Contents Company information Individual financial statements
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ITR –Quarterly Information - 03/31/2012 - WEG SA Version : 1 Contents Company information Composition of capital 1 Cash dividends 2 Individual financial statements Balance sheet - Assets 3 Balance sheet – Liabilities and equity 4 Income statement 5 Statement of comprehensive income 6 Cash flow statement 7 Statement of changes in equity Statement of changes in equity - 01/01/2012 to 03/31/2012 8 Statement of changes in equity - 01/01/2011 to 03/31/2011 9 Statement 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 Statement of changes in equity - 01/01/2012 to 03/31/2012 16 Statement of changes in equity - 01/01/2011 to 03/31/2011 17 Statement of value added 18 Comments on performance 19 Notes to financial information 28 Opinions and Statements Special Review Report – Unqualified 48 Report of Supervisory Board or Equivalent Body 49 ITR –Quarterly Information - 03/31/2012 - WEG SA Version : 1 Company information / Composition of capital Number of shares (Units) Current quarter 03/31/2012 Paid-in capital Common Preferred Total 620,405,029 0 620,405,029 Treasury stock Common 500,000 Preferred 0 Total 500,000 PAGE: 1 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Company information / Cash dividends Event Approval Earning Board of Directors’ Meeting 03/20/2012 Interest on equity capital First payment 08/15/2012 Type of share Common Class of share Earnings per share (Reais / share) 0.06500 PAGE: 2 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version: 1 Individual financial statements / Balance sheet – Assets (In thousands of reais) Account code Account description Current quarter 03/31/2012 Prior year 12/31/2011 1 Total assets 3,738,538 3,816,355 1.01 Current assets 578,195 584,445 1.01.01 Cash and cash equivalents 543,887 520,939 1.01.01.01 Cash and banks 1.01.01.02 Short-term investments 191 28 543,696 520,911 1.01.06 Taxes recoverable 6,365 3,782 1.01.06.01 Current taxes recoverable 6,365 3,782 1.01.08 Other current assets 27,943 59,724 1.01.08.03 Other 27,943 59,724 1.01.08.03.01 Dividends 1.01.08.03.02 Interest on equity capital 543 3,644 27,400 56,080 1.02 Non-current assets 3,160,343 3,231,910 1.02.01 Long-term receivables 247,500 241,192 1.02.01.01 Short-term investments at fair value 246,101 239,860 1.02.01.06 Deferred taxes 840 712 840 712 0 79 0 79 559 541 559 541 1.02.01.06.01 Deferred income and social contribution taxes 1.02.01.08 Receivables from related parties 1.02.01.08.02 Receivables from subsidiaries 1.02.01.09 Other non-current assets 1.02.01.09.03 Judicial deposits 1.02.02 Investments 2,900,942 2,978,752 1.02.02.01 Equity interests 2,900,942 2,978,752 1.02.02.01.02 Investments in subsidiaries 2,900,942 2,978,752 1.02.03 Property, plant and equipment 11,891 11,956 1.02.03.01 Property, plant and equipment in use 11,891 11,956 1.02.04 Intangible assets 10 10 PAGE: 3 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version: 1 Individual financial statements / Balance sheet – Liabilities and equity (In thousands of reais) Account code Account description 2 Total liabilities and equity 2.01 Current liabilities 2.01.01 Current quarter 03/31/2012 Prior year 12/31/2011 3,738,538 3,816,355 53,127 8,753 Labor and social charges 3,245 3,200 2.01.01.01 Social obligations 3,245 3,200 2.01.03 Tax obligations 7,146 2,601 2.01.03.01 Federal tax obligations 7,146 2,601 0 36 2.01.03.01.01 Income and social contribution taxes payable 2.01.03.01.02 Other payables 7,146 2,565 2.01.05 Other payables 42,736 2,952 2.01.05.02 Other 42,736 2,952 42,522 2,182 2.01.05.02.01 Dividends and interest on equity capital payable 2.01.05.02.04 Other 214 770 6,842 7,490 Other payables 680 1,837 Payables to related parties 680 1,837 680 1,837 2.02 Non-current liabilities 2.02.02 2.02.02.01 2.02.02.01.02 Payables to subsidiaries 2.02.03 Deferred taxes 3,749 3,764 2.02.03.01 Deferred income and social contribution taxes 3,749 3,764 2.02.04 Provisions 2,413 1,889 2.03 Equity 3,678,569 3,800,112 2.03.01 Paid-in capital 2,265,367 2,265,367 2.03.02 Capital reserves -50,776 239 2.03.02.04 Options granted 331 239 2.03.02.07 Premium on issue of shares -51,107 0 2.03.03 Revaluation reserves 2.03.04 Income reserves 2.03.04.01 Legal reserve 2.03.04.02 Statutory reserve 2.03.04.08 Additional proposed dividends 2.03.04.09 2.03.05 3,784 3,834 684,007 857,721 29,347 29,347 664,715 664,715 0 173,714 Treasury stock -10,055 -10,055 Retained earnings/accumulated losses 113,612 0 2.03.06 Equity valuation adjustments 691,708 704,466 2.03.06.01 Deemed cost 691,708 704,466 2.03.07 Cumulative translation adjustments -29,133 -31,515 PAGE: 4 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version: 1 Individual financial statements / Income statement (In thousands of reais) Account code Account description YTD 01/01/2012 to 03/31/2012 Accrued - prior year 01/01/2011 to 03/31/2011 3.04 Operating income/expenses 131,796 106,125 3.04.02 General and administrative expenses -853 -763 3.04.02.01 Management fees -471 -424 3.04.02.02 Other administrative expenses -382 -339 3.04.04 Other operating income 3.04.05 Other operating expenses 3.04.06 3.05 2 2 -603 -216 Equity pickup 133,250 107,102 Income before financial income (expenses) and taxes 131,796 106,125 3.06 Financial income (expenses) 16,299 16,021 3.06.01 Financial income 16,655 16,064 3.06.02 Financial expenses 3.07 Income before income taxes 3.08 Income and social contribution taxes 3.08.01 Current 3.08.02 Deferred 3.09 3.11 -356 -43 148,095 122,146 152 -582 8 -577 144 -5 Net income from continuing operations 148,247 121,564 Income/loss for the period 148,247 121,564 0.23895 0.19579 0.23887 0.19579 3.99 Earnings per share – (reais/share) 3.99.01 Basic earnings per share 3.99.01.01 Common shares 3.99.02 Diluted earnings per share 3.99.02.01 Common shares PAGE: 5 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version: 1 Individual financial statements / Statement of comprehensive income (In thousands of reais) Account code Account description YTD 01/01/2012 to 03/31/2012 4.01 Net income for the period 4.02 Other comprehensive income 4.02.01 Cumulative translation adjustments 4.03 Comprehensive income for the period Accrued - prior year 01/01/2011 to 03/31/2011 148,247 121,564 2,382 2,413 2,382 2,413 150,629 123,977 PAGE: 6 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version: 1 Individual financial statements / Cash flow statement – Indirect method (In thousands of reais) Account code Account description YTD 01/01/2012 to 03/31/2012 Accrued - prior year 01/01/2011 to 03/31/2011 6.01 Net cash from operating activities 13,856 8,194 6.01.01 Cash from operations 15,002 15,117 6.01.01.01 Pre-tax income 148,095 122,146 6.01.01.02 Depreciation and amortization 65 73 -133,250 -107,102 92 0 6.01.01.03 Equity pickup 6.01.01.04 Expenses with share purchase option plan 6.01.02 Changes in assets and liabilities -1,464 -7,088 6.01.02.01 Increase (decrease) in accounts receivable -4,556 2,048 6.01.02.02 Increase (decrease) in accounts payable 3,119 -8,677 6.01.02.03 Income and social contribution taxes paid -27 -459 6.01.03 Other 6.02 Net cash from investing activities 6.02.01 Investments 6.02.02 Dividends and interest on equity capital 6.02.03 Long-term financial investments 318 165 183,041 172,997 0 -20 189,282 173,017 -6,241 0 6.03 Net cash from financing activities -173,949 -161,510 6.03.01 Dividends/interest on equity capital -173,949 -161,510 6.05 Increase/(decrease) in cash and cash equivalents 22,948 19,681 6.05.01 Opening cash and cash equivalents balance 520,939 689,944 6.05.02 Closing cash and cash equivalents balance 543,887 709,625 PAGE: 7 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version: 1 Individual financial statements / Statements of changes in equity - 01/01/2012 to 03/31/2012 (In thousands of reais) Account code Account description Paid-in capital Capital reserves Options granted and Treasury stock Income reserves Retained earnings/ accumulated losses Other comprehensive income 5.01 Equity Opening balances 2,265,367 4,073 684,007 173,714 672,951 3,800,112 5.03 Adjusted opening balances 2,265,367 4,073 684,007 173,714 672,951 3,800,112 5.04 Capital transactions with shareholders 0 -51,015 0 -47,443 0 -98,458 5.04.03 Recognized options granted 0 92 0 0 0 92 5.04.07 Interest on equity capital 0 0 0 -47,443 0 -47,443 5.04.08 Premium on share issue 0 -51,107 0 0 0 -51,107 5.05 Total comprehensive income 0 0 0 161,005 -10,376 150,629 5.05.01 Net income for the period 0 0 0 148,247 0 148,247 5.05.02 Other comprehensive income 0 0 0 12,758 -10,376 2,382 5.05.02.04 Translation adjustments in the period 0 0 0 0 2,382 2,382 5.05.02.06 Realization of deemed cost 0 0 0 12,758 -12,758 0 5.06 Internal changes in equity 0 -50 0 -173,664 0 -173,714 5.06.02 Revaluation reserve released to retained earnings 0 -50 0 50 0 0 5.06.04 Payment of dividends 0 0 0 -173,714 0 -173,714 5.07 Closing balances 2,265,367 -46,992 684,007 113,612 662,575 3,678,569 PAGE: 8 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version: 1 Individual financial statements / Statements of changes in equity - 01/01/2011 to 03/31/2011 (In thousands of reais) Account code Account description Paid-in capital Capital reserves Options granted and Treasury stock Income reserves Retained earnings/ accumulated losses Other comprehensive income 5.01 Equity Opening balances 1,812,294 48,815 900,676 0 692,822 3,454,607 5.03 Adjusted opening balances 1,812,294 48,815 900,676 0 692,822 3,454,607 5.04 Capital transactions with shareholders 0 0 -101,208 -42,368 0 -143,576 5.04.06 Dividends 0 0 -101,208 0 0 -101,208 5.04.07 Interest on equity capital 0 0 0 -42,368 0 -42,368 5.05 Total comprehensive income 0 0 0 134,470 -10,493 123,977 5.05.01 Net income for the period 0 0 0 121,564 0 121,564 5.05.02 Other comprehensive income 0 0 0 12,906 -10,493 2,413 5.05.02.04 Translation adjustments in the period 0 0 0 0 2,413 2,413 5.05.02.06 Realization of deemed cost 0 0 0 12,906 -12,906 0 5.06 Internal changes in equity 0 -13 0 13 0 0 5.06.02 Revaluation reserve released to retained earnings 0 -13 0 13 0 0 5.07 Closing balances 1,812,294 48,802 799,468 92,115 682,329 3,435,008 PAGE: 9 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version: 1 Individual financial statements / Statement of value added (In thousands of reais) Account code Account description YTD 01/01/2012 to 03/ 31/2012 Accrued - prior year 01/01/2011 to 03/31/2011 7.02 Inputs purchased from third parties 7.02.02 Materials, electricity, third party services and other -390 -135 0 -88 7.02.03 Loss/recovery of amounts receivable -390 -47 7.03 Gross value added -390 -135 7.04 Withholdings -65 -73 7.04.01 Depreciation, amortization and depletion -65 -73 7.05 Net value added produced -455 -208 7.06 Value added received in transfer 149,905 123,166 7.06.01 Equity pickup 133,250 107,102 7.06.02 Financial income 16,655 16,064 7.07 Total value added to be distributed 149,450 122,958 7.08 Distribution of value added 149,450 122,958 7.08.01 Personnel 876 618 7.08.01.01 Direct compensation 843 595 7.08.01.02 Benefits 18 11 7.08.01.03 Unemployment Compensation Fund (FGTS) 15 12 7.08.02 Taxes, charges and contributions -6 733 7.08.02.01 Federal -6 733 7.08.03 Third-party capital remuneration 333 43 7.08.03.01 Interest 7.08.04 Equity remuneration 7.08.04.01 Interest on equity capital 7.08.04.03 Retained profit/loss for the period 333 43 148,247 121,564 47,443 42,368 100,804 79,196 PAGE: 10 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version: 1 Consolidated financial statements / Balance sheet Assets (In thousands of reais) Account code Account description Current quarter 03/31/2012 Prior year 12/31/2011 1 Total assets 8,824,120 9,105,861 1.01 Current assets 5,478,846 5,867,061 1.01.01 Cash and cash equivalents 2,563,889 2,931,615 1.01.01.01 Cash and banks 98,895 59,512 1.01.01.02 Short-term investments 2,464,994 2,872,103 1.01.03 Accounts receivable 1,263,963 1,307,692 1.01.03.01 Trade accounts receivable 1,263,963 1,307,692 1.01.04 Inventories 1,371,264 1,362,314 1.01.06 Taxes recoverable 166,464 156,076 1.01.06.01 Current taxes recoverable 166,464 156,076 1.01.08 Other current assets 113,266 109,364 1.01.08.03 Other 1.02 Non-current assets 1.02.01 1.02.01.01 113,266 109,364 3,345,274 3,238,800 Long-term receivables 447,124 432,469 Short-term investments at fair value 287,973 280,635 1.02.01.01.01 Trading securities 287,973 280,635 1.02.01.06 115,265 111,488 115,265 111,488 490 0 490 0 Deferred taxes 1.02.01.06.01 Deferred income and social contribution taxes 1.02.01.08 Receivables from related parties 1.02.01.08.04 Receivables from other related parties 1.02.01.09 43,396 40,346 1.02.01.09.03 Judicial deposits Other non-current assets 24,490 24,038 1.02.01.09.04 Taxes recoverable 12,994 12,902 5,912 3,406 1.02.01.09.05 Other 1.02.02 Investments 349 349 1.02.02.01 Equity interests 349 349 1.02.02.01.04 Other equity interests 349 349 1.02.03 Property, plant and equipment 2,478,938 2,445,760 1.02.03.01 Property, plant and equipment in use 2,414,457 2,375,326 1.02.03.03 Construction in progress 64,481 70,434 1.02.04 Intangible assets 418,863 360,222 1.02.04.01 Intangible assets 31,260 28,681 31,260 28,681 387,603 331,541 1.02.04.01.02 Other 1.02.04.02 Goodwill PAGE: 11 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version: 1 Consolidated financial statements / Balance sheet – Liabilities and equity (In thousands of reais) Account code Account description Current quarter 03/31/2012 Prior year 12/31/2011 2 Total liabilities and equity 8,824,120 9,105,861 2.01 Current liabilities 2,580,679 2,752,960 2.01.01 Labor and social charges 161,850 161,436 2.01.01.01 Social obligations 161,850 161,436 2.01.02 Trade accounts payable 329,571 298,195 2.01.03 Tax obligations 84,450 88,474 2.01.03.01 Federal tax obligations 84,450 88,474 2.01.03.01.01 Income and social contribution taxes payable 38,434 44,186 2.01.03.01.02 Other 46,016 44,288 2.01.04 Loans and financing 1,464,198 1,701,435 2.01.04.01 Loans and financing 1,464,198 1,701,435 2.01.05 Other payables 540,610 503,420 2.01.05.02 Other 540,610 503,420 2.01.05.02.01 Dividends and interest on equity capital payable 2.01.05.02.04 Advances from clients 2.01.05.02.05 Profit sharing 2.01.05.02.06 Other 44,428 2,804 286,379 285,843 29,758 26,314 180,045 188,459 2.02 Non-current liabilities 2,484,115 2,446,312 2.02.01 Loans and financing 1,769,528 1,756,293 2.02.01.01 Loans and financing 1,769,528 1,756,293 2.02.02 Other payables 137,777 122,485 2.02.02.02 Other 137,777 122,485 2.02.02.02.03 Tax obligations 61,117 58,326 2.02.02.02.04 Other 76,660 64,159 2.02.03 Deferred taxes 424,223 421,918 2.02.03.01 Deferred income and social contribution taxes 424,223 421,918 2.02.04 Provisions 152,587 145,616 2.03 Consolidated equity 3,759,326 3,906,589 2.03.01 Paid-in capital 2,265,367 2,265,367 2.03.02 Capital reserves -50,776 239 2.03.02.04 Options granted 331 239 2.03.02.07 Premium on issue of shares 2.03.03 Revaluation reserves 2.03.04 Income reserves 2.03.04.01 Legal reserve 2.03.04.02 Statutory reserve 2.03.04.08 Additional proposed dividends 2.03.04.09 2.03.05 -51,107 0 3,784 3,834 684,007 857,721 29,347 29,347 664,715 664,715 0 173,714 Treasury stock -10,055 -10,055 Retained earnings/accumulated losses 113,612 0 2.03.06 Equity valuation adjustments 691,708 704,466 2.03.06.01 Deemed cost 691,708 704,466 2.03.07 Cumulative translation adjustments -29,133 -31,515 2.03.09 Non-controlling interest 80,757 106,477 PAGE: 12 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version: 1 Consolidated financial statements / Income statement (In thousands of reais) Account code Account description YTD 01/01/2012 to 03/31/2012 Accrued - prior year 01/01/2011 to 03/31/2011 3.01 Revenue from sale of products and/or services 3.02 Cost of goods sold and/or services rendered 3.03 Gross profit 391,967 310,662 3.04 Operating income/expenses -243,289 -188,625 3.04.01 Selling expenses -142,191 -116,019 3.04.02 General and administrative expenses -67,767 -58,490 3.04.02.01 Management fees 3.04.02.02 Other administrative expenses 1,369,762 1,126,117 -977,795 -815,455 -4,763 -4,046 -63,004 -54,444 3.04.04 Other operating income 4,958 8,671 3.04.05 Other operating expenses -38,289 -22,787 3.05 Income before financial income (expenses) and taxes 148,678 122,037 3.06 Financial income (expenses) 45,885 39,846 3.06.01 Financial income 127,801 93,543 3.06.02 Financial expenses -81,916 -53,697 3.07 Income before income taxes 194,563 161,883 3.08 Income and social contribution taxes -43,288 -37,624 3.08.01 Current -48,453 -40,104 3.08.02 Deferred 5,165 2,480 3.09 Net income from continuing operations 151,275 124,259 3.11 Consolidated income/loss for the period 151,275 124,259 3.11.01 Attributed to shareholders of parent company 148,247 121,564 3,028 2,695 0.23895 0.19579 0.23887 0.19579 3.11.02 Attributed to non-controlling shareholders 3.99 Earnings per share (Reais/share) 3.99.01 Basic earnings per share 3.99.01.01 Common shares 3.99.02 Diluted earnings per share 3.99.02.01 Common shares PAGE: 13 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version: 1 Consolidated financial statements / Statement of comprehensive income (In thousands of reais) Account code Account description YTD 01/01/2012 to 03/31/2012 Accrued - prior year 01/01/2011 to 03/31/2011 4.01 Consolidated net income for the period 4.02 Other comprehensive income 151,275 124,259 2,446 2,413 4.02.01 Translation adjustments in the period 2,446 2,413 4.03 Consolidated comprehensive income for the period 153,721 126,672 4.03.01 Attributed to shareholders of parent company 150,629 123,977 4.03.02 Attributed to non-controlling shareholders 3,092 2,695 PAGE: 14 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version: 1 Consolidated financial statements / Cash flow statement – Indirect method (In thousands of reais) Account code Account description YTD 01/01/2012 to 03/31/2012 Accrued - prior year 01/01/2011 to 03/31/2011 6.01 Net cash from operating activities 219,027 189,204 6.01.01 Cash from operations 267,172 228,227 6.01.01.01 Pre-tax income 194,563 161,883 6.01.01.02 Depreciation and amortization 49,573 47,499 6.01.01.04 Employee profit sharing 22,944 18,845 6.01.01.05 Expenses with share purchase option plan 92 0 6.01.02 Changes in assets and liabilities -62,061 -33,545 6.01.02.01 Increase (decrease) in accounts receivable 12,595 20,692 6.01.02.02 Increase (decrease) in accounts payable 43,053 59,352 6.01.02.03 Increase (decrease) in inventories -8,068 -13,249 6.01.02.04 Income and social contribution taxes paid -51,241 -45,622 6.01.02.05 Employee profit sharing paid -58,400 -54,718 6.01.03 Other 13,916 -5,478 6.02 Net cash from investing activities -190,699 -34,575 6.02.01 Property, plant and equipment -73,424 -33,800 -63,348 -3,365 2,136 177 2,382 2,413 -7,338 0 6.02.02 Intangible assets 6.02.03 Disposal of permanent assets 6.02.04 Cumulative translation adjustments 6.02.05 Long-term financial investments 6.02.06 Premium on issue of shares -51,107 0 6.03 Net cash from financing activities -396,054 -220,489 6.03.03 Dividends/interest on equity capital -172,052 -161,353 6.03.04 Loans and financing raised 172,478 195,845 -352,546 -223,158 -43,934 -31,823 6.03.05 Payment of loans and financing 6.03.06 Interest paid on loans and financing 6.05 Increase/(decrease) in cash and cash equivalents -367,726 -65,860 6.05.01 Opening cash and cash equivalents balance 2,931,615 2,552,996 6.05.02 Closing cash and cash equivalents balance 2,563,889 2,487,136 PAGE: 15 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version: 1 Consolidated financial statements / Statement of changes in equity - 01/01/2012 to 03/31/2012 (In thousands of reais) Account code Account description Paid-in capital Capital reserves Options granted and Treasury stock Income reserves Retained earnings/ accumulated losses Other comprehensive income 5.01 Equity Non-controlling interest Consolidated equity Opening balances 2,265,367 4,073 684,007 173,714 672,951 3,800,112 106,477 3,906,589 5.03 Adjusted opening balances 2,265,367 4,073 684,007 173,714 672,951 3,800,112 106,477 3,906,589 5.04 Capital transactions with shareholders 0 -51,015 0 -47,443 0 -98,458 -28,748 -127,206 5.04.03 Recognized options granted 0 92 0 0 0 92 0 92 5.04.07 Interest on equity capital 0 0 0 -47,443 0 -47,443 0 -47,443 5.04.08 Premium on share issue 0 -51,107 0 0 0 -51,107 0 -51,107 5.04.09 Other 0 0 0 0 0 0 -28,748 -28,748 5.05 Total comprehensive income 0 0 0 161,005 -10,376 150,629 3,028 153,657 5.05.01 Net income for the period 0 0 0 148,247 0 148,247 3,028 151,275 5.05.02 Other comprehensive income 0 0 0 12,758 -10,376 2,382 0 2,382 5.05.02.04 Translation adjustments in the period 0 0 0 0 2,382 2,382 0 2,382 5.05.02.06 Realization of deemed cost 0 0 0 12,758 -12,758 0 0 0 5.06 Internal changes in equity Revaluation reserve released to retained earnings 0 -50 0 -173,664 0 -173,714 0 -173,714 5.06.02 0 -50 0 50 0 0 0 0 5.06.04 Payment of proposed dividends 5.07 Closing balances 0 0 0 -173,714 0 -173,714 0 -173,714 2,265,367 -46,992 684,007 113,612 662,575 3,678,569 80,757 3,759,326 PAGE: 16 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version: 1 Consolidated financial statements / Statement of changes in equity - 01/01/2011 to 03/31/2011 (In thousands of reais ) Account code Account description Paid-in capital Capital reserves Options granted and Treasury stock Income reserves Retained earnings/ accumulated losses Other comprehensive income 5.01 Equity Non-controlling interest Consolidated equity Opening balances 1,812,294 48,815 900,676 0 692,822 3,454,607 89,229 3.543.836 5.03 Adjusted opening balances 1,812,294 48,815 900,676 0 692,822 3,454,607 89,229 3.543.836 5.04 Capital transactions with shareholders 0 0 -101,208 -42,368 0 -143,576 1,563 -142.013 5.04.06 Dividends 0 0 -101,208 0 0 -101,208 0 -101.208 5.04.07 Interest on equity capital 0 0 0 -42,368 0 -42,368 0 -42.368 5.04.08 Other 0 0 0 0 0 0 1,563 1.563 5.05 Total comprehensive income 0 0 0 134,470 -10,493 123,977 2,695 126.672 5.05.01 Net income for the period 0 0 0 121,564 0 121,564 2,695 124.259 5.05.02 Other comprehensive income 0 0 0 12,906 -10,493 2,413 0 2.413 5.05.02.04 Translation adjustments in the period 0 0 0 0 2,413 2,413 0 2.413 5.05.02.07 Realization of deemed cost 0 0 0 12,906 -12,906 0 0 0 5.06 0 -13 0 13 0 0 0 0 5.06.02 Internal changes in equity Revaluation reserve released to retained earnings 5.07 Closing balances 0 -13 0 13 0 0 0 0 1,812,294 48,802 799,468 92,115 682,329 3,435,008 93,487 3.528.495 PAGE: 17 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version: 1 Consolidated financial statements / Statement of value added (In thousands of reais) Account code Account description YTD 01/01/2012 to 03/31/2012 Accrued - prior year 01/01/2011 to 03/31/2011 7.01 Revenues 1,578,581 1,316,121 7.01.01 Sale of goods, products and services 1,574,991 1,312,542 7.01.02 Other revenues 7.01.04 Set up/reversal of allowance for doubtful accounts 7.02 7.02.02 4,889 4,375 -1,299 -796 Inputs purchased from third parties -880,031 -739,468 Materials, electricity, third party services and other -869,030 -743,485 7.02.03 Loss/recovery of amounts receivable -11,001 4,017 7.03 Gross value added 698,550 576,653 7.04 Withholdings -49,573 -47,499 7.04.01 Depreciation, amortization and depletion -49,573 -47,499 7.05 Net value added produced 648,977 529,154 7.06 Value added received in transfer 127,801 93,544 7.06.02 Financial income 127,801 93,544 7.07 Total value added to be distributed 776,778 622,698 7.08 Distribution of value added 776,778 622,698 7.08.01 Personnel 299,342 238,899 7.08.01.01 Direct compensation 257,916 203,001 7.08.01.02 Benefits 26,810 23,440 7.08.01.03 Unemployment Compensation Fund (FGTS) 14,616 12,458 7.08.02 Taxes, charges and contributions 235,982 198,954 7.08.02.01 Federal 206,189 173,929 7.08.02.02 State 28,570 23,901 7.08.02.03 Local 1,223 1,124 7.08.03 Third-party capital remuneration 90,179 60,586 7.08.03.01 Interest 84,069 56,097 7.08.03.02 Rental 7.08.04 Equity remuneration 7.08.04.01 Interest on equity capital 7.08.04.03 Retained profit/loss for the period 7.08.04.04 Non-controlling interest in retained profits 6,110 4,489 151,275 124,259 47,443 42,381 100,804 79,183 3,028 2,695 PAGE: 18 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Comments on performance Highlights Net operating revenues in the 1Q12 totaled R$ 1,369.8 million, with 22% growth over 1Q11 and decrease of 7% over the last quarter. EBITDA was of R$ 208.6 million, with 15.2% margin, with increase of 27% in relation to the previous year and decrease of 19% in relation the previous quarter. Net income totaled R$ 148.2 million, with net margin of 10.8%, with 22% growth in comparison with 1Q1 1 and decrease of 5% over 4Q11. Investments in fixed assets totaled R$ 58.7 million in the first three months of 2012. Main Quarterly Figures Net Operating Revenue Domestic Market External Markets External Markets in US$ Gross Operating Profit Gross Margin Q1 2012 1,369,762 714,268 655,494 Q4 2011 1,468,551 781,938 686,613 -6.7% -8.7% -4.5% 370,825 380,772 -2.6% 391,967 445,686 -12.1% 28.6% 30.3% Net Income 148,247 156,248 Net Margin 10.8% 10.6% EBITDA 208,638 % 27.6% -5.1% 15.2% 17.6% EPS 0.2390 0.2518 121,564 21.9% 10.8% 258,210 -19.2% EBITDA Margin Q1 2011 % 1,126,117 21.6% 660,322 8.2% 465,795 40.7% 279,522 32.7% 310,662 26.2% 164,808 26.6% 14.6% -5.1% 0.1958 22.0% Figures in R$ Thousands Comments from Laurence Beltrão Gomes, WEG’s Investor Relations Officer. We began 2012 with the same strong growth pace that we ended 2011. In this 1Q12 net revenue growth 22% compared to 1Q11. Growth in external markets the highlight at 32.7% clip when comparisons are made in US dollars. Organic growth in the external markets, which excludes revenue growth provided by the acquisitions, was 21.2%. We emphasize that both EBITDA and net income also showed robust growth rates, of 27% and 22%, respectively, over the 1Q11. This performance was a result of our commercial strategy and of acquisitions and strategic partnerships established in 2011 and are aligned with the corporate aspirations set out in our strategic planning WEG 2020, which aims to achieve annual revenues of R$ 20 billion in 2020. We hope in 2012 continue to growth robustly, with the development of solutions with higher technological content, incorporating our products into complete solutions for mining and electrical rooms, more compact and efficient products for oil platforms and electrical traction systems for supply boats and urban transportation. And we will continue leveraging our broad and unique distribution network, which also provides technical assistance to the WEG products. Current market conditions are still challenging, with greater presence of competitors in Brazil and still many uncertainties on the global macroeconomic situation. However, there are many opportunities in Brazil and in international markets, where we have been expanding our product portfolio and market share. Although the Brazilian industrial sector faces structural bottlenecks, we believe that recent stimulus measures to increase competitiveness of the industrial sector within the “Brasil Maior” Program, will have positive impact for the sector. PAGE: 19 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Comments on performance Economic Activity and Industrial Production Industrial production in Brazil started 2012 at a weak pace, continuing the accommodation movement started the second half of 2011. In general, the same situation of weak recovery and slowdown in economic conditions can be seen both in other emerging countries as in some mature markets. A clear indication in this direction is provided by purchasing manager indexes (PMI), used as indicators of economic conditions and industrial activity in some of our major markets. Indexes above 50 indicate industrial expansion and below 50 signal industrial contractions. March 2012 December 2011 Manufacturing ISM USA Markit/BME Germany Purchasing Managers’ Index (PMI) Germany 53.4 48.4 53.9 48.4 HSBC China Manufacturing PMI™ 48.3 48.7 China In Brazil, industrial activity fell by 3.4% on the two months up to February in comparison the same period of the previous year. The drop in production accumulated in the 12 months until February is smaller, of 1% compared to 2011. This demonstrates that the activity slowdown observed during the second half of 2011 is losing momentum and can be reversed soon. This seems to be the expectation of the financial markets, as captured in the Brazilian Central Bank’s Focus report, that in early April estimated industry output in growth in 2012 to be around 2%. Indicators of the current industry scenario according to category of use Change (%) Categories of Use Feb/Jan* Capital Goods 5.70 Intermediary Goods 2.30 Consumer Goods -0.20 Durable Goods -4.30 Semi-durable and non-durable 1.10 General Industry 1.30 Source: IBGE, Research office, Industry Coordination (*) Series with seasonal adjustments Feb 12 / Feb 11 -16.00 0.40 -5.40 -22.10 0.50 -3.90 Acummulated On Year 12 months -14.60 -1.10 -3.00 -15.40 1.20 -3.40 -1.00 -0.30 -1.80 -6.10 -0.50 -1.00 The production of capital goods, which was the positive highlight of industrial production data throughout 2011, showed decrease. It should be noted that data on industrial production of capital goods are influenced by the poor performance in heavy vehicles production, as the production of durable consumer goods was negatively influenced by the drop in light vehicle production. Net Operating Revenue Net Operating Revenue (NOR) reached R$ 1,369.8 million in the first quarter of 2012 (1Q12), corresponding to an increase of 21.6% in relation to first quarter of 2011 (1Q11) and decrease of 6.7% in relation to fourth quarter of 2011 (4Q11). Revenue growth in this quarter was helped by the addition of R$ 75.8 million due of consolidation of net revenues from Watt Drive (Austria), Electric Machinery (USA) and WEG-Cestari, the partnership established to develop, manufacture and distribute power transmission systems (gearboxes, electric motors and frequency inverters) in the Brazilian market. Adjusted for the consolidation of acquisitions, growth of net revenues would have been 14.9% in the 1Q12 over 1Q11. PAGE: 20 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Comments on performance Net Operating Revenue per Market (R$ million) External Market Domestic Market 1,469 1,370 1,277 1,317 43% 44% 47% 48% 59% 57% 56% 53% 52% Q1 Q2 Q3 Q4 Q1 1,126 41% 2011 2012 Net operating revenue breakdown according to destination market is the following: Domestic Market: R$ 714.3 million, representing 52% of Net Operating Revenues, with growth of 8.2% over 1Q11 and decrease of 8.7% compared to 4Q11. Figures incorporate the consolidation of revenues of WEG-Cestari. Adjusted for this, growth over 1Q11 would have been 5.3%. External Market: R$ 655.5 million, equivalent to 48% of Net Operating Revenues, with growth of 40,7% over the same period of last year and decrease of 4.5% over the previous quarter. Considering the average US dollar/Brazilian Real exchange rate of quarter, the NOR of external market in US dollar reached US$ 370.8 million, which represents growth of 32.7% over 1Q11 and decrease of 2.6% over 4Q11. Adjusting for the consolidation of revenues of Watt Drive and Electric Machinery, growth over 1Q11 would have been of 28.6% when measured in Brazilian Reais and of 21,2% in US dollars. Evolution and Distribution of Net Revenues according to Geographic Market (R$ Million) Q1 2012 Net Operating Revenues - Domestic Market - External Markets - External Markets in US$ North America South and Central America Europe Africa Australasia 1,369.8 714.3 655.5 370.8 35.8% 14.6% 27.8% 12.7% 9.1% Q4 2011 1,468.6 781.9 686.6 380.8 34.3% 15.1% 25.5% 14.8% 10.3% Change -6.7% -8.7% -4.5% -2.6% 1.5 pp -0.5 pp 2.3 pp -2.1 pp -1.2 pp Q1 2011 1,126.1 660.3 465.8 279.5 35.0% 14.0% 25.0% 16.0% 10.0% Change 21.6% 8.2% 40.7% 32.7% 0.8 pp 0.6 pp 2.8 pp -3.3 pp -0.9 pp PAGE: 21 of 49 ITR – Quarterly Information – 03/31/2012 - WEG SA Version: 1 Comments on performance Distribution of Net Revenues per Business Area Q1 2012 Q4 2011 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 63.5% 28.8% 34.7% 22.8% 12.1% 10.7% 8.1% 6.2% 1.9% 5.6% 5.1% 0.5% 64.0% 26.0% 37.9% 22.0% 15.4% 6.6% 8.9% 6.9% 2.0% 5.1% 5.0% 0.2% % Q1 2011 % -0.5 pp 2.7 pp -3.2 pp 0.8 pp -3.3 pp 4.1 pp -0.8 pp -0.7 pp -0.1 pp 0.5 pp 0.2 pp 0.3 pp 60.7% 30.0% 30.7% 22.5% 14.2% 8.3% 11.3% 9.2% 2.2% 5.5% 5.4% 0.2% 2.8 pp -1.2 pp 4 pp 0.3 pp -2.1 pp 2.4 pp -3.2 pp -3 pp -0.2 pp 0.1 pp -0.2 pp 0.3 pp Business Areas Performance of the business areas continues to follow the same trends as we have noted throughout 2011. In the industrial electrical-electronic equipment we continue to benefit from the expansion of investment in some specific segments in Brazil, such as oil & gas, shipbuilding, mining and cement. Growth continued to be more pronounced in the external markets, both in fast-growing markets, such as China and India, where our presence is still relatively small, as in markets where we have a more established presence and have archived a level of brand recognition, as in the Americas and Europe. In the business area GTD there was growth of the importance of the external markets as a result of the consolidation of revenues of Electric Machinery. Even with low demand at this moment in Transmission & Distribution (T&D) and strong pricing pressure, we continue to invest to strength our market position by expanding into segments such as large hydroelectric, wind energy and increasing business in power substations. Moreover, we have taken steps to expand our North American businesses, including our transformer manufacturing plant in Mexico, where we still have spare capacity. In electric motors for domestic use business are, the stimulus measures announced in December 2011, including the temporary reduction of IPI federal excise taxes, did not produced positive impacts on our market, which normally experiences seasonal weakness in the first quarter. Finally, the relative area participation of paints and varnishes business are did not change significantly, given our focus on cross-selling for the same customers in others areas. Q1 2012 Net Operating Revenues Cost of Goods Sold Gross Operating Profit Gross Margin (-) Selling Expenses (-) General & Administrative (-) Profit Sharing Result from Activities (+) Depreciation & Amortization EBITDA EBITDA Margin 1,369.8 (977.8) 392.0 28.6% (142.2) (67.8) (22.9) 159.1 49.6 208.6 15.2% Q4 2011 1,468.6 (1,022.9) 445.7 % -6.7% -4.4% -12.1% 30.3% (140.7) (70.2) (25.2) 209.6 48.6 258.2 17.6% Q1 2011 1,126.1 (815.5) 310.7 % 21.6% 19.9% 26.2% 27.6% 1.1% -3.5% -8.9% -24.1% 1.9% -19.2% (116.0) (58.5) (18.8) 117.3 47.5 164.8 22.6% 15.9% 21.8% 35.6% 4.4% 26.6% 14.6% PAGE: 22 of 49 ITR – Quarterly Information – 03/31/2012 - WEG SA Version : 1 Comments on performance Cost of Goods Sold Cost of Goods Sold (COGS) totaled R$ 977.8 million in 1Q12, increasing 20% over 1Q11 and decreasing by 4% over 4Q11. Gross margin was 28.6%, 1 percentage point higher than in the 1Q11 and 1.7 percentage point lower than in the 4Q11. Gross margin Given the number of working days and market dynamics, revenues and margins are seasonally lower at the first quarter of every year. In this first quarter we observed an increase of one percentage point in gross margin, to 28.6%, the result of the expansion of activities, both as a response to market growth as because of production ramp-up in the greenfield units in India and Linhares, with consequent partial dilution of manufacturing costs. It is important to notice that gross margin was negatively affected by the consolidation of the recently acquired operations, which still do not present the same patterns of WEG’s other operations. Cost of Raw Materials Average on the London Metal Exchange (LME) spot copper prices fell by 14% in the 1Q12 compared to the average of 1Q11 and rose by 10% compared to the 4Q11 average. According to the CRUspiGlobal índex, steel prices in the international markets showed decline of 9% over 1Q11 and increase of 1.4% over 4Q11. Our selling prices are recalculated according to the characteristics of each order and tend to reflect the current market conditions, naturally and gradually incorporating increases in input costs. In addition, prices of key raw materials such as steel and copper tend to be the same or at least follow similar trends in the various global markets. Selling, General and Administrative Expenses Consolidated selling, general and administrative expenses (SG&A) represented 15.3% of net operating revenues in the 1Q12, which compares to 15.5% in 1Q11 and 14.4% in 4Q11. The comparison of absolute figures shows operating expense growth of 20.3% over 1Q11 and decline of 0.5% over the previous quarter, attesting the success of the efforts to increase rationalization and productivity. EBITDA and EBITDA Margin As a result of the aforementioned effects, the EBITDA in 1Q12 (calculated according to the methodology defined by CVM Ofício Circular 01/07) totaled R$ 208.6 million, an increase of 26.6% over 1Q11 and decrease of 19.2% over the previous quarter. The EBITDA margin reached 15.2%, 0.6 percentage point higher compared to the 1Q11 and 2.4 percentage points lower compared to the 4Q11. PAGE: 23 of 49 ITR – Quarterly Information – 03/31/2012 - WEG SA Version : 1 Comments on performance Major impacts on EBITDA 37,6 206,1 FX Impact on Revenues 158,9 26,0 COGS (ex depreciation) 10,8 4,1 208,6 Selling Expenses 164,8 Volumes, Prices & Product Mix Changes EBITDA Q1 11 General and Administrative Expenses Profit Sharing Program EBITDA Q1 12 Net Financial Results Financial revenues totaled R$ 127.8 million in 1Q12 (R$ 140.2 million in 4Q11 and R$ 96.5 million in 1Q11). Financial expenses totaled R$ 81.9 million (R$ 111.2 million in 4Q11 and R$ 53.7 million in 1Q11). In this quarter, net financial income was positive in R$ 45.9 million (positive in R$ 29.0 million in 4Q11 and positive in R$ 39.8 million in 1Q11). Income Tax and Social Contribution The Income Tax and Social Contribution Tax on Net Profit provision in 1Q12 was R$ 48.4 million (R$ 46.6 million in 4Q11 and R$ 40.1 million in 1Q11). Additionally, R$ 5.2 million were recorded as “Deferred Income Tax” (R$ -1.7 million in 4Q11 and R$ 2.5 million in 1Q11). Net income As a result of the previously discussed impacts, net income for 1Q12 was R$ 148.2 million, an increase of 22% compared to 1Q11 and a decline of 5% over the previous quarter. The net margin of the quarter was 10.8%, without changes compared to 1Q11 and 0.2 percentage point higher over the 4Q11. Operating cash flow Cash flow from operating activities in 1Q12 totaled R$ 219.0 million, to an increase of 16% in comparison to 1Q11, mainly as a result from growth in operating activities and the relative improvement of efficiency in the use of working capital. Cash flow from investing activities Investing activities consumed R$ 190.7 million in cash in 1Q12, with strong increase in comparison previous year. The reasons are the re-acceleration of investments in expansion and modernization of productive capacity and consolidation of WEG-Cestari operations, which cause increase in the balance of fixed and intangible assets. PAGE: 24 of 49 ITR – Quarterly Information – 03/31/2012 - WEG SA Version : 1 Comments on performance Cash flow from financing activities Financing activities consumed R$ 396.1 million, with payment of loans and financing thus reducing gross debt. In relation to prior year, cash used in financing activities increased 80%. Cash flow 2.931,6 190,7 219,0 396,1 2.563,9 Investing Operating Financing Cash 4Q11 Cash 1Q12 Capex Investments in fixed assets for expansion and modernization of production capacity amounted to R$ 58.7 million in the first three months of 2012, being 92% directed to industrial units and other facilities in Brazil and the remaining to production units and other subsidiaries abroad. As previously announced, we shall observe a gradual acceleration in investment over 2012 in comparison to 2011, when efforts were concentrated in ramping up capacity utilization in the new manufacturing plants in Hosur, India, and Linhares (ES). It is expected that investments in 2012 will reach approximately R$ 300 million. Investment in fixed assets (R$ million) Outside Brazil Brazil 63,1 33,8 8,2 49,9 41,1 1,0 7,3 2,4 25,6 38,8 42,6 1T 2T 3T 2011 58,7 5,0 62,1 53,7 4T 1T 2012 PAGE : 25 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Comments on performance Debt and Cash Position (R$ Thousand) CASH & EQUIVALENT - Current - Long Term DEBT - Current - In Brazilian Reais - In other currencies - Long Term - In Brazilian Reais - In other currencies NET CASH (DEBT) March 2012 2,851,862 2,563,889 287,973 3,233,726 1,464,198 509,861 954,336 1,769,528 1,543,720 225,810 (381,864) December 2011 March 2011 3,212,250 2,931,615 280,635 2,487,136 2,487,136 - 3,457,728 1,701,435 2,356,004 1,104,366 585,687 1,115,748 1,756,293 538,068 566,297 1,251,638 1,560,712 195,581 (245,478) 1,110,127 141,511 131,132 As of March 31, 2012, cash (cash, cash equivalents and short and long term financial investments) totaled R$ 2,851.9 million and gross financial debt totaled R$ 3,233.7 million, resulting in a net debt position of R$ 381.9 million (net cash of R$ 131.1 million in March 31, 2011 and net debt of R$ 245.5 million in December 31, 2011). Cash is invested mainly in Brazilian currency denominated financial instruments referenced to the Interbank Deposit Certificate (CDI), in first-tier Banks. According to the maturity, gross debt is divided between: Short-term debt, totaling R$ 1,464.2 million (45% of total), represented by short-term portion of loans from BNDES and other development agencies, mostly in local currency, and trade finance related transactions denominated in foreign currencies and for working capital financing of subsidiaries abroad, denominated in the respective currencies of each country. Long-term debt, totaling R$ 1,769.5 million (55% of total), mainly represented by financing from BNDES and other development agencies, mostly in local currency, and, to a smaller extent, by working capital financing of subsidiaries abroad in respective currency of each country. The duration of the long-term debt is 26.7 months. According to the reference currencies, the total debt can be divided into: Denominated in Brazilian Reais, totaling R$ 2,053.6 million (64% of total), mainly represented by financing from BNDES and other development agencies. The weight average cost of debt denominated in Reais is approximately 6.8% per year. Floating rate contracts are indexed mainly by the Long-Term Interest Rate (TLJP). The duration of the portion denominated in Reais is 18 months. Denominated in US dollars, Euros and other currencies, totaling R$ 1,180.1 million (36% of total), represented by working capital loans contracted by subsidiaries abroad in local currencies and trade finance transactions (advances on foreign exchange contracts or ACC), in Brazil. The duration of the portion in foreign currencies is 10,9 months. Dividends On March 20 the Board of Directors approved the payment to shareholders, as interest on stockholders’ equity (JCP), totaling R$ 47.4 million. Shareholders on March 20, 2012 will be entitled to payment of R$ 0.076470590 per share (before deduction of income tax at source), payable on August 15, 2012. We maintain our policy to declare interest on stockholders equity quarterly and declare dividends based on profit earned each semester. Thus, we reported six different earnings each year. PAGE: 26 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Comments on performance WEGE3 Share Performance At the end of the last trading of March 2012 at BM&F Bovespa, the common shares issued by WEG, traded under the code WEGE3, were quoted at R$ 19.80 with a nominal increase of 5.4% in the year. Considering the dividends and interest on stockholders equity declared in this first quarter, the total return for the shareholders was of 6.6% in 2012. The average daily volume traded in 1Q12 was R$ 6.2 million, 29% lower than 1Q11. Throughout the quarter 42,664 stock trades were carried out (50,599 stock trades in 1Q11), involving 19.6 million shares (26.1 million shares in 1Q11) and totaling R$ 383.7 million (R$ 534.9 million in 1Q11). Share Price Performance and Traded Volume 30,00 3.000 WEGE3 Shares traded (thousands) 25,00 WEGE3 15,00 10,00 1.000 (th) Quotes 2.000 Traded 20,00 5,00 0,00 0 Dividend adjusted performance (dividend and interest on stockholders equity) PAGE: 27 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 WEG S.A. Notes to financial statements March 31, 2012 (In thousands of reais, except where otherwise indicated) 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 production and sale of capital goods, such as electric motors, equipment for generation, transmission and distribution of electrical energy, industrial automation and paints and varnishes. The operations are performed through manufacturing facilities located in Brazil, Argentina, Mexico, United States of America, Portugal, Austria, South Africa, India and China. The Company has shares traded on BM&F Bovespa under the code “WEGE3” and has been listed since June 2007 in the special segment of corporate governance called New Market. The Company has American Depositary Receipts (ADR) – Level 1 that are traded on over-the-counter (OTC) market, in the United States under the symbol WEGZY. 2. Accounting policies Preparation of financial statements requires the use of certain accounting estimates and judgment by the Company’s management, the most relevant of which are disclosed in Note 3. Authorization to complete the preparation of these financial statements was granted at the executive board meeting on April 16, 2012. There were no changes in the policies of these financial statements in relation to the December 31, 2011 financial statements. 3. Estimates and assumptions Preparation of the financial statements involves the use of estimates. These estimates took into account the experience of past and current events, assumptions relating to future events and other objective and subjective factors. Significant items subject to such estimates and assumptions include: a) b) c) d) e) f) credit risk analysis to determine the allowance for doubtful accounts; review of the economic useful lives of property, plant and equipment items and their recovery in operations; measurement of fair value of financial instruments; commitments to post-employment benefits for employees; transactions related to share purchase options plan; and deferred income tax asset on income and social contribution tax losses, as well as the analysis of other risks in determining other provisions, including for contingencies, arising out of administrative and judicial proceedings and other assets and liabilities at the balance sheet date. The settlement of transactions involving these estimates may result in amounts different from those recorded in the financial statements due to uncertainties inherent to the estimate process. These estimates and assumptions are reviewed periodically. PAGE: 28 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Notes to financial statements 4. Cash and cash equivalents COMPANY 03/31/12 12/31/11 a) Cash and banks b) Short-term investments In local currency: CONSOLIDATED 03/31/12 12/31/11 191 28 98,895 59,512 789,797 760,771 2,752,967 3,152,738 789,797 760,771 2,716,274 3,113,536 Bank deposit certificate (CDB) 543,696 520,911 2,428,301 2,832,901 Financial Bills (LF) 246,101 239,860 287,973 280,635 In foreign currency: - - 36,693 37,502 Certificates of Deposits Abroad - - 11,298 25,041 Other balances held abroad - - 25,395 12,461 - - - 1,700 789,988 760,799 2,851,862 3,212,250 Short-term 543,887 520,939 2,563,889 2,931,615 Long-term 246,101 239,860 287,973 280,635 NDF – Non Deliverable Forwards TOTAL Investments in Brazil: CDBs and LFs are remunerated at the rates of 100% to 107% of the CDI (100% to 106% of the CDI at December 31, 2011). Investments abroad: Certificates of deposits issued by foreign financial institutions are bear interest as follows: - In Euros with interest of 0.51% to 1.7% p.a. at the original amount of EUR 836, with balance at March 31, 2012 of R$ 2,033; - In US dollars with interest of 0.02% to 4.5% p.a. at the original amount of US$ 5.024, with balance at March 31, 2012 of R$ 9,265; - In the original currency with interest from 3.9% to 16.5% p.a. at the amount of R$ 25,395; Short-term investments held as cash and cash equivalents are readily redeemable. 5. Trade accounts receivable CONSOLIDATED a) Balance breakdown: Domestic market External market SUBTOTAL Present value adjustment Allowance for doubtful accounts TOTAL b) Effective losses on trade accounts receivable in the period c) Maturity of trade notes: Falling due: Overdue: Up to 30 days More than 30 days TOTAL 03/31/12 12/31/11 679,433 600,684 1,280,117 673,032 650,876 1,323,908 (2,124) (14,030) 1,263,963 (3,070) (13,146) 1,307,692 270 144 1,123,540 72,178 84,399 1,280,117 1,191,813 68,854 63,241 1,323,908 PAGE: 29 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Notes to financial statements Changes in the allowance for doubtful accounts are as follows: Balance at 12/31/2010 Amounts written off permanently Set up of provision Reversal of provision Balance at 12/31/2011 Amounts written off permanently Set up of provision Reversal of provision Balance at 03/31/2012 (13,314) 144 (4,244) 4,268 (13,146) 270 (1,517) 363 (14,030) 6. Inventories CONSOLIDATED Finished products Work in process Raw materials and other Imports in transit Provision for obsolescence Total inventories in the domestic market Finished products Work in process Raw materials and other Provision for obsolescence Total inventories in the external market TOTAL 03/31/12 12/31/11 279,245 294,091 231,167 41,439 (9,600) 836,342 262,408 262,454 225,658 51,611 (9,741) 792,390 339,486 88,459 122,546 (15,569) 534,922 384,601 82,453 119,184 (16,314) 569,924 1,371,264 1,362,314 Changes in the provision for obsolescence: Balance at 12/31/2010 Inventories written off permanently Set up of provision Balance at 12/31/2011 Inventories written off permanently Set up of provision Balance at 03/31/2012 (19,977) 22,148 (28,226) (26,055) 3,481 (2,595) (25,169) Inventories are insured and their coverage is determined considering the values and level of risk involved. At March 31, 2012, the amount of R$ 977,795 was recognized as cost of goods sold (R$ 815,455 at March 31, 2011). Cost of sales includes the amounts of R$ 3,481, referring to inventories permanently written off, and R$ 2,595 referring to set up of provision for obsolescence. PAGE: 30 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Notes to financial statements 7. Taxes recoverable COMPANY 03/31/11 12/31/11 State VAT (ICMS) on capital expenditures Value Added Tax (IVA) from foreign subsidiaries PIS/COFINS on capital expenditures ICMS IPI IRPJ/CSLL recoverable PIS/COFINS Other TOTAL Short-term Long-term CONSOLIDATED 03/31/12 12/31/11 6,365 6,365 3,782 3,782 23,000 55,885 6,759 20,243 12,094 11,111 37,181 13,185 179,458 22,759 51,462 10,122 20,700 14,237 11,778 30,255 7,665 168,978 6,365 - 3,782 - 166,464 12,994 156,076 12,902 Credits will be realized by the Company and its subsidiaries through refund and/or offset against taxes and contributions. 8. Related parties The commercial transactions for purchase and sale of products, raw materials and hiring of services, as well as intercompany loans and funding and management compensation were carried out as under: COMPANY 03/31/12 12/31/11 CONSOLIDATED 03/31/12 12/31/11 BALANCE SHEET ACCOUNTS Non-current assets Management of financial resources WEG Tintas Ltda Hidráulica Industrial S.A. Ind. e Com. Sensores Eetrônicos Instrutech Ltda Equisul Ind. e Com Ltda - 79 490 - - 79 - 183 295 12 - Current liabilities Contracts with managing officers - - 3,502 3,502 1,566 1,566 680 1,837 542 138 1,699 138 - - Non-current liabilities Management of financial resources WEG Equipamentos Elétricos S.A. RF Reflorestadora Ltda P&L ACCOUNTS Management compensation: a) Fixed (fees) Board of Directors Executive Board b) Variable (profit sharing ) Board of Directors Executive Board COMPANY 03/31/12 03/31/11 CONSOLIDATED 03/31/12 03/31/11 471 302 169 424 281 143 4,763 423 4,340 4,046 393 3,653 212 136 76 167 111 56 1,246 191 1,055 970 155 815 PAGE: 31 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Notes to financial statements Additional information: a) Commercial operations Transactions for purchase and sale of inputs and products are carried out on an arm’s length basis, prevailing cash sales. b) Management of financial resources The financial and commercial operations between Group companies are recorded in book accounts, in compliance with the requirements of the Group’s bylaws, not subject to interest. The credit/debt contracts entered into with Administrators are recorded in book accounts, subject to interest from 95% to 100% of the CDI variation. c) Provision of services 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) Guarantees and sureties WEG S.A. granted guarantees and sureties to foreign subsidiaries, in the amount of US$ 203.0 million (US$ 207.5 million at December 31, 2011). e) Management compensation Compensation paid to the Board of Directors and Executive Board members amounted to R$ 423 and R$ 4,340, respectively, for services rendered, representing a total amount of R$ 4,763. 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$ 1,246, under other operating expenses. Board members and officers receive additional corporate benefits, as follows: Health and dental assistance, life insurance, supplementary pension benefits, among others. 9. Deferred taxes – IRPJ/CSLL Deferred income and social contribution tax credits and debts were determined in accordance with applicable rules in force. a) Balance breakdown: COMPANY 03/31/12 12/31/11 Non-current assets IRPJ tax losses CSLL tax losses Temporary differences: Provision for contingencies Taxes questioned in court Losses on receivables from customers Losses on no moving inventories Indemnification from labor and contract terminations Freight and sales commissions Accounts payable (electric energy, technical assistance and other) Employee profit sharing Other temporary additions Non-current liabilities Accelerated depreciation incentive – Law No. 11196/05 Fixed assets deemed cost Transition tax regime adjustment Other temporary exclusions CONSOLIDATED 03/31/12 12/31/11 840 - 712 - 115,265 10,924 1,334 111,488 11,773 1,252 630 210 565 147 28,652 11,249 1,903 5,687 10,078 5,378 11,899 9,533 18,628 28,346 9,686 3,234 5,628 10,772 4,819 12,610 7,173 16,195 3,749 3,706 43 - 3,764 3,724 40 - 424,223 3,004 337,874 73,348 9,997 421,918 2,923 344,605 64,815 9,575 PAGE: 32 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Notes to financial statements 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. 10. Investments 10.1. Investments in subsidiaries P&L for the Adjusted equity WEG Equipamentos Elétricos S.A. RF Reflorestadora S.A RF Reflorestadora Ltda WEG Tintas Ltda. WEG Amazônia S.A. WEG Administradora de Bens Ltda. WEG Logística Ltda. WEG Linhares Equips Elétricos S.A. WEG Drives & Controls Automação Ltda WEG Partner Aerogeradores S.A. WEG-Cestari Redut. e Motorredut.S.A. Hidráulica Indl.S.A. Ind. e Com. Agro Trafo Administradora de Bens S.A. Sensores Eletrônicos Instrutech Ltda. Logotech Sensores Eletrônicos Ltda. Equisul Indústria e Comércio Ltda 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 (India) 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 2,346,785 234,479 69,175 39,840 19,470 254 82,506 237,508 10 38,066 52,742 4,154 1,595 443 6,218 44,079 22,006 9,535 82,152 (907) 14 85,898 28,941 43,455 1,464 125,878 29,096 (718) 111,283 368 853 1,398 36,569 23,971 839,838 2,572 8,203 7,039 36,373 1,543 1,697 23,286 501 862 333 59,279 7,280 period 119,674 3,152 4,364 (827) 202 110 1,417 15,938 2,488 205 29 314 (12) (208) 3,092 440 437 4,426 (295) (5) 3,368 (1,908) 4,501 (6) 6,033 2,229 2 (94) (32) 103 1,126 874 1,025 24,416 (729) 98 24 3,911 231 (218) 518 (23) 32 (6) 50 (147) Investment in capital (%) 03/31/12 Direct 100.00 100.00 99.91 0.02 99.99 91.75 0.01 0.10 0.12 10.44 8.00 1.00 0.79 100.00 4.99 0.01 0.07 5.74 0.05 - Indirect 0.09 99.98 100.00 100.00 99.99 0.01 99.90 50.01 61.92 8.25 99.99 99.90 99.88 89.55 92.00 99.00 99.21 100.00 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 Equity pickup 12/31/11 Direct 100.00 100.00 99.91 0.02 99.00 91.75 0.01 0.10 0.12 10.44 8.00 1.00 0.79 100.00 4.99 0.07 5.74 0.05 - 03/31/12 03/31/11 Investment book value 03/31/12 12/31/11 Indirect 0.09 99.98 100.00 100.00 99.99 1.00 99.90 61.92 8.25 99.99 99.90 99.88 89.55 92.00 99.00 99.21 100.00 99.99 60.00 60.00 99.99 50.68 100.00 100.00 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 99.95 100.00 100.00 100.00 100.00 109,174 (*) 3,152 4,360 15,946 27 293 35 5 40 (5) (2) 225 133,250 99,663 2,846 4,378 1 (2) 217 (37) 3 36 (38) (13) 48 107,102 2,346,785 234,479 69,111 6 1 237,508 3,812 8 4,603 1,761 95 647 14 18 5 2,089 2,900,942 2,666,862 232,948 65,550 7 831 3,786 8 4,478 1,669 86 625 20 1 20 5 1,856 2,978,752 (*) Equity pickup adjusted by unearned income. PAGE: 33 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Notes to financial statements As disclosed in the financial statements at December 31, 2011, a partnership between WEG and Cestari was performed with the organization of WEG-Cestari Redutores e Motorredutores S.A.. As from January 1, 2012, 100% of its assets and liabilities were consolidated. In January 2012, subsidiary WEG Equipamentos Elétricos S.A. acquired 41.89% interest in Zest Electric Motors (Pty) Ltd. Goodwill in the amount of R$ 51,107 was initially measured as the excess consideration transferred in relation to net assets acquired, and recognized in equity as capital transaction. Consideration transferred was made using available cash and cash equivalents in the amount of R$ 106,167. 10.2. Other investments These refer to other investments recorded at cost of acquisition in the amount of R$ 349 at March 31, 2012 (R$ 349 at December 31, 2011). 11. Property, plant and equipment Until March 31, 2012, the Company capitalized borrowing costs in the amount of R$ 471 (R$ 1,221 at December 31, 2011) referring to construction in progress. The costs are capitalized until the moment of transfer of construction in progress to property, plant and equipment in use. COMPANY 03/31/12 12/31/11 15,973 15,973 15,973 15,973 Land, construction and facilities Equipment Furniture and fixtures Hardware Construction in progress Reforestation Other Subtotal Accumulated depreciation/depletion Construction and facilities Equipment Furniture and fixtures Hardware Reforestation TOTAL Annual depreciation rate (%) 02 to 03 05 to 20 07 to 10 20 to 50 - (4,082) 11,891 (4,017) 11,956 CONSOLIDATED 03/31/12 12/31/11 1,093,752 1,073,721 2,524,027 2,455,418 75,920 76,988 80,021 70,884 64,482 70,434 48,934 48,676 41,906 39,476 3,929,042 3,835,597 (174,542) (1,158,754) (37,281) (58,324) (7,640) (13,563) 2,478,938 (169,563) (1,102,709) (39,907) (55,352) (7,325) (14,981) 2,445,760 PAGE: 34 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Notes to financial statements a) Summary of changes in property, plant and equipment: Class of PPE Land, construction and facilities Equipment Furniture and fixtures Hardware Construction in progress Reforestation Other TOTAL 12/31/11 904,158 1,352,709 37,081 15,532 70,434 41,351 24,495 2,445,760 Transfer Acquisitions between classes 11,214 4,154 14,937 32,844 525 2,511 (514) 8,185 (24,551) 18,738 258 (1,611) 6,734 73,424 Write-offs (1,569) (49) (38) 13 (493) (2,136) Deprec. and depletion (4,621) (36,854) (1,534) (1,490) (316) (535) (45,350) Exchange effect 4,305 3,206 104 23 (153) (245) 7,240 03/31/12 919,210 1,365,273 38,638 21,698 64,481 41,293 28,345 2,478,938 b) Amounts provided as collateral – PPE items were provided as collateral for loans, financing, labor claims and tax suits in the amount of R$ 14,526 – consolidated at March 31, 2012 (R$ 14,333 at December 31, 2011). 12. Intangible assets - consolidated Amortization /years Projects: - Development of products and processes - Information technology Software license Other Subtotal Goodwill on acquisition of subsidiaries 5 5 5 5 Cost 69,505 79,442 61,488 34,638 245,073 460,097 705,170 - TOTAL Accumulated amortization (69,505) (73,195) (44,729) (26,384) (213,813) (21,387) (235,200) 03/31/12 6,247 16,759 8,254 31,260 438,710 469,970 12/31/11 8,329 10,959 9,393 28,681 331,541 360,222 a) Summary of changes in intangible assets: 12/31/11 Projects: - Development of products and processes - Information technology Software license Other Subtotal Goodwill on acquisition of subsidiaries TOTAL 8,329 10,959 9,393 28,681 331,541 360,222 Additions 6,541 27 6,568 56,780 63,348 Amortization (2,082) (1,290) (427) (3,799) (3,799) Exchange effect 549 (739) (190) (718) (908) 03/31/12 6,247 16,759 8,254 31,260 387,603 418,863 Goodwill additions in the period refer to acquisition of interest in WEG-Cestari Redutores e Motorredutores S.A.; as well as the change in the value of acquisition of Electric Machinery Holding Company. b) Schedule of amortization of intangible assets (except goodwill): 2012 2013 2014 2015 2016 onward TOTAL 11,488 5,841 4,557 2,559 6,815 31,260 PAGE: 35 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Notes to financial statements 13. Loans and financing At March 31, 2012, financing raised in foreign currency comprises Advances on Exchange Contracts (ACC’s), BNDESFINEM 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$ 458.7 million in the short term (R$ 497.1 million at December 31, 2011) and R$ 44.4 million in the long term (R$ 23.5 million at December 31, 2011), corresponding to US$ 273.4 million (US$ 277.8 million at December 31, 2011). Direct financing from BNDES is secured by sureties of the controlling company WEG S.A. Finame financing is secured by sureties and chattel mortgage. All covenants related to capitalization, current and net debt/Ebitda ratios, included in the contracts with BNDES and IFC, are being met. Type IN BRAZIL SHORT TERM Working capital (ACC’s) Working capital Working capital Working capital Working capital Non Deliverable Forwards (NDF) Property, plant and equipment Property, plant and equipment OTHER Annual charges Interest of 1,% to 4.0% p.a. (+) exchange variation TJLP (+) 1.4% to 5.0% p.a. Interest of 4.0% to 5.3% p.a. US Dollar (+) 1.4% to 1.8% p.a. US Dollar (+) Libor (+) 3.25% p.a. Foreign exchange variation TJLP (+) 1.0% to 5.0% p.a. UFIR (+) 1.0% to 4.0% p.a. Sundry 1,005,544 473,053 163,801 332,220 15,407 6,614 609 6,435 3,029 4,376 1.204.287 596,087 247,694 330,505 15,868 6,335 310 5,939 1,126 423 TJLP (+) 1.4% to 3.0% 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 Dollar (+) Libor (+) 3.25% p.a. Foreign exchange variation Sundry 1,725,093 793,644 59,506 672,596 13,779 50,819 39,479 91,075 4,195 1,732,781 812,841 55,016 678,941 13,914 56,241 40,642 75,004 182 EURIBOR (+) 0.6% to 3.5% p.a. LIBOR (+) 0.9% to 4.5% p.a. 90% of PBOC (4.5% to 5.0%) p.a. BBSY (+) 1.3% to 1.5% p.a. Interest 1.5% to 11.75% p.a. 458,654 77,387 185,962 33,154 27,391 134,760 497,148 176,198 94,921 50,965 30,900 144,164 44,435 11,526 9,239 12,176 11,208 287 23,512 11,900 9,390 1,913 309 1,464,198 1,769,528 1,701,435 1,756,293 LONG TERM Working capital Property, plant and equipment Working capital Property, plant and equipment Working capital Working capital Export prepayment – PPE Other OVERSEAS SHORT TERM Working capital Working capital Working capital Working capital Working capital LONG TERM Working capital Working capital Working capital Working capital Other TOTAL SHORT TERM TOTAL LONG TERM CONSOLIDATED 03/31/12 12/31/11 90% of PBOC (4.5% to 5.0%) p.a. JIBAR (+) 3.0% to 3,5% p.a. Interest 1.0% to 6.4% p.a. EURIBOR 1.5% to 2.55% p.a. PAGE: 36 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Notes to financial statements Maturity of long-term financing and loans: 2013 2014 2015 2016 2017 onwards TOTAL 03/31/12 1,056,422 379,172 162,995 109,459 61,480 12/31/11 1,142,720 348,885 133,482 70,520 60,686 1,769,528 1,756,293 14. Provisions 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 counsel. 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 the provision for contingencies (i) Tax: - IRPJ and CSLL - INSS - PIS/COFINS - Other (i.1) (i.2) (ii) Labor COMPANY 03/31/12 12/31/11 2,184 1,660 1,853 1,660 331 - (iii) Civil 40,431 38,834 - - 63,505 63,456 229 229 3,383 3,682 2,413 1,889 152,587 145,616 559 559 541 541 - 21,752 17,362 4,390 21,300 17,223 4,077 (iv) Other TOTAL CONSOLIDATED 03/31/12 12/31/11 45,268 39,644 13,329 12,883 26,900 23,843 559 559 4,480 2,359 (v) Judicial deposits - Tax - Other b) Statement of changes in the period - consolidated 12/31/11 a) Tax b) Labor c) Civil d) Other TOTAL 39,644 38,834 63,456 3,682 145,616 Additions 5,624 1,777 3,019 10,420 Interest 326 95 421 Write-offs (2,572) (2,572) Reversals (506) (493) (299) (1,298) 03/31/12 45,268 40,431 63,505 3,383 152,587 c) The provisions set up refer substantially to: (i) Tax contingencies (i.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%. (i.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. PAGE: 37 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Notes to financial statements (ii) Labor contingencies The Company and its subsidiaries are defendants in labor claims primarily involving health and risk exposure, among others. In this respect, the amount of R$ 40,431 at March 31, 2012 (R$ 38,834 at December 31, 2011) was provisioned. (iii) Civil contingencies These correspond primarily to civil lawsuits, including personal injury, aesthetic damage, occupational diseases and indemnities arising out of occupational accidents. The amount of R$ 63,505 (R$ 63,456 at December 31, 2011) was provisioned. (v) Restricted judicial deposits IRPJ/CSLL on “Plano Verão” Other TOTAL RESTRICTED JUDICIAL DEPOSITS - Non-restricted judicial deposits TOTAL JUDICIAL DEPOSITS COMPANY 03/31/12 12/31/11 559 541 559 541 559 541 CONSOLIDATED 03/31/12 12/31/11 13,195 13,195 8,557 8,105 21,752 21,300 2,738 2,738 24,490 24,038 The judicial deposits not restricted to the contingencies are awaiting a decree allowing withdrawal thereof. d) Contingencies classified as possible losses At March 31 2012, 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$ 88,603 (R$ 82,115 at December 31, 2011). The proceedings considered relevant and on which there is a legal opinion involve: - tax based on profit computed as a percentage of gross revenue in the estimated amount of R$ 68.0 million. - tax on profits arising abroad in the estimated amount of R$ 18.0 million. 15. Equity a) Capital The Company capital is represented by 620,905,029 common registered book shares, with voting rights and no par value, including 500,000 treasury stock, as per item “d”. b) Shareholders’ remuneration – interest on equity capital On March 20, 2012, the Company declared interest on equity capital in the gross amount of R$ 47,443 (R$ 40,326 net) corresponding to R$ 0.065 per share, net of 15% withholding income tax, pursuant to paragraph 2, article 9 of Law No. 9249/95, except for corporate shareholders that are already exempt from the mentioned tax. Under the terms of article 37 of the Articles of Incorporation and article 9 of Law No. 9949/95, interest on equity capital will be attributed to mandatory dividends and paid for capital represented by 620,405,029 shares as from August 15, 2012. c) Stock option plan (i) The plan The purpose of the Plan, to be managed by the Board of Directors, is to grant options to purchase WEG S.A. (“Company”) shares to statutory officers of the Company and its subsidiaries located in Brazil, with the objective of attracting, motivating and retaining them, in addition to aligning their interests to those of the Company and its shareholders. Each purchase option attributes to titleholder the right to purchase 1 (one ) common share issued by the Companhia (BM&FBOVESPA: “WEGE3”), strictly on the terms and conditions established by the Plan (“Option”). PAGE: 38 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Notes to financial statements Share purchase options to be granted are limited to a maximum of 2% (two percent) of total shares representing Company capital. Participants must maintain blocked for trading the shares representing the investment during the retention period, as defined by the Plan. The Plan may be extinguished, suspended or changed, at any time, based on proposal approved by the Company’s Board of Directors. (ii) The programs The Board of Directors may approve, on a half-yearly basis, Stock Option Programs ("Programs”), whereby the participants, number of options, strike price, distribution of options, effectiveness date and other specific rules are defined, with observance of the basic guidelines of each program. To participate in each program, participants must invest in Company shares the amount of their variable remuneration in the period. Number of shares Program Granted R$ Acquired Options Vesting period 1 st nd April/11 274,678 47,953 93,006 2 rd 3 Subtotal st September/11 274,678 19,072 37,894 1 nd 2 rd 3 Subtotal Restated price IPCA R$ 000 Option difference Option price Expenses 31,002 31,002 21.01 21.01 23.16 24.32 30.60 32.98 7.43 8.66 230 268 31,002 21.01 25.54 35.29 9.76 303 93,006 12,631 12,631 17.45 17.45 19.39 20.43 25.08 27.05 5.70 6.62 801 72 84 12,632 17.45 21.54 29.00 7.46 94 37,894 1 March/12 Number of options Strike price 535,000 42,620 76,820 2 st nd 3rd Subtotal Total 250 25,607 19.17 21.34 27.22 5.89 150 25,607 19.17 22.51 29.40 6.89 176 25,606 19.17 23.75 31.51 7.76 199 76,820 525 207,720 1,576 The weighted average fair value was determined based on the Black-Scholes-Merton method, considering the following factors: Program Vesting period 1st April/11 2nd 3rd 1st September/11 2nd 3rd 1st March/12 2nd 3rd Factors: Option strike price ( R$) 21.01 21.01 21.01 17.45 17.45 17.45 19.17 19.17 19.17 Option term - in days Related current share price (R$) 755 22.10 1,008 22.10 1,260 22.10 756 18.06 1,008 18.06 1,259 18.06 755 19.80 1,008 19.80 1,257 19.80 Expected share price volatility (%) Risk-free interest rate during option term (%) 26.33 26.33 26.33 29.88 29.88 29.88 29.85 29.85 29.85 12.79 12.81 12.83 10.90 11.05 11.22 9.76 10.12 10.33 Recording of expenses with stock options is made along the vesting period. At March 31, 2012, R$ 92 was recorded in other income account in the income statement for the year against capital reserve in equity. PAGE: 39 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Notes to financial statements d) Treasury stock The Company maintains in treasury 500,000 shares acquired to be used in connection with exercise of share purchase options by beneficiaries of the Company’s share purchase option plan or for subsequent cancellation or disposal. 16. Operating Revenue BREAKDOWN OF NET REVENUE CONSOLIDATED 03/31/12 03/31/11 Gross operating revenue Domestic market External market 1,607,331 929,573 677,758 1,343,137 862,863 480,274 Deductions Taxes Returns/rebates (237,569) (205,228) (32,341) (217,020) (187,592) (29,428) Net operating revenue 1,369,762 1,126,117 17. Operating expenses by nature The Company elected to present the consolidated income statement by function. As required by IFRS, the Company details below the consolidated income statement by nature: CONSOLIDATED 03/31/12 03/31/11 NATURE OF EXPENSE Depreciation and amortization Personnel expenses Raw materials and materials for use and consumption Freight and insurance expenses Other expenses (1,221,084) (49,573) (332,821) (629,110) (43,438) (166,142) (1,004,080) (47,499) (268,181) (526,561) (31,992) (129,847) FUNCTION OF EXPENSE Cost of products and services sold Selling expenses General and administrative expenses Management fees Other operating expenses (1,221,084) (977,795) (142,191) (63,004) (4,763) (33,331) (1,004,080) (815,455) (116,019) (54,444) (4,046) (14,116) PAGE: 40 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Notes to financial statements 18. Other operating revenues/expenses The amounts recorded refer to the share in net income, reversal/(provision) of tax proceedings and others, as follows: CONSOLIDATED 03/31/12 03/31/11 OTHER OPERATING REVENUES - Other OTHER OPERATING EXPENSES - Employee profit sharing - Employee profit sharing - foreign subsidiaries - Managing officer profit sharing - Provision /Reversal of tax suits - Tax incentives (Rouanet Law, Fia and others) - Other TOTAL NET 4,958 4,958 (38,289) (21,408) (1,536) (1,246) (4,420) (900) (8,779) (33,331) 8,671 8,671 (22,787) (17,808) (1,037) (970) (817) (373) (1,782) (14,116) 19. Financial income (expenses), net COMPANY 03/31/12 03/31/11 FINANCIAL INCOME Interest income Foreign exchange variation Present value adjustment - customers PIS/COFINS on interest on equity capital Other income FINANCIAL EXPENSES Interest on loans and financing Foreign exchange variation Present value adjustments – suppliers Other expenses FINANCIAL INCOME (EXPENSES), NET CONSOLIDATED 03/31/12 03/31/11 16,655 19,587 (2,982) 50 16,064 18,696 (2,676) 44 127,801 75,040 36,031 11,491 (2,982) 8,221 93,543 66,335 16,634 8,411 (2,676) 4,839 (356) (356) (43) (43) (81,916) (43,934) (27,149) (4,444) (6,389) (53,697) (31,823) (15,301) (4,691) (1,882) 16,299 16,021 45,885 39,846 PAGE: 41 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Notes to financial statements 20. Provision for income and social contribution taxes The Company and its subsidiaries in Brazil determine income and social contribution taxes whereby taxable profit is based on accounting records, except for WEG Administradora de Bens Ltda., Instrutech Ltda, Logotech Ltda and Agro Trafo Administradora de Bens S.A., which determine taxable profit as a percentage of gross sales. Provision for income tax was set up at the rate of 15%, plus 10% surtax, whereas social contribution tax was calculated at 9%, pursuant to current legislation. Provision for taxes of foreign companies is set up according to each country’s legislation. Income before income taxes Nominal rate COMPANY 03/31/12 03/31/11 148,095 122,146 34% 34% CONSOLIDATED 03/31/12 03/31/11 194,563 161,883 34% 34% IRPJ and CSLL at nominal rate (50,352) (41,530) (66,151) (55,040) 45,305 5,171 28 36,415 4,568 (35) (2,299) 4,519 4,981 16,131 (469) 179 (405) 6,025 14,410 (2,793) 152 8 144 (582) (577) (5) (43,288) (48,453) 5,165 (37,624) (40,104) 2,480 -0.10% 0.48% 22.25% 23.24% Reconciliation of income and social contribution taxes: Adjustments to calculate effective income and social contribution taxes: Investments in subsidiaries Difference in tax rates on income abroad Tax incentives Interest on equity capital Other adjustments IRPJ and CSLL on income Current tax Deferred tax Effective rate - % 21. Pension plan The Company and its subsidiaries are sponsors of WEG Seguridade Social – Pension Plan, whose main objective is to supplement the official pension plan provided by the social security system. This plan, administered by WEG Seguridade Social, provides the benefits of monthly income, sickness allowance supplementation, disability retirement supplementation, lump sum payment due to disability, death benefit, lump sum payment due to death, deferred proportional benefit and self-sponsorship. The number of participants at March 31, 2012 is of 20,371 (18,912 at March 31, 2011). The Company and its subsidiaries made contributions amounting to R$ 5,196 until March 31, 2012 (R$ 4,539 until March 31, 2011). Based on actuarial calculations made by independent actuaries, according to procedures established by CVM Rule No. 371/2000, no significant net actuarial liability was identified. 22. Insurance coverage The business unit in Brazil is responsible for managing the insurance portfolio of the WEG Group in Brazil and abroad, and it continuously prepares, together with the executive committee, risk policies for the WEG Group in order to protect its assets. The risk analysis assumptions adopted, given their nature, are not part of the scope of the audit of financial statements, and were therefore not examined by our independent auditors. In 2010, the Company began the process of implementation of the Worldwide Insurance Program (WIP), whereby local insurance policies will be replaced by worldwide policies, in compliance with the laws and standards effective in each country. Some of the worldwide insurance policies successfully implemented by the WEG Group are highlighted below: Transportation risk (export, import and domestic), civil liability for products, civil liability for management (D&O), surety bond and general civil liability. The above program was successfully completed in the first quarter, replacing all local policies by worldwide policies, and risk management of the Group will be aligned and in conformity with the risk management policy outlined by the WEG Group's executive board. PAGE: 42 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Notes to financial statements Insurance policies are issued only by multinational first-tier insurance companies that are able to provide services to the WEG Group in all countries where it operates. The financial strength and sustainability of these insurance companies are continuously monitored by the corporate unit in Brazil. Some of our policies and related capital are shown below: - Operating risks (assets): US$ 60 million - Loss of profits: US$ 20 million - Civil liability: US$ 25 million - Civil liability – products: US$ 100 million - Transportation: US$ 4 million per shipment (export and import) and R$ 6 million (domestic) 23. Financial instruments The Company and its subsidiaries carried out an assessment of their financial instruments, including derivatives, recorded in the financial statements at March 31, 2012, presenting the following book and market values: BOOK VALUE 03/31/12 12/31/11 Cash and cash equivalents: Cash and banks Short-term investments: - In local currency - In foreign currency - Non Deliverable Forwards – NDF Trade accounts receivable Trade accounts payable Loans and financing: - In local currency - In foreign currency - Non Deliverable Forwards – NDF MARKET VALUE 03/31/12 12/31/11 98,895 59,512 98,895 59,512 2,716,274 36,693 1,263,963 329,571 3,113,536 37,502 1,700 1,307,692 298,195 2,716,274 36,693 1,263,963 329,571 3,113,536 37,502 1,700 1,307,692 298,195 2,053,581 1,179,537 609 2,146,581 1,310,837 310 2,053,581 1,179,537 609 2,145,977 1,311,441 310 Risk factors of the financial instruments are primarily related to: (i) Financial risks Foreign currency risks The Company conducts export and import operations in several currencies and manages and monitors financial exposure, with a view to balancing its financial assets and liabilities within the limits set out by management. The financial exposure limit (balance sheet) corresponds to four months of revenue in foreign currency, as defined by the Company’s Board of Directors. The Company conducted exports in the amount of US$ 201.5 million (US$ 157.6 million at March 31, 2011), representing a natural hedge for debts and other costs denominated in other currencies, mainly in US$. Risk of debt charges These risks derive from the possibility of the subsidiaries incurring losses on account of fluctuations in interest rates or other debt indices, which increase financial expenses related to loans and financing raised in the market, or reduce interest income of subsidiaries. The Company continuously monitors market interest rates in order to assess the need for protection against risk of volatility of such rates. PAGE: 43 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Notes to financial statements Derivative financial instruments The Company has the following operations with derivative financial instruments: a) Non Deliverable Forwards (NDF), in the notional amount of: (i) US$ 27.1 million, held by subsidiary WEG Equipamentos Elétricos S.A., for the purpose of protecting exports against risks of exchange rate fluctuations. (ii) EUR 11.5 million, held by subsidiary WEG Equipamentos Elétricos S.A., for the purpose of protecting exports against risks of exchange rate fluctuations. (iii) US$ 13.3 million, held by the foreign subsidiary Zest Electric Motors (Proprietary) Limited, for the purpose of protecting its import operations against risks of exchange rate fluctuations; b) SWAP operations, in the notional amount of: (i) EUR 10.0 million and, (ii) GBP 0.9 million, both maintained by subsidiary Watt Drive Antriebstechnik GmbH (Austrian company acquired in November 2011), in order to hedge its financing against risks of Euribor and GBP (pound sterling) fluctuations. Management of the Company and its subsidiaries permanently monitor derivative financial instruments engaged through their internal controls. The sensitivity analysis table should be read in conjunction with other financial assets and liabilities denominated in foreign currency existing at March 31, 2012, as the effect of the estimated impacts of exchange rates on NDFs presented below will be offset, if effected, in whole or in part, against devaluations of all assets and liabilities. In preparing the table below, management defined that exchange rates used for MTM of financial instruments should be considered for the probable scenario (market value), valid at March 31, 2012. Such rates represent the best estimate of future behavior of prices and the value by which positions could be settled at the maturity. Unrealized gains and losses on derivative operations are recorded as loans and financing (losses) or short-term investments (gains), against foreign exchange gains (losses) in P&L. The table below presents the effect of “cash and expense” effects of the results of financial instruments in each of the scenarios in reais. PAGE: 44 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Notes to financial statements a) Non Deliverable Forwards (NDF) operations: Risk Counterparty Notional Value (In millions) Rate Market value at 03/31/12 Average rate Possible scenario 25% Remote scenario 50% Average rate R$ Average rate R$ R$ Dollar rise Banco Bradesco S.A. USD 5.0 US$/R$ 1.9203 (13) 2.4007 (2,415) 2.8808 (4,815) Dollar rise Bank of America USD 5.0 US$/R$ 1.9201 (31) 2.4001 (2,431) 2.8802 (4,831) Dollar rise Banco do Brasil S.A. USD 6.8 US$/R$ 1.9216 (11) 2.4020 (3,278) 2.8824 (6,545) Dollar rise JP Morgan USD 2.5 US$/R$ 1.9044 (16) 2.3805 (1,206) 2.8567 (2,396) Dollar rise Banco HSBC S.A. USD 0.5 US$/R$ 1.9200 (2) 2.4000 (242) 2.8799 (482) Dollar rise Banco Santander S.A. USD 6.3 US$/R$ 1.9290 (71) 2.4113 (3,109) 2.8935 (6,147) Dollar rise Standard Chartered USD 1.0 US$/R$ 1.9215 (2) 2.4018 (482) 2.8822 (963) EUR rise Banco Bradesco S.A. EUR 2.0 EUR/R$ 2.5136 (141) 3.1420 (1,397) 3.7704 (2,655) EUR rise Bank of America EUR 3.0 EUR/R$ 2.4841 (61) 3.1052 (1,925) 3.7262 (3,788) EUR rise Banco do Brasil S.A. EUR 2.0 EUR/R$ 2.5791 (10) 3.2221 (1,300) 3.8687 (2,589) EUR rise Banco Itaú S.A. EUR 1.0 EUR/R$ 2.5740 (90) 3.2176 (733) 3.8611 (1,377) EUR rise Banco Santander S.A. EUR 3.5 EUR/R$ 2.5280 (160) 3.1601 (2,372) 3.7921 (4,584) SUBTOTAL Dollar fall (608) First National Bank USD 13.3 US$/ZAR 7.7744 TOTAL (539) (20,890) 5,8308 (1,147) (6,157) (41,172) 3,8872 (27,047) (12,315) (53,487) b) Swap operations: Risk Counterparty Notional value (In millions) Possible scenario 25% Market value at 03/31/12 Average rate R$ Average rate R$ Remote scenario 50% Average rate R$ Euribor fall Bank Austria EUR 10.0 Interest 2.46% p.a. (4,968) Interest 1.84% p.a. (6,482) Interest 1.23% p.a. (7,997) GBP fall Bank Austria GBP 0.9 CHF/GBP 1.4471 (1,766) CHF/GBP 1.0853 (2,453) CHF/GBP 0.7235 (3,140) (6,734) (8,935) TOTAL (11,137) The recording was based on the market price at March 31, 2012 on an accrual basis. Such operations had a negative net impact at March 31, 2012 of R$ 3,109, recognized as financial expenses. The Company does not have margins given in guarantee for derivative financial instruments outstanding at March 31, 2012. (ii) Operating risks Credit risk Credit risk arises from the possibility of the subsidiaries not receiving amounts from sales operations or credits held with financial institutions resulting from short-term investments. To mitigate the risk arising out of sales operations, the Company’s subsidiaries adopt the practice of analyzing the financial position of their customers, establishing a credit limit and constantly monitoring their debt balances. In connection with financial institutions, the Company and subsidiaries only invest in low credit risk institutions. PAGE: 45 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Notes to financial statements 24. Government subsidies and assistance The Company was granted subsidies in the amount of R$ 1,641 arising from tax incentives, recognized in P&L for the period: a) WEG Amazônia S.A. 26 - ICMS incentive credit of 90.25% 25 - 75% reduction in IRPJ 1 b) WEG Linhares Equipamentos Elétricos S.A. 1,615 - ICMS incentive credit of 85.00% 1,615 All the conditions in order to obtain government subsidies were met. 25. Segment information Management has defined operating and geographic segments of the Company based on reports used internally to make strategic business decisions. The Company's management is structured and systematized with information on operations, considering the segments of industry, energy, overseas and consolidated. Brazil Revenue from sale of products and/or services Income before income taxes Depreciation/amortization/depletion Identifiable assets Identifiable liabilities Overseas Eliminations and adjustments Consolidated Industry 03/31/12 03/31/11 Energy 03/31/12 03/31/11 03/31/12 03/31/11 837,877 222,093 299,472 57,714 577,497 33,088 408,391 11,650 (345,085) (227,836) 1,369,762 1,126,117 (118,332) (68,449) 194,563 161,883 30,587 29,986 9,957 10,374 9,029 7,139 09/30/11 12/31/10 09/30/11 12/31/10 09/30/11 12/31/10 3,073,226 2,734,721 1,318,144 1,264,986 1,726,503 1,645,050 576,126 558,117 309,033 373,178 408,491 433,886 49,573 47,499 09/30/11 12/31/10 09/30/11 12/31/10 (241,013) (221,968) 5,876,860 5,422,789 (208,986) (193,975) 1,084,664 1,171,206 679,411 173,957 266,151 44,725 03/31/12 03/31/11 03/31/12 03/31/11 Industry: three phase and single phase motors of low and average voltage, drives & controls, industrial automation equipment, paints and varnish. Energy: electric generators for hydraulic and thermal power plants (biomass), hydro turbines (PCH – small hydroelectric plants), transformers, substations, control panels and system integration services. Overseas: Consists of operations conducted through subsidiaries located in several countries. The column of eliminations and adjustments includes eliminations applicable to the Company in the context of consolidated financial statements under IFRS. All operating assets and liabilities are presented as identifiable assets and liabilities. 26. Earnings per share – basic and diluted a) Basic Profit attributable to the Company shareholders Weighted average number of common shares held by shareholders (shares/thousand) Earnings per share - basic - R$ 03/31/12 148,247 620,405 0.238952 03/31/11 121,564 620,905 0.195785 PAGE: 46 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Notes to financial statements b) Diluted 03/31/12 03/31/11 Profit attributable to the Company shareholders 148,247 121,564 Weighted average number of potentially dilutive common shares held by shareholders (shares/thousand) 620,613 620,905 0.238872 0.195785 Earnings per share – diluted – R$ Potentially dilutive shares are the 207,720 shares referring to the share purchase option plan. 27. Statement of comprehensive income The cumulative translation adjustments are presented as other comprehensive income. These amounts are not subject to taxation. The presentation of the statement of comprehensive income is required by CPC 26 - Presentation of Financial Statements, and includes other comprehensive income, corresponding to revenues and expenses not recognized in the income statement, as required or permitted by the pronouncements, interpretations and guidance issued by Brazilian FASB (CPC). PAGE: 47 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Opinions and statements / Special Review Report - Unqualified The Shareholders and Board of Directors WEG S.A. Jaraguá do Sul, SC Introduction We have reviewed the interim, individual and consolidated financial information of WEG SA, contained in the Quarterly Information Form - ITR for the quarter ended March 31, 2012, which comprises the balance sheet at March 31, 2012 and related income statement, statement of comprehensive income, of changes in equity and cash flow statement for the quarter then ended, including explanatory notes. Management is responsible for the preparation of the interim individual financial information in accordance with CPC 21 – Interim Financial Reporting, and of the interim consolidated financial information in accordance with CPC 21 and with IAS 34 – Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), as well as for the fair presentation of this information in conformity with the standards issued by the Brazilian Securities and Exchange Commission (CVM) applicable to the preparation of Quarterly Financial Information (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review. Scope of review We conducted our review in accordance with Brazilian and International Standards on Review Engagements (NBC TR 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion on the individual interim financial information Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim individual financial information included in the quarterly information referred to above is not fairly presented, in all material respects, in accordance with CPC 21 applicable to the preparation of quarterly information (ITR) and presented consistently with the standards issued by the Brazilian Securities and Exchange Commission (CVM) applicable to quarterly information. Conclusion on the consolidated interim financial information Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim consolidated financial information included in the quarterly information referred to above is not fairly presented, in all material respects, in accordance with CPC 21 and IAS 34 applicable to preparation of quarterly information (ITR) and presented consistently with the standards issued by the Brazilian Securities and Exchange Commission (CVM) applicable to quarterly information. Other matters Interim statements of value added We have also reviewed the individual and consolidated interim statements of value added for the three-month period ended March 31, 2012, whose presentation in the interim financial information is required by rules issued by the Brazilian Securities and Exchange Commission (CVM) applicable to preparation of quarterly information (ITR), and as supplementary information under IFRS, which do not require SVA presentation. These statements were submitted to the same review procedures described above and, based on our review, we are not aware of any facts that would lead us to believe that they are not presented fairly, in all material respects, in accordance with the overall individual and consolidated interim financial information. Blumenau (SC), April 17, 2012. ERNST & YOUNG TERCO Auditores Independentes S.S. CRC-2-SC 000.048/F-O Marcos Antonio Quintanilha Accountant CRC-1-SP 132.776/O-3-T-SC PAGE: 48 of 49 ITR – Quarterly Information - 03/31/2012 - WEG SA Version : 1 Opinions and statements / Report of Supervisory Board or Equivalent Body The Supervisory Board meeting is scheduled for May/12. PAGE: 49 of 49
