SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 6-K
 
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
 
For the month of May, 2004

Commission File Number 1-14732
 

 
COMPANHIA SIDERÚRGICA NACIONAL
(Exact name of registrant as specified in its charter)
 

National Steel Company
(Translation of Registrant's name into English)
 

Rua Lauro Muller, 116 - sala 3702
Rio de Janeiro, RJ
Federative Republic of Brazil
(Address of principal executive office)
 

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

Form 20-F ___X___ Form 40-F _______

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

Yes _______ No ___X____


(Convenience Translation into English from the Original Previously Issued in Portuguese)

Independent Accountants Special Review Report

To the Stockholders and Management of
Companhia Siderúrgica Nacional
Rio de Janeiro – RJ

1.

We have conducted a special review on the quarterly report (ITRs) of COMPANHIA SIDERÚRGICA NACIONAL (a Brazilian corporation), which includes the individual (Parent Company) and consolidated balance sheets as of March 31, 2004, the related statements of income for the quarter then ended, the performance report and the relevant information, presented in accordance with the accounting principles generally accepted in Brazil, prepared under the responsibility of the Company’s management.


2.

Except for the issue presented in paragraph (3), our review was conducted in accordance with specific standards established by the Brazilian Institute of Accountants - IBRACON, together with the Federal Accounting Council (CFC), and mainly comprised: (a) inquires and discussions with the Company’s management responsible for the accounting, financial and operating areas as to the principal criteria adopted in the preparation of the quarterly information; and (b) review of the information and subsequent events that had or may have significant effects on the Company’s and its subsidiaries financial position and operations.


3.

As described in Note 14 to the quarterly financial information, the Company and its affiliate MRS Logística S.A. and its subsidiary Galvasud S.A. elected to defer net losses arising from exchange variations in the year 2001, in conformity with Provisional Measure no.3/2001 and Deliberations no.404/2001 and 409/2001 from the Brazilian Securities Commission – CVM. The accounting practices adopted in Brazil require the recognition in income of the effects of exchange rate variations during the period in which they occurred. As a result, as of March 31, 2004 the stockholders’ equity is overstated by approximately R$55 million (R$75 million in the year 2003) and the net income for the period ended March 31, 2004, is understated by approximately R$20 million (R$23 million for the first quarter of 2003), net of fiscal effects.


4.

Based on our special review, except for the effects of the matter mentioned in paragraph (3), we are not aware of any material modification that should be made to the quarterly report referred to in paragraph (1) above for it to be in accordance with the accounting practices adopted in Brazil, applied in compliance with the standards laid down by CVM (Brazilian Securities Commission), specifically applicable to the preparation of the quarterly information.


5.

As described in Note 7 to the Quarterly Information, as of March 31, 2004, the Company and its subsidiaries had recorded in current assets, accounts receivable in the amount of R$77 million, related to the sale of energy in the Wholesale Electric Energy Market – MAE, for the period between September 2000 and September 2002. These amounts are subject to changes, depending on the decision on judicial process under-way filed by electric energy sector, related to the interpretation of market regulation in effect for that period.


6.

The individual and consolidated financial statements as of December 31, 2003 presented for comparative purposes, were reviewed by us, and our report, dated February 27, 2004 included a qualification with respect to the deferral of net negative exchange variations for the year 2001 and an emphasis paragraph with respect to the realization of accounts receivable related to the sale of energy on the wholesale Electric Energy Market – MAE for the period September 2000 to September 2002. The individual and consolidated statements of income in the quarter ended March 31, 2003, presented for comparative purposes, were reviewed by us, and our report, dated May 2, 2003, contains a qualification with respect to the deferral of net negative exchange variations in the year 2001 and an emphasis paragraph with respect to the realization of accounts receivable related to the sale of energy on the MAE.


7.

Our special review was conducted for the purpose of issuing a report on the Quarterly Information referred to in paragraph (1) above, taken as a whole. The Supplementary Information related to the Value-added Statement, presented in Note 24, the EBTIDA Statement included in Note 25, and the Statements of Changes in Financial Position and of Cash Flows presented in Attachment 16.01 to the Quarterly Information are presented for the purposes of allowing additional analyzes and are not required as part of the basic quarterly report. This information was reviewed according to the review procedures mentioned in paragraph (2) above, and based on our special review, is fairly stated, in all material respects, in relation to the Quarterly Information taken as a whole.



Rio de Janeiro, April 30, 2004

DELOITTE TOUCHE TOHMATSU Marcelo Cavalcanti Almeida
Auditores Independentes Engagement Partner

  (Translation of the report originally issued in Portuguese.
  See Note 29 to the financial statements)
   
FEDERAL PUBLIC SERVICE CORPORATE LAW
CVM - BRAZILIAN SECURITIES COMMISSION  
QUARTERLY INFORMATION - ITR  
COMMERCIAL, INDUSTRY & OTHER TYPES OF COMPANY DATE - 03/31/2004

01.01 - IDENTIFICATION

1 - CVM CODE
00403-0
2 - NAME OF COMPANY
COMPANHIA SIDERÚRGICA NACIONAL
3 - TAX PAYER
33.042.730/0001-04

02.01 - BALANCE SHEET - ASSETS (IN THOUSANDS OF BRAZILIAN REAIS)

1- Code 2 - Description 3 - 03/31/2004 4 - 12/31/2003
1 Total Assets 24,463,953 24,310,482
1.01 Current Assets 5,444,298 5,507,669
1.01.01 Cash 123,428 69,027
1.01.02 Credits 1,682,192 1,740,091
1.01.02.01 Trade accounts receivable - Domestic Market 702,768 695,978
1.01.02.02 Trade Accounts Receivable - Export Market 1,080,337 1,142,383
1.01.02.03 Allowance for doubtful accounts (100,913) (98,270)
1.01.03 Inventories 832,916 642,435
1.01.04 Others 2,805,762 3,056,116
1.01.04.01 Marketable Securities 2,192,910 2,124,144
1.01.04.02 Withholding Income Tax and Social Contribution to Offset 4,668 75,407
1.01.04.03 Deferred Income Tax 213,372 241,194
1.01.04.04 Deferred Social Contribution 53,465 61,737
1.01.04.05 Dividends Receivable 68,643 117,219
1.01.04.06 Prepaid Expenses 42,341 38,456
1.01.04.07 Other 230,363 397,959
1.02 Long-Term Assets 3,266,334 3,162,132
1.02.01 Credits 28,312 27,066
1.02.01.01 Compulsory Loans - Eletrobras 28,312 27,066
1.02.02 Credit With Related Parties 1,310,366 1,285,434
1.02.02.01 Affiliates -  
1.02.02.02 Subsidiaries 1,310,366 1,285,434
1.02.02.03 Other Related Parties - -
1.02.03 Others 1,927,656 1,849,632
1.02.03.01 Deferred Income Tax 669,456 636,448
1.02.03.02 Deferred Social Contribution 72,353 72,456
1.02.03.03 Judicial Deposits 519,756 481,122
1.02.03.04 Securities Receivable 46,133 44,595
1.02.03.05 Marketable Securities 154,270 154,458
1.02.03.06 Recoverable PIS/PASEP 56,176 55,031
1.02.03.07 Prepaid Expenses 48,437 48,110
1.02.03.08 Investment Available for Sale 253,021 248,691
1.02.03.09 Others 108,054 108,721
1.03 Permanent Assets 15,753,321 15,640,981
1.03.01 Investments 3,120,001 2,879,772
1.03.01.01 In Affiliates - -
1.03.01.02 In Subsidiaries 3,120,001 2,879,772
1.03.01.03 Other Investments - -
1.03.02 Property, plant and Equipment 12,333,522 12,430,298
1.03.02.01 In Net Operation 12,151,205 12,246,545
1.03.02.02 Construction 66,249 67,750
1.03.02.03 Lands 116,068 116,003
1.03.03 Deferred 299,798 330,911

02.01 - BALANCE SHEET - LIABILITIES (IN THOUSANDS OF BRAZILIAN REAIS)

1- Code 2 - Description 3 - 03/31/2004 4 - 12/31/2003
2 Total Liabilities 24,463,953 24,310,782
2.01 Current Liabilities 3,984,296 4,551,745
2.01.01 Loans and Financing 1,538,863 2,279,335
2.01.02 Debentures 577,938 89,152
2.01.03 Suppliers 243,033 432,791
2.01.04 Taxes and Contributions 592,602 799,413
2.01.04.01 Salaries and Social Contributions 46,897 91,805
2.01.04.02 Taxes Payable 324,695 546,047
2.01.04.03 Deferred Income Tax 162,507 118,795
2.01.04.04 Deferred Social Contribution 58,503 42,766
2.01.05 Dividends Payable 717,603 717,608
2.01.06 Provisions 12,570 8,177
2.01.06.01 Labor, Civil and Tax 12,570 8,177
2.01.07 Debt with Related Parties - -
2.01.08 Others 301,687 225,269
2.01.08.01 Accounts Payable - Affiliated Company 185,205 183,491
2.01.08.02 Others 116,482 41,778
2.02 Long-Term Liabilities 12,689,366 12,316,105
2.02.01 Loans and Financing 6,818,318 5,880,015
2.02.02 Debentures 900,000 1,566,550
2.02.03 Provisions 3,602,723 3,509,206
2.02.03.01 Labor, Civil, Fiscal and Environmental 588,818 584,309
2.02.03.02 For income Tax in judge 18,825 18,239
2.02.03.03 For Social Contribution in judge 42,585 42,334
2.02.03.04 Other Tax in judge 562,035 442,178
2.02.03.05 Deferred Income tax 1,757,691 1,780,990
2.02.03.06 Deferred Social Contribution 632,769 641,156
2.02.04 Debt with Related Parties 1,022,823 1,006,489
2.02.05 Others 345,502 353,845
2.02.05.01 Provision for Investment Devaluation 62,834 68,437
2.02.05.02 Others 282,668 285,408
2.03 Deferred Income - -
2.05 Stockholder´s Equity 7,790,201 7,442,932
2.05.01 Paid-In Capital 1,680,947 1,680,947
2.05.02 Capital Reserve 17,319 17,319
2.05.03 Revaluation Reserve 4,946,563 5,008,072
2.05.03.01 Own Assets 4,946,563 5,008,072
2.05.03.02 Subsidiaries/Affiliates - -
2.05.04 Revenue Reserves 736,594 736,594
2.05.04.01 Legal 249,391 249,391
2.05.04.02 Estatutory - -
2.05.04.03 For Contingencies - -
2.05.04.04 Unrealized Income - -
2.05.04.05 Profit Retentions - -
2.05.04.06 Especial For Non-Distributesd Dividends - -
2.05.04.07 Other Profit Reserves 487,203 487,203
2.05.04.07.01 For Investments 487,203 487,203
2.05.05 Retained Earnings 408,868 -

03.01 - STATEMENT OF OPERATIONS (IN THOUSANDS OF BRAZILIAN REAIS)

1- Code 2 - Description 3 -01/01/2004 to 03/31/2004 4 - 01/01/2004 to 03/31/2003 5 - 01/01/2003 to 03/31/2003 6 - 01/01/2003 to 03/31/2003
3.01 Gross Revenue from Sales and Services 1,912,141 1,912,141 1,645,432 1,912,141
3.02 Deductions from Gross Revenue (323,783) (323,783) (253,398) (323,783)
3.03 Net Revenue from Sales and Services 1,588,358 1,588,358 1,392,034 1,588,358
3.04 Cost of Goods and Services Sold (863,101) (863,101) (699,744) (863,101)
3.04.01 Depreciation, Depletion and Amortization (156,065) (156,065) (117,652) (156,065)
3.04.02 Others (707,036) (707,036) (582,092) (707,036)
3.05 Gross Profit 725,257 725,257 692,290 725,257
3.06 Operating Income/Expenses (250,082) (250,082) (142,635) (250,082)
3.06.01 Selling (59,606) (59,606) (47,604) (59,606)
3.06.01.01 Depreciation and Amortization (1,772) (1,772) (1,519) (1,772)
3.06.01.02 Others (57,834) (57,834) (46,085) (57,834)
3.06.02 General and Administrative (47,163) (47,163) (52,697) (47,163)
3.06.02.01 Depreciation and Amortization (5,565) (5,565) (5,570) (5,565)
3.06.02.02 Others (41,598) (41,598) (47,127) (41,598)
3.06.03 Financial (374,435) (374,435) (15,976) (374,435)
3.06.03.01 Financial Income 32,371 32,371 (137,282) 32,371
3.06.03.02 Financial Expenses (406,806) (406,806) 121,306 (406,806)
3.06.03.02.01 Amortization of Especial Exchange Variation (27,501) (27,501) (34,073) (27,501)
3.06.03.02.02 Foreign Exchange and Monetary loss, net (78,985) (78,985) 337,712 (78,985)
3.06.03.02.03 Financial Expenses (300,320) (300,320) (182,333) (300,320)
3.06.04 Other Operating Income 11,762 11,762 71,937 11,762
3.06.05 Other Operating Expenses (22,834) (22,834) (46,986) (22,834)
3.06.06 Equity Results of Subsidiaries and Affiliated Companies 242,194 242,194 (51,309) 242,194
3.07 Operating Income/Loss 475,175 475,175 549,655 475,175
3.08 Non-Operating Income/Loss (54) (54) (5,401) (54)
3.08.01 Income 2 2 19 2
3.08.02 Expenses (56) (56) (5,420) (56)
3.09 Income before taxes and participations/contributions 475,121 475,121 544,254 475,121
3.10 Provision for income tax and social contribution (65,125) (65,125) 44,589 (65,125)
3.11 Deferred Income Tax (62,637) (62,637) (182,811) (62,637)
3.12 Statutory Participations/Contributions - - - -
3.12.01 Participations - - - -
3.12.02 Contributions - - - -
3.13 Reversal of Interest on Stockholder´s Equity - - - -
3.15 Net Income (Loss) for the Period 347,359 347,359 406,032 347,359
  OUTSTANDING SHARES (THOUSANDS) 71,729,261 71,729,261   71,729,261
  EARNINGS PER SHARE (R$) 0.00484 0.00484   0.00484
  LOSS PER SHARE (R$)        

Companhia Siderúrgica Nacional
Management Report for
The first quarter of 2004

(Convenience Translation into English from the Original Previously Issued in Portuguese)

1. OPERATING CONTEXT

Companhia Siderúrgica Nacional ("CSN") is engaged in the production of flat steel products, its main industrial complexes being the Presidente Vargas Mill in the City of Volta Redonda, State of Rio de Janeiro, and the processing unit in the City of Araucaria, State of Paraná.

CSN is engaged in the mining of iron ore, limestone and dolomite in the State of Minas Gerais, to cater for the needs of the Presidente Vargas mill, and to improve their activities, the Company also maintains strategic investments in railroad, electricity and ports.

For the purpose of establishing a closer approach to its customers and winning additional markets on a global level, the Company has a steel distributor with service and distribution centers extending from the Northeast to the South of Brazil, a two-piece steel can plant geared to the Northeastern beverage industry, and also, a rolling mill in the United States and a 50% participation in another rolling mill in Portugal.

2. PRESENTATION OF THE FINANCIAL STATEMENTS

Hereunder the configuration of the Quarterly Information form, the Parent Company and Consolidated Statements of changes in Financial Position and Cash Flow are presented on table “Other Information considered material by the Company”.

3. SIGNIFICANT ACCOUNTING POLICIES

The Financial Statements were prepared in conformity with the accounting practices adopted in Brazil, as well as with the accounting standards and pronouncements established by CVM - the Brazilian Securities Commission and IBRACON - Brazilian Institute of Accountants

(a) Income statement

The results of operations are determined on an annual accrual basis. The Company decided to defer the net exchange variation incurred during fiscal year 2001, as detailed in Note 14.

(b) Marketable securities

Securities are recorded at cost plus yields accrued through the balance sheet date, and do not exceed the market value.

(c) Allowance for doubtful accounts

The allowance for doubtful accounts has been set up in an amount which, in the opinion of Management suffices to absorb any losses that might be incurred in realizing accounts receivable.

(d) Inventories

Inventories are stated at the lower of the average production/purchase cost and net realization value or replacement cost, except in the case of imports in process, which are stated at their identified cost.

(e) Other current and long-term assets

Other current and long-term assets are stated at their realization value, including, when applicable, yields accrued to the balance sheet date or, in the case of prepaid expenses, at cost.

(f) Investments

Investments in subsidiaries and jointly owned subsidiary companies are recorded by the equity accounting method, plus any amortizable goodwill and discount negative goodwill, if applicable.

The other permanent investments are recorded at acquisition cost.

(g) Property, plant and equipment

The property, plant and equipment of the Parent Company is presented at market or replacement values, based on appraisal reports (refer to note 13) conducted by independent expert appraisers firms, as permitted by Deliberation No. 288 issued by the Brazilian Securities Commission ("CVM") on December 3, 1998. Depreciation is computed by the straight-line method at the rates, shown in the same note, based on the remaining economic useful lives of the assets after revaluation. Iron mines – Casa de Pedra depletion is calculated on the basis of the quantity of iron ore extracted. Interest charges related to capital funding for construction in progress are capitalized for as long as the projects remain unconcluded.

(h) Deferred charges

The deferred charges are basically comprised of expenses incurred for development and implantation of projects that should generate a payback to the Company in the next few years, being the amortization applied on a straight-line basis will follow the period foreseen for the economic return on the above projects. The charges also include the unamortized net of the foreign exchange variations related to the year 2001.

(i) Current and long-term liabilities

These are stated at their known or estimated values, including, when applicable, accrued charges, monetary and foreign exchange variation incurred through the balance sheet date.

(j) Employees’ Benefit

In accordance with Deliberation No. 371, issued by the Brazilian Securities Commission (“CVM”), of December 13, 2000, the Company decided to record the respective actuarial liabilities as from January 1, 2002, in accordance with the above as mentioned in reported deliberation and based on by independent actuarial studies (see note 26 item d).

(k) Income Tax and Social Contribution on Net Income

Income tax and social contribution on net income are calculated based at their effective tax rates and consider the tax loss absorption limited to 30%, to compute the tax liability. Tax credits are set up for deferred taxes on tax losses, negative basis of social contribution on net income and on temporary differences as well as income tax and social contribution on the 2001 deferred exchange variation and other temporary differences.

(l) Derivatives

The derivatives operations are recorded in accordance with the characteristics of the financial instruments.

The swaps operations are recorded based on the operations’ net results, which are booked monthly as for the contractual conditions.

4. CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements as of March 31, 2004 and December 31, 2003 include the following direct and indirect subsidiaries and joint subsidiaries:

  Currency Percentage share of total and
voting capital stock (%)
Companies

of Origin

03/31/2004

12/31/2003

Main Ativities

 
Direct Participation: Fully Consolidated
CSN Energy Corp. US$ 100.00 100.00 Participation in other companies through equity states
CSN Export Co. US$ 100.00 100.00 Financial Operations
CSN Islands Corp. US$ 100.00 100.00 Financial Operations
CSN Islands II Corp. US$ 100.00 100.00 Financial Operations
CSN Islands III Corp. US$ 100.00 100.00 Financial Operations
CSN Islands IV Corp. US$ 100.00 100.00 Financial Operations
CSN Islands V Corp. US$ 100.00 100.00 Financial Operations
CSN Islands VII Corp. US$ 100.00 100.00 Financial Operations
CSN Islands VIII Corp. US$ 100.00 100.00 Financial Operations
CSN Overseas US$ 100.00 100.00 Financial Operations
CSN Panama, S.A. US$ 100.00 100.00 Participation in other companies through equity states
CSN Steel Corp. US$ 100.00 100.00 Participation in other companies through equity states
Cia. Metalic Nordeste R$ 99.99 99.99 Production of packings
Indústria Nacional de Aços Laminados - INAL S.A. R$ 99.99 99.99 Steel Products Service Center
FEM - Projetos, Construções e Montagens S.A. R$ 99.99 99.99 Assembly and Mantainance
CSC - Cia. Siderúrgica do Ceará R$ 99.99 99.99 Steel Marketing
CSN Energia S.A. R$ 99.90 99.90 Trading of Eletric Power
CSN Participações Energéticas S.A. R$ 99.70 99.70 Participation in other companies through equity states
CSN I S.A. R$ 99.67 99.67 Steel Marketing
Sepetiba Tecon S.A. R$ 20.00 20.00 Maritime Port Services
 
Direct Participation: Proporcionally Consolidated
GalvaSud S.A. R$ 51.00 51.00 Steel Products Service Center
Companhia Ferroviária do Nordeste (CFN) R$ 49.99 48.60 Logistics
 
Indirect Participation: Fully Consolidated
CSN Aceros, S.A. US$ 100.00 100.00 Steel Products
CSN Cayman Ltd. US$ 100.00 100.00 Financial Operation and Product Trading
CSN Iron, S.A. US$ 100.00 100.00 Financial Operations
CSN LLC US$ 100.00 100.00 Steel Marketing
CSN LLC Holding US$ 100.00 100.00 Participation in other companies through equity states
CSN LLC Partner US$ 100.00 100.00 Participation in other companies through equity states
Energy I Corp. US$ 100.00 100.00 Participation in other companies through equity states
Management Services Co., Inc. US$ 100.00 100.00 Services
Tangua Inc. US$ 100.00 100.00 Participation in other companies through equity states
Sepetiba Tecon S.A. R$ 80.00 80.00 Maritime Port Services
 
Indirect Participation: Proportionally Consolidated
Lusosider EUR 50.00 50.00 Steel Marketing

The Financial Statements prepared in US dollars and in Euros were translated at the exchange rate in effect on March 31, 2004 –R$/US$2.9086 (R$/US$2.8892 on December 31, 2003) and EUR/US$1.23182 (EUR/US$1.26353 on December 31, 2003).

The gains/losses originated by this translation were accounted for in the income statements of the related periods, as equity accounting in the parent company and exchange variation in the consolidated. These Financial Statements were prepared applying the same accounting principles as those applied by the Parent Company.

All intercompany balances and transactions have been eliminated in the preparation of the consolidated Financial Statements.

The year-end closing dates for the consolidated subsidiaries and jointly owned subsidiaries coincide with those of the parent company.

Consistent with the Financial Statements for the year ended December 31, 2002, the Company did not consolidate the investee MRS Logística S.A., due to the fact that it does not represent any relevant change to the consolidated economic unit. As of March 31, 2004 and December 31, 2003, the Company holds 32.22% of participation in the total capital stock and 18.72% in the investee voting capital stock.

The participation in Itá Energética S.A. is shown, as investment available for sale in long-term assets, therefore, was not consolidated. (See note 11)

The reconciliation between shareholders’ equity and net income for the year of the Parent Company and consolidated is as follows:

Shareholder's equity Net profit (loss)
 

  31/3/2004 31/12/2003 31/3/2004 31/3/2003
 



Parent company 7,790,291  7,442,932  347,359  406,032 
Elimination of gains on inventories (39,558) (23,561) (15,999) (9,483)
Other adjustments 11  1,925    
 



Consolidated 7,750,734  7,419,382  333,285  396,549 
 



5. TRANSACTIONS WITH RELATED PARTIES

a) Asset










Companies Accounts
receivable
Financial
Aplicattion
Mutua/ Current
Accounts(1) 
Debentures Dividends
Receivable
Advance for future
capital
Advance to Suppliers Total 









CSN Cayman 359,507    247,860         607,367 
CSN Export Co. 769,032              769,032 
CSN Islands II Corp. 58              58 
CSN Islands III Corp. 77              77 
CSN Islands IV Corp. 48              48 
CSN Islands V Corp. 57              57 
CSN Islands VII Corp. 285              285 
CSN Overseas      562,476         562,476 
CSN Panama, S.A. 538    500,030         500,568 
GalvaSud S.A. 4,577              4,577 
INAL S.A. 38,838              38,838 
MRS Logística S.A. 111              111 
Exclusive Funds    2,121,474           2,121,474 
CSN Energia S.A.       68,643     68,647 
Others 48,766      36,000   54,031 29,647 168,444 









Total on 03/31/2004 1,221,898  2,121,474 1,310,366 36,000 68,643 54,031 29,647 4,842,059 









Total on 12/31/2003 1,330,871  2,089,716 1,285,434 36,000 117,219 51,530 39,818 4,950,588 









b) Liabilities






  Loans and Financing Accounts Payable Suppliers  
 


 
Companies Prepayments Fixed Rate
Notes(2)
Investees
Loans
Swap Mutual/Current Accounts(1) Associated Companies Inventory Other Total









CSN Cayman 64,483       96,945     161,428 
CSN Export Co. 782,084       14,289     796,373 
CSN Iron   1,798,242           1,798,242 
CSN Islands III Corp.   227,716           227,716 
CSN Islands IV Corp.   297,391           297,391 
CSN Islands V Corp.   444,689           444,689 
CSN Islands VII Corp.   888,279           888,279 
CSN Islands VIII Corp.   1,056,694     348     1,057,042 
CSN Overseas 453,010   53,295   1,051,319     1,557,624 
Banco Fibra       54,602       54,602 
GalvaSud S.A.             51 51 
INAL S.A.           11,840 (943) 10,897 
MRS Logística S.A.             29,550 29,550 
CSN Energia S.A.         45,126     45,126 
Other         1   141,933 141,934 









Total on 03/31/2004 1,299,577 4,713,011 53,295 54,602 1,208,028 11,840 170,591 7,510,944 









Total on 12/31/2003 1,297,617 4,000,792 100,864 (84,068) 1,189,980 23,227 172,652 6,701,064 









c) Result




  Income Expenses
 


 
Companies Revenues from
sales and
services
Interest and
exchange
variation
Others Total Revenues from
sales and
services
Interest and
exchange
variation
Total








CSN Cayman 133,236 7,833   141,069    4,210  4,210 
CSN Export Co. 282,059 7,558   289,617    16,837  16,837 
CSN Iron            51,637  51,637 
CSN Islands II Corp.            5,596  5,596 
CSN Islands III Corp.            7,100  7,100 
CSN Islands IV Corp.            7,580  7,580 
CSN Islands V Corp.            11,663  11,663 
CSN Islands VII Corp.            44,152  44,152 
CSN Islands VIII Corp.            63,609  63,609 
CSN Overseas   9,642   9,642    27,781  27,781 
CSN Panama, S.A.   9,558   9,558         
Banco Fibra            96,752  96,752 
GalvaSud S.A. 11,597     11,597  372    372 
INAL S.A. 129,207     129,207  2,661    2,661 
MRS Logística S.A.          38,160    38,160 
Exclusive Funds   75,881   75,881         
Other     3 86,432    86,432 








Total on 03/31/2004 556,099 110,472 3 666,574  127,625 336,917  464,542 








Total on 12/31/2003 541,125 (65,137) 39 476,027  88,840 (166,140) (77,300)








CSN Cayman and CSN Iron – The Company has Indirect Participation through Energy I Corp. and CSN Panama S.A, respectively
Other: CFN, CSC, Fundação CSN, CBS – Caixa Beneficente dos Empregados da CSN, FEM, Sepetiba Tecon S.A. ,Cia. Metalic Nordeste, CSN
Aceros, CSN Steel, Lusosider, Itá Energética S.A., CSN I S.A. and CSN Participações Energéticas S.A.

These operations were carried out under conditions considered by the Company management as normal market terms and effective legislation for similar operations, being the main ones highlighted below:
(1) Annual Libor + 3% p.y. – Indeterminate maturity – CSN Cayman, CSN Export Co., CSN Overseas e CSN Panamá S.A. (part)
IGPM + 6% p.y – indeterminate maturity – CSN Panama S.A.(Part)
(2) Contracts in US$ - interest of 9.5% p.y.. (1st tranche) and 8.25% p.y.(2st tranche) - maturity 1ª and 2ª tranche: 06/01/2007 – CSN Iron

- Interest of 9.75%p.y. – Maturity: 04/22/2005 – CSN Islands III Corp
- Interest of 6.85%p.y. – Maturity: 06/04/2005 – CSN Islands IV Corp
- Interest of 7.875%p.y. – Maturity: 07/07/2005 – CSN Islands V Corp
- Interest of 7.3 and 7.75% p.y. – Maturity: 09/12/2008 – CSN Island VII Corp
- Interest of 5.65% p.y. – Maturity: 12/16/2013 – CSN Island VIII Corp

6. MARKETABLE SECURITIES

  Parent Company Consolidated
 

  03/31/2004 12/31/2003 03/31/2004 12/31/2003
 



Short term            
Financial investment fund 2,121,474  2,089,716  2,218,778  2,225,245 
Investments abroad (Time Deposit) 39,097  3,048  827,887  1,134,890 
Fixed income investments 32,339  31,380  77,167  65,657 
 



  2,192,910  2,124,144  3,123,832  3,425,792 
Derivatives       370,446  228,965 
 



  2,192,910  2,124,144  3,494,278  3,654,757 
 



Long Term
Fixed income investments and debentures (net of probables losses and with holding income tax) 154,270  154,458  169,247  169,335 
 



  154,270  154,458  169,247  169,335 
 



  2,347,180  2,278,602  3,663,525  3,824,092 
 



The Company management applies most of the Company’s financial resources in Investment Fund comprised of Brazilian government bonds and fixed income bonds issued in the Brazil, with monetary or foreign exchange variation.

7. ACCOUNTS RECEIVABLE

  Parent Company Consolidated
 

  03/31/2004  12/31/2003  03/31/2004  12/31/2003 
 



Domestic market 702,768  695,978  936,626  935,143 
Subsidiary and Associated Company 61,968  42,499       
Other clients 640,800  653,479  936,626  935,143 
 
Foreign market 1,080,337  1,142,383  412,030  323,407 
Subsidiary and Associated Company 1,159,930  1,288,372       
Other clients 16,390  21,585  426,573  410,083 
Exportation Contract Advance (95,983) (167,574) (14,543) (86,676)
 
Allowance for doubtful accounts (100,913) (98,270) (147,271) (144,439)
 



  1,682,192  1,740,091  1,201,385  1,114,111 
 



MAE

The Company’s subsidiary, CSN Energia, carries a balance receivable in respect of the sale and purchase of energy in the Wholesale Electric Energy Market – MAE that, as of March 31, 2004 amounted to R$114.635 (R$118.187 on December 31, 2003).

From September 2000 to September 2002, the Company recorded the amounts determined in conformity with the statements provided by the MAE amounted to R$482,937 and until March 31, 2004, CSN received the amount of R$368,302.

Further, with the respect to the balance receivable as of March 31, 2004, R$77,496, it refers to amounts due by concessionaires and/or permissionaires under preliminary injunctions for suspending the corresponding payments. The Company’s Management understands that it is not necessary to set up a provision for doubtful accounts in view of the actions being taken by the Company and by the official sector agencies.

8. INVENTORIES

  Parent Company Consolidated
 

  03/31/2004 12/31/2003 03/31/2004 12/31/2003
 



Finished products 232,301  125,740  369,333  272,354 
Products in process 142,180  98,034  150,709  106,696 
Rawmaterials 226,516  172,558  267,452  217,272 
Spare parts and maintenance supplies 216,282  216,985  251,570  255,961 
Imports in progress 7,064  9,083  8,856  11,879 
Others 8,574  20,035  18,996  27,645 
 



  832,916  642,435  1,066,916  891,807 
 



9. DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION

  Parent Company Consolidated
 

  03/31/2004  12/31/2003  03/31/2004  12/31/2003 
 



Current assets
Income tax 213,372  241,194  229,907  251,609 
Social contribution 53,465  61,737  59,417  65,486 
 



  266,837  302,931  289,324  317,095 
 



Long-term assets
Income tax 669,456  636,448  681,698  650,401 
Social contribution 72,353  72,456  76,774  77,493 
 



  741,809  708,904  758,472  727,894 
 



Current liabilities
Income tax 162,507  118,795  163,008  119,462 
Social contribution 58,503  42,766  58,683  43,006 
 



  221,010  161,561  221,691  162,468 
 



Long-term liabilities
Income tax 1,757,691  1,780,990  1,794,171  1,818,851 
Social contribution 632,769  641,156  632,769  641,156 
 



  2,390,460  2,422,146  2,426,940  2,460,007 
 



 
 



  31/3/2004  31/3/2003  31/3/2004  31/3/2003 
 



Income
Income tax (38,526) (132,990) (32,005) (125,923)
Social contribution (24,111) (49,821) (21,766) (47,248)
 



  (62,637) (182,811) (53,771) (173,171)
 



The sources of the deferred social contribution and income tax of the Parent Company are shown as follows:

  03/31/2004 12/31/2003
 

  Income Tax Social Contribution Income Tax Social Contribution
 



  Short Term Long Term  Short Term Long Term Short Term Long Term  Short Term Long Term
 







Assets
Non deductible provisions 112,768  178,671  40,597  50,504  107,050  129,600  38,539  47,184 
Taxes under litigation    123,201           112,279       
Taxes losses/ Negative basis 100,604  331,874  12,868     131,843  314,734  22,370    
Goodwill amortization    7,018           6,232       
Others    28,692     21,849  2,301  73,603  828  25,272 
 







  213,372  669,456  53,465  72,353  241,194  636,448  61,737  72,456 
 







Liabilities
Deferred exchange variation 18,920     6,811     25,795  4,841  9,286  1,743 
Income tax and social contribution on revaluation reserve 93,000  1,752,850  33,480  631,026  93,000  1,776,149  33,480  639,413 
Other 50,587  4,841  18,212  1,743             
 







  162,507  1,757,691  58,503  632,769  118,795  1,780,990  42,766  641,156 
 







The deferred assets related to income tax losses and social contribution negative basis were set up based on the history CSN’s profitability and on projections of future profitability, which were approved by Company’s Administration Council. These credits are expected to be completely offset in up to 5 years.

In addition to the credits already recorded, the Company has filed a lawsuit related to the "Plano Verão", claiming the financial and fiscal effects related to the computation of the Consumer Price Index (“IPC”) of January 1989, in the calculation of corporate income tax (IRPJ) and social contribution ("CSL") (refer to note 19, item c).

Reconciliation between expenses and income of current income tax (“IRPJ”) and social contribution ("CSL") of the parent company and the application of the effective rate on net income before CSL and IRPJ is as follows:

  03/31/2004 03/31/2003
 

  IRPJ  CSL  IRPJ  CSL 
 



Net income (Loss) before CSL and IRPJ 475,121  475,121  544,254  544,254 
- Rate 25% 9% 25% 9%
Total (118,780) (42,761) (136,064) (48,983)
Adjustments to reflect the effective rate:
Equity Result 60,609  21,819  (10,270) (3,697)
Relief of MAE Exposition 2,833  1,020  (12,629) (4,546)
Earnings from foreign subsidiary (50,588) (18,212) (21,311) (7,672)
"Plano Verão" effects       65,829  48,929 
Temporary differences placed on deferred       132,989  49,820 
Other permanent addition (writte off) 16,058  240  (5,740) (2,066)
 



Parent Company’s current and deferred income tax and social contribution (89,868) (37,894) 12,804  31,785 
 



Consolidated current and deferred income tax ando social contribution (90,251) (37,993) 4,493  28,529 
 



10. RECOVERABLE PIS/PASEP

As a result of a favorable final decision by the Federal Supreme Court of the unconstitutionality of the Decrees no. 2,445/88 and no. 2,449/88, by the Senate Resolution no. 49/95, and based on the legal counsel opinion, the Company states on March 31, 2004 the amount of R$565,176 (R$55,031 on December 31, 2003) in respect of this credit, which includes principal and legal charges.

11. INVESTMENTS AVAILABLE FOR SALE

The Board of Directors decided to sell the company’s shareholding in Itá Energética and as a consequence, the investment balance was transferred to long term assets, not being part of this note equity accounting any more, although accounted by the same method, as determined by Instruction CVM No 247/96, art 7º. As of March 31, 2004, total assets amounts to R$253,022 (R$248,691 on December 31, 2003) and the equity result for the first quarter of 2004 amounts to R$4,330 (R$42,209 on the first quarter of 2003). The realization estimated value of such asset is higher than the accounted balance as of March 31, 2004

12. INVESTIMENTS

a) Direct participation in subsidiary and jointly controlled companies

  03/31/2004 12/31/2003



      Net Income     Net Income  
  Number of shares % (loss) Stockholders’ % (loss) Stockholders’
 
Ownership For the equity (unsecurred Ownership For the equity (unsecurred
Companies Common stock Preferred stock    quarter liability)    quarter liability)

Steel and services                       
GalvaSud S.A. 3,538,541    51.00 (5,249) 7,643  51.00 26,422  15,945 
INAL S.A. 130,000    99.99 16,652  309,724  99.99 34,768  293,072 
Cia. Metalic Nordeste 75,763  4,425 99.99 (1,705) 90,684  99.99 10,964  87,005 
CSC 1,100    99.99       99.99 (2) (4,590)
FEM 376    99.99 17,910  (35,808) 99.99 (66,521) (56,418)
CSN I S.A. 1 99.67    99.67   
 
Corporative
CSN Overseas 272,951    100.00 141,858  1,185,087  100.00 263,852  1,036,271 
CSN Energy Corp. 200,000    100.00 1,644  536,146  100.00 75,443  530,937 
CSN Islands Corp. 50    100.00    145  100.00    145 
CSN Panama, S.A. 17  11 100.00 40,132  656,760  100.00 4,386  612,515 
CSN Export Co.   100.00 18,717  23,364  100.00 4,613  4,616 
CSN Islands II Corp.   100.00    (1,736) 100.00 (1,869) (1,724)
CSN Islands III Corp.   100.00 (1) (582) 100.00 (580) (577)
CSN Islands IV Corp.   100.00 (1) (92) 100.00 (93) (90)
CSN Islands V Corp.   100.00 (1) (151) 100.00 (153) (150)
CSN Islands VII Corp.   100.00 (83) (282) 100.00 (201) (198)
CSN Islands VIII Corp.   100.00 (9,260) (11,201) 100.00 (1,934) (1,932)
CSN Steel Corp.   100.00 1,666  11,152  100.00 12,800  12,733 
 
Energy and infrastructure
MRS Logistica S.A 35,085  74,289 32.22 34,874  315,512  32.22 351,882  280,639 
CFN 18,153    49.99 (8,493) (12,266) 48.60 (38,678) (3,037)
Sepetiba Tecon S.A. 12,444    20.00 (4,883) (11,291) 20.00 (12,127) (6,408)
CSN Energia S.A.   99.90 835  177,709  99.90 (16,559) 91,829 
CSN Participações Energéticas S.A.   99.70    99.70   

b) Investment Movement

  12/31/2003 03/31/2004



  Investment Balance of   Equity Net Investment Balance of  
  Balance (provision Addition result Goodwill Balance (provision  
Companies   for loss) Retirements   (Negative Goodwill)    for loss) Consolidated

Steel and services                     
GalvaSud S.A. 8,132       (4,234)   3,898      
INAL S.A. 293,065       16,652    309,717      
Cia. Metalic Nordeste 199,130     5,268 (1,706) (3,144) 199,548     108,990
CSC    (4,590)   (1)      (4,591)  
FEM    (56,418) 2,700 17,910       (35,808)  
CSN I S.A.               
 







  500,329  (61,008) 7,968 28,621  (3,144) 513,165  (40,399) 108,990
Corporative Center
CSN Overseas 1,036,271       148,816    1,185,087      
CSN Energy Corp. 530,936       5,209    536,145      
CSN Islands Corp. 145         146      
CSN Panama, S.A. 612,515       44,245    656,760      
CSN Export Co. 4,616       18,748    23,364      
CSN Islands II Corp.    (1,724)   (12)      (1,736)  
CSN Islands III Corp.    (577)   (5)      (582)  
CSN Islands IV Corp.    (90)   (1)      (91)  
CSN Islands V Corp.    (150)   (1)      (151)  
CSN Islands VII Corp.    (198)   (84)      (282)  
CSN Islands VIII Corp.    (1,932)   (9,269)      (11,201)  
CSN Steel Corp. 12,733       (1,581)   11,152      
 







  2,197,216  (4,671)   206,066    2,412,654  (14,043)  
Energy and infrastructure
MRS Logistica S.A. 90,432       11,238    101,670     101,670
CFN    (1,476)   (4,657)      (6,133)  
Sepetiba Tecon S.A.    (1,282)   (977)      (2,259)  
CSN Energia S.A. 91,794       717    92,511      
CSN Participações Energéticas S.A.               
 







  182,227  (2,758)   6,321    194,182  (8,392) 101,670
 







  2,879,772  (68,437) 7,968 241,008  (3,144) 3,120,001  (62,834) 210,660
 







(1) Do not include Itá Energetica equity result . See note 11
(2) Do not include the indirect subsidiaries investment balances. See amounts as follows in the note d “Goodwill/Negative goodwill and other indirect investments” of this note.

c) Additional Information about the Investees

Incorporated on May 26, 1998, through a partnership between CSN (51,0%) and Thyssen-Krupp Stahl AG (49,0%), it initiated its operational activity in December 2000. it has as objective the operation of a galvanization line for hot immersion and weld laser lines to produce welded “blanques” directed to the automobile industry.

The GalvaSud shares were provided as guarantee of financing obtained by the company from Unibanco - União de Bancos Brasileiros S.A. and Kreditanstalt Fur Wiederaulfbau.

As of April 30, 2003, in continuing the process of corporate reorganization, the merger of INAL into CISA, was approved, and followed by, the change of corporate name from CISA – CSN Indústira de Aços Revestidos S.A. to Indústria Nacional de Aços Laminados – INAL S.A.

The Company aims to be CSN’s arm in the commercialization and reprocessing of steel products in terms of being a service and distribution center.

The objective of Cia. Metalic Nordeste, Incorporated on November 27, 2002, based at Maracanaú, in the state of Ceará, it is the manufacture of packings in steel and interest in other companies.

The goodwill of R$125,759, recorded upon acquisition of the investment, has its economical foundation based by the future rentability of the company’s assets, as Metalic is the only manufacturer of two pieces steel can. Metalic has 5.5% of the market share. This material is an alternative to aluminum, because of its lower cost and better performance, both for the filling aspect as for lithography. To March 31, 2004, the Company amortized R$16,769 of this goodwill, of which R$3,144 in 2004 (R$13,625 on December 31, 2003).

The Company was incorporated on April 22, 1976 with the objective of rendering services on steel structure assembly and its aggregates.

On June 02, 2002, as a CSN decision, the Company closed down its activities.

Incorporated on September 20, 1996, through a privatization auction. The Company’s main objective is to explore and develop the inland transit’s public service at the Southeastern network.

MRS transports the ore from Casa de Pedra to UPV Mill and the imported raw material through the Sepetiba Port. It also links the Presidente Vargas Mill to the Ports of Rio de Janeiro and Santos and also to the state of São Paulo, the principal CSN market.

Incorporated on July 18, 1997, through a privatization auction. It has as main objective, the exploration and development of the cargo railroad transport public service at the southeastern network.

Investment made on September 3, 1998, through a privatization auction. The objective is to exploit the nº 1 Containers Terminal of the Sepetiba Port, located in Sepetiba, state of Rio de Janeiro.

On November 7, 2003, CSN and Companhia Vale do Rio Doce - CVRD entered into a contract for the purchase and sale of investments that provided the Company with the full control of Sepetiba Tecon through the acquisition of 62,5% of the share participation of its controlling company CSN Aceros.

Company incorporated on October 27, 1999, with the main objective of distributing and trading the excess of electric energy generated by CSN and by companies, consortiums or other entities in which CSN hold participation.

d) Goodwill, negative goodwill and other indirect participations

As of March 31, 2004, the Company and its subsidiaries maintained on their consolidated balance sheet the net amount of R$34,479 of investment goodwill, negative goodwill and other indirect participation, as follows: Lusosider Projectos Sierúrgicos S.A. – negative goodwill of R$52,941 based on the expectation of future losses; Tangua Inc. – goodwill of R$80.0267 based on the expectation of future profits with amortization defined for five years; Indústria Nacional de Aços Laminados – INAL S.A. – goodwill of R$7,104 based on the expectation for future profits with the amortization defined for five years and R$49 of other indirect participation.

e) Additional Information about indirect participation abroad.

CSN LLC

The Company was incorporated in 2001 with the assets and liabilities of the ex Heartland Steel Inc. located in Terre Haute, state of Indiana – EUA and is a complex comprising cold rolling, hot coil seraping line and galvanization line.

On October 13, 2003, CSN through its subsidiary CSN Panamá, S.A., recorded an increase in the capital of Tangua Inc. by a capitalization account receivables amounting to US$175 million and became the holder of 100% of each capital share through its subsidiaries CSN LLC Holding and CSN LCC Partner is the holder of al shares of CSN LLC shares.

Lusosider

Lusosider Aços e Planos S.A. was incorporated in 1996 providing continuity to Siderurgia Nacional – flat products company, privatized on that date by the Portuguese Government. The company is located in Seixal, Portugal and is engaged in a galvanization line and tin plates.

On june 18,2003, the Company through its subsidiary CSN Steel Corp., acquired from Espírito Santo investment bank shares issued by Lusosider Projectos Siderúrgicos S.A., holder of Lusosider Aços e Planos S.A., which represents 50% of the total capital of Lusosider’s capital in the amount of EUR10,8 million (US$11,8 million).

13. PROPERTY, PLANT AND EQUIPMENT

    Parent Company
   
     03/31/2004  12/31/2003 
    

  Effective rates for depreciations,    Accumulated      
  depletion and    depreciation      
  amortization    epletion and      
  ( % p.a) Cost  amortization Net  Net 
 




Land   116,068    116,068  116,003 
Machinery and equipment   10,769,509  (717,870) 10,051,639  10,144,612 
Buildings 4.00 798,747  (30,666) 768,081  769,432 
Furnitures and fixtures 10.00 93,114  (80,182) 12,932  13,748 
Mines and mineral deposits 0.49 1,236,793  (4,693) 1,232,100  1,233,523 
Other asset items 20.00 164,460  (78,007) 86,453  85,230 
   



    13,178,691  (911,418) 12,267,273  12,362,548 
   
Construction in progress   66,249  66,249  67,750 
   



Parent company   13,244,940  (911,418) 12,333,522  12,430,298 
   



Consolidated   14,235,554  (1,201,368) 13,034,186  13,134,055 
   



At the Extraordinary General Shareholders’ Meeting held December 19, 2002 the stockholders approved, based on paragraphs 15 and 17 of CVM Deliberation no 183, a revaluation report considering the fixed assets of thermical mill – CTE - II, in the City of Volta Redonda, RJ. The report established an increase in the amount of R$508,433 which composes a new amount of R$970,332 for the assets, already net of the depreciation incurred.

At the Extraordinary General Shareholders’ Meeting held April 29, 2003 the stockholders approved, based on paragraphs 15 and 17 of CVM Deliberation no183, a revaluation report, considering land, equipment, installations and real estate property in the plants of the Presidente Vargas Mill, Itaguaí, Casa de Pedra and Arcos beside the iron ore mine in Casa de Pedra. The report established an increase in the amount of R$4,068,559 which composes a new amount of R$10,769,704 for the assets, already net of the depreciation.

As of March 31, 2004, the assets provided as guarantee of financial operations amounted R$1,775,695 (R$2,309,512 on December 31, 2003).

Depreciation, depletion and amortization for the first quarter of 2004 amounted to R$174,792 (R$120,953 in 2003), of which R$171,297 (R$113,902 in 2003) charged to cost of production and R$3,495 (R$7,051 in 2003) charged to selling, general and administrative expenses (amortization of deferred charges not included.

The amount of depreciation, depletion and write off of revalued assets of the controlling company charged to results for each year is transferred in the stockholders equity, in an equal amount from the revaluation reserve to retained earnings. During the first quarter of 2004, this total net of the income tax and social contribution aggregated R$61,509 (R$28,848 in 2003).

Construction in progress is mainly comprised of a set of investment plans aiming at the technological updating and development in order to maintain the company’s competitiveness on the national and international markets. The main plans are geared to projects for protection of environment, cost reduction, infrastructure and automation and information technology. The total financial charges capitalized in the first quarter of 2004 for construction in progress amounted to a net expenditure of R$757 (net revenue of R$9,789 on the first quarter of 2003).

14. DEFERRED CHARGES

  Parent Company Consolidated
 

  03/31/2004  12/31/2003  03/31/2004  12/31/2003 
 



Defered exchange variation 1,360,636  1,360,636  1,368,644  1,368,644 
Information technology projects 165,304  156,320  170,331  161,346 
Other projects 188,153  186,754  291,093  288,851 
 



  1,714,093  1,703,710  1,830,068  1,818,841 
Accumulated amortization (1,414,295) (1,372,799) (1,457,214) (1,412,524)
 



  299,798  330,911  372,854  406,317 
 



The IT projects are represented by automation projects of operating processes that aim at reducing costs and increase the competitiveness of the Company.

The amortization of the IT projects and of other projects on the first quarter of 2004 amounted R$ 13,995 (R$ 9,634 on 2003), of which R$ 10,104 (R$ 6,820 on 2003) appropriated to production cost and R$ 3,891 (R$ 2,814 on 2003) to overhead and administrative expenses.

Based on Provisional Measure no. 3 of September 26, 2001 and CVM Deliberations no. 404 and 409 of September 27 and November 1, 2001, respectively the Company and its subsidiaries MRS Logística and GalvaSud have chosen to defer the negative net results arising from the adjustment of the amounts of credits and obligations in foreign currency, as a result of the exchange rate variation which took place in that year.

The Company deferred the exchange variation in the amount of R$1,360,636 in September 2001 and until March 31, 2004 amortized R$1,284,957 (R$27,501 on the first quarter of 2004). The balance will be amortized until 2004, the net movement being as follows:

Deferements Deferred Accumulated depreciation including loan settlement Balance to be
  exchange
amortized on
  variation 2001 2002 2003 2004 (1st quarter) 2004







2001 1,360,636 (615,173 (511,944 (130,339 (27,501) 75,679 

15. LOANS, FINANCING AND DEBENTURES

  Parent Company Consolidated
 

  03/31/2004 12/31/2003 03/31/2004 12/31/2003
 



  Short Term Long Term  ShortTerm Long Term Short Term Long Term  ShortTerm Long Term
 







FOREIGN CURRENCY
 
Prepayment 276,431  1,134,718  174,538  1,235,494  111,572     112,758  75,842 
ACC 81,934     164,391     81,934     164,391    
Fixed Rate Notes 387,913  4,325,098  760,398  3,240,394  428,419  4,015,927  628,054  3,411,302 
BNDES/Finame 155,091  742,949  154,181  772,944  162,994  752,422  154,181  772,944 
Financed Imports 187,601  234,674  171,247  270,860  347,108  247,777  332,995  347,236 
Bilateral 54,011  121,449  44,571  105,830  54,011  121,449  44,571  105,830 
Others 20,261  73,543  105,985  59,068  51,578  133,497  75,681  62,581 
 







  1,163,242  6,632,431  1,575,311  5,684,590  1,237,616  5,271,072  1,512,631  4,775,735 
 







 
LOCAL CURRENCY
 
BNDES/Finame 47,990  178,887  55,951  188,425  103,466  186,916  55,951  188,425 
Debêntures (Note 16) 577,938  900,000  89,152  1,566,550  577,938  900,000  89,152  1,566,550 
Others 61,448  7,000  54,168  7,000  14,907  21,325  79,159  39,932 
 







  687,376  1,085,887  199,271  1,761,975  696,311  1,108,241  224,262  1,794,907 
 







Total Loans and Financing 1,850,618  7,718,318  1,774,582  7,446,565  1,933,927  6,379,313  1,736,893  6,570,642 
 







 
SWAP 266,183     593,905     361,723     649,878    
 
 







Total Loans and Financing + SWAP 2,116,801  7,718,318  2,368,487  7,446,565  2,295,650  6,379,313  2,386,771  6,570,642 
 







On March 31, 2004, the long-term amortization schedule is shown below:

  Parent Company Consolidated
 

2005 1,081,100  1,136,515 
2006 1,164,250  1,179,651 
2007 2,036,676  532,099 
2008 1,847,071  1,334,985 
2009 231,194  239,053 
2010 to 2024 1,358,027  1,957,010 



  7,718,318  6,379,313 
 

Interest is applied to the external and domestic loans and financing and debentures, at the following annual rates as of March 31, 2004:

  Parent Company Consolidated
 

Up to 7% 4,241,856  3,789,152 
Between 7.1 to 9% 1,855,252  1,048,740 
Between 9.1 to 11% 3,585,186  3,671,457 
Above 11% 152,825  165,614 



  9,835,119  8,674,963 
 

Breakdown of total debt by currency of origin:

  Parent Company Consolidated
 

  03/31/2004  12/31/2003  03/31/2004  12/31/2003 
 



U.S. Dollar 55.25 66.89 69.92 71.88
Yen 21.41 10.47 1.85 2.33
Long-term interest rates - TJLP 2.31 2.44 3.33 3.91
CDI 12.38 12.58 14.03 13.78
Basket of currencies 2.04 2.11 3.45 2.48
Other currencies 6.61 5.51 7.42 5.62
  100.00 100.00 100.00 100.00

The Company carries out derivative operations, in accordance with Note 17, for the purpose of minimizing the risk of relevant oscillation in foreign currency parity.

The guarantees provided for the loans and financing amount to R$3,855,220 as of March 31, 2004 (R$4,794,549 on December 31, 2003), and comprise mainly fixed assets items, bank guarantees, prepayment operations and promissory notes. This amount does not take into consideration the guarantees provided to subsidiaries, joint subsidiaries and associated companies, as mentioned in Note 18.

On January 2004 the Company issued Notes, through CSN Island VIII Corp., the amount of US$200 million with 9.75% rate p.y. and maturity in 10 years.

16. DEBENTURES

(a) First Issue

As approved at the Extraordinary Stockholders' General Meeting and ratified at the Administration Council Meeting, held on January 10, 2002 and February 20, 2002, respectively, the Company issued on February 1st, 2002, 69,000 debentures nominatives and non convertible, with no guarantee or preference, with unit nominal value of R$10. There have been issued 54,000 debentures from the first series and 15,000 from the second series with a total notional amount of R$690,000. However, the credit from negotiation with financial institutions, occurred on March 01, 2002 in the amount of R$699,227. The difference of R$9,277, resulting from the unit price variation between the issued date and the transaction date, is recorded in the stockholders’ equity as capital reserve.

The nominal unit value is being monetarily restated, added by the respective remuneration “pro-rata temporis”, being the first issue corrected by CDI plus 2.75% p.y and the second issue by IGPM plus 13.25% interest. The maturity is expected for 02/01/2005 (First Series) and 02/01/2006 (Second Series), with the option of advance redemption (total or partial) by the issuer’s.

In conformity with the provisions of “Private Deed for Issuance of Non-convertible unsecured Debentures of Companhia Siderúrgica Nacional’s First Issuance “ of February 10, 2002, and in compliance with the provisions of CVM instruction nº 358, the Company’s administration Council approved at the meeting held on January 7, 2004 the redemption of all debentures of second series, covered by the deed, representing a total of 15,000 (fifteen thousand) debentures, which was done on February 9, 2004.

On March 31, 2004 and December 31,2003, the Company repurchased 2,345 debentures of the first series.

(b) Second Issue

As approved at the Administration Council meeting held on October 21 and ratified at the meeting held on December 5, 2003, the Company issued, on December 1, 2003, 40,000 nominative, non convertible debentures, unsecured and without preference in one sole series, for the nominal unit value of R$10. Such debentures were issued for the total amount of R$400,000, being the credits arose from the negotiations with the financial institutions were received on December 09 and 10, 2003, amounting R$401,805. The difference of R$1,805, resulting from the unit price variation between the date of issue and of the effective negotiation is recorded in the stockholders investment as a capital reserve.

The unit notional amount is updated monetarily stated, plus the related remuneration calculated on a pro rata temporis basis, adjusted by 107% of the CDI Cetip. Maturity is foreseen for December 1, 2006.

c)Third issue

As approved at the Administration Council meeting held on December 11, 2003 and ratified at the December 18, 2003 meeting, the Company issued on December 1, 2003, 50,000 nominative and non convertible debentures, unsecured and without preference in two series, at the unit notional amount of R$10. Such debentures were issued for the total value of R$500,000, being the credits arose from the negotiations with the financial institutions were received on December 22 and 23, 2003, amounting R$505,029. The difference of R$5,029, resulting from the variation of the unit price between the date of issue and of the effective negotiation is recorded in stockholders’ investment as a Capital Reserve.

The notional amount of the 1st series is monetarily restated, plus the related pro rata temporis remuneration, adjusted by 106.5% of CDI Cetip and the 2nd series by the IGP-M plus 10% p.y. The maturity of the 1st series is foreseen for December 1, 2006 and of the 2nd series for December 1, 2008.

The deeds for the issue of these three series of debentures have certain restrictive covenants, which have been duly complied with.

17. FINANCIAL INSTRUMENTS

General Considerations

The Company’s business includes specially flat steel products to supply domestic and foreign market and mining of iron ore, limestone and dolomite to supply the Presidente Vargas Mill needs. The main market risk factors that can affect the Company business are shown as follows:

(a) Exchange Rate Risk

Although most of the revenues of the Company are in Brazilian Reais, as of March 31, 2004, R$6.508,688 of the Company’s consolidated debt were denominated in foreign currency. As a consequence, the Company is subject to changes in exchange rates and manages the risk of these rates fluctuations, that affects the value in Brazilian Reais that will be necessary to pay the liabilities in foreign currency, using derivative financial instruments, mainly futures contracts, swaps and forward contracts, as well as investing of a great part of its cash and funds available in securities remunerated by exchange variation.

(b) Credit Risk

The credit risk exposure is managed through the restriction of subsidiaries in derivative instruments to large financial institutions with a high quality of credit. Thus, management believes that the risk of non-compliance by the counterparts is insignificant. The Company does not maintain or issue financial instruments with commercial aims. The selection of clients as well as the diversification of its accounts receivable and the control on sales financing terms by business segment are procedures that the Company adopts to minimize occasioned problems with its commercial partners.

The financial instruments recorded in the Parent Company’s balance sheet accounts as of March 31, 2004, in which market value differs from the book value, are as follows:

  Book Value Market Value
 

Investment and Goodwill in jointly owned subsidiary - INEPAR 3,727  1,122 
Loans and financing (short and long term) 9,835,119  10,534,792 

On March 31, 2004 the consolidated position of derivative agreements outstanding was as follows:

 
  Agreement
 
  Date Expiration date Reference value Market value
 



Foreign exchange Swap Sundry 01/01/2004 a 01/12/2005 US$1,022,003 thousand (R$150,691)
Variable income Swap (*) Sundry 5/2/2005 US$49,223 thousand R$122,695
"Cap" Interest Options (semestral Libor) 03/28/2001 12/31/2004 US$100,000 thousand

(*) Refers to no cash swap that, at the end of the contract, the counterpart shall remunerate the variation of variable income assets, inasmuch the subsidiary of CSN Overseas undertake to remunerate the same notional updated value at the pre-fixed rate of 11.5% per annum.

Considering the loss position in the exchange and interest derivatives, the Company recorded the respective market values.

(c) Market Value

The amounts presented as “market value” were calculated according to the conditions that were used in local and foreign markets on March 31, 2004, for financial transactions with identical features, such as: volume and term of the transaction and maturity dates. Mathematical methods are used presuming there is no arbitrage between the markets and the financial assets. Finally, all transactions carried out in non-organized markets (over-the-counter market) are contracted with financial institutions previously approved by the Company’s Board of Directors.

18. COLLATERAL SIGNATURE AND GUARANTEES

With respect to its wholly owned and joint subsidiaries, the Company has – expressed in their original currency - the following responsibilities for guarantees provided (collateral signature and guarantees):

  In Million
 
Companies Moeda 03/31/2004 12/31/2003 Expiration Date Conditions






Cia. Metalic Nordeste R$ 4.8 4.8 05/15/2008 Invoices/guarantee given to Banco Santos ref. Contracts for the financing of equipment
Cia. Metalic Nordeste R$ 7.2 7.2 01/27/2003 to 01/30/2006 Invoices/guarantee given to Banco Rural, BEC and ABC Brasil re. Working capital contracts
Cia. Metalic Nordeste R$ 20.1 20.1 1/15/2006 Guarantee given to the BNDES, for contracts re. Financing of machinery and equipment
CSN Iron US$ 79.3 79.3 6/1/2007 Promissory Note of Eurobond operation
CSN Islands III US$ 75.0 75.0 4/21/2005 Installment of guarantee for the CSN emission of Bonds
CSN Islands IV US$ 100.0 100.0 6/4/2004 Installment of guarantee for the CSN emission of Bonds
CSN Islands V US$ 150.0 150.0 7/7/2005 Installment of guarantee for the CSN emission of Bonds
CSN Islands VII US$ 75.0 75.0 9/12/2008 Installment of guarantee for the CSN emission of Bonds
CSN Islands VII US$ 200.0 200.0 9/12/2008 Installment of guarantee for the CSN emission of Bonds
CSN Islands VIII US$ 350.0 350.0 12/16/2013 Installment of guarantee for the CSN emission of Bonds
INAL S.A. R$ 2.6 2.6 3/15 and 4/15/2006 Guarantee for equipment financing
Sepetiba Tecon S.A. US$   36.0 12/30/2004 to 09/15/2013 Guarantee for equipment implementation terminal financing
Sepetiba Tecon S.A. R$   29.3 12/15/2011 and 1/16/2012 Guarantee for financing of 60% of construction work and installations

19. CONTINGENT LIABILITIES AND JUDICIAL DEPOSITS

The Company is currently party to several administrative and court proceedings involving different actions, claims and complaints, as shown below:

  03/31/2004
12/31/2003
  Deposits
Contingent liability
Deposits
Contingent liability
Short Term:        
Labor   7,149   5,757
Civil   5,421   2,239
Fiscal


181
Parent Company
12,570

8,177
Consolidated
12,570

8,177
         
Long Term:        
Labor 17,669 57,150 17,633 59,513
Civil 3,606 40,511 3,136 38,926
Fiscal 280,100 1,053,192 241,972 928,048
Income Tax 125,271 18,825 125,271 18,239
Social Contribution 93,110
42,585
93,110
42,334
Parent Company 519,756
1,212,263
481,122
1,087,060
Consolidated 542,281
1,309,616
502,367
1,201,102

The provision for contingencies estimated by the Company’s Management was substantially based on the appraisal of its tax and legal advisors. Such provision is only recorded for lawsuits classified as probable

a) Labor litigation dispute:

As of March 31, 2004, CSN was the defendant in 3,018 labor claims (2,930 on December 31,2003, which required a provision in the amount of R$64,299 (R$65,270 on December 31, 2003). Most of the lawsuits are related to subsidiary responsibility, wages equalization, overtime and additional payment for unhealthy and hazardous activities.

The lawsuits related to subsidiary responsibility represent a great portion of the total labor litigations against the Company and are originated from the non payment by the contracted companies of the employees’ obligations, which results in CSN inclusion in the lawsuits to honor, at a subsidiary level, the payment of such obligations.

The most recent lawsuits originated from subsidiary responsibility tend to terminate in relation to CSN due to the procedures adopted by the Company in order to inspect and assure the compliance with the wages and social charges payments, by the creation of the Contract Follow-up Centers since 2000.

b) Civil Actions:

These are, mainly, claims for indemnities among the civil judicial processes in, which the Company is involved. Such processes, in general, are originated from work related accident and occupational diseases related to industrial activities of the Company. For all these disputes, as of March 31, 2004 the Company accrued the amount of R$45,932 (R$41,165 on 2003)

c) Tax Litigation Dispute:

Income Tax and Social Contribution

The Company claims recognition of the financial and tax effects on the calculation of the income tax and social contribution on net income, related to computation of the Consumer Price Index - IPC, occurred in 1989, by a percentage of 51.87%.

In February 2003, part of a favorable final decision by the Federal Regional Court of the 1st Region was judged, granted to CSN the right to recognize part it’s claim, by the percentage of 42.72%, deducting the monetary stated of 12.51% applied to the calculation of the income tax and social contribution. The Company continues to claim the unfavorable part.

As a consequence, in 2003 CSN recorded the amount of R$161,789 for reversal of part of the relates provision for contingency and set up R$207,390 of income tax (IRPJ) and social contribution (CSL) tax credits related to this claim.

As of March 31, 2004, the Company has recorded R$218,381 as judicial deposit (R$218,381 on December 31, 2003) and a provision of R$61,410 (R$60,573 on December 31, 2003).

In February 2003, the tax authorities assessed the Company for the calculation of prior years’ IRPJ and CSL. On August 21, 2003 a decision was given by the 2nd Team of the Federal Revenue Agency that cancelled such tax assessment, being the Company assessed again, by the tax authorities, for the same matter, in November 2003. The Company set up the provision for contingencies in the amount of R$413,437.

PIS/COFINS – Law 9,718/99

CSN is questioning the legality of Law 9,718/99, which increases the PIS and COFINS calculation basis, including, the financial revenue of the Company. As provision amounts to R$256,747 as of March 31, 2004 (R$224,488 on December 31,2003), which includes legal charges.

The Company obtained a favorable sentence in the first stage of appeal and the process is going through compulsory re-examination by the 2nd Regional Federal Court of Appeals.

CPMF

The Company is questioning the CPMF (Provisional Contribution on Financial Activities) taxation since the promulgation of the Constitutional Amendment No. 21/99. The amount of this provision as of March 31, 2004 is R$210,707 (R$187, 678 on December 31, 2003), which includes legal charges.

The sentence in the court first instance was favorable and the process is being judged by the 2nd Regional Federal Court of Appeals. However, we emphasize that the most recent precedent by the courts has not been favorable to the taxpayers.

CIDE – Contribution for Intervention in the economic domain

CSN disputes the legal validity of Law 10,168/00, which established the collection of the intervention contribution in the economic domain over the amounts paid, credited or remitted to beneficiaries that are not permanent residents of the country, as royalties or remuneration of supply contracts, technical assistance, trade mark license agreement and exploration of patents.

The Company recorded judicial deposits in 2002 and its corresponding provision in the amount of R$21,497 on March 31, 2004 (R$21,170 on December 31,2003), includes legal charges.

The first instance court decision was unfavorable and the process is currently sub–judice in the 2nd Regional Federal Court of Appeals. However, there is not a legal precedent, due to the fact that the issue is very recent. According to the Company’s lawyers, favorable outcome is considered possible. In any case, the Company decided to set-up the respective provision.

Educational Salary

The Company discusses the unconstitutionality of the Educational-Salary and the possible recovery of the amounts paid in the period from January 5,1989 to October 16, 1996. The provision as of March 31, 2004 amounts to R$31,283 (R$29,468 on December 31, 2003), which include legal charges.

The sentence in the legal court first instance was unfavorable and the process is currently sub – judice in the 2nd Regional Federal Court of Appeals. Recently, the Brazilian Supreme Court judged the subject against the taxpayer, which reduces the favorable outcome expectations in this process.

SAT – Workers’ Compensation Insurance

The Company understands that it must pay the “SAT” at the rate of 1% in all of its establishments, and not 3%, as determined by the current law. The amounts of R$45,854 (R$42,563 on December 31, 2003) are being accrued as of March 31, 2004, including legal charges.

The sentence at the first stage of appeal was unfavorable and the process is currently in TRF of the 2nd Region. Although there was so far no judgment in the Brazilian Supreme Court, according to the Company’s lawyers, favorable outcome is considered possible. In any case, the Company decided to set-up the respective provision.

Others

The Company also provided for several other lawsuits in respect of FGTS LC 110, Drawback and Freight Surcharge for Renovation of Merchant Marine (AFRMM), whose amount as of March 31, 2004 aggregated R$10, 579 (R$16,784 on December 31, 2003) including legal additions.

20. STOCKHOLDERS’ EQUITY

  Paid in Capital
Reserves
Retained Earnings
Total Shareholders Equity
         
Balance 09/30/2003 1,680,947 5,274,140 874,269 7,829,356
         
Reversal of revaluation reserve   (1,933)   (1,933)
Realization of revaluation net        
of income tax and social contribution   (57,201) 57,201  
Reserve premium - Insurance of debentures   6,834   6,834
Net income for the quarter     325,975 325,975
Legal reserve   52,942 (52,942)  
Investments reserve   487,203 (487,203)  
Proposed dividends and interest on capital     (717,300) (717,300)
 



Balance 12/31/2003 1,680,947
5,761,985
 
7,442,932
         
Realization of revaluation reserve net        
of income tax and social contribution   (61,509) 61,509  
Net income for the quarter     347,359 347,359
 



Balance 03/31/2004 1,680,947
5,700,476
408,868
7,790,291

(a) Capital stock

The Company’s capital stock on March 31, 2004 and 2003 is comprised of 71,729,261 thousand common shares, all book shares and without par value. Each common share entitles the owner to one vote at the General Meetings of Stockholders.

(b) Revaluation reserve (Parent Company)

This heading covers revaluations of the Company’s fixed assets approved by the Extraordinary General Stockholders’ Meeting held December 19, 2002 and April 29, 2003, which were intended for determining adequate amounts for the Company’s fixed assets at market value. The objective of such procedure is for the financial statements to reflect assets value at a value closer to their replacement value, in conformity with CVM Deliberation no 288 of December 3, 1998.

Pursuant to the dispositions of CVM liberation No. 273 of August 20, 1998, a provision for social contribution and income tax was set up on the balance of revaluation reserve (except land), classified as a long-term liability.

The realized portion of the revaluation reserve, net of income tax and social contribution, is included for purposes of calculating the mandatory minimum dividend.

(c) Capital composition

On March 31, 2004, the main CSN’ stockholders are:

  Nunber of shares (In thousand)
  Common
%
Vicunha Siderurgia S.A. 33,337,091 46.48%
Caixa Beneficente dos Empregados da CSN - CBS 2,604,922 3.63%
Several (ADR - NYSE) 12,667,283 17.66%
Other (Stocks - appox. 26 thousand)
23,119,965
32.23%
Outstanding stocks 71,729,261
100.00%

(d) Investment Policy and Payment of Interest on Stockholders’ Equity/Dividends

On December 13, 2000, the Board of Directors decided to adopt a policy of profit distribution, which, by observing the provision of law no. 6,404/76, altered by law no. 9,457/97 implies the distribution of all net profit to the stockholders, as long as the following priorities are preserved irrespective of their order: (i) corporate strategy, (ii) compliance with the obligations, (iii) making the necessary investments and (iv) maintenance of a good financial situation of the Company.

21. NET REVENUES AND COST OF PRODUCTS SOLD

  Parent Company
  03/31/2004
03/31/2003
  Tons (In thousand)
Net Revenues
Cost of Products Sold (In thousand)
Tons
Net Revenues
Cost of Products Sold
             
Domestic Market 761 1,117,523 606,601 731 928,869 466,015
Foreign Market 297
373,407
200,739
352
376,267
194,965
Steel Products 1,058
1,490,930
807,340
1,083
1,305,136
660,980
             
Domestic Market   91,839 52,286   82,354 37,093
Foreign Market   5,589
3,475

4,544
1,671
Other Sales
97,428
55,761

86,898
38,764
  1,058
1,588,358
863,101
1,083
1,392,034
699,744
             
  Consolidated
  03/31/2004
03/31/2003
  Tons (In thousand)
Net Revenues
Cost of Products Sold (In thousand)
Tons
Net Revenues
Cost of Products Sold
             
Domestic Market 776 1,176,460 624,709 730 988,780 501,563
Foreign Market 362
569,201
321,609
362
483,538
214,029
Steel Products 1,138
1,745,661
946,318
1,092
1,472,318
715,592
             
Domestic Market   107,368 74,516   108,309 46,575
Foreign Market   12,121
3,475

4,544
1,670
Other Sales
119,489
77,991

112,853
48,245
  1,138
1,865,150
1,024,309
1,092
1,585,171
763,837

22. CONSOLIDATED REVENUES AND INCOME BY SEGMENT OF BUSINESS

The information by business segment is based on the accounting books in accordance with Corporation Law.

The disclosure by business segment followed the concept of IAS14, as suggested by the Brazilian Securities Commission (“CVM”), providing the means to evaluate the performance in all Company’ business segments.

  Consolidated
  Steel and Services
Corporative Infrastructure
Energy and
Total
         
Net Revenue 1,856,977   8,173 1,865,150
Cost of Products and services sold  (1,008,192)
 
 (16,117)
 (1,024,309)
Gross Profit 848,785   (7,944) 840,841
Operational income and expenses        
Sales expenses (124,495)   (459) (124,954)
Administrative expenses   (60,270) (2,793) (63,063)
Other Operation Incomes (expenses) 5,929
(989)
(214)
4,726
  (118,566) (61,259) (3,466) (183,291)
Net Financial Result   (122,631)   (122,631)
Net Exchange Variation   (81,178)   (81,178)
Equity Adjustments 11,830
(4,381)

7,449
Operating Income (Loss) 742,049 (269,449) (11,410) 461,190
Non-Operation losses 339


339
Income before income tax and social contribution 742,388 (269,449) (11,410) 461,529
Income Tax and Social Contribution (207,027)
74,904
3,879
(128,244)
Net Income (Loss) 535,361
(194,545)
(7,531)
333,285

23. FINANCIAL RESULTS/ NET MONETARY AND FOREIGN EXCHANGE VARIATIONS

  Parent Company
Consolidated
  03/31/2004
03/31/2003
03/31/2004
03/31/2003
Financial expenses:        
Loans and financing - foreign currency (60,569) (34,375) (137,262) (53,793)
Loans and financing - Brazilian currency (57,308) (56,698) (68,692) (63,020)
With subsidiaries (106,531) (53,111)    
PIS/COFINS on financial revenues (36,833) (4,485) (37,453) (4,722)
Fiscal interest, fine and interest on arrears (9,274) (3,393) (9,836) (3,965)
CPMF (23,034) (15,938) (24,809) (17,822)
Other financial expenses (6,771)
(14,333)
(12,015)
(20,947)
  (300,320)
(182,333)
(290,067)
(164,269)
         
Financial Income:        
Yeld on Financial Application net of provision for losses 77,305 7,282 123,711 11,990
Exchange Swap (73,194) (157,346) 28,220 (157,346)
Other Income 28,260
12,782
15,505
20,701
  32,371
(137,282)
167,436
(124,655)
Net financial income (267,949)
(319,615)
(122,631)
(288,924)
         
Monetary Variation        
- Assets 4,441 5,522 3,449 3,330
- Liabilities (5,740)
(21,541)
(5,858)
(23,959)
  (1,299)
(16,019)
(2,409)
(20,629)
Exchange Variation        
- Assets 19,342 (61,407) 51,821 (49,264)
- Liabilities (97,028) 415,138 (102,421) 308,685
- Amortization of deferred foreign exchange variation (27,501)
(34,073)
(28,169)
(34,741)
  (105,187)
319,658
(78,769)
224,680
Net monetary and exchange variations (106,486)
303,639
(81,178)
204,051

24. STATEMENT OF VALUE-ADDED (PARENT COMPANY)

  R$ Million
  03/31/2004
03/31/2003
     
Revenue    
Sales of products and services 1,900 1,637
Allowance for doubtful accounts (3) (1)
Non-operating income
(5)
  1,897
1,631
Input purchased from third parties    
Raw material used up (384) (320)
Cost of products and services (256) (196)
Materials, energy, third-party services and others (105)
(31)
  (745)
(547)
Gross value-added 1,152
1,084
     
Retention    
Depreciation, amortization and depletion (63)
(81)
Net produced value-added 1,089
1,003
     
Value-added transferred    
Income from equity states 242 (51)
Financial income/Exchange variation 56
(193)
  298
(244)
Total value-added to distribute 1,387
759
  
VALUE-ADDED DESTINATION    
Staff and charges 68 93
Taxes, charges and contributions 517 414
Interest of capital stock 393 (183)
Retained earnings (loss) 409 435

1,387
759

25. STATEMENT OF EBITDA

The Company’s EBITDA (gross profit minus selling, general and administrative expenses, plus depreciation and depletion) is as follows:

  R$ Million
  Parent Company
Consolidated
  03/31/2004
03/31/2003
03/31/2004
03/31/2003
Net Income 1,588 1,392 1,865 1,585
Gross Profit 725 692 841 821
Operating Expeses (sales, general and administrative) (107) (100) (188) (166)
Depreciation (cost of product sold and operating expenses) 164
125
180
133
EBITDA 782
717
833
788
EBITDA-MARGIN % 49%
52%
45%
50%

26. EMPLOYEES’ PENSION FUND

(a) Private Pension Administration

The Company is the principal sponsor of the CSN Employees’ Pension Fund ("CBS"), a private non-profit pension fund established in July 1960, as legal entity of social security end, with no lucrative end and authorized to function by the deliberation nº1964, of December 28, 1979, from the Ministry of Social Security. CBS congregates CSN employees, of CSN related companies and entity itself, and provided they sign the assent agreement and its activities are conducted by the law nº109, of May29, 2001.

(b) Characteristics of the Plans

CBS has three benefit plans:

35% of Average Salary Plan

It is a defined benefit plan, which began on 02/01/1966, with the objective of paying retirements (related to length of service, special, invalidity or old-age) on a life long basis, equivalent to 35% of the participant’s salaries for the 12 last salaries. The plan also guarantees the payment of sickness assistance to the licensed by the Oficial Pension Plan (Previdência Oficial). It also guarantees the payment of funeral grant and pension. The participants (active and retired) and the sponsors make 13 contributions per year, being the same number of benefits paid per year. This plan is in process of extinction, becoming inactive on 10/31/1977, when the new benefit plan began.

Supplementary Average Salary Plan

It is a defined benefit plan, which began on 11/01/1977. The purpose of this plan is to complement the difference between the 12 last average salaries and the Official Pension Plan (Previdência Oficial) benefit, to the retired, and also on a life long basis. As with the 35% Average Salary Plan, there is sickness assistance, funeral grant and pension coverage. Thirteen contributions and payment of benefits are made per year. It became inactive since 12/26/1995, because of the combined supplementary benefits plan creation.

Combined Supplementary Benefits Plan

This plan began in 12/27/1995. It is a mixed plan, being a defined contribution, related to the retirement and a defined benefit, in relation to other benefits (pension, in activity, invalidity and sickness benefit). In this plan, the retirement benefit is calculated based on the sponsor and participants contributions, totaling 13 per year. Upon retirement of the participant, the plan becomes a defined benefit plan and 13 benefits are paid per year.

As of March 31, 2004 and December 31, 2003, the plans are presented as follow:

  03/31/2004
12/31/2003
Members 18,819
18,929
In activity 7,454 7,504
Retired employees 11,365 11,425
     
Distribution of members by benefit plan:    
     
35% of Average Salary Plan 5,988 6,053
Active 46 46
Retired employees 5,942 6,007
     
Supplementary Average Salary Plan 5,557 5,572
Active 443 447
Retired employees 5,114 5,125
     
Combined Supplementary Benefits Plan 7,274 7,304
Active 6,965 7,011
Retired employees 309 293
 

Linked beneficiaries: 5,449
5,396
35% of average salary plan 4,251 4,220
Supplementary average salary plan 1,153 1,136
Combined supplementary benefits plan 45 40
 

Total of members / Beneficiaries 24,268
24,325

(c) Insufficiency of Reserve Equalization

On January 25, 1996, the Supplementary Social Security Secretariat – SPC (Secretaria de Previdencia Complementar), through letter no. 55 SPC/CGOF/COJ approved a proposal to equalize the insufficiency of reserves based on value determined on September 30, 1995, monetarily update to December 31, 1995.

Through letter no. 1555/SPC/GAB/COA, of August 22, 2002, confirmed by letter no. 1598/SPC/GAB/COA of August 28, 2002 new proposal was approved for refinancing of reserves to amortize, the sponsors’ responsibility in 240 monthly and successive installments being the 1st to 12 th in the amount of R$958 and from 13th on R$3,133, monetarily indexed (INPC + 6% p.y.), starting June 28, 2002. The contract also foresees the installments anticipation in case of cash necessity in defined benefit plan and the transfer of occasioned deficits/superavits for which the sponsors are responsible to the updated debtor balance, so as to preserve the plans’ balance without exceeding the maximum period of amortization.

(d) Actuarial Liabilities

As provided by CVM Deliberation No. 371, of December 13, 2000, approving the NPC 26 of IBRACON – “Employee’s Benefit Accounting” that established new calculation and disclosure accounting practices, the management of the Company, with its external actuaries, in conformity with the report dated January 30, 2004,

Actuarial Liability Recognition

The Administration decided to recognize the actuarial liability adjustment in the results for the period of five years, as from January 1, 2002, being appropriated to the first quarter of 2004 the amount of R$6,995,(20,393 on 2003) in accordance with paragraphs 83 and 84 of NPC 26 of IBRACON and CVM Deliberation No. 371/2000, which, added to related contribution private pension fund outlay, totaled R$17,808(23,433 on 2003).

With respect to the recognition of the actuarial liability, the amortizing contribution related to the amount for the participants for determination of the reserve in sufficionary was deduced from the present value of total actuarial obligation of the respective plans. A number of participants are disputing in count this amortizing contribution; The Company, however, based on its legal and actuarial advises understands that such contribution was duly approved by the Complementary Social Security – SPC and consequently, is legally due by the participants.

In addition, in the case of “Plano Milênio” (Mixed Plan of Supplementary Benefit), of defined contribution, which shows net asset and where the sponsor’s contribution corresponds to an equal counterpart of the participants’ contribution, the understanding of the actuary is that up to 50% of the net actuarial asset may be used for reduction of the sponsor’s contribution. As a result, the sponsor opted for recognizing 50% of such asset on its books, in the amount foreseen of R$4,770 in 2004 (R$2,910 in 2003).

Main acturial assuptions adopted in the actuarial liability calculation
Methodology Used
Unit Methods of Projects Credits
Rate for discount of actuarial obligation 13.4% a.y ( 8% real and 5% inflation)
Rate of expected yeld on plan assets 13.4% a.y ( 8% real and 5% inflation)
Index for estimated salary increase INPC + 1% (6.05%)
Index for the increase in estimated benefits INPC + 0% (5.00%)
Long term estimate rate of inflation INPC + 0% (5.00%)
Biometrical mortality table UP84 with 3-year aggravation and segregated by sex
Biometrical invalidity table Mercer Table for entering invalidity
Rate of expected rotation 1% ao p.y
Probability of entering retirement The first time the participant qualifies for a benefit

Main actuarial assumptions adopted in the actuarial liability calculation

CSN do not have obligations on other after-employees benefit.

27.SUBSEQUENT EVENTS

Repurchase of shares

On April 27, 2004, the Council of Administration authorized the purchase of up to 1,176,470 groups of thousand shares issued by the Company to be hold in treasury and subsequent sale and/or cancellation. The period for acquisition is of 3 months starting on April 28, 2004.

Grouping of shares

On April 29, 2004, the Company approved, at an Ordinary and Extraordinary shareholders assembly of March 30, 2004 the Administration Council’s proposal for breaking down the capital stock whereby each share would be represented by 4 shares, followed by the grouping of these shares in the proportion of 1000 shares to 1 share, which will result in grouping 250 shares into 1, as well as the change in the relationship by ADR of 1 share to 1 ADR.

Dividends and interest on capital

On April 29, 2004, the shareholders also approved the payment of R$245,521 for interest on capital and R$471,779 for dividends, starting June 11, 2004.

OPERATIONAL INVESTMENTS

The expenses with the main projects on the first quarter of 2004 were:

  Value
Description R$ '000

Improvement in the coke batteries #1,4 and 5 5,325
Replacement of steel laddies 4,555
Modernization of the picking continuum lines #3 and 4 1,538
Particulate emissions to Roof Monitor (Lanternim) 1,313
Steel Plant automation 1,170
HC cutting line installation 917
Replacement of PLC's of Electrotinning Lines #5 and 6 760
Sinter Plant # 2 Exhaustion Motors Start up Control 691
Slurry Yard 639
Replacement of converter B shell 549
Box Annealing Furnace #1 - Base process control 477
Capacity increase of Liquid Metal Overhead Cranes 389
Cutting Machines adaptation 349
Sanitary Sewage System 189
Torpedo Cars modification and repair 188
Rib eliminating roll 141
Sinter Plant #2 revamp 125
Gas I System revamp - Phase 1 120
Carbochemical rain water deviation 106
Studies and Projects 104
  19.645

Production and Production Costs

•   Production

Output volumes for the first quarter of 2004 reached 1.4 million tons of crude steel and 1.3 million tons of rolled finished products, representing a growth rate of 6.5% and of nearly 20%, respectively, in relation to the same period of the previous year. This growth is the result of improved operating performance of revamped equipment (Blast Furnace #3 and Hot Strip Mill #2).

•   Production Costs (Parent Company)

Total production costs were 33% higher in relation to 1Q03, following higher consumption of outsourced hot rolled coils (accounting for R$36 million of the increase) to supply CSN Paraná and fulfill the demand of coated products customers, and higher prices and consumption for outsourced coke (R$55 million) and scrap (R$10 million). Another significant issue was the higher depreciation costs (R$44 million) related to the asset revaluation effected in April 2003 and to the incorporation of CISA’s assets, currently CSN Paraná.

In the 1Q04 production costs breakdown, when compared to 4Q03, we highlight the stable coal and coke (included in raw material in the graph) share of 23% of total costs in both periods, as well as the share of dollar denominated or dollar linked costs, which held steady at 36% of cash costs (without depreciation) in the period. For further information see ‘Outlook’ on page 4.

Net Revenues

Sales volumes of finished products and slabs reached 1.1 million tons in the quarter, up 4.2% in relation to the same period of last year. In the domestic market, sales rose 6.3%, representing 68% of total sales in the quarter. In the same comparison, export sales remained stable. In comparison to 4Q03, seasonal demand and the strategy of increasing inventories, in expectation of better pricing in 2Q04, resulted in a 22% decrease in volumes sold.

Consolidated net revenues grew 17.7%, reaching R$ 1,865 million, due to higher average prices in both domestic and external markets and to slightly higher volumes. Domestic sales represented 69% of total net revenues in the quarter, in line with the same period of the previous year.

In the parent company, the Asian market, which represented 60% of our exports in 4Q03, decreased 23% in 1Q04, mainly following the increase of sales to the USA due to slabs exports to CSN LLC, increasing NAFTA’s share to 27%. Europe’s share also rose to 34% due to sales of hot coils to Lusosider. While comparable figures are not yet available on a consolidated basis and as CSN LLC and Lusosider sales are destined to their respective regions, CSN believes that consolidated sales will show substantially the same distribution.

Gross Profit, Operational Income and EBITDA

• Gross Profit

Gross profit for 1Q04 increased by R$19.5 million in relation to 1Q03. Gross margin, however, fell 6.7 percentage points (p.p.), from 51.8% in 1Q03 to 45.1% in 1Q04. This reduction is due to the lower average exchange rate for exports in 2004 and higher production costs on a per ton basis, being partially offset by higher prices. In relation to 4Q03, gross margin rose 5.2 p.p., following improved pricing and sales mix in 1Q04.

• Operational Income

In 1Q04, operational income reached R$658 million compared to R$672 million in 1Q03, reflecting the increase in operating expenses, mainly due to higher freight costs for exports. In relation to the previous quarter, the R$330 million increase is mainly due to lower contingencies provisions recorded as other operating expenses and to lower provisions for doubtful accounts in 1Q04, as a result of a non-recurring adjustment in 2003 for CSN Energia’s Wholesale Energy Market (MAE) receivables.

• EBITDA

EBITDA amounted to R$833 million, a 5.8% growth in relation to the R$788 million recorded in the same period of last year. EBITDA margin (EBITDA divided by net revenues) decreased from 49.7% to 44.7%, or 5.0 p.p. due to the impact of the lower average exchange rate for exports and higher production and freight costs. Compared to 4Q03, EBITDA margin grew 8.5 p.p., in line with gross profit and reflecting the lower provisions for doubtful accounts.

Financial Results

Financial results (which include financial revenues and expenses as well as net exchange and monetary variation, but exclude amortization of deferred exchange losses) totaled an expense of R$175.6 million in the quarter, compared to an expense of R$50.1 million in the same period of 2003. The main reason for this result is the extraordinary gains arising from renegotiations of swaps in 1Q03. Deferred Exchange Losses: Total amortization of deferred 2001 exchange losses was of R$28 million in 1Q04, compared to R$35 million in 1Q03. The balance to be amortized in 2004 is R$76 million.

Net Income

As a consequence of the above-mentioned effects, consolidated net income was R$333.3 million in 1Q04, 16% below the R$396.5 million net income recorded in the previous year and 5.8% higher than that of 4Q03.

Net Debt/EBITDA = 1.4 times

On March 31, 2004, consolidated net debt was R$4,729 million, R$179 million below the R$4,908 million net debt recorded in the end of 2003. This net debt reduction was limited by the increase in working capital, following the strategic increase in inventories and the payment of income tax and social contribution related to fiscal year 2003, since net income recorded by offshore companies are only charged at the end of the year and paid in the beginning of the following period.

The low nominal cost of gross debt denominated in US Dollars, along with the net exchange variation effect and the result obtained with hedging instruments, resulted in consolidated net debt cost in Reais equivalent to 81% of CDI (interbank deposit rates), an improvement in relation to the 100% of CDI expected by the Company.

Current net debt/annualized EBITDA ratio reached 1.4x, in line with the expectations announced in the 2003 result conference call. The Company expects to keep this ratio between 1.0 and 1.2 times 2004 EBITDA.

Capex

In 1Q04, total capital expenditures were R$104 million. The highlight, once more, was the capex related to CSN Paraná, besides projects related to maintaining the operating and technological excellence of our facilities.

Recent Events

Companhia Siderúrgica Nacional
Statements of Changes in Financial Positions
For Periods ended as of 31 March, 2003, and 2004
(In thousand of )
 
  Parent Company
Consolidated
  2004
2003
2004
2003
         
SOURCES OF FUNDS        
Funds provided by operations        
Net income (loss) for the period 347,359 406,032 333,285 396,549
Expenses (income) not affecting working capital        
- Monetary and foreign exchange variation and long term accrued charges (net) 102,327 (288,282) 27,462 (118,141)
- Equity pick up and amortization of goodwill (242,194) 51,309 (7,449) 45,569
- Write-offs of permanent assets 55 105 505 347
- Depreciation/depletion/amortization 163,402 124,742 180,353 133,068
- Amortization of deferred foreign exchange Variation 27,501 34,073 28,169 34,741
- Deferred income tax and social contribution (64,591) 141,759 (63,645) 143,317
- Provision for Contingent Liabilities PIS/COFINS/CPMF 55,289 22,658 55,289 22,658
- Employee´s Pension Fund Provision 6,995 20,393 6,731 20,393
- Deferred Income Variations     28,471  
- Others (13,027) (25,097) (23,040) (10,306)
  383,116 487,692 566,131 668,195
Funds Provided by Others        
Loans and financing resources 993,192 335,227 588,197 92,740
Decrease in other long term assets 19,081 5,317 11,313 34,403
Increase in other long term liabilities 68,195 35,870 68,233 2,030
Others 25,385 5,673 25,328 7,059
  1,105,853 382,087 693,071 136,232
TOTAL SOURCES OF FUNDS 1,488,969 869,779 1,259,202 804,427
         
USES OF FUNDS        
Funds used in permanent assets        
Investments 7,969 42,474    
Property, plant and equipment 78,070 491,288 92,594 60,256
Deferred assets 10,384 44,662 11,078 17,732
  96,423 578,424 103,672 77,988
Other        
Transfer of loans and financing to short-term 833,661 645,029 809,290 448,533
Increases in non current assets 53,679 15,573 44,954 19,039
Decrease in long-term Liabilities 1,128 36,620 1,290 55,026
Other   6   2,283
  888,468 697,228 855,534 524,881
TOTAL USES OF FUNDS 984,891 1,275,652 959,206 602,869
         
INCREASE IN NET WORKING CAPITAL 504,078 (405,873) 299,996 201,558
         
CHANGES IN NET WORKING CAPITAL        
Current Assets        
At end of period 5,444,298 4,374,028 6,670,519 4,692,781
At beginning of period 5,507,669 4,257,340 6,775,380 4,227,070
  (63,371) 116,688 (104,861) 465,711
Current Liabilities        
At end of period 3,984,296 3,965,975 4,137,661 4,992,788
At beginning of period 4,551,745 3,443,414 4,542,518 4,728,635
  (567,449) 522,561 (404,857) 264,153
INCREASE IN NET WORKING CAPITAL 504,078 (405,873) 299,996 201,558

Companhia Siderúrgica Nacional
Cash Flow Statements (Supplemental information)
For Periods ended as of 31 March, 2003 and 2004
(In thousand of reais)
     
  Parent Company
Consolidated
  2004
2003
2004
2003
Cash Flow from operating activities        
Net income (loss) for the year 347,359 406,032 333,285 396,549
Adjustments to reconcile the net (loss) income for the year        
with the resources from operating activities:        
- Amortization of deferred exchange variation 27,501 34,073 28,169 34,741
- Net monetary and exchange variation 128,046 (368,970) (15,546) (239,911)
- Provision for loan and financing charges 223,715 150,544 206,199 110,427
- Depreciation/ depletion/ amortization 163,402 124,742 180,353 133,068
- Write off of permanent assets 55 105 505 347
- Equity pick up and amortization of good will (242,194) 51,309 (7,449) 45,569
- Deferred income tax and social controbution 62,637 182,812 53,771 173,171
- Provision Swap / Forward (327,723) 328,954 (371,502) 328,954
- Provision marked to market   (246,055)   (246,055)
- Employee´s Pension Fund Provision 6,995 20,393 6,731 20,393
- Other provisions 63,613 (42,149) 50,025 (30,384)
  453,406 641,790 464,541 726,869
(Increase) decrease in assets:        
- Accounts receivable - trade 87,262 71,865 (90,035) 133,480
- Inventories (190,344) (97,431) (177,205) (110,034)
- Judicial Deposits (39,063) (13,470) (40,343) (17,182)
- Credits with subsidiary and associated companies (44,525) 65,640    
- Carryforward taxes 192,791 (12,156) 185,964 (11,248)
- Others 100,276 119,063 75,288 (9,554)
  106,397 133,511 (46,331) (14,538)
Increase (decrease) in liabilities        
- Suppliers (160,347) (45,090) (149,237) (56,671)
- Salaries and payroll charges (2,345) 9,047 (441) 9,001
- Taxes (221,352) (63,128) (221,878) (58,800)
- Accounts payable - Subsidiary Companies (6,605) 3,624    
- Option Hedge premium   211,241   212,085
- Other 39,193 22,633 55,511 (59,055)
  (351,456) 138,327 (316,045) 46,560
Net resources from operating activities 208,347 913,628 102,165 758,891
         
Cash Flow from financing activities        
Investments (7,969) (42,474)    
Property, plant and equipment (77,314) (501,077) (91,838) (63,501)
Deferred assets (10,384) (44,662) (11,078) (17,732)
Net resources used on investing activities (95,667) (588,213) (102,916) (81,233)
         
Cash Flow from investing activities        
Financial Funding        
- Loans and Financing 993,192 1,028,977 673,822 851,405
  993,192 1,028,977 673,822 851,405
Payments        
- Financial Institution        
- Principal (782,353) (605,578) (726,697) (580,464)
- Charges (200,347) (142,142) (190,856) (151,689)
- Interest on stockholder´s equity/dividends (5) (8) (5) (8)
  (982,705) (747,728) (917,558) (732,161)
Net resources from (to) financing activities 10,487 281,249 (243,736) 119,244
         
Increase in cash and cash equivalents 123,167 606,664 (244,487) 796,902
Cash and cash equivalents, beginning of period 2,193,171 850,278 3,650,707 1,186,347
Cash and cash equivalents, end of period 2,316,338 1,456,942 3,406,220 1,983,249
         
Additional cash flow information        
Monetary variation and interest capitalized 756 (9,789) 756 (3,245)

  (Translation of the report originally issued in Portuguese.
  See Note 29 to the financial statements)
   
FEDERAL PUBLIC SERVICE CORPORATE LAW
CVM - BRAZILIAN SECURITIES COMMISSION  
QUARTERLY INFORMATION - ITR  
COMMERCIAL, INDUSTRY & OTHER TYPES OF COMPANY DATE - 03/31/2004

01.01 - IDENTIFICATION
1 - CVM CODE
00403-0
2 - NAME OF COMPANY
COMPANHIA SIDERÚRGICA NACIONAL
3 - TAX PAYER
33.042.730/0001-04

02.01 - CONSOLIDATED BALANCE SHEET - ASSETS (IN THOUSANDS OF BRAZILIAN REAIS)

1- Code 2 - Description 3 - 03/31/2004 4 - 12/31/2003
1 Total Assets 22,365,781 22,522,205
1.01 Current Assets 6,670,519 6,775,380
1.01.01 Cash 282,388 224,915
1.01.02 Credits 1,201,385 1,114,111
1.01.02.01 Trade accounts receivable - Domestic Market 936,626 935,143
1.01.02.02 Trade Accounts Receivable - Export Market 412,030 323,407
1.01.02.03 Allowance for doubtful accounts (147,271) (144,439)
1.01.03 Inventories 1,066,916 891,807
1.01.04 Others 4,119,830 4,544,547
1.01.04.01 Marketable Securities 3,494,278 3,654,757
1.01.04.02 Withholding Income Tax and Social Contribution to Offset 9,422 78,760
1.01.04.03 Deferred Income Tax 229,907 251,609
1.01.04.04 Deferred Social Contribution 59,417 65,486
1.01.04.05 Dividends Receivable    
1.01.04.06 Prepaid Expenses 52,030 54,799
1.01.04.07 Others 274,776 439,136
1.02 Long-Term Assets 2,043,083 1,964,670
1.02.01 Credits 28,653 27,407
1.02.01.01 Compulsory Loans - Eletrobras 28,653 27,407
1.02.02 Credit With Related Parties - -
1.02.02.01 Affiliates - -
1.02.02.02 Subsidiaries - -
1.02.02.03 Other Related Parties - -
1.02.03 Others 2,014,430 1,937,263
1.02.03.01 Deferred Income Tax 681,698 650,401
1.02.03.02 Deferred Social Contribution 76,774 77,493
1.02.03.03 Judicial Deposits 542,281 502,367
1.02.03.04 Securities Receivable 46,256 44,719
1.02.03.05 Recoverable PIS/PASEP 56,360 55,203
1.02.03.06 Prepaid Expenses 82,905 82,502
1.02.03.07 Investment Available for Sale 253,021 248,691
1.02.03.08 Marketable Securities 169,247 169,335
1.02.03.09 Others 105,888 106,552
1.03 Permanent Assets 13,652,179 13,782,155
1.03.01 Investments 245,139 241,783
1.03.01.01 Participações em Coligadas - -
1.03.01.02 Participações em Controladas 245,139 241,783
1.03.01.03 Outros Investimentos - -
1.03.02 Property, Plant and Equipment 13,034,186 13,134,056
1.03.02.01 In Operation Net 12,825,954 12,929,118
1.03.02.02 Construction 81,026 77,596
1.03.02.03 Land 127,206 127,341
1.03.03 Deferred 372,854 406,317

02.01 - CONSOLIDATED BALANCE SHEET - LIABILITIES (IN THOUSANDS OF BRAZILIAN REAIS)

1- Code 2 - Description 3 - 03/31/2004 4 - 12/31/2003
2 Total Liabilities 22,365,781 22,522,205
2.01 Current Liabilities 4,137,661 4,542,518
2.01.01 Loans And Financing 1,717,712 2,297,619
2.01.02 Debentures 577,938 89,152
2.01.03 Suppliers 337,575 518,859
2.01.04 Taxes and Contributions 620,520 833,281
2.01.04.01 Salaries and Social Contributions 60,994 103,998
2.01.04.02 Taxes Payable 337,835 566,815
2.01.04.03 Deferred Income Tax 163,008 119,462
2.01.04.04 Deferred Social Contribution 58,683 43,006
2.01.05 Dividends Payable 717,603 717,608
2.01.06 Provisions 12,570 8,177
2.01.06.01 Labor, Civil and Tax 12,570 8,177
2.01.07 Debt with Related Parties - -
2.01.08 Others 153,743 77,822
2.02 Long-Term Assets 10,442,419 10,553,809
2.02.01 Loans and Financing 5,479,313 5,004,092
2.02.02 Debentures 900,000 1,566,550
2.02.03 Provisions 3,736,556 3,661,109
2.02.03.01 Labor, Civil, Fiscal and Environmental 686,171 698,351
2.02.03.02 For income Tax in judge 18,825 18,239
2.02.03.03 For Social Contribution in judge 42,585 42,334
2.02.03.04 Other Tax in judge 562,035 442,178
2.02.03.05 Deferred Income tax 1,794,171 1,818,851
2.02.03.06 Deferred Social Contribution 632,769 641,156
2.02.04 Debt with Related Parties - -
2.02.05 Others 326,550 322,058
2.02.05.01 Provision for Investment Devaluation -  
2.02.05.02 Others 326,550 322,058
2.03 Deferred Income 34,967 6,496
2.04 Minority Interest - -
2.05 Stockholder´s Equity 7,750,734 7,419,382
2.05.01 Paid-In Capital 1,680,947 1,680,947
2.05.02 Capital Reserve 17,319 17,319
2.05.03 Revaluation Reserve 4,946,563 5,008,072
2.05.03.01 Own Assets 4,946,563 5,008,072
2.05.03.02 Subsidiaries/Affiliates - -
2.05.04 Revenue Reserves 736,594 713,044
2.05.04.01 Legal 249,391 249,391
2.05.04.02 Estatutory - -
2.05.04.03 For Contingencies - -
2.05.04.04 Unrealized Income - -
2.05.04.05 Profit Retentions - -
2.05.04.06 Especial For Non-Distributesd Dividends - -
2.05.04.07 Other Profit Reserves 487,203 463,653
2.05.04.07.01 For Investments 487,203 463,653
2.05.05 Retained Earnings 369,311 -

03.01 - STATEMENT OF OPERATIONS (IN THOUSANDS OF BRAZILIAN REAIS)

1- Code 2 - Description 3 -01/01/2004 to 03/31/2004 4 - 01/01/2004 to 03/31/2003 5 - 01/01/2003 to 03/31/2003 6 - 01/01/2003 to 03/31/2003
3.01 Gross Revenue from Sales and Services 2,261,816 2,261,816 1,875,335 1,875,335
3.02 Deductions from Gross Revenue (396,666) (396,666) (290,164) (290,164)
3.03 Net Revenue from Sales and Services 1,865,150 1,865,150 1,585,171 1,585,171
3.04 Cost of Goods and Services Sold (1,024,309) (1,024,309) (763,837) (763,837)
3.04.01 Depreciation, Depletion and Amortization (169,616) (169,616) (123,987) (123,987)
3.04.02 Others (854,693) (854,693) (639,850) (639,850)
3.05 Gross Profit 840,841 840,841 821,334 821,334
3.06 Operating Income/Expenses (379,651) (379,651) (279,316) (279,316)
3.06.01 Selling (124,954) (124,954) (103,628) (103,628)
3.06.01.01 Depreciation and Amortization (2,133) (2,133) (1,780) (1,780)
3.06.01.02 Others (122,821) (122,821) (101,848) (101,848)
3.06.02 General and Administrative (63,063) (63,063) (63,236) (63,236)
3.06.02.01 Depreciation and Amortization (8,469) (8,469) (7,301) (7,301)
3.06.02.02 Others (54,594) (54,594) (55,935) (55,935)
3.06.03 Financial (203,809) (203,809) (84,873) (84,873)
3.06.03.01 Financial Income 167,436 167,436 (124,655) (124,655)
3.06.03.02 Financial Expenses (371,245) (371,245) 39,782 39,782
3.06.03.02.01 Amortization of Especial Exchange Variation (28,169) (28,169) (34,741) (34,741)
3.06.03.02.02 Foreign Exchange and Monetary loss, net (53,009) (53,009) 238,792 238,792
3.06.03.02.03 Financial Expenses (290,067) (290,067) (164,269) (164,269)
3.06.04 Other Operating Income 12,295 12,295 80,623 80,623
3.06.05 Other Operating Expenses (7,569) (7,569) (62,633) (62,633)
3.06.06   7,449 7,449 (45,569) (45,569)
3.07 Operating Income/Loss 461,190 461,190 542,018 542,018
3.08 Non-Operating Income/Loss 339 339 (5,320) (5,320)
3.08.01 Income 45 45 110 110
3.08.02 Expenses 294 294 (5,430) (5,430)
3.09 Income before taxes and participations/contributions 461,529 461,529 536,698 536,698
3.10 Provision for income tax and social contribution (74,473) (74,473) 33,022 33,022
3.11 Deferred Income Tax (53,771) (53,771) (173,171) (173,171)
3.12 Statutory Participations/Contributions - - - -
3.12.01 Paticipations - - - -
3.12.02 Contributions - - - -
3.13 Reversal of Interest on Stockholder´s Equity - - - -
3.15 Net Income (Loss) for the Period 333,285 333,285 396,549 396,549
  OUTSTANDING SHARES (THOUSANDS) 71,729,261 71,729,261 71,729,261 71,729,261
  EARNINGS PER SHARE (R$) 0.00465 0.00465 0.00553 0.00553
  LOSS PER SHARE (R$)        

(Convenience Translation into English from the Original Previously Issued in Portuguese)

Independent Accountants Special Review Report

To the Stockholders and Management of
Companhia Siderúrgica Nacional
Rio de Janeiro – RJ

1.

We have conducted a special review on the quarterly report (ITRs) of COMPANHIA SIDERÚRGICA NACIONAL (a Brazilian corporation), which includes the individual (Parent Company) and consolidated balance sheets as of March 31, 2004, the related statements of income for the quarter then ended, the performance report and the relevant information, presented in accordance with the accounting principles generally accepted in Brazil, prepared under the responsibility of the Company’s management.


2.

Except for the issue presented in paragraph (3), our review was conducted in accordance with specific standards established by the Brazilian Institute of Accountants - IBRACON, together with the Federal Accounting Council (CFC), and mainly comprised: (a) inquires and discussions with the Company’s management responsible for the accounting, financial and operating areas as to the principal criteria adopted in the preparation of the quarterly information; and (b) review of the information and subsequent events that had or may have significant effects on the Company’s and its subsidiaries financial position and operations.


3.

As described in Note 14 to the quarterly financial information, the Company and its affiliate MRS Logística S.A. and its subsidiary Galvasud S.A. elected to defer net losses arising from exchange variations in the year 2001, in conformity with Provisional Measure no.3/2001 and Deliberations no.404/2001 and 409/2001 from the Brazilian Securities Commission – CVM. The accounting practices adopted in Brazil require the recognition in income of the effects of exchange rate variations during the period in which they occurred. As a result, as of March 31, 2004 the stockholders’ equity is overstated by approximately R$55 million (R$75 million in the year 2003) and the net income for the period ended March 31, 2004, is understated by approximately R$20 million (R$23 million for the first quarter of 2003), net of fiscal effects.


4.

Based on our special review, except for the effects of the matter mentioned in paragraph (3), we are not aware of any material modification that should be made to the quarterly report referred to in paragraph (1) above for it to be in accordance with the accounting practices adopted in Brazil, applied in compliance with the standards laid down by CVM (Brazilian Securities Commission), specifically applicable to the preparation of the quarterly information.


5.

As described in Note 7 to the Quarterly Information, as of March 31, 2004, the Company and its subsidiaries had recorded in current assets, accounts receivable in the amount of R$77 million, related to the sale of energy in the Wholesale Electric Energy Market – MAE, for the period between September 2000 and September 2002. These amounts are subject to changes, depending on the decision on judicial process under-way filed by electric energy sector, related to the interpretation of market regulation in effect for that period.


6.

The individual and consolidated financial statements as of December 31, 2003 presented for comparative purposes, were reviewed by us, and our report, dated February 27, 2004 included a qualification with respect to the deferral of net negative exchange variations for the year 2001 and an emphasis paragraph with respect to the realization of accounts receivable related to the sale of energy on the wholesale Electric Energy Market – MAE for the period September 2000 to September 2002. The individual and consolidated statements of income in the quarter ended March 31, 2003, presented for comparative purposes, were reviewed by us, and our report, dated May 2, 2003, contains a qualification with respect to the deferral of net negative exchange variations in the year 2001 and an emphasis paragraph with respect to the realization of accounts receivable related to the sale of energy on the MAE.


7.

Our special review was conducted for the purpose of issuing a report on the Quarterly Information referred to in paragraph (1) above, taken as a whole. The Supplementary Information related to the Value-added Statement, presented in Note 24, the EBTIDA Statement included in Note 25, and the Statements of Changes in Financial Position and of Cash Flows presented in Attachment 16.01 to the Quarterly Information are presented for the purposes of allowing additional analyzes and are not required as part of the basic quarterly report. This information was reviewed according to the review procedures mentioned in paragraph (2) above, and based on our special review, is fairly stated, in all material respects, in relation to the Quarterly Information taken as a whole.



Rio de Janeiro, April 30, 2004

DELOITTE TOUCHE TOHMATSU Marcelo Cavalcanti Almeida
Auditores Independentes Engagement Partner

 


 

 
SIGNATURE
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 17, 2004

 
COMPANHIA SIDERÚRGICA NACIONAL
By:
/S/  Otavio de Garcia Lazcano

 
Otavio de Garcia Lazcano
Principal Financial Officer
 

 

 
FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.