6-K
Table of Contents

 
 
United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant To Rule 13a-16 or 15d-16
of the
Securities Exchange Act of 1934
For the month of
November 2006
Companhia Vale do Rio Doce
Avenida Graça Aranha, No. 26
20030-900 Rio de Janeiro, RJ, Brazil
(Address of principal executive office)
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)
(Check One) Form 20-F þ Form 40-F o
(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)
(Check One) Yes o No þ
(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b). 82-___.)
 
 

 


 

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USGAAP Financial Pages
Report of independent Registered
Public Accounting Firm
To the Board of Directors and Stockholders
Companhia Vale do Rio Doce
We have reviewed the accompanying unaudited condensed consolidated balance sheet of Companhia Vale do Rio Doce and subsidiaries as of September 30, 2006, and the related unaudited condensed consolidated statements of income, of cash flows and of changes in stockholders’ equity for the three-month periods ended September 30 and June 30, 2006 and September 30, 2005 and for the nine-month periods ended September 30, 2006 and 2005, respectively. This interim financial information is the responsibility of the Company’s management.
We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.
We previously audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2005, and the related consolidated statements of income, of cash flows and of changes in stockholders’ equity for the year then ended (not presented herein) and in our report dated March 6, 2006, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2005 is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.
PricewaterhouseCoopers
Auditores Independentes
Rio de Janeiro, Brazil
November 8, 2006

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Condensed Consolidated Balance Sheets
Expressed in millions of United States dollars
                 
    September     December 31,  
    30,2006     2005  
    (unaudited)          
Assets
               
Current assets
               
Cash and cash equivalents
    2,891       1,041  
Accounts receivable
               
Related parties
    213       159  
Unrelated parties
    2,045       1,490  
Loans and advances to related parties
    59       22  
Inventories
    1,336       1,142  
Deferred income tax
    358       186  
Recoverable taxes
    303       362  
Others
    374       373  
 
           
 
    7,579       4,775  
 
           
 
               
Property, plant and equipment, net
    19,427       14,166  
Investments in affiliated companies and joint ventures and other investments, net of provision for losses on equity investments
    1,690       1,672  
Other assets
               
Goodwill on acquisition of subsidiaries
    594       548  
Loans and advances
               
Related parties
    5       4  
Unrelated parties
    67       61  
Prepaid pension cost
    455       308  
Judicial deposits
    828       568  
Advances to suppliers — energy
    429       311  
Recoverable taxes
    208       110  
Others
    266       121  
 
           
 
    2,852       2,031  
 
           
TOTAL
    31,548       22,644  
 
           

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Condensed Consolidated Balance Sheets
Expressed in millions of United States dollars
(Except number of shares)
(Continued)
                 
    September 30,     December 31,  
    2006     2005  
    (unaudited)          
Liabilities and stockholders’ equity
               
 
               
Current liabilities
               
 
               
Suppliers
    908       1,110  
Payroll and related charges
    235       229  
Dividends and interest attributed to stockholders
    628        
Current portion of long-term debt — unrelated parties
    978       1,218  
Short-term debt
    233       15  
Loans from related parties
    46       62  
Provision for income taxes
    340       244  
Taxes payable
    92       53  
Employees post-retirement benefits
    36       30  
Others
    358       364  
 
           
 
    3,854       3,325  
 
           
Long-term liabilities
               
Employees post-retirement benefits
    252       241  
Long-term debt — unrelated parties
    4,612       3,714  
Loans from related parties
    1       1  
Provisions for contingencies (Note 11 (b))
    1,425       1,286  
Unrealized loss on derivative instruments
    247       260  
Deferred income tax
    360       2  
Provisions for asset retirement obligations
    250       225  
Others
    478       395  
 
           
 
    7,625       6,124  
 
           
Minority interests
    1,189       1,218  
 
           
 
               
Stockholders’ equity
               
Preferred class A stock — 1,800,000,000 no-par-value shares authorized and 959,758,200 issued
    4,702       2,150  
Common stock — 900,000,000 no-par-value shares authorized and 1,499,898,858 issued
    3,806       3,806  
Treasury stock — 15,172,516 preferred and 28,291,020 common shares
    (389 )     (88 )
Additional paid-in capital
    498       498  
Other cumulative comprehensive deficit
    (1,792 )     (2,729 )
Appropriated retained earnings
    4,706       4,357  
Unappropriated retained earnings
    7,349       3,983  
 
           
 
    18,880       11,977  
 
           
TOTAL
    31,548       22,644  
 
           
See notes to condensed consolidated financial statements.

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Condensed Consolidated Statements of Income
Expressed in millions of United States dollars (Unaudited)
(except number of shares and per-share amounts)
                                         
                            Nine-month periods ended  
    Three-month periods ended     September 30,  
    September 30,     June 30,     September 30,              
    2006     2006     2005     2006     2005  
Operating revenues, net of discounts, returns and allowances
                                       
Sales of ores and metals
    4,014       3,286       2,887       10,060       7,712  
Revenues from logistic services
    383       362       359       1,034       907  
Aluminum products
    638       640       358       1,707       1,031  
Other products and services
    31       25       6       68       9  
 
                             
 
    5,066       4,313       3,610       12,869       9,659  
Taxes on revenues
    (214 )     (167 )     (165 )     (531 )     (465 )
 
                             
Net operating revenues
    4,852       4,146       3,445       12,338       9,194  
 
                             
Operating costs and expenses
                                       
Cost of ores and metals sold
    (1,580 )     (1,350 )     (1,202 )     (4,186 )     (3,248 )
Cost of logistic services
    (203 )     (196 )     (188 )     (573 )     (500 )
Cost of aluminum products
    (382 )     (324 )     (249 )     (963 )     (643 )
Others
    (16 )     (14 )     (6 )     (38 )     (9 )
 
                             
 
    (2,181 )     (1,884 )     (1,645 )     (5,760 )     (4,400 )
Selling, general and administrative expenses
    (167 )     (212 )     (160 )     (547 )     (408 )
Research and development
    (134 )     (101 )     (104 )     (306 )     (192 )
Employee profit sharing plan
    (34 )     (35 )     (24 )     (97 )     (65 )
Others
    (88 )     (41 )     (107 )     (171 )     (158 )
 
                             
 
    (2,604 )     (2,273 )     (2,040 )     (6,881 )     (5,223 )
 
                             
Operating income
    2,248       1,873       1,405       5,457       3,971  
 
                             
Non-operating income (expenses)
                                       
Financial income
    59       45       36       146       92  
Financial expenses
    (172 )     (245 )     (216 )     (630 )     (359 )
Foreign exchange and monetary gains (losses), net
    38       28       163       325       465  
Gain on sale of investments
    16       338       126       363       126  
 
                             
 
    (59 )     166       109       204       324  
 
                             
Income before income taxes, equity results and minority interests
    2,189       2,039       1,514       5,661       4,295  
 
                             
Income taxes
                                       
Current
    (419 )     (158 )     (172 )     (819 )     (662 )
Deferred
    71       (80 )     (102 )     (62 )     (162 )
 
                             
 
    (348 )     (238 )     (274 )     (881 )     (824 )
 
                             
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments
    187       184       194       527       547  
Minority interests
    (124 )     (105 )     (117 )     (352 )     (373 )
 
                             
Net income
    1,904       1,880       1,317       4,955       3,645  
 
                             
Basic and diluted earnings per Preferred Class A Share
    0.79       0.77       0.57       2.04       1.58  
Basic and diluted earnings per Common Share
    0.79       0.77       0.57       2.04       1.58  
Weighted average number of shares outstanding (thousands of shares) Common shares
    1,471,608       1,471,608       1,471,608       1,471,608       1,471,608  
Preferred Class A shares
    952,346       959,717       831,432       955,873       831,432  
See notes to condensed consolidated financial statements.

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Condensed Consolidated Statements of Cash Flows
Expressed in millions of United States dollars (Unaudited)
                                         
                            Nine-month periods ended  
    Three-month periods ended     September 30,  
    September 30,     June 30,     September 30,              
    2006     2006     2005     2006     2005  
Cash flows from operating activities:
                                       
Net income
    1,904       1,880       1,317       4,955       3,645  
 
                                       
Adjustments to reconcile net income to cash provided by operating activities:
                                       
Depreciation, depletion and amortization
    232       205       171       618       436  
Dividends received
    242       98       158       452       353  
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments
    (187 )     (184 )     (194 )     (527 )     (547 )
Deferred income taxes
    (71 )     80       102       62       162  
Provisions for contingencies
    23       19       10       55       (1 )
Gain on sale of investments
    (16 )     (338 )     (126 )     (363 )     (126 )
Foreign exchange and monetary losses (gains)
    25       (75 )     (201 )     (341 )     (472 )
Unrealized derivative losses (gains), net
    (75 )     51       66       20       (24 )
Minority interests
    124       105       117       352       373  
Interest payable (receivable), net
    (55 )     40       12       (43 )     48  
Others
    1       (21 )     3       24       (61 )
Decrease (increase) in assets:
                                    .  
Accounts receivable
    (291 )     (346 )     281       (475 )     (283 )
Inventories
    34       (23 )     (44 )     (6 )     (114 )
Others
    10       (38 )     (441 )     (136 )     (702 )
Increase (decrease) in liabilities:
                                    .  
Suppliers
    28       103       (21 )     (236 )     166  
Payroll and related charges
    47       47       22       (14 )      
Income taxes
    112       175       396       109       642  
Others
    88       (34 )     160       (117 )     150  
 
                             
Net cash provided by operating activities
    2,175       1,744       1,788       4,389       3,645  
 
                             
Cash flows from investing activities:
                                    .  
Loans and advances receivable
                                    .  
Related parties
                                    .  
Additions
    (2 )     1       (1 )     (8 )     (28 )
Repayments
    8             28       11       53  
Others
    20       (35 )     (1 )     33        
Guarantees and deposits
    (26 )     (12 )     (32 )     (61 )     (52 )
Additions to investments
    (57 )     (2 )           (61 )     (91 )
Additions to property, plant and equipment
    (834 )     (961 )     (1,302 )     (2,650 )     (2,740 )
Proceeds from disposal of investments
          418       126       432       126  
Proceeds from disposals of property, plant and equipment
    11       29       1       49       4  
Cash used to acquire subsidiaries, net cash of acquired
    (6 )                 (6 )      
 
                             
Net cash used in investing activities
    (886 )     (562 )     (1,181 )     (2,261 )     (2,728 )
 
                             
Cash flows from financing activities:
                                    .  
Short-term debt, net issuances (repayments)
    213       (65 )     (194 )     198       43  
Loans
                                    .  
Related parties
                                    .  
Additions
    (1 )     1             10       7  
Repayments
    (17 )     29       (17 )     (28 )     (43 )
Issuances of long-term debt
                                    .  
Related parties
                            15  
Others
    12       4       22       1,363       371  
Stock treasury
    (276 )     (25 )           (301 )      
Repayments of long-term debt
    (206 )     (200 )     (156 )     (727 )     (744 )
Dividends and interest attributed to stockholders
          (650 )           (650 )     (500 )
Dividends to minority interest
    (37 )     (19 )           (56 )      
 
                             
Net cash used in financing activities
    (312 )     (925 )     (345 )     (191 )     (851 )
 
                             
Increase in cash and cash equivalents
    977       257       262       1,937       66  
Effect of exchange rate changes on cash and cash equivalents
    20       (7 )     17       (87 )     (80 )
Cash and cash equivalents, beginning of period
    1,894       1,644       956       1,041       1,249  
 
                             
Cash and cash equivalents, end of period
    2,891       1,894       1,235       2,891       1,235  
 
                             
Cash paid during the period for:
                                    .  
Interest on short-term debt
    (2 )     (5 )     (1 )     (8 )     (1 )
Interest on long-term debt
    (146 )     (73 )     (71 )     (313 )     (188 )
Income tax
    (247 )     (31 )     (202 )     (465 )     (452 )
Non-cash transactions
                                    .  
Income tax paid with credits
    (56 )     (40 )     (16 )     (126 )     (74 )
Interest capitalized
    (34 )     (31 )     (10 )     (96 )     (34 )
Fair market value adjustment in relation to acquisition of minority interest in Caemi (Note 5)
                      (2,182 )      
See notes to condensed consolidated financial statements.

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Condensed Consolidated Statements of Changes in Stockholders’ Equity
Expressed in millions of United States dollars (Unaudited)
(except number of shares and per-share amounts)
                                         
    Three-month periods ended     Nine-month periods ended September 30,  
    September 30,     June 30,     September 30,              
    2006     2006     2005     2006     2005  
Preferred class A stock (including three special shares)
                                       
Beginning of the period
    4,702       4,702       2,150       2,150       1,176  
Capital increase (Note 5)
                      2,552        
Transfer from appropriated retained earnings
                            974  
 
                             
End of the period
    4,702       4,702       2,150       4,702       2,150  
 
                             
Common stock
                                       
Beginning of the period
    3,806       3,806       3,806       3,806       2,121  
Merger of shares
                            1,685  
 
                             
End of the period
    3,806       3,806       3,806       3,806       3,806  
 
                             
Treasury stock
                                       
Beginning of the period
    (113 )     (88 )     (88 )     (88 )     (88 )
Acquisitions
    (276 )     (25 )           (301 )      
 
                             
End of the period
    (389 )     (113 )     (88 )     (389 )     (88 )
 
                             
Additional paid-in capital
                                       
Beginning and end of the period
    498       498       498       498       498  
 
                             
Other cumulative comprehensive deficit
                                       
Cumulative translation adjustments
                                       
Beginning of the period
    (1,888 )     (2,006 )     (2,859 )     (2,856 )     (3,869 )
Change in the period
    (34 )     118       590       934       1,600  
 
                             
End of the period
    (1,922 )     (1,888 )     (2,269 )     (1,922 )     (2,269 )
 
                             
Unrealized gain on available-for-sale securities
                                       
Beginning of the period
    112       132       115       127       95  
Change in the period
    18       (20 )     49       3       69  
 
                             
End of the period
    130       112       164       130       164  
 
                             
Total other cumulative comprehensive deficit
    (1,792 )     (1,776 )     (2,105 )     (1,792 )     (2,105 )
 
                             
Appropriated retained earnings
                                       
Beginning of the period
    4,705       4,687       1,829       4,357       4,143  
Transfer from unappropriated retained earnings
    1       18       107       349       452  
Transfer to capital stock
                            (2,659 )
 
                             
End of the period
    4,706       4,705       1,936       4,706       1,936  
 
                             
Unappropriated retained earnings
                                       
Beginning of the period
    5,386       4,824       4,798       3,983       3,315  
Net income
    1,904       1,880       1,317       4,955       3,645  
Dividends and interest attributed to stockholders
                                       
Preferred class A stock
          (513 )           (513 )     (180 )
Common stock
          (787 )           (787 )     (320 )
Appropriation to reserves
    59       (18 )     (107 )     (289 )     (452 )
 
                             
End of the period
    7,349       5,386       6,008       7,349       6,008  
 
                             
Total stockholders’ equity
    18,880       17,208       12,205       18,880       12,205  
 
                             
Comprehensive income is comprised as follows:
                                       
Net income
    1,904       1,880       1,317       4,955       3,645  
Cumulative translation adjustments
    (34 )     118       590       934       1,600  
Unrealized gain (loss) on available-for-sale securities
    18       (20 )     49       3       69  
 
                             
Total comprehensive income
    1,888       1,978       1,956       5,892       5,314  
 
                             
 
                                       
Shares
                                       
Preferred class A stock (including six special shares)(1)
    959,758,200       959,758,200       831,455,478       959,758,200       831,455,478  
Common stock
    1,499,898,858       1,499,898,858       1,499,898,858       1,499,898,858       1,499,898,858  
Treasury stock (2)
                                       
Beginning of the period
    (29,595,036 )     (28,313,936 )     (28,314,626 )     (28,313,936 )     (28,314,922 )
Acquisitions
    (13,868,500 )     (1,281,100 )           (15,149,600 )      
Sales
                            296  
 
                             
End of the period
    (43,463,536 )     (29,595,036 )     (28,314,626 )     (43,463,536 )     (28,314,626 )
 
                             
 
    2,416,193,522       2,430,062,022       2,303,039,710       2,416,193,522       2,303,039,710  
 
                             
Dividends and interest attributed to stockholders (per share)
                                       
Preferred class A stock (including six special shares)
          0.54             0.54       0.22  
Common stock
          0.54             0.54       0.22  
 
(1)   Increase of 128,302,722 (after split of shares) preferred shares due to merger of shares from Caemi.
 
(2)   As of September, 2006, 28,291,020 common shares and 15,172,516 preferred shares were held in treasury in the amount of US$389. The 28,291,020 common shares are provided as collateral to secure a loan of our subsidiary Alunorte. On September 30, 2006 the market value of 4,924,760 of these shares would be sufficient to offset the balance of the debt.
See notes to condensed consolidated financial statements.

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Notes to the Condensed Consolidated Financial Statements
Expressed in millions of United States dollars, unless otherwise stated
1   The Company and its operation
 
    Companhia Vale do Rio Doce (CVRD) is a limited liability company, duly organized and existing under the laws of the Federative Republic of Brazil. Our operations are carried out through CVRD and its subsidiary companies, joint ventures and affiliates, and mainly consist of mining, non-ferrous metal production and logistics, as well as energy, aluminum and steel activities. Further details of our joint ventures and affiliates are described in Note 8.
 
    The main operating subsidiaries we consolidate are as follows:
                         
            % voting   Head office    
Subsidiary   % ownership   capital   location   Principal activity
Alumina do Norte do Brasil S.A. — Alunorte (“Alunorte”)
    57       61     Brazil   Alumina
Alumínio Brasileiro S.A. — Albras (“Albras”)
    51       51     Brazil   Aluminum
CADAM S.A (CADAM)
    61       100     Brazil   Kaolin
CVRD Overseas Ltd.
    100       100     Cayman Islands   Trading
Ferrovia Centro-Atlântica S. A.
    100       100     Brazil   Logistics
CVRD International S.A. (1)
    100       100     Swiss   Trading
Minerações Brasileiras Reunidas S.A. — MBR
    90       90     Brazil   Iron ore
Mineração Onça Puma Ltda
    100       100     Brazil   Nickel
Navegação Vale do Rio Doce S.A. — DOCENAVE
    100       100     Brazil   Shipping
Pará Pigmentos S.A.
    82       86     Brazil   Kaolin
Rio Doce Manganês S.A.
    100       100     Brazil   Manganese and Ferroalloys
Rio Doce Manganèse Europe — RDME
    100       100     France   Ferroalloys
Rio Doce Manganese Norway — RDMN
    100       100     Norway   Ferroalloys
Iron ore, Ferroalloys and
Urucum Mineração S.A.
    100       100     Brazil   Manganese
Valesul Aumínio S.A. (2)
    100       100     Brazil   Aluminum
 
(1)   Previously known as Itabira Rio Doce Company Ltd. — ITACO
 
(2)   Subsidiary consolidated as from July, 2006 (Note 5 and 8)
2   Basis of consolidation
 
    All majority-owned subsidiaries in which we have both share and management control are consolidated. All significant intercompany accounts and transactions are eliminated. As from January 1, 2004, our variable interest entities in which we are the primary beneficiary are consolidated. Investments in unconsolidated affiliates and joint ventures are reported at cost plus our equity in undistributed earnings or losses. Included in this category are certain joint ventures in which we have majority ownership but, by force of shareholders’ agreements, do not have effective management control. We provide for losses on equity investments with negative stockholders’ equity where applicable.
 
    We evaluate the carrying value of our listed investments relative to publicly available quoted market prices. If the quoted market price is below book value, and such decline is considered other than temporary, we write-down our equity investments to quoted market value.
 
    We define joint ventures as businesses in which we and a small group of other partners each participate actively in the overall entity management, based on a shareholders agreement. We define affiliates as businesses in which we participate as a minority stockholder but with significant influence over the operating and financial policies of the investee.
 
    Investments in unincorporated joint ventures, formed for the purpose of investing in hydroelectric power projects, are proportionately consolidated.

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3   Summary of significant accounting policies
 
    Our condensed consolidated interim financial information for the three-month periods ended September 30, 2006, June 30, 2006 and September 30, 2005 and for the nine-month periods ended June 30, 2006 and 2005 is unaudited. However, in our opinion, such condensed consolidated financial information includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for interim periods. The results of operations for the three-month and nine-month periods ended September 30, 2006 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2006.
 
    In preparing the condensed consolidated financial statements, we are required to use estimates to account for certain assets, liabilities, revenues and expenses. Our condensed consolidated financial statements therefore include various estimates concerning the selection of useful lives of property, plant and equipment, provisions necessary for contingent liabilities, fair values assigned to assets and liabilities acquired in business combinations, income tax valuation allowances, employee post-retirement benefits and other similar evaluations. Actual results may vary from our estimates.
 
    We have remeasured all assets and liabilities into U.S. dollars at the current exchange rate at each balance sheet date (R$2.1623 and R$2.3370 at September 30, 2006 and December 31, 2005, respectively to US$1.00 or the first available exchange rate if exchange on the last day of the period, was not available), and all accounts in the statements of income (including amounts relative to local currency indexation and exchange variances on assets and liabilities denominated in foreign currency) at the average rates prevailing during the period. The translation gain or loss resulting from this remeasurement process is included in the cumulative translation adjustments account in stockholders’ equity.
 
4   Recently-issued accounting pronouncements
 
    In September 2006, the Financial Accounting Standards Board issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. Accordingly to the Board, a single definition of fair value, together with a framework for measuring fair value, should result in increased consistency and comparability in fair value measurements. This standard is effective for fiscal years ending on or after November 15, 2007. We are currently studying the impact of this standard.
 
    In September 2006, the Financial Accounting Standards Board issued SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans. SFAS No. 158 requires employers to recognize the over funded or under funded status of defined benefit postretirement plans as an asset or a liability and to recognize the changes in the funded status through comprehensive income. Statement No. 158 also requires that defined benefit plan assets and obligations be measured as of the fiscal year-end. This standard is effective for fiscal years ending on or after December 15, 2006. We are currently studying the impact of this standard. At December 31, 2005 the Company had a funded status (excess of benefit obligation over plan assets) in the amount of US$811, from which US$131 was recorded as prepaid pension cost.
 
    In July 2006, the FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes.” FIN 48 prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return (including a decision whether to file or not to file a return in a particular jurisdiction). Under the Interpretation, the financial statements will reflect expected future tax consequences of such positions presuming the taxing authorities’ full knowledge of the position and all relevant facts, but without considering time values. This standard is effective for fiscal years starting on or after December, 15 2006. We are currently studying the impact of this standard.

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5   Major acquisitions and disposals during the years presented
 
    On November, 2006 the Board of Directors approved the restructuring of its stake in USIMINAS, involving its entry into the control group and the partial sale of common shares. We will sell to Nippon Steel, Votorantim Participações S/A, and Camargo Correa S/A, 5,362,928 common shares amounting to R$379 million (approximately US$176). The remaining 13,829,192 Usiminas common shares will be sold through a public offer.
 
    During the third quarter of 2006, we sold 1,361,100 shares of GERDAU S.A. by approximately US$19. In the subsequent period after the closing of third quarter of 2006, we sold 3,379,825 shares of Gerdau S.A. by approximately US$48.
 
    On July 3, 2006 we acquired the remaining 45.5% of Valesul Alumínio S. A., which was a jointly controlled company with equal voting rights, for US$28, becoming our aluminum subsidiary and therefore we have been consolidating it since them.
 
    During the second quarter of 2006, we sold our total interest in Gulf Industrial Investment Company for US$418, resulting in a net gain of US$338.
 
    At an Extraordinary Shareholders’ Meeting on March 31, 2006, the Capital Stock increased by US$2,552, corresponding to 128,302,722 preferred shares (64,151,361 before split), due to the issuance of shares in relation to the acquisition of the outstanding minority interest in Caemi.
 
    Pro forma information considers that our acquisition of the 39.77% preferred shares of Caemi, totaling 100% of total interest as if it was completed at the beginning of each period.
                         
    Three-month periods ended  
    September 30, 2005  
            Caemi - Merger        
    Consolidated     (39.77%)     Pro Forma (unaudited)  
Income before minority interests
    1,434             1,434  
Minority interests
    (117 )     104       (13 )
 
                 
Net income
    1,317       104       1,421  
 
                 
 
                       
Outstanding shares (thousands)
    2,303,040             2,431,343  
Basic and diluted earnings per share
    0.57             0.58  
                                                 
    Nine-month periods ended September 30,  
    2006     2005  
            Caemi -                     Caemi -        
            Merger     Pro Forma             Merger     Pro Forma  
    Consolidated     (39.77%)     (unaudited)     Consolidated     (39.77%)     (unaudited)  
Income before minority interests
    5,307             5,307       4,018             4,018  
Minority interests
    (352 )     54       (298 )     (373 )     196       (177 )
 
                                   
Net income
    4,955       54       5,009       3,645       196       3,841  
 
                                   
 
                                               
Outstanding shares (thousands)
    2,416,194             2,416,194       2,303,040             2,341,343  
Basic and diluted earnings per share
    2.05             2.05       1.58             1.58  
    In November 2005, we acquired 93.0% of the voting capital of Canico Resource Corp. (Canico) a Canadian-based junior resource company focused on the development of the Onça-Puma nickel laterite, for US$750. In December 2005, we acquired an additional 6.20% of the voting capital of Canico for US$50. Canico ´s only significant asset other than US$63 of cash and cash equivalents was US$794 of mining rights. On February 10, 2006, we concluded the acquisition of the outstanding common shares of Canico, acquiring the remaining voting capital of Canico, 0.8% of its total capital for US$6, which is now a wholly owned subsidiary.
 
    During the first quarter of 2006, we sold our total interest in Nova Era Silicon (49%) to JFE Steel Corporation for US$14, resulting in a net gain of US$9.

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6   Income taxes
 
    Income taxes in Brazil comprise federal income tax and social contribution, which is an additional federal tax. The statutory composite enacted tax rate applicable in the periods presented is 34% represented by a 25% federal income tax rate plus a 9% social contribution rate.
 
    The amount reported as income tax expense in our consolidated financial statements is reconciled to the statutory rates as follows:
                                         
                            Nine-month periods ended  
    Three-month periods ended     September 30,  
    September     June 30,     September              
    30,2006     2006     30,2005     2006     2005  
Income before income taxes, equity results and minority interests
    2,189       2,039       1,514       5,661       4,295  
 
                             
Federal income tax and social contribution expense at statutory enacted rates
    (744 )     (693 )     (515 )     (1,925 )     (1,460 )
Adjustments to derive effective tax rate:
                                       
Tax benefit on interest attributed to stockholders
    80       85       50       256       235  
Exempt foreign income
    301       348       143       763       271  
Difference on tax basis of equity investees
    (23 )     (18 )     (9 )     (107 )     (30 )
Tax incentives
    71       44       54       147       135  
Other non-taxable gains (losses)
    (33 )     (4 )     3       (15 )     25  
 
                             
Federal income tax and social contribution expense in consolidated statements of income
    (348 )     (238 )     (274 )     (881 )     (824 )
 
                             
    We have certain tax incentives relative to our manganese operations in Carajás, our potash operations in Rosario do Catete, our alumina and aluminum operations in Barcarena and our kaolin operations in Ipixuna and Mazagão. The incentives relative to manganese comprise partial exemption up to 2013. The incentive relating to alumina and potash comprise full income tax exemption on defined production levels, which expires in 2009 and 2013, respectively, while the partial exemption incentives relative to aluminum and kaolin expire in 2013. An amount equal to the tax saving must be appropriated to a reserve account within stockholders’ equity and may not be distributed in the form of cash dividends. Tax loss carry forward has no expiration date.
 
7   Inventories
                 
    September 30,     December 31,  
    2006     2005  
Finished products
               
Iron ore and pellets
    318       271  
Manganese and ferroalloys
    118       151  
Alumina
    41       22  
Aluminum
    77       52  
Kaolin
    36       18  
Others
    36       28  
Spare parts and maintenance supplies
    710       600  
 
           
 
    1,336       1,142  
 
           

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8   Investments in affiliated companies and joint ventures
                                                                                                                                 
    September 30, 2006     Investments     Equity Adjustments     Dividends received  
                                                                            Nine-month periods ended                             Nine-month periods ended  
                                                    Three-month periods ended     September 30,     Three-month periods ended     September 30,  
                            Net income                                                                        
    Participation in     Net     (loss) for the     September     December     September     June 30,     September                     September     June 30,     September              
    capital (%)     equity     period     30, 2006     31, 2005     30, 2006     2006     30, 2005     2006     2005     30, 2006     2006     30, 2005     2006     2005  
    voting     total                                                                                                                  
Ferrous
                                                                                                                               
Companhia Nipo-Brasileira de Pelotização — NIBRASCO (1)
    51.11       51.00       71       32       36       60       (1 )     7       13       16       26                         22        
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS (1)
    51.00       50.89       73       21       37       37       4       2       8       11       24                   16       13       20  
Companhia Coreano-Brasileira de Pelotização — KOBRASCO
    50.00       50.00       78       33       39       41       2       5       3       16       20             11             11        
Companhia Ítalo-Brasileira de Pelotização — ITABRASCO (1)
    51.00       50.90       66       19       34       33       3       2       5       10       19                   10       12       10  
SAMARCO Mineração S.A. — SAMARCO (2)
    50.00       50.00       550       326       325       335       57       67       82       163       172       175             75       200       130  
Minas da Serra Geral S.A. — MSG
    50.00       50.00       46       2       23       21       1       1       2       1       (2 )           1             1        
Gulf Industrial Investment Company — GIIC (5)
                                  62             4       14       18       49                   20             31  
Others
                            21       25       1                         (1 )           1             1        
 
                                                                                                       
 
                                    515       614       67       88       127       235       307       175       13       121       260       191  
Logistics
                                                                                                                               
MRS Logística S.A
    37.23       40.45       472       180       198       109       32       24       17       69       39             20             20       5  
 
                                                                                                       
 
                                    198       109       32       24       17       69       39             20             20       5  
Holdings
                                                                                                                               
 
                                                                                                                               
Steel
                                                                                                                               
Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS (4)
    22.99       11.46       3.090       843       352       281       43       28       36       96       135       12       28       29       40       63  
California Steel Industries Inc. — CSI
    50.00       50.00       343       101       172       161       17       18       (1 )     50       15       37             8       40       28  
SIDERAR (cost $15) — available for sale investments (4)
    4.85       4.85                   111       142                                                              
 
                                                                                                       
 
                                    635       584       60       46       35       146       150       49       28       37       80       91  
Aluminum and bauxite
                                                                                                                               
Mineração Rio do Norte S.A. — MRN
    40.00       40.00       359       109       143       178       18       14       17       44       49       18       22             77       58  
Valesul Alumínio S.A. — VALESUL (6)
    100.00       100.00                         58             8       (2 )     12       2                               8  
 
                                                                                                       
 
                                    143       236       18       22       15       56       51       18       22             77       66  
Coal
                                                                                                                               
Henan Longyu Resources Co. Ltd
    25.00       25.00       412       85       103       96       10       4             21                   15             15        
Shandong Yankuang International Company Ltd(3)
    25.00       25.00       102             27       22                                                              
 
                                                                                                       
 
                                    130       118       10       4             21                   15             15        
Other affiliates and joint ventures
                                                                                                                               
Others
                            69       11                                                              
 
                                                                                                       
 
                                    69       11                                                              
 
                                                                                                       
 
                                    977       949       88       72       50       223       201       67       65       37       172       157  
 
                                                                                                       
Total
                            1.690       1.672       187       184       194       527       547       242       98       158       452       353  
 
                                                                                                       
 
(1)   CVRD held a majority of the voting interest of several entities that were accounted for under the equity method, in accordance with EITF 96-16, due to veto rights held by minority shareholders under shareholders agreements;
 
(2)   Investment includes goodwill of US$50 and US$46 in 2006 and 2005, respectively;
 
(3)   Pre operating investment;
 
(4)   The quoted market value of Usiminas is equal to US$879 and Siderar is equal to US$111;
 
(5)   Sold for US$418 in May, 2006.
 
(6)   Subsidiary consolidated as from July, 2006 (see note 5)

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9   Stockholders’ equity
 
    On May 22, 2006 a stock split was effected which had been approved by the Extraordinary General Shareholders’ Meeting on April 27, 2006. Each existing, common and preferred, share was split into two shares.
 
    After the split our capital comprises 2,459,657,058 shares, of which 959,758,200 common shares 1,499,898,858 class “A” preferred shares, including six special class shares without par value (“Golden Share”). The share/ADR proportion will be maintained at 1/1; therefore, each common and preferred share, will continue to be represented by one ADR supported by one common share (NYSE: RIO) or by one ADR supported by one class “A” preferred share (NYSE: RIOPR) respectively.
 
    For comparative purposes we considered the effects of the split as it had occurred consistently in all periods presented.
 
    On June 21, 2006 the Board of Directors approved a buy-back program of our preferred shares. The program involves the acquisition of up to 47,986,763 preferred shares, corresponding to 5% of our preferred shares, to be executed during 180 days. We had acquired 1,281,100 and 13,868,500 preferred shares as of June 30, 2006 and September 30, 2006, respectively, totalizing at September 30, 2006 an acquisition of 15,149,600.
 
    On April 2006 we paid the first installment of the minimum mandatory dividend for 2006 of US$650. The distribution was made in the form of interest on stockholders’ equity and dividends and on October 2006 we paid the second installment of the minimum mandatory dividend for 2006 of US$650. The distribution was made in the form of interest on stockholders’ equity and dividends.
 
10   Pension costs
                                         
                            Nine-month periods  
    Three-month periods ended     ended September 30,  
    September     June 30,     September              
    30, 2006     2006     30, 2005     2006     2005  
Service cost — benefits earned during the period
    2       1       1       4       2  
Interest cost on projected benefit obligation
    70       70       63       186       179  
Expected return on assets
    (100 )     (100 )     (80 )     (266 )     (224 )
Amortization of initial transitory obligation
    3       3       3       8       8  
Net deferral
    (7 )     (8 )     (3 )     (19 )     (11 )
 
                             
Net periodic pension cost
    (32 )     (34 )     (16 )     (87 )     (46 )
 
                             
    In addition to benefits provided under the Pension Plan, accruals have been made relative to supplementary health care benefits extended in previous periods as part of early-retirement programs. Such accruals included in long-term liabilities totaled US$77, US$76 and US$71, at September 30, 2006, June 30, 2006 and September 30, 2005, respectively, plus US$7, US$6 and US$5, respectively, in current liabilities.
 
    The cost recognized for the three-month periods ended September 30, 2006, June 30, 2006, and September 30, 2005 and for the nine-month periods ended September 30, 2006 and September 30, 2005, relative to the defined contribution element of the New Plan was US$3, US$3, US$2, US$9 and US$6, respectively.
 
    We previously disclosed in our consolidated financial statements for the year ended December 31, 2005, that we expected to contribute US$59 to our defined benefit pension plan in 2006. As of September 30, 2006, US$44 of our contributions has been made. We do not expect any significant change in our previous estimate.

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11   Commitments and contingencies
 
(a)   At September 30, 2006, we had extended guarantees for borrowings obtained by affiliates and joint ventures in the amount of US$3, as follows:
                                         
    Amount of     Denominated                     Counter  
Affiliate or Joint Venture   guarantee     currency     Purpose     Final maturity     guarantees  
SAMARCO
    3     US$   Debt guarantee     2008     None
    We expect no losses to arise as a result of the above guarantees. We charge commission for extending these guarantees.
 
    We have not provided any significant guarantees since January 1, 2003, which would require fair value adjustments under FIN 45 – “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others”.
 
(b)   CVRD and its subsidiaries are defendants in numerous legal actions in the normal course of business. Based on the advice of our legal counsel, management believes that the provision for contingent losses is sufficient to cover probable losses in connection with such actions.
 
    The provision for contingencies and the related judicial deposits are composed as follows:
                                 
    September 30, 2006     December 31, 2005  
    Provision for     Judicial     Provision for     Judicial  
    contingencies     deposits     contingencies     deposits  
Labor and social security claims
    355       218       229       138  
Civil claims
    249       141       210       98  
Tax — related actions
    794       468       816       329  
Others
    27       1       31       3  
 
                       
 
    1,425       828       1,286       568  
 
                       
    Labor and social security — related actions principally comprise claims for (i) payment of time spent traveling from their residences to the work-place, (ii) additional health and safety related payments and (iii) various other matters, often in connection with disputes about the amount of indemnities paid upon dismissal and the one-third extra holiday pay.
 
    Civil — actions principally related to claims made against us by contractors in connection with losses alleged to have been incurred by them as a result of various past government economic plans during which full indexation of contracts for inflation was not permitted and accidents.
 
    Tax — related actions principally comprise our challenges of certain revenue taxes, value added tax and income tax.
 
    We continue to vigorously pursue our interests in all the above actions but recognize that we probably will incur some losses in the final instance, for which we have made provisions.
 
    Our judicial deposits are made as required by the courts for us to be able to enter or continue a legal action. When judgment is favorable to us, we receive the deposits back; when unfavorable, the deposits are delivered to the prevailing party.
 
    Contingencies settled in the three-month periods ended September 30, 2006 and 2005 and June, 2006 aggregated US$56, US$86 and US$178 , respectively, and additional provisions aggregated US$64 , US$96 and US$184 , respectively, classified in other operating expenses.
 
    In addition to the contingencies for which we have made provisions we are defending claims

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    which in our opinion, and based on the advice of our legal counsel, the likelihood of loss is possible losses, which total US$1,194 at September 30, 2006, for which no provision has been made.
 
(c)   At the time of our privatization in 1997, we issued shareholder revenue interests known in Brazil as “debentures” to our then-existing shareholders, including the Brazilian Government. The terms of the “debentures”, were set to ensure that our pre-privatization shareholders, including the Brazilian Government, would participate alongside us in potential future financial benefits that we are able to derive from exploiting our mineral resources.
 
    At October 2, 2006 and March 27, 2006 we paid as remuneration of these “debentures” the amounts of $4 and $2, respectively.
 
(d)   We use various judgments and assumptions when measuring our environmental liabilities and asset retirement obligations. Changes in circumstances, law or technology may affect our estimates and we periodically review the amounts accrued and adjust them as necessary. Our accruals do not reflect unasserted claims because we are currently not aware of any such issues. Also the amounts provided are not reduced by any potential recoveries under cost sharing, insurance or indemnification arrangements because such recoveries are considered uncertain. On September 30, 2006, US$8 of environmental liabilities and asset retirement obligations was classified in current liabilities (Others).
 
    The changes are demonstrated as follows:
                                         
                            Nine-month periods  
    Three-month periods ended     ended September 30,  
    September     June 30,     September              
    30, 2006     2006     30, 2005     2006     2005  
Provisions for asset retirement obligations beginning of period
    252       248       159       225       134  
Accretion expense
    7       6             19       14  
Liabilities settled in the current period
    (1 )     (3 )     (2 )     (4 )     (6 )
Cumulative translation adjustment
          1       9       18       24  
 
                                       
 
                             
Provisions for asset retirement obligations end of period
    258       252       166       258       166  
 
                             

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12   Segment and geographical information
 
    We adopt SFAS 131 “Disclosures about Segments of an Enterprise and Related Information” with respect to the information we present about our operating segments. SFAS 131 introduced a “management approach” concept for reporting segment information, whereby such information is required to be reported on the basis that the chief decision-maker uses internally for evaluating segment performance and deciding how to allocate resources to segments. We analyze our segment information on aggregated and disaggregated basis as follows:
 
    Ferrous products — comprises iron ore mining and pellet production, as well as the Northern and Southern transportation systems, including railroads, ports and terminals, as they pertain to mining operations. Manganese mining and ferroalloys are also included in this segment.
 
    Non-ferrous products – comprises the production of non-ferrous minerals, including potash, kaolin and copper.
 
    Logistics – comprises our transportation systems as they pertain to the operation of our ships, ports and railroads for third-party cargos.
 
    Holdings – divided into the following sub-groups:
    Aluminum — comprises aluminum trading activities, alumina refining and aluminum metal smelting and investments in joint ventures and affiliates engaged in bauxite mining.
 
    Others — comprises our investments in joint ventures and affiliates engaged in other businesses.
    Information presented to senior management with respect to the performance of each segment is generally derived directly from the accounting records maintained in accordance with accounting practices adopted in Brazil together with certain minor inter-segment allocations.

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Consolidated net income and principal assets are reconciled as follows:
Results by segment — before eliminations
                                                                                                                                                                         
    As of and for the three-month periods ended  
    September 30, 2006     June 30, 2006     September 30, 2005  
                            Holdings                                             Holdings                                             Holdings              
            Non                                                     Non                                                     Non                                
    Ferrous     ferrous     Logistics     Aluminum     Others     Eliminations     Consolidated     Ferrous     ferrous     Logistics     Aluminum     Others     Eliminations     Consolidated     Ferrous     ferrous     Logistics     Aluminum     Others     Eliminations     Consolidated  
RESULTS
                                                                                                                                                                       
Gross revenues — Export
    4,540       459       13       817       20       (1,984 )     3,865       3,649       378       15       877       19       (1,643 )     3,295       3,387       166       17       432             (1,398 )     2,604  
Gross revenues — Domestic
    769       95       379       167             (209 )     1,201       697       27       364       82             (152 )     1,018       586       70       353       87             (90 )     1,006  
Cost and expenses
    (3,317 )     (319 )     (250 )     (735 )     (24 )     2,193       (2,452 )     (2,770 )     (230 )     (264 )     (643 )     (22 )     1,795       (2,134 )     (2,554 )     (200 )     (256 )     (408 )           1,488       (1,930 )
Research and development
    (34 )     (38 )     (2 )           (60 )           (134 )     (31 )     (18 )     (2 )           (50 )           (101 )     (18 )     (19 )                 (67 )           (104 )
Depreciation, depletion and amortization
    (165 )     (28 )     (22 )     (17 )                 (232 )     (151 )     (23 )     (15 )     (14 )     (2 )           (205 )     (130 )     (14 )     (9 )     (18 )                 (171 )
 
                                                                                                                             
Operating income
    1,793       169       118       232       (64 )           2,248       1,394       134       98       302       (55 )           1,873       1,271       3       105       93       (67 )           1,405  
Financial income
    190             8       5       5       (149 )     59       173       2       4       6       (7 )     (133 )     45       159             7       2       7       (139 )     36  
Financial expenses
    (317 )     (2 )     (2 )     9       (9 )     149       (172 )     (302 )     (2 )     (1 )     (72 )     (1 )     133       (245 )     (268 )     1       (14 )     (75 )     1       139       (216 )
Foreign exchange and monetary gains (losses), net
    42                   (2 )     (2 )           38       64       (53 )     4       12       1             28       126       1       (9 )     46       (1 )           163  
Gain on sale of investments
    16                                     16       338                                     338                               126             126  
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments
    69             31       18       69             187       88             24       22       50             184       127             17       15       35             194  
Income taxes
    (298 )     1       (2 )     (49 )                 (348 )     (197 )           (4 )     (36 )     (1 )           (238 )     (248 )     2       (5 )     (22 )     (1 )           (274 )
Minority interests
    (41 )                 (83 )                 (124 )     (30 )                 (75 )                 (105 )     (104 )           (1 )     (12 )                 (117 )
 
                                                                                                                             
Net income
    1,454       168       153       130       (1 )           1,904       1,528       81       125       159       (13 )           1,880       1,063       7       100       47       100             1,317  
 
                                                                                                                             
 
                                                                                                                                                                       
Sales classified by geographic destination:
                                                                                                                                                                       
Export market
                                                                                                                                                                       
America, except United States
    376             8       232             (249 )     367       276             7       157             (153 )     287       413             10       66             (286 )     203  
United States
    160       5             23       20       (66 )     142       156       2             3       19       (81 )     99       56       3             43             (17 )     85  
Europe
    1,483       259       5       362             (762 )     1,347       1,257       169       2       380             (625 )     1,183       1,303       82       7       205             (582 )     1,015  
Middle East/Africa/Oceania
    193       42             52             (44 )     243       193       112             106             (69 )     342       155       20             9             24       208  
Japan
    515       13             137             (170 )     495       366       8             142             (128 )     388       345       20             97             (120 )     342  
China
    1,413       37             11             (497 )     964       1,131       6       5       89             (417 )     814       858       17             12             (319 )     568  
Asia, other than Japan and China
    400       103                         (196 )     307       270       81       1                   (170 )     182       257       24                         (98 )     183  
 
                                                                                                                             
 
    4,540       459       13       817       20       (1,984 )     3,865       3,649       378       15       877       19       (1,643 )     3,295       3,387       166       17       432             (1,398 )     2,604  
Domestic market
    769       95       379       167             (209 )     1,201       697       27       364       82             (152 )     1,018       586       70       353       87             (90 )     1,006  
 
                                                                                                                             
 
    5,309       554       392       984       20       (2,193 )     5,066       4,346       405       379       959       19       (1,795 )     4,313       3,973       236       370       519             (1,488 )     3,610  
 
                                                                                                                             

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Operating segment — after eliminations
                                                                                                 
    As of and for the three-month periods ended  
    September 30, 2006  
    Revenues                                     Depreciation,             Property,     Addition to        
                            Value     Net     Cost and             depletion and     Operating     Plant and     Property,        
    Export     Domestic     Total     added tax     revenues     expenses     Net     amortization     income     Equipment,     Plant and     Investiments  
Ferrous
                                                                                               
Iron ore
    2,385       524       2,909       (82 )     2,827       (1,058 )     1,769       (141 )     1,628       12,383       530       44  
Pellets
    470       100       570       (22 )     548       (334 )     214       (14 )     200       533       12       471  
Manganese
    12       5       17       (1 )     16       (17 )     (1 )     (1 )     (2 )     60       1        
Ferroalloys
    85       45       130       (12 )     118       (122 )     (4 )     (6 )     (10 )     196       8        
 
                                                                       
 
    2,952       674       3,626       (117 )     3,509       (1,531 )     1,978       (162 )     1,816       13,172       551       515  
 
                                                                                               
Non ferrous
                                                                                               
Potash
          55       55       (3 )     52       (33 )     19       (7 )     12       174       2        
Kaolin
    45       8       53       (2 )     51       (44 )     7       (8 )     (1 )     233              
Copper
    247       33       280       (7 )     273       (71 )     202       (13 )     189       1,352       56        
 
                                                                       
 
    292       96       388       (12 )     376       (148 )     228       (28 )     200       1,759       58        
 
                                                                                               
Aluminum
                                                                                               
Alumina
    271             271       (8 )     263       (187 )     76       (10 )     66       1,624       114        
Aluminum
    304       59       363       (12 )     351       (192 )     159       (7 )     152       390       10        
Bauxite
    4             4             4       (5 )     (1 )           (1 )     499       74       143  
 
                                                                       
 
    579       59       638       (20 )     618       (384 )     234       (17 )     217       2,513       198       143  
 
                                                                                               
Logistics
                                                                                               
Railroads
          278       278       (47 )     231       (131 )     100       (20 )     80       700       17       198  
Ports
    11       63       74       (12 )     62       (37 )     25       (4 )     21       222       4        
Ships
    11       20       31       (4 )     27       (28 )     (1 )           (1 )     3              
 
                                                                       
 
    22       361       383       (63 )     320       (196 )     124       (24 )     100       925       21       198  
Others
    20       11       31       (2 )     29       (113 )     (84 )     (1 )     (85 )     1,058       6       834  
 
                                                                       
 
    3,865       1,201       5,066       (214 )     4,852       (2,372 )     2,480       (232 )     2,248       19,427       834       1,690  
 
                                                                       

17


Table of Contents

     
Operating segment — after eliminations (continued)
                                                                                                 
    As of and for the three-month periods ended  
    June 30, 2006  
                                                            Depreciation,             Property,     Addition to        
    Revenues     Value     Net     Cost and             depletion and     Operating     Plant and     Property,        
    Export     Domestic     Total     added tax     revenues     expenses     Net     amortization     income     Equipment,     Plant and     Investiments  
Ferrous
                                                                                               
Iron ore
    1,986       485       2,471       (73 )     2,398       (959 )     1,439       (122 )     1,317       11,991       675       42  
Pellets
    313       90       403       (21 )     382       (270 )     112       (10 )     102       523       30       580  
Manganese
    8       4       12       (1 )     11       (17 )     (6 )     (1 )     (7 )     60       3        
Ferroalloys
    87       38       125       (10 )     115       (117 )     (2 )     (4 )     (6 )     208       15        
 
                                                                       
 
    2,394       617       3,011       (105 )     2,906       (1,363 )     1,543       (137 )     1,406       12,782       723       622  
 
                                                                                               
Non ferrous
                                                                                               
Potash
          23       23       (2 )     21       (11 )     10       (7 )     3       177       1        
Kaolin
    40       7       47             47       (34 )     13       (7 )     6       239              
Copper
    201       4       205             205       (55 )     150       (12 )     138       1,297       18        
 
                                                                       
 
    241       34       275       (2 )     273       (100 )     173       (26 )     147       1,713       19        
 
                                                                                               
Aluminum
                                                                                               
Alumina
    339             339             339       (204 )     135       (8 )     127       1,519       88        
Aluminum
    279       14       293       (1 )     292       (111 )     181       (6 )     175       384       6       72  
Bauxite
    8             8             8       (7 )     1             1       420       56       126  
 
                                                                       
 
    626       14       640       (1 )     639       (322 )     317       (14 )     303       2,323       150       198  
 
                                                                                               
Logistics
                                                                                               
Railroads
          272       272       (46 )     226       (133 )     93       (19 )     74       693       26       167  
Ports
          64       64       (11 )     53       (30 )     23       (5 )     18       226       1        
Ships
    15       11       26       (2 )     24       (28 )     (4 )     (1 )     (5 )     3              
 
                                                                       
 
    15       347       362       (59 )     303       (191 )     112       (25 )     87       922       27       167  
 
                                                                                               
Others
    19       6       25             25       (92 )     (67 )     (3 )     (70 )     1,046       42       777  
 
                                                                       
 
    3,295       1,018       4,313       (167 )     4,146       (2,068 )     2,078       (205 )     1,873       18,786       961       1,764  
 
                                                                       

18


Table of Contents

     
Operating segment — after eliminations (continued)
                                                                                                 
    As of and for the three-month periods ended  
    September 30, 2005  
                                                            Depreciation,             Property,     Addition to        
    Revenues     Value     Net     Cost and             depletion and     Operating     Plant and     Property,        
    Export     Domestic     Total     added tax     revenues     expenses     Net     amortization     income     Equipment,     Plant and     Investiments  
Ferrous
                                                                                               
Iron ore
    1,649       416       2,065       (66 )     1,999       (693 )     1,306       (120 )     1,186       8,171       934       50  
Pellets
    438       91       529       (22 )     507       (347 )     160       (7 )     153       453       3       579  
Manganese
    14       6       20       (2 )     18       (25 )     (7 )     (1 )     (8 )     35       2        
Ferroalloys
    61       31       92       (9 )     83       (87 )     (4 )     (5 )     (9 )     198       14        
 
                                                                       
 
    2,162       544       2,706       (99 )     2,607       (1,152 )     1,455       (133 )     1,322       8,857       953       629  
 
                                                                                               
Non ferrous
                                                                                               
Potash
          47       47       (4 )     43       (32 )     11       (1 )     10       159       4        
Kaolin
    36       6       42       (2 )     40       (56 )     (16 )     (3 )     (19 )     244       5        
Copper
    75       17       92       (1 )     91       (59 )     32       (9 )     23       1,192       26        
 
                                                                       
 
    111       70       181       (7 )     174       (147 )     27       (13 )     14       1,595       35        
 
                                                                                               
Aluminum
                                                                                               
Alumina
    116       30       146       (4 )     142       (130 )     12       (7 )     5       1,284       141        
Aluminum
    191       11       202       (2 )     200       (105 )     95       (11 )     84       378       5       64  
Bauxite
    10             10             10       (10 )                       200       56       162  
 
                                                                       
 
    317       41       358       (6 )     352       (245 )     107       (18 )     89       1,862       202       226  
 
                                                                                               
Logistics
                                                                                               
Railroads
          267       267       (38 )     229       (161 )     68       (5 )     63       688       79       97  
Ports
          67       67       (6 )     61       (32 )     29       (2 )     27       255              
Ships
    14       11       25       (3 )     22       (26 )     (4 )           (4 )     4              
 
                                                                       
 
    14       345       359       (47 )     312       (219 )     93       (7 )     86       947       79       97  
 
                                                                                               
Others
          6       6       (6 )           (106 )     (106 )           (106 )     114       33       692  
 
                                                                       
 
    2,604       1,006       3,610       (165 )     3,445       (1,869 )     1,576       (171 )     1,405       13,375       1,302       1,644  
 
                                                                       

19


Table of Contents

     
Results by segment — before eliminations (Unaudited)
                                                                                                                 
    Nine-month periods ended September 30,  
    2006     2005  
            Non                     Holdings                             Non                     Holdings              
    Ferrous     ferrous     Logistics     Aluminum     Others     Eliminations     Consolidated     Ferrous     ferrous     Logistics     Aluminum     Others     Eliminations     Consolidated  
 
                                                                                   
RESULTS
                                                                                                               
Gross revenues — Export
    11,492       1,017       44       2,284       39       (5,076 )     9,800       8,985       525       54       1,299             (3,875 )     6,988  
Gross revenues — Domestic
    2,002       177       1,037       338       7       (492 )     3,069       1,651       161       899       261             (301 )     2,671  
Cost and expenses
    (8,664 )     (710 )     (744 )     (1,888 )     (50 )     5,568       (6,488 )     (6,906 )     (515 )     (624 )     (1,191 )           4,176       (5,060 )
Research and development
    (87 )     (81 )     (5 )           (133 )           (306 )     (38 )     (69 )           (6 )     (79 )           (192 )
Depreciation, depletion and amortization
    (450 )     (70 )     (51 )     (45 )     (2 )           (618 )     (324 )     (44 )     (28 )     (40 )                 (436 )
 
                                                                                   
Operating income
    4,293       333       281       689       (139 )           5,457       3,368       58       301       323       (79 )           3,971  
Financial income
    524       2       20       13       2       (415 )     146       306       1       26       7       8       (256 )     92  
Financial expenses
    (895 )     (6 )     (5 )     (125 )     (14 )     415       (630 )     (556 )     (4 )     (21 )     (35 )     1       256       (359 )
Foreign exchange and monetary gains (losses), net
    232       5       (7 )     96       (1 )           325       322       7       (16 )     153       (1 )           465  
Gain on sale of investments
    363                                     363                               126             126  
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments
    235             69       56       167             527       307             39       51       150             547  
Income taxes
    (741 )     1       (9 )     (131 )     (1 )           (881 )     (705 )     (1 )     (15 )     (101 )     (2 )           (824 )
Minority interests
    (138 )                 (214 )                 (352 )     (233 )           (1 )     (139 )                 (373 )
 
                                                                                   
Net income
    3,873       335       349       384       14             4,955       2,809       61       313       259       203             3,645  
 
                                                                                   
 
                                                                                                               
Sales classified by geographic destination:
                                                                                                               
Export market
                                                                                                               
America, except United States
    923       1       21       520             (574 )     891       963             32       253             (575 )     673  
United States
    420       10             29       39       (188 )     310       348       3       3       163             (215 )     302  
Europe
    3,890       523       13       1,030             (1,967 )     3,489       3,645       257       19       522             (1,626 )     2,817  
Middle East/Africa/Oceania
    569       158             190             (181 )     736       556       92             15             (102 )     561  
Japan
    1,243       50             405             (442 )     1,256       890       32             292             (332 )     882  
China
    3,500       53       8       100             (1,230 )     2,431       1,898       55             38             (713 )     1,278  
Asia, other than Japan and China
    947       222       2       10             (494 )     687       685       86             16             (312 )     475  
 
                                                                                   
 
    11,492       1,017       44       2,284       39       (5,076 )     9,800       8,985       525       54       1,299             (3,875 )     6,988  
Domestic market
    2,002       177       1,037       338       7       (492 )     3,069       1,651       161       899       261             (301 )     2,671  
 
                                                                                   
 
    13,494       1,194       1,081       2,622       46       (5,568 )     12,869       10,636       686       953       1,560             (4,176 )     9,659  
 
                                                                                   

20


Table of Contents

     
Operating segment – after eliminations (Unaudited)
                                                                                                 
    Nine-month periods ended September 30,  
    2006  
                                                            Depreciation,             Property,     Addition to        
    Revenues     Value     Net     Cost and             depletion and     Operating     Plant and     Property,        
    Export     Domestic     Total     added tax     revenues     expenses     Net     amortization     income     Equipment,     Plant and     Investiments  
 
                                                                       
Ferrous
                                                                                               
Iron ore
    6,004       1,376       7,380       (212 )     7,168       (2,877 )     4,291       (376 )     3,915       12,383       1,796       44  
Pellets
    1,158       277       1,435       (62 )     1,373       (899 )     474       (36 )     438       533       49       471  
Manganese
    28       12       40       (3 )     37       (41 )     (4 )     (3 )     (7 )     60       12        
Ferroalloys
    243       118       361       (31 )     330       (323 )     7       (14 )     (7 )     196       23        
 
                                                                       
 
    7,433       1,783       9,216       (308 )     8,908       (4,140 )     4,768       (429 )     4,339       13,172       1,880       515  
 
                                                                                               
Non ferrous
                                                                                               
Potash
          100       100       (6 )     94       (58 )     36       (16 )     20       174       9        
Kaolin
    126       22       148       (5 )     143       (119 )     24       (21 )     3       233              
Copper
    538       58       596       (12 )     584       (179 )     405       (33 )     372       1,352       109        
 
                                                                       
 
    664       180       844       (23 )     821       (356 )     465       (70 )     395       1,759       118        
 
                                                                                               
Aluminum
                                                                                               
Alumina
    760       10       770       (10 )     760       (529 )     231       (26 )     205       1,624       263        
Aluminum
    830       86       916       (15 )     901       (415 )     486       (19 )     467       390       17        
Bauxite
    21             21             21       (21 )                       499       178       143  
 
                                                                       
 
    1,611       96       1,707       (25 )     1,682       (965 )     717       (45 )     672       2,513       458       143  
 
                                                                                               
Logistics
                                                                                               
Railroads
          764       764       (132 )     632       (378 )     254       (55 )     199       700       69       198  
Ports
    11       181       192       (32 )     160       (98 )     62       (12 )     50       222       6        
Ships
    40       38       78       (7 )     71       (81 )     (10 )     (2 )     (12 )     3              
 
                                                                       
 
    51       983       1,034       (171 )     863       (557 )     306       (69 )     237       925       75       198  
Others
    41       27       68       (4 )     64       (245 )     (181 )     (5 )     (186 )     1,058       119       834  
 
                                                                       
 
    9,800       3,069       12,869       (531 )     12,338       (6,263 )     6,075       (618 )     5,457       19,427       2,650       1,690  
 
                                                                       

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Operating segment – after eliminations (Unaudited) — (continued)
                                                                                                 
    Nine-month periods ended September 30,  
    2005  
    Revenues                                     Depreciation,             Property,     Addition to        
                            Value     Net     Cost and           depletion and     Operating     Plant and     Property,        
    Export     Domestic     Total     added tax     revenues     expenses     Net     amortization     income     Equipment,     Plant and     Investiments  
Ferrous
                                                                                               
Iron ore
    4,208       1,113       5,321       (177 )     5,144       (1,890 )     3,254       (291 )     2,963       8,171       1,865       50  
Pellets
    1,167       272       1,439       (60 )     1,379       (917 )     462       (14 )     448       453       36       579  
Manganese
    44       15       59       (5 )     54       (48 )     6       (1 )     5       35       3        
Ferroalloys
    261       138       399       (37 )     362       (265 )     97       (13 )     84       198       55        
 
                                                                       
 
    5,680       1,538       7,218       (279 )     6,939       (3,120 )     3,819       (319 )     3,500       8,857       1,959       629  
 
                                                                                               
Non ferrous
                                                                                               
Potash
          108       108       (9 )     99       (61 )     38       (5 )     33       159       11        
Kaolin
    108       18       126       (5 )     121       (114 )     7       (19 )     (12 )     244       5        
Copper
    225       35       260       (5 )     255       (143 )     112       (26 )     86       1,192       94        
 
                                                                       
 
    333       161       494       (19 )     475       (318 )     157       (50 )     107       1,595       110        
 
                                                                                               
Aluminum
                                                                                               
Alumina
    324       68       392       (23 )     369       (323 )     46       (19 )     27       1,284       331        
Aluminum
    576       30       606       (4 )     602       (288 )     314       (21 )     293       378       16       64  
Bauxite
    33             33             33       (31 )     2             2       200       117       162  
 
                                                                       
 
    933       98       1,031       (27 )     1,004       (642 )     362       (40 )     322       1,862       464       226  
 
                                                                                               
Logistics
                                                                                               
Railroads
          658       658       (102 )     556       (376 )     180       (22 )     158       688       165       97  
Ports
          173       173       (25 )     148       (91 )     57       (3 )     54       255       7        
Ships
    41       35       76       (7 )     69       (70 )     (1 )     (2 )     (3 )     4       1        
 
                                                                       
 
    41       866       907       (134 )     773       (537 )     236       (27 )     209       947       173       97  
 
                                                                                               
Others
    1       8       9       (6 )     3       (170 )     (167 )           (167 )     114       34       692  
 
                                                                       
 
    6,988       2,671       9,659       (465 )     9,194       (4,787 )     4,407       (436 )     3,971       13,375       2,740       1,644  
 
                                                                       

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13   Derivative financial instruments
 
    Volatility of interest rates, exchange rates and commodity prices are the main market risks to which we are exposed — all three are managed through derivative operations. These have the exclusive aim of reducing exposure to risk. We do not contract derivatives for speculative purposes.
 
    We monitor and evaluate our derivative positions on a regular basis and adjust our strategy in response to market conditions. We also periodically review the credit limits and credit worthiness of our counter-parties in these transactions. In view of the policies and practices established for operations with derivatives, management considers the occurrence of non-measurable risk situations as unlikely.
 
    The asset (liability) balances and the change in fair value of derivative financial instruments are as follows (the quarterly information is unaudited):
                                                         
    Interest                                            
    rates     Currencies                             Copper        
    (LIBOR)     (*)     Gold     Alumina     Aluminum     (*)     Total  
Unrealized gains (losses) at July 1, 2006
    (1 )     2       (61 )     (74 )     (178 )           (312 )
Financial settlement
                5       11       12             28  
Unrealized gains (losses) in the period
          33       5       2       32       3       75  
Effect of exchange rate changes
                                         
 
                                         
 
                                                       
Unrealized gains (losses) at September 30, 2006
    (1 )     35       (51 )     (61 )     (134 )     3       (209 )
 
                                         
 
                                                       
Unrealized gains (losses) at April 1, 2006
    (3 )     1       (58 )     (73 )     (163 )           (296 )
Financial settlement
    1             4       13       15             33  
Unrealized gains (losses) in the period
    1       1       (7 )     (15 )     (31 )           (51 )
Effect of exchange rate changes
                      1       1             2  
 
                                         
Unrealized gains (losses) at June 30, 2006
    (1 )     2       (61 )     (74 )     (178 )           (312 )
 
                                         
 
                                                       
Unrealized gains (losses) at July 1, 2005
    (9 )     2       (30 )     (22 )     (54 )           (113 )
Financial settlement
          (1 )     3       7       7             16  
Unrealized gains (losses) in the period
    2             (8 )     (13 )     (47 )           (66 )
Effect of exchange rate changes
                (2 )     (2 )     (5 )           (9 )
 
                                         
Unrealized gains (losses) at September 30, 2005
    (7 )     1       (37 )     (30 )     (99 )           (172 )
 
                                         
 
                                                       
Unrealized gains (losses) at January 1, 2006
    (4 )     1       (46 )     (53 )     (157 )           (259 )
Financial settlement
    1             13       38       41             93  
Unrealized gains (losses) in the period
    2       34       (14 )     (42 )     (3 )     3       (20 )
Effect of exchange rate changes
                (4 )     (4 )     (15 )           (23 )
 
                                         
Unrealized gains (losses) at September 30, 2006
    (1 )     35       (51 )     (61 )     (134 )     3       (209 )
 
                                         
 
                                                       
Unrealized gains (losses) at January 1, 2005
    (17 )     4       (37 )     (55 )     (127 )           (232 )
Financial settlement
    8       (1 )     7       23       26             63  
Unrealized gains (losses) in the period
    4       (2 )     (2 )     8       16             24  
Effect of exchange rate changes
    (2 )           (5 )     (6 )     (14 )           (27 )
 
                                         
Unrealized gains (losses) at September 30, 2005
    (7 )     1       (37 )     (30 )     (99 )           (172 )
 
                                         
 
(*)   Included as “others” in Other assets.

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Unrealized gains (losses) in the period are included in our income statement under the caption of financial expenses and foreign exchange and monetary gains (losses), net.
Final maturity dates for the above instruments are as follows:
     
Gold
  December 2008
Interest rates(LIBOR)
     October 2007
Currencies
  December 2011
Alumina
  December 2008
Aluminum
  December 2008
Copper
  December 2008
14   Acquisition of INCO (Subsequent events)
 
    On October 23, 2006 we acquired Inco Limited (Inco) for US$13 billion, corresponding to 174,623,019 common shares for Cdn$ 86.00 each share, representing 75.66% of its outstanding shares.
 
    Our acquisition is consistent with our long-term corporate strategy and with our non-ferrous metals busines strategy. It is a new step in our strategy of developing, operating and maximizing the performance of large-scale, long-life and low-cost assets.
 
    Our acquisition will bring a better diversification to our activities by products, markets and geographic asset base contributing to reducing our business and financial risks.
 
    Inco is a leading Canadian-based nickel company, and one of the largest nickel producer possessing the world’s largest nickel reserve base.
 
    In accordance with our stated purpose of acquiring 100% of the outstanding shares of Inco, we are taking the steps to acquire the remaining shares. Until November 3, 2006 we have already acquired 196,078,276 shares by aproximatelly US$15 billion, representing 86.57% of Inco’s capital.
 
    Our financial disbursement with the acquisition of 100% of Inco shares is estimated to reach aproximatelly US$17 billion. Most part of money is coming from a bridge loan supplied by a syndicate of banks. The bridge loan has a two-year tenor, with an interest rate of Libor plus 40 basis points during the first year and Libor plus 60 basis points during the second year.
 
    We expect to conclude several transactions to take out the bridge loan aiming to extended our debt maturity close to the pre-acquisition level, longer than seven years.
 
    The allocations on the purchase price to acquired assets and liabilities in the following unaudited information are based on management’s preliminary internal valuation estimates. Accordingly, the purchase price allocation ajustments set forth bellow are preliminary and are subject to revision , which may be material.
 
    Fair value used herein were calculated using current pension and post retirement benefits obligation funded status, current interest rates and sales prices for finished goods, estimated future production, investment, costs, commodity prices and cash flows.

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    The preparation of this information assumes that upon completation of the acquisition we will own 100% of Inco.
         
Cash consideration using the US$/Cdn.$ exchange rate as of September 30, 2006
    16,869  
Estimated transaction costs
    32  
 
     
Purchase price
    16,901  
Book value of assets acquired and liabilities assumed, net
    (4,672 )
Adjustment to fair value of inventory
    (2,097 )
Adjustment to fair value of property, plant and equipment
    (12,310 )
Change of control adjustments
    1,145  
Adjustment to fair value of other liabilities assumed
    372  
Adjustment to deferred taxes
    3,360  
 
     
Goodwill
    2,699  
 
     
*   *   *

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Supplemental Financial Information (Unaudited)
The following unaudited information provides additional details in relation to certain financial ratios.
EBITDA — Earnings Before Financial Expenses, Minority Interests, Gain on Sale of Investments, Foreign Exchange and Monetary Gains (Losses), Equity in Results of Affiliates and Joint Ventures and Change in Provision for Losses on Equity Investments, Income Taxes, Depreciation and Amortization
(a)   EBITDA represents operating income plus depreciation, amortization and depletion plus impairment/gain on sale of property, plant and equipment plus dividends received from equity investees.
 
(b)   EBITDA is not a US GAAP measure and does not represent cash flow for the periods presented and should not be considered as an alternative to net income (loss), as an indicator of our operating performance or as an alternative to cash flow as a source of liquidity.
 
(c)   Our definition of EBITDA may not be comparable with EBITDA as defined by other companies.
 
(d)   Although EBITDA, as defined above, does not provide a US GAAP measure of operating cash flows, our management uses it to measure our operating performance and financial analysts in evaluating our business commonly use it.
Selected financial indicators for the main affiliates and joint ventures are available on the Company’s website, www.cvrd.com.br, under “investor relations”

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Indexes on CVRD’s Consolidated Debt (Supplemental information — Unaudited)
                                         
                            Nine-month periods ended  
    Three-month periods ended     September 30,  
    September     June 30,     September              
    30, 2006     2006     30, 2005     2006     2005  
Current debt
                                       
Current portion of long-term debt — unrelated parties
    978       1,115       688       978       688  
Short-term debt
    233       15       171       233       171  
Loans from related parties
    46       64       51       46       51  
 
                             
 
    1,257       1,194       910       1,257       910  
Long-term debt
                                       
Long-term debt — unrelated parties
    4,612       4,688       3,031       4,612       3,031  
Loans from related parties
    1       1       1       1       1  
 
                             
 
    4,613       4,689       3,032       4,613       3,032  
 
                             
Gross debt (current plus long-term debt)
    5,870       5,883       3,942       5,870       3,942  
 
                             
 
                                       
Interest paid over:
                                       
Short-term debt
    (2 )     (5 )     (1 )     (8 )     (1 )
Long-term debt
    (146 )     (73 )     (71 )     (313 )     (188 )
 
                             
Interest paid
    (148 )     (78 )     (72 )     (321 )     (189 )
EBITDA
    2,722       2,176       1,734       6,527       4,760  
Stockholders’ equity
    18,880       17,208       12,205       18,880       12,205  
LTM (2) EBITDA / LTM (2) Interest paid
    21.63       23.76       21.03       21.63       21.03  
Gross Debt / LTM (2) EBITDA
    0.71       0.80       0.68       0.71       0.68  
Gross debt / Equity Capitalization (%)
    24       25       24       24       24  
 
                                       
Financial expenses
                                       
Third party — local debt
    (12 )     (13 )     (17 )     (38 )     (42 )
Third party — foreign debt
    (56 )     (55 )     (52 )     (164 )     (132 )
Related party debt
    (1 )     (2 )     2       (5 )     (4 )
 
                             
Gross interest
    (69 )     (70 )     (67 )     (207 )     (178 )
Labor and civil claims and tax-related actions
    (29 )     (26 )     (27 )     (81 )     (51 )
Tax on financial transactions — CPMF
    (18 )     (18 )     (15 )     (57 )     (40 )
Derivatives (Interest rate / Currencies)
    32       1       2       34       1  
Derivatives (Gold / Alumina / Aluminium / Copper / Energy )
    43       (55 )     (66 )     (79 )     (4 )
Call option premium
    (86 )                 (86 )      
Others
    (45 )     (77 )     (43 )     (154 )     (87 )
 
                             
 
    (172 )     (245 )     (216 )     (630 )     (359 )
 
                             
Financial income
                                       
Cash and cash equivalents
    44       31       27       104       60  
Others
    15       14       9       42       32  
 
                             
 
    59       45       36       146       92  
 
                             
Financial expenses, net
    (113 )     (200 )     (180 )     (484 )     (267 )
 
                             
Foreign exchange and monetary gain (losses), net (1)
    38       28       163       325       465  
 
                             
Financial result, net
    (75 )     (172 )     (17 )     (159 )     198  
 
                             
 
(1)   Includes foreign exchange gain(loss) on derivatives in the amount of US$ 0, US$ 1, US$ (2), US$ 23 and US$ 27 for the three-month periods ended September 30, 2006, June 30, 2006 and September 30, 2005 and for the nine-month periods ended September 30, 2006 and September 30, 2005, respectively.
 
(2)   Last twelve months

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Calculation of EBITDA (Supplemental information — Unaudited)
                                         
                            Nine-month periods ended  
            Three-month periods ended     September 30,  
    September 30,             September 30,              
    2006     June 30, 2006     2005     2006     2005  
 
                                       
Operating income
    2,248       1,873       1,405       5,457       3,971  
Depreciation
    232       205       171       618       436  
 
                             
 
    2,480       2,078       1,576       6,075       4,407  
Dividends received
    242       98       158       452       353  
 
                             
EBITDA
    2,722       2,176       1,734       6,527       4,760  
 
                             
 
                                       
Net operating revenues
    4,852       4,146       3,445       12,338       9,194  
Margin EBITDA
    56.1 %     52.5 %     50.3 %     52.9 %     51.8 %
Adjusted EBITDA x Operating Cash Flows (Supplemental information — Unaudited)
                                                                                 
                    As of and for the three-month periods ended     Nine-month periods ended September 30,  
    September 30, 2006     June 30, 2006     September 30, 2005     2006     2005  
            Operating             Operating             Operating             Operating             Operating  
    EBITDA     cash flows     EBITDA     cash flows     EBITDA     cash flows     EBITDA     cash flows     EBITDA     cash flows  
Net income
    1,904       1,904       1,880       1,880       1,317       1,317       4,955       4,955       3,645       3,645  
Income tax — deferred
    (71 )     (71 )     80       80       102       102       62       62       162       162  
Income tax — current
    419             158             172             819             662        
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments
    (187 )     (187 )     (184 )     (184 )     (194 )     (194 )     (527 )     (527 )     (547 )     (547 )
Foreign exchange and monetary losses
    (38 )     25       (28 )     (75 )     (163 )     (201 )     (325 )     (341 )     (465 )     (472 )
Financial expenses
    113       (55 )     200       40       180       12       484       (43 )     267       48  
Minority interests
    124       124       105       105       117       117       352       352       373       373  
Gain on sale of investments
    (16 )     (16 )     (338 )     (338 )     (126 )     (126 )     (363 )     (363 )     (126 )     (126 )
Net working capital
          28             (116 )           354             (875 )           (140 )
Net unrealized derivative losses (gains)
                                  65                         (25 )
Others
          (51 )           49             13             99             (62 )
 
                                                           
Operating income
    2,248       1,701       1,873       1,441       1,405       1,459       5,457       3,319       3,971       2,856  
Depreciation, depletion and amortization
    232       232       205       205       171       171       618       618       436       436  
Dividends received
    242       242       98       98       158       158       452       452       353       353  
 
                                                           
 
    2,722       2,175       2,176       1,744       1,734       1,788       6,527       4,389       4,760       3,645  
 
                                                           
 
                                                                               
Operating cash flows
            2,175               1,744               1,788               4,389               3,645  
 
                                                                     
Income tax
            419               158               172               819               662  
Foreign exchange and monetary gains (losses)
            (63 )             47               38               16               7  
Financial expenses
            168               160               168               527               219  
Net working capital
            (28 )             116               (354 )             875               140  
Others
            51               (49 )             (78 )             (99 )             87  
 
                                                                     
EBITDA
            2,722               2,176               1,734               6,527               4,760  
 
                                                                     

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Table of Contents

Board of Directors, Fiscal Council and Executive Officers
Board of Directors
Sérgio Ricardo Silva Rosa
Chairman
Arlindo Magno de Oliveira
Eduardo Fernando Jardim Pinto
Erik Persson
Francisco Augusto da Costa e Silva
Hiroshi Tada
Julio Sérgio Gomes de Almeida
Jorge Luiz Pacheco
Mário da Silveira Teixeira Júnior
Oscar Augusto de Camargo Filho
Renato da Cruz Gomes
Advisory Committees of the Board of Directors
Controlling Committee
Antonio José de Figueiredo Ferreira
Inácio Clemente da Silva
Paulo Roberto Ferreira de Medeiros
Executive Development Committee
Arlindo Magno de Oliveira
João Moisés de Oliveira
Olga Nietta Loffredi
Oscar Augusto de Camargo Filho
Strategic Committee
Roger Agnelli
Gabriel Stoliar
Demian Fiocca
Mário da Silveira Teixeira Júnior
Oscar Augusto de Camargo Filho
Sérgio Ricardo Silva Rosa
Finance Committee
Fábio de Oliveira Barbosa
Rômulo de Mello Dias
Wanderlei Viçoso Fagundes
Ivan Luiz Modesto Schara
Governance and Sustainability Committee
Renato da Cruz Gomes
Ricardo Simonsen
Ricardo Carvalho Giambroni
Fiscal Council
Marcelo Amaral Moraes
Chairman
Anibal Moreira dos Santos
Bernard Appy
José Bernardo de Medeiros Neto
Executive Officers
Roger Agnelli
Chief Executive Officer
Murilo de Oliveira Ferreira
Executive Officer for Equity Holdings and Business Development
José Carlos Martins
Executive Officer for Ferrous Minerals
Carla Grasso
Executive Officer for Human Resources and Corporate Services
José Lancaster
Executive Officer for Non-Ferrous Minerals
Fábio de Oliveira Barbosa
Chief Financial Officer and Investor Relations
Gabriel Stoliar
Executive Officer for Planning
Tito Botelho Martins
Executive Officer for Logistics in acting
Tito Botelho Martins
Executive Officer for Corporate Affairs
Otto de Souza Marques Júnior
Chief Officer of Control Department
Marcus Vinícius Dias Severini
Chief Accountant
CRC-RJ 093892/O-3

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Table of Contents

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
                 
    COMPANHIA VALE DO RIO DOCE        
 
           (Registrant)        
 
               
Date: November 14, 2006
  By:   /s/ Fabio de Oliveira Barbosa
 
Fabio de Oliveira Barbosa
       
 
      Chief Financial Officer