tenaris6k.htm
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 November 5, 2015

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   ü      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   ü   

    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 nine-month period ended  September 30, 2015.

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: November 5, 2015.
 
 
 
Tenaris, S.A.
 
 
 
 
By: /s/ Cecilia Bilesio                         
Cecilia Bilesio
Corporate Secretary




 
 
 
Tenaris S.A. Consolidated Condensed Interim Financial Statements for the nine-month period ended September 30, 2015



TENARIS S.A.





CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS


SEPTEMBER 30, 2015











29, Avenue de la Porte-Neuve – 3rd Floor.
L - 2227 Luxembourg
R.C.S. Luxembourg: B 85 203
CONSOLIDATED CONDENSED INTERIM INCOME STATEMENT
 
 
 
 
 
 
Tenaris S.A. Consolidated Condensed Interim Financial Statements for the nine-month period ended September 30, 2015


(all amounts in thousands of U.S. dollars, unless otherwise stated)
        
Three-month period
ended September 30,
    
Nine-month period
ended September 30,
  
   
Notes
    
2015
    
2014
    
2015
    
2014
  
Continuing operations
        
(Unaudited)
    
(Unaudited)
  
               
(Restated)
          
(Restated)
  
Net sales
     3       1,559,194       2,420,631       5,680,827       7,661,457  
Cost of sales
     4       (1,096,539 )     (1,510,166 )     (3,861,608 )     (4,628,088 )
Gross profit
             462,655       910,465       1,819,219       3,033,369  
Selling, general and administrative expenses
     5       (381,582 )     (480,103 )     (1,255,309 )     (1,487,200 )
Other operating income (expense), net
     6       (400,532 )     3,243       (392,874 )     2,488  
Operating (loss) income
             (319,459 )     433,605       171,036       1,548,657  
Finance Income
     7       2,554       7,021       25,639       34,141  
Finance Cost
     7       (4,721 )     (12,878 )     (20,341 )     (36,499 )
Other financial results
     7       6,754       2,293       (10,234 )     41,757  
(Loss) income before equity in earnings of non-consolidated companies and income tax
             (314,872 )     430,041       166,100       1,588,056  
Equity in earnings of non-consolidated companies
             (5,375 )     (226,412 )     6,809       (193,224 )
(Loss) income before income tax
             (320,247 )     203,629       172,909       1,394,832  
Income tax
             (35,420 )     (116,614 )     (202,310 )     (459,898 )
(Loss) income for the period
             (355,667 )     87,015       (29,401 )     934,934  
                                         
Attributable to:
                                        
Owners of the parent
             (354,904 )     81,209       (33,508 )     911,599  
Non-controlling interests
             (763 )     5,806       4,107       23,335  
              (355,667 )     87,015       (29,401 )     934,934  
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 (loss) earnings per share (U.S. dollars per share)
       (0.30 )     0.07       (0.03 )     0.77  
Basic and diluted (loss) earnings per ADS (U.S. dollars per ADS) (1)
       (0.60 )     0.14       (0.06 )     1.54  

(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 September 30,
    
Nine-month period
ended September 30,
  
   
2015
    
2014
    
2015
    
2014
  
   
(Unaudited)
    
(Unaudited)
  
         
(Restated)
          
(Restated)
  
(Loss) income for the period
     (355,667 )     87,015       (29,401 )     934,934  
Items that will not be reclassified to profit or loss:
                                
Remeasurements of post employment benefit obligations
     9,043       162       7,670       4,590  
Income tax on items that will not be reclassified
     (3,187 )     (61 )     (2,895 )     (1,226 )
      5,856       101       4,775       3,364  
Items that may be subsequently reclassified to profit or loss:
                                
Currency translation adjustment
     (98,361 )     (137,240 )     (229,701 )     (125,928 )
Change in value of available for sale financial instruments and cash flow hedges
     (3,780 )     (1,127 )     1,769       (509 )
Share of other comprehensive income of non-consolidated companies:
                                
 - Currency translation adjustment
     (37,136 )     (50,129 )     (72,024 )     (37,623 )
 - Changes in the fair value of derivatives held as cash flow hedges and others
     (556 )     (29 )     (4,252 )     (933 )
Income tax relating to components of other comprehensive income
     (177 )     (275 )     (284 )     (242 )
Other comprehensive loss for the period, net of tax
     (134,154 )     (188,699 )     (299,717 )     (161,871 )
Total comprehensive (loss) income for the period
     (489,821 )     (101,684 )     (329,118 )     773,063  
Attributable to:
                                
Owners of the parent
     (489,061 )     (107,174 )     (333,121 )     750,099  
Non-controlling interests
     (760 )     5,490       4,003       22,964  
      (489,821 )     (101,684 )     (329,118 )     773,063  

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 Restated Consolidated Financial Statements and notes for the fiscal year ended December 31, 2014.
 
 
 
1
 
Tenaris S.A. Consolidated Condensed Interim Financial Statements for the nine-month period ended September 30, 2015

CONSOLIDATED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION

(all amounts in thousands of U.S. dollars)
        
At September 30, 2015
    
At December 31, 2014
  
   
Notes
    
(Unaudited)
    
(Restated)
  
ASSETS
                              
Non-current assets
                              
  Property, plant and equipment, net
     9       5,507,972             5,159,557        
  Intangible assets, net
     10       2,219,960             2,757,630        
  Investments in non-consolidated companies
             555,190             643,630        
  Available for sale assets
             21,572             21,572        
  Other investments
     11       281,317             1,539        
  Deferred tax assets
             199,900             268,252        
  Receivables
             235,455       9,021,366       262,176       9,114,356  
Current assets
                                        
  Inventories
             2,023,626               2,779,869          
  Receivables and prepayments
             202,268               267,631          
  Current tax assets
             189,159               129,404          
  Trade receivables
             1,232,464               1,963,394          
  Other investments
     11       2,338,772               1,838,379          
  Cash and cash equivalents
     11       497,753       6,484,042       417,645       7,396,322  
Total assets
                     15,505,408               16,510,678  
EQUITY
                                        
Capital and reserves attributable to owners of the parent
                     11,967,491               12,654,114  
Non-controlling interests
                     154,667               152,200  
Total equity
                     12,122,158               12,806,314  
LIABILITIES
                                        
Non-current liabilities
                                        
  Borrowings
             24,106               30,833          
  Deferred tax liabilities
             745,803               714,123          
  Other liabilities
             261,158               285,865          
  Provisions
             67,833       1,098,900       70,714       1,101,535  
                                         
Current liabilities
                                        
  Borrowings
             974,792               968,407          
  Current tax liabilities
             138,730               352,353          
  Other liabilities
             385,035               296,277          
  Provisions
             7,396               20,380          
  Customer advances
             188,162               133,609          
  Trade payables
             590,235       2,284,350       831,803       2,602,829  
Total liabilities
                     3,383,250               3,704,364  
Total equity and liabilities
                     15,505,408               16,510,678  
                                         

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 Restated Consolidated Financial Statements and notes for the fiscal year ended December 31, 2014.
 
 
 
 
2
 
Tenaris S.A. Consolidated Condensed Interim Financial Statements for the nine-month period ended September 30, 2015
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
Retained Earnings (2)
Total
Non-controlling interests
Total
                 
(Unaudited)
Balance at December 31, 2014
1,180,537
118,054
609,733
 (678,008)
 (317,799)
11,906,630
12,819,147
152,200
12,971,347
Restatement
 -
 -
 -
19,724
 -
 (184,757)
 (165,033)
 -
 (165,033)
Balance at December 31, 2014 (Restated)
1,180,537
118,054
609,733
 (658,284)
 (317,799)
11,721,873
12,654,114
152,200
12,806,314
                   
(Loss) income for the period
 -
 -
 -
 -
 -
 (33,508)
 (33,508)
4,107
 (29,401)
Currency translation adjustment
 -
 -
 -
 (229,180)
 -
 -
 (229,180)
 (521)
 (229,701)
Remeasurements of post employment benefit obligations, net of taxes
 -
 -
 -
 -
4,775
  
4,775
  
4,775
Change in value of available for sale financial instruments and cash flow hedges net of tax
 -
 -
 -
 -
1,068
 -
1,068
417
1,485
Share of other comprehensive income of non-consolidated companies
 -
 -
 -
 (72,024)
 (4,252)
 -
 (76,276)
 -
 (76,276)
Other comprehensive (loss) income for the period
 -
 -
 -
 (301,204)
1,591
 -
 (299,613)
 (104)
 (299,717)
Total comprehensive (loss) income for the period
 -
 -
 -
 (301,204)
1,591
 (33,508)
 (333,121)
4,003
 (329,118)
Acquisition of non-controlling interests
 -
 -
 -
 -
659
 -
659
 (1,536)
 (877)
Dividends paid in cash
 -
 -
 -
 -
 -
 (354,161)
 (354,161)
 -
 (354,161)
Balance at September 30, 2015
1,180,537
118,054
609,733
 (959,488)
 (315,549)
11,334,204
11,967,491
154,667
12,122,158
 
 
Attributable to owners of the parent
    
 
Share Capital (1)
Legal Reserves
Share Premium
Currency Translation Adjustment
Other Reserves
Retained Earnings
Total
Non-controlling interests
Total
                 
(Unaudited)
Balance at December 31, 2013
1,180,537
118,054
609,733
 (406,744)
 (305,758)
11,094,598
12,290,420
179,446
12,469,866
                   
Income for the period
 -
 -
 -
 -
 -
911,599
911,599
23,335
934,934
Currency translation adjustment
 -
 -
 -
(125,307)
 -
 -
(125,307)
(621)
(125,928)
Remeasurements of post employment benefit obligations, net of taxes
 -
 -
 -
 -
3,363
 -
3,363
1
3,364
Change in value of available for sale financial instruments and cash flow hedges net of tax
 -
 -
 -
 -
(1,000)
 -
(1,000)
249
(751)
Share of other comprehensive income of non-consolidated companies
 -
 -
 -
(37,623)
(933)
 -
(38,556)
 -
(38,556)
Other comprehensive income (loss) for the period
 -
 -
 -
(162,930)
1,430
 -
(161,500)
(371)
(161,871)
Total comprehensive income (loss) for the period
 -
 -
 -
 (162,930)
1,430
911,599
750,099
22,964
773,063
Acquisition of non-controlling interests
 -
 -
 -
 -
8
 -
8
(148)
(140)
Dividends paid in cash
 -
 -
 -
 -
 -
(354,161)
(354,161)
(48,289)
(402,450)
Balance at September 30, 2014 (Restated)
1,180,537
118,054
609,733
(569,674)
(304,320)
11,652,036
12,686,366
153,973
12,840,339
 
(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 September 30, 2015 and 2014 there were 1,180,536,830 shares issued. All issued shares are fully paid.
(2) 
The Distributable Reserve and Retained Earnings as of September 30, 2015 calculated in accordance with Luxembourg Law are disclosed in Note 12.

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 Restated Consolidated Financial Statements and notes for the fiscal year ended December 31, 2014.
 
 
3
 
Tenaris S.A. Consolidated Condensed Interim Financial Statements for the nine-month period ended September 30, 2015
 
CONSOLIDATED CONDENSED INTERIM STATEMENT OF CASH FLOWS

(all amounts in thousands of U.S. dollars)
        
Nine-month period ended September 30,
  
   
Notes
    
2015
    
2014
  
Cash flows from operating activities
        
(Unaudited)
  
               
(Restated)
  
(Loss) income for the period
           (29,401 )     934,934  
Adjustments for:
                      
Depreciation and amortization
  
9 & 10
       460,416       459,258  
Impairment charge
     6       400,314       -  
Income tax accruals less payments
             (112,002 )     78,146  
Equity in earnings of non-consolidated companies
             (6,809 )     193,224  
Interest accruals less payments, net
             3,003       (31,205 )
Changes in provisions
             (15,865 )     5,425  
Changes in working capital
             1,350,106       267,983  
Other, including currency translation adjustment
             (37,447 )     (69,989 )
Net cash provided by operating activities
             2,012,315       1,837,776  
                         
Cash flows from investing activities
                        
Capital expenditures
  
9 & 10
       (824,082 )     (714,367 )
Changes in advance to suppliers of property, plant and equipment
             23,316       (50,652 )
Investment in non-consolidated companies
     13       -       (1,380 )
Acquisition of subsidiaries
             -       (27,157 )
Net loan to non-consolidated companies
     13       (16,671 )     (10,725 )
Proceeds from disposal of property, plant and equipment and intangible assets
             2,894       8,223  
Dividends received from non-consolidated companies
             20,674       17,429  
Changes in investments in securities
             (780,045 )     (932,598 )
Net cash used in investing activities
             (1,573,914 )     (1,711,227 )
                         
Cash flows from financing activities
                        
Dividends paid
     8       (354,161 )     (354,161 )
Dividends paid to non-controlling interest in subsidiaries
             -       (48,289 )
Acquisitions of non-controlling interests
             (877 )     (140 )
Proceeds from borrowings (*)
             1,454,833       2,088,212  
Repayments of borrowings (*)
             (1,436,803 )     (1,817,881 )
Net cash used in financing activities
             (337,008 )     (132,259 )
                         
Increase (decrease) in cash and cash equivalents
             101,393       (5,710 )
Movement in cash and cash equivalents
                        
At the beginning of the period
             416,445       598,145  
Effect of exchange rate changes
             (21,366 )     (9,251 )
Increase (decrease) in cash and cash equivalents
             101,393       (5,710 )
At September 30,
             496,472       583,184  
                         
           
At September 30,
  
Cash and cash equivalents
             2015       2014  
Cash and bank deposits
             497,753       584,270  
Bank overdrafts
             (1,281 )     (1,086 )
              496,472       583,184  

(*) 
Mainly related to the renewal of short-term local facilities carried out during the nine-month period ending September 30, 2015 and 2014, 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 Restated Consolidated Financial Statements and notes for the fiscal year ended December 31, 2014.
 
 
 
4
 
Tenaris S.A. Consolidated Condensed Interim Financial Statements for the nine-month period ended September 30, 2015
 
 
 
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
Other operating income (expense), net
7
Financial results
8
Dividend distribution
9
Property, plant and equipment, net
10
Intangible assets, net
11
Cash and cash equivalents and other investments
12
Contingencies, commitments and restrictions to the distribution of profits
13
Investments in non-consolidated companies
14
Related party transactions
15
Fair value
16
Subsequent event








 
5
 
Tenaris S.A. Consolidated Condensed Interim Financial Statements for the nine-month period ended September 30, 2015


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 29 to the Company’s audited Restated Consolidated Financial Statements for the year ended December 31, 2014.

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 November 4, 2015.

Restatement of 2014 Financial Statements
 
On May 28, 2015, the Company restated its Consolidated Financial Statements for the year ended December 31, 2014 to reduce the carrying amount of the Company’s investment in Usiminas. All information as of December 31, 2014 included in these Consolidated Condensed Interim Financial Statements is derived from the Company's audited Restated Consolidated Financial Statements for the year ended December 31, 2014 and Restated Consolidated Condensed Interim Financial Statements as of and for the nine-month period ended September 30, 2014.

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 Restated Consolidated Financial Statements for the year ended December 31, 2014. These Consolidated Condensed Interim Financial Statements should be read in conjunction with the audited Restated Consolidated Financial Statements for the year ended December 31, 2014, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standard Board (“IASB”) and 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’ 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 the risk management department or in any risk management policies since the year ended December 31, 2014.

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

None of the accounting pronouncements issued after December 31, 2014 and as of the date of these Financial Statements have a material effect on the Company’s financial condition or result of operations.


 
6
 
Tenaris S.A. Consolidated Condensed Interim Financial Statements for the nine-month period ended September 30, 2015


3 
Segment information

Reportable operating segment

(all amounts in thousands of U.S. dollars)
(Unaudited)
Nine-month period ended September 30, 2015
Tubes
Other
Total
IFRS - Net Sales
5,151,665
529,162
5,680,827
       
Management View - Operating income
704,823
45,454
750,277
·   Differences in cost of sales and others
 (170,733)
 (7,776)
 (178,509)
·   Depreciation and amortization/Impairment
 (401,812)
1,080
 (400,732)
IFRS - Operating income
132,278
38,758
171,036
Financial income (expense), net
    
 (4,936)
Income before equity in earnings of non-consolidated companies and income tax
    
166,100
Equity in earnings of non-consolidated companies
    
6,809
Income before income tax
    
172,909
       
Capital expenditures
789,216
34,866
824,082
Depreciation and amortization
444,859
15,557
460,416

(all amounts in thousands of U.S. dollars)
(Unaudited)
Nine-month period ended September 30, 2014
Tubes
Other
Total
       
IFRS - Net Sales
7,085,040
576,417
7,661,457
       
Management View - Operating income
1,476,196
22,751
1,498,947
·   Differences in cost of sales and others
40,275
9,698
49,973
·   Depreciation and amortization
 (356)
93
 (263)
IFRS - Operating income
1,516,115
32,542
1,548,657
Financial income (expense), net
    
39,399
Income before equity in earnings of non-consolidated companies and income tax
    
1,588,056
Equity in earnings of non-consolidated companies
    
 (193,224)
Income before income tax
    
1,394,832
       
Capital expenditures
690,438
23,929
714,367
Depreciation and amortization
442,652
16,606
459,258


In the nine-month period ended September 30, 2015, net income under management view amounted to $252.3 million, while under IFRS amounted to $29.4 million loss. In addition to the above, the main differences arise from the impact of functional currencies on financial result, income taxes, changes in inventories standard costs and the result of investments in non-consolidated companies.

Geographical information

 
(Unaudited)
(all amounts in thousands of U.S. dollars)
North America
South America
Europe
Middle East & Africa
Far East & Oceania
Total
Nine-month period ended September 30, 2015
            
Net sales
2,310,458
1,642,445
603,232
896,689
228,003
5,680,827
Capital expenditures
557,055
154,188
65,372
28,305
19,162
824,082
Depreciation and amortization
260,632
93,534
84,208
7,464
14,578
460,416
             
Nine-month period ended September 30, 2014
            
Net sales
3,594,536
1,568,996
755,739
1,445,859
296,327
7,661,457
Capital expenditures
336,555
271,878
87,866
3,773
14,295
714,367
Depreciation and amortization
251,796
90,013
94,231
7,549
15,669
459,258

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, Colombia and Ecuador; “Europe” comprises principally Italy, United Kingdom, Norway and Romania; “Middle East and Africa” comprises principally Angola, Iraq, Nigeria, Saudi Arabia, United Arab Emirates, Kazakhstan and Congo and “Far East and Oceania” comprises principally China, Indonesia and Japan.
 
 
 
7
 
Tenaris S.A. Consolidated Condensed Interim Financial Statements for the nine-month period ended September 30, 2015
 

 
4 
Cost of sales

 
Nine-month period ended September 30,
(all amounts in thousands of U.S. dollars)
2015
2014
 
(Unaudited)
Inventories at the beginning of the period
2,779,869
2,702,647
     
Plus: Charges of the period
    
Raw materials, energy, consumables and other
1,528,439
2,939,612
Increase in inventories due to business combinations
 -
4,338
Services and fees
240,925
334,169
Labor cost
751,783
904,535
Depreciation of property, plant and equipment
274,484
273,952
Amortization of intangible assets
17,694
10,818
Maintenance expenses
147,556
162,689
Allowance for obsolescence
49,317
2,108
Taxes
17,328
14,353
Other
77,839
103,975
 
3,105,365
4,750,549
Less: Inventories at the end of the period
(2,023,626)
(2,825,108)
 
3,861,608
4,628,088

For the nine-month period ended September 30, 2015, labor cost include approximately $85.6 million of severance indemnities related to the adjustment of the workforce to current market conditions.

5 
Selling, general and administrative expenses

 
Nine-month period ended September 30,
(all amounts in thousands of U.S. dollars)
2015
2014
 
(Unaudited)
Services and fees
120,229
139,261
Labor cost
465,279
453,672
Depreciation of property, plant and equipment
14,005
15,134
Amortization of intangible assets
154,233
159,354
Commissions, freight and other selling expenses
284,891
448,771
Provisions for contingencies
17,671
27,610
Allowances for doubtful accounts
26,312
27,811
Taxes
101,880
117,488
Other
70,809
98,099
 
1,255,309
1,487,200

For the nine-month period ended September 30, 2015, labor cost include approximately $57 million of severance indemnities related to the adjustment of the workforce to current market conditions.

6 
Other operating income (expense), net

 
Nine-month period ended September 30,
(all amounts in thousands of U.S. dollars)
2015
2014
 
(Unaudited)
Other operating income and expenses
7,440
2,488
Impairment charge
(400,314)
 -
 
(392,874)
2,488

 
 
8
 
Tenaris S.A. Consolidated Condensed Interim Financial Statements for the nine-month period ended September 30, 2015
 

 
6 
Other operating income (expense), net (Cont.)

Impairment charge

Tenaris’s main source of revenue is the sale of products and services to the oil and gas industry, and the level of such sales is sensitive to international oil and gas prices and their impact on drilling activities.
 
A further decline in oil prices and futures in July is resulting in further reductions in investments by Tenaris customers. Drilling activity and demand for Tenaris products and services, particularly in North America, continues to decline. Selling prices for Tenaris products in North America are also affected by high levels of unfairly traded imported products (including the accumulation of excess inventories of imported products). Tenaris conducted an impairment test over its main assets and determined a charge of $400,3 million during the third quarter of 2015,  which affected its welded pipe assets in USA.

At September 30, 2015 the carrying value of the goodwill impaired was as follows:

 (all amounts in thousands of U.S. dollars)
 Assets before impairment
 Impairment
 Assets after impairment
 CGU OCTG - USA
1,382,993
(400,314)
982,679
 
 
The value-in-use was used to determine the recoverable value. Value-in-use is calculated by discounting the estimated cash flows over a five year period based on forecasts approved by management. For the subsequent years beyond the five-year period, a terminal value is calculated based on perpetuity considering a nominal growth rate of 2%. The growth rate considers the long-term average growth rate for the oil and gas industry, the higher demand to offset depletion of existing fields and the Company’s expected market penetration.

The main key assumptions, used in estimating the value in use are oil and natural gas prices evolution, the level of drilling activity and Tenaris’s market share.

For purposes of assessing key assumptions, Tenaris uses external sources of information and management judgment based on past experience.

The discount rate used was 9.2%, based on the respective weighted average cost of capital (WACC) which is considered to be a good indicator of capital cost. The WACC was determined taking into account the industry, country and size of the business.

The main factors that could result in additional impairment charges in future periods would be an increase in the discount rate / decrease in growth rate used in the Company’s cash flow projections and a further deterioration of the business, competitive and economic factors, such as the oil and gas prices, capital expenditure program of Tenaris’s clients, the evolution of the rig count, the competitive environment and the cost of raw materials.

For OCTG - USA an increase of 100 Bps in the discount rate would generate an additional impairment of $126 million;  a decline of 100 Bps in the growth rate would generate an additional impairment of $96 million; and a decline of 5% in the cash flow projections would generate an additional  impairment of $49 million.


 
 
9
 
Tenaris S.A. Consolidated Condensed Interim Financial Statements for the nine-month period ended September 30, 2015

 

7 
Financial results

(all amounts in thousands of U.S. dollars)
Nine-month period ended September 30,
 
2015
2014
 
(Unaudited)
     Interest Income
26,439
29,468
     Net result on changes in FV of financial assets at FVTPL
(800)
4,673
Finance Income
25,639
34,141
Finance Cost
(20,341)
(36,499)
     Net foreign exchange transactions results (*)
(27,803)
59,094
     Foreign exchange derivatives contracts results
31,734
(11,839)
     Other
(14,165)
(5,498)
Other Financial results
(10,234)
41,757
Net Financial results
(4,936)
39,399

(*) For the nine-month period ended September 30, 2015, include the negative impact from the Brazilian Real devaluation against the U.S. dollar denominated borrowings in Brazil. For the nine-month period ended September 30, 2014 include the positive impact from the Argentine peso devaluation against the U.S. dollar on the Argentine peso denominated borrowings and liabilities.

8 
Dividend distribution

On May 6, 2015 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 27, 2014 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 20, 2015. In the aggregate, the interim dividend paid in November 2014 and the balance paid in May 2015 amounted to approximately $531.3 million.

On May 7, 2014 the Company’s Shareholders approved an annual dividend in the amount of $0.43 per share ($0.86 per ADS). The amount approved included the interim dividend previously paid in November 21, 2013 in the amount of $0.13 per share ($0.26 per ADS). The balance, amounting to $0.30 per share ($0.60 per ADS), was paid on May 22, 2014. In the aggregate, the interim dividend paid in November 2013 and the balance paid in May 2014 amounted to approximately $507.6 million.

9 
Property, plant and equipment, net

(all amounts in thousands of U.S. dollars)
2015
2014
 
(Unaudited)
Nine-month period ended September 30,
    
Opening net book amount
5,159,557
4,673,767
Currency translation adjustment
(133,558)
(79,704)
Additions (*)
771,880
654,551
Disposals
(2,136)
(7,638)
Increase due to business combinations- consolidation of joint operations
 -
12,430
Transfers
718
(414)
Depreciation charge
(288,489)
(289,086)
At September 30,
5,507,972
4,963,906

(*) The increase is mainly due to the progress in the construction of the greenfield seamless facility in Bay City, Texas.

10 
Intangible assets, net

(all amounts in thousands of U.S. dollars)
2015
2014
 
(Unaudited)
Nine-month period ended September 30,
    
Opening net book amount
2,757,630
3,067,236
Currency translation adjustment
(16,155)
(1,863)
Additions
52,202
59,816
Increase due to business combinations
 -
19,066
Transfers
(718)
414
Impairment charge (See Note 6)
(400,314)
 -
Amortization charge
(171,927)
(170,172)
Disposals
(758)
(585)
At September 30,
2,219,960
2,973,912
 
 
 
 
10
 
Tenaris S.A. Consolidated Condensed Interim Financial Statements for the nine-month period ended September 30, 2015
 
 
11 
Cash and cash equivalents and other investments

(all amounts in thousands of U.S. dollars)
At September 30,
At December 31,
 
2015
2014
Cash and cash equivalents
(Unaudited)
  
Cash at banks
132,460
120,772
Liquidity funds
242,544
110,952
Short – term investments
122,749
185,921
 
497,753
417,645
     
Other investments - current
    
Fixed Income (time-deposit, zero coupon bonds, commercial papers)
1,076,808
718,877
Bonds and other fixed Income
1,080,203
817,823
Fund Investments
181,761
301,679
 
2,338,772
1,838,379
Other investments - Non-current
    
Bonds and other fixed Income (*)
279,652
 -
Others
1,665
1,539
 
281,317
1,539
     
(*) Related to investments designated as held to maturity and measured at amortized cost.

12 
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 Restated Consolidated Financial Statements for the year ended December 31, 2014.

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' material ongoing legal proceedings:

 
§
Tax assessment in Italy

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 EUR282 million (approximately $316 million), comprising principal, interest and penalties, was appealed with the tax court in Milan. In February 2014, the tax court issued its decision on this tax assessment, partially reversing the assessment for 2007 and lowering the claimed amount to approximately EUR9 million (approximately $10 million), including principal, interest and penalties. On October 2, 2014, the Italian tax authorities appealed against the tax court decision on the first assessment. On June 12, 2015, the tax court accepted the defense arguments by the Tenaris subsidiary 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.
 
 
 
 
11
 
Tenaris S.A. Consolidated Condensed Interim Financial Statements for the nine-month period ended September 30, 2015
 

 
12 
Contingencies, commitments and restrictions to the distribution of profits (Cont.)

Contingencies (Cont.)

On December 24, 2013, the Italian subsidiary received a second tax assessment from the Italian tax authorities related to allegedly omitted withholding tax on dividend payments made in 2008. This second assessment, based on the same arguments of the first assessment, is for an estimated amount, as of September 30, 2015, of EUR248 million (approximately $278 million), comprising principal, interest and penalties. On February 20, 2014, the assessment for 2008 was appealed with the tax court in Milan. A first hearing on this appeal was held on June 22, 2015, a second on October 12, 2015 and a new hearing will take place on December 21, 2015.

Based on the tax court decisions on the first assessment, Tenaris believes that it is not probable that the ultimate resolution of either the first or the second tax assessment will result in a material obligation.

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

In 2013, 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.

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 issued its decision finding in favor of Confab and the other defendants and dismissing the CSN lawsuit. The claimants appealed the court decision and the defendants filed their response to the appeal. It is currently expected that the court of appeals will issue its judgment on the appeal in the first half of 2016.

The Company is aware that on November 10, 2014, CSN filed a separate complaint with Brazil’s securities regulator Comissão de Valores Mobiliários (CVM) on the same grounds and with the same purpose as the lawsuit referred to above. The CVM proceeding is underway and the Company has not yet been served with process or requested to provide its response.

Finally, on December 11, 2014, CSN filed a claim with Brazil’s antitrust regulator Conselho Administrativo de Defesa Econômica (CADE). In its claim, CSN alleged that the antitrust clearance request related to the January 2012 acquisition, which was approved by CADE without restrictions in August 2012, contained a false and deceitful description of the acquisition aimed at frustrating the minority shareholders’ right to a tag-along tender offer, and requested that CADE investigate and reopen the antitrust review of the acquisition and suspend the Company’s voting rights in Usiminas until the review is completed. On May 6, 2015, CADE rejected CSN’s claim. CSN did not appeal the decision and on May 19, 2015, CADE finally closed the file.

Tenaris believes that all of CSN's claims and allegations are groundless and without merit, as confirmed by several opinions of Brazilian legal counsel and previous decisions by CVM, including a February 2012 decision determining that the above mentioned acquisition did not trigger any tender offer requirement, and, more recently, the first instance court decision on this matter first referred to above. Accordingly, no provision was recorded in these Consolidated Condensed Interim Financial Statements.

 
 
 
 
12
 
Tenaris S.A. Consolidated Condensed Interim Financial Statements for the nine-month period ended September 30, 2015
 

 
12 
Contingencies, commitments and restrictions to the distribution of profits (Cont.)

Commitments

Set forth is a description of Tenaris’ 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 May 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 12-month prior notice. Due to the current 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 Tenaris is temporarily allowed to purchase steel volumes in accordance with its needs. As of September 30, 2015, the estimated aggregate contract amount through September 30, 2016, calculated at current prices, is approximately $264 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 $397 million related to the investment plan to expand Tenaris’ U.S. operations with the construction of a state-of-the-art seamless pipe mill in Bay City, Texas. As of September 30, 2015 approximately $718.7 million had already been invested.

Restrictions to the distribution of profits and payment of dividends

As of December 31, 2014, 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 result for the year ended December 31, 2014
21,072,180
Total equity in accordance with Luxembourg law
22,980,504

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 September 30, 2015, this reserve was 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.

At December 31, 2014, distributable amount under Luxembourg law totals $21.7 billion, as detailed below:
 
 
(all amounts in thousands of U.S. dollars)
  
Retained earnings at December 31, 2013 under Luxembourg law
21,899,189
Other income and expenses for the year ended December 31, 2014
(295,767)
Dividends approved
(531,242)
Retained earnings at December 31, 2014 under Luxembourg law
21,072,180
Share premium
609,733
Distributable amount at December 31, 2014 under Luxembourg law
21,681,913

13 
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’ suppliers of round steel bars and flat steel products for its pipes business.

At September 30, 2015, the closing price of Ternium’s ADSs as quoted on the New York Stock Exchange was $12.3 per ADS, giving Tenaris’ ownership stake a market value of approximately $282.3 million (Level 1). At September 30, 2015, the carrying value of Tenaris’ ownership stake in Ternium, based on Ternium’s IFRS financial statements, was approximately $485.4 million.
 
 
 
13
 
Tenaris S.A. Consolidated Condensed Interim Financial Statements for the nine-month period ended September 30, 2015
 
 
13 
Investments in non-consolidated companies (Cont.)

 
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’ principal supplier of flat steel in Brazil for its pipes and industrial equipment businesses.

At September 30, 2015, the closing price of the Usiminas’ ordinary shares as quoted on the BM&FBovespa Stock Exchange was BRL8.26 (approximately $2.1) per share, giving Tenaris’ ownership stake a market value of approximately $51.9 million (Level 1). At September 30, 2015, the carrying value of Tenaris’ ownership stake in Usiminas, was approximately $66.9 million.

 
c)
Techgen, S.A. de C.V. (“Techgen”)
 
Techgen is a Mexican project company currently undertaking the construction and operation of a natural gas-fired combined cycle electric power plant in the Pesquería area of the State of Nuevo León, Mexico, with a power capacity of between 850 and 900 megawatts. As of February 2014, Tenaris completed the initial investments in Techgen of 22% of its share capital, the remaining ownership is held by Ternium and Tecpetrol International S.A. (a wholly-owned subsidiary of San Faustin S.A., the controlling shareholder of both Tenaris and Ternium) by 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 June 1, 2016 and ending on May 31, 2036, and a party to a contract for the purchase of power generation equipment and other services related to the equipment. As of September 30, 2015, Tenaris exposure under these agreements amount to $62.6 million and $4.7 million respectively.

Tenaris issued a Corporate Guarantee covering 22% of the obligations of Techgen under a syndicated loan agreement between Techgen and several banks. The loan agreement amounted to $800 million to be 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 September 30, 2015, disbursements under the loan agreement amounted $782 million, as a result the amount guaranteed by Tenaris was approximately $172 million. If the loan is disbursed in full, the amount guaranteed by Tenaris will be approximately $176 million.

14 
Related party transactions

As of September 30, 2015:  

§
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 shares 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’ directors and senior management as a group owned 0.13% 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”.
 
 
 
 
14
 
Tenaris S.A. Consolidated Condensed Interim Financial Statements for the nine-month period ended September 30, 2015
 

14 
Related party transactions (Cont.)

The following transactions were carried out with related parties.

 
 (all amounts in thousands of U.S. dollars)
Nine-month period ended September 30,
   
2015
  
2014
(i)
Transactions
(Unaudited)
 
(a) Sales of goods and services
      
 
Sales of goods to non-consolidated parties
21,150
  
19,943
 
Sales of goods to other related parties
72,207
  
76,968
 
Sales of services to non-consolidated parties
7,483
  
7,131
 
Sales of services to other related parties
3,201
  
2,340
   
104,041
  
106,382
         
 
(b) Purchases of goods and services
      
 
Purchases of goods to non-consolidated parties
222,867
  
204,937
 
Purchases of goods to other related parties
21,051
  
27,327
 
Purchases of services to non-consolidated parties
11,800
  
23,707
 
Purchases of services to other related parties
56,372
  
65,648
   
312,090
  
321,619
         
 
 (all amounts in thousands of U.S. dollars)
At September 30,
  
At December 31,
   
2015
  
2014
(ii)
Period-end balances
(Unaudited)
    
 
(a) Arising from sales / purchases of goods / services
      
 
Receivables from non-consolidated parties
69,181
  
104,703
 
Receivables from other related parties
30,906
  
31,628
 
Payables to non-consolidated parties
 (35,613)
  
 (53,777)
 
Payables to other related parties
 (17,132)
  
 (28,208)
   
47,342
  
54,346
         
 
(b) Financial debt
      
 
Borrowings from other related parties
 -
  
 (200)
   
 -
  
 (200)
 
15 
Fair Value

 
§
Measurement

IFRS 13 requires for financial instruments that are measured at fair value, a disclosure of fair value measurements by level.

The following table presents the assets and liabilities that are measured at fair value as of September 30, 2015 and December 31, 2014:

September 30, 2015
Level 1
Level 2
Level 3 (*)
Total
Assets
        
Cash and cash equivalents
497,753
 -
 -
497,753
Other investments
1,428,204
910,568
1,462
2,340,234
Derivatives financial instruments
 -
36,223
 -
36,223
Available for sale assets
 -
 -
21,572
21,572
Total
1,925,957
946,791
23,034
2,895,782
Liabilities
        
Derivatives financial instruments
 -
55,288
 -
55,288
Total
 -
55,288
 -
55,288

 
 
 
15
 
Tenaris S.A. Consolidated Condensed Interim Financial Statements for the nine-month period ended September 30, 2015
 

 
15 
Fair Value (Cont.)

 
§
Measurement (Cont.)


December 31, 2014
Level 1
Level 2
Level 3 (*)
Total
Assets
        
Cash and cash equivalents
417,645
 -
 -
417,645
Other investments
1,277,465
560,914
1,539
1,839,918
Derivatives financial instruments
 -
25,588
 -
25,588
Available for sale assets
 -
 -
21,572
21,572
Total
1,695,110
586,502
23,111
2,304,723
Liabilities
        
Derivatives financial instruments
 -
56,834
 -
56,834
Total
 -
56,834
 -
56,834

(*) Main balances included in this level correspond to Available for sale assets related to Tenaris’ interest in the nationalized Venezuelan companies. For further detail regarding Available for sale assets, see Note 30 to the Company’s audited Restated Consolidated Financial Statements for the year ended December 31, 2014.

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).

There were no transfers between Level 1 and 2 during the period.

The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by Tenaris is the current bid price. These instruments are included in Level 1 and comprise primarily corporate and sovereign debt securities.

The fair value of financial instruments that are not traded in an active market (such as certain debt securities, certificates of deposits with original maturity of more than three months, forward and interest rate derivative instruments) is determined by using valuation techniques which maximize the use of observable market data where available and rely as little as possible on entity specific estimates. If all significant inputs required to value an instrument are observable, the instrument is included in Level 2. Tenaris values its assets and liabilities included in this level using bid prices, interest rate curves, broker quotations, current exchange rates, forward rates and implied volatilities obtained from market contributors as of the valuation date.

If one or more of the significant inputs are not based on observable market data, the instruments are included in Level 3. Tenaris values its assets and liabilities in this level using observable market inputs and management assumptions which reflect the Company’s best estimate on how market participants would price the asset or liability at measurement date.

 
§
Estimation

Financial assets or liabilities classified as assets at fair value through profit or loss are measured under the framework established by the IASB accounting guidance for fair value measurements and disclosures.

The fair values of quoted investments are generally based on current bid prices. If the market for a financial asset is not active or no market is available, fair values are established using standard valuation techniques.

Some of Tenaris investments are designated as held to maturity and measures at amortized cost. Tenaris estimates that the fair value of these financial assets is 97.9% of its carrying amount including interests accrued as of September 30, 2015.

For the purpose of estimating the fair value of Cash and cash equivalents and Other Investments expiring in less than ninety days from the measurement date, the Company usually chooses to use the historical cost because the carrying amount of financial assets and liabilities with maturities of less than ninety days approximates to their fair value. 
 
 
 
16
 
Tenaris S.A. Consolidated Condensed Interim Financial Statements for the nine-month period ended September 30, 2015
 
 
15 
Fair Value (Cont.)

 
§
Estimation (Cont.)

The fair value of all outstanding derivatives is determined using specific pricing models that include inputs that are observable in the market or can be derived from or corroborated by observable data. The fair value of forward foreign exchange contracts is calculated as the net present value of the estimated future cash flows in each currency, based on
observable yield curves, converted into U.S. dollars at the spot rate of the valuation date.

Borrowings are comprised primarily of fixed rate debt and variable rate debt with a short term portion where interest has already been fixed, they are classified under other financial liabilities and measured at their carrying amount. Tenaris estimates that the fair value of its main financial liabilities is approximately 99.7% and 99.9% of its carrying amount including interests accrued as of September 30, 2015 and 2014, respectively. Fair values were calculated using standard valuation techniques for floating rate instruments and comparable market rates for discounting flows.

16 
Subsequent event
 
Interim dividend payment
 
On November 4, 2015, the Company’s Board of Directors approved the payment of an interim dividend of $0.15 per share ($0.30 per ADS), or approximately $177 million, payable on November 25 2015, with and ex-dividend date of November 23, 2015.
 
 
 

 
Edgardo Carlos
 
Chief Financial Officer
 
17