DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Contents
Company information
Composition of Capital
1
Cash dividends
2
Individual financial statements
Balance Sheet - Assets
3
Balance Sheet - Liabilities
5
Income statements
7
Statement of comprehensive income
8
Cash flow statement
9
Statement of changes in equity
Statements of changes in equity 01/01/2012 to 12/31/2012
10
Statements of changes in equity 01/01/2011 to 12/31/2011
11
Statements of changes in equity 01/01/2010 to 12/31/2010
12
Statements of Value Added
13
Consolidated financial statements
Balance Sheet - Assets
14
Balance Sheet – Liabilities and equity
16
Income statement
18
Statement of comprehensive income
19
Cash flow statement
20
Statement of changes in equity
Statements of changes in equity 01/01/2012 to 12/31/2012
22
Statements of changes in equity 01/01/2011 to 12/31/2011
23
Statements of changes in equity 01/01/2010 to 12/31/2010
24
Statements of Value Added
25
Management report
27
Notes to financial statements
35
Opinions and Statements
Independent Auditor’s Report - Unqualified
60
Report of Supervisory Board report or Equivalent body
61
Statement of Officers on the Financial Statements
62
Statement of Officers on the Independent Auditor’s Report
63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Company information / Composition of capital
Number of shares
(Units)
Last fiscal year
12/31/2012
Paid-in capital
Common
Preferred
Total
620,405,029
0
620,405,029
Treasury stock
Common
Preferred
Total
500,000
0
500,000
PAGE: 1 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Company information / Cash dividends
Event
Approval
Earning
First payment
Type of share
Class of share
Earnings per share (Reais / Share)
Board of Directors’
Meeting
03/20/2012
Interest on equity
08/15/2012
Common
0.06500
Board of Directors’
Meeting
06/26/2012
Interest on equity
08/15/2012
Common
0.06500
Board of Directors’
Meeting
07/24/2012
Dividend.
08/15/2012
Common
0.10000
Board of Directors’
Meeting
09/25/2012
Interest on equity
03/13/2013
Common
0.06500
Board of Directors’
Meeting
12/18/2012
Interest on equity
03/13/2013
Common
0.05900
Board of Directors’
Meeting
02/26/2013
Dividend.
03/13/2013
Common
0.20600
PAGE: 2 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Individual financial statements / Balance sheet - Assets
(In thousands of reais)
Account
code
Account description
1
Total assets
1.01
1.01.01
12/31/2012
12/31/2011
12/31/2010
4,154,315
3,816,355
3,535,994
Current assets
889,397
584,445
752,552
Cash and cash equivalents
561,214
520,939
689,944
1.01.01.01
Cash and banks
28
28
9
1.01.01.02
Short-term investments
561,186
520,911
689,935
1.01.02
Short-term investments
261,244
0
0
1.01.02.01
Short-term investments at fair value
261,244
0
0
1.01.02.01.01
Trading securities
261,244
0
0
1.01.06
Taxes recoverable
6,107
3,782
6,125
1.01.06.01
Current taxes recoverable
6,107
3,782
6,125
1.01.08
Other current assets
60,832
59,724
56,483
1.01.08.03
Other
60,832
59,724
56,483
1.01.08.03.01 Dividends
1.01.08.03.02 Interest on equity
1.02
Noncurrent assets
1.02.01
Long-term receivables
2,513
3,644
4,633
58,319
56,080
51,850
3,264,918
3,231,910
2,783,442
864
241,192
923
1.02.01.01
Short-term investments at fair value
0
239,860
0
1.02.01.01.01
Trading securities
0
239,860
0
1.02.01.06
Deferred taxes
0
712
602
1.02.01.06.01
Deferred income and social contribution taxes
0
712
602
1.02.01.08
Receivables from related parties
0
79
0
1.02.01.08.02
Receivables from subsidiaries
1.02.01.09
Other noncurrent assets
1.02.01.09.03 Judicial deposits
0
79
0
864
541
321
864
541
321
1.02.02
Investments
3,259,097
2,978,752
2,770,286
1.02.02.01
Equity interest
3,259,097
2,978,752
2,770,286
3,259,097
2,978,752
2,770,286
1.02.02.01.02 Investments in subsidiaries
1.02.03
Property, plant and equipment
4,947
11,956
12,233
1.02.03.01
Property, plant and equipment in use
4,947
11,956
12,233
PAGE: 3 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Individual financial statements / Balance sheet - Assets
(In thousands of reais)
Account
code
Account description
12/31/2012
12/31/2011
12/31/2010
1.02.04
Intangible assets
10
10
0
1.02.04.01
Intangible assets
10
10
0
10
10
0
1.02.04.01.02 Goodwill
PAGE: 4 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Individual financial statements / Balance sheet - Liabilities
(In thousands of reais)
Account
code
Account description
2
Total liabilities
2.01
Current liabilities and equity
2.01.01
Labor and social charges
2.01.01.01
2.01.03
2.01.03.01
Federal tax obligations
12/31/2012
12/31/2011
12/31/2010
4,154,315
3,816,355
3,535,994
90,072
8,753
71,158
3,320
3,200
3,063
Social obligations
3,320
3,200
3,063
Tax obligations
6,482
2,601
5,330
6,482
2,601
5,330
86
36
0
2.01.03.01.01 Income and social contribution taxes payable
2.01.03.01.02
Other taxes payables
6,396
2,565
5,330
2.01.05
Other payables
80,270
2,952
62,765
2.01.05.02
Other
80,270
2,952
62,765
2.01.05.02.01 Dividends and interest on equity capital payable
79,070
2,182
62,214
Other
1,200
770
551
2.02
Noncurrent liabilities
3,894
7,490
10,229
2.02.02
Other payables
296
1,837
4,783
2.02.02.01
Payables to related parties
296
1,837
4,783
2.02.02.01.02
Payables to subsidiaries
296
1,837
4,783
2.02.03
Deferred taxes
123
3,764
3,820
2.02.03.01
Deferred income and social contribution taxes
123
3,764
3,820
2.01.05.02.04
2.02.04
Provisions
3,475
1,889
1,626
2.03
Equity
4,060,349
3,800,112
3,454,607
2.03.01
Paid-in capital
2,718,440
2,265,367
1,812,294
-53,319
239
44,931
0
0
44,931
758
239
0
-54,077
0
0
2.03.02
Capital reserves
2.03.02.01
Premium on share issue
2.03.02.04
Options granted
2.03.02.07
Premium on capital transaction
2.03.03
Revaluation reserve
2.03.04
Income reserves
2.03.04.01
Legal reserve
2.03.04.02
Statutory reserve
3,784
3,834
3,884
687,792
857,721
900,676
32,799
29,347
53,409
537,245
664,715
746,059
PAGE: 5 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Individual financial statements / Balance sheet - Liabilities
(In thousands of reais)
Account
code
Account description
2.03.04.08
Additional proposed dividends
2.03.04.09
Treasury stock
-10,055
-10,055
0
2.03.06
Equity valuation adjustments
656,646
704,466
758,715
2.03.06.01
Deemed cost
656,646
704,466
758,715
2.03.07
Cumulative translation adjustments
47,006
-31,515
-65,893
12/31/2012
12/31/2011
12/31/2010
127,803
173,714
101,208
PAGE: 6 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Individual financial statements / Income Statement
(In thousands of reais)
Account
code
Account description
3.04
Operating income/expenses
01/01/2012 to 12/31/2012
01/01/2011 to 12/31/2011
01/01/2010 to 12/31/2010
600,689
517,855
502,947
3.04.02
General and administrative expenses
-4,151
-3,040
-3,083
3.04.02.01
Management fees
-2,011
-1,701
-1,580
3.04.02.02
Other expenses
-2,140
-1,339
-1,503
3.04.04
Other operating income
2
178
109
3.04.05
Other operating expenses
-3,132
-1,480
-911
3.04.06
Equity pick-up
607,970
522,197
506,832
3.05
Income before financial income (expenses) and taxes
600,689
517,855
502,947
3.06
Financial income (expenses)
54,795
70,401
17,256
3.06.01
Financial income
54,975
70,562
17,581
3.06.02
Financial expenses
3.07
Income before income taxes
3.08
Income and social contribution taxes
3.08.01
Current
3.08.02
Deferred
862
165
123
3.09
Net income from continuous operations
655,979
586,936
519,782
3.11
Income/ loss for the period
655,979
586,936
519,782
3.99
Earnings per share- (reais / share)
3.99.01
Basic earnings per share
3.99.01.01
Common shares
1.06000
0.95000
0.84000
3.99.02
Diluted earnings per share
3.99.02.01
Common shares
1.06000
0.95000
0.84000
-180
-161
-325
655,484
588,256
520,203
495
-1,320
-421
-367
-1,485
-544
PAGE: 7 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Individual financial statements / Statement of comprehensive income
(In thousands of reais)
Account
code
Account description
4.01
Net income for the period
4.02
4.02.01
4.03
Comprehensive income for the period
01/01/2012 to 12/31/2012
01/01/2011 to 12/31/2011
01/01/2010 to 12/31/2010
655,979
586,936
519,782
Other comprehensive income
78,521
34,378
-34,008
Cumulative translation adjustments
78,521
34,378
-34,008
734,500
621,314
485,774
PAGE: 8 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Individual financial statements / Cash flow statements – Indirect method
(In thousands of reais)
Account
code
Account description
6.01
Net cash flows from operating activities
01/01/2012 to 12/31/2012
01/01/2011 to 12/31/2011
01/01/2010 to 12/31/2010
43,284
53,499
45,151
6.01.01
Cash from operations
48,283
66,574
13,663
6.01.01.01
Income before taxes
655,484
588,256
520,203
6.01.01.02
Depreciation and amortization
6.01.01.03
Equity pickup
250
276
292
-607,970
-522,197
-506,832
6.01.01.05
Other
519
239
0
6.01.02
Changes in assets and liabilities
-6,685
-14,052
31,596
6.01.02.01
Increase (decrease) in accounts receivable
-9,101
-6,532
24,933
6.01.02.02
Increase (decrease) in accounts payable
2,732
-6,071
6,408
6.01.02.03
Income and social contribution taxes paid
-316
-1,449
255
6.01.03
Other
6.02
Net cash flows from investing activities
1,686
977
-108
313,856
85,909
839,771
6.02.01
Investment
6.02.02
Dividends and interest on equity capital received
6.02.03
Long-term financial investments
-21,384
-239,860
0
6.03
Net cash from financing activities
-316,865
-308,413
-285,967
6.03.01
Dividends/interest on equity capital paid
-316,865
-298,358
-285,967
6.03.03
Treasury stock
0
-10,055
0
6.05
Increase/(decrease) in cash and cash equivalents
40,275
-169,005
598,955
6.05.01
Opening cash and cash equivalents balance
520,939
689,944
90,989
6.05.02
Closing cash and cash equivalents balance
561,214
520,939
689,944
0
-1,304
-1
335,240
327,073
839,772
PAGE: 9 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Individual financial statements / Statements of changes in equity - 01/01/2012 to 12/31/2012
(In thousands of reais)
Account
code
Account description
Capital
Paid-in
Capital reserve options
granted and treasury stock
5.01
Opening balances
2,265,367
5.03
Adjusted opening balances
2,265,367
4,073
5.04
Capital transactions with shareholders
453,073
-53,558
5.04.01
Capital increase
453,073
0
5.04.03
Recognized options granted
0
519
5.04.06
Dividends
0
5.04.07
Interest on equity capital
5.04.08
Premium on capital transaction
4,073
Income reserves
Retained earnings
losses)
684,007
Other comprehensive
income
Equity
173,714
672,951
3,800,112
684,007
173,714
672,951
3,800,112
-453,073
-247,433
0
-300,991
-453,073
0
0
0
0
0
0
519
0
0
-62,041
0
-62,041
0
0
0
-185,392
0
-185,392
0
-54,077
0
0
0
-54,077
5.05
Total comprehensive income
0
0
0
703,799
30,701
734,500
5.05.01
Net income for the period
0
0
0
655,979
0
655,979
5.05.02
Other comprehensive income
0
0
0
47,820
30,701
78,521
5.05.02.04
Translation adjustments in the period
0
0
0
0
78,521
78,521
5.05.02.06
Realization of deemed cost
0
0
0
47,820
-47,820
0
5.06
Internal changes in equity
0
-50
329,055
-502,277
0
-173,272
5.06.01
Recognition of reserves
0
0
329,055
-329,055
0
0
5.06.02
Realization of revaluation reserve
0
-50
0
50
0
0
5.06.04
Payments of dividends
0
0
0
-173,714
0
-173,714
5.06.05
Prescribed dividends
5.07
Closing balances
0
0
0
442
0
442
2,718,440
-49,535
559,989
127,803
703,652
4,060,349
PAGE: 10 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Individual financial statements / Statements of changes in equity - 01/01/2011 to 12/31/2011
(In thousands of reais)
Account
code
Account description
Capital
Paid-in
Capital reserve options
granted and treasury stock
5.01
Opening balances
1,812,294
5.03
Adjusted opening balances
1,812,294
48,815
5.04
Capital transactions with shareholders
453,073
-44,692
48,815
Income reserves
Retained earnings
losses)
799,468
Other comprehensive
income
Equity
101,208
692,822
3,454,607
799,468
101,208
692,822
3,454,607
-418,197
-165,317
0
-175,133
5.04.01
Capital increase
453,073
-44,931
-408,142
0
0
0
5.04.03
Recognized options granted
0
239
0
0
0
239
5.04.04
Treasury stock - acquired
0
0
-10,055
0
0
-10,055
5.04.06
Dividends
0
0
0
-60,179
0
26,678
5.04.07
Interest on equity capital
0
0
0
-105,138
0
-191,995
5.05
Total comprehensive income
0
0
0
641,185
-19,871
621,314
5.05.01
Net income for the period
0
0
0
586,936
0
586,936
5.05.02
Other comprehensive income
0
0
0
54,249
-19,871
34,378
5.05.02.04
Translation adjustments in the period
0
0
0
0
34,378
34,378
5.05.02.06
Realization of deemed cost
0
0
0
54,249
-54,249
0
5.06
Internal changes in equity
0
-50
302,736
-403,362
0
-100,676
5.06.01
Recognition of reserves
0
0
302,736
-302,736
0
0
5.06.02
Realization of revaluation reserve
0
-50
0
50
0
0
5.06.04
Payments of dividends
0
0
0
-101,208
0
-101,208
5.06.05
Prescribed dividends
5.07
Closing balances
0
0
0
532
0
532
2,265,367
4,073
684,007
173,714
672,951
3,800,112
PAGE: 11 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Individual financial statements / Statements of changes in equity - 01/01/2010 to 12/31/2010
(In thousands of reais)
Account
code
Account description
Capital
Paid-in
Capital reserve options
granted and treasury stock
Income reserves
Retained earnings
losses)
Other comprehensive
income
Equity
5.01
Opening balances
1,812,294
48,866
533,512
5.03
Adjusted opening balances
1,812,294
48,866
5.04
Capital transactions with shareholders
0
0
5.04.06
Dividends
0
0
0
-66,437
0
-66,437
5.04.07
Interest on equity capital
0
0
0
-138,791
0
-138,791
5.05
Total comprehensive income
0
0
0
571,872
-86,098
485,774
5.05.01
Net income for the period
0
0
0
519,782
0
519,782
5.05.02
Other comprehensive income
0
0
0
52,090
-86,098
-34,008
5.05.02.04
Translation adjustments in the period
0
0
0
0
-34,008
-34,008
5.05.02.06
Realization of deemed cost
0
0
0
52,090
-52,090
0
127,285
777,782
3,299,739
533,512
127,285
777,782
3,299,739
0
-205,228
0
-205,228
5.06
Internal changes in equity
0
-51
265,956
-392,721
1,138
-125,678
5.06.01
Recognition of reserves
0
0
265,956
-265,956
0
0
5.06.02
Realization of revaluation reserve
0
-51
0
51
0
0
5.06.04
Payments of dividends
0
0
0
-127,285
0
-127,285
5.06.05
Prescribed dividends
0
0
0
469
0
469
5.06.20
Other
0
0
0
0
1,138
1,138
5.07
Closing balances
1,812,294
48,815
799,468
101,208
692,822
3,454,607
PAGE: 12 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Individual financial statements / Statements of Value Added
(In thousands of reais)
Account
code
Account description
7.02
Inputs purchased from third-parties
01/01/2012 to 12/31/2012
01/01/2011 to 12/31/2011
01/01/2010 to 12/31/2010
-2,542
-703
-589
7.02.02
Materials, electricity, third party services and other
-994
-378
-514
7.02.03
Loss/recovery of amounts receivable
-1,548
-325
-75
7.03
Gross value added
-2,542
-703
-589
7.04
Withholdings
-250
-276
-292
7.04.01
Depreciation, amortization and depletion
7.05
Net value added produced
-250
-276
-292
-2,792
-979
-881
7.06
7.06.01
Value added received in transfer
662,946
592,760
524,413
Equity pick-up
607,971
522,197
506,832
7.06.02
Financial income
54,975
70,563
17,581
7.07
7.08
Total value added to be distributed
660,154
591,781
523,532
Distribution of value added
660,154
591,781
523,532
7.08.01
Personnel
3,880
2,886
2,252
7.08.01.01
Direct compensation
3,769
2,793
2,140
7.08.01.02
Benefits
55
46
67
7.08.01.03
Unemployment Compensation Fund (FGTS)
56
47
45
7.08.02
Taxes, charges and contributions
188
1,926
1,173
7.08.02.01
Federal
187
1,926
1,172
7.08.02.03
Municipal
1
0
1
7.08.03
Third-party capital remuneration
107
33
325
7.08.03.01
Interest
107
33
325
7.08.04
Equity remuneration
655,979
586,936
519,782
7.08.04.01
Interest on equity capital
185,392
191,995
138,791
7.08.04.02
Dividends
189,844
147,036
167,645
7.08.04.03
Retained profit/loss for the period
280,743
247,905
213,346
PAGE: 13 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Consolidated financial statements / Balance sheet - Assets
(In thousands of reais)
Account
code
Account description
12/31/2012
12/31/2011
12/31/2010
1
Total assets
8,873,550
9,105,861
7,511,164
1.01
Current assets
5,710,017
5,867,061
4,794,009
1.01.01
Cash and cash equivalents
2,302,256
2,931,615
2,552,996
1.01.01.01
Cash and banks
211,295
59,512
53,971
1.01.01.02
Short-term investments
2,090,961
2,872,103
2,499,025
1.01.02
Short-term investments
261,244
0
0
1.01.02.01
Short-term investments at fair value
261,244
0
0
1.01.02.01.01
Trading securities
261,244
0
0
1.01.03
Trade accounts receivable
1,472,839
1,307,692
1,044,712
1.01.03.01
Clients
1,472,839
1,307,692
1,044,712
1.01.04
Inventories
1,306,273
1,362,314
1,008,952
1.01.06
Taxes recoverable
183,627
156,076
107,182
1.01.06.01
Current taxes recoverable
183,627
156,076
107,182
1.01.08
Other current assets
183,778
109,364
80,167
1.01.08.03
Other
1.02
Noncurrent assets
183,778
109,364
80,167
3,163,533
3,238,800
2,717,155
88,833
432,469
136,984
2,032
280,635
0
1.02.01
Long-term receivables
1.02.01.01
Short-term investments at fair value
1.02.01.01.01
Trading securities
2,032
280,635
0
1.02.01.06
Deferred taxes
36,891
111,488
78,810
1.02.01.06.01
Deferred income and social contribution taxes
36,891
111,488
78,810
1.02.01.09
Other noncurrent assets
49,910
40,346
58,174
1.02.01.09.03 Judicial deposits
27,844
24,038
21,697
1.02.01.09.04 Taxes recoverable
16,032
12,902
31,661
1.02.01.09.05
Other
6,034
3,406
4,816
1.02.02
Investments
7,622
349
601
1.02.02.01
Equity interests
349
349
601
349
349
601
7,273
0
0
1.02.02.01.04 Other equity interests
1.02.02.02
Investment properties
PAGE: 14 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Consolidated financial statements / Balance sheet - Assets
(In thousands of reais)
Account
code
Account description
12/31/2012
12/31/2011
12/31/2010
1.02.03
Property, plant and equipment
2,537,094
2,445,760
2,395,575
1.02.03.01
Property, plant and equipment in use
2,537,094
2,445,760
2,395,575
1.02.04
Intangible assets
529,984
360,222
183,995
1.02.04.01
Intangible assets
31,215
28,681
43,870
1.02.04.01.02
Other
31,215
28,681
43,870
1.02.04.02
Goodwill
498,769
331,541
140,125
PAGE: 15 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Consolidated financial statements / Balance sheet - Liabilities and equity
(In thousands of reais)
Account
code
Account description
12/31/2012
12/31/2011
12/31/2010
2
Total liabilities and equity
8,873,550
9,105,861
7,511,164
2.01
Current liabilities
3,012,824
2,752,960
1,938,803
2.01.01
Labor and social charges
168,831
161,436
141,797
2.01.01.01
Social obligations
168,831
161,436
141,797
2.01.02
Trade accounts payable
331,037
298,195
242,300
2.01.03
Tax obligations
126,655
88,474
72,204
2.01.03.01
Federal tax obligations
126,655
88,474
72,204
2.01.03.01.01 Income and social contribution taxes payable
72,927
44,186
41,718
2.01.03.01.02
Other
53,728
44,288
30,486
2.01.04
Loans and financing
1,645,772
1,701,435
1,018,995
2.01.04.01
Loans and financing
1,645,772
1,701,435
1,018,995
2.01.05
Other payables
740,529
503,420
463,507
2.01.05.02
Other
740,529
503,420
463,507
79,381
2,804
63,440
358,124
285,843
271,949
33,559
26,314
23,583
2.01.05.02.01 Dividends and interest on equity capital payable
2.01.05.02.04
Advance from clients
2.01.05.02.05
Profit sharing
2.01.05.02.06
Other
269,465
188,459
104,535
2.02
Noncurrent liabilities
1,709,100
2,446,312
2,028,525
2.02.01
Loans and financing
1,044,068
1,756,293
1,399,948
2.02.01.01
Loans and financing
1,044,068
1,756,293
1,399,948
2.02.02
Other payables
137,916
122,485
86,875
2.02.02.02
Other
137,916
122,485
86,875
47,328
58,326
58,765
2.02.02.02.03 Tax obligations
2.02.02.02.04
Other
90,588
64,159
28,110
2.02.03
Deferred taxes
320,503
421,918
415,318
2.02.03.01
Deferred income and social contribution taxes
320,503
421,918
415,318
2.02.04
Provisions
206,613
145,616
126,384
2.03
Consolidated equity
4,151,626
3,906,589
3,543,836
2.03.01
Paid-in capital
2,718,440
2,265,367
1,812,294
PAGE: 16 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Consolidated financial statements / Balance sheet - Liabilities and equity
(In thousands of reais)
Account
code
Account description
2.03.02
Capital reserves
2.03.02.01
Premium on share issue
2.03.02.04
Options granted
2.03.02.07
Premium on capital transaction
2.03.03
Revaluation reserve
2.03.04
Income reserves
2.03.04.01
Legal reserve
12/31/2012
12/31/2011
12/31/2010
-53,319
239
44,931
0
0
44,931
758
239
0
-54,077
0
0
3,784
3,834
3,884
687,792
857,721
900,676
32,799
29,347
53,409
2.03.04.02
Statutory reserve
537,245
664,715
746,059
2.03.04.08
Additional proposed dividends
127,803
173,714
101,208
2.03.04.09
Treasury stock
-10,055
-10,055
0
2.03.06
Equity valuation adjustments
656,646
704,466
758,715
2.03.06.01
Deemed cost
656,646
704,466
758,715
2.03.07
Cumulative translation adjustments
47,006
-31,515
-65,893
2.03.09
Noncontrolling interest
91,277
106,477
89,229
PAGE: 17 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Consolidated financial statements / Income statement
(In thousands of reais)
Account
code
Account description
01/01/2012 to 12/31/2012
01/01/2011 to 12/31/2011
01/01/2010 to 12/31/2010
3.01
Revenue from sale of products and/or services
6,173,878
5,189,409
4,391,973
3.02
Cost of goods sold and/or services rendered
-4,293,022
-3,633,358
-3,005,021
3.03
Gross profit
1,880,856
1,556,051
1,386,952
3.04
Operating income/expenses
-1,072,445
-892,926
-784,315
3.04.01
Selling expenses
-619,980
-508,904
-434,249
3.04.02
General and administrative expenses
-307,202
-259,483
-262,724
3.04.02.01
Management fees
-18,793
-16,988
-17,336
3.04.02.02
Other
-288,409
-242,495
-245,388
3.04.04
Other operating income
18,593
17,072
20,098
3.04.05
Other operating expenses
-163,856
-141,611
-109,530
3.04.06
Equity pick-up
3.05
Income before financial income (expenses) and taxes
0
0
2,090
808,411
663,125
602,637
3.06
Financial income (expenses)
3.06.01
Financial income
3.06.02
Financial expenses
3.07
Income before income taxes
3.08
3.08.01
3.08.02
Deferred
29,621
23,851
-33,923
3.09
Net income from continuing operations
664,864
607,021
533,634
3.11
Consolidated income/loss for the period
664,864
607,021
533,634
3.11.01
Attributed to shareholders of parent company
655,979
586,936
519,782
3.11.02
Attributed to noncontrolling shareholders
8,885
20,085
13,852
3.99
Earnings per share - (reais / share)
3.99.01
Basic earnings per share
1.06000
0.95000
0.84000
1.06000
0.95000
0.84000
55,691
103,001
123,115
460,420
499,570
348,471
-404,729
-396,569
-225,356
864,102
766,126
725,752
Income and social contribution taxes
-199,238
-159,105
-192,118
Current
-228,859
-182,956
-158,195
3.99.01.01
Common shares
3.99.02
Diluted earnings per share
3.99.02.01
Common shares
PAGE: 18 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Consolidated financial statements / Statement of comprehensive income
(In thousands of reais)
Account
code
Account description
4.01
Consolidated net income for the period
4.02
Other comprehensive income
83,513
34,366
-34,023
4.03
Consolidated comprehensive income for the period
748,377
641,387
499,611
4.03.01
Attributed to shareholders of parent company
734,500
621,314
485,774
4.03.02
Attributed to noncontrolling shareholders
13,877
20,073
13,837
01/01/2012 to 12/31/2012
01/01/2011 to 12/31/2011
01/01/2010 to 12/31/2010
664,864
607,021
533,634
PAGE: 19 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Consolidated financial statements / Cash flow statements – Indirect method
(In thousands of reais)
Account
code
Account description
6.01
Net cash from operating activities
01/01/2012 to 12/31/2012
01/01/2011 to 12/31/2011
01/01/2010 to 12/31/2010
893,566
333,136
653,442
6.01.01
Cash from operations
1,181,424
1,047,749
996,724
6.01.01.01
Pre-tax income
864,102
766,126
729,965
6.01.01.02
Depreciation and amortization
208,337
188,030
183,990
6.01.01.03
Equity pickup
0
0
-2,090
108,466
93,354
84,859
519
239
0
6.01.01.04
Employee profit sharing
6.01.01.05
Other
6.01.02
Changes in assets and liabilities
-354,559
-748,906
-378,019
6.01.02.01
Increase (decrease) in accounts receivable
-324,344
-343,874
-6,203
6.01.02.02
Increase (decrease) in accounts payable
187,545
130,982
96,334
6.01.02.03
Increase (decrease) in inventories
6.01.02.04
Income and social contribution taxes paid
6.01.02.05
Employee profit sharing paid
6.01.03
Other
6.02
Net cash from investing activities
6.02.01
Investments
6.02.02
Property, plant and equipment
6.02.03
Intangible assets
92,326
-273,341
-205,873
-210,296
-174,304
-152,808
-99,790
-88,369
-109,469
66,701
34,293
34,737
-381,567
-646,798
-365,205
-7,220
0
0
-237,882
-189,065
-261,863
-17,939
2,426
-4,772
6.02.04
Disposal of assets
22,827
21,000
18,929
6.02.05
Cumulative translation adjustments
78,521
34,378
-34,008
6.02.07
Long-term financial investments
17,359
-280,635
0
6.02.08
Premium on capital transaction
6.02.09
Acquisition of subsidiary
6.03
Net cash from financing activities
6.03.01
Loans and financing raised
6.03.02
Payment of loans and financing
6.03.03
Interest paid on loans and financing
6.03.04
Dividends/interest on equity capital paid
6.03.05
Treasury stock
-54,077
0
0
-183,156
-234,902
-83,491
-1,141,358
692,281
137,642
982,720
2,284,737
1,562,279
-1,578,739
-1,127,569
-962,927
-174,827
-155,246
-122,838
-318,422
-299,586
-338,872
0
-10,055
0
PAGE: 20 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Consolidated financial statements / Cash flow statements – Indirect method
(In thousands of reais)
Account
code
Account description
6.03.06
Acquisition of noncontrolling interest
6.05
Increase/(decrease) in cash and cash equivalents
-629,359
378,619
425,879
6.05.01
Opening cash and cash equivalents balance
2,931,615
2,552,996
2,127,117
6.05.02
Closing cash and cash equivalents balance
2,302,256
2,931,615
2,552,996
01/01/2012 to 12/31/2012
01/01/2011 to 12/31/2011
01/01/2010 to 12/31/2010
-52,090
0
0
PAGE: 21 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Consolidated financial statements / Statements of changes in equity - 01/01/2012 to 12/31/2012
(In thousands of reais)
Account
Code
Account description
Capital
paid-in
Capital reserves options
granted and treasury stock
5.01
Opening balances
2,265,367
5.03
Adjusted opening balances
2,265,367
4,073
5.04
Capital transactions with shareholders
453,073
-53,558
5.04.01
Capital increase
453,073
0
-453,073
0
0
0
0
0
5.04.03
Recognized options granted
0
519
0
0
0
519
0
519
5.04.06
Dividends
0
0
0
-62,041
0
-62,041
-1,940
-63,981
5.04.07
Interest on equity
0
0
0
-185,392
0
-185,392
-784
-186,176
5.04.08
Goodwill on capital transaction
0
-54,077
0
0
0
-54,077
-26,353
-80,430
5.05
Total comprehensive income
0
0
0
703,799
30,701
734,500
13,877
748,377
5.05.01
Net income for the year
0
0
0
655,979
0
655,979
8,885
664,864
5.05.02
Other comprehensive income (losses)
0
0
0
47,820
30,701
78,521
4,992
83,513
5.05.02.04
Adjustments of Translation for the year
0
0
0
0
78,521
78,521
4,992
83,513
5.05.02.06
Realization at deemed cost
0
0
0
47,820
-47,820
0
0
0
5.06
Internal changes in equity
0
-50
329,055
-502,277
0
-173,272
0
-173,272
5.06.01
Recognition of reserves
0
0
329,055
-329,055
0
0
0
0
5.06.02
Realization of revaluation reserve
0
-50
0
50
0
0
0
0
4,073
Income reserves
Retained earnings
Accumulated losses
684,007
Other comprehensive
income
Equity
Noncontrolling interest
Consolidated equity
173,714
672,951
3,800,112
106,477
3,906,589
684,007
173,714
672,951
3,800,112
106,477
3,906,589
-453,073
-247,433
0
-300,991
-29,077
-330,068
5.06.04
Payments of dividends
0
0
0
-173,714
0
-173,714
0
-173,714
5.06.05
Prescribed dividends
0
0
0
442
0
442
0
442
5.07
Closing balances
2,718,440
-49,535
559,989
127,803
703,652
4,060,349
91,277
4,151,626
PAGE: 22 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Consolidated financial statements / Statements of changes in equity - 01/01/2011 to 12/31/2011
(In thousands of reais)
Account
Code
Account description
Capital
Paid-in
Capital reserves options,
granted and treasury stock
5.01
Opening balances
1,812,294
5.03
Adjusted opening balances
1,812,294
48,815
5.04
Capital transactions with shareholders
453,073
-44,692
5.04.01
Capital increase
453,073
-44,931
-408,142
0
0
0
0
0
5.04.03
Recognized options granted
0
239
0
0
0
239
0
239
5.04.04
Acquired treasury stock
0
0
-10,055
0
0
-10,055
0
-10,055
5.04.06
Dividends
0
0
0
-60,179
0
-60,179
-1,133
-61,312
5.04.07
Interest on equity
0
0
0
-105,138
0
-105,138
0
-105,138
5.05
Total comprehensive income
0
0
0
641,185
-19,871
621,314
20,140
641,454
5.05.01
Net income for the year
0
0
0
586,936
0
586,936
20,085
607,021
5.05.02
Other comprehensive income (losses)
0
0
0
54,249
-19,871
34,378
55
34,433
5.05.02.04
Adjustments of Translation for the year
0
0
0
0
34,378
34,378
-12
34,366
5.05.02.06
Realization of deemed cost
0
0
0
54,249
-54,249
0
67
67
5.06
Internal changes in equity
0
-50
302,736
-403,362
0
-100,676
-1,759
-102,435
5.06.01
Recognition of reserves
0
0
302,736
-302,736
0
0
0
0
5.06.02
Realization of revaluation reserve
0
-50
0
50
0
0
0
0
48,815
Income reserves
799,468
Retained earnings
Accumulated losses
Other comprehensive
income
Equity
Noncontrolling interest
Consolidated equity
101,208
692,822
3,454,607
89,229
3,543,836
799,468
101,208
692,822
3,454,607
89,229
3,543,836
-418,197
-165,317
0
-175,133
-1,133
-176,266
5.06.04
Payments of dividends
0
0
0
-101,208
0
-101,208
0
-101,208
5.06.05
Prescribed dividends
0
0
0
532
0
532
0
532
5.06.06
Other
0
0
0
0
0
0
-1,759
-1,759
5.07
Closing balances
2,265,367
4,073
684,007
173,714
672,951
3,800,112
106,477
3,906,589
PAGE: 23 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Consolidated financial statements / Statements of changes in equity - 01/01/2010 to 12/31/2010
(In thousands of reais)
Account
Code
Account description
Capital
Paid-in
Capital reserves options
granted and treasury stock
Income reserves
Retained earnings
Accumulated losses
5.01
Opening balances
1,812,294
48,866
533,512
5.03
Adjusted opening balances
1,812,294
48,866
5.04
Capital transactions with shareholders
0
0
5.04.06
Dividends
0
0
5.04.07
Interest on equity
0
0
5.05
Total comprehensive income
0
5.05.01
Net income for the year
0
5.05.02
Other comprehensive income (losses)
5.05.02.04
5.05.02.06
5.06
5.06.01
Other comprehensive
income
Equity
Noncontrolling
interests
Equity
Consolidated
127,285
777,782
3,299,739
27,547
3,327,286
533,512
127,285
777,782
3,299,739
27,547
3,327,286
0
-205,228
0
-205,228
-1,302
-206,530
0
-66,437
0
-66,437
-1,244
-67,681
0
-138,791
0
-138,791
-58
-138,849
0
0
571,872
-86,098
485,774
13,838
499,612
0
0
519,782
0
519,782
13,853
533,635
0
0
0
52,090
-86,098
-34,008
-15
-34,023
Adjustments of Translation for the year
0
0
0
0
-34,008
-34,008
-15
-34,023
Realization of deemed cost
0
0
0
52,090
-52,090
0
0
0
Internal changes in equity
0
-51
265,956
-392,721
1,138
-125,678
49,146
-76,532
Recognition of reserves
0
0
265,956
-265,956
0
0
0
0
5.06.02
Realization of revaluation reserve
0
-51
0
51
0
0
0
0
5.06.04
Payments of dividends
0
0
0
-127,285
0
-127,285
0
-127,285
5.06.05
Prescribed dividends
0
0
0
469
0
469
0
469
5.06.20
Other
0
0
0
0
1,138
1,138
49,146
50,284
5.07
Closing balances
1,812,294
48,815
799,468
101,208
692,822
3,454,607
89,229
3,543,836
PAGE: 24 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Consolidated financial statements / Statements of Value Added
(In thousands of reais)
Account
Code
Account description
01/01/2012 to 31/12/2012
01/01/2011 to 12/31/2011
01/01/2010 to 12/31/2012
7.01
Revenues
7,091,928
6,005,251
5,172,316
7.01.01
Sales of goods, products and services
7,074,406
6,006,960
5,156,766
7.01.02
Other revenues
23,939
718
20,005
7.01.04
Set up/Reversal of allowance for. doubtful accounts
-6,417
-2,427
-4,455
7.02
Inputs purchased from third parties
-3,979,234
-3,382,369
-2,837,025
7.02.02
Materials, electricity, third party services and other
-3,928,347
-3,376,707
-2,830,569
7.02.03
Loss/recovery of amounts receivable
-50,887
-5,662
-6,456
7.03
Gross value added
3,112,694
2,622,882
2,335,291
7.04
Withholdings
-208,337
-188,030
-183,990
7.04.01
Depreciation, amortization and depletion
-208,337
-188,030
-183,990
7.05
Net value added produced
2,904,357
2,434,852
2,151,301
7.06
Value added received in transfer
460,420
499,570
350,561
7.06.01
Equity pickup
7.06.02
Financial income
0
0
2,090
460,420
499,570
348,471
7.07
7.08
Total value added to be distributed
3,364,777
2,934,422
2,501,862
Distribution of value added
3,364,777
2,934,422
2,501,862
7.08.01
Personnel
1,277,996
1,051,038
880,085
7.08.01.01
Direct compensation
1,097,014
896,973
746,290
123,360
105,138
90,946
57,622
48,927
42,849
7.08.01.02
Benefits
7.08.01.03
Unemployment Compensation Fund (FGTS)
7.08.02
Taxes, charges and contributions
991,837
842,670
833,592
7.08.02.01
Federal
885,100
749,346
726,965
7.08.02.02
State
97,746
87,351
99,726
7.08.02.03
Municipal
8,991
5,973
6,901
7.08.03
Remuneration of third-party’s capital
430,080
433,693
254,551
7.08.03.01
Interest
402,520
414,051
237,456
7.08.03.02
Rental
27,560
19,642
17,095
7.08.04
Equity capital remuneration
664,864
607,021
533,634
7.08.04.01
Interest on equity capital
189,844
191,995
138,791
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Consolidated financial statements / Statements of Value Added
(In thousands of reais)
Account
Code
Account description
01/01/2012 to 12/31/2012
01/01/2011 to 12/31/2011
01/01/2010 to 12/31/2012
7.08.04.02
Dividends
185,392
147,036
167,645
7.08.04.03
Retained profit/loss for the period
280,743
247,905
213,346
7.08.04.04
Noncontrolling interest in retained profits
8,885
20,085
13,852
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MESSAGE FROM THE PRESIDENT
Dear Shareholders,
The performance achieved by WEG in 2012 is a reason for celebration. Even in a difficult economic environment,
with low growth rates in Brazil and in developed countries, we managed to grow Consolidated Revenue by 19%.
We expanded our presence and our product line abroad allowing for a 38% growth.
In 2012, we continued the implementation of the WEG 2020’s Strategic Plan aiming to integrate operations acquired,
such as the Electric Machinery, established in the US and the manufacturer of turbo-generators and other high-voltage
electric machines. Also, there is the integration of the operations of the Austrian company Watt Drive and WEG-Cestari,
thereby consolidating our position of players in the business power transmission. This year, we also announced the
acquisitions of Stardur and Paumar integrating the Company’s paint business, in addition to Injetel that complemented
our product line in the building automation market.
Operating generation of cash (EBITDA) totaled R$1,053.5 million, reflecting 19% increase with a margin of 17.1%. In the
current year, R$238.4 million was invested in property, plant and equipment.
The technological update of our product portfolio is one of the key factors contributing to the maintenance of our
competitiveness in our markets. We invested approximately R$145 million in research, development and innovation in
2012. One of the results arising from this focus on innovation was the 2012 FINEP Innovation Award 2012.
We also made advances in the Social Responsibility area. In 2012, we invested R$12.6 million in specific areas,
such as citizenship, culture, sport and environment, being R$2.9 million through tax incentive laws, R$3.6 million of
Company’s resources, in addition to environmental investment of approximately R$6.2 million in several
manufacturing facilities.
An important acknowledgement of the development of our practices was the inclusion of WEGE3 shares in the BM&F
Bovespa corporate sustainability index (ISE). WEG is the only company in the ISE index in the segment of capital
goods.
We also highlight the inclusion of WEG, in November 2012, in the MSCI Global Standard Indexes, which we believe is a
result of the actions we have been implementing to seize increase in liquidity of WEGE3 share.
Finally, we must acknowledge and thank all effort and dedication devoted by our 25,350 employees in Brazil and abroad,
which was essential to WEG’s good performance in 2012.
We still expect to find, in 2013, a quite challenging scenario, with gradual improvement of global economic
conditions, still within a quite competitive environment.
Important measures announced by the Brazilian Government in 2012, as well as the actual interest rate at levels
historically low combined with a favorable exchange rate may contribute to the increase competitiveness of the industry in
Brazil and thus promote investments in the expansion of industrial productive capacity.
WEG will continue in the quest for continuous and sustainable growth focused on the implementation of WEG 2020 Plan.
With the support we have been receiving from our employees, customers, suppliers, shareholders and from the overall
community, we are confident to boost our chances of success.
Thank you all for the trust and confidence.
HARRY SCHMELZER JR.
Chief Executive Officer
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WEG S.A.
MANAGEMENT REPORT
December 31, 2012
We present hereby to our shareholders the Consolidated Financial Statements of WEG Group and WEG S.A. for the
year ended December 31, 2012.
SCENARIO
The global economic recovered at a slow pace in 2012. The presidential election and tax issues in the United States
increased the insecurity of markets in the mid year, while the change of leadership in China without external impact
visible and also seemingly calmer. Jointly with the continuity of sovereign debt crisis of periphery European countries,
these were the main events promoting the volatility in financial markets and affecting economic performance. The
emerging markets, even with the economic slowdown in China, continued to grow faster than those of developed
economies. In this sense, we may see:
ƒ
World product growth, according to estimates of the report World Economic Outlook report of the
International Monetary Fund, is expected to reach 3.3% in 2012, in comparison to 5.3% increase of
emerging economies on average, against only 1.2 more advanced economies. It is noteworthy that the
expansion pace estimated in 2012 is lower than that observed in 2011, showing that the adjustment of
mature economies impacts the global economic dynamism. Another important point is that global interest
rates were kept at levels historically, showing that countries maintain the commitment with monetary
incentive;
ƒ
In Brazil, gross domestic product growth should be around 1% in comparison with 2011, a
performance below expectations. Brazil’s industrial production fell 2.7% in 2012, according to the
Brazilian Institute of Geography and Statistics (IBGE). Capital goods production dropped 11.8% over the
previous year, which reflected its worst performance;
ƒ
Preliminary data from the Brazilian Electrical and Electronics Industry Association (ABINEE) indicates
that the Brazilian electronics sector should reached 5% growth in sales in 2012 over the previous
year. In areas related to capital goods, closer to WEG’s business, such as industrial automation and
industrial equipment, growth rates were of 8% and 3% respectively. Only the area GTD showed better
performance, with an estimated growth of 18%. These growth rates reflect both the performance of
the Brazilian market as of exports.
We emphasize that troughout the Brazilian government has been adopting several tax reduction measures, under the
“Brazil Maior” Program, as well as structured incentive policies by BNDES to extend loans for investments. Furthermore,
the exchange rate has found a new level, more favorable for local producers. This set of measures demonstrate the
concern for the recovery of competitiveness of the Brazilian industrial sector and encourage us, in the expectation
that we will face the remaining structural bottlenecks of competitiveness.
ECONOMIC AND FINANCIAL ASPECTS
Operating revenue
In 2012, the consolidated Net Operating Revenue (NOR) reached R$ 6,173.9 million, up 19% as compared to prior
year. This revenue growth can be observed in all areas of business. The industrial electric and electronic
equipment, paints and varnishes and GTD maintained the high growth rates observed since the previous year, while
home appliance engines showed modest growth.
We highlight the following aspects in each of these areas:
Industrial electro-electronic equipment – Revenues grew by 17% over 2011, primarily due to good performance
in external markets, where we see revenue growth of 26.5%. Our growth strategy abroad has two main premises.
The first is the geographic expansion by leveraging our extensive expertise in electrical machines and our relationship
with leading manufacturers of capital goods to conquer new positions. Moreover, in the markets in which we already
have a strong commercial base in electrical products, primarily with industrial electric motors, we have been
seeking to introduce new products and services aiming to increase the scope of our offer.
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In Brazil, even though the industrial production performance and investment in the expansion of production capacity
has been low, we managed to find growth opportunities. Our operations are focused on acting on opportunities in
industry segments with their own dynamism, expanding our portfolio of products and using our vertical productive
capacity and engineering to offer customized and integrated solutions.
Electric energy generation, transmission and distribution equipment (GTD) - Net Operating Revenue grew
by 22% over 2011. Energy generation equipment (G) focuses on renewable and distributed energy sources,
such as small hydroelectric plants and thermal biomass energy, and more recently, wind and solar energy
sources. The wind energy has been recording high growth rates in Brazil, while the PCHs and thermal biomass energy
recorded lower, although consistent growth rates. In the transmission and distribution business (T&D) continues to
record expansion in demand, however with depressed prices, which prevented these from having a better performance.
This global price situation arises from the lack of balance between productive capacity and demand, both in emerging
and in mature economies.
Motors for home appliances – Revenues grew by 2.2% over 2011. This indicates that the growth in the white
goods demand was reached by imported finished products or domestic production with little local content and
that government incentives to the increase consumption, such as temporary tax reductions, did not have
impact on the entire production chain.
Paints and varnishes - Area with the highest relative growth rate, 31% over the previous year. Our strategy in
paints and varnishes is to leverage relationships with customers who have achieved in other business areas,
performing cross-sales and maximizing the return of our sales effort. In 2012, investments and transactions were
made for purposes of expansion in new markets and new products.
Domestic Market
Net Operating Revenue in the domestic market totaled R$ 3,016.7 million, up 4% as compared to prior year and
representing 49% of our NOR. Nevertheless the unfavorable conditions particularly for the Brazilian industry, which
experienced decreases throughout the year in industrial production in general and capital goods in particular, we
managed, thanks to our productive flexibility and business agility, to find and exploit the opportunities in some economic
sectors with own dynamism. Our strategy to expand our product and service portfolio, providing industrial solutions
increasingly comprehensive and integrated, allows us to remain Brazil’s market leaders in many of the our operating
areas.
External Market
Net Operating Revenue in the external markets grew by 38% over the prior year and totaled R$ 3,157.2 million,
corresponding 51% of our NOR. Translated in US dollar average, net operating revenue in the external markets
totaled US$ 1,609.7 million, showing growth of 18% compared to 2011.
As we have already observed in 2011, this good performance in external markets was the result of both the operations
expansion in our traditional markets as expansion into new markets and business. Growth of 38% in the external
markets, 32% are due to operations organic growth, with the remainder resulting from the acquisition and integration of
business and manufacturing operations of the various acquisitions made in recent years.
Cost of goods sold
Cost of goods sold (COGS) reached R$ 4,293.0 million, or 69.5% of NOR (70.0% in 2011), generating gross margin of
30.5%, slightly improvement over the previous year.
Despite the margin stability, we continue to see challenging conditions for maintaining the industrial operations
competitiveness in Brazil. We have global sourcing programs of raw materials and inputs and of continuous improvement
to optimize capacity and increase of industrial efficiency. The new electric motors industrial units in Linhares, state of
Espírito Santo, and high voltage electrical machines in Hosur, India, had low initial contribution in the dilution of
fixed costs during the ramp-up of production. However, we are confident that these units show, with the gradual
occupation of their productive capacity, increasing results, since they were designed within industry standards
more advanced.
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We also highlight the devaluation of 14.3% in the Brazilian currency and the tax exemptions implemented by the
Brazilian government, which contributed to the competitiveness of our products. These measures, together with the
conditions of long-term credit offered by agents, such as the BNDES, have provided greater resilience to industrial
segment and reduced negative impacts of global macroeconomic conditions on the industry.
Selling, General and Administrative Expenses
Consolidated selling, general and administrative expenses totaled R$ 927.2 million, or 15% of NOR (R$ 768.4 million in
2011, or 14.8% of NOR). Operating expenses grew by 20.7% as compared to prior year in absolute terms, with small
relative expansion of 0.2 percentage points. Despite the performance on the administrative expenses, seeking greater
operational efficiency, strong growth in the external markets caused greater expansion of sales expenses.
EBITDA
As a result of aforementioned impacts, EBITDA totaled R$ 1,053.5 million (calculated according to the method
established by the Brazilian Securities and Exchange Commission (CVM) in Official Circular No. 01/07), an
increase of 19% over 2011. EBITDA margin reached 17.1%, 0.1 percentage point higher over 2011. We
emphasize that this was the first year that the EBITDA surpassed R$ 1 billion.
EBITDA calculated using the new methodology set forth by the Brazilian Comissão de Valores Mobiliários (CVM)
Instruction nº 527/2012 would have reached R$ 1,016.7 million, with margin of 16.5%. Compared to 2011, the
absolute growth would have been 19.5% and EBITDA margin expansion would have been 0.1 percentage point.
Financial Income and Expenses
Net financial income was positive in R$ 55.7 million (R$ 103.0 million in 2011), with Financial Income totaled R$ 460.4
million (R$ 499.6 million in 2011) and Financial Expenses totaled R$ 404.7 million (R$ 396.6 million in 2011). The
reduction in net financial income in the previous year was a result both of lower real interest that occurred in Brazil, as
the effect of devaluation on debt in foreign currencies.
Net Income
As a result from the aforementioned effects, Consolidated Net Income attributable to WEG S.A.’s shareholders
reached R$ 656.0 million, up 12% in relation to R$ 586.9 million in 2011. Return on net equity in 2012 was of 17.3%
(17% in 2011), with net margin of 10.6% (11.3% in 2011).
CAPITALIZATION
Maintaining our financial flexibility is important in our strategy to capture investment opportunities with attractive returns
without excessive increase in risk exposure. Thus, our capital structure is sound and preserves our access to funds
and sources of liquidity. In addition, we maintain close relationship with agents, such as the Brazilian Development
Bank (BNDES) and the International Finance Corporation (IFC), as important sources of capital for long-term
investments, and FINEP, which has been a big supporter of our investments in research and development in
technological innovation.
In 2012, we observed a decrease in both our cash position as of total financing while maintaining a net debt position of
close to balance end. The new level of real interest rates in Brazil decreases the attractiveness of high cash positions,
as discussed earlier. The cash resources are invested in top-tier banks and mostly in domestic currency.
At December 31, 2012 cash and cash equivalents totaled R$ 2,565.5 million, mainly in short-term. The gross financial
debt totaled R$ 2,689.8 million, being 61% in short-term financing and 39% in long-term financing. At the end of 2012,
WEG recorded net debt of R$ 124.3 million.
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Cash & Equivalent
- Short-term
- Long-term
Debt
- Short-term
- In Reais
- In other currencies
- Long-term
- In Reais
- In other currencies
Net Cash (Debt)
December 2012
2,565,532
2,563,500
2,032
2,689,840
1,645,772
1,067,683
578,089
1,044,068
829,910
219,158
(124,308)
December 2011
3,212,250
2,931,615
280,635
3,457,728
1,701,435
585,687
1,115,748
1,756,293
1,560,712
195,581
(245,478)
INVESTMENTS
Investiments in fixed assets for capacity expansion and modernization totaled R$ 238.4 million in 2012, 90% of
which destined to industrial plants and other installations in Brazil and the remaining amount to production units
and other subsidiaries abroad. In addition to these investments, R$ 27 million in fixed assets were incorporated
from the consolidated of Stardur, Paumar, Injetel and WEG Cestari transactions in 2012.
Disbursements in capacity expansion over the 2012 were lower than originally forecasted because our investment
program is managed for optimum capacity utilization and maximization of return on invested capital. Thus, the relatively
lower performance in domestic and optimization efforts to meet demand in the external market determined a slower
speed of implementation of the investment program.
INVESTMENTS IN RESEARCH, DEVELOPMENT AND INNOVATION (RD&I)
Important technological changes continue to affect our markets and products. Accordingly, we maintain a
consistent research program, development and technological innovation, one of the main vectors of our future
growth, as outlined in the strategic planning WEG 2020. These efforts in research and development include the
development of new products, continuous improvement of products already available, engineering of adjustment
and application of products and systems, and improvement of our industrial processes.
In 2012, these investments totaled R$148.3 million, reflecting 2.4% of Net Operating Revenue.
DIVIDENDS
Management will propose during the annual General Shareholders’ Meeting to distribute R$ 375.2 million as payment
of dividends and interest on stockholders equity on 2012 results, which corresponds to R$ 0.60482353 per share before
eventual taxes deductions. This amount represents 57% of net income before statutory adjustments.
As of August 15th, 2012, payments declared during the first half of 2012 were made to shareholders (intermediate
dividends), in the total amount of R$ 156.9 million. The payment of dividend declared during the second half of 2012
(supplementary dividends), in the total amount of R$ 218.3 million, will begin on March 13th, 2013.
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Net income, dividends and pay-out (%)
54%
55%
59%
58%
57%
656,0
560,0
301,1
2008
586,9
548,9
519,8
306,4
300,0
2009
Dividends
339,0
2010
2011
Net income
Pay-out
375,2
2012
HIGHLIGHTS
Acquisition Stardur
On June 19th, 2012 WEG S.A. announced acquisition of Stardur Tintas Especiais Ltda., a company
specialized in manufacturing and marketing of coatings and operates in coatings such as high and low solids,
engineered plastics, water soluble, coil coating and automotive repainting segment, complementing WEG’s
coatings business unit product portfólio. With 250 employees and 10,000 square meters area in Indaiatuba,
State of São Paulo, Stardur recorded net revenues of approximately R$ 78 million in 2011.
On October 16th, 2012 WEG S.A. announced that a fire broke out at the plant. There were no casualties, only
material damage, for which the WEG has insurance coverage. The production at the Indaiatuba plant has been
interrupted and being transfered to Guaramirin (SC) and Mauá (SP) plants.
Acquisition Paumar
On December 03rd, 2012 WEG S.A. announced acquisition of Indústria de Tintas e Vernizes Paumar S.A.
(“Paumar”), a company specialized in manufacturing and marketing of coatings, varnishes, enamels and lacquers.
Paumar was founded in 1964 and currently employs 67 people, occupying around 5,800 square meters of an
industrial area of around 37,500 square meters in Mauá, in the State of São Paulo. Revenues in 2011 were of
approximately R$ 21 million.
The acquisition of Paumar mainly for maintenance of productive capacity, affected by fire on October 2012 at the Stardur
unit.
Acquisition Injetel
On October 31st, 2012 WEG S.A. announced acquisition of Injetel Indústria e Comércio de Componentes Plásticos
Ltda. (“Injetel”), a company specialized in manufacturing and marketing of power switches, power outlets and plugs for
commercial and residential applications.
Injetel was founded in 1991 and currently employs 50 people, occupying around 2,000 square meters industrial area
in Curitiba, in the State of Paraná. Revenues in 2011 were of approximately R$ 7 million.
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Selection for the ISE (Corporate Sustainability Index)
On November 29th, 2012 BM&FBOVESPA announced that WEG S.A. was selected for the ISE portfolio
BM&FBOVESPA, which ranges from January 07, 2013 to January 03, 2014. Company is the sole representative of
capital goods, machinery and equipment and electro-electronic equipment industry segment. WEG is also of 14
companies that authorized the opening of the questionnaire responses of selection.
The new portfolio brings together 51 parts of 37 companies. They represent 16 sectors and totaled R$ 1.07
trillion in market value, equivalent to 44.81% of the total value of companies traded on the BM&FBOVESPA on
11/26/2012.
Inclusion on MSCI Global Indices’
On November 14th, 2012, company MSCI Inc., owner of the family of MSCI equity indexes, announced the inclusion,
from November 30, 2012, the common shares issued by WEG traded on the BM&F Bovespa with the code WEGE3, in
the MSCI Global Standard Indexes.
The indices calculated by MSCI are used as reference performance by investors totaling more than U$ 7 trillion
worldwide. The inclusion of the shares of WEG in the MSCI indexes is the result of the gradual increase in the liquidity
of these shares. At the same time, it is expected that inclusion can increase the interest of foreign institutional investors
in shares “WEGE3” and receipt “WEGZY” traded OTC in the U.S.
FINEP 2012 Award
On December 19th, 2012, cerimony in the presence of president Dilma Rousseff, the process of managing innovation in
WEG was awarded one of the FINEP Innovation Award 2012, category “Large Company”.
The Award is organized by the Financier of Studies and Projects (Finep), linked to the Ministery of Science,
Technology and Innovation (MCTI) and was created to recognize and disseminate innovative efforts made by
companies, scientific and technological institutions, and Brazilian inventors, developed in Brazil and already
applied in the country or abroad.
OUTLOOK
The Outlook for 2013 are continuity of the main trends observed in recent years, with gradual recovery of global
economic growth. We believe these conditions will be similar to those found as of 2010, these conditions will allow
us to continue implementing the actions forecasted in our WEG 2020’s strategic planning and maintain the growth of
our operating activities. Penetrate new markets and the expansion of the line of products through acquisitions and
strategic partnerships will continue to be explored.
In Brazil, we see prospects to resume industrial segment growth. Measures for elimination of payroll and tax
simplification, the credit for investment incentives within the PSI of the BNDES and the new level, which improves the
competitiveness of the domestic industry, should result in gradual improvement in industry performance. Additionally,
we will continue to observe investments in infrastructure of the Brazil’s Growth Acceleration Program (PAC), in road ports
and airports concessions and in the preparations for 2014 World Cup and the 2016 Olympic Games in Rio de Janeiro.
Additionally, we will give greater attention to investment in generation, transmission and distribution of electricity,
guaranteeing the conditions for a continued economic growth.
Abroad, we will continue to seek opportunities to expand our business, in the so-called mature economies, with less
favorable macroeconomic environment. Our proximity to the customers, the broad portfolio of products technologically
advanced and our ability to provide customized solutions will continue to distinct us from the market the global market.
This flexibility and agility in serving the market have always been the trademark of our performance.
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Our capital budget for 2013 provides for the following investments:
Investments
(R$ million)
Property, plant and equipment (plant expansion/modernization)
265.3
Intangible (Software)
3.9
Working capital
87.4
Total investments
356.6
These investments will be supported by the utilization of the Capital Budget Reserve and of funds to be raised with
financial institutions in Brazil and abroad.
AUDIT SERVICES
In accordance with CVM Instruction No. 381/03, we hereby inform that the Company and its subsidiaries
adopt as a formal procedure to seek advice from independent auditors, Ernst Young Terco Auditores
Independentes ("EYT"), in order to ensure that the provision of these other services will not affect the
independence and objectivity required for the performance of independent audit services. In this regard, E&YT
issues an annual statement of independence, under the terms of NBC TA 260, issued by Brazil’s National Association of
State Boards of Accountancy (CFC), whereby it states that, as provided for in the independence rules adopted by the
Brazilian Securities and Exchange Commission (CVM), the relation between E&YT (and its subsidiaries and affiliates)
and the Company does not impair independence. This statement is submitted to WEG’s Board of Directors. The policy
of the Company and its subsidiaries for the engagement of independent auditor’s services ensures there is no
conflict of interests, loss of independence or objectivity.
During 2012, EYT provided specific management advisory services, as well as the translation of financial statements
into English, in addition to the assurance services of financial statements, as follows:
2012
1,054,010
%
100
Audit financial statements
889,399
84
Other services
164,611
16
- Legal advisory in Brazil
75,000
7
- Financial and tax advisory abroad
89,611
9
BRAZIL
ARBITRATION CHAMBER
The Company is bound to arbitration by the Market Arbitration Chamber, pursuant to the arbitration clause
provided for in its articles of incorporation.
Jaraguá do Sul (SC), February 2013.
The Management
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WEG S.A.
Notes to financial statements
At December 31, 2012
(In thousands of reais, except when indicated otherwise).
1. Company information
WEG S.A. (the “Company”) is a publicly traded company with main place of business at Avenida Prefeito Waldemar
Grubba, No 3.300, in Jaraguá do Sul - SC, Brazil, holding company member of the WEG Group, and its business
purpose is the manufacture and marketing of capital goods, such as, electric motors, generators and transformers;
reducers, geared reducers, frequency inverters, starter motors and maneuver devices; control and protection of
electric circuits and industrial automation; electric traction solutions (land and sea); solutions for the generation of
renewable and distributed energy, exploring all opportunities in small hydroelectric plants and thermal biomass, wind
and solar energy sources; no-breaks and alternators for groups of generators; electric substations; industrial
electrical and electronic equipment systems; and industrial paint & varnish. The operations are performed through
manufacturing facilities located in Brazil, Argentina, Mexico, United Stated, Portugal, Austria, South Africa, India,
and China. The Company has shares traded on BM&F Bovespa under the code “WEGE3” and has been listed
since June 2007 in the special segment of corporate governance called New Market. The Company has American
Depositary Receipts (ADR) – Level 1 that are traded on over-the-counter (OTC) market, in the United States
under the symbol WEGZY.
2. Accounting policies
Preparation of financial statements requires the use of certain accounting estimates and judgment by the
Company’s management, the most relevant of which are disclosed in Note 3.
Authorization to complete the preparation of these financial statements was granted at the executive board meeting
on February 8, 2013.
The policies adopted with regard to individual and consolidated financial statements were as follows:
a) Individual financial statements (Company)
The individual financial statements were prepared in accordance with the accounting practices adopted in Brazil
issued by the Brazilian FASB (CPC) and are published jointly with the consolidated financial statements. The
accounting practices adopted in Brazil applied in the individual financial statements differ from the International
Financial Reporting Standards (IFRS) applicable to the individual financial statements only concerning the
valuation of investments by the equity method, since under IFRS they would be measured at cost or fair value.
b) Consolidated financial statements
The financial statements were prepared in accordance with accounting practices adopted in Brazil, that include
rules issued by the Brazilian Securities and Exchange Commission (CVM) and pronouncements from Brazil’s
FASB (CPC), which comply with international accounting standards issued by (IASB).
2.1. Consolidation basis
The financial statements of subsidiaries are prepared for the same reporting period as that of the Company, using
consistent accounting practices, and include the financial statements presented in Note 11.
All balances, revenue, expenses and unrealized gains and losses, arising from the transactions of
companies of the Group included in the consolidation are eliminated altogether.
A change in interest equity on a subsidiary that does not result in loss of control is accounted for a
transaction between shareholders under equity.
The P&L for the year and comprehensive income are attributed to the company’s shareholders and the noncontrolling shareholders of consolidated companies. Losses are attributed to noncontrolling interest, even if
these result in negative balance.
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DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Notes to financial statements
2.2 Business combination
Upon acquiring a business, the Company assesses financial assets and liabilities assumed so as to classify
them and allocate them in accordance with contractual terms, economical circumstances and relevant
conditions within no longer than one year from acquisition date. In the event of a business combination in stages,
fair value on acquisition date of interests previously held in the acquired company’s capital is reassessed at fair
value on the acquisition date, and any impacts are recognized in income statements.
Goodwill is initially measured as transferred payment exceeding amount in relation to acquired net assets
(identifiable net assets acquired and liabilities assumed). If payment is lower than fair value of acquired net
assets, difference should be recognized as gain in income statements.
After initial recognition, goodwill is measured at cost, net of any accumulated impairment losses. For
impairment test purposes, goodwill acquired in a business combination is, as from acquisition date, allocated to
each Company’s cash generating unit, which are expected to benefit from such combination synergy, regardless of
other assets or liabilities of the acquired company being attributed to these units. When goodwill is part of a cash
generating unit and a portion thereof is disposed of, goodwill related to the portion sold is to be included in the cost
of operations upon computing gains or losses from disposal. Goodwill of this transaction is computed based on
amounts proportional to the portion sold in relation to the cash generation unit.
2.3 Foreign currency translation
a) Functional currency of companies of the Group
Consolidated financial statements are presented in reais (R$), which is the functional currency of the Company and
its subsidiaries in Brazil.
The functional currency of the foreign subsidiaries is determined based on the primary economic environment in
which it operates, and when the currency differs from the financial statements’ functional currency and
presentation, this shall be translated into reais (R$) on the date of the financial statements.
b) Transactions and balances
Transactions in foreign currencies are initially recorded based on the functional exchange rate effective at the date
of the transaction. Monetary assets and liabilities stated in foreign currency are then retranslated at the functional
currency exchange rate in force as of balance sheet date. All currency translation differences are recognized in
P&L. Nonmonetary items are measured at historical cost in foreign currency are translated into foreign currency by
using the exchange rate prevailing on dates of initial transactions. Nonmonetary items that are measured at fair
value in a foreign currency are translated using the exchange rates prevailing upon the fair value determination.
c) Translation of balances of the Group´s company
Assets and liabilities of foreign subsidiaries are translated into reais by the exchange rate effective on the date of
financial statements, and the corresponding financial statements are translated by the monthly average exchange
rate. Exchange rate differences resulting from such translation shall be individually accounted for in equity.
Whereupon the sale of a subsidiary abroad, the cumulative deferred value recognized in equity, related to this
subsidiary abroad, shall be recognized in the financial statements.
2.4 Cash and cash equivalents
Include cash, credit balances in current accounts, investments redeemable in the short and long term, which are
registered at cost plus interest earned up to the year closing date, in accordance with rates agreed with financial
institutions and do not exceed its market or realization value (Note 4).
2.5. Short-term investments
Are registered at cost plus interest earned up to the year closing date, in accordance with rates agreed with
financial institutions and do not exceed its market or realization value. Short-term investments are not
considered cash and cash equivalents for these are not immediately redeemable (Note 5).
2.6. Customers
Correspond to trade accounts receivable for the sale of goods or rendering of services in the normal course of
activities, presented at present and realization value. Allowance for doubtful accounts is calculated based on credit
risk analysis, which considers the percentage trade acceptance bill, market liquidity and the credit level, being
sufficient to cover losses on amounts receivable (Note 6).
2.7. Inventories
Inventories are evaluated and stated at average acquisition or production cost, considering the present value,
when applicable. The Company’s inventory costing is carried out by means of absorption, by using the weighted
moving average.
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DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Notes to financial statements
Provisions for inventory for : (i) realization; (ii) slow-moving; and (iii) obsolete inventories are set up, when
deemed necessary by the Management. Imports of raw materials in transit are stated at accumulated cost of
each import (Note 6).
2.8 Related parties
Purchase and sale of inputs, products and services are carried out under terms and conditions similar to those of
transactions with non-related third parties (Note 9).
2.9. Investment properties
The investment properties are recorded at acquisition and/or construction cost, less accumulated
depreciations thereof, except for land, which does not depreciate.
Investment properties are written off when disposed of or when they are no longer permanently used. The
difference between the net amount resulting from the sale and the book value of the asset is recognized in the
income statement in the year in which the write-off took place. Transfers from this account only occur when there
is a change in its use (Note 11).
2.10. Property, plant and equipment
PP&E are assessed at acquisition and/or construction cost, plus interest capitalized during the construction
period, when applicable. PP&E are presented deducted from the corresponding depreciations, which does not
apply to land, considering it is not depreciated. Include costs incurred with loans during the period of construction,
improvement and expansion period of industrial units.
Expenses with repair and maintenance that do not increase the useful life of assets are recognized as expenses,
when incurred. Gains and losses from disposals are assessed by comparing the sale’s product with the net book
value and are recognized in the financial statement.
Depreciation is calculated by the straight line method considers the asset’s useful life, and reviewed periodically
with the purpose of adjusting depreciation rates (Note 12).
2.11. Intangible assets
These are assessed at acquisition cost, deducted of amortization and of provisions, if any, in order to adjust these to
the probable realization, when necessary. Intangible assets with indefinite useful life are amortized based on the
estimated period for the generation of future economic benefits. Goodwill based on estimated future profitability,
with indefinite life, was amortized up to December 31, 2008, being subject to recoverability test on an annual basis
or where evidence indicates possible loss in economic value (Note 13).
2.12. Evaluation of assets at recoverable value
PP&E and intangible assets and, which include premiums for future profitability expectation and other noncurrent
assets, when applicable, are annually evaluated at recoverable value through future cash flows. Sales growth rates
are considered as premises of sale growth rates within conservative level of 90% of budget, margins equivalent to
those obtained in the last fiscal year and discount rates that account for the expected returns. At December 31,
2012 the reduction in these assets was not assessed.
2.13. Provision for contingencies
Provisions are recognized when the Company and its subsidiaries have a current obligation arising from past
events, with probable need for an outflow of resources to offset the obligation and allowing for the amount to
be reliably estimated. Provision are periodically reviewed according to their nature and based on the opinion of
the Company’s legal counselors. (Note 15).
2.14. Dividends and interest on equity
Dividends and interest on equity capital allocated to dividends are recognized as a liability based on minimum
dividends defined by the Company’s articles of incorporation. Any amount exceeding the minimum mandatory is
only recognized as a liability upon the shareholder’s approval in a Special or Annual General Meeting or Board
of Directors (Note17).
2.15. Adjustment to present value
Assets and liabilities from short-term operations, when relevant, were adjusted at present value based on discount
rates that reflect the best market's evaluation. The discount rate used is the Certificate of Interbank Deposit (CDI).
The measurement of the adjustment at present value was carried out on a “pro rata die”, as from the origin of each
transaction.
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DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Notes to financial statements
2.16. Benefit plan
The Company sponsors a defined pension plan providing risk benefits, such as, disability, illness, death annuity
benefits, and lump-sum death benefits. The costing of the plan is established based on the projected unit credit
cost method. The actuarial commitments with pension and retirement benefits are accrued based on actuarial
calculations, annually produced by independent actuaries, pursuant to the projected unit credit cost method, net of
plan assets given in guarantee of the plan, and the corresponding costs recognized during the employees’ length
of service. Actuarial assumptions are used, such as mortality tables, estimate evolution costs of health care,
biological and economic assumptions, and also historical data of expenses incurred and of employees’
contributions (Note 16).
2.17. Financial instruments
The Company’s financial instruments include:
a) Cash and cash equivalents: Presented at market value, equivalent to its book value.(Note 4);
b) Short-term investments: The market value is reflected in the amounts recorded in the balance
sheets. Short-term investments are classified as intended for trading (Nota 5).
c) Customers: Recognized at their realization value through the tax effective rate and are classified are loans and
receivables (Note 6).
d) Trade accounts payable: Recognized based at their amortized cost based on the tax effective rate and are
classified are receivables.
e) Loans and financing: The main purpose of this financial instrument is to generate resources to finance
the Company’s expansion programs and supply cash flows’ needs within a short term. (Note 14);
- Financings and loans in local currency – are classified as financial liabilities non-measured at fair value and
accounted for at their restated amounts pursuant to the fees agreed upon. Market values of said loans are
equivalent to their book value, for being financial instruments with particular characteristics from specific
financing sources.
- Loans and financing in foreign currency – taken out to support working capital of commercial operations in
Brazil and in subsidiaries abroad and are restated pursuant to fees agreed upon.
- Swap and NDF Operations – “Non Deliverable Forwards”: Classified as derivative financial instruments,
registered based on their market price.
2.18. Treasury stock
These are recognized at cost and deducted of equity. No gains or losses are recognized in P&L on purchase, sale,
issue or cancellation of the Company's own equity instruments. Any difference between the book value and the
consideration received is recognized in other capital reserves.
2.19. Stock option plan
The company grants stock purchase options to its statutory officers or its subsidiaries in Brazil, which will
exercise their option only after specific grace period. The options are measured at fair value based on the granting
date by using the Black-Scholes-Merton pricing model and are recognized as expenses under the other results
accounts in the income statement for the year matched against capital reserve in Equity to the extent that the
deadlines for the exercise of call option periods are realized. (Note 17).
Changes and reversals subsequent to calculation of acquisition are performed only upon: (i) decrease in the price
of options granted for the year; (ii) decrease in number of options that are expected to be granted.
2.20 Government grants and assistance
The government grants are recognized when there is reasonable assurance that the benefit will be received and
the corresponding conditions were met. When the benefit refers to expense item, it will be recorded in income in
equal amounts throughout the expected useful life of the corresponding benefit, on a systematic basis in
relation to cost of which the benefit intends to settle. When the benefit refers to assets, it is recognized as
deferred income and recorded in income in equal amounts over the expected useful life of the corresponding
asset. When the Company receives non-monetary benefits, the relevant item and the benefit are recorded at
par value and reflected in the income statement over the expected useful life of the asset in equal annual
installments (Note 26).
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DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Notes to financial statements
2.21 Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will be generated in favor of the
Company. Revenue is measured at the fair value of the consideration received, excluding deductions, rebates and
taxes or duties on sales. Revenue from the sale of goods is recognized in income statements when all inherent
risks and rewards have been transferred to the buyer. The revenue of services is recognized in income based on
its realization.
2.22. Taxes
a) Income and social contribution taxes—current and deferred
Except for subsidiaries established abroad, which comply with tax rates valid in the respective country, income and
social contribution taxes of the Company and subsidiaries in Brazil are calculated at 25% and 9% rates,
respectively.
b) Other taxes
Revenues, expenses and assets are recognized net of taxes on sales, except: (i) when taxes on sales incurred
on the purchase of goods or services are not recoverable with the tax authorities, case in which taxes on sales
are recognized as part of the acquisition cost or of expense item, as follows; (ii) when amounts receivable and
payable are presented together with taxes on sales; and net value of taxes on sales, recoverable or payable, is
included as a component of amounts receivable or payable in the balance sheet.
2.23 Earnings per share - base and diluted
Base earnings per share is calculated by dividing the net profit attributable to the Company’s shareholders by
the weighted average number of common shares issued during the fiscal year. Diluted profit per share is
calculated by adjusting the weighted average number of outstanding common shares assuming all common shares
that would potentially result in dilution. (Note 28).
2.24 Segment information
The management defined the operational and geographical segments of the Company based on the reports used
internally for strategic business decision-making.
The Company's management is structured and aligned with
information of the operations considering the industrial, energy, foreign and consolidated segments (Note 27).
2.25 New pronouncements that are not yet in force
The Management has been following the pronouncements that: (i) were issued, however shall be effective only as
from January 1, 2013; and (ii) are under investigation by regulatory organs and are public knowledge, and
concluded that none of these pronouncements should cause significant impacts on the Company’s financial
statements.
3. Estimates and assumptions
The financial statements included the use of estimates that considered past and current event experiences,
assumptions related to future events and other objective and subjective factors. Significant items subject to
these estimates and assumptions include:
a) credit risk analysis for the determination of the allowance for doubtful accounts;
b) review of the economic useful life of fixed assets and their recovery in operations;
c) fair value measurement of financial instruments;
d) commitments with employees’ benefit plans;
e) transactions with stock option plan;
f) f)deferred income tax assets on income and social contribution tax losses, and
g) analysis of other risks for determination of other provisions, including contingencies arising from administrative
and judicial proceedings and other assets and liabilities at the date of financial statements
The settlement of transactions involving these estimates may result in amounts different from those recorded
in the financial statements due to the misstatements inherent to the estimate process. Estimates and
assumptions are periodically reviewed.
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DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Notes to financial statements
4. Cash and cash equivalents
COMPANY
12/31/12
12/31/11
a) Cash and banks
b) Short-term investments
In local currency
Bank Deposit Certificate (CDB) and Investment funds
In foreign currency
Certificates of Deposits Abroad
Other balances held abroad
SWAP
NDF – “Non Deliverable Forwards”
TOTAL
28
561,186
561,186
561,186
-
28
520,911
520,911
520,911
-
561,214
520,939
CONSOLIDATED
12/31/12
12/31/11
211,295
2,090,961
1,932,330
1,932,330
149,656
128,596
21,060
8,956
19
2,302,256
59,512
2,872,103
2,832,901
2,832,901
37,502
25,041
12,461
1,700
2,931,615
Investments in Brazil:
CDBs and LFs are remunerated at the rates of 98% to 107% of the CDI (100% to 106% of CDI at December 31, 2011).
Investments abroad:
Certificates of deposits issued by foreign financial institutions are bear interest as follows:
- In Euros with interest of 0.25% to 2.4% p.a. at the original amount of EUR33,972, of which balance amounts to
R$91,635 (R$7,430 at December 31, 2011);
- In US dollars with interest of 0.02% to 0.5% p.a. at the original amount of US$18,060, of which the balance amounts
to R$36,961 (R$17,611at December 31, 2011);
- In the original currency with interest from 2.0% to 7.0% p.a. at the amount of R$21,060 (R$12,461 at December 31,
2011).
5. Short-term investments
Treasury Bills
Bank Deposit Certificate (CDB)
Other
Total
Short-term
Long-term
12/31/12
COMPANY
12/31/11
261,244
261,244
261,244
-
239,860
239,860
239,860
CONSOLIDATED
12/31/12
12/31/11
261,244
2,032
263,276
261,244
2,032
239,860
40,775
280,635
280,635
6. Trade accounts receivable
CONSOLIDATED
12/31/12
12/31/11
a) Breakdown of balances
Domestic Market
External Market
SUBTOTAL
Present value adjustment
Allowance for losses on trade receivables
TOTAL
753,737
738,189
1,491,926
(897)
(18,190)
1,472,839
673,032
650,876
1,323,908
(3,070)
(13,146)
1,307,692
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DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Notes to financial statements
b) Actual losses on trade accounts receivable for the period
c) Maturity of trade notes
Not yet due
Due: Up to 30 days
Over 30 days
TOTAL
3,010
144
1,266,632
97,068
128,226
1,491,926
1,191,813
68,854
63,241
1,323,908
The breakdown of provision with losses on trade accounts receivable is as follows:
Balance at 01/01/2011
Losses written-off
Setting up of provisions
Reversal of provisions
Balance at 12/31/2011
Losses written-off
Setting up of provisions
Reversal of Provisions
Balance at 12/31/2012
(13,314)
144
(4,244)
4,268
(13,146)
3,010
(8,810)
756
(18,190)
7. Inventories
Finished products
Products in process
Raw materials and others
Imports in transit
Provision for obsolescence
Total inventories - domestic market
CONSOLIDATED
12/31/12
12/31/11
229,276
262,408
222,197
262,454
229,249
225,658
51,611
51,611
(9,780)
(9,741)
722,109
792,390
Finished products
Products in process
Raw materials and others
Provision for obsolescence
Total inventories - external market
408,681
72,734
119,982
(17,233)
584,164
384,601
82,453
119,184
(16,314)
569,924
1,306,273
1,362,314
OVERALL TOTAL
The breakdown of provision for obsolescence is as follows:
Balance at 01/01/2011
Inventories write-off
Setting up of provisions
Balance at 12/31/2011
Inventories write-off
Setting up of provisions
Balance at 12/31/2012
(19,977)
22,148
(28,226)
(26,055)
9,067
(10,025)
(27,013)
Inventories are insured and their coverage is determined considering the values and level of risk involved, the
cost of sales includes R$ 9,067 (R$ 22,148 at December 31, 2011) regarding inventories written off in the
amount of R$ 10,025 (R$ 28,226 at December 31, 2011), maintaining provision for inventory losses.
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DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Notes to financial statements
8. Taxes recoverable
COMPANY
CONSOLIDATED
12/31/12
12/31/11
12/31/12
12/31/11
State VAT (ICMS) on capital expenditures
23,462
22,759
Value Added Tax (IVA) from foreign subisidiaries
69,400
51,462
PIS/COFINS on capital expenditures
3,696
10,122
ICMS
24,554
20,700
IPI
12,643
14,237
IRPJ/CSLL recoverable
6,107
3,782
16,050
11,778
PIS/COFINS
33,416
30,255
Other
16,438
7,665
TOTAL
6,107
3,782
199,659
168,978
Short-term
6,107
3,782
183,627
156,076
Long-term
16,032
12,902
Credits will be realized by the Company and its subsidiaries through regular tax collection, also including tax credits
subject to refund and/or offset.
9.
Related parties
The financial statements include the financial information of the Company and its subsidiaries as in Note 11.
Business transactions of purchase and sale of products, raw materials and contracting of services as well as
financial transactions of loans, raising of funds among Group companies and management fees are as follows:
BALANCE SHEET
COMPANY
12/31/12
12/31/11
CONSOLIDATED
12/31/12
12/31/11
Noncurrent assets
Management of financial resources
WEG Tintas Ltda
-
79
-
-
-
79
-
-
Current liabilities
Agreements with directors/officers
-
-
2,092
2,092
1,566
1,566
296
1,837
-
-
296
-
1,699
138
-
-
Noncurrent liabilities
Management of financial resources
WEG Equipamentos Elétricos S.A.
RF Reflorestadora Ltda
INCOME STATEMENT
COMPANY
12/31/12
12/31/11
CONSOLIDATED
12/31/12
12/31/11
Management compensation:
a) Fixed (fees)
Board of Directors
Executive Board
2,011
1,342
669
1,701
1,124
577
18,793
1,825
16,968
16,988
1,588
15,400
b) Variable (profit sharing)
Board of Directors
Executive Board
1,582
1,058
524
979
647
332
9,849
1,439
8,410
6,129
906
5,223
PAGE: 42 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Notes to financial statements
Additional information:
a) Business transactions
The transactions of purchase and sale of inputs and products are made under the same conditions with
unrelated third parties, prevailing spot sales;
b) Management of financial resources
The financial and commercial operations between Group companies are recorded in book accounts, in
compliance with the requirements of the Group’s bylaws, not subject to interest.
The credit/debit contracts entered into with Administrators are recorded in book accounts, subject to interest between
95% and 100% of the CDI variation;
c) Services provision and other covenants
WEG Equipamentos Elétricos S.A. entered into an agreement for “Guarantees and Other Covenants” with Hidráulica
Industrial S.A. Ind. e Com - HISA, for WEG to be guarantor in loan operations and provide guarantee to customers
(Performance Bond, guarantee insurance, etc.);
d) Securities and guarantees
WEG S.A. granted guarantees and sureties to foreign subsidiaries, in the amount of US$ 237.9 million (US$207.5
million at December 31, 2011);
e) Management compensation
Board of Directors members were paid the amount of R$ 1,825 (R$ 1,588 at 12/31/2011) and the executive officers
were paid the amount of R$ 16,968 (R$ 15,400 at December 31, 2011), for their services, aggregating the total of R$
18.793 (R$ 16,988 at 12/31/2011).
As long as the result of activity on capital invested is at least 10%, interest to be paid to management is expected to
range from 0% to 2.5% of net income. The provision is recognized in P&L for the period, in the amount of R$
9,849 (R$6,129 at December 31, 2011), under other operating expenses. Board members and officers receive
additional corporate benefits, as follows: Health and dental insurance, life insurance, supplementary pension
benefits, among others.
10. Deferred taxes
Deferred income tax and social contribution tax credits and debts were determined in accordance with each country’s
ruling standards.
a) Breakdown:
COMPANY
12/31/12
12/31/11
Income tax losses
CSLL tax losses
Temporary differences:
Provision for contingencies
Taxes questioned in court
Losses on trade receivables
Losses on obsolete inventories
Labor severance pay and for contract termination
Freight and sales commissions
Accounts payable (electric energy, technical assistance
and others)
Employee profit sharing
Adjustment of transition tax regime
Accelerated depreciation incentive – Law No, 11196/05
Other additions and exclusions
Deemed cost of PP&E
CONSOLIDATED
12/31/12
12/31/11
21
-
21,393
3,277
11,773
1,252
879
-
565
-
32,302
24,383
2,694
5,244
13,316
7,936
28,346
9,686
3,234
5,628
10,772
4,819
(51)
614
(1,586)
(40)
147
(3,724)
15,241
11,254
(97,766)
(4,359)
768
(319,295)
12,610
7,173
(64,815)
(2,923)
6,620
(344,605)
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DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Notes to financial statements
TOTAL
Noncurrent assets
Noncurrent liabilities
(123)
(123)
(3,052)
712
(3,764)
(283,612)
36,891
(320,503)
(310,430)
111,488
(421,918)
b) Estimated realization term
Management estimates that deferred assets arising from temporary differences will be realized in proportion to
realization of contingencies, losses and projected obligations.
In relation to deferred tax credits calculated on income and social contribution tax losses, management
estimates that they will be realized within the next 5 years.
11. Investments
11.1. Investments in subsidiaries
Investment in capital (%)
12/31/12
12/31/11
Direct Indirect Direct Indirect
P&L
WEG Equipamentos
Elétricos S.A.
RF Reflorestadora S.A
RF Reflorestadora Ltda
WEG Tintas Ltda.
WEG Amazônia S.A.
WEG Administradora de
Bens Ltda.
WEG Logística Ltda.
WEG Linhares Equips
Elétricos S.A.
WEG Drives & Controls
Automação Ltda
WEG Partner
Aerogeradores S.A.
WEG-Cestari Redutt.
Motorredut. S.A.
WEG Automação Critical
Power Ltda (**)
Hidráulica Indl.S.A. Ind. e
Com.
Agro Trafo
Administradora de Bens
S.A.
Sensores Eletrônicos
Instrutech Ltda.
Logotech Sensores
Eletrônicos Ltda.
Injetel Ind. Com. Comp.
Plásticos Ltda
Ind. de Tintas e Vernizes
Paumar S.A.
WEG Equipamientos
Electricos S.A.
WEG Chile S.A.
WEG Colômbia Ltda.
WEG Electric Corp.
WEG Service CO.
WEG Overseas S.A.
Equity
Pickup
12/31/12 12/31/11
Investment Book
Value
12/31/12
12/31/11
(*)
2,667,895
237,332
82,917
37,415
574,529 100.00
10,012 100.00
23,449 99.91
(3,252)
0.02
- 100.00
- 100.00
0.09 99.91
99.98
0.02
0.09
99.98
533,587
10,012
23,427
(1)
487,376
11,618
2,437
18,433
1
2,667,895
237,332
82,840
6
2,666,862
232,948
65,550
7
24,720
4,767
368
4,623
5.09
-
94.91
100.00
-
100.00
100.00
(3,450)
-
-
1,238
-
-
98,118
8,610
-
99.99
-
99.99
-
-
1
-
254,217
41,336
99.99
0.01
99.00
1.00
41,344
1,077
254,217
831
10
-
-
99.90
-
99.90
-
-
-
-
36,090
1,664
-
50.01
-
-
-
-
-
17,572
(754)
0.05
99.95
0.12
99.88
1
(2)
9
52,789
514
-
61.92
-
61.92
-
-
-
-
4,853
727
91.75
8.25
91.75
8.25
667
(238)
4,453
3,786
2,555
934
0.05
99.95
0.01
99.99
1
-
2
-
-
112
-
-
0.10
99.90
-
-
-
-
814
222
-
100.00
-
-
-
-
-
66,950
5,539
-
100.00
-
-
-
-
-
89.55 10.44
92.00
8.00
99.00
1.00
99.91
0.79
100.00
- 100.00
89.55
92.00
99.00
99.21
100.00
-
1,425
288
16
121
(11)
967
263
12
51
(43)
5,666
1,929
120
808
9
54,268
24,118
12,027
102,585
(128)
9
13,938 10.44
3,562
8.00
1,592
1.00
14,728
0.79
569
(11) 100.00
4,478
1,669
86
625
20
PAGE: 44 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
WEG México S.A. de
C.V.
WEG Transformadores
México S.A. de C.V.
Voltran S.A de C.V.
WEG Indústrias
Venezuela C.A.
Zest Electric Motors (Pty)
Ltd.
WEG Nantong CO Ltd.
WEG Middle East Fze.
WEG Industries (Índia)
Private Ltd.
WEG Electric (Índia)
Private Limited
WEG Electric Motors
Japan CO. Ltd.
WEG Singapore Pte. Ltd.
WEG Germany GmbH.
WEG Benelux S.A.
WEG Ibéria S.L.
WEG France S.A.S
WEG Electric Motors
(UK) Ltd.
WEG Itália S.R.L.
WEG Euro Ind. Electrica
S.A.
WEG Electric CIS
WEG Scandinavia AB.
WEG Austrália Pty Ltd.
WEG Peru S.A.
Pulverlux S.A.
EPRIS Argentina S.R.L.
Electric
Machinery
Holding Company
Watt
Drive
Antriebstechnik GmbH
TOTAL
Version: 1
104,336
12,609
-
99.99
-
99.99
-
-
1
1
35,144
46,490
1,165
3,189
-
60.00
60.00
-
60.00
60.00
-
-
-
-
5,928
1,967
-
99.99
-
99.99
-
-
-
-
157,064
54,797
(1,647)
41,694
4,376
(886)
-
92.57
100.00
100.00
-
50.68
100.00
100.00
-
-
-
-
107,617
(8,018)
-
99.99
-
99.99
-
-
-
-
677
272
4.99
94.99
4.99
94.99
13
(1)
34
20
1,351
3,701
40,226
29,076
725,889
3,105
588
3,284
501
3,342
97,295
(521)
-
100.00
100.00
100.00
99.99
100.00
100.00
-
100.00
100.00
100.00
99.99
100.00
100.00
-
-
-
-
12,116
9,562
2,870
1,741
0.07
100.00
99.93
0.07
100.00
99.93
1
-
7
5
44,038
4,796
1,368
30,525
908
778
161
9,447
3,284
(1,091)
4,882
282
(57)
56
5.74
0.05
-
94.26
100.00
100.00
100.00
99.95
100.00
100.00
5.74
0.05
-
94.26
100.00
100.00
100.00
99.95
100.00
100.00
529
-
246
-
2,529
-
1,856
-
61,867
1,990
-
100.00
-
100.00
-
-
-
-
8,147
(281)
-
100.00
-
100.00
607,970
522,197
3,259,097
2,978,752
(*) Equity pickup adjusted by unearned income.
(**) Change in the corporate name of Equisul Indústria e Comércio Ltda.
11.2. Acquisitions
Seeking to ever increase the Company's product and solution portfolio, thus gaining flexibility to cater to customers and
increase its potential for growth, the following companies were acquired:
(i) Zest Electric Motors (Pty) Ltd.
In January 2012, the subsidiary WEG Equipamentos Elétricos S.A., acquired 41.89% of Zest Electric Motors (Pty) Ltd.
The goodwill, in the amount of R$ 54,077, was initially measured as transferred payment exceeding amount in relation
to acquired net assets and recognized in equity as capital transaction. The consideration transferred was realized
through resources available in cash and cash equivalents in the amount of R$106,167.
(ii) WEG-Cestari Redutores e Motorredutores S.A.
In January 2012, the subsidiary WEG Equipamentos Elétricos S.A., acquired 50% + 01 in WEG-Cestari Redutores e
Motorredutores S.A.. Goodwill, in the amount of R$66,706, was initially measured as transferred payment exceeding
amount in relation to acquired net assets. The consideration transferred was realized through resources available
in cash and cash equivalents in the amount of R$84,613.
The financial statements of this subsidiary were consolidated as of January 1, 2012.
PAGE: 45 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Notes to financial statements
(iii) Stardur Tintas Especiais Ltda.
In June 2012, the subsidiary WEG Equipamentos Elétricos S.A., acquired 100% in Stardur Tintas Especiais Ltda.
Goodwill, in the amount of R$48,020, was initially measured as transferred payment exceeding amount in relation to
acquired net assets. The consideration transferred was realized through resources available in cash and cash
equivalents in the amount of R$85,000.
The financial statements of this subsidiary were consolidated as of July 1, 2012.
(iv) Injetel Ind. Com. Comp. Plásticos Ltda.
In October 2012, the subsidiary WEG Drives e Controls Automação Ltda., acquired 100% in Injetel Ind. Com.
Comp. Plásticos Ltda. Goodwill, in the amount of R$3,552, was initially measured as transferred payment exceeding
amount in relation to acquired net assets. The consideration transferred was realized through resources available in
cash and cash equivalents in the amount of R$ 4,233.
The consideration transferred was realized through resources available in cash and cash equivalents in the
amount of R$4,233.
The financial statements of this subsidiary were consolidated as of November 1, 2012.
(v) Ind. de Tintas e Vernizes Paumar S.A.
In November 2012, the subsidiary WEG Equipamentos Elétricos S.A., acquired 100% in Ind. de Tintas e Vernizes
Paumar S.A.. Goodwill, in the amount of R$32,724, was initially measured as transferred payment
exceeding amount in relation to acquired net assets. The consideration transferred was realized through
resources available in cash and cash equivalents in the amount of R$15,000.
The financial statements of this subsidiary were consolidated as of December 1, 2012.
11.3. Restructuring
(i) Capital reduction - WEG Iberia S.L.
In December 2012, the subsidiary WEG Iberia S.L. reduced its capital by EUR 42,4 million in favor of its subsidiary
WEG Equipamentos Elétricos S.A. with 50.68% on equity interest formerly held in the subsidiary Zest Electric
Motors (Pty) Ltd.. The transaction had not impacts on the consolidated financial statements.
(ii) Merger - Stardur Tintas Especiais Ltda.
In December 2012, WEG Equipamentos Elétricos S.A. increased its capital in Ind. de Tintas e Vernizes
Paumar S.A (“Paumar”). with an investment held in Stardur Tintas Especiais Ltda (“Stardur”), with subsequent
merger of Stardur in Paumar, as the best alternative capable of minimizing the effects of production stoppage by
Stardur; due to the fire of October 16, 2012, avoiding/and or minimizing the loss in the market and considering the
impossibility of reconstruction of such industrial facilities; the technical and operating feasibility of
Paumar to produce and market product lines formerly manufactured by Stardur; the operating and administrative
cost reductions through the merger Stardur in Paumar; and the complementary product line.
11.4. Other investments
These refer to other investments recorded at cost of acquisition in the amount of R$ 402 (R$ 349 at December 31,
2011) and the transfer of R$7,220 of a real estate property for ownership to investments.
12. Property, plant and equipment
The Company capitalized borrowing costs in the amount of R$ 1,306 (R$ 1,221 at December 31, 2011) regarding
ongoing constructions. The costs are capitalized until the moment of transfer of construction in progress to property,
plant and equipment in use.
Land, construction and facilities
Equipment
Furniture and fixtures
Hardware
Construction in progress
Reforestation
Other
COMPANY
12/31/12 12/31/11
7,089
15,973
-
CONSOLIDATED
12/31/12
12/31/11
1,141,222
1,073,721
2,652,581
2,455,418
82,998
76,988
83,145
70,884
76,079
70,434
50,005
48,676
41,221
39,476
PAGE: 46 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Notes to financial statements
Subtotal
Accumulated
depreciation/depletion
Construction and facilities
Equipment
Furniture and fixtures
Hardware
Reforestation
Other
TOTAL
Annual depreciation
rate (%)
02 to 03
05 to 20
07 to 10
20 to 50
-
7,079
15,973
4,127,251
3,835,597
(2,132)
4,947
(4,017)
11,956
(191,688)
(1,271,564)
(41,592)
(60,502)
(8,464)
(16,347)
2,537,094
(169,563)
(1,102,709)
(39,907)
(55,352)
(7,325)
(14,981)
2,445,760
a) Summary of changes in property, plant and equipment:
PP&E Classification
Land, construction and facilities
Equipment
Furniture and fixtures
Hardware
Construction in progress
Reforestation
Other
TOTAL
12/31/11
904,158
1,352,709
37,081
15,532
70,434
41,351
24,495
2,445,760
Transfer
between
classes
29,863
25,428
(704)
(56,711)
(3,496)
(5,620)
Acquis.
Write-offs
26,729
145,179
8,878
14,690
59,852
1,328
8,700
265,356
Deprec. and
depletion
Exchange
effect
12/31/12
(21,649)
(153,859)
(4,883)
(7,392)
(1,139)
(4,183)
(193,105)
20,427
21,763
803
645
2,604
1,288
47,530
949,534
1,381,017
41,405
22,643
76,079
41,540
24,876
2,537,094
(9,994)
(10,203)
(474)
(128)
(100)
(1,928)
(22,827)
b) Amounts offered in guarantee – PPE items were provided as collateral for loans, financing, labor claims and tax
suits in the amount of R$ 15,790 (R$ 14,333 at December 31, 2011).
13. Intangible assets – consolidated
Amortization/Years
Information Technology Project
Software license
Other
Subtotal
Goodwill - Acquisition of subsidiaries
TOTAL
5
5
5
-
Accumulated
Depreciation
Cost
79,441
68,256
40,849
188,546
520,156
708,702
12/31/12
(79,441)
(50,885)
(27,005)
(157,331)
(21,387)
(178,718)
17,371
13,844
31,215
498,769
529,984
12/31/11
8,329
10,959
9,393
28,681
331,541
360,222
a) Summary of changes in intangible assets:
12/31/11
Information Technology Project
Software license
Other
Subtotal
Goodwill - Acquisition of subsidiaries
TOTAL
8,329
10,959
9,393
28,681
331,541
360,222
Transfer of
Additions
PP&E
120
5,500
5,620
5,620
11,069
1,175
12,244
157,727
169,971
Amort.
(8,329)
(5,050)
(1,853)
(15,232)
(15,232)
Exchange
12/31/12
effect
273
(371)
(98)
9,501
9,403
17,371
13,844
31,215
498,769
529,984
PAGE: 47 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Notes to financial statements
b) Schedule of amortization of intangible assets (except goodwill):
12/31/12
7.461
6,789
4,584
3,917
8,464
31,215
2012
2013
2014
2015
2016
After 2017
TOTAL
12/31/11
14,166
4,654
3,369
1,396
975
4,121
28,681
(c) Goodwill on acquisition of subsidiaries is not amortized for accounting purposes. Therefore the income tax
liability was recognized by the Company (Note 9).
14. Loans and financing
Financing raised in foreign currency comprises Advances on Exchange Contracts (ACC’s), BNDES-FINEM in
currency basket, BNDES-FINEM in dollar and IFC in dollar (+) LIBOR.
Financing taken by foreign subsidiaries for working capital purposes is denominated in US dollars and/or in the
currency of each country, amounting to R$ 490,7 million in the short-term (R$ 497,1 million at December 31, 2011)
and R$ 40,8 million in the long-term (R$ 23,5 million at December 31, 2011), corresponding to US$ 260,1 million
(US$277,8 million at December 31, 2011).
Direct loans from BNDES are guaranteed by the parent company, WEG S.A. Finame operations are guaranteed by
collateral signature and statutory lien.
All covenant clauses related to indicators of capitalization, current liquidity and the relation between net debt/Ebitda,
included in the BNDES and IFC contracts, are being met.
Type
In Brazil
SHORT TERM
Working capital (ACCs)
Working Capital
Working Capital
Working Capital
Working Capital
Working Capital
Prepayment of Export
Non Deliverable Forwards (NDF)
Property, plant and equipment
SWAP
Other
LONG TERM
Working Capital
Property, plant and equipment
Working Capital
Property, plant and equipment
Working Capital
Working Capital
Prepayment of Export
SWAP
Other
Annual charges
Interest of 2.6% to 3.0% p.a. (+) exchange
variation
TJLP (+) 1.4% to 3.0% p.a.
Interest of 4.9% to 9.0 %p.a.
US$ dollar (+) 1.4% to 1.8% p.a.
US$ dollar (+) Libor (+) 3.3% p.a.
UFIR (+) 1.0% to 4.0% p.a.
Exchange rate variation
Exchange rate variation
TJLP (+) 1.0% to 5.0% p.a.
Sundry
TJLP (+) 1.4% to 2.0% p.a.
UFIR (+) 1.0% to 4.0% p.a.
Interest of 4.0% to 9.0 %p.a.
TJLP (+) 1.0% to 5.0% p.a.
US$ dollar (+) 1.4% to 1.8% p.a.
US$ (+) Libor (+) 3.3% p.a.
Exchange rate variation
Sundry
CONSOLIDATED
12/31/12
12/31/11
1,155,042
1,204,287
37,406
490,076
545,257
20,166
6,876
23,074
14,558
7,901
6,244
254
3,230
596,087
247,694
330,505
15,868
6,335
1,126
310
5,939
423
1,003,260
391,430
44,427
373,596
8,866
52,423
37,464
88,137
326
6,591
1,732,781
812,841
55,016
678,941
13,914
56,241
40,642
75,004
182
PAGE: 48 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Notes to financial statements
ABROAD
SHORT TERM
Working Capital
Working Capital
Working Capital
Working Capital
Working Capital
Non Deliverable Forwards (NDF)
LONG TERM
Working Capital
Working Capital
Working Capital
Working Capital
Working Capital
SWAP
EURIBOR (+) 0.8% to 1.4% p.a.
LIBOR (+) 0.3% to 0.9% p.a.
90% of PBOC (4.5% to 5.0%) p.a.
BBSY (+) 2.0% p.a.
Interest of 0.8% to 11.5% p.a.
Exchange rate variation
490,730
202,796
173,116
8,899
5,238
100,093
498
497,148
176,198
94,921
50,965
30,900
144,164
-
Libor (+) 2.4% p.a.
Interest of 1.5% to 15% p.a.
Euribor (+) 1.0% p.a.
90% of PBOC (4.5% to 5.0%) p.a.
JIBAR (+) 3.0% to 3.5% p.a.
-
40,808
15,943
13,471
3,307
8,087
23,512
2,222
11,900
9,390
-
1,645,772
1,044,068
1,701,435
1,756,293
12/31/12
12/31/11
1,142,720
348,885
133,482
70,520
31,090
29,596
1,756,293
TOTAL SHORT TERM
TOTAL LONG TERM
Maturity of long-term financing and loans:
2013
2014
2015
2016
2017
2018
TOTAL
405,730
386,643
144,776
59,253
47,666
1,044,068
15. Provision for contingencies
The Company and its subsidiaries are parties to administrative and judicial proceedings of labor, civil and tax
nature arising from the normal activities of their businesses. The respective provisions were set up for proceedings
the likelihood of loss of which was rated as “probable” based on the estimate of value at risk determined by the
Company’s legal counselors.
The Company's management estimates that the provision for contingencies set up is sufficient to cover any losses
from the proceedings in progress.
a) Balance of provision for contingencies
12/31/12
2,586
2,586
-
COMPANY
12/31/11
1,660
1,660
-
(ii) Labor
-
-
46,118
38,834
(iii) Civil
-
-
68,980
63,456
889
229
2,393
3,682
(i) Tax:
- IRPJ and CSLL
- INSS
- Presumed IPI credit
- Other
(iv) Other
(a.1)
(a.2)
(a.3)
CONSOLIDATED
12/31/12
12/31/11
89,122
39,644
14,668
12,883
36,977
23,843
24,700
12,777
2,918
PAGE: 49 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Notes to financial statements
TOTAL
(v) Restricted judicial deposits
- Tax
- Other
3,475
1,889
206,613
145,616
864
864
-
541
541
-
25,133
19,670
5,463
21,300
17,223
4,077
b) Changes in the provision for contingencies for the period – consolidated
12/31/11
Additions
Interest
Write-offs
a) Tax
b) Labor
c) Civil
d) Other
TOTAL
39,644
38,834
63,456
3,682
145,616
49,478
9,550
25,649
1,260
85,937
1,553
695
2,248
(856)
(10,345)
(11,201)
Reversals
(2,963)
(10,475)
(2,549)
(15,987)
12/31/12
89,122
46,118
68,980
2,393
206,613
c) The provisions set up basically refer to:
(i) Tax contingencies
(a.1) The Company maintains a provision for the proceeding referring to IPC difference (51.82%) of January 1989 –
“Plano Verão” (Summer Plan). The decision is favorable to the limit of the index of 35.58%.
(a.2) This refers to social security contribution taxes payable. The litigation refers to social security charges levied on
the private pension plan, profit sharing, education funding tax, among others.
(a.3) Refers to judicial proceedings, in order to ensure the right to claim IPI credits (from the acquisition of raw
materials, materials, intermediate products and packaging exempt, taxed at zero rate or not subject to taxation) offset
against IRPJ, CSLL, PIS, COFINS, IPI debits of the subsidiary Ind. de Tintas e Vernizes Paumar S.A..
(ii) Labor contingencies
The Company and its subsidiaries are defendants in labor claims primarily involving health and risk exposure,
among others. Based on which a provision of R$ R$46,118 (R$38,834 at December 31, 2011) was set up.
(iii) Civil contingencies
These correspond primarily to civil lawsuits, including personal injury, aesthetic damage, occupational diseases
and indemnities arising out of occupational accidents. A provision of R$ 68,980 was set up (R$ 63.456 at December
31, 2011)
(iv) Restricted judicial deposits
COMPANY
CONSOLIDATED
12/31/12
12/31/11
12/31/12
12/31/11
IRPJ/CSLL on "Summer Plan"
13,195
13,195
Other
864
541
11,938
8,105
TOTAL RESTRICTED JUDICIAL DEPOSITS
864
541
25,133
21,300
- Non-restricted judicial deposits
2,711
2,738
TOTAL JUDICIAL DEPOSITS
864
541
27,844
24,038
The judicial deposits not restricted to the contingencies are awaiting a decree allowing withdrawal thereof.
d) Contingencies classified as possible losses
The Company and its subsidiaries are parties to other suits, the likelihood of loss of which are rated as "possible", for
which no provision for contingencies was set up.
The estimated amount of such litigation relates to the tax proceedings totaling R$ 143,997 (R$82,115 at December
31, 2011). Those considered relevant and with "legal opinions" include the following proceedings:
- taxation according to taxable profit in the total estimated amount of R$ 68.0 million.
- taxation on profits computed abroad in the total estimated amount of R$ 35 million.
- taxation on products of Information Technology Acts in the amount of R$36 million.
PAGE: 50 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Notes to financial statements
16. Benefit plan
The Company and its subsidiaries are sponsors of WEG Social Security – Pension Plan, which seeks to supplement
the retirement benefits offered by the official social security system.
The Plan managed by WEG Seguridade Social includes monthly income benefits, supplementation of sick-leave,
supplementation of retirement due to disability, pension due to death, lump sum benefit (due to death), proportional
deferred benefit and self-funding.
There comprise 20,431 participants (19,926 at December 31, 2011). The Company and its subsidiaries made
contributions in the amount of R$ 20,359 (R$ 17,612 at December 31, 2011).
Based on actuarial calculations carried out by independent actuarial, as per the procedures established by CVM
Resolution No. 371/2000, actuarial liabilities were identified in the amount of R$5,000.
17. Equity
a) Capital
The Company's capital stock is made up by 620,405,029 common registered and uncertified shares, without par
value, all of which with voting rights, not including the 500,000 shares held in treasury as per item "d”.
The Annual and Extraordinary Shareholders Meeting of April 24, 20112 approved Company’s capital increase from R$
2,265,367 to R$2,718,440, without change in the number of shares, with use of the following reserves:
- Legal reserve
R$ 29,347
- Reserve for Equity Budget
R$423,726
R$453,073
b) Dividends and interest on equity
The Group's Bylaws provide for the distribution of at least 25% of Adjusted Net Income, considering that the
Company propose the following:
NET INCOME FOR THE YEAR ATTRIBUTABLE TO THE COMPANY’S SHAREHOLDERS
(-) Legal reserve
(+) Realization of Reevaluation Reserve (1989) and attributed cost (2010)
CALCULATION BASE DIVIDENDS
Dividends for the 1st half R$ 0.100/share (R$ 0.097/share in 2011)
Interest on equity for the 1st half was R$ 0.130/share (R$ 0.123/share in 2011), IRRF R$
14,233 (R$ 13,472 in 2011).
Dividends for the 2nd half R$ 0.206/share (R$ 0.140/share in 2011)
Interest on equity in the 2nd half was R$ 0.124/share (R$ 0.140/share in 2011), IRRF R$
13,576 (R$ 15,328 in 2011)
Total dividends/interest on equity for the year
12/31/12
655,979
(32,799)
47,870
671,050
62,041
12/31/11
586,936
(29,347)
54,299
611,888
60,179
94,886
127,803
89,811
86,857
90,506
375,236
102,184
339,031
c) Constitution of reserves
- Legal reserve: set up in the total amount of R$ 32,799 (R$29,347 at December 31, 2011) equivalent to 5% and net
income for the year, observing the 20% capital limit.
- Profit retention reserve: Refers to the remaining net income for the year R$ 254,123, plus accumulated profit of
R$ 48,312(from the realization of reevaluation reserve (1989), of the realization of the attributed cost (2010) and
reversal of dividends from prior years), which were allocated to the capital budget reserve for the 2013 investment
plan.
d) Treasury stock
The Company, based on the Board of Directors’ Minutes of April 26, 2011 and with the purpose of supporting its Stock
Option Plan, was authorized to acquire up to 500,000 Company’s common shares. 500,000 common shares
were acquired, in the amount of R$10,055 at average cost of R$20.11/share. The shares acquired shall be held
in Treasury to be used in the exercise of the purchase right of stock options by the Company’s stock option plans
beneficiaries or the subsequent cancellation or disposal.
PAGE: 51 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Notes to financial statements
18. Stock option plan
(i) Plan description
The Plan is managed by the Board of Directors, seeking to grant stock option plans for WEG S.A.’s (Company)
shares to its statutory officers or of its subsidiaries with head offices in Brazil, so as to attract, motivate and retain
them, as well as aligning their interests to that of the Company and its shareholders.
Each option grants its bearer with the right to acquire 1 (one) common Company-issued share
(BM&FBOVESPA: “WEGE3”), strictly according to the terms and conditions established in the Plan
("Option”).
Share purchase options to be granted are limited to 2% (two percent) of the total Company’s capital.
The participant must maintain the invested shares blocked during the retention period, according to the minimum
levels determined by the Plan.
The Plan may be extinguished, suspended or altered at any moment, through a proposal approved by the Company's
Board of Directors.
(ii) Programs
The Board of Directors may approve, each semester, a Share Purchase Option Program ("Program"), which will define
the participants, number of Options, exercise price, Option distribution, term and other rules specific to each Program.
In order to participate in each Program, the participant must invest an amount of his/her variable compensation in
each period in Company’s shares.
Number of shares
In reais (R$)
Amounts
Number of
Vesting
appropriate
Price
Options Strike
Program
Option Option
(thousand
Corrected
Granted Acquired Rights Period
Rights
Price
Price Difference
R$)
by IPCA
1st
30,352 21.01
23.16
30.60
7.43
226
274,678 46,653 91,056
April/11
2nd
30,352 21.01
24.32
32.98
8.66
263
30,352 21.01
25.54
35.29
9.76
296
3rd
Subtotal
91,056
785
1st
11,965 17.45
19.39
25.08
5.70
68
September/11 274,678 18,072 35,894
2nd
11,965 17.45
20.43
27.05
6.62
79
3rd
11,965 17.45
21.54
29.00
7.46
89
Subtotal
35,894
236
1st
25,067 19.17
21.34
27.22
5.89
148
535,000 41,000 75,200
March/12
2nd
25,067 19.17
22.51
29.40
6.89
173
3rd
25,067 19.17
23.75
31.51
7.76
194
Subtotal
75,200
515
1st
13,608 17.50
19.48
25.51
6.02
82
110,000 21,162 40,824
September/12
2nd
13,608 17.50
20.56
27.33
6.78
92
3rd
13,608 17.50
21.69
29.16
7.47
102
Subtotal
40,824
276
General Total
242,974
1,812
PAGE: 52 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Notes to financial statements
The weighted average of fair value was determined based on the Black-Scholes-Merton method, considering the
following aspects:
Program
Vesting Period
Factors:
Exercise price of option (R$)
Lifespan of the option - in days
Current price for corresponding share
(R$)
Expected volatility in share price (%)
Interest free of risk for the lifespan of
the option (%)
1st
April/11
2nd
3rd
September/11
1st
2nd
3rd
1st
March/12
2nd
3rd
September/12
1st
2nd
3rd
21.01 21.01 21.01 17.45 17.45 17.45 19.17 19.17 19.17 17.50 17.50 17.50
755 1.008 1.260
756 1.008 1.259
755 1.008 1.257
753 1.006 1.257
22.10 22.10 22.10 18.06 18.06 18.06 19.80 19.80 19.80 20.10 20.10 20.10
26.33 26.33 26.33 29.88 29.88 29.88 29.85 29.85 29.85 24.50 24.50 24.50
12.79 12.81 12.83 10.90 11.05 11.22 9.76 10.12 10.33 8.32 8.57 8.78
Recording of expenses with shares is carried out throughout the period of acquisition of "vesting rights”.
In 2012, R$519 (R$239 at December 31, 2011) was recorded as other results in the financial statements for the
year against capital reserve in Equity The accumulated equity totals R$ 758 (R$ 239 at December 31, 2011).
19. Net revenue
BREAKDOWN OF NET REVENUE
Gross revenue
Domestic market
External market
Deductions
Taxes
Returns and Rebates
Net revenue
CONSOLIDATED
12/31/12
12/31/11
7,240,816
3,945,096
3,295,720
6,130,291
3,766,447
2,363,844
(1,066,938)
(900,528)
(166,410)
(940,882)
(817,551)
(123,331)
6,173,878
5,189,409
20. Operating expenses by nature
The Company opted for presenting consolidated income statement by function.
Company sets out below a detailed consolidated income statement by nature:
As required by IFRS, the
CONSOLIDATED
12/31/12
12/31/11
EXPENSE BY NATURE
Depreciation and amortization
Personnel expenses
Raw materials and use and consumption materials
Freight and insurance costs
Other expenses
(5,365,467)
(208,337)
(1,352,979)
(2,797,680)
(181,766)
(824,705)
(4,526,284)
(188,030)
(1,132,117)
(2,392,200)
(124,399)
(689,538)
EXPENSE BY FUNCTION
Cost of products and services sold
Selling expenses
General and administrative expenses
Management fees
Other operating expenses
(5,365,467)
(4,293,022)
(619,980)
(288,409)
(18,793)
(145,263)
(4,526,284)
(3,633,358)
(508,904)
(242,495)
(16,988)
(124,539)
PAGE: 53 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Notes to financial statements
21. Other operating revenue/expenses
The recorded values are relative to profit sharing, reversal/(provision) for lawsuits and others, as follows:
CONSOLIDATED
12/31/12
12/31/11
OTHER OPERATING REVENUE
- Other
OTHER OPERATING EXPENSES
- Profit sharing – Employees
- Profit sharing – foreign subsidiaries
- Profit sharing - executive board
- Constitution/Reversal of provision for tax proceedings
- Tax incentives of Rouanet Law
- Other
TOTAL NET
18,593
18,593
(163,856)
(99,608)
(8,858)
(9,849)
(12,201)
(3,629)
(29,711)
(145,263)
17,072
17,072
(141,611)
(87,629)
(5,725)
(6,129)
(196)
(2,194)
(37,612)
(124,539)
22. Financial income (expenses), net
FINANCIAL INCOME
Short-term investment yield
Exchange variation
Present value adjustment – customers
Pis/Cofins on interest on equity
Other
FINANCIAL EXPENSES
Interest on loans and financing
Exchange variation
Present value adjustment – suppliers
Other expenses
NET FINANCIAL INCOME
12/31/12
COMPANY
12/31/11
CONSOLIDATED
12/31/12
12/31/11
54,975
67,088
(12,552)
439
70,562
81,958
(11,739)
343
460,420
222,910
156,712
42,824
(12,552)
50,526
499,570
313,069
123,346
48,251
(11,739)
26,643
(180)
(180)
(161)
(161)
(404,729)
(174,827)
(191,919)
(13,389)
(24,594)
(396,569)
(155,246)
(177,636)
(17,756)
(45,931)
54,795
70,401
55,691
103,001
23. Provision for income and social contribution taxes
The parent company and subsidiaries in Brazil assess income and social contribution taxes according to taxable
income, except for WEG Administradora de Bens Ltda., Instrutech Ltda, e Agro Trafo Administradora de Bens
S.A., which adopt profit computed as a percentage of the Company's gross revenue. The provision for income tax
was constituted at a 15% rate added of a 10% additional, and social contribution with a 9% rate. Taxes for companies
abroad are constituted according to the Law of each country.
Reconciliation of income and social contribution taxes
Income before taxes on profit
Statutory rate
IRPJ and CSLL calculated at the statutory rate
12/31/12
655,484
34%
COMPANY
12/31/11
588,256
34%
(222,865)
(200,007)
CONSOLIDATED
12/31/12
12/31/11
864,102
766,126
34%
34%
(293,795)
(260,483)
PAGE: 54 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Notes to financial statements
Adjustment to determine effective income and social
contribution taxes:
Result from investments in subsidiaries
Rate difference on foreign results
Tax incentives
Interest on equity
Other adjustments
IRPJ and CSLL as per the income statement
Current tax
Deferred tax
Effective rate - %
207,889
16,898
(1,427)
177,547
22,128
(988)
(2,414)
(2,114)
40,750
63,300
(4,965)
22
(6,368)
33,481
65,288
2,447
495
(367)
862
(1,320)
(1,485)
165
(199,238)
(228,859)
29,621
(159,105)
(182,956)
23,851
-0.08%
0.22%
23.06%
20.77%
24. Insurance coverage
The corporate unit in Brazil is responsible for the management of the insurance portfolio of the WEG Group in Brazil
and abroad; and continuously constitutes, jointly with the executive board, the risk policies for the WEG Group so as
to protect its assets. Risk analysis assumptions adopted, given their nature, are not included in the audit
scope and, as a result, were not audited by our independent auditors.
The Company implemented the Worldwide Insurance Program – WIP, through which the local insurance policies
will be replaced by worldwide policies, such as: transport risk (Export, Import and Domestic), Civil Product Liability,
Civil Management's Liability (D&O), Surety Insurance, General Civil Liability, Properties and Environment Pollution.
The insurance policies are issued only by first tier multinational insurance companies which are able to cater to the
WEG Group in the countries where it operates. The financial structure and sustainability of said insurance companies
are continuously monitored by the Brazilian corporate unit.
Below we highlight some of the policies and the due capital:
- Operating Risks (Equity): R$60 million;
- Loss of profits: US$62 million;
- Civil liability US$25 million;
- Civil liability products: US$ 100 million
- Transport: US$ 4 million per shipment (Import and export) and R$ 6 million (Domestic).
- Environmental pollution: US$25 million.
25. Financial instruments
The Company and its subsidiaries carried out an evaluation of its financial instruments, including derivatives, recorded
in the financial statements as at December 31, 2012, which presented the following book and market values:
BOOK VALUE
MARKET VALUE
12/31/12
12/31/11
12/31/12
12/31/11
Cash and cash equivalents:
Cash and banks
Short-term investments:
- Local currency
- Foreign Currency
- SWAP
- Non Deliverable Forwards (NDF)
Short-term investments
Customers
Suppliers
Loans and financing:
- Local currency
- Foreign Currency
211,295
59,512
211,295
59,512
1,932,330
149,656
8,956
19
263,276
1,472,839
331,037
2,832,901
37,502
1,700
280,635
1,307,692
298,195
1,932,330
149,656
8,956
19
263,276
1,472,839
331,037
2,832,901
37,502
1,700
280,635
1,307,692
298,195
1,892,593
780,181
2,145,977
1,311,441
1,892,593
780,181
2,145,977
1,311,441
PAGE: 55 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Notes to financial statements
- Non Deliverable Forwards (NDF)
- SWAP
8,399
8,667
310
-
8,399
8,667
310
-
The risk factors of financial instruments relate to:
(i) Financial risks
Foreign currency risk
The Company has import and export operations in various currencies, it manages and monitors its exposure to foreign
currency, seeking to balance its financial assets and liabilities within the limits established by Management .
The financial exposure limit (balance sheet) is equivalent to 3 months of revenue in foreign currency as defined by
the Company's Board of Directors.
The Company had export operations totaling US$ 905.5 million (US$ 851.6 million at December 31, 2011),
which acts as a natural hedge for indebtedness and other costs pegged to other currencies, especially US
Dollars.
Risks related to debt charges
These risks arise from the possibility that the subsidiaries may suffer losses due to fluctuations in interest rates or
other debt indexes, which increase financial expenses related to loans and financings obtained in the market, or
decrease financial revenues relative to financial investments from subsidiaries. The Company continuously monitors
the interest rates in the market so as to evaluate the need, if any, of protection against the risk of volatility of said
rates.
Derivative financial instruments
The Company has the following operations with financial instruments:
a) NDF derivative financial instruments – Non Deliverable Forwards, with notional amount of:
(i) US$ 66.6 million, (US$ 10 million at December 31, 2011) held by subsidiary WEG Equipamentos Elétricos
S.A., seeking to protect exports from the fluctuation risks of the exchange rates;
(ii) EUR 42,3 million held by subsidiary WEG Equipamentos Elétricos S.A. to protect exports from the
fluctuation risks of the exchange rates;
(iii) US$ 13.7million, (US$ 14.4 million at December 31, 2011) held its subsidiary abroad Zest Electric
Motors (Pty) Ltd., to protect imports from the fluctuation risks of the exchange rates.
b) SWAP operations, in the notional amount of:
(i)
EUR 10 million, held by its subsidiary Watt Drive Antriebstechnik GmbH, with the purpose of hedging
financing from fluctuation risks of Euribor;
(ii) EUR 30,0 million held by subsidiary WEG Equipamentos Elétricos S.A. to protect against Libor increase risks;
(iii) R$ 200 million, held by the subsidiary WEG Equipamentos Elétricos S.A., SWAP from fixed to floating interest
rate, to hedge against decrease risk in interest rate.
The Company's Management and that of its subsidiaries permanently monitors the derivative financial instruments
contracted through its internal controls.
The sensitivity analysis statement chart must be read jointly with the other financial assets and liabilities expressed
in foreign currency as at December 31, 2012, as the estimated impact of the foreign currency rate over the NDFs
and on SWAPs presented below will be offset, if effective, entire or partially, with loss of value of assets and
liabilities
Management defined that the Company must use the exchange rates used to mark financial instruments to market
valid as at December 31, 2012 for the likely scenario (market value). Said rates represent the best estimate of future
behavior of said prices and represent the value for which the positions may have been settled on their maturity date.
PAGE: 56 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Notes to financial statements
Unrealized profit and losses in operations with derivatives are recorded (in case of loss) in the loans and financing
line or (in case of profit) as financial investments and matched against exchange gains (losses) in P&L.
The table below presents "cash and expense" effects of the results of financial instruments in real scenarios.
a) NDF Operations – “Non Deliverable Forwards”:
Risk
Counterparty
USD increase
USD increase
USD increase
USD increase
USD increase
USD increase
USD increase
Banco Bradesco S.A.
Bank of America
Banco do Brasil S.A.
JP Morgan
Banco Safra
Citibank
Banco Santander S.A.
USD TOTAL
Banco Bradesco S.A.
Deutsche
Banco Santander S.A.
Banco Itaú S.A.
Banco of America
Standard Chartered
Banco do Brasil S.A.
EUR TOTAL
First National Bank
First National Bank
USD TOTAL
TOTAL
EUR increase
EUR increase
EUR increase
EUR increase
EUR increase
EUR increase
EUR increase
USD decrease
USD decrease
Notional value
Currency
(million)
USD 8.0
USD 13.5
USD 18.8
USD 2.5
USD 2.5
USD 1.5
USD 19.8
USD 66.6
EUR 5.5
EUR 2.0
EUR 10.8
EUR 6.5
EUR 7.5
EUR 0.5
EUR 9.5
EUR 42.3
USD 10.4
USD 3.3
USD 13.7
US$/R$
US$/R$
US$/R$
US$/R$
US$/R$
US$/R$
US$/R$
EUR/R$
EUR/R$
EUR/R$
EUR/R$
EUR/R$
EUR/R$
EUR/R$
US$/ZAR
US$/ZAR
Market value at
Possible scenario 25%
Remote scenario 50%
12/31/12
Average
R$
Average
R$
Average price
R$ thousand
price
thousand
price
thousand
2.0604
(791)
2.5731
(4,912)
3.0878
(9,033)
2.0713
(952)
2.5863
(7,943)
3.1036
(14,934)
2.0699
(882)
2.5859
(10,611)
3.1030
(20,339)
2.0853
45
2.6013
(1,259)
3.1215
(2,562)
2.1066
116
2.6356
(1,201)
3.1627
(2,517)
2.0537
(77)
2.5671
(847)
3.0805
(1,617)
2.0717
(1,021)
2.5917
(11,276)
3.1100
(21,531)
(3,562)
(38,049)
(72,533)
2.7375
(637)
3.4192
(4,401)
4.1030
(8,165)
2.7923
(190)
3.4903
(1,586)
4.1884
(2,982)
2.7417
(850)
3.4392
(8,218)
4.1270
(15,586)
2.7741
(861)
3.4676
(5,369)
4.1611
(9,877)
2.8117
(1,092)
3.5139
(6,365)
4.2167
(11,637)
2.8551
34
3.5689
(323)
4.2827
(680)
2.7342
(742)
3.4140
(7,236)
4.0969
(13,730)
(4,338)
(33,498)
(62,657)
8.4840
(499)
6.3630
(5,815)
4.2420
(11,143)
8.4840
19
6.3630
(1,761)
4.2420
(3,502)
(480)
(7,576)
(14,645)
(8,380)
(79,123)
(149,835)
c) SWAP operations:
Risk
Notional value
Counterparty
(million)
Market value
12/31/12
Average quotation
Euribor decrease
Libor decrease
Libor decrease
CDI increase
CDI increase
CDI increase
Total Interest Swap
TOTAL
Bank Austria
Citibank
Citibank
Safra
Santander
Santander
EUR 10.0
R$ 15.0
R$ 15.0
R$ 70.0
R$ 50.0
R$ 80.0
Interest of 1.51% p.a.
Interest of 0.65% p.a.
Interest of 0.70% p.a.
Interest of 8.02% p.a.
Interest of 7.97% p.a.
Interest of 8.00% p.a.
Possible scenario 25%
R$
thousand
(8,087)
(380)
(200)
3,414
2,782
2,760
289
289
Average quotation
Interest of 1.13% p.a.
Interest of 0.49% p.a.
Interest of 0.52% p.a.
Interest of 10.02% p.a.
Interest of 9.96% p.a.
Interest of 10.00% p.a.
R$ thousand
(9,122)
(477)
(320)
(92)
378
(1,476)
(11,109)
(11,109)
Remote scenario 50%
Average quotation
Interest of 0.76% p.a.
Interest of 0.33% p.a.
Interest of 0.35% p.a.
Interest of 12.03% p.a.
Interest of 11.95% p.a.
Interest of 12.00% p.a.
R$ thousand
(10,158)
(573)
(441)
(3,376)
(1,879)
(5,463)
(21,890)
(21,890)
We carried out the accounting record based on the market price as at December 31, 2012 according to the accrual
method. These operations had a net positive impact as at December 31, 2012 of R$ 6,977, (R$ 3,899 at December
31, 2011), which were recognized as financial revenues. The Company did not have outstanding derivative
financial instruments at December 31, 2012.
(ii) Operational risks
Credit risk
Risks arise from the possibility of the Company's subsidiaries not receiving the amounts related to sales or not
receiving credit from financial institutions regarding financial investments. To mitigate the risk from sales, the
Company's subsidiaries analyze the financial situation of their customers, as well as establish a credit limit and
permanently assess their debtor balance. Regarding financial investments, the Company and its subsidiaries
invest in low risk credit institutions.
PAGE: 57 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Notes to financial statements
26. Subsidies and assistance government
The Company obtained subventions in the amount of R$ 19,858 (R$ 2,877 in 2011) from tax incentives, recognized
in the year:
12/31/12
91
91
-
12/31/11
1,213
955
258
b) WEG Equipamentos Elétricos S.A.
- ICMS incentive credit of 85.00%
- Municipal investment
8,361
8,337
24
1,664
1,664
-
c) WEG Equipamentos Elétricos S.A.
- Municipal investment
165
165
-
11,241
11,241
-
a) WEG Amazônia S.A.
- ICMS incentive credit of 90.25%
- Corporate Income Tax (IRPJ) 75% reduction
d) WEG Logística Ltda
- ICMS incentive credit of 75.00%
All conditions to obtain government incentives were met.
27. Information by segment
Revenue from sale of products / services
Earnings before income taxes
Depreciation / Amortization / Depletion
Identifiable assets
Identifiable liabilities
BRAZIL
Foreign
Write-offs and Adjustments
Consolidated
Industry
Energy
12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012
12/31/2011
12/31/2012 12/31/2011
3,628,243 3,131,392
1,414,518 1,320,846
2,873,460 1,990,544
(1,742,343) (1,253,373)
6,173,878 5,189,409
1,059,513
817,283
398,621
234,465
166,420
86,220
(760,45)
(371,84)
864,102
766,126
127,787
120,073
41,224
41,370
39,326
26,587
208,337
188,030
3,318,386 2,734,721
1,370,784 1,264,986
1,938,375 1,645,050
(391,88)
(221,97)
6,235,661 5,422,789
758,499
558,117
394,642
373,178
601,254
433,886
(328,81)
(193,98)
1,425,587 1,171,206
Industry: single phase and triple phase motors with low and medium tension, drives and controls,
equipment and services for industrial automation, paints and varnishes.
Energy: electricity generators for thermal and hydraulic power plants (biomass), hydraulic turbines (PCHs),
transformers, substations, control panels and system integration services.
Foreign: composed by operations carried out by subsidiaries in other countries.
The adjustment and elimination column applicable to the Company in the context of the Consolidated IFRS Financial
Statements. All operating assets and liabilities are presented as identifiable assets and liabilities.
28. Earnings per share
a) Basic
Calculation of basic earnings (loss) per share is made by dividing net income (loss) for the year, attributed to common
shareholders, by the weighted average number of common shares available during the year.
Profit attributed to Company shareholders
Weighted average number of outstanding common shares (shares /thousand)
Basic and diluted earnings per share – R$
12/31/12
655,979
620,405
1.0573
12/31/11
586,936
620,405
0.9461
PAGE: 58 of 63
DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Notes to financial statements
b) Diluted
Net earnings per share is calculated by dividing the net profit attributable to Company’s common shareholders
by the weighted average number of outstanding common shares for the year plus the weighted average
number of common shares that would be issued upon the conversion of all potential diluted common shares
into common shares.
Profit attributed to Company shareholders
Weighted average of potentially diluted
(shares/thousand)
Basic and diluted earnings per share – R$
common
shares
held
by
shareholders
12/31/12
655,979
620,648
12/31/11
586,936
620,536
1.0569
0.9459
The amount of 242,974 shares (130,900 at December 31, 2011) was considered to be shares with potential to dilute,
related to the stock option plan.
29. Statement of comprehensive income
The Company presents as other comprehensive income the values of accumulated translation adjustment. These
values are not taxable.
The presentation of the comprehensive income results is required by CPC 26 – Financial Statement Presentation and
includes the comprehensive results which correspond to revenue and expense items which are not recognized in the
financial statements as required or allowed by the standards, interpretations and guidance issued by the CPC.
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DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Opinions and Statements / Independent Auditor’s Report – Unqualified
The Shareholders, Board of Directors and Officers
WEG S.A.
Jaraguá do Sul, SC
We have reviewed the accompanying individual and consolidated financial information of WEG S.A., identified as Company and
Consolidated, comprising the balance sheet at December 31, 2012 and the related statements of income, statements of
comprehensive income, statements of changes in equity and cash flow statements for the year then ended, and a summary of
significant accounting practices and other explanatory information.
Management's responsibility for the financial statements
Management is responsible for the preparation and fair presentation of the individual financial statements in accordance with
accounting practices adopted in Brazil and of the consolidated financial statements in accordance with the International Financial
Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB), and with accounting practices
adopted in Brazil, and for such internal control as management determines is necessary to enable the preparation of these
financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance
with Brazilian and International Standards on Auditing. Those standards require that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the Company's preparation and fair presentation of the Company’s financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control. An audit also includes evaluating the appropriateness of accounting practices used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion on the
individual financial statements
In our opinion, the individual financial statements referred to above present fairly, in all material respects, the financial position of
WEG S.A. at December 31, 2012, and its financial performance and cash flows for the year then ended, in accordance with
accounting practices adopted in Brazil.
Opinion on the consolidated financial statements
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of WEG S.A. at December 31, 2012, and its consolidated financial performance and consolidated cash flows for the year then
ended, in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards
Board (IASB) and accounting practices adopted in Brazil.
Emphasis of matter
As described in Note 2, the individual financial statements were prepared in accordance with accounting practices adopted in
Brazil. For WEG S.A., such practices differ from IFRS applicable to individual financial statements solely as regards to assessment
of investments in subsidiaries, affiliated companies and joint ventures under the equity method. IFRS require evaluation of these
investments by their fair value
or their cost value.
Other matters
Statements of value added
We have also examined the individual and consolidated added value statements (DVA), relative to the year ended December 31,
2012, prepared under the responsibility of the Company's Management, whose presentation is required for the Brazilian
Corporation Law for publicly-held companies, and supplementary IFRS information does not require the presentation of DVA.
The financial statements herein have been submitted to the same audit procedures previously described and, in our opinion are
adequately presented, in all material aspects, regarding the financial statements taken as a whole.
Blumenau (SC), February 8, 2013.
ERNST & YOUNG TERCO
Auditores Independentes S.S.
CRC-2-SP 015.199/O-6 F- SC
Marcos Antonio Quintanilha
Accountant CRC-1-SP 132.776/O - 3 -T - SC
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DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Opinions and Statements / Report of Supervisory Board report or Equivalent body
Supervisory Board of WEG SA., performing its legal function, has examined the Management Report, and the proposals of the
Management for allocation of Net Income, based on the tests and clarifications offered by the Management, by the representatives
of the Independent Auditors, and also based on the report of ERNST & YOUNG TERCO – Auditores Independentes S.S. on the
unqualified Financial Statements dated February 8, 2013. The Supervisory Board resolves that said documents are appropriate to
be examined and voted on by the Annual Shareholders' Meeting.
Jaraguá do Sul (SC), February 26, 2013.
ALIDOR LUEDERS
EDUARDO GRANDE BITTENCOURT
HAYTON JUREMA DA ROCHA
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DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Opinions and Statements / Statement of Officers on the Financial Statements
Through this instrument, the CEO and other Officers of WEG S.A., a publicly owned company, with head office at Avenida Prefeito
Waldemar Grubba, 3300, registered under CNPJ (Brazilian IRS Registry of Legal Entities) No. 84429695/0001-11, for the
purposes described in items V and VI of Article 25 of CVM instruction 480, of December 7, 2009, hereby state that they have
reviewed, discussed and agree with the opinions regarding the financial statements of WEG S.A. and consolidated statements for
year ended December 31, 2012.
Jaraguá do Sul (SC), February 08, 2013.
Harry Schmelzer Junior - CEO
Sérgio Luiz Silva Schwartz - Vice-CEO
Laurence Beltrão Gomes - CFO and IRO
Antônio Cesar da Silva - Marketing Officer
Carlos Diether Prinz - Diretor - Transmission and Distribution Officer
Hilton Jose da Veiga Faria - Human Resources Officer
Luis Gustavo Lopes Iensen - International Department Officer
Siegfried Kreutzfeld - Diretor - Motors Officer
Sinésio Tenfen - Diretor – Energy Officer
Umberto Gobbato - Automation Officer
Wandair José Garcia – Information Technology Officer
Wilson José Watzko - Controllership Officer
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DFP – Standardized Financial Statements – 12/31/2012 – WEG SA
Version: 1
Opinions and Statements / Statement of Officers on the Independent Auditor’s Report
Through this instrument, the CEO and other Officers of WEG S.A., a publicly owned company, with head office at Avenida Prefeito
Waldemar Grubba, 3300, registered under CNPJ (Brazilian IRS Registry of Legal Entities) No. 84429695/0001-11, for the
purposes described in items V and VI of Article 25 of CVM instruction 480, of December 7, 2009, hereby state that they have
reviewed, discussed and agree with the opinions expressed in the Ernst & Young Terco Auditores Independentes S.S. of February
8, 2013 on the financial statements of WEG S.A. and consolidated statements for year ended December 31, 2012.
Jaraguá do Sul (SC), February 08, 2013.
Harry Schmelzer Junior - CEO
Sérgio Luiz Silva Schwartz - Vice-CEO
Laurence Beltrão Gomes - CFO and IRO
Antônio Cesar da Silva - Marketing Officer
Carlos Diether Prinz - Transmission and Distribution Officer
Hilton Jose da Veiga Faria - Human Resources Officer
Luis Gustavo Lopes Iensen - International Department Officer
Siegfried Kreutzfeld - Diretor - Motors Officer
Sinésio Tenfen - Diretor – Energy Officer
Umberto Gobbato - Automation Officer
Wandair José Garcia – Information Technology Officer
Wilson José Watzko - Controllership Officer
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