A
ADR – American Depositary Receipt. Security
representing the shares of non-U.S. companies,
issued and traded in capital markets in the
United States.
Amortization – Accounting procedure to gradually
write off the value of an asset. In the case of fixed
assets, the term used is “depreciation” and for
natural resources the term “exhaustion” is employed.
Both mean, essentially, amortization.
Assets – Any goods or property with commercial
or exchange value belonging to a society, institution
or individual.
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B
Balanced Scorecard – Integrated tool used to manage
the implementation of a strategy through objectives,
indicators and inter-related projects that are distributed
across various perspectives in a business.
Bar – Long, straight product with a constant crosssection,
constituting a simple geometric form.
Billet – Steel section (usually square) resulting from
continuous casting or rolling of larger sections. The
section is usually square. Billets are the raw material
for the rolling of long products.
Blast furnace – A large scale furnace lined with
refractory brick used in integrated steel mills to
produce pig iron from iron ore.
Board of Auditors - Corporate governance body
comprising independent members, elected by the
shareholder's assembly. The Board of Auditors (as
per article 163 of law 6,404/76, Brazilian Corporate
Law) is in charge of overseeing the actions of
managers and making sure that legal and statutory
duties are met.
Board of Directors - Company’s governance body
comprising members elected by the shareholder’s
assembly. The Board of Directors is in charge of
(article 142 of law 6,404/76 Brazilian Corporate
Law) electing and replacing directors, monitoring and
providing opinions on the company’s management
and establishing the directions of business.
Bonus share - Distribution to shareholders of shares
resulting from increases in capital stock through
incorporation of reserves or issuance of new shares.
Bovespa Level 1 Corporate Governance - Set of
conduct rules for companies, managers and controlling
shareholders, which contribute to the appreciation of
shares and other assets issued by a company. Level
1 Companies are mainly committed to improving disclosure
to the market and shareholding dispersion.
By-product - Desirable or undesirable secondary
product of the industrial process.
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C
Capacity – Index of the production potential that
measures the output of a process. The capacity
of a process may be larger than the general capacity
of an industrial facility.
Capital market – Market in which financial assets,
such as shares or debentures, are traded.
Capital stock – Stock issued by a company and
having par value, stated value, or no par value
representative of the total invested capital.
Coaching – Interpersonal relationship in which one
person acts to identify and maximize the potential
and performance of an individual or team in search
of personal and professional growth.
Common share – Securities representing equity
ownership in a corporation, providing voter rights and
entitling the holder to a share of the company's
success through dividends and/ or capital appreciation.
Continuous casting – Process of continuous production
of billets or slabs from liquid steel that is poured
into a cast or mold.
Corporate governance – System by which corporations
are managed and supervised, involving the relationship
between shareholders/quota holders, board of
directors, executive committee, independent auditors
and board of auditors. Good corporate governance
practices are aimed at increasing the value of a
company’s shares, facilitating the access of companies
to capital resources and contributing to their continuity
(Brazilian Institute for Corporate Governance definition).
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D
Dividend – Cash amount distributed to shareholders
proportionally to the number of shares owned. Dividends are usually paid from the profit obtained
by a company in the current or previous fiscal year.
DR – Depositary Receipt. Serves as evidence of
deposit of a financial instrument with a custodian
institution for negotiation in international markets.
Drawing – Cold process by which wire rod is
transformed into wire.
Drawn product – Product obtained by drawing rolled
bars or wire rod.
Dust removal system – A highly efficient system
for filtering the tiny solid particles resulting from
steelmaking.
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E
EBITDA – Earnings before interest, taxes, depreciation
and amortization. It is calculated as gross profit
minus interest, sales, general and administrative
expenses plus depreciation and amortization.
EBITDA margin – Equal to EBITDA divided by total
revenue and expressed as a percentage. The percentage
represents the amount of each dollar of revenue
that results in EBITDA.
EBTDA – Earnings before taxes, depreciation and
amortization. It is calculated as gross profit minus
sales, general and administrative expenses plus
depreciation and amortization.
Electric arc furnace – Equipment for the production
of steel in which the metallic charge (scrap + solid
pig iron) is melted using energy resulting from an
electrode-generated electric arc.
Equity pickup – Realization of equity changes
in a controlled or subsidiary company reflected
on the results of the parent company.
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F
Fasb 133 – North American accounting standard.
Flat steel – Product category for steel including
plates and strip. Flat steel is used in car exteriors,
home appliances, etc.
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G
Galvanization – Coating of steel with a thin zinc
layer to improve resistance to corrosion and the
product's visual aspect.
Galvanized steel – Steel coated with a zinc layer for
protection against surface corrosion and improvement
of the product's visual aspect.
Global company – A company with operations in
many countries, relying on integrated management
and production processes, manufacturing products
in different regions of the world and replicating
its competitive advantages globally.
Gross debt – Amount referring to bank loans plus
issued debentures.
Gross margin – Equivalent to gross income divided
by net sales revenues. Gross margin is expressed
as a percentage representing the amounts (in different
currencies) of net sales revenues that produced
gross income.
Gross revenues – Total sales before cost of materials
and services.
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H
Hedge – A mechanism used by buyers and sellers
to reduce the risk of adverse price movements
in a security.
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I
Integrated mill – Steel mill that employs iron ore
as raw material.
Investment grade – Risk rating by specialized
agencies of companies or countries considered
as capable of honoring their commitments.
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J
Joint venture – Combined investment made by two
companies in a third.
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L
Ladle – Equipment in which liquid steel is stored for
adjustment of chemical composition (addition of alloys
to correct manganese, silicon and carbon levels),
temperature and composition homogenization, and to
improve the cleanliness of steel.
LD Converter – Equipment that refines liquid pig iron
and scrap into steel with chemical reactions produced
by high-pressure oxygen blows.
Liability – Encompasses a company’s obligations,
debt and equity investments.
Libor – London Interbank Offered Rate. Interest rate
for exchange between international banks, banks and
large companies, and banks and governments
in the Eurodollar market. Usually associated with
premiums in riskier loans.
Liquidity – Ability of an asset to be converted into
cash quickly.
Listed company – Company in which the capital
stock is represented by shares traded on the stock
market and over the counter.
Logistics – Process of planning, implementing and
controlling the entrance and exit of materials as well
as product storage, information and services. Logistics
is concerned with the entire production chain, from
suppliers to customers.
Long steel - Steel product in which one dimension
(length) is predominant. Includes bars, profiles, wire
rod, rebar, structural shapes and wires. Long steel is
Gerdau’s main product line.
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M
Market share – Measure of the participation of a brand
or product in the market.
Melt shop – In a steel mill, the area where steel
is produced.
Mesh (ribbed welded) – Grid frame made of ribbed
rebar used in the construction of concrete slabs.
Minority shareholder – Holder of a number of
shares that is not sufficient to control the company.
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N
Net assets –
The net value of a company’s assets.
Equivalent to the difference between the total value
of assets and the debt with third parties.
Net debt –
Gross debt minus cash and financial applications.
Net margin –
Equivalent to net income divided by net
sales revenues. Expressed as a percentage. Net margin
is expressed as a percentage representing the amounts
(in different currencies) of net sales revenues that
produced net income.
Net profit –
Earnings in a given period of time,
determined by subtracting a company's total expenses
from total revenue.
Net revenues –
Gross revenues minus sales taxes,
freight and discounts.
NGO –
Non-governmental organization. A non-profit
organization not associated with governments,
unions or political parties that operates in various
areas with the objective of improving certain aspects
of society.
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O
Officers – Officers are elected by the Board of Directors
or by the shareholders assembly. They are responsible for
representing and managing the company.
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P
Papers (capital market) – Negotiable securities
representing the smallest portion of the capital
of an open capital company.
Pig iron – Product of blast furnaces resulting from the
reduction of iron ore using charcoal or coke. It is the
liquid or solid raw material used to produce steel.
Preferred shares – Securities representing the
smallest portion of capital stock in a corporation,
providing privileges in terms of dividend distribution
and/or reimbursement of capital in the case
of dissolution. In general, preferred stock holders
do not enjoy voting rights.
Productivity – Ratio between what is produced and
the necessary resources for producing it in a given
time. In the steel industry, one of the most widely
used productivity indicators is ton/man/year.
Profile – Industrial product whose straight crosssection
is made up of simple geometrical figures.
Usually employed in structural applications.
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R
Rating – Risk assessment of an institution or its
shares made by a specialized company that evaluates
the credit quality of the issuing institution.
Rebar – A steel rod with ridges for use in reinforced
concrete.
Recycling – Process through which iron scrap
is re-used to produce steel.
Rolled product – Product resulting from the rolling
process, in which raw material is successively
compressed until acquiring the desired shape
and dimensions.
Rolling – Cold or hot mechanical process that changes
the cross-sectional dimensions or shape of steel
produced in the melt shop.
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S
Sarbanes-Oxley – A law enacted by the U.S.
Congress to protect investors from accounting fraud in
corporations. The rules and applications amend and
complement the current legislation for public
companies with shares traded in North American
stock exchanges.
Scale – Substance resulting from iron oxidation on
the surface of steel. Scale is formed during the hot
rolling process or when steel is exposed to high
temperatures.
Scrap – Iron material that is reprocessed for steel
production.
Semi-integrated mill – Steel mill in which the
production process encompasses refining and
conformation and which employs scrap and/or
sponge iron and pig iron to produce steel.
Senior Liquidity Facility – Credit line available for the
company for use in moments when the financial or
capital market is unfavorable, with guaranteed
access to resources under pre-defined conditions.
Shredder – Equipment to clean and break scrap.
Slab – A steel product that serves as the basis
for the production of plates and strips.
Slag – A mixture of metallic and non-metallic oxides
formed on the surface of steel during the production
process.
Specialty steel (long) – Manufactured through a process
that ensures specific physical and chemical characteristics
that are essential for special applications such as in
the automotive, oil, tools and machinery and
equipment industries.
Steel – An iron and carbon alloy with carbon content
not exceeding 1.5%, which may also contain other
chemical elements aimed at improving its properties.
Structural profiles – Category of steel product
including I and H beams, wide flange beams and
sheet piles. Used in buildings, industrial installations,
bridge reinforcements, etc.
Sustainability – A principle held in societies which
maintain the necessary characteristics for a just
social system that remains environmentally balanced
and economically prosperous for a long and undefined
period of time. The principle meets present needs
without compromising the capacity of future generations
to fulfill their own needs.
Swap – Hedge operation designed to protect
a company from financial risks such as interest
and exchange rates.
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T
Tag along –Right of minority shareholders to benefit
from the same conditions offered to controlling
shareholders if the control of the company is sold.
Third sector – Economy sector comprising not for
profit and non-governmental organizations (first
sector) and non-private companies (second sector).
Trainee – Recent university graduate who is being
consistently and rapidly prepared to assume
a position in a company.
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W
Wire rod – Round steel product obtained from the
rolling process. Wire rod is usually drawn and used
in the production of wire, screws and nails.
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Y
Yield – The annual rate of return on a share expressed
as dividends or interest on capital stock. It refers to
the relationship between annual dividends and interest
on capital stock and the price of a share at the end
of a specific year.