Provided By MZ Data Products
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 6-K
 
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
 
For the month of June, 2008

Commission File Number 1-14732
 

 
COMPANHIA SIDERÚRGICA NACIONAL
(Exact name of registrant as specified in its charter)
 

National Steel Company
(Translation of Registrant's name into English)
 

Av. Brigadeiro Faria Lima 3400, 20º andar
São Paulo, SP, Brazil
04538-132
(Address of principal executive office)
 

Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F. 

Form 20-F ___X___ Form 40-F _______

 Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.  

Yes _______ No ___X____


(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

FEDERAL PUBLIC SERVICE         
CVM – BRAZILIAN SECURITIES AND EXCHANGE COMMISSION         
QUARTERLY FINANCIAL INFORMATION    March 31, 2008    Accounting Practices 
COMMERCIAL, INDUSTRY & OTHER TYPES OF COMPANY        Adopted in Brazil 

REGISTRATION WITH CVM SHOULD NOT BE CONSTRUED AS AN EVALUATION OF THE COMPANY. 
COMPANY MANAGEMENT IS RESPONSIBLE FOR THE INFORMATION PROVIDED.
 

01.01 – IDENTIFICATION

1 - CVM CODE 00403-0  2 - COMPANY NAME COMPANHIA SIDERÚRGICA NACIONAL  3 - CNPJ (Corporate Taxpayer’s ID)33.042.730/0001-04 
4 - NIRE (Corporate Registry ID)33-3.00011595 

01.02 – HEAD OFFICE

1 - ADDRESS 
R. SÃO JOSÉ, 20 GR. PARTE 1602 PARTE 
2 - DISTRICT     
 CENTRO 
3 - ZIP CODE 
22010-020 
4 - CITY   
RIO DE JANEIRO 
5 - STATE 
RJ 
6 - AREA CODE 
21 
7 - TELEPHONE 
2141-1800 
8 - TELEPHONE 
   - 
9 - TELEPHONE 
  - 
10 - TELEX 
11 - AREA CODE 
21 
12 - FAX 
2141-1809 
13 - FAX 
   - 
14 – FAX 
   - 
 
15 - E-MAIL 
invrel@csn.com.br 

01.03 – INVESTOR RELATIONS OFFICER (Company Mailing Address)

1- NAME OTÁVIO DE GARCIA LAZCANO 
2 - ADDRESS 
AV. BRIGADEIRO FARIA LIMA, 3400 20° ANDAR 
3 - DISTRICT 
ITAIM BIBI 
4 - ZIP CODE 
04538-132 
5 - CITY   
SÃO PAULO 
6 - STATE   
SP 
7 - AREA CODE 
11 
8 - TELEPHONE 
3049-7100 
9 - TELEPHONE 
   - 
10 - TELEPHONE 
   - 
11 - TELEX 
12 - AREA CODE 
11 
13 - FAX 
3049-7150 
14 - FAX 
   - 
15 – FAX 
   - 
 
16 - E-MAIL 
invrel@csn.com.br 

01.04 – REFERENCE AND AUDITOR INFORMATION

CURRENT YEAR  CURRENT QUARTER  PREVIOUS QUARTER 
1 - BEGINNING 2 - END  3 - QUARTER  4 - BEGINNING  5 - END  6 - QUARTER  7 - BEGINNING  8 - END 
1/1/2008 12/31/2008  1/1/2008  3/31/2008  10/1/2007  12/31/2007 
09 - INDEPENDENT ACCOUNTANT 
KPMG AUDITORES INDEPENDENTES 
10 - CVM CODE 
00418-9 
11. TECHNICIAN IN CHARGE 
ANSELMO NEVES MACEDO 
12 – TECHNICIAN’S CPF (INDIVIDUAL TAXPAYER’S REGISTER)
033.169.788-28 

1


01.05 – CAPITAL STOCK

Number of Shares 

(In thousands)
1- CURRENT QUARTER 

3/31/2008 
2- PREVIOUS QUARTER 

12/31/2007 
3 – SAME QUARTER 
PREVIOUS YEAR 
3/31/2007 
Paid-in Capital 
     1 – Common  804,204  272,068  272,068 
     2 – Preferred 
     3 – Total  804,204  272,068  272,068 
Treasury Shares 
     4 – Common  34,734  15,578  15,578 
     5 – Preferred 
     6 – Total  34,734  15,578  15,578 

01.06 – COMPANY PROFILE

1 - TYPE OF COMPANY 
Commercial, Industry and Other Types of Company 
2 - STATUS 
Operational 
3 - NATURE OF OWNERSHIP 
Private National 
4 - ACTIVITY CODE 
1060 – Metallurgy and Steel Industry 
5 - MAIN ACTIVITY 
MANUFACTURING, TRANSFORMATION AND TRADING OF STEEL PRODUCTS 
6 - CONSOLIDATION TYPE 
Total 
7 - TYPE OF REPORT OF INDEPENDENT AUDITORS 
Qualified 

01.07 – COMPANIES NOT INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS

1 - ITEM  2 - CNPJ (Corporate Taxpayer’s ID) 3 - COMPANY NAME 

01.08 - CASH DIVIDENDS APPROVED AND/OR PAID DURING AND AFTER THE QUARTER

1 - ITEM  2 - EVENT  3 - APPROVAL  4 - TYPE  5 - DATE OF PAYMENT  6 - TYPE OF SHARE  7 - AMOUNT PER SHARE 
01  RCA  12/21/2007  Dividend  01/08/2008  Common  2.5930110000 
02  RCA  12/21/2007  Interest on Own Capital  01/08/2008  Common  0.4471180000 

 

2


01.09 - SUBSCRIBED CAPITAL AND CHANGES IN THE CURRENT YEAR

1 - ITEM 


2 - DATE OF CHANGE
 
3 - CAPITAL STOCK 
(In thousands of reais)
4 - AMOUNT OF CHANGE 
(In thousands of reais)
5 - NATURE OF CHANGE 

7 - NUMBER OF SHARES ISSUED  
(Thousand)
8 - SHARE PRICE WHEN ISSUED   
(In reais)

01.10 - INVESTOR RELATIONS OFFICER

1 - DATE 
05/06/2008 
2 - SIGNATURE 

 

3


02.01 – BALANCE SHEET - ASSETS (in thousands of Reais)

1 - CODE  2 - DESCRIPTION  3 - 3/31/2008  4 -12/31/2007 
Total Assets  26,242,986  26,608,601 
1.01  Current Assets  3,934,089  4,783,329 
1.01.01  Cash and Cash Equivalents  39,515  26,223 
1.01.02  Receivable  1,770,505  2,021,141 
1.01.02.01  Accounts Receivable  993,303  997,443 
1.01.02.01.01  Domestic Market  665,462  562,428 
1.01.02.01.02  Foreign Market  416,423  506,670 
1 .01.02.01.03  Allowance for Doubtful Accounts  (88,582) (71 ,655)
1.01 .02.02  Sundry Receivable  777,202  1,023,698 
1.01.02.02.01  Employees  4,742  3,987 
1.01.02.02.02  Suppliers  142,758  283,582 
1.01.02.02.03  Recoverable Income and Social Contribution Taxes  3,446  804 
1.01 .02.02.04  Deferred Income Tax  228,314  300,628 
1.01.02.02.05  Deferred Social Contribution  80,544  106,577 
1.01.02.02.06  Other Taxes  65,004  79,310 
1 .01.02.02.07  Proposed Dividends Receivable  238,203  238,203 
1.01.02.02.08  Other Receivable  14,191  10,607 
1.01.03  Inventories  1,548,787  1,780,473 
1.01.04  Other  575,282  955,492 
1.01.04.01  Marketable Securities  352,174  718,892 
1.01.04.02  Prepaid Expenses  36,861  50,353 
1.01 .04.03  Insurance Claimed  186,247  186,247 
1.02  Non-Current Assets  22,308,897  21,825,272 
1.02.01  Long-Term Assets  2,525,358  2,472,203 
1.02.01.01  Sundry Receivable  820,303  815,445 
1.02.01.01.02  Securities Receivable  131,759  132,816 
1.02.01.01.03  Deferred Income Tax  411,983  405,706 
1.02.01.01.04  Deferred Social Contribution  136,178  134,553 
1.02.01.01.05  Other Taxes  140,383  142,370 
1.02.01.02  Receivable from Related Parties  888,222  819,988 
1.02.01.02.01  Associated and Related Companies 
1.02.01.02.02  Subsidiaries  888,222  819,988 
1.02.01.02.03  Other Related Parties 
1.02.01.03  Other  816,833  836,770 
1.02.01.03.01  Judicial Deposits  665,717  684,338 
1.02.01.03.02  Marketable Securities  90,834  90,834 
1.02.01.03.03  Prepaid Expenses  33,068  34,371 
1.02.01.03.04  Other  27,214  27,227 
1.02.02  Permanent Assets  19,783,539  19,353,069 
1.02.02.01  Investments  7,022,302  6,573,043 
1 .02.02.01.01  In Associated/ Related Companies 

4


02.01 – BALANCE SHEETS - ASSETS (in thousands of Reais)

1 - CODE  2 - DESCRIPTION  3 - 3/31/2008  4 -12/31/2007 
1 .02.02.01.02  In Associated/ Related Companies - Goodwill 
1.02.02.01.03  In Subsidiaries  6,988,451  6,535,133 
1.02.02.01.04  In Subsidiaries - Goodwill  33,820  37,879 
1.02.02.01.05  Other Investments  31  31 
1.02.02.02  Property, Plant and Equipment  12,598,577  12,618,843 
1.02.02.02.01  In Operation, Net  10,834,557  11,011,930 
1.02.02.02.02  In Construction  1,351,931  1,194,921 
1.02.02.02.03  Land  412,089  411,992 
1.02.02.03  Intangible Assets 
1.02.02.04  Deferred Charges  162,660  161,183 

 

5


02.02 – BALANCE SHEET - LIABILITIES (in thousands of Reais)

1 - CODE  2 - DESCRIPTION  3 - 3/31/2008  4 -12/31/2007 
Total Liabilities  26,242,986  26,608,601 
2.01  Current Liabilities  5,185,902  6,523,450 
2.01.01  Loans and Financing  1,058,779  1,386,359 
2.01.02  Debentures  347,929  350,147 
2.01 .03  Suppliers  875,483  1,046,600 
2.01.04  Taxes and Contributions  652,416  764,223 
2.01.04.01  Salaries and Social Contributions  68,743  72,897 
2.01.04.02  Taxes Payable  221,677  358,740 
2.01.04.03  Deferred Income Tax  110,798  93,000 
2.01 .04.04  Deferred Social Contribution  39,887  33,480 
2.01.04.05  Taxes paid in installments  211,311  206,106 
2.01.05  Dividends Payable  1,364,596  2,115,881 
2.01.06  Provisions  112,676  117,702 
2.01.06.01  Contingencies  149,525  123,897 
2.01.06.02  Judicial Deposits  (89,086) (57,315)
2.01 .06.03  Provision for Pension Fund  52,237  51,120 
2.01 .07  Debts with Related Parties 
2.01 .08  Other  774,023  742,538 
2.01.08.01  Accounts Payable - Subsidiaries  554,270  560,474 
2.01 .08.02  Other  219,753  182,064 
2.02  Non-Current Liabilities  12,706,943  12,457,541 
2.02.01  Long-Term Liabilities  12,706,943  12,457,541 
2.02.01.01  Loans and Financing  6,658,292  6,344,740 
2.02.01.02  Debentures  600,000  600,000 
2.02.01.03  Provisions  4,324,046  4,324,095 
2.02.01.03.01  Contingencies  3,461,703  3,389,164 
2.02.01.03.02  Judicial Deposits  (1,036,308) (1,011,875)
2.02.01.03.03  Deferred Income Tax  1,396,067  1,431,475 
2.02.01.03.04  Deferred Social Contribution  502,584  515,331 
2.02.01.04  Debts with Related Parties 
2.02.01.05  Advance for Future Capital Increase 
2.02.01.06  Other  1,124,605  1,188,706 
2.02.01.06.01  Allowance for Investment Loss  90,356  85,016 
2.02.01.06.02  Accounts Payable – Subsidiaries  83,756  83,941 
2.02.01.06.03  Provision for Pension Fund  143,980  180,760 
2.02.01.06.04  Taxes paid in installments  740,295  773,585 
2.02.01.06.05  Other  66,218  65,404 
2.02.02  Deferred Income 
2.04  Shareholders’ Equity  8,350,141  7,627,610 
2.04.01  Paid-In Capital Stock  1,680,947  1,680,947 
2.04.02  Capital Reserves  30  30 

6


02.02 – BALANCE SHEETS - LIABILITIES (in thousands of Reais)

1 - CODE  2 - DESCRIPTION  3 - 3/31/2008  4 -12/31/2007 
2.04.03  Revaluation Reserves  4,512,692  4,585,553 
2.04.03.01  Own Assets  4,290,796  4,360,515 
2.04.03.02  Subsidiaries/ Associated and Related Companies  221,896  225,038 
2.04.04  Profit Reserves  1,533,159  1,361,080 
2.04.04.01  Legal  336,189  336,189 
2.04.04.02  Statutory 
2.04.04.03  For Contingencies 
2.04.04.04  Unrealized Income 
2.04.04.05  Retention of Profits 
2.04.04.06  Special For Non-distributed Dividends 
2.04.04.07  Other Profit Reserves  1,196,970  1,024,891 
2.04.04.07.01  From Investments  1,768,321  1,768,321 
2.04.04.07.02  Treasury Shares  (571,351) (743,430)
2.04.05  Retained Earnings/ Accumulated Losses  623,313 
2.04.06  Advance for Future Capital Increase 

 

7


03.01 – STATEMENT OF INCOME (in thousands of Reais)

1 - CODE  2 - DESCRIPTION  3 - 1/1/2008 to 3/31/2008  4 - 1/1/2008 to 3/31/2008  5 - 1/1/2007 to 3/31/2007  6 - 1/1/2007 to 3/31/2007 
3.01  Gross Revenue from Sales and/or Services  3,104,282  3,104,282  2,431,278  2,431,278 
3.02  Gross Revenue Deductions  (778,609) (778,609) (482,279) (482,279)
3.03  Net Revenue from Sales and/or Services  2,325,673  2,325,673  1,948,999  1,948,999 
3.04  Cost of Goods and/or Services Sold  (1,381,399) (1,381,399) (1,180,380) (1,180,380)
3.04.01  Depreciation, Depletion and Amortization  (272,454) (272,454) (192,541) (192,541)
3.04.02  Other  (1,108,945) (1,108,945) (987,839) (987,839)
3.05  Gross Income  944,274  944,274  768,619  768,619 
3.06  Operating Income/Expenses  (29,217) (29,217) 227,514  227,514 
3.06.01  Selling Expenses  (101,029) (101,029) (68,532) (68,532)
3.06.01.01  Depreciation and Amortization  (1,869) (1,869) (1,606) (1,606)
3.06.01.02  Other  (99,160) (99,160) (66,926) (66,926)
3.06.02  General and Administrative  (68,952) (68,952) (58,283) (58,283)
3.06.02.01  Depreciation and Amortization  (4,126) (4,126) (4,268) (4,268)
3.06.02.02  Other  (64,826) (64,826) (54,015) (54,015)
3.06.03  Financial  (256,152) (256,152) (94,744) (94,744)
3.06.03.01  Financial Income  137,189  137,189  (105,257) (105,257)
3.06.03.02  Financial Expenses  (393,341) (393,341) 10,513  10,513 
3.06.03.02.01  Foreign Exchange and Monetary Variation, net  (158,326) (158,326) 285,275  285,275 
3.06.03.02.02  Financial Expenses  (235,015) (235,015) (274,762) (274,762)
3.06.04  Other Operating Income  4,903  4,903  2,298  2,298 
3.06.05  Other Operating Expenses  (51,905) (51,905) (40,920) (40,920)
3.06.06  Equity pick-up  443,918  443,918  487,695  487,695 
3.07  Operating Income  915,057  915,057  996,133  996,133 
3.08  Non-Operating Income  (1,160) (1,160) (1,023) (1,023)
3.08.01  Income  196  196 
3.08.02  Expenses  (1,356) (1,356) (1,024) (1,024)

8


03.01 – STATEMENT OF INCOME (in thousands of Reais)

1 - CODE  2 - DESCRIPTION  3 - 1/1/2008 to 3/31/2008  4 - 1/1/2008 to 3/31/2008  5 - 1/1/2007 to 3/31/2007  6 - 1/1/2007 to 3/31/2007 
3.09  Income before Taxes/Profit Sharing  913,897  913,897  995,110  995,110 
3.10  Provision for Income and Social Contribution Taxes  (76,304) (76,304) (215,983) (215,983)
3.11  Deferred Income Tax  (66,495) (66,495) (25,639) (25,639)
3.11.01  Deferred Income Tax  (48,426) (48,426) (18,130) (18,130)
3.11.02  Deferred Social Contribution  (18,069) (18,069) (7,509) (7,509)
3.12  Statutory Profit Sharing/Contributions 
3.12.01  Profit Sharing 
3.12.02  Contributions 
3.13  Reversal of Interest on Shareholders’ Equity 
3.15  Income/Loss for the Period  771,098  771,098  753,488  753,488 
  OUTSTANDING SHARES, EX-TREASURY (in thousands) 769,470  769,470  256,490  256,490 
  EARNINGS PER SHARE (in Reais) 1.00212  1.00212  2.93769  2.93769 
  LOSS PER SHARE (in Reais)        

9


(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

FEDERAL PUBLIC SERVICE         
CVM – BRAZILIAN SECURITIES AND EXCHANGE COMMISSION         
QUARTERLY INFORMATION    March 31, 2008    Accounting Practices 
COMMERCIAL, INDUSTRY & OTHER TYPES OF COMPANY        Adopted in Brazil 

   
00403-0    COMPANHIA SIDERÚRGICA NACIONAL    33.042.730/0001-04 
   
         
   
04.01 – NOTES TO THE FINANCIAL STATEMENTS     
   

(In thousands of reais, unless otherwise stated)

1. OPERATIONS

Companhia Siderúrgica Nacional (“CSN” or “Company”) is engaged in the production of flat steel products and its main industrial complex is the Presidente Vargas Steelworks (“UPV”) located in the City of Volta Redonda, State of Rio de Janeiro.

CSN is engaged in the mining of iron ore, limestone and dolomite in the State of Minas Gerais and tin in the State of Rondônia, by means of the subsidiary ERSA, in order to meet the needs of UPV. It also maintains strategic investments in mining companies, railroad, electricity and ports, to optimize its activities. In addition, it is implementing a cement plant inside UPV, in Volta Redonda.

To be closer to clients and win markets on a global level, CSN has a steel distributor, two metal package plants in addition to a galvanized steel plant in the South and another in the Southeast of Brazil supplying mainly the home appliances and automotive industry. Abroad, the Company has a rolling mill in Portugal and another mill in the United States.

2. PRESENTATION OF THE QUARTERLY FINANCIAL INFORMATION

The individual (Company) and consolidated quarterly financial information was prepared in accordance with the accounting practices adopted in Brazil, based on the Brazilian Corporation Law (Law 6404/76 and its amendments) and rules issued by the Brazilian Securities and Exchange Commission - CVM.

With the objective of improving the information disclosed to the market, the Company is presenting the following additional information covering the Parent Company and the consolidated financial information:

(a) Segment reporting

A segment is a distinguishable component of the Company, intended for manufacturing products or rendering services – a business segment -, or in providing products and services within a particular economic environment – geographical segment -, which are subject to risks and rewards that are different from other segments.

(b) Statements of cash flows

The additional statements of cash flows are prepared in accordance with the guidance contained in the CVM Circular Letter 01/07, with the purpose of showing how the Company generates and uses cash resources and cash equivalents.

(c) Statements of added value

The Management discloses, in accordance with the guidance contained in the CVM Circular Letter 01/07 and CFC Resolution no. 1010/05, the Statement of Added Value which has as purpose to present the value of the wealth generated by the Company and its distribution among the elements that contributed to its generation.

All the information presented has been extracted from the Company’s accounting records including certain reclassifications in the regular statement of income, given that they are recorded in the statement of added value as distribution of the added value generated.

3. DESCRIPTION OF SIGNIFICANT ACCOUNTING PRACTICES

(a) Statement of income

The results of operations are recognized on the accrual basis.

Revenue from the sales of products is recognized when all risks and rewards have been transferred to the buyer. Revenue from services rendered is recognized in proportion to the stage of completion of the service. Revenue is not recognized in the statement of income if there are significant uncertainties as to its realization.

10


(b) Current and non-current assets

Marketable securities

The investment funds have daily liquidity and the assets are valued at fair value, according to instructions of the Central Bank of Brazil and CVM, since the Company considers these investments as trading securities available for sale held to maturity.

Fixed income securities and financial investments abroad are recorded at cost plus income accrued up to the date of the quarterly financial information, and do not exceed market value.

Trade accounts receivable

Trade accounts receivable are recorded at the invoiced amount, including the respective taxes and ancillary expenses. The allowance for doubtful accounts was recorded in an amount considered adequate by Management to support any losses arising on collection of accounts receivable.

Inventories

Inventories are stated at their average cost of acquisition or production and imports in transit are recorded at their cost of acquisition, not exceeding their market or realization values. Provisions for losses or obsolescence are recorded whenever Management considers it appropriate.

Investments

Investments in subsidiaries and jointly-owned subsidiary companies are recorded by the equity accounting method, and the goodwill ascertained in the acquisition of investments is presented by the net amount in a sub-account of this group. Other permanent investments are recorded at cost of acquisition.

Property, plant and equipment

The property, plant and equipment is presented at market or replacement values, based on appraisal reports issued by independent expert appraisal firms, as permitted by Resolutions 183/95 and 288/98 issued by the Brazilian Securities and Exchange Commission. Depreciation is calculated by the straight-line method, according to the remaining economic useful lives of the assets after revaluation. Depletion of the Casa de Pedra iron mine is calculated based on the quantity of iron ore extracted. Interest charges related to loans and financing specific for construction in progress are capitalized until the constructions are concluded.

The jointly-owned subsidiaries MRS Logística and Itá Energética S.A. maintain the registration of property, plant and equipment by the cost of acquisition, formation or construction.

Deferred charges

The deferred charges are recorded at the cost of acquisition, formation, development and implementation of projects that will generate an economic return to the Company within the next years, and their amortization is calculated on a straight-line basis based on the period foreseen for economic benefits arising from these projects, for a term no longer than ten years.

Other current and non-current assets

Stated at their realization value, including, when applicable, the yields earned up to the date of the quarterly financial information or, in the case of prepaid expenses, at cost.

(c) Current and non-current liabilities

These are stated at their known or estimated values, including, when applicable, accrued charges and monetary and foreign exchange variations incurred up to the date of the quarterly financial information.

11


Employees’ benefits

In accordance with Resolution 371/00, issued by the Brazilian Securities and Exchange Commission, the Company has been recording the respective actuarial liabilities as from January 1, 2002, in accordance with the aforementioned reported resolution and based on studies prepared by external actuaries.

Income and social contribution taxes

Current and deferred income and social contribution taxes are calculated with the tax rates of 15% plus an additional of 10% on taxable basis for income tax and with a 9% rate on taxable basis for social contribution on net income. In the calculation of taxes, the tax loss carryforward and negative basis of social contribution is also considered, limited to 30% of taxable income.

Tax credits are recorded for deferred taxes on tax losses carryforwards, negative basis of social contribution on net income and on temporary differences, pursuant to the CVM Instruction 37/02 and take into consideration the history of profitability and the expectation of generating future taxable income, based on a technical study.

(d) Derivatives

The derivatives operations are recorded in accordance with the characteristics of the financial instruments. Swap operations are recorded based on the net results of the operations, which are recorded monthly in line with the contractual conditions, and swaps traded through the exclusive funds are adjusted to fair value.

Exchange options are adjusted monthly to fair value whenever the position shows a loss. These losses are recognized as the Company’s liability with the corresponding entry in the financial results. Options traded through exclusive funds are adjusted to fair value and futures contracts have their positions adjusted to fair value on a daily basis by the Futures and Commodities Exchange - BM&F with recognition of gains and losses directly in the statement of income.

(e) Treasury Shares

As established by the CVM Instruction 10/80, treasury shares are recorded at cost of acquisition, and the market value of these shares is calculated based on the stock exchange quotation on the last day of the period.

(f) Accounting estimates

The preparation of the quarterly financial information in accordance with the accounting practices adopted in Brazil requires that Management uses its judgment in determining and recording the accounting estimates. The settlement of the transactions involving these estimates may result in significantly different amounts from those estimated, due to lack of precision inherent to the process of their determination. The Company periodically reviews the estimates and assumptions.

(g) Foreign Currency

The monetary assets and liabilities denominated in foreign currencies were converted into reais by the exchange rate of the closing date of the quarterly financial information and the differences resulting from the conversion of currencies were recognized in the results for the period. For the subsidiaries abroad, the assets, liabilities and result accounts were converted into reais by the exchange rate on the closing date of the quarterly financial information.

(h) Change in the Corporation Law – Law no. 11638/07

On December 28, 2007, Law no. 11638 was enacted, with effectiveness as from January 1, 2008. The purpose of the new law was to update the Brazilian corporate legislation to enable the convergence process of accounting practices adopted in Brazil with those in the international financial reporting standards (IFRS) and allow that new accounting rules and procedures are issued by the Brazilian Securities and Exchange Commission - CVM based on international accounting rules.

12


Pursuant to the CVM Instruction no. 469 of May 2, 2008, the Management of the Company and of its subsidiaries point out the following issues that in its evaluation may affect the preparation of the financial statements for the year ending December 31, 2008:

• In the shareholders’ equity a new subgroup will be created called “Equity Valuation Adjustment” with the purpose of recording the increases and decreases resulting from valuations at market value, mainly of certain financial instruments, and translation adjustments of investments in subsidiaries abroad, whose functional currency of the investee is different from the parent company;

• The assets and liabilities arising from non-current operations and from material current operations will be adjusted at present value;

• In property, plant and equipment there is the possibility of reversal of revaluation reserve. The new Law gave companies the option of maintaining the existing balances and realize these balances within the current rules or cancel these balances until the end of 2008;

• In deferred assets only pre-operating and restructuring expenses which will effectively contribute to the increase of the future result will be recorded.

Although the referred Law has already taken effect, the main changes introduced by it depend on the regulation by the Brazilian regulatory bodies. The Company’s Management, due to the complexity in the calculation and the need to change the control processes and systems of the Company and of its subsidiaries, to comply with the referred Law, did not conclude until the present date the quantification and evaluation of the possible impacts on the result for the year and the shareholders’ equity of the Company.

 

13


4. CONSOLIDATED QUARTERLY FINANCIAL INFORMATION

The accounting policies are consistent with those used in the prior quarter and are uniform in all the consolidated companies.

The consolidated quarterly financial information for the period ended March 31, 2008 and December 31, 2007 includes the following direct and indirect subsidiaries and jointly-owned subsidiaries:

    Functional     Ownership interest (%)    
       
Companies    currency    03/31/2008    12/31/2007    Main activities 
         
Direct investment: full consolidation                 
CSN Energy    US$    100.00    100.00    Equity interest 
                Financial operations, trading of products 
CSN Export    US$    100.00    100.00    and equity interest 
CSN Islands VII    US$    100.00    100.00    Financial operations 
CSN Islands VIII    US$    100.00    100.00    Financial operations 
CSN Islands IX    US$    100.00    100.00    Financial operations 
CSN Islands X    US$    100.00    100.00    Financial operations 
CSN Islands XI    US$    100.00    100.00    Financial operations 
CSN Overseas    US$    100.00    100.00    Financial operations and equity interest 
CSN Panama    US$    100.00    100.00    Financial operations and equity interest 
CSN Steel    US$    100.00    100.00    Financial operations and equity interest 
Sepetiba Tecon    R$    99.99    99.99    Maritime port services 
Pelotização Nacional    R$    99.99    99.99    Mining and equity interest 
Minas Pelotização    R$    99.99    99.99    Mining and equity interest 
CSN Aços Longos    R$    99.99    99.99    Steel and Metal products industry and trade 
Nacional Siderurgia    R$    99.99    99.99    Steel industry 
CSN I    R$    99.99    99.99    Equity interest 
Estanho de Rondônia - ERSA    R$    99.99    99.99    Mining 
Cia Metalic Nordeste    R$    99.99    99.99    Package production 
Indústria Nacional de Aços Laminados - INAL    R$    99.99    99.99    Steel products service center 
CSN Cimentos    R$    99.99    99.99    Cement production 
Inal Nordeste    R$    99.99    99.99    Steel products service center 
CSN Energia    R$    99.90    99.90    Trading of electricity 
Nacional Minérios    R$    99.99    99.99    Mining and equity interest 
CSN Gestão de Recursos Financeiros    R$    99.99    99.99    Financial operations and equity interest 
Congonhas Minérios    R$    99.99    99.99    Mining and equity interest 
GalvaSud    R$    15.29    15.29    Steel industry 
Direct investment: proportional consolidation                 
Itá Energética    R$    48.75    48.75    Electricity generation 
Companhia Ferroviária do Nordeste - CFN    R$    46.88    46.88    Railroad transport 
MRS Logística    R$    32.93    32.93    Railroad transport 
Indirect investment: full consolidation                 
CSN Aceros    US$    100.00    100.00    Equity interest 
CSN Cayman    US$    100.00    100.00    Financial operations, trading of products 
and equity interest 
CSN Iron    US$    100.00    100.00    Financial operations 
Companhia Siderurgica Nacional LLC    US$    100.00    100.00    Steel industry 
CSN Holdings Corp    US$    100.00    100.00    Equity interest 
Companhia Siderurgica Nacional Partner LLC    US$    100.00    100.00    Equity interest 
Energy I    US$    100.00    100.00    Equity interest 
Tangua    US$    100.00    100.00    Equity interest 
CSN Madeira    EUR    100.00    100.00    Financial operations, trading of products 
and equity interest 
Cinnabar    EUR    100.00    100.00    Financial operations and equity interest 
Hickory    EUR    100.00    100.00    Financial operations and trading of products 
Lusosider Projectos Siderúrgicos    EUR    100.00    100.00    Equity interest 
CSN Acquisitions    GBP    100.00    100.00    Financial operations and equity interest 
CSN Finance (UK)   GBP    100.00    100.00    Financial operations and equity interest 
Inversiones CSN Espanha S.L.    EUR    100.00    100.00    Financial operations and equity interest 
CSN Finance B.V. (Netherlands)   EUR    100.00    100.00    Financial operations and equity interest 
CSN Holdings (UK)   GBP    100.00    100.00    Financial operations and equity interest 
Companhia de Fomento Mineral    R$        100.00    Mining and equity interest 
MG Minérios    R$    99.99    99.99    Mining and equity interest 
Companhia Metalúrgica Prada    R$    99.99    99.99    Package production 
Itamambuca Participações    R$    99.93    99.93    Mining and equity interest 
Lusosider Aços Planos    EUR    99.93    99.93    Steel industry 
GalvaSud    R$    84.71    84.71    Steel industry 
CSN Energia    R$    0.10    0.10    Trading of electricity 

14


The quarterly financial information prepared in US dollars, in Euros and in Pounds Sterling were translated into Brazilian Reais at the exchange rate as of March 31, 2008 – R$/US$1.7491 (R$/US$1.7713 as of December 31, 2007), R$/EUR2.76060 (R$/EUR2.60859 as of December 31, 2007) and R$/GBP3.46864 (R$/GBP3.56102 as of December 31, 2007).

The gains and losses from these translations were recorded in the income statements of the related periods, as equity accounting in the parent company and exchange variation in the consolidated statements.

The following consolidation procedures were adopted in the preparation of the following consolidated quarterly financial information.

• Elimination of balances of asset and liability accounts between consolidated companies;
• Elimination of balances of investments and shareholders’ equity between consolidated companies;
• Elimination of balances of income and expenses and unrealized income arising from consolidated intercompany transactions;
• Presentation of income and social contribution taxes on the unearned income as deferred taxes in the consolidated quarterly financial information.

Pursuant to CVM Instruction 408/04 the Company consolidates the quarterly financial information of exclusive investment funds Diplic and Mugen.

The base date for the subsidiaries’ and jointly-owned subsidiaries’ quarterly financial information coincides with that of the parent company.

The reconciliation between shareholders’ equity and net income for the period of the parent company and consolidated is as follows:

    Shareholders’ Equity    Net income for the period / year 
     
    03/31/2008    12/31/2007    03/31/2008    03/31/2007 
         
Parent Company    8,350,141    7,627,610    771,098    753,488 
Elimination of income on inventories    (89,143)   (85,349)   (3,794)   9,415 
         
Consolidated    8,260,998    7,542,261    767,304    762,903 
         

15


5. RELATED-PARTY TRANSACTIONS

The purchase and sale of products and inputs and the contracting of services with subsidiaries are performed under normal market conditions, such as prices, terms, charges, quality etc. The main operations of borrowings, financing and loans are as follows:

a) Assets

   
    Accounts 
receivable 
      Loans (1)       Advance for    Advance to 
suppliers 
   
Companies      Financial    / current    Dividends    future capital      Total 
      Investments    accounts    receivable    increase      
               
CSN Export    559,211                        559,211 
Nacional Minérios    45,812            9,675    383,990        439,477 
Exclusive Funds        317,356                    317,356 
CFN            134,908        136,153        271,061 
CSN Madeira    172,313                        172,313 
CSN Cimentos    195                129,589        129,784 
Prada    33,168        71,177                104,345 
INAL    43,250        2,471    41,194            86,915 
MRS Logística    26            85,781        162    85,969 
CSN I                56,469            56,469 
CSN Aços Longos                    32,406        32,406 
GalvaSud    11,034            10,193            21,227 
Ersa                16,477            16,477 
CSN Energia                14,985            14,985 
Other (*)   5,023        447    3,429        198    9,097 
               
Total at 03/31/2008    870,032    317,356    209,003    238,203    682,138    360    2,317,092 
               
Total at 12/31/2007    889,791    683,690    202,382    238,203    620,512    1,249    2,635,827 
               
(1) Loans Receivable from related parties are price level restated by 101% of the Interbank Deposit Certificate (CDI) for CFN and 100% of CDI for Prada.
(*) Other: Tecon, Metalic, Inal Nordeste and ITASA.

b) Liabilities

   
Companies    Loans and financing    Derivatives    Accounts    Suppliers     
      payable       
           
  Prepayment (1)   Fixed Rate 
Notes (2)
  Loans and        Loans (3)        
      Intercompany    Swap    current    Other    Total 
      Bonds (2)       accounts         
               
Cinnabar    1,312,162    633,518    85,476        266,603        2,297,759 
CSN Iron    66,637        1,049,985                1,116,622 
CSN Islands VIII        1,054,169        (64,286)   1,607        991,490 
CSN Export    788,035                10,773        798,808 
CSN Madeira    340,679        18,313        267,949        626,941 
CSN Islands VII        558,807        (74,932)           483,875 
CBS Previdência                        196,217    196,217 
CSN Energia                    23,979        23,979 
INAL                    22,033    1,092    23,125 
CSN Aceros                    17,583        17,583 
Ita Energética                        9,215    9,215 
Ersa                        8,732    8,732 
Other (*)                   4,363    2,589    6,952 
Total at                             
03/31/2008    2,507,513    2,246,494    1,153,774    (139,218)   614,890    217,845    6,601,298 
               
Total at                             
12/31/2007    2,162,209    2,023,536    1,172,430    30,027    621,277    248,796    6,258,275 
               

(1) Contracts in US$ - CSN Export: interest from 6.15% to 7.46% p.a. with maturity on 05/06/2015.
Contracts in US$ - Cinnabar: interest from 5.75% to 10.0% p.a. with maturity on 01/13/2017.
Contracts in US$ - CSN Madeira: interest of 7.25% p.a. with maturity on 09/26/2016.
Contracts in US$ - CSN Iron: interest of 7.00% p.a. with maturity on 01/17/2012.

(2) Contracts in US$ - CSN Iron Intercompany Bonds: interest of 9.125% p.a. with maturity on 06/01/2047.
Contracts in YEN - CSN Islands VII: interest of 7.3% and 7.75% p.a. with maturity on 09/12/2008.
Contracts in YEN - CSN Islands VIII: interest of 5.65% p.a. with maturity on 12/15/2013.
Contracts in YEN - Cinnabar: interest of 1.5% p.a. with maturity on 07/13/2010.
Contracts in R$ - Cinnabar (part): IGPM + 6% p.a. with indefinite maturity.
Contracts in US$ - CSN Madeira (part): semiannual Libor + 2.5% p.a. with maturity on 09/15/2011.

16


(3) Contracts in US$ - CSN Madeira (part): semiannual Libor + 3% p.a. with indefinite maturity.
Contracts in US$ - CSN Export: semiannual Euribor + 0.5% p.a. with indefinite maturity.
Contracts in US$ - Cinnabar (part): semiannual Libor + 3% p.a. with indefinite maturity.

(*) OTHER: Prada, Metalic, Galvasud, Nacional Minérios and Fundação CSN.

c) Results

   
Companies    Income        Expenses 
         
      Interest and            Interest and         
  Products    monetary        Products    monetary         
   and    and     Total    and     and    Other    Total 
  services    exchange        services    exchange         
      variations            variations         
               
CSN Export    187,694    (1,675)   186,019    158,219    3,008        161,227 
INAL    222,810        222,810    97,227            97,227 
Companhia Metalúrgica Prada    48,295    1,838    50,133    17,104            17,104 
GalvaSud    95,491        95,491    56,809            56,809 
Cia Metalic Nordeste    12,398        12,398    7,669            7,669 
INAL Nordeste    12,706        12,706    5,907            5,907 
Nacional Minérios    19,953        19,953    10,269            10,269 
CFN        3,761    3,761                 
MRS Logística                82,534            82,534 
Cinnabar        (759)   (759)       75,993        75,993 
CSN Iron                    11,047        11,047 
CSN Madeira    74,014    2,497    76,511    32,427    (2,360)       30,067 
CSN Islands VII        58,864    58,864        64,239        64,239 
CSN Islands VIII        104,949    104,949        116,112        116,112 
Exclusive Funds        (101,606)   (101,606)                
Ersa                8,731            8,731 
Itá Energética                29,870            29,870 
Other (*)   195        195    899    (224)   (3,969)   (3,294)
               
Total at 03/31/2008    673,556    67,869    741,425    507,665    267,815    (3,969)   771,511 
               
Total at 03/31/2007    857,418    (167,085)   690,333    700,506    (148,437)   966    553,035 
               

(*) OTHER: CSN Cimentos, Fundação CSN, CSN Aceros, Tecon and CBS Previdência

17


6. CASH AND CASH EQUIVALENTS AND MARKETABLE SECURITIES

    Consolidated    Parent Company 
         
    03/31/2008    12/31/2007    03/31/2008    12/31/2007 
         
Current                 
   Cash and Cash Equivalents                 
      Cash and Banks    176,144    225,344    39,515    26,223 
 
   Marketable Securities                 
       In Brazil:                 
           Exclusive investment funds            317,356    683,690 
           Brazilian government securities    726,655    1,026,849         
           Fixed income and debentures    255,061    244,478    96    94 
           Derivatives    32,724    6,787         
         
    1,014,440    1,278,114    317,452    683,784 
       Abroad:                 
           Time Deposits    532,702    870,682    34,722    35,108 
           Derivatives    1,740,451    1,472,134         
         
    2,273,153    2,342,816    34,722    35,108 
 
         
Total Marketable Securities    3,287,593    3,620,930    352,174    718,892 
         
                 
         
Non-current                 
   Investments abroad    17,491    17,713         
   Debentures and other securities (net of provision)   90,834    90,834    90,834    90,834 
    108,325    108,547    90,834    90,834 
         

The available financial resources, in the parent company and in subsidiaries headquartered in Brazil, are basically invested in exclusive investment funds, whose cash is mostly invested in repurchase operations pegged to Brazilian government securities, with immediate liquidity. Additionally, a significant portion of the financial resources of the Company and its subsidiaries abroad is invested in Time Deposits in first-tier banks.

The exclusive funds are audited or reviewed by independent auditors and its assets account for possible losses in investments and operations carried out by those funds. The Company may be called to account for the operation fees of the fund (management, custody and audit fees) as well as to ensure the shareholders’ equity in the event of losses resulting from interest, exchange rate or other financial asset changes.

The Company holds 77% of the debentures issued by Companhia Brasileira de Latas (CBL) in 2002, in the amount of R$212,870 and provision for losses in the amount of R$123,197, recorded in the non-current assets as of March 31, 2008. The Management believes that the provision is adequate to support possible losses in the realization of assets. CSN is CBL’s main supplier of raw material.

7. ACCOUNTS RECEIVABLE

    Consolidated    Parent Company 
         
    03/31/2008    12/31/2007    03/31/2008    12/31/2007 
         
Domestic market                 
Subsidiaries            138,508    95,650 
Other customers    837,144    764,943    526,954    466,778 
       
    837,144    764,943    665,462    562,428 
Foreign market                 
Subsidiaries            731,524    794,141 
Other customers    363,534    387,808    8,482    4,794 
Advance on Export Contracts (ACE)   (323,583)   (292,265)   (323,583)   (292,265)
         
    39,951    95,543    416,423    506,670 
Allowance for doubtful accounts    (133,802)   (116,085)   (88,582)   (71,655)
         
    743,293    744,401    993,303    997,443 
         

18


8. INVENTORIES

        Consolidated        Parent Company 
     
    03/31/2008    12/31/2007    03/31/2008    12/31/2007 
         
Finished products    421,933    673,821    298,085    398,358 
Work in process    295,147    376,200    250,132    307,552 
Raw materials    822,862    743,143    505,217    577,173 
Supplies    596,085    573,441    502,831    486,171 
Provision for losses    (18,249)   (17,154)   (16,222)   (14,883)
Materials in transit    54,972    70,294    8,744    26,102 
         
    2,172,750    2,419,745    1,548,787    1,780,473 
         

9. DEFERRED INCOME AND SOCIAL CONTRIBUTION TAXES

(a) Deferred Income and Social Contribution Taxes

Deferred Income and Social Contribution taxes are recognized in order to reflect future tax effects attributable to temporary differences between the tax bases of assets and liabilities and their respective carrying value.

Pursuant to the CVM Instruction 371/02, a few Company’s subsidiaries, based on the expectation of future taxable income, as determined by technical valuation approved by Management, recognized tax credits on tax losses carryforward and negative bases of social contribution of previous years. These credits have no statutory limitation and their compensation is limited to 30% of annual taxable income. The book value of deferred tax assets is reviewed monthly and projections are reviewed annually. If there are any material aspects that may change the projections, these projections will be revised during the year.

        Consolidated        Parent Company 
     
    03/31/2008    12/31/2007    03/31/2008    12/31/2007 
         
Current assets                 
Income tax    307,585    377,669    228,314    300,628 
Social contribution    109,204    134,407    80,544    106,577 
         
    416,789    512,076    308,858    407,205 
         
Non-current assets                 
Income tax    472,719    466,006    411,983    405,706 
Social contribution    158,286    156,428    136,178    134,553 
         
    631,005    622,434    548,161    540,259 
         
Current liabilities                 
Income tax    129,459    104,115    110,798    93,000 
Social contribution    46,605    37,481    39,887    33,480 
         
    176,064    141,596    150,685    126,480 
         
Non-current liabilities                 
Income tax    1,484,714    1,521,040    1,396,067    1,431,475 
Social contribution    534,497    547,574    502,584    515,331 
         
    2,019,211    2,068,614    1,898,651    1,946,806 
         
 
 
         
    03/31/2008    03/31/2007    03/31/2008    03/31/2007 
         
Income                 
Income tax    (51,847)   18,297    (48,426)   (18,130)
Social contribution    (19,566)   5,910    (18,069)   (7,509)
         
    (71,413)   24,207    (66,495)   (25,639)
         

19


(b) The deferred income and social contribution taxes of the parent company are shown as follows:

    03/31/2008    03/31/2007 
     
    Income tax    Social contribution    Income tax     Social contribution 
         
    Short-
Term 
  Long-Term    Short-
Term 
  Long-
Term 
  Short-
Term 
  Long-
Term 
  Short-
Term 
  Long-
Term 
                 
Assets                                 
Provisions for contingencies    37,381    265,505    13,457    95,582    30,974    253,117     11,151    91,122 
Provision for interest on shareholders’ equity    29,823        10,736        17,681           6,365     
Provision for payment of private pension plans        35,995        12,958        45,190        16,268 
Taxes under litigation        33,711                31,947         
Tax losses    4,580                4,580             
Other provisions    156,530    76,772    56,351    27,638    247,393    75,452     89,061    27,163 
                 
    228,314    411,983    80,544    136,178    300,628    405,706    106,577    134,553 
                 
Liabilities                                 
Income and social contribution taxes on revaluation reserve    102,000    1,396,067    36,720    502,584    93,000    1,431,475     33,480    515,331 
Other    8,798        3,167                     
                 
    110,798    1,396,067    39,887    502,584    93,000    1,431,475     33,480    515,331 
                 

(c) The reconciliation between the income and social contribution taxes expenses and revenues of the parent company and consolidated and the application of the effective rate on net income before Corporate Income tax (IR) and Social Contribution (CSL) are shown as follows:

        Consolidated        Parent Company 
     
    03/31/2008    03/31/2007    03/31/2008    03/31/2007 
         
Income before income and social contribution taxes    965,715    1,053,467    913,897    995,110 
   Combined statutory rates    34%    34%    34%    34% 
         
Income Tax / Social Contribution at the combined statutory tax rate    (328,343)   (358,179)   (310,725)   (338,337)
Adjustments to reflect the effective tax rate:                 
   Benefit of Interest on shareholders’ equity – JCP    16,513    10,877    16,513    10,877 
   Equity income of subsidiaries at different rates or which are not taxable    130,672    61,816    154,088    91,759 
   Goodwill amortization    (19,372)   (3,089)   (1,015)   (3,089)
   Tax incentives    3,186    3,416    2,136    3,416 
   Other permanent (additions) deductions    (1,067)   (5,405)   (3,796)   (6,248)
Income and social contribution taxes on net income for the period    (198,411)   (290,564)   (142,799)   (241,622)
Effective rate    21%    28%    16%    24% 

20


10. INVESTMENTS

a) Direct investments in subsidiaries and jointly-owned subsidiaries

    03/31/2008    12/31/2007 
     
Companies    Number of 
shares (in units)
   Direct
Investment
     Net
Income
(loss) for 
the quarter 
  Shareholders’
Equity (unsecured 
liabilities)
  Direct
Investment
     Net
Income 
(loss) for 
the year 
  Shareholders’
Equity
(unsecured
liabilities)
   
       Common    Preferred             
                 
 
Steel                                 
GalvaSud    11,801,406,867        15.29    25.569    716.190    99.99    (63,694)   690,620 
CSN I    3,332,250,934    6,664,501,866    99.99    14,701    642,980    100.00    27,709    628,280 
CSN Steel    480,726,588        100.00    64,154    1,469,587    99.99    426,448    1,423,270 
INAL    421,408,393        99.99    (574)   626,592    99.99    60,775    627,165 
Cia. Metalic
Nordeste 
  87,868,185    4,424,971    99.99    857    154,847    99.99    (8,312)   154,007 
INAL Nordeste    37,800,000        99.99    (923)   53,354    100.00    594    54,030 
CSN Overseas    7,173,411        100.00    43,310    943,531    99.99    50,610    911,648 
CSN Aços Longos    5,024,366        99.99          100.00       
CSN Panama    4,240,032        100.00    78,462    739,781    100.00    348,175    669,714 
CSN Energy    3,675,319        100.00    247,052    1.062.836    99.99    506,319    817,231 
Nacional Siderurgia    1,000,000        99.99        1.000    100.00        1,000 
CSN Export    31,954        100.00    9,794    116.033    100.00    27,696    107,587 
CSN Islands VII    1,000        100.00    80    650    100.00    34    578 
CSN Islands VIII    1,000        100.00    19    4,201    100.00    488    4.235 
CSN Islands IX    1,000        100.00    (873)   4,585    100.00    (3,366)   5,528 
CSN Islands X    1,000        100.00    (992)   (26,230)   100.00    (4,020)   (25,558)
CSN Islands XI    1,000        100.00            100.00         
 
Logistics                                 
Sepetiba Tecon    254,015,053        99.99    2,545    165,796    99.99    8,301    163,250 
MRS Logistica    188,332,667    151,667,333    32.93    121,445    1,322,556    32.93    548,383    1,201,111 
CFN    160,695,617        46.88    (5,664)   (92,357)   46.88    (34,450)   (86,693)
 
Energy                                 
Itá Energética    520,219,172        48.75    9,281    592,704    48.75    29,617    583,423 
CSN Energia    1,000        99.99    7,176    29,128    99.90    9,208    85,249 
 
Mining                                 
ERSA    34,236,307        99.99    997    29,753    99.99    18,741    28,756 
Nacional Minérios    30,000,000        99.99    (12,818)   48,243    99.99    40,737    61,061 
Congonhas Minérios    5,010,000        99.99    129    5,211    99.99    72    5,082 
Pelotização Nacional    1,000,000        99.99        1,000    99.99        1,000 
Minas Pelotização    1,000,000        99.99        1,000    99.99        1,000 
 
Cement                        99.99         
CSN Cimentos    32,779,940        99.99    (2,013)   (20,831)   99.99    (12,120)   (18,818)

21


b) Movement of investments

    12/31/2007    03/31/2008 
     
Companies    Opening
Balance of
investment 
  Balance
of Provision
for losses 
  Equity pick-up
and provision
for losses 
     Goodwill
amortization (1)
  Closing
Balance of
investment 
  Balance
Provision
for losses 
           
 
Steel                         
GalvaSud    105,597        3,910        109,507     
CSN I    628,280        14,700        642,980     
CSN Steel    1,423,270        46,316        1,469,586     
INAL    627,165        (574)       626,591     
Cia. Metalic Nordeste    153.992        857        154,849     
INAL Nordeste    54,030        (676)       53,354     
CSN Aços Longos                     
Nacional Siderurgia    1,000                1,000     
CSN Overseas    911,648        31,884        943,532     
CSN Panama    669,714        70,069        739,783     
CSN Energy    817,231        236,720        1,053,951     
CSN Export    107,587        8,445        116,032     
CSN Islands VII    578        73        651     
CSN Islands VIII    4,235        (34)       4,201     
CSN Islands IX    5,528        (942)       4,586     
CSN Islands X        (25,558)   (672)           (26,230)
             
    5,509,856    (25,558)   410,075        5,920,604    (26,230)
Logistics                         
Sepetiba Tecon    163,250        2,545        165,795     
MRS Logistica    395,547        39,994        435,541     
CFN        (40,640)   (2,655)           (43,295)
             
    558,797    (40,640)   39,883        601,336    (43,295)
Energy                         
Itá Energética    284,419        4,524        288,943     
CSN Energia    85,164        7,198        92,362     
             
    369,583        11,722        381,305     
Mining                         
ERSA    66,633        997             (4,059)   63,571     
Nacional Minérios    61,061        (12,817)       48,244     
Congonhas Minérios    5,082        129        5,211     
Pelotização Nacional    1,000                1,000     
Minas Pelotização    1,000                1,000     
    134,776        (11,691)            (4,059)   119,026     
Cement                         
CSN Cimentos        (18,818)   (2,012)           (20,830)
Total    6,573,012    (85,016)   447,977             (4,059)   7,022,271    (90,356)

(1) It composes the parent company’s equity pick-up, and the consolidated balance of goodwill to amortize is shown in item (e) of this note.

c) Additional Information on the main operating subsidiaries

• GALVASUD

Located in Porto Real, in the State of Rio de Janeiro, the Company has as corporate purpose all industrial, commercial and sales promotion activities related to: i) installation and operation of a steel products services center, ii) installation and operation of a hot-immersion galvanization line, iii) installation and operation of laser welding lines for the production of welded blanks destined for the automobile production, iv) just in time supply to the automotive industry and, v) promotion and sales of the products of the Company and of third parties, shareholders inclusively, to the automobile industry.

CSN holds 15.29% of Galvasud’s capital stock directly and 84.71% indirectly through wholly-owned subsidiary CSN I.

• INDÚSTRIA NACIONAL DE AÇOS LAMINADOS – INAL

Located in Araucária, State of Paraná, with establishments in the States of São Paulo, Rio de Janeiro, Paraná, Rio Grande do Sul, Pernambuco and Minas Gerais. Its objective is to reprocess and act as distributor of CSN’s steel products, acting as a service and distribution center. Inal serves the industrial, automotive, home appliance, home building, and machinery and equipment segments, among others.

22


• INAL NORDESTE

Based in Camaçari, State of Bahia, the Company has as its main purpose to reprocess and distribute CSN’s steel products, operating as a service and distribution center in the Northeast region of the country.

• COMPANHIA METALÚRGICA PRADA

Based in the city of São Paulo, Prada has branches in the States of São Paulo, Minas Gerais, Santa Catarina and Rio Grande do Sul and has as main activities the manufacturing and trading of metallic products, manufacturing and trading of metallic packaging, as well as the import and export of these products.

For the manufacturing of its products, Prada uses as raw material tinplates supplied by CSN, which is its indirect parent company by means of INAL.

• CIA. METALIC NORDESTE

Based in Maracanaú, State of Ceará, the company has as corporate purpose the manufacturing of metallic packaging destined basically to the beverage industry.

Its operations unit is reckoned as one of the world’s most modern ones and counts on two different production lines: the can production line, whose raw material is tin-coated steel whose supplier is the parent company CSN, and the lid production line, which uses aluminum as raw material.

Its production is mainly focused on the North and Northeast markets of Brazil, with the surplus production of lids sold abroad.

The subsidiary received an incentive from PROVIN – Incentive Program to the Operation of Companies, established by the Government of the State of Ceará, which has as main purpose the promotion of the industrial development and job generation in the State.

• SEPETIBA TECON

Company whose objective is to exploit the No.1 Containers Terminal of the Itaguaí Port, located in Itaguaí, State of Rio de Janeiro. This terminal is linked to Presidente Vargas Steelworks by the Southeast railroad network, which is granted to MRS Logística.

Sepetiba Tecon was the winner of the Auction occurred on September 3, 1998, which allows the exploitation of the containers terminal for the term of 25 years, extendable for another 25 years.

• CSN ENERGIA

Its main objective is distributing and trading the surplus electric power generated by CSN and by companies, consortiums or other entities in which CSN holds an interest.

CSN Energia holds a balance receivable related to the electric power sales under the scope of the Electric Power Trade Chamber (“Câmara de Comercialização de Energia Elétrica”) – CCEE, in the amount of R$59,129 (R$59,129 as of December 31, 2007), which are due by concessionaires that present injunctions suspending the corresponding payments. Management understands that an allowance for doubtful accounts is not necessary in view of the judicial measures taken by the official entities of the sector.

23


• CSN CIMENTOS

Based in Volta Redonda, State of Rio de Janeiro, CSN Cimentos is a business in the process of implementation, which will have the production and trading of cement as main purpose. CSN Cimentos will use as raw material the blast furnace slag from the pig iron production of Presidente Vargas Steelworks. The results verified in this company refer to expenses related to residual expenditures resulting from activities of projects, constructions and assemblies, stopped in 2002, when the company was called FEM – Projetos, Construções e Montagens.

• ESTANHO DE RONDÔNIA – ERSA

Ersa is a subsidiary based in the State of Rondônia, where it operates two units, one in the city of Itapuã do Oeste and the other in the city of Ariquemes.

The subsidiary’s mining operation for cassiterite (tin ore) is located in Itapuã do Oeste and the casting operations from which metallic tin is obtained, which is one of the main raw materials used in UPV for the production of tin plates, is located in Ariquemes.

• NACIONAL MINÉRIOS - NAMISA

The company is headquartered in the city of Congonhas, State of Minas Gerais, and its main purpose is the trading of iron ore obtained from mining companies or other companies that trade this raw material, with special focus on exports.

The main operations are developed in the city of Congonhas, State of Minas Gerais, and in Itaguaí, State of Rio de Janeiro.

In July 2007, NAMISA acquired all the shares of the mining company Companhia de Fomento Mineral – CFM, a mining company which has a production capacity of 6 million tonnes of iron ore per year. On March 30, 2008 NAMISA incorporated at book value the net assets of CFM in the amount of R$30,838, and according to note 29 CSN analyzes the potential sale, partial or total, of this company.

d) Additional information on the main jointly-owned subsidiaries

The balances of the balance sheet and of the statement of income of the companies whose control is shared are shown as follows. These amounts were consolidated in the quarterly financial information of the Company, in accordance with the interest described in item (a) of this Note.

    03/31/2008    12/31/2007 
     
    CFN    MRS       ITASA    CFN    MRS     ITASA 
             
 
Current Assets    66,682    683,787    79,905    108,037    904,143    69,220 
Non-Current Assets    407,819    2,315,149    970,969    371,479    2,191,698    980,891 
   Long-term assets    35,760    284,799    4,269    32,712    274,005    4,177 
 Investments, Property, Plant and Equipment and Deferred Charges    372,059    2,030,350    966,700    338,767    1,917,693    976,714 
             
Total Assets    474,501    2,998,936    1,050,874    479,516    3,095,841    1,050,111 
             
 
Current Liabilities    42,923    864,087    120,394    46,596    1,143,200    115,278 
Non-Current Liabilities    523,935    812,293    337,776    519,613    751,530    351,410 
 
Shareholders’ Equity    (92,357)   1,322,556    592,704    (86,693)   1,201,111    583,423 
             
Total Liabilities and Shareholders’ Equity    474,501    2,998,936    1,050,874    479,516    3,095,841    1,050,111 
             

24


    03/31/2008    03/31/2007 
     
    CFN    MRS     ITASA    CFN    MRS     ITASA 
             
 
Net revenue    16,821    532,344    51,044    14,009    480,386    48,995 
   Cost of Goods and Services Sold    (14,751)   (303,428)   (12,310)   (16,864)   (262,540)   (12,435)
             
Gross Income (Loss)   2,070    228,916    38,734    (2,855)   217,846    36,560 
   Operating Revenue (Expenses)   (2,297)   (27,017)   (12,996)   (4,230)   (21,817)   (6,594)
   Net Financial Income    (5,807)   (16,416)   (11,657)   (8,721)   (11,893)   (11,865)
             
Operating Income (Loss)   (6,034)   185,483    14,081    (15,806)   184,136    18,101 
   Non-Operating Income    370    (4)         (10)    
             
Profit (Loss) before income and social contribution taxes    (5,664)   185,479    14,081    (15,806)   184,126    18,101 
   Current and deferred income and social contribution taxes        (64,034)   (4,800)       (62,593)   (6,168)
             
Net Income (Loss) for the year    (5,664)   121,445    9,281    (15,806)   121,533    11,933 
             

• CIA FERROVIÁRIA NORDESTE – CFN

CFN has as its main objective the exploitation and development of the public rail cargo transport service for the Northeast network.

CFN entered into a concession agreement with the Federal Government on December 31, 1997 for a period of 30 years, extendable for another 30 years. The agreement allows the development of the public service of exploitation of the northeast network which comprises 7 States of the Federation in an extension of 4,534 km. The concession also comprises the leasing of assets of Rede Ferroviária Federal SA (RFFSA) which serve this network and include, among others, constructions, permanent tracks, locomotives, railcars, vehicles, tracks and accessories.

In 2006, the merger of Transnordestina into CFN was authorized, which enabled CFN to concentrate its activities and those of its subsidiary on one single company. In addition, BNDESPar became the holder of a direct investment in CFN, thus making feasible the use of funds from FINOR (Northeast Investment Fund) for the project called “Transnordestina”.

• MRS LOGíSTICA

The Company’s main objective is to exploit and to develop public rail cargo transport service for the Southeast network – which comprises the stretch connecting Rio de Janeiro, São Paulo and Belo Horizonte.

MRS entered into a concession agreement with the Federal Government on December 1, 1996 for a period of 30 years, extendable for other 30 years. The agreement allows the development of the public service of exploitation of the southeast network. The concession also comprises the leasing of assets of Rede Ferroviária Federal SA (RFFSA) which serve this network for the same period of the concession and include, among others, constructions, permanent tracks, locomotives, railcars, vehicles, tracks and accessories.

MRS transports the iron ore from Casa de Pedra mine and raw material imported through the Port of Itaguaí, to the Presidente Vargas steelworks (UPV) in Volta Redonda. It also links the UPV steelworks to the ports of Rio de Janeiro and Santos and also to other cargo terminals in the State of São Paulo, which is the main market for CSN’s goods.

• ITÁ ENERGÉTICA S.A. – ITASA

Itasa holds a 60.5% interest in the Itá Consortium created for the exploitation of the Itá Hydroelectric Plant pursuant to the concession agreement of December 28, 1995, and its addendum no.1 dated July 31, 2000, executed between the consortium holders (Itasa and Centrais Geradoras do Sul do Brasil - Gerasul, formerly called Tractebel Energia S.A.) and the Brazilian Agency for Electric Energy (ANEEL).

25


CSN holds 48.75% of the subscribed capital and the total amount of common shares issued by Itasa, a special purpose company originally established to make feasible the construction of the Itá Hydroelectric Plant, the contracting of the supply of goods and services necessary to carry out the venture and the obtainment of financing through the offering of the corresponding guarantees.

e) Goodwill on acquisition of investments

As of March 31, 2008, the Company maintained recorded the amount of R$896,106 (R$954,452 as of December 31, 2007), net of amortizations, related to goodwill based on the expectation of future profits, with amortization up to five years, net of amortization.

    Balance at    Amortizations/    Balance at     
Goodwill on Investments:    12/31/2007    write-off    03/31/2008    Investor 
         
Parent Company                 
Ersa    37,878    (4,058)   33,820    CSN 
Sub-total parent company    37,878        33,820     
GalvaSud    41,761    (6,961)   34,800    CSN I 
CSN LLC    8,888    (2,745)   6,143    CSN Panama 
Prada    61,305    (3,831)   57,474    INAL 
Lusosider    11,864    (965)   10,899    CSN Steel 
CFM    792,600    (39,630)   752,970    NAMISA 
Other    156    (156)       INAL 
Total Consolidated    954,452    (58,346)   896,106     

f) Additional information on indirect interests abroad:

• Companhia Siderúrgica Nacional – LLC

Incorporated in 2001 with the assets and liabilities of the extinct Heartland Steel Inc., headquartered in Wilmington, State of Delaware – USA, it has an industrial plant in Terre Haute, State of Indiana – USA, where there is a complex comprising a cold rolling line, a pickling line for hot spools and a galvanization line. CSN LLC is a wholly-owned, indirect subsidiary through CSN Panama.

• LUSOSIDER

Incorporated in 1996 in succession to Siderurgia Nacional – a company privatized by the Portuguese government that year. Lusosider is the only Portuguese company of the steel sector to produce cold-rerolled flat steel, with a corrosion-resistant coating. The Company presents in Paio Pires an installed capacity of around 550 thousand tonnes/year to produce four large groups of metallurgic products: galvanized plate, cold-rolled plate and pickled and oiled plate.

Its products may be used in the packaging industry, in civil construction (piping and metallic structures), in home appliance components.

26


11. PROPERTY, PLANT AND EQUIPMENT

    Parent Company 
     
                03/31/2008    12/31/2007 
     
    Depreciation,
depletion and
amortization rate
(% p.a.)
  Revalued
Cost 
  Accumulated
depreciation,
depletion and
amortization 
  Net               Net 
           
Machinery and equipment    9.89    7,988,191    (709,781)   7,278,410    7,443,415 
Mines and mineral deposits    2.50    2,560,776    (86,996)   2,473,780    2,489,582 
Buildings    3.66    964,578    (38,511)   926,067    930,764 
Other assets    20.00    233,063    (90,261)   142,802    134,296 
Furniture and fixtures    10.00    105,129    (91,631)   13,498    13,873 
Land        412,089        412,089    411,992 
Property, plant and equipment in progress        1,351,931        1,351,931    1,194,921 
           
        13,615,757    (1,017,180)   12,598,577    12,618,843 
           
 
                    Consolidated 
     
                03/31/2008    12/31/2007 
   
Machinery and equipment        9,382,382    (1,082,441)   8,299,941    8,463,455 
Mines and mineral deposits        2,580,621    (98,847)   2,481,774    2,496,542 
Buildings        1,630,817    (140,080)   1,490,737    1,499,028 
Other assets        1,214,533    (382,212)   832,321    717,724 
Furniture and fixtures        126,914    (107,272)   19,642    20,293 
Land        475,056        475,056    488,350 
Property, plant and equipment in progress        1,782,006        1,782,006    1,610,250 
           
        17,192,329    (1,810,852)   15,381,477    15,295,642 
           

At the Extraordinary General Meeting held on April 30, 2007, pursuant to paragraphs 15 and 17 of the CVM Resolution 183/95, the shareholders approved the reappraisal report which included land, buildings, improvements, Casa de Pedra iron ore mine, machinery, equipment and facilities of the operating units of Volta Redonda, Arcos, Congonhas do Campo, Itaguaí, Barueri and Araucária, as well as the Company’s real estate properties for operating support.

In order to maintain uniform procedures, the Company also performed the reappraisal of the assets of the subsidiaries Galvasud, Inal, Inal Nordeste, Cia Metalic, Sepetiba Tecon, Estanho de Rondônia and CSN Cimentos, which were approved at the Extraordinary General Meetings held by the subsidiaries.

The portion of depreciation, depletion and write-off of the revaluated assets, absorbed in the result of each year, is transferred in shareholders’ equity in equal amount, from the revaluation reserve to retained earnings, thus, composing the base for the distribution of dividends. In the quarter ended March 31, 2008 this amount net of income and social contribution taxes amounted to R$72,861.

For the jointly-owned subsidiaries, property, plant and equipment are recorded by the cost of acquisition, formation or construction and are presented in this note, mainly in the group of other assets.

As of March 31, 2008, the Company presented R$6,327,186 (R$6,432,820 as of December 31, 2007) as revaluation of own assets and R$221,896 (R$225,038 as of December 31, 2007) as subsidiaries’ assets, net of depreciation.

The financial charges capitalized in the quarter amounted to R$22,012 in the parent company and R$22,864 in the consolidated. These charges are basically determined on the financing agreements for the company’s mining projects.

As of March 31, 2008, the assets provided as collateral for financial operations amounted to R$47,985 (R$47,985 as of December 31, 2007).

27


12. DEFERRED CHARGES

                Consolidated 
   
            03/31/2008    12/31/2007 
               
        Accumulated         
    Cost    Amortization    Net    Net 
         
Information technology projects    39,510    (33,679)   5,831    7,756 
Expansion projects    193,905    (131,769)   62,136    69,716 
Pre-operating expenses    116,428    (59,956)   56,472    31,695 
Other    243,968    (146,420)   97,548    117,304 
         
    593,811    (371,824)   221,987    226,471 
         
 
                Parent Company 
   
            03/31/2008    12/31/2007 
               
        Accumulated         
    Cost    Amortization    Net    Net 
         
Information technology projects    39,510    (33,679)   5,831    7,756 
Expansion projects    193,905    (131,769)   62,136    69,716 
Other    136,257    (41,564)   94,693    83,711 
         
    369,672    (207,011)   162,660    161,183 
         

The information technology projects are represented by projects for automation and computerization of operating processes that aim to reduce costs and increase the Company’s competitiveness.

The expansion projects are primarily related to expanding the production capacity of Casa de Pedra mine and enlarging the port of Itaguaí for the shipping of part of this production.

The amortization of the deferred charges related to information technology projects and other projects in 2008 was in the amount of R$14,993 (R$13,485 in the first quarter of 2007), of which R$12,504 (R$10,393 in the first quarter of 2007) was allocated to production costs and R$2,489 (R$3,092 in the first quarter of 2007) was allocated to selling, general and administrative expenses.

Funds applied in deferred assets are amortized on a straight-line basis over the time period expected for future benefits, not exceeding 10 years.

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13. LOANS AND FINANCING

                Consolidated            Parent Company 
     
        Current Liabilities        Non-
current
Liabilities 
      Current Liabilities        Non-
current
Liabilities 
   
    03/31/2008    12/31/2007     03/31/2008     12/31/2007     03/31/2008    12/31/2007    03/31/2008     12/31/2007 
   
                                 
                                 
FOREIGN CURRENCY                                 
Short-term Financing                                 
 Working capital        89,934                         
Long-Term Loans                                 
 Advance on Export Contracts    107,074    65,874    90,592    202,701    107,074    65,874    90,592    202,701 
 Prepayment    177,666    172,664    1,346,994    1,416,569    247,233    245,210    2,965,775    2,682,151 
 Perpetual Bonds    26,309    26,643    1,311,825    1,328,475                 
 Fixed Rate Notes    529,423    543,174    1,661,645    1,682,735    613,445    528,375    2,717,339    2,568,055 
 Import Financing    74,851    75,629    142,933    138,951    65,629    64,318    87,849    91,366 
 BNDES/Finame    1,404    1,526    81,847    81,865    1,324    1,448    76,905    77,881 
                 
 Other    149,628    17,391    297,661    291,033    8,761    9,935    10,232    10,362 
                 
    1,066,355    902,901    4,933,497    5,142,329    1,043,466    915,160    5,948,692    5,632,516 
 
LOCAL CURRENCY                                 
Long-Term Loans                                 
 BNDES/Finame    143,003    138,675    1,086,026    1,070,783    88,616    85,360    704,700    707,323 
 Debentures (Note 14)   412,077    413,220    640,950    640,950    347,929    350,147    600,000    600,000 
 Other    31,127    24,619    73,907    76,829    100,989    97,216    4,900    4,901 
                 
    586,207    576,514    1,800,883    1,788,562    537,534    532,723    1,309,600    1,312,224 
                 
Total Loans and Financing    1,652,562    1,569,349    6,734,380    6,930,891    1,581,000    1,447,883    7,258,292    6,944,740 
                 
 
Derivatives    (35,075)   258,639            (174,292)   288,623         
                 
 
Total Loans, Financing and Derivatives    1,617,487    1,827,988    6,734,380    6,930,891    1,406,708    1,736,506    7,258,292    6,944,740 
                 

As of March 31, 2008, the amortization of the long-term principal presents the following composition, by year of maturity:

    Consolidated    Parent Company 
     
2009    373,802    5.6%    294,858    4.1% 
2010    1,734,917    25.8%    951,099    13.1% 
2011    610,907    9.1%    612,567    8.4% 
2012    1,415,828    21.0%    1,359,769    18.7% 
After 2013    1,287,102    19.1%    4,039,999    55.7% 
Perpetual Bonds    1,311,824    19.5%         
         
    6,734,380    100.0%    7,258,292    100.0% 
         

Interest on loans and financing and debentures have the following annual rates as of March 31, 2008:

        Consolidated        Parent Company 
     
    Local Currency    Foreign Currency    Local Currency    Foreign Currency 
         
Up to 7%    113,573    1,825,767    11,746    3,485,128 
From 7.1 to 9%    448,887    591,359    430,859    2,068,613 
From 9.1 to 11%    609,335    3,567,862    456,600    1,438,417 
Above 11%    1,198,735        947,929     
Variable    16,555    (20,206)       (174,293)
         
    2,387,085    5,964,782    1,847,134    6,817,866 
         
        8,351,867        8,665,000 
         

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Percentage composition of total loans, financings and debentures, by contracted currency/index of origin:

        Consolidated        Parent Company 
   
    03/31/2008    12/31/2007    03/31/2008    12/31/2007 
   
Local Currency                 
   CDI    8.76    8.54    7.04    7.23 
   IGPM    4.81    4.38    4.99    4.76 
   TJLP    14.77    13.88    9.16    9.13 
   IGP-DI    0.14    0.13    0.14    0.13 
   Other currencies    0.09    0.07         
    28.57    27.00    21.33    21.25 
         
Foreign Currency                 
   US dollar    71.70    69.89    54.70    52.07 
   Yen            25.96    23.34 
   Euro    0.15    0.16    0.02    0.02 
   Other currencies    (0.42)   2.95    (2.01)   3.32 
    71.43    73.00    78.67    78.75 
         
    100.00    100.00    100.00    100.00 
         

In July 2005, the Company issued perpetual bonds amounting to US$750 million through its subsidiary CSN Islands X Corp.. These bonds of indefinite maturity pay 9.5% p.a. and the Company has the right to settle the transaction at its face value after 5 years, on the maturity dates for the interest.

As of March 31, 2008 loans with certain agents have certain restrictive clauses which are adequately complied with.

The Company contracts derivative operations with the purpose of minimizing significant fluctuation risks in the parity between the Real and foreign currencies.

The loans, financings and debentures recorded in equity accounts as of March 31, 2008, whose estimated market value is different from the book value, are represented as follows:

        Consolidated        Parent Company 
     
    Book Value    Market Value    Book Value    Market Value 
         
Loans, financings and debentures (short and long-term)        8,351,867    8,649,179         8,665,000    8,638,255 

The guarantees provided for loans comprise fixed assets items, bank guarantees, sureties and securitization operations (exports), as shown in the following table and does not consider the guarantees provided to subsidiaries and jointly-owned subsidiaries mentioned in Note 16.

    03/31/2008    12/31/2007 
     
Property, Plant and Equipment    47,985    47,985 
Personal Guarantee    68,391    68,159 
Imports    85,087    87,525 
Securitizations (Exports)   224,032    252,307 
     
    425,495    455,976 
     

The securitization operations carried out through the subsidiary CSN Export have certain covenants, which were adequately complied with on March 31, 2008.

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Funding and amortizations in the current period are demonstrated in the tables below:

Funding 
 
Company    Description    Principal
(millions)
  Issue    Term    Maturity    Interest
rate (p.a.)
                     
CSN Cimentos    BNDES      02/26/2008    7years    02/15/2014    TJLP+2.7%to3.2% 
Total funding in R$                       
CSN    ACC    20    03/19/2008    1year    03/16/2009    3.25% 
CSN Madeira    CSFB    80    01/16/2008    7months    08/01/2008    4.21% 
Total funding in US$        100                 

Amortizations 
                         
Company    Description    Principal
(millions)
  Settlement    Interest
rate (p.a.)
               
                         
CSN    ACC/ACE    R$60    Jan/2008    6.00% 

14. DEBENTURES

(a) Third issue

As approved at the Board of Directors Meeting held on December 11 and ratified on December 18, 2003, the Company issued, on December 1, 2003, 50,000 registered and non-convertible debentures, in two tranches, unsecured without preference, for the unit face value of R$10. These debentures were issued for a total issue value of R$500,000. The credits generated in the negotiations with the financial institutions were received on December 22 and 23, 2003, in the amount of R$505,029. The difference of R$5,029, resulting from the variation of the unit price between the date of issue and of the effective trading was recorded in Shareholders’ Equity as Capital Reserve, subsequently used in the stock repurchase program.

The debentures of this 1st tranche issue, amounting to R$250,000, representing 25,000 debentures, were redeemed on December 1, 2006, as provided for by deed and compensation interest corresponding to 106.5% of Cetip’s CDI was due on these debentures until the redemption date.

The face value of the 2nd tranche of this issue is adjusted by the IGP-M plus compensation interest of 10% p.a. and its maturity is scheduled for December 1, 2008.

(b) Fourth issue

As approved at the Board of Directors Meeting held on December 20, 2005 and ratified on April 24, 2006, the Company issued, on February 1, 2006, 60,000 non-convertible and unsecured debentures, in one single tranche, with a unit face value of R$10. These debentures were issued in the total issuance value of R$600,000. The credits from the negotiations with the financial institutions were received on May 3, 2006 in the amount of R$623,248. The difference of R$23,248, resulting from the variation of the unit price between the date of issue and the effective trading was recorded in Shareholders’ Equity as Capital Reserve and subsequently used in the stock repurchase program.

Compensation interest is applied on the face value balance of these debentures, representing 103.6% of the Cetip’s CDI, in the amount of R$9,934 as of March 31, 2008, and the maturity of the face value is scheduled for February 1, 2012, without early redemption option.

The deeds for these issues contain certain restrictive covenants, which have been duly complied with.

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15. DERIVATIVES AND FINANCIAL INSTRUMENTS

General Considerations

The Company’s business mainly consists of the production of flat steel to supply the domestic and foreign markets and mining of iron ore, limestone, dolomite and tin to supply the Presidente Vargas Steelworks’ (UPV) needs. The Company also sells the surplus production. In order to finance its activities, the Company often resorts to the domestic and international capital markets, and due to the debt profile it seeks, part of the Company’s debt is denominated in U.S. dollar.

As of March 31, 2008, the consolidated position of the outstanding derivative agreements was as follows:

    Agreement    Book Value    Fair Value 
   
    Maturity    Notional Value     
         
 
Variable income swap (*)   Jul-31-08    US$49,223 thousand    R$1,740,451    R$1,738,101 
 
Exchange swaps registered with    Apr-01-08    US$719,500 thousand    R$42,828    R$44,851 
CETIP    May-02-08    US$250,000 thousand    (R$7,753)   (R$5,171)
 
Exchange swaps registered with    Apr-01-08    US$560,000 thousand    R$34,040    R$34,040 
CETIP (contracted by exclusive    May-02-08    US$100,000 thousand    (R$2,401)   (R$2,401)
funds)   Mar-16-09    US$20,000 thousand    R$1,085    R$1,085 

(*) In June 2007, non-cash swap contracts, in the amount of US$458 million, were transferred from the subsidiary CSN Steel to the subsidiary CSN Madeira, through a loan agreement. The non-cash swap establishes that UBS Pactual Asset Management S.A. DTVM - the counterparty financial institution - undertakes to remunerate, at the end of the contract, the positive price variation of variable income assets, while the subsidiary undertakes to pay the same notional value adjusted at the fixed rate of 6.2569% per annum in US dollars. In conformity with an addendum to the agreement in July 2007, the maturity of the operation was extended to July 31, 2008.

The main non-operating risk factors that can affect the Company’s business are listed below, as well as a more detailed explanation about the derivatives associated with them:

I - Exchange rate risk

Although most of the Company’s revenues are denominated in Brazilian reais, as of March 31, 2008, R$5,999,852 or 72% of the Company’s consolidated loans and financing (except for derivates) were denominated in foreign currency (R$6,045,232 or 70% on December 31, 2007). As a result, the Company is subject to fluctuations in exchange and interest rates and manages the risk of the fluctuations in the amounts in Brazilian reais that will be necessary to pay the obligations in foreign currency, using a number of financial instruments, including dollar investments and derivatives, mainly futures contracts, swaps contracts, and exchange option contracts.

Exchange swap transactions

Exchange swap agreements aim to protect its liabilities denominated in foreign currency against the devaluation of the Real. Basically, the Company carried out swaps of its U.S. dollar-denominated liabilities for Interbank Deposit Certificate - CDI. The notional value (reference) of these swaps as of March 31, 2008 was US$1,649,500 thousand.

32


II – Interest rate risk

The Company has short and long term liabilities and, consequently, exposure to fixed and floating interest rates and some indexes, such as IGP-M. The Company also has assets which can be indexed to floating interest rates, fixed interest rates and/or other indexes. Due to this exposure, the Company may carry out transactions with derivatives to manage these risks better.

III – Derivatives associated with other price fluctuation risks of financial assets

Variable income swap agreements

The outstanding agreements as of March 31, 2008 were as follows:

Date
of Issue 
  Maturity date of
agreements 
  Notional value
(US$
thousand)
  Assets    Liabilities    Curve value (book value)   Fair value 
       
      3/31/2008   12/31/2007    3/31/2008   12/31/2007   3/31/2008   12/31/2007   3/31/2008   12/31/2007
                     
 
4/7/2003    7/31/2008    35,835    1,359,722    1,164,232    93,428    93,179    1,266,295    1,071,053    1,264,581    1,070,171 
4/9/2003    7/31/2008    5,623    211,814    181,361    14,652    14,613    197,161    166,748    196,893    166,610 
4/10/2003    7/31/2008    1,956    76,068    65,132    5,096    5,083    70,973    60,050    70,879    60,001 
4/11/2003    7/31/2008    1,032    39,281    33,633    2,686    2,679    36,594    30,954    36,545    30,929 
4/28/2003    7/31/2008    1,081    37,543    32,146    2,802    2,794    34,742    29,352    34,690    29,325 
4/30/2003    7/31/2008    76    2,645    2,264    198    197    2,446    2,066    2,443    2,065 
5/14/2003    7/31/2008    192    6,949    5,951    497    495    6,453    5,455    6,444    5,450 
5/15/2003    7/31/2008    432    15,787    13,518    1,115    1,112    14,673    12,406    14,652    12,395 
5/19/2003    7/31/2008    1,048    40,112    34,345    2,701    2,694    37,411    31,651    37,361    31,626 
5/20/2003    7/31/2008    264    10,425    8,926    679    677    9,746    8,248    9,733    8,242 
5/21/2003    7/31/2008    415    17,071    14,618    1,067    1,065    16,005    13,552    15,985    13,543 
5/22/2003    7/31/2008    326    13,445    11,513    840    837    12,607    10,676    12,591    10,668 
5/28/2003    7/31/2008    439    17,449    14,941    1,129    1,126    16,321    13,815    16,301    13,806 
5/29/2003    7/31/2008    408    16,543    14,169    1,048    1,045    15,496    13,120    15,477    13,110 
6/5/2003    7/31/2008    96    3,776    3,234    247    247    3,530    2,988    3,525    2,985 
                     
        49,223    1,868,632    1,599,983    128,184    127,843    1,740,451    1,472,134    1,738,101    1,470,926 
                     

The purpose of these swaps is to improve the return on CSN’s financial assets, increasing the exposure to variable income, which historically yields greater long term returns than the fixed income assets, thus, decreasing the impact of the cost of carrying CSN’s long term debt in consolidated financial expenses, net.

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IV – Consolidated balance sheet classified by currency

    03/31/2008 
   
    U.S. Dollar    Euro    Other
Foreign
Currencies 
  Reais    Total 
           
Current Assets    652,645    2,448,784    12,807    4,381,255    7,495,491 
   Cash and Cash equivalents    35,254    20,637    363    119,890    176,144 
   Marketable Securities    227,759    2,036,928    8,466    1,014,440    3,287,593 
   Customers    103,649    183,467        456,177    743,293 
   Inventories    117,555    169,895        1,885,300    2,172,750 
   Insurance Claimed                186,247    186,247 
   Deferred Income and Social Contribution Taxes                416,789    416,789 
   Other    168,428    37,857    3,978    302,412    512,675 
Non-current Assets    189,978    140,848        18,343,006    18,673,832 
   Long-term Assets    55,610    17,491        2,099,392    2,172,493 
     Financial Investments        17,491        90,834    108,325 
     Deferred Income and Social Contribution Taxes                631,005    631,005 
     Judicial Deposits                676,258    676,258 
     Other    55,610            701,295    756,905 
   Permanent    134,368    123,357        16,243,614    16,501,339 
           
Total    842,623    2,589,632    12,807    22,724,261    26,169,323 
           
 
Current Liabilities    1,657,503    193,803    81    3,646,239    5,497,626 
   Loans, Financing and Debentures    886,414    144,867        586,206    1,617,487 
   Suppliers    681,732    42,025    81    359,583    1,083,421 
   Deferred Income and Social Contribution Taxes                176,064    176,064 
   Taxes payable    76,334    524        512,285    589,143 
   Other    13,023    6,387        2,012,101    2,031,511 
Non-current Liabilities    4,712,597    220,874    108    7,477,120    12,410,699 
   Loans, Financing and Debentures    4,712,597    220,792    108    1,800,883    6,734,380 
   Contingent Liabilities- Net of Deposits        58        2,512,629    2,512,687 
   Deferred Income Tax and Social Contribution Taxes                2,019,211    2,019,211 
   Other        24        1,144,397    1,144,421 
Shareholders’ Equity                8,260,998    8,260,998 
           
Total    6,370,100    414,677    189    19,384,357    26,169,323 
           

V - Credit risk

The credit risk exposure with financial instruments is managed through restricting the counterparts to large financial institutions with high credit quality. Thus, Management believes that the risk of non-compliance by the counterparts is insignificant. The Company neither maintains nor issues financial instruments for commercial purposes. The selection of clients, as well as the diversification of its accounts receivable and the control on sales financing conditions through business segment are procedures adopted by CSN to minimize occasional problems with its customers. Since part of the Companies’ funds is invested in Brazilian government securities, there is exposure to the credit risk with the government.

VI - Fair value

The market values were calculated according to the conditions in the local and foreign markets as of March 31, 2008, for financial transactions with identical features, such as volume and term of the transaction and maturity dates. All transactions carried out in non-organized markets (over-the-counter markets) were contracted with financial institutions previously approved by the Company’s Board of Directors.

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16. SURETIES AND GUARANTEES

The Company has the following responsibilities with its subsidiaries and jointly-owned subsidiaries, in the amount of R$4,318.8 million (R$4,331.7 million on December 31, 2007), for guarantees provided:

    In millions         
       
Companies    Currency    03/31/2008    12/31/2007    Maturity    Conditions 
           
CFN    R$    250.2    250.2    11/15/2020    BNDES loan guarantee 
CSN Cimentos    R$    0.3        Indeterminate    Guarantee to settle the debt with INSS 
CSN Cimentos    R$    27.0        Indeterminate    Surety in letter of bank guarantee 
CSN Cimentos    R$    0.3    0.3    12/31/2020    To guarantee the fixed cash debt corresponding to tax credit 
CSN Cimentos    R$    7.9    7.9    10/13/2008    To ensure the Lessee the obligations of the Lessor 
CSN Energia    R$    1.0    1.0    Indeterminate    To guarantee the payment of the amount discussed in the Tax Foreclosure no.2007.51.01.503434-7 
INAL    R$    10.0        Indeterminate    Collateral signature in guarantee contract for tax foreclosure 
INAL    R$    0.6        Indeterminate    Collateral signature in guarantee contract to ensure ICMS processes 
INAL    R$    0.3    0.3    3/2/2008    To ensure the responsibility of the Lessee in the compliance with the requirement of the court collateral 
Prada    R$    0.4    0.4    1/3/2012    Electricity Purchase and Sale Agreement dated December 4, 2006 
Prada    R$    5.8    5.8    8/28/2008    To ensure the responsibility of the Lessee referring to rent agreement of real estate 
Sepetiba Tecon    R$    15.0    15.0    5/5/2011    Collateral by CSN to issue the Export Credit Note 
 
Total in R$        318.8    280.9         
 
CSN Islands VII    US$    275.0    275.0    09/12/2008    Guarantee by CSN in Bond issue 
CSN Islands VIII    US$    550.0    550.0    12/16/2013    Guarantee by CSN in Bond issue 
CSN Islands IX    US$    400.0    400.0    1/15/2015    Guarantee by CSN in Bond issue 
CSN Islands X    US$    750.0    750.0    Perpetual    Guarantee by CSN in Bond issue 
CSN Steel    US$    120.0    120.0    12/29/2011    Guarantee by CSN in Promissory Notes issue 
INAL    US$    1.4    1.4    3/26/2008    Personal guarantee to finance equipment 
Sepetiba Tecon    US$    16.7    16.7    9/15/2012    Personal guarantee to finance equipment acquisition and terminal implementation 
Aços Longos    US$    55.0    55.0    Indeterminate    Letter of Credit for equipment acquisition 
CSN Cimentos    US$    13.3    13.3    6/30/2008    Letter of Credit for equipment acquisition 
CSN Cimentos    US$    15.5    15.5    4/19/2008    Standby 
Nacional Minérios    US$    90.0    90.0    7/19/2010    Collateral by CSN to issue bank guarantee necessary to purchase of Cia de Fomento Mineral e Participações - CFM 
 
Total in US$        2,286.9    2,286.9         
 

17. TAXES PAID IN INSTALLMENTS

The Company filed a lawsuit pleading the right to the presumed credit of IPI on the acquisition of exempt, immune inputs, not taxed or taxed at zero rate and in May 2003 an injunction was obtained authorizing the use of the referred credits. The Regional Federal Court of the 2nd Region, through the appeal filed by the Federal Union, revoked the aforementioned authorization and on August 27, 2007, the lawsuit had an unfavorable decision to the Company. In view of such a decision, the Company paid the debit in 60 months, and as of March 31, 2008 the position was as follows:

    Parent Company 
 
     03/31/2008               12/31/2007 
 
Corporate Income Tax (IRPJ)   323,385    332,950 
Social Contribution on Net Income (CSLL)   54,024    55,621 
Excise Tax (IPI)   254,047    261,502 
Social Integration Program (PIS)   50,010    51,489 
Contribution for Social Security Financing (COFINS)   270,140    278,129 
     
    951,606    979,691 
     
 
Current Liabilities    211,311    206,106 
Non-current Liabilities    740,295    773,585 

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18. CONTINGENT LIABILITIES AND JUDICIAL DEPOSITS

The Company is currently party to several administrative and judicial proceedings involving actions and complaints of a number of issues. Details of the amounts recorded as provisions and the respective judicial deposits related to those actions are shown below:

       03/31/2008       12/31/2007 
     
    Judicial    Contingent    Net    Judicial    Contingent    Net 
    Deposits    Liabilities    Contingencies    Deposits    Liabilities    Contingencies 
             
Current                         
Contingencies:                         
   Labor    (42,396)   93,981    51,585    (40,422)   90,310    49,888 
   Civil    (46,690)   55,544    8,854    (16,893)   33,587    16,694 
             
Parent Company    (89,086)   149,525    60,439    (57,315)   123,897    66,582 
             
Consolidated    (92,645)   162,299    69,654    (60,956)   136,020    75,064 
             
 
Non-current                         
Contingencies:                         
   Environmental    (204)   54,529    54,325    (204)   55,202    54,998 
   Tax        1,044    1,044        961    961 
             
    (204)   55,573    55,369    (204)   56,163    55,959 
Legal liabilities questioned in court:                         
   Tax                         
     IPI premium credit    (916,107)   2,119,561    1,203,454    (892,961)   2,088,721    1,195,760 
     CSL credit over exports        1,026,684    1,026,684        987,072    987,072 
     SAT    (32,744)   109,957    77,213    (31,984)   109,546    77,562 
     Education Allowance    (33,121)   33,121        (33,121)   33,121     
     CIDE    (26,346)   26,346        (25,819)   25,819     
     Income tax / “Plano Verão”    (20,892)   20,892        (20,892)   20,892     
     Other provisions    (6,894)   69,569    62,675    (6,894)   67,830    60,936 
             
    (1,036,104)   3,406,130    2,370,026    (1,011,671)   3,333,001    2,321,330 
Parent Company    (1,036,308)   3,461,703    2,425,395    (1,011,875)   3,389,164    2,377,289 
             
Consolidated    (1,048,036)   3,560,723    2,512,687    (1,023,173)   3,484,645    2,461,472 
             
Total – Parent Company    (1,125,394)   3,611,228    2,485,834    (1,069,190)   3,513,061    2,443,871 
             
Total – Consolidated    (1,140,681)   3,723,022    2,582,341    (1,084,129)   3,620,665    2,536,536 
             

The provisions for contingencies estimated by the Company’s Management were substantially based on the opinion of tax and legal advisors, being recorded only the lawsuits classified as risk of probable loss. Additionally, the provisions include tax liabilities arising from actions taken on the Company’s initiative, accrued of SELIC (Special Settlement and Custody System) interest rates.

The Company and its subsidiaries are defending themselves in other judicial and administrative proceedings (labor, civil and tax) in the approximate amount of R$4.4 billion, R$3.5 billion of which corresponds to tax lawsuits, R$0.1 billion of which corresponds to civil lawsuits and R$0.8 billion of which corresponds to labor and pension lawsuits. According to the Company’s legal counsel, these administrative and legal proceedings are assessed as possible risk of loss. These proceedings were not accrued in accordance with the Management’s judgment and with accounting rules adopted in Brazil.

a) Labor Actions:

On March 31, 2008, the Company was defendant in 9,128 labor grievances (9,162 claims as of December 31, 2007), with a provision in the amount of R$93,981 (R$90,310 as of December 31, 2007). Most of the lawsuits are related to joint and/or subsidiary responsibility, wage parity, additional allowances for unhealthy and hazardous activities, overtime and differences related to the 40% fine on FGTS (severance pay), and due to the government’s economic plans.

b) Civil Actions:

Among the civil judicial proceedings in which the Company takes part, there are mainly lawsuits with indemnification request. Such proceedings, in general, arise from occupational accidents and diseases

36


related to the Company’s industrial activities. A provision in the amount of R$55,544 on March 31, 2008 (R$33,587 on December 31, 2007) was recorded for these demands.

c) Environmental Actions:

As of March 31, 2008, the Company had a provision of R$54,529 (R$55,202 as of December 31, 2007) for expenses related to environmental recovery within the Company’s plants in the States of Rio de Janeiro, Minas Gerais and Santa Catarina.

d) Tax Proceedings:

Income and Social Contribution Taxes

(i) The Company claims the recognition of the financial and tax effects on the calculation of the income and social contribution taxes on net income, related to the write down of inflation of the Consumer Price Index (IPC), which occurred in January and February 1989, by a percentage of 51.87% (“Plano Verão”).

In 2004, the proceeding was concluded and a final and unappealable decision was issued, granting to CSN the right to apply the index of 42.72% (January 1989), from which the 12.15% already applied should be deducted. The application of the index of 10.14% (February 1989) was also granted. The proceeding is currently under expert accounting inspection.

The Company maintains a judicial deposit in the amount of R$331,959 on March 31, 2008 (R$331,408 on December 31, 2007) and a provision of R$20,892 (R$20,892 on December 31, 2007), which represents the portion not recognized by the courts.

(ii) The company filed an action questioning the levying of Social Contribution on Income (CSL) on export revenues, based on Constitutional Amendment no. 33/01 and in March 2004 the Company obtained an injunction authorizing the exclusion of these revenues from the aforementioned calculation basis, as well as the offsetting of the amounts paid as from 2001. The lower court decision was favorable and the decision made by a court of second instance, pronounced before the appeal filed by the Federal Government at the Regional Federal Court (TRF), judged this proceeding unfavorably for CSN. In view of these facts an Extraordinary Appeal for the STF was filed, which has not been judged yet. An initial decision by the Federal Supreme Court (STF) was obtained suspending the effects of the decision by the Regional Federal Court until the judgment of the aforementioned Extraordinary Appeal. Up to March 31, 2008, the amount of suspended liability and the credits offset based on the aforementioned proceedings was R$1,026,684 (R$987,072 on December 31, 2008), plus SELIC interest rate.

CIDE – Contribution for intervention in the Economic Domain

CSN questions the legality of Law 10168/00, which established the payment of the CIDE on the amounts paid, credited or remitted to beneficiaries not resident in Brazil, for royalties or remuneration purposes on supply contracts, technical assistance, trademark license agreement and exploitation of patents.

The Company maintains deposits in court and a provision in the amount of R$26,346 as of March 31, 2008 (R$25,819 as of December 31, 2007), which includes legal charges.

The lower court decision was unfavorable, which was ratified by the 2nd Regional Federal Court (TRF). Embargos of Declaration were filed against the unfavorable decision of the TRF of the 2nd Region, which have not been judged yet.

Education Allowance

The Company discussed the unconstitutionality of the Education Allowance and the possible recovery of the amounts paid in the period from January 5, 1989 to October 16, 1996. The lawsuit was judged unfounded, and the Federal Regional Court maintained its unfavorable decision, which is final and unnappealable.

In view of this fact, CSN attempted to pay the amount due, but FNDE and INSS did not reach an agreement about who should receive it. A fine was also demanded, but CSN did not agree.

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CSN filed new proceedings questioning the above-mentioned facts and deposited in court the amounts due. In the first proceeding, the 1st level sentence judged partially favorable the request of CSN, where the Judge removed the amount of the fine, maintaining, however, the SELIC rate. The Company presented brief of respondent to the appeal of the defendant, and appealed concerning SELIC rate.

The amount provisioned as of March 31, 2008 totals R$33,121 (R$33,121 as of December 31, 2007).

SAT - Workers’ Compensation Insurance

The Company understands that it should pay the SAT at the rate of 1% in all of its establishments, and not 3%, as determined by the current legislation. The amount recorded in a provision as of March 31, 2008 totals R$109,957 (R$109,546 on December 31, 2007), which includes legal charges. The lower court decision was unfavorable and the proceeding is under judgment in the 2nd Region of the Federal Regional Court.

IPI premium credit on exports

The Brazilian tax laws allowed companies to recognize IPI premium credit until 1983, when the Brazilian government, through Executive act, cancelled these benefits, prohibiting companies to use these credits.

The Company challenged the constitutionality of this act and filed a claim to obtain the right to use the IPI premium credit on exports from 1992 to 2002, once only laws enacted by the legislative branch may cancel or revoke benefits prepared by prior legislation.

In August 2003 the Company obtained a favorable decision at a Brazilian lower court, authorizing the use of the credits aforementioned. The national treasury appealed against this decision and obtained a favorable decision, and the Company then filed a special and extraordinary appeal against this decision at the Superior Court of Justice and at the Federal Supreme Court, respectively, and is currently awaiting for decisions of these courts.

Between September 2006 and May 2007, the Treasury filed 5 tax foreclosures and 3 administrative proceedings against the Company requesting the payment in the amount of approximately R$3.2 billion referring to the payment of taxes which were offset by IPI premium credits.

On August 29, 2007, the Company offered assets in lien represented by treasury shares in the amount of R$536 million. 25% of this amount will be substituted by judicial deposits in monthly installments performed up to December 31, 2007 and as these substitutions take place, it was requested that the equivalent amount in shares was released from the lien, at the share price determined at the closing price of the day prior to the deposit.

The Company maintains provisioned the amount of credits already offset, accrued of default charges until March 31, 2008, which total R$2,119,561 (R$2,088,721 as of December 31, 2007). The difference between the total amount in litigation and the amount recorded as provision is part of the R$4.4 billion reported above as administrative and legal proceedings, considered as possible loss.

On March 31, 2008, the Company maintains judicial deposits for these liabilities in the amount of R$916,107.

In the middle of 2007, the Superior Court of Justice issued a contrary decision to another taxpayer denying the use of these credits. This decision is subject to revision by the Federal Supreme Court, which, in that event, is the highest court. The Company observed that a number of other Brazilian companies are challenging in court the same prohibition and it has been following up their progress.

Other

The Company also recorded provisions for lawsuits related to FGTS - Supplementary Law 110, COFINS Law 10,833/03, PIS - Law 10,637/02 and PIS/COFINS - Manaus Free-Trade Zone, in the amount of R$70,613 as of March 31, 2008 (R$68,791 as of December 31, 2007), which includes legal charges.

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19. SHAREHOLDERS’ EQUITY

    Paid-in capital 
stock 
  Reserves    Retained 
earnings 
  Treasury
Shares 
  Total 
Shareholders' 
Equity 
           
 
BALANCES AT 09/30/2007           1,680,947    5,684,946    2,514,860    (743,430)   9,137,323 
 
Realization of the revaluation reserve of own assets, net of income and social contribution taxes        (76,186)   76,186         
Realization of the revaluation reserve reflecting subsidiary assets, net of income and social contribution taxes        (9,377)   9,377         
Constitution of reserve        1,090,710    (1,090,710)        
Dividends declared on December 21, 2007 (R$2.59301 per share)           (665,081)       (665,081)
Additional dividends (R$4.85137 per share)           (1,244,329)       (1,244,329)
Additional interest on shareholders' equity (R$0.27553 per share)         (70,674)       (70,674)
Net income for the quarter            470,371        470,371 
           
BALANCES AT 12/31/2007           1,680,947    6,690,093        (743,430)   7,627,610 
           
Realization of the revaluation reserve of own assets, net of income and social contribution taxes        (69,719)   69,719         
Realization of the revaluation reserve reflecting subsidiary assets, net of income and social contribution taxes        (3,142)   3,142         
Cancellation of the Company's treasury shares            (172,079)   172,079     
Proposed interest on shareholders' equity at March 31, 2008 (R$0.063118 per share)         (48,567)       (48,567)
Net income for the quarter            771,098        771,098 
           
BALANCES AT 03/31/2008           1,680,947    6,617,232    623,313    (571,351)   8,350,141 
           

i. Paid-in capital stock

The Company’s fully subscribed and paid-in capital stock on March 31, 2008 is in the amount of R$1,680,947, split into 804,203,838 common book-entry shares, with no par value. Each share is entitled to one vote in the resolutions of the General Meeting.

ii. Authorized capital stock

As of March 31, 2008 the Company’s bylaws set forth that the Company’s capital stock could be increased up to 1,200,000,000 shares, by decision of the Board of Directors.

iii. Legal Reserve

Recorded at the rate of 5% on the net income determined in each fiscal year, pursuant to article 193 of Law 6404/76. The Company reached the limit for recording the legal reserve, as determined by the current legislation.

iv. Revaluation reserve

This reserve covers the revaluations of the Company’s property, plant and equipment, which pursuant to the CVM Resolution 288/98, aimed to adjust the amounts of the Company’s property, plant and equipment to the market value, enabling the quarterly financial information to present values of the assets value closer to their market or replacement value.

In compliance with the provisions of the CVM Resolution 273/98, a provision was recorded for deferred income and social contribution taxes on the balance of the revaluation reserve (except land).

39


The realized portion of the revaluation reserve, through the depreciation or write-off of assets, net of income and social contribution taxes, is included for purposes of calculating the minimum mandatory dividend.

v. Treasury shares

The Board of Directors approved, on May 25, 2005, for a period of 360 days, the purchase of 15,000,000 shares of the Company to be held in treasury for subsequent disposal and/or cancellation.

On January 29, 2007, the Board of Directors authorized the purchase of other 923,628 shares to be also held in treasury for further sale and/or cancellation. The second authorization would expire on January 25, 2008, but since the Company repurchased all shares referring to this approval before the expiration of the period, the Board of Directors authorized the closing of the program.

On December 21, 2007 it authorized the acquisition of 4,000,000 shares of the Company, to be held in treasury, to be subsequently sold or cancelled. This program expired on February 27, 2008 and there was no purchase in connection with the program approved.

On March 20, 2008 it authorized the acquisition of 10,800,000 shares of the Company, to be held in treasury and subsequently sold or cancelled. The maximum term for the performance of the operations was set as up to April 28, 2008 and there was no purchase in connection with the program.

As of March 31, 2008, the position of treasury shares was as follows:

Number of    Total value                Share 
shares purchased    paid for        Unit cost of shares        Market value 
       
(in units)   shares    Minimum    Maximum    Average    on 03/31/2008 (*)
           
11,578,128    R$571,351    R$35.88    R$75.04    R$47.72     
34,734,384(**)   R$571,351                R$2,174,372 

(*) Average quotation of shares as of 03/31/08 at the value of R$62.60 per share.
(**) New amount of shares after the split occurred in January 2008.

While held in treasury, the shares will have no proprietorship and/or political rights.

vi. Shareholding structure

As of March 31, 2008, the Company’s shareholding structure was as follows:

    Number of 
Common Shares 
  Total %
of shares 
  % excluding 
treasury 
shares 
       
Vicunha Siderurgia S.A.    348,859,995    43.38%    45.34% 
BNDESPAR    51,257,958    6.37%    6.66% 
Caixa Beneficente dos Empregados da CSN - CBS    35,490,867    4.41%    4.61% 
Sundry (ADR - NYSE)   186,656,971    23.21%    24.26% 
Other shareholders (approximately 10 thousand)   147,203,663    18.30%    19.13% 
       
    769,469,454    95.68%    100.00% 
Treasury shares    34,734,384    4.32%     
       
Total shares    804,203,838    100.00%     

At the Extraordinary General Meeting held on January 22, 2008, the Company’s shareholders approved the cancellation of 4,000,000 treasury shares, and also the split of the number of shares representing the Company’s capital stock, operation by which each share of the capital stock started being represented by 3 shares after the split. The maintenance of the ratio share/ADR (American Depositary Receipt) at 1/1 was also approved, i.e., each ADR will continue to be represented by one share.

40


vii. Investment policy and payment of interest on shareholders’ equity and dividends

On December 11, 2000, CSN’s Board of Directors decided to adopt a policy for the distribution of profits which, observing the provisions of Law 6,404/76, amended by Law 9,457/97, will imply in the distribution of all the Company’s net profit to the shareholders, provided that the following priorities are preserved irrespective of their order: (i) corporate strategy, (ii) compliance with obligations, (iii) consummation of the necessary investments and (iv) maintenance of the Company’s good financial situation.

20. INTEREST ON SHAREHOLDERS’ EQUITY

The calculation of interest on shareholders’ equity is based on the variation of the Long-Term Interest Rate (TJLP) on shareholders’ equity, limited to 50% of the income for the year before income tax or 50% of retained earnings and profit reserves, where the higher of the two limits may be used, pursuant to the legislation in force.

In compliance with the CVM Resolution 207, of December 31, 1996 and with tax rules, the Company opted to record the proposed interest on shareholders’ equity in the amount of R$48,567 in the quarter, corresponding to the remuneration of R$0.063118 per share, as corresponding entries against the financial expenses account, and reverse it in the same account, and not presenting it in the income statement and not generating effects on net income after IRPJ/CSL, except with respect to tax effects, recognized under income and social contribution taxes. The Company’s Management will propose that the amount of interest on shareholders’ equity be attributed to the mandatory minimum dividend.

41


21. NET REVENUES AND COST OF GOODS SOLD

    Consolidated 
   
    03/31/2008    03/31/2007 
     
    Tonnes 
(thousand)
  Net 
revenue 
  Cost of Goods
Sold 
  Tonnes 
(thousand)
  Net 
revenue 
  Cost of Goods
Sold 
             
 
Steel products                         
Domestic market    1,115    2,069,133    (1,083,191)   719    1,384,822    (670,431)
Foreign market    277    442,581    (404,181)   476    743,217    (573,167)
             
    1,393    2,511,714    (1,487,372)   1,195    2,128,039    (1,243,598)
             
Mining products                         
Domestic market    1,147    46,798    (12,509)   1,132    48,453    (13,990)
Foreign market    2,780    208,442    (135,189)   364    31,133    (22,403)
             
    3,927    255,240    (147,698)   1,496    79,586    (36,393)
Other sales                         
Domestic market        243,607    (169,078)       248,766    (193,770)
Foreign market        19,665    (2,602)       28,291    (3,113)
             
        263,272    (171,680)       277,057    (196,883)
             
        3,030,225    (1,806,750)       2,484,682    (1,476,874)
             

    Parent Company 
   
    03/312008    03/31/2007 
     
    Tonnes 
(thousand)
  Net 
revenue 
  Cost of Goods
Sold 
  Tonnes 
(thousand)
  Net 
revenue 
  Cost of Goods
Sold 
             
 
Steel products                         
Domestic market    1,116    1,943,049    (1,081,958)   753    1,344,264    (743,099)
Foreign market    153    204,953    (181,356)   371    492,620    (387,245)
             
    1,269    2,148,002    (1,263,314)   1,124    1,836,884    (1,130,344)
             
Mining products                         
Domestic market    1,518    45,651    (30,389)   1,132    47,593    (13,990)
Foreign market    1,066    63,734    (44,233)            
             
    2,584    109,385    (74,622)   1,132    47,593    (13,990)
 
Other sales                         
Domestic market        65,124    (40,862)       60,599    (32,933)
Foreign market        3,162    (2,601)       3,923    (3,113)
             
        68,286    (43,463)       64,522    (36,046)
             
        2,325,673    (1,381,399)       1,948,999    (1,180,380)
             

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22. FINANCIAL RESULT AND MONETARY AND FOREIGN EXCHANGE VARIATIONS, NET

    Consolidated    Parent Company 
     
    03/31/2008    03/31/2007    03/31/2008    03/31/2007 
         
Financial expenses:                 
Loans and financing - foreign currency    (115,937)   (152,836)   (6,248)   (9,365)
Loans and financing - domestic currency    (46,059)   (57,115)   (39,456)   (51,581)
Related parties            (98,046)   (100,919)
PIS/COFINS on other revenues    (483)   (5,599)   (483)   (5,599)
Interest, fines and interest on tax in arrears    (79,658)   (87,539)   (77,283)   (82,792)
Other financial expenses    (18,648)   (34,226)   (13,499)   (24,506)
         
    (260,785)   (337,315)   (235,015)   (274,762)
         
Financial income:                 
Related parties            (101,606)   4,084 
Income on financial investments, net of provision for losses    32,939    76,891    919    3,050 
Income on derivatives    173,862    99,137    197,373    (124,008)
Other income    38,459    18,432    40,503    11,617 
         
    245,260    194,460    137,189    (105,257)
         
Net financial result    (15,525)   (142,855)   (97,826)   (380,019)
         
 
Monetary variations:                 
- Assets    (880)   1,094    1,381    915 
- Liabilities    (9,662)   (7,150)   (11,671)   (5,734)
         
    (10,542)   (6,056)   (10,290)   (4,819)
         
Exchange variations:                 
- Assets    (123,093)   (37,478)   (57)   (48,613)
- Liabilities    270,451    240,552    (147,979)   338,707 
         
    147,358    203,074    (148,036)   290,094 
         
Net monetary and exchange variations    136,816    197,018    (158,326)   285,275 
         

23. OTHER OPERATING EXPENSES / INCOME

    Consolidated    Parent Company 
     
    03/31/2008    03/31/2007    03/31/2008    03/31/2007 
         
 
Other Operating Expenses    (64,041)   (164,009)   (51,905)   (40,920)
   Provision for Actuarial Liabilities    22,682    966    22,682    966 
   Provision for Contingencies    (32,398)   5,919    (27,893)   6,573 
   Contractual Fines      (12,676)     (12,676)
   Equipment Stoppage    (8,992)   (1,461)   (9,001)   (1,405)
   Other    (45,333)   (156,757)   (37,693)   (34,379)
 
Other Operating Income    9,871    241,654    4,903    2,298 
   Indemnifications    (2,268)   1,457    1,564    880 
   Other    12,139    240,197    3,339    1,418 
         
Other Operating Income/(Expenses)   (54,170)   77,645    (47,002)   (38,622)
         

On January 30, 2007, the Company took part in an auction for the acquisition of the Anglo-Dutch steel company Corus Group PLC and its 603 cents a pound offer was beaten by the offer of the Indian Tata Steel which was of 608 cents a pound. Thus, in view of the outcome of this auction, the Company verified expenses in the amount of R$113 million and revenues in the amount of R$235 million. These amounts are recorded in “Other expenses” and “Other revenues”, respectively.

24. LOSS BLAST FURNACE III

On January 22, 2006 an accident involving equipment adjacent to Blast Furnace #3 took place, mainly affecting the powder collecting system and interrupted the equipment production until the end of the first semiannual period of that year. The amount of the Company’s insurance policy for loss of profits and equipment, effective on the date of the claim, was at most US$750 million, which the Management deems as sufficient to recover any losses derived from the accident. The cause of the accident is covered by the policy expressly recognized by the insurance companies, and the work to calculate the losses is in progress.

43


The amount of losses subject to indemnification determined by claims adjusters up to the closing date of the quarterly financial information is R$922,929 (net of deductible). Based on the insurance policy and confident as to the conclusion of studies about the loss, CSN requested and the insurance companies granted advances in the amount of R$736,682. The advanced total amount will be deducted from losses subject to indemnification, verified during the normal course of the regulation process.

As of March 31, 2008, the Company maintains balance receivable from losses claimed in the amount of R$186,247 (R$186,247 as of December 31, 2007) and it does not identify risks in this credit, taking into account the international reputation and prestige of insurance and reinsurance companies.

25. CONSOLIDATED NON-OPERATING EXPENSES AND INCOME

As of March 31, 2008, the consolidated non-operating expenses of the Company amounted to R$1,071 (R$180,241 on March 31, 2007). The result of the first quarter of 2007 includes R$182,074 related to the gain on the sale of 34,072,613 shares of Corus Group PLC, acquired by CSN for strategic reasons during the bidding process with Tata Steel for the acquisition of the total number of Corus Group PLC’s shares, which were sold that quarter.

26. INFORMATION BY BUSINESS SEGMENT

(i) Consolidated balance sheet by Business Segment

    03/31/2008 
   
    Steel    Mining   

Logistics,
Energy
 and
Cement 

  Eliminations    Total 
           
Current assets    11,717,282    469,494    455,618    (5,146,903)   7,495,491 
   Marketable securities    3,894,076    5,650    236,519    (848,652)   3,287,593 
   Trade Accounts Receivable    1,705,244    62,826    54,937    (1,079,714)   743,293 
   Other    6,117,962    401,018    164,162    (3,218,537)   3,464,605 
Non-current assets    37,084,897    3,313,775    2,055,593    (23,780,433)   18,673,832 
   Long-Term Assets    10,483,096    7,338    324,390    (8,642,331)   2,172,493 
   Investments, Property, Plant and Equipment and Deferred Charges    26,601,801    3,306,437    1,731,203    (15,138,102)   16,501,339 
           
Total assets    48,802,179    3,783,269    2,511,211    (28,927,336)   26,169,323 
           
 
Current liabilities    8,881,541    401,139    425,117    (4,210,171)   5,497,626 
   Loans, Financing and Debentures    3,285,080    108,801    143,970    (1,920,364)   1,617,487 
   Suppliers    2,030,003    78,119    56,313    (1,081,014)   1,083,421 
   Other    3,566,458    214,219    224,834    (1,208,793)   2,796,718 
Non-current liabilities    18,716,920    1,442,316    1,073,932    (8,822,469)   12,410,699 
   Loans, Financing and Debentures    13,410,985    174,910    603,826    (7,455,341)   6,734,380 
   Net contingencies – judicial deposits    2,438,918    5,173    68,596        2,512,687 
   Other    2,867,017    1,262,233    401,510    (1,367,128)   3,163,632 
Shareholders’ Equity    21,339,167    1,804,365    1,012,162    (15,894,696)   8,260,998 
           
Total Liabilities and Shareholders’ Equity    48,937,628    3,647,820    2,511,211    (28,927,336)   26,169,323 
           

44


(ii) Consolidated statement of income by Business Segment

    03/31/2008 
   
    Steel    Mining    Logistics,
Energy and
Cement  
  Eliminations    Total 
           
 
Net revenues from sales    3,234,363    295,479    279,905    (779,522)   3,030,225 
Cost of goods sold and services rendered    (2,163,893)   (238,167)   (171,864)   767,174    (1,806,750)
Gross profit    1,070,470    57,312    108,041    (12,348)   1,223,475 
Operating Income and Expenses                     
   Selling expenses    (153,164)   (11,303)   (3,650)   6,795    (161,322)
   Administrative expenses    (84,319)   (2,862)   (17,257)       (104,438)
   Other operating income (expenses)   (51,036)   (2,383)   (751)       (54,170)
    (288,519)   (16,548)   (21,658)   6,795    (319,930)
Net financial income    (93,447)   (5,390)   (6,103)   89,415    (15,525)
Foreign exchange and monetary variations, net    35.848    5,482    (7,887)   103,373    136,816 
Equity in the earnings of subsidiaries (goodwill)   1.246.762    (41,767)   44    (1,263,089)   (58,050)
Operating income    1,971,114    (911)   72,437    (1,075,854)   966,786 
Non-operating income    (1,275)       (45)   249    (1,071)

Income before income and social contribution taxes 

  1,969,839    (911)   72,392    (1,075,605)   965,715 
Income and social contribution taxes    (148,998)   (22,897)   (28,277)   1,761    (198,411)
           
Net income for the period    1,820,841    (23,808)   44,115    (1,073,844)   767,304 
           

(iii) Other consolidated information by Business Segment

    03/31/2008 
   
    Steel    Mining    Logistics, 
Energy and 
Cement 
  Total 
         
Depreciation, Amortization and Depletion    259,825    37,874    27,542    325,241 
Provision for Contingencies net of Judicial Deposits    2,500,255    5,161    76,925    2,582,341 
   Tax    2,383,643    3,198    21,180    2,408,021 
   Labor    53,168    63    42,072    95,303 
   Civil    9,068        12,838    21,906 
   Other    54,376    1,900    835    57,111 

45


27. STATEMENT OF ADDED VALUE

    Consolidated    Parent Company 
     
    03/31/2008    03/31/2007    03/31/2008    03/31/2007 
         
Revenues                 
 Sales of products and services (except for refunds and discounts)   3,824,048    3,040,070    3,006,850    2,403,151 
 Allowance for doubtful accounts    (16,887)   (1,058)   (16,927)   (1,235)
 Non-operating income    (1,071)   180,241    (1,160)   (1,023)
         
    3,806,090    3,219,253    2,988,763    2,400,893 
         
Input purchased from third parties                 
 Raw material consumed    (863,592)   (705,919)   (504,332)   (539,856)
 Cost of goods and services sold (except for depreciation)   (437,025)   (449,440)   (494,008)   (362,433)
 Materials, power, third-party services and others    (231,525)   (97,071)   (154,544)   (127,303)
    (1,532,142)   (1,252,430)   (1,152,884)   (1,029,592)
Gross added value    2,273,948    1,966,823    1,835,879    1,371,301 
         
 
Retentions                 
 Depreciation, amortization and depletion    (325,241)   (245,957)   (278,449)   (198,415)
         
Net added value produced    1,948,707    1,720,866    1,557,430    1,172,886 
         
 
Value added received (transferred)                
 Equity in the earnings of subsidiaries    (58,050)   (27,751)   443,918    487,695 
 Financial income/Exchange variations (gains)   121,289    158,081    138,513    (152,955)
         
    63,239    130,330    582,431    334,740 
         
Total value added to be distributed    2,011,946    1,851,196    2,139,861    1,507,626 
         
 
         
DISTRIBUTION OF VALUE ADDED                 
 Personnel and charges    225,590    123,915    134,101    103,227 
 Taxes, fees and contributions    1,020,850    889,278    841,517    735,596 
 Interest and exchange variation    (1,798)   75,100    393,145    (84,685)
 Interest on shareholders’ equity and dividends    48,567    31,990    48,567    31,990 
 Retained earnings in the year    722,531    721,498    722,531    721,498 
 Unrealized profits in the year    (3,794)   9,415         
         
    2,011,946    1,851,196    2,139,861    1,507,626 
         

28. EMPLOYEES’ PENSION FUND

(i) Administration of the Private Pension Plan

The Company is the principal sponsor of CBS Previdência, a private non-profit pension fund established in July 1960, main purpose of which is to pay supplementary benefits to participants in the official Pension Plan. CBS Previdência is composed of employees of CSN, CSN related companies and the entity itself, provided they sign the adherence agreement.

(ii) Description of characteristics of the plans

CBS Previdência has three benefit plans:

35%-of-average-salary plan

It is a defined benefit plan (BD), which began on February 1, 1966, for the purpose of paying retirements (time service, special, disability or old age) on a life-long basis, equivalent to 35% of the participant’s last average 12 salaries. The plan also guarantees the payment of a sickness allowance to a participant on sick leave through the Official Pension Plan and it also guarantees the payment of death grant and a cash grant. The active and retired participants and the sponsors make thirteen contributions per year, which is the same as the number of benefits paid. This plan became inactive on October 31, 1977, when the supplementation plan of the average salary came into force, which is in process of extinction.

Supplementary average salary plan

The defined benefit plan (BD) began on November 1, 1977. The purpose of this plan is to supplement the difference between the 12 last average salaries and the Official Pension Plan (Previdência Oficial) benefit, to the retired employees. It is also life-long basis. Like the 35% Average Salary Plan, there is sickness assistance, death grant and pension coverage. Thirteen contributions and payment of benefits are paid per year. This plan became inactive on December 26, 1995, since the combined supplementary benefits plan was implemented.

46


Combined supplementary benefit plan

Begun on December 27, 1995, it is a combined variable contribution plan (CV). Besides the programmed pension benefit, there is the payment of risk benefits (pension in activity, disability and sickness benefit). In this plan, the retirement benefit is calculated based on the accumulated total sponsors and participants contributions (thirteen per year). Upon the participant’s retirement, the plan becomes a defined benefit plan and thirteen benefits are paid per year.

As of March 31, 2008 and December 31, 2007, the plans are composed as follows:

    35%-of-Average-Salary
Plan
 
  Supplementation of 
Average Salary Plan
 
  Combined 
Supplementary Benefit
 
Plan 
  Total members 
         
    03/31/2008    12/31/2007    03/31/2008    12/31/2007    03/31/2008    12/31/2007    03/31/2008    12/31/2007 
                 
Members                                 
     In service    15    14    36    37    10,994    10,397    11,045    10,448 
     Retired    5,058    5,106    4,819    4,841    597    567    10,474    10,514 
                 
    5,073    5,120    4,855    4,878    11,591    10,964    21,519    20,962 
                 
 
Related beneficiaries:                                 
                 
     Beneficiaries    4,017    4,023    1,367    1,359    79    78    5,463    5,460 
                 
Total participants                                 
                 
(members/beneficiaries)   9,090    9,143    6,222    6,237    11,670    11,042    26,982    26,422 
                 

(iii) Payment of actuarial deficit

According to the official letter 1555/SPC/GAB/COA, of August 22, 2002, confirmed by official letter 1598/SPC/GAB/COA of August 28, 2002, a proposal was approved for refinancing the reserves to amortize the sponsors’ responsibility in 240 consecutive monthly installments, monetarily indexed by INPC + 6% p.a., starting June 28, 2002.

The agreement provides for the prepayment of installments should there be a need for cash in the defined benefit plan and the incorporation to the updated debit balance of the eventual deficits/surpluses under the sponsors’ responsibility, so as to preserve the equilibrium of the plans without exceeding the maximum period of amortization stipulated in the agreement.

(iv) Actuarial Liabilities

As provided by CVM Resolution 371/00, which approved the NPC 26 of IBRACON – “Accounting of the Employee’s benefits” and which established new accounting practices for the calculation and disclosure, the Management, through a study from external actuaries, calculated the effects arising from this practice, and the Company has kept records in conformity with the report issued on January 10, 2008.

The Company’s Management decided to recognize the adjustments to the actuarial liabilities in the results for the period of five years as from January 1, 2002, in compliance with the established in paragraphs 83 and 84 of the NPC 26 and as of March 31, 2008, the balance of provision for the coverage of the actuarial liability amounts to R$196,217 (R$231,880 as of December 31, 2007).

47


29. SUBSEQUENT EVENTS

Sale of NAMISA

According to a Notice to the Market of April 22, 2008, Companhia Siderúrgica Nacional hired Goldman Sachs to be its financial advisor in the potential sale, partial or total, of its equity interest in Nacional Minérios S.A. ("NAMISA").

Stock repurchase program

At the Extraordinary General Meeting held on May 6, 2008, the Company’s Board of Directors authorized the acquisition of 10,800,000 shares issued by the Company, to be held in treasury and their subsequent sale or cancellation. The maximum term for this operation is May 28, 2008.

48


05.01 – COMMENTS ON THE COMPANY’S PERFORMANCE IN THE QUARTER 
 

SEE ITEM 08.01:

“COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER”

49


06.01 – CONSOLIDATED BALANCE SHEET - ASSETS (in thousands of reais)

1- CODE  2 - DESCRIPTION  3 - 3/31/2008  4 -12/31/2007 
Total Assets  26,169,323  27,052,241 
1.01  Current Assets  7,495,491  8,396,140 
1.01.01  Cash and Cash Equivalents  176,144  225,344 
1.01.02  Receivable  1,615,438  1,877,645 
1.01.02.01  Trade Accounts Receivable  743,293  744,401 
1.01 .02.01 .01  Domestic Market  837,144  764,943 
1.01.02.01.02  Foreign Market  39,951  95,543 
1 .01.02.01.03  Allowance for Doubtful Accounts  (133,802) (116,085)
1.01.02.02  Sundry Credits  872,145  1,133,244 
1.01.02.02.01  Employees  6,131  5,048 
1.01.02.02.02  Suppliers  193,420  320,781 
1.01.02.02.03  Recoverable Income and Social Contribution Taxes  11,240  14,342 
1.01.02.02.04  Deferred Income Tax  307,585  377,669 
1.01 .02.02.05  Deferred Social Contribution  109,204  134,407 
1.01.02.02.06  Other Taxes  188,001  220,552 
1.01.02.02.07  Other Receivables  56,564  60,445 
1.01.03  Inventories  2,172,750  2,419,745 
1.01.04  Other  3,531,159  3,873,406 
1.01.04.01  Marketable Securities  3,287,593  3,620,930 
1.01.04.02  Prepaid Expenses  57,319  66,229 
1.01 .04.03  Insurance Claimed  186,247  186,247 
1.02  Non-Current Assets  18,673,832  18,656,101 
1.02.01  Long-Term Assets  2,172,493  2,177,707 
1.02.01.01  Sundry Receivable  1,082,661  1,068,879 
1.02.01.01.02  Securities Receivable  232,862  234,445 
1.02.01.01.03  Deferred Income Tax  472,719  466,006 
1.02.01.01.04  Deferred Social Contribution  158,286  156,428 
1.02.01.01.05  Other Taxes  218,794  212,000 
1.02.01.02  Receivable from Related Parties 
1.02.01.02.01  From Associated and Related Companies 
1.02.01.02.02  From Subsidiaries 
1.02.01.02.03  From Other Related Parties 
1.02.01.03  Other  1,089,832  1,108,828 
1.02.01.03.01  Judicial Deposits  676,258  694,733 
1.02.01.03.02  Securities  108,325  108,547 
1.02.01.03.03  Prepaid Expenses  126,692  128,968 
1.02.01.03.04  Other  178,557  176,580 
1.02.02  Permanent Assets  16,501,339  16,478,394 
1.02.02.01  Investments  897,875  956,281 
1 .02.02.01.01  In Associated and Related Companies 
1 .02.02.01.02  In Associated and Related Companies - Goodwill 

50


06.01 - CONSOLIDATED BALANCE SHEET - ASSETS (in thousands of reais)

1- CODE  2- DESCRIPTION  3 - 3/31/2008  4 -12/31/2007 
1.02.02.01.03  In Subsidiaries 
1.02.02.01.04  In Subsidiaries - Goodwill  896,106  954,452 
1.02.02.01.05  Other Investments  1,769  1,829 
1.02.02.02  Property, Plant and Equipment  15,381,477  15,295,642 
1.02.02.02.01  In Operation, Net  13,124,415  13,197,042 
1.02.02.02.02  In Construction  1,782,006  1,610,250 
1.02.02.02.03  Land  475,056  488,350 
1.02.02.03  Intangible Assets 
1.02.02.04  Deferred Charges  221,987  226,471 

51


06.02 CONSOLIDATED BALANCE SHEET - LIABILITIES (in thousands of reais)

1 - CODE  2 - DESCRIPTION  3 - 3/31/2008  4 -12/31/2007 
Total Liabilities  26,169,323  27,052,241 
2.01  Current Liabilities  5,497,626  6,844,150 
2.01.01  Loans and Financing  1,205,410  1,414,768 
2.01.02  Debentures  412,077  413,220 
2.01.03  Suppliers  1,083,421  1,346,789 
2.01 .04  Taxes, Fees and Contributions  870,281  1,054,376 
2.01.04.01  Salaries and Social Contributions  105,074  110,313 
2.01.04.02  Taxes Payable  377,832  596,361 
2.01 .04.03  Deferred Income Tax  129,459  104,115 
2.01 .04.04  Deferred Social Contribution  46,605  37,481 
2.01.04.05  Taxes paid in installments  211,311  206,106 
2.01.05  Dividends Payable  1,364,596  2,115,881 
2.01.06  Provisions  121,891  126,184 
2.01.06.01  Contingencies  162,299  136,020 
2.01.06.02  Judicial Deposits  (92,645) (60,956)
2.01 .06.03  Provision for Pension Fund  52,237  51,120 
2.01 .07  Debts with Related Parties 
2.01 .08  Other  439,950  372,932 
2.02  Non-Current Liabilities  12,410,699  12,665,830 
2.02.01  Long-Term Liabilities  12,405,610  12,660,694 
2.02.01.01  Loans and Financing  6,093,430  6,289,941 
2.02.01.02  Debentures  640,950  640,950 
2.02.01.03  Provisions  4,531,898  4,530,086 
2.02.01.03.01  Contingencies  3,560,723  3,484,645 
2.02.01.03.02  Judicial Deposits  (1,048,036) (1,023,173)
2.02.01.03.03  Deferred Income Tax  1,484,714  1,521,040 
2.02.01.03.04  Deferred Social Contribution  534,497  547,574 
2.02.01.04  Debts with Related Parties 
2.02.01.05  Advance for Future Capital Increase 
2.02.01.06  Other  1,139,332  1,199,717 
2.02.01.06.01  Provision for Pension Fund  143,980  180,760 
2.02.01.06.02  Taxes paid in installments  740,295  773,585 
2.02.01.06.03  Other  255,057  245,372 
2.02.02  Deferred Income  5,089  5,136 
2.03  Minority Interests 
2.04  Shareholders’ Equity  8,260,998  7,542,261 
2.04.01  Paid-In Capital Stock  1,680,947  1,680,947 
2.04.02  Capital Reserves  30  30 
2.04.03  Revaluation Reserves  4,512,691  4,585,553 
2.04.03.01  Own Assets  4,290,795  4,360,513 
2.04.03.02  Subsidiaries/ Associated and Related Companies  221,896  225,040 
2.04.04  Profit Reserves  1,444,017  1,275,731 

52


06.02 CONSOLIDATED BALANCE SHEET - LIABILITIES (in thousands of reais)

1 - CODE  2 - DESCRIPTION  3 - 3/31/2008  4 -12/31/2007 
2.04.04.01  Legal  336,189  336,189 
2.04.04.02  Statutory 
2.04.04.03  For Contingencies 
2.04.04.04  Unrealized Income 
2.04.04.05  Profit Retention 
2.04.04.06  Special For Undistributed Dividends 
2.04.04.07  Other Profit Reserves  1,107,828  939,542 
2.04.04.07.01  Investments  1,768,321  1,768,321 
2.04.04.07.02  Treasury Shares  (571,351) (743,430)
2.04.04.07.03  Unrealized Income  (89,142) (85,349)
2.04.05  Retained Earnings/Accumulated Losses  623,313 
2.04.06  Advance for Future Capital Increase 

53


07.01 CONSOLIDATED STATEMENT OF INCOME (in thousands of reais)

1 - CODE  2 - DESCRIPTION  3 - 1/1/2008 to 3/31/2008  4 - 1/1/2008 to 3/31/2008  5 - 1/1/2007 to 3/31/2007  6 - 1/1/2007 to 3/31/2007 
3.01  Gross Revenue from Sales and/or Services  3,951,881  3,951,881  3,078,691  3,078,691 
3.02  Deductions from Gross Revenue  (921,656) (921,656) (594,009) (594,009)
3.03  Net Revenue from Sales and/or Services  3,030,225  3,030,225  2,484,682  2,484,682 
3.04  Cost of Goods and/or Services Sold  (1,806,750) (1,806,750) (1,476,874) (1,476,874)
3.04.01  Depreciation and Amortization  (311,887) (311,887) (232,996) (232,996)
3.04.02  Other  (1,494,863) (1,494,863) (1,243,878) (1,243,878)
3.05  Gross Profit  1,223,475  1,223,475  1,007,808  1,007,808 
3.06  Operating Income/Expenses  (256,689) (256,689) (134,582) (134,582)
3.06.01  Selling  (161,322) (161,322) (141,486) (141,486)
3.06.01.01  Depreciation and Amortization  (2,266) (2,266) (1,907) (1,907)
3.06.01.02  Other  (159,056) (159,056) (139,579) (139,579)
3.06.02  General and Administrative  (104,438) (104,438) (97,153) (97,153)
3.06.02.01  Depreciation and Amortization  (11,088) (11,088) (11,054) (11,054)
3.06.02.02  Other  (93,350) (93,350) (86,099) (86,099)
3.06.03  Financial  121,291  121,291  54,163  54,163 
3.06.03.01  Financial Income  245,260  245,260  194,460  194,460 
3.06.03.02  Financial Expenses  (123,969) (123,969) (140,297) (140,297)
3.06.03.02.01  Foreign Exchange and Monetary Variation, net  136,816  136,816  197,018  197,018 
3.06.03.02.02  Financial Expenses  (260,785) (260,785) (337,315) (337,315)
3.06.04  Other Operating Income  9,871  9,871  241,654  241,654 
3.06.05  Other Operating Expenses  (64,041) (64,041) (164,009) (164,009)
3.06.06  Equity pick-up  (58,050) (58,050) (27,751) (27,751)
3.07  Operating Income  966,786  966,786  873,226  873,226 

54


07.01 CONSOLIDATED STATEMENT OF INCOME (in thousands of reais)

1 - CODE  2 - DESCRIPTION  3 - 1/1/2008 to 3/31/2008  4 - 1/1/2008 to 3/31/2008  5 - 1/1/2007 to 3/31/2007  6 - 1/1/2007 to 3/31/2007 
3.08  Non-Operating Income  (1,071) (1,071) 180,241  180,241 
3.08.01  Income  649  649  836,598  836,598 
3.08.02  Expenses  (1,720) (1,720) (656,357) (656,357)
3.09  Income before Taxes/Profit Sharing  965,715  965,715  1,053,467  1,053,467 
3.10  Provision for Income and Social Contribution Taxes  (126,998) (126,998) (314,771) (314,771)
3.11  Deferred Income Tax  (71,413) (71,413) 24,207  24,207 
3.11.01  Deferred Income Tax  (51,847) (51,847) 18,297  18,297 
3.11.02  Deferred Social Contribution  (19,566) (19,566) 5,910  5,910 
3.12  Statutory Profit Sharing/Contributions 
3.12.01  Profit Sharing 
3.12.02  Contributions 
3.13  Reversal of Interest on Shareholders’ equity 
3.14  Minority Interest 
3.15  Income/Loss for the Period  767,304  767,304  762,903  762,903 
  OUTSTANDING SHARES, EX-TREASURY (in thousands) 769,470  769,470  256,490  256,490 
  EARNINGS PER SHARE (in reais) 0.99719  0.99719  2.97440  2.97440 
  LOSS PER SHARE (in reais)        

55


 
08.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER 
 

Production 

The Presidente Vargas Steelworks produced 1.2 million tonnes of crude steel in the 1Q08, 6% lower than in the 1Q07 and 2.5% lower than in the previous quarter.

First-quarter rolled steel output totaled 1.2 million tonnes, very similar to the 1Q07 figure.

         Production (in thousand t)               Change (%)
  1Q07    4Q07    1Q08    1Q08 x 1Q07   1Q08 x 4Q07 
Crude Steel (P Vargas Mill)   1,321    1,274    1,242    -6.0%    -2.5% 
Purchased Slabs from Third Parties    24         
   
Total Crude Steel    1,345    1,274    1,242    -7.7%    -2.5% 
   
Rolled Products * (UPV)   1,171    1,298    1,169    -0.2%    -10.0% 
   
   * Products delivered for sale, including shipments to CSN Paraná             

Production Costs (parent company)

CSN’s total production cost was in the amount of R$ 1.14 billion in the 1Q08, R$ 45 million (or 3.7%) down year-on-year, mainly due to the following factors:

Raw materials: There was a total reduction of R$ 87 million in this item, due to:

- Third-party slabs: In the 1Q08 there was no consumption of slabs acquired from third parties in the 1Q08, generating savings of R$ 23 million in relation to 1Q07 production costs;
-
Zinc: There was a decline in costs of R$ 48 million in the 1Q08 in relation to the 1Q07, basically due to the reduction in the metal’s price, in addition to the appreciation of the Real in the period;
-
Coal: There was a reduction in costs of R$ 19 million in 1Q08 in relation to 1Q07, also principally due to the appreciation of the Real. The average cost was R$ 254/t.
These costs were not affected by the 200% readjustment in prices imposed by Australian producers as from April/08, which raised the FOB price to US$ 300/t. In fact, the impact on production costs will only be felt as from July/08, since the Company has sufficient stocks for more than two months. In addition, CSN acquires coal from the US, whose readjustments in prices will take place in July 2008, affecting the costs as from the third quarter;
-
Coke: the expenses in 1Q08 were R$ 10 million higher than in 1Q07, due to the increased consumption.

56


The average cost was R$ 461/t and there has been no impact as yet from the recent price hikes, since the Company has sufficient stocks for three months of production.
Other raw materials: reduction of R$ 7 million;

Labor: growth of R$ 17 million (19%), thanks to the 5% pay rise in May/07 and the 20% increase in the number of production employees;

Depreciation: there was an accrual of R$ 20 million due to the revaluation of the Company’s assets in the 1H07;

Other: other costs moved up by R$ 5 million.

Sales 

Total Sales

The volume of rolled steel sales totaled 1.4 million tonnes in the 1Q08, 17% higher than in the 1Q07 and in line with the volume sold in the 4Q07.

Domestic Market

In the 1Q08, the domestic sales volume was 1.1 million tonnes, 10% up on the 4Q07 and 55% higher than in the 1Q07. National sales have been moving up substantially since the beginning of 2007, climbing from 60% of total volume in the 1Q07, to 80% in the 1Q08, due to CSN’s strategy of prioritizing the domestic market, motivated by the more attractive prices in this market than in international ones, coupled with the healthy performance of Brazil’s economy, which fueled demand for steel products.

In March/08, the volume of steel products sold by CSN in the domestic market, where the margins are historically higher, reached the record ratio of 84% of total sales, 93% of which only in the Parent Company CSN.


Export Market

On the other hand, the exported volume of steel products sold by CSN has been falling in recent months due to the increased routing of sales to the domestic market. In the 1Q08, they accounted for 20% of total sales, down from 40% in the 1Q07.

57


Market Share and Product Mix

The Company’s market share in the domestic flat steel market (hot-rolled, cold-rolled, galvanized and tin mill products) has been expanding steadily, having reached 38% in the 1Q08, led by tin plate, galvanized, hot-rolled and cold-rolled, in which segments CSN recorded the respective market shares of 99%, 49%, 34% and 26% of these product lines, representing growth of 1%, 4%, 3% and 6%, respectively, in comparison with the 4Q07.

In the 4Q07, CSN had a 47% share of the construction market, 42% of the distribution market, 36% of the home appliance/OEM market, 21% of the automotive market and a massive consolidated 99% share of the steel packaging market.

Coated products accounted for 47% of the sales volume in the 1Q08.

Prices 

In the domestic market, average domestic net revenue per tonne in the 1Q08 remained in line with the previous quarter, at above US$ 1,000 per tonne.

In March/08, the Company raised the price of certain products, as follows: hot-rolled, 13.5%; cold-rolled, 8.5%; galvanized, 3.5% and tin plate, 6%. In addition, further increases have been announced for May/08, namely: hot-rolled, 15%; cold-rolled, 11%; galvanized, 6.5% and tin plate, 6%. The impact on the Company’s revenue will be felt as from the 2Q08.

Despite the appreciation of the Real against the dollar, average export prices in Reais moved up 14%, when compared to 4Q07 due to the international price recovery and the improved product mix.

Despite the hefty readjustments in prices in the 1Q08, there is still room for further increases in months ahead. Steel Business Briefing’s Global Market Outlook report contains a survey conducted with global steel market players last February in which 82% of interviewees expected prices to move up in the second quarter.

Mining

PRODUCTION

The Casa de Pedra mine produced 4.1 million tonnes in the 1Q08.

Nacional Minérios (NAMISA) produced the overall amount of 1.2 million tonnes in the 1Q08, while its iron ore purchases from third parties totaled 1.0 million tones in the same period.

The Presidente Vargas Steelworks absorbed 1.8 million iron ore tonnes.

SALES

Consolidated iron ore sales totaled 3.6 million tonnes in the 1Q08.

Exports reached 2.8 million tonnes shipped, accounting for 77% of the total sales of the period. The domestic market accounted for 0.8 million tonnes, or 23% of the total.

It is worth noting that the rotary railcar dumper entered the pre-operational phase this quarter. This equipment will raise the Porto de Itaguaí’s iron-ore handling and loading capacity to 30 million tpa.

INVENTORIES

The Company closed the first quarter with iron ore inventories of approximately 12 million tonnes.

58


Net Revenue 

Net revenue totaled R$ 3.0 billion in the 1Q08, a new record for the Company, 22% higher than in 1Q07 and slightly higher than in the 4Q07, due to the massive concentration of sales in the domestic market, as aforementioned in this report.

    STEEL    MINING *         
                     
Net Revenue (1Q08)   Domestic    Exports    Total    Domestic   Exports    Total    OTHER    TOTAL 
Volume (thousand tonnes)   1,115    277    1,393    853    2,780    3,632     
Net Revenue (R$ MM)   2,069    443    2,512    46    208     254    264    3,030 
   
* Date related to iron ore. 

Operating Revenue and Expenses

Operating expenses amounted to R$ 320 million in the 1Q08, a R$ 6 million negative variation in relation to the previous quarter, mainly due to the increase in selling expenses in an amount higher than R$ 31 million, on account of greater domestic market sales efforts. This was partially offset by the reduction in the amount of G&A and other operating expenses in the amount of R$ 25 million.

In comparison with the 1Q07, these expenses had a negative variation of R$ 159 million, due to the non-recurring accounting impact of CSN’s participation in the Corus acquisition auction in the 1Q07.

EBITDA 

The 1Q08 EBITDA totaled R$ 1.3 billion, 26% higher in comparison with 1Q07 mainly due to greater revenues earned. . In quarter-over-quarter terms, EBITDA edged up by 1%.

Once again the EBITDA margin exceeded 40%, reaching 42%, 1.5 p.p. above the 1Q07 and 0.3 p.p. up on the 4Q07.

59


     * EBITDA adjusted for the effects of earnings losses.

Financial Result and Indebtedness 

The 1Q08 net financial result was positive by R$ 121 million, a R$ 306 million improvement on the 4Q07 results.

The main factors responsible for this improvement in the 1Q08 in comparison with the 4Q07 were the following:

• The non-recurrent addition of R$ 391 million to provisions for IPI premium credits on exports in the 4Q07;
• A R$ 54 million reduction in gains from financial investments in the 1Q08;
• The R$ 44 million negative effect of the lower appreciation of the Real in the 1Q08 versus the 4Q07.

Net debt closed the first quarter at R$ 4.78 billion, virtually at the same level of the amount recorded at the end of 2007 (R$ 4.80 billion). The net debt/EBITDA ratio, based on EBITDA in the last 12 months, continued to fall, declining from 0.99x at the end of 2007 to 0.93x as of March 31, 2008.

Non-operating Revenue / Expenses 

The Company presented a net non-operating expense of R$ 1 million in the 1Q08, versus a net expense of R$28 million in the 4Q07, mainly due to fixed asset write-offs in the latter quarter.

Income Taxes 

Income and social contribution taxes totaled R$ 198 million in the 1Q08, principally due to the increase in the taxable income over the 4Q07.

Net Income 

CSN presented a 1Q08 net income of R$ 767 million, 51% up on the previous quarter, basically due to non-recurring addition of R$ 391 million in that period to provisions for IPI premium credits on exports.

Investments

First-quarter investments totaled R$ 374 million, R$ 222 million of which went to the parent company and R$ 152 million to the subsidiaries, mostly to the following projects and companies:

CSN:

• Expansion of the Casa de Pedra mine: R$ 87 million;
• Maintenance and repairs: R$ 43 million;
• Expansion of the Porto de Itaguaí: R$ 9 million;

60


Subsidiaries:

• MRS (transportation and logistics): R$ 57 million;
• CSN Cimentos: R$ 43 million;
• CFN: R$ 17 million;
• CSN Aços Longos: R$ 13 million;
• CFM: R$ 5 million.

The remainder went to other projects, mainly focusing on technological improvements for the Company and its subsidiaries.

Working Capital 

As of March 31, 2008, working capital totaled R$ 1.2 billion, 7% down on the end-of-2007 figure. The reduction was essentially due to the decrease in the asset balances, which include the R$ 247 million reduction in “Inventories” and the R$ 128 million drop in Advances to Suppliers. However, part of this impact was also offset by the R$ 336 million decrease in the liabilities balance, mainly related to “Accounts Payable to Suppliers” and “Taxes Payable”, the latter being impacted by the booking of additional provisions for IPI premium credits in the 4Q07.

The average 1Q08 supplier payment period fell from 73 days to 54 days in March/08, while the average client receipt period dropped from 19 to 17 days in relation to 4Q07. At the end of December 2007, the average inventory turnover fell by 22 days, from 131 to 108.

            R$ MM 
            Chg. 
WORKING CAPITAL    Dec/2007    Mar/2008    1Q08 x 4Q07 
Assets    3,710    3,285    425 
   
Cash Availabilities    225    176    49 
Accounts Receivable    744    743    1 
- Domestic Market    813    837    (24)
- Export Market    47    40   
- Allowance for Doubtful Accounts    (116)   (134)   18 
Inventory    2,420    2,173    247 
Advances to Suppliers    321    193    128 
   
Liabilities    2,401    2,065    336 
   
Accounts Payable to Suppliers    1,347    1,083    264 
Salaries and Social Contribution    110    105   
Taxes Payable    944    765    179 
Advances from Clients      112    (112)
   
Working Capital    1,309    1,220    89 
   
 
TURN OVER RATIO            Chg. 
Average term    Dec/2007    Mar/2008    1Q08 x 4Q07 
Receipt    19    17    2 
Payment    73    54    19 
Inventories    131    108    22 
   

Capital Market 

Share Performance

Despite the drops of 5% in the IBOVESPA and of 8% in the Dow Jones in the 1Q08, CSN’s shares recorded a positive performance on both BOVESPA and NYSE, appreciating by 19% and 21%, respectively.

61


The average daily traded volume also moved up both in BOVESPA and NYSE. The Brazilian stock exchange enjoyed a growth of16%, from approximately R$ 132 million at the end of 2007 to R$ 154 million in the 1Q08. In NYSE, the volume climbed by an even more impressive 62%, from US$ 90 million to US$ 146 million.

Capital Markets - CSNA3 / SID / IBOVESPA / DOW JONES         
   
    1Q07 *    4Q07 *    1Q08 
no. of shares    804,203,838     804,203,838   804,203,838 
   
Market Value             
 Closing price (R$/share)   28.16    52.53    62.56 
 Closing price (US$/ADR)   14.28    29.86    35.99 
 Market Value (R$ million)   21,666    40,423    48,138 
 Market Value (US$ million)   10,988    22,976    27,693 
   
Profitability (total return to shareholder)            
 CSNA3    38%    25%    19% 
 SID    43%    27%    21% 
 Ibovespa    3%    6%    -5% 
 Dow Jones    -1%    -4%    -8% 
   
Volume             
 Daily average (no. of shares)   979,193    952,785    2,629,207 
 Daily average (R$ thousand)   72,710    132,254    154,310 
 Daily average (no. of ADRs)   1,073,605    1,151,640    4,331,746 
 Daily average (US$ thousand)   38,595    89,943    145,989 
   
Source: Economática and Bloomberg
* Prices and number of shares for the 1Q07 and 4Q07 were adjusted in order to reflect he effect of the split.

Stock Split and Shareholder Payout
The EGM of January 22, 2008 approved a 3:1 stock split, i.e., each share representing the Company’s capital stock started being represented by three shares. Consequently, as from that date, the Company’s capital has totaled R$1,680,947,363.71, divided into 804,203,838 common shares. The ratio of one CSN share for one ADR (American Depositary Receipt) was maintained.

The AGM of April 18, 2008 approved the payment of R$ 2,115 million to shareholders as dividends and interest on own capital. Of this total, R$ 800 million was paid as an advance on January 8, 2008 (R$ 665 million in dividends and R$ 135 million in interest on own capital) and the remaining R$ 1,315 million (R$ 1,244 million in dividends and R$ 71 million in interest on equity was paid on May 5, 2008.

62


Company Performance

In 2008 until one day before Standard & Poor's raised Brazil’s risk rating to investment grade, which triggered a huge stock-market surge, CSN’s shares had appreciated by 36%, one of the highest levels among those stocks that comprise the IBOVESPA index. As a result of this significant profitability, the Company’s market capitalization reached US$ 35 billion in April, 2008 the 5th highest among the world’s steel producers.

     
Ranking  Company  Mkt Cap(US$ bi)
     
1st  Arcelor Mittal  134.4 
2nd  Posco  44.2 
3rd  Nippon Steel  39.4 
4th  Evraz  36.4 
5th  CSN  35.8 
6th  Baoshan Iron/Steel  34.6 
7th  JFE Holdings  33.7 
8th  Thyssenkrupp  33.7 
9th  Gerdau  30.1 
10th  Usiminas  25.5 
     
Source: Bloomberg - May 06th, 2008

63


09.01 - EQUITY IN SUBSIDIARIES AND/OR ASSOCIATED COMPANIES

1 - ITEM  2 - NAME OF SUBSIDIARY/AFFILIATED COMPANY  3 - CNPJ (Corporate Taxpayer’s ID) 4 - CLASSIFICATION  5 - PARTICIPATION IN CAPITAL 
OF INVESTEE - % 
6 – INVESTOR’S 
SHAREHOLDERS' EQUITY - % 
7 - TYPE OF COMPANY  8 - NUMBER OF SHARES HELD IN CURRENT QUARTER  
(in thousands)
9 - NUMBER OF SHARES HELD IN PREVIOUS QUARTER 
(in thousands)
     01  CSN OVERSEAS  05.722.388/0001-58  PRIVATE SUBSIDIARY  100.00  11.30 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY  7,173  7,173 
 
     02  CSN STEEL  05.706.345/0001-89  PRIVATE SUBSIDIARY  100.00  17.60 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY  480,727  480,727 
 
     04  CSN ENERGY  06.202.987/0001-03  PRIVATE SUBSIDIARY  100.00  12.73 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY  3,675  3,675 
 
     06  IND. NAC. DE AÇOS LAMINADOS – INAL  02.737.015/0001-62  PRIVATE SUBSIDIARY  99.99  7.50 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY  421,366  421,366 
 
     07  CSN CIMENTOS  42.564.807/0001-05  PRIVATE SUBSIDIARY  99.99  0.00 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY  32,777  32,777 
 
     08  CIA METALIC DO NORDESTE  01.183.070/0001-95  PRIVATE SUBSIDIARY  99.99  1.85 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY  92,284  92,284 
 
     09  INAL NORDESTE  00.904.638/0001-57  PRIVATE SUBSIDIARY  99.99  0.64 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY  37,796  37.796 



64


09.01 - EQUITY IN SUBSIDIARIES AND/OR ASSOCIATED COMPANIES

1 - ITEM  2 - NAME OF SUBSIDIARY/AFFILIATED COMPANY  3 - CNPJ (Corporate Taxpayer’s ID) 4 - CLASSIFICATION  5 - PARTICIPATION IN CAPITAL 
OF INVESTEE - % 
6 – INVESTOR’S
SHAREHOLDERS' EQUITY - %  
7 - TYPE OF COMPANY  8 - NUMBER OF SHARES HELD IN CURRENT QUARTER 
(in thousands)
9 - NUMBER OF SHARES HELD IN PREVIOUS QUARTER 
(in thousands)
     10  CSN PANAMA  05.923.777/0001-41  PRIVATE SUBSIDIARY  100.00  8.86 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY    4,240  4,240 
 
     11  CSN ENERGIA  03.537.249/0001-29  PRIVATE SUBSIDIARY  99.90  0.35 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY   
 
     13  CSN I  04.518.302/0001-07  PRIVATE SUBSIDIARY  99.99  7.70 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY    9,995,753  9,995,753 
 
     14  GALVASUD  02.618.456/0001-45  PRIVATE SUBSIDIARY  15.29  8.58 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY    1,804,435  1,804,435 
 
     16  SEPETIBA TECON  02.394.276/0001-27  PRIVATE SUBSIDIARY  99.99  1.99 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY    253,990  254,015 
     17  COMPANHIA FERROVIÁRIA DO NORDESTE-CFN  02.281.836/0001-37  PUBLICLY-TRADED 
SUBSIDIARY 
46.88  0.00 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY    75,334  54,451 
     18  ITÁ ENERGÉTICA  01.355.994/0002-02  PUBLICLY-TRADED 
SUBSIDIARY 
48.75  7.10 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY    253,607  253,607 




65


09.01 - EQUITY IN SUBSIDIARIES AND/OR ASSOCIATED COMPANIES

1 - ITEM  2 - NAME OF SUBSIDIARY/AFFILIATED COMPANY  3 - CNPJ (Corporate Taxpayer’s ID) 4 - CLASSIFICATION  5 - PARTICIPATION IN CAPITAL 
OF INVESTEE - % 
6 – INVESTOR’S 
SHAREHOLDERS' EQUITY - % 
7 - TYPE OF COMPANY  8 - NUMBER OF SHARES HELD IN CURRENT QUARTER 
(in thousands)
9 - NUMBER OF SHARES HELD IN PREVIOUS QUARTER 
(in thousands)
     19  MRS LOGÍSTICA  01.417.222/0001-77  PUBLICLY-TRADED  32.93  15.84 
      SUBSIDIARY       
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY    111,962  111,962 
 
     27  CSN EXPORT  05.760.237/0001-94  PRIVATE SUBSIDIARY  100.00  1.39 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY      32  32 
 
     28  CSN ISLANDS VII  05.918.539/0001-48  PRIVATE SUBSIDIARY  100.00  0.01 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY     
 
     29  CSN ISLANDS VIII  06.042.103/0001-09  PRIVATE SUBSIDIARY  100.00  0.05 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY     
 
     30  CSN ISLANDS IX  07.064.261/0001-14  PRIVATE SUBSIDIARY  100.00  0.05 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY     
 
     31  ERSA – ESTANHO DE RONDÔNIA  00.684.808/0001-35  PRIVATE SUBSIDIARY  99.99  0.36 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY    34,233  34,233 
 
     32  CSN ISLANDS X             / -  PRIVATE SUBSIDIARY  100.00  0.00 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY     

66


09.01 - EQUITY IN SUBSIDIARIES AND/OR ASSOCIATED COMPANIES

1 - ITEM  2 - NAME OF SUBSIDIARY/AFFILIATED COMPANY  3 - CNPJ (Corporate Taxpayer’s ID) 4 - CLASSIFICATION  5 - PARTICIPATION IN CAPITAL 
OF INVESTEE - % 
6 – INVESTOR’S 
SHAREHOLDERS' EQUITY - % 
7 - TYPE OF COMPANY  8 - NUMBER OF SHARES HELD IN CURRENT QUARTER 
(in thousands)
9 - NUMBER OF SHARES HELD IN PREVIOUS QUARTER 
(in thousands)
     33   NACIONAL MINÉRIOS  08.446.702/0001-05  PRIVATE SUBSIDIARY  99.99  0.58 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY    29,997  29,997 
 
     34  PELOTIZAÇÃO NACIONAL   09.295.313/0001-99  PRIVATE SUBSIDIARY  99.99  0.01 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY'   1,000  1,000 
 
     35  CONGONHAS MINÉRIOS  08.902.291/0001-15  PRIVATE SUBSIDIARY  99.99  0.06 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY'   5,009  5,009 
 
     36  MINAS PELOTIZAÇÃO   09.295.323/0001-24  PRIVATE SUBSIDIARY  99.99  0.01 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY'    1,000  999 
 
     37  ISLANDS XI             / -  PRIVATE SUBSIDIARY  100.00  0.00 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY     
 
     38  CSN AÇOS LONGOS             / -  PRIVATE SUBSIDIARY  99.99  0.00 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY    5,024 
 
     39  NACIONAL SIDERURGIA             / -  PRIVATE SUBSIDIARY  99.99  0.01 
COMMERCIAL, INDUSTRY AND OTHER TYPES OF COMPANY      9,999 

67


10.01 – CHARACTERISTICS OF PUBLIC OR PRIVATE ISSUANCE OF DEBENTURES

   
1 – ITEM  04 
   
2 –ORDER No. 
   
3 –REGISTRY No. AT CVM  CVM/SRE/DEB/2003/023 
   
4 – REGISTRATION DATE AT CVM  12/19/2003 
   
5 – ISSUED SERIES  2A 
   
6 – TYPE OF ISSUE  COMMON 
   
7 – NATURE OF ISSUE  PUBLIC 
   
8 – DATE OF ISSUE  12/1/2003 
   
9 – EXPIRATION DATE  12/1/2008 
   
10 – TYPE OF DEBENTURE  WITHOUT PREFERENCE 
   
11 – CONDITION FOR CURRENT REMUNERATION   
   
12 – PREMIUM/NEGATIVE GOODWILL   
   
13 – NOMINAL VALUE (Reais) 10,000.00 
   
14 – AMOUNT ISSUED (Thousands of Reais) 250,000 
   
15 NUMBER OF SECURITIES ISSUED (UNIT) 25,000 
   
16 – OUTSTANDING SECURITIES (UNIT) 25,000 
   
17 – TREASURY SECURITIES (UNIT)
   
18 – CALLED AWAY SECURITIES (UNIT)
   
19 – CONVERTED SECURITIES (UNIT)
   
20 – SECURITIES TO BE DISTRIBUTED (UNIT)
   
21 – DATE OF THE LAST RENEGOTIATION   
   
22 – DATE OF NEXT EVENT  12/1/2008 
   

68


10.01 – CHARACTERISTICS OF PUBLIC OR PRIVATE ISSUANCE OF DEBENTURES

   
1 – ITEM  05 
   
2 – ORDER no. 
   
3 –REGISTRY No. AT CVM  CVM/SRE/DEB/2006/011 
   
4 – REGISTRATION DATE AT CVM  4/28/2006 
   
5 – ISSUED SERIES  UN 
   
6 – TYPE OF ISSUE  COMMON 
   
7 – NATURE OF ISSUE  PUBLIC 
   
8 – DATE OF ISSUE  2/1/2006 
   
9 – EXPIRATION DATE  2/1/2012 
   
10 – TYPE OF DEBENTURE  WITHOUT PREFERENCE 
   
11 – CONDITION FOR CURRENT REMUNERATION   
   
12 – PREMIUM/NEGATIVE GOODWILL   
   
13 – NOMINAL VALUE (Reais) 10,000.00 
   
14 – AMOUNT ISSUED (Thousands of Reais) 600,000 
   
15 NUMBER OF SECURITIES ISSUED (UNIT) 60,000 
   
16 – OUTSTANDING SECURITIES (UNIT) 60,000 
   
17 – TREASURY SECURITIES (UNIT)
   
18 – CALLED AWAY SECURITIES (UNIT)
   
19 – CONVERTED SECURITIES (UNIT)
   
20 – SECURITIES TO BE DISTRIBUTED (UNIT)
   
21 – DATE OF THE LAST RENEGOTIATION   
   
22 – DATE OF NEXT EVENT  8/1/2008 
   

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15.01 – INVESTMENT PROJECTS 
 

Amongst the Company’s major investments, we emphasize the expansion of the production capacity of the Casa de Pedra mine and Itaguaí port, where the Company invested the amount of R$503,338 and R$462,854, respectively, up to March 31, 2008.

For further information, see the Management Report.

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16.01 - OTHER INFORMATION CONSIDERED MATERIAL BY THE COMPANY 
 

     Companhia Siderúrgica Nacional
Statements of Cash Flows
For the periods ended on March 31, 2008 and 2007
(In thousands of reais)

    Consolidated    Parent Company 
     
    3/31/2008    3/31/2007    3/31/2008    3/31/2007 
         
 
Cash flow from operating activities                 
Net income for the period    767,304    762,903    771,098    753,488 
Adjustments to reconcile the net income for the period                 
with the resources from operating activities:                 
- Net monetary and exchange variations    (69,021)   (241,389)   169,579    (253,506)
- Provision for loan and financing charges    161,996    209,951    143,750    161,865 
- Depreciation, depletion and amortization    325,241    245,957    278,449    198,415 
- Write-offs of property, plant and equipment    8,780    654,817    1,356    1,024 
Equity in accounting and amortization of goodwill and negative goodwill    58,050    27,750    (443,919)   (487,695)
Deferred income and social contribution taxes    71,413    (24,207)   66,494    25,639 
Swap provision    (587,924)   (237,261)   (462,915)   (12,123)
Actuarial liability provision    (35,663)   (966)   (35,663)   (966)
Provision for contingencies    29,724    (11,297)   25,897    (6,573)
- Other provisions    39,306    34,759    36,847    32,238 
    769,206    1,421,017    550,973    411,806 
(Increase) decrease in assets:                 
 - Accounts receivable    (15,780)   (803,288)   (12,818)   (129,564)
 - Inventories    237,790    (32,360)   224,975    (43,019)
 - Receivable from subsidiaries            (68,248)   10,858 
 - Recoverable taxes    29,569    (22,760)   13,654    (9,967)
 - Other    105,274    38,347    113,092    (26,125)
    356,853    (820,061)   270,655    (197,817)
 
Increase (decrease) in liabilities                 
 - Accounts Payable to Suppliers    (263,368)   (119,583)   (171,117)   (123,559)
 - Salaries and payroll charges    (5,239)   52,891    (5,271)   56,265 
 - Taxes    (202,225)   51,381    (164,268)   62,697 
 - Accounts payable - Subsidiaries            (6,204)   (14,753)
 - Contingent Liabilities    70,859    127,234    72,120    117,602 
 - Charges paid on loans and financings    (199,436)   (233,493)   (145,017)   (176,009)
 - Others    45,953    (80,989)   48,689    (60,444)
    (553,456)   (202,559)   (371,068)   (138,201)
 
Net cash provided by operating activities    572,603    398,397    450,560    75,788 
 
Cash Flows from investing activities                 
 - Judicial Deposits    (38,077)   (25,368)   (36,932)   (24,962)
 - Investments        (1)       (22,001)
 - Property, plant and equipment    (357,628)   (233,035)   (205,904)   (135,139)
 - Deferred charges    (16,509)   (1,300)   (16,470)   (1,149)
Net resources used on investing activities    (412,214)   (259,704)   (259,306)   (183,251)
 
Cash Flow from financing activities                 
Financial Funding                 
 - Loans and Financing    217,372    2,170,629    404,341    2,069,366 
    217,372    2,170,629    404,341    2,069,366 
Payments                 
 - Financial Institutions - principal    (253,712)   (1,916,033)   (148,181)   (1,487,323)
 - Dividends and interest on shareholders’ equity    (800,840)   (799)   (800,840)   (799)
 - Treasury shares        (66,709)       (66,709)
    (1,054,552)   (1,983,541)   (949,021)   (1,554,831)
Net cash raised (used) in financing activities    (837,180)   187,088    (544,680)   514,535 
 
Increase (decrease) in cash and marketable securities    (676,791)   325,781    (353,426)   407,072 
Cash and marketable securities, beginning of period    2,367,353    2,132,722    745,115    588,863 
Cash and marketable securities (except for derivatives), end of period    1,690,562    2,458,503    391,689    995,935 

71


 
17.01 – SPECIAL REVIEW REPORT – QUALIFIED OPINION 
 

Independent Accountant’s Review Report
(A translation of the original report in Portuguese as published in Brazil containing financial statements prepared in accordance with accounting practices adopted in Brazil and rules from the Brazilian Securities Commission - CVM)

To
The Board of Directors
Companhia Siderúrgica Nacional
Rio de Janeiro - RJ

1. We have reviewed the Quarterly Financial Information of Companhia Siderúrgica Nacional (the Company) and the consolidated Quarterly Financial Information of the Company and its subsidiaries for the quarter ended March 31, 2008, comprising the balance sheets, the statements of income, of cash flows and of added value, the management report and notes, which are the responsibility of its management.

2. Except for the matter described in the paragraph 3, our review was conducted in accordance with the specific rules set forth by the IBRACON - The Brazilian Institute of Independent Auditors, in conjunction with the CFC - Federal Accounting Council, and consisted mainly of the following: (a) inquiries and discussions with the persons responsible for the Accounting, Finance and Operational areas of the company and its subsidiaries as to the main criteria adopted in the preparation of the Quarterly Financial Information; and (b) reviewing information and subsequent events that have or may have relevant effects on the financial position and operations of the Company and its subsidiaries.

3. The Brazilian Securities Commission (CVM), through Instruction n° 469 of May 2, 2008, in its article 8, determined that the elements comprising the assets and liabilities deriving from long-term operations were adjusted at present value based on discount rates which reflect the best current market valuations with respect to the value of money in time and particular risks of the asset or liability. However, as mentioned in Note 3h, the Company's management is in the process of analyzing and evaluating the possible impacts of such adjustments at present value, in accordance with this instruction. Thus, we were unable to obtain reasonable assurance with respect to the measurement of these adjustments in this quarterly financial information.

4. Based on our review, except for the possible effects, if any, related to the matter described in paragraph 3, we are not aware of any material modifications that should be made to the Quarterly Financial Information referred to in the first paragraph for it to be in accordance with the rules issued by the Brazilian Securities Commission, applicable to the preparation of the Quarterly Financial Information, including CVM Instruction n° 469/08.

72


5. As mentioned in note 3h, on December 28, 2007 Law n° 11.638 was enacted, and effective from January 1, 2008. This Law modified, amended and introduced new rules to the existing Corporate Law (Law n° 6.404/76) and resulted in changes to certain accounting practices currently adopted in Brazil. Despite the fact that the new Law is already in force, the changes required depend on the issuance of further normatization by local regulators, in order for them to be fully adopted by the companies. Therefore, in this transition phase, CVM, through Instruction CVM n° 469/08, allowed the non-application all rules described within Law n° 11.638/07 in the preparation of Quarterly Financial Information. As a consequence, the accounting information included in the Quarterly Financial Information of the Company and its subsidiaries for the quarter ended March 31, 2008, were prepared in accordance with the specific rules set forth by the CVM and does not contemplate all the changes to the accounting practices introduced by Law n° 11.638/07.

May 6, 2008

KPMG Auditores Independentes
CRC 2SP014428/O-6-F-RJ

Anselmo Neves Macedo    Carla Bellangero 
Accountant CRC SP-160482/O-6 S-RJ    Accountant CRC SP-196751/O-4 S-RJ 

73


TABLE OF CONTENTS

GROUP TABLE  DESCRIPTION  PAGE 
01  01  IDENTIFICATION 
01  02  HEAD OFFICE 
01  03  INVESTOR RELATIONS OFFICER (Company Mailing Address)
01  04  REFERENCE 
01  05  CAPITAL STOCK 
01  06  COMPANY PROFILE 
01  07  COMPANIES NOT INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS 
01  08  CASH DIVIDENDS 
01  09  SUBSCRIBED CAPITAL AND CHANGES IN THE CURRENT YEAR 
01  10  INVESTOR RELATIONS OFFICER 
02  01  BALANCE SHEET – ASSETS 
02  02  BALANCE SHEET – LIABILITIES 
03  01  STATEMENT OF INCOME 
04  01  NOTES TO THE FINANCIAL STATEMENTS  10 
05  01  COMMENTS ON THE COMPANY’S PERFORMANCE IN THE QUARTER  49 
06  01  CONSOLIDATED BALANCE SHEET – ASSETS  50 
06  02  CONSOLIDATED BALANCE SHEET – LIABILITIES  52 
07  01  CONSOLIDATED STATEMENT OF INCOME  54 
08  01  COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER  56 
09  01  EQUITY IN SUBSIDIARIES AND/OR ASSOCIATED COMPANIES  64 
10  01  CHARACTERISTICS OF PUBLIC OR PRIVATE ISSUANCE OF DEBENTURES  68 
15  01  INVESTMENT PROJECTS  70 
16  01  OTHER INFORMATION CONSIDERED MATERIAL BY THE COMPANY  71 
17  01  SPECIAL REVIEW REPORT  72 
    CSN OVERSEAS   
    CSN STEEL   
    CSN ENERGY   
    IND. NAC. DE AÇOS LAMINADOS – INAL   
    CSN CIMENTOS   
    CIA METALIC DO NORDESTE   
    INAL NORDESTE   
    CSN PANAMA   
    CSN ENERGIA   
    CSN I   
    GALVASUD   
    SEPETIBA TECON   
    COMPANHIA FERROVIÁRIA DO NORDESTE-CFN   
    ITÁ ENERGÉTICA   
    MRS LOGÍSTICA   
    CSN EXPORT   
    CSN ISLANDS VII   

74


GROUP  TABLE  DESCRIPTION  PAGE 
    CSN ISLANDS VIII   
    CSN ISLANDS IX   
    ERSA – ESTANHO DE RONDÔNIA   
    CSN ISLANDS X   
    NACIONAL MINÉRIOS   
    PELOTIZAÇÃO NACIONAL   
    CONGONHAS MINÉRIOS   
    MINAS PELOTIZAÇÃO   
    ISLANDS XI   
    CSN AÇOS LONGOS   
    NACIONAL SIDERURGIA  /73 

 

75


 

SIGNATURE
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: June 24, 2008

 
COMPANHIA SIDERÚRGICA NACIONAL
By:
/S/ Benjamin Steinbruch

 
Benjamin Steinbruch
Chief Executive Officer

 

 

 
By:
/S/ Otávio de Garcia Lazcano

 
Otávio de Garcia Lazcano
Chief Financial Officer and Investor Relations Officer

 

 

 
FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.