Sep. 22, 2009 (PR Newswire) -- TAMPA, FL, Sept. 22 /PRNewswire-FirstCall/ - Gerdau Ameristeel Corporation (NYSE: GNA; TSX: GNA) (the "Company") is pleased to announce that on September 15, 2009, the Ontario Securities Commission (the "OSC") granted approval for the Company to adopt International Financial Reporting Standards ("IFRS") with an adoption date of January 1, 2009 and a transition date of January 1, 2008. The Company believes that the adoption of IFRS is in the best interests of the Company and the users of its financial information because the adoption of IFRS will align the bases of accounting under which the Company and its majority shareholder, Gerdau S.A., prepare their financial statements and increase the comparability of the Company's financial statements to those of a number of global issuers, including competitors within the steel industry, who already prepare, or will soon be required to prepare, financial statements in accordance with IFRS. The following discussion provides further information about the Company's conversion to IFRS.

IFRS Conversion Process

The Company has substantially completed the process to transition from US GAAP to IFRS. The Company's comprehensive IFRS conversion plan (the "Plan") addresses changes in accounting policies, restatement of comparative periods, internal controls and any required changes to business processes. The Plan generally consists of three primary phases, which in certain cases will be in process concurrently as IFRS is applied to specific areas:

    -   Assessment: To establish project governance, develop a detailed
project plan and timeline and identify key areas that will be
impacted by the transition to IFRS.

-   Conversion: To identify specific changes required to existing
accounting policies, information systems and business processes,
together with an analysis of policy alternatives allowed under IFRS
and development of IFRS compliant financial statements.

-   Sustainability: To execute the changes to information systems and
business processes, completing formal authorization processes to
approve recommended accounting policy changes and training programs
across the Company's finance and other staff, as necessary. This
phase will culminate in the collection of financial information
necessary to compile IFRS compliant financial statements, embedding
IFRS principles in business processes, and Audit Committee approval
of IFRS financial statements.

As of the date of this press release, the Company has met the objectives of the Plan and is currently on schedule with the detailed timetable prepared in the assessment phase discussed above. As part of the Plan, the Company is providing in-depth training to its accounting personnel, Board of Directors and Audit Committee to ensure they have a thorough understanding of IFRS. The Company's analysis of IFRS and comparison with currently applied US GAAP accounting principles has identified a number of differences as discussed under the heading "Impact of IFRS on Financial Reporting" below.

Initial Adoption of IFRS

IFRS 1 "First-time Adoption of International Financial Reporting Standards" ("IFRS 1") sets forth guidance for the initial adoption of IFRS. Commencing with the first interim period in which the Company reports under IFRS in 2009, the Company will adjust its comparative fiscal 2008 financial statements for annual and interim periods to comply with IFRS. In addition, the Company will reconcile equity and net earnings from the previously reported fiscal 2008 US GAAP amounts to the restated 2008 IFRS amounts.

Under IFRS 1, the standards are applied retrospectively at the transitional balance sheet date with all adjustments to assets and liabilities taken to retained earnings unless certain exemptions are applied. IFRS 1 provides for certain optional exemptions and elections as well as certain mandatory exceptions to this general principle. The Company will be applying the following exemptions and elections to its opening balance sheet dated January 1, 2008:

    Optional exemptions

Business combinations

IFRS 1 indicates that a first-time adopter may elect not to apply IFRS 3 "Business Combinations" ("IFRS 3") retrospectively to business combinations that occurred before the date of transition to IFRS. The Company will take advantage of this election and apply IFRS 3 only to business combinations that occurred on or after January 1, 2008.

Cumulative translation differences

IFRS 1 allows a first-time adopter to not comply with the requirements of IAS 21 "The Effects of Changes in Foreign Exchange Rates" for cumulative translation differences that existed at the date of transition to IFRS. The Company has chosen to apply this election and will deem its cumulative translation differences for all foreign operations to be zero at the date of transition to IFRS. If, subsequent to adoption, a foreign operation is disposed of, the translation differences that arose before the date of transition to IFRS shall be excluded from the gain or loss on disposal.

As of January 1, 2008, included within the Company's Accumulated Other Comprehensive Income balance of $64 million was approximately $111 million of cumulative foreign currency translation adjustments which will be reclassified to Retained Earnings under IFRS 1, resulting in no change in total Shareholders' Equity.

Share-based payment transactions

IFRS 1 encourages, but does not require, first-time adopters to apply IFRS 2 "Share-based Payment" ("IFRS 2") to equity instruments that were granted on or before November 7, 2002, or equity instruments that were granted subsequent to November 7, 2002 and vested before the later of the date of transition to IFRS or January 1, 2005. The Company has elected to apply IFRS 2 only to equity instruments that were unvested as of its transition date, January 1, 2008.

Carrying value of assets and liabilities

The Company is adopting IFRS subsequent to the date from which its parent, Gerdau S.A., adopted IFRS. In accordance with IFRS 1, if a subsidiary company adopts IFRS subsequent to its parent adopting IFRS, the subsidiary shall measure its assets and liabilities at either:

    (i)  the same carrying amounts as in the financial statements of the
parent based on the parent's date of transition to IFRS; or

(ii) the carrying amounts required by the rest of IFRS 1, based on the
subsidiary's date of transition to IFRS.

The Company has elected to record the carrying amounts required by IFRS 1
based on its date of transition (January 1, 2008) to IFRS as described in (ii)
above.

Mandatory exceptions

Estimates

In accordance with IFRS 1, an entity's estimates under IFRS at the date of transition to IFRS must be consistent with estimates made for the same date under previous US GAAP, unless there is objective evidence that those estimates were in error. The Company's IFRS estimates as of January 1, 2008 will be consistent with its US GAAP estimates for the same date unless evidence is obtained that indicates that the estimates were in error. As of the date of this press release, no errors have been identified.

Impact of IFRS on Financial Reporting

IFRS employs a conceptual framework that is similar to US GAAP. However, significant differences exist in certain matters of recognition, measurement and disclosure. While adoption of IFRS will not change the Company's actual cash flows, it will result in changes to the Company's reported financial position and results of operations. To assist the users of the Company's financial statements in understanding these changes, the following discussion describes the differences between US GAAP and IFRS for the Company's accounting policies and financial statement accounts which could be significantly affected by the conversion to IFRS. Please also refer to the attached reconciliation tables which provide a reconciliation between US GAAP and IFRS of the Company's Shareholders' Equity as of June 30, 2009 and a reconciliation of Net Income (Loss) for the three and six months ended June 30, 2009.

(a) Impairment of goodwill

US GAAP - US GAAP requires an impairment analysis based on a two-step process of first determining the estimated fair value of the reporting unit and then comparing it to the carrying value of the net assets allocated to the reporting unit. If the estimated fair value exceeds the carrying value, no further analysis or goodwill write-down is required. If the estimated fair value of the reporting unit is less than the carrying value of the net assets, the implied fair value of the reporting unit is allocated to all the underlying assets and liabilities, including both recognized and unrecognized tangible and intangible assets, based on their estimated fair value at the date of the impairment test. If necessary, goodwill would then be written down to its implied fair value.

IFRS - IAS 36 "Impairment of Assets" ("IAS 36") requires an impairment analysis based on a one-step process.