FORM 6 - K



SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


Report of Foreign Private Issuer
Pursuant to Rule 13a - 16 or 15d - 16 of
the Securities Exchange Act of 1934


As of August 2, 2017

TENARIS, S.A.
(Translation of Registrant's name into English)

TENARIS, S.A.
29, Avenue de la Porte-Neuve 3rd floor
L-2227 Luxembourg
(Address of principal executive offices)


Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or 40-F.

Form 20-F  Ö   Form 40-F

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12G3-2(b) under the Securities Exchange Act of 1934.

Yes         No  Ö  


If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-       .
 
 
 

 
 
The attached material is being furnished to the Securities and Exchange Commission pursuant to Rule 13a-16 and Form 6-K under the Securities Exchange Act of 1934, as amended. This report contains Tenaris S.A. Consolidated Condensed Interim Financial Statements for the six-month period ended June 30, 2017.



SIGNATURE




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.



Date: August 2, 2017.



Tenaris, S.A.




By: /s/ Cecilia Bilesio
Cecilia Bilesio
Corporate Secretary
 
 
 

Tenaris S.A. Consolidated Condensed Interim Financial Statements for the six-month period ended June 30, 2017

 









TENARIS S.A.






CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS


June 30, 2017

















29, Avenue de la Porte-Neuve – 3rd Floor.
L - 2227 Luxembourg
R.C.S. Luxembourg: B 85 203
 
 
1

Tenaris S.A. Consolidated Condensed Interim Financial Statements for the six-month period ended June 30, 2017

CONSOLIDATED CONDENSED INTERIM INCOME STATEMENT
(all amounts in thousands of U.S. dollars, unless otherwise stated)
   
Three-month period
ended June 30,
   
Six-month period
ended June 30,
 
   
Notes
   
2017
   
2016
   
2017
   
2016
 
Continuing operations
       
(Unaudited)
   
(Unaudited)
 
Net sales
   
3
     
1,242,804
     
1,054,917
     
2,396,664
     
2,261,267
 
Cost of sales
   
4
     
(865,729
)
   
(779,623
)
   
(1,689,585
)
   
(1,676,685
)
Gross profit
           
377,075
     
275,294
     
707,079
     
584,582
 
Selling, general and administrative expenses
   
5
     
(327,132
)
   
(333,160
)
   
(621,563
)
   
(612,008
)
Other operating income (expense), net
           
1,547
     
(3,644
)
   
1,988
     
(4,774
)
Operating income (loss)
           
51,490
     
(61,510
)
   
87,504
     
(32,200
)
Finance Income
   
6
     
11,059
     
24,212
     
23,986
     
44,107
 
Finance Cost
   
6
     
(6,020
)
   
(4,814
)
   
(11,958
)
   
(9,118
)
Other financial results
   
6
     
(20,667
)
   
(9,830
)
   
(32,082
)
   
(39,928
)
Income (loss) before equity in earnings of non-consolidated companies and income tax
           
35,862
     
(51,942
)
   
67,450
     
(37,139
)
Equity in earnings of non-consolidated companies
           
30,201
     
18,612
     
65,401
     
30,339
 
Income (loss) before income tax
           
66,063
     
(33,330
)
   
132,851
     
(6,800
)
Income tax
           
7,357
     
10,416
     
54,602
     
3,975
 
Income (loss) for continuing operations
           
73,420
     
(22,914
)
   
187,453
     
(2,825
)
                                         
Discontinued operations
                                       
Result for discontinued operations
   
13
     
-
     
13,737
     
91,542
     
21,598
 
Income (loss) for the period
           
73,420
     
(9,177
)
   
278,995
     
18,773
 
                                         
Attributable to:
                                       
Owners of the parent
           
74,524
     
(13,266
)
   
279,651
     
4,895
 
Non-controlling interests
           
(1,104
)
   
4,089
     
(656
)
   
13,878
 
             
73,420
     
(9,177
)
   
278,995
     
18,773
 
Earnings per share attributable to the owners of the parent during the period:
                                       
Weighted average number of ordinary shares (thousands)
           
1,180,537
     
1,180,537
     
1,180,537
     
1,180,537
 
Continuing operations
                                       
Basic and diluted earnings (loss) per share (U.S. dollars per share)
       
0.06
     
(0.02
)
   
0.16
     
(0.01
)
Basic and diluted earnings (loss) per ADS (U.S. dollars per ADS) (1)
           
0.13
     
(0.05
)
   
0.32
     
(0.03
)
Continuing and discontinued operations
                                       
Basic and diluted earnings (loss) per share (U.S. dollars per share)
           
0.06
     
(0.01
)
   
0.24
     
-
 
Basic and diluted earnings (loss) per ADS (U.S. dollars per ADS) (1)
           
0.13
     
(0.02
)
   
0.47
     
0.01
 

 (1) Each ADS equals two shares.
 

CONSOLIDATED CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME

(all amounts in thousands of U.S. dollars)
 
Three-month period ended June 30,
   
Six-month period ended June 30,
 
   
2017
   
2016
   
2017
   
2016
 
   
(Unaudited)
   
(Unaudited)
 
Income (loss) for the period
   
73,420
     
(9,177
)
   
278,995
     
18,773
 
Items that may be subsequently reclassified to profit or loss:
                               
Currency translation adjustment
   
62,347
     
11,769
     
90,297
     
102,463
 
Change in value of cash flow hedges
   
8,239
     
450
     
12,066
     
(5,734
)
Income tax relating to components of other comprehensive income
   
-
     
-
     
23
     
-
 
Share of other comprehensive income of non-consolidated companies:
                               
 - Currency translation adjustment
   
(8,593
)
   
14,652
     
(3,862
)
   
8,005
 
 - Changes in the fair value of derivatives held as cash flow hedges and others
   
4,662
     
(394
)
   
4,652
     
(796
)
     
66,655
     
26,477
     
103,176
     
103,938
 
Items that will not be reclassified to profit or loss:
                               
Remeasurements of post employment benefit obligations
   
605
     
1,433
     
605
     
1,433
 
Income tax on items that will not be reclassified
   
(219
)
   
(763
)
   
(219
)
   
(763
)
Remeasurements of post employment benefit obligations of non-consolidated companies
   
(134
)
           
1,461
         
     
252
     
670
     
1,847
     
670
 
Other comprehensive Income for the period, net of tax
   
66,907
     
27,147
     
105,023
     
104,608
 
Total comprehensive income for the period
   
140,327
     
17,970
     
384,018
     
123,381
 
Attributable to:
                               
Owners of the parent
   
141,090
     
14,032
     
384,287
     
109,388
 
Non-controlling interests
   
(763
)
   
3,938
     
(269
)
   
13,993
 
     
140,327
     
17,970
     
384,018
     
123,381
 
Total comprehensive Income for the year
                               
attributable to Owners of the parent arises from
                               
Continuing operations
   
141,090
     
295
     
292,745
     
87,790
 
Discontinued operations
   
-
     
13,737
     
91,542
     
21,598
 
     
141,090
     
14,032
     
384,287
     
109,388
 

The accompanying notes are an integral part of these Consolidated Condensed Interim Financial Statements. These Consolidated Condensed Interim Financial Statements should be read in conjunction with our audited Consolidated Financial Statements and notes for the fiscal year ended December 31, 2016.
 
 
2

Tenaris S.A. Consolidated Condensed Interim Financial Statements for the six-month period ended June 30, 2017
 
 
CONSOLIDATED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION

(all amounts in thousands of U.S. dollars)
       
At June 30, 2017
   
At December 31, 2016
 
   
Notes
   
(Unaudited)
       
ASSETS
                             
Non-current assets
                             
  Property, plant and equipment, net
   
8
     
6,124,342
           
6,001,939
       
  Intangible assets, net
   
9
     
1,761,686
           
1,862,827
       
  Investments in non-consolidated companies
   
12
     
601,712
           
557,031
       
  Available for sale assets
           
21,572
           
21,572
       
  Other investments
   
10
     
284,738
           
249,719
       
  Deferred tax assets
           
149,849
           
144,613
       
  Receivables, net
           
198,233
     
9,142,132
     
197,003
     
9,034,704
 
Current assets
                                       
  Inventories, net
           
1,988,820
             
1,563,889
         
  Receivables and prepayments, net
           
186,950
             
124,715
         
  Current tax assets
           
180,624
             
140,986
         
  Trade receivables, net
           
1,024,453
             
954,685
         
  Other investments
   
10
     
1,431,881
             
1,633,142
         
  Cash and cash equivalents
   
10
     
271,224
     
5,083,952
     
399,737
     
4,817,154
 
  Assets of disposal group classified as held for sale
   
13
             
-
             
151,417
 
Total assets
                   
14,226,084
             
14,003,275
 
EQUITY
                                       
Capital and reserves attributable to owners of the parent
                   
11,341,154
             
11,287,417
 
Non-controlling interests
                   
106,155
             
125,655
 
Total equity
                   
11,447,309
             
11,413,072
 
LIABILITIES
                                       
Non-current liabilities
                                       
  Borrowings
           
32,015
             
31,542
         
  Deferred tax liabilities
           
536,157
             
550,657
         
  Other liabilities
           
220,176
             
213,617
         
  Provisions
           
42,914
     
831,262
     
63,257
     
859,073
 
Current liabilities
                                       
  Borrowings
           
820,850
             
808,694
         
  Current tax liabilities
           
97,818
             
101,197
         
  Other liabilities
           
215,587
             
183,887
         
  Provisions
           
23,179
             
22,756
         
  Customer advances
           
80,334
             
39,668
         
  Trade payables
           
709,745
     
1,947,513
     
556,834
     
1,713,036
 
  Liabilities of disposal group classified as held for sale
   
13
             
-
             
18,094
 
Total liabilities
                   
2,778,775
             
2,590,203
 
Total equity and liabilities
                   
14,226,084
             
14,003,275
 


The accompanying notes are an integral part of these Consolidated Condensed Interim Financial Statements. These Consolidated Condensed Interim Financial Statements should be read in conjunction with our audited Consolidated Financial Statements and notes for the fiscal year ended December 31, 2016.
 
 
3

Tenaris S.A. Consolidated Condensed Interim Financial Statements for the six-month period ended June 30, 2017
 
CONSOLIDATED CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY
(all amounts in thousands of U.S. dollars)

   
Attributable to owners of the parent
             
   
Share Capital (1)
   
Legal Reserves
   
Share Premium
   
Currency Translation Adjustment
   
Other Reserves (2)
   
Retained Earnings (3)
   
Total
   
Non-controlling interests
   
Total
 
                                                   
(Unaudited)
 
Balance at December 31, 2016
   
1,180,537
     
118,054
     
609,733
     
(965,955
)
   
(313,088
)
   
10,658,136
     
11,287,417
     
125,655
     
11,413,072
 
                                                                         
Income (loss) for the period
   
-
     
-
     
-
     
-
     
-
     
279,651
     
279,651
     
(656
)
   
278,995
 
Currency translation adjustment
   
-
     
-
     
-
     
89,886
     
-
     
-
     
89,886
     
411
     
90,297
 
Remeasurements of post employment benefit obligations, net of taxes
   
-
     
-
     
-
     
-
     
386
     
-
     
386
     
-
     
386
 
Change in value of available for sale financial instruments and cash flow hedges, net of taxes
   
-
     
-
     
-
     
-
     
12,113
     
-
     
12,113
     
(24
)
   
12,089
 
Share of other comprehensive income of non-consolidated companies
   
-
     
-
     
-
     
(3,862
)
   
6,113
     
-
     
2,251
     
-
     
2,251
 
Other comprehensive income for the period
   
-
     
-
     
-
     
86,024
     
18,612
     
-
     
104,636
     
387
     
105,023
 
Total comprehensive income (loss) for the period
   
-
     
-
     
-
     
86,024
     
18,612
     
279,651
     
384,287
     
(269
)
   
384,018
 
Acquisition of non-controlling interests
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(31
)
   
(31
)
Dividends paid in cash
   
-
     
-
     
-
     
-
     
-
     
(330,550
)
   
(330,550
)
   
(19,200
)
   
(349,750
)
Balance at June 30, 2017
   
1,180,537
     
118,054
     
609,733
     
(879,931
)
   
(294,476
)
   
10,607,237
     
11,341,154
     
106,155
     
11,447,309
 
 
   
Attributable to owners of the parent
             
   
Share Capital (1)
   
Legal Reserves
   
Share Premium
   
Currency Translation Adjustment
   
Other Reserves (2)
   
Retained Earnings (3)
   
Total
   
Non-controlling interests
   
Total
 
                                                   
(Unaudited)
 
Balance at December 31, 2015
   
1,180,537
     
118,054
     
609,733
     
(1,006,767
)
   
(298,682
)
   
11,110,469
     
11,713,344
     
152,712
     
11,866,056
 
Income for the period
   
-
     
-
     
-
     
-
     
-
     
4,895
     
4,895
     
13,878
     
18,773
 
Currency translation adjustment
   
-
     
-
     
-
     
102,348
     
-
     
-
     
102,348
     
115
     
102,463
 
Remeasurements of post employment benefit obligations, net of taxes
   
-
     
-
     
-
     
-
     
670
     
-
     
670
     
-
     
670
 
Change in value of available for sale financial instruments and cash flow hedges, net of taxes
   
-
     
-
     
-
     
-
     
(5,734
)
   
-
     
(5,734
)
   
-
     
(5,734
)
Share of other comprehensive income of non-consolidated companies
   
-
     
-
     
-
     
8,005
     
(796
)
   
-
     
7,209
     
-
     
7,209
 
Other comprehensive income for the period
   
-
     
-
     
-
     
110,353
     
(5,860
)
   
-
     
104,493
     
115
     
104,608
 
Total comprehensive income for the period
   
-
     
-
     
-
     
110,353
     
(5,860
)
   
4,895
     
109,388
     
13,993
     
123,381
 
Acquisition of non-controlling interests
   
-
     
-
     
-
     
-
     
(5
)
   
-
     
(5
)
   
(472
)
   
(477
)
Dividends paid in cash
   
-
     
-
     
-
     
-
     
-
     
(354,161
)
   
(354,161
)
   
(4,311
)
   
(358,472
)
Balance at June 30, 2016
   
1,180,537
     
118,054
     
609,733
     
(896,414
)
   
(304,547
)
   
10,761,203
     
11,468,566
     
161,922
     
11,630,488
 

(1) The Company has an authorized share capital of a single class of 2.5 billion shares having a nominal value of USD1.00 per share. As of June 30, 2017 and 2016 there were 1,180,536,830 shares issued. All issued shares are fully paid.
(2) Other reserves include mainly the result of transactions with non-controlling interest that do not result in a loss of control, the remeasurement of post-employment benefit obligations and the changes in value of cash flow hedges and in available for sale financial instruments.
(3) The Distributable Reserve and Retained Earnings as of June 30, 2017 calculated in accordance with Luxembourg Law are disclosed in Note 11.

The accompanying notes are an integral part of these Consolidated Condensed Interim Financial Statements. These Consolidated Condensed Interim Financial Statements should be read in conjunction with our audited Consolidated Financial Statements and notes for the fiscal year ended December 31, 2016.
 

 
4

Tenaris S.A. Consolidated Condensed Interim Financial Statements for the six-month period ended June 30, 2017

CONSOLIDATED CONDENSED INTERIM STATEMENT OF CASH FLOWS

(all amounts in thousands of U.S. dollars)
       
Six-month period ended June 30,
 
   
Notes
   
2017
   
2016
 
Cash flows from operating activities
       
(Unaudited)
 
                   
Income for the period
         
278,995
     
18,773
 
Adjustments for:
                     
Depreciation and amortization
   
8 & 9
     
311,066
     
327,118
 
Income tax accruals less payments
           
(129,818
)
   
(68,731
)
Equity in earnings of non-consolidated companies
           
(65,401
)
   
(30,339
)
Interest accruals less payments, net
           
4,889
     
(12,906
)
Changes in provisions
           
(19,920
)
   
8,171
 
Income from the sale of Conduit business
   
13
     
(89,694
)
   
-
 
Changes in working capital
           
(365,222
)
   
410,232
 
Other, including currency translation adjustment
           
68,409
     
36,557
 
Net cash (used in) provided by operating activities
           
(6,696
)
   
688,875
 
                         
Cash flows from investing activities
                       
Capital expenditures
   
8 & 9
     
(293,806
)
   
(441,423
)
Changes in advance to suppliers of property, plant and equipment
           
4,329
     
34,352
 
Proceeds from disposal of Conduit business
   
13
     
327,631
     
-
 
Investment in non-consolidated companies
   
12
     
-
     
(17,108
)
Loan to non-consolidated companies
   
12
     
(9,006
)
   
(23,848
)
Investment in companies under cost method
   
10
     
(3,681
)
   
-
 
Proceeds from disposal of property, plant and equipment and intangible assets
           
2,878
     
3,979
 
Dividends received from non-consolidated companies
           
22,971
     
20,674
 
Changes in investments in securities
           
170,071
     
325,682
 
Net cash provided by (used in) investing activities
           
221,387
     
(97,692
)
                         
Cash flows from financing activities
                       
Dividends paid
   
7
     
(330,550
)
   
(354,161
)
Dividends paid to non-controlling interest in subsidiaries
           
(19,200
)
   
(4,311
)
Acquisitions of non-controlling interests
           
(31
)
   
(477
)
Proceeds from borrowings (*)
           
1,062,371
     
495,942
 
Repayments of borrowings (*)
           
(1,060,486
)
   
(627,904
)
Net cash (used in) financing activities
           
(347,896
)
   
(490,911
)
                         
(Decrease) increase in cash and cash equivalents
           
(133,205
)
   
100,272
 
Movement in cash and cash equivalents
                       
At the beginning of the period
           
398,580
     
286,198
 
Effect of exchange rate changes
           
5,462
     
6,173
 
(Decrease) increase in cash and cash equivalents
           
(133,205
)
   
100,272
 
At June 30,
           
270,837
     
392,643
 
                         
           
At June 30,
 
Cash and cash equivalents
           
2017
     
2016
 
Cash and bank deposits
           
271,224
     
394,351
 
Bank overdrafts
           
(387
)
   
(1,708
)
             
270,837
     
392,643
 

(*) Mainly related to the renewal of short-term local facilities carried out during the six-month period ending June 30, 2017 and 2016, respectively.

The accompanying notes are an integral part of these Consolidated Condensed Interim Financial Statements. These Consolidated Condensed Interim Financial Statements should be read in conjunction with our audited Consolidated Financial Statements and notes for the fiscal year ended December 31, 2016.
 
 
5

Tenaris S.A. Consolidated Condensed Interim Financial Statements for the six-month period ended June 30, 2017
 
 
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS


1
General information
2
Accounting policies and basis of presentation
3
Segment information
4
Cost of sales
5
Selling, general and administrative expenses
6
Financial results
7
Dividend distribution
8
Property, plant and equipment, net
9
Intangible assets, net
10
Cash and cash equivalents and other investments
11
Contingencies, commitments and restrictions to the distribution of profits
12
Investments in non-consolidated companies
13
Net assets of disposal group classified as held for sale
14
Related party transactions
15
Category of financial instruments and classification within the fair value hierarchy
16
Nationalization of Venezuelan subsidiaries
















6

Tenaris S.A. Consolidated Condensed Interim Financial Statements for the six-month period ended June 30, 2017


NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
(In the notes all amounts are shown in U.S. dollars, unless otherwise stated)

1
General information

Tenaris S.A. (the "Company") was established as a public limited liability company (société anonyme) under the laws of the Grand-Duchy of Luxembourg on December 17, 2001. The Company holds, either directly or indirectly, controlling interests in various subsidiaries in the steel pipe manufacturing and distribution businesses. References in these Consolidated Condensed Interim Financial Statements to "Tenaris" refer to Tenaris S.A. and its consolidated subsidiaries. A list of the principal Company's subsidiaries is included in Note 30 to the Company's audited Consolidated Financial Statements for the year ended December 31, 2016.

The Company's shares trade on the Buenos Aires Stock Exchange, the Italian Stock Exchange and the Mexican Stock Exchange; the Company's American Depositary Securities ("ADS") trade on the New York Stock Exchange.

These Consolidated Condensed Interim Financial Statements were approved for issuance by the Company's Board of Directors on August 2, 2017.

2
Accounting policies and basis of presentation

These Consolidated Condensed Interim Financial Statements have been prepared in accordance with IAS 34, "Interim Financial Reporting". The accounting policies used in the preparation of these Consolidated Condensed Interim Financial Statements are consistent with those used in the audited Consolidated Financial Statements for the year ended December 31, 2016. These Consolidated Condensed Interim Financial Statements should be read in conjunction with the audited Consolidated Financial Statements for the year ended December 31, 2016, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standard Board ("IASB") and in conformity with IFRS as adopted by the European Union ("EU").

The preparation of Consolidated Condensed Interim Financial Statements in conformity with IFRS requires management to make certain accounting estimates and assumptions that might affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the balance sheet dates, and the reported amounts of revenues and expenses for the reported periods. Actual results may differ from these estimates.

Material inter-company transactions, balances and unrealized gains (losses) on transactions between Tenaris's subsidiaries have been eliminated in consolidation. However, since the functional currency of some subsidiaries is its respective local currency, some financial gains (losses) arising from inter-company transactions are generated. These are included in the Consolidated Condensed Interim Income Statement under Other financial results.

There were no changes in valuation techniques during the period and there have been no changes in any risk management policies since the year ended December 31, 2016.

Whenever necessary, certain comparative amounts have been reclassified to conform to changes in presentation in the current period.

Following the sale of the steel electric conduit business in North America, known as Republic Conduit, the results of the mentioned business are presented as discontinued operations in accordance with IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations". Consequently, all amounts related to discontinued operations within each line item of the Consolidated Income Statement are reclassified into discontinued operations. The Consolidated Statement of Cash Flows includes the cash flows for continuing and discontinued operations, cash flows from discontinued operations and earnings per share are disclosed separately in Note 13, as well as additional information detailing net assets of disposal group classified as held for sale and discontinued operations.

None of the accounting pronouncements issued after December 31, 2016 and as of the date of these Consolidated Condensed Interim Financial Statements have a material effect on the Company's financial condition or result of operations.


7

Tenaris S.A. Consolidated Condensed Interim Financial Statements for the six-month period ended June 30, 2017


3
Segment information

Reportable operating segment

(all amounts in thousands of U.S. dollars)
 
(Unaudited)
 
Six-month period ended June 30, 2017
 
Tubes
   
Other
   
Total continuing operations
   
Total discontinued operations
 
IFRS - Net Sales
   
2,260,021
     
136,643
     
2,396,664
     
11,899
 
Management View - Operating (loss) income
   
(28,076
)
   
11,826
     
(16,250
)
   
3,372
 
·   Differences in cost of sales and others
   
106,391
     
(857
)
   
105,534
     
(918
)
·   Depreciation and amortization
   
(1,866
)
   
86
     
(1,780
)
   
-
 
IFRS - Operating income
   
76,449
     
11,055
     
87,504
     
2,454
 
Financial income (expense), net
                   
(20,054
)
   
(9
)
Income before equity in earnings of non-consolidated companies and income tax
                   
67,450
     
2,445
 
Equity in earnings of non-consolidated companies
                   
65,401
     
-
 
Income before income tax
                   
132,851
     
2,445
 
 
                               
Capital expenditures
   
288,747
     
4,914
     
293,661
     
145
 
Depreciation and amortization
   
304,371
     
6,695
     
311,066
     
-
 

(all amounts in thousands of U.S. dollars)
 
(Unaudited)
 
Six-month period ended June 30, 2016
 
Tubes
   
Other
   
Total continuing operations
   
Total discontinued operations
 
IFRS - Net Sales
   
2,115,190
     
146,077
     
2,261,267
     
116,660
 
Management View - Operating income
   
23,386
     
14,347
     
37,733
     
32,074
 
·   Differences in cost of sales and others
   
(96,857
)
   
(2,710
)
   
(99,567
)
   
2,476
 
·   Depreciation and amortization
   
29,526
     
108
     
29,634
     
-
 
IFRS - Operating (loss) income
   
(43,945
)
   
11,745
     
(32,200
)
   
34,550
 
Financial income (expense), net
                   
(4,939
)
   
(6
)
(Loss) income before equity in earnings of non-consolidated companies and income tax
                   
(37,139
)
   
34,544
 
Equity in earnings of non-consolidated companies
                   
30,339
     
-
 
(Loss) income before income tax
                   
(6,800
)
   
34,544
 
                                 
Capital expenditures
   
419,151
     
21,806
     
440,957
     
466
 
Depreciation and amortization
   
317,199
     
7,191
     
324,390
     
2,728
 

In the six-month period ended June 30, 2017, net income under management view amounted to $209.8 million, while under IFRS it amounted to $279.0 million. In addition to the amounts reconciled above, the main differences arise from the impact of functional currencies on financial result, deferred income taxes as well as the result of investment in non-consolidated companies and changes on the valuation of inventories according to cost estimation internally defined.

Geographical information

 
(Unaudited)
 
(all amounts in thousands of U.S. dollars)
North America
South America
Europe
Middle East & Africa
Asia Pacific
Total continuing operations
Total discontinued operations
Six-month period ended June 30, 2017
 
 
 
 
 
   
Net sales
1,061,010
505,220
257,230
469,841
103,363
2,396,664
11,899
Capital expenditures
238,140
32,445
16,005
5,188
1,883
293,661
145
Depreciation and amortization
179,057
62,745
51,574
6,204
11,486
311,066
 -
               
Six-month period ended June 30, 2016
             
Net sales
667,962
691,488
308,381
524,953
68,483
2,261,267
116,660
Capital expenditures
368,408
39,972
16,351
9,546
6,680
440,957
466
Depreciation and amortization
188,759
63,309
56,270
5,213
10,839
324,390
2,728
 
 
8

Tenaris S.A. Consolidated Condensed Interim Financial Statements for the six-month period ended June 30, 2017

 

3
Segment information (Cont.)

Allocation of net sales to geographical information is based on customer location. Allocation of depreciation and amortization is based on the geographical location of the underlying assets.

There are no revenues from external customers attributable to the Company's country of incorporation (Luxembourg). For geographical information purposes, "North America" comprises Canada, Mexico and the United States; "South America" comprises principally Argentina, Brazil and Colombia; "Europe" comprises principally Italy, Norway and Romania; "Middle East and Africa" comprises principally Kazakhstan, United Arab Emirates, Nigeria and Saudi Arabia and "Asia Pacific" comprises principally Thailand, China and Japan.

4
Cost of sales
 
   
Six-month period ended June 30,
 
(all amounts in thousands of U.S. dollars)
 
2017
   
2016
 
   
(Unaudited)
 
Inventories at the beginning of the period
   
1,563,889
     
1,843,467
 
                 
Plus: Charges of the period
               
Raw materials, energy, consumables and other
   
1,329,052
     
624,520
 
Services and fees
   
115,251
     
100,324
 
Labor cost
   
361,198
     
347,583
 
Depreciation of property, plant and equipment
   
183,741
     
184,365
 
Amortization of intangible assets
   
11,503
     
14,331
 
Maintenance expenses
   
75,540
     
61,898
 
Allowance for obsolescence
   
(8,319
)
   
37,929
 
Taxes
   
8,924
     
7,483
 
Other
   
45,029
     
54,006
 
     
2,121,919
     
1,432,439
 
Less: Inventories at the end of the period
   
(1,988,820
)
   
(1,533,666
)
From discontinued operations
   
(7,403
)
   
(65,555
)
     
1,689,585
     
1,676,685
 

5
Selling, general and administrative expenses

   
Six-month period ended June 30,
 
(all amounts in thousands of U.S. dollars)
 
2017
   
2016
 
   
(Unaudited)
 
Services and fees
   
69,476
     
63,149
 
Labor cost
   
221,689
     
247,604
 
Depreciation of property, plant and equipment
   
8,942
     
8,473
 
Amortization of intangible assets
   
106,880
     
119,949
 
Commissions, freight and other selling expenses
   
153,638
     
119,197
 
Provisions for contingencies
   
3,181
     
13,870
 
Allowances for doubtful accounts
   
(4,738
)
   
(25,375
)
Taxes
   
23,424
     
40,416
 
Other
   
41,112
     
41,280
 
     
623,604
     
628,563
 
From Discontinued operations
   
(2,041
)
   
(16,555
)
     
621,563
     
612,008
 
 
 
9

Tenaris S.A. Consolidated Condensed Interim Financial Statements for the six-month period ended June 30, 2017

 
6
Financial results

(all amounts in thousands of U.S. dollars)
 
Six-month period ended June 30,
 
   
2017
   
2016
 
   
(Unaudited)
 
     Interest Income
   
25,684
     
33,586
 
     Net result on changes in FV of financial assets at FVTPL
   
(1,698
)
   
10,521
 
Finance Income
   
23,986
     
44,107
 
Finance Cost
   
(11,958
)
   
(9,118
)
     Net foreign exchange transactions results (*)
   
(33,057
)
   
(19,019
)
     Foreign exchange derivatives contracts results (**)
   
(6,384
)
   
(27,196
)
     Other
   
7,350
     
6,281
 
Other Financial results
   
(32,091
)
   
(39,934
)
Net Financial results
   
(20,063
)
   
(4,945
)
From discontinued operations
   
9
     
6
 
     
(20,054
)
   
(4,939
)

(*)The six-month period ended June 2017 includes the negative impact from Euro appreciation against the U.S. dollar on Euro denominated intercompany liabilities in subsidiaries with functional currency U.S. Dollar, largely offset by an increase in currency translation adjustment reserve from an Italian subsidiary.
(**) The six-month period ended June 2016 includes the negative impact from Brazilian Real appreciation against the U.S. dollar on hedging instruments and of Cash and cash equivalent and Other investments denominated in U.S. dollar in subsidiaries which functional currency is the Brazilian real, partially offset by an increase in currency translation adjustment reserve from the Brazilian subsidiaries.

7
Dividend distribution

On May 3, 2017, the Company's Shareholders approved an annual dividend in the amount of $0.41 per share ($0.82 per ADS). The amount approved included the interim dividend previously paid in November 23, 2016 in the amount of $0.13 per share ($0.26 per ADS). The balance, amounting to $0.28 per share ($0.56 per ADS), was paid on May 24, 2017. In the aggregate, the interim dividend paid in November 2016 and the balance paid in May 2017 amounted to approximately $484.0 million.

On May 4, 2016 the Company's Shareholders approved an annual dividend in the amount of $0.45 per share ($0.90 per ADS). The amount approved included the interim dividend previously paid in November 25, 2015 in the amount of $0.15 per share ($0.30 per ADS). The balance, amounting to $0.30 per share ($0.60 per ADS), was paid on May 25, 2016. In the aggregate, the interim dividend paid in November 2015 and the balance paid in May 2016 amounted to approximately $531.2 million.

8
Property, plant and equipment, net

(all amounts in thousands of U.S. dollars)
 
2017
   
2016
 
   
(Unaudited)
 
Six-month period ended June 30,
           
Opening net book amount
   
6,001,939
     
5,672,258
 
Currency translation adjustment
   
40,807
     
47,585
 
Additions (*)
   
275,690
     
423,780
 
Disposals
   
(2,100
)
   
(7,567
)
Transfers
   
689
     
2,099
 
Depreciation charge
   
(192,683
)
   
(192,838
)
At June 30,
   
6,124,342
     
5,945,317
 

(*) Mainly due to the progress in the construction of the greenfield seamless facility in Bay City, Texas.
 

 
10

Tenaris S.A. Consolidated Condensed Interim Financial Statements for the six-month period ended June 30, 2017


9
Intangible assets, net

(all amounts in thousands of U.S. dollars)
 
2017
   
2016
 
   
(Unaudited)
 
Six-month period ended June 30,
           
Opening net book amount
   
1,862,827
     
2,143,452
 
Currency translation adjustment
   
562
     
6,635
 
Additions
   
17,971
     
17,643
 
Disposals
   
(602
)
   
(434
)
Transfers
   
(689
)
   
(604
)
Amortization charge
   
(118,383
)
   
(134,280
)
At June 30,
   
1,761,686
     
2,032,412
 

10
Cash and cash equivalents and other investments


(all amounts in thousands of U.S. dollars)
 
At June 30,
   
At December 31,
 
   
2017
   
2016
 
Cash and cash equivalents
 
(Unaudited)
       
Cash at banks
   
118,375
     
92,730
 
Liquidity funds
   
90,644
     
215,807
 
Short – term investments
   
62,205
     
91,200
 
 
   
271,224
     
399,737
 
 
               
Other investments - current
               
Fixed Income (time-deposit, zero coupon bonds, commercial papers)
   
630,821
     
782,029
 
Bonds and other fixed Income
   
800,321
     
841,638
 
Fund Investments
   
-
     
9,475
 
Others
   
739
     
-
 
 
   
1,431,881
     
1,633,142
 
Other investments - Non-current
               
Bonds and other fixed Income
   
279,232
     
248,049
 
Others (*)
   
5,506
     
1,670
 
 
   
284,738
     
249,719
 

(*) Related to investments in companies under cost method.
 
 
 
11

Tenaris S.A. Consolidated Condensed Interim Financial Statements for the six-month period ended June 30, 2017


11
Contingencies, commitments and restrictions to the distribution of profits

Contingencies

This note should be read in conjunction with Note 25 to the Company's audited Consolidated Financial Statements for the year ended December 31, 2016.

Tenaris is from time to time subject to various claims, lawsuits and other legal proceedings, including customer claims, in which third parties are seeking payment for alleged damages, reimbursement for losses or indemnity. Some of these claims, lawsuits and other legal proceedings involve highly complex issues, and often these issues are subject to substantial uncertainties. Accordingly, potential liability with respect to a large portion of such claims, lawsuits and other legal proceedings cannot be estimated with certainty. Management, with the assistance of legal counsel, periodically reviews the status of each significant matter and assesses potential financial exposure. If a potential loss from a claim, lawsuit or proceeding is considered probable and the amount can be reasonably estimated, a provision is recorded. Accruals for loss contingencies reflect a reasonable estimate of the losses to be incurred based on information available to management as of the date of preparation of the financial statements, and take into consideration litigation and settlement strategies. The Company believes that the aggregate provisions recorded for potential losses in these financial statements are adequate based upon currently available information. However, if management's estimates prove incorrect, current reserves could be inadequate and Tenaris could incur a charge to earnings which could have a material adverse effect on Tenaris's results of operations, financial condition, net worth and cash flows.

Set forth below is a description of Tenaris's material ongoing legal proceedings:

§
Tax assessment in Italy

Dalmine, an Italian subsidiary of Tenaris, received on December 24, 2012 a tax assessment from the Italian tax authorities related to allegedly omitted withholding tax on dividend payments made in 2007. The assessment, which was for an estimated amount of EUR297 million (approximately $339 million), comprising principal, interest and penalties, was appealed with the first-instance tax court in Milan. In February 2014, the first-instance tax court issued its decision on this tax assessment, partially reversing the assessment and lowering the claimed amount to approximately EUR9 million (approximately $10.3 million), including principal, interest and penalties. On October 2, 2014, the Italian tax authorities appealed against the second-instance tax court decision on the 2007 assessment. On June 12, 2015, the second-instance tax court accepted Dalmine's defense arguments and rejected the appeal by the Italian tax authorities, thus reversing the entire 2007 assessment and recognizing that the dividend payment was exempt from withholding tax. The Italian tax authorities have appealed the second-instance tax court decision before the Supreme Court.

On December 24, 2013, Dalmine received a second tax assessment from the Italian tax authorities, based on the same arguments as those in the first assessment, relating to allegedly omitted withholding tax on dividend payments made in 2008 – the last such distribution made by Dalmine. Dalmine appealed the assessment with the first-instance tax court in Milan. On January 27, 2016, the first-instance tax court rejected Dalmine's appeal. This first-instance ruling, which held that Dalmine is required to pay an amount of EUR225 million (approximately $257 million), including principal, interest and penalties, contradicts the first and second-instance tax court rulings in connection with the 2007 assessment. Dalmine obtained the suspension of the interim payment that would have been due, based on the first-instance decision, through the filing with the tax authorities of a bank guarantee, and appealed the January 2016 ruling with the second-instance tax court. The hearing in the second instance tax court has been called on September 25, 2017.

Tenaris continues to believe that Dalmine has correctly applied the relevant legal provisions and based on, among other things, the tax court decisions on the 2007 assessment and the opinion of legal counsel, Tenaris believes that it is not probable that the ultimate resolution of either the 2007 or the 2008 tax assessment will result in a material obligation.

§
CSN claims relating to the January 2012 acquisition of Usiminas shares

In 2013, Confab Industrial S.A., a Brazilian subsidiary of the Company ("Confab")was notified of a lawsuit filed in Brazil by Companhia Siderúrgica Nacional (CSN) and various entities affiliated with CSN against Confab and the other entities that acquired a participation in Usiminas' control group in January 2012.

 
12

Tenaris S.A. Consolidated Condensed Interim Financial Statements for the six-month period ended June 30, 2017

 
11
Contingencies, commitments and restrictions to the distribution of profits (Cont.)

Contingencies (Cont.)

§
CSN claims relating to the January 2012 acquisition of Usiminas shares (Cont.)

The CSN lawsuit alleges that, under applicable Brazilian laws and rules, the acquirers were required to launch a tag-along tender offer to all non-controlling holders of Usiminas' ordinary shares for a price per share equal to 80% of the price per share paid in such acquisition, or BRL28.8, and seeks an order to compel the acquirers to launch an offer at that price plus interest. If so ordered, the offer would need to be made to 182,609,851 ordinary shares of Usiminas not belonging to Usiminas' control group, and Confab would have a 17.9% share in that offer.

On September 23, 2013, the first instance court dismissed the CSN lawsuit, and on February 8, 2017, the court of appeals maintained the understanding of the first instance court. On March 6, 2017, CSN filed a motion for clarification against the decision of the court of appeals, which was rejected on July 19, 2017. CSN may still appeal to the Superior Court of Justice or the Federal Supreme Court. For further information on the CSN lawsuit, see Note 25 to the Consolidated Financial Statements for the year ended December 31, 2016.

Tenaris continues to believe that all of CSN's claims and allegations are groundless and without merit, as confirmed by several opinions of Brazilian legal counsel, two decisions issued by the Brazilian securities regulator (CVM) in February 2012 and December 2016, and the first and second instance court decisions referred to above. Accordingly, no provision was recorded in these Consolidated Condensed Interim Financial Statements.

§
Veracel Celulose Accident Litigation

On September 21, 2007, an accident occurred in the premises of Veracel Celulose S.A. ("Veracel") in connection with a rupture in one of the tanks used in an evaporation system manufactured by Confab. The Veracel accident allegedly resulted in material damages to Veracel. Itaú Seguros S.A. ("Itaú"), Veracel's insurer at the time of the Veracel accident, initiated a lawsuit against Confab seeking reimbursement of damages paid to Veracel in connection with the Veracel accident. Veracel initiated a second lawsuit against Confab seeking reimbursement of the amount paid as insurance deductible in connection with the Veracel accident and other amounts not covered by insurance. Itaú and Veracel claim that the Veracel accident was caused by failures and defects attributable to the evaporation system manufactured by Confab. Confab believes that the Veracel accident was caused by the improper handling by Veracel's personnel of the equipment supplied by Confab in violation of Confab's instructions. The two lawsuits have been consolidated, and are now being considered by the 6th Civil Court of São Caetano do Sul; however, each lawsuit will be adjudicated through a separate ruling. Both proceedings are currently at evidentiary stage.

On March 10, 2016, a court-appointed expert issued its report on certain technical matters concerning the Veracel accident. Based upon a technical opinion received from a third-party expert, in August 2016, Confab filed its objections to the expert's report. Other parties have also filed their observations and/or opinions concerning the expert's report, which are currently subject to the court examination. As of June 30, 2017, the estimated amount of Itaú's claim is approximately BRL78 million (approximately $23.6 million), and the estimated amount of Veracel's claim is approximately BRL49.7 million (approximately $15.0 million), for an aggregate amount BRL127.7 million ($38.6 million). The final result of this claim depends largely on the court's evaluation of technical matters arising from the expert's opinion and objections presented by Confab. No provision has been recorded in these Consolidated Condensed Interim Financial Statements.

§
Petroamazonas Penalties

On January 22, 2016, Petroamazonas ("PAM"), an Ecuadorian state-owned oil company, imposed penalties to the Company's Uruguayan subsidiary, Tenaris Global Services S.A. ("TGS"), for its alleged failure to comply with delivery terms under a pipe supply agreement. The penalties amount to approximately $ 22.5 million as of the date hereof. Tenaris believes, based on the advice of counsel, that PAM has no legal basis to impose the penalties and that TGS has meritorious defenses against PAM. However, in light of the prevailing political circumstances in Ecuador, the Company cannot predict the outcome of a claim against a state-owned company and it is not possible to estimate the amount or range of loss in case of an unfavorable outcome.
 
 
13

Tenaris S.A. Consolidated Condensed Interim Financial Statements for the six-month period ended June 30, 2017

 
11
Contingencies, commitments and restrictions to the distribution of profits (Cont.)

Contingencies (Cont.)

§
Ongoing investigation

The Company has learned that Italian and Swiss authorities are investigating whether certain payments were made from accounts of entities presumably associated with affiliates of the Company to accounts controlled by an individual allegedly related with officers of Petróleo Brasileiro S.A. and whether any such payments were intended to benefit Confab. Any such payments could violate certain applicable laws, including the U.S. Foreign Corrupt Practices Act. The Company had previously reviewed certain of these matters in connection with an investigation by the Brazilian authorities related to "Operation Lava Jato" and the Audit Committee of the Company's Board of Directors has engaged external counsel in connection with a review of the alleged payments and related matters. In addition, the Company has voluntarily notified the U.S. Securities and Exchange Commission and the U.S. Department of Justice. The Company intends to share the results of this review with the appropriate authorities, and to cooperate with any investigations that may be conducted by such authorities. At this time, the Company cannot predict the outcome of these matters or estimate the range of potential loss or extent of risk, if any, to the Company's business that may result from resolution of these matters.

Commitments

Set forth is a description of Tenaris's main outstanding commitments:

§
A Tenaris company is a party to a contract with Nucor Corporation under which it is committed to purchase on a monthly basis a minimum volume of hot-rolled steel coils at prices that are negotiated annually by reference to prices to comparable Nucor customers. The contract became effective in January 2013 and will be in force until December 2017; provided, however, that either party may terminate the contract at any time after January 1, 2015 with a 12-month prior notice. Due to the weak pipe demand associated with the reduction in drilling activity, the parties entered into a temporary agreement pursuant to which application of the minimum volume requirements were suspended, and the company is temporarily allowed to purchase steel volumes in accordance with its needs. As of June 30, 2017, the estimated aggregate contract amount through December 31, 2017, calculated at current prices, is approximately $464.9 million.

§
A Tenaris company entered into various contracts with suppliers pursuant to which it committed to purchase goods and services for a total amount of approximately $110.1 million related to the investment plan to expand Tenaris's U.S. operations with the construction of a state-of-the-art seamless pipe mill in Bay City, Texas. As of June 30, 2017 approximately $1,551 million had already been invested.

Restrictions to the distribution of profits and payment of dividends

As of December 31, 2016, equity as defined under Luxembourg law and regulations consisted of:

(all amounts in thousands of U.S. dollars)
 
Share capital
1,180,537
Legal reserve
118,054
Share premium
609,733
Retained earnings including net income for the year ended December 31, 2016
17,493,012
Total equity in accordance with Luxembourg law
19,401,336

At least 5% of the Company's net income per year, as calculated in accordance with Luxembourg law and regulations, must be allocated to the creation of a legal reserve equivalent to 10% of the Company's share capital. As of June 30, 2017, this reserve is fully allocated and additional allocations to the reserve are not required under Luxembourg law. Dividends may not be paid out of the legal reserve.

The Company may pay dividends to the extent, among other conditions, that it has distributable retained earnings calculated in accordance with Luxembourg law and regulations.

 
14

Tenaris S.A. Consolidated Condensed Interim Financial Statements for the six-month period ended June 30, 2017

 
11
Contingencies, commitments and restrictions to the distribution of profits (Cont.)

Restrictions to the distribution of profits and payment of dividends (Cont.)

At December 31, 2016, distributable amount under Luxembourg law totals $18.1 billion, as detailed below:

(all amounts in thousands of U.S. dollars)
 
Retained earnings at December 31, 2015 under Luxembourg law
18,024,204
Other income and expenses for the year ended December 31, 2016
(23,561)
Dividends approved
(507,631)
Retained earnings at December 31, 2016 under Luxembourg law
17,493,012
Share premium
609,733
Distributable amount at December 31, 2016 under Luxembourg law
18,102,745

12
Investments in non-consolidated companies

a)
Ternium

Ternium S.A. ("Ternium"), is a steel producer with production facilities in Mexico, Argentina, Colombia, United States and Guatemala and is one of Tenaris's main suppliers of round steel bars and flat steel products for its pipes business.

At June 30, 2017, the closing price of Ternium's ADSs as quoted on the New York Stock Exchange was $28.09 per ADS, giving Tenaris's ownership stake a market value of approximately $645.3 million (Level 1). At June 30, 2017, the carrying value of Tenaris's ownership stake in Ternium, based on Ternium's IFRS financial statements, was approximately $530.8 million.

b)
Usiminas

Usiminas is a Brazilian producer of high quality flat steel products used in the energy, automotive and other industries and it is Tenaris's principal supplier of flat steel in Brazil for its pipes and industrial equipment businesses.

As of June 30, 2017 the closing price of the Usiminas' ordinary and preferred shares, as quoted on the BM&FBovespa Stock Exchange, was BRL8.83 ($2.67) and BRL4.6 ($1.39), respectively, giving Tenaris's ownership stake a market value of approximately $99.2 million (Level 1). As that date, the carrying value of Tenaris's ownership stake in Usiminas was approximately $67.6 million.

c)
Techgen, S.A. de C.V. ("Techgen")
 
Techgen is a Mexican company that operates a natural gas-fired combined cycle electric power plant in the Pesquería area of the State of Nuevo León, Mexico. The company started producing energy on December 1, 2016 and is fully operational, with a power capacity of between 850 and 900 megawatts. As of June 30, 2017, Tenaris held 22% of Techgen's share capital, and its affiliates Ternium and Tecpetrol International S.A. (a wholly-owned subsidiary of San Faustin S.A., the controlling shareholder of both Tenaris and Ternium) held 48% and 30% respectively.

Techgen is a party to transportation capacity agreements for a purchasing capacity of 150,000 MMBtu/Gas per day starting on August 1, 2016 and ending on July 31, 2036, and a party to a contract for the purchase of power generation equipment and other services related to the equipment. As of June 30, 2017, Tenaris's exposure under these agreements amounted to $59.8 million and $5.3 million respectively.

Tenaris issued a corporate guarantee covering 22% of the obligations of Techgen under a syndicated loan agreement between Techgen and several banks for an aggregate amount of $760 million which has been used in the construction of the facility. The main covenants under the corporate guarantee are limitations on the sale of certain assets and compliance with financial ratios (e.g. leverage ratio). As of June 30, 2017, the facility agreement has been fully disbursed and, accordingly, the amount guaranteed by Tenaris was approximately $167.2 million. During the six-month period ended June 30, 2017, Techgen's shareholders made additional investments in Techgen, through subordinated loans, which in the case of Tenaris amounted to $9 million. As of June 30, 2017, the aggregate outstanding principal amount under these loans was $95.2 million.

 
15

Tenaris S.A. Consolidated Condensed Interim Financial Statements for the six-month period ended June 30, 2017

 
13
Net assets of disposal group classified as held for sale

On December 15, 2016, Tenaris entered into an agreement with Nucor Corporation (NC) pursuant to which it has sold to NC the steel electric conduit business in North America, known as Republic Conduit for an amount of $328 million (net of transaction costs). The sale was completed on January 19, 2017, with effect from January 20, 2017. The result of this transaction was an after-tax gain of $89.7 million, calculated as the net proceeds of the sale less the book value of net assets held for sale, the corresponding tax effect and related expenses.
   
Six-month period ended June 30,
 
   
2017
   
2016
 
 Income from discontinued operations
   
1,848
     
21,598
 
 After tax gain on the sale of Conduit
   
89,694
     
-
 
 Net Income for discontinued operations
   
91,542
     
21,598
 

Details of Conduit sale

Cash received
   
331,295
         
Transaction and other costs
   
(3,663
)
       
Carrying amount of net assets sold
   
(137,814
)
       
Gain on sale before income tax
   
189,817
         
Income tax expense on gain
   
(100,123
)
       
Gain on sale after income tax
   
89,694
         

The financial performances presented are relative to the 19 days of January 2017 and the six month period ended June 30, 2016.

(all amounts in thousands of US dollars, unless otherwise stated)
     
   
2017
   
2016
 
Net sales
   
11,899
     
116,660
 
Cost of sales
   
(7,403
)
   
(65,555
)
Gross profit
   
4,496
     
51,105
 
Selling, general and administrative expenses
   
(2,041
)
   
(16,555
)
Other operating income & expenses
   
(1
)
   
-
 
Operating income
   
2,454
     
34,550
 
Finance Income (expenses), net
   
(9
)
   
(6
)
Income before income tax
   
2,445
     
34,544
 
Income tax
   
(597
)
   
(12,946
)
Net income
   
1,848
     
21,598
 

The following table shows the current and non-current assets and liabilities of disposal group as at 31, December 2016 and the carrying amounts of assets and liabilities as at the date of sale.

ASSETS
 
At January 19, 2017
   
At December 31, 2016
 
Non-current assets
                       
  Property, plant and equipment, net
   
41,438
           
41,470
       
  Intangible assets, net
   
45,894
     
87,332
     
45,894
     
87,364
 
Current assets
                               
  Inventories, net
   
29,349
             
29,819
         
  Receivables and prepayments, net
   
1,157
             
451
         
  Trade receivables, net
   
38,620
             
33,620
         
  Cash and cash equivalents
   
206
     
69,332
     
163
     
64,053
 
Total assets of disposal group classified as held for sale
           
156,664
             
151,417
 
LIABILITIES
                               
Non-current liabilities
                               
  Deferred tax liabilities
   
5,294
             
4,696
         
  Other liabilities
   
-
     
5,294
     
680
     
5,376
 
Current liabilities
                               
  Current tax liabilities
   
65
             
4,100
         
  Other liabilities
   
2,913
             
1,668
         
  Trade payables
   
10,578
     
13,556
     
6,950
     
12,718
 
Total liabilities of disposal group classified as held for sale
           
18,850
             
18,094
 

Summarized cash flow information is as follows:
   
2017
   
2016
 
Cash at the beginning
   
18,820
     
15,343
 
Cash at the end
   
206
     
22,726
 
(Decrease) Increase in cash
   
(18,614
)
   
7,383
 
                 
(Used in) provided by operating activities
   
(3,046
)
   
17,728
 
Provided by (used in) investing activities
   
32
     
(345
)
Used in financing activities
   
(15,600
)
   
(10,000
)
 
 
16

Tenaris S.A. Consolidated Condensed Interim Financial Statements for the six-month period ended June 30, 2017
 
14
Related party transactions

As of June 30, 2017:

§
San Faustin S.A., a Luxembourg société anonyme ("San Faustin"), owned 713,605,187 shares in the Company, representing 60.45% of the Company's capital and voting rights.

§
San Faustin owned all of its shares in the Company through its wholly-owned subsidiary Techint Holdings S.à r.l., a Luxembourg société à responsabilité limitée ("Techint"), who is the holder of record of the above-mentioned Tenaris shares.

§
Rocca & Partners Stichting Administratiekantoor Aandelen San Faustin, a Dutch private foundation (Stichting) ("RP STAK") held voting rights in San Faustin sufficient in number to control San Faustin.

§
No person or group of persons controls RP STAK.

Based on the information most recently available to the Company, Tenaris's directors and senior management as a group owned 0.10% of the Company's outstanding shares.

Transactions and balances disclosed as with "non-consolidated parties" are those with companies over which Tenaris exerts significant influence or joint control in accordance with IFRS, but does not have control. All other transactions and balances with related parties which are not non-consolidated parties and which are not consolidated are disclosed as "Other".

The following transactions were carried out with related parties:

 
 (all amounts in thousands of U.S. dollars)
Six-month period ended June 30,
 
 
2017
 
2016
(i)
Transactions
(Unaudited)
 
(a) Sales of goods and services
 
 
 
 
Sales of goods to non-consolidated parties
16,251
 
9,736
 
Sales of goods to other related parties
18,382
 
11,780
 
Sales of services to non-consolidated parties
5,739
 
4,517
 
Sales of services to other related parties
1,648
 
1,549
 
 
42,020
 
27,582
 
 
     
 
(b) Purchases of goods and services
     
 
Purchases of goods to non-consolidated parties
106,301
 
19,007
 
Purchases of goods to other related parties
6,801
 
11,481
 
Purchases of services to non-consolidated parties
5,653
 
4,545
 
Purchases of services to other related parties
25,024
 
28,454
 
 
143,779
 
63,487


 
 (all amounts in thousands of U.S. dollars)
At June 30,
 
At December 31,
 
 
2017
 
2016
(ii)
Period-end balances
(Unaudited)
 
 
 
Arising from sales / purchases of goods / services / others
     
 
Receivables from non-consolidated parties
127,277
 
117,187
 
Receivables from other related parties
20,102
 
13,357
 
Payables to non-consolidated parties
 (39,811)
 
 (21,314)
 
Payables to other related parties
 (7,615)
 
 (12,708)
 
 
99,953
 
96,522
 
 
17

Tenaris S.A. Consolidated Condensed Interim Financial Statements for the six-month period ended June 30, 2017

 
15
Category of financial instruments and classification within the fair value hierarchy

Accounting policies for financial instruments have been applied to classify as either: loans and receivables, held-to-maturity, available-for-sale, or fair value through profit and loss. For financial instruments that are measured in the statement of financial position at fair value, IFRS 13 requires a disclosure of fair value measurements by level according to the following fair value measurement hierarchy:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

Level 3 - Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The following tables present the financial instruments by category and levels as of June 30, 2017 and December 31, 2016.

 
       
Measurement Categories
   
At Fair Value
 
June 30, 2017
 
Carrying Amount
   
Loans & Receivables
   
Held to Maturity
   
Available for sale
   
Assets at fair value through profit and loss
   
Level 1
   
Level 2
   
Level 3
 
Assets
                                               
Cash and cash equivalents
   
271,224
     
118,375
     
-
     
-
     
152,849
     
152,849
     
-
     
-
 
Cash at banks
   
118,375
     
118,375
     
-
     
-
     
-
     
-
     
-
     
-
 
Liquidity funds
   
90,644
     
-
     
-
     
-
     
90,644
     
90,644
     
-
     
-
 
Short – term investments
   
62,205
     
-
     
-
     
-
     
62,205
     
62,205
     
-
     
-
 
Other investments Current
   
1,431,881
     
-
     
261,726
     
-
     
1,170,155
     
540,673
     
629,482
     
-
 
Fixed Income (time-deposit, zero coupon bonds, commercial papers)
   
630,821
     
-
     
-