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SEGMENT REPORTING | 12 Months Ended
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Dec. 31, 2019
SEGMENT REPORTING |
SEGMENT REPORTING | NOTE 28 — SEGMENT REPORTING
|  | Business Segments
|  | 2019
|  |  |  | North America |  | South America |  | Special Steel |  | Eliminations and |  |
|  | Brazil Operation |  | Operation |  | Operation |  | Operation |  | Adjustments |  | Consolidated
Net sales |  | 16,122,171 |  | 14,656,028 |  | 3,259,253 |  | 6,701,900 |  | (1,095,342) |  | 39,644,010
Cost of sales |  | (14,363,253) |  | (13,351,209) |  | (2,762,157) |  | (6,167,502) |  | 1,203,395 |  | (35,440,726)
Gross profit |  | 1,758,918 |  | 1,304,819 |  | 497,096 |  | 534,398 |  | 108,053 |  | 4,203,284
Selling, general and administrative expenses |  | (539,344) |  | (444,326) |  | (119,627) |  | (170,170) |  | (156,989) |  | (1,430,456)
Other operating income (expenses) |  | 293,806 |  | 30,048 |  | 15,510 |  | 33,058 |  | 55,734 |  | 428,156
Equity in earnings of unconsolidated companies |  | (828) |  | (110,959) |  | 66,468 |  | 6,776 |  | 21,493 |  | (17,050)
Operational income before financial income (expenses) and taxes |  | 1,512,552 |  | 779,582 |  | 459,447 |  | 404,062 |  | 28,291 |  | 3,183,934
Financial result, net |  | (520,821) |  | (99,029) |  | (163,459) |  | (109,116) |  | (616,789) |  | (1,509,214)
Income (Loss) before taxes |  | 991,731 |  | 680,553 |  | 295,988 |  | 294,946 |  | (588,498) |  | 1,674,720
Income and social contribution taxes |  | (214,400) |  | (188,458) |  | (100,341) |  | (60,749) |  | 106,115 |  | (457,833)
Net income (Loss) |  | 777,331 |  | 492,095 |  | 195,647 |  | 234,197 |  | (482,383) |  | 1,216,887
Supplemental information: |  |  |  |  |  |  |  |  |  |  |  |
Net sales between segments |  | 920,659 |  | 62,196 |  | — |  | 112,487 |  | — |  | 1,095,342
Depreciation/amortization |  | 1,008,713 |  | 571,015 |  | 120,462 |  | 374,105 |  | — |  | 2,074,295
Investments in associates and joint ventures |  | 11,472 |  | 681,807 |  | 748,392 |  | 224,201 |  | 146,527 |  | 1,812,399
Total assets |  | 17,195,824 |  | 15,178,053 |  | 4,562,604 |  | 8,597,180 |  | 8,469,309 |  | 54,002,970
Total liabilities |  | 4,686,686 |  | 4,506,771 |  | 996,876 |  | 1,604,885 |  | 15,034,625 |  | 26,829,843
|  | Business Segments
|  | 2018
|  |  |  | North America |  | South America |  | Special Steel |  | Eliminations and |  |
|  | Brazil Operation |  | Operation |  | Operation |  | Operation |  | Adjustments |  | Consolidated
Net sales |  | 15,745,161 |  | 19,927,390 |  | 3,801,210 |  | 8,158,626 |  | (1,472,909) |  | 46,159,478
Cost of sales |  | (13,044,433) |  | (18,164,834) |  | (3,230,952) |  | (7,064,608) |  | 1,494,727 |  | (40,010,100)
Gross profit |  | 2,700,728 |  | 1,762,556 |  | 570,258 |  | 1,094,018 |  | 21,818 |  | 6,149,378
Selling, general and administrative expenses |  | (564,031) |  | (607,581) |  | (136,707) |  | (186,037) |  | (168,438) |  | (1,662,794)
Other operating income (expenses) |  | (33,814) |  | 19,114 |  | (11,421) |  | 10,081 |  | (18,952) |  | (34,992)
Gains and losses on assets held for sale and sales of interest in subsidiaries |  | — |  | — |  | — |  | — |  | (414,507) |  | (414,507)
Equity in earnings of unconsolidated companies |  | (1,700) |  | (77,872) |  | 51,648 |  | 15,629 |  | 22,436 |  | 10,141
Operational (Loss) income before financial income (expenses) and taxes |  | 2,101,183 |  | 1,096,217 |  | 473,778 |  | 933,691 |  | (557,643) |  | 4,047,226
Financial result, net |  | (442,966) |  | (37,351) |  | (117,270) |  | (112,109) |  | (1,180,099) |  | (1,889,795)
Income (Loss) before taxes |  | 1,658,217 |  | 1,058,866 |  | 356,508 |  | 821,582 |  | (1,737,742) |  | 2,157,431
Income and social contribution taxes |  | (410,651) |  | (224,897) |  | (86,667) |  | (191,386) |  | 1,082,552 |  | 168,951
Net income (Loss) |  | 1,247,566 |  | 833,969 |  | 269,841 |  | 630,196 |  | (655,190) |  | 2,326,382
Supplemental information: |  |  |  |  |  |  |  |  |  |  |  |
Net sales between segments |  | 1,280,770 |  | 84,335 |  | 4,988 |  | 102,816 |  | — |  | 1,472,909
Depreciation/amortization |  | 951,826 |  | 511,154 |  | 88,537 |  | 340,297 |  | — |  | 1,891,814
Investments in associates and joint ventures |  | 3,250 |  | 301,271 |  | 701,233 |  | 213,899 |  | 148,149 |  | 1,367,802
Total assets |  | 17,473,039 |  | 14,659,926 |  | 4,421,487 |  | 8,825,830 |  | 5,900,747 |  | 51,281,029
Total liabilities |  | 8,072,380 |  | 4,935,210 |  | 1,053,007 |  | 1,736,085 |  | 9,545,776 |  | 25,342,458
|  | Business Segments
|  | 2017
|  |  |  | North America |  | South America |  | Special Steel |  | Eliminations and |  |
|  | Brazil Operation |  | Operation |  | Operation |  | Operation |  | Adjustments |  | Consolidated
Net sales |  | 12,562,727 |  | 15,433,380 |  | 4,025,736 |  | 6,228,543 |  | (1,332,767) |  | 36,917,619
Cost of sales |  | (10,996,383) |  | (14,823,590) |  | (3,523,394) |  | (5,301,172) |  | 1,331,544 |  | (33,312,995)
Gross profit |  | 1,566,344 |  | 609,790 |  | 502,342 |  | 927,371 |  | (1,223) |  | 3,604,624
Selling, general and administrative expenses |  | (539,613) |  | (569,696) |  | (202,862) |  | (166,656) |  | (176,081) |  | (1,654,908)
Other operating income (expenses) |  | (11,513) |  | 29,113 |  | 11,260 |  | 14,989 |  | 47,882 |  | 91,731
Impairment of assets |  | (45,279) |  | (1,069,528) |  | — |  | — |  | — |  | (1,114,807)
Gains and losses on assets held for sale and sales of interest in subsidiaries |  | — |  | — |  | — |  | — |  | (721,682) |  | (721,682)
Reversal of contingent liabilities, net |  | — |  | — |  | — |  | — |  | 929,711 |  | 929,711
Equity in earnings of unconsolidated companies |  | — |  | (111,581) |  | 41,554 |  | 15,460 |  | 19,970 |  | (34,597)
Operational (Loss) income before financial income (expenses) and taxes |  | 969,939 |  | (1,111,902) |  | 352,294 |  | 791,164 |  | 98,577 |  | 1,100,072
Financial result, net |  | (564,397) |  | (46,184) |  | (74,301) |  | (122,837) |  | (335,629) |  | (1,143,348)
Income (Loss) before taxes |  | 405,542 |  | (1,158,086) |  | 277,993 |  | 668,327 |  | (237,052) |  | (43,276)
Income and social contribution taxes |  | (103,263) |  | 201,807 |  | (123,552) |  | (192,902) |  | (77,481) |  | (295,391)
Net income (Loss) |  | 302,279 |  | (956,279) |  | 154,441 |  | 475,425 |  | (314,533) |  | (338,667)
Supplemental information: |  |  |  |  |  |  |  |  |  |  |  |
Net sales between segments |  | 1,216,526 |  | 59,478 |  | 6,490 |  | 50,273 |  | — |  | 1,332,767
Depreciation/amortization |  | 909,333 |  | 684,121 |  | 155,038 |  | 344,059 |  | — |  | 2,092,551
Investments in associates and joint ventures |  | — |  | 346,080 |  | 584,898 |  | 199,647 |  | 149,674 |  | 1,280,299
Total assets |  | 17,051,262 |  | 14,872,755 |  | 5,208,265 |  | 8,834,041 |  | 4,335,438 |  | 50,301,761
Total liabilities |  | 9,592,948 |  | 3,315,546 |  | 1,711,963 |  | 2,753,091 |  | 9,034,272 |  | 26,407,820
The main products sold in each segment are: Brazil Operations: rebar, bars, shapes, drawn products, billets, blooms, slabs, wire rod, structural shapes and iron ore. North America Operations: rebar, bars, wire rod, light and heavy structural shapes. South America Operations: rebar, bars and drawn products. Special Steel Operations: stainless steel, round, square and flat bars, wire rod. The column of eliminations and adjustments includes the elimination of sales between segments in the context of the Consolidated Financial Statements. The Company’s geographic information with revenues classified according to the geographical region where the products were shipped is as follows:
|  |  |  |  |  |  |  |  |  | Geographic Area
|  | Brazil |  | Latin America (1) |  | North America (2) |  | Europe/Asia |  | Consolidated
|  | 2019 |  | 2019 |  | 2019 |  | 2019 |  | 2019
Net sales |  | 17,573,278 |  | 4,201,165 |  | 17,869,567 |  | — |  | 39,644,010
Total assets |  | 26,124,159 |  | 5,781,527 |  | 22,097,284 |  | — |  | 54,002,970
|  |  |  |  |  |  |  |  |  | Geographic Area
|  | Brazil |  | Latin America (1) |  | North America (2) |  | Europe/Asia |  | Consolidated
|  | 2018 |  | 2018 |  | 2018 |  | 2018 |  | 2018
Net sales |  | 17,284,473 |  | 4,785,281 |  | 23,524,381 |  | 565,343 |  | 46,159,478
Total assets |  | 26,283,287 |  | 5,251,637 |  | 19,746,105 |  | — |  | 51,281,029
|  | Brazil |  | Latin America (1) |  | North America (2) |  | Europe/Asia |  | Consolidated
|  | 2017 |  | 2017 |  | 2017 |  | 2017 |  | 2017
Net sales |  | 13,450,378 |  | 4,769,526 |  | 18,142,218 |  | 555,497 |  | 36,917,619
Total assets |  | 23,872,075 |  | 6,009,394 |  | 19,629,950 |  | 790,342 |  | 50,301,761
| (1) |  | Does not include operations of Brazil
| (2) |  | Does not include operations of Mexico
IFRS requires the Company to disclose revenue per product unless the information is not available and the cost to obtain it would be excessive. Management does not consider this information useful for its decision-making process, because it would aggregate sales in different markets and in different currencies, subject to the effects of changes in exchange rates. Furthermore, the trends of steel consumption and the price dynamics of each product or group of products in different countries and different markets within these countries are poorly correlated and, as a result, the information would not be useful and would not serve to conclude about historical trends. Considering this scenario and considering that the information of revenue by product is not maintained by the Company on a consolidated basis and the cost to obtain the revenue per product information would be excessive compared to the benefits of the information, the Company does not present revenue by product.

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