SUSTAINABLE EVOLUTION - Gerdau

ANNUAL REPORT 2011
SUSTAINABLE EVOLUTION

Gerdau
SUSTAINABLE
EVOLUTION
Throughout its 110 years, Gerdau has grown,
diversified its business in the steel value chain, and
developed a strong commitment to people and the
environment. It has built its history on the foundation
of integrity, consistency, and professionalism, always
seeking to establish a direct relationship of mutual
gains with its shareholders, customers, suppliers,
employees, and communities.
Producing and delivering solutions in steel is
Gerdau’s passion and purpose. The company
strives for excellence in all aspects of its business
besides working in an agile and flexible way with
a capacity to face adversity and take advantage of
market opportunities. With an industrial presence in
14 countries - in the Americas, Europe, and Asia - it
values understanding and respecting the cultures of
each region where it operates.
Today Gerdau is the leader in the segment of long
steel in the Americas and one of the largest suppliers
of special long steel in the world. It has over 45,000
employees and its operations add up to a an installed
capacity of over 25 million metric tons of steel per
year. It is the largest scrap recycler in Latin America
and worldwide transforms millions of metric tons of
this raw material into new steel products each year.
The Company is listed on the stock exchanges of São
Paulo, New York, Madrid and Lima and has more than
140,000 shareholders.
For the landmark of its 110
years, the Company issued
a commemorative seal with
the image of the Pontas de
Paris Nail Factory, which
gave rise to the Company.

MEXICO
GUATEMALA
HONDURAS
MISSION
To create value for our customers,
shareholders, employees, and communities
by operating as a sustainable steel business.
VISION
COLOMBIA
PERU
BOLIVIA
CHILE
To be a global organization and a benchmark
in any business we conduct.
ARGENTINA
VALUES
UNITED STATES
DOMINICAN REPUBLIC
VENEZUELA
URUGUAY
BRAZIL
CANADA
Be the CUSTOMER’s choice
SAFETY above all
Respected, engaged and fulfilled EMPLOYEES
Pursuing EXCELLENCE with SIMPLICITY
Focus on RESULTS
INTEGRITY with all stakeholders
Economic, social and environmental SUSTAINABILITY
UNITED KINGDOM
GERMANY
FRANCE
SPAIN
ITALY
GERDAU AROUND THE WORLD
61
143
4
48
4
126
3
Steel mills
Downstream operations
Iron ore extraction areas
Scrap collection and processing facilities *
Power plants
Retail facilities
Private port terminals
Gerdau headquarters
Associated companies
Joint ventures
* Scrap collection and processing facilities, solid pig
iron production facilities, and coal units.
INDIA

KEY INDICATORS*
Consolidated financial performance (R$ million)
40,000
30,000
20,000
10,000
0
35,407
4,651
2011
EBITDA 1
2,098
31,393
5,201
2010
1 Represents earnings before interest, taxes, depreciation and
amortization, also known as generation of cash from operations.
* The dollar exchange rate on December 31, 2011 was R$ 1.8758.
2,457
Net revenue Net income
Financial margins 2011 2010
Gross margin 14% 18%
Net margin 6% 8%
EBITDA margin 13% 17%
Output and shipments 2011 2010
Steel production (thousand metric tons) 19,623 17,852
Rolled steel production
(thousand metric tons)
Consolidated shipments
(thousand metric tons)
16,419 14,782
19,164 17,363
Investiments 2011 2010
Investments in fixed assets
(R$ million)
1,961 1,289
Environmental management 2011 2010
Reuse of by-products
(% of total generated)
78.3 78.0
Investments (R$ million) 370.9 137.7
Social responsibility projects 2011 2010
Investiments (R$ million) 61.0 57.4
Volunteer employees
(% of applicable personnel)
24.9 24.1
Capital markets 2011 2010
Metalúrgica Gerdau S.A.
Dividends (R$ per share) 0.55 0.65
Dividend yield (%) 2 3.1 2.4
Gerdau S.A.
ANNUAL REPORT GERDAU 2011
Dividends (R$ per share) 0.35 0.44
Dividend yield (%) 2 2.4 1.9
2 Ratio of dividend paid per share to quotation on the last day of the year.

2
TABLE OF CONTENTS
Message from the Chairman of the Board
Message from the CEO
110 years of history
Corporate governance
Risk management
Strategy and competitive advantage
Business
Performance of operations
Finances
Relationships
Employees
Customers
Suppliers
Shareholders
Society
Environment
Environmental management
Timeline
Summarized financial statements
Glossary
Corporate information
03
04
06
08
15
16
18
19
28
32
33
37
39
40
42
44
45
48
54
64
68
HIGHLIGHTS
ANNUAL REPORT GERDAU 2011
▪ Gerdau completes 110 years of business operations,
currently occupying a leading position in the long
steel segment in the Americas and one of the largest
suppliers of special long steel in the world.
▪ The Company has defined as its strategy to sell
part of its iron ore resources in Brazil and to continue
investing toward self-sufficiency of this important raw
material at its integrated mills in Brazil.
▪ Investments continue to be made for beginning the
production of flat steel in Brazil. The new rolling mill
for hot rolled coils will start its operations by the end of
2012 at Gerdau Açominas (MG).
▪ Gerdau announces a project to expand the supply
of special steels in Brazil and in the United States,
as well as making significant investment in India.
These initiatives are aimed at the segment of special
bar quality (SBQ), which is sold primarily to the
automotive supply chain.
▪ The project to expand the Cosigua (RJ) mill began
and a new rolling mill for wire rod and rolled rebar will
be installed there. The equipment will be operational
in 2013, with an initial installed capacity of 600,000
metric tons per year, a volume that will be expand
to 1.1 million metric tons a year during its second
phase. With this investment, the rolling mill’s total
annual capacity will increase from 1.5 million to 2.1
million metric tons in 2013, and in the second phase
will reach 2.6 million metric tons per year.
▪ The public offering of shares of Gerdau S.A. is
completed with the net proceeds of R$ 3.6 billion
in cash resources for Gerdau. Of this total, R$ 2.1
billion were used to make advance payment of debts.
Because of this, there was a 27% reduction in net
debt and an increase of 108% of cash in comparison
between December 2011 and the same period in
2010, which keeps the Company in a comfortable
financial situation for years to come.

MESSAGE FROM THE
CHAIRMAN OF THE BOARD
Strategy of balancing profitability
and growth with sustainability
Each year, we have always worked hard to exceed
our own levels of efficiency and competitiveness.
The year 2011 was no different and it is the year that
Gerdau completed 110 years of operations. We had
a good financial and operational performance
despite the instability of the global economic scenario,
due mainly to the European economic crisis. We were
able to adjust our operations to the swings in the
markets where we operate, following our strategy of
balancing profitability and growth with sustainability.
TOWARD REACHING FULL SUSTAINABILITY
The strength of our management structure, the
continuous training of our teams, our top quality
services to customers, investments for the
preservation of the environment, and our deep
involvement in strengthening the communities where
we operate give us conviction that we are able to
meet the expectations of our stakeholders based on a
relationship of trust and mutual gains.
At Gerdau, one of our values is economic, social,
and environmental sustainability, which is
substantiated by a long-term vision that seeks the
perpetuity of our business. We therefore believe
that the longevity of our Company must involve
a conduct of professionalism and commitment
to deliver value to our customers, shareholders,
employees, communities, and suppliers. The practice
of sustainability makes us more competitive and
reaffirms our respect and our responsibility to future
generations.
More recently we began to reflect on the need to
incorporate into sustainability the concepts related
to culture and politics. When working in different
countries, we believe that cultural sustainability,
ANNUAL REPORT GERDAU 2011 3
which is a full understanding and respect of cultures
in the different regions where we operate, is essential
to the long-term stability of our Company. And with
this comes the increasingly stronger preference of
our customers. Furthermore, we believe that political
sustainability, through the engagement of different
segments of society in building a long-term vision
for the regions where we operate, has an extremely
important role in improving the quality of life as a
whole. With this we can seek to contribute to building
a better future for society.
VISION OF THE FUTURE
The uncertainties of the economic scenario will make
it more challenging to predict steel demand trends.
However, considering the current panorama, the
expectations for 2012 are positive and because of
this we will continue investing to achieve increasing
standards of excellence.
Finally, I would like to thank the Board of Directors and
Gerdau Executive Committee for their commitment
and dedication, as well as all our teams that
undoubtedly make Gerdau a better company.
“The practice of sustainability makes us more
competitive and reaffirms our respect and our
responsibility to future generations.”
Jorge Gerdau Johannpeter
Chairman of the Gerdau Board of Directors

4
MESSAGE FROM THE CEO
Record shipments with
higher demand for steel in
the Americas
The year 2011 represented a milestone for Gerdau:
while we celebrate 110 years of doing business,
we broke a record in shipments by reaching 19.2
million metric tons – a volume 10% higher than 2010.
This good performance was driven by a greater
demand for long steel on the American continent
despite the adversities caused by the slowdown of
global economy and the European crisis.
Consolidated net revenues, in turn, evolved 13% over
2010, reaching R$ 35.4 billion. Consolidated steel
production on the other hand grew 10% to 19.6 million
metric tons. Consolidated generation of cash from
operation (EBITDA) went to R$ 4.7 billion and net
income of R$ 2.1 billion, both impacted by the strong
pressure of the cost of raw materials, mainly iron ore,
pig iron, coal, and scrap.
Throughout the year, we intensified our work in order
to reduce the cost of raw materials, increase the
productivity of mills, and expand the product
mix. We invested R$ 2 billion in mills and equipment
(CAPEX), especially for entering into the flat steel
sector in Brazil, which is scheduled to start in late
2012, and for expanding our own production of
iron ore. Thus, we continue having the goal of
reaching self-sufficiency of this raw material in Brazil.
Furthermore, studies for the commercial exploitation
of surplus iron ore located in the state of Minas Gerais
are underway.
ANNUAL REPORT GERDAU 2011
With a focus on the automotive industry, we
announced significant investments to increase the
supply of special steels in Brazil and in the United
States, as well as to expand our presence in India
– markets whose demand for vehicles has shown
significant growth.
For the landmark of its 110 years, Gerdau revised
and updated its Vision, Mission, Values, and Code
of Ethics at a global level in order to strengthen
our corporate culture. Also as part of the
celebrations we established a unique positioning
of the brand and updated our logo’s design, which
has undergone a subtle revitalization, making it
lighter and more modern. This has strengthened
Gerdau’s brand globally.
Following the challenge of being an organization
increasingly integrated, we started the first
phase of deploying the Gerdau Template project
in 2011, which will make it possible to use a
single information technology system globally.
At this first moment, the project, which includes
SAP technology, was implemented in Mexico,
Colombia, and Peru. In 2012, the next operations
to receive the deployment are those located in the
United States (not including special steel units), in
Canada, Argentina, Chile, and Uruguay.
The hard work and commitment of our more
than 45,000 employees based on a relationship of
respect and mutual gains were essential to reach
our objectives. One example of this are the results
of the 2011 Opinion Survey that evaluates the
Company’s internal climate globally. For this year,
the favorability index reached 75%, which is a level
considered to be excellent in comparison with the
world’s largest companies.

During the year we also strengthened our work
with communities, not only through increasing
social investments, but also with the active
participation of approximately 9,500 volunteer
employees who devote part of their time to
transfer knowledge to various social organizations.
As for the environment, Gerdau plays a key role
by recycling millions of tons of scrap per year,
removing obsolete materials from the cities and
the countryside and turning them into steel, which
also contributes to the generation of income
for thousands of families. We also operate with
advanced industrial technologies for the protection
of the environment and have tried to widen the
applications of our by-products in the steel industry
and other segments of the economy.
OUTLOOK
The signals from the global steel market point to
a growing demand in 2012 mainly in emerging
countries such as China, Brazil, and India, which
have shown good levels of economic growth.
On the other hand, we will continue monitoring
the situation of the European countries whose
economies are facing a time of severe downturn.
Faced with this scenario, we will keep working
hard to continue Gerdau’s path of sustainable
growth and development.
ACKNOWLEDGEMENTS
To conclude, I would like to thank the trust shown
by our customers, shareholders, suppliers and
communities. I would also like to give a special
thanks to our employees for their daily dedication
in overcoming challenges and achieving success.
ANNUAL REPORT GERDAU 2011 5
“In the year that Gerdau completed
110 years of business operations, we
saw record of shipments. Even against a
backdrop of global economic uncertainty, we
closed the year with a net revenue growth
and reduction in expenses and debt.”
André B. Gerdau Johannpeter
Gerdau Chief Executive Officer

6
110 YEARS OF HISTORY
Centennial journey consolidates
operations in the steel industry
In 2011, Gerdau celebrated 110 years of existence
consolidating its path of sustainable development
in the steel industry. Ethical values, professional
management, financial austerity, along with industrial
and commercial competitiveness were the basis
for the Company’s solid and consistent growth and
today it is the leader in the segment of long steels
in the Americas and one of the largest special steel
supplier in the world. Celebrations were organized
in all countries where it operates to celebrate this
milestone, bringing together its more than 45,000
employees.
Gerdau’s history began in 1901 with the Pontas
de Paris Nail Factory in Porto Alegre. The year of
1948 marked the Company’s entrance into the steel
industry with the acquisition of the Riograndense mill,
also located in Porto Alegre, in order to ensure the
Steel production (1948 - 2011)
(in thousands of metric tons)
3
48
11
53
21
58
62
63
144
68
503
73
950
1,294
ANNUAL REPORT GERDAU 2011
supply of raw material for the production of nails. The
new mill anticipated the minimill concept, a model
based on the use of scrap and regional sales, which
has kept its operating costs more competitive. (see
“Timeline”).
In the following decades, Gerdau continued expanding
its operations to produce steel in Brazil through the
construction and purchase of units in the main consumer
centers as well as to expand its distribution network.
The first step in its internationalization process
occurred in Uruguay with the acquisition of Laisa
in 1980. This move was followed with the purchase
2,056
2,878
Gerdau has produced steel since 1948 and throughout its history has become the 10th largest producer
78
83
88
93
3,661
98
12,343
03
19,599 19,623
08
11

of Courtice Steel located in the province of Ontario
(Canada) in 1989. Over the following years, the
expansion of business abroad resulted in entering into
different countries, located in the Americas, Europe
and Asia. With this the Company reached in 2011 the
position of 10th largest steel producer in the world
according to studies by the World Steel Association.
Watch the video of the 110 years celebration on
Gerdau’s website (www.gerdau.com.br/110years.html).
RENEWED BRAND
As part of the celebrations, Gerdau established a single
global brand positioning and updated the design of its
logo, which has undergone a subtle revitalization, and
it has become lighter and more modern. The purpose
of its new “One brand, One logo” positioning is to
strengthen its brand globally. With this, there was a
simplification of the brands in Brazil and the long steel
and special steels operations located in North America,
up until then called Gerdau Ameristeel and Gerdau
Macsteel, began to be called Gerdau. Descriptors were
developed to differentiate the two business operations
in North America, and the descriptor for the long steel
operations, previously called Gerdau Ameristeel, began
to be called Gerdau Long Steel North America. Gerdau
Special Steel North America is the descriptor of the
company’s special steel operations in the United States
formerly known as Gerdau Macsteel.
Gerdau’s logo has undergone five changes during its
110 year history. The first graphical representation of
Gerdau’s brand was a stamp with a picture of a nail,
ANNUAL REPORT GERDAU 2011 7
which was widely used in promotional materials in
the 40s, 50s, and 60s. Then in 1970, Gerdau’s first
institutional logo was created in which the two letter
Gs represented the Company’s spirit of cohesion and
desire to grow. This version of the logo underwent a
minor change in 1976 and, in the 1980s, the Company
again changed its logo, which it had been using until
early 2011.
GERDAU CORPORATE CULTURE AND ETHICS
In order to strengthen its corporate culture, Gerdau
revised and updated its Vision, Mission, and Values
at a global level. The completion of this work was made
based on interviews with members of the Board of
Directors, Gerdau’s Executive Committee, and with the
company’s main leaders. Moreover, another thousand
leaders located in all operations of Gerdau around the
world were involved through an online questionnaire,
which established an even greater participatory
process. With these inputs, it was also possible to
develop a book with stories about the experiences that
employees had in their daily work routines that reflect
each one of the Company’s Values. This book entitled
“Our culture unites us – lessons from our history” will be
distributed to all of Gerdau’s operations in 2012.
In addition, the Company launched its new Code
of Ethics and promoted the training of more than
45,000 employees in the countries where it operates.
The new code reinforces Gerdau’s commitments and
expected behavior with regard to each of the values,
thus becoming an important instrument for maintaining
these concepts and the Company’s longevity.
At Gerdau, employees can send or register their
questions and concerns related to ethics by the
Ethics Channel that is available on the intranet or
by an internal extension. All inquiries are treated
confidentially. The new Code of Ethics is public and
can be found on Gerdau’s website (www.gerdau.com.
br/sobre-gerdau/governanca-corporativa-diretriz-etica.
aspx). The Company also offers channels that seek to
encourage the free expression of opinions, attitudes,
and concerns of all stakeholders through which it has
relationships by means of its website (www.gerdau/
institucional/contatos.aspx).

8
CORPORATE
GOVERNANCE
Century-old values and a solid
management structure are the
basis of Gerdau’s actions
Gerdau follows international standards of
corporate governance and in all its operations
uses the most modern management tools. This
makes it possible to reach increasing levels of
excellence and at the same time have the flexibility
and agility to adapt to the fluctuations in the markets
it operates. With 110 years of history, the Company
guides its conduct by century-old values and strict
ethical principles, fundamental to a relationship of
transparency with its stakeholders and to continue
its path of sustainable development.
It has three publicly listed companies – Gerdau
S.A., Metalúrgica Gerdau S.A., and Empresa
Siderúrgica Del Perú S.A.A. (Siderperu). The
shares of Metalúrgica Gerdau S.A. are traded on
BM&FBOVESPA (São Paulo) and those of Siderperu
on the Lima Stock Exchange. Gerdau S.A., in turn, is
traded in São Paulo, Madrid and New York. In order
to be able to trade its shares in the United States,
Gerdau S.A. has to meet the requirements of the
Sarbanes-Oxley (SOx) Act, which establishes good
corporate governance practices as well as a strict
control over internal processes.
GOVERNANCE STRUCTURE
The long-term strategies of Gerdau S.A. are set by
the Board of Directors, which is the body that monitors
the implementation of the policies established by it
and makes decisions about themes relevant to the
ANNUAL REPORT GERDAU 2011
scope of business and operations. It is also up to the
Board of Directors to appoint members of the Gerdau
Executive Committee (CEG).
The Board of Directors of Gerdau S.A. is composed
of nine members including outside members, which
hold between eight and ten meetings a year. The
Board of Directors of Metalúrgica Gerdau S.A., in turn,
consists of eleven members and nine of them are also
part of the Board of Directors of Gerdau S.A. In both
companies the term of office of each of its members is
one year with the possibility of reelection.
The members of the Board of Directors and
of the Audit Committee are elected annually
at the Ordinary General Meeting (OGM).
The responsibilities of the Board of Directors
include deciding on the accounts submitted by
the administrators, as well as for analyzing,
discussing, and voting on the financial statements,
the allocation of net income, and the dividend
distribution policy, among other items.
Metalúrgica Gerdau S.A. and Gerdau S.A. have
audit committees responsible for monitoring and
inspecting the actions of the board members. In
addition, these bodies issue opinions and provide
advice on the Board of Directors’ report and the
financial statements.
Gerdau’s corporate management is the
responsibility of the Board of Directors and the
Gerdau Executive Committee (CEG) coordinates
and oversees the Business Divisions and Functional
Processes. Composed of a CEO, a COO, and five
Executive Vice Presidents, the CEG carries out the
policies determined by the Board of Directors. To
do so, it has the support of committees established
according to criteria of expertise.

INDEPENDENT AUDIT
The financial statements of Gerdau’s publicly traded
companies regularly undergo an external audit. The
Company, in accordance with CVM Instruction No.
381/2003, informs that its service provider in this
area did not perform services not related to external
CORPORATE GOVERNANCE STRUCTURE
Support
Committees
Brazil
Special
Steel
Shareholders’
Meeting
Board of
Directors
Gerdau Officers
and Executive
Committee
Business
Operations
North
America
Board of
Auditors
ANNUAL REPORT GERDAU 2011 9
auditing during the year 2011. Gerdau’s policy for
the contracting of eventual services not related
to external auditing by the independent auditor is
based on the principles that preserve the auditor’s
independence.
Corporate Governance
Committee, Strategy
Committee and Compensation
and Succession Committee
Macroprocesses
Latin
America
Read more about the Gerdau governance structure at
www.gerdau.com.br/investidores/governanca-corporativa.aspx

10
SUMMARIZED CORPORATE STRUCTURE
94.2%
Gerdau
América Latina
Participações
S.A.
9.7% 63.4%
Gerdau
Internacional
Empreendimentos
Ltda.
49.0% 99.9%
Indústrias
Nacionales
C. por A.
Dominican Rep.
99.2%
Diaco S.A.
Colombia
100.0%
Siderúrgica
Zuliana, C.A.
Venezuela
49.0%
Corsa
Controladora
S.A. de CV
Mexico
Sipar
Aceros S.A.
Argentina
100.0%
Gerdau
Laisa S.A.
Uruguay
100.0%
Gerdau
Aza S.A.
Chile
100.0%
Siderúrgica
Tultitlán S.A.
de CV
Mexico
30.0%
86.7%
Empresa
Siderúrgica
del Perú S.A.A.
Peru
Corporación
Centroamericana
del Acero, S.A.
Guatemala
26.9%
94.0%
Gerdau
Açominas S.A.
Brazil
100.0%
Gerdau
Macsteel Inc.
USA
6.7%
Metalúrgica
Gerdau S.A.
40.6%
Gerdau S.A.
93.3%
Gerdau
Ameristeel Corp.
USA
50.0%
Gallatin
Steel Inc.
USA
94.0%
Gerdau Aços
Longos S.A.
Brazil
ANNUAL REPORT GERDAU 2011
95.9%
Gerdau Aços
Especiais S.A.
100.0%
Corporación
Sidenor, S.A.
Spain
100.0%
Sidenor
Industrial, S.A.
Spain
80.6%
95.6%
Gerdau
Comercial
de Aços S.A.
Brazil
Kalyani
Gerdau Steel Ltd.
India
Direct and indirect shareholdings on total share capital
December 2011

GERDAU S.A. BOARD OF DIRECTORS
Jorge Gerdau Johannpeter
Chairman
Frederico C. Gerdau
Johannpeter
Vice Chairman
Affonso Celso Pastore
Board Member
Germano H. Gerdau
Johannpeter
Vice Chairman
André B. Gerdau
Johannpeter
Board Member
Alfredo Huallem
Board Member
ANNUAL REPORT GERDAU 2011 11
Klaus Gerdau Johannpeter
Vice Chairman
Claudio Gerdau
Johannpeter
Board Member
Oscar de Paula
Bernardes Neto
Board Member

12
GERDAU EXECUTIVE COMMITTEE (CEG)
1 - André B. Gerdau Johannpeter
Chief Executive Officer (CEO) and President of the Gerdau Executive Committee (CEG)
2 - Claudio Gerdau Johannpeter
Chief Operating Officer (COO)
3 - Expedito Luz
Executive Vice President of Legal Affairs and Compliance
4 - Manoel Vitor de Mendonça Filho
Executive Vice President, Brazil Business Operation - Açominas and Long Steel Brazil
5 - Ricardo Giuzeppe Mascheroni
Executive Vice President, North America and Latin America Business Operation - North
6 - Osvaldo Burgos Schirmer
Executive Vice President, Finance, Auditing, and Investor Relations
7 - Francisco Deppermann Fortes
Executive Vice President of Human Resources,
Management, and Organizational Development
ANNUAL REPORT GERDAU 2011
5 4 2
1 6 7 3

CORPORATE MANAGEMENT*
CORPORATE MANAGEMENT
André Araujo Hofmeister | Director, Planning and Business Development
Antonio José Bacelar Teixeira | Director, Logistics
Antônio Marques de Almeida | Director, Brazil Shared Services
Denise Casagrande da Rocha | Director, Personnel Development
Dirceu Tarcisio Togni | Director, Industry and Engineering
Enio Viterbo Junior | Director, Health, Safety and Environment
Fernando Jimenez Boldrini | Director, Gerdau Shared Services
Fladimir Batista Lopes Gauto | Director, Procurement
Geraldo Toffanello | Director, Accounting
Glen Anderson Beeby | Director, Information Technology
Harley Lorentz Scardoelli | Director, Finance
Hildo Alberto Baldasso | Director, Technical Engineering
José Paulo Soares Martins | Director, Gerdau Institute
Marcos Eduardo Faraco Wahrhaftig | Director, Gerdau Template Project
Paulo Perlott Ramos | Director, Marketing, Sales and Metallics
Paulo Augusto de Lima Torres | Director, Operational Planning
Renato Gasparetto Jr. | Director, Corporate Communications and Public Affairs
BUSINESS DIVISIONS MANAGEMENT
BRAZIL
Heitor L. Beninca Bergamini | Executive Director - Long Steel Brazil
Rodrigo Belloc Soares | Executive Director - Gerdau Açominas
Marcus Rocha Duarte | Director, Solid Fuels of Brazil Business Operation
Paulo José Barros Rabelo | Director, Iron Ore of Brazil Business Operation
Aloysio Antonio P. de Carvalho | Director, Planning & Management Technology - Gerdau Açominas
Antônio Pinto Segreto | Industrial Director - Gerdau Açominas
Carmine Sarao Neto | Director, Human Resources - Gerdau Açominas
Daniel Antonio M. de Mesquita | Engineering Director - Gerdau Açominas
Fernando José Dutra Parreira | Executive Director, Southern Brazil Business Operation - Long Steel Brazil
José Carlos de Matos Silva | Sales Director - Gerdau Açominas
José Eustaquio de Lima | Executive Director, Comercial Gerdau - Long Steel Brazil
José Falcão Filho | Director, Metallics - Long Steel Brazil
José Walnei G. de Almeida | Director, Direct Sales - Long Steel Brazil
Luciana Domagala | Director, Human Resources - Long Steel Brazil & Special Steel Brazil
Luiz Augusto Polacchini | Director, Logistics of Brazil Business Operation
Marcelo Costa Nasser | Executive Director, Fabricated Reinforcing Steel Facilities - Long Steel Brazil
Mario Sant’Anna Junior | Executive Director, Brazil Forestry Operation - Long Steel Brazil
Nestor Mundstock | Executive Director, Cosigua mill - Long Steel Brazil
Paulo Ricardo Tomazelli | Commercial Director - Long Steel Brazil
ANNUAL REPORT GERDAU 2011 13
* Updated in February, 2012

14
CORPORATE MANAGEMENT*
SPECIAL STEEL
Mark Anthony Marcucci | Executive Director, Special Steel Business Division
André Beaudry | Executive Director, Business Development (India)
A.S. Mathur | Executive Director, Kalyani Gerdau (India)
T. Mohan Babu | Chief Operating Officer, Kalyani Gerdau (India)
Roberto de Barros Bezerra | Industrial Director, Kalyani Gerdau (India)
Cesar Arroyo Garcia | Director, Human Resources, Gerdau Sidenor (Spain)
Francisco Javier F. Retana | Industrial Director, Gerdau Sidenor (Spain)
Gregorio Iparraguirre Campos | Commercial Director, Gerdau Sidenor (Spain)
Hermenio Pinto Gonçalves | Industrial Director, Special Steel Brazil
Joaquim Guilherme Bauer | Executive Director, Special Steel Brazil
Jack Finlayson | President, Gerdau Special Steel North America (USA)
John Kelleher | Vice President, Operations Gerdau Special Steel North America (USA)
José Jainaga Gomez | General Director, Gerdau Sidenor (Spain)
Ricardo Sendim Fioramonte | Commercial Director, Special Steel Brazil
Robert Jeffrey Karmol | Controller, Gerdau Special Steel North America (USA)
Rodrigo Ferreira de Souza | Financial Director, Gerdau Sidenor (Spain)
Richard Mark Szink | Director, Sales & Marketing, Gerdau Special Steel North America (USA)
LATIN AMERICA
André Felipe Gueiros Reinaux | Executive Director, Latin America - North
Hermann Von Mühlenbrock Soto | Executive Director, Latin America - South
Renato Silva Bernardes | Executive Director, Gerdau Mexico
Carlos Hamilton de O. Pimenta | Executive Director, Diaco (Colombia)
José Padilla Bello | Executive Director, Sizuca (Venezuela)
José Pedro Sintas | Executive Director, Gerdau Laisa (Uruguay)
Luís Daniel Pécora Nova | Executive Director, Sipar Gerdau (Argentina)
Samuel Nanes Venguer | Administrative, Financial and Institutional Relations Director, Gerdau Mexico
NORTH AMERICA
Guilherme Gerdau Johannpeter | President, Gerdau Long Steel North America
André Pires de Oliveira Dias | Vice President of Finance, Gerdau Long Steel North America
Carl Czarnik | Vice President of Human Resources, Gerdau Long Steel North America
James Kerkvliet | Vice President of Sales and Marketing, Gerdau Long Steel North America
Matthew C. Yeatman | Vice President of Metallics Raw Materials, Gerdau Long Steel North America
Peter Campo | Vice President of Downstream Operations, Gerdau Long Steel North America
Wang Chia Yuan | Vice President of Mill Operations, Gerdau Long Steel North America
ANNUAL REPORT GERDAU 2011
* Updated in February, 2012

RISK MANAGEMENT
Strict internal control of
processes ensures appropriate
risk management
Gerdau monitors in a structured manner all the possible
risks of its business and its operations. This is done
using a rigorous risk management system that is
continually improved, which contributes to efficient
management and generation of sustainable value for
shareholders.
MANAGING OPERATIONAL RISKS
Gerdau’s internal audit is responsible for mapping
operational risks and respective internal controls of
the processes. Operational risks arise from failures,
deficiencies, or inadequacy of internal processes,
people, or technology environments. These risks
can be related to the industrial process or to the
management of the Company’s different areas,
including the supply of raw materials and inputs,
marketing & sales, information technology, logistics,
and personnel management.
These risks are assessed annually from the results
of the audit work and Sarbanes-Oxley Certification
tests, as well as interviews with senior management
and information received from the managers of the
processes. Based on this data, the Audit Plan is
carried out for the following year, which involves
identifying gaps in the processes as well as
opportunities for improvements in controls and other
mitigation measures.
MANAGING BUSINESS RISKS
Gerdau also rigorously monitors the business risks,
which include issues related to competitiveness
and the Company’s positioning in the steel market.
ANNUAL REPORT GERDAU 2011 15
The management of business risks is carried out by
different decision-making forums that consider the
benefits and risks linked to it. Furthermore, the various
business indicators monitor not only results, but also
factors that can impact the Company, many of which
are flags of strategic and operational risks.
The Gerdau Executive Committee (CEG) and
its committees have the responsibility to identify,
evaluate, and determine actions in relation to business
risks that arise. The CEG, for example, manages
strategic risks that involve the evaluation of credit
availability in the international market, the emergence
of new competitors, launching of new products,
Gerdau’s reputation with its various stakeholders, and
the needs of future investments. The compliance team
in turn is responsible for staying continuously up-todate
with the laws in each country where Gerdau
operates and to comply with all the current regulations
and legal norms.
RISK MANAGEMENT COMMITTEE
The Risk Management Committee oversees
managing the most relevant risks in a direct or
indirect way.
The themes supervised directly by the committee
include the status of assessments on the controls
under the Sarbanes-Oxley Act, the audit work on
operational risks, the progress of complaints made
through the ethics channel (respecting anonymity
and confidentiality), compliance, and others. The
approval of the Annual Audit Plan is also part of its
responsibility.
Indirect supervision is given to risks that are already
regularly monitored by other decision-making forums.
Periodically the body requests presentations on
risk management from other processes as a way
to assess the adequacy of risk control in different
areas, trying to prove whether the risks that Gerdau is
subject are being properly identified and managed.

16
STRATEGY AND
COMPETITIVE
ADVANTAGE
Continuous search for new
levels of profitability and
sustainable growth
Gerdau in 2011 continued working to extend the levels
of efficiency of its operations driven by the strategy
of striving to reach higher levels of profitability
and growth with sustainability. To increase the
competitiveness of the business, one of the pillars
of its strategy has been efforts to reduce costs and
increase our own supply of iron ore and coal, which
are key raw materials in the steelmaking process.
Furthermore, studies for the commercial exploitation
of surplus iron ore located in Minas Gerais are
underway.
To be relevant in markets where it operates is another
of Gerdau’s strategic pillars. The Company also
believes that geographic diversification is fundamental
for its continual growth process. In this sense, its
presence in India, where in 2012 it will start up a
rolling mill for special steels and rebars and a sintering
facility, consists of one of its biggest challenges. In an
GERDAU STRATEGY
Relevance
in the markets
Profitability
and
Growth with Sustainability
Business
competitiveness
Integrated Organization
ANNUAL REPORT GERDAU 2011
effort to consolidate itself as a player in all segments
of the steel industry, Gerdau has been investing to
start up production of flat steel in Brazil by the end
of 2012 with the manufacturing of hot rolled coils at
Gerdau Açominas (MG).
UNIQUE FEATURES OF GERDAU MANAGEMENT
Gerdau Business System
One of Gerdau’s main competitive advantages
is its ability to enhance and disseminate its best
practices in a way that is standardize and fast to their
teams in the different countries where it operates.
This work, which covers all areas of the Company, is
accomplished through the Gerdau Business System
(GBS), a system that consolidates different practices
developed in-house or as benchmarks outside the
Company.
Because it is an open system and is constantly being
improved, GBS identifies, evaluates, and incorporates
new practices that have shown significant results
in operations. It also facilitates spreading Gerdau’s
corporate culture, contributing to the Company’s
complete integration.
In 2011, an experiment was conducted to simplify
the system in order to accelerate the deployment of
priorities practices and to make it increasingly focused
on business needs.
Player
in all segments
Geographic
diversification

Shared Services Gerdau
Since 2006, the Company has had the Shared
Services Gerdau (SSG), which is a service center
that brings together all the operational processes
common to the Gerdau units in Brazil such as
Accounting Services, Indirect Taxes Management,
Financial Services, Planning and Management
of Services, Management of Registrations, and
Employee Support and Services. The role of the
SSG is to make it possible to streamline resources
and services as well as to simplify and standardize
processes, reducing costs and providing more agility
and operational productivity.
In 2011, Shared Services Gerdau was recognized by
the Group for the Study of Shared Services Centers
(GESC) as a reference services center in Brazil. As
a result of successful experience in Brazil, Gerdau
will expand the service to its other operations in 2012
through three centers located in Brazil, Mexico, and
the United States. The center in Brazil will continue
giving support to the operations in the country, the one
in Mexico will focus on operations in Latin America
and Spain, and the one in the United States will meet
the demands of operations of long and special steels
in North America.
ANNUAL REPORT GERDAU 2011 17
Gerdau Template
Following the challenge of being an organization
increasingly integrated, Gerdau started the first
phase of deploying the Gerdau Template in 2011,
which will make it possible to apply a single
information technology system in the countries
where it operates, using SAP technology. This
will enable greater efficiency, security, and agility in
the collection and sharing of information and in the
integration of new units.
The initiative includes the participation of a permanent
team consisting of about 250 employees and the
support of several specialized consultants. The first
phase of the project was completed in 2011 with the
deployment of the system in Mexico, Colombia, and
Peru. During this process, 151,000 data related to
suppliers, customers, products, and materials were
reviewed and uploaded into the new system. In
addition to this, about 50,000 tests were performed.
Two thousand people received training and of those,
135 have become multipliers, which means that they
are responsible for training and supporting employees
who use the system in their respective countries. In
2012 the operations located in the United States (not
including special steel units), Canada, Argentina,
Chile, and Uruguay will have the new system.
The Gerdau Template deployed in Mexico, Colombia (photo), and Peru will enable greater efficiency in collecting and sharing information

Business
Gerdau continues to invest to increase its own production
of iron ore from its mines located in Miguel Burnier
(photo), Várzea do Lopes, and Gongo Soco (MG)

PERFORMANCE OF
OPERATIONS
Greater global demand drives
record shipments in 2011
The expansion of world demand for steel and
Gerdau’s commercial efforts allowed the company to
break the record in shipments in 2011. It sold 19.2
million metric tons during the year, representing a
growth of 10% compared to the previous year. This
good performance was driven by increased demand
from the automotive and energy industry in the United
States and Canada, and by the construction in Brazil
and other Latin American countries.
Consolidated steel production also broke a record.
It progressed 10% over 2010, totaling 19.6 million
metric tons with expansion in volumes produced in
all regions where the Company operates. Important
investments were made during the year for the
expansion of installed capacity and modernization
of industrial mills totaling R$ 2 billion in 2011. The
biggest investments have been for the production of
flat steel in Brazil, scheduled to start by the end of
2012, to increase our own production of iron ore.
Shipments per Business Division
19.2 million metric tons
Latin America
15.3%
Does not include
operations
in Brazil
Special Steel
13.8%
Includes special steel
operations in Brazil,
Spain and the US
Note: The above information does not include data from
affiliated companies and jointly-owned subsidiaries.
Brazil
36.9%
Does not include
special steel
operations in Brazil
North America
34.0%
Does not include
Mexico and special
steel mills in the
United States
ANNUAL REPORT GERDAU 2011
“In the year that Gerdau completed 110
years, we continue investing in order to
ensure excellence in all operations. We
have also worked with a focus on reducing
costs and achieving new synergies
between the units. Over the next five
years, we will invest R$ 10.3 billion with a
special focus on entering into the flat steel
production market in Brazil, expanding the
special steel installed capacity in Brazil
and the United States, and increasing our
presence in India. We will also continue
our project to sell the surplus of iron ore
with the goal of achieving self-sufficiency
of this important raw material in Brazil.”
Claudio Gerdau Johannpeter
Gerdau Chief Operating Officer (COO)
19

20 ANNUAL REPORT GERDAU 2011
OUTLOOK | WORLD
▪ The World Steel Association estimates
indicate that global steel consumption is
expected to grow 5.4% in 2012 driven
mainly by demand from emerging markets
(BRIC, Middle East, and North Africa). The
Company also believes that the United
States will continue in its recovery period
and is following carefully the evolution of the
economic crisis in Europe.
▪ About 70% of consumption for 2012 should
occur in developing economies where
Gerdau has a large portion of its operations.
▪ According to this scenario, Gerdau is fully
prepared to meet the future needs of steel
in countries where it operates. In 2012, the
Company will continue investing to add value
to its products, increase the installed capacity
in relevant markets, improve operational
excellence of its units, reduce costs, and
achieve new synergies between operations.
▪ Investments of R$ 10.3 billion are scheduled
for the next five years (2012 - 2016).
BRAZIL (except special steel mills)
Gerdau reported a good shipments performance
in 2011 in Brazil especially in the area of construction.
The shipments volume reached 7.1 million metric
tons, a 6% growth over 2010, and steel production
in turn reached 7.6 million metric tons, up 9% from a
year earlier.
Despite increases in the levels of production volume
and shipments, the level of business profitability
was impacted by the pressure of raw material costs,
unfavorable exchange rates, and expansion of direct
and indirect imports of steel.
Under “Brazil”, Gerdau reports all its activities in the
country except for the special steel segment, whose
information is provided separately. In the Brazilian
market, the Company operates with 11 steel mills, 4
downstream operations, 40 fabricated reinforcing steel
facilities, 4 flat steel service centers, 7 scrap collection
and processing facilities, and 4 iron ore extraction
areas. In each state of the country, the Company
has at least one Comercial Gerdau unit, which is a
distributor of flat and long steel. In total there are 82
distribution branches.
Gerdau steel was used for the construction of the Rio Negro bridge,
the second largest cable-stayed bridge in the world over river water

During the year, Gerdau intensified its work to
reduce the cost of raw materials, increase the
productivity of its mills, and expand its product
mix. In relation to our own production of iron ore, the
Company continues with the goal of achieving selfsufficiency
of this raw material in Brazil. Furthermore,
studies for the commercial exploitation of surplus iron
ore located in Minas Gerais are underway.
In 2011, Gerdau continued with its investments for
the start of production of flat steel in Brazil, especially
the installation of a hot rolled coil mill at Gerdau
Açominas (see table “Gerdau will start production of
flat steel in Brazil”).
GERDAU WILL START PRODUCTION OF FLAT STEEL IN BRAZIL
In late 2012, Gerdau will begin producing flat
steel products in Brazil, expanding the product
range offered to its customers. In the first stage
of the investment, a new rolling mill for hot rolled
coils will start up operations aimed to meet
the needs of the construction industry (steel
The new rolling mill for hot rolled coils will start its operations by the end of 2012
ANNUAL REPORT GERDAU 2011
To meet the needs of the civil construction consumer
market, the Company expanded the installed capacity
of the structural shapes rolling mill in 2011, which is
also located in Gerdau Açominas, to 700,000 metric
tons per year. Considering the prospect of continued
growth in demand, the Company has already initiated
studies to expand to 1 million metric tons the annual
production capacity of structural shapes, which are
used in construction, the oil industry, as well as for
machinery and equipment.
Throughout the year, Gerdau also provided steel
for the construction of soccer stadiums for the 2014
World Cup and major infrastructure building projects
construction), oil, shipbuilding, machinery, and
implements. In the second stage, a heavy plate
rolling mill will begin its operations. Both pieces of
equipment will be located at Gerdau Açominas in
Ouro Branco (MG).
21

22 ANNUAL REPORT GERDAU 2011
for the country such as railways, wind power mills,
bridges, ports, and highways, as well as the Federal
Government’s My House, My Life program stimulating
home ownership. In addition, it continued investing
to add value to its clients in the civil construction
sector. An example of this was the increase in the
rebar fabricating capacity with the expansion and
opening of new units. The fabricated reinforcing steel
facilities system provides greater cost savings, quality,
and speed in the execution of building projects.
The Company has also announced investments in
improvements to the Araçariguama (SP) rolling mill
with the installation of a new line of Gerdau GG 50
rebar in coils, which will start up operation in 2012.
OUTLOOK | BRAZIL
▪ The perspective for 2012 is for continued
growth of the internal market where steel
consumption is expected to reach 26.7
million metric tons, which is an increase of
7% over 2011 according to the Brazil Steel
Institute.
▪ Gerdau will continue to provide steel for
the construction of soccer stadiums as well
as infrastructure building projects such as
Bus Rapid Transit (BRT), railways, wind
power mills, ports, and highways. In 2012,
the civil construction sector should be
driven by the acceleration of the building
projects for the World Cup in 2014 and by
the continuity of Federal Government’s My
House, My Life program.
▪ Given these prospects, the Company is
fully prepared to meet the demand for steel
in Brazil considering its current installed
capacity and planned investments.
In addition, a new rolling mill for wire rod and rolled
rebar will be installed at the Cosigua (RJ) mill, which
will begin operations in 2013, initially with an installed
capacity of 600,000 metric tons per year, a volume
that will be increased to 1.1 million metric tons a
year in a second stage. The expansion project also
includes the installation in Rio de Janeiro of a new
rebar fabricated reinforcing steel facility for civil
construction and another subsidiary of Comercial
Gerdau focused on selling steel products.
LATIN AMERICA (does not include operations in Brazil)
Gerdau ended the year with increased shipments
and production in Latin America, which is a market
that showed a significant recovery in 2011 despite
the high level of imports and high pressure from
costs. The consolidated volume of shipments in Latin
America was 2.6 million metric tons in 2011, 19%
more than the previous year with the highest growth
taking place in Colombia, Argentina, and Chile. In
the same period, steel production reached 1.7 million
metric tons, an increase of 15% compared to 2010.
Gerdau made several investments in order to
keep up with the growing demand for steel in the
region. A new fabricated reinforcing steel facility
was inaugurated in Mexico, and it is Gerdau’s first
in the country. The unit is geared to meet the civil
construction industry in the region.
A new welded wire mesh factory was installed
in Guatemala, which is also dedicated to civil
construction. Also, a new drawing mill and rolling mill
for rebars and light merchant bars is scheduled to
start up operations in 2012, strengthening our service
capacity in the domestic market and neighboring
countries. The new mill will have an annual installed
capacity of 200,000 metric tons.

Gerdau opened its first fabricated reinforcing steel facility in Mexico, geared to meet the demand of civil construction of the region
In the Dominican Republic, the Company opened
a new rolling mill with a capacity of 400,000 metric
tons for rebars and light merchant bars in 2011. As a
result, Gerdau became the sole producer of structural
shapes in the Caribbean region.
In Venezuela, several operational improvements
were made as well as technical and managerial
training of employees. As a result, there was an
increase of 50% in production with the expansion of
service capacity and volume of deliveries for the civil
construction market.
In Colombia, Gerdau took up its activities again at
its Duitama unit that has a rebar rolling mill with an
annual production capacity of 90,000 metric tons.
It also made several investments for technological
upgrading of the Yumbo mill, which resumed
operations in early 2012 to better meet the growing
demand for long steel in the country. The mill, whose
production is geared to meet the civil construction
industry, has an annual installed capacity of 240
metric tons.
OUTLOOK | LATIN AMERICA
ANNUAL REPORT GERDAU 2011
Investments are also planned to increase the capacity
of the mills and plants of Tocancipá and Tuta in 2012,
adding 80,000 metric tons to their annual installed
capacity in Colombia. Furthermore, a port terminal
will be inaugurated in the country for shipment of coal
and coke, which are important raw materials for steel
production. The port will serve mainly the markets of
Brazil, Mexico, and the United States.
▪ A strong recovery in the civil construction
and infrastructure sectors should keep
demand for steel strong in 2012.
▪ According to the World Steel Association,
the countries of Latin America (except Brazil)
should reach a steel consumption of 41.7
million metric tons in 2012, which is an
increase of 5% over the previous year.
23

24 ANNUAL REPORT GERDAU 2011
In Peru, a project is being studied to expand the
capacity of the rolling mill Siderperu. The improvement
of the port logistics structure and of the mill’s
environmental protection technologies are also
scheduled for 2012. This year completed the fiveyear
period of commitments made by Gerdau in the
purchase of Siderperu with the Peruvian State. The
fulfillment of this commitment was endorsed by audit
firms of recognized prestige and has been supervised
and approved by the Agency for Promoting Private
Investments (ProInversión).
In Chile, investments were made in a new dust removal
system in the Colina mill. In addition, studies are
underway to expand the Company’s installed capacity.
NORTH AMERICA (does not include Mexico and
special steel mills in the United States)
The growing recovery in the economy of the United
States and Canada has had a positive impact on
the performance of Gerdau’s shipments in the
region. Moreover, the constant work of management
to increase productivity and reduce costs, along with
investments in modernization of units has increased the
Company’s competitiveness.
During the year, 6.5 million metric tons of steel were
sold, which is 14% more compared to 2010 mostly due
to the increase in demand for long steel products from
the manufacturing and oil & gas industries in the region,
as well as due to the increase of exports from the United
States. Steel production reached 7 million metric tons –
12% higher from a year earlier.
Gerdau has a large industrial presence in North America with 20 steel mills, 12 downstream operations, 48 fabricated reinforcing steel facilities,
and 22 scrap collection and processing facilities

Gerdau has a large industrial presence in the region:
20 mills, 12 downstream operations, 48 fabricated
reinforcing steel facilities, and 22 scrap collection
and processing units. This makes it possible for us to
serve our customers with unique advantages such as
agility and a broad product mix.
In the coming years, the Company will continue
investing to increase the competitiveness of its
units. The annual installed capacity of the Midlothian
mill in Texas, Gerdau’s main unit in North America, will
evolve to 1.8 million metric tons of steel. The installed
capacity of rebars will also be expanded in the same
unit to 550,000 metric tons per year. Both initiatives
will start operations in 2014. Furthermore, a new
reheating furnace will be commissioned at the Calvert
City (Kentucky) mill at the end of 2012.
In 2012, the Company will also initiate the deployment
of the Gerdau Template, a project to ensure the use
of a single information technology system through
the SAP platform in all of Gerdau’s operations (see
“Strategy and Competitive Advantage” section).
OUTLOOK | NORTH AMERICA
▪ The perspective for 2012 is a recovery
of the economies of North America driven
primarily by the continued recovery in the
manufacturing industry and of the oil & gas,
energy, and agriculture sectors.
▪ The World Steel Association predicts that
steel consumption in the United States is
expected to grow 5% in 2012, reaching 93.8
million metric tons. In Canada, the growth
forecast is 5% in steel consumption, reaching
14.7 million metric tons.
ANNUAL REPORT GERDAU 2011
Gerdau provided steel for the construction of the Freedom Towers
(USA), a project to rebuild the World Trade Center
SPECIAL STEEL (includes mills in Brazil, Spain, the
United States and India)
In 2011, the growing demand from the automotive
sector in Brazil and the United States brought
about a 6% increase in shipments of special steel
at Gerdau in comparison with the previous year,
reaching 2.9 million metric tons. In the same period,
steel production reached 3.4 million metric tons, an
increase of 5%. Against this backdrop of growth in
shipments, Gerdau announced new investments in
its special steel units in Brazil and the United States
(see table “Gerdau invests to increase its production
capacity of special steel”).
In Brazil, the Brazilian automotive sector posted
shipments of 3.4 million vehicles in the period,
keeping in line with the 2010 volume according to
the National Association of Vehicle Manufacturers
(Anfavea). Thus, the Brazilian market remained the
4th largest in the world in vehicles sold. Due to the
anticipated growth in coming years, new vehicle mills
will be installed in the country and existing companies
in this market will expand, thus creating an increased
demand for special steels.
25

26 ANNUAL REPORT GERDAU 2011
In the markets of the United States, Canada, and
Mexico, the production of vehicles (passenger and
light commercial vehicles) recorded 13 million units,
which increased 10% compared to 2010. Motivated
by the good performance of the market, new car
manufacturers are also coming to the United States,
and the level of nationalization of the automotive
components also continues to expand.
The production of Gerdau’s special steel is directed to the
segment of special bar quality (SBQ), which primarily serves
the automotive supply chain
As for Europe, the number of light, medium, and
heavy commercial vehicles evolved to 1.9 million
units, which is 10% higher than in 2010 according to
the European Automobile Manufacturers’ Association
(ACEA). To cope with the economic instability of
the region, the Company continued its efforts to
reduce costs, increase productivity, and diversify the
markets served.
OUTLOOK | SPECIAL STEEL
▪ The prospects for 2012 are positive for the
special steel market in Brazil, the United States,
and India.
▪ In Brazil, according to the National Association
of Vehicle Manufacturers (Anfavea), it is
estimated that vehicle production will grow 2%
in 2012, thus keeping the high demand levels
already recorded in the last years.
▪ In the United States, demand for steel should
also remain at high levels mainly due to the
need to renew the fleet of vehicles and the good
moment being experienced by the oil & gas
industry. For the market of medium and heavy
commercial vehicles, which carry more steel
in their composition, the estimates indicate a
growth of 10% in production in 2012. In relation
to the market for light vehicles (light commercial
and passenger vehicles), the estimate is an 8%
growth in production.
▪ As regards to Europe, the prospects for
the production of light, medium, and heavy
commercial vehicles are of decreasing in 2012.
▪ In India, the prospects for production of vehicles
(passenger, light and medium commercial
vehicles, motorcycles, and tricycles) point to a
growth of up to 13% in 2012 compared with 2011
according to the Society of Indian Automobile
Manufacturers (SIAM).

Gerdau, one of the largest suppliers of
special steel in the world, is making significant
investments to expand the supply of special
steels in Brazil and the United States, as well
as expand its presence in India. Its production
is aimed at the segment of special bar quality
(SBQ), which is sold primarily to the automotive
supply chain.
In Brazil, an expansion of the Pindamonhangaba
(SP) mill is scheduled with the installation of a
new special steel rolling mill, continuous casting,
and a reheating furnace. With this, the annual
installed capacity of the mill will grow from its
current 700,000 metric tons of rolled products to
1.2 million metric tons. In the Mogi das Cruzes
(SP) mill, the rolling capacity will be increased
from 216,000 metric tons to 276,000 metric
tons per year. Both investments should start up
operations by the end of 2012.
ANNUAL REPORT GERDAU 2011
GERDAU INVESTS TO INCREASE ITS PRODUCTION CAPACITY OF SPECIAL STEEL
A program is underway in the United States to
expand the mill in Monroe (Michigan), which
should be completed by the second half of 2013.
The initiative includes the installation of a new
continuous casting system, as well as a new
reheating furnace of the walking beam type and
four rolling stands. Gerdau’s other special steel
mills in the United States located in Fort Smith
(Arkansas), Jackson (Michigan), and St. Paul
(Minnesota) will also receive investments to
better serve customers of the automotive and
industrial sector.
In India, Gerdau will start up rolling mill operations
in 2012 for special steels and rebars along with
sintering, besides continuing with the installation
of a coke mill and carrying out projects in the area
of power generation.
New special steel rolling mill, continuous casting, and reheating furnace will be installed in the Pindamonhangaba mill (SP)
27

28 ANNUAL REPORT GERDAU 2011
FINANCES
Greater demand for steel
boosts net revenue
NET REVENUE
Gerdau’s record in shipments in 2011 resulted in a
13% increase in its consolidated net revenue, which
reached R$ 35.4 billion.
OPERATING EXPENSES
In 2011, the cost of shipments in consolidated terms
totaled R$ 30.3 billion, 17% above that recorded in
2010. This increase reflects a higher shipments
volume and rising costs of key raw materials.
The expenses with shipments increased in
accordance with the higher shipments volume while
general and administrative expenses remained in line
with those of the year 2010 even with the expansion
of the economic activity because of the Company’s
Consolidated statement of income - summarized*
Gerdau S.A. and subsidiaries (R$ millions)
* Years ended on December 31, 2011 and 2010
Source of net revenue
R$ 35.4 billion
Special Steel
21.2%
Includes special steel
operations in Brazil,
Spain and the US
North America
30.5%
Does not include Mexico
and special steel mills
in the United States
Note: The information above does not include data from
affiliated companies and jointly owned subsidiaries
Brazil
35.9%
Does not include
special steel
operations in Brazil
Latin America
12.4%
Does not include
operations in Brazil
2011 2010 % 2011/2010
Net shipments 35,407 31,393 13%
Cost of shipments (30,298) (25,873) 17%
Gross profit 5,109 5,520 -7%
Selling, general, and administrative expenses (2,402) (2,358) 2%
Reversal (Losses) by the non-recoverability of assets and restructuring
costs
- 336 -
Other income/operating expenses and result from equity in earnings 172 146 18%
Income before financial income and taxes 2,879 3,644 -21%
Financial income (528) (685) -23%
Income before taxes 2,351 2,959 -21%
Income tax and social contribution (253) (502) -50%
Net income for period 2,098 2,457 -15%

Composition of consolidated EBITDA *
(R$ million)
* Includes the results of affiliated companies and jointly owned subsidiaries according to the equity method.
efforts to reduce costs. With this, the share of
the selling, general, and administrative expenses
compared to net revenue decreased from 8% in 2010
to 7% in 2011.
EBITDA
The EBITDA, also known as generation of cash from
operations, was R$ 4.7 billion in 2011, a reduction of
11% compared to 2010 primarily due to higher costs
of raw materials. As a consequence, the EBITDA
margin was also impacted, going from 17% last year
to 13% in 2011.
Despite the drop of the EBITDA, there was an
increase of 49% in the generation of cash from
operations of the North America Business Operation
(does not include mills producing special steels),
mainly because of higher shipments volumes.
FINANCIAL RESULT
The financial result was negative R$ 528 million
against a R$ 685 million loss the previous year,
which was due mainly to the public offering of shares
held in April 2011. This offer caused a reduction in
indebtedness, and increased financial resources
(see details on the public offering of shares in the
“Shareholders” section).
EBITDA
R$ 4.7 billion
Brazil
Does not include special
steel operations in Brazil
ANNUAL REPORT GERDAU 2011
2011 2010 % 2011/2010
Net income 2,098 2,457 -15%
Net financial income 528 685 -23%
Provision for income tax and social contributions 253 502 -50%
Depreciation and amortization 1,772 1,893 -6%
Reversal/losses by assets write-offs - (336) -
EBITDA 4,651 5,201 -11%
EBITDA Margin 13% 17%
1,153
437
1,177
1,884
North
America
Does not include Mexico
and special steel mills
in the United States
2011 2010
1,284
419
789
2,709
Latin America
Does not include
operations in Brazil
Special Steel
Includes special steel
operations in Brazil,
Spain and the US
Note: Includes the results of affiliated companies and jointly owned
subsidiaries according to the equity method
29

30 ANNUAL REPORT GERDAU 2011
Net income
(R$ million)
NET INCOME
During the year, Gerdau’s consolidated net income
reached R$ 2.1 billion against R$ 2.5 billion in
2010 due mainly to lower operating income. The
reversal/loss for the non-recoverability of assets and
restructuring costs that occurred in 2010 totaling
R$ 208 million, net of taxes, also contributed to this
reduction.
VALUE ADDED BREAKDOWN
The value added of Gerdau companies in
consolidated terms reached R$ 9.8 billion in 2011,
which is a 5% increase on the previous year. This
good performance is a result of revenues from
products and services net of discounts, which reached
R$ 37 billion in the year, net of costs.
R$ 27.2 billion related to raw materials and consumer
goods, outsourced services, depreciation and
amortization, equity in earnings, and financial income,
among other items.
FINANCIAL LIABILITIES
In 2011, the level of indebtedness showed
improvement to the previous year. One of the main
factors that influenced this performance was the
public offering of shares, which resulted in a net inflow
of R$ 3.6 billion in resources for the Company.
2011 2010 % 2011/2010
Income before taxes * 2,351 2,959 -21%
Income tax and social contribution (253) (502) -50%
Consolidated net income * 2,098 2,457 -15%
* Includes the results of affiliated companies and jointly owned subsidiaries according to the equity method.
Of this total, R$ 2.1 billion was used to advance
payment of debts, which contributed to a 27%
reduction in net debt (gross debt less available
cash, cash equivalents, and investments) and a
108% increase in cash, which keeps Gerdau in a
comfortable financial situation for years to come.
As a result, the net debt that was R$ 12.5 billion in
Value added breakdown
R$ 9.8 billion
6.3%
Dividends and
interest on
shareholder’s equity
15.2%
Profits
reinvested
10.1%
Interest on
financing
41.9%
Salaries benefits,
profit sharing
and training
26.5%
Taxes
and social
contributions

December 2010 dropped to R$ 9.1 billion at year-end
of 2011, while cash (available cash, cash equivalents,
and investments) totaled R$ 4.6 billion, and 22% of
this amount was held by Gerdau companies abroad,
mainly in US dollars.
On December 31, 2011, 49% of the Company’s gross
debt (loans and financing and debentures) was in
Indebtedness
(R$ million)
ANNUAL REPORT GERDAU 2011
foreign currency contracted by the subsidiaries in
Brazil, 28% in different currencies contracted by
subsidiaries abroad, and 23% in reais. Of the total
gross debt, 87% was long-term and 13% short-term.
The relationship between net debt and EBITDA reached
2.0 times in December 2011 against 2.4 in December
2010. The relationship between gross debt and EBITDA,
in turn, reached 2.9 times versus 2.8 times.
31/12/2011 31/12/2010
Short term 1,757 1,693
Local currency (Brazil) 821 703
Foreign currency (Brazil) 243 169
Companies abroad 693 821
Long term 11,927 12,977
Local currency (Brazil) 2,383 2,623
Foreign currency (Brazil) 6,462 5,656
Companies abroad 3,082 4,698
Gross debt 13,684 14,670
Cash, cash equivalents, and financial investments 4,578 2,204
Net debt 9,106 12,466
31

Relationships
100% of the employees at the Cotia (São Paulo)
unit participated in programs that encourage
innovation, creativity, and teamwork

EMPLOYEES
Incentives to overcome challenges
and autonomy contribute to
increased competitiveness
Gerdau respects, values, and invests in its more
than 45,000 employees. It stimulates overcoming
challenges, entrepreneurship, and autonomy,
providing opportunities for developing a work
environment where people feel more engaged and
fulfilled. Upon completing 110 years, the Company
reinforced the spread of its corporate culture by
updating at a global level its Values, Code of
Ethics, Mission, and Vision, which are critical to its
sustainability, making it even more cohesive and
integrated (see chapter “110 Years of History”).
HEALTH AND SAFETY
People’s safety is a fundamental value for Gerdau.
Because of this, no emergency situation or production
results justify the lack of safety of its employees and
contractors. That is why the Total Safety System was
created, which is a comprehensive and rigorous set
of practices that involves continuous investment in
technologies, equipment, and overall management
systems in this area. During the year, these
investments reached R$ 71 million, up 45% over 2010.
As a result of the Company’s continuous efforts
and investments, the frequency rate of accidents
per million hours worked (international index that
measures the occurrence of accidents in the
workplace) was reduced from 2.3 in 2010 to 1.6 in
2011. This index is well below the industry average,
whose most recent number available is
2.3 according to the World Steel Association.
In recognition of its safety practices, Gerdau received
the Safety and Health Excellence Recognition
for the second time in 2011, which is an important
award granted by the World Steel Association.
The project called “The Path of the Liquid Steel”
Accident frequency rate*
Accident frequency rate*
2.79
2011
1.6
2011
0.97
3.83
ANNUAL REPORT GERDAU 2011
*Lost-time accident frequency rates per million hours worked,
including employees and service providers. The data also includes
restricted work and change of function (OSHA recordable treated
as LT accidents).
Investments in
occupational
safety and
health
(R$ million)
2.3
2010
2010
1.28
5.13
2.9
2009
2009
1.20
Companies acquired less than 5 years ago
Companies acquired more than 5 years ago
71.0
2011
49.1
2010
39.9
2009
33

34 ANNUAL REPORT GERDAU 2011
seeks to ensure safe procedures for personnel and
equipment during the processes of melting, refining,
and transporting steel. The initiative is part of a set
of procedures to identify and assess the main risks
of the production process, establishing strict control
standards to eliminate them in all its units.
The project “Path of the Liquid Steel” received the award
Safety and Health Recognition of the World Steel Association
Gerdau values safe behavior and therefore honors
employees and units with the best results. Among
the highlights is the performance of Barão de Cocais
(MG) mill.
INTERNAL CLIMATE
The results of the Opinion Survey, which evaluates
Gerdau’s internal climate at a global level, had
a favorability index of 75% that reflects the good
relationship between the Company and its employees
and is in line with the previous year’s performance.
According to the Hay Group, which is recognized
internationally in the area of internal climate
management, the satisfaction of working in Gerdau
is among the highest in the world. The rate of
participation in the survey reached 96%.
TRAINING
In 2011, Gerdau invested R$ 32.1 million in training
its staff, which is 52% more than in 2010. In total, the
activities involved 2.3 million hours of training, which
corresponds on average to 49.7 hours of training per
employee.
One of the highlights of this area is the Gerdau
Business Program (GBP), an MBA tailor-made for the
Company’s needs for training high-performance global
leaders. During the year, the Company began its third
GBP class in which Gerdau executives participate
during a two-year period in modules in world-renown
educational institutes such as Insper in Brazil, Insead
in France, and Duke University in the United States.
FUTURE GERDAU TRAINEES
The Future Gerdau Trainee program seeks to attract,
develop, and retain talents with higher potential and
aligned with the Company’s corporate culture. The
intention is that they take on leadership positions in
the Company in the future. In 2011, more than 24,000
people participated in the selection process,
which included interactive stages to provide greater
exposure of the candidates and this way make a
more thorough evaluation of their profile. In total, 152
young people were admitted and started to work at
Gerdau units in nine countries: Brazil, Canada, Chile,
Colombia, United States, Mexico, Peru, Dominican
Republic, and Venezuela.
SUCESSORS
To prepare fully trained professionals, Gerdau created
the People Development Committees, which have
as their main objective to discuss and define the
succession of executive positions in the Organization.
Debates about career and succession are conducted
by leaders of different areas. Throughout the year, 435
People Development Committees were held in the
various countries where Gerdau operates.
Training and development 2011 2010
Investments (R$ million) 32.1 21.1
Number of training hours per employee 53.4 49.7

COMPENSATION AND BENEFITS
Gerdau adopts a compensation policy that seeks
to enhance the commitment and outstanding
performance of its employees. Besides the fixed
salary, they receive variable remuneration based upon
the achievement of individual goals, of the teams, and
of the operations.
The Company also offers a benefit plan to its
employees and their families that includes a defined
contribution private pension plan, life insurance,
health insurance, dental care, college scholarship,
and a nutrition allowance for children up to 12 months,
among others. These benefits are aligned with
Gerdau’s needs in the various regions of the world
where it operates.
LABOR UNION AGREEMENTS
Gerdau’s relationship with the unions is guided by
the pursuit of common interests and mutual gains.
To this end, the negotiations are conducted in a
transparent manner taking into account respect for
labor demands and the sustainability of the Company
in the long run. In 2011, Gerdau closed 16 labor
agreements in Brazil, Canada, Chile, Spain, the
United States, Mexico, and Peru.
EMPLOYEE COMMUNICATIONS
Gerdau establishes an open and permanent
dialog with its employees through an employee
communications global system that contributes
to spreading Gerdau’s corporate culture. Among
the main channels of communication is Gerdau
Connection, a biannual magazine sent to the homes
of all the Company’s employees that cover topics such
as products, the steel market, sustainability, safety,
and management practices. In addition, employees
can read news about the Company at the blog Gerdau
Connection, which publishes an average of two
articles a week and is available on the Intranet.
In 2011, Gerdau continued its quarterly meetings
through conference calls, bringing together over a
thousand leaders around the world who are led by
the Chief Executive Officer (CEO) and the Chief
Profit sharing
(R$ million)
ANNUAL REPORT GERDAU 2011
585.7
2011
511.3
2010
Benefits (R$ million) 2011 2010
Meals 71.7 52.3
Transportation 68.6 52.0
Health Insurance 299.0 265.8
Private Pension Plan 137.3 147.9
Operating Officer (COO). At these meetings the
leaders discuss the global economic scenario and
prospects for the business, as well as the Company’s
challenges and priorities for the months ahead.
MANAGEMENT FOCUSED ON THE OPERATOR
Gerdau is continually developing initiatives to
increase the autonomy and responsibility of its
teams. One of these is the program Management
Focused on the Operator (MFO) whereby the
managerial activities of the cells are shared with the
operators. Thus, in addition to carrying out their usual
activities, they also take annual turns to take control of
processes such as quality, costs, maintenance, safety,
and environment.
As the employees are developed, MFO increases
the productivity of the processes and the quality
of final products. All this reflects positively on
business results.
KNOWLEDGE MANAGEMENT
The Knowledge Management portal is one of
Gerdau’s unique management tools that aims to
maximize the knowledge existing in the Company
by increasing the operational efficiency of the
35

36 ANNUAL REPORT GERDAU 2011
mills. One of the main channels of interaction of
the portal are Practice Communities that facilitate
communication between employees from different
countries through a virtual network for sharing best
practices.
Thus, it is possible from any location to request
assistance from specialists in different countries
for the development of problem solving. Practice
Communities today bring together more than 3,400
professionals from 89 facilities in 13 countries. The
year 2011 closed with 34 communities in operation
and approximately 10,800 documents and news
being accessed.
SIX SIGMA
Since 2000 Gerdau has used the Six Sigma
methodology to leverage results quickly and
consistently and to reach more challenging goals. This
methodology consists of carrying out improvement
projects using quality and statistic tools by specially
trained professionals. In 2011, 98 projects were
completed, which brought a financial return of
approximately US$ 160 million. Currently Gerdau
develops Six Sigma projects at units in Argentina,
Brazil, Canada, Chile, and the United States.
STIMULUS TO INNOVATION AND CREATIVITY ARE A STRONG FOCUS AT GERDAU
Gerdau seeks creative solutions to ensure greater
competitiveness for its operations. To do so it
develops participatory programs such as Quality
Improvement Story (QIS) and Ideas Program to
stimulate autonomy, creativity, innovation, and
teamwork among its employees. In 2011, four mills
in Brazil and four in Colombia reached 100% of
their employees to be involved in these programs.
Worldwide, Gerdau has more than 11,500
employees participating.
In QIS, teams of three to seven people offer
solutions by means of methodologies and
management tools to problems encountered in
their daily tasks. In 2011, 6,179 professionals
participated in 410 projects, which helped generate
earnings of US$ 176 million for Gerdau. Every year
the solutions that bring more return to the business
are presented at the Global Meeting of the Quality
Improvement Story at which time the teams that
have achieved more significant results around the
world are recognized.
In the Ideas Program, on the other hand,
employees present either individually or in groups
innovative solutions to their managers related to
daily tasks. In 2011, this initiative recorded the
participation of 7,108 employees. There were
59,725 ideas registered with 30,107 of them
implemented throughout the year. As a result,
Gerdau achieved earnings of US$ 14 million.
The Global Meeting of the Quality Improvement Story brings together the best projects to solve problems faced in the daily tasks of the business

CUSTOMERS
Superior quality in everything
we do ensures excellent
customer service
Being the customer’s choice is one of Gerdau’s
values. That’s why the Company is always seeking
to achieve the highest quality in everything it does
and to develop innovative solutions to meet the
specific needs of each one of its more than 120,000
customers in all market segments and geographic
regions where it operates. It also works to help them
be more competitive based on a relationship of mutual
respect, trust, and a long-term win-win vision. Gerdau
continuously invests in training a team of highly skilled
professionals, which has 258 employees with master’s
degrees and 21 with doctorate degrees.
It also has a large and qualified sales team, which
allows greater proximity to customers, making the
service more responsive and effective. This effort
of differentiated customer service brought about the
positive results obtained in the opinion survey
conducted with approximately 7,600 customers in
2011, which showed a high level of satisfaction and
preference, especially in commercial and technical
service items, product quality, and logistics.
The Company also works continuously to monitor
and anticipate the needs of its customers. To do so,
it has four research and development centers
– two in Brazil, one in the United States, and one
in Spain – mainly focused to meet the needs of
the automotive industry. In Spain, for example,
the Research and Development Center of Gerdau
Sidenor is participating in the Etorgai project, which
is a public-private initiative of industrial research
for strategic sectors that seeks to develop a type
of nano-alloyed steel for the automotive chain. The
objective is to improve mechanical properties such as
resistance, tenacity, and useful life so that in the future
nano-alloyed steel can also be applied in the segment
ANNUAL REPORT GERDAU 2011
of renewable energies. The research involves the
participation of 55 persons, of which 25 are part of the
Gerdau Sidenor team.
In several countries where it operates, Gerdau also
conducts seminars and training courses for improving
the qualification of its customers. Throughout 2011,
for example, it developed the program “The World of
Special Steels” that sought to enhance the technical
knowledge of its customers on applications and
specifications of products in this segment. Among
the topics discussed during the talks were the
manufacturing processes of steel for mechanical
purposes, its mechanical properties, thermal
treatments, as well as the application and selection of
products. The theoretical content was complemented
with the technical visits of the participants to Gerdau’s
special steel mills in Brazil.
Following the concept of sustainability, the Company
also develops programs to encourage excellence in
management and entrepreneurship with small and
medium customers (see table “Gerdau invests in the
development of its customers”), thus reinforcing the
steel supply chain. With its broad product line, Gerdau
has been supplying steel for significant projects in
several countries. In Brazil, for example, Gerdau steel
is part of the construction and modernization of eight
soccer stadiums for the 2014 FIFA World Cup and
major infrastructure projects for the country such as
railways, wind power mills ports, and roads. In the
United States, Gerdau steel has also been used for
building the Freedom Towers, a project for rebuilding
the World Trade Center, among other ventures.
In 2011, Gerdau was the first steel producer in Brazil
to receive the Falcão Bauer Environmental Seal for
agricultural products. The Company had already been
the first steel manufacturer in the country to have civil
construction products certified by the environmental
seal, helping its clients obtain environmental
certifications for projects developed with Gerdau steel.
In total, more than 30 products from Gerdau have
received certification.
37

38 ANNUAL REPORT GERDAU 2011
GERDAU INVESTS IN THE DEVELOPMENT OF ITS CUSTOMERS
In 2011, Gerdau intensified its programs to
encourage excellence in management and
entrepreneurship of micro and small customers.
Courses were developed in Brazil for developing
micro and small metalworking shops, and in
Colombia the focus of these initiatives was on the
network of distributors. In Chile, on the other hand,
the initiatives sought to leverage the business of
small and medium metallurgy companies.
In Brazil, the Company also developed three new special
steel products in 2011. One of them is patina-bound
steel for the local manufacturing of fasteners for steel
structures, which were previously imported. Among the
benefits of this new product is its corrosion resistance,
which is up to three times greater than that of common
steel. Gerdau also developed a steel micro-alloyed
to niobium for automotive fasteners, which means a
significant reduction in supply chain costs, and the
SAE4145 steel for fasteners used in wind towers.
During the year, the quality of Gerdau’s products and
services were recognized through various awards.
In the special steel segment, it was awarded by the
Sogefi Group, one of the leading manufacturers of
stabilizer bars and automotive suspension springs in the
world, as a supplier with the best performance in South
America with an emphasis on product quality, punctuality
The courses and consulting services given to these
customers seek to encourage management skills,
innovation, and total quality, which contribute to
their increased productivity and competitiveness.
During the year more than 6,000 hours of training
were given, benefiting 121 companies. As a result,
these companies recorded an average increase of
34% in their volumes of purchasing steel products
compared to 2010.
Training for small and medium metalworking shops in Brazil seeks to encourage management skills, innovation, and total quality
with deliveries, and partnership in developing new
business. It also received the Supplier Performance
Award from Meadville Forging Company, a leading
forging company in the United States, for the quality of
its products and customer service.
In Brazil, Gerdau’s long steel products were awarded
by the Magazine “Revenda” as Best Product of the
Year in the categories of rebars and nails. Gerdau also
was recognized with the Anamaco Award for suppliers
with the best performance in the construction industry,
which awarded Gerdau in the categories of rebars, nails,
fences/trusses and annealed wire, along with the Pini
Award in the category of rebar. In the agricultural sector, it
was featured in the Top List with its products oval-shaped
wire and barbed wire, as well as in the Top of Mind Rural
and Magazine “Rural” for its wires and fences.

SUPPLIERS
Long-term relationship and search
for mutual gains with suppliers
Gerdau believes that the development and
sustainability of its business are directly linked to
being able to build lasting relationships with its
chain of suppliers.
This is done by having a relationship that is direct,
transparent, and with mutual gains resulting in greater
competitiveness and better quality of customer service
by the Company.
To achieve this, Gerdau continued in 2011 to hold
global negotiating tables involving employees
from all operations of the Company in order to get
economies of scale, productivity, and efficiency in the
purchase of supplies and equipment. This initiative
enables greater market knowledge of key materials
in the manufacturing process and expands the
synergies between Gerdau’s operations around the
world, as well as generates business opportunities
GERDAU ENCOURAGES THE COMPETITIVENESS OF SUPPLIERS
Since 2007, Gerdau has supported the training
of micro, small, and medium companies with
the belief that it plays a key role in the business
chain of steel. This work is done by means of
the Supplier Development Program, which is
an initiative that grows every year. In 2011, the
program was launched in Argentina and Peru
and was expanded to seven other states in
Brazil beyond Rio Grande do Sul, where the
initiative was carried out four years ago. During
the year, 21,000 hours of consulting and training
were developed benefiting 291 companies that
generate more than 2,000 direct jobs. As a result
ANNUAL REPORT GERDAU 2011
for its suppliers in different countries and regions
streamlines its logistics of deliveries.
At the same time, Gerdau gives preference to
hiring suppliers that share its policy of respect for
people and the environment. Besides requiring strict
compliance with the laws in each country where it
operates, the Company also performs periodic audits
to ensure compliance of their suppliers to their levels
of excellence.
Because steel scrap is one of its main raw materials
for steel production, Gerdau is dedicated to improving
its supply chain in various countries. In 2011, aiming
to develop and integrate these micro and small
suppliers into the Company’s business, technical and
managerial training programs were promoted for more
than 75 companies and scrap cooperatives in Brazil,
Chile, Colombia, Peru, and Uruguay, which resulted in
an increase of 32% on sales of scrap to Gerdau when
comparing the years 2011 and 2010. The training
programs pass on to the suppliers good practices
in management, quality, and occupational health
and safety. Moreover, the importance of achieving
sustainable practices in the social and environmental
area is reinforced. In 2012 the initiative will also be
done in Mexico and Venezuela.
of the initiative, the business volume between
Gerdau and the micro and small participating
companies grew 8% compared to 2010.
The program seeks to train organizations on
issues related to excellence and sustainability
of their business, as well as on the evolution
of its management performance in the main
competitive dimensions. In 2012, the initiative will
be expanded to Colombia and Mexico and will
involve, among all participating countries, a total
of 450 micro, small, and medium companies.
39

40 ANNUAL REPORT GERDAU 2011
SHAREHOLDERS
Good governance practices
ensure sustainable performance
in the capital market
With 65 years of experience in capital markets,
Gerdau has more than 140,000 shareholders
worldwide. Throughout this period it has established a
sustainable performance in the capital market based
on financial strength and good corporate governance
practices. Currently Gerdau has three publicly traded
companies: Metalúrgica Gerdau S.A., Gerdau S.A.,
and Empresa Siderúrgica del Perú S.A.A. (Siderperu).
In 2011, these companies totaled US$ 48 billion in
trading volume on the stock exchanges of São Paulo,
New York, Madrid, and Lima.
SUPPLY OF CAPITAL
A public offering of shares was completed in the
year that resulted in a net inflow of R$ 3.6 billion in
the Company’s cash resources. Of this total, R$ 2.1
billion were used to make advance payment of debts.
Because of this, there was a 27% reduction in net
debt and an increase of 108% of cash comparing
December 2011 with the same period in 2010,
which keeps the Company in a comfortable financial
situation for years to come.
The operation involved a primary offering of common
and preferred shares of Gerdau S.A., worth R$ 3.7
billion, and a secondary offering of Gerdau S.A.’s
preferred shares held by Metalúrgica Gerdau S.A.
and Gerdau BG Participações S.A., amounting to
R$ 1.3 billion.
There were 68.03 million common shares and 134.83
million preferred shares issued of Gerdau S.A. to carry
out the primary offering. In the secondary offering, 69
million preferred shares held by Metalúrgica Gerdau
S.A. and by BG Participações S.A. were sold.
LEVEL OF INVESTMENT
Gerdau’s improved liquidity position and capital
structure contributed so that the rating agencies
Standard & Poor’s and Fitch Ratings maintained
an investment grade rating of BBB- in 2011. In
addition, Moody’s agency assigned to the Company
an investment grade of Baa3 with a stable outlook.
As a result, Gerdau received an investment grade
by all three most known risk rating agencies in the
capital market, which demonstrates the market’s
confidence in the Company’s management.
IMPROVEMENT OF PRACTICES
In 2011, the companies Metalúrgica Gerdau S.A.
and Gerdau S.A. voluntarily joined Abrasca Code
of Self-Regulation and Good Practices of Public
Companies. The objective of the code is to encourage
the adoption and use of a set of principles, rules, and
recommendations that help to ensure a standard of
good corporate governance.
Gerdau S.A. also follows the strict corporate
governance standards determined by the Sarbanes-
Oxley (SOx) Act because the company’s shares are
traded on the New York Stock Exchange through
ADRs - American Depositary Receipts.
SHAREHOLDER COMPENSATION
Gerdau’s three publicly listed companies –
Metalúrgica Gerdau S.A., Gerdau S.A., and Empresa
Siderúrgica del Perú S.A.A. (Siderperu) – have clear
compensation policies in line with the parameters of
the market. Metalúrgica Gerdau S.A. and Gerdau
S.A. pay dividends and/or interest every three months
on capital of at least 30% of adjusted net income
for the year in accordance with Brazilian accounting
practices. This percentage is higher than the level of
25% set by corporate law. Empresa Siderúrgica del
Perú S.A.A. (Siderperu) in turn pays dividends of up to
33% of its adjusted net income.
In 2011 shareholders of Metalúrgica Gerdau
S.A. received dividends of R$ 224 million, which
corresponds to R$ 0.55 per share. The compensation
for those owning Gerdau S.A. shares reached R$ 597
million, which corresponds to R$ 0.35 per share.

Distribution of Dividends
(R$ million)
50
40
30
20
41%
37%
30%
25%
For the fifth consecutive year, Gerdau S.A. and
Metalúrgica Gerdau S.A. are among the 38 member
companies of the Business Sustainability Index
(ISE) from BM&FBovespa. The ISE brings together
companies recognized for their commitment to
sustainable development and socially responsible
practices, and that also insert the topic into their
strategies.
Moreover, the Gerdau companies are part of the main
index of BM&FBOVESPA, Ibovespa, in which Gerdau
S.A. has the tenth highest liquidity among companies
that make up this indicator. They are also listed on the
Special Corporate Governance Stock Index (IGC),
the Share Index with Differentiated Tag Along Rights
(ITAG), on the Brazil Index 50 (IBrX50), the Index
of Basic Materials (IMAT), and the Industrial Sector
Index (INDX).
RECOGNITION OF CAPITAL MARKET
During the year, Gerdau won the Latin Finance Deal
of the Year award in the category Best Follow-On
Equity Issue granted by the publication Latin Finance
that considered the public offering of shares held by
Gerdau as the most successful operation of its kind
held in Latin America during the year 2011.
Furthermore, it was one of the winners of the 15th
Anefac-Fipecafi-Serasa - Transparency Trophy related
to financial statements for 2010. It was the 12th time
in a row that Gerdau was ranked among the top
ten companies with the best financial statements.
The award is aimed at companies headquartered in
Brazil with operations in the areas of trade, industry,
Metalúrgica Gerdau S.A. (Payout)
33% 33%
30%
25%
ANNUAL REPORT GERDAU 2011
Minimum Dividend
Gerdau S.A. (Payout) Compulsory Dividend (Law S/A)
32% 32%
30%
25%
2009 2010 2011
and services, beside the 50 largest state-owned
companies.
In addition, Gerdau and its professionals were
highlighted in nine categories in the ranking of the
Institutional Investor Magazine - 2011 Latin America
Executive Team. The publication recognizes every
year the top Chief Executive Officers (CEOs), Chief
Financial Officers (CFOs), and investor relations
professionals from Latin America based on a survey
made with analysts and fund managers.
The company also received the IR Magazine Brazil
Award - Honorable Mention for the area of investor
relations in the segment of individual investors.
The award recognizes the excellence of companies
and investor relations (IR) professionals in their
communication with their shareholders and IR
practices in Brazil. The winners are chosen by
a survey carried out by the Brazilian Institute of
Economics of Getúlio Vargas Foundation – FGV.
AGILITY AND TRANSPARENCY IN
COMMUNICATION WITH SHAREHOLDERS
Shareholders and analysts of the stock market are
informed about the performance of Gerdau’s business
through a communication system that is efficient
and easy to access. In this sense, one of the
highlights is the Company’s website (www.gerdau.
com/investidores) that provides specific information
for individual shareholders and institutional investors
in Portuguese, English, and Spanish. In addition,
Gerdau holds conferences and presentations in
various markets worldwide.
41

42 ANNUAL REPORT GERDAU 2011
SOCIETY
Sustainable development
of communities and the
business chain
Gerdau believes that the strengthening of
communities is critical to the growth of its business
and sustainable development of the regions
close to its units. That is why it stimulates local
business chains of steel, mainly by encouraging the
growth of micro and small companies and it supports
ENTREPRENEURIAL EDUCATION PROJECTS BENEFIT STUDENTS
Gerdau believes that entrepreneurial attitudes
can contribute to creating jobs and improving
people’s quality of life. One example of this is
its partnership with Junior Achievement that
benefited more than 13,000 students in 238
schools in 2011. The programs were offered
in Brazil, Argentina, Uruguay, Peru, Colombia,
Mexico, and the Dominican Republic with the
participation of 595 volunteers from Gerdau.
Junior Achievement is the largest and oldest
organization of practical education in business,
economics, and entrepreneurship in the world.
In 2012, Gerdau will also begin to support
The JA Job Shadow Program is developed by Gerdau employees in various countries
social programs relevant to the communities where it
operates.
Besides the investments in this area, which totaled
R$ 61 million in 2011, the company involves its
employees in doing volunteer work, as well as
mobilizing different segments of society, multiplying
the results of their actions by bringing together the
knowledge and skills of those involved. All of these
activities receive orientation from the Gerdau Institute,
which is responsible for the Company’s policies and
guidelines for social responsibility and are guided by
specific focus of activity: education, management &
quality, and providing emergency assistance.
projects from this entity in the United States,
Spain and Venezuela.
One of the projects developed by employees
of Gerdau that can be highlighted is the JA Job
Shadow Program. The initiative provides students
the opportunity to follow in the footsteps of an
executive during his/her entire workday. This
way young people acquire a realistic view of
the business world while also learning how the
knowledge acquired in the classroom can be
applied in professional life.

ANNUAL REPORT GERDAU 2011
GERDAU SUPPORTS THE MODERNIZATION OF PUBLIC MANAGEMENT IN BRAZIL
Gerdau seeks to contribute with the development
of society by actively participating in programs of
public interest. That is why the Company supports
the initiatives of the Competitive Brazil Movement
(MBC), which aims to provide greater efficiency and
more productivity to the government in Brazil. The
Modernizing Public Management Program (PMGP),
for example, accounts for returns of R$ 188.00 for
every R$ 1.00 invested. This means that the gains
of the ten Brazilian states and eight municipalities
benefited by this program reach, considering five
years of work, an annual efficiency of more than
R$ 14.2 billion. These results are obtained without
raising taxes or interrupting services,
In 2011, Gerdau continued in its internationalization
efforts and dissemination of best practices
of social responsibility in order to strengthen
concepts on socially responsible management and
to stimulate a reflection on the challenge of the
Company in the insertion of the topic into its strategy
and business. Throughout the year, 50 workshops
on social responsibility were carried out involving
944 executives in Brazil, the United States, Peru,
Colombia, Mexico, and the Dominican Republic.
Furthermore, another nine Gerdau Institute
committees were created: five in Spain, two in Mexico,
one in Colombia, and one in the Dominican Republic,
which are added to the 48 committees already in
place in Argentina, Brazil, Canada, Chile, the United
States, Peru, and Uruguay. The committees have the
active participation of employees from different areas
of the Company who have the autonomy to coordinate
in each of the Company’s units the budget and
initiatives to be supported in the communities.
Through the Gerdau Volunteer Program (PVG), the
Company encourages its employees to pursue
volunteer activities in society. During the year,
approximately 9,500 employees served as volunteers
in social projects, which is a number 21% higher than
the one recorded in 2010.
but only through improved management and
increased productivity, which turns into benefits for
society. The MBC is also committed to improving
the business environment in Brazil. That is why it
develops a number of actions to take management
tools and concepts to micro and small companies.
One of the most effective channels of this strategy
is the MPE Brazil, a Competitiveness Award for
Micro and Small Company that was attended by
over 58,000 companies in its 2011 edition. In Rio
Grande do Sul where Gerdau’s headquarters are
located, work has also been developed in the area
of public administration through the Rio Grande do
Sul Quality and Productivity Program (PGQP).
In North America, for example, Gerdau employees
support the United Way, which is one of the largest
charity institutions in the world, through the donation
of funds or volunteer hours. For every dollar donated
by employees, the Company invests the same
amount to meet the demands of the communities
in areas close to the Company’s mills. Founded in
1876, United Way supports social projects that benefit
communities in 42 countries mainly in the areas of
health, education, and income generation.
Programs to encourage excellence in
management and entrepreneurship stand out in
the business chain. In 2011, these initiatives were
intensified through partnerships with major institutions
such as the Brazilian Service to Support Micro and
Small Enterprises (SEBRAE), Deutsche Gesellschaft
für Internationale zusammenarbeit (GIZ), and
Corporación de Fomento de la Producción de Chile
(Corfo) – read more about this topic in the chapters
“Customers” and “Suppliers”.
In Brazil another highlight in 2011 was to support the
remodeling of the Church of Our Lady of Conception
located in Conselheiro Lafaiete (MG), whose baroque
construction dates back to 1733.
43

Environment
Gerdau inaugurated its new dust removal
system for air protection in the Cearense
(Ceará) mill and replaced the existing one

ENVIRONMENTAL
MANAGEMENT
Efficient management
system keeps the
environment protected
Gerdau is continually working to reduce the impact
of its activities on the environment. That is why it
follows stringent practices to protect nature, invests in
new industrial technologies, and seeks to rationalize
the use of natural resources and inputs. In 2011,
R$ 370.9 million was allocated for the protection
of the environment with a special highlight to the
modernization projects of the dust removal systems
in mills in Brazil, Chile, Colombia, and the United
States. The dust removal systems captures with
high efficiency the solid particles generated in the
steelmaking process.
Through the Environmental Management System
(EMS), a set of processes aligned with ISO
14001 standard, the Company monitors under an
environmental point of view, the entire steel production
ANNUAL REPORT GERDAU 2011
cycle, from obtaining the raw material until the final
delivery of the product, including the allocation of
by-products. Currently, 47 industrial mills of Gerdau,
which represents 87% of the total, have the ISO
14001 certification.
SCRAP
As the largest recycler in Latin America, Gerdau
transforms more than 15 million tons of scrap steel
every year. More than 75% of Gerdau’s production
is made from electric steel mills whose main raw
material is scrap, while the world average is only 28%.
The use of scrap for the steel production process
contributes to the preservation of the environment
because it reduces the consumption of energy and
other supplies such as iron ore and coke, and, as a
result, reduces emissions of CO . 2
ENERGY
Gerdau continuously invests in expanding its energy
efficiency through the improvement and optimization
of industrial processes. It is also expanding the use of
natural gas in its operations, which is already used in
more than 90% of Gerdau’s units worldwide.
GERDAU LAUNCHES A PROJECT TO RECYCLE THOUSANDS OF VEHICLES IN BRAZIL
Gerdau has begun a pioneering project
to recycle thousands of vehicles
confiscated decades ago by the State of
Rio Grande do Sul. Besides contributing
to the protection of the environment, this
initiative plays an important economic
and social role since it reduces the costs
that the government has to store the
cars and creates job opportunities. In
2012, the project will be expanded to
other regions of the country.
This initiative should be expanded to other regions of Brazil in 2012
45

46 ANNUAL REPORT GERDAU 2011
Furthermore, an expansion of the capacity of its
own energy production is scheduled through the
construction of new hydroelectric mills in Brazil. At the
same time, the Company is working on increasing the
energy generation by reusing the by-products from the
production process of its mills.
AIR
Gerdau’s industrial mills are equipped with modern
atmosphere protection systems, which are the dust
removal systems. They are equipment that capture
with high efficiency solid particles generated in the
production of steel, which are later reused by other
industry segments.
The use of scrap as the main raw material for steel
production in most mills contributes to reaching high
energy efficiency, which makes it possible to reduce
CO in the atmosphere by 70% in comparison with the
2
world average for this sector.
BY-PRODUCTS
Gerdau seeks intelligent and sustainable alternatives
for the use of by-products generated during the
steel production. This is done through several
initiatives such as identifying recycling opportunities
in the production process of steel itself, developing
research partnerships with universities, research
institutions, and industries, as well as making internal
improvements in the processing of by-products to
facilitate recycling.
In 2011, Gerdau increased the level of reuse of its byproducts,
contributing to the conservation of natural
resources. The reuse rate of these materials, which
considers the volume of waste reused by different
segments of economy and the steel industry itself,
reached 78.3%.
During the year, one of the highlights was the
beginning of recycling 100% of the dust collected
Gerdau recycles 100% of the dust collected by the dust removal system of the mills in São Paulo and Rio de Janeiro

y the dust removal systems of the electric melt
shops of the mills located in São Paulo and Rio de
Janeiro. During the process, all of the zinc contained
in the dust is reused and the rest is transformed into
products for construction. In 2012, feasibility studies
were initiated to extend this project to other industrial
mills located in Brazil. Moreover, Gerdau’s mills in the
United States, Canada and Spain also have initiatives
for the reuse of melt shop dust.
The entire process of transportation, storage, and
selling of by-products meets legal requirements and of
the Gerdau’s Environmental Management System.
SUSTAINABLE PRODUCTS
In Brazil, Gerdau’s products for construction are
certified by the Falcão Bauer Environmental Seal.
In addition to ensuring compliance to prerequisites of
sustainability, the seal facilitates achieving, through
contractors, environmental certifications for its projects
developed with Gerdau steel.
Sustainable building is also a growing market in
Chile, and Gerdau has participated actively in this
process. Gerdau steel produced in the country meets
the necessary requirements, including the use of
recyclable material and local manufacturing, so that
builders receive environmental certifications for their
building projects.
BIODIVERSITY
Gerdau contributes to preserving biodiversity in the
regions where its units are located. Currently, of the
19,500 acres owned by the Company, 5,800 represent
areas of legal reserves or permanent preservation.
Another 7,600 hectares corresponds to voluntarily
preserved forests.
Gerdau also invests in various projects of planting
native flora. In 2011, 103,000 seedlings of different
species were planted in the vicinity of its units
worldwide, contributing to maintaining and expanding
reserves located in their mills.
Water recirculation rate (%)
97.1%
2011
ANNUAL REPORT GERDAU 2011
97.6%
2010
2009
97.3%
WATER
Gerdau has a high level of water reuse. In 2011,
97.1% of the water used in the manufacturing process
was treated and reused internally, totaling 2 billion
cubic meters. The small amount of water that is not
reused corresponds mainly to evaporative losses. On
average, Gerdau consumes 3.8 cubic meters of water
per ton of steel produced, of which all are virtually
reused.
ENVIRONMENTAL EDUCATION
Gerdau continually holds lectures, gives training,
and holds environmental awareness campaigns for
employees. In 2011 these activities involved 27,600
people totaling 67,800 hours of training.
In addition, Gerdau launched the 1 st Germinate Prize
of Environmental Education in 2011. The project had
the participation of public and private schools where
Gerdau Açominas steel mill is located, totaling 69
entries. Of this total, four of them were selected and
will be developed with resources from Gerdau in 2012.
Employees and teachers of the winning schools will
be trained in environmental education and the projects
will be monitored by Gerdau employees that are part
of the Germinate Program, which aims to educate
citizens qualified for solving socio-environmental
problems.
47

48 ANNUAL REPORT GERDAU 2011
TIMELINE
João Gerdau businesses branch
into two separate areas: Hugo runs
the nail factory and his brother
Walter assumes responsibility for
the Gerdau Furniture Factory, both
in Porto Alegre (state of Rio
Grande do Sul, Brazil). In 1930,
Hugo and Walter Gerdau take
part in the creation of the State
Center for the Manufacturing
Industry, future Federation of
Industries of the State.
João Gerdau and his son Hugo
lay the foundations of Gerdau
with the Pontas de Paris Nail
Factory in Porto Alegre (state
of Rio Grande do Sul, Brazil).
The Nail Factory
is expanded with
construction of a new mills
in Passo Fundo (state of
Rio Grande do Sul, Brazil),
active until 1964
Hugo Gerdau becomes a
founding member of the
Cia. Geral de Indústrias
(state of Rio Grande do
Sul, Brazil), which later
becomes Fogões Geral.
He later assumes control of
the company and in 1947
leaves the business.
Learn about the important facts that
marked Gerdau’s history
The Nail Factory – today
Metalúrgica Gerdau S.A.
– becomes a public c
ompany and begins
trading on the Porto
Alegre stock exchange.
1907 1933 1947
1901 1914 1946
Curt Johannpeter,
son-in-law of Hugo,
takes the helm of
the company and
oversees a decisive
phase of business
expansion.

Steel production begins with
Riograndense – known as Usina
Farrapos (UFA) – in Porto Alegre
(state of Rio Grande do Sul,
Brazil), with forward-thinking
conception of the minimill, a model
based on the use of scrap and
regional sales, enabling more
competitive operational costs.
The second Riograndense
unit starts up operation in
Sapucaia do Sul (RS). The
mill was also known as Rio
dos Sinos mill.
The Gerdau
Foundation is
created, with health,
education, housing
and social assistance
programs, reinforcing
the culture of social
responsibility within
the organization.
Germano, Klaus, Jorge,
and Frederico Gerdau
Johannpeter, the sons of
Curt Johannpeter, take
on leadership positions
in the Company.
The São Judas
Tadeu Wire Factory
is set up in São
Paulo (state
of São Paulo,
Brazil), marking
the company’s
expansion into the
Brazilian southeast.
ANNUAL REPORT GERDAU 2011
Gerdau acquires the
Açonorte steel mill
(state of Pernambuco,
Brazil), whose facilities
were being transferred
from Tição (in the city
of Iguarassu) to the
industrial district of
Curado (in the city of
Recife).
1948 1963
1967 1969
1957 1964 1970
Siderúrgica
Riograndense
publicly launches
shares on the Rio
de Janeiro and
São Paulo stock
exchanges.
49

50 ANNUAL REPORT GERDAU 2011
Steel distribution activities start with
the first Comercial Gerdau in the
state of São Paulo (Brazil).
Gerdau assumes control of the Guaíra
mill, a steel production pioneer in the
state of Paraná (Brazil).
Construction of Cosigua mill
(RJ) begins in the Industrial
District of Santa Cruz, which
was completed in record time of
14 months. The project had the
participation of Thyssen ATH and
was financed by the World Bank
through the International Finance
Corporation (IFC), among others.
Beginning of internationalization
with the acquisition of Laisa
in Uruguay.
Cosigua begins to have its
shares traded on the Stock
Exchanges in São Paulo and
Rio de Janeiro.
Operation begins at
the Cearense mill in
Maracanaú (state of
Ceará, Brazil).
Second Gerdau
mill in the state of
Paraná (Brazil) begins
operation, in Araucária.
Cosigua shares
are publicly
released,
which earns
the company
over 60 thousand
new shareholders.
Gerdau wins its first
privatization auction in
Brazil and acquires the
Barão de Cocais steel
mill (state of Minas
Gerais, Brazil).
1971 1980 1988
1982 1984 1989
Gerdau acquires
Usiba (state of
Bahia, Brazil) at a
privatization auction.
Gerdau enters North
America with the
acquisition of Courtice
Steel, now Gerdau
Ameristeel Cambridge, in
Ontario (Canada).

Gerdau acquires
Siderúrgica Pains,
currently Divinópolis mill.
The Company acquires AzA in Chile
and Aços Finos Piratini (state of Rio
Grande do Sul, Brazil).
The Gerdau GG 50 rebar, a
Gerdau flagship product in
Brazil, is released.
Gerdau acquires
MRM, in the
province of
Manitoba, Canada.
Acquisition of part
of the capital stock of
Sipar rolling mill in
Argentina. In 2005,
Gerdau takes a
controlling stake.
1994 1995 1998 1999
1992 1997
Gerdau becomes a partner
of Açominas with a small
ownership stake.
ANNUAL REPORT GERDAU 2011
Gerdau acquires control of
Ameristeel, marking its arrival
in the United States.
Gerdau S.A., a public
company in Brazil, is listed
on New York Stock
Exchange (NYSE).
51

52 ANNUAL REPORT GERDAU 2011
Gerdau celebrates 100 years
in business, with installed steel
production capacity of 8.4
million metric tons per year.
Gerdau takes a controlling
stake in Gerdau Açominas
(state of Minas Gerais,
Brazil), its largest mill.
Gerdau acquires the
Cartersville mill (United States).
2001
2002
The merger of Gerdau
and Co-Steel, in North
America, creates
Gerdau Ameristeel.
Diaco (Colombia) and
North Star Steel (United
States) are acquired.
2004
2005
Gerdau goes into Europe,
acquiring 40% of Sidenor.
As a result of this
acquisition, the Company
takes an indirect stake in
Aços Villares (Brazil).
The Gerdau Institute,
responsible for coordinating
the organization’s social
responsibility policies and
guidelines, is created.
André B. Gerdau Johannpeter takes over as Chief
Executive Officer (CEO) and Claudio Gerdau
Johannpeter becomes Chief Operating Officer (COO).
Gerdau acquires Chaparral Steel, one of the
largest producers of structural shapes in the
United States, thus marking the greatest
acquisition in the history of the Company.
The Company enters Mexico (Siderúrgica
Tultitlán) and Venezuela (Siderúrgica Zuliana).
The Organization also acquires a stake in the
Dominican Republic (Industrias Nacionales - Inca)
and in Aceros Corsa (Mexico); signs agreement for
purchase of Macsteel (United States), and starts
the Kalyani Gerdau joint venture (India).
Gerdau Açominas (state of Minas Gerais,
Brazil) increases its production capacity by
50% to 4.5 million metric tons per year.
2006
Gerdau acquires Siderperu (Peru),
Sheffield Steel (United States),
Callaway Building Products (United
States) and GSB (Spain).
The Company announces its
joint venture Pacific Coast
Steel (United States).
Gerdau São Paulo mill state
of São Paulo, Brazil)
commences operations.
2007

Gerdau enters Central America, with a
30% stake in Corporación Centroamericana
del Acero, in Guatemala.
The Company acquires a 50.9%
stake in Cleary Holdings (Colombia),
a metallurgical coke producer and
holder of coking coal reserves.
Gerdau takes over Macsteel
operations (United States).
The Várzea do Lopes mine (state of
Minas Gerais, Brazil) is initiated.
The Company›s entering into
the flat steel sector in
Brazil is disclosed.
Company announces new
investments in India.
Gerdau invests to expand its
own production of iron ore.
ANNUAL REPORT GERDAU 2011
Gerdau acquires Tamco (United States), a leading
producer of rebars on the west coast of the United States,
with production capacity of 500,000 metric tons per year.
Gerdau gains 100% ownership of Gerdau
Ameristeel, with the acquisition of approximately
34% of the company’s minority shares. As a result,
the company shares are no longer traded on the
Toronto and New York stock exchanges.
An additional stake of 49.1% is acquired in
Cleary Holdings (Colombia), granting Gerdau
100% ownership of the company’s capital.
Gerdau incorporates Aços Villares, a special steel
producer in Brazil, in which the Company already
had an 87% direct and indirect stake.
2008 2010
2009 2011
Gerdau completes 110 years of activity, reaching
an annual production capacity of 25 million
metric tons and revitalizes its logo’s design.
The Mission, Vision, Values, and Code of
Ethics are revised and unified at a global level,
strengthening Gerdau’s corporate culture.
Gerdau begins studies for commercial exploration of part
of its iron ore resources located in Minas Gerais.
The first phase for implementing the Gerdau
Template is completed, which aims to deploy a
single system of information technology using SAP
in all countries where the Company operates.
Gerdau announces investments to
increase the installed capacity in special
steel mills in Brazil and the United States.
53

54
SUMMARIZED
FINANCIAL
STATEMENTS
Gerdau S.A and Metalúrgica Gerdau S.A.
As of December 31, 2011 and 2010
GERDAU S.A. AND SUBSIDIARIES
- CONSOLIDATED BALANCE SHEETS
CURRENT ASSETS
ANNUAL REPORT GERDAU 2011
As of December 31, 2011 and 2010
(In thousands of Brazilian reais)
2011 2010
Cash and cash equivalents 1,476,599 1,061,034
Short-term investments held for trading 3,095,359 1,105,902
Short-term investments available for sale 6,290 9,559
Trade accounts receivable - net 3,602,748 3,153,027
Inventories 8,059,427 6,797,785
Tax credits 815,983 586,056
Unrealized gains with financial instruments 140 783
Other current assets 262,603 231,798
NON-CURRENT ASSETS
17,319,149 12,945,944
Long-term investments - 26,797
Tax credits 389,035 401,222
Deferred income taxes 1,547,967 1,579,011
Related parties 111,955 35,037
Unrealized gains with financial instruments - 5,529
Judicial deposits 713,480 493,502
Other non-current assets 201,989 177,143
Prepaid pension cost 533,740 437,072
Advance for capital increase in jointly-controlled entity 65,254 -
Investments in associates and jointly-controlled entities 1,355,291 1,264,520
Other investments 19,366 19,002
Goodwill 9,155,789 8,158,098
Other intangibles 1,273,708 1,176,823
Propriety, plant and equipment, net 17,295,071 16,171,560
32,662,645 29,945,316
TOTAL ASSETS 49,981,794 42,891,260

CURRENT LIABILITIES
ANNUAL REPORT GERDAU 2011 55
2011 2010
Trade accounts payable 3,212,163 1,783,274
Short-term debt 1,715,305 1,577,968
Debentures 41,688 115,069
Taxes payable 591,983 524,967
Payroll and related liabilities 617,432 475,237
Dividends payable 136,391 90,289
Unrealized losses on financial instruments 314 -
Environmental liabilities 31,798 29,191
Other current liabilities 429,927 425,905
NON-CURRENT LIABILITIES
6,777,001 5,021,900
Long-term debt 11,182,290 12,360,056
Debentures 744,245 616,902
Related parties 6 722
Deferred income tax 1,858,725 2,270,849
Unrealized losses on financial instruments 5,013 92,476
Provision for tax, civil, and labor liabilities 907,718 645,375
Environmental liabilities 36,621 42,902
Employee benefits 1,089,784 834,471
Put options on non-controlling interest 533,544 516,706
Other non-current liabilities 327,044 341,286
EQUITY
16,684,990 17,721,745
Capital 19,249,181 15,651,352
Treasury stock -237,199 -161,405
Legal reserve 407,615 307,329
Stock option 36,339 22,700
Other reserves -701,399 -1,884,002
Retained earnings 6,242,932 5,534,468
EQUITY ATTRIBUTABLE TO THE EQUITY HOLDERS OF PARENT 24,997,469 19,470,442
NON-CONTROLLING INTERESTS 1,522,334 677,173
EQUITY 26,519,803 20,147,615
TOTAL LIABILITIES AND EQUITY 49,981,794 42,891,260

56
GERDAU S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
ANNUAL REPORT GERDAU 2011
As of December 31, 2011 and 2010
(In thousands of Brazilian reais)
2011 2010
NET SALES 35,406,780 31,393,209
Cost of sales -30,298,232 -25,873,476
GROSS PROFIT 5,108,548 5,519,733
Selling expenses -603,747 -551,547
General and administrative expenses -1,797,937 -1,805,914
Reversal of impairment of assets - 336,346
Other operating income 195,015 207,320
Other operating expenses -85,533 -100,840
Equity in earnings of unconsolidated companies 62,662 39,454
INCOME BEFORE FINANCIAL INCOME AND TAXES 2,879,008 3,644,552
Financial income 455,802 295,563
Financial expenses -970,457 -1,097,633
Exchange variations, net 51,757 104,364
Gains and losses on financial instruments, net -65,438 12,392
INCOME BEFORE TAXES 2,350,672 2,959,238
Income and social contribution taxes
Current -519,843 -642,306
Deferred 266,747 140,447
NET INCOME 2,097,576 2,457,379
ATTRIBUTABLE TO:
Owners of the parent 2,005,727 2,142,488
Non-controlling interests 91,849 314,891
2,097,576 2,457,379
Basic earnings per share – preferred and common 1,22 1,50
Diluted earnings per share – preferred and common 1,22 1,50

GERDAU S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities
ANNUAL REPORT GERDAU 2011 57
As of December 31, 2011 and 2010
(In thousands of Brazilian reais)
2011 2010
Net income for the year 2,097,576 2,457,379
Adjustments to reconcile net income for the year to net cash provided by
operating activities:
Depreciation and amortization 1,771,881 1,893,074
Reversal of impairment of assets - -336,346
Equity in earnings of unconsolidated companies -62,662 -39,454
Exchange variation, net -51,757 -104,364
Losses (gains) on financial instruments, net 65,438 -12,392
Post-employment benefits 15,882 82,611
Stock-based compensation 13,974 18,629
Income tax 253,096 501,859
Losses (Gains) on disposal of property, plant and equipment and investments 21,006 -20,532
Gains on available for sale securities -28,073 -
Allowance for doubtful accounts 42,980 16,018
Provision for tax, labor, and civil claims 261,024 199,092
Interest income on investments -265,766 -174,622
Interest expense on loans 828,106 919,594
Interest on loans with related parties -4,388 -
Provision for net realisable value adjustment in inventory 56,999 50,526
Reversal of net realisable value adjustment in inventory -122,877 -50,634
Changes in assets and liabilities
4,892,439 5,400,438
Increase in trade accounts receivable -203,041 -660,891
Increase in inventories -681,604 -1,160,419
Increase in trade accounts payable 1,121,433 110,358
(Increase) Decrease in other receivables -415,192 176,403
Decrease in other payables -127,854 -168,962
Distributions from jointly-controlled entities 61,150 68,647
Purchases of trading securities -6,113,717 -712,204
Proceeds from maturities and sales of trading securities 4,384,832 2,423,597
Cash provided by operating activities 2,918,446 5,476,967
Interest paid on loans and financing -726,360 -796,799
Income and social contribution taxes paid -482,068 -541,048
Net cash provided by operating activities 1,710,018 4,139,120

58
Cash flows from investing activities
ANNUAL REPORT GERDAU 2011
2011 2010
Additions to property, plant and equipment -1,961,379 -1,288,769
Proceeds from sales of property, plant and equipment,
investments and other intangibles
11,473 19,269
Additions of other intangible -141,666 -94,598
Advance for capital increase in jointly-controlled entity -74,785 -
Payments for business acquisitions, net of cash of acquired entities - -283,110
Purchases of available for sale securities -723,285 -1,371,835
Proceeds from sales of available for sale securities 778,484 1,415,981
Net cash used in investing activities -2,111,158 -1,603,062
Cash flows from financing activities
Capital increase 3,874,329 -
Purchase of treasury shares -78,094 -38,705
Dividends and interest on capital paid -550,706 -1,018,488
Payment of loans and financing fees -25,530 -4,562
Payment for interest increase in subsidiaries - -2,908,969
Proceeds from loans and financing 1,378,637 3,885,937
Repayment of loans and financing -3,781,247 -3,453,158
Intercompany loans, net -90,325 39,344
Net cash provided by /(used in) financing activities 727,064 -3,498,601
Exchange variation on cash and cash equivalents 89,641 -68,367
Increase (Decrease) in cash and cash equivalents 415,565 -1,030,910
Cash and cash equivalents at beginning of year 1,061,034 2,091,944
Cash and cash equivalents at end of year 1,476,599 1,061,034

METALÚRGICA GERDAU S.A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
CURRENT ASSETS
ANNUAL REPORT GERDAU 2011 59
As of December 31, 2011 and 2010
(In thousands of Brazilian reais)
2011 2010
Cash and cash equivalents 1,477,020 1,062,247
Short-term investments held for trading 3,095,359 1,110,804
Short-term investments available for sale 6,290 9,559
Trade accounts receivable - net 3,602,748 3,153,025
Inventories 8,059,427 6,797,785
Tax credits 829,617 602,509
Unrealized gains with financial instruments 140 783
Other current assets 264,966 235,429
NON-CURRENT ASSETS
17,335,567 12,972,141
Long-term investments - 26,797
Tax credits 389,035 401,222
Deferred income taxes 1,658,416 1,683,813
Related parties 82,088 33,981
Unrealized gains on financial instruments - 5,529
Judicial deposits 713,963 493,751
Other non-current assets 201,954 177,870
Prepaid pension cost 533,740 437,205
Advance for capital increase in jointly-controlled entity 65,254 -
Investments in associates and jointly-controlled entities 1,355,291 1,264,520
Other investments 19,560 19,196
Goodwill 9,247,802 8,251,454
Other intangibles 1,273,708 1,176,823
Propriety, plant and equipment, net 17,295,833 16,172,403
32,836,644 30,144,564
TOTAL ASSETS 50,172,211 43,116,705

60
CURRENT LIABILITIES
ANNUAL REPORT GERDAU 2011
2011 2010
Trade accounts payable 3,212,278 1,783,390
Short-term debt 1,715,305 1,577,968
Debentures 45,475 105,897
Taxes payable 594,532 526,732
Payroll and related liabilities 617,432 476,136
Dividends payable 124,894 84,323
Environmental liabilities 31,798 29,191
Unrealized losses on financial instruments 314 -
Other current liabilities 431,900 428,001
NON-CURRENT LIABILITIES
6,773,928 5,011,638
Long-term debt 11,182,290 12,360,056
Debentures 2,040,970 1,919,705
Deferred income tax 1,907,493 2,320,237
Unrealized losses on financial instruments 5,013 92,476
Provision for tax, civil, and labor liabilities 909,116 646,535
Environmental liabilities 36,621 42,902
Employee benefits 1,089,784 834,471
Put options on non-controlling interest 1,348,963 1,256,740
Other non-current liabilities 327,045 342,016
EQUITY
18,847,295 19,815,138
Capital 6,881,998 6,881,998
Treasury stock -69,861 -69,861
Other reserves 76,141 172,187
Retained earnings 2,504,820 1,683,083
Accumulated comprehensive income -353,044 -837,690
EQUITY ATTRIBUTABLE TO THE EQUITY HOLDERS OF PARENT 9,040,054 7,829,717
NON-CONTROLLING INTERESTS 15,510,934 10,460,212
EQUITY 24,550,988 18,289,929
TOTAL LIABILITY AND EQUITY 50,172,211 43,116,705

METALÚRGICA GERDAU S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
ANNUAL REPORT GERDAU 2011 61
As of December 31, 2011 and 2010
(In thousands of Brazilian reais)
2011 2010
NET SALES 35,406,780 31,393,209
Cost of sales -30,298,231 -25,873,476
GROSS PROFIT 5,108,549 5,519,733
Selling expenses -603,747 -551,547
General and administrative expenses -1,819,196 -1,833,931
Reversal of impairment of assets - 336,346
Other operating income 209,487 196,370
Other operating expenses -89,284 -101,300
Equity in earnings of unconsolidated companies 62,662 39,454
INCOME BEFORE FINANCIAL INCOME AND TAXES 2,868,471 3,605,125
Financial income 457,042 298,279
Financial expenses -1,131,756 -1,253,236
Exchange variations, net 51,754 104,364
Gains and losses on financial instruments, net -65,438 12,392
INCOME BEFORE TAXES 2,180,073 2,766,924
Income tax and social contribution taxes
Current -526,394 -643,673
Deferred 325,970 165,917
NET INCOME 1,979,649 2,289,168
ATTRIBUTED TO:
Owners of the parent 760,522 895,684
Non-controlling interests 1,219,127 1,393,484
1,979,649 2,289,168
Basic earnings per share – common and preferred 1,87 2,20
Diluted earnings per share – common and preferred 1,87 2,20

62
METALÚRGICA GERDAU S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities
ANNUAL REPORT GERDAU 2011
As of December 31, 2011 and 2010
(In thousands of Brazilian reais)
2011 2010
Net income for the year 1,979,649 2,289,168
Adjustments to reconcile net income for the year to net cash provided by
operating activities:
Depreciation and amortization 1,771,964 1,893,159
Reversal of impairment of assets - -336,346
Equity in earnings of unconsolidated companies -62,662 -39,454
Exchange variation, net -51,754 -104,364
Losses (Gains) on financial instruments, net 65,438 -12,392
Post-employment benefits 16,637 92,165
Stock-based compensation 13,974 18,629
Income tax 200,424 477,756
Losses (Gains) on disposal of property, plant and equipment and investments 21,978 -20,383
Gains on available for sale securities -28,073 -
Allowance for doubtful accounts 42,980 16,018
Provision for tax, labor, and civil claims 261,263 199,463
Interest income on investments -266,275 -175,155
Interest expense on loans 989,482 1,073,137
Interest on loans with associated companies -3,712 -
Provision for net realisable value adjustment in inventory 56,999 50,526
Reversal of net realisable value adjustment in inventory -122,877 -50,634
4,885,435 5,371,293
Changes in assets and liabilities
Increase in trade accounts receivable -203,041 -660,891
Increase in inventories -681,604 -1,160,419
Increase in trade accounts payable 1,121,447 110,521
(Increase) Decrease in other receivables -422,642 195,515
Decrease in other payables -126,120 -184,296
Distributions from jointly-controlled entities 61,150 68,647
Purchases of trading securities -6,113,717 -712,204
Proceeds from maturities and sales of trading securities 4,387,297 2,425,062
Cash provided by operating activities 2,908,205 5,453,228
Interest paid on loans and financing -715,237 -793,235
Income and social contribution taxes paid -482,272 -542,708
Net cash provided by operating activities 1,710,696 4,117,285

Cash flows from investing activities
ANNUAL REPORT GERDAU 2011 63
2011 2010
Additions to property, plant and equipment -1,961,379 -1,288,769
Proceeds from sales of property, plant and equipment, investments and other
intangibles
11,473 19,269
Additions to other intangibles -141,666 -94,598
Advance for capital increase in jointly-controlled entity -74,785 -
Payments for business acquisitions, net of cash of acquired entities - -283,110
Purchases of available for sale securities -723,285 -1,371,835
Proceeds from sales of available for sale securities 778,484 1,416,107
Net cash used in investing activities -2,111,158 -1,602,936
Cash flows from financing activities
Effects of capital increase in subsidiaries 2,623,134 -
Proceeds from preferred shares of subsidiaries 1,291,529 -
Purchase of treasury shares -78,094 -40,578
Dividends and interest on capital paid -543,083 -897,397
Payment of loans and financing fees -25,530 -4,562
Proceeds from loans and financing 1,342,587 3,834,706
Repayment of loans and financing -3,824,276 -3,506,831
Intercompany loans, net -60,665 39,748
Payment for interest increase in subsidiaries - -2,908,969
Net cash provided by /(used in) financing activities 725,602 -3,483,883
Exchange variation on cash and cash equivalents 89,633 -68,361
Increase (Decrease) in cash and cash equivalents 414,773 -1,037,895
Cash and cash equivalents at beginning of the year 1,062,247 2,100,142
Cash and cash equivalents at end of the year 1,477,020 1,062,247

64
GLOSSARY
A
ABRASCA (Brazilian Association of Listed
Companies) – a nonprofit civil society organization
founded in 1971 in São Paulo, bringing together
companies legally registered in Brazil as publicly
traded companies.
Adjusted net income – net income after deduction of
legal reserves. It is the basis for calculating dividends
to be paid to shareholders.
ADR – Tacronym for American Depositary Receipt.
Security that represents shares of non-U.S.
companies issued and traded on the capital market of
the United States.
B
Billet – steel product of a square or rectangular
section produced by continuous casting or by
laminating larger sections. It is raw material for rolling
long products.
Blast furnace – oven with large dimensions, coated
with refractory bricks, used in integrated mills to
produce pig iron from iron ore.
Bovespa Level 1 Corporate Governance – set
of conduct standards for companies, directors and
controlling entities, through which they commit
primarily to improving provision of information to the
market and to a broad ownership base.
By-product – secondary product of an industrial
process, which may or may not be desirable.
C
Cash generation – see EBITDA.
ANNUAL REPORT GERDAU 2011
Coke – a carbon rich fuel used as a reducer of iron
ore in blast furnaces. It is derived from mineral coal.
Coke Mill – area of the steel mill where coke is made
from coal.
Common share – securities representing the smallest
portion of capital stock in a corporation, and which
give the holder voting rights.
Compliance – obedience to laws and adherence to
standards that govern a particular industry.
Continuous casting – process that continually
produces billets or slabs from liquid steel poured into
a mold.
Corporate governance – system whereby companies
are managed and monitored, involving relations
between shareholders, Board of Directors, Executive
Board, independent auditors, and Board of Auditors.
The purpose of good corporate governance practices
is to increase the value of the company, facilitate its
access to capital and contribute to its sustainability
(definition of the Brazilian Institute of Corporate
Governance).
Corporate Sustainability Index – a portfolio of
the Bolsa de Valores de Sao Paulo (BOVESPA)
composed of companies known for being committed
to social responsibility and corporate sustainability.
D
Debenture – debt securities issued by a corporation
to raise funds to be invested or to finance working
capital.
Dividend – amount distributed to shareholders in
cash, based on the number of shares held. Results
from profits obtained by a company in the current
fiscal year or in past fiscal years.
Dividend yield – this indicator measures the financial
return of a share in the form of dividends and/or
interest on capital. It is the ratio of dividends and/or

interest on shareholders’ equity per share to the price
of the stock at the end of a specific period.
Dust removal system – set of measures adopted
to control dust at the place where it is generated. It
involves hoods for capture, piping, fans, and filters.
E
EBITDA – earnings before interest, taxes,
depreciation and amortization. Also known as
generation of cash from operations.
EBITDA margin – equal to EBITDA divided by net
revenue, expressed in percentage. The percentage
represents the total of each monetary unit of net
revenue that resulted in EBITDA.
Electric arc furnaces – steelmaking equipment
in which the metallic load (scrap + solid pig iron) is
melted using energy resulting from an electrodegenerated
electric arc.
F
Falcão Bauer Seal – Certification of the Falcão Bauer
Quality Institute launched in November 2007 with the
objective of checking and ensuring the sustainability
of products.
Financial liabilities – covers the quotas representing
underwriting liabilities whose payment is independent
of budget authorization.
Fixed assets – a component of the balance sheet
composed of the sum of tangible assets used in the
company’s operating activities and that should not
be converted into cash or consumed in the course of
the company’s operations (e.g. buildings, machinery,
equipment, land, etc.).
Flat steel – classification of steel products that
includes plates and strips. Flat steels are used on
external parts of automobiles, household appliances,
etc.
G
ANNUAL REPORT GERDAU 2011 65
Gerdau Business System (GBS) – one of the
Company’s main competitive advantages is the Gerdau
Business System (GBS), which consolidates and
transfers best management and operational practices,
through standardized procedures, to all its units in
different countries, along with encouraging continuous
improvement based on different practices developed
internally or from references external to the Company.
Gross debt – bank loans plus debentures issued by
the company.
H
Heavy Plate – steel flat rolled product, normally
rectangular with nominal thickness bigger than 5
mm. It can be produced directly in the form of plates
or from hot cutting of coils of heavy plates(nominal
thickness bigger than 5 mm).
Hot rolled coils – flat-rolled steel products produced
in the shape of coils, which can be classified as coils
of hot-rolled thin plates (with a nominal thickness of
up to 5 mm) and of hot-rolled heavy plates (with a
nominal thickness greater than 5 mm ) according to
ABNT.
I
Investment grade – risk rating from specialized
agencies, conferred upon companies or countries
evaluated as capable of honoring their commitments.
Iron ore – raw material for the production of pig iron
and sponge iron, the form in which iron is found in
nature.
ISO 14001 – standard developed by the International
Organization for Standardization (ISO) that specifies
the requirements related to an organization’s
environmental management system.

66
J
Joint venture – the joint investment of two companies
in a third company.
L
Liquidity – greater or lesser ease in trading a
security, converting it to cash.
Long steel – classification of steel products in which
one dimension (the length) prevails over the others.
Includes bars, shapes, wire rod, rebar, structural
shapes and wire. This is Gerdau’s primary product line.
Lost time accident – an accident that prevents the
employee from returning to work, to his normal duties,
on the day immediately following the accident, in the
normal working hours, or that results in death, partial
permanent disability, total or total temporary disability.
M
MBA – Master of Business administration. Postgraduate
course geared to education of executives.
Melt shop – area of a mill where raw materials such as
scrap and pig iron are processed and made into steel.
Minimill – mill built to meet the demand of a given
region and using local resources and raw materials.
Minority shareholder – individual or group holding
a number of shares that is not sufficient to control
the company.
N
Net debt – gross debt minus cash on hand and
financial investments.
Net income – final result achieved in a certain period,
after all income and expenses are recorded.
ANNUAL REPORT GERDAU 2011
Net margin – equal to net income divided by net
revenue. Expressed as a percentage. The percentage
represents the total of each monetary unit of net
revenue that resulted in net income. It is expressed as a
percentage. The percentage represents the total of each
monetary unit of net revenue that resulted in net income.
P
Preferred share – securities representing the
smallest portion of capital stock in a corporation,
providing privileges in terms of dividend distribution
and/or reimbursement of capital in the case of
dissolution. In general, preferred stock holders do
not enjoy voting rights.
R
Rating – mechanism for classifying the creditworthiness
of a company, a country, a security, or a structured
transaction, which provides potential lenders with an
independent opinion regarding the credit risk of the object
analyzed.
Rebar – long ribbed steel bar, used as structural
reinforcement in civil construction of roads, bridges,
buildings, etc.
Rolling – mechanical shaping process carried out
cold or hot to modify shape and dimensions in the
cross-section of the initial material, usually from the
melt shop.
S
Sarbanes-Oxley – law approved by the U.S. congress
to protect investors against the possibility of accounting
fraud at corporations. The rules and applications
amend and supplement the laws in effect for public
companies that trade shares on U.S. stock exchanges.
Sintering – process that consists of agglomerating iron
ore in a mix with approximately 5% of a finely divided
carbon. This mix is heated, causing alloying of ore

particles and results in a uniform and porous product,
called sinter, which is used as load in a blast furnace.
Slab – steel product of the sector of flat steels, basis
for the production of plates and strips.
Special steel (long) – its production process
ensures the specific physical and metallurgical
characteristics required by special applications,
such as automotive, petrochemical, tools, and
machinery and equipment industries.
Steel – iron and carbon alloy (up to 1.5%) that can
also contain other chemical elements, aimed at the
improvement of its properties.
Structural shape – group of steel products including
I and H profiles, wide-flange beams and sheet pile.
Used in construction of buildings, industrial facilities,
bridge reinforcements, etc.
T
Tag along – right that guarantees minority
shareholders the same conditions offered to
controlling shareholders, in the case of sale of
company control.
Trainee – recent college graduate who undergoes an
accelerated program to assume future positions in the
company.
Truss – triangular frame produced in ca-60 grooved
steel, used in pre-fabricated slabs for buildings,
bridges and viaducts, spacers for slabs and floors and
other applications.
V
Value added breakdown – this figure derives from
the revenue generated by products and services, net
of discounts granted, subtracting the costs related to
raw materials, consumer goods, outsourced services,
depreciation, amortization, equity income, and
financial income, among others.
W
ANNUAL REPORT GERDAU 2011 67
Wire rod – steel product of a small circular crosssection
obtained in the rolling process. Wire rod is
normally drawn and used in the production of wire,
screws, and nails.

68
Corporate information
Gerdau
Av. Farrapos, 1811
Porto Alegre – RS – Brazil
CEP 90.220-005
Tel.: 55 (51) 3323-2000
www.gerdau.com
Shareholders Relations
Av. Farrapos, 1811
Porto Alegre – RS – Brazil
CEP 90.220-005
acionistas@gerdau.com.br
Tel.: 0800 702-2001
Tel.: 55 (51) 3323-2211
Fax: 55 (51) 3323-2281
Depositary Bank in Brazil
Itaú Corretora de Valores S.A.
investfone@itau.com.br
Tel.: (11) 5029.7780
Depositary Bank Overseas
The Bank of New York Mellon
shrrelations@bnymellon.com
Tel.: +1 888 BNY ADRS (From the United States)
Tel.: +1 201 680-6825 (Outside the United States)
Investor and Analyst Service
Av. Farrapos, 1811
Porto Alegre - RS - Brazil
CEP 90.220-005
inform@gerdau.com.br
Tel.: 55 (51) 3323-2703
Fax: 55 (51) 3323-2281
Independent Auditor
Deloitte Touche Tohmatsu
Credits
Coordination
Gerdau Corporate Communications and
Public Affairs
ANNUAL REPORT GERDAU 2011
Editing and production supervision
Gerdau Corporate Communications and Public Affairs
and Odin Art & Communication
Concept
Gerdau Corporate Communications
and Public Affairs
Graphic Design
Néktar Design
Printing
Gráfica Impresul
Paper and ink
Duo Design 300g (cover) and Couché Matte 150g
(content), produced by Cia. Suzano through the
cultivation of planted forests certified by Forest
Stewardship Council (FSC). Printed with soy-based
inks.
Circulation
600 copies in Brazilian Portuguese, 300 in English,
and 300 in Spanish.
Photo credits and illustrations
Gerdau image bank (p. 6, 12, 34), Bruno Magalhães/
Agência Nitro (p. 10), Chico Batata (p. 20),
Claudia Hurtado (p. 23), Cia Group Eventos (p.
36), Emmanuelle Bernard (p. 10), Foguinho/
Save The Image (p. 38, 45), Gentil Barreira (p.
44), Ivson Miranda (p. 3, 5, 10, 12, 19, 21, 27, 44,
46), Istockphoto/Christopher Penler (p. 24), Leo
Drummond (p. 18), Mathias Cramer (p. 6), MP Fotos/
Eduardo Simões (p. 24), Nicolas Bright (p. 42), Produ-
Video Eventos (p. 26).
We would like to thank all of those who contributed by
supplying information and images for this publication.
Gerdau believes in the importance of seeking
continuous improvement in all its processes, products,
and services. As such, we would like to hear your
opinion about the 2011 annual report. Evaluate its
scope, relevance, quality of information, and graphic
presentation. Your opinion is very important to us.
Access our website
www.gerdau.com.br/relatoriogerdau/2011 and
answer the opinion survey or send an email to
gerdau@gerdau.com with suggestions on aspects
which can be improved. We thank you in advance
for your participation.

www.gerdau.com
ARGENTINA
www.sipargerdau.com
BRAZIL
www.gerdau.com.br
CANADA
www.gerdau.com/longsteel
CHILE
www.gerdauaza.cl
COLOMBIA
www.diaco.com.co
DOMINICAN REPUBLIC
www.industriasnacionales.com
GUATEMALA
www.acerosdeguatemala.com
INDIA
www.kalyanigroup.com
MEXICO
www.gerdau.com.mx
PERU
www.sider.com.pe
SPAIN
www.gerdau.es
UNITED STATES
www.gerdau.com/longsteel
www.gerdau.com/specialsteel
URUGUAY
www.gerdaulaisa.com.uy
VENEZUELA
www.sizuca.com.ve