US$426 million and US$407 million for 2003, 2002 and 2001, respectively. The financial statements of these affiliates and subsidiaries were audited by other auditors whose reports thereon have been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts for these affiliates and subsidiaries, is based solely on the reports of the other auditors. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits and the reports of other auditors provide a reasonable basis for the opinion expressed above. The financial information relating to quarterly consolidated statements of income, of cash flows, of changes in stockholder ´s equity and related explanatory notes included in the consolidated financial statements have not been audited by us.

As discussed in Note 4 to the financial statements, the Company changed its method of accounting for asset retirement obligations, as from January 1, 2003.

PricewaterhouseCoopers
Auditores Independentes

Rio de Janeiro, Brazil
February 20, 2004

F - 2


 

Consolidated Balance Sheets
Expressed in millions of United States dollars

                 
    As of December 31,
    2003
  2002
Assets
               
Current assets
               
Cash and cash equivalents
    585       1,091  
Accounts receivable
               
Related parties
    115       121  
Unrelated parties
    703       539  
Loans and advances to related parties
    56       49  
Inventories
    505       292  
Deferred income tax
    91       211  
Others
    419       286  
 
   
 
     
 
 
 
    2,474       2,589  
 
   
 
     
 
 
Property, plant and equipment, net
    6,484       3,297  
Investments in affiliated companies and joint ventures and other investments, net of provision for losses on equity investments
    1,034       732  
Other assets
               
Goodwill on acquisition of subsidiaries
    451       412  
Loans and advances
               
Related parties
    40       89  
Unrelated parties
    68       73  
Prepaid pension cost
    82       79  
Deferred income tax
    234       358  
Judicial deposits
    407       239  
Unrealized gain on derivative instruments
    5       3  
Others
    155       84  
 
   
 
     
 
 
 
    1,442       1,337  
 
   
 
     
 
 
TOTAL
    11,434       7,955  
 
   
 
     
 
 

F - 3


 

Consolidated Balance Sheets
Expressed in millions of United States dollars
(Except number of shares)

(Continued)

                 
    As of December 31,
    2003
  2002
Liabilities and stockholders’ equity
               
Current liabilities
               
Suppliers
    482       365  
Payroll and related charges
    78       76  
Interest attributed to stockholders
    118       3  
Current portion of long-term debt — unrelated parties
    1,009       717  
Short-term debt
    129       184  
Loans from related parties
    119       64  
Others
    318       99  
 
   
 
     
 
 
 
    2,253       1,508  
 
   
 
     
 
 
Long-term liabilities
               
Employees post-retirement benefits
    198       141  
Long-term debt — unrelated parties
    2,767       2,359  
Loans from related parties
    4       7  
Provisions for contingencies (Note 18)
    635       428  
Unrealized loss on derivative instruments
    96       76  
Others
    268       122  
 
   
 
     
 
 
 
    3,968       3,133  
 
   
 
     
 
 
Minority interests
    329       27  
 
   
 
     
 
 
Stockholders’ equity
               
Preferred class A stock - 600,000,000 no-par-value shares authorized and 138,575,913 issued
    1,055       904  
Common stock - 300,000,000 no-par-value shares authorized and 249,983,143 issued
    1,902       1,630  
Treasury stock - 4,183 (2002 - 4,481) preferred and 4,715,170 common shares
    (88 )     (88 )
Additional paid-in capital
    498       498  
Other cumulative comprehensive income
    (4,375 )     (5,175 )
Appropriated retained earnings
    3,035       2,230  
Unappropriated retained earnings
    2,857       3,288  
 
   
 
     
 
 
 
    4,884       3,287  
 
   
 
     
 
 
TOTAL
    11,434       7,955  
 
   
 
     
 
 

See notes to consolidated financial statements.

F - 4


 

Consolidated Statements of Income
Expressed in millions of United States dollars
(except number of shares and per-share amounts)

                                                 
    Three months ended
  Year ended December 31,
    December   September   December            
    31, 2003
  30, 2003
  31, 2002
  2003
  2002
  2001
            (unaudited)                                
Operating revenues, net of discounts, returns and allowances
                                               
Sales of ores and metals
                                               
Iron ore and pellets
    1,075       918       737       3,500       2,820       2,600  
Gold
          5       13       21       103       139  
Manganese and ferroalloys
    104       81       67       349       283       259  
Potash
    24       28       24       94       91       71  
Others
    41       25       12       96       45       41  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
 
    1,244       1,057       853       4,060       3,342       3,110  
Revenues from logistic services
    192       159       98       604       458       608  
Aluminum products
    254       243       150       852       462       284  
Other products and services
          24             29       20       75  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
 
    1,690       1,483       1,101       5,545       4,282       4,077  
Value-added tax
    (52 )     (51 )     (42 )     (195 )     (159 )     (142 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Net operating revenues
    1,638       1,432       1,059       5,350       4,123       3,935  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Operating costs and expenses
                                               
Cost of ores and metals sold
    (670 )     (530 )     (392 )     (2,066 )     (1,579 )     (1,550 )
Cost of logistic services
    (138 )     (89 )     (56 )     (370 )     (252 )     (378 )
Cost of aluminum products
    (194 )     (185 )     (139 )     (678 )     (412 )     (269 )
Others
    (3 )     (8 )     (2 )     (14 )     (20 )     (75 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
 
    (1,005 )     (812 )     (589 )     (3,128 )     (2,263 )     (2,272 )
Selling, general and administrative expenses
    (97 )     (74 )     (51 )     (265 )     (224 )     (241 )
Research and development
    (37 )     (22 )     (14 )     (82 )     (50 )     (43 )
Employee profit sharing plan
    (9 )     (2 )     (18 )     (32 )     (38 )     (38 )
Others
    (98 )     (21 )     (46 )     (199 )     (119 )     (379 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
 
    (1,246 )     (931 )     (718 )     (3,706 )     (2,694 )     (2,973 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Operating income
    392       501       341       1,644       1,429       962  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Non-operating income (expenses)
                                               
Financial income
    18       27       40       102       127       135  
Financial expenses
    (122 )     (83 )     (48 )     (351 )     (375 )     (335 )
Foreign exchange and monetary gains (losses), net
    (8 )     (57 )     257       242       (580 )     (426 )
Gain on sale of investments
    17                   17             784  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
 
    (95 )     (113 )     249       10       (828 )     158  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Income before income taxes, equity results and minority interests
    297       388       590       1,654       601       1,120  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Income taxes
                                               
Current
    10       41       (8 )     (90 )     (12 )     46  
Deferred
    (76 )     (41 )     (101 )     (207 )     161       172  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
 
    (66 )           (109 )     (297 )     149       218  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments
    88       89       121       306       (87 )     (53 )
Minority interests
    (49 )     (9 )     (33 )     (105 )     17       2  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Income from continuing operations
    270       468       569       1,558       680       1,287  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Change in accounting pratice for asset retirement obligations (Note 4)
                      (10 )            
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Net income
    270       468       569       1,548       680       1,287  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Basic earnings per Preferred Class A Share
    0.70       1.22       1.48       4.03       1.77       3.34  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Basic earnings per Common Share
    0.70       1.22       1.48       4.03       1.77       3.34  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Weighted average number of shares outstanding (thousands of shares)
                                               
Common shares
    245,268       245,268       249,864       245,268       249,864       249,864  
Preferred Class A shares
    138,571       138,571       135,042       138,571       135,042       135,042  

See notes to consolidated financial statements.

F - 5


 

Consolidated Statements of Cash Flows
Expressed in millions of United States dollars

                                                 
    Three months ended
  Year ended December 31,
    December   September   December            
    31, 2003
  30, 2003
  31, 2002
  2003
  2002
  2001
            (unaudited)                                
Cash flows from operating activities:
                                               
Net income
    270       468       569       1,548       680       1,287  
Adjustments to reconcile net income to cash provided by operating activities:
                                               
Depreciation, depletion and amortization
    78       63       43       238       214       212  
Dividends received
    59       66       19       197       91       132  
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments
    (88 )     (89 )     (121 )     (306 )     87       53  
Deferred income taxes
    76       41       101       207       (161 )     (172 )
Current income taxes contingency
                                   
Provisions for other contingencies
                (1 )     9       53       79  
Impairment of property, plant and equipment
    39             51       51       62       79  
Gain on sale of investments
    (17 )                 (17 )           (784 )
Change in accounting pratice for asset retirement obligations (Note 4)
                      10              
Pension plan
    4       3       3       12       11       32  
Foreign exchange and monetary losses (gains)
    5       13       (310 )     (382 )     1,031       460  
Net unrealized derivative losses (gains)
    20       21       7       43       83       38  
Minority interests
    49       9       33       105       (17 )     (2 )
Others
    6       (20 )     (73 )     (15 )     46       131  
Decrease (increase) in assets:
                                               
Accounts receivable
    (68 )     (24 )     49       37       (123 )     (49 )
Inventories
    6       (27 )     (26 )     (22 )     (69 )     (40 )
Others
    (36 )     (1 )     (21 )     (9 )     (105 )     17  
Increase (decrease) in liabilities:
                                               
Suppliers
    59       (2 )     125       (18 )     102       21  
Payroll and related charges
    (17 )     (15 )     1       (25 )     23       42  
Others
    69       (71 )     55       94       94       (18 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Net cash provided by operating activities
    514       435       504       1,757       2,102       1,518  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Cash flows from investing activities:
                                               
Loans and advances receivable
                                               
Related parties
                                               
Additions
    (65 )     (15 )     (66 )     (157 )     (101 )     (75 )
Repayments
    9       33       23       71       75       79  
Others
          18       2       35       20       7  
Guarantees and deposits
    (13 )     78       (17 )     (99 )     (78 )     (85 )
Additions to investments
    1       (8 )           (68 )     (1 )     (338 )
Additions to property, plant and equipment
    (594 )     (443 )     (258 )     (1,543 )     (766 )     (595 )
Proceeds from disposal of investments
    83             (49 )     83             989  
Proceeds from disposals of property, plant and equipment
          21       5       58       7       3  
Cash used to acquire subsidiaries, net of cash acquired
          (380 )           (380 )     (45 )     (516 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Net cash used in investing activities
    (579 )     (696 )     (360 )     (2,000 )     (889 )     (531 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Cash flows from financing activities:
                                               
Short-term debt, net issuances (repayments)
    (1 )     (4 )     (202 )     (38 )     (345 )     (28 )
Loans
                                               
Related parties
                                               
Additions
    24       48       22       72       54       145  
Repayments
    (2 )     (2 )     (46 )     (26 )     (75 )     (44 )
Issuances of long-term debt
                                               
Related parties
    12             6       14       17       66  
Others
    29       779       37       1,025       698       317  
Repayments of long-term debt
                                               
Related parties
                      (4 )     (15 )     (40 )
Others
    (351 )     (139 )     (85 )     (766 )     (330 )     (310 )
Interest attributed to stockholders
    (427 )     (33 )     (273 )     (675 )     (602 )     (1,066 )
Treasury stock
                                  (27 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Net cash used in financing activities
    (716 )     649       (541 )     (398 )     (598 )     (987 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Increase (decrease) in cash and cash equivalents
    (781 )     388       (397 )     (641 )     615        
Effect of exchange rate changes on cash and cash equivalents
    26       (14 )     86       135       (641 )     (94 )
Cash and cash equivalents, beginning of period
    1,340       966       1,402       1,091       1,117       1,211  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Cash and cash equivalents, end of period
    585       1,340       1,091       585       1,091       1,117  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Cash paid during the period for:
                                               
Interest on short-term debt
                (15 )     (7 )     (46 )     (45 )
Interest on long-term debt
    (38 )     (54 )     (35 )     (178 )     (157 )     (164 )
Income tax
    (16 )     (6 )     (8 )     (55 )     (12 )     (46 )
Non-cash transactions
                                               
Special pension plan contribution in shares of CSN
                                  (249 )
Conversion of loans receivable to investments
    (91 )     (9 )     (15 )     (187 )     (55 )     (35 )
Income tax paid with credits
                      (81 )            

See notes to consolidated financial statements.

F - 6


 

Consolidated Statements of Changes in Stockholders’ Equity
Expressed in millions of United States dollars
(except number of shares and per-share amounts)

                                                 
    Three months ended
  Year ended December 31,
    December   September   December            
    31, 2003
  30, 2003
  31, 2002
  2003
  2002
  2001
            (unaudited)                                
Preferred class A stock (including one special share)
                                               
Beginning of the period
    1.055       1.055       904       904       820       709  
Transfer from appropriated retained earnings
                      151       84       111  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
End of the period
    1.055       1.055       904       1.055       904       820  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Common stock
                                               
Beginning of the period
    1.902       1.902       1.630       1.630       1.479       1.279  
Transfer from appropriated retained earnings
                      272       151       200  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
End of the period
    1.902       1.902       1.630       1.902       1.630       1.479  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Treasury stock
                                               
Beginning of the period
    (88 )     (88 )     (88 )     (88 )     (88 )     (61 )
Acquisitions in 2001
                                  (27 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
End of the period
    (88 )     (88 )     (88 )     (88 )     (88 )     (88 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Additional paid-in capital
                                               
End of the period
    498       498       498       498       498       498  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Other cumulative comprehensive income
                                               
Amounts not recognized as net periodic pension cost
                                               
Beginning of the period
                                    (100 )
Excess of additional minimum liability
                                    151  
Tax effect on above
                                    (51 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
End of the period
                                   
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Cumulative translation adjustments
                                               
Beginning of the period
    (4.473 )     (4.406 )     (5.295 )     (5.185 )     (3.475 )     (2.972 )
Change in the period
    24       (67 )     110       736       (1.710 )     (503 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
End of the period
    (4.449 )     (4.473 )     (5.185 )     (4.449 )     (5.185 )     (3.475 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Unrealized gain on available-for-sale securities
                                               
Beginning of the period
    14       18                         24  
Change in the period
    60       (4 )           74             (24 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
End of the period
    74       14             74              
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Adjustments relating to investments in affiliates
                                               
Beginning of the period
    10       10       10       10       10       8  
Change in the period
                                  2  
Trasnfer to retained earnings
    (10 )                 (10 )            
 
   
 
     
 
     
 
     
 
     
 
     
 
 
End of the period
          10       10             10       10  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Total other cumulative comprehensive income
    (4.375 )     (4.449 )     (5.175 )     (4.375 )     (5.175 )     (3.465 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Appropriated retained earnings
                                               
Beginning of the period
    2.251       2.292       1.635       2.230       3.212       3.537  
Transfer (to) from retained earnings
    784       (41 )     595       1.228       (747 )     (14 )
Transfer to capital stock
                      (423 )     (235 )     (311 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
End of the period
    3.035       2.251       2.230       3.035       2.230       3.212  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Retained earnings
                                               
Beginning of the period
    3.472       3.281       3.314       3.288       2.184       1.647  
Net income
    270       468       569       1.548       680       1.287  
Interest attributed to stockholders
                                               
Preferred class A stock
    (40 )     (115 )           (275 )     (117 )     (276 )
Common stock
    (71 )     (203 )           (486 )     (206 )     (488 )
Appropriation (to) from reserves
    (774 )     41       (595 )     (1.218 )     747       14  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
End of the period
    2.857       3.472       3.288       2.857       3.288       2.184  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Total stockholders’ equity
    4.884       4.641       3.287       4.884       3.287       4.640  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Comprehensive income (loss) is comprised as follows:
                                               
Net income
    270       468       569       1.548       680       1.287  
Amounts not recognized as net periodic pension cost
                                  100  
Cumulative translation adjustments
    24       (67 )     110       736       (1.710 )     (503 )
Unrealized gain (loss) on available-for-sale securities
    60       (4 )           74             (24 )
Adjustments relating to investments in affiliates
                                  2  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Total comprehensive income (loss)
    354       397       679       2.358       (1.030 )     862  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Shares
                                               
Preferred class A stock (including one special share)
    138.575.913       138.575.913       138.575.913       138.575.913       138.575.913       138.575.913  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Common stock
    249.983.143       249.983.143       249.983.143       249.983.143       249.983.143       249.983.143  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Treasury stock (1)
                                               
Beginning of the period
    (4.719.353 )     (4.719.405 )     (4.719.921 )     (4.719.651 )     (4.715.261 )     (3.659.311 )
Acquisitions
                            (4.390 )     (1.055.950 )
Sales
          52       270       298              
 
   
 
     
 
     
 
     
 
     
 
     
 
 
End of the period
    (4.719.353 )     (4.719.353 )     (4.719.651 )     (4.719.353 )     (4.719.651 )     (4.715.261 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
 
    383.839.703       383.839.703       383.839.405       383.839.703       383.839.405       383.843.795  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Interest attributed to stockholders (per share)
                                               
Preferred class A stock (including one special share)
    0,29       0,83             1,98       0,84       1,99  
Common stock
    0,29       0,83             1,98       0,84       1,99  

(1)   As of December 31, 2003, 4,715,170 common shares and 4,183 preferred shares were held in treasury in the amount of US$ 88. The 4,715,170 common shares guarantee a loan of to our subsidiary Alunorte.

See notes to consolidated financial statements.

F - 7


 

    Notes to the Consolidated Financial Statements
Expressed in millions of United States dollars, unless otherwise stated
 
1   The Company and its operations
 
    Companhia Vale do Rio Doce (CVRD) is a limited liability company, duly organized and existing under the laws of the Federative Republic of Brazil. Our operations are carried out through CVRD and its subsidiary companies, joint ventures and affiliates, and mainly consist of mining, non-ferrous metal production and logistics, as well as energy, aluminum and steel activities. Further details of our operations and those of our joint ventures and affiliates are described in Note 13.
 
    The main operating subsidiaries we consolidate are as follows:
                 
            Head office   Principal
Subsidiary
  % ownership
  location
  activity
Alumina do Norte do Brasil S.A. — Alunorte
    57     Brazil   Aluminum
CADAM S.A. (2) (4)
    61     Brazil   Kaolin
CELMAR S.A. — Indústria de Celulose e Papel (3)
    100     Brazil   Forestry
CVRD Overseas Ltd.
    100     Cayman Island Trading
Ferrovia Centro-Atlântica S.A. (4)
    100     Brazil   Logistics
Ferteco Mineração S.A. — FERTECO (3)
    100     Brazil   Iron ore and Pellets
Itabira Rio Doce Company Ltd. — ITACO
    100     Cayman Island Trading
Mineração Serra do Sossego S.A. (1) (5)
    100     Brazil   Copper
Minerações Brasileiras Reunidas S.A. — MBR (2) (4)
    85     Brazil   Iron ore
Navegação Vale do Rio Doce S.A. — DOCENAVE
    100     Brazil   Shipping
Pará Pigmentos S.A.
    76     Brazil   Kaolin
Rio Doce International Finance Ltd. — RDIF
    100     Bahamas   International finance
Rio Doce Manganèse Europe — RDME
    100     France   Ferroalloys
Rio Doce Manganese Norway — RDMN
    100     Norway   Ferroalloys
Salobo Metais S.A. (1)
    100     Brazil   Copper
Rio Doce Manganês S.A. (6)
    100     Brazil   Manganese and Ferroalloys
Urucum Mineração S.A.
    100     Brazil   Iron ore, Ferroalloys and
Vale do Rio Doce Alumínio S.A. — ALUVALE (5)
    100     Brazil   Manganese
 
              Aluminum
 
               
(1) Development stage companies
               
 
(2) Through Caemi Mineração e Metalurgia S.A.
               
 
(3) Merged with CVRD on August 29, 2003
               
 
(4) Consolidated as from September 2003
               
 
(5) Merged with CVRD on December 30, 2003
               
 
(6) Formerly Sibra-Eletrosiderúrgica Brasileira S.A.
               

2   Basis of consolidation
 
    All majority-owned subsidiaries where we have both share and management control are consolidated, with elimination of all significant intercompany accounts and transactions. Investments in unconsolidated affiliates and joint ventures are reported at cost plus our equity in undistributed earnings or losses. Included in this category are certain joint ventures in which we have majority ownership but, by force of shareholders’ agreements, do not have effective management control. We provide for losses on equity investments with negative stockholders’ equity where applicable (see Note 13).
 
    We evaluate the carrying value of our listed investments relative to publicly available quoted market prices. If the quoted market price is below book value, and such decline is considered other than temporary, we write-down our equity investments to quoted market value.
 
    We define joint ventures as businesses in which we and a small group of other partners each participate actively in the overall entity management, based on a shareholders agreement. We define affiliates as businesses in which we participate as a minority stockholder but with significant influence over the operating and financial policies of the investee.

F - 8


 

    Our condensed consolidated interim financial information for the three-month periods ended December 31, 2003, September 30, 2003, and December 31, 2002 is unaudited. However, in our opinion, such condensed consolidated financial information includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for interim periods. Certain interim footnotes have been excluded due of the inclusion of the footnote for the annual information.
 
3   Summary of significant accounting policies
 
    In preparing the consolidated financial statements, we are required to use estimates to account for certain assets, liabilities, revenues and expenses. Our consolidated financial statements therefore include various estimates concerning the selection of useful lives of property, plant and equipment, provisions necessary for contingent liabilities, fair values assigned to assets and liabilities acquired in business combinations, income tax valuation allowances, employee post-retirement benefits and other similar evaluations; actual results may vary from our estimates.
 
(a)   Basis of presentation
 
    We have prepared the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), which differ in certain respects from the accounting practices adopted in Brazil that we use in preparing our statutory financial statements.
 
    The U.S. dollar amounts for the years presented have been remeasured (translated) from the Brazilian currency amounts in accordance with the criteria set forth in Statement of Financial Accounting Standards 52 – “Foreign Currency Translation” ( SFAS 52).
 
    Prior to July 1, 1997, Brazil was considered under SFAS 52 to have a highly inflationary economy and accordingly, up to June 30, 1997, we adopted the U.S. dollar as both our functional currency and reporting currency.
 
    As from July 1, 1997, we concluded that the Brazilian economy had ceased to be highly inflationary and changed our functional currency from the reporting currency (U.S. dollars) to the local currency (Brazilian reais), for Brazilian operations and extensions thereof. Accordingly, we translated the U.S. dollar amounts of non-monetary assets and liabilities into reais at the current exchange rate, and those amounts became the new accounting bases for such assets and liabilities.
 
    We have remeasured all assets and liabilities into U.S. dollars at the current exchange rate at each balance sheet date (R$2.8892 and R$3.5333 to US$1.00 at December 31, 2003 and 2002, respectively), and all accounts in the statements of income (including amounts relative to local currency indexation and exchange variances on assets and liabilities denominated in foreign currency) at the average rates prevailing during the period. The translation gain or loss resulting from this remeasurement process is included in the cumulative translation adjustments account in stockholders’ equity.
 
    The net exchange transaction gain (loss) included in our statement of income was $222, ($515) and ($410) in 2003, 2002 and 2001, respectively, included within the line “Foreign exchange and monetary losses, net”.
 
(b)   Business combinations
 
    We adopt the procedures determined by SFAS 141 – “Business Combinations” to recognize acquisitions of interests in other companies. The method of accounting used in our business combination transactions is the “purchase method”, which requires that acquirers reasonably determine the fair value of the identifiable assets and liabilities of acquired companies, individually, in order to determine the goodwill paid in the purchase to be recognized as an intangible asset. On the acquisition of assets, which include the rights to mine reserves of natural resources, the establishment of values for these assets includes the placing of fair values on purchased reserves, which are classified in the balance sheet as property, plant and equipment.

F - 9


 

    Goodwill was amortized in a systematic manner over the periods estimated to be benefited through December 31, 2001. As required by SFAS 142 - “Goodwill and Other Intangible Assets” from January 1, 2002 goodwill resulting from the acquisitions is not amortized, but is tested for impairment at least annually and reduced to fair value to the extent any such impairment is identified.
 
(c)   Inventories
 
    Inventories are stated at the average cost of purchase or production, lower than replacement or realizable values. We record allowances for slow moving or obsolete inventories when considered appropriate, reflecting our periodic assessment of recoverability. A write-down of inventory utilizing the allowance establishes a new cost basis for the related inventory.
 
    Finished goods inventories include all related materials, labor and direct production expenditures, and exclude general and administrative expenses.
 
(d)   Property, plant and equipment
 
    Property, plant and equipment are recorded at cost, including interest cost incurred during the construction of major new facilities. We compute depreciation on the straight-line basis at annual rates which take into consideration the useful lives of the items, such as: from 2% to 20% for the railroads, 5% for ships, 3% for buildings, from 2% to 5% for installations and from 5% to 20% for mining and other equipment. Expenditures for maintenance and repairs are charged to operating costs and expenses as incurred.
 
    We capitalize the costs of developing major new ore bodies or expanding the capacity of operating mines and amortize these to operations on the unit-of-production method based on the total probable and proven quantity of ore to be recovered. Exploration costs are expensed until economic viability of mining activities is established; subsequently such costs are capitalized together with further exploration costs. We capitalize mine development costs as from the time we actually begin such development.
 
(e)   Available-for-sale equity securities
 
    Equity securities classified as “available-for-sale” are recorded in accordance with SFAS 115 “Accounting for Certain Investments in Debt and Equity Securities”. Accordingly, we exclude unrealized holding gains and losses, net of taxes, if applicable, from income and recognize them as a separate component of stockholders’ equity until realized.
 
(f)   Revenues and expenses
 
    Revenues are recognized when title has transferred to the customer or services are rendered. Revenue from exported products is recognized when such products are loaded on board the ship. Revenue from products sold in the domestic market is recognized when delivery is made to the customer. Revenue from transportation services, other than shipping operations, is recognized when the service order has been fulfilled. Shipping operations are recorded on the completed voyage basis and net revenue, costs and expenses of voyages not completed at period-end are deferred. Anticipated losses on voyages are provided when probable and can be reasonably estimated. Expenses and costs are recognized on the accrual basis.
 
(g)   Environmental and site reclamation and restoration costs
 
    Expenditures relating to ongoing compliance with environmental regulations are charged against earnings or capitalized as appropriate. These ongoing programs are designed to minimize the environmental impact of our activities. With respect to our major iron ore mine at Carajás, which has extensive remaining reserves, liabilities for final site reclamation and restoration costs will be recorded when the respective reclamation and restoration strategies can be reasonably determined and the related costs can be reasonably estimated.

F - 10


 

(h)   Compensated absences
 
    We fully accrue the employees compensation liability for vacations vested during the year.
 
(i)   Income taxes
 
    In accordance with SFAS 109 — “Accounting for Income Taxes”, the deferred tax effects of tax loss carryforwards and temporary differences have been recognized in the consolidated financial statements. A valuation allowance is made when we believe that it is more likely than not that tax assets will not be fully recoverable in the future.
 
(j)   Statement of cash flows
 
    Cash flows relating to overnight financing and investment are reported net. Short-term investments that have a ready market and maturity to us, when purchased, of 90 days or less are considered cash equivalents.
 
(k)   Earnings per share
 
    Earnings per share are computed by dividing net income by the weighted average number of common and preferred shares outstanding during the period.
 
(l)   Interest attributed to stockholders
 
    As from January 1, 1996 Brazilian corporations are permitted to attribute interest on stockholders’ equity. The calculation is based on the stockholders’ equity amounts as stated in the statutory accounting records and the interest rate applied may not exceed the long-term interest rate (TJLP) determined by the Brazilian Central Bank. Also, such interest may not exceed 50% of net income for the year nor 50% of retained earnings plus revenue reserves.
 
    The amount of interest attributed to stockholders is deductible for income tax purposes. Accordingly, the benefit to us, as opposed to making a dividend payment, is a reduction in our income tax charge equivalent to the statutory tax rate applied to such amount. Income tax is withheld from the stockholders relative to interest at the rate of 15%.
 
    Under Brazilian law, interest attributable to stockholders is considered as part of the annual minimum dividend (See Note 16). Accordingly such distributions are treated as dividends for accounting purposes.
 
    We have opted to pay such tax-deductible interest to our stockholders and have therefore accrued the amounts due as of December 31, 2003, 2002 and 2001, with a direct charge to stockholders’ equity.
 
(m)   Derivatives and hedging activities
 
    As of January 1, 2001 we adopted SFAS 133 — “Accounting for Derivative Financial Instruments and Hedging Activities”, as amended by SFAS 137, SFAS 138 and SFAS 149. Those standards require that we recognize all derivative financial instruments as either assets or liabilities on our balance sheet and measure such instruments at fair value. Changes in the fair value of derivatives are recorded in each period in current earnings or in other comprehensive income, in the latter case depending on whether a transaction is designated as an effective hedge.
 
    The transition adjustment relating to the fair value of derivatives existing as of December 31, 2000 is recorded as a charge of $8 in our statement of income for the year ended December 31, 2001. In view of the immateriality of this effect of a change in accounting principle the corresponding amount was included with other non-operating expenses. Certain of our affiliated companies and joint ventures also recorded similar charges, of which our portion of $4 is included in the caption “Equity in results of affiliates and joint ventures” in the statement of income.

F - 11


 

    Further information about our derivatives and hedging activities is included in Note 22.
 
(n)   Comprehensive income
 
    We have disclosed comprehensive income as part of the Statement of Changes in Stockholders’ Equity, in compliance with SFAS 130 – “Reporting Comprehensive Income”.
 
(o)   Reclassification
 
    Certain minor reclassifications have been made to the financial statements for 2002 and 2001 to make them comparable with the 2003 presentation.
 
4   Change in accounting practice
 
    In June 2001, the FASB issued SFAS 143 — “Accounting for Asset Retirement Obligations”. We adopted SFAS 143 as from January 1, 2003, and as a consequence an additional $26 for asset retirement obligations was recorded as “Others — long-term liabilities”, a net increase of $11 in mine development costs was registered within “Property, plant and equipment” and a resulting charge of $10 was registered as “Change in Accounting Practice for Asset Retirement Obligations” on the Statement of Income, net of income tax ($15 gross of deferred income tax). Over time the liabilities will be accreted for the change in their present value and initial capitalized costs will be amortized over the useful lives of the related assets.
 
5   Recently-issued accounting pronouncements
 
    In December 2003, the FASB issued FIN 46R – “Consolidation of Variable Interest Entities, (revised December 2003)”. The primary objectives of FIN 46R are to provide guidance on the identification of entities for which control is achieved through means other than through voting rights (variable interest entities or VIEs) and how to determine when and which business enterprise should consolidate the VIE (the primary beneficiary). This new model for consolidation applies to an entity in which either (1) the equity investors (if any) do not have a controlling financial interest or (2) the equity investment at risk is insufficient to finance that entity’s activities without receiving additional subordinated financial support from other parties. In addition, FIN 46R requires that both the primary beneficiary and all other enterprises with a significant variable interest in a VIE make additional disclosures regarding the nature, purpose, size and activities of the VIE and the enterprise’s maximum exposure to loss as a result of its involvement with the VIE.
 
    The implementation date of FIN 46R is the first period ending after December 15, 2003 for Special Purpose Entities (SPEs) and as from January 1 2004 for previously existing variable interest entities which are not SPEs. FIN 46R may be applied prospectively with a cumulative adjustment as of the date on which it is first applied or by restating previously issued financing statements for one or more years with a cumulative-effect adjustment as of the beginning of the first year restated. It is possible that we will consolidate or disclose information in relation to certain joint ventures and equity investments.
 
    With respect to SPEs the adoption of FIN 46R did not result in consolidation of any additional entities at December 31, 2003.
 
    We are evaluating the impact of implementing FIN 46R as from January 1, 2004 with respect to consolidating variable interest entities which are not SPEs.
 
    In May 2003 FASB issued SFAS No. 150 – “Accounting For Certain Financial Instruments with Characteristics of both Liabilities and Equity”, which establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). The FASB decided to make this statement effective shortly after issuance for contracts created or modified after it is issued

F - 12


 

    and for existing contracts at the beginning of the first interim period beginning after June 15, 2003. We do not expect SFAS 150 to have a material impact on our financial statements.
 
    Emerging Issue Task Force No. 01-08 (EITF 01-08), Determining Whether an Arrangement is a Lease, provides guidance in determining whether an arrangement should be considered a lease subject to the requirements of FASB Statement No. 13 (FAS 13), Accounting for Leases. The rule defines, among others, that an arrangement conveys the right to use the property, plant, and equipment (PP&E) if the purchaser (lessee) has (1) the ability to operate the PP&E, (2) control physical access to the PP&E, or (3) it is remote that one or more other parties will take more than a minor amount of the output and the pricing for the output is not fixed per unit or based on current market prices at the date of delivery.
 
    The consensus is to be applied to arrangements agreed or committed to, modified, or acquired in business combinations initiated after the beginning of an entity’s next reporting period beginning after May 28, 2003. We have not entered into significant arrangements since this date.
 
6   Our privatization
 
    In May 1997, we were privatized by the Brazilian Government, which transferred voting control to Valepar S.A. (“Valepar”). The Brazilian Government has retained certain rights with respect to our future decisions and those of Valepar and has also caused us to enter into agreements which may affect our activities and results of operations in the future. These rights and agreements are:

.   Preferred Special Share. The Brazilian Government holds a preferred special share of CVRD which confers upon it permanent veto rights over changes in our (i) name, (ii) headquarters location, (iii) corporate purpose with respect to mineral exploration, (iv) continued operation of our integrated iron ore mining systems and (v) certain other matters.
 
.   Preferred Class A Share of Valepar. The Brazilian Government held a preferred class A share of Vale par which confers upon it approval rights for a period of five years in respect of (i) concentration of ownership of Vale par by particular types of investors in excess of prescribed limitations and (ii) changes in the Valepar holding company structure relating to ownership of our common shares. This share was cancelled on April 28, 2003.
 
.   Shareholder revenue interests. On July 7, 1997, we issued to shareholders of record on April 18, 1997 (including the Brazilian Government) revenue interests providing holders thereof with the right to receive semi-annual payments based on a percentage of our net revenues above threshold production volumes from identified mining resources. These instruments are not secured by the corresponding mineral reserves and deposits.

    In addition to the preferred special share mentioned above, the National Treasury and the Banco Nacional de Desenvolvimento Econômico e Social – BNDES, the Government – owned development bank, together held 32% of our common shares and 4% of our preferred shares, which in aggregate represented 22% of our total capital at December 31, 2001. These common shares were sold through a public offering in Brazil and abroad which was completed on March 27, 2002.
 
7   Major acquisitions and disposals during the years presented
 
    We made the following acquisitions during the periods presented. Pro forma information with respect to our acquisitions of the control of Alunorte in June 2002 and Caemi in September 2003 is shown in items (b) and (c) below:
 
(a)   On April 27, 2001 we acquired 100% of Ferteco Mineração S.A. — FERTECO, a non-public company whose main activity is production and commercialization of iron ore and pellets, for $523 in cash.

F - 13


 

    The assets and liabilities acquired and corresponding goodwill were as follows:
         
Fair value of assets
    401  
Fair value of liabilities
    (251 )
 
   
 
 
Net assets at fair value
    150  
Purchase price
    523  
 
   
 
 
Goodwill
    373  
 
   
 
 

    For FERTECO inventories were valued at $57, property, plant and equipment were valued at $178, and the deferred tax liability was $24.
 
(b)   In December 2001, acting through our wholly-owned foreign subsidiary Itabira Rio Doce Company Ltd. - Itaco, we acquired 659,375,000 common shares of Caemi Mineração e Metalurgia S.A. (Caemi), corresponding to 16.82% of its total capital and 50% of its voting capital from Cayman Iron Ore Investment Co., Ltd., a wholly-owned subsidiary of Mitsui & Co., Ltd. (Mitsui) for US$ 279. Caemi is a Brazilian company headquartered in Rio de Janeiro, which operates in the iron ore, kaolin, refractory bauxite and railroad sectors and was accounted for as an equity investee up to September 2, 2003 (see below).
 
    This acquisition was approved by the European Commission subject to the commitment for Caemi to sell its equity investment in Quebec Cartier Mining Company (QCM), a Canadian producer of iron ore and pellets. On December 31, 2003 Caemi sold its holding of QCM ´s common shares to the Quebec Provincial Government for the symbolic amount of 100 Canadian dollars and converted loans to QCM of 20 million Canadian dollars into preferred stock with no voting rights (other than on matters required by law). Caemi will continue to guarantee certain financings of QCM until 2007 and has undertaken to provide further financial support to QCM, if necessary, in the form of subordinated loans up to 2010, limited to 34.5 million Canadian dollars (equivalent to $27 at December 31, 2003). The fair value of this commitment has been fully provided.
 
    CVRD and Mitsui, each of which held 50% of Caemi’s common shares, entered into a shareholder agreement requiring both shareholders to approve all major decisions affecting Caemi.
 
    The estimated net assets and corresponding goodwill were as follows:
         
    December 31, 2001
Estimated fair value of assets
    1,127  
Estimated fair value of liabilities
    (734 )
 
   
 
 
Net assets at fair value
    393  
Interest in total capital acquired
    16.82 %
Estimated fair value of net assets acquired
    66  
Purchase price
    279  
 
   
 
 
Goodwill
    213  
 
   
 
 

    On September 2, 2003 we acquired a further 43.37% of the capital of Caemi for $426, increasing our participation to 60.23%. Caemi has been consolidated as from this date.

F - 14


 

    The acquisition cost of the 43.37% of Caemi, net of cash acquired, was as follows:
         
    September 2, 2003
Estimated fair value of assets
    1,699  
Estimated fair value of liabilities
    (716 )
 
   
 
 
Net assets at fair value
    983  
Interest in total capital acquired
    43.37 %
Estimated fair value of net assets acquired
    426  
Purchase price
    426  
Less cash acquired
    (46 )
 
   
 
 
Acquisition cost of Caemi, net of cash acquired
    380  
 
   
 
 

    Caemi Pro forma
 
    The unaudited condensed pro forma income statement below shows the impact of the acquisition of Caemi on the consolidated statements of income as if the current 60.23% participation in Caemi had been acquired on January 1, 2002 (instead of the 16.86% equity investment previously held, being 16.82% initially acquired and 0.04% purchased subsequently).
                                                 
    2003
  2002
            Pre-                    
    CVRD   acquisition           CVRD        
    Consolidated
  CAEMI (1)
  Pro Forma
  Consolidated
  CAEMI (2)
  Pro Forma
                    (unaudited)                   (unaudited)
Net operating revenues
    5,350       424       5,774       4,123       572       4,695  
Operating costs and expenses
    (3,706 )     (343 )     (4,049 )     (2,694 )     (545 )     (3,239 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Operating income (loss)
    1,644       81       1,725       1,429       27       1,456  
Non-operating income (expenses)
    10       16       26       (828 )     (101 )     (929 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Income before income taxes, equity results and minority interests
    1,654       97       1,751       601       (74 )     527  
Income taxes
    (297 )     (41 )     (338 )     149       12       161  
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments
    306       (20 )     286       (87 )     (2 )(3)     (89 )
Minority interests
    (105 )     18       (87 )     17       64       81  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Income from continuing operations
    1,558       54       1,612       680             680  
Change in accounting pratice for asset retirement obligations
    (10 )           (10 )                  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Net income
    1,548       54       1,602       680             680  
 
   
 
     
 
     
 
     
 
     
 
     
 
 

(1) Period from January to August, 2003 (Consolidated as from September 2003).

(2) Period from January to December, 2002, net of consolidation adjustments.

(3) Includes elimination of Caemi equity investment write-down based on quoted market price - $86.

(c)   On June 27, 2002 we acquired a further 12.62% of the capital of ALUNORTE for $42, increasing our participation to 57.03% (represented by 62.09% of total common stock and 19.05% of total preferred stock). ALUNORTE has been consolidated as from this date.
 
    Unaudited pro forma information with respect to the effect on our consolidated statements of income, reflecting the consolidation of ALUNORTE as if control has been acquired as at January 1, 2001 is as follows:

F - 15


 

                                                 
    2002
  2001
            Pre-                    
    CVRD   acquisition   Pro Forma   CVRD           Pro Forma
    Consolidated
  ALUNORTE
  (unaudited)
  Consolidated
  ALUNORTE
  (unaudited)
Net operating revenues
    4,123       138       4,261       3,935       294       4,229  
Operating costs and expenses
    (2,694 )     (151 )     (2,845 )     (2,973 )     (219 )     (3,192 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Operating income
    1,429       (13 )     1,416       962       75       1,037  
Non-operating income (expenses)
    (828 )     (38 )     (866 )     158       (83 )     75  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Income before income taxes, equity results and minority interests
    601       (51 )     550       1,120       (8 )     1,112  
Income taxes
    149             149       218       (5 )     213  
Equity in results of affiliates and joint ventures
    (28 )     23       (5 )     (49 )     7       (42 )
Change in provision for losses on equity investments
    (59 )           (59 )     (4 )           (4 )
Minority interests
    17       28       45       2             2  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Net income
    680             680       1,287       (6 )     1,281  
 
   
 
     
 
     
 
     
 
     
 
     
 
 

(d)   On March 9, 2001 we transferred our 10.33% interest in Companhia Siderúrgica Nacional — CSN to VALIA, as a special pension plan contribution, for $249 (fair market value determined based on the weighted average price of the last thirty trading sessions at the São Paulo stock exchange in the period ended on March 9, 2001). This transfer resulted in a gain of $107. We have provided VALIA with a guarantee that we will make additional contributions to the pension plan if the market value of the CSN shares falls below threshold levels prior to the sale thereof by VALIA. At December 31, 2003 we have provided $1 in respect of this commitment.

(e)   On April 27, 2001 we concluded the sale of our 32.00% interest in Bahia Sul Celulose S.A. - BSC for $318, received in cash on May 7, 2001. This operation resulted in a gain of $170.

(f)   On June 6, 2001 we concluded the sale of our 51.48% interest in Celulose Nipo-Brasileira S.A. - CENIBRA for $671, received in cash on September 14, 2001. This operation resulted in a gain of $507.

(g)   On October 10, 2003, the subsidiary Companhia Paulista de Ferro Ligas (CPFL) finalized the sale of its shares in Fertilizantes Fosfatados S.A. (Fosfértil) to Bunge Fertilizantes S.A. for $84. The profit on the operation was $61.

    This transaction is in line with CVRD’s focus on mining and logistics and its strategy to sell equity participations which had assumed the nature of portfolio investments.
 
(h)   On November 7, 2003 we sold our investment in Companhia Ferroviária do Nordeste (CFN) to CSN for a symbolic amount, recording a loss on this transaction of $44.

8   Income taxes

    Income taxes in Brazil comprise federal income tax and social contribution, which is an additional federal tax. The statutory composite enacted tax rate applicable in the periods presented is 34% represented by a 25% federal income tax rate plus a 9% social contribution rate.

F - 16


 

    The amount reported as income tax expense in our consolidated financial statements is reconciled to the statutory rates as follows:
                                                 
    Three months ended
  Year ended December 31,
    December   September   December            
    31, 2003
  30, 2003
  31, 2002
  2003
  2002
  2001
            (unaudited)                                
Income before income taxes, equity results and minority interests
    297       388       590       1,654       601       1,120  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Federal income tax and social contribution expense at statutory enacted rates
    (101 )     (132 )     (200 )     (562 )     (204 )     (381 )
Adjustments to derive effective tax rate:
                                               
Tax benefit on interest attributed to stockholders
    42       107       9       271       99       260  
Exempt foreign income (expenses)
    (26 )     9       22       (59 )     196       226  
Difference on tax basis of equity investees
    (56 )           20       (56 )     20       58  
Tax effect related to provision for losses and write-downs
                29             29       59  
Tax incentives
    12       8       2       60       4       26  
Valuation allowance reversal (provision)
    40       4       25       53       (12 )     (44 )
Other non-taxable gains (losses)
    23       4       (16 )     (4 )     17       14  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Federal income tax and social contribution expense in consolidated statements of income
    (66 )           (109 )     (297 )     149       218  
 
   
 
     
 
     
 
     
 
     
 
     
 
 

    We have certain tax incentives relative to our iron ore and manganese operations in Carajás and relative to alumina in Barcarena. The incentives relative to iron ore and manganese comprise full income tax exemption on defined production levels up to 2005 and partial exemption up to 2013. Both incentives relative to alumina expire in 2010. An amount equal to the tax saving must be appropriated to a reserve account within stockholders’ equity and may not be distributed in the form of cash dividends.

    The major components of the deferred tax accounts in the balance sheet are as follows:
                 
    As of December 31
    2003
  2002
Net current deferred tax assets
               
Accrued expenses deductible only when disbursed
    91       211  
 
   
 
     
 
 
 
    91       211  
 
   
 
     
 
 
Long-term deferred tax assets and liabilities
               
Assets
               
Deferred tax relative to temporary differences
    3       5  
Tax deductible goodwill in business combinations
    79       66  
Related to provision for losses and write-downs of investments
    149       158  
Additional retirement benefits provision, net of unrecognized pension obligation
    73       47  
Tax loss carryforwards
    132       187  
Other temporary differences
    206       211  
 
   
 
     
 
 
 
    642       674  
 
   
 
     
 
 
Liabilities
               
Inflationary income
    (26 )     (21 )
Relative to investments acquired
    (202 )      
Prepaid retirement benefit
    (28 )     (27 )
Fair value adjustments in business combinations
    (40 )     (38 )
 
   
 
     
 
 
 
    (296 )     (86 )
 
   
 
     
 
 
Valuation allowance
               
Beginning balance
    (230 )     (213 )
Translation adjustments
    (37 )     73  
Business acquisition, sales and others
    102       (78 )
Net change in allowance
    53       (12 )
 
   
 
     
 
 
Ending balance
    (112 )     (230 )
 
   
 
     
 
 
Net long-term deferred tax assets
    234       358  
 
   
 
     
 
 

F - 17


 

9   Cash and cash equivalents
                 
    As of December 31
    2003
  2002
Cash
    88       51  
Deposits in local currency
    267       220  
Deposits in United States dollars
    230       820  
 
   
 
     
 
 
 
    585       1,091  
 
   
 
     
 
 

10   Accounts receivable
                 
    As of December 31
    2003
  2002
Customers
               
Domestic
    195       189  
Export, all denominated in United States dollars
    665       503  
 
   
 
     
 
 
 
    860       692  
Allowance for doubtful accounts
    (30 )     (26 )
Allowance for ore weight credits
    (12 )     (6 )
 
   
 
     
 
 
Total
    818       660  
 
   
 
     
 
 

    Accounts receivable from customers in the steel industry amount to 27.5% and 18.4% of domestic receivables (export receivables – 88.1% and 95.1%) at December 31, 2003 and 2002, respectively. No single customer accounted for more than 10% of total revenues in any of the years presented.
 
11   Inventories
                 
    As of December 31
    2003
  2002
Finished products
               
Iron ore and pellets
    146       86  
Manganese and ferroalloys
    78       51  
Alumina
    20       15  
Kaolin
    16       6  
Others
    8       6  
Spare parts and maintenance supplies
    237       128  
 
   
 
     
 
 
 
    505       292  
 
   
 
     
 
 

F - 18


 

12   Property, plant and equipment
 
a)   Per business area:
                                                 
    As of December 31, 2003
  As of December 31, 2002
            Accumulated                   Accumulated    
    Cost
  depreciation
  Net
  Cost
  depreciation
  Net
Ferrous
                                               
Ferrous - Southern System
                                               
Mining
    2,196       812       1,384       728       318       410  
Railroads
    866       389       477       646       308       338  
Marine terminals
    183       87       96       99       60       39  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
 
    3,245       1,288       1,957       1,473       686       787  
Ferrous - Northern System
                                               
Mining
    676       277       399       483       208       275  
Railroads
    924       376       548       727       292       435  
Marine terminals
    196       85       111       139       65       74  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
 
    1,796       738       1,058       1,349       565       784  
Pelletizing
    382       133       249       283       76       207  
Ferroalloys
    273       153       120       171       96       75  
Energy
    128       11       117       58       6       52  
Construction in progress
    914             914       406             406  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
 
    6,738       2,323       4,415       3,740       1,429       2,311  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Non-Ferrous
                                               
Potash
    54       22       32       39       15       24  
Gold
    27       25       2       119       100       19  
Kaolin
    220       75       145       71       17       54  
Research and projects
    86       62       24       63       48       15  
Construction in progress
    797             797       288             288  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
 
    1,184       184       1,000       580       180       400  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Logistics
                                               
General cargo
    575       188       387       232       109       123  
Maritime transportation
    8       6       2       10       8       2  
Construction in progress
    35             35       19             19  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
 
    618       194       424       261       117       144  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Holdings
                                               
Aluminum
    545       92       453       248       55       193  
Others
    2       1       1       12       2       10  
Construction in progress
    111             111       204             204  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
 
    658       93       565       464       57       407  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Corporate Center
                                               
Corporate
    67       28       39       35       13       22  
Construction in progress
    41             41       13             13  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
 
    108       28       80       48       13       35  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Total
    9,306       2,822       6,484       5,093       1,796       3,297  
 
   
 
     
 
     
 
     
 
     
 
     
 
 

b)   Per type of assets:
                                                 
    As of December 31, 2003
  As of December 31, 2002
            Accumulated                   Accumulated    
    Cost
  depreciation
  Net
  Cost
  depreciation
  Net
Land and buildings
    749       303       446       489       188       301  
Installations
    2,466       932       1,534       1,448       590       858  
Equipment
    883       405       478       391       196       195  
Railroads
    1,741       756       985       1,258       568       690  
Mine development costs
    353       115       238       193       53       140  
Purchased mining reserves
    578       8       570                    
Others
    638       303       335       384       201       183  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
 
    7,408       2,822       4,586       4,163       1,796       2,367  
Construction in progress
    1,898             1,898       930             930  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Total
    9,306       2,822       6,484       5,093       1,796       3,297  
 
   
 
     
 
     
 
     
 
     
 
     
 
 

F - 19


 

    Losses on disposals and impairments of property, plant and equipment totaled $51, $62 and $79 in 2003, 2002 and 2001, respectively. Disposals and impairments mainly relate to impairment of gold mines, sales of ships and trucks, locomotives and other equipment which were replaced in the normal course of business.
 
    In 2002 we sold certain forestry assets of our subsidiary Florestas Rio Doce S.A. for $59 and recorded a gain on this sale of $49. In 2003 we sold our last significant gold mining operations for $ 21 which was the book value.
 
(c)   Hydroelectric projects
 
    We participate in several jointly-owned hydroelectric plants, already in operation or under construction. We have an undivided interest in these plants and are responsible for our proportionate share of the costs of construction and operation and are entitled to our proportionate share of the energy produced.
 
    The situation of these projects at December 31, 2003 is as follows:
                                                         
    Date of                   Our                
    completion /   Our           share of   Our share of           Our share of
    expected   interest   Plant in   plant in   accumulated   Plant under   plant under
Project
  completion
  %
  service
  service
  depreciation
  construction
  construction
Igarapava
  September, 1999     38.1       136       52       (8 )            
Porto Estrela
  November, 2001     33.3       57       19       (1 )            
Funil
  January, 2003     51.0       112       57       (2 )            
Candonga
  May, 2004     50.0                         87       44  
Aimorés
  October, 2004     51.0                         178       91  
Capim Branco I
  February, 2006     48.4                         25       12  
Capim Branco II
  December, 2006     48.4                         8       4  
Foz do Chapecó
  July, 2008     40.0                         5       2  
Estreito
  October, 2008     30.0                         4       1  

    Income and expenses relating to operating plants are not material.

F - 20


 

13   Investments in affiliated companies and joint ventures
                                                 
    December 31,
    2003
  Investments
                            Net        
                            income        
    Participation in   Net   for the        
    capital (%)
  equity
  period
  2003
  2002
    voting   total                                
Steel
                                               
Usinas Siderúrgicas de Minas Gerais S.A. - USIMINAS
    22.99       11.46       271       297       31        
Companhia Siderúrgica de Tubarão - CST (1)
    26.93       28.79       307       161       86       27  
California Steel Industries Inc. - CSI
    50.00       50.00       206       5       103       107  
SIDERAR (costs $15) - available for sale investments
    4.85       4.85                   89       30  
 
                                   
 
     
 
 
 
                                    309       164  
Aluminum and bauxite
                                               
Mineração Rio do Norte S.A. - MRN
    40.00       40.00       420       81       168       162  
Valesul Alumínio S.A. - VALESUL
    54.51       54.51       90       18       49       39  
Alumínio Brasileiro S.A. - ALBRAS
    51.00       51.00       220       203       112        
Alumínio Brasileiro S.A. - ALBRAS - change in provision for losses
                                          (1 )
Alumina do Norte do Brasil S.A. - ALUNORTE (4)
    62.09       57.03                          
 
                                   
 
     
 
 
 
                                    329       200  
Ferrous
                                               
Caemi Mineração e Metalurgia S.A. (3)
    100.00       60.23             17             77  
Companhia Nipo-Brasileira de Pelotização - NIBRASCO
    51.11       51.00       35       6       18       12  
Companhia Hispano-Brasileira de Pelotização - HISPANOBRÁS
    51.00       50.89       32       6       17       14  
Companhia Coreano-Brasileira de Pelotização - KOBRASCO
    50.00       50.00             38       1        
Companhia Coreano-Brasileira de Pelotização - KOBRASCO - change in provision for losses
                                          (16 )
Companhia Ítalo-Brasileira de Pelotização - ITABRASCO
    51.00       50.90       21       5       11       9  
Gulf Industrial Investment Company - GIIC
    50.00       50.00       80       24       40       37  
SAMARCO Mineração S.A. - SAMARCO (5)
    50.00       50.00       369       140       221       184  
Minas da Serra Geral S.A. - MSG
    50.00       50.00       31       4       15       9  
Others
                            21       24  
 
                                   
 
     
 
 
 
                                    344       350  
Logistics
                                               
Companhia Ferroviária do Nordeste - CFN - change in provision for losses (2)
                                   
Ferroban - Ferrovias Bandeirantes S.A. - change in provision for losses
                            1        
Ferrovia Centro-Atlântica S.A. - FCA - change in provision for losses (3)
                                   
MRS Logística S.A.
                            39        
MRS Logística S.A. - change in provision for losses
                                  (6 )
Sepetiba Tecon S.A. - change in provision for losses
                                  (4 )
Others
                            4        
 
                                   
 
     
 
 
 
                                    44       (10 )
Other affiliates and joint ventures
                                               
Fertilizantes Fosfatados S.A. - FOSFERTIL (2)
    10.96       11.12                         25  
Others
                            8       3  
 
                                   
 
     
 
 
 
                                    8       28  
 
                                   
 
     
 
 
Total
                                    1,034       732  
 
                                   
 
     
 
 

     

[Additional columns below]

[Continued from above table, first column(s) repeated]

                                                 
    Equity Adjustments
    Three months ended
  Year ended December 31,
    December   September   December            
    31, 2003
  30, 2003
  31, 2002
  2003
  2002
  2001
            Unaudited                                
Steel
                                               
Usinas Siderúrgicas de Minas Gerais S.A. - USIMINAS
          14             34       (15 )      
Companhia Siderúrgica de Tubarão - CST (1)
    19       14       8       45       19       (1 )
California Steel Industries Inc. - CSI
    2       (2 )     7       2       19       (3 )
SIDERAR (costs $15) - available for sale investments
                                   
 
   
 
     
 
     
 
     
 
     
 
     
 
 
 
    21       26       15       81       23       (4 )
Aluminum and bauxite
                                               
Mineração Rio do Norte S.A. - MRN
    12       11       7       33       38       32  
Valesul Alumínio S.A. - VALESUL
    2       2       6       10       14       11  
Alumínio Brasileiro S.A. - ALBRAS
    10       14             104              
Alumínio Brasileiro S.A. - ALBRAS - change in provision for losses
                69             10       4  
Alumina do Norte do Brasil S.A. - ALUNORTE (4)
                            (23 )     (6 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
 
    24       27       82       147       39       41  
Ferrous
                                               
Caemi Mineração e Metalurgia S.A. (3)
          5       (11 )     23       (102 )      
Companhia Nipo-Brasileira de Pelotização - NIBRASCO
          3       2       3       4       (2 )
Companhia Hispano-Brasileira de Pelotização - HISPANOBRÁS
          1             3       5       5  
Companhia Coreano-Brasileira de Pelotização - KOBRASCO
    1                   1       (2 )     (8 )
Companhia Coreano-Brasileira de Pelotização - KOBRASCO - change in provision for losses
    8       1       3       17       (15 )      
Companhia Ítalo-Brasileira de Pelotização - ITABRASCO
          1       1       3       5       4  
Gulf Industrial Investment Company - GIIC
    3       3       2       12       5       (17 )
SAMARCO Mineração S.A. - SAMARCO (5)
    12       17       31       70       28       11  
Minas da Serra Geral S.A. - MSG
          1             2       4        
Others
    (1 )                 (1 )     2        
 
   
 
     
 
     
 
     
 
     
 
     
 
 
 
    23       32       28       133       (66 )     (7 )
Logistics
                                               
Companhia Ferroviária do Nordeste - CFN - change in provision for losses (2)
          (1 )     (1 )     (3 )     (4 )     (8 )
Ferroban - Ferrovias Bandeirantes S.A. - change in provision for losses
                            (1 )      
Ferrovia Centro-Atlântica S.A. - FCA - change in provision for losses (3)
          (8 )     (10 )     (93 )     (42 )     (95 )
MRS Logística S.A.
    37       5             39       (20 )      
MRS Logística S.A. - change in provision for losses
          2       7       6       (7 )      
Sepetiba Tecon S.A. - change in provision for losses
    (1 )     1       2       (1 )     (9 )     (3 )
Others
                (5 )           (5 )     (2 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
 
    36       (1 )     (7 )     (52 )     (88 )     (108 )
Other affiliates and joint ventures
                                               
Fertilizantes Fosfatados S.A. - FOSFERTIL (2)
    (9 )     5       3       1       8       5  
Others
    (7 )                 (4 )     (3 )     20  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
 
    (16 )     5       3       (3 )     5       25  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Total
    88       89       121       306       (87 )     (53 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 

     

[Additional columns below]

[Continued from above table, first column(s) repeated]

                                                         
                                                    Quoted
    Dividends received
  market
                                                    Decem-
    Three months ended
  Year ended December 31,
  ber 31,
    December   September   December                
    31, 2003
  30, 2003
  31, 2002
  2003
  2002
  2001
  2003
            (unaudited)                                        
Steel
                                                       
Usinas Siderúrgicas de Minas Gerais S.A. - USIMINAS
          3             3       4       3       219  
Companhia Siderúrgica de Tubarão - CST (1)
    17       30       3       52       4       10       476  
California Steel Industries Inc. - CSI
          2       3       5       9       2        
SIDERAR (costs $15) - available for sale investments
                                        89  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    17       35       6       60       17       15       784  
Aluminum and bauxite
                                                       
Mineração Rio do Norte S.A. - MRN
    11       11             27       31       31        
Valesul Alumínio S.A. - VALESUL
    6             6       9       6              
Alumínio Brasileiro S.A. - ALBRAS
                                         
Alumínio Brasileiro S.A. - ALBRAS - change in provision for losses
                                         
Alumina do Norte do Brasil S.A. - ALUNORTE (4)
                                         
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    17       11       6       36       37       31        
Ferrous
                                                       
Caemi Mineração e Metalurgia S.A. (3)
                            3             290  
Companhia Nipo-Brasileira de Pelotização - NIBRASCO
                2             2       5        
Companhia Hispano-Brasileira de Pelotização - HISPANOBRÁS
                1       2       2       5        
Companhia Coreano-Brasileira de Pelotização - KOBRASCO
                                         
Companhia Coreano-Brasileira de Pelotização - KOBRASCO - change in provision for losses
                                         
Companhia Ítalo-Brasileira de Pelotização - ITABRASCO
                4       1       4       5        
Gulf Industrial Investment Company - GIIC
          4             9       6       11        
SAMARCO Mineração S.A. - SAMARCO (5)
    25       14             78       17       21        
Minas da Serra Geral S.A. - MSG
                      1       1       5        
Others
                                         
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    25       18       7       91       35       52       290  
Logistics
                                                       
Companhia Ferroviária do Nordeste - CFN - change in provision for losses (2)
                                         
Ferroban - Ferrovias Bandeirantes S.A. - change in provision for losses
                                         
Ferrovia Centro-Atlântica S.A. - FCA - change in provision for losses (3)
                                         
MRS Logística S.A.
                                         
MRS Logística S.A. - change in provision for losses
                                         
Sepetiba Tecon S.A. - change in provision for losses
                                         
Others
                                                       
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
                                         
Other affiliates and joint ventures
                                                       
Fertilizantes Fosfatados S.A. - FOSFERTIL (2)
          2             9       2       3        
Others
                      1             31        
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
          2             10       2       34        
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total
    59       66       19       197       91       132       1,074  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 

(1)   During the quarter ended June 30, 2003 CVRD acquired an additional 4.42% of the voting shares and 5.64% of the preferred shares, representing 5.17% of CST’s total capital for $ 60;
 
(2)   Investment sold in 2003;
 
(3)   Consolidated as from September 02, 2003, after acquisition of control;
 
(4)   Consolidated as from June 30, 2002, after acquisition of control;
 
(5)   Investment includes goodwill of $37 and $30 in 2003 and 2002, respectively.

F - 21


 

14   Short-term debt
 
    Our short-term borrowings are from commercial banks and relate export financing denominated in United States dollars.
 
    Average annual interest rates on short-term borrowings were 3.19%, 3.97% and 4.96% in 2003, 2002 and 2001, respectively.
 
15   Long-term debt
                                 
    As of December 31
    Current liabilities
  Long-Term liabilities
    2003
  2002
  2003
  2002
Foreign debt
                               
Loans and financing contracted in the following currencies:
                               
United States dollars
    470       431       1,151       1,034  
Japanese Yen
    30       1       2       29  
Others
    3       1       25       1  
Fixed Rate Notes — US$ denominated
    300       200       600       600  
Securitization of export receivables — US$ denominated
    44       25       481       275  
Perpetual notes
                65       63  
Accrued charges
    54       20              
 
   
 
     
 
     
 
     
 
 
 
    901       678       2,324       2,002  
 
   
 
     
 
     
 
     
 
 
Local debt
                               
Indexed by Long-Term Interest Rate — TJLP
    10       8       88       22  
Indexed by General Price Index-Market (IGPM)
    16       14       19       24  
Basket of currencies
    30       13       23       32  
Non-convertible debentures
                90       64  
Indexed by U.S. dollars
    33       1       221       215  
Accrued charges
    19       3       2        
 
   
 
     
 
     
 
     
 
 
 
    108       39       443       357  
 
   
 
     
 
     
 
     
 
 
Total
    1,009       717       2,767       2,359  
 
   
 
     
 
     
 
     
 
 

    The long-term portion at December 31, 2003 becomes due in the following years:
         
2005
    480  
2006
    564  
2007
    554  
2008
    198  
Thereafter
    816  
No due date (Perpetual notes and non-convertible debentures)
    155  
 
   
 
 
 
    2,767  
 
   
 
 

    At December 31, 2003 annual interest rates on long-term debt were as follows:
         
Up to 7%
    2,366  
7.1% to 9%
    930  
9.1% to 11%
    316  
Over 11%
    99  
Variable (Perpetual notes)
    65  
 
   
 
 
 
    3,776  
 
   
 
 

F - 22


 

    The indexes applied to debt and respective percentage variations in each year were as follows:
                         
    2003
  2002
  2001
TJLP — Long-Term Interest Rate (effective rate)
    11.50       9.87       9.50  
IGP-M — General Price Index — Market
    8.71       25.31       10.37  
United States Dollar
    (18.23 )     52.27       18.67  

    At December 31, 2003 the US$ denominated Fixed Rate Notes of $900 (2002 - $800) and other debt of $1,634 (2002 - $1,470) are unsecured. The export securitization of $525 (2002 - $300) is secured by existing and future accounts receivable of our subsidiary CVRD Overseas Ltd. Loans from international lenders of $232 (2002- $295) are guaranteed by the Federal Government, to which we have given counter-guarantees of $165 (2002 - $164) secured by our own shares and accounts receivable of a subsidiary. We have also loans from local and international institutions secured by property, plant and equipment in the amount of $165 (2002 - $129). The remaining long-term debt of $387 (2002 - $213) is secured mainly by assets of subsidiaries.

    The Perpetual Notes are exchangeable for 48 billion preferred shares of the affiliate MRN (initially equivalent to 8% of the total number of shares of MRN owned by us). Interest is payable on the Notes in an amount equal to dividends paid on the underlying preferred shares, relative to periods starting as from the 2000 fiscal year. The Notes may be redeemed at our option or the Noteholders at any time by transfer of the underlying preferred shares to the Noteholders, providing the preemptive rights of the existing shareholders of MRN have been waived or have expired. Redemption by transfer of the underlying net assets of MRN is compulsory if certain events occur, including the liquidation or merger of MRN or the transfer of MRN’s asset and liabilities to a consortium formed by its shareholders to take over the operations of MRN. In the event of early termination the Notes may be redeemed, at the option the Noteholders, in lieu of transfer of the shares, for a cash sum equal to $48 plus the net present value of average annual earnings declared and paid by MRN for the three years immediately preceding such termination multiplied by 20 and discounted by 10% per year. This latter amount represents a fair value at December 31, 2003 of $65.

16   Stockholders’ equity

    Each holder of common and preferred class A stock is entitled to one vote for each share on all matters that come before a stockholders’ meeting, except for the election of the Board of Directors, which is restricted to the holders of common stock. As described in Note 6, the Brazilian Government holds a preferred special share which confers on it permanent veto rights over certain matters.

    As of December 31, 2003, we had acquired 4,719,353 shares to be held in treasury for subsequent disposal or cancellation at an average weighted unit cost of R$27.80 (minimum cost of R$20.07 and maximum of R$52.09).
 
    Both common and preferred stockholders are entitled to receive a dividend of at least 25% of annual net income, upon approval at the annual stockholders’ meeting. In the case of preferred stockholders, this dividend cannot be less than 6% of the preferred capital as stated in the statutory accounting records or, if greater, 3% of the book equity value per share. With respect to each of 2003, 2002 and 2001 we distributed dividends to preferred stockholders in excess of this limit. Interest attributed to stockholders as from January 1, 1996 is considered part of the minimum dividend.

    Brazilian law permits the payment of cash dividends only from retained earnings as stated in the statutory accounting records and such payments are made in Reais. At December 31, 2003, we had no undistributed retained earnings. In addition, appropriated retained earnings at December 31, 2003 includes $2,283, related to the unrealized income and expansion reserves, which could be freely transferred to retained earnings and paid as dividends, if

F - 23


 

    approved by the stockholders.

    No withholding tax is payable on distribution of profits earned as from January 1, 1996, except for distributions in the form of interest attributed to stockholders as explained in Note 3 (l).

    Brazilian laws and our By-laws require that certain appropriations be made from retained earnings to reserve accounts on an annual basis, all determined in accordance with amounts stated in the statutory accounting records, as detailed below:
                                                 
    Three months ended
  Year ended December 31
    December   September   December            
    31, 2003
  30, 2003
  31, 2002
  2003
  2002
  2001
            (unaudited)                                
Appropriated retained earnings
                                               
Unrealized income reserve
                                               
Balance January 1
    255       260       191       211       548       874  
Transfer to retained earnings
    (62 )     (5 )     20       (18 )     (337 )     (326 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Balance December 31
    193       255       211       193       211       548  
Expansion reserve
                                               
Balance January 1
    1,361       1,385       993       1,494       1,667       1,546  
Transfer to capital stock
                      (423 )           (278 )
Transfer from (to) retained earnings
    729       (24 )     501       1,019       (173 )     399  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Balance December 31
    2,090       1,361       1,494       2,090       1,494       1,667  
Legal reserve
                                               
Balance January 1
    292       297       193       241       325       307  
Transfer from (to) retained earnings
    82       (5 )     48       133       (84 )     18  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Balance December 31
    374       292       241       374       241       325  
Fiscal incentive depletion reserve
                                               
Balance January 1
    343       350       258       284       649       771  
Transfer to capital stock
                            (212 )      
Transfer to retained earnings
    4       (7 )     26       63       (153 )     (122 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Balance December 31
    347       343       284       347       284       649  
Fiscal incentive investment reserve
                                               
Balance January 1
                            23       39  
Transfer to capital stock
                            (23 )     (33 )
Transfer from retained earnings
    31                   31             17  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Balance December 31
    31                   31             23  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Total appropriated retained earnings
    3,035       2,251       2,230       3,035       2,230       3,212  
 
   
 
     
 
     
 
     
 
     
 
     
 
 

    The purpose and basis of appropriation to such reserves is described below:

  Unrealized income reserve — this represents principally our share of the earnings of affiliates and joint ventures, not yet received in the form of cash dividends.
 
  Expansion reserve — this is a general reserve for expansion of our activities.
 
  Legal reserve — this reserve is a requirement for all Brazilian corporations and represents the appropriation of 5% of annual net income under Brazilian GAAP up to a limit of 20% of capital stock under Brazilian GAAP.
 
  Fiscal incentive depletion reserve — this represents an additional amount relative to mineral reserve depletion equivalent to 20% of the sales price of mining production, which is deductible for tax purposes providing an equivalent amount is transferred from retained earnings to the reserve account. This fiscal incentive expired in 1996.
 
  Fiscal incentive investment reserve — this reserve results from an option to designate a portion of income tax otherwise payable for investment in government approved projects and is recorded in the year following that in which the taxable income was earned. As from 2000, this reserve also contemplates the tax incentives described in Note 8.

F - 24


 

17   Pension plans

    Since 1973 we have sponsored a defined benefit pension plan (the “Old Plan”) covering substantially all employees, with benefits based on years of service, salary and social security benefits. This plan is administered by Fundação Vale do Rio Doce de Seguridade Social – VALIA and was funded by monthly contributions made by us and our employees, calculated based on periodic actuarial appraisals.

    In May 2000, we implemented a new pension plan, which is primarily a defined contribution plan with a defined benefit feature relative to service prior to May 2000 (the “New Plan”), and offered our active employees the opportunity of transferring to the New Plan. Over 98% of our active employees opted to transfer to the New Plan. The Old Plan will continue in existence, covering almost exclusively retired participants and their beneficiaries.

    The following information details the status of the defined benefit elements of our plans in accordance with SFAS 132 - “Employers’ Disclosure about Pensions and Other Post-retirement Benefits”, as amended.

(a)   Change in benefit obligation
                 
    As of December 31
    2003
  2002
Benefit obligation at beginning of year
    1,308       1,388  
Service cost
    2       2  
Interest cost
    136       120  
Benefits paid
    (111 )     (94 )
Effect of exchange rate changes
    20       (288 )
Actuarial loss
    75       180  
 
   
 
     
 
 
Benefit obligation at end of year
    1,430       1,308  
 
   
 
     
 
 

    We use a measurement date of December 1, 2003 for our pension and postretirement benefit plans.

(b)   Change in plan assets
                 
    As of December 31
    2003
  2002
Fair value of plan assets at beginning of year
    1,285       1,374  
Actual return on plan assets
    432       277  
Employer contributions
    14       12  
Benefits paid
    (111 )     (94 )
Effect of exchange rate changes
    17       (284 )
 
   
 
     
 
 
Fair value of plan assets at end of year
    1,637       1,285  
 
   
 
     
 
 

    Plan assets at December 31, 2003 include $194 of portfolio investments in our own shares ($102 at December 31, 2002) and $20 of shares of related parties ($ 8 at December 31, 2002), as well as $323 of Federal Government Securities ($387 at December 31, 2002).

    Employer contributions expected for 2004 are $ 14 (unaudited).

F - 25


 

(c)   Accrued pension cost liability (prepaid pension cost)
                 
    As of December 31
    2003
  2002
Funded status, excess of benefit obligation over plan assets
    (207 )     23  
Unrecognized net transitory obligation
    (56 )     (65 )
Unrecognized net actuarial loss
    181       (37 )
 
   
 
     
 
 
Accrued pension cost liability (prepaid pension cost)
    (82 )     (79 )
 
   
 
     
 
 

(d)   Assumptions used in each year (expressed in nominal terms)
                 
    2003
  2002
Discount rate
    11.30%  p.a       11.30%  p.a  
Expected return on plan assets
    13.40%  p.a       11.30%  p.a  
Rate of compensation increase — up to 47 years
    6.91%  p.a       6.91%  p.a  
Inflation
    5.00%  p.a       5.00%  p.a  

    All assumptions will be revised during 2004.

(e)   Investment targets and composition of plan assets

    The asset allocation for the Company’s pension plans at the end of 2003 and 2002, and the target allocation for 2004, by asset category, follows. The fair value of plan assets for these plans is $1,637 and $1,285 at the end of 2003 and 2002, respectively.
                         
        Percentage of plan assets at
    Target
allocation
  December 31,
Asset category
 
  for 2004
  2003
  2002
Equity securities
    30 %     27 %     29 %
Real estate
    7 %     6 %     7 %
Loans
    4 %     2 %     3 %
Fixed Income
    59 %     65 %     61 %
 
   
 
     
 
     
 
 
Total
    100 %     100 %     100 %
 
   
 
     
 
     
 
 

    The fixed income allocation target of 59% was established in order to match the asset with the benefit payments. The proposal for 2004 is an increase of up to 33% in the investments in inflation-indexed funds. The remaining investments in fixed income would be responsible for the payment of short-term plan benefits.

    The increase in the target allocation for equity securities is related to a 32% expected return in the IBOVESPA (Brazilian stock index). This high return is due to an expected increase of corporate profits, and a belief that Brazil’s risk will decrease, economic activity will increase, and U.S. interest rates will remain low.

F - 26


 

(f)   Pension costs
                         
    Year ended December 31
    2003
  2002
  2001
Service cost — benefits earned during the period
    2       2       2  
Interest cost on projected benefit obligation
    136       120       180  
Actual return on assets
    (432 )     (277 )     (220 )
Amortization of initial transitory obligation
    9       9       12  
Net deferral
    297       157       58  
 
   
     
     
 
Net periodic pension cost
    12       11       32  
 
   
     
     
 

    In addition to benefits provided under our pension plan, accruals have been made relative to supplementary benefits extended in previous periods as part of early-retirement programs. Such accruals included in long-term liabilities totaled $198 and $141, at December 31, 2003 and 2002, respectively, plus $32 and $23, respectively, in current liabilities.

    The cost recognized in the years 2003, 2002 and 2001 relative to the defined contribution element of the New Plan was $5, $5 and $3, respectively.

18   Commitments and contingencies

(a)   At December 31, 2003, we had extended guarantees for borrowings obtained by affiliates and joint ventures in the amount of $283, of which $242 is denominated in United States dollars and the remaining $41 in local currency, as follows:
                             
    Amount of   Denominated       Final   Counter
Affiliate or Joint Venture
  guarantee
  currency
  Purpose
  maturity
  guarantees
ALBRAS
    231     US$   Debt guarantee   2007   None
 
    40       R$   Debt guarantee   2010   None
SAMARCO
    10     US$   Debt guarantee   2020   None
VALESUL
    1       R$   Debt guarantee   2006   None
NIBRASCO
    1     US$   Debt guarantee   2004   Collateral Pledge
 
   
 
                     
 
    283                      
 
   
 
                     

    We expect no losses to arise as a result of the above guarantees. We charge commission for extending these guarantees in the case of Albras and Samarco.

    We have not provided any significant guarantees since January 1, 2003 which would require fair value adjustments under FIN 45 – “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others”.

(b)   CVRD and its subsidiaries are defendants in numerous legal actions in the normal course of business. Based on the advice of our legal counsel, management believes that the provision made against contingent losses is sufficient to cover probable losses in connection with such actions.

F - 27


 

    The provision for contingencies and the related judicial deposits are composed as follows:
                                 
    December 31, 2003
  December 31, 2002
    Provision for   Judicial   Provision for   Judicial
    contingencies
  deposits
  contingencies
  deposits
Labor claims
    177       66       109       52  
Civil claims
    167       54       95       32  
Tax — related actions
    285       279       220       153  
Others
    6       8       4       2  
 
   
 
     
 
     
 
     
 
 
 
    635       407       428       239  
 
   
 
     
 
     
 
     
 
 

    Labor — related actions principally comprise employee claims for (i) payment of time spent travelling from their residences to the work-place, (ii) additional payments for alleged dangerous or unhealthy working conditions and (iii) various other matters, often in connection with disputes about the amount of indemnities paid upon dismissal.

    Civil actions principally relate to claims made against us by contractors in connection with losses alleged to have been incurred by them as a result of various past government economic plans during which full indexation of contracts for inflation was not permitted.

    Tax — related actions principally comprise our challenges of certain revenue taxes, VAT and of the tax on financial movements – CPMF.

    We continue to vigorously pursue our interests in all the above actions but recognize that probably we will incur some losses in the final instance, for which we have made provisions.

    Our judicial deposits are made as required by the courts for us to be able to enter or continue a legal action. When judgment is favorable to us, we receive the deposits back; when unfavorable, the deposits are delivered to the prevailing party. An increase of $126 for tax deposits during 2003 refers mainly to an action in which we challenged the annual limitation on use to our tax loss carryforwards.

    Contingencies settled in 2003, 2002 and 2001 aggregated $182 $178 and $6, respectively, and additional provisions aggregated $146, $264 and $79, respectively.

    In addition to the contingencies for which we have made provisions we have possible losses in connection with tax contingencies totaling $308 and $220 at December 31, 2003 and 2002, respectively, for which no provision is maintained.

(c)   We are defendants in two actions seeking substantial compensatory damages brought by the Municipality of Itabira, State of Minas Gerais, which we believe are without merit. Due to the remote likelihood that any loss will arise therefrom no provision has been made in the financial statements with respect to these two actions.

(d)   We are committed under a take-or-pay agreement to take annual delivery of approximately 207,060 metric tons per year of aluminum from ALBRAS at market prices. This estimate is based on 51% of ALBRAS expected production and, at a market price of $1,458.16 per metric ton, at December 31, 2003, represents an annual commitment of $302. Actual take from Albras was $296, $257 and $220 during 2003, 2002 and 2001, respectively.

(e)   We and BNDES entered into a contract, known as the Mineral Risk Contract, in March 1997, relating to prospecting authorizations for mining regions where drilling and exploration are still in their early stages. The Mineral Risk Contract provides for the joint development of certain unexplored mineral deposits in approximately two million identified hectares of land in the Carajás region, as well as proportional participation in any financial benefits earned from the development of such resources. Iron ore and manganese deposits already identified and subject to development are specifically excluded from the Mineral Risk Contract.

F - 28


 

    Pursuant to the Mineral Risk Contract, we and BNDES each agreed to provide US$ 205 million, which represents half of the US$ 410 million in expenditures estimated as necessary to complete geological exploration and mineral resource development projects in the region over a period of five years, which was extended for an additional period of two years. We will oversee these projects and BNDES will advance us half of our costs on a quarterly basis. Under the Mineral Risk Contract, as of December 31, 2003, the remaining contributions towards exploration and development activities totaled US$ 87 million. In the event that either of us wishes to conduct further exploration and development after having spent such US$ 205 million, the contract provides that each party may either choose to match the other party’s contributions, or may choose to have its financial interest proportionally diluted. If a party’s participation in the project is diluted to an amount lower than 40% of the amount invested in connection with exploration and development projects, then the Mineral Risk Contract provides that the diluted party will lose all the rights and benefits provided for in the Mineral Risk Contract and any amounts previously contributed to the project.

    Under the Mineral Risk Contract, BNDES has agreed to compensate us through a finder’s fee production royalty on their share of mineral resources that are discovered and placed into production. This finder’s fee is equal to 3.5% of the revenues derived from the sale of gold, silver and platinum group metals and 1.5% of the revenues derived from the sale of other minerals, including copper, except for gold and other minerals discovered at Serra Leste, for which the finder’s fee is equal to 6.5% of revenues.

(f)   At the time of our privatization in 1997, we issued shareholder revenue interests known in Brazil as “debentures” to our then-existing shareholders, including the Brazilian Government. The terms of the “debentures”, were set to ensure that our pre-privatization shareholders, including the Brazilian Government, would participate alongside us in potential future financial benefits that we are able to derive from exploiting our mineral resources.

    In preparation for the issuance of the debentures, we issued series B preferred shares on a one-for-one basis to all holders of our common shares and series A preferred shares. We then exchanged all of the series B shares for the debentures at par value. The debentures are not redeemable or convertible, and do not trade on a stapled basis or otherwise with our common or preferred shares. During 2002 we registered the debentures with the CVM in order to permit trading.

    Under Brazilian Central Bank regulations, pre-privatization shareholders that held their shares through our preferred share American Depositary Receipt, or ADR, program and institutional investors that held their shares through rule 1,298/87 of Brazilian Central Bank were not permitted to receive the debentures or any financial benefits relating to the debentures. We sought approval from the Central Bank to distribute the debentures to these investors, but the Central Bank rejected our request. We renewed our request to the Central Bank, but we cannot be sure that we will succeed. Therefore, unless the Central Bank approves our request, the debentures will not have any value for ADR holders and foreign investors through annex V.

    Under the terms of the debentures, holders will have the right to receive semi-annual payments equal to an agreed percentage of our net revenues (revenues less value added tax) from certain identified mineral resources that we owned as of May 1997, to the extent that we exceed defined threshold production volumes of these resources, and from the sale of mineral rights that we owned as of May 1997. Our obligation to make payments to the holders will cease when the relevant mineral resources are exhausted at which time we are required to repay the original par value plus accrued interest. Based on current production levels, and estimates for new projects, we expect to start payments referring to copper resources in 2004, to iron ore resources in approximately 2020 for the Northern System and 2030 for the Southern System, and payments related to other mineral resources at the end of the decade.

    The table below summarizes the amounts we will be required to pay under the debentures based on the net revenues we earn from the identified mineral resources and the sale of mineral rights.

F - 29


 

         
Area
  Mineral
  Required Payments by CVRD
Southern System
  Iron ore   1.8% of net revenue, after total sales from May 1997 exceeds 1.7 billion tons.
 
       
Northern System
  Iron ore   1.8% of net revenue, after total sales from May 1997 exceeds 1.2 billion tons.
 
       
Pojuca, Andorinhas, Liberdade and Sossego
  Gold and copper   2.5% of net revenue from the beginning of commercialization corresponding to our ownership interest at April 15, 1997.
 
       
Igarapé Bahia and Alemão
  Gold and copper   2.5% of net revenue, after total sales from May 1997 exceeds 70 tons of gold.
 
       
Fazenda Brasileiro (*)
  Gold   2.5% of net revenue after total sales from May 1997 exceeds 26 tons.
 
       
Other areas, excluding Carajás/Serra Leste
  Gold   2.5% of net revenue.
 
       
Other areas owned as of May 1997
  Other minerals   1% of net revenue, 4 years after the beginning of the commercialization.
 
       
All areas
  Sale of mineral rights owned as of May 1997   1% of the sales price.

    We sold Fazenda Brasileiro in August 2003 and will pay the corresponding amount of $2 debenture holders by March 31, 2004.

(g)   We use various judgments and assumptions when measuring our environmental liabilities and asset retirement obligations. Changes in circumstances, law or technology may affect our estimates and we periodically review the amounts accrued and adjust them as necessary. Our accruals do not reflect unasserted claims because we are currently not aware of any such issues. Also the amounts provided are not reduced by any potential recoveries under cost sharing, insurance or indemnification arrangements because such recoveries are considered uncertain. The changes are demonstrated as follows:

F - 30


 

         
Balance as of October 1, 2003
    60  
Increase due to new subsidiaries
    2  
Accretion expense
    2  
Revisions to estimated cash flows
    15  
Cumulative translation adjustment
    2  
 
   
 
 
Balance as of December 31, 2003
    81  
 
   
 
 
Balance as of July 1, 2003
    42  
Increase due to new subsidiaries
    9  
Accretion expense
    2  
Cumulative translation adjustment
    7  
 
   
 
 
Balance as of September 30, 2003
    60  
 
   
 
 
Balance as of December 31, 2002
    15  
Initial recognition of SFAS 143 as at January 1, 2003
    26  
Increase due to new subsidiaries acquired
    11  
Accretion expense
    6  
Revisions to estimated cash flows
    15  
Cumulative translation adjustment
    8  
 
   
 
 
Balance as of December 31, 2003
    81  
 
   
 
 

    The quarterly information is unaudited

    Had SFAS 143 been applied prior to January 1, 2003, the pro forma asset retirement obligation at December 31, 2002, 2001 and 2000 would have been $41, $44 and $42, respectively.

    Additionaly, had SFAS 143 been applied previously, net income for the years ended December 31, 2002 and 2001 on a pro forma basis would have been lower by $8 and $6 (unaudited).

    Had SFAS 143 been applied in prior years the impact on net income and earnings per share would be as follows:
                 
    2002
  2001
Net income
    680       1,287  
Net income (pro forma — unaudited)
    672       1,281  
Basic earnings per Preferred Class A Share
    1.77       3.34  
Basic earnings per Common Share
    1.77       3.34  
Basic earnings per Preferred Class A Share (pro forma — unaudited)
    1.75       3.32  
Basic earnings per Common Share (pro forma — unaudited)
    1.75       3.32  

19   Segment and geographical information
 
    In 1999 we adopted SFAS 131 “Disclosures about Segments of an Enterprise and Related Information” with respect to the information we present about our operating segments. SFAS 131 introduced a “management approach” concept for reporting segment information, whereby such information is required to be reported on the basis that the chief decision-maker uses internally for evaluating segment performance and deciding how to allocate resources to segments. Our business segments are currently organized as follows:

    Ferrous products — comprises iron ore mining and pellet production, as well as the Northern

F - 31


 

    and Southern transportation systems, including railroads, ports and terminals, as they pertain to mining operations. Manganese mining and ferroalloys are also included in this segment.

    Non-ferrous products – comprises the production of non-ferrous minerals.

    Logistics – comprises our transportation systems as they pertain to the operation of our ships, ports and railroads for third-party cargos.

    Holdings – divided into the following sub-groups:

  Aluminum — comprises aluminum trading activities, alumina refining and investments in joint ventures and affiliates engaged in bauxite mining and aluminum metal smelting.
 
  Steel — comprises our investments in joint ventures and affiliates operating in the steel industry.
 
  Others — comprises our investments in joint ventures and affiliates engaged in other businesses.

    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 accounting practices generally accepted in Brazil together with certain minor inter-segment allocations.

    Consolidated net income and principal assets are reconciled as follows:

F - 32


 

Results by segment — before eliminations (Unaudited)

                                                         
    As of and for the three months ended
December 31, 2003

                            Holdings
       
            Non                    
    Ferrous
  ferrous
  Logistics
  Aluminum
  Others
  Eliminations
  Consolidated
Gross revenues — Export
    1,650       36       22       233             (732 )     1,209  
Gross revenues — Domestic
    296       30       156       41             (42 )     481  
Cost and expenses
    (1,549 )     (76 )     (146 )     (216 )     (3 )     774       (1,216 )
Depreciation, depletion and amortization
    (60 )     (7 )     (6 )     (5 )                 (78 )
Pension plan
    (3 )           (1 )                       (4 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Operating income (loss)
    334       (17 )     25       53       (3 )           392  
Financial income
    50             3       2             (37 )     18  
Financial expenses
    (136 )           (4 )     (19 )           37       (122 )
Foreign exchange and monetary gains (losses), net
    (12 )     1       (2 )     6       (1 )           (8 )
Gain on sale of investments
    17                                     17  
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments
    23             36       24       5             88  
Income taxes
    (60 )     (3 )     (1 )           (2 )           (66 )
Minority interests
    (39 )     1             (11 )                 (49 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Net income
    177       (18 )     57       55       (1 )           270  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Sales classified by geographic destination:
                                                       
Export market
                                                       
America, except United States
    147             10       45             (86 )     116  
United States
    75                   7             (45 )     37  
Europe
    750       26       10       150             (322 )     614  
Middle East/Africa/Oceania
    88                               (20 )     68  
Japan
    165       4                         (71 )     98  
China (2)
    290       5             12             (117 )     190  
Asia, other than Japan and China
    135       1       2       19             (71 )     86  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    1,650       36       22       233             (732 )     1,209  
Domestic market
    296       30       156       41             (42 )     481  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    1,946       66       178       274             (774 )     1,690  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Assets:
                                                       
Property, plant and equipment, net
    4,495       1,000       424       564       1             6,484  
Additions to Property, plant and equipment
    318       125       121       30                   594  
Investments in affiliated companies and joint ventures and other investments, net of provision for losses
    344             44       329       317             1,034  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Capital employed
    4,137       266       429       498       20             5,350  

     

[Additional columns below]

[Continued from above table, first column(s) repeated]

                                                         
    As of and for the three months ended
September 30, 2003

                            Holdings
       
            Non                    
    Ferrous
  ferrous
  Logistics
  Aluminum
  Others
  Eliminations
  Consolidated
Gross revenues — Export
    1,411       28       14       218             (651 )     1,020  
Gross revenues — Domestic
    309       31       130       46             (53 )     463  
Cost and expenses
    (1,282 )     (38 )     (91 )     (210 )     1       704       (916 )
Depreciation, depletion and amortization
    (50 )     (6 )     (3 )     (4 )                 (63 )
Pension plan
    (3 )                                   (3 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Operating income (loss)
    385       15       50       50       1             501  
Financial income
    49       1       3       2       1       (29 )     27  
Financial expenses
    (89 )     (2 )     (2 )     (18 )     (1 )     29       (83 )
Foreign exchange and monetary gains (losses), net
    (48 )     (4 )     3       (8 )                 (57 )
Gain on sale of investments
                                         
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments
    32             (1 )     27       31             89  
Income taxes
    (1 )           (1 )     (1 )     3              
Minority interests
    (3 )                 (6 )                 (9 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Net income
    325       10       52       46       35             468  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Sales classified by geographic destination:
                                                       
Export market
                                                       
America, except United States
    142             10       44             (87 )     109  
United States
    91       2             6             (46 )     53  
Europe
    534       19       4       96             (236 )     417  
Middle East/Africa/Oceania
    85                               (20 )     65  
Japan
    160       6             26             (79 )     113  
China (2)
    275       1             46             (132 )     190  
Asia, other than Japan and China
    124                               (51 )     73  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    1,411       28       14       218             (651 )     1,020  
Domestic market
    309       31       130       46             (53 )     463  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    1,720       59       144       264             (704 )     1,483  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Assets:
                                                       
Property, plant and equipment, net
    4,024       858       439       529       38             5,888  
Additions to Property, plant and equipment
    235       170       16       22                   443  
Investments in affiliated companies and joint ventures and other investments, net of provision for losses
    338             7       320       325             990  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Capital employed
    3,818       246       473       477       26             5,040  

     

[Additional columns below]

[Continued from above table, first column(s) repeated]

                                                         
    As of and for the three months ended
December 31, 2002

                            Holdings
       
            Non           (1)            
    Ferrous
  ferrous
  Logistics
  Aluminum
  Others
  Eliminations
  Consolidated
Gross revenues — Export
    1,139       24       11       117             (525 )     766  
Gross revenues — Domestic
    206       26       138       30       (1 )     (64 )     335  
Cost and expenses
    (982 )     (97 )     (73 )     (148 )     (13 )     599       (714 )
Depreciation, depletion and amortization
    (36 )     (3 )     (2 )     (2 )                 (43 )
Pension plan
    (2 )           (1 )                       (3 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Operating income (loss)
    325       (50 )     73       (3 )     (14 )     10       341  
Financial income
    77       1       3       3       1       (45 )     40  
Financial expenses
    (83 )     (1 )           (6 )     (3 )     45       (48 )
Foreign exchange and monetary gains (losses), net
    246       11       (51 )     55       6       (10 )     257  
Gain on sale of investments
                                         
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments
    28             (7 )     82       18             121  
Income taxes
    (130 )           (7 )     24       4             (109 )
Minority interests
    2       (6 )           (29 )                 (33 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Net income
    465       (45 )     11       126       12             569  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Sales classified by geographic destination:
                                                       
Export market
                                                       
America, except United States
    102             5       10             (59 )     58  
United States
    89       1             2             (59 )     33  
Europe
    477       19       5       84             (198 )     387  
Middle East/Africa/Oceania
    88                               (20 )     68  
Japan
    125       1             11             (58 )     79  
China (2)
                                         
Asia, other than Japan and China
    258       3       1       10             (131 )     141  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    1,139       24       11       117             (525 )     766  
Domestic market
    206       26       138       30       (1 )     (64 )     335  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    1,345       50       149       147       (1 )     (589 )     1,101  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Assets:
                                                       
Property, plant and equipment, net
    2,346       400       144       383       24             3,297  
Additions to Property, plant and equipment
    144       76       3       35                   258  
Investments in affiliated companies and joint ventures and other investments, net of provision for losses
    350             (10 )     200       192             732  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Capital employed
    2,364       119       161       209       24             2,877  

(1)   Control of Alunorte was acquired in and consolidated from June 2002.

(2)   In three months ended December 31, 2002 China was classified within Asia.

F - 33


 

Operating income by product – after eliminations (unaudited)

                                                                                 
    For the three months ended
    December 31, 2003
    Revenues
  Value                           Impairment/
Gain on Sale
of property,
  Depreciation,    
                            added   Net   Cost and           plant and   depletion and   Operating
    Export
  Domestic
  Total
  tax
  revenues
  expenses
  Net
  equipment
  amortization
  income
Ferrous
                                                                               
Iron ore
    675       146       821       (13 )     808       (442 )     366       (10 )     (36 )     320  
Pellets
    198       56       254             254       (179 )     75             (2 )     73  
Manganese
    8       3       11       (2 )     9       (15 )     (6 )           (1 )     (7 )
Ferroalloys
    62       31       93       (6 )     87       (76 )     11       (17 )     (3 )     (9 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    943       236       1,179       (21 )     1,158       (712 )     446       (27 )     (42 )     377  
Non ferrous
                                                                               
Gold
                                                           
Potash
          24       24       (3 )     21       (9 )     12             (4 )     8  
Kaolin
    36       5       41       (2 )     39       (27 )     12       (12 )     (3 )     (3 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    36       29       65       (5 )     60       (36 )     24       (12 )     (7 )     5  
Aluminum
                                                                               
Alumina
    111       38       149       (1 )     148       (107 )     41             (5 )     36  
Aluminum
    91             91             91       (88 )     3                   3  
Bauxite
    12       2       14       (1 )     13       (12 )     1                   1  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    214       40       254       (2 )     252       (207 )     45             (5 )     40  
Logistics
                                                                               
Railroads
          127       127       (14 )     113       (84 )     29             (23 )     6  
Ports
          38       38       (5 )     33       (21 )     12             (3 )     9  
Ships
    18       9       27             27       (36 )     (9 )                 (9 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    18       174       192       (19 )     173       (141 )     32             (26 )     6  
Others
    (2 )     2             (5 )     (5 )     (33 )     (38 )           2       (36 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    1,209       481       1,690       (52 )     1,638       (1,129 )     509       (39 )     (78 )     392  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 

     

[Additional columns below]

[Continued from above table, first column(s) repeated]

                                                                                 
    For the three months ended
    September 30, 2003
    Revenues
  Value                           Impairment/
Gain on sale
of property,
  Depreciation,    
                            added   Net   Cost and           plant and   depletion and   Operating
    Export
  Domestic
  Total
  tax
  revenues
  expenses
  Net
  equipment
  amortization
  income
Ferrous
                                                                               
Iron ore
    554       147       701       (16 )     685       (344 )     341             (31 )     310  
Pellets
    159       58       217       (7 )     210       (151 )     59             (2 )     57  
Manganese
    7       4       11       (1 )     10       (14 )     (4 )                 (4 )
Ferroalloys
    46       24       70       (6 )     64       (46 )     18             (3 )     15  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    766       233       999       (30 )     969       (555 )     414             (36 )     378  
Non ferrous
                                                                               
Gold
    5             5             5       13       18                   18  
Potash
          28       28       (4 )     24       (12 )     12             (1 )     11  
Kaolin
    21       4       25             25       (24 )     1             (3 )     (2 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    26       32       58       (4 )     54       (23 )     31             (4 )     27  
Aluminum
                                                                               
Alumina
    107       42       149       (3 )     146       (99 )     47             (4 )     43  
Aluminum
    77       4       81             81       (73 )     8                   8  
Bauxite
    12       1       13             13       (11 )     2                   2  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    196       47       243       (3 )     240       (183 )     57             (4 )     53  
Logistics
                                                                               
Railroads
          101       101       (10 )     91       (35 )     56             (17 )     39  
Ports
    1       39       40       (3 )     37       (19 )     18             (2 )     16  
Ships
    10       8       18       (1 )     17       (28 )     (11 )                 (11 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    11       148       159       (14 )     145       (82 )     63             (19 )     44  
Others
    21       3       24             24       (25 )     (1 )                 (1 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    1,020       463       1,483       (51 )     1,432       (868 )     564             (63 )     501  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 

     

[Additional columns below]

[Continued from above table, first column(s) repeated]

                                                                                 
    For the three months ended
    December 31, 2002
    Revenues
  Value                           Impairment/
Gain on sale
of property,
  Depreciation,    
                            added   Net   Cost and           plant and   depletion and   Operating
    Export
  Domestic
  Total
  tax
  revenues
  expenses
  Net
  equipment
  amortization
  income
Ferrous
                                                                               
Iron ore
    406       135       541       (16 )     525       (226 )     299             (22 )     277  
Pellets
    160       36       196       (5 )     191       (144 )     47             2       49  
Manganese
    9       (2 )     7       (1 )     6       4       10             (4 )     6  
Ferroalloys
    46       14       60       (4 )     56       (46 )     10             (1 )     9  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    621       183       804       (26 )     778       (412 )     366             (25 )     341  
Non ferrous
                                                                               
Gold
    13             13             13       (32 )     (19 )     (35 )     1       (53 )
Potash
          24       24       (4 )     20       (11 )     9             (1 )     8  
Kaolin
    10       2       12             12       (8 )     4                   4  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    23       26       49       (4 )     45       (51 )     (6 )     (35 )           (41 )
Aluminum
                                                                               
Alumina
    45       28       73       (2 )     71       (61 )     10             (2 )     8  
Aluminum
    73             73             73       (64 )     9                   9  
Bauxite
    4             4             4       (4 )                        
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    122       28       150       (2 )     148       (129 )     19             (2 )     17  
Logistics
                                                                               
Railroads
          76       76       (8 )     68       (16 )     52             (16 )     36  
Ports
          11       11       (2 )     9       (14 )     (5 )           (1 )     (6 )
Ships
          11       11             11       (25 )     (14 )                 (14 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
          98       98       (10 )     88       (55 )     33             (17 )     16  
Others
                                  7       7             1       8  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    766       335       1,101       (42 )     1,059       (640 )     419       (35 )     (43 )     341  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 

F - 34

 


 

Results by segment — before eliminations

                                                         
    As of and for the year ended December 31,
    2003
                            Holdings
       
            Non                    
    Ferrous
  ferrous
  Logistics
  Aluminum
  Others
  Eliminations
  Consolidated
Gross revenues — Export
    5,256       105       75       758             (2,354 )     3,840  
Gross revenues — Domestic
    1,142       107       472       165             (181 )     1,705  
Cost and expenses
    (4,871 )     (192 )     (366 )     (760 )     3       2,535       (3,651 )
Depreciation, depletion and amortization
    (191 )     (18 )     (14 )     (15 )                 (238 )
Pension plan
    (11 )           (1 )                       (12 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Operating income
    1,325       2       166       148       3             1,644  
Financial income
    195       1       14       10       4       (122 )     102  
Financial expenses
    (406 )     (4 )     (9 )     (49 )     (5 )     122       (351 )
Foreign exchange and monetary gains (losses), net
    150       16       (14 )     93       (3 )           242  
Gain on sale of investments
    17                                     17  
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments
    133             (52 )     147       78             306  
Income taxes
    (266 )     (3 )     (2 )     (27 )     1             (297 )
Minority interests
    (44 )     (3 )           (58 )                 (105 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Income from continuing operations
    1,104       9       103       264       78             1,558  
Change in accounting pratice for asset retirement obligations (note 4)
    (10 )                                   (10 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Net income
    1,094       9       103       264       78             1,548  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Sales classified by geographic destination:
                                                       
Export market
                                                       
America, except United States
    526             38       156             (329 )     391  
United States
    337       8             32             (188 )     189  
Europe
    2,213       76       30       378             (913 )     1,784  
Middle East/Africa/Oceania
    292             4                   (70 )     226  
Japan
    569       13             96             (259 )     419  
China (2)
    897       7             77             (401 )     580  
Asia, other than Japan and China
    422       1       3       19             (194 )     251  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    5,256       105       75       758             (2,354 )     3,840  
Domestic market
    1,142       107       472       165             (181 )     1,705  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    6,398       212       547       923             (2,535 )     5,545  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Assets:
                                                       
Property, plant and equipment, net
    4,495       1,000       424       564       1             6,484  
Additions to Property, plant and equipment
    822       440       186       95                   1,543  
Investments in affiliated companies and joint ventures and other investments, net of provision for losses
    344             44       329       317             1,034  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Capital employed
    4,137       266       429       498       20             5,350  

     

[Additional columns below]

[Continued from above table, first column(s) repeated]

                                                         
    As of and for the year ended December 31,
    2002
                            Holdings
       
            Non           (1)            
    Ferrous
  ferrous
  Logistics
  Aluminum
  Others
  Eliminations
  Consolidated
Gross revenues — Export
    4,200       143       41       387             (1,843 )     2,928  
Gross revenues — Domestic
    996       96       374       75       3       (190 )     1,354  
Cost and expenses
    (3,773 )     (225 )     (244 )     (426 )     7       2,033       (2,628 )
Depreciation, depletion and amortization
    (170 )     (25 )     (14 )     (4 )     (1 )           (214 )
Pension plan
    (9 )     (1 )     (1 )                       (11 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Operating income
    1,244       (12 )     156       32       9             1,429  
Financial income
    193       1       11       11       4       (93 )     127  
Financial expenses
    (433 )     (6 )     (5 )     (15 )     (9 )     93       (375 )
Foreign exchange and monetary gains (losses), net
    (442 )     (36 )     (18 )     (85 )     1             (580 )
Gain on sale of investments
                                         
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments
    (66 )           (88 )     39       28             (87 )
Income taxes
    145             (8 )     22       (10 )           149  
Minority interests
    2       (6 )           21                   17  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Income from continuing operations
    643       (59 )     48       25       23             680  
Change in accounting pratice for asset retirement obligations (note 4)
                                         
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Net income
    643       (59 )     48       25       23             680  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Sales classified by geographic destination:
                                                       
Export market
                                                       
America, except United States
    392             25       27             (207 )     237  
United States
    340       35       3       10             (190 )     198  
Europe
    1,799       100       9       318             (734 )     1,492  
Middle East/Africa/Oceania
    239                               (46 )     193  
Japan
    488       3       1       11             (228 )     275  
China (2)
    574       4       1       21             (270 )     330  
Asia, other than Japan and China
    368       1       2                   (168 )     203  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    4,200       143       41       387             (1,843 )     2,928  
Domestic market
    996       96       374       75       3       (190 )     1,354  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    5,196       239       415       462       3       (2,033 )     4,282  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Assets:
                                                       
Property, plant and equipment, net
    2,346       400       144       383       24             3,297  
Additions to Property, plant and equipment
    524       132       33       63       14             766  
Investments in affiliated companies and joint ventures and other investments, net of provision for losses
    350             (10 )     200       192             732  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Capital employed
    2,364       119       161       209       24             2,877  

     

[Additional columns below]

[Continued from above table, first column(s) repeated]

                                                         
    As of and for the year ended December 31,
    2001
                            Holdings
       
            Non                    
    Ferrous
  ferrous
  Logistics
  Aluminum
  Others
  Eliminations
  Consolidated
Gross revenues — Export
    3,558       173       147       283       47       (1,414 )     2,794  
Gross revenues — Domestic
    1,083       78       344       1       8       (231 )     1,283  
Cost and expenses
    (3,632 )     (176 )     (412 )     (259 )     (37 )     1,645       (2,871 )
Depreciation, depletion and amortization
    (167 )     (17 )     (26 )           (2 )           (212 )
Pension plan
    (27 )     (3 )     (2 )                       (32 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Operating income
    815       55       51       25       16             962  
Financial income
    169       1       11       7       6       (59 )     135  
Financial expenses
    (368 )     (10 )     (11 )     (1 )     (4 )     59       (335 )
Foreign exchange and monetary gains (losses), net
    (396 )     (21 )     (10 )           1             (426 )
Gain on sale of investments
                            784             784  
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments
    (7 )           (108 )     41       21             (53 )
Income taxes
    220             (3 )     1                   218  
Minority interests
    2                                     2  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Income from continuing operations
    435       25       (70 )     73       824             1,287  
Change in accounting pratice for asset retirement obligations (note 4)
                                         
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Net income
    435       25       (70 )     73       824             1,287  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Sales classified by geographic destination:
                                                       
Export market
                                                       
America, except United States
    238             65       9             (118 )     194  
United States
    247       139       21       73       47       (112 )     415  
Europe
    1,469       33       44       173             (635 )     1,084  
Middle East/Africa/Oceania
    216             4                   (20 )     200  
Japan
    525             10       12             (155 )     392  
China (2)
                                         
Asia, other than Japan and China
    863       1       3       16             (374 )     509  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    3,558       173       147       283       47       (1,414 )     2,794  
Domestic market
    1,083       78       344       1       8       (231 )     1,283  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    4,641       251       491       284       55       (1,645 )     4,077  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Assets:
                                                       
Property, plant and equipment, net
    3,171       240       305             97             3,813  
Additions to Property, plant and equipment
    508       40       25             22             595  
Investments in affiliated companies and joint ventures and other investments, net of provision for losses
    673       29       34       287       195             1,218  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Capital employed
    2,976       249       313       18       70       4       3,630  

(1)   Control of Alunorte was acquired and consolidated from June 2002.

(2)   In 2001 China was classified within Asia.

F - 35


 

Operating income by product – after eliminations

                                                                                 
    Year ended December 31,
    2003
                                                            Impairment/        
    Revenues
  Value                           Gain on sale
of property,
  Depreciation,    
                            added   Net   Cost and           plant and   depletion and   Operating
    Export
  Domestic
  Total
  tax
  revenues
  expenses
  Net
  equipment
  amortization
  income
Ferrous
                                                                               
Iron ore
    2,108       554       2,662       (65 )     2,597       (1,318 )     1,279       (10 )     (105 )     1,164  
Pellets
    627       211       838       (19 )     819       (627 )     192       (12 )     (11 )     169  
Manganese
    38       11       49       (5 )     44       (35 )     9             (2 )     7  
Ferroalloys
    201       99       300       (21 )     279       (218 )     61       (17 )     (10 )     34  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    2,974       875       3,849       (110 )     3,739       (2,198 )     1,541       (39 )     (128 )     1,374  
Non ferrous
                                                                               
Gold
    21             21             21       (2 )     19             (2 )     17  
Potash
          94       94       (12 )     82       (40 )     42             (7 )     35  
Kaolin
    83       13       96       (3 )     93       (70 )     23       (12 )     (7 )     4  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
 
    104       107       211   &nb