ITR -Quarterly Information - 06/30/2013 - 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 06/30/2013
8
Statements of changes in equity - 01/01/2012 to 06/30/2012
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 06/30/2013
16
Statements of changes in equity - 01/01/2012 to 06/30/2012
17
Statements of value added
18
Comments on performance
19
Notes to financial statements
28
Opinions and Statements
Special Review Report - Unqualified
47
ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Company information / Composition of capital
Number of shares
(Units)
Quarterly ended
06/30/2013
Paid-in capital
Common
Preferred
Total
620,419,011
0
620,419,011
Treasury stock
Common
486,018
Preferred
0
Total
486,018
PAGE: 1 of 47 ITR – Quarterly Information – 06/30/2013 – 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
PAGE: 2 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Individual financial statements / Balance sheet Assets
(In thousands of reais)
Account
code
Account description
Current quarter
06/30/2013
Prior year
12/31/2012
1
Total assets
4,348,404
4,154,315
1.01
Current assets
941,836
889,397
1.01.01
Cash and cash equivalents
839,887
561,214
1.01.01.01
Cash and banks
30
28
1.01.01.02
Short-term investments
839,857
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
13,243
6,107
1.01.06.01
Current taxes recoverable
13,243
6,107
1.01.08
Other current assets
88,706
60,832
1.01.08.03
Other current assets
88,706
60,832
1.01.08.03.01
Dividends
34,125
2,513
1.01.08.03.02
Interest on equity
54,581
58,319
1.02
Noncurrent assets
3,406,568
3,264,918
1.02.01
Long-term receivables
1,147
864
1.02.01.09
Other noncurrent assets
1,147
864
1.02.01.09.03
Judicial deposits
1,147
864
1.02.02
Investments
3,400,522
3,259,097
1.02.02.01
Equity interest
3,400,522
3,259,097
1.02.02.01.02
Investments in subsidiaries
3,400,522
3,259,097
1.02.03
Property, plant and equipment
4,889
4.947
1.02.03.01
Property, plant and equipment in use
4,889
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 – 06/30/2013 – 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 and equity
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
Premium on share issue
Options granted
Premium on capital transaction
Revaluation reserve
Income reserves
Statutory reserve
Additional proposed dividends
Treasury stock
Retained earnings/accumulated losses
Equity valuation adjustments
Deemed cost
Cumulative translation adjustments
Current quarter
06/30/2013
4,348,404
99,519
3,364
3,364
6,380
6,380
24
6,356
89,775
89,775
88,615
1,160
8,318
4,875
4,875
4,875
238
238
3,205
4,240,567
2,718,440
(58,137)
1,004
(59,141)
3,736
560,271
32,799
537,245
(9,773)
315,789
619,650
619,650
80,818
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 – 06/30/2013 – 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
04/01/2013 to 06/30/2013
Current period
01/01/2013 to 06/30/2013
Prior quarter
04/01/2012 to 06/30/2012
Prior period
01/01/2012 to 06/30/2012
192,640
(666)
(475)
(191)
(1,429)
194,735
192,640
12,569
12,400
169
205,209
(241)
(90)
(151)
204,968
204,968
353,798
(1,462)
(941)
(521)
(1,892)
357,152
353,798
24,019
23,917
102
377,817
(550)
(435)
(115)
377,267
377,267
125,533
(969)
(500)
(469)
(650)
127,152
125,533
14,062
13,822
240
139,595
224
1
223
139,819
139,819
257,329
(1,822)
(971)
(851)
2
(1,253)
260,402
257,329
30,361
30,477
(116)
287,690
376
9
367
288,066
288,066
0.33037
0.60809
0.22537
0.46432
0.33020
0.60781
0.22529
0.46416
PAGE: 5 of 47 ITR – Quarterly Information – 06/30/2013 – 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
04/01/2013 to 06/30/2013 01/01/2013 to 06/30/2013
204,968
58,947
58,947
263,915
377,267
33,812
33,812
411,079
Prior quarter
04/01/2012 to 06/30/2012
Prior period
01/01/2012 to 06/30/2012
139,816
58,861
58,861
198,677
288,066
61,243
61,243
349,309
PAGE: 6 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A 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
6.01.01.20
6.01.02
6.01.02.01
6.01.02.02
6.01.02.03
6.01.03
6.02
6.02.02
6.02.04
6.03
6.03.01
6.05
6.05.01
6.05.02
Account description
Net cash flows from operating activities
Cash from operations
Income before taxes
Depreciation and amortization
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
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 06/30/2013
Prior period
01/01/2012 to 06/30/2012
14,812
20,969
377,817
58
(357,152)
246
(7,077)
(9,944)
3,365
(498)
920
468,217
206,973
261,244
(204,356)
(204,356)
278,673
561,214
839,887
17,619
27,649
287,690
131
(260,402)
230
(10,648)
(14,354)
3,733
(27)
618
177,603
189,282
(11,679)
(173,955)
(173,955)
21,267
520,939
542,206
PAGE: 7 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Individual financial statements / Statement of changes in equity - 01/01/2013 to 06/30/2013
(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)
(4,818)
246
105
(5,169)
(48)
(48)
(54,401)
Income reserves
559,989
559,989
282
282
560,271
Retained earnings/
accumulated losses
127,803
127,803
(98,813)
49
(14,924)
(83,938)
414,263
377,267
36,996
36,996
(127,464)
48
(127,803)
291
315,789
Other comprehensive
income
703,652
703,652
(3,184)
(3,184)
33,812
(36,996)
700,468
Equity
4,060,349
4,060,349
(103,349)
295
387
(14,924)
(83,938)
(5,169)
411,079
377,267
33,812
33,812
(127,512)
(127,803)
291
4,240,567
PAGE: 8 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Individual financial statements / Statement of changes in equity - 01/01/2012 to 06/30/2012
(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
(51,558)
230
(51,788)
(25)
(25)
(47,510)
Income
reserves
684,007
684,007
(391,032)
(453,073)
62,041
292,975
Retained earnings/
accumulated losses
173,714
173,714
(156,926)
(62,041)
(94,885)
312,501
288,066
24,435
24,435
(173,470)
25
(173,714)
219
155,819
Other comprehensive
income
672,951
672,951
36,808
36,808
61,243
(24,435)
709,759
Equity
3,800,112
3,800,112
(146,443)
230
(94,885)
(51,788)
349,309
288,066
61,243
61,243
(173,495)
(173,714)
219
3,829,483
PAGE: 9 of 47 ITR – Quarterly Information – 06/30/2013 – 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 06/30/2013
Prior period
01/01/2012 to 06/30/2012
(806)
152
(958)
(806)
(58)
(58)
(864)
381,069
357,152
23,917
380,205
380,205
2,230
2,146
49
35
865
865
(157)
(157)
377,267
83,938
14,924
278,405
(938)
(199)
(739)
(938)
(131)
(131)
(1,069)
290,879
260,402
30,477
289,810
289,810
1,785
1,723
33
29
(100)
(100)
59
59
288,066
94,885
62,041
131,140
PAGE: 10 of 47 ITR – Quarterly Information – 06/30/2013 – 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
06/30/2013
9,542,922
6,339,494
3,034,080
104,640
2,929,440
1,554,042
1,554,042
1,368,012
170,070
170,070
213,290
213,290
3,203,428
98,741
2,027
2,027
40,762
40,762
55,952
30,812
17,091
8,049
7,585
365
365
7,220
2,570,042
2,570,042
527,060
28,108
28,108
498,880
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 – 06/30/2013 – 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
Premium on share issue
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
06/30/2013
9,542,922
2,840,488
244,200
244,200
362,605
113,854
113,854
52,277
61,577
1,327,078
1,327,078
792,751
792,751
89,310
395,904
24,450
283,087
2,380,354
1,721,686
1,721,686
113,323
113,323
50,147
63,176
310,429
310,429
234,916
4,322,080
2,718,440
(58,137)
1,004
(59,141)
3,736
560,271
32,799
537,245
(9,773)
315,789
619,650
619,650
80,818
81,513
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 – 06/30/2013 – 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
04/01/2013 to 06/30/2013
1,669,639
(1,141,608)
558,031
(299,095)
(173,858)
(80,190)
(5,155)
(75,035)
4,991
(50,038)
258,936
(2,483)
145,637
(148,120)
256,453
(51,691)
(59,551)
7,860
204,762
204,762
204,968
(206)
Current period
01/01/2013 to 06/30/2013
3,177,216
(2,155,550)
1,021,666
(565,968)
(330,483)
(153,898)
(10,342)
(143,556)
10,559
(92,146)
455,698
22,168
268,673
(246,505)
477,866
(100,033)
(110,856)
10,823
377,833
377,833
377,267
566
Prior quarter
04/01/2012 to 06/30/2012
1,528,791
(1,067,130)
461,661
(259,847)
(155,143)
(76,017)
(4,677)
(71,340)
8,236
(36,923)
201,814
(13,481)
134,525
(148,006)
188,333
(46,498)
(56,193)
9,695
141,835
141,835
139,819
2,016
Prior period
01/01/2012 to 06/30/2012
2,898,553
(2,044,925)
853,628
(503,136)
(297,334)
(143,784)
(9,440)
(134,344)
13,194
(75,212)
350,492
32,404
262,326
(229,922)
382,896
(89,786)
(104,646)
14,860
293,110
293,110
288,066
5,044
0.33037
0.60809
0.22537
0.46432
0.33020
0.60781
0.22529
0.46416
PAGE: 13 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Consolidated financial statements / Statement of comprehensive income
(In thousand of reais)
Quarter to date
04/01/2013 to 06/30/2013
Current period
01/01/2013 to 06/30/2013
Prior quarter
04/01/2012 to 06/30/2012
Prior period
01/01/2012 to 06/30/2012
204,762
377,833
141,835
293,110
Account
code
Account description
4.01
Consolidated net income for the period
4.02
Other comprehensive income
58,959
34,214
59,098
61,544
4.02.01
Adjustment of conversion period
58,959
34,214
59,098
61,544
4.03
Consolidated comprehensice income for the period
263,721
412,047
200,933
354,654
4.03.01
Attributed to shareholders of parent company
263,915
411,079
198,680
349,309
4.03.02
Attributed to noncontrolling shareholders
(194)
968
2,253
5,345
PAGE: 14 of 47 ITR – Quarterly Information – 06/30/2013 – 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
6.01.01.20
6.01.02
6.01.02.03
6.01.02.04
6.01.02.05
6.01.02.06
6.01.02.07
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
6.03.03
6.03.05
6.03.06
6.05
6.05.01
6.05.02
Account description
Net cash from operating activities
Cash from operations
Pre-tax income
Depreciation and amortization
Employee profit sharing
Expenses plan options purchase shares
Changes in assets and liabilities
Increase (decrease) in inventories
Income and social contribution taxes paid
Employee profit sharing paid
Increase (decrease) in accounts receivable
Increase (decrease) in accounts payable
Other
Net cash from investing activities
Property, plant and equipment
Intangible assets
Disposal of assets
Cumulative translation adjustments
Acquisition of subsidiary
Premium on capital transaction
Long-term financial investments
Acquisition of noncontrolling
Net cash from financing activities
Loans and financing raised
Dividends/interest on equity capital paid
Payment of loans and financing
Interest paid on loan and financing
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 06/30/2013
408,440
647,524
477,866
105,747
63,665
246
(282,634)
(64,721)
(128,334)
(68,936)
(163,450)
142,807
43,550
168,928
(118,040)
(1,483)
4,827
33,812
(5,169)
261,249
(6,268)
154,456
1,183,571
(204,467)
(736,534)
(88,114)
731,824
2,302,256
3,034,080
Prior period
01/01/2012 to 06/30/2012
370,796
530,431
382,896
101,731
45,574
230
(197,874)
(65,298)
(95,186)
(60,971)
(140,355)
163,936
38,239
(303,822)
(113,749)
(15,742)
4,533
61,243
(164,668)
(51,788)
28,439
(52,090)
(371,654)
574,371
(172,314)
(683,207)
(90,504)
(304,680)
2,931,615
2,626,935
PAGE: 15 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Consolidated financial statements / Statement of changes in equity - 01/01/2013 to 06/30/2013
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
5.05.02.01
5.05.02.02
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
Goodwill on capital transaction
Other
Total comprehensive income
Net income for the year
Other comprehensive income (losses)
Adjustment of translation for the year
Realization at 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 Income
Options granted reserves
and Treasury stock
(49,535) 559,989
(49,535) 559,989
(4,818)
282
246
105
282
(5,169)
(48)
(48)
(54,401) 560,271
Retained earnings/
accumulated losses
127,803
127,803
(98,813)
49
(14,924)
(83,938)
414,263
377,267
36,996
36,996
(127,464)
48
(127,803)
291
315,789
Other
comprehensive
income
703,652
703,652
(3,184)
(3,184)
33,812
(36,996)
700,468
Equity
4,060,349
4,060,349
(103,349)
295
387
(14,924)
(83,938)
(5,169)
411,079
377,267
33,812
33,812
(127,512)
(127,803)
291
4,240,567
Non-controlling Consolidated
interest
equity
91,277
4,151,626
91,277
4,151,626
(10,732)
(114,081)
295
387
(214)
(15,138)
(444)
(84,382)
(5,169)
(10,074)
(10,074)
968
412,047
566
377,833
402
34,214
402
34,214
(127,512)
(127,803)
291
81,513
4,322,080
PAGE: 16 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Consolidated financial statements / Statement of changes in equity - 01/01/2012 to 06/30/2012
Statement
(In thousand 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
5.04.09
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
Opening balances
Adjustment opening balances
Capital transactions with shareholders
Capital Increase
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
Paid-in
capital
2,265,367
2,265,367
453,073
453,073
-
Capital reserves
Income
Options granted reserves
and Treasury stock
4,073 684,007
4,073 684,007
(51,558) (391,032)
- (453,073)
230
62,041
(51,788)
(25)
(25)
-
Closing balances
2,718,440
(47,510)
Account description
292,975
Retained earnings/
accumulated losses
173,714
173,714
(156,926)
(62,041)
(94,885)
312,501
288,066
24,435
24,435
(173,470)
25
(173,714)
219
Other
comprehensive
income
672,951
672,951
36,808
36,808
61,243
(24,435)
-
Equity
3,800,112
3,800,112
(146,443)
230
(94,885)
(51,788)
349,309
288,066
61,243
61,243
(173,495)
(173,714)
219
Non-controlling
interest
106,477
106,477
(27,637)
(27,637)
5,345
5,044
301
301
-
Consolidated
equity
3,906,589
3,906,589
(174,080)
230
(94,885)
(51,788)
(27,637)
354,654
293,110
61,544
61,544
(173,495)
(173,714)
219
155,819
709,759
3,829,483
84,185
3,913,668
PAGE: 17 of 47 ITR – Quarterly Information – 06/30/2013 – 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
Value added received in transfer
Net value added produced
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 06/30/2013
3,701,513
3,700,404
3,814
(2,705)
(1,994,170)
(1,979,497)
(14,673)
1,707,343
(105,747)
(105,747)
1,601,596
268,673
268,673
1,870,269
1,870,269
707,951
608,264
66,188
33,499
523,271
468,373
51,400
3,498
261,214
245,432
15,782
377,833
83,938
14,924
278,405
566
Prior period
01/01/2012 to 06/30/2012
3,318,183
3,313,159
8,323
(3,299)
(1,840,571)
(1,824,093)
(16,478)
1,477,612
(101,731)
(101,731)
1,375,881
262,326
262,326
1,638,207
1,638,207
632,732
558,919
44,799
29,014
465,202
413,755
46,996
4,451
247,163
233,631
13,532
293,110
94,886
62,041
131,139
5,044
PAGE: 18 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Highlights
•
Net operating revenue in the second quarter of 2013 reached R$ 1,699.6 million, with 11.2% growth over 2Q12 and 15.0%
over 1Q13;
•
EBITDA reached R$ 312.5 million and EBITDA margin of 18.4%. Growth was 23.1% over the previous year and 25.6%
over the previous quarter;
•
Net Income totaled R$ 205.0 million, with net margin of 12.1% and 46.6% growth over 2Q12 and 19.0% over 1Q13;
•
Investments in fixed assets totaled R$ 118.0 million in the first six months of 2013.
Key Figures
Q2 2013
Net Operating Revenue
Domestic Market
External Markets
External Markets in US$
Gross Operating Profit
Gross Margin
Net Income
Net Margin
EBITDA
Q1 2013
%
Q2 2012
%
06M13
06M12
%
1,699,639
873,354
826,285
1,477,577
772,935
704,642
15.0%
13.0%
17.3%
1,528,791 11.2%
729,235 19.8%
799,556 3.3%
3,177,216
1,646,289
1,530,927
2,898,553
1,443,503
1,455,050
9.6%
14.0%
5.2%
399,171
353,077
13.1%
406,915 -1.9%
752,247
777,720
-3.3%
558,031
463,635
20.4%
461,661 20.9%
1,021,666
853,628
19.7%
32.8%
31.4%
32.2%
29.5%
204,968
172,299
377,267
288,066
12.1%
11.7%
312,547
248,898
EBITDA Margin
18.4%
16.8%
EPS
0.3304
0.2777
30.2%
19.0%
139,819 46.6%
25.6%
253,972 23.1%
16.6%
17.7%
15.6%
19.0%
0.2254 46.6%
0.6081
0.4643
9.1%
11.9%
9.9%
561,445
452,223
31.0%
24.2%
31.0%
Figures in R$ Thousand
Economic Activity and Industrial Production
The global industrial activity continued at a slow pace in the second quarter of 2013, both in Brazil and abroad. 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 deterioration in China and maintenance of
an unfavorable situation in Germany. In U.S. the situation continued positive, albeit at a rather slow pace.
Manufacturing ISM Report on Business ® USA
Markit/BME Germany Manufacturing PMI® Germany
HSBC China Manufacturing PMI™
China
June 2013
50.9
48.6
48.2
May 2013
49.0
49.4
49.2
April 2013
50.7
48.1
50.4
December 2012
50.2
46.0
51.5
In Brazil we observe rapid deterioration in industrial production growth expectations in the financial market, according to the
Central Bank of Brazil Focus survey. In early July 2013, the average growth for 2013 is 2.53%, almost a full percentage point
below expectations at the end of 1Q13. The IBGE data for industrial production has fluctuated monthly from expansions and
declines. May was down 2.0%, after growing 2.6% in March and April. In the year we observed expansion of 1.7%, while the
last 12 months to May saw accumulate decline of 0.5%, confirming the slow recovery.
PAGE: 19 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Industrial Indicators According to Categories of Use in Brazil
Change (%)
Categories of Use
Mai 13 / Abr 13* May 13 / May 12
Capital Goods
Intermediary Goods
Consumer Goods
Durable Goods
Semi-durable and non-durable
General Industry
Source: IBGE, Research office, Industry Coordination
(*) Series with seasonal adjustments
-3,5
-1,1
-1,8
-1,2
-1,0
-2,0
12,5
-0,6
1,6
4,1
0,8
1,4
Acummulated
On Year
12 months
13,3
0,2
0,3
4,6
-1,0
1,7
-2,3
-0,7
0,3
2,7
-0,4
-0,5
Once again, the production of capital goods showed the best results among the categories of use, maintaining the expansion
of 13.3% accumulated in the year, although still down 2.3% over the past 12 months. One must remember that both the
performance of the general industrial production, as the production of capital goods are strongly influenced by variations in the
production of light and heavy vehicles. Discounting this impact, the performance in capital goods remained positive, showing
that production incentives begin to produce positive impacts.
Net Operating Revenue
In the second quarter of 2013 (2Q13) Net Operating Revenues totaled R$ 1,699.6 million, corresponding to an increase of
11.2% in relation to the second quarter of 2012 (2Q12) and of 15.0% in relation to the first quarter of 2013 (1Q13). The growth
rate considering the comparison on the same basis, adjusted for consolidation of revenues from acquisitions, was 10.7% over
2Q12. In the quarter was the sale of an industrial property in Hortolândia (SP), which meant additional revenue of R$ 22.3
million. Adjusted for this non-recurring revenue, growth in Operating Revenue was 9.2% over 2Q12.
Net Operating Revenue per Market (R$ million)
External Market
Domestic Market
1,613
1,529
1,478
1,370
52%
50%
48%
50%
Q2
Q3
53%
Q1
2012
49%
48%
48%
52%
1,700
1,662
47%
Q4
51%
52%
Q1
Q2
2013
PAGE: 20 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 In the 2Q13, net operating revenue breaks down as follows:
•
Domestic Market: R$ 873.4 million, representing 51% of Net Operating Revenue, with 19.8% growth over 2Q12 and 13.0%
over 1Q13. Adjusting for the consolidation of revenues from acquisitions Stardur, Paumar and Injetel and the revenue from
sale of the Hortolândia property, growth over 2Q12 would have been 15.9%;
•
External Market: R$ 826.3 million, equivalent to 49% of Net Operating Revenue. The comparison in Brazilian Reais shows
growth of 3.3% over the same period last year and 17.3% over the previous quarter. Considering the average US dollar,
comparison shows decreases of 1.9% compared to 2Q12 and increase of 13.1% over 1Q13.
Evolution of Net Revenues according to Geographic Market (R$ Million)
Q2 2013
Q1 2013
Change
Q2 2012
Change
Net Operating Revenues
- Domestic Market
- External Markets
- External Markets in US$
1,699.6
873.4
826.3
399.2
1,477.6
772.9
704.6
353.1
15.0%
13.0%
17.3%
13.1%
1,528.8
729.2
799.6
406.9
11.2%
19.8%
3.3%
-1.9%
External Market – Distribution of Net Revenues according to Geographic Market
Q2 2013
Q1 2013
Change
Q2 2012
Change
North America
South and Central America
Europe
Africa
Australasia
31.2%
18.5%
24.4%
12.7%
13.2%
37.5%
14.8%
25.9%
11.7%
10.2%
-6.3 pp
3.7 pp
-1.4 pp
1 pp
3.1 pp
29.8%
13.9%
27.8%
16.9%
11.6%
1.4 pp
4.6 pp
-3.4 pp
-4.2 pp
1.6 pp
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
Q2 2013
Q1 2013
%
Q2 2012
%
61.5%
25.7%
35.8%
21.2%
12.3%
8.9%
10.9%
7.7%
3.2%
6.5%
5.7%
0.8%
63.8%
27.7%
36.1%
19.8%
11.7%
8.1%
10.1%
7.3%
2.8%
6.3%
5.7%
0.7%
-2.3 pp
-2 pp
-0.3 pp
1.4 pp
0.6 pp
0.8 pp
0.8 pp
0.4 pp
0.3 pp
0.2 pp
0.1 pp
0.1 pp
66.2%
25.0%
41.2%
20.6%
12.6%
8.1%
7.9%
5.5%
2.4%
5.2%
4.7%
0.6%
-4.7 pp
0.8 pp
-5.5 pp
0.5 pp
-0.3 pp
0.8 pp
3 pp
2.2 pp
0.8 pp
1.2 pp
1.1 pp
0.2 pp
Business Areas
The revenues performance in the 2Q13 showed gradual acceleration in relation to the previous quarter, in line with seasonality
of the markets. We continue to see favorable trends in the most important variables for profitability and are confident that the
prospects for improvement are consistent.
In the Industrial Electro-Electronic Equipment in domestic market we observed good performance with the more favorable
exchange rate, especially in those sectors most exposed to competition from imported products. These tend to be segments
that demand products that have more standard features, with higher volumes and lower degree of customization, for
applications in areas such as machinery and equipment. The good performance of these clients is the main positive impact
brought by the new level of the Brazilian currency against the U.S. dollar. Additionally, these same clients have responded
favorably to incentives for production implemented by the “Plano Brazil Maior”, such as attractive terms and accessible
financing and tax reductions. On the other hand, we observed a loss of dynamism in investments in the process industries,
such as, for example, oil and gas and mining.
PAGE: 21 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 In the external markets we observe lower dynamism in key industrial markets, as seen in the purchasing manager index (PMI)
data. To this we also add to appreciation of the U.S. dollar relative to virtually all currencies, which, due to currency conversion,
ultimately impacts consolidated revenues measured in US$, particularly from emerging markets, where the devaluation is more
intense. Additionally, we are consolidating market positions that we have recently won, which translate into lower growth rates
compared to that observed in recent quarters. Our strong recent growth brought, as expected, a tightening of competitive
conditions in many markets. However, we remain confident in the advantages of our product portfolio, which is technologically
up to date and has features that are adapted for the specificities of each market.
In the Energy Generation, Transmission and Distribution (GTD) area, market conditions for T&D continued its gradual
pricing improvement trend relative to recent quarters, with consequent positive impact on profitability. The highlight in this
sector has been the supplies of substations for industrial use and wind farms. The market for generation equipment continues
at a slow pace, but with better prospects for the second half of the year, when we expect new generation capacity auctions to
take place, with rules that allow participation of diverse sources of energy at competitive conditions.
The Motors for Domestic Use area showed significant improvement, with local production also responding to the new level of
the currency, which has made it more competitive. Moreover, the recent adjustments in import taxes contributed to prevent that
consumer stimulus continued to benefit imported products. This is true both for the “white goods” as for domestic application
motors.
The Paints and Varnishes area showed fast growth, both in the traditional business as with consolidation of acquisitions
closed in 2012. Our strategy is based in expanding the products portfolio and in entering new segments, exploiting the
commercial synergies with other WEG products.
Cost of Goods Sold
Cost of Goods Sold (COGS) totaled R$ 1,141.6 million in 2Q13, increasing 7.0% over 2Q12 and 12.6% over 1Q13. Gross
margin reached 32.8%, with expansion of 2.6 percentage points over 2Q12 and 1.5 percentage point over 1Q13.
Gross Margin
This increase in gross margin compared to 2Q12, is due to: (i) relative stability, in Reais, of raw material costs (i) the positive
effect of devaluation on revenues (ii) greater dilution of manufacturing costs with revenue growth; (iii) reduction on payroll
social security taxes; and (iv) sale of industrial property of Hortolândia.
Cost of Raw Materials
Average copper spot prices at the London Metal Exchange fell by 9% in the 2Q13 compared to the average of 2Q12 and 10%
in relation to the average of 1Q13. Steel prices in the international markets fell by 12% over 2Q12 and 6% in relation to the
1Q13. It is important to note that despite falling prices in US dollar, currency devaluation means relative cost stability in
Brazilian currency.
The prices of these commodities, the two main raw materials in our production process, are relatively uniform across the
various markets, as in the case of copper. Although there are some variations in steel prices from market to market, pricing
trends are similar. These characteristics are important in times when there is a variation in commodity prices or increases in
the volatility of macroeconomic variables such as exchange rate. We manage our selling prices according to the characteristics
of each order and with the current market conditions, incorporating variations in input costs gradually, which limits our
exposure to changes in these costs.
Selling, General and Administrative Expenses
Consolidated selling, general and administrative expenses (SG&A) represented 14.9% of net operating revenue in the 2Q13,
0.2 percentage point lower than the 15.1% of the 2Q12 and 0.6 percentage point lower than the 15.6% of the 1Q13. In
absolute terms, operating expenses grew by 9.9% over 2Q12 and 10.3% over the previous quarter.
PAGE: 22 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 EBITDA and EBITDA Margin
Q2 2013
Net Operating Revenues
Q1 2013
%
Q2 2012
%
1,699.6
1,477.6
15.0%
1,528.8
11.2%
Consolidated Net Income for the Period
204.8
173.1
18.3%
141.8
44.4%
Net Margin
12.0%
11.7%
(+) Income taxes & Contributions
(+/-) Financial income (expenses)
(+) Depreciation & Amortization
EBITDA
51.7
2.5
53.6
312.5
48.3
(24.7)
52.1
248.9
EBITDA Margin
18.4%
16.8%
9.3%
6.9%
n.a.
2.8%
25.6%
46.5
13.5
52.2
254.0
11.2%
-81.6%
2.8%
23.1%
16.6%
Figures in R$ thousands
As a result of aforementioned impacts, EBITDA in 2Q13, calculated according to the new methodology defined by CVM in the
Instruction nº 527/2012, totaled R$ 312.5 million, an increase of 23.1% over 2Q12 and 25.6% over 1Q13. EBITDA margin
reached 18.4%, 1.8 percentage point higher than the 2Q12 and 1.5 percentage point higher than the 1Q13.
As for comparative purposes, EBITDA calculated according to the methodology previously used reached R$ 322.6 million, an
increase of 24.1% over 2Q12 and 25.6% over the previous quarter, EBITDA margin of 19%.
Adjusting the effect of sale of property in Hortolândia both in revenue and EBITDA, EBITDA margin would have reached
17.9%.
Net Financial Results
In this quarter, net financial result was negative in R$ 2.5 million (negative in R$ 13.5 million in 2Q12 and positive in R$ 24.7
million in 1Q13). Financial revenues totaled R$ 145.6 million in 2Q13 (R$ 134.5 million in 2Q12 and R$ 123.0 million in 1Q13).
Financial expenses totaled R$ 148.1 million (R$ 148.0 million in 2Q12 and R$ 98.4 million in 1Q13). The decrease in net
financial result is mainly due to the exchange rate depreciation and relatively lower interest rates in the Brazilian financial
market.
Income Tax and Social Contribution
Income Tax and Social Contribution on Net Profit provision in 2Q13 reached R$ 59.6 million (R$ 56.2 million in 2Q12 and R$
51.3 million in 1Q13). Additionally, R$ 7.9 million were recorded as ‘‘Deffered income tax / social contribution’’ credit (credit of
R$ 9.7 million in 2Q12 and credit of R$ 3.0 million in 1Q13).
PAGE: 23 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Net Income
As the result of the previously discussed impacts, net income for 2Q13 was R$ 205.0 million, an increase of 46.6% over 2Q12
and 19% over the previous quarter. The net margin of the quarter was 12.1%, 2.9 percentage point higher than the 2Q12 and
0.4 percentage point higher than the 1Q13.
Cash flow
408.4
2,302.3
154.5
168.9
3,034.1
Financing
Investing
Operating
Cash Dec 2012
Cash June 2013
Operating cash flow
Cash flow from operating activities totaled R$ 408.4 million in the first half of 2013, an increase of 10% over the same period
last year. The expansion in operating cash generation was due to the increase in cash generated from operations, with
increase in net income before depreciation. On the other hand, we observed increase in receivables, mainly explained by the
impact of exchange rate on receivables denominated in foreign currencies.
Cash flow from investing activities
Investing activities generated R$ 168.9 million in the first half of 2013, mainly due to the maturing of long-term financial
instruments, which are, according to accounting standards, classified as “investments”. There were no new acquisitions
announced and paid for in this quarter.
Cash flow from financing activities
Financing activities generated R$ 154.5 million in the first half of 2013, mainly with new funding with attractive maturity and
interest rates terms, as previously discussed. During the period we increased financing by R$ 447.0 million (new debt of R$
1,183.6 million and amortizations of R$ 736.5 million) and paid R$ 204.5 million in dividends declared against second half of
2012 results.
Investments
Investments in fixed assets for capacity expansion and modernization totaled R$ 118.0 million in the first six months of 2013,
85% of which destined to the industrial plants and other installations in Brazil and the remaining amount to production units and
other subsidiaries abroad. Our budget for investments in capacity expansion and modernization plans to invest R$ 265 million
in 2013. Additionally, we estimate approximately R$ 87 million in the expansion of working capital.
PAGE: 24 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 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
6.0
11.8
50.8
49.5
Q1
Q2
2012
2013
Debt and Cash Position
Debt and Cash Position (R$ Thousands)
June 2013
Cash & Financial instruments
3,036,107
- Current
3,034,080
- Long Term
2,027
Debt
3,048,764
- Current
1,327,078
- In Brazilian Reais
855,787
- In other currencies
471,291
- Long Term
1,721,686
- In Brazilian Reais
1,454,531
- In other currencies
267,155
Net Cash (Debt)
(12,657)
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)
June 2012
2,879,132
2,878,475
657
3,260,988
1,935,177
998,122
937,055
1,325,811
1,090,936
234,875
(381,856) As of June 30, 2013 cash, cash equivalents and financial investments totaled R$ 3,036.1 million, mainly in short-term. Gross
financial debt totaled R$ 3,048.8 million, 44% in short-term operations and 56% in long-term operations.
There were no significant changes in debt position and cash compared to 1Q13, when we took advantage of attractive maturity
and interest rate conditions to increase the duration and extended the profile of our total debt. In this quarter we observed a
reduction in net debt to R$ 12.7 million at the end of the period, a natural result of the new issuance and amortizations during
the period. Cash is invested in Brazilian currency in first-tier banks, in fixed income instruments linked to the CDI.
The characteristics of the debt are:
•
•
•
Total duration of the debt is 19.2 months and duration of long-term portion is 30.9 months.
Duration of the Brazilian Reais denominated portion is 20.9 months and of the foreign currencies denominated portion is
13.8 months.
The weighted average cost of fixed-rate debt denominated in Brazilian Reais is approximately 6.2% per year. Floating rate
contracts are indexed mainly by the Brazilian long-term interest rate (TLJP).
Compensation to shareholders
In the first half of 2013, the Board of Directors approved the following compensation to shareholders:
• On March 26, as interest on stockholders’ equity (JCP), to shareholders on said date, in the gross amount of R$ 40.1
million;
PAGE: 25 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 •
On June 25, as interest on stockholders’ equity (JCP), to shareholders on said date, in the gross amount of R$ 43.8
million;
In addition, on July 30, the Board of Directors approved intermediate dividends related the net income for the first half of 2013,
in the total amount of R$ 114.8 million to the shareholders on said date. These proceeds will be paid from August 21, 2013
onwards.
Event
Dividends
Interest on Stockholders’ Equity
Interest on Stockholders’ Equity
Board Meeting
Date
7/30/2013
6/25/2013
3/26/2013
Payment Date
8/21/2013
8/21/2013
8/21/2013
Total
Gross amount per
share
R$ 0.18500000
R$ 0.07058823
R$ 0.06470589
R$ 0.32029412
Amounts declared as remuneration to shareholders in the first half represent 52.7% of net income for the period.
Dividends
Interest on Stockholders' Equity
Gross Total
Per Share
Net Earnings
Total Dividends / Net Earnings
1st Half
2013
114.8
83.9
198.7
0.32029412
377.3
52.7%
1st Half
%
2012
62.0
94.9
156.9 26.6%
0.25294118 26.6%
288.1
54.5%
We maintain our policy to declare interest on stockholders equity quarterly and declare dividends based on profit earned each
semester (six earnings 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
June 2013 quoted at R$ 28.15, with nominal high of 4.3% in the year. Considering the dividends and interest on stockholders
equity declared in the first half, the high was 5.7% in 2013.
The average daily traded volume in 2Q13 was R$ 16.3 million, (R$ 4.9 million in 2Q12). Throughout the quarter 134,061 stock
trades were carried out (39,940 stock trades in 2Q12), involving 37.9 million shares (15.5 million shares in 2Q12) and totaling
R$ 1,027.8 million (R$ 306.3 million in 2Q12).
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
0
Dividend adjusted performance (dividend and interest on stockholders equity)
Traded shares (thousands)
24,00
PAGE: 26 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 WEG S.A.
Notes to financial statements
At June 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 july 12,
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 24);
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 – 06/30/2013 – WEG S/A Version: 1 Notes to financial statements 4. Cash and cash equivalents
COMPANY
06/30/13
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
30
839,857
839,857
839,857
839,887
28
561,186
561,186
561,186
561,214
CONSOLIDATED
06/30/13
12/31/12
104,640
2,929,440
2,855,249
2,855,249
70,879
42,136
28,743
351
2,961
3,034,080
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 104% 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 0.07% to 0.50% p.a. at the original amount of EUR 7,447, of which balance amounts to R$ 21,466 (R$
91,635 at December 31, 2012);
- In US dollars with interest of 0.09% to 0.50% p.a. at the original amount of US$ 9,461, of which the balance amounts to R$
20,670 (R$ 36,961 at December 31, 2012);
- In the original currency with interest from 0.1% to 7.0% p.a. at the amount of R$ 28,743 (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
06/30/13
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 06/30/2013
834,830
742,413
1,577,243
(2,690)
(20,511)
1,554,042
788
1,375,016
75,713
126,514
1,577,243
753,737
738,189
1,491,926
(897)
(18,190)
1,472,839
3,010
1,266,632
97,068
128,226
1,491,926
(13,146)
3,010
(8,810)
756
(18,190)
788
(4,216)
1,107
(20,511)
PAGE: 28 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Notes to financial statements 6. Inventories
CONSOLIDATED
06/30/13
12/31/12
267,803
229,276
265,061
222,197
224,261
229,249
51,346
51,167
(9,694)
(9,780)
798,777
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 06/30/2013
388,992
75,127
125,929
(20,813)
569,235
408,681
72,734
119,982
(17,233)
584,164
1,368,012
1,306,273
(26,055)
9,067
(10,025)
(27,013)
2,427
(5,921)
30,507
Inventories are insured and their coverage is determined considering the values and level of risk involved, the cost of sales
includes R$ 2,427 (R$ 3,113 at june 30, 2012) regarding inventories written off and the amount of R$ 5,921 (R$ 5,174 at june 30,
2012), related to accrual of provision for inventory losses.
7. Taxes recoverable
State VAT (ICMS) on capital expenditures
Value Added Tax (IVA) from foreign subisidiaries
PIS/COFINS on capital expenditures
ICMS
IPI
IRPJ/CSLL recoverable
PIS/COFINS
Other
TOTAL
Short-term
Long-term
COMPANY
06/30/13
12/31/12
13,243
6,107
13,243
6,107
13,243
6,107
-
CONSOLIDATED
06/30/13
12/31/12
25,516
23,462
68,174
69,400
3,395
3,696
26,823
24,554
11,578
12,643
22,904
16,050
12,292
33,416
16,479
16,438
187,161
199,659
170,070
183,627
17,091
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 – 06/30/2013 – 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
06/30/13
12/31/12
06/30/13
12/31/12
BALANCE SHEET
Current liabilities
-
-
1,980
2,092
Agreements with directos/officers
-
-
1,980
2,092
4,875
296
-
-
4,875
296
-
-
Noncurrent liabilities
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
06/30/13
12/31/12
06/30/13
12/31/12
941
971
10,342
9,440
508
433
637
334
1,017
9,325
878
8,562
934
512
7,062
3,245
504
430
335
177
1,009
6,053
461
2,784
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$ 209,9 million (US$ 237,9 million at
December 31, 2012);
PAGE: 30 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Notes to financial statements e) Management compensation
Board of Directors members were paid the amount of R$ 1,017 (R$ 878 at june 30, 2012) and the executive officers were paid the
amount of R$ 9,325 (R$ 8,562 at june 30, 2012), for their services, aggregating the total of R$ 10,342 (R$ 9,440 at june 30,
2012).
As long as the result of activity on capital invested is at least 10%, interest to be paid to management is expected to range from
0% to 2.5% of net income. The provision is recognized in P&L for the period, in the amount of R$ 7,062 (R$ 3,245 at june 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
06/30/13
12/31/12
21
955
(52)
426
(1,567)
(238)
(238)
879
(51)
614
(1,586)
(123)
(123)
CONSOLIDATED
06/30/13
12/31/12
24,918
26,771
4,307
3,277
38,406
27,829
5,039
9,013
10,205
8,655
16,928
8,104
(116,074)
(4,869)
1,884
(304,012)
(269,667)
40,762
(310,429)
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 – 06/30/2013 – WEG S/A Version: 1 Notes to financial statements 10. Investments
10.1. Investments in subsidiaries
Ajusted
Shareholders’
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 (%)
2.767.671
238,301
91,980
37,102
32,228
58,630
118,881
282,454
10
37,879
17,988
49,675
6,814
3,059
1,122
68,637
62,798
28,146
11,942
122,551
238
5
124,078
298,167
3,962
12,879
(313)
11,465
3,863
17,678
37,812
2,656
417
(3,114)
1,961
504
308
1,687
8,763
3,279
307
8,154
351
(4)
10,437
Direct
100.00
100.00
99.91
0.02
5.00
99.99
0.05
91.75
0.05
10.44
8.00
1.00
0.79
100.00
-
37,275
48,127
5,380
171,423
65,775
(474)
107,414
718
1,510
2,172
45,189
32,921
824,161
3,180
12,754
10,898
41,477
5,229
1,657
30,217
957
392
257
55,977
17,501
(496)
(67)
37
22,083
5,094
1,212
(28)
43
217
183
2,003
1,718
60,581
96
406
520
4,638
841
(1,135)
1,386
68
134
94
(4,368)
4,649
5.00
0.07
5.74
0.05
-
06/30/13
Indirect
0.09
99.98
95.00
100.00
99.99
0.01
99.9
50.01
99.95
62.14
8.25
99.95
100.00
100.00
89.55
92.00
99.00
99.21
100.00
99.99
Direct
100.00
100.00
99.91
0.02
5.09
99.99
0.05
91.75
0.05
10.44
8.00
1.00
0.79
100.00
-
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
-
Equity
12/31/12 06/30/13 06/30/12
Indirect
- 298,614(*) 219,463
3,962
5,630
0.09
12,867
8,431
99.98
(1)
94.91
583
100.00
99.99
0.01
37,812 25,430
99.9
50.01
99.95
(1)
61.92
8.25
1,799
146
99.95
100.00
100.00
89.55
906
699
92.00
262
137
99.00
1
9
99.21
89
62
100.00
(4)
(7)
99.99
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
2
3
1
258
401
357,152 260,402
Investment Value
06/30/13
12/31/12
2,767,671
238,301
91,895
6
1,611
1
282,454
9
6,252
2
6,553
2,244
120
971
5
1
2,667,895
237,332
82,840
6
1,238
1
254,217
9
4,453
2
5,666
1,929
120
808
9
1
36
7
2,382
1
3,400,522
34
7
2,529
1
3,259,097
(*)Equity pickup adjusted by unearned income
10.2. Acquisitions
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$11,437.
10.3. Other investments - Consolidated
Refers to investment property (real state) and other investments recorded at cost in the amount of R$ 7,585 (R$ 7,622 at
December 31, 2012)
PAGE: 32 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Notes to financial statements 11. Property, plant and equipment
The Company capitalized on the first semester of 2013, the cost of borrowing in the amount of R$ 357 (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
06/30/13
12/31/12
06/30/13
12/31/12
Land
1,440
1,440
334,822
332,30
Construction and facilities
5,639
5,639
824,044
809,192
Equipment
2,737,936
2,652,581
Furniture and fixtures
89,584
82,998
Hardware
83,884
83,145
Construction in progress
101,107
76,079
Reforestation
50,433
50,005
Other
39,046
41,221
Subtotal
7,079
7,079
4,260,856
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
-
(2,190)
(2,190)
4,889
(2,132)
(2,132)
4,947
(1,690,814)
(204,466)
(1,353,838)
(45,433)
(60,228)
(9,694)
(17,155)
2,570,042
(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:
Transfer Acquis Write-offsDeprec. and
between
depletion
classes
256
20
3,892
2,254
(10,328)
11,953 65,809
(3,864)
(81,804)
18
5,135
(114)
(2,791)
(97)
4,064
(97)
(3,928)
(15,474) 40,162
428
(1,229)
(548)
168
(752)
(2,022)
(4,827)
(102,156)
- 118,040
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
Exchange
effect
2,516
6,256
10,987
498
1,125
340
169
21,891
06/30/13
334,822
619,578
1,384,098
44,151
23,656
101,107
40,739
21,891
2,570,042
b) Amounts offered in guarantee - PPE 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).
12. Intangible assets – consolidated
Software license
Other
Subtotal
Goodwill - Acquisition of subsidiaries
TOTAL
Amortization/
Years
5
5
-
Cost
69,234
43,160
112,394
520,233
632,627
Accumulated
Amortization
(53,815)
(30,399)
(84,214)
(21,353)
(105,567)
06/30/13
12/31/12
15,419
12,761
28,108
498,880
527,060
17,371
13,844
31,215
498,769
529,984
a) Summary of changes in intangible assets:
Information Technology Project
Software license
Other
Subtotal
Goodwill - Acquisition of subsidiaries
TOTAL
12/31/12
Additions
Amortization
17,371
13,844
31,215
498,769
529,984
1,249
234
1,483
1,483
(2,476)
(1,115)
(3,591)
(3,591)
Exchange
effect
(725)
(202)
(927)
111
(816)
06/30/13
15,419
12,761
28,180
498,880
527,060
PAGE: 33 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Notes to financial statements b) Schedule of amortization of intangible assets (except goodwill):
06/30/13
3,745
6,455
4,127
3,175
10,678
28,180
2013
2014
2015
2016
After 2017
TOTAL
12/31/12
7,461
6,789
4,584
3,917
8,464
31,215
(c) Goodwill on acquisition of subsidiaries is not amortized for accounting purposes, Therefore the income tax liability was
recognized by the Company (Note 9).
13. Loans and financing
Financing raised in foreign currency comprises Prepaiment 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$ 403.1 million in the short-term (R$ 490.7 million at December 31, 2012) and R$ 105.1 million in the longterm (R$ 40.8 million at December 31, 2012), corresponding to US$ 229.4 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
Other
Annual charges
CONSOLIDATED
06/30/13
12/31/12
Interest of 2.6% to 3.0% p.a. (+) exchange variation
TJLP (+) 1.4% to 5.0% p.a.
Interest of 3.5% to 9.0 %p.a.
US$ dollar (+) 1.4% to 1.8% p.a.
US$ dollar (+) Libor (+) 3.3% p.a.
UFIR (+) 1.0% to 4.0% p.a.
Exchange rate variation
Exchange rate variation
TJLP (+) 1.0% to 5.0% p.a.
Sundry
923,928
650,822
178,208
21,834
8,418
18,466
31,705
5,800
6,097
2,578
1,155,042
37,406
490,076
545,257
20,166
6,876
23,074
14,558
7,901
6,244
3,484
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 2.0% p.a.
UFIR (+) 1.0% to 4.0% p.a.
Interest of 4.0% to 9.0 %p.a.
TJLP (+) 1.0% to 5.0% p.a.
US$ dollar (+) 1.4% to 1.8% p.a.
US$ (+) Libor (+) 3.3% p.a.
Exchange rate variation
Sundry
1,616,552
167,084
40,346
1,230,824
11,014
45,987
36,927
79,107
5,263
1,003,260
391,430
44,427
373,596
8,866
52,423
37,464
88,137
6,917
ABROAD
SHORT TERM
Working Capital
Working Capital
Working Capital
Working Capital
Working Capital
Non Deliverable Forwards (NDF)
EURIBOR (+) 0.8% to 1.4% p.a.
LIBOR (+) 0,6% to 1.5% p.a.
90% of PBOC (5.0% to 5.5%) p.a.
BBSY (+) 2.0% p.a.
Interest of 0.8% to 11.5% p.a.
Exchange rate variation
403,150
211,528
75,616
1,356
982
113,668
-
490,730
202,796
173,116
8,899
5,328
100,093
498
PAGE: 34 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Notes to financial statements LONG TERM
Working Capital
Working Capital
Working Capital
SWAP
Libor (+) 2.4% p.a.
Interest of 1.5% to 15% p.a.
Euribor (+) 1.0% p.a.
-
TOTAL SHORT TERM
TOTAL LONG TERM
105,134
86,071
11,957
7,106
40,808
15,943
13,471
3,307
8,087
1,327,078
1,721,686
1,645,772
1,044,068
Maturity of long-term financing and loans:
06/30/13
124,328
394,327
1,016,948
51,598
134,485
1,721,686
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.
a) Balance of provision for contingencies
(i) Tax:
- IRPJ e CSLL
- INSS
- Presumed IPI credit
- Other
(a.1)
(a.2)
(a.3)
COMPANY
06/30/13
12/31/12
3,205
2,586
2,808
2,586
397
-
CONSOLIDATED
06/30/13
12/31/12
99,829
89,122
14,862
14,668
38,701
36,977
24,700
24,700
21,566
12,777
(ii) Labor
-
-
64,797
46,118
(iii) Cívil
-
-
67,808
68,980
(iv) Other
-
889
2,482
2,393
TOTAL
3,205
3,475
234,916
206,613
(v) Restricted judicial deposits
- Tax
- Other
1,147
1,147
-
864
864
-
27,816
21,393
6,423
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
06/30/13
89,122
46,118
68,980
2,393
206,613
7,921
24,758
4,275
1,045
38,008
2,786
546
768
4,100
(3,226)
(3,790)
(532)
(7,548)
(3,399)
(2,425)
(433)
(6,257)
99,829
64,797
67,808
2,482
234,916
PAGE: 35 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Notes to financial statements 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$ 64,797 (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$ 67,808 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
06/30/13
12/31/12
1,147
864
1,147
864
1,147
864
CONSOLIDATED
06/30/13 12/31/12
13,195
13,195
14,621
11,938
27,816
25,133
2,996
2,711
30,812
27,844
The judicial deposits not associated ace contingencies, are waiting authorized to withdraw from court.
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$ 145,700 (R$ 143,997 at December 31, 2012).
The processes with to possible "legal opinions" as their classification involving:
- taxation according to taxable profit in the total estimated amount of R$ 68 million.
- taxation on profits computed abroad in the total estimated amount of R$ 35 million.
- taxation on products of Information Technology Acts in the amount of R$ 36 million.
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 selffunding.
There comprise 20,859 participants (20,534 at june 30, 2012). The Company and its subsidiaries made contributions in the amount
of R$ 11,624 (R$ 10,196 at june 30, 2012).
Based on actuarial calculations carried out by independent actuarial, as per the procedures established by CVM Resolution No.
371/2000, actuarial liabilities were identified in the amount of R$ 5,000.
16. Equity
a) Capital
The Company's capital stock is made up by 620,419,011 common registered and uncertified shares, without par value, all of which
with voting rights, not including the 486,018 shares held in treasury as per item "c”.
PAGE: 36 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Notes to financial statements b) Shareholder compensation
b.1) Interest on equity capital
The Company declared throughout the first half 2013 interest on equity capital in the gross amount of R$ 83,938 (R$ 71,347 net)
equivalent to R$ 0,115 per share, which will be paid net of withholding income tax, according to the following approvals of Board of
Directors:
I.
On March 26, 2013 in the gross amount of R$ 40,144 (R$ 34,122 net) equivalent to R$ 0,055 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.
II.
On July 25, 2013 in the gross amount of R$ 43,794 (R$ 37,225 net) equivalent to R$ 0,060 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.
b.2) Interim dividends
The Executive Board submitted to the Board of Directors proposed the distribution of interim dividends on the results obtained in the first
half of 2013, amounting to R $ 114,778 (R$ 0.185 per share) of the total amount of R$ 14,924 is accrued, it corresponds to the
mandatory dividends adding the interest on equity capital is calculated on the profit. The remaining balance will be recorded upon the
approval of the board.
Under clause 37 of the Company's bylaws and article nine of Law 9,949/95 interest on equity capital will be paid as from August 21,
2013 on mandatory dividends for a capital stock of 620,419,011 shares.
The total amount of dividends and interest on equity capital net payable amount to the total amount of R$ 186.1 million, R$ 0.30 per
share, equivalent to 49.34% of net income for the period.
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$20.11/share. The shares acquired shall be held in Treasury to be used in the exercise of the
purchase right of stock options by the Company’s stock option plans beneficiaries or the subsequent cancellation or disposal.
In the first half of 2013 were exercised by the beneficiaries of the stock option plan, the amount of 13.982 shares.
The Company maintains 486.018 treasury shares in the amount of R$ 9.773.
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
strictly according to the terms and conditions established in the Plan ("Option”).
(BM&FBOVESPA:“WEGE3”),
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.
PAGE: 37 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Notes to financial statements (ii) Programs
The Board of Directors may approve, each semester, a Share Purchase Option Program ("Program"), which will define the
participants, number of Options, exercise price, Option distribution, term and other rules specific to each Program.
In order to participate in each Program, the participant must invest an amount of his/her variable compensation in each period in
Company’s shares.
Number of shares
Program
Granted
April /11
Number
Vesting
of Options
Period
Rights
Acquired
Rights 274,678
46,653
91,056
1º
2º
3º
274,678
18,072
35,894
1º
2º
3º
30,352
30,352
30,352
91,056
11,965
11,965
11,964
35,894
25,067
25,067
25,066
75,200
Subtotal
September /11
Subtotal
March /12
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
Subtotal
September /12
13,608
13,608
13,608
40,824
27,525
27,525
27,524
82,574
325,548
Subtotal
April /13
Subtotal
Total
In reais (R$)
Price
Strike
corrected
Price
by IPCA
21.01
23.16
21.01
24.32
21.01
25.54
Amount
Option
Option appropriate
price Difference ousand R$)
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
226
263
296
785
68
79
89
236
148
173
194
515
82
92
102
276
201
231
260
692
2,504
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
1°
2°
3°
1°
2°
3°
1°
2°
3°
1°
2°
3°
1°
2°
3°
Exercise price
of option (R$)
21.01
17.45
19.17
17.5
24.43
Lifespan of the
option – in days
755
1,008
1,260
756
1,008
1,259
755
1,008
1,257
753
1,006
1,257
760
1,008
1,260
Current price for
Interest free of risk
corresponding
Expected volatility
for the lifespan of the
share
in share price (%)
option (%)
(R$)
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
PAGE: 38 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Notes to financial statements Summary of the movement of shares plan:
Number of shares
Program
Balance 12/31/2013
Granted
Expired
Exercised
Balance 06/30/2013
April/11
91,056
-
-
(13,982)
77,074
September/11
35,894
-
-
-
35,894
March/12
75,200
-
-
-
75,200
September/12
40,824
-
-
-
40,824
April/13
-
82,574
-
-
82,574
242,974
82,574
-
(13,982)
311,566
The recognition of expenses with stock option is carried out throughout the period of acquisition of "vesting rights”.
In june 30, 2013, R$ 350 (R$ 230 at june 30, 2012) was recorded as other results in the financial statements for the year against
capital reserve in Equity.
The options exercised during the first half of 2013 were held under capital reserves in equity in the amount of R$ 104 and R$ 55 for
the options held and R$ 49 reversal of accrued amount recorded in retained earnings.
The accumulated equity totals R$ 1,004 in june 30, 2013 (R$ 758 at December 31, 2012).
18. Net revenue
BREAKDOWN OF NET REVENUE
CONSOLIDATED
06/30/13
06/30/12
Gross revenue
Domestic market
External market
3,785,106
2,164,320
1,620,786
3,383,637
1,879,609
1,504,028
Deductions
Taxes
Returns and Rebates
(607,890)
(523,188)
(84,702)
(485,084)
(414,606)
(70,478)
Net revenue
3,177,216
2,898,553
19. Operating expenses by nature
The Company opted for presenting consolidated income statement by function. As required by IFRS, the Company sets out below
a detailed consolidated income statement by nature:
CONSOLIDATED
06/30/13
06/30/12
EXPENSE BY NATURE
Depreciation and amortization
Personnel expenses
Raw materials and use and consumption materials
Freight and insurance costs
Other expenses
(2,721,518)
(105,747)
(720,110)
(1,365,740)
(89,858)
(440,063)
(2,548,061)
(101,731)
(690,147)
(1,295,439)
(88,682)
(372,062)
EXPENSE BY FUNCTION
Cost of products and services sold
Selling expenses
General and administrative expenses
Management fees
Other operating expenses
(2,721,518)
(2,155,550)
(330,483)
(143,556)
(10,342)
(81,587)
(2,548,061)
(2,044,925)
(297,334)
(134,344)
(9,440)
(62,018)
PAGE: 39 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Notes to financial statements 20. Other operating revenue/expenses
The recorded values are relative to profit sharing, reversal/ (provision) for lawsuits and others, as follows:
CONSOLIDATED
06/30/13
06/30/12
10,559
13,194
10,559
13,194
(92,146)
(75,212)
(58,304)
(42,353)
(5,362)
(3,222)
(7,062)
(3,245)
(5,631)
(6,463)
(1,886)
(1,629)
(13,901)
(18,300)
(81,587)
(62,018)
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
21. Financial income (expenses), net
FINANCIAL INCOME
Short-term investment yield
Exchange variation
Present value adjustment - customers
Pis/Cofins on interest on equity
Other
FINANCIAL EXPENSES
Interest on loans and financing
Exchange variation
Present value adjustment - suppliers
Other expenses
NET FINANCIAL INCOME
06/30/13
COMPANY
06/30/12
CONSOLIDATED
06/30/13
06/30/12
23,917
29,741
(5,960)
136
30,477
36,510
(6,155)
122
268,673
101,778
137,112
17,174
(5,960)
18,569
262,326
132,927
86,642
21,890
(6,155)
27,022
102
102
(116)
(116)
(246,505)
(88,114)
(133,615)
(5,308)
(19,468)
(229,922)
(90,504)
(118,921)
(7,863)
(12,634)
24,019
30,361
22,168
32,404
22. Provision for income and social contribution taxes
The parent company and subsidiaries in Brazil assess income and social contribution taxes according to taxable income, except for
WEG Administradora de Bens Ltda,, Instrutech Ltda, e Agro Trafo Administradora de Bens S.A., which adopt profit computed as a
percentage of the Company's gross revenue. The provision for income tax was constituted at a 15% rate added of a 10%
additional, and social contribution with a 9% rate, Taxes for companies abroad are constituted according to the Law of each
country.
Reconciliation of income and social contribution taxes
Income before taxes on profit
Statutory rate
IRPJ and CSLL calculated at the statutory rate
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
06/30/13
06/30/12
377,817
287,690
34%
34%
CONSOLIDATED
06/30/13 06/30/12
477,866
382,896
34%
34%
(128,458)
(97,815)
(162,474)
(130,185)
121,432
6,632
(156)
88,537
9,635
19
(2,609)
8,850
24,760
28,690
2,750
(2,881)
(4,248)
12,326
32,261
2,941
(550)
(435)
(115)
(376)
9
367
(100,033)
(110,856)
10,823
(89,786)
(104,646)
14,860
0.15%
(0.13)%
20.93%
23.45%
PAGE: 40 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Notes to financial statements 23. 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.
- 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.
24. Financial instruments
The Company and its subsidiaries carried out an evaluation of its financial instruments, including derivatives, recorded in the financial
statements as at june 30, 2013, which presented the following book and market values:
Cash and cash equivalents
Cash and banks
Short-term investments:
- Local currency
- Foreign Currency
- SWAP
- Non Deliverable Forwards - NDF
Short-term investments
Customers
Suppliers
Loans and financing:
- Local currency
- Foreign Currency
- Non Deliverable Forwards (NDF)
- SWAP
BOOK VALUE
06/30/13
12/31/12
MARKET VALUE
06/30/13
12/31/12
104,640
211,295
104,640
211,295
2,855,249
70,879
351
2,961
2,027
1,554,042
362,605
1,932,330
149,656
8,956
19
263,276
1,472,839
331,037
2,855,249
70,879
351
2,961
2,027
1,554,042
362,605
1,932,330
149,656
8,956
19
263,276
1,472,839
331,037
2,310,318
725,156
5,800
7,490
1,892,593
780,181
8,399
8,667
2,310,318
725,156
5,800
7,490
1,892,593
780,181
8,399
8,667
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.
PAGE: 41 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Notes to financial statements The financial exposure limit (balance sheet) is equivalent to 3 months of revenue in foreign currency as defined by the Company's
Board of Directors.
The Company had export operations totaling US$ 429.1 million (US$ 454.7 million at june 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 has the following operations with financial instruments:
a) NDF derivative financial instruments - Non Deliverable Forwards, with notional amount of:
(i) US$ 17.5 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 14.0 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;
(iii) US$ 14.0 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 june 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
june 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.
PAGE: 42 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Notes to financial statements a)
NDF Operations - “Non Deliverable Forwards”:
Market value at
06/30/13
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 EUR Increase Total EUR
USD Decrease USD Decrease Total US$
Total
Notional vallue (thousands) Currency
1,500
500
500
4,000
1,500
500
2,750
6,250
17,500
500
2,500
2,500
5,000
3,000
500
14,000
2,397
11,637
14,034
US$/R$
US$/R$
US$/R$
US$/R$
US$/R$
US$/R$
US$/R$
US$/R$
2.3206
2.3543
2.3584
2.2931
2.2807
2.3240
2.2827
2.3198
EUR/R$
EUR/R$
EUR/R$
EUR/R$
EUR/R$
EUR/R$
3.0293
2.9382
3.0135
2.9305
2.9943
2.9361
US$/ZAR
US$/ZAR
10.1398
9.4809
Possible scenario 25% Remote scenario 50% R$ Average thousand
price (305)
(95)
(97)
(338)
(183)
(92)
(548)
(1,268)
(2,926)
(129)
(553)
(303)
(1.047)
(432)
(97)
(2,561)
752
1,896
2,648
(2,839)
Average price 2.9079
2.9428
2.9480
2.8743
2.8578
2.9050
2.8548
2.9026
3.7866
3.6937
3.7668
3.6752
3.7429
3.6701
7.6049
7.1107
R$ thousand (1,176) (390) (392) (2,631) (1,038) (383) (2,117) (4,893) (13,020) (507) (2,389) (2,187) (4,710) (2,678) (464) (12,935) (611) (4,762) (5,373) (31,328) Average R$ price thousand
3.4894
3.5314
3.5376
3.4491
3.4294
3.4860
3.4258
3.4831
4.5440
4.4325
4.5202
4.4103
4.4915
4.4042
5.0699
4.7405
(2,046)
(684)
(686)
(4,924)
(1,893)
(673)
(3,687)
(8,517)
(23,110)
(886)
(4,225)
(4,070)
(8,373)
(4,924)
(831)
(23,309)
(1,973)
(11,420)
(13,393)
(59,812)
b) SWAP Operations:
Market value at
06/30/13
Notional vallue (milion)
Average price
R$ thousand
EUR 10.0
Interest of 1.88% p.a.
(7,106)
USD 15.0
Interest of 0.92% p.a.
(271)
USD 15.0
Interest of 0.96% p.a.
(113)
R$ 70.0
Interest of 10.3% p.a.
417
R$ 50.0
Interest of 10.2% p.a.
800
R$ 80.0
Interest of 10.3% p.a.,
(866)
(7,139)
Risk
Euribor decrease
Libor decrease
Libor decrease
CDI increase
CDI increase
CDI increase
Total
Possible scenario 25%
Average price
Interest of 1.41% p.a.
Interest of 0.69% p.a.
Interest of 0.72% p.a.
Interest of 12.93% p.a.
Interest of 12.80% p.a.
Interest of 12.88% p.a.
R$ thousand
(8,400)
(357)
(221)
(3,139)
(1,611)
(5,157)
(18,885)
Remote scenario 50%
Average price
Interest of 0.94% p.a.
Interest of 0.46% p.a.
Interest of 0.48 % p.a.
Interest of 15.51% p.a.
Interest of 15.36% p.a.
Interest of 15.45% p.a.
R$ thousand
(9,693)
(443)
(330)
(6,452)
(3,865)
(9,175)
(29,958)
We carried out the accounting record based on the market price as at june 30, 2013 according to the accrual method, These
operations had a net negative impact as at june 30, 2013 of R$ 4,435 (R$ 5,775 negative at june 30, 2012), which were
recognized as financial revenues.The Company did not have outstanding derivative financial instruments at june 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.
PAGE: 43 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Notes to financial statements 25. Subsidies and assistance government
The Company obtained subventions in the amount of R$ 16,842 (R$ 8,710 at june 30, 2012) from tax incentives, recognized in
the year:
a) WEG Amazônia S.A.
- ICMS incentive credit of 90.25%
122
122
b) WEG Linhares Equipamentos Elétricos S.A.
- ICMS incentive credit of 85.00%
- Corporate Income Tax (IRPJ) 75.00% reduction
- Municipal investment
9,948
8,709
1,227
12
c) WEG Equipamentos Elétricos S.A.
- Municipal Investment
111
111
c) WEG Logística Ltda.
- ICMS incentive credit of 75.00%
6,661
6,661
All conditions to obtain government incentives were met.
26. Information by segment
Revenue from sale of products / services Earnings before income taxes Depreciation / Amortization / Depletion Identifiable assets Identifiable liabilities Brazil
Industry
6/30/2013 6/30/2012 2,036,014 1,766,845 650,625 496,904 65,707 62,066 6/30/2013 12/31/2012
3,293,530 3,318,387 778,883 758,499 Foreign
Eliminations and adjustments
Consolidated
Energy
6/30/2013 653,746 201,335 20,064 6/30/2013 1,390,230 452,239 6/30/2012
652,554
150,927
20,218
12/31/2012
1,370,784
394,642
6/30/2013
1,422,077
107,289
19,976
6/30/2013
2,160,608
650,796
6/30/2012
1,314,468
66,106
19,447
12/31/2012
1,938,375
601,254
6/30/2013
(934,621)
(481,383)
‐
6/30/2013
(416,713)
(344,495)
6/30/2012 (835,314) (331,041) ‐ 12/31/2012 (391,884) (328,808) 6/30/2013
3,177,216
477,867
105,747
6/30/2013
6,427,655
1,537,423
6/30/2012
2,898,553
382,896
101,731
12/31/2012
6,235,662
1,425,587
Industry: single phase and triple phase motors with low and medium tension, drives and controls, equipment and
services for industrial automation, paints and varnishes.
Energy: electricity generators for thermal and hydraulic power plants (biomass), hydraulic turbines (PCHs), transformers,
substations, control panels and system integration services.
Foreign: composed by operations carried out by subsidiaries in other countries.
The adjustment and elimination column applicable to the Company in the context of the Consolidated IFRS Financial Statements,
All operating assets and liabilities are presented as identifiable assets and liabilities.
PAGE: 44 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Notes to financial statements 27. 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.
06/30/13
377,267
620,416
0.60809
Profit attributed to Company shareholders
Weighted average number of outstanding common shares (shares /thousand)
Basic earnings per share - R$
06/30/12
288,066
620,405
0.46432
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$
06/30/13
377,267
620,700
0.60781
06/30/12
288,066
620,613
0.46416
The amount of 311,566 shares (207,720 at june 30, 2012) was considered to be shares with potential to dilute, related to the stock
option plan.
28. 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 – 06/30/2013 – WEG S/A Version: 1 Opinions and statements – Special Review Report Unqualified 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 June 30, 2013, which comprise the balance sheet as of june 30,
2013 and the related statements of income, comprehensive income for the three and six months period them ended, and the
individual changes in shareholders’ equity and cash flows for the six 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.
PAGE: 46 of 47 ITR – Quarterly Information – 06/30/2013 – WEG S/A Version: 1 Opinions and statements – Special Review Report Unqualified 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.
Other issues
Statements of value added
We have also reviewed the statements of value added, Individual and Consolidated, for the quarter ended June 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 six months ended June 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 July 13, 2012,
unqualified.
Joinville, July 12, 2013
KPMG Auditores Independentes
CRC SC-000071/F-8
Marcelo Lima Tonini
Accountant CRC PR-045569/O-4 T – SC
PAGE: 47 of 47