ITR -Quarterly Information - 09/30/2015 - WEG S/A
Version : 1
Contents
Company information
Composition of capital
1
Cash dividends
2
Individual financial statements
Balance sheet - Assets
3
Balance sheet - Liabilities and equity
4
Income statements
5
Statement of comprehensive income
6
Cash flow statement
7
Statement of changes in equity
Statements of changes in equity - 01/01/2015 to 09/30/2015
8
Statements of changes in equity - 01/01/2014 to 09/30/2014
9
Statements of value added
10
Consolidated financial statements
Balance sheet - Assets
11
Balance sheet - Liabilities and equity
12
Income statement
13
Statement of comprehensive income
14
Cash flow statement
15
Statement of changes in equity
Statements of changes in equity - 01/01/2015 to 09/30/2015
16
Statements of changes in equity - 01/01/2014 to 09/30/2014
17
Statements of value added
18
Comments on performance
19
Notes to financial statements
29
Opinions and Statements
Special Review Report – Unqualified
52
ITR – Quarterly Information – 09/30/2015 – WEG S/A
Version: 1
Company information / Composition of capital
Number of shares
(Units)
Current Quarterly
09/30/2015
Paid-in capital
Common
Preferred
Total
1,614,353,076
0
1,614,353,076
Treasury stock
Common
1,519,786
Preferred
0
Total
1,519,786
1
ITR – Quarterly Information – 09/30/2015 – WEG S/A
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
03/24/2015
Interest on equity
08/12/2015
Common
0.07100
Board of Directors’
Meeting
06/23/2015
Interest on equity
08/12/2015
Common
0.04200
Board of Directors’
Meeting
07/28/2015
Dividends
08/12/2015
Common
0.08300
Board of Directors’
Meeting
09/22/2015
Interest on equity
03/16/2016
Common
0.04600
2
ITR – Quarterly Information – 09/30/2015 – WEG S/A
Version: 1
Individual financial statements / Balance sheet Assets
(In thousands of reais)
Account
code
Account description
Current quarter
09/30/2015
Prior year
12/31/2014
1
1.01
Total assets
5,963,787
5,180,037
Current assets
1,072,345
1,023,924
1.01.01
Cash and cash equivalents
1,006,142
886,700
1.01.01.01
Cash and banks
1.01.01.02
Short-term investments
1.01.02
Long-term investments
1.01.06
Taxes recoverable
1.01.06.01
Current taxes recoverable
12,023
8,948
1.01.08
Other current assets
54,180
70,577
1.01.08.03
Other
54,180
70,577
1.01.08.03.01
Dividends
1.01.08.03.02
Interest on equity
1.01.08.03.03
Other
1.02
Noncurrent assets
1.02.01
Long-term receivables
1.02.01.06
Deferred taxes
1.02.01.06.01
Deferred income and contribution taxes
1.02.01.08
Credits with related parts
1.02.01.08.02
35
24
1,006,107
886,676
-
57,699
12,023
8,948
1,432
2,453
52,625
68,124
123
-
4,891,442
4,156,113
8,718
3,987
497
557
497
557
6
-
Credits with subsidiaries
6
-
1.02.01.09
Other noncurrent assets
8,215
3,430
1.02.01.09.03
Judicial deposits
8,215
3,430
1.02.02
Investments
4,878,098
4,147,413
1.02.02.01
Equity interest
4,878,098
4,147,413
1.02.02.01.02
Investments in subsidiaries
4,878,098
4,147,413
1.02.03
Property, plant and equipment
4,626
4,713
1.02.03.01
Property, plant and equipment in use
4,626
4,713
3
ITR – Quarterly Information – 09/30/2015 – WEG S/A
Version: 1
Individual financial statements / Balance sheet
Liabilities and equity
(In thousands of reais)
Account
code
2
2.01
2.01.01
2.01.01.01
2.01.03
2.01.03.01
2.01.03.01.01
2.01.03.01.02
2.01.05
2.01.05.02
2.01.05.02.01
2.01.05.02.04
2.02
2.02.02
2.02.02.01
2.02.02.01.02
2.02.04
2.03
2.03.01
2.03.02
2.03.02.04
2.03.02.07
2.03.03
2.03.04
2.03.04.01
2.03.04.02
2.03.04.08
2.03.04.09
2.03.05
2.03.06
2.03.06.01
2.03.07
Account description
Total liabilities
Current liabilities
Labor and social charges
Social obligations
Tax obligations
Federal tax obligations
Income and social contribution taxes payable
Other taxes payables
Other payables
Other
Dividends and interest on equity capital payable
Other
Noncurrent liabilities
Other liabilities
Related parties liabilities
Debt with subsidiaries
Provisions
Equity
Paid-in capital
Capital reserves
Options granted
Premium on capital transaction
Revaluation reserve
Income reserve
Legal reserve
Statutory reserve
Additional proposed dividends
Treasury stock
Retained earnings/accumulated losses
Equity valuation adjustments
Deemed cost
Cumulative translation adjustments
Current quarter
09/30/2015
5,963,787
97,877
6,637
6,637
12,501
12,501
6
12,495
78,739
78,739
77,771
968
4,362
4,362
5,861,548
3,533,973
(57,672)
1,903
(59,575)
3,630
661,433
47,736
630,929
(17,232)
462,329
491,234
491,234
766,621
Prior year
12/31/2014
5,180,037
118,793
4,090
4,090
9,336
9,336
95
9,241
105,367
105,367
104,174
1,193
4,859
873
873
873
3,986
5,056,385
3,533,973
(59,139)
1,817
(60,956)
3,658
837,741
47,736
630,929
167,494
(8,418)
548,750
548,750
191,402
4
ITR – Quarterly Information – 09/30/2015 – WEG S/A
Version: 1
Individual financial statements / Income statement
(In thousands of reais)
Account
code
3.04
3.04.02
3.04.02.01
3.04.02.02
3.04.04
3.04.05
3.04.06
3.05
3.06
3.06.01
3.06.02
3.07
3.08
3.08.01
3.08.02
3.09
3.11
3.99
3.99.01
3.99.01.01
3.99.02
3.99.02.01
Account description
Operating income/expenses
General and administrative expenses
Management fees
Other expenses
Other operating income
Other operating expenses
Equity pick-up
Income before financial result and taxes
Financial income (expenses)
Financial income
Financial expenses
Income before income taxes
Income and social contribution taxes
Current
Deferred
Net income from continuous operations
Income/ loss for the period
Earnings per share - (Reais/share)
Basic earnings per share
Common shares
Diluted earnings per share
Common shares
Current quarter
07/01/2015 to 09/30/2015
Current period
01/01/2015 to 09/30/2015
Prior quarter
07/01/2014 to 09/30/2014
Prior period
01/01/2014 to 09/30/2014
238,532
(905)
(545)
(360)
(778)
240,215
238,532
26,945
26,991
(46)
265,477
(68)
(73)
5
265,409
265,409
699,260
(2,876)
(1,606)
(1,270)
(2,492)
704,628
699,260
73,587
73,715
(128)
772,847
(698)
(638)
(60)
772,149
772,149
239,316
(791)
(463)
(328)
7,000
(1,025)
234,132
239,316
22,007
22,041
(34)
261,323
(2,754)
(307)
(2,447)
258,569
258,569
635,561
(2,406)
(1,423)
(983)
7,000
(2,242)
633,209
635,561
59,090
59,198
(108)
694,651
(3,210)
(685)
(2,525)
691,441
691,441
0.16459
0.47869
0.16028
0.42862
0.16445
0.47833
0.16016
0.42829
5
ITR – Quarterly Information – 09/30/2015– WEG S/A
Version: 1
Individual financial statements / Statement of comprehensive income
(In thousands of reais)
Account
code
4.01
4.02
4.02.01
4.03
Account description
Net income for the period
Other comprehensive income
Cumulative translation adjustments
Comprehensive income for the period
Current quarter
07/01/2015 to 09/30/2015
265,409
397,222
397,222
662,631
Current period
Prior quarter
01/01/2015 to 09/30/2015 07/01/2014 to 09/30/2014
772,149
575,219
575,219
1,347,368
258,569
85,524
85,524
344,093
Prior period
01/01/2014 to 09/30/2014
691,441
(35)
(35)
691,406
6
ITR – Quarterly Information – 09/30/2015 – WEG S/A
Version: 1
Individual financial statements / Cash flow statements - indirect method
(In thousands of reais)
Account
code
6.01
6.01.01
6.01.01.01
6.01.01.02
6.01.01.03
6.01.01.04
6.01.02
6.01.02.01
6.01.02.02
6.01.02.03
6.01.03
6.02
6.02.02
6.02.03
6.03
6.03.01
6.03.02
6.05
6.05.01
6.05.02
Account description
Net cash flows from operating activities
Cash from operations
Income before taxes
Depreciation, amortization and depletion
Equity pickup
Expenses plan options purchase shares
Changes in assets and liabilities
Increase (decrease) in accounts receivable
Increase (decrease) in accounts payable
Income and social contribution taxes paid
Other
Net cash flows from investing activities
Dividends and interest on equity capital received
Long-term financial investments
Net cash from financing activities
Dividends/interest on equity capital paid
Treasury shares
Increase/(decrease) in cash and cash equivalents
Opening cash and cash equivalents balance
Closing cash and cash equivalents balance
Current period
01/01/2015 to 09/30/2015
Prior period
01/01/2014 to 09/30/2014
56,434
68,907
772,847
87
(704,628)
601
(13,987)
(16,824)
3,565
(728)
1,514
598,454
540,755
57,699
(535,446)
(526,632)
(8,814)
119,442
886,700
1,006,142
51,106
62,205
694,651
88
(633,209)
675
(12,358)
(4,409)
(7,304)
(645)
1,259
412,777
468,887
(56,110)
(464,604)
(465,560)
956
(721)
870,906
870,185
7
ITR – Quarterly Information – 09/30/2015 – WEG S/A
Version: 1
Individual financial statements / Statement of changes in equity - 01/01/2015 to 09/30/2015
(In thousands of reais)
Account
code
5.01
5.03
5.04
5.04.03
5.04.04
5.04.05
5.04.06
5.04.07
5.05
5.05.01
5.05.02
5.05.02.04
5.05.02.06
5.06
5.06.02
5.06.04
5.06.05
5.07
Account description
Opening balances
Adjusted opening balances
Capital transactions with shareholders
Recognized options granted
Treasury shares acquired
Sold treasury shares
Dividens
Interest on equity capital
Total comprehensive income
Net income for the period
Other comprehensive income
Translation adjustments in the period
Realization of deemed cost
Internal changes in equity
Realization of resoluction reserve
Dividends paid
Dividends prescribed
Closing balances
Paid-in
capital
3,533,973
3,533,973
3,533,973
Capital reserves,
Options granted and
Treasury stock
(55,481)
(55,481)
1,467
86
1,381
(28)
(28)
(54,042)
Income reserves
670,247
670,247
(8,814)
(10,223)
1,409
661,433
Retained earnings/
accumulated losses
167,494
167,494
(367,930)
(591)
(133,904)
(233,435)
829,665
772,149
57,516
57,516
(166,900)
28
(167,494)
566
462,329
Other comprehensive
income
740,152
740,152
517,703
517,703
575,219
(57,516)
1,257,855
Equity
5,056,385
5,056,385
(375,277)
(505)
(10,223)
2,790
(133,904)
(233,435)
1,347,368
772,149
575,219
575,219
(166,928)
(167,494)
566
5,861,548
8
ITR – Quarterly Information – 09/30/2015 – WEG S/A
Version: 1
Individual financial statements / Statement of changes in equity - 01/01/2014 to 09/30/2014
(In thousands of reais)
Account
code
5.01
5.03
5.04
5.04.01
5.04.03
5.04.05
5.04.06
5.04.07
5.04.08
5.05
5.05.01
5.05.02
5.05.02.04
5.05.02.06
5.06
5.06.02
5.06.04
5.06.05
5.07
Account description
Opening balances
Adjusted opening balances
Capital transactions with shareholders
Capital increase
Recognized options granted
Sold treasury shares
Dividends
Interest on equity capital
Premium on capital transaction
Total comprehensive income
Net income for the period
Other comprehensive income
Translation adjustments in the period
Realization of deemed cost
Internal changes in equity
Realization of revaluation reserve
Dividends paid
Dividends prescribed
Closing balances
Paid-in
capital
2,718,440
2,718,440
815,533
815,533
3,533,973
Capital reserves,
Options granted and
Treasury stock
(54,012)
(54,012)
(1,748)
290
661
(2,699)
(39)
(39)
(55,799)
Income
reserves
1,005,903
1,005,903
(814,577)
(815,533)
956
191,326
Retained earnings/
accumulated losses
163,174
163,174
(292,099)
(117)
(125,334)
(166,648)
723,663
691,441
32,222
32,222
(162,528)
39
(163,174)
607
432,210
Other comprehensive
income
724,267
724,267
(32,257)
(32,357)
(35)
(32,222)
692,010
Equity
4,557,772
4,557,772
(292,891)
173
1,617
(125,334)
(166,648)
(2,699)
691,406
691,441
(35)
(35)
(162,567)
(163,174)
607
4,793,720
9
ITR – Quarterly Information – 09/30/2015 – WEG S/A
Version: 1
Individual financial statements / Statement of value added
(In thousands of reais)
Account
code
7.02
7.02.02
7.02.03
7.03
7.04
7.04.01
7.05
7.06
7.06.01
7.06.02
7.07
7.08
7.08.01
7.08.01.01
7.08.01.02
7.08.01.03
7.08.02
7.08.02.01
7.08.03
7.08.03.01
7.08.04
7.08.04.01
7.08.04.02
7.08.04.03
Account description
Inputs purchased from third-parties
Materials, electricity, third party services and other
Loss/recovery of amounts receivable
Gross value added
Withholdings
Depreciation, amortization and depletion
Net value added produced
Value added received in transfer
Equity pick-up
Financial income
Total value added to be distributed
Distribution of value added
Personnel
Direct compensation
Benefits
Unemployment Compensation Fund (FGTS)
Taxes, charges and contributions
Federal
Third-party capital remuneration
Interest
Equity remuneration
Interest on equity capital
Dividends
Retained profit/loss for the period
Current period
01/01/2015 to 09/30/2015
Prior period
01/01/2014 to 09/30/2014
(1,303)
(321)
(982)
(1,303)
(88)
(88)
(1,391)
778,343
704,628
73,715
776,952
776,952
3,587
3,449
53
85
1,094
1,094
122
122
772,149
233,435
133,904
404,810
5,725
(292)
6,017
5,725
(88)
(88)
5,637
692,405
633,209
59,196
698,042
698,042
2,959
2,846
53
60
3,542
3,542
100
100
691,441
166,648
125,334
399,459
10
ITR – Quarterly Information – 09/30/2015 – WEG S/A
Version: 1
Consolidated financial statements / Balance Sheet - Assets
(In thousand of reais)
Account
code
1
1.01
1.01.01
1.01.01.01
1.01.01.02
1.01.02
1.01.03
1.01.03.01
1.01.04
1.01.06
1.01.06.01
1.01.08
1.01.08.03
1.01.08.03.03
1.01.08.03.04
1.02
1.02.01
1.02.01.01
1.02.01.01.01
1.02.01.06
1.02.01.06.01
1.02.01.09
1.02.01.09.03
1.02.01.09.04
1.02.01.09.06
1.02.01.09.06
1.02.02
1.02.02.01
1.02.02.01.04
1.02.02.02
1.02.03
1.02.03.01
1.02.04
1.02.04.01
1.02.04.01.02
1.02.04.02
Account description
Total assets
Current assets
Cash and cash equivalents
Cash and banks
Short-term investments
Long-term investments
Trade accounts receivable
Clients
Inventories
Taxes recoverable
Current taxes recoverable
Other current assets
Other
Derivative financial instruments
Other
Noncurrent assets
Long-term receivables
Short-term investments at fair value
Trading securities
Deferred taxes
Deferred income and social contribution taxes
Other noncurrent assets
Judicial deposits
Taxes recoverable
Derivative financial instruments
Other
Investments
Equity interests
Other equity interests
Investment properties
Property, plant and equipment
Property, plant and equipment in use
Intangible assets
Intangible assets
Other
Goodwill
Current quarter
09/30/2015
14,289,917
9,679,358
3,411,805
481,447
2,930,358
877,157
2,576,676
2,576,676
2,248,834
234,592
234,592
330,294
330,294
27,174
303,120
4,610,559
569,135
108,749
108,749
460,386
55,298
17,264
314,253
73,571
1,463
1,463
1,463
3,255,878
3,255,878
784,083
110,787
110,787
673,296
Prior year
12/31/2014
11,782,630
8,063,213
3,284,275
302,346
2,981,929
865,162
1,867,864
1,867,864
1,704,919
159,446
159,446
181,547
181,547
8,766
172,781
3,719,417
161,644
1,047
1,047
55,864
55,864
104,733
44,394
19,221
34,974
6,144
8,224
1,004
1,004
7,220
2,877,942
2,877,942
671,607
81,317
81,317
590,290
11
ITR – Quarterly Information – 09/30/2015 – WEG S/A
Version: 1
Consolidated financial statements / Balance Sheet - Liabilities and equity
(In thousand of reais)
Account
code
2
2.01
2.01.01
2.01.01.01
2.01.02
2.01.03
2.01.03.01
2.01.03.01.01
2.01.03.01.02
2.01.04
2.01.04.01
2.01.05
2.01.05.02
2.01.05.02.01
2.01.05.02.04
2.01.05.02.05
2.01.05.02.06
2.01.05.02.07
2.02
2.02.01
2.02.01.01
2.02.02
2.02.02.02
2.02.02.02.03
2.02.02.02.04
2.02.02.02.05
2.02.03
2.02.03.01
2.02.04
2.03
2.03.01
2.03.02
2.03.02.04
2.03.02.07
2.03.03
2.03.04
2.03.04.01
2.03.04.02
2.03.04.08
2.03.04.09
2.03.05
2.03.06
2.03.06.01
2.03.07
2.03.09
Account description
Total liabilities
Current liabilities
Labor and social charges
Social obligations
Trade accounts payable
Tax obligations
Federal tax obligations
Income and social contribution taxes payable
Other
Loans and financing
Loans and financing
Other payables
Other
Dividends and interest on equity capital payable
Advance from clients
Profit sharing
Derivative financial instruments
Other
Noncurrent liabilities
Loans and financing
Loans and financing
Other payables
Other
Tax obligations
Derivative financial instruments
Other
Deferred taxes
Deferred income and social contribution taxes
Provisions
Consolidated equity
Paid-in capital
Capital reserves
Options granted
Premium on capital transaction
Revaluation reserve
Income reserves
Legal reserve
Statutory reserve
Additional proposed dividends
Treasury stock
Retained earnings/accumulated losses
Equity valuation adjustments
Deemed cost
Cumulative translation adjustments
Noncontrolling interest
Current quarter
09/30/2015
14,289,917
4,597,696
313,073
313,073
671,967
151,490
151,490
73,898
77,592
2,107,029
2,107,029
1,354,137
1,354,137
92,809
578,720
84,861
3,107
594,640
3,702,273
2,972,924
2,972,924
168,922
168,922
8,601
12,809
147,512
230,914
230,914
329,513
5,989,948
3,533,973
(57,672)
1,903
(59,575)
3,630
661,433
47,736
630,929
(17,232)
462,329
491,234
491,234
766,621
128,400
Prior year
12/31/2014
11,782,630
3,379,017
173,382
173,382
445,577
148,335
148,335
84,714
63,621
1,462,493
1,462,493
1,149,230
1,149,230
111,707
590,815
111,173
2,461
333,074
3,264,350
2,615,049
2,615,049
107,463
107,463
9,011
12,147
86,305
282,989
282,989
258,849
5,139,263
3,533,973
(59,139)
1,817
(60,956)
3,658
837,741
47,736
630,929
167,494
(8,418)
548,750
548,750
191,402
82,878
12
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Version: 1
Consolidated financial statements / Income
Statement
(In thousand of reais)
Account
code
3.01
3.02
3.03
3.04
3.04.01
3.04.02
3.04.02.01
3.04.02.02
3.04.04
3.04.05
3.05
3.06
3.06.01
3.06.02
3.07
3.08
3.08.01
3.08.02
3.09
3.11
3.11.01
3.11.02
3.99
3.99.01
Account description
3.99.01.01
Common shares
3.99.02
Diluted earnings per share
3.99.02.01
Common shares
Revenue from sale of products and/or services
Cost of goods sold and/or services rendered
Gross profit
Operating income/expenses
Selling expenses
General and administrative expenses
Management fees
Other administrative expenses
Other operating income
Other operating expenses
Income before financial results and taxes
Financial results
Financial income
Financial expenses
Income before income taxes
Income and social contribution taxes
Current
Deferred
Net income from continuous operations
Consolidated Income/ loss for the period
Attributed to shareholders of parent company
Attributed to non-controlling shareholders
Earnings per share - (Reais/share)
Basic earnings per share
Prior quarter
07/01/2014 to 09/30/2014
Prior period
01/01/2014 to 09/30/2014
2,546,349
(1,821,547)
724,802
(412,115)
(245,007)
(119,326)
(5,355)
(113,971)
14,393
(62,175)
312,687
(28,713)
522,019
(550,732)
283,974
(15,853)
(99,702)
83,849
268,121
268,121
265,409
2,712
Current period
01/01/2015 to 09/30/2015
7,026,072
(4,990,920)
2,035,152
(1,173,766)
(688,043)
(333,695)
(16,249)
(317,446)
20,844
(172,872)
861,386
66,438
1,059,845
(993,407)
927,824
(145,688)
(224,492)
78,804
782,136
782,136
772,149
9,987
2,055,972
(1,417,439)
638,533
(351,435)
(205,555)
(97,548)
(4,916)
(92,632)
2,072
(50,404)
287,098
41,583
208,182
(166,599)
328,681
(66,085)
(77,674)
11,589
262,596
262,596
258,569
4,027
5,661,062
(3,874,783)
1,786,279
(1,007,104)
(593,516)
(282,669)
(14,664)
(268,005)
5,657
(136,576)
779,175
102,411
503,266
(400,855)
881,586
(183,564)
(201,431)
17,867
698,022
698,022
691,441
6,581
0.16459
0.47869
0.16028
0.42862
0.16445
0.47833
0.16016
0.42829
Current quarter
07/01/2015 to 09/30/2015
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Version: 1
Consolidated financial statements / Statement of comprehensive income
(In thousand of reais)
Current quarter
07/01/2015 to 09/30/2015
Current period
01/01/2015 to 09/30/2015
Prior quarter
07/01/2014 to 09/30/2014
Prior period
01/01/2014 to 09/30/2014
Consolidated net income for the period
268,121
782,136
262,596
698,022
Other comprehensive income
418,242
595,897
85,761
(147)
85,761
(147)
Account
code
Account description
4.01
4.02
4.02.01
Adjustment of conversion period
418,242
595,897
4.03
Consolidated comprehensive income for the period
686,363
1,378,033
348,357
697,875
662,631
1,347,368
344,093
691,406
4.03.01
Attributed to shareholders of parent company
4.03.02
Attributed to noncontrolling shareholders
23,732
30,665
4,264
6,469
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Version: 1
Consolidated financial statements / Cash flow statement - Indirect method
(In thousand of reais)
Account
code
6.01
6.01.01
6.01.01.01
6.01.01.02
6.01.01.04
6.01.01.05
6.01.01.06
6.01.01.07
6.01.01.08
6.01.01.09
6.01.01.10
6.01.01.11
6.01.02
6.01.02.01
6.01.02.02
6.01.02.03
6.01.02.04
6.01.02.05
6.01.03
6.02
6.02.01
6.02.02
6.02.03
6.02.04
6.02.05
6.02.06
6.02.07
6.02.08
6.02.09
6.03
6.03.01
6.03.02
6.03.03
6.03.04
6.03.05
6.05
6.05.01
6.05.02
Account description
Net cash from operating activities
Cash from operations
Income before taxes
Depreciation, amortization and depletion
Employee profit sharing
Expenses plan options purchase shares
Provision for credit risk
Provision for tax, civil and labor liabilities
Provision for inventory losses
Provision for product warranty
Low of noncurrent assets
Accrued interest on loans and financing
Changes in assets and liabilities
Increase (decrease) in accounts receivable
Increase (decrease) in accounts payable
Increase (decrease) in inventories
Income and social contribution taxes paid
Employee profit sharing paid
Other
Net cash from investing activities
Property, plant and equipment
Intangible assets
Receive sale of fixed assets
Cumulative translation adjustments
Long-term investments
Premium on capital transaction
Acquisition of subsidiary
Acquisition of noncontrolling
Cash acquired from subsidiary
Net cash from financing activities
Loans and financing obtained
Payment of loans and financing
Interest paid on loans and financing
Treasury shares
Dividends/interest on equity capital paid
Increase (decrease) in cash and cash equivalents
Opening cash and cash equivalents balance
Closing cash and cash equivalents balance
Current period
01/01/2015 to 09/30/2015
(17,646)
1,566,026
927,824
234,216
134,181
601
18,489
70,664
39,431
23,822
4,483
112,315
(1,608,124)
(1,285,098)
624,587
(552,594)
(235,308)
(159,711)
24,452
89,737
(352,913)
(23,001)
13,202
575,220
(10,948)
(115,552)
3,729
55,439
1,346,271
(580,619)
(182,272)
(8,814)
(519,127)
127,530
3,284,275
3,411,805
Prior period
01/01/2014 to 09/30/2014
891,999
1,322,940
881,586
182,667
114,978
675
4,784
9,503
5,184
12,998
1,862
108,703
(444,952)
(122,894)
249,930
(205,126)
(218,669)
(148,193)
14,011
(679,315)
(290,635)
(35,926)
4,641
(35)
(227,108)
(2,699)
(136,528)
(5,947)
14,922
(375,400)
780,347
(590,725)
(129,286)
956
(436,692)
(162,716)
3,372,130
3,209,414
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Version: 1
Consolidated financial statements / Statement of changes in equity - 01/01/2015 to 09/30/2015
(In thousand of reais)
Account
code
5.01
5.03
5.04
5.04.03
5.04.04
5.04.05
5.04.06
5.04.07
5.04.09
5.05
5.05.01
5.05.02
5.05.02.04
5.05.02.06
5.06
5.06.02
5.06.04
5.06.05
5.07
Capital reserves,
Paid-in
capital Options granted and
Treasury stock
Opening balances
3,533,973
(55,481)
Adjusted opening balances
3,533,973
(55,481)
Capital transactions with shareholders
1,467
Recognized options granted
86
Treasury Shares Acquired
Sold treasury shares
1,381
Dividens
Interest on equity
Other
Total comprehensive income
Net income for the period
Other comprehensive income
Adjustment of translation for the period
Realization at deemed cost
Internal changes in equity
(28)
Realization of revaluation reserve
(28)
Dividends paid
Dividends prescribed
Closing balances
3,533,973
(54,042)
Account description
Income
reserves
670,247
670,247
(8,814)
(10,223)
1,409
661,433
Other
Retained earnings/ comprehensive
accumulated losses
income
167,494
740,152
167,494
740,152
(367,930)
(591)
(133,904)
(233,435)
829,665
517,703
772,149
57,516
517,703
575,219
57,516
(57,516)
(166,900)
28
(167,494)
566
462,329
1,257,855
Equity
5,056,385
5,056,385
(375,277)
(505)
(10,223)
2,790
(133,904)
(233,435)
1,347,368
772,149
575,219
575,219
(166,928)
(167,494)
566
5,861,548
Non-controlling Consolidated
interest
equity
82,878
5,139,263
82,878
5,139,263
14,857
(360,420)
(505)
(10,223)
2,790
(133,904)
(1,737)
(235,172)
16,594
16,594
30,665
1,378,033
9,987
782,136
20,678
595,897
20,678
595,897
(166,928)
(167,494)
566
128,400
5,989,948
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Version: 1
Consolidated financial statements / Statement of changes in equity - 01/01/2014 to 09/30/2014
(In thousand of reais)
Opening balances
Adjustment opening balances
Capital transactions with shareholders
Increase of capital
Recognized options granted
Sold treasury shares
Dividends
Interest on equity
Goodwill on capital transaction
Other
Total comprehensive income
Net income for the period
Other comprehensive income
Adjustments of Translation for the period
Realization of deemed cost
Internal changes in equity
Realization of revaluation reserve
Dividends paid
Dividends prescribed
Paid-in
capital
2,718,440
2,718,440
815,533
815,533
-
Capital
reserves,
Options granted
and Treasury
stock
(54,012)
(54,012)
(1,748)
290
661
(2,699)
(39)
(39)
-
Closing balances
3,533,973
(55,799)
Account description
Account
code
5.01
5.03
5.04
5.04.01
5.04.03
5.04.05
5.04.06
5.04.07
5.04.08
5.04.09
5.05
5.05.01
5.05.02
5.05.02.04
5.05.02.06
5.06
5.06.02
5.06.04
5.06.05
5.07
Income
Retained earnings/
reserves
accumulated
losses
1,005,903
163,174
1,005,903
163,174
(814,577)
(292,099)
(815,533)
(117)
956
(125,334)
(166,648)
723,663
691,441
32,222
32,222
(162,528)
39
(163,174)
607
191,326
432,210
Other
comprehensive
income
724,267
724,267
(32,257)
(32,257)
(35)
(32,222)
-
Equity
4,557,772
4,557,772
(292,891)
173
1,617
(125,334)
(166,648)
(2,699)
691,406
691,441
(35)
(35)
(162,567)
(163,174)
607
Non-controlling
interest
84,495
84,495
(7,592)
(1,865)
(5,727)
6,469
6,581
(112)
(112)
-
Consolidated
equity
4,642,267
4,642,267
(300,483)
173
1,617
(125,334)
(168,513)
(2,699)
(5,727)
697,875
698,022
(147)
(147)
(162,567)
(163,174)
607
692,010
4,793,720
83,372
4,877,092
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Version: 1
Consolidated financial statements / Statement of value added
(In thousand of reais)
Account
code
7.01
7.01.01
7.01.02
7.01.04
7.02
7.02.02
7.02.03
7.03
7.04
7.04.01
7.05
7.06
7.06.02
7.07
7.08
7.08.01
7.08.01.01
7.08.01.02
7.08.01.03
7.08.02
7.08.02.01
7.08.02.02
7.08.02.03
7.08.03
7.08.03.01
7.08.03.02
7.08.04
7.08.04.01
7.08.04.02
7.08.04.03
7.08.04.04
Account description
Revenues
Sales of goods, products and services
Other revenues
Set up/Reversal of allowance for doubtful accounts
Inputs purchased from third parties
Materials, electricity, third party services and other
Loss/recovery of amounts receivable
Gross value added
Withholdings
Depreciation, amortization and depletion
Net value added produced
Value added received in transfer
Financial income
Total value added to be distributed
Distribution of value added
Personnel
Direct compensation
Benefits
Unemployment Compensation Fund (FGTS)
Taxes, charges and contributions
Federal
State
Municipal
Remuneration of third-party’s capital
Interest
Rental
Equity capital remuneration
Interest on equity capital
Dividens
Retained profit/loss for the period
Noncontrolling interest in retained profits
Current period
01/01/2015 to 09/30/2015
7,927,956
7,925,249
10,717
(8,010)
(4,492,398)
(4,477,153)
(15,245)
3,435,558
(234,216)
(234,216)
3,201,342
1,059,845
1,059,845
4,261,187
4,261,187
1,527,010
1,321,476
144,806
60,728
930,078
850,977
71,518
7,583
1,021,963
991,675
30,288
782,136
233,435
133,904
404,810
9,987
Prior period
01/01/2014 to 09/30/2014
6,515,196
6,518,526
3,565
(6,895)
(3,540,153)
(3,531,359)
(8,794)
2,975,043
(182,667)
(182,667)
2,792,376
503,265
503,265
3,295,641
3,295,641
1,299,984
1,120,068
123,846
56,070
870,685
781,414
81,496
7,775
426,950
398,842
28,108
698,022
166,648
125,334
399,459
6,581
18
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Version: 1
Comments on performance
Highlights





Net Operating Revenues in the third quarter of 2015 reached R$ 2,546.3 million, for 23.9% growth over the 3Q14
and 8.4% growth over the 2Q15;
EBITDA reached R$ 395.1 million and EBITDA margin reached 15.5%. EBITDA grew by 12.7% to 3Q14 and by
12.2% to the previous quarter;
Net Income totaled R$ 265.4 million, with net margin of 10.4% and growth of 2.6% over the 3Q14 and of 1.7% over
the 2Q15;
Capacity expansion and modernization investments totaled R$ 334.0 million in the first nine months of 2015, being
49% in industrial plants in Brazil and 51% in expansion projects abroad.
On September 17, WEG S.A. announced the acquisition of Autrial S.L., a manufacturer of electrical panels for
industrial equipment and plants, headquartered in Valencia, Spain.
Key Figures
(R$ Thousands)
Eggon João da Silva
On September 13, Mr. Eggon João da Silva, one of the WEG’s founders, passed away.
Born on October 17, 1929, in what is now the municipality of Schroeder, north of Santa Catarina, Eggon João da Silva began
to work early, at 13 years old, in a registry in Jaragua do Sul. After 14 years working at the largest main bank in Santa Catarina
and also becoming a partner at the industrial company João Wiest & Cia. Ltda., Mr. Eggon founded WEG, alongside Werner
Ricardo Voigt and Geraldo Werninghaus, on April of 1961. Until 1989, Eggon was WEG’s CEO, leading the company to
become one the largest in the industry, with important market share both in the domestic and the international markets. From
1989 to 2004 he served as WEG’s Chairman of the Board of Directors.
Eggon João da Silva trajectory is not linked solely to WEG. He was also Director on the Board of four large companies Oxford, Tigre, Marisol, and Perdigão, and in the latter, even became the CEO from 1994 to 95, guiding the company through
a very tough financial turnaround.
As a self-taught businessman, with long-term vision and extreme strategic planning capacity, Eggon João da Silva left a
legacy for the Brazilian and global industrial sector, helping to create a strong corporate culture that hinges on valuing people,
efficiency and productivity.
His most famous phrase is as a lesson for future generations:” When you lack machines, you can buy them; if you do not
have money, you can borrow it; but you cannot buy or borrow people and people motivated by idea are the basis for success”.
19
ITR – Quarterly Information – 09/30/2015 – WEG S/A
Version: 1
Economic Activity and Industrial Production
Volatility continued to dominate the global economic environment in the third quarter, caused by the uncertainties on the
Chinese economy adjustment. From the industrial activity point of view, as measured by the purchasing managers indexes
(PMI), China continued to consistently post readings below 50 (that indicate deceleration), continuing the slowdown trend that
has been clear since the beginning of 2015. In the US the indexes reverted the brief summer of recovery, and although still
show mild expansion, indicate dynamism is dwindling. On the other hand, the German PMI showed consistency in the
expansion that began at the end of 2014 and which is slowly spreading to other European countries.
In Brazil, economic activity continued to decline, with no expectations of a short term turnaround. The estimates on Banco
Central do Brasil “Focus” survey point to gross domestic product (GDP) falling close to 3.0% in 2015 and an additional 1.2%
in 2016. The downturn continued the strongest in the industrial sector and industrial production, as measured by the
Instituto Brasileiro de Geografia e Estatística (IBGE), showed 6.9% drop until August and 5.7% drop over the previous 12
months. The expectations on the “Focus” survey is for industrial production to fall by 7% in 2015 and a further fall of 1% in
2016.
Industrial Indicators in Brazil According to Large Economic Categories
Source: IBGE, Research Office, Industry Coordination
(*) Series with seasonal adjustments
It is always important to remember that variations in industrial production are strongly influenced by the automobile industry
performance. Conditions in other industry sectors, although weak, are not necessarily as negative.
Net Operating Revenue
Net Operating Revenues totaled R$ 2,546.3 million in the third quarter of 2015 (3Q15), for 23.9% growth over the third quarter
of 2014 (3Q14) and 8.4% growth over the second quarter of 2015 (2Q15). Adjusting net revenues for transactions occurred
in the period, organic growth was of 21.4% over 3Q14.
20
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Version: 1
Net Operating Revenue per Market (R$ million)
There were no significant changes during the 3Q15 to the market trends that we observed in the first half of 2015. Net
Operating Revenue in 3Q15 breakdowns as follows:

Brazilian Market: R$ 1,087.4 million, representing 43% of Net Operating Revenue, with 9.4% growth over 3Q14 and
3.4% growth over 2Q15. Organic growth in the Brazilian market, excluding the consolidation of the Efacec Energy
Service Ltda. acquisition, was of 9.2% over 3Q14;

External Markets: R$ 1,459.0 million, equivalent 57% of Net Operating Revenue. The external market growth has
been strongly influenced by changes in exchange rates in the markets in which we operate. For a better analysis,
we believe it is necessary to observe the growth from various points of view. Thus, the growth compared to 3Q14
was:

Measured in Brazilian Reais: 37.4%

Measured in Brazilian Reais, excluding the acquisitions (organic growth): 33.4%

In local currencies, weighted by the revenues in each market: 7.4%

Measured in average US dollar for the quarter: down by 11.9%
Evolution of Net Revenues according to Geographic Market (R$ Million)
The devaluation of the Brazilian Real against the US dollar, comparing 3Q15 and 3Q14 average rates, reached 56%.
Revenue abroad grew at a slower pace, however, as our selling prices are not necessarily denominated in US dollars, but
in the relevant currency in each of the various markets. Thus, despite the drop in revenues in US dollars, we continue to
grow in local currencies, consistently executing our external market growth strategy, with two fronts: (i) geographic
expansion of our presence, introducing our products and building up our brand; and (ii) expand the product line the markets
in which WEG brand is already established.
21
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Version: 1
External Market – Distribution of Net Revenues according Geographic Market
Business Areas
Industrial Electro-Electronic Equipment – As we have observed in recent quarters, the highlight in this area was the good
performance in the external market. There are several factors influencing this performance, beyond the simple revenue
conversion effect of foreign currencies in weaker Brazilian Reais. The Brazilian currency devaluation creates favorable
conditions for expansion abroad, allowing for additional efforts in sales personnel, services and infrastructure, all of which are
later converted into a structurally stronger market position. We also continue to expand our capacity, with new plants in Mexico
and China, which are increasing our product line and allowing us to be more flexible in servicing our customers.
In Brazil, however, the industrial sector continues to suffer the impact of the economic recession, which discourages
investment in capacity expansion. Even the currency devaluation, which could provide additional competitiveness for the
exports of our industrial clients has had little material impact, mostly concentrated on sectors where investment in electrical
equipment intensity is lower. Thus, demand still depends on investments for maintenance of current installed capacity, which
is resilient, but insufficient to foster market growth.
Energy Generation, Transmission and Distribution (GTD) – This is a business area where equipment are characteristically
large, with manufacturing lead times that may be several months long. Thus, revenue growth, which remained strong, is the
result of executing an order book that was built several months ago. Highlights have been, for a number of quarters, the wind
power generation systems. It is important to note that we began delivering wind systems around mid 3Q14, which means that
the growth rate in GTD is high partially because the relatively easy comparison base. This effect is expected to gradually
taper off in coming quarters, with the contribution of this business to growth converging to a more sustainable level.
In the transmission and distribution segment (T&D) we noticed that, in the Brazilian market, the low economic activity and the
falling electricity demand has decreased the demand for investments in expansion and postponing maintenance investment.
This scenario should not affect revenues in the short term, with the execution of the current order book, but the prospects for
the coming years is that growth tends to be increasingly concentrated abroad.
Motors for Domestic Use – in this business area we also observe the impact of devaluation of the Brazilian currency on the
growth rate, with the strong growth of WEG Yatong operations in China. This is an appliances’ electric motor operation whose
clients are in mature markets like North America and Europe, and revenues are in hard currency. Although the second half
of the year is seasonally stronger, performance in the Brazilian market remained weak, as expected. Given the current
disposable income and consumer credit conditions, we do not expect rapid recovery in market performance.
Paints and Varnishes – The business area continued to show the weak performance of the industrial and consumer goods
markets in Brazil. We have made adjustments to the cost structure and operating expenses and have sought new markets
and application segments for our products. Recently we started operating a new paints plant in Mauá, São Paulo, which will
allow us additional efficiency gains.
22
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Version: 1
External Market – Distribution of Net Revenues according Geographic Market
Cost of Goods Sold
Cost of Goods Sold (COGS) totaled R$ 1,821.5 million in 3Q15, 28.5% above 3Q14 and 8.6% above 2Q15. Gross margin
reached 28.5%, with reduction of 2.6 percentage points over 3Q14, and almost at the same level of 2Q15.
The factors that influenced the gross margin were:




Additional provisioning: (a) labor claims for class actions discussing general working conditions, among others, (b)
receivables; and, (c) low turnover of inventories;
The relative importance of wind power generation systems revenue, a new product in which we still in the production
learning curve and expect future efficiency gains. Moreover, wind generation integrates subsystems that are not
manufactured by WEG and thus, has lower than average operating margins;
The difference in timing of implementing the necessary price increases to counter the cost increases on raw materials
denominated in or referenced to the US dollar, as a results of the continued devaluation of the Brazilian Real; and,
The relative importance of revenues from recently acquired businesses, such as WEG Yatong, with an impact on
the product mix.
Cogs breakdown
In the 3Q15 the average copper spot prices at the London Metal Exchange (LME) showed further drop of 12.8% over the
previous quarter and accumulated decrease of 24.6% compared to 3Q14. Steel prices also showed additional decrease of
20% compared to 3Q14, and decrease of 38.4% compared to 2Q15. As always, these are the variations of US dollars prices,
which means that prices in Brazilian Reais continued to rise, as they incorporate devaluation of 55.6% over 3Q14.
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Selling, General and Administrative Expenses
Consolidated selling, general and administrative expenses (SG&A) totaled R$ 364.3 million in 3Q15, 20.2% growth over the
3Q14 and 5.8% growth over the previous quarter. As a percentage of Net Operating Revenue, operating expenses
represented 14.3% in 3Q15, 0.4 percentage points lower than in 3Q14, and 0.3 percentage points lower than in 2Q15,
highlighting the good work of control and search for efficiency.
EBITDA and EBTIDA Margin
In the 3Q15, EBITDA (according to the Instruction CVM 527/2012) totaled R$ 395.1 million, 12.7% growth over the 3Q14 and
12.2% growth over the 2Q15. EBITDA margin reached 15.5%, 1.6 percentage points lower than 3Q14, but 0.5 percentage
point higher than 2Q15. The better control over operating expenses provided a smaller drop in EBITDA margin than that
observed in gross margin.
IN R$ million
Net Financial Results
Net financial result was negative in R$ 28.7 million in 3Q15 (positive in R$ 41.6 million and R$ 53.5 million in 3Q14 and 2Q15,
respectively). Financial revenues totaled R$ 522.0 million in 3Q15 (R$ 208.2 million and R$ 18.2 million, respectively), with
strong expansion in absolute value compared to the previous quarter as a result of changes on exchange rate. Financial
expenses totaled R$ 550.7 million (R$ 166.6 million in 3Q14 and positive in R$ 35.3 million in 2Q15).
The negative net financial result is mainly due to the mark-to-market of derivative transactions used to protect the foreign
currency debt. We have approximately US$ 345 million in exchange swaps earning CDI (Brazilian base interest rate) and
these instruments are priced using the exchange rate, the DI interest rate and the so-called “exchange coupon”, the US dollar
denominated interest rate in Brazil. With the downgrade of the Brazilian sovereign rating, there was a strong increase in
foreign exchange coupon, which negatively affected the market value of these swaps and prevented the exchange rate of the
loans in US$ were fully protected. Importantly, this is an accounting impact and that there is no actual cash outflow until the
transactions are settled. Brought to maturity, this debt has quite attractive conditions.
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Income TAX
In the 3Q15 the provision for “Income Tax and Social Contribution on Net Profit” reached R$ 99.7 million (R$ 77.7 million
and R$ 48.5 million in 3Q14 and 2Q15, respectively). Additionally, a credit of R$ 83.8 million was recorded as ‘‘Deferred
Income Tax / social contribution’’ (credit of R$ 11.6 million and debt of R$ 16.4 million, respectively). The decrease in the
effective tax rate on income is due to differences in tax rates on results abroad.
Net Income
As a result of aforementioned impacts, net income for 3Q15 was R$ 265.4 million, an increase of 2.6% over 3Q14 and
increase of 1.7% over the previous quarter. Net margin for the quarter was 10.4%, 2.2 percentage points lower than in
3Q14 and 0.7 percentage points lower than the previous quarter.
Cash Flow
In the first nine months of 2015, operating activities consumed R$ 17.6 million, mainly from the impact of
exchange rate changes over working capital accounts (inventories, receivables and suppliers). The cash
generated from operations was not sufficient to completely compensate for this impact.
Investing activities were also impacted by exchange rate changes, mainly on the “Accumulated Conversion
Adjustment” account, which accounts for the impacts of FX on fixed assets abroad. As such, despite the
continuous execution of the investment program, with emphasis on the capacity expansion in new plants in
China and Mexico, investment activities generated R$ 89.7 million.
Finally, financing activities generated R$ 55.4 million in the period, with R$ 1,346.3 million in new financing
raised and R$ 580.6 million in amortizations (net increase of R$ 765.6 million) in addition to the payment of
interest on loans and dividends and interest on stockholders’ capital referring to the second half of 2014.
​
Investments
Total investments in fixed assets in the first nine months of 2015 reached R$ 352.9 million, of which the organic investments
in capacity expansion and modernization totaled R$ 334.0 million. The balance refers to fixed assets added as result of the
consolidation of acquisitions. Investment program highlights are the new electric motors industrial plants in Mexico, which is
already operating, and China, which should start production soon. Investments in production units outside Brazil, including
new industrial plants in Mexico and China, among others, consumed 51% of total investments.
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Version: 1
Our program for 2015 foresees investments of R$ 477.6 million in capacity expansion and modernization, but we have
flexibility in implementing these investments, always in search of maximizing capacity utilization and return on invested capital.
We are following carefully the market conditions evolution, especially in Brazil, and we can make timely adjustments to
expenditures on production plants to prevent that production capacity expands ahead of effective demand.
Debt and Cash Position
On September 30, 2015 cash, cash equivalents and financial investments totaled R$ 4,630.4 million, almost entirely
invested in fixed income instruments linked to the CDI, in the short-term and in Brazilian currency, with first-tier banks.
Gross financial debt totaled R$ 5,095.9 million, being 41% in short-term and 59% in long-term.
IN R$ Thousands
At the end of the 3Q15, WEG had R$ 465.5 million net debt. The increase of gross debt and, consequently, the net debt is a
result of changes on exchange rate on foreign currency denominated debt. This impact will be offset in future as working
capital accounts (inventories and customers), also affected by exchange rate, are realized.
The current characteristics of the debt are:

The total debt duration is of 22.8 months and for the long-term portion is of 37.3 months. Duration for portion
denominated in Brazilian Reais is of 17.0 months and for the portion in foreign currencies is of 30.1 months. These
values are almost the same as those of the 2Q15, demonstrating the continuing availability of attractive financing
lines.
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
Version: 1
The weighted average cost of fixed-rate Brazilian Reais denominated debt is approximately 6.4% per year.
Floating rate contracts are indexed mainly by Brazilian long-term interest rate (TJLP).
The current characteristics of the debt are:
The two main lines of funding are:


NCE Compulsory – obtained from commercial banks in Brazil, in Brazilian Reais, at fixed rates, with maturities up
to three years.
Export Prepayments (PPE) – obtained from commercial banks in Brazil in US$, with a LIBOR spread plus interest.
According to internal policies, we usually swap to CDI to hedge against changes on exchange rate.
Dividends
As August 12, 2015, payments declared during the first half of 2015 were made to shareholders, as below:




On March 24, as interest on stockholders’ equity (JCP), to shareholders on said date, in the gross amount of R$
67.4 million
On June 23, as interest on stockholders’ equity (JCP), to shareholders on said date, in the gross amount of R$
78.8 million
On July 28, as dividends referring to profit recorded in the first half of 2015, in the total amount of R$ 133.9 million
In addition, On September 22, the Board of Directors approved interest on stockholders’ equity (JCP), to
shareholders of recorded on said date, in the gross amount of R$ 87.3 million. This JCP will be paid from March
16, 2016.
Our policy is to declare interest on stockholders equity quarterly and declare dividends based on profit earned each
semester, thus, we reported six different earnings each year, which is paid semiannually .
WEGE3 Share Performance
The common shares issued by WEG, traded under the code WEGE3 at BM&F Bovespa, ended the last trading session of
September 2015 quoted at R$ 15.45, with a nominal gain 1.0% in the year and of 2.2% considering the dividends and interest
on stockholders equity declared in the period. These percentages are already adjusted for the stock split approved at the
Ordinary and Extraordinary General Shareholders Meeting held on March 30. The stock split at the ratio of two common
shares for each existing share, and were ex-split on April 1st.
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The average daily traded volume in 3Q15 was R$ 31.9 million, (R$ 22.9 million in 3Q14). Throughout the quarter 442,081
stock trades were carried out (176,040 stock trades in 3Q14), involving 115.6 million shares and moving R$ 2,042.5 million
(R$ 1,370.1 million in 3Q14).
AUTRIAL S.L. ACQUISITION, IN SPAIN
On September 17, WEG S.A. announced the acquisition of Autrial S.L., a manufacturer of electrical panels for industrial
equipment and plants, headquartered in Valencia, Spain.
Autrial was founded in 1977 as a family owned business, and has extensive experience in manufacturing of electrical panels
for switch, control and protection of electric motors, distribution panels, panels for generator sets, panels for photovoltaic
systems, among others. The manufacturing plant occupies an area of 10,000 square meters, employing around 130 people.
Net revenues in 2014 were of approximately €14 million.
WEG SELECTED FOR DOW JONES SUSTAINABILITY INDICES
On September 10, we were selected again to compose the Dow Jones Sustainability Indices (DJSI). The WEGE3 shares
continued to integrate the Dow Jones Sustainability Emerging Markets Index portfolio (DJSI-EM) which became effective from
September 21, 2015.
DJSI, developed by Dow Jones and the RobecoSAM Group, was the first global index to assess corporate sustainability
considering the economic, environmental and social development aspects. In 2015, DJSI considered a universe of 3,400
companies worldwide, including the 800 largest companies in Emerging Markets, among which 82 companies with more
sustainable practices were selected.
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WEG S.A.
Notes to financial statements
At September 30, 2015
(In thousands of reais, except when indicated otherwise).
1. Company information
WEG S.A. (the “Company”) is a publicly traded company headquartered 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; 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. Basis of preparation and declaration of conformity
The individual and consolidated interim financial statements ("interim financial statements") have been prepared considering all the
relevant information of the Company and prepared in accordance with international standards of financial reporting (International
Financial Reporting Standards - "IFRS"), implemented in Brazil by the Committee Accounting Pronouncements ("CPC"), approved
by the Brazilian Securities Commission ("CVM") and the Federal Accounting Board ("CFC").
The Technical Standards Review No. 07 (approved in December 2014) amended CPC 35, CPC 37 and CPC 18 and authorized the
use of the equity method in the Financial Statements separate under IFRS, eliminating the difference between Brazilian GAAP and
IFRS.
The quarterly information have been prepared considering the historical cost basis of value, except for the measurement at fair value
of certain financial instruments, when required by the standards.
Authorization to complete the preparation of these quarterly information was granted at the executive board meeting on October 15,
2015.
The accounting policies, basis of consolidation and methods of calculation adopted in the preparation of quarterly information, as well
the estimates and judgments used in applying the accounting policies are the same practiced in preparing the financial statements
for the year ended December 31, 2014.
3. Accounting estimates
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 are:
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) deferred income tax assets, and
g) Provisions, for contingencies;
The settlement of transactions involving these estimates may result in amounts different from those recorded in the quarterly
information statements due to the misstatements inherent to the estimate process. Estimates and assumptions are periodically
reviewed.
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4. Cash and cash equivalents
COMPANY
09/30/15
12/31/14
a) Cash and banks
35
24
b) Short-term investments
1,006,107
886,676
In local currency
1,006,107
886,676
Bank Deposit Certificate (CDB), Repurchase operations and
1,006,107
886,676
Investment funds
In foreign currency
Certificates of Deposits Abroad,
Other balances held abroad
TOTAL
1,006,142
886,700
CONSOLIDATED
09/30/15
12/31/14
481,447
302,346
2,930,358
2,981,929
2,824,803
2,916,630
2,824,803
2,916,630
105,555
82,318
23,237
3,411,805
65,299
38,160
27,139
3,284,275
Investments in Brazil:
Are remunerated at the rates of 100% to 105.3% of the CDI (100% to 105.3% of CDI at December 31, 2014).
Investments abroad:
In Euros
In U.S. Dollars
In Pesos argentinos
Other currencies
TOTAL
Taxa de Juros
0.001% p.a.
0.20% to 0.25% p.a.
22.00% p.a.
0.80% to 6.00% p.a.
In original currency
1,727
6,365
117,872
Sundry
CONSOLIDATED
09/30/15
12/31/14
7,666
5,410
25,298
18,102
49,354
14,648
23,237
27,139
105,555
65,299
5. Short-term investments
Bank Deposit Certificate (CDB), Repurchase operations
Others
TOTAL
Current assets
Noncurrent assets
COMPANY
09/30/15
12/31/14
57,699
57,699
57,699
-
CONSOLIDATED
09/30/15
12/31/14
877,157
865,162
1,047
877,157
866,209
877,157
865,162
1,047
The investments which are interest at rates from 9.0% a 9.8% p.a. (9.0% a 11.30% p.a. at December 31, 2014).
6. Trade accounts receivable
CONSOLIDATED
09/30/15
12/31/14
a) Breakdown of balances
Domestic Market
External Market
SUBTOTAL
Present value adjustment
Allowance for losses on trade receivables
TOTAL
1,111,949
1,529,692
2,641,641
(6,780)
(58,185)
2,576,676
986,990
921,931
1,908,921
(1,361)
(39,696)
1,867,864
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Version: 1
b) 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
8,166
5,020
2,320,764
160,340
160,537
2,641,641
1,652,153
111,114
145,654
1,908,921
The breakdown of provision with losses on trade accounts receivable is as follows:
Balance at 01/01/2014
Losses written-off
Setting up of provisions
Saldo at 12/31/2014
Losses written-off
Setting up of provisions
Reversal of Provisions
Balance at 09/30/2015
(27,973)
5,020
(16,743)
(39,696)
8,166
(28,556)
1,901
(58,185)
7. Inventories
Finished products
Products in process
Raw materials and others
Imports in transit
Provision for slow moving
Total inventories - domestic market
CONSOLIDATED
09/30/15
12/31/14
323,206
319,997
333,774
314,885
313,781
300,553
61,896
43,777
(12,515)
(10,882)
1,020,142
968,330
Finished products
Products in process
Raw materials and others
Provision for slow moving
Total inventories - external market
771,775
244,853
277,924
(65,860)
1,228,692
492,000
123,208
149,443
(28,062)
736,589
OVERALL TOTAL
2,248,834
1,704,919
The breakdown of provision for slow moving is as follows:
Balance at 01/01/2014
(33,407)
Recognition of provision
(6,914)
Reversal of a provision
1,377
Balance at 12/31/2014
(38,944)
Recognition of provision
(41,465)
Reversal of a provision
2,034
Balance at 09/30/2015
(78,375)
Inventories are insured and their coverage is determined considering the values and level of risk involved. Recognition and
reversal of provision of loss for slow moving are recorded in cost of goods sold.
8. Taxes recoverable
State VAT (ICMS) on capital expenditures
Value Added Tax (IVA) from foreign subsidiaries
PIS/COFINS on capital expenditures
COMPANY
12/31/14
09/30/15
-
CONSOLIDATED
09/30/15
12/31/14
30,514
29,827
104,169
65,209
3,550
2,647
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ICMS
IPI
IRPJ/CSLL recoverable
PIS/COFINS
REINTEGRA
Other
TOTAL
Short-term
Long-term
Version: 1
12,023
12,023
12,023
-
8,948
8,948
8,948
-
28,408
25,932
22,564
24,080
10,706
1,933
251,856
234,592
17,264
20,446
16,619
15,918
11,248
13,441
3,312
178,667
159,446
19,221
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
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:
Amount of outstanding balances:
BALANCE SHEET
Noncurrent assets
Management of financial resources
WEG Equipamentos Elétricos S.A.
COMPANY
09/30/15
12/31/14
6
-
6
-
Current liabilities
Agreements with administrators
-
Noncurrent liabilities
Management of financial resources
WEG Equipamentos Elétricos S.A.
INCOME STATEMENT
CONSOLIDATED
09/30/15
12/31/14
-
-
-
4,477
4,477
3,075
3,075
-
873
-
-
-
873
-
-
COMPANY
09/30/15
09/30/14
CONSOLIDATED
09/30/15
09/30/14
Management compensation:
a) Fixed (fees)
Board of Directors
Executive Board
1,606
757
849
1,423
724
699
16,249
1,513
14,736
14,664
1,449
13,215
b) Variable (profit sharing )
Board of Directors
Executive Board
1,510
711
799
1,259
641
618
13,318
1,377
11,941
10,710
1,282
9,428
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 compliance with the requirements of the
Group’s bylaws;
The credit/debit contracts entered into with Administrators are recorded subject to interest between 95% and 100% of the CDI
variation;
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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 SA has securities and guarantees to subsidiaries abroad, in the amount of US$ 204.4 million (US$ 190.5 million at December
31, 2014);
e) Management compensation
Board of Directors members were paid the amount of R$ 1,513 (R$ 1,449 at September 30, 2014) and the executive officers were
paid the amount of R$ 14,736 (R$ 13,215 at September 30, 2014), for their services, aggregating the total of R$ 16,249 (R$ 14,664
at September 30, 2014). It is expected the participation of 0% to 2.5% of net income consolidated to be paid to management as
long as the result of activity on capital invested. The performance targets refer to Return on Investment (50%), growing on net
operating revenue (25%) and growing on EBITDA (25%). The corresponding provision is recognized in the income statement in the
amount of R$ 13,318 (R$ 10,710 at September 30, 2014), under the caption other operating income. Board members and officers
receive additional corporate benefits, as follows: Health and dental insurance, life insurance, supplementary pension benefits,
among others.
10. Deferred taxes
Credits and deferred tax liabilities for income tax and social contribution was calculated according to the Deliberation
CVM nº 599/09 which approved the CPC 32 - Income Taxes.
a) Breakdown:
Income tax losses
Social contribution tax losses
Temporary differences:
Provision:
Labor and civil contingencies
Taxes questioned in court
Losses on trade receivables
Losses on slow moving inventories
Labor severance pay and for contract termination
Freight and sales commissions
Third-party services
Employee profit sharing
Unrealized gains from derivatives
Accelerated depreciation incentive - Law n° 11,196/05
Difference of amortization goodwill x accouting
Difference of depreciation fiscal x accounting (useful life)
Other
Deemed cost of PP&E
TOTAL
Noncurrent assets
Noncurrent liabilities
COMPANY
09/30/15
12/31/14
80
58
2,027
(52)
(79)
(1,479)
497
497
-
1,355
(52)
704
(1,508)
557
557
-
CONSOLIDATED
09/30/15 12/31/14
58,719
31,775
8,999
8,361
67,423
29,910
8,172
12,693
16,193
12,309
56,227
22,132
(19,078)
(6,818)
(30,816)
(151,666)
39,127
(245,691)
(122,165)
108,749
(230,914)
47,024
26,350
5,210
8,471
16,165
10,191
46,420
8,303
(13,033)
(6,387)
(28,331)
(137,367)
16,860
(267,137)
(227,125)
55,864
(282,989)
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, with a view to projecting future profits.
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11. Investments
11.1. Investments in subsidiaries
Equity
Investment in Capital (%)
Country
Ajusted
Shareholder
s’ equity
P&L
09/30/15
12/31/14
Direct Indirect Direct
WEG Equipamentos Elétricos S.A.
(*)
09/30/15
Book Value
09/30/14
09/30/15
12/31/14
Indirect
4,198,511
712,362 100.00
-
100.00
-
640,548
571,909
4,198,511
3,502,936
RF Reflorestadora Ltda.
163,691
3,358 100.00
-
100.00
-
3,402
3,208
163,691
169,296
WEG Tintas Ltda.
120,137
11,749
99.91
0.09
99.91
0.09
11,738
18,658
120,026
114,441
WEG Amazônia S.A.
43,329
(394)
0.02
99.98
0.02
99.98
-
-
7
7
WEG Administradora de Bens
Ltda.
31,684
1,396
3.53
96.47
4.41
95.59
(129)
23
1,120
1,095
WEG Logística Ltda.
110,986
12,645
- 100.00
-
100.00
-
-
-
-
WEG Linhares Equips. Elétricos
S.A.
209,384
35,754
- 100.00
-
100.00
-
-
1
1
WEG Drives & Controls Aut. Ltda.
407,865
48,865
89.20
10.80
89.20
10.80
43,587
36,752
363,815
339,277
8
(1)
0.10
99.90
-
99.90
-
-
-
-
WEG-Cestari Redut. Motorredut.
S.A.
40,144
1,642
-
50.00
-
50.00
-
-
-
-
WEG Automação Critical Power
Ltda.
40,257
1,543
0.03
99.97
0.03
99.97
-
-
11
11
Hidráulica Indl. S.A. Ind. e Com.
45,898
(674)
-
62.32
-
62.32
-
-
-
-
9,428
329
91.75
8.25
91.75
8.25
2,340
58
8,650
6,548
Injetel Ind. Com. Comp. Plásticos
Ltda.
19,130
339
- 100.00
-
100.00
-
-
-
-
Ind. de Tintas e Vernizes Paumar
S.A.
122,774
(4,987)
- 100.00
-
100.00
-
-
-
-
WEG-Jelec Oil and Gas Sol. Aut.
Ltda.
10
-
- 100.00
-
100.00
-
-
-
-
4,744
(805)
99.99
-
-
-
-
-
-
177,844
23,350
- 100.00
-
100.00
-
-
-
-
5,922
1,886
-
76.09
-
76.09
-
-
-
-
3,553
(362)
- 100.00
-
100.00
-
-
-
-
88,313
23
-
-
100.00
-
-
-
-
WEG Partner Aerogeradores S.A.
Brazil
Agro Trafo Adm. de Bens S.A.
Transformadores do Nordeste
Ltda.
Zest WEG Group Africa (PTY) Ltd.
Zest Energy (Pty) Ltd.
0.01
South Africa
Zest WEG Manufacturing (Pty) Ltd.
Zest WEG Electric (Pty) Ltd.
74.90
34
ITR – Quarterly Information – 09/30/2015 – WEG S/A
Electric/Instrumentations Eng.
Cont.(Pty)
Version: 1
86.67
-
86.67
-
-
-
-
290
- 100.00
-
100.00
-
-
-
-
55,085
(7,079)
- 100.00
-
100.00
-
-
-
-
5,690
(331)
- 100.00
-
100.00
-
-
-
-
13,171
465
- 100.00
-
100.00
-
-
-
-
12,437
(296)
- 100.00
-
-
-
-
-
-
128,358
27,376
89.56
10.44
89.55
2,021
2,017
13,508
8,207
4,106
1,571
- 100.00
-
100.00
-
-
-
-
81
(1)
- 100.00
-
100.00
-
-
-
-
15,172
(7,544)
- 100.00
-
100.00
-
-
-
-
17,924
4,769
- 100.00
-
100.00
-
-
-
-
138,555
127,520
- 100.00
-
100.00
-
-
-
-
905,997
34,687
- 100.00
-
100.00
-
-
-
-
Belgium
43,728
2,801
- 100.00
-
100.00
-
-
-
-
Chile
44,028
5,821
92.00
8.00
92.00
465
152
3,593
2,350
WEG (Nantong) Electric Motor Co.,
Ltd.
166,456
5,363
- 100.00
-
100.00
-
-
-
-
Changzhou Machine Master Co.,
Ltd.
51,176
(1,016)
- 100.00
-
100.00
-
-
-
-
Changzhou Master Machinery Co.,
Ltd.
(1,190)
(216)
- 100.00
-
100.00
-
-
-
-
Changzhou
Co., Ltd.
45,319
(426)
- 100.00
-
100.00
-
-
-
-
55,202
1,495
- 100.00
-
100.00
-
-
-
-
Wuxi Ecovi Technology Co., Ltd.
(3,924)
1,684
- 100.00
-
100.00
-
-
-
-
Jiangsu Shiya Elect. Technolog.
Co., Ltd
16,049
(154)
- 100.00
-
100.00
-
-
-
-
The First Drive Technology Co.,
Ltd.
21,626
-
- 100.00
-
100.00
-
-
-
-
WEG (Jiangsu) Electric Equip. Co.,
Ltd.
132,921
(1,814)
- 100.00
-
100.00
-
-
-
-
22,547
684
- 100.00
-
100.00
-
-
-
-
3,482
(498)
- 100.00
-
100.00
-
-
-
-
Zest WEG Group Namibia Limited
WEG (Germany) GmbH
Watt Drive GmbH
Wurttembergische Elektromotoren
GmbH
WEG Equipamientos Electricos
S.A.
Argentina
EPRIS Argentina S.R.L.
WEG Austrália Pty Ltd.
Australia
Watt Drive Antriebstechnik GmbH
WEG International Trade GmbH
Áustria
WEG Holding GmbH
WEG Benelux S.A.
WEG Chile S.A.
Sinya
4,395
315
-
Germany
Antriebstechnik KATT Hessen
GmbH
Pulverlux S.A.
28,183
10.44
8.00
Electromotor
Changzhou Yatong Jiewei Elect.,
Ltd.
China
Watt Euro-Drive Pte. Ltd.
Singapore
WEG Singapore Pte. Ltd.
35
ITR – Quarterly Information – 09/30/2015 – WEG S/A
WEG Colômbia S.A.S
FTC Energy Group S.A.
Colômbia
SUNTEC WEG Transformadores
S.A.S.
Version: 1
51,674
(854)
- 100.00
1.00
99.00
(140)
(5)
-
120
1,684
(805)
-
51.00
-
-
-
-
-
-
9,617
437
- 100.00
-
-
-
-
-
-
WEG Middle East Fze.
Emirates
Arabs
(2,502)
370
- 100.00
-
100.00
-
-
-
-
WEG Ibéria Industrial S.L.
Espanha
67,995
2,330
- 100.00
-
100.00
-
-
-
-
303,268
24,869
- 100.00
-
100.00
-
103
-
-
38,047
(11,062)
- 100.00
-
100.00
-
-
-
-
15,660
3,838
- 100.00
-
100.00
-
-
-
-
836
(79)
-
51.00
-
-
-
-
-
-
15,408
(790)
- 100.00
-
100.00
-
-
-
-
(2,342)
767
- 100.00
-
100.00
-
-
-
-
(358)
(284)
-
90.00
-
90.00
-
-
-
-
199,896
11,244
- 100.00
-
100.00
-
-
-
-
2,527
387
95.00
5.00
95.00
19
7
127
71
England
30,160
5,137
- 100.00
-
100.00
-
-
-
-
Italy
23,115
4,530
- 100.00
0.07
99.93
(8)
1
-
9
3,580
459
-
95.00
-
100.00
-
-
-
-
4,402
179
- 100.00
-
100.00
-
-
-
-
233,250
24,911
- 100.00
-
100.00
-
-
1
1
63,195
4,520
-
60.00
-
60.00
-
-
-
-
93,081
18,432
-
60.00
-
60.00
-
-
-
-
106
108
-
66.67
-
66.67
-
-
-
-
Peru
3,639
2,170
0.05
99.95
0.05
99.95
1
(1)
2
-
Portugal
87,687
12,780
5.74
94.26
5.74
94.26
784
327
5,035
3,043
WEG Electric CIS
Russia
1,557
(3,538)
- 100.00
-
100.00
-
-
-
-
WEG Scandinavia AB
Sweden
3,142
(1,850)
- 100.00
-
100.00
-
-
-
-
ENI Eletrical Tanzania (Pty) Limited
Tanzania
630
118
- 100.00
-
100.00
-
-
-
-
9,753
(6,439)
- 100.00
-
99.99
-
-
-
-
193
(90)
-
-
50.00
-
-
-
-
704,628
633,209
4,878,098
4,147,413
WEG Electric Corporation
Electric Machinery Company Inc.
WEG Service Co.
United States
of America
FTC Energy Group Inc.
WEG France SAS
France
Zest Electric Ghana Ltd.
Ghana
E & I Electrical Ghana Ltd.
WEG Industries Índia Private Ltd.
Índia
WEG Electric (Índia) Private Ltd.
WEG (UK) Ltd.
WEG Itália S.R.L.
WEG Electric Motors Japan Co.
Ltd.
Watt Euro-Drive SDN BHD
Japan
Malaysia
WEG México S.A. de C.V.
WEG Transform. México S.A. de
C.V.
Mexico
Voltran S.A. de C.V.
ENI Eletrical Moçambique (Pty)
Limited
WEG Peru S.A.
WEG Euro Ind. Electrica S.A.
WEG Indústrias Venezuela C.A.
E & I Zambia Ltd.
5.00
Mozambique
Venezuela
Zambia
TOTAL
50.00
(*)Equity Income adjusted for unrealized profits on transactions between related parties.
36
ITR – Quarterly Information – 09/30/2015 – WEG S/A
Version: 1
11.2 Acquisitions 2015
(i) Efacec Energy Service Ltda.
The subsidiary WEG Equipamentos Elétricos S.A., acquired the company Efacec Energy Service Ltda., changing its name
toTransformadores do Nordeste Ltda., which operates in the maintenance of power transformers, motors, generators, circuit
breakers and field engineering services various industrial segments of energy. The goodwill, in the amount of R$ 5,451, was
measured as the excess of the consideration transferred in relation to net assets acquired. Inclusion in the consolidated balance
sheet as of January 2015.
(ii) FTC Energy Group S.A.
The subsidiary WEG Colombia SAS, acquired the company FTC Energy Group, which operates in the manufacture of electrical
panels for process automation in Colombia. The goodwill in the amount of R$ 7,280, was initially measured as the excess of the
consideration transferred in relation to net assets acquired. Inclusion in the consolidated balance sheet as of January 2015.
(iii) Antriebstechnik KATT Hessen GmbH
The subsidiary WEG Equipamentos Elétricos S.A., acquired the company Antriebstechnik KATT Hessen GmbH, which operates in
the manufacture of electric motors in Germany. The goodwill in the amount of R$ 4,260, was initially measured as the excess of
the consideration transferred in relation to net assets acquired. Inclusion in the consolidated balance sheet as of January 2015.
(iv) Transformadores Suntec S.A.S.
The subsidiary WEG Colombia SAS, acquired the company Transformadores Suntec S.A.S., which operates in the manufacture of
transformers in Colombia. The goodwill in the amount of R$ 54,560, was initially measured as the excess of the consideration
transferred in relation to net assets acquired. Included in the consolidated balance sheet as of April 2015.
(v) Zest WEG Manufacturing (Pty) Ltd.
The Zest WEG Manufacturing (Pty) Ltd., subsidiary of Zest WEG Group Africa (Pty) Ltd., has acquired the manufacturing of highvoltage transformer, power substation, molded circuit breakers and related services, belonging to TSS Transformers (Pty) Ltd.
('TSS'), a manufacturer based in South Africa. The goodwill in the amount of R$ 16,878, was initially measured as the excess of
the consideration transferred in relation to net assets acquired. Included in the consolidated balance sheet as of August 2015.
(vi) Autrial S.L.
On September 17, 2015, the Company announced the signing of agreement to acquire Autrial SL, a company engaged in the
manufacture of electrical panels for industrial equipment and facilities in Spain. The acquisition is subject to fulfillment of certain
conditions precedent and is not part of the interim financial statements of September 30, 2015.
12. Property, plant and equipment
Land
Construction and facilities
Equipment
Furniture and fixtures
Hardware
Construction in progress
Reforesting
Other
Subtotal
Accumulated deprec,/depletion
Annual depreciation rate (%)
Construction and facilities
02 to 03
Equipment
05 to 20
Furniture and fixtures
07 to 10
Hardware
20 to 50
Reforesting
Other
TOTAL net property, plant and equipment
COMPANY
09/30/15
12/31/14
1,440
1,440
5,639
5,639
7,079
7,079
(2,453)
(2,366)
(2,453)
(2,366)
4,626
4,713
CONSOLIDATED
09/30/15
12/31/14
398,468
378,747
1,074,245
944,907
3,546,410
3,150,970
124,448
103,459
105,456
89,903
301,541
116,886
53,870
53,051
90,643
104,205
5,695,081
4,942,128
(2,439,203)
(2,064,186)
(300,065)
(249,834)
(1,959,508)
(1,664,119)
(70,516)
(54,869)
(73,867)
(62,829)
(16,137)
(14,076)
(19,110)
(18,459)
3,255,878
2,877,942
37
ITR – Quarterly Information – 09/30/2015 – WEG S/A
Version: 1
a) Summary of changes in property, plant and equipment - consolidated:
12/31/14
PP&E Classification
Land
Construction and facilities
Equipment
Furniture and fixtures
Hardware
Construction in progress
Reforesting
Advance to suppliers
Other
TOTAL
378,747
695,073
1,486,851
48,590
27,074
116,886
38,975
83,390
2,356
2,877,942
Transfer
between
classes
4
9,569
30,007
248
(323)
(39,755)
49
201
-
Acquisition
1
Write-offs Deprec, and Exchange
depletion
effect
5,252
25,754
150,290
(10,630)
(50)
(5,703)
(20,829)
(181,688)
6,281
11,527
186,328
819
(30,525)
6,697
362,423
(282)
(175)
(264)
(581)
(17,685)
(6,010)
(9,340)
(2,061)
(3,222)
(223,150)
09/30/15
25,095
64,663
107,14
5
5,105
2,826
38,346
10,274
2,894
256,348
398,468
774,180
1,586,902
53,932
31,589
301,541
37,733
63,188
8,345
3,255,878
b) b) Amounts offered in guarantee - PP&E items were provided as collateral for loans, financing, labor claims and tax suits in the
amount of R$ 24,145 (R$ 23,118 at December 31, 2014).
13. Intangible assets – consolidated
Amortization/
Years
Software license
Right to use property
Other
Subtotal
Goodwill - Acquisition of
subsidiaries
TOTAL
5
50 – 99
5
-
Cost Accumulated
Amortization
09/30/15
12/31/14
102,122
70,902
200,177
373,201
(70,350)
(17,752)
(174,312)
(262,414)
31,772
53,150
25,865
110,787
26,343
39,390
15,584
81,317
694,648
1,067,849
(21,352)
(283,766)
673,296
784,083
590,290
671,607
a) Summary of changes in intangible assets:
Software license
Right to use property
Other
Subtotal
Goodwill - Acquisition of subsidiaries
TOTAL
12/31/14
Additions
26,343
39,390
15,584
81,317
590,290
671,607
10,013
13,325
23,338
88,429
111,767
Transfers Amortization
(6,484)
(504)
(4,078)
(11,066)
(11,536)
(11,536)
(11,066)
Exchange
effect
09/30/15
1,900
14,264
1,034
17,198
6,113
23,311
31,772
53,150
25,865
110,787
673,296
784,083
In May 2015 was finalized the PPA report (Purchase Price Allocation) of companies Sinya Changzhou Co., Ltd., Changzhou Master
Machinery Co., Ltd. and Changzhou Master Machine Co., Ltd., acquired in June 2014. As PPA result of the amount of R$ 11,536
initially recognized as goodwill was recorded in fixed assets according to their fair value. The PPA report did not identify other assets
or liabilities at fair value to be recognized.
b) Schedule of amortization of intangible assets (except goodwill):
2015
2016
2017
2018
2019
After 2020
TOTAL
09/30/15
4,783
16,105
14,634
12,882
8,977
53,406
110,787
12/31/14
11,348
10,644
8,903
7,515
4,209
38,698
81,317
38
ITR – Quarterly Information – 09/30/2015 – WEG S/A
Version: 1
14. Loans and financing
Direct loans from BNDES and FINEP are guaranteed by the controlling company, WEG S.A. FINAME operations are guaranteed by
endorsement and statutory lien.
All covenant clauses related to indicators of capitalization, current liquidity and the relation between net debt/Ebitda, included in the
BNDES, are being met.
Type
In Brazil
SHORT TERM
In Reais, pre fixed rate
Working capital
Property, plant and equipment
In Reais, pos fixed rate
Working capital
Working capital
In U.S. Dollars
Working capital (ACCs)
Working capital
Prepayment of Export
Others
Others
LONG TERM
In Reais, pre fixed rate
Working Capital
Property, plant and equipment
In Reais, pos fixed rate
Working Capital
Working Capital
In U.S. Dollars
Prepayment of Export (PPE)
Others
Others
ABROAD
SHORT TERM
In U.S. dollars
Working Capital
In Euros
Working Capital
In Pesos (Mexico)
Working Capital
In Renmimbi (China)
Working Capital
In Rande (South Africa)
Working Capital
Other Currency
Working Capital
LONG TERM
In U.S. dollars
Working Capital
In Euros
Working Capital
In Pesos (Mexico)
Working Capital
In Rande (South Africa)
Working Capital
Other Currency
Working Capital
Annual charges in 09/30/15
CONSOLIDATED
09/30/15
12/31/14
1,361,872
1,086,642
3.5% a 11.0% p.a.
2.5% a 8.7% p.a.
776,145
2,994
382,749
2,495
TJLP (+) 1.4% a 5.0% p.a.
UFIR (+) 1.0% a 4.0% p.a.
345,327
13,229
375,135
15,281
Variation US$ (+) 0.9% a 1.0% p.a.
Variation US$ (+) 1.4% p.a.
Variation US$ (+) Libor (+) 1.1% p.a.
158,388
148
61,932
266,032
3,045
38,419
3,709
3,486
2,669,167
2,376,690
1,053,067
19,336
1,552,001
19,391
111,638
26,943
89,983
33,612
1,449,853
675,281
8,330
6,422
745,157
375,851
Libor (+) 0.8% a 1.5% p.a.
173,934
116,264
Euribor (+) 0.8% a 3.0% p.a.
242,011
10,603
TIEE + 1.1% p.a.
2,041
74,262
4.5% a 6.0% p.a.
125,300
137,387
83,391
1,325
118,480
36,010
303,757
238,359
122,339
81,597
7,880
146,806
171,069
-
9.25% p.a.
1,101
159
Interest of local market
1,368
9,797
Sundry
3.5% a 11.0% p.a.
2.5% a 8.7% p.a.
TJLP (+) 1.4% a 5.0% p.a.
UFIR (+) 1.0% a 4.0% p.a.
Variation US$ (+) Libor (+) 1.0% a 1.5% p.a.
Sundry
9.25% p.a.
Interest of local market
Libor (+) 1.5% p.a.
Euribor (+) 1.25% a 1.5% p.a.
TIIE (+) 1.1% p.a.
39
ITR – Quarterly Information – 09/30/2015 – WEG S/A
Version: 1
TOTAL SHORT TERM
2,107,029
1,462,493
TOTAL LONG TERM
2,972,924
2,615,049
Maturity of long-term financing and loans:
09/30/15
44,562
570,340
986,905
994,275
157,496
219,346
2,972,924
2016
2017
2018
2019
2020
After 2021
TOTAL
12/31/14
1,203,080
647,792
214,807
519,357
17,457
12,556
2,615,049
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 eventual losses from the proceedings in progress.
a) Balance of provision for contingencies
COMPANY
09/30/15
12/31/14
(i) Tax
- IRPJ e CSLL
- INSS
- PIS e COFINS
- IRRF
- Others
CONSOLIDATED
09/30/15
12/31/14
4,362
3,886
476
-
3,986
3,510
476
-
101,359
17,217
44,914
28,706
476
10,046
90,767
15,310
38,703
26,297
476
9,981
(ii) Labor
-
-
145,077
91,781
(iii) Cívil
-
-
78,453
73,747
(iv) Others
-
-
4,624
2,554
4,362
3,986
329,513
258,849
(a.1)
(a.2)
(a.3)
(a.4)
TOTAL
b) Changes for the period - consolidated
a) Tax
b) Labor
c) Civil
d) Other
TOTAL
12/31/14
Additions
Interest
Write-offs
Reversals
09/30/15
90,767
91,781
73,747
2,554
258,849
11,235
49,268
10,751
2,070
73,324
2,146
8,525
2,380
13,051
(3,180)
(7,702)
(10,882)
(2,789)
(1,317)
(723)
(4,829)
101,359
145,077
78,453
4,624
329,513
c) The provisions recorded basically refer to:
(i)
Tax contingencies
(a.1) The Company and its subsidiaries maintain a provision of 16.24% 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.
40
ITR – Quarterly Information – 09/30/2015 – WEG S/A
Version: 1
(a.3) Refers to non-ratification by the Secretariat of the Federal Revenue of Brazil (FRB) about the request for compensation from
the credit balance of PIS and COFINS with federal tax debts.
(a.4) Relates to late payment penalty levied on credit IRRF on interest on capital received, offset by debts of the same nature, whose
compensation has not been approved by the RFB.
(ii) Labor contingencies
The Company and its subsidiaries are defendants in labor claims primarily involving health and risk exposure, among others, Was
provisioned the amount of R$ 145,077 (R$ 91,781 at December 31, 2014).
(iii) Civil contingencies
These correspond primarily to civil lawsuits, including personal injury, aesthetic damage, occupational diseases and indemnities
arising out of occupational accidents. Was provisioned the amount of R$ 78,453 (R$ 73,747 at December 31, 2014).
d) Judicial deposits
COMPANY
09/30/15
12/31/14
Tax
Labor e Civil
Other
TOTAL RESTRICTED JUDICIAL DEPOSITS
Non-restricted judicial deposits
TOTAL JUDICIAL DEPOSITS
3,888
4,327
8,215
8,215
3,430
3,430
3,430
CONSOLIDATED
09/30/15
12/31/14
31,514
19,857
1,003
52,374
2,924
55,298
27,656
12,234
889
40,779
3,615
44,394
The judicial deposits not associated ace contingencies are waiting authorized to withdraw from court.
e) 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 in the amount of R$ 85,648 (R$ 66,326 at December 31,
2014). The mainly processes classified as “possible” by legal opinions, are:
- taxation on profits computed abroad in the total estimated amount of R$ 48 million.
- not properly approved of IPI credits amounting to R$ 10.6 million.
- incidence of ICMS-ST on purchase transactions of raw materials amounting to R$ 9.3 million.
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, annual bonus, supplemental sickness benefits,
supplemental disability retirement, pension due to death, supplementation of the annual bonus and death benefit.
The number of participants is 21,336 (22,013 at September 30, 2014). The Company and its subsidiaries made contributions in the
amount of R$ 21,711 (R$ 19,757 at September 30, 2014). Based on actuarial calculations performed by independent actuarial,
aiming to define the liability net amount between the defined benefit obligation and the fair value of plan assets, in accordance with
the procedures established by CVM Resolution No. 695/12 – technical pronouncement CPC 33 (R1) Benefits Employee, The
company maintains a provision of R$ 4,092 (R$ 4,092 at December 31, 2014).
17. Equity
a) Capital
The Company's capital consists of 1,614,353,076 registered book-entry common shares with no par value, all with voting rights,
including 1,519,786 treasury shares pursuant to item "c".
41
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Version: 1
In the Ordinary and Extraordinary Shareholders Meeting, held on March 31, 2015, was approved the split of all shares without par
value, issued by the Company for each one (1) current action pass to be represented by two (2) shares of the same species and
without changing the share capital. The shareholding position considered to split the Company's common shares is the March 31,
2015.
b) Shareholder compensation - Interest on equity capital
b.1.) Interest on equity capital
The Company stated on September 22, 2015, in the gross amount of R$ 87,286 (net R$ 74,193), corresponding to R$ 0.046 per
share, after the deduction of income tax of 15% pursuant to § 2 of Article 9 of Law No. 9,249 / 95, except for corporate shareholders
who are exempt from this taxation.
The Interest on Own Capital, pursuant to Article 37 of the Bylaws and Article 9 of Law No. 9,249 / 95, will be imputed to mandatory
dividends and will be paid as from March 16, 2016.
c) Treasury stock
On April 26, 2011 was authorized by the Board of Directors, to acquire up to 500,000 Company’s common shares, at average cost
of R$ 20.11. At September 30, 2015, the Company had the amount of 919,786 shares considering the stock split occurred in March
31, 2015.
On April 28, 2015 was approved by the Board of Directors, the purchase of up to 600,000 common shares, performed by the
average price of R$ 17.04 per share.
The acquired shares will be held in treasury for use in connection with exercise of options of purchase of shares by the beneficiaries
of the Share Purchase Option Program (“Program”) of the Company or subsequently canceled or sold.
Were exercised by the beneficiaries of the Share Purchase Option Program (“Program”) the amount of 257,023 shares, of which
90,359 shares exercised until December 31, 2014 and 166,664 shares exercised in the period from January to September 2015.
The Company keeps in treasury 1,519,786 shares at the average cost of R$ 11.34 per share in the total amount of R$ 17,232.
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 in shares of the Company an amount of their variable compensation
in the period.
The Programs of Stock Options have been updated on the date of March 31, 2015, in light of the stock split, without nominal value,
issued by the Company, in which for each 1 (one) share became represented by 2 (two) shares of the same specie, considered the
new market value and the increase of shares. The update has no impact on the calculation made at the beginning of the program.
42
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Version: 1
In reais (R$)
Amount
Number of
Program
Price corrected
Options Rights
Strike Price
by IPCA
April /11
OptionA
ppropriate
Difference
(thousand R$)
Option price
163,155
8.08
9.36
12.68
3.32
785
71,398
6.71
7.87
10.40
2.54
236
169,393
7.38
8.67
11.30
2.64
515
95,053
6.73
7.91
10.51
2.60
276
April /13
214,688
9.40
11.10
14.33
3.23
692
September /13
108,862
9.60
11.40
15.58
4.19
455
March/14
221,040
10.48
12.54
17.30
4.76
1,053
91,160
13.12
15.75
19.77
4.03
367
March/15
187,020
14.05
16.90
22.49
5.60
1,046
August /15
181,055
16.60
19.60
25.44
5.84
1,058
September /11
March /12
September /12
August /14
Total
1,502,824
6,483
The weighted average of fair value was determined based on the Black-Scholes-Merton method, considering the following aspects:
Exercise price
Lifespan of the
Of option (R$)
option – in days
Program
Current price for
corresponding
share (R$)
I Interest free of risk for
Expected volatility
the lifespan of the
In share price (%)
option (%)
April /11
8.08
755 – 1,260
8.50
13.17
12.79 – 12.83
September /11
6.71
756 – 1,259
6.95
14.94
10.90 – 11.22
March /12
7.38
755 – 1,257
7.62
14.93
9.76 – 10.33
September /12
6.73
753 – 1,257
7.73
12.25
8.32 – 8.78
April /13
9.40
760 – 1,260
9.89
14.27
8.67 – 9.24
September /13
9.60
756 – 1,258
10.68
14.13
11.29 – 11.81
March /14
10.48
753 – 1,257
12.16
10.26
12.28 – 12.58
August /14
13.12
754 – 1,257
13.45
10.02
11.26 – 11.28
March /15
14.05
751 – 1,254
15.21
19.73
13.26 – 13.43
43
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August/15
Version: 1
752 – 1,255
16.60
16.62
13.74 – 13.78
21.25
Summary of the movement of shares plan:
Number of shares
Program
12/31/14
Stock split
Granted
Expired/
Canceled
Exercised
09/30/15
April/11
58,010
-
58,010
-
(55,864)
60,156
September/11
27,691
-
26,998
-
(16,277)
38,412
March/12
75,054
-
75,054
-
(35,532)
114,576
September/12
44,540
-
43,283
-
(8,079)
79,744
107,344
-
107,344
-
(43,112)
171,576
54,431
-
54,431
-
(7,800)
101,062
March/14
110,520
-
110,520
-
-
221,040
August/14
45,580
-
45,580
-
-
91,160
March/15
-
93,510
93,510
-
-
187,020
August/15
-
181,055
-
-
-
181,055
523,170
274,565
614,730
-
(166,664)
1,245,801
April/13
September/13
TOTAL
The recognition of expenses with stock option is carried out throughout the period of acquisition of "vesting rights”.
In September 30, 2015, was recorded R$ 601 (R$ 675 at September 30, 2014) as other results in the financial statements for the
year counterpart capital reserve in Equity.
The options exercised in September 30, 2015 were held under the caption capital reserve in equity in the amount of R$ 515, R$1,106
for the options performed and R$ 591 complement to the amount accrued recognized in retained earnings,
The accumulated equity totals in September 30, 2015 R$ 1,903 (R$ 1,817 at December 31, 2014).
19. Net revenue
BREAKDOWN OF NET REVENUE
CONSOLIDATED
09/30/15
09/30/14
Gross revenue
Domestic market
External market
8,053,772
4,028,034
4,025,738
6,667,631
3,653,155
3,014,476
(1,027,700)
(899,177)
(128,523)
(1,006,569)
(857,464)
(149,105)
7,026,072
3,166,767
3,859,305
5,661,062
2,789,855
2,871,207
Deductions
Taxes
Returns and Rebates
Net revenue
Domestic Market
External Market
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Version: 1
20. Construction contracts
Construction contract’s revenues and costs are recognized according to the execution of each project by the method of
percentage of incurred costs.
CONSOLIDATED
09/30/15
09/30/14
394,290
201,736
Gross operational revenue recognized
(391,078)
(153,580)
Incurred costs
09/30/15
Received prepayments
12/31/14
159,760
167,628
21. Operating expenses by nature and function
CONSOLIDATED
09/30/15
09/30/14
EXPENSE BY NATURE
Depreciation, amortization and depletion
Personnel expenses
Raw materials and use and consumption materials
Freight and insurance costs
Other expenses
(6,164,686)
(234,216)
(1,534,602)
(3,234,807)
(210,780)
(950,281)
(4,881,887)
(182,667)
(1,281,063)
(2,513,931)
(197,053)
(707,173)
EXPENSE BY FUNCTION
Cost of products and services sold
Selling expenses
General and administrative expenses
Management fees
Other operating expenses
(6,164,686)
(4,990,920)
(688,043)
(317,446)
(16,249)
(152,028)
(4,881,887)
(3,874,783)
(593,516)
(268,005)
(14,664)
(130,919)
22. Other operating revenue/expenses
The recorded values are relative to profit sharing, reversal/ provision for lawsuits and others, as follows:
CONSOLIDATED
09/30/15
09/30/14
20,844
5,657
20,844
5,657
(172,872)
(136,576)
(113,612)
(99,294)
(20,569)
(15,684)
(13,318)
(10,710)
(5,266)
8,172
(3,411)
(3,968)
(16,696)
(15,092)
(152,028)
(130,919)
OTHER OPERATING REVENUE
- Others
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
23. Net financial result
FINANCIAL INCOME
Bank deposit certificate (CDB)
Exchange variation
Exchange variation – Trade accounts payable
Exchange variation – Customers
Exchange variation – Loans
Exchange variation – Others
Present value adjustment - customers
09/30/15
73,715
90,405
-
COMPANY
09/30/14
59,198
69,439
-
CONSOLIDATED
09/30/15
09/30/14
1,059,845
503,266
341,881
221,922
315,150
184,133
75,268
78,547
227,925
43,181
46,011
35,908
(34,054)
26,497
48,323
50,040
45
ITR – Quarterly Information – 09/30/2015 – WEG S/A
Pis/Cofins on interest on equity
PIS/COFINS on financial income
Derivatives
PROEX – Equaliz. Interest rate
Other income
FINANCIAL EXPENSES
Interest on loans and financing
Exchange variation
Exchange variation – Trade accounts payable
Exchange variation – Customers
Exchange variation – Loans
Exchange variation – Other
Present value adjustment - suppliers
Derivatives
Others Expenses
NET FINANCIAL RESULT
Version: 1
(15,374)
(1,595)
279
(10,544)
303
(15,534)
(6,135)
332,356
13,918
29,886
(10,621)
12,211
11,817
33,764
(128)
(128)
(108)
(108)
(993,407)
(150,319)
(741,854)
(75,487)
(63,022)
(579,429)
(23,916)
(22,579)
(33,687)
(44,968)
(400,855)
(129,134)
(212,668)
(31,862)
(38,215)
(64,650)
(77,941)
(16,180)
152
(43,025)
73,587
59,090
66,438
102,411
24. Provision for income and social contribution taxes
The Company and its subsidiaries in Brazil assess income and social contribution taxes according to taxable income, except for
WEG Administradora de Bens Ltda, and 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.
09/30/15
772,847
34%
COMPANY
09/30/14
694,651
34%
(262,768)
(236,181)
(315,460)
(299.740)
239,574
22,859
(363)
215,291
17,906
(226)
(4,052)
37,531
65,397
6,347
79,457
(23,698)
8,790
(1,243)
(1,051)
52,556
56,904
2,339
6,670
(698)
(638)
(60)
(3,210)
(685)
(2,525)
(145,688)
(224,492)
78,804
(183,564)
(201,431)
17,867
0.09%
0.46%
15.70%
20.82%
Reconciliation of income and social contribution taxes
Income before taxes on profit
Statutory rate
IRPJ and CSLL calculated at the statutory rate
Adjustment to determine effective income and social contribution
taxes:
Result from investments in subsidiaries
Rate difference on foreign results
Tax incentives
Reintegra
Interest on equity
Consolidation adjustment - Profits to perform
Other adjustments
IRPJ and CSLL as per the income statement
Current tax
Deferred tax
Effective rate - %
CONSOLIDATED
09/30/15
09/30/14
927,824
881,586
34%
34%
25. Insurance coverage
The corporate unit in Brazil is responsible for the management of the insurance portfolio of the WEG Group in Brazil and abroad,
establishing risk policies for the Group in order to protect its assets. The Company and its subsidiaries 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), Securety Insurance,
General Civil Liability, Properties and Environment Pollution, Contractual Insurance and Risk Engineering Installation and
Mounting.
46
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Version: 1
The insurance policies are issued only in multinational insurance companies first line and that can meet the WEG Group in the
countries where it has operations. The financial structure and sustainability of said insurance companies are continuously
monitored by WEG Brazil .
Below we highlight some of the policies and the due capital.
- Operating Risks (Equity): US$ 36 million;
- Loss of profits: US$ 13 million (for the paint and vanishes companies);
- Civil liability US$ 25 million;
- Civil liability products: US$ 50 million;
- Transport: US$ 5 million per shipment (Import, Export and Domestic);
- Environmental pollution: US$ 20 million;
- Contractual Insurance: as stipulated in the contract;
- Risk Engineering Installation and Assembly: R$ 100 million Brazil, R$ 40 million Latin America (except Cuba) and USD 5 million
United States.
- Managers civil responsibility (D&O): US$ 30 milion.
26. Financial instruments
The Company and its subsidiaries carried out an evaluation of its financial instruments, including derivatives, recorded in the financial
statements presented the following values:
BOOK VALUE
MARKET VALUE
Cash and cash equivalents
Cash and banks
Short-term investments:
- Local currency
- Foreign currency
Short-term investments:
Derivatives
- SWAP
- Non Deliverable Forwards - NDF
Total assets
Loans and financing:
- Local currency
- Foreign currency
Derivatives
- SWAP
- Non Deliverable Forwards - NDF
Total liabilities
09/30/15
12/31/14
09/30/15
12/31/14
3,411,805
481,447
2,930,358
2,824,803
105,555
877,157
341,428
339,063
2,365
4,630,390
3,284,275
302,346
2,981,929
2,916,630
65,299
866,209
43,740
42,590
1,150
4,194,224
3,411,805
481,447
2,930,358
2,824,803
105,555
877,157
341,428
339,063
2,365
4,630,390
3,284,275
302,346
2,981,929
2,916,630
65,299
866,209
43,740
42,590
1,150
4,194,224
5,079,953
2,360,718
2,719,235
15,916
12,911
3,005
5,095,869
4,077,542
2,470,647
1,606,895
14,608
14,608
4,092,150
5,079,953
2,360,718
2,719,235
15,916
12,911
3,005
5,095,869
4,077,542
2,470,647
1,606,895
14,608
14,608
4,092,150
The risk factors of financial instruments are relate to:
(i) Financial risks
Foreign currency risk
The Company and its subsidiaries 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 (net) can be to equivalent to 2 months of exports in foreign currency as defined by the Company's Board of Directors.
The Company and its subsidiaries had export operations in the amount US$ 568.3 million (US$ 455.2 million in 2014), which acts as a
natural hedge for indebtedness and other costs tied 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 and its subsidiaries 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,
47
ITR – Quarterly Information – 09/30/2015 – WEG S/A
Version: 1
Derivative financial instruments
The Company and its subsidiaries have the following operations with derivative financial instruments:
a) NDF derivative financial instruments - Non Deliverable Forwards, with notional amount of:
(i) US$ 1.0 million, held by subsidiary WEG Austrália Pty Ltda, for the purpose of protecting exports from the fluctuation risks of the
exchange rates;
(ii) US$ 9.9 million, held by foreign subsidiary Zest Electric Motors (Pty) Ltd., for the purpose of protecting its transactions imports of
products from the risks of fluctuations in exchange rates;
(iii) EUR 12,0 million, held by subsidiary WEG Equipamentos Elétricos S.A., for the purpose of protecting exports from the fluctuation
risks of the exchange rates; b) SWAP operations, in the notional amount of:
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) US$ 8.6 million held by subsidiary WEG Equipamentos Elétricos S.A., to protect against Libor increase risks;
(iii) US$ 345 million, held by the subsidiary WEG Equipamentos Elétricos S.A., SWAP from protect the Prepayment Export operations
against the risk of fluctuation rates,
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 September 30, 2015, 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 has determined that, for the probable scenario (market value) should be considered the exchange rates used to market of financial instruments, valid on September 30, 2015. These rates represent the best estimate of the future behavior of
prices and these represent the amount by which the positions could be settled at maturity.
The table below presents in reais "cash and expense" effects of the results of financial instruments witch scenarios.
a)
Operations of Non Deliverable Forwards - NDF:
Possible scenario 25%
Market value at
09/30/2015
Remote scenario 50%
Notional
value
(thousan
ds)
Currency
Average
price
Dollar Increase
1,036
US$/AUD
0.7654
295
0.9568
(2,265)
1.1481
(3,193)
Dollar Increase
184
US$/ZAR
11.7454
304
14.6818
(775)
17.6181
(929)
Dollar Decrease
9,946
US$/ZAR
14.0444
1,572
10.5333
(8,468)
7.0222
(18,507)
Total of Dollar
11,166
Euro Increase
12,000
Risk
R$
Thousand
Average
price
2,171
EUR/R$
4.5408
(3,005)
R$
thousand
Average price
R$ thousand
(11,508)
5.6825
(16,628)
(22,629)
6.8190
(30,250)
48
ITR – Quarterly Information – 09/30/2015 – WEG S/A
Version: 1
Euro Increase
201
EUR/ZAR
12.3905
102
15.4881
(893)
18.5858
(1,071)
Euro Decrease
146
EUR/ZAR
15.7257
54
11.7943
(110)
7.8629
(274)
Total of Euro
12,347
Libra Decrease
163
Total of Libra
163
(2,849)
GBP/ZAR
21.1380
TOTAL
38
(17,631)
15.8542
(210)
(31,595)
10.5695
(457)
38
(210)
(457)
(640)
(29,349)
(54,681)
b) SWAP Operations:
Possible scenario 25%
Remote scenario 50%
Market value at 09/30/2015
Risk
Euribor
Decrease
Libor
Increase
Dollar
Decrease (*)
TOTAL
Notional
value
(million)
EUR 10.0
US$ 8.6
US$ 345.0
R$
Average price
Thousand
Interest 0.75%
p.a.
(12,809)
Interest 0.28%
p.a.
(102)
.3.9729
339,063
326,152
Average price
Interest 0.56%
p.a.
Interest 0.25%
p.a.
.2.9797
R$
Thousand
Average price
R$ thousand
(13,199)
Interest 0.37% p.a.
(13,588)
(107)
Interest 0.22% p.a.
(113)
52,541
.1.9865
(238,147)
39,235
(251,848)
(*) Currency swap with the purpose of protect US$ 345 million in PPE financial operations (prepaid export) and ACC (advance
exchange contract) that have at September 30, 2015, the liability amount of R$ 563,007 in exchange rate.
The Company and its subsidiaries accounting records based on the market price as at September 30, 2015 according to the fair
value and accrual method, These operations had a net positive impact as at September 30, 2015 of R$ 298,669 (R$ 12,340 positive
at September 30, 2014), which were recognized in net income, The Company has no margins pledged in guarantee for derivative
financial instruments outstanding at September 30, 2015.
(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
27. Subsidies and assistance government
The Company and its subsidiaries obtained subventions in the amount of R$ 35,735 (R$ 30,089 at September 30, 2014) from tax
incentives, recognized in the period:
CONSOLIDATED
09/30/15
09/30/14
TOTAL SUBSIDIES AND ASSISTANCE GOVERNMENT
a) WEG Amazônia S.A.
- ICMS incentive credit of 90.25%
- Corporate Income Tax (IRPJ) 75% reduction
35,735
205
205
-
30,089
894
190
704
b) WEG Linhares Equipamentos Elétricos S.A.
- ICMS incentive credit of 85%
- Corporate Income Tax (IRPJ) 75% reduction
- Reinvestment reduction by 30% of income tax
25,359
22,237
2,926
177
18,748
18,089
515
125
49
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Version: 1
- Municipal investment
c) WEG Logística Ltda.
- ICMS incentive credit of 75%
19
19
10,171
10,171
10,447
10,447
There are no contingencies tied to subsidies, and all of the conditions for obtaining government subsidies have been fulfilled.
28. Information by segment
Brazil
Foreign
Industry
09/30/15
Revenue from sale of products /
Services
3,621,5210
Earnings before income taxes 1,194,6680
Depreciation / Amortization /
Depletion
132,478
09/30/15
Identifiable assets
3,178,8700
Identifiable liabilities
826,873
Eliminations and adjustments
Consolidated
Energy
09/30/14
09/30/15
09/30/14
09/30/15
09/30/14
09/30/15
09/30/14
09/30/15
09/30/14
3,419,508
1,092,298
1,682,988
483,531
1,257,615
414,816
3,685,926
325,099
2,675,923
146,877
(1,964,363))
(1,075,474))
(1,691,984)
(772,405).
7,026,072
927,824
5,661,062
881,586
110,646
12/31/14
3,125,990
782,492
42,582
09/30/15
1,789,999
618,724
33,114
12/31/14
1,509,993
599,922
59,156
09/30/15
4,621,027
1,613,024
38,907
12/31/14
2,663,313
823,931
09/30/15
(95,879).
(507,757).
12/31/14
180,628
(308,673).
234,216
09/30/15
9,494,017
2,550,864
182,667
12/31/14
7,479,924
1,897,672
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 and solutions for renewable and distributed wind energy.
Foreign: composed by operations carried out by subsidiaries in other countries.
The adjustment and elimination column include the eliminations applicable to the Company in the context of the Consolidated
Financial Statements. All operating assets and liabilities are presented as identifiable assets and liabilities.
29. Earnings per share
a) Basic
Calculation of basic earnings per share is made by dividing net income, attributed to common shareholders, by the weighted average
number of common shares available during the year.
09/30/15 09/30/14
Profit attributed to Company shareholders
772,149
691,441
Weighted average number of common shares (adjusted with scrolling) held by shareholders (shares /
1,613,060 1,613,190
thousand)
Basic earnings per share - R$
0.47869
0.42862
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.
09/30/15 09/30/14
Profit attributed to Company shareholders
772,149
691,441
Weighted average number of common shares (adjusted with scrolling) held by shareholders (shares /
1,614,269 1,614,446
thousand)
Basic and diluted earnings per share - R$
0.47833
0.42829
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ITR – Quarterly Information – 09/30/2015 – WEG S/A
Version: 1
30. Statement of comprehensive income
The Company and its subsidiaries 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 (R1) 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.
51
ITR – Quarterly Information – 09/30/2015 – WEG S/A
Version: 1
Quarterly Information Review Report
To the Shareholders and Board of Directors
Weg S.A.
Jaraguá do Sul - SC
Introduction
We have reviewed the interim financial statements, individual and consolidated, of Weg S.A. (“Company”) contained
within the Quarterly Information for the quarter ended September 30, 2015, which comprise the balance sheet as
of September 30, 2015 and the related statements of income and comprehensive income for the three and nine
months period them ended and the changes in shareholders’ equity and cash flows for the nine months period then
ended, including the notes to the financial statements.
Management is responsible for the preparation of the interim financial statements in accordance with the technical
pronouncement CPC 21(R1) and IAS 34 - Interim Financial Reporting, issued by the International Accounting
Standards Board - IASB, as well as for the presentation of these information in accordance with the standards
issued by the Brazilian Securities and Exchange Commission (CVM) applicable to the Quarterly Information. Our
responsibility is to express a conclusion on the interim financial statements based on our review.
Scope of the review
We conducted our review in accordance with Brazilian and international standards for reviewing interim financial
information (NBC TR 2410 and ISRE 2410 - Review of Interim Financial Information Performed by the Independent
Auditor of the Entity, respectively). An interim review consists principally of making enquiries and having discussions
with persons responsible for financial and accounting matters, and applying analytical and other review procedures.
An interim review is substantially less in scope than an audit conducted in accordance with auditing standards. An
interim review does not provide assurance that we would become aware of any or all significant matters that might
be identified in an audit. Accordingly, we do not express such an audit opinion.
Conclusion about the interim financial statements
Based on our review, we are not aware of any fact that leads us to believe that the individual and consolidated
interim financial statements included in the quarterly information referred to above have not been prepared, in all
material respects, in accordance with CPC 21(R1) and IAS 34 issued by the IASB applicable to the Quarterly
Information and presented in accordance with the standards issued by the Brazilian Securities and Exchange
Commission.
Other issues
Statements of value added
We have also reviewed the statements of value added, individual and consolidated, for the nine months period
ended in September 30, 2015, prepared under the responsibility of the Company’s Management, whose disclosure
in the interim financial statements is required in accordance with the standards issued by the Brazilian Securities
and Exchange Commission (CVM) applicable to the preparation of the Quarterly Information and considered as
supplemental information by international accounting standards (IFRS), which do not require the disclosure of the
statement of value added. This statement was submitted to the same review procedures previously described and,
based on our review, we are not aware of any fact that would lead us to believe that they have not been fairly stated,
in all material aspects, in relation to the interim financial statements, individual and consolidated, taken as a whole.
Joinville, October 15, 2015
KPMG Auditores Independentes
CRC SC-000071/F-8
Marcelo Lima Tonini
Accountant CRC PR-045569/O-4 T – SC
52