Gerdau Ameristeel Reports Profit for Second Consecutive Quarter

TAMPA, FL, Aug. 5 /CNW/ - Gerdau Ameristeel Corporation (NYSE: GNA; TSX: GNA) today reported net income of $46.7 million ($0.11 per share diluted) for the three months ended June 30, 2010, in comparison to a net loss of $52.4 million ($0.12 per share) for the three months ended June 30, 2009 and net income of $25.2 million ($0.06 per share diluted) for the three months ended March 31, 2010. The Company has adopted International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board, as of January 1, 2010 and, as such, the comparative periods for fiscal year 2009 have been restated under IFRS.

For the six months ended June 30, 2010, the Company reported net income of $71.9 million ($0.17 per share diluted) compared to a net loss of $83.9 million ($0.19 per share) for the six months ended June 30, 2009.

Net sales for the three months ended June 30, 2010 increased 30% to $1.3 billion from $1.0 billion reported for the three months ended June 30, 2009 and 18% from $1.1 billion for the three months ended March 31, 2010. For the three months ended June 30, 2010 weighted average mill selling price increased 15% or $89 per ton in comparison to the three months ended June 30, 2009, and increased 9% or $59 per ton in comparison to the three months ended March 31, 2010. Finished steel shipments were 1.5 million tons for the three months ended June 30, 2010, an increase of 15% in comparison to the three months ended June 30, 2009 and a 4% increase compared to the three months ended March 31, 2010.

Net sales for the six months ended June 30, 2010 increased 19% to $2.5 billion from $2.1 billion reported for the six months ended June 30, 2009. For the six months ended June 30, 2010 weighted average mill selling price was $672 per ton which was relatively flat as compared to $666 for the six months June 30, 2009. Finished steel shipments were 3.0 million tons for the six months ended June 30, 2010, an increase of 20% in comparison to the six months ended June 30, 2009.

For the three months ended June 30, 2010, metal spread, the difference between mill selling prices and scrap raw material costs, was $409 per ton, a decrease of $31 per ton from the same period in 2009. The decrease in metal spread was primarily due to an increase in scrap raw material costs. Scrap raw material cost used in production for the three months ended June 30, 2010 was $292 per ton, an increase of $120 per ton compared to the three months ended June 30, 2009.

For the six months ended June 30, 2010, metal spread was $392 per ton, a decrease of $89 per ton from the same period in 2009. Scrap raw material cost used in production for the six months ended June 30, 2010 was $280 per ton, an increase of $95 per ton compared to the six months ended June 30, 2009.

EBITDA, as adjusted (see EBITDA section herein for an explanation of the EBITDA calculation), was $136.4 million for the three months ended June 30, 2010, compared to EBITDA of $66.0 million for the three months ended June 30, 2009 and $116.7 million for the three months ended March 31, 2010. For the six months ended June 30, 2010, EBITDA was $253.1 million compared to EBITDA of $107.8 million for the six months ended June 30, 2009.

EBITDA was favorably impacted primarily by shipment volume but also by the increase in earnings from joint ventures for the three and six months ended June 30, 2010 as compared to prior year comparative periods. Income from joint ventures was $18.1 million for the three months ended June 30, 2010, an increase of $23.3 million and $10.4 million from the three months ended June 30, 2009 and March 31, 2010, respectively. Income from joint ventures increased $41.3 million for the first half of 2010 as compared to the first half of 2009. Additionally, as a result of the significant increase in the Company's stock price during the second quarter of 2010, EBITDA includes an unfavorable non-cash stock compensation charge of $9.3 million and $10.2 million for the three and six months ended June 30, 2010, respectively, which represents an increase of $8.4 million when comparing the first and second quarter of 2010.

At June 30, 2010, the Company had $540.3 million of cash and short-term investments, a decrease of $116.0 million from December 31, 2009. This decline was primarily the result of the Company's pension contributions, interest payments and increased investment in working capital. In addition to its cash and short-term investments, the Company had approximately $498.4 million available under secured credit facilities which resulted in a total liquidity position over $1.0 billion at June 30, 2010.

As of June 30, 2010, the Company had 433,745,489 common shares outstanding.

CEO Comments

Mario Longhi, President and CEO of Gerdau Ameristeel, commented:

"Our ability to manage costs and maximize efficiency throughout our operations, along with the gradual improvement in business fundamentals, was clearly reflected in our second quarter EBITDA results.

Looking toward the second half of 2010, we remain cautious as unemployment continues to be high and the overall economy remains fragile. We will continue to work closely with our customers and monitor our end markets to ensure that we maximize the opportunities presented to us as well as leverage our business systems and network of mini-mills to optimize productivity and remain globally competitive."

IFRS Conversion

As previously mentioned, the Company's Consolidated Financial Statements have been prepared under IFRS. The Company previously prepared its Consolidated Financial Statements under generally accepted accounting principles in the United States ("US GAAP"). In accordance with IFRS 1, First-Time Adoption of International Financial Reporting Standards, the Company's IFRS transition date was January 1, 2009 and the Company prepared its opening IFRS balance sheet as of that date. The Company has restated its comparative periods under IFRS and the Company's quarterly and annual filings will contain reconciliations between IFRS and previously reported amounts under US GAAP for 2009.

Forward Looking Statements

In this press release, "Gerdau Ameristeel" and "Company" refer to Gerdau Ameristeel Corporation and its subsidiaries and 50%-owned joint ventures. Certain statements in this press release, including, without limitation, the section entitled "CEO Comments" constitute forward-looking statements. Such statements describe the Company's assumptions, beliefs and expectations with respect to its operations, future financial results, business strategies and growth and expansion plans can often be identified by the words "anticipates," "believes," "estimates," "expects," "intends," "plans," and other words and terms of similar meaning. The Company cautions readers that forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those currently projected by the Company. In addition to those noted in the statements themselves, any number of factors could affect actual results, including, without limitation:

Excess global steel industry capacity and the availability of competitive substitute materials; the cyclical nature of the steel industry and the industries served by the Company and economic conditions in North America and worldwide; increases in the cost of steel scrap, energy and other raw materials; steel imports and trade regulations; a change in China's steelmaking capacity or slowdown in China's steel consumption; the Company's participation in the consolidation of the steel industry; the substantial capital investment and similar expenditures required in the Company's business; unexpected equipment failures and plant interruptions or outages; the Company's level of indebtedness; the cost of compliance with environmental and occupational health and safety laws; the enactment of laws intended to reduce greenhouse gases and other air emissions; the Company's ability to fund its pension plans; the ability to renegotiate collective bargaining agreements and avoid labor disruptions; the Company's ability to successfully implement a new enterprise resource planning system; currency exchange rate fluctuations; actions or potential actions taken by the Company's principal stockholder, Gerdau S.A.; the liquidity of the Company's long-term investments, including investments in auction rate securities; and the Company's reliance on its 50% owned joint ventures that it does not control.

Any forward-looking statements in this press release are based on current information as of the date of this press release and the Company does not undertake any obligation to update any forward-looking statements to reflect new information, future developments or events, except as required by law.

Notice of Conference Call

Gerdau Ameristeel invites you to listen to a live broadcast of its second quarter conference call on Thursday, August 5, 2010, at 2:30 pm EST. The call will be hosted by Mario Longhi, President and CEO, and Barbara Smith, VP and CFO, and can be accessed via our Web site at www.gerdauameristeel.com or by calling 1-888-231-8191 (1-647-427-7450 if outside the United States) and using the reference number 90661223. Web cast attendees are welcome to listen to the conference in real-time or on-demand at your convenience.

About Gerdau Ameristeel

Gerdau Ameristeel is the second largest mini-mill steel producer in North America, with annual manufacturing capacity of approximately 10 million metric tons of mill finished steel products. Through its vertically integrated network of mini-mills, scrap recycling facilities and downstream operations, Gerdau Ameristeel serves customers throughout the United States and Canada. The Company's products are generally sold to steel service centers, steel fabricators, or directly to original equipment manufacturers for use in a variety of industries, including non-residential, infrastructure, commercial, industrial and residential construction, metal building, manufacturing, automotive, mining, cellular and electrical transmission and equipment manufacturing. Gerdau Ameristeel's majority shareholder is Gerdau S.A.

    
    GERDAU AMERISTEEL CORPORATION AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (US$ in thousands, except earnings per share data)
    (Unaudited)

                             Three Months Ended        Three Months Ended
                           ------------------------  ------------------------
                            June 30,     June 30,     June 30,     June 30,
                              2010         2009         2010         2009
                           -----------  -----------  -----------  -----------
    NET SALES              $1,327,473   $1,035,964   $2,465,198   $2,073,663
    Cost of sales          (1,188,836)    (966,272)  (2,220,664)  (1,956,051)
                           -----------  -----------  -----------  -----------
    GROSS PROFIT              138,637       69,692      244,534      117,612

    OPERATING EXPENSES
      Selling, general and
       administrative
       expenses                82,816       68,901      143,243      131,310
      Facility closure
       costs                        -       43,379            -       43,379
      Other operating
       (income) expense,
       net                       (862)      (1,209)      (3,002)       1,189
                           -----------  -----------  -----------  -----------
                               81,954      111,071      140,241      175,878

    INCOME (LOSS) FROM
     OPERATIONS                56,683      (41,379)     104,293      (58,266)

    INCOME (LOSS) FROM 50%
     OWNED JOINT VENTURES      18,086       (5,256)      25,762      (15,500)
                           -----------  -----------  -----------  -----------

    INCOME (LOSS) BEFORE
     FINANCE COSTS, NET AND
     INCOME TAXES              74,769      (46,635)     130,055      (73,766)

    FINANCE COSTS, NET
      Interest income            (426)      (1,762)        (842)      (3,163)
      Interest expense -
       non-affiliated          23,249       38,582       46,626       80,538
      Interest expense -
       affiliated              12,180            -       24,360            -
      Gain on redeemable
       noncontrolling
       interest                (5,014)      (6,062)      (4,560)      (5,487)
      Foreign exchange
       (gain) loss, net        (4,745)      14,488       (2,996)      11,755
      Realized gain on
       investments                  -            -       (2,528)           -
                           -----------  -----------  -----------  -----------
                               25,244       45,246       60,060       83,643

    INCOME (LOSS) BEFORE
     INCOME TAXES              49,525      (91,881)      69,995     (157,409)

    INCOME TAX EXPENSE
     (BENEFIT)                  3,734      (40,274)          26      (72,350)
                           -----------  -----------  -----------  -----------
    NET INCOME (LOSS)          45,791      (51,607)      69,969      (85,059)
                           -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------

    NET INCOME (LOSS)
     ATTRIBUTABLE TO:
      Equity holders of the
       Company                $46,743     $(52,404)     $71,944     $(83,884)
      Noncontrolling
       interest                  (952)         797       (1,975)      (1,175)
                           -----------  -----------  -----------  -----------
                              $45,791     $(51,607)     $69,969     $(85,059)
                           -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------
    EARNINGS PER SHARE
     ATTRIBUTABLE TO EQUITY
     HOLDERS OF THE COMPANY

    Basic earnings (loss)
     per share                  $0.11       $(0.12)       $0.17       $(0.19)
    Diluted earnings (loss)
     per share                  $0.11       $(0.12)       $0.17       $(0.19)



    GERDAU AMERISTEEL CORPORATION AND SUBSIDIARIES
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (US$ in thousands)
    (Unaudited)

                                         June 30,   December 31,  January 1,
    ASSETS                                 2010         2009         2009
                                       ------------ ------------ ------------
    Current assets
      Cash and cash equivalents        $   340,391  $   631,293  $   482,535
      Restricted cash                        1,700        1,691            -
      Short-term investments               199,935       25,000      205,817
      Trade accounts receivable, net       606,092      460,066      677,569
      Inventories                        1,046,141      814,788    1,267,768
      Costs and estimated earnings in
       excess of billings on
       uncompleted contracts                 3,512        4,687       14,771
      Income taxes receivable               72,165       93,652       28,455
      Other current assets                  24,592       22,643       23,033
                                       ------------ ------------ ------------
        Total current assets             2,294,528    2,053,820    2,699,948

    Non-current assets
      Investments in 50% owned joint
       ventures                            153,764      148,609      161,901
      Long-term investments                 25,996       28,538       33,189
      Property, plant and equipment,
       net                               1,541,255    1,620,852    1,801,471
      Goodwill                           1,961,651    1,962,098    1,957,029
      Other intangible assets, net         420,446      450,003      515,736
      Deferred tax assets                   35,006       29,760            -
      Other non-current assets              47,653       23,459       32,305
                                       ------------ ------------ ------------
        Total non-current assets         4,185,771    4,263,319    4,501,631
                                       ------------ ------------ ------------

    TOTAL ASSETS                       $ 6,480,299  $ 6,317,139  $ 7,201,579
                                       ------------ ------------ ------------
                                       ------------ ------------ ------------

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities
      Trade accounts payable and
       accrued liabilities             $   356,172  $   225,111  $   199,582
      Accrued salaries, wages and
       employee benefits                    68,012       71,214      127,351
      Accrued interest - non-affiliated     13,920       15,344       54,480
      Accrued interest - affiliated         28,019        3,772            -
      Provisions                            38,510       35,126       34,551
      Short-term debt - non-affiliated       3,140        3,174        1,893
      Billings in excess of costs and
       estimated earnings on uncompleted
       contracts                            21,151       26,212       45,687
      Other current liabilities              8,640       12,959       20,932
                                       ------------ ------------ ------------
        Total current liabilities          537,564      392,912      484,476

    Non-current liabilities
      Long-term debt - non-affiliated    1,723,364    1,721,806    3,032,824
      Long-term debt - affiliated          606,678      606,711            -
      Retirement benefit obligations       300,969      348,684      339,055
      Deferred tax liabilities             233,690      259,170      269,661
      Redeemable noncontrolling
       interest                             21,531       32,439       46,927
      Provisions                            20,333       21,203       18,552
      Other non-current liabilities        130,925       89,753      116,092
                                       ------------ ------------ ------------
        Total non-current liabilities    3,037,490    3,079,766    3,823,111

    TOTAL LIABILITIES                    3,575,054    3,472,678    4,307,587
                                       ------------ ------------ ------------

    Shareholders' equity
      Capital                            2,539,827    2,535,883    2,531,516
      Retained earnings                    259,049      187,105      373,323
      Other comprehensive income            79,789       94,893      (37,427)
                                       ------------ ------------ ------------
    Equity attributable to equity
     holders of the Company              2,878,665    2,817,881    2,867,412
    Equity attributable to
     noncontrolling interest                26,580       26,580       26,580
                                       ------------ ------------ ------------

    TOTAL SHAREHOLDERS' EQUITY           2,905,245    2,844,461    2,893,992
                                       ------------ ------------ ------------
    TOTAL LIABILITIES AND
     SHAREHOLDERS' EQUITY              $ 6,480,299  $ 6,317,139  $ 7,201,579
                                       ------------ ------------ ------------
                                       ------------ ------------ ------------



    GERDAU AMERISTEEL CORPORATION AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (US$ in thousands)
    (Unaudited)

                              Three Months Ended        Six Months Ended
                                   June 30,                  June 30,
                              2010         2009         2010         2009
                           -----------  -----------  -----------  -----------
    Cash flows from
     operating activities
    Net income (loss)      $   45,791   $  (51,607)  $   69,969   $  (85,059)
    Adjustments to
     reconcile net income
     (loss) to net cash
     (used in) provided by
     operating activities:
      Depreciation             46,702       52,764       93,437      105,093
      Amortization of
       intangibles             14,900       16,490       29,558       33,098
      Income tax expense
       (benefit)                3,734      (40,274)          26      (72,350)
      Interest expense -
       non-affiliated          23,249       38,582       46,626       80,538
      Interest expense -
       affiliated              12,180            -       24,360            -
      Gain on redeemable
       noncontrolling
       interest                (5,014)      (6,062)      (4,560)      (5,487)
      Loss on disposition
       of property, plant
       and equipment              347          533          949        1,467
      (Income) loss from
       50% owned joint
       ventures               (18,086)       5,256      (25,762)      15,500
      Distributions from
       50% owned joint
       ventures                 5,000            -       20,405          405
      Stock compensation
       expense                  9,314        8,041       10,144        6,138
      Realized gain on
       investments                  -            -       (2,528)           -
      Facility closure
       costs                        -       43,379            -       43,379
      Writedown of inventory        -       14,618            -       33,044

    Changes in operating
     assets and liabilities:
      Accounts receivable     (43,440)      37,518     (147,435)     147,443
      Inventories            (100,833)     181,654     (234,037)     383,176
      Other assets             13,843       (2,498)      (2,392)       1,868
      Liabilities             (38,270)     (34,563)      71,460     (109,462)
                           -----------  -----------  -----------  -----------
    Cash (used in)
     provided by operating
     activities               (30,583)     263,831      (49,780)     578,791

      Income tax (paid)
       refund                  (1,301)      22,494       (1,190)      19,309
      Interest paid            (2,486)      (1,699)     (41,886)     (81,577)
                           -----------  -----------  -----------  -----------
    Net cash (used in)
     provided by operating
     activities               (34,370)     284,626      (92,856)     516,523

    Cash flows from
     investing activities
      Purchases of property,
       plant and equipment     (8,630)     (22,816)     (18,819)     (59,100)
      Proceeds from
       disposition of
       property, plant and
       equipment                  967          234        1,424        1,413
      Change in restricted
       cash                        (4)           -           (9)           -
      Purchases of
       investments           (124,891)    (218,169)    (289,741)    (487,857)
      Proceeds from sales
       of investments          89,953      290,482      120,016      436,179
                           -----------  -----------  -----------  -----------
    Net cash (used in)
     provided by investing
     activities               (42,605)      49,731     (187,129)    (109,365)

    Cash flows from
     financing activities
      Repayments of
       non-affiliated debt        (28)      (1,021)      (1,596)      (3,647)
      Payments of deferred
       financing costs           (170)     (13,921)      (1,658)     (13,921)
      Cash dividends                -            -            -       (8,646)
      Distributions to
       subsidiary's
       noncontrolling
       interest                     -            -       (4,373)      (3,593)
      Proceeds from
       exercise of employee
       stock options              209        1,565          803        1,659
                           -----------  -----------  -----------  -----------
    Net cash provided by
     (used in) financing
     activities                    11      (13,377)      (6,824)     (28,148)
    Effect of exchange rate
     changes on cash and
     cash equivalents         (12,446)      17,011       (4,093)      12,045
                           -----------  -----------  -----------  -----------
    Net (decrease) increase
     in cash and cash
     equivalents              (89,410)     337,991     (290,902)     391,055

    Cash and cash
     equivalents beginning
     of period                429,801      535,599      631,293      482,535
                           -----------  -----------  -----------  -----------
    Cash and cash
     equivalents end of
     period                $  340,391   $  873,590  $   340,391   $  873,590
                           -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------
    

EBITDA: EBITDA is calculated by adding income (loss) before interest and other expense on debt; taxes; depreciation; amortization of intangibles; gain on redeemable noncontrolling interest; facility closure costs; realized gain on investments; and foreign exchange (gain) loss, net; and deducting interest income. Management believes EBITDA, a non-IFRS measure, is a useful supplemental measure of cash available prior to debt service, capital expenditures and income tax. The Company calculates EBITDA using the equity method, which includes net earnings from 50% owned joint ventures and excludes cash distributions from 50% owned joint ventures. EBITDA should not be construed as an alternative to net income determined in accordance with IFRS as a performance indicator or to cash flows from operations as a measure of liquidity and cash flows. The Company's method of calculating EBITDA may differ from the methods used by other companies and, accordingly, it may not be comparable to similarly titled measures used by other companies. Reconciliation of EBITDA to net income (loss) for the three and six months ended June 30, 2010 and 2009 is shown below:

    
                                                     For the Three Months
                                                       Ended - Unaudited

                                                     June 30,      June 30,
                                                       2010          2009
                                                   ------------  ------------
    ($000s)
      Net income (loss)                            $    45,791   $   (51,607)
      Income tax expense (benefit)                       3,734       (40,274)
      Interest expense - non-affiliated                 23,249        38,582
      Interest expense - affiliated                     12,180             -
      Interest income                                     (426)       (1,762)
      Gain on redeemable noncontrolling interest        (5,014)       (6,062)
      Depreciation                                      46,702        52,764
      Amortization of intangibles                       14,900        16,490
      Facility closure costs                                 -        43,379
      Foreign exchange (gain) loss, net                 (4,745)       14,488
                                                   ------------  ------------
      EBITDA                                       $   136,371   $   65,998
                                                   ------------  ------------
                                                   ------------  ------------


                                                       For the Six Months
                                                       Ended - Unaudited

                                                     June 30,      June 30,
                                                       2010          2009
                                                   ------------  ------------
    ($000s)
      Net income (loss)                            $    69,969   $   (85,059)
      Income tax expense (benefit)                          26       (72,350)
      Interest expense - non-affiliated                 46,626        80,538
      Interest expense - affiliated                     24,360             -
      Interest income                                     (842)       (3,163)
      Gain on redeemable noncontrolling interest        (4,560)       (5,487)
      Depreciation                                      93,437       105,093
      Amortization of intangibles                       29,558        33,098
      Facility closure costs                                 -        43,379
      Foreign exchange (gain) loss, net                 (2,996)       11,755
      Realized gain on investments                      (2,528)            -
                                                   ------------  ------------
      EBITDA                                       $   253,050   $   107,804
                                                   ------------  ------------
                                                   ------------  ------------



    SUPPLEMENTAL OPERATING AND FINANCIAL INFORMATION - UNAUDITED

       THE INFORMATION IN THIS TABLE EXCLUDES 50% OWNED JOINT VENTURES

                                       For the Three Months Ended

                                 June 30, 2010            June 30, 2009
                           ------------------------  ------------------------
                              Tons                      Tons
                           -----------               -----------
    Production
      Melt Shops            1,820,595                 1,341,067
      Rolling Mills         1,662,677                 1,215,710

                              Tons           %          Tons           %
                           -----------  -----------  -----------  -----------
    Finished Steel Shipments
      Rebar                   247,805       16%         266,169       20%
      Merchant/Special
       Sections/Structurals   883,192       57%         652,549       49%
      Rod                     117,093        8%         123,501        9%
      Fabricated Steel        290,184       19%         298,758       22%
                           -----------  -----------  -----------  -----------
        Total Shipments     1,538,274      100%       1,340,977      100%


                              $/Ton                     $/Ton
                           -----------               -----------
    Selling Prices
      Mill external
       shipments           $      701                $      612
      Fabricated steel
       shipments                  812                       941

    Scrap Charged                 292                       172

    Metal Spread (Selling
     price less scrap)
      Mill external
       shipments                  409                       440
      Fabricated steel
       shipments                  520                       769

    Mill manufacturing cost       275                       308



    SUPPLEMENTAL OPERATING AND FINANCIAL INFORMATION - UNAUDITED

       THE INFORMATION IN THIS TABLE EXCLUDES 50% OWNED JOINT VENTURES

                                         For the Six Months Ended

                                 June 30, 2010            June 30, 2009
                           ------------------------  ------------------------
                              Tons                      Tons
                           -----------               -----------
    Production
      Melt Shops            3,570,723                 2,491,961
      Rolling Mills         3,233,788                 2,421,669

                              Tons           %          Tons           %
                           -----------  -----------  -----------  -----------
    Finished Steel
     Shipments
      Rebar                   512,957       17%         458,669       18%
      Merchant/Special
       Sections/
       Structurals          1,758,287       58%       1,254,435       50%
      Rod                     226,231        8%         240,668        9%
      Fabricated Steel        527,070       17%         572,467       23%
                           -----------  -----------  -----------  -----------
        Total Shipments     3,024,545      100%       2,526,239      100%

                              $/Ton                     $/Ton
                           -----------               -----------
    Selling Prices
      Mill external
       shipments           $      672                $      666
      Fabricated steel
       shipments                  799                     1,013

    Scrap Charged                 280                       185

    Metal Spread (Selling
     price less scrap)
      Mill external
       shipments                  392                       481
      Fabricated steel
       shipments                  519                       828

    Mill manufacturing cost       275                       333
    

RECONCILIATIONS BETWEEN IFRS AND US GAAP

IFRS 1 requires an entity to reconcile equity, net loss and cash flows for prior periods. The Company's first time adoption of IFRS did not have a significant impact on the total operating, investing or financing cash flows in prior periods. The following represents the reconciliations from US GAAP to IFRS for the respective periods noted for equity, net loss, and EBITDA:

    
    Reconciliations of net loss ($000s):

                                                  Three months    Six months
                                                      ended         ended
                                                     June 30,      June 30,
                                                       2009          2009
                                                  -------------  ------------
    Net loss, US GAAP                              $   (56,783)  $   (91,427)

    Business combinations - redeemable
     noncontrolling interest                   (a)       6,062         5,487
    Pension and postemployment benefits        (b)       5,642         8,967
    Stock-based compensation                   (c)      (2,770)       (2,169)
    Provisions                                 (d)       3,548         3,446
    Facility closure costs                     (f)      (6,834)       (6,834)
    Income taxes                               (e)        (472)       (2,529)
                                                  -------------  ------------
    Subtotal - IFRS adjustments                          5,176         6,368
                                                  -------------  ------------

    Net loss, IFRS                                 $   (51,607)  $   (85,059)
                                                  -------------  ------------
                                                  -------------  ------------


    Reconciliations of EBITDA ($000s):

                                                  Three months    Six months
                                                      ended         ended
                                                     June 30,      June 30,
                                                       2009          2009
                                                  -------------  ------------
    EBITDA, as previously reported             (1) $    64,834   $   113,465
    Adjustment for equity method               (2)      (5,256)      (15,905)
                                                  -------------  ------------
    EBITDA                                         $    59,578   $    97,560
    Pension and postemployment benefits        (b)       5,642         8,967
    Stock-based compensation                   (c)      (2,770)       (2,169)
    Provisions                                 (d)       3,548         3,446
                                                  -------------  ------------
    Subtotal - IFRS adjustments                          6,420        10,244
                                                  -------------  ------------
    EBITDA, as currently reported                  $    65,998   $   107,804
                                                  -------------  ------------
                                                  -------------  ------------

    (1) EBITDA as reported in the June 30, 2009 quarterly filing.

    (2) The Company changed its calculation of EBITDA to the equity method,
        which now includes net earnings from 50% joint ventures and excludes
        cash distributions from 50% owned joint ventures.
    

Description of adjustments impacting net loss, EBITDA and/or shareholders' equity

In addition to the exemptions and exceptions discussed above, the following narratives explain the significant differences between the previous historical US GAAP accounting policies and the current IFRS accounting policies applied by the Company. Only the differences having a significant impact on the Company are described below. The following is not a complete summary of all of the differences between US GAAP and IFRS. Relative to the impacts on the Company, the descriptive caption next to each lettered item below corresponds to the same lettered and descriptive caption in the tables above, which reflect the quantitative impacts from each change.

(a) Business combinations - redeemable non-controlling interest

Under US GAAP, a redeemable noncontrolling interest is not required to be separately recognized in the balance sheet as a financial instrument when the redemption value is determined to be at the fair value of the underlying noncontrolling interest. Under IFRS, the Company was required to record a liability for the present value of the expected redemption amount of the written put. As of January 1, 2009 (the Company's transition date), the counterpart was recorded directly in Capital in the Company's unaudited interim condensed consolidated balance sheet. Subsequent changes to the present value of the expected redemption amount are recognized in the statement of operations in Interest expense - affiliated. Upon exercise, under IFRS, the differential between the amount paid and the carrying amount of the noncontrolling interest at the date of exercise would be reclassified to Capital in the Company's unaudited interim condensed consolidated balance sheet.

(b) Pension and postemployment benefits

Under US GAAP, the Company recognized actuarial gains and in the statement of operations using the corridor approach. Under IFRS, another approach is permitted allowing a company to adopt a policy of recognizing all of its actuarial gains and losses in the period in which they occur in other comprehensive income. Under US GAAP, prior service cost should be recognized in other comprehensive income at the date of the adoption of the plan amendment and then amortized into income over the participants' remaining years of service, service to full eligibility date, or life expectancy, as applicable. Under IFRS, prior service cost should be recognized on a straight-line basis over the average period until the benefits become vested. To the extent that benefits are vested as of the date of the plan amendment, the cost of those benefits should be recognized immediately in the statement of operations. Additionally, under US GAAP, the Company recognized curtailments in accumulated other comprehensive income to the extent that prior actuarial gains (losses) had been recognized in accumulated other comprehensive income and had not yet been recognized in the statement of operations based on the corridor approach. Under IFRS, curtailments are recognized immediately in the statement of operations when they occur.

This adjustment reflects the reclassification of actuarial gains and losses recognized as pension cost in the statement of operations under US GAAP to other comprehensive income for the period and the recognition of curtailments and prior service cost immediately in the statement of operations for vested participants. The Company had $3.7 million of curtailment gains during the three months ended June 30, 2009 which were recognized in accumulated other comprehensive income under US GAAP but were required to be recognized in the statement of operations under IFRS. The curtailment gains resulted primarily from facility closures as well as certain one-time retirement benefit changes implemented by the Company.

(c) Stock-based compensation

Under US GAAP, the Company recognizes compensation expense associated with share-based compensation plans with graded vesting features on a straight-line basis over the vesting period. Under IFRS, the Company is required to treat each "tranche" of a share-based compensation arrangement with a graded vesting schedule as several individual grants, which results in the recognition of compensation expense on an accelerated basis by comparison to US GAAP.

(d) Provisions

Under US GAAP, the Company discounted its provisions to reflect the time value of money when the aggregate amount of the liability, and the amount and timing of cash payments for the liability were fixed or reliably determinable. The discount rate used by the Company was one which would have produced an amount at which the liability theoretically could be settled in an arm's-length transaction with a third party. After initial measurement of a liability, no adjustment in the obligation was made if there was a change in the discount rate. Under IFRS, a provision is discounted if the time value of money is material. IFRS requires the use of a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the liability. Where all risk adjustments are reflected in the cash flows, then the cash flows are discounted at a risk-free rate, which means that typically, a government bond "yield" rate should be used. The re-measurement of a provision includes the effect of a change in discount rate. This adjustment is the result of the Company's use of a pre-tax discount rate under IFRS that reflects current market assessments of the time value of money and the risks specific to the liability.

(e) Income taxes

This adjustment reflects the deferred income tax effects of the above adjustments. In addition, under US GAAP, the deferred tax benefit associated with share-based compensation awards (equity awards) is recognized over the vesting period based on the grant date fair value of the grant. Any difference between the tax benefit realized on the tax return and the amount previously recognized through the statement of operations is recognized either in equity or income, depending on the Company's prior experience, when the tax deduction is realized on the tax return. Under IFRS, the deferred tax benefit associated with share-based compensation awards (equity awards) is recognized over the vesting period based on the best estimate of the future tax deduction at each balance sheet date.

(f) Facility closure costs

Under US GAAP, the Company recognized certain facility closure obligations when the facilities ceased operations or when the cost was incurred. Under IFRS, these facility closure obligations are recognized when the obligations are unavoidable and are not related to the ongoing activities of the facility. This difference in recognition principles between US GAAP and IFRS creates merely a timing difference in the recognition of these facility closure costs between reporting periods. As such, this adjustment relates to certain obligations which are required to be recognized in the second quarter of 2009 under IFRS but were recognized under US GAAP in the third quarter of 2009.

%SEDAR: 00000593E

SOURCE GERDAU AMERISTEEL CORPORATION

For further information: For further information: Mario Longhi, President and Chief Executive Officer, Gerdau Ameristeel, (813) 207-2346, mlonghi@gerdauameristeel.com; Barbara R. Smith, Vice President and Chief Financial Officer, Gerdau Ameristeel, (813) 319-4324, basmith@gerdauameristeel.com

Organization Profile

GERDAU AMERISTEEL CORPORATION

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