ITR -Quarterly Information - 09/30/2013 - 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 - 01/01/2013 to 09/30/2013
8
Statements of changes in equity - 01/01/2012 to 09/30/2012
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 - 01/01/2013 to 09/30/2013
16
Statements of changes in equity - 01/01/2012 to 09/30/2012
17
Statements of value added
18
Comments on performance
19
Notes to financial statements
29
Opinions and Statements
Special Review Report – Unqualified
46
ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Company information / Composition of capital
Number of shares
(Units)
Quarterly ended
09/30/2013
Paid-in capital
Common
Preferred
Total
620,905,029
0
620,905,029
Treasury stock
Common
474,183
Preferred
0
Total
474,183
PAGE: 1 of 47 ITR – Quarterly Information – 09/30/2013 – 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
03/26/2013
Interest on equity
08/21/2013
Common
0.05500
Board of Directors’
Meeting
06/25/2013
Interest on equity
08/21/2013
Common
0.06000
Board of Directors’
Meeting
07/30/2013
Dividends
08/21/2013
Common
0.18500
Board of Directors’
Meeting
09/24/2013
Interest on equity
03/12/2014
Common
0.06500
PAGE: 2 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Individual financial statements / Balance sheet Assets
(In thousands of reais)
Account
code
Account description
Current quarter
09/30/2013
Prior year
12/31/2012
1
Total assets
4,386,216
4,154,315
1.01
Current assets
897,916
889,397
1.01.01
Cash and cash equivalents
856,179
561,214
1.01.01.01
Cash and banks
28
28
1.01.01.02
Short-term investments
856,151
561,186
1.01.02
Short-term investments
0
261,244
1.01.02.01
Short-term investments at fair value
0
261,244
1.01.02.01.01
Trading securities
0
261,244
1.01.06
Taxes recoverable
11,116
6,107
1.01.06.01
Current taxes recoverable
11,116
6,107
1.01.08
Other current assets
30,621
60,832
1.01.08.03
Other
30,621
60,832
1.01.08.03.01
Dividends
1.01.08.03.02
Interest on equity
1.02
Noncurrent assets
1.02.01
Long-term receivables
1,731
2,513
28,890
58,319
3,488,300
3,264,918
2,666
864
1.02.01.06
Deferred taxes
849
0
1.02.01.06.01
Deferred income and contribution taxes
849
0
1.02.01.08
Recoverable to related parties
509
0
1.02.01.08.02
Recoverable to subsidiries
1.02.01.09
Other noncurrent assets
509
0
1,308
864
1.02.01.09.03
Judicial deposits
1,308
864
1.02.02
Investments
3,480,765
3,259,097
1.02.02.01
Equity interest
3,480,765
3,259,097
1.02.02.01.02
Investments in subsidiaries
3,480,765
3,259,097
1.02.03
Property, plant and equipment
4,859
4.947
1.02.03.01
Property, plant and equipment in use
4,859
4,947
1.02.04
Intangible assets
10
10
1.02.04.01
Intangible assets
10
10
1.02.04.01.02
Goodwill
10
10
PAGE: 3 of 47 ITR – Quarterly Information – 09/30/2013 – 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
2.02.03
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
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 payables
Payables to related parties
Payables to subsidiaries
Deferred taxes
Deferred income and social contribution taxes
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
09/30/2013
4,386,216
53,974
3,515
3,515
7,093
7,093
18
7,075
43,366
43,366
42,572
794
4,530
0
0
0
0
0
4,530
4,327,712
2,718,440
(57,919)
1,129
(59,048)
3,724
560,508
32,799
537,245
0
(9,536)
410,210
606,931
606,931
85,818
Prior year
12/31/2012
4,154,315
90,072
3,320
3,320
6,482
6,482
86
6,396
80,270
80,270
79,070
1,200
3,894
296
296
296
123
123
3,475
4,060,349
2,718,440
(53,319)
758
(54,077)
3,784
687,792
32,799
537,245
127,803
(10,055)
656,646
656,646
47,006
PAGE: 4 of 47 ITR – Quarterly Information – 09/30/2013 – 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 income (expenses) 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
Quarter to date
07/01/2013 to 09/30/2013
Current period
01/01/2013 to 09/30/2013
Prior quarter
07/01/2012 to 09/30/2012
Prior period
01/01/2012 to 09/30/2012
212,509
(823)
(488)
(335)
0
(2,094)
215,426
212,509
15,350
15,936
(46)
227,859
902
(185)
1,087
228,761
228,761
566,307
(2,285)
(1,429)
(856)
0
(3,986)
572,578
566,307
39,369
39,313
56
605,676
352
(620)
972
606,028
606,028
171,749
(1,178)
(520)
(658)
0
(743)
173,670
171,749
13,026
13,061
(35)
184,775
(19)
(223)
204
184,756
184,756
429,078
(3,000)
(1,491)
(1,509)
2
(1,996)
434,072
429,078
43,387
43,538
(151)
472,465
357
(214)
571
472,822
472,822
0.36871
0.97680
0.29780
0.76212
0.36851
0.97632
0.29768
0.76182
PAGE: 5 of 47 ITR – Quarterly Information – 09/30/2013 – 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
Quarter to date
Current period
07/01/2013 to 09/30/2013 01/01/2013 to 09/30/2013
228,761
5,000
5,000
233,761
606,028
38,812
38,812
644,840
Prior quarter
07/01/2012 to 09/30/2012
Prior period
01/01/2012 to 09/30/2012
184,756
13,086
13,086
197,842
472,822
74,329
74,329
547,151
PAGE: 6 of 47 ITR – Quarterly Information – 09/30/2013 – 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 stock
Increase/(decrease) in cash and cash equivalents
Opening cash and cash equivalents balance
Closing cash and cash equivalents balance
Current period
01/01/2013 to 09/30/2013
Prior period
01/01/2012 to 09/30/2012
23,593
33,557
605,676
88
(572,578)
371
(11,455)
(10,537)
(229)
(689)
1,491
661,386
400,142
261,244
(390,014)
(390,731)
717
294,965
561,214
856,179
30,946
38,949
472,465
196
(434,072)
360
(9,002)
(11,535)
2,699
(166)
999
318,164
334,938
(16,774)
(316,864)
(316,864)
0
32,246
520,939
553,185
PAGE: 7 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Individual financial statements / Statement of changes in equity - 01/01/2013 to 09/30/2013
(In thousands of reais)
Account
code
5.01
5.03
5.04
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
Recognized options granted
Treasury stock sold
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
2,718,440
Capital reserves,
Options granted and
Treasury stock
(49,535)
(49,535)
(4,600)
371
198
(5,169)
(60)
(60)
(54,195)
Income reserves
559,989
559,989
519
519
560,508
Retained earnings/
accumulated losses
127,803
127,803
(246,114)
47
(114,778)
(131,383)
655,743
606,028
49,715
49,715
(127,222)
60
(127,803)
521
410,210
Other comprehensive
income
703,652
703,652
(10,903)
(10,903)
38,812
(49,715)
692,749
Equity
4,060,349
4,060,349
(250,195)
418
717
(114,778)
(131,383)
(5,169)
644,840
606,028
38,812
38,812
(127,282)
(127,803)
521
4,327,712
PAGE: 8 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Individual financial statements / Statement of changes in equity - 01/01/2012 to 09/30/2012
(In thousands of reais)
Account
code
5.01
5.03
5.04
5.04.01
5.04.03
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
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
2,265,367
2,265,367
453,073
453,073
2,718,440
Capital reserves,
Options granted and
Treasury stock
4,073
4,073
(51,428)
360
(51,788)
(38)
(38)
(47,393)
Income
reserves
684,007
684,007
(453,073)
(453,073)
230,934
Retained earnings/
accumulated losses
173,714
173,714
(204,369)
(62,041)
(142,328)
508,801
472,822
35,979
35,979
(173,457)
38
(173,714)
219
304,689
Other comprehensive
income
672,951
672,951
38,350
38,350
74,329
(35,979)
711,301
Equity
3,800,112
3,800,112
(255,797)
360
(62,041)
(142,328)
(51,788)
547,151
472,822
74,329
74,329
(173,495)
(173,714)
219
3,917,971
PAGE: 9 of 47 ITR – Quarterly Information – 09/30/2013 – 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
01/01/2013 to 09/30/2013
Prior period
01/01/2012 to 09/30/2012
(2,664)
(179)
(2,485)
(2,664)
(88)
(88)
(2,752)
611,891
572,578
39,313
609,139
609,139
3,090
2,969
67
54
151
151
(130)
(130)
606,028
131,383
114,778
359,867
(1,698)
(597)
(1,101)
(1,698)
(196)
(196)
(1,894)
477,610
434,072
43,538
475,716
475,716
2,654
2,559
52
43
154
154
86
86
472,822
142,328
62,041
268,453
PAGE: 10 of 47 ITR – Quarterly Information – 09/30/2013 – 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
1.01.02.01
1.01.02.01.01
1.01.03
1.01.03.01
1.01.04
1.01.06
1.01.06.01
1.01.08
1.01.08.03
1.02
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
1.02.01.09.05
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
Short-term investments
Short-term investments at fair value
Trading securities
Trade accounts receivable
Clients
Inventories
Taxes recoverable
Current taxes recoverable
Other current assets
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
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
09/30/2013
9,552,065
6,306,860
2,937,836
216,105
2,721,731
1,562,243
1,562,243
1,467,641
166,574
166,574
172,566
172,566
3,245,205
118,883
2,077
2,077
56,970
56,970
59,836
32,549
17,394
9,893
7,584
364
364
7,220
2,574,218
2,574,218
544,520
30,992
30,992
513,528
Prior year
12/31/2012
8,873,550
5,710,017
2,302,256
211,295
2,090,961
261,244
261,244
261,244
1,472,839
1,472,839
1,306,273
183,627
183,627
183,778
183,778
3,163,533
88,833
2,032
2,032
36,891
36,891
49,910
27,844
16,032
6,034
7,622
402
402
7,220
2,537,094
2,537,094
529,984
31,215
31,215
498,769
PAGE: 11 of 47 ITR – Quarterly Information – 09/30/2013 – 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
2.02
2.02.01
2.02.01.01
2.02.02
2.02.02.02
2.02.02.02.03
2.02.02.02.04
2.02.03
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 and equity
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
Other
Noncurrent liabilities
Loans and financing
Loans and financing
Other payables
Other
Tax obligations
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
09/30/2013
9,552,065
2,709,593
231,383
231,383
362,428
138,569
138,569
78,783
59,786
1,114,526
1,114,526
862,687
862,687
42,708
477,696
57,472
284,811
2,432,182
1,773,632
1,773,632
115,300
115,300
52,051
63,249
295,173
295,173
248,077
4,410,290
2,718,440
(57,919)
1,129
(59,048)
3,724
560,508
32,799
537,245
(9,536)
410,210
606,931
606,931
85,818
82,578
Prior year
12/31/2012
8,873,550
3,012,824
168,831
168,831
331,037
126,655
126,655
72,927
53,728
1,645,772
1,645,772
740,529
740,529
79,381
358,124
33,559
269,465
1,709,100
1,044,068
1,044,068
137,916
137,916
47,328
90,588
320,503
320,503
206,613
4,151,626
2,718,440
(53,319)
758
(54,077)
3,784
687,792
32,799
537,245
127,803
(10,055)
656,646
656,646
47,006
91,277
PAGE: 12 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A 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
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
Atributed to shareholders of parent company
Atributed to non-controlling shareholders
Earnings per share - (Reais/share)
Basic earnings per share
3.99.01.01
Common shares
3.99.02
Diluted earnings per share
3.99.02.01
Common shares
Quarter to date
07/01/2013 to 09/30/2013
1,758,381
(1,159,128)
599,253
(328,076)
(185,888)
(86,088)
(5,281)
(80,807)
2,382
(58,482)
271,177
26,548
156,197
(129,649)
297,725
(67,507)
(92,342)
24,835
230,218
230,218
228,761
1,457
Current period
01/01/2013 to 09/30/2013
4,935,597
(3,314,678)
1,620,919
(894,044)
(516,371)
(239,986)
(15,623)
(224,363)
12,941
(150,628)
726,875
48,716
424,870
(376,154)
775,591
(167,540)
(203,198)
35,658
608,051
608,051
606,028
2,023
Prior quarter
07/01/2012 to 09/30/2012
1,613,067
(1,114,480)
498,587
(276,482)
(156,743)
(81,392)
(4,627)
(76,765)
1,246
(39,593)
222,105
20,626
101,326
(80,700)
242,731
(55,785)
(61,926)
6,141
186,946
186,946
184,756
2,190
Prior period
01/01/2012 to 09/30/2012
4,511,620
(3,159,405)
1,352,215
(779,618)
(454,077)
(225,176)
(14,067)
(211,109)
14,440
(114,805)
572,597
53,030
363,652
(310,622)
625,627
(145,571)
(166,572)
21,001
480,056
480,056
472,822
7,234
0.36871
0.97680
0.29780
0.76212
0.36851
0.97632
0.29768
0.76182
PAGE: 13 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Consolidated financial statements / Statement of comprehensive income
(In thousand of reais)
Quarter to date
07/01/2013 to 09/30/2013
Current period
01/01/2013 to 09/30/2013
Prior quarter
07/01/2012 to 09/30/2012
Prior period
01/01/2012 to 09/30/2012
230,218
608,051
186,946
480,056
Other comprehensive income
4,680
38,894
12,811
74,054
Adjustment of conversion period
4,680
38,894
12,811
74,054
Consolidated comprehensice income for the period
234,898
646,945
199,757
554,110
Attributed to shareholders of parent company
233,761
644,840
197,842
547,151
1,137
2,105
1,915
6,959
Account
code
Account description
4.01
Consolidated net income for the period
4.02
4.02.01
4.03
4.03.01
4.03.02
Attributed to noncontrolling shareholders
PAGE: 14 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A 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
6.01.02
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
6.03
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
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
Disposal of assets
Cumulative translation adjustments
Long-term financial investments
Premium on capital transaction
Acquisition of subsidiary
Acquisition of noncontrolling
Net cash from financing activities
Loans and financing raised
Payment loans and financing
Interest paid on loan and financing
Treasury stock
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
01/01/2013 to 09/30/2013
735,328
1,039,825
775,591
161,504
102,179
551
(380,019)
(123,528)
216,998
(164,417)
(192,547)
(116,525)
75,522
93,276
(186,951)
(20,877)
12,448
38,894
261,199
(5,169)
(6,268)
(193,024)
1,337,629
(1,019,081)
(120,230)
717
(392,059)
635,580
2,302,256
2,937,836
Prior period
01/01/2012 to 09/30/2012
587,804
854,736
625,627
154,365
74,384
360
(318,245)
(223,067)
150,126
3,940
(150,729)
(98,515)
51,313
(347,183)
(164,185)
(17,949)
6,111
74,054
23,332
(51,788)
(164,668)
(52,090)
(904,005)
834,218
(1,286,438)
(134,146)
(317,639)
(663,384)
2,931,615
2,268,231
PAGE: 15 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Consolidated financial statements / Statement of changes in equity - 01/01/2013 to 09/30/2013
Statement
(In thousand of reais)
Account
code
5.01
5.03
5.04
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
Capital reserves, Income
Other
Paid-in
Retained earnings/ comprehensive
capital Options granted and reserves
Treasury stock
accumulated losses
income
Opening balances
2,718,440
(49,535) 559,989
127,803
703,652
Adjusted opening balances
2,718,440
(49,535) 559,989
127,803
703,652
Capital transactions with shareholders
(4,600)
519
(246,114)
Recognized options granted
371
47
Treasury stock sold
198
519
Dividends
(114,778)
Interest on equity
(131,383)
Goodwill on capital transaction
(5,169)
Other
Total comprehensive income
655,743
(10,903)
Net income for the year
606,028
Other comprehensive income (losses)
49,715
(10,903)
Adjustment of translation for the period
38,812
Realization at deemed cost
49,715
(49,715)
Internal changes in equity
(60)
(127,222)
Realization of revaluation reserve
(60)
60
Dividends paid
(127,803)
Dividends prescribed
521
Closing balances
2,718,440
(54,195) 560,508
410,210
692,749
Account description
Equity
4,060,349
4,060,349
(250,195)
418
717
(114,778)
(131,383)
(5,169)
644,840
606,028
38,812
38,812
(127,282)
(127,803)
521
4,327,712
Non-controlling Consolidated
interest
equity
91,277
4,151,626
91,277
4,151,626
(10,804)
(260,999)
418
717
(544)
(115,322)
(609)
(131,992)
(5,169)
(9,651)
(9,651)
2,105
646,945
2,023
608,051
82
38,894
82
38,894
(127,282)
(127,803)
521
82,578
4,410,290
PAGE: 16 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Consolidated financial statements / Statement of changes in equity - 01/01/2012 to 09/30/2012
Statement
(In thousand of reais)
Account description
Account
code
5.01
5.03
5.04
5.04.01
5.04.03
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
Paid-in
capital
Opening balances
2,265,367
Adjustment opening balances
2,265,367
Capital transactions with shareholders
453,073
Capital Increase
453,073
Recognized options granted
Dividends
Interest on equity
Goodwill on capital transaction
Other
Total comprehensive income
Net income for the year
Other comprehensive income (losses)
Adjustments of Translation for the year
Realization of deemed cost
Internal changes in equity
Realization of revaluation reserve
Dividends paid
Dividends prescribed
-
5.07
Closing balances
2,718,440
Capital reserves,
Income
Options granted reserves Retained earnings/
accumulated losses
and Treasury stock
4,073 684,007
173,714
4,073 684,007
173,714
(51,428) (453,073)
(204,369)
- (453,073)
360
(62,041)
(142,328)
(51,788)
508,801
472,822
35,979
35,979
(38)
(173,457)
(38)
38
(173,714)
219
(47,393)
230,934
304,689
Other
comprehensive
income
672,951
672,951
38,350
38,350
74,329
(35,979)
-
Equity
3,800,112
3,800,112
(255,797)
360
(62,041)
(142,328)
(51,788)
547,151
472,822
74,329
74,329
(173,495)
(173,714)
219
Non-controlling
interest
106,477
106,477
(27,352)
(27,352)
6,959
7,234
(275)
(275)
-
Consolidated
equity
3,906,589
3,906,589
(283,149)
360
(62,041)
(142,328)
(51,788)
(27,352)
554,110
480,056
74,054
74,054
(173,495)
(173,714)
219
711,301
3,917,971
86,084
4,004,055
PAGE: 17 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A 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
Dividends
Retained profit/loss for the period
Noncontrolling interest in retained profits
Current period
01/01/2013 to 09/30/2013
5,741,637
5,738,906
5,755
(3,024)
(3,092,389)
(3,062,324)
(30,065)
2,649,248
(161,504)
(161,504)
2,487,744
424,870
424,870
2,912,614
2,912,614
1,074,643
922,599
101,969
50,075
831,008
747,665
77,948
5,395
398,912
374,251
24,661
608,051
131,383
114,778
359,867
2,023
Prior period
01/01/2012 to 09/30/2012
5,176,132
5,170,305
11,464
(5,637)
(2,912,898)
(2,888,182)
(24,716)
2,263,234
(154,365)
(154,365)
2,108,869
363,652
363,652
2,472,521
2,472,521
967,277
852,856
70,541
43,880
688,463
612,819
68,930
6,714
336,725
316,129
20,596
480,056
142,328
62,041
268,453
7,234
PAGE: 18 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Highlights Net operating revenue in the third quarter of 2013
reached R$ 1,758.4 million, with 9.0% growth over
3Q12 and 3.5% over 2Q13; EBITDA reached R$ 326.9 million and EBITDA
margin of 18.6%. Growth was 19.0% over the previous
year and 4.6% over the previous quarter;
Key
Figures Net Income totaled R$ 228.8 million, with net margin of
13.0% and 23.8% growth over 3Q12 and 11.6% over
2Q13;
Investments in fixed assets totaled R$ 182.0 million in the
first nine months of 2013. Q3 2013
1,758,381
872,363
886,018
Q2 2013
1,699,639
873,354
826,285
3.5%
-0.1%
7.2%
387,197
399,171
599,253
558,031
34.1%
32.8%
Net Income
228,761
204,968
Net Margin
13.0%
12.1%
Net Operating Revenue
Domestic Market
External Markets
External Markets in US$
Gross Operating Profit
Gross Margin
EBITDA
326,934
312,547
EBITDA Margin
18.6%
18.4%
EPS
0.3687
0.3304
%
Q3 2012
1,613,067
798,626
814,441
%
09M13
4,935,597
2,518,652
2,416,945
09M12
4,511,620
2,242,129
2,269,491
9.4%
12.3%
6.5%
-3.0%
401,460 -3.6% 1,139,444
1,179,180
-3.4%
7.4%
498,587 20.2% 1,620,919
1,352,215
19.9%
9.0%
9.2%
8.8%
30.9%
11.6%
184,756 23.8%
11.5%
4.6%
11.6%
274,739 19.0%
32.8%
30.0%
606,028
472,822
12.3%
10.5%
888,379
726,962
17.0%
18.0%
16.1%
0.2978 23.8%
0.9768
0.7621
%
28.2%
22.2%
28.2%
Figures in R$ Thousand
PAGE: 19 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Economic
Activity and
Industrial
Production
The global industrial activity showed acceleration in the third quarter of 2013. Purchasing manager indexes
(PMI), commonly used as indicators of industrial activity (PMI indexes above 50 indicate industrial expansion,
while indexes below 50 indicate contraction in industrial activity), showed consistent recovery in major
markets, reversing the recent unfavorable situation in China, confirming the slight recovery in Germany and
the maintenance of favorable situation in USA.
Manufacturing ISM Report on Business ® USA
Markit/BME Germany Manufacturing PMI® Germany
HSBC China Manufacturing PMI™
China
September 2013 June 2013
56,2
50,9
51,1
48,6
50,2
48,2
In Brazil, financial market expectations for industrial production growth continued to fall. According to the
Industrial Indicators According to Categories of Use in Brazil
Brazilian Central Bank’s Focus survey, the average growth estimate for 2013 was 2.10% in early October
2013, compared to the expected 2.5% in the previous quarter. The IBGE data for industrial production
continued to oscillate from month to month, showing a slight expansion trend. In the year until August, we
observed IP expansion of 1.6%, while in the last 12 months expansion was of 0.7%.
Change (%)
Categories of Use
Aug 13 / Aug 12
Acummulated
On Year
12 months
Capital Goods
2.6
11.8
13.5
4.6
Intermediary Goods
0.6
-2.0
0.1
-0.2
Consumer Goods
-0.6
-2.8
0.4
0.9
Durable Goods
0.2
-6.3
2.3
3.2
Semi-durable and non-durable
-0.3
-1.6
-0.2
0.2
General Industry
0.0
-1.2
1.6
0.7
Source: IBGE, Research office, Industry Coordination
(*) Series with seasonal adjustments
The highlight in the categories of use of industrial production remains the production of capital goods, with
expansion of 13.5% accumulated in the year and 4.6% over the past 12 months. It is always necessary to
consider that both the performance of the industrial production in general and of capital goods in particular
are strongly influenced by variations in the production of vehicles. Even so, the performance in capital goods
has responded favorably to the production incentives deployed within “Plano Brasil Maior” and enhanced by
the new level of the exchange rate.
Aug 13 / Jul 13*
PAGE: 20 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Net Operating
Revenue
In the third quarter of 2013 (3Q13) Net Operating Revenues totaled R$ 1,758.4 million, corresponding to an
Net Operating Revenue per Market (R$ million)
increase of 9.0% in relation to the third quarter of 2012 (3Q12) and of 3.5% in relation to the second quarter
of 2013 (2Q13). Adjusted for the acquisitions, net revenues growth rate was 11.8% over 3Q12.
External Market
Domestic Market
1,613
1,529
1,662
1,758
49%
50%
1,478
1,370
52%
50%
53%
48%
52%
48%
50%
47%
52%
51%
50%
Q1
Q2
Q3
Q4
Q1
Q2
Q3
48%
2012
2013
In the 3Q13, net operating revenue breaks down as follows:
Evolution of Net Revenues according to Geographic Market
(R$ Million)
Q3 2013
Q2 2013
Change
Q3 2012
ƒ Domestic Market: R$ 872.4 million, representing approximately 50% of Net Operating Revenue, with 9.2%
growth over 3Q12 and stability over 2Q13. Adjusting for the consolidation of revenues from acquisitions
Stardur, Paumar and Injetel, growth over 3Q12 would have been 15.0%;
ƒ External Market: R$ 886.0 million, equivalent to approximately 50% of Net Operating Revenue. The
comparison in Brazilian Reais shows growth of 8.8% over the same period last year and 7.2% over the
previous quarter. Considering the average US dollar, comparison shows decreases of 3.6% compared to
3Q12 and 3% over 2Q13.
Net Operating Revenues
- Domestic Market
- External Markets
- External Markets in US$
1,758.4
872.4
886.0
387.2
1,699.6
873.4
826.3
399.2
3.5%
-0.1%
7.2%
-3.0%
1,613.1
798.6
814.4
401.5
Change
9.0%
9.2%
8.8%
-3.6%
External Market – Distribution of Net Revenues according to Geographic Market
Q3 2013
Q2 2013
Change
Q3 2012
Change
North America
South and Central America
Europe
Africa
Australasia
1,700
35.4%
17.5%
25.1%
12.5%
9.5%
32.1%
18.0%
25.8%
12.5%
11.6%
3.3 pp
-0.5 pp
-0.7 pp
0 pp
-2.1 pp
37.6%
15.5%
20.0%
13.6%
13.3%
-2.2 pp
2 pp
5.1 pp
-1.1 pp
-3.8 pp
PAGE: 21 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Distribution of Net Revenues per Business Area Electro-electronic Industrial Equipments
Domestic Market
External Market
Energy Generation , Transmission and Distribution
Domestic Market
External Market
Electric Motors for Domestic Use
Domestic Market
External Market
Paints and Varnishes
Domestic Market
External Market
Business Areas
Q3 2013
Q2 2013
%
Q3 2012
%
59.8%
23.1%
36.7%
23.0%
13.0%
10.0%
10.5%
7.6%
2.9%
6.6%
5.9%
0.8%
61.5%
25.7%
35.8%
21.2%
12.3%
8.9%
10.9%
7.7%
3.2%
6.5%
5.7%
0.8%
-1.7 pp
-2.6 pp
0.9 pp
1.9 pp
0.8 pp
1.1 pp
-0.4 pp
-0.1 pp
-0.3 pp
0.1 pp
0.1 pp
0 pp
60.1%
23.1%
37.0%
24.5%
14.2%
10.3%
8.6%
6.2%
2.5%
6.8%
6.0%
0.8%
-0.3 pp
0 pp
-0.3 pp
-1.4 pp
-1.2 pp
-0.2 pp
1.9 pp
1.4 pp
0.4 pp
-0.1 pp
-0.1 pp
0 pp
Third quarter of 2013 showed, alongside the favorable seasonality that characterizes the second half of the year in
our markets, the continuity of the main trends observed in the previous quarter, mainly revenue growth in the
domestic market in those segments that gained more competitiveness with the new levels of the Brazilian currency.
In the Industrial Electro-Electronic Equipment we continue to see good performance in domestic market in those
segments that were more exposed to competition from imported products, now strengthened by the more favorable
exchange. This positive performance is best observed, as it was in the previous quarter, in serial products, with high
volumes and lower customization degree, in applications such as, for example, the serial capital goods
manufacturing.
In the external markets, despite the recovery of mature economies become increasingly clear, the speed of this
recovery remained slow. The appreciation of U.S. dollar relative to virtually all currencies remained the tonic and
causing an impact of decreased revenues growth rate when measured in U.S. currency. As we have alerted before,
after a recent period of strong growth, we observe an expected reaction and tightening of competitive conditions in
many markets. We are consolidating market positions that we have recently won and we are confident in growth
should resume.
In the Energy Generation, Transmission and Distribution (GTD) area, the highlight were the electric power
generation auctions conducted by the Brazilian regulator in August. The results indicated more sustainable price
conditions being practiced by market participants and more diversification of the energy sources winning the auction.
After a long hiatus, there was participation of sources such as thermal biomass and small hydro. The auctions results
and our new wind energy technological agreement make us more confident in the market performance of power
generation for the next year. At the same time, the market conditions of T&D continued to improve. The pricing
trajectory is positive and note investments projects that were postponed being gradually resumed.
The improved conditions observed in the Motors for Domestic Use area in the previous quarter were maintained,
with local production gaining competitiveness in response to the new level of the currency and taking more
advantage of the demand stimulus for consumer durables “white goods”.
The Paints and Varnishes area maintained good performance as the acquisitions made in 2012 continued to be
consolidated. Our strategy is based in expanding the products portfolio and in entering new segments, exploiting
the commercial synergies with other WEG products.
Cost of Goods
Sold
Cost of Goods Sold (COGS) totaled R$ 1,159.1 million in 3Q13, increasing 4.0% over 3Q12 and 1.5% over 2Q13.
Gross margin reached 34.1%, with expansion of 3.2 percentage points over 3Q12 and 1.2 percentage point over
2Q13.
As in the previous quarter, the increase in gross margin compared to 3Q12, is due to: (i) relative stability, in Reais,
of raw materials costs (ii) the positive effect of devaluation on revenues; and (iii) greater dilution of manufacturing
costs with revenue growth.
PAGE: 22 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Average copper spot prices at the London Metal Exchange fell by 8.3% in the 3Q13 compared to the average
of 3Q12 and 1.1% in relation to the average of 2Q13. Steel prices in the international markets fell by 4% over
3Q12 and 0.1% over 2Q13. We remind that these variations are calculated in US dollar and that currency
devaluation means relative cost stability in Brazilian currency.
We manage our selling prices according to the characteristics of each product and limiting exposure to cost
variations, considering current market conditions. The two main raw materials used in our products
manufacture, steel and cooper, have relatively uniform prices or follow similar trends in the different markets.
Cost of Raw
Materials
Consolidated selling, general and administrative expenses (SG&A) represented 15.5% of net operating
revenue in the 3Q13, 0.7 percentage point higher than the 14.8% of the 3Q12 and 0.5 percentage point
higher than the 14.9% of the 2Q13. In absolute terms, operating expenses grew by 14.2% over 3Q12 and
7.1% over the previous quarter. Selling, General
and
Administrative
Expenses
Q3 2013
Net Operating Revenues
Q2 2013
1,758.4
%
Q3 2012
1,699.6
3.5%
12.4%
Consolidated Net Income for the Period
230.2
204.8
Net Margin
13.1%
12.0%
(+) Income taxes & Contributions
(+/-) Financial income (expenses)
(+) Depreciation & Amortization
EBITDA
67.5
(26.5)
55.8
326.9
51.7
2.5
53.6
312.5
EBITDA Margin
18.6%
18.4%
%
1,613.1
9.0%
186.9
23.1%
11.6%
30.6%
n.a.
4.0%
4.6%
55.8
(20.6)
52.6
274.7
21.0%
28.7%
5.9%
19.0%
17.0%
Figures in R$ Million
EBITDA and
EBITDA Margin
As a result of aforementioned impacts, EBITDA in 3Q13, calculated according to the methodology defined by
CVM in the instruction nº 527/12, totaled R$ 326.9 million, an increase of 19.0% over 3Q12 and 4.6% over
2Q13. EBITDA margin reached 18.6%, 1.6 percentage point higher than the 3Q12 and 0.2 percentage point
higher than the 2Q13.
As additional information for comparative purposes, calculated according to the previous methodology,
EBITDA reached R$ 344.5 million in the 3Q13, EBITDA margin of 19.6%.
100,5
(39,8)
(29,1)
COGS (ex
depreciation)
44,8
FX Impact on
Revenues
274,7
(7,2)
Selling
Expenses
General and
Administrative
Expenses
Volumes,
Prices &
Product Mix
Changes
(9,7)
Profit
Sharing
Program
EBITDA Q3 12
(7,2)
326,9
Other
Expenses
EBITDA Q3 13
Net Financial
Results
In this quarter, net financial result was positive in R$ 26.5 million (positive in R$ 20.6 million in 3Q12 and
negative in R$ 2.5 million in 2Q13). Financial revenues totaled R$ 156.2 million in 3Q13 (R$ 101.3 million in
3Q12 and R$ 145.6 million in 2Q13). Financial expenses totaled R$ 129.6 million (R$ 80.7 million in 3Q12 and
R$ 148.1 million in 2Q13). The positive net financial result is mainly due the difference between interest rate
in remuneration of investments and debt.
Income Tax and
Social
Contribution
Income Tax and Social Contribution on Net Profit provision in 3Q13 reached R$ 92.3 million (R$ 61.9 million
in 3Q12 and R$ 59.6 million in 2Q13). We recognized deferred tax credits, mainly because of constitution of
new provisions, to the amount of R$ 24.8 million (credit of R$ 6.1 million in 3Q12 and credit of R$ 7.9 million
in 2Q13).
Net Income
As the result of the previously discussed impacts, net income for 3Q13 was R$ 228.8 million, an increase of
23.8% over 3Q12 and 11.6% over the previous quarter. The net margin of the quarter was 13.0%, 1.6
percentage point higher than the 3Q12 and 1.0 percentage point higher than the 2Q13. PAGE: 23 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Cash flow
735.3
2,302.3
93.3
(193.0)
Investing
Financing
2,937.8
Operating
Cash Dec 2012
Operating cash
flow
Cash September 2013
Over the first nine months of 2013, cash flow from operating activities totaled R$ 735.3 million, 25% above
the amount generated in the same period last year. The expansion was due both to the increase in cash
generated from operations, with an increase of 20% in net income before depreciation, and to working capital
management.
Cash flow from
investing
activities
Investing activities generated R$ 93.3 million in the first nine months of 2013, mainly due to the maturing of
long-term financial instruments, which are, according to accounting standards, classified as “investments”. Cash flow from
financing
activities
Financing activities consumed R$ 193.0 million in the first nine months of 2013. We highlight, among other
impacts, the new funding with attractive maturity and interest rates, which increased financing by R$ 318.5
million (new debt of R$ 1,337.6 million and amortizations of R$ 1,019.1 million). Additionally, we paid R$ 392.1
million in dividends declared against results from the second half of 2012 and first half of 2013.
Investments
Investments in fixed assets for capacity expansion and modernization totaled R$ 182.0 million in the first nine
months of 2013, 81% of which destined to the industrial plants and other installations in Brazil and the
remaining amount to production units and other subsidiaries abroad. Investments in capacity expansion and
modernization should reach, until the end of 2013, an amount close to R$ 265 million.
Investments in Fixed Assets (R$ million)
Outside Brazil
Brazil
73.7
58.7
55.5
50.4
5.0
3.7
53.7
51.9
45.4
Q1
Q2
Q3
9.3
5.1
64.5
Q4
56.8
61.3
63.9
6.0
11.8
15.6
50.8
49.5
48.3
Q1
Q2
Q3
2012
2013
PAGE: 24 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Debt and Cash
Position
Debt and Cash Position (R$ Thousands)
September 2013
2,939,913
2,937,836
2,077
2,888,158
1,114,526
689,217
425,309
1,773,632
1,527,412
246,220
51,755
Cash & Financial instruments
- Current
- Long Term
Debt
- Current
- In Brazilian Reais
- In other currencies
- Long Term
- In Brazilian Reais
- In other currencies
Net Cash (Debt)
December 2012
2,565,532
2,563,500
2,032
2,689,840
1,645,772
1,067,683
578,089
1,044,068
824,910
219,158
(124,308)
September 2012
2,525,535
2,524,865
670
2,873,962
1,617,387
868,994
748,393
1,256,575
1,044,603
211,972
(348,427)
As of September 30, 2013 cash, cash equivalents and financial investments totaled R$ 2,939.9 million, mainly
in short-term. Gross financial debt totaled R$ 2,888.2 million, 39% in short-term operations and 61% in longterm operations.
There were no significant changes in debt position and cash compared to the previous quarter. In early 2013,
we took attractive maturity and interest rate conditions to increase the duration and extended the profile of
our total debt. At the end of this quarter, as a natural result of the new issuance and amortization during the
period, we observed net cash position of R$ 51.8 million. Cash continues invested mainly in Brazilian currency
in first-tier banks, in fixed income referenced in Reais and linked to the CDI.
The characteristics of the debt are:
ƒ Total duration of the debt is 19.2 months and duration of long-term portion is 29.1 months.
ƒ Duration is 21.0 months for the Brazilian Reais denominated portion and 13.4 months for the foreign
currencies denominated portion.
ƒ The weighted average cost of fixed-rate debt denominated in Brazilian Reais is approximately 6.0% per
year. Floating rate contracts are indexed mainly by the Brazilian long-term interest rate (TJLP).
As of August 21, payments declared during the first half of 2013 were made to shareholders, as below:
ƒ On March 26, as interest on stockholders’ equity (JCP), to shareholders on said date, in the gross amount
of R$ 40.1 million;
ƒ On June 25, as interest on stockholders’ equity (JCP), to shareholders on said date, in the gross amount
of R$ 43.8 million;
ƒ On July 30, as dividends referring to profit recorded in the first half of 2013, in the total amount of R$ 114.8
million.
ƒ In addition, on September 24, the Board of Directors approved interest on stockholders’ equity (JCP), to
the shareholders of record on said date, in the gross amount of R$ 47.4 million. This JCP will be paid from
March 12, 2014 onwards.
Dividends
Event
Interest on Stockholders’ Equity
Dividends
Interest on Stockholders’ Equity
Interest on Stockholders’ Equity
Board Meeting
Date
09/24/2013
07/30/2013
06/25/2013
03/26/2013
Payment Date
03/12/2014
08/21/2013
08/21/2013
08/21/2013
Total
Gross amount per
share
R$ 0.076470588
R$ 0.185001236
R$ 0.07058823
R$ 0.06470589
R$ 0.396765944
Our practice continues to be to declare interest on stockholders equity quarterly and declare dividends
based on profit earned each semester (i.e., six events declared each year).
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 2013 quoted at R$ 27.00, same value in the beginning of the year. Considering
the dividends and interest on stockholders equity declared in the first half, the high was 2.3% in 2013.
The average daily traded volume in 3Q13 was R$ 13.5 million, (R$ 4.8 million in 3Q12). Throughout the quarter
139,999 stock trades were carried out (45,117 stock trades in 3Q12), involving 31.6 million shares (15.0
million shares in 3Q12) and totaling R$ 878.9 million (R$ 303.8 million in 3Q12).
PAGE: 25 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Share Price Performance and Traded Volume
30,00
10.000
Shares Traded (thousands)
WEGE3
28,00
26,00
8.000
WEGE3 share prices
22,00
6.000
20,00
18,00
4.000
16,00
14,00
2.000
12,00
10,00
Traded shares (thousands)
24,00
0
Dividend adjusted performance (dividends and interest on stockholders equity)
New wind
energy
technological
agreement
On August 14, WEG S.A. announced it has entered into a technological agreement with Northern Power
Systems (“NPS”). Founded in 1975 and based in Barre, Vermont, USA, Northern Power designs, develops
and manufactures wind turbines, been a pioneer and one of the technological leaders in permanent magnet
direct drive or PM/DD.
The technological agreement foresees that the companies will cooperate so WEG can offer to the South
American wind market a utility-scale technology platform that will include wind turbines rated between 2.1
and 2.3MW and rotors sized from 93m to 110m, which shall meet customer requirements in a range of a
wind classes. Turbines leveraging PM/DD technology typically demonstrate higher availability and lower
maintenance and repair costs than traditional gear-based turbines, offering higher energy production over the
turbine’s lifetime, and providing enhanced economic returns to owners. The wind turbines initially will be
manufactured at WEG’s manufacturing facilities in Jaraguá do Sul, state of Santa Catarina, Brazil.
WEG has already secured an initial order from Geradora Eólica Bons Ventos da Serra I S.A., a partnership
between Brazilian Servtec Group, a tradition strategic player in the Brazilian engineering and energy spaces,
and several investments funds managed by Rio Bravo, a very active financial player in this industry. WEG will
supply 11 of the 2.1MW wind turbines to a wind farm located in Ibiapina, in the State of Ceará, from mid 2014
onwards.
Transformer
business
acquisition in
the South Africa
On September 09, WEG S.A. announced the acquisition of the transformer and substation manufacturing
business from Hawker Siddeley Electric Africa (Pty) Ltd. (“HST”) in South Africa. The acquired business will
form a new subsidiary, WEG Transformers Africa (Pty) Ltd.
HST was one of the pioneers companies in mini substations and has become one of the largest manufacturers
of mini substations and distribution transformers in South Africa, with the capability to design and manufacture
the complete range presently in use in the country’s industrial sector. HST has estimated potential revenues
of approximately US$ 10 million over the next 12 months.
Investments in
Mexico and
China
On September 30, WEG S.A. announced investments of US$ 345 million over the next 5 years for expansion
of motors production capacity in Mexico and China. In Mexico, investments will expand local production
capacity and increase verticalization, integrating the production process of the Mexican operation and making
it similar to what exists today at WEG’s largest industrial plant, in Jaraguá do Sul (SC). The Project includes
the construction of an iron foundry that will supply all the needs for machined cast components for all industrial
electric motors frame sizes manufactured in Mexico and destined to all North America consumer markets.
The planned investments are US$ 210 million over the next 5 years.
In China, the plans are for investments of US$ 135 million until 2020 in the construction of a new manufacturing
plant of industrial motors targeted to the Asian market, besides the additional investment at the Nantong
operation. The location selected for this new plant was Rugao, a technological and industrial development
zone 65km away from Nantong and 180km from Shanghai.
PAGE: 26 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 WEG S.A.
Notes to financial statements
At September 30, 2013
(In thousands of reais, except when indicated otherwise).
1. Company information
WEG S.A. (the “Company”) is a publicly traded company with main place of business at Avenida Prefeito Waldemar Grubba, no
3.300, in Jaraguá do Sul - SC, Brazil, holding company member of the WEG Group, and its business purpose is the manufacture
and marketing of capital goods, such as, electric motors, generators and transformers; control and protection of electric circuits and
industrial automation; electric traction solutions (land and sea); solutions for the generation of renewable and distributed energy,
exploring all opportunities in small hydroelectric plants and thermal biomass, wind and solar energy sources; no-breaks and
alternators for groups of generators; electric substations; industrial electrical and electronic equipment systems; and industrial
paint & varnish. The operations are performed through manufacturing facilities located in Brazil, Argentina, Mexico, United Stated,
Portugal, Austria, South Africa, India, and China.
The Company has shares traded on BM&F Bovespa under the code “WEGE3” and has been listed since June 2007 in the
special segment of corporate governance called New Market.
The Company has American Depositary Receipts (ADR) - Level 1 that are traded on over-the-counter (OTC) market, in the
United States under the symbol WEGZY.
2. Accounting policies
The quarterly information have been prepared in accordance with the rules of the Brazilian Securities Commission (CVM) applicable
to the preparation of Quarterly Information (ITR), using 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 11,
2013.
The accounting policies and methods of calculation adopted in the preparation of quarterly information, as well as major uncertainties
in the estimates and judgments used in applying the accounting policies are the same practiced in preparing the financial statements
for the year ended 12.31.2012.
3. Estimates and assumptions
The financial statements included the use of estimates that considered past and current event experiences, assumptions related
to future events and other objective and subjective factors. Significant items subject to these estimates and assumptions include:
a) credit risk analysis for the determination of the allowance for doubtful accounts (Note 5);
b) review of the economic useful life of fixed assets and their recovery in operations (Note 11);
c) fair value measurement of financial instruments (Note 25);
d) commitments with employees’ benefit plans (Note 15);
e) transactions with stock option plan (Note 17);
f) deferred income tax assets on income and social contribution tax losses (Note 9), and
g) analysis of other risks for determination of other provisions, including contingencies arising from administrative and judicial
proceedings and other assets and liabilities at the date of financial statements (Note 14);
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.
PAGE: 27 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Notes to financial statements 4. Cash and cash equivalents
COMPANY
09/30/13
12/31/12
a) Cash and banks
b) Short-term investments
In local currency
Bank Deposit Certificate (CDB) and Investment funds
In foreign currency
Certificates of Deposits Abroad
Other balances held abroad
SWAP
NDF - “Non Deliverable Forwards”
TOTAL
28
856,151
856,151
856,151
856,179
28
561,186
561,186
561,186
561,214
CONSOLIDATED
09/30/13
12/31/12
216,105
2,721,731
2,657,783
2,657,783
61,636
25,679
35,957
903
1,409
2,937,836
211,295
2,090,961
1,932,330
1,932,330
149,656
128,596
21,060
8,956
19
2,302,256
Investments in Brazil:
Are remunerated at the rates of 100% to 103.5% of the CDI (98% to 107% of CDI at December 31, 2012).
Investments abroad:
Certificates of deposits issued by foreign financial institutions are bear interest as follows:
- In Euros with interest of 0.08% to 0.41% p.a. at the original amount of EUR 4,294, of which balance amounts to R$ 12,967 (R$
91,635 at December 31, 2012);
- In US dollars with interest of 0.02% to 0.50% p.a. at the original amount of US$ 5,694, of which the balance amounts to R$
12,712 (R$ 36,961 at December 31, 2012);
- In the original currency with interest from 0.2% to 18.3% p.a. at the amount of R$ 35,957 (R$ 21,060 at December 31, 2012),
Financial investments readily convertible to a known amount of cash, and aren’t subject to significant risks of change in value. For
these, were considered as cash equivalents in the statements of cash flows.
5. Trade accounts receivable
CONSOLIDATED
09/30/13
12/31/12
a) Breakdown of balances
Domestic Market
External Market
SUBTOTAL
Present value adjustment
Allowance for losses on trade receivables
TOTAL
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
The breakdown of provision with losses on trade accounts receivable is as follows:
Balance at 01/01/2012
Losses written-off
Setting up of provisions
Reversal of provisions
Balance at 12/31/2012
Losses written-off
Setting up of provisions
Reversal of Provisions
Balance at 09/30/2013
837,485
748,962
1,586,447
(3,929)
(20,275)
1,562,243
753,737
738,189
1,491,926
(897)
(18,190)
1,472,839
1,349
3,010
1,346,068
87,357
153,022
1,586,447
1,266,632
97,068
128,226
1,491,926
(13,146)
3,010
(8,810)
756
(18,190)
1,349
(5,361)
1,927
(20,275)
PAGE: 28 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Notes to financial statements 6. Inventories
CONSOLIDATED
09/30/13
12/31/12
323,069
229,276
285,365
222,197
230,953
229,249
63,720
51,167
(8,047)
(9,780)
895,060
722,109
Finished products
Products in process
Raw materials and others
Imports in transit
Provision for obsolescence
Total inventories - domestic market
Finished products
Products in process
Raw materials and others
Provision for obsolescence
Total inventories - external market
OVERALL TOTAL
The breakdown of provision for obsolescence is as follows:
Balance at 01/01/2012
Inventories write-off
Setting up of provisions
Balance at 12/31/2012
Inventories write-off
Setting up of provisions
Balance at 09/30/2013
415,808
81,322
98,021
(22,570)
572,581
408,681
72,734
119,982
(17,233)
584,164
1,467,641
1,306,273
(26,055)
9,067
(10,025)
(27,013)
4,964
(8,568)
(30,617)
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.
7. Taxes recoverable
State VAT (ICMS) on capital expenditures
Value Added Tax (IVA) from foreign subsidiaries
PIS/COFINS on capital expenditures
ICMS
IPI
IRPJ/CSLL recoverable
PIS/COFINS
Other
TOTAL
Short-term
Long-term
COMPANY
09/30/13
12/31/12
11,116
6,107
11,116
6,107
11,116
6,107
-
CONSOLIDATED
09/30/13
12/31/12
26,412
23,462
62,572
69,400
2,982
3,696
27,016
24,554
10,679
12,643
20,903
16,050
14,018
33,416
19,386
16,438
183,968
199,659
166,574
183,627
17,394
16,032
Credits will be realized by the Company and its subsidiaries through regular tax collection, also including tax credits subject to
refund and/or offset.
PAGE: 29 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Notes to financial statements 8. Related parties
The financial statements include the financial information of the Company and its subsidiaries as in Note 10. 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:
COMPANY
CONSOLIDATED
09/30/13
12/31/12
09/30/13
12/31/12
509
-
-
-
509
-
-
-
Current liabilities
Agreements with directos/officers
-
-
2,926
2,926
2,092
2,092
Noncurrent liabilities
Management of financial resources
WEG Equipamentos Elétricos S.A.
-
296
-
-
-
296
-
-
BALANCE SHEET
Noncurrent assets
Management of financial resources
WEG Equipamentos Elétricos S.A.
COMPANY
INCOME STATEMENT
Management compensation:
a) Fixed (fees)
Board of Directors
Executive Board
b) Variable (profit sharing )
Board of Directors
Executive Board
CONSOLIDATED
09/30/13
09/30/12
09/30/13
09/30/12
1,429
1,491
15,623
14,067
762
667
990
501
1,525
14,098
1,351
12,716
1,502
893
11,196
5,496
801
701
592
301
1,602
9,594
809
4,687
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, not subject to interest;
The credit/debit contracts entered into with Administrators are recorded subject to interest between 95% and 100% of the CDI
variation;
c) Services provision and other covenants
WEG Equipamentos Elétricos S.A. entered into an agreement for “Guarantees and Other Covenants” with Hidráulica Industrial
S.A. Ind. e Com - HISA, for WEG to be guarantor in loan operations and provide guarantee to customers (Performance Bond,
guarantee insurance, etc.);
d) Securities and guarantees
WEG S.A. granted guarantees and sureties to foreign subsidiaries, in the amount of US$ 196,7 million (US$ 237,9 million at
December 31, 2012);
PAGE: 30 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Notes to financial statements e) Management compensation
Board of Directors members were paid the amount of R$ 1,525 (R$ 1,351 at September 30, 2012) and the executive officers
were paid the amount of R$ 14,098 (R$ 12,716 at September 30, 2012), for their services, aggregating the total of R$ 15,623
(R$ 14,067 at September 30, 2012).
Was planned in OGM/13 the participation of 0% to 2.5% of net income to be paid to management as long as the result of activity
on capital invested is at least 10%. The provision is recognized in P&L for the period, in the amount of R$ 11,196 (R$ 5,496 at
September 30, 2012), under other operating expenses. Board members and officers receive additional corporate benefits, as
follows: Health and dental insurance, life insurance, supplementary pension benefits, among others.
9. Deferred taxes
Deferred income tax and social contribution tax credits and debts were determined in accordance with each country’s ruling
standards.
a) Breakdown:
Income tax losses
CSLL tax losses
Temporary differences:
Provision for contingencies
Taxes questioned in court
Losses on trade receivables
Losses on low movement inventories
Labor severance pay and for contract termination
Freight and sales commissions
Accounts payable (electric energy, technical assist and others)
Employee profit sharing
Adjustment of transition tax regime
Accelerated depreciation incentive - Law n° 11.196/05
Other additions and exclusions
Deemed cost of PP&E
TOTAL
Noncurrent assets
Noncurrent liabilities
COMPANY
09/30/13
12/31/12
179
286
21
1,540
(52)
456
(1,560)
849
849
-
879
(51)
614
(1,586)
(123)
(123)
CONSOLIDATED
09/30/13
12/31/12
28,792
26,771
5,317
3,277
39,523
31,102
5,109
8,356
10,505
8,918
19,917
18,805
(124,912)
(5,028)
13,051
(297,658)
(238,203)
56,970
(295,173)
32,302
24,383
4,399
7,588
13,316
7,936
15,241
11,254
(97,766)
(4,359)
(8,659)
(319,295)
(283,612)
36,891
(320,503)
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.
PAGE: 31 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Notes to financial statements 10. Investments
10.1. Investments in subsidiaries
Ajusted
Shareholder
s’ equity
WEG Equipamentos Elétricos S.A.
RF Reflorestadora Ltda.
WEG Tintas Ltda.
WEG Amazônia S.A.
WEG Administradora de Bens Ltda.
WEG Logística Ltda.
WEG Linhares Equips Elétricos S.A.
WEG Drives & Controls Automação Ltda.
WEG Partner Aerogeradores S.A.
WEG-Cestari Redut. Motorredut. S.A.
WEG Automação Critical Power Ltda.
Hidráulica Indl. S.A. Ind. e Com.
Agro Trafo Administradora de Bens S.A.
Sensores Eletrônicos Instrutech Ltda.
Injetel Ind. Com. Comp. Plásticos Ltda.
Ind. de Tintas e Vernizes Paumar S.A.
WEG Equipamientos Electricos S.A.
WEG Chile S.A.
WEG Colômbia Ltda.
WEG Electric Corp.
WEG Service CO.
WEG Overseas S.A.
WEG México S.A. de C.V.
WEG Transformadores México S.A. de
C.V.
Voltran S.A de C.V.
WEG Indústrias Venezuela C.A.
Zest Electric Motors (Pty) Ltd.
WEG Nantong CO Ltd.
WEG Middle East Fze.
WEG Industries (Índia) Private Ltd.
WEG Electric (Índia) Private Limited
WEG Electric Motors Japan CO. Ltd.
WEG Singapore Pte. Ltd.
WEG Germany GmbH.
WEG Benelux S.A.
WEG Ibéria S.L.
WEG France S.A.S
WEG Electric Motors (UK) Ltd.
WEG Itália S.R.L.
WEG Euro Ind. Electrica S.A.
WEG Electric CIS
WEG Scandinavia AB.
WEG Austrália Pty Ltd.
WEG Peru S.A.
Pulverlux S.A.
EPRIS Argentina S.R.L.
Electric Machinery Holding Company
Watt Drive Antriebstechnik GmbH
TOTAL
P&L
Participation (%)
Equity
09/30/13
Indirect
Direct
12/31/12
Indirect
-
100.00
0.09
100.00
99.91
0.09
5,027
18,309
Investment Value
09/30/13 09/30/12
09/30/13
12/31/12
2,833,228
2,667,895
7,681
15,090
237,923
96,103
237,332
82,840
2,833,228
418,692
237,924
96,193
5,027
18,326
Direct
100.0
0
100.0
0
99.91
38,292
877
0.02
99.98
0.02
99.98
-
-
6
6
32,806
61,255
127,196
12,043
6,488
25,993
5.00
-
95.00
100.00
99.99
5.09
-
94.91
100.00
99.99
612
-
-
1,640
1
1,238
1
293,994
10
37,358
18,052
47,369
6,899
1,373
67,129
55,227
25,163
11,422
128,377
529
53,360
3,122
481
(5,420)
2,045
672
559
179
13,256
5,421
(480)
12,618
654
0.01
99.9
50.01
99.95
62.14
8.25
100.00
100.00
89.55
92.00
99.00
99.21
100.00
99.99
0.05
91.75
0.05
10.44
8.00
1.00
0.79
-
0.01
99.9
50.01
99.95
61.92
8.25
99.95
100.00
100.00
89.55
92.00
99.00
99.21
100.00
53,360
1,877
1,379
434
(8)
125
-
34,470
156
1
1,097
250
11
91
-
293,994
9
6,330
5,766
2,013
114
1,012
-
254,217
9
4,453
2
5,666
1,929
120
808
-
3
122,078
(7)
13,696
99.99
0.05
91.75
10.44
8.00
1.00
0.79
100.0
0
0.01
99.99
100.00
-
99.99
(7)
-
(9)
-
3
1
9
1
40,125
50,099
7,413
175,182
69,341
82
104,821
254
1,618
2,274
48,155
35,092
860,069
2,006
13,391
12,245
45,273
5,924
686
30,891
1,670
634
217
53,447
16,391
2,429
1,807
1,259
26,210
7,750
1,829
1,555
(409)
345
273
2,890
2,346
91,134
(1,256)
125
1,355
6,493
1,419
(2,211)
1,324
782
423
68
(7,326)
3,277
5.00
0.01
0.07
5.74
0.05
-
60.00
60.00
99.99
96.62
100.00
100.00
99.99
94.99
100.00
100.00
100.00
99.99
100.00
100.00
100.00
99.93
94.26
100.00
100.00
100.00
99.95
100.00
100.00
100.00
100.00
4.99
0.07
5.74
0.05
-
60.00
60.00
99.99
92.57
100.00
100.00
99.99
94.99
100.00
100.00
100.00
99.99
100.00
100.00
100.00
99.93
94.26
100.00
100.00
100.00
99.95
100.00
100.00
100.00
100.00
(20)
(6)
1
1
362
496
572,578 434,072
13
8
2,600
1
3,480,765
34
7
2,529
1
3,259,097
- 491,127(*) 374,743
(*)Equity pickup adjusted by unearned income
10.2. Acquisitions
(i) Zest Electric Motors (Pty) Ltd.
In January 2013, the subsidiary WEG Equipamentos Elétricos S.A., acquired 4.05% of Zest Electric Motors (Pty) Ltd. The goodwill,
in the amount of R$ 5,169, was initially measured as transferred payment exceeding amount in relation to acquired net assets and
recognized in equity as capital transaction. The consideration transferred was realized through resources available in cash and
cash equivalents in the amount of R$11,437.
PAGE: 32 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Notes to financial statements (ii) WEG Transformers África (Pty) Ltd.
In September 2013, WEG Transformers África (Pty) Ltd., subsidiary of Zest Eletric Motors (Pty) Ltd., acquired the business of
manufacturing of transformers and substations belonging to Hawker Siddeley Eletric África (Pty) Ltd. (HST) in South Africa. The
goodwill, in the amount of R$14,479, was initially measured as transferred payment exceeding amount in relation to acquired net
assets. The consideration transferred was realized through resources available in cash and cash equivalents in the amount of
R$18,443.
10.3. Restructing
Incorporation – Sensores Eletrônicos Instrutech Ltda
In September 2013, the subsidiary WEG Drive & Controls – Automação Ltda., incorporated the company Sensores Eletrônicos
Instrutech Ltda., aimed at reducing costs and operational expenses, mainly due to the implementation of ERP (SAP System),
allowing greater interaction and synergy of activities related to the production process and material flow as well as strengthening
the management of the process of customer service generating greater competitiveness.
11. Property, plant and equipment
The Company capitalized until September, 2013, the cost of borrowing in the amount of R$ 512 (R$ 1,306 at December 31, 2012)
regarding ongoing constructions. The costs are capitalized until the moment of transfer of construction in progress to property,
plant and equipment in use.
COMPANY
CONSOLIDATED
09/30/13
12/31/12
09/30/13
12/31/12
Land
1,440
1,440
335,825
332,030
Construction and facilities
5,639
5,639
850,361
809,192
Equipment
2,774,549
2,652,581
Furniture and fixtures
91,964
82,998
Hardware
82,457
83,145
Construction in progress
86,931
76,079
Reforestation
50,899
50,005
Other
34,755
41,221
Subtotal
7,079
7,079
4,307,741
4,127,251
Accumulated deprec,/depletion
Construction and facilities
Equipment
Furniture and fixtures
Hardware
Reforestation
Other
TOTAL
Annual depreciation rate (%)
02 to 03
05 to 20
07 to 10
20 to 50
-
(2,220)
(2,220)
4,859
(2,132)
(2,132)
4,947
(1,733,523)
(210,118)
(1,390,880)
(47,071)
(57,669)
(10,339)
(17,446)
2,574,218
(1,590,157)
(191,688)
(1,271,564)
(41,592)
(60,502)
(8,464)
(16,347)
2,537,094
a) Summary of changes in property, plant and equipment - consolidated:
12/31/12
PP&E Classification
Land
Construction and facilities
Equipment
Furniture and fixtures
Hardware
Construction in progress
Reforestation
Other
TOTAL
332,030
617,504
1,381,017
41,405
22,643
76,079
41,540
24,876
2,537,094
Transfer Acquis. Write-offsDeprec. and
between
depletion
classes
202
2,102
(935)
14,440 20,648
(1,676)
(15,795)
17,461 110,040
(8,308)
(125,302)
67
7,246
(242)
(4,284)
(104)
7,557
(233)
(6,229)
(30,586) 40,910
894
(1,874)
(1,480) (2,446)
(1,054)
(2,730)
(156,214)
- 186,951 (12,448)
Exchange
effect
2,426
5,122
8,761
701
1,154
528
143
18,835
09/30/13
335,825
640,243
1,383,669
44,893
24,788
86,931
40,560
17,309
2,574,218
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$ 21,507 (R$ 15,790 at December 31, 2012).
PAGE: 33 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Notes to financial statements 12. Intangible assets – consolidated
Software license
Other
Subtotal
Goodwill - Acquisition of subsidiaries
TOTAL
Amortization/
Years
5
5
-
Cost
70,307
46,340
116,647
534,881
651,528
Accumulated
Amortization
(54,426)
(31,229)
(85,655)
(21,353)
(107,008)
09/30/13
12/31/12
15,881
15,111
30,992
513,528
544,520
17,371
13,844
31,215
498,769
529,984
a) Summary of changes in intangible assets:
Software license
Other
Subtotal
Goodwill - Acquisition of subsidiaries
TOTAL
12/31/12
Additions
Amortization
17,371
13,844
31,215
498,769
529,984
2,956
3,442
6,398
14,479
20,877
(3,517)
(1,773)
(5,290)
(5,290)
Exchange
effect
09/30/13
(929)
(402)
(1,331)
280
(1,051)
15,881
15,111
30,992
513,528
544,520
09/30/13
2,080
7,191
4,848
3,894
12,979
30,992
12/31/12
7,461
6,789
4,584
3,917
8,464
31,215
b) Schedule of amortization of intangible assets (except goodwill):
2013
2014
2015
2016
After 2017
TOTAL
13. Loans and financing
Financing raised in foreign currency comprises Prepayment of Export, BNDES-FINEM in currency basket, BNDES-FINEM in dollar
and IFC in dollar (+) LIBOR.
Financing taken by foreign subsidiaries for working capital purposes is denominated in US dollars and/or in the currency of each
country, amounting to R$ 358.3 million in the short-term (R$ 490.7 million at December 31, 2012) and R$ 104.5 million in the longterm (R$ 40.8 million at December 31, 2012), corresponding to US$ 207.5 million (US$ 260.1 million at December 31, 2012).
Direct loans from BNDES are guaranteed by the parent company, WEG S.A. Finame operations are guaranteed by collateral
signature and statutory lien.
All covenant clauses related to indicators of capitalization, current liquidity and the relation between net debt/Ebitda, included in
the BNDES and IFC contracts, are being met.
Type
In Brazil
SHORT TERM
Working capital (ACCs)
Working capital
Working capital
Working capital
Working capital
Working capital
Prepayment of Export
Non Deliverable Forwards (NDF)
Property, plant and equipment
SWAP
Other
Annual charges
CONSOLIDATED
09/30/13
12/31/12
Interest of 2.6% to 3.0% p.a. (+) exchange variation
TJLP (+) 1.4% to 3.0% p.a.
Interest of 3.5% to 8.0 %p.a.
US$ dollar (+) 1.4% to 1.8% p.a.
US$ dollar (+) Libor (+) 3.3% p.a.
UFIR (+) 1.0% to 4.0% p.a.
US$ dollar (+) Libor (+) 1.1% p.a.
Exchange rate variation
TJLP (+) 1.0% to 4.1% p.a.
Sundry
756,234
484,284
180,479
21,813
8,173
15,146
31,904
3,643
7,008
1,484
2,300
1,155,042
37,406
490,076
545,257
20,166
6,876
23,074
14,558
7,901
6,244
254
3,230
PAGE: 34 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Notes to financial statements LONG TERM
Working Capital
Property, plant and equipment
Working Capital
Property, plant and equipment
Working Capital
Working Capital
Prepayment of Export
Other
TJLP (+) 1.4% to 3.0% p.a.
UFIR (+) 1.0% to 4.0% p.a.
Interest of 3.5% to 8.0 %p.a.
TJLP (+) 1.0% to 4.1% p.a.
US$ dollar (+) 1.4% to 1.8% p.a.
US$ dollar (+) Libor (+) 3.3% p.a.
US$ dollar (+) Libor (+) 1.1% p.a.
Sundry
ABROAD
SHORT TERM
Working Capital
Working Capital
Working Capital
Working Capital
Working Capital
Non Deliverable Forwards (NDF)
EURIBOR (+) 0.6% to 2.5% p.a.
LIBOR (+) 0,7% to 1.9% p.a.
90% of PBOC (4.5% to 5.0%) p.a.
BBSY (+) 2.0% p.a.
Interest of 0.7% to 15.0% p.a.
Exchange rate variation
LONG TERM
Working Capital
Working Capital
Working Capital
SWAP
Libor (+) 2.4% p.a.
Interest of 1.0% to 15.0% p.a.
Euribor (+) 1.0% p.a.
-
TOTAL SHORT TERM
TOTAL LONG TERM
1,669,100
136,646
38,206
1,334,199
13,704
40,824
37,167
63,697
4,657
1,003,260
391,430
44,427
373,596
8,866
52,423
37,464
88,137
6,917
358,292
176,807
102,161
1,884
77,440
-
490,730
202,796
173,116
8,899
5,328
100,093
498
104,532
87,278
10,095
7,159
40,808
15,943
13,471
3,307
8,087
1,114,526
1,773,632
1,645,772
1,044,068
Maturity of long-term financing and loans:
09/30/13
53,159
443,726
1,052,406
60,214
164,127
1,773,632
2014
2015
2016
2017
2018
TOTAL
12/31/12
405,730
386,643
144,776
59,253
47,666
1,044,068
14. Provision for contingencies
The Company and its subsidiaries are parties to administrative and judicial proceedings of labor, civil and tax nature arising from
the normal activities of their businesses. The respective provisions were set up for proceedings the likelihood of loss of which was
rated as “probable” based on the estimate of value at risk determined by the Company’s legal counselors. The Company's
management estimates that the provision for contingencies set up is sufficient to cover any losses from the proceedings in
progress.
PAGE: 35 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Notes to financial statements a) Balance of provision for contingencies
(i) Tax:
- IRPJ e CSLL
- INSS
- Presumed IPI credit
- Other
(a.1)
(a.2)
(a.3)
COMPANY
09/30/13
12/31/12
4,530
2,586
2,943
2,586
1,587
-
CONSOLIDATED
09/30/13
12/31/12
109,195
89,122
15,474
14,668
39,826
36,977
24,700
24,700
29,195
12,777
(ii) Labor
-
-
75,641
46,118
(iii) Cívil
-
-
60,188
68,980
(iv) Other
-
889
3,053
2,393
TOTAL
4,530
3,475
248,077
206,613
(v) Restricted judicial deposits
- Tax
- Other
1,308
1,308
-
864
864
-
29,748
22,316
7,432
25,133
19,670
5,463
b) Changes in the provision for contingencies for the period - consolidated
a) Tax
b) Labor
c) Civil
d) Other
TOTAL
12/31/12
Additions
Interest
Write-offs
Reversals
09/30/13
89,122
46,118
68,980
2,393
206,613
14,862
36,677
5,818
1,630
58,987
5,211
1,583
1,395
8,189
(4,056)
(5,087)
(532)
(9,675)
(4,681)
(10,918)
(438)
(16,037)
109,195
75,641
60,188
3,053
248,077
c) The provisions recorded basically refer to:
(i)
Tax contingencies
(a.1) The Company maintains a provision for the proceeding referring to IPC difference (51.82%) of January 1989 “Plano Verão”
(Summer Plan). The decision is favorable to the limit of the index of 35.58%.
(a.2) This refers to social security contribution taxes payable. The litigation refers to social security charges levied on the private
pension plan, profit sharing, education funding tax, among others.
(a.3)
Refers to judicial proceedings, in order to ensure the right to claim IPI credits (from the acquisition of raw materials,
materials, intermediate products and packaging exempt, taxed at zero rate or not subject to taxation) offset against IRPJ, CSLL,
PIS, COFINS, IPI.
(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$ 75,641 (R$ 46,118 at December 31, 2012).
(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$ 60,188 was set up (R$ 68,980 at December 31, 2012).
(iv) Restricted judicial deposits
IRPJ/CSLL “Summer Plan”
Other
TOTAL RESTRICTED JUDICIAL DEPOSITS
Non-restricted judicial deposits
TOTAL JUDICIAL DEPOSITS
COMPANY
09/30/13
12/31/12
1,308
864
1,308
864
1,308
864
CONSOLIDATED
09/30/13 12/31/12
13,195
13,195
16,553
11,938
29,748
25,133
2,801
2,711
32,549
27,844
The judicial deposits not associated ace contingencies are waiting authorized to withdraw from court.
PAGE: 36 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Notes to financial statements d) Contingencies classified as possible losses
The Company and its subsidiaries are parties to other suits, the likelihood of loss of which are rated as "possible", for which no
provision for contingencies was set up.
The estimated amount of such litigation relates to the tax proceedings totaling R$ 74,584 (R$ 143,997 at December 31, 2012).
The processes with to possible "legal opinions" as their classification involving:
- taxation on profits computed abroad in the total estimated amount of R$ 35 million.
- taxation on products of Information Technology Acts in the amount of R$ 36 million.
15. Benefit plan
The Company and its subsidiaries are sponsors of WEG Social Security - Pension Plan, which seeks to supplement the retirement
benefits offered by the official social security system.
The Plan managed by WEG Seguridade Social includes monthly income benefits, supplementation of sick-leave, supplementation
of retirement due to disability, pension due to death, lump sum benefit (due to death), proportional deferred benefit and self-funding.
The number of participants is 21,468 participants (20,653 at September 30, 2012). The Company and its subsidiaries made
contributions in the amount of R$ 17,489 (R$ 15,670 at September 30, 2012).
Based on actuarial calculations carried out by independent actuarial, as per the procedures established by CVM Resolution No.
695/12 – technical pronouncement CPC 33 (R1), actuarial liabilities were identified in the amount of R$ 5,000.
16. Equity
a) Capital
The Company's capital stock is made up by 620,905,029 common registered and uncertified shares, without par value, all of which
with voting rights, not including the 474,183 shares held in treasury as per item "c”.
b) Shareholder compensation - Interest on equity capital
The Company declared throughout on September 24, 2013, interest on equity capital in the gross amount of R$ 47,445 (R$ 40,328
net) equivalent to R$ 0,065 per share, which will be paid net of withholding income tax at 15%, pursuant to paragraph two, article nine
of Law 9,249/95, except for shareholders that are legal entities and are exempt from the taxation.
Interest on equity capital, under clause 37 of the Company's bylaws and article nine of Law 9,949/95, will be imputed to the mandatory
dividends and will be paid as from March 12, 2014, for a capital stock of 620,430,846 shares.
c) Treasury stock
The Company, based on the Board of Directors’ minutes of April 26, 2011 and with the purpose of supporting its Stock Option
Plan, was authorized to acquire up to 500,000 Company’s common shares, 500,000 common shares were acquired, in the
amount of R$10,055 at average cost of R$ 20.11/share. The shares acquired shall be held in Treasury to be used in the exercise
of the purchase right of stock options by the Company’s stock option plans beneficiaries or the subsequent cancellation or
disposal.
Were exercised by the beneficiaries of the stock option plan the amount of 25,817 shares. The Company maintains 474.183
treasury shares in the amount of R$ 9.536.
17. 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
PAGE: 37 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Notes to financial statements The Board of Directors may approve, each semester, a Share Purchase Option Program ("Program"), which will define the
participants, number of Options, exercise price, Option distribution, term and other rules specific to each Program.
In order to participate in each Program, the participant must invest an amount of his/her variable compensation in each period in
Company’s shares.
Number of shares
Program
Granted Acquired
Rights Number
Vesting
of Options
Period
Rights
274,678
46,653
91,056
1º
2º
3º
September /11 274,678
18,072
35,894
1º
2º
3º
April /11
Subtotal
Subtotal
535,000
41,000
75,200
1º
2º
3º
110,000
21,162
40,824
1º
2º
3º
242,974
45,572
82,574
1º
2º
3º
September /13 174,452
22,810
41,870
1º
2º
3º
March /12
Subtotal
September /12
Subtotal
April /13
Subtotal
Subtotal
Total
30,352
30,352
30,352
91,056
11,965
11,965
11,964
35,894
25,067
25,067
25,066
75,200
13,608
13,608
13,608
40,824
27,525
27,525
27,524
82,574
13,957
13,957
13,956
41,870
325,548
In reais (R$)
Price
Strike
corrected
Price
by IPCA
21.01
23.16
21.01
24.32
21.01
25.54
Amount
Option
Option
appropriate
price Difference (thousand R$)
30.60
32.98
35.29
7.43
8.66
9.76
17.45
17.45
17.45
19.39
20.43
21.54
25.08
27.05
29,00
5.70
6.62
7.46
19.17
19.17
19.17
21.34
22.51
23.75
27.22
29.40
31.51
5.89
6.89
7.76
17.50
17.50
17.50
19.48
20.56
21.69
25.51
27.33
29.16
6.02
6.78
7.47
24.43
24.43
24.43
27.28
28.83
30.47
34.58
37.24
39.91
7.30
8.41
9.44
24,96
24,96
24,96
27,97
29,60
31,33
37,47
40,55
43,50
9,50
10,95
12,16
226
263
296
785
68
79
89
236
148
173
194
515
82
92
102
276
201
231
260
692
132
153
170
455
2,959
The weighted average of fair value was determined based on the Black-Scholes-Merton method, considering the following aspects:
Vesting
Period
Program
April /11
September/11
March /12
September /12
April /13
September /13
1°
2°
3°
1°
2°
3°
1°
2°
3°
1°
2°
3°
1°
2°
3°
1°
2°
3°
Exercise price
of option (R$)
21.01
17.45
19.17
17.5
24.43
24,96
Lifespan of the
option – in days
755
1,008
1,260
756
1,008
1,259
755
1,008
1,257
753
1,006
1,257
760
1,008
1,260
756
1,007
1,258
Current price for
Interest free of risk
corresponding
Expected volatility
for the lifespan of the
share
in share price (%)
option (%)
(R$)
22.10
26.33
12.79
22.10
26.33
12.81
22.10
26.33
12.83
18.06
29.88
10.90
18.06
29.88
11.05
18.06
29.88
11.22
19.80
29.85
9.76
19.80
29.85
10.12
19.80
29.85
10.33
20.10
24.50
8.32
20.10
24.50
8.57
20.10
24.50
8.78
25.72
28.53
8.67
25.72
28.53
9.01
25.72
28.53
9.24
27,75
28,25
11,29
27,75
28,25
11,69
27,75
28,25
11,81
PAGE: 38 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Notes to financial statements Summary of the movement of shares plan:
Program
Number of shares
Balance 12/31/2012
Granted
Expired
Exercised
Balance 09/30/2013
April/11
91,056
-
(18,949)
72,107
September/11
35,894
-
(6,868)
29,026
March/12
75,200
-
-
75,200
September/12
40,824
-
-
40,824
April/13
-
82,574
-
-
82,574
September/13
-
41,870
-
-
41,870
124,444
-
(25,817)
341,601
Total
242,974
The recognition of expenses with stock option is carried out throughout the period of acquisition of "vesting rights”.
In September 30, 2013, R$ 551 (R$ 360 at September 30, 2012) was recorded as other results in the financial statements for the
year against capital reserve in Equity.
The options exercised during 2013 were held under capital reserves in equity in the amount of R$ 180 and R$ 133 for the options
held and R$ 47 reversal of accrued amount recorded in retained earnings.
The accumulated equity totals R$ 1,129 in September 30, 2013 (R$ 758 at December 31, 2012).
18. Net revenue
BREAKDOWN OF NET REVENUE
CONSOLIDATED
09/30/13
09/30/12
Gross revenue
Domestic market
External market
5,866,652
3,309,059
2,557,593
5,299,778
2,936,302
2,363,476
Deductions
Taxes
Returns and Rebates
(931,055)
(803,308)
(127,747)
(788,158)
(658,684)
(129,474)
Net revenue
4,935,597
4,511,620
19. 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
09/30/13
09/30/12
Gross operational revenue recognized
229,226
111,044
Incurred costs
(185,956)
(70,926)
Received prepayments
09/30/13
255,121
12/31/12
63,543
PAGE: 39 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Notes to financial statements 20. Operating expenses by nature
CONSOLIDATED
09/30/13
09/30/12
EXPENSE BY NATURE
Depreciation, amortization and depletion
Personnel expenses
Raw materials and use and consumption materials
Freight and insurance costs
Other expenses
(4,208,722)
(161,504)
(1,097,987)
(2,116,636)
(152,569)
(680,026)
(3,939,023)
(154,365)
(1,034,849)
(2,028,761)
(138,378)
(582,670)
EXPENSE BY FUNCTION
Cost of products and services sold
Selling expenses
General and administrative expenses
Management fees
Other operating expenses
(4,208,722)
(3,314,678)
(516,371)
(224,363)
(15,623)
(137,687)
(3,939,023)
(3,159,405)
(454,077)
(211,109)
(14,067)
(100,365)
21. Other operating revenue/expenses
The recorded values are relative to profit sharing, reversal/ (provision) for lawsuits and others, as follows:
CONSOLIDATED
09/30/13
09/30/12
12,941
14,440
12,941
14,440
(150,628)
(114,805)
(93,423)
(68,545)
(8,765)
(5,840)
(11,196)
(5,496)
(11,509)
(10,010)
(3,516)
(2,629)
(22,228)
(22,285)
(137,687)
(100,365)
OTHER OPERATING REVENUE
- Other
OTHER OPERATING EXPENSES
- Profit sharing - Employees
- Profit sharing - foreign subsidiaries
- Profit sharing - executive board
- Constitution/Reversal of provision for tax proceedings
- Tax incentives of Rouanet Law
- Other
TOTAL NET
22. Financial income (expenses), net
FINANCIAL INCOME
Short-term investment yield
Exchange variation
Present value adjustment - customers
Pis/Cofins on interest on equity
Other income
FINANCIAL EXPENSES
Interest on loans and financing
Exchange variation
Present value adjustment - suppliers
Other expenses
NET FINANCIAL INCOME
09/30/13
COMPANY
09/30/12
CONSOLIDATED
09/30/13
09/30/12
39,313
48,104
(9,104)
313
43,538
52,620
1
(9,438)
355
424,870
159,807
204,534
30,095
(9,104)
39,538
363,652
183,638
117,059
33,034
(9,438)
39,359
56
56
(151)
(151)
(376,154)
(120,230)
(212,620)
(7,813)
(35,491)
(310,622)
(134,146)
(146,439)
(10,902)
(19,135)
39,369
43,387
(48,716)
53,030
PAGE: 40 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Notes to financial statements 23. Provision for income and social contribution taxes
The parent company and subsidiaries in Brazil assess income and social contribution taxes according to taxable income, except
for WEG Administradora de Bens Ltda. 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.
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
Interest on equity
Other adjustments
IRPJ and CSLL as per the income statement
Current tax
Deferred tax
Effective rate - %
COMPANY
09/30/13
09/30/12
605,676
472,465
34%
34%
CONSOLIDATED
09/30/13 09/30/12
775,591
625,627
34%
34%
(205,930)
(160,638)
(263,701)
(212,713)
194,677
11,207
398
147,583
13,702
(290)
(4,563)
5,437
41,812
44,877
8,598
(2,815)
(216)
28,694
48,573
(7,094)
352
(620)
972
357
(214)
571
(167,540)
(203,198)
35,658
(145,571)
(166,572)
21,001
(0.06)%
(0.08)%
21.60%
23.27%
24. Insurance coverage
The corporate unit in Brazil is responsible for the management of the insurance portfolio of the WEG Group in Brazil and abroad;
and continuously constitutes, jointly with the executive board, the risk policies for the WEG Group so as to protect its assets.
Risk analysis assumptions adopted, given their nature, are not included in the audit scope and, as a result, were not audited by
our independent auditors.
The Company implemented the Worldwide Insurance Program - WIP, through which the local insurance policies will be
replaced by worldwide policies, such as: transport risk (Export, Import and Domestic), Civil Product Liability, Civil Management's
Liability (D&O), Surety Insurance, General Civil Liability, Properties and Environment Pollution, Contractual Insurance and Risk
Engineering Installation and Assembly.
The insurance policies are issued only by first tier multinational insurance companies which are able to cater to the WEG Group
in the countries where it operates. The financial structure and sustainability of said insurance companies are continuously
monitored by the Brazilian corporate unit.
Below we highlight some of the policies and the due capital.
- Operating Risks (Equity): R$60 million;
- Loss of profits: US$13 million (for the paint and vanishes companies);
- Civil liability US$25 million;
- Civil liability products: US$ 100 million;
- Transport: US$ 4 million per shipment (Import and Export) and R$ 6 million (Domestic);
- Environmental pollution: US$25 million;
- Contractual Insurance: as stipulated in the contract;
- Risk Engineering Installation and Assembly: R$ 40 million Latin America and USD 5 million United States.
PAGE: 41 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Notes to financial statements 25. Financial instruments
The Company and its subsidiaries carried out an evaluation of its financial instruments, including derivatives, recorded in the financial
statements as at September 30, 2013, which presented the following book and market values:
BOOK VALUE
09/30/13
12/31/12
MARKET VALUE
09/30/13
12/31/12
Cash and cash equivalents
Cash and banks
Short-term investments:
- Local currency
- Foreign currency
- SWAP
- Non Deliverable Forwards - NDF
Short-term investments
Customers
Total assets
2,937,836
216,105
2,721,731
2,657,783
61,636
903
1,409
2,077
1,562,243
4,502,156
2,302,256
211,295
2,090,961
1,932,330
149,656
8,956
19
263,276
1,472,839
4,038,371
2,937,836
216,105
2,721,731
2,657,783
61,636
903
1,409
2,077
1,562,243
4,502,156
2,302,256
211,295
2,090,961
1,932,330
149,656
8,956
19
263,276
1,472,839
4,038,371
Suppliers
Loans and financing:
- Local currency
- Foreign currency
- Non Deliverable Forwards (NDF)
- SWAP
Total liabilities
362,428
2,888,158
2,216,629
659,243
3,643
8,643
3,250,586
331,037
2,689,840
1,892,593
780,181
8,399
8,667
3,020,877
362,428
2,888,158
2,216,629
659,243
3,643
8,643
3,250,586
331,037
2,689,840
1,892,593
780,181
8,399
8,667
3,020,877
The risk factors of financial instruments are relate to:
(i) Financial risks
Foreign currency risk
The Company has import and export operations in various currencies, it manages and monitors its exposure to foreign currency,
seeking to balance its financial assets and liabilities within the limits established by Management.
The financial exposure limit (balance sheet) is equivalent to 2 months of revenue in foreign currency as defined by the Company's
Board of Directors.
The Company had export operations totaling US$ 659.6 million (US$ 682.7 million at September 30, 2012), which acts as a natural
hedge for indebtedness and other costs pegged to other currencies, especially US Dollars.
Risks related to debt charges
These risks arise from the possibility that the subsidiaries may suffer losses due to fluctuations in interest rates or other debt
indexes, which increase financial expenses related to loans and financings obtained in the market, or decrease financial
revenues relative to financial investments from subsidiaries. The Company continuously monitors the interest rates in the market
so as to evaluate the need, if any, of protection against the risk of volatility of said rates.
Derivative financial instruments
The Company 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$ 16.5 million, (US$ 66.6 million at December 31, 2012) held by subsidiary WEG Equipamentos Elétricos S.A., seeking to
protect exports from the fluctuation risks of the exchange rates;
(ii) EUR 11.0 million, (EUR 42.3 million at December 31, 2012) held by subsidiary WEG Equipamentos Elétricos S.A. to
protect exports from the fluctuation risks of the exchange rates;
PAGE: 42 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Notes to financial statements (iii) US$ 19.5 million, (US$ 13.7 million at December 31,2012) held its subsidiary abroad Zest ElectricMotors (Pty) Ltd., to
protect imports from the fluctuation risks of the exchange rates,
b) SWAP operations, in the notional amount of:
(i) EUR 10 million, held by its subsidiary Watt Drive Antriebstechnik GmbH, with the purpose of hedging financing from
fluctuation risks of Euribor;
(ii) US$ 30 million held by subsidiary WEG Equipamentos Elétricos S.A. to protect against Libor increase risks;
(iii) R$ 200 million, held by the subsidiary WEG Equipamentos Elétricos S.A., SWAP from fixed to floating interest rate, to hedge
against decrease risk in interest rate.
The Company's Management and that of its subsidiaries permanently monitors the derivative financial instruments contracted
through its internal controls.
The sensitivity analysis statement chart must be read jointly with the other financial assets and liabilities expressed in foreign
currency as at September 30, 2013, as the estimated impact of the foreign currency rate over the NDFs and on SWAPs
presented below will be offset, if effective, entire or partially, with loss of value of assets and liabilities.
Management defined that the Company must use the exchange rates used to mark financial instruments to market valid as at
September 30, 2013 for the likely scenario (market value). Said rates represent the best estimate of future behavior of said prices
and represent the value for which the positions may have been settled on their maturity date.
Unrealized profit and losses in operations with derivatives are recorded (in case of loss) in the loans and financing line or (in case
of profit) as financial investments and matched against exchange gains (losses) in P&L.
The table below presents "cash and expense" effects of the results of financial instruments in real scenarios.
a)
NDF Operations - “Non Deliverable Forwards”:
Market value at
09/30/13
Risk
USD Increase USD Increase USD Increase USD Increase USD Increase USD Increase USD Increase USD Increase Total US$
EUR Increase EUR Increase EUR Increase EUR Increase EUR Increase Total EUR
USD Decrease USD Decrease Total US$
Total
Possible scenario 25%
Notional value
R$
(thousands) Currency Average price thousand Average price
1,500 2.2810 (246) 2.8589 US$/R$ 500 2.3165 (77) 2.8956 US$/R$ 500 2.3206 (78) 2.9007 US$/R$ 4,000 2.2466 (152) 2.8175 US$/R$ 1,500 2.2402 (122) 2.8053 US$/R$ 500 2.2842 (72) 2.8552 US$/R$ 1,750 2.2626 (289) 2.8271 US$/R$ 6,250 2.2797 (1.018) 2.8527 US$/R$ 16,500 (2,054) 500 3.0871 (157) 3.8588 EUR/R$ 500 3.1005 (152) 3.8757 EUR/R$ 5,000 3.1257 (306) 3.9071 EUR/R$ 1,000 3.0430 (141) 3.8037 EUR/R$ 4,000 3.1116 (531) 3.8895 EUR/R$ 11,000 (1,287) 3,157 US$/ZAR
10.2179 485 7.6634 16,338 US$/ZAR
10.0292 622 7.5219 19,495 1,107 (2,234) Remote scenario 50%
R$
R$
thousand Average price thousand
(1,101) 3.4306 (1,956) (366) 3.4747 (656) (368) 3.4809 (658) (2,399) 3.3810 (4,645) (962) 3.3664 (1,802) (358) 3.4263 (643) (1,279) 3.3925 (2,269) (4,580) 3.4233 (8,142) (11,413) (20,771) (543) 4.6306 (929) (540) 4.6508 (927) 4.6685 (8,121) (4,213) (902) 4.5645 (1,662) (3,643) 4.6674 (6,754) (9,841) (18,393) (1,310) 5.1090 (3,104) (8,656) 5.0146 (17,923) (9,966) (21,027) (31,220) (60,191) PAGE: 43 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Notes to financial statements b) SWAP Operations:
Risk
Euribor decrease
Libor decrease
Libor decrease
CDI increase
CDI increase
CDI increase
Total
Notional vallue (milion)
EUR 10.0
USD 15.0
USD 15.0
R$ 80.0
R$ 50.0
R$ 70.0
Market value at
09/30/13
Average price
R$ thousand
Interest of 1.91% p.a.
(7,159)
Interest of 0.79% p.a.
(237)
Interest of 0.84% p.a.
(119)
Interest of 10.8% p.a.
(1,128)
Interest of 10.7% p.a.
689
Interest of 10.8% p.a.,
214
(7,740)
Possible scenario 25%
Average price
Interest of 1.43% p.a.
Interest of 0.59% p.a.
Interest of 0.63% p.a.
Interest of 13.5% p.a.
Interest of 13.4% p.a.
Interest of 13.5% p.a.
Remote scenario 50%
R$ thousand
(8,497)
(293)
(192)
(5,099)
(1,530)
(3,088)
(18,699)
Average price
Interest of 0.96% p.a.
Interest of 0.39% p.a.
Interest of 0.42 % p.a.
Interest of 16.1% p.a.
Interest of 16.0% p.a.
Interest of 16.2% p.a.
R$ thousand
(9,836)
(348)
(264)
(8,828)
(3,612)
(6,174)
(29,062)
We carried out the accounting record based on the market price as at September 30, 2013 according to the accrual method.
These operations had a net positive impact as at September 30, 2013 of R$ 6,786 (R$ 3,994 negative at September 30, 2012),
which were recognized as financial expenses. The Company did not have outstanding derivative financial instruments at
September 30, 2013.
(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.
26. Subsidies and assistance government
The Company obtained subventions in the amount of R$ 25,565 (R$ 13,463 at September 30, 2012) from tax incentives,
recognized in the year:
a) WEG Amazônia S.A.
- ICMS incentive credit of 90.25%
- Corporate Income Tax (IRPJ) 75.00% reduction
213
195
18
b) WEG Linhares Equipamentos Elétricos S.A.
- ICMS incentive credit of 85.00%
- Corporate Income Tax (IRPJ) 75.00% reduction
- Municipal investment
15,282
13,535
1,728
19
c) WEG Equipamentos Elétricos S.A.
- Municipal Investment
149
149
c) WEG Logística Ltda.
- ICMS incentive credit of 75.00%
9,921
9,921
All conditions to obtain government incentives were met.
27. Information by segment
Brazil
Industry
Energy
9/30/2012 9/30/2013 9/30/2012
9/30/2013
Revenue from sale of products /
3,148,616 2,715,042 1,034,543 1,023,323
services 1,033,332 798,546 326,816 261,418 Earnings before income taxes Depreciation / Amortization /
100,200 94,487 30,345 30,463 Depletion 9/30/2013 12/31/2012 9/30/2013 12/31/2012
3,360,754 3,318,387 1,437,553 1,370,784
Identifiable assets 866,529 758,499 493,991 394,642 Identifiable liabilities Foreign
9/30/2013 9/30/2012
Eliminations and adjustment
9/30/2013 9/30/2012 9/30/2013
9/30/2012
2,230,020
152,867 (1,477,582) (1,281,858) 4,935,597
(737,426) (551,709) 775,590 4,511,620
625,627 30,959 9/30/2013
2,166,978
684,264 29,415 12/31/2012
1,938,375
601,254 ‐ 9/30/2013
(451,371) (377,128) 2,055,113
117,372 Consolidated
‐ 161,504 12/31/2012 9/30/2013
(391,884) 6,513,914
(328,808) 1,667,656
154,365 12/31/2012
6,235,662
1,425,587
PAGE: 44 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Notes to financial statements Industry: single phase and triple phase motors with low and medium tension, drives and controls, equipment and services
for industrial automation, paints and varnishes.
Energy: electricity generators for thermal and hydraulic power plants (biomass), hydraulic turbines (PCHs), transformers,
substations, control panels and system integration services.
Foreign: composed by operations carried out by subsidiaries in other countries.
The adjustment and elimination column include the eliminations applicable to the Company in the context of the Consolidated
IFRS Financial Statements. All operating assets and liabilities are presented as identifiable assets and liabilities.
28. Earnings per share
a) Basic
Calculation of basic earnings (loss) per share is made by dividing net income (loss) for the year, attributed to common shareholders,
by the weighted average number of common shares available during the year.
09/30/13
606,028
620,422
0.97680
Profit attributed to Company shareholders
Weighted average number of outstanding common shares (shares /thousand)
Basic earnings per share - R$
09/30/12
472,822
620,405
0.76212
b) Diluted
Net earnings per share is calculated by dividing the net profit attributable to Company’s common shareholders by the weighted
average number of outstanding common shares for the year plus the weighted average number of common shares that
would be issued upon the conversion of all potential diluted common shares into common shares.
Profit attributed to Company shareholders
Weighted average of potentially diluted common shares held by shareholders(shares/thousand)
Basic and diluted earnings per share - R$
09/30/13
606,028
620,728
0.97632
09/30/12
472,822
620,648
0.76182
The amount of 341,601 shares (242,974 at September 30, 2012) was considered to be shares with potential to dilute, related to
the stock option plan.
29. Statement of comprehensive income
The Company presents as other comprehensive income the values of accumulated translation adjustment. These values are not
taxable.
The presentation of the comprehensive income results is required by CPC 26 - Financial Statement Presentation and includes
the comprehensive results which correspond to revenue and expense items which are not recognized in the financial statements
as required or allowed by the standards, interpretations and guidance issued by the CPC.
PAGE: 45 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Notes to financial statements 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, 2013, which comprise the balance sheet as of
September 30, 2013 and the related statements of income, comprehensive income for the three and nine months period
them ended, and the individual 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 individual interim financial statements in accordance with the
technical pronouncement CPC 21(R1) – Interim financial statements, and the consolidated interim financial statements in
accordance with the technical pronouncement CPC 21(R1) and International Accounting Standard (IAS) 34 - Interim
Financial Reporting, issued by the International Accounting Standards Board (IASB), as well as for the presentation of
these interim financial statements 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 applying analytical and other review
procedures, and making enquiries of and having discussions with persons responsible for financial and accounting matters.
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 individual interim financial statements
Based on our review, we are not aware of any fact that leads us to believe that the individual 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 applicable to the Quarterly Information and presented in accordance with the standards issued by
the Brazilian Securities and Exchange Commission.
Conclusion about the consolidated interim financial statements
Based on our review, we are not aware of any fact that leads us to believe that the 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 applicable to the Quarterly Information and presented in accordance with the standards issued by
the Brazilian Securities and Exchange Commission.
PAGE: 46 of 47 ITR – Quarterly Information – 09/30/2013 – WEG S/A Version: 1 Notes to financial statements Other issues
Statements of value added
We have also reviewed the statements of value added, Individual and Consolidated, for the quarter ended September 30,
2013, 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 respects, in relation to the
interim financial statements, Company and Consolidated, taken as a whole.
Comparative interim financial information
The individual and consolidated financial information contained in the quarterly financial information relating to the
balance sheet of December 31, 2012 and the statements of income comprehensive income, cash flows, changes in equity
and value added for the three and nine months ended September 30, 2012, presented for comparative purposes, were
audited and reviewed, respectively, by other auditors who issued audit report dated February 8, 2013 and the review report
dated October 11, 2012, unqualified.
Joinville, October 14, 2013
KPMG Auditores Independentes
CRC SC-000071/F-8
Marcelo Lima Tonini
Accountant CRC PR-045569/O-4 T – SC
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