Tenaris SA Annual Report 2014

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FY2014 Annual Report · Tenaris SA

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Restated Annual Report
on the Consolidated
Financial Statements
for the Fiscal Year
2014

Tenaris’ 2014 annual report was previously issued on March 31, 2015.

For more information concerning this restatement see “General

This restated annual report reflects the restatement of the Company’s

Information-Restatement of previously issued financial statements”

consolidated financial statements for the fiscal year 2014 in connection

and note 12 “Investments in non-consolidated companies –

with the reduction of the carrying value of Tenaris’ investment in

Usiminas”, to our audited restated consolidated financial statements

Usinas Siderúrgicas de Minas Gerais S.A. – Usiminas (“Usiminas”)

included in this restated annual report.

to $122 million as of September 30, 2014, following a revision of its

value in use calculation.

Certain defined terms

Cautionary statement concerning

Unless otherwise specified or if the context so requires:

forward-looking statements

•

References in this restated annual report to “the Company” refer

made by us to the public may contain “forward-looking statements”.

exclusively to Tenaris S.A., a Luxembourg public limited liability

Forward looking statements are based on management’s current views

company (société anonyme).

and assumptions and involve known and unknown risks that could cause

•

References in this restated annual report to “Tenaris”, “we”, “us”

actual results, performance or events to differ materially from those

This restated annual report and any other oral or written statements

or “our” refer to Tenaris S.A. and its consolidated subsidiaries. See

expressed or implied by those statements.

Accounting Policies A, B and L to our audited restated consolidated

financial statements included in this restated annual report.

We use words such as “aim”, “will likely result”, “will continue”,

•

References in this restated annual report to “San Faustin” refer to San

“contemplate”, “seek to”, “future”, “objective”, “goal”, “should”,

Faustin S.A., a Luxembourg public limited liability company (société

“will pursue”, “anticipate”, “estimate”, “expect”, “project”, “intend”,

anonyme) and the Company’s controlling shareholder.

“plan”, “believe” and words and terms of similar substance to identify

•

“Shares” refers to ordinary shares, par value $1.00, of the Company.

forward-looking statements, but they are not the only way we identify

“ADSs” refers to the American Depositary Shares, which are evidenced

such statements. This restated annual report contains forward-looking

by American Depositary Receipts, and represent two Shares each.

statements, including with respect to certain of our plans and current

“OCTG” refers to oil country tubular goods.

goals and expectations relating to Tenaris’s future financial condition

“tons” refers to metric tons; one metric ton is equal to 1,000

and performance. Sections of this restated annual report that by

kilograms, 2,204.62 pounds, or 1.102 U.S. (short) tons.

their nature contain forward-looking statements include, but are not

“billion”” refers to one thousand million, or 1,000,000,000.

limited to, “Business Overview”, “Principal Risks and Uncertainties”,

“U.S. dollars”, “US$”, “USD” or “$” each refers to the United States dollar.

and “Operating and Financial Review and Prospects”. In addition

to the risks related to our business discussed under “Principal Risks

and Uncertainties”, other factors could cause actual results to differ

Presentation of certain financial and other information

materially from those described in the forward-looking statements.

These factors include, but are not limited to:

ACCOUNTING PRINCIPLES

We prepare our consolidated financial statements in conformity

•

our ability to implement our business strategy or to grow through

with International Financial Reporting Standards, as issued by the

acquisitions, joint ventures and other investments;

International Accounting Standards Board, or IFRS, and adopted by the

•

the competitive environment and our ability to price our products

European Union, or E.U.

and services in accordance with our strategy;

We publish consolidated financial statements expressed in U.S. dollars.

drilling worldwide;

Our restated consolidated financial statements included in this restated

•

general macroeconomic and political conditions in the countries in

annual report are those as of December 31, 2014 and 2013, and for

which we operate or distribute pipes; and

the years ended December 31, 2014, 2013 and 2012.

•

our ability to absorb cost increases and to secure supplies of essential

•

trends in the levels of investment in oil and gas exploration and

raw materials and energy.

ROUNDING

Certain monetary amounts, percentages and other figures included in

By their nature, certain disclosures relating to these and other risks are

this restated annual report have been subject to rounding adjustments.

only estimates and could be materially different from what actually

Accordingly, figures shown as totals in certain tables may not be the

occurs in the future. As a result, actual future gains or losses that may

arithmetic aggregation of the figures that precede them, and figures

affect our financial condition and results of operations could differ

expressed as percentages in the text may not total 100% or, as

materially from those that have been estimated. You should not place

applicable, when aggregated may not be the arithmetic aggregation

undue reliance on the forward-looking statements, which speak only

of the percentages that precede them.

as of the date of this restated annual report. Except as required by law,

we are not under any obligation, and expressly disclaim any obligation

to update or alter any forward-looking statements, whether as a result

of new information, future events or otherwise.

Index

05.

Leading indicators

06.

Letter from the Chairman

08.

Company profile

09.

Management report

09.

Information on Tenaris

09.

10.

13.

14.

16.

19.

37.

42.

43.

44.

45.

The Company

Overview

History and Development of Tenaris

Business Overview

Research and Development

Tenaris in numbers

Principal Risks and Uncertainties

Operating and Financial Review and Prospects

Quantitative and Qualitative Disclosure

about Market Risk

Recent Developments

Environmental Regulation

Related Party Transactions

Employees

Corporate Governance

63.

Management certification

Financial information

65.

Restated Consolidated Financial Statements

161.

Investor information

Annual Report4.

TenarisLeading indicators

TUBES SALES VOLUMES (thousands of tons)

Seamless

Welded

Total

TUBES PRODUCTION VOLUMES (thousands of tons)

Seamless

Welded

Total

FINANCIAL INDICATORS (millions of $)

Net sales

Operating income

EBITDA (2)

Net income

Cash flow from operations

Capital expenditures

BALANCE SHEET (millions of $)

Total assets

Total borrowings

Net financial debt / (cash) (3)

Total liabilities

Shareholders’ equity including non-controlling interests

PER SHARE / ADS DATA ($ per share / per ADS) (4)

Number of shares outstanding (5) (thousands of shares)

Earnings per share

Earnings per ADS

Dividends per share (6)

Dividends per ADS (6)

ADS Stock price at year-end

NUMBER OF EMPLOYEES (5)

2014

Restated(1)

2,790

885

3,675

2,940

908

3,848

2013

2012

2,612

1,049

3,661

2,611

988

3,599

2,676

1,188

3,864

2,806

1,188

3,994

10,338

10,597

10,834

1,899

2,720

1,181

2,044

1,089

16,511

999

(1,257)

3,704

12,806

2,185

2,795

1,574

2,377

753

15,931

931

(911)

3,461

12,470

2,357

2,875

1,702

1,856

790

15,960

1,744

271

4,460

11,500

1,180,537

0.98

1.96

0.45

0.90

30.21

27,816

1.31

2.63

0.43

0.86

43.69

26,825

1.44

2.88

0.43

0.86

41.92

26,673

1. The consolidated financial statements for the year ended December 31, 2014, included in the

previously issued annual report, have been restated to reduce the carrying amount of the Company’s
investment in Usiminas. For more information, see “I General Information” to our audited restated
consolidated financial statements included in this restated annual report.

3. Defined as borrowings less cash and cash
equivalents and other current investments.

5. As of December 31.

6. Paid in respect of the year.

4. Each ADS represents two shares.

2. Defined as operating income plus depreciation, amortization and impairment charges/(reversals). In

2014, the EBITDA figure excludes an impairment charge of $206 million on our welded pipe
operations in Colombia and Canada and in 2012, the EBITDA figure excludes a non-recurring gain
of $49 million, corresponding to a tax related lawsuit collected in Brazil.

Annual ReportLetter from the Chairman

Dear Shareholders,

We successfully completed a satisfactory year in 2014 with a record level of monthly shipments in December. We
continued to make progress in North America and other areas, with shipments of seamless pipe products rising
7% year on year. However, our sales of high value premium products were affected by the onset of inventory
adjustments in Saudi Arabia in the second half and overall sales were further affected by an exceptionally low
level of demand in Brazil. These offsetting trends resulted in our overall sales and EBITDA remaining at the
same level of 2013 as we successfully maintained our margins at an industry-leading level.

Our positioning in shale and deepwater operations worldwide contributed strongly to these results. Sales of OCTG
products for U.S. onshore operations rose 24% year on year. In Argentina, sales of OCTG rose by 13% year on
year as YPF continued to explore the potential of the Vaca Muerta shale. Sales to Gulf of Mexico deepwater
projects rose significantly year on year, and in sub-Saharan Africa they rose a further 12% consolidating the good
performance of 2013.

2014 was also a good year for the deployment of our new premium products for complex deepwater and HPHT
applications. Our BlueDock™ connector was successfully run by Petrobras in Brazil and Repsol in Trinidad. In the
Gulf of Mexico, we successfully qualified our Wedge 623™ and Blue® Riser connections for Shell’s Mars B project.
And we successfully introduced our Blue® Quick Seal, Blue® Max and Blue® Heavy Wall connections for deepwater
and HPHT operations in the North Sea and Angola. In the last few months, this success has been complemented
by significant contract awards for TengizChevroil’s operations in Kazakhstan, for Maersk’s UK operations in the
North Sea, and Statoil’s Mariner project in the North Sea.

During the year, we made progress with our investment plans focused on enhancing our capability to produce
high-end products, strengthening our position in North America, improving health and safety conditions and
reducing our environmental footprint.

We reinforced our safety routines during the year. In addition to our Safe Hour meetings, we established regular
meetings with our sub-contractors to share our safety-first priorities, introduced a communications campaign
throughout the company centered on 12 basic safety rules and extended our Safestart training program. The
Safestart program was first introduced in our Conroe mill in the U.S. in 2011 and aims to encourage personal
responsibility for safety and reduce injuries on and off the job by focusing on risk perception. Our safety indicators
for the year show a mixed result but the trend in the second half was positive and we recorded our lowest quarterly
values for our main safety indicators in the fourth quarter. We will continue to focus on improving our safety
performance, which is an essential element of our competitive differentiation in the eyes of our customers and the
communities where we operate.

The market environment that faces us in 2015 is very different from that we have had in the past few years. Demand
for oil and gas has grown at a lower pace than the additional supply of tight oil from the shales in North America,
and the imbalance led to a sudden change in the circumstances that allowed the price of oil to remain in a range of
around $100 per barrel for over 3 years. Customers have reacted to the collapse in oil and LNG prices by cutting their
investment budgets and looking for a structural change in their costs of operations. We estimate that overall market
demand for OCTG in 2015 will decline by around 30% compared to 2014, including reductions in inventory.

Despite the rapid reaction by oil and gas companies, it will take time to rebalance oil supply and demand. We
are, therefore, preparing for what could be a prolonged downturn. We are confident however that the longer-term
fundamentals of the oil and gas industry remain positive. Demand for oil and gas will grow with the improvement
in the global economy, decline rates are accelerating impacted by the higher incidence of shale production, and we
see the long-term equilibrium in oil and gas prices at a higher level than the prices of today.

Tenaris7.

We are working actively with our customers to help them reduce costs by optimization of processes and efficient
management of pipe materials and inventories and optimum product selection to support their level of activity. At the
same time, we are adjusting our operations to fit the new environment. We are reducing our labor costs worldwide
through a wide set of measures, while preserving our key competences and maintaining our focus on the relation with
our communities. The costs of our metallic load are declining and we are optimizing allocation among our plants to
take advantage of currency movements and differential operating costs. We are reviewing our fixed costs with a view
to making our structure more efficient and are taking actions to reduce our investment in working capital.

In the United States and Canada, despite the rapid decline in the market, we are seeing opportunities to improve
elements of the supply chain system and expand market share against imports. Although unfairly traded imports from
Korea continue at a very high level in spite of the trade case ruling of August, we expect that domestic producers should
have an opportunity to displace them on competitive terms. By 2017, when our Bay City mill will enter operations, we
expect the market will have recovered and domestic producers should be able to effectively serve the market.

Our long term investment plan, including Bay City, will continue in 2015, but we are confident that our cash
flow from operations will be sufficient to cover these investments and maintain our dividend payments.

We are also maintaining our strong focus on training, that has positioned Tenaris as a leader in corporate
education. We expanded our agreement with edX, the open, online learning initiative founded by Harvard and MIT.
TenarisUniversity, in cooperation with the Roberto Rocca Technical School, produced its first MOOC (Massive
Online Open Course) – an Introduction to Computer Numerical Control – aimed at young technical students. Over
4,000 participants have enrolled in the course from 100 different countries with a 22% completion rate and a very
high rating, well above the average for MOOCs in general. This year, we will produce several further MOOCs and
use the edX platform for several Special Purpose Online Courses aimed at our own training needs.

We concluded 2014 with operating income of $1.9 billion on sales of $10.3 billion and earnings per share of $1.14(1),
13% lower than 2013, as we recorded impairment charges of $206 million on the value of our welded pipe assets in
Colombia and Canada. Our cash flow from operations remained strong and we ended the year with a net cash position
of $1.3 billion after investing $1.1 billion in capital expenditure and paying out $531 million in dividends. Considering
the change in market conditions and the high level of our capital expenditure commitments, we are proposing to
maintain the final dividend at 30 cents per share, making for an increase in the total annual dividend of 5%.

We believe that we entered this downturn in a better position than our competitors based on our strong
financial position, our global positioning, our extensive customer base and the quality of our products and
services. We are also confident that we will emerge from it with our competitive positioning strengthened and
fully prepared to support our customers in a new cycle.

This is a difficult time for our industry and our employees. I would like to thank them for their contribution to
last year’s results and their ongoing commitment as we position the company for the new market environment.
I would also like to express my thanks to our customers, suppliers and shareholders for their continuing support
and confidence in Tenaris.

March 30, 2015

/s/ Paolo Rocca

Paolo Rocca

(1) Earnings per share as of February 18, 2015. This figure was restated to earnings per share of $0.98 subsequent to the issuance

of this letter, on May 28, 2015. For more information, see “I General Information” to our audited restated consolidated
financial statements included in this restated annual report.

Annual ReportCompany profile

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Tenaris is a leading supplier of tubes and related services for the world’s energy industry and certain other
industrial applications. Our mission is to deliver value to our customers through product development,
manufacturing excellence and supply chain management. We seek to minimize risk for our customers and
help them reduce costs, increase flexibility and improve time-to-market. Our employees around the world
are committed to continuous improvement by sharing knowledge across a single global organization.

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A

Information
on Tenaris

The Company
Our holding company’s legal and commercial name
is Tenaris S.A. The Company was established as a
public limited liability company (société anonyme)
organized under the laws of the Grand Duchy of
Luxembourg. The Company’s registered office is
located at 29 avenue de la Porte-Neuve, 3rd Floor,
L-2227, Luxembourg, telephone (352) 2647-8978.

The Company has no branches. For information
on the Company’s subsidiaries, see note 30
“Principal subsidiaries” to our audited restated
consolidated financial statements included in this
restated annual report.

Overview
We are a leading global manufacturer and supplier of
steel pipe products and related services for the world’s
energy industry and for other industrial applications.
Our customers include most of the world’s leading oil
and gas companies as well as engineering companies
engaged in constructing oil and gas gathering,
transportation, processing and power generation
facilities. Our principal products include casing,
tubing, line pipe, and mechanical and structural pipes.

We operate an integrated worldwide network of
steel pipe manufacturing, research, finishing and
service facilities with industrial operations in the
Americas, Europe, Asia and Africa and a direct
presence in most major oil and gas markets.

Our mission is to deliver value to our customers
through product development, manufacturing
excellence, and supply chain management. We seek
to minimize risk for our customers and help them
reduce costs, increase flexibility and improve time-
to-market. Our employees around the world are
committed to continuous improvement by sharing
knowledge across a single global organization.

History and Development of Tenaris
Tenaris began with the formation of Siderca
S.A.I.C., or Siderca, the sole Argentine
producer of seamless steel pipe products, by San
Faustin’s predecessor in Argentina in 1948. We
acquired Siat, an Argentine welded steel pipe
manufacturer, in 1986. We grew organically in
Argentina and then, in the early 1990s, began
to evolve beyond this initial base into a global
business through a series of strategic investments.
These investments included the acquisition,
directly or indirectly, of controlling or strategic
interests in the following companies:

•

Tubos de Acero de México S.A., or Tamsa, the sole
Mexican producer of seamless steel pipe products
(June 1993);
Dalmine S.p.A., or Dalmine, a leading
Italian producer of seamless steel pipe products
(February 1996);
Tubos de Acero de Venezuela S.A., or Tavsa, the
sole Venezuelan producer of seamless steel pipe
products (October 1998)(1);
Confab Industrial S.A., or Confab, the leading
Brazilian producer of welded steel pipe products
(a controlling interest in August 1999, and the
remainder during the second quarter of 2012);
NKKTubes, a leading Japanese producer of
seamless steel pipe products (August 2000);
Algoma Tubes Inc., or AlgomaTubes, the sole
Canadian producer of seamless steel pipe
products (October 2000);
S.C. Silcotub S.A., or Silcotub, a leading Romanian
producer of seamless steel pipe products (July 2004);

(1) In 2009, the Venezuelan government nationalized Tavsa and other
companies in which we had investments. For more information on
the Tavsa nationalization process, see note 30 “Nationalization
of Venezuelan Subsidiaries” to our restated audited consolidated
financial statements included in this restated annual report.

10.

•

Maverick Tube Corporation, or Maverick, a
leading North American producer of welded steel
pipe products with operations in the United States,
Canada and Colombia (October 2006);
Hydril Company, or Hydril, a leading North
American manufacturer of premium connection
products for oil and gas drilling production
(May 2007);
Seamless Pipe Indonesia Jaya, or SPIJ, an Indonesian
oil country tubular goods, or OCTG, processing
business with heat treatment and premium
connection threading facilities (April 2009);
Pipe Coaters Nigeria Ltd, the leading company in
the Nigerian coating industry (November 2011);
Usinas Siderúrgicas de Minas Gerais S.A., or
Usiminas, where through our subsidiary Confab,
we hold an interest representing 5.0% of the shares
with voting rights and 2.5% of the total share
capital (January 2012); and
a sucker rod business, in Campina, Romania
(February 2012).

In addition, we have established a global network
of pipe finishing, distribution and service facilities
with a direct presence in most major oil and gas
markets and a global network of research and
development centers.

Business Overview
Our business strategy is to continue expanding our
operations worldwide and further consolidate our
position as a leading global supplier of high-quality
tubular products and services to the energy and
other industries by:

•

pursuing strategic investment opportunities in
order to strengthen our presence in local and
global markets;

•

expanding our comprehensive range of products
and developing new high-value products designed
to meet the needs of customers operating in
increasingly challenging environments;
securing an adequate supply of production inputs
and reducing the manufacturing costs of our core
products; and
enhancing our offer of technical and pipe
management services designed to enable customers
to optimize their selection and use of our products
and reduce their overall operating costs.

Pursuing strategic investment opportunities

and alliances
We have a solid record of growth through strategic
investments and acquisitions. We pursue selective
strategic investments and acquisitions as a means
to expand our operations and presence in selected
markets, enhance our global competitive position
and capitalize on potential operational synergies.
Our track record on companies’ acquisitions is
described above (See “History and Development of
Tenaris”). In addition, we continue to build a new
greenfield seamless mill in Bay City, Texas. The
new facility will include a state-of-the-art rolling
mill as well as finishing and heat treatment lines.
We plan to bring the 600,000 tons per year capacity
mill and logistics center into operation in 2017,
within a budget in a range of $1.5 billion to $1.8
billion. As of December 31, 2014, approximately
$0.4 billion had already been invested and an
additional $0.5 billion had been committed.

Developing high-value products
We have developed an extensive range of high-value
products suitable for most of our customers’
operations using our network of specialized
research and testing facilities and by investing in our
manufacturing facilities. As our customers expand

Tenaris11.

their operations, we seek to supply high-value
products that reduce costs and enable them to operate
safely in increasingly challenging environments.

Securing inputs for our manufacturing operations
We seek to secure our existing sources of raw
material and energy inputs, and to gain access to
new sources, of low-cost inputs which can help us
maintain or reduce the cost of manufacturing our
core products over the long term. For example, in
February 2014, we entered into an agreement with
our affiliates Ternium and Tecpetrol to build a
natural gas-fired combined cycle electric power plant
in Mexico¸ expected to be completed in 2016, which
would supply Tenaris’s and Ternium’s respective
Mexican industrial facilities. For information on
the new power plant, see note 12 c) “Investments
in non-consolidated companies – Techgen S.A. de
C.V.” to our audited restated consolidated financial
statements included in this restated annual report.

Enhancing our offer of technical and pipe

management services
We continue to enhance our offer of technical
and pipe management services for our customers
worldwide. Through the provision of these
services, we seek to enable our customers to
optimize their operations, reduce costs and to
concentrate on their core businesses. They are also
intended to differentiate us from our competitors
and further strengthen our relationships with
our customers worldwide through long-term
agreements. For example, in Mexico, since
1994, we supply Pemex, the state-owned oil
company, one of the world’s largest crude oil and
condensates producers under just-in-time, or JIT,
agreements, which allow us to provide it with
comprehensive pipe management services on a
continuous basis.

Our Competitive Strengths
We believe our main competitive strengths include:
our global production, commercial and
distribution capabilities, offering a full product
range with flexible supply options backed up by
local service capabilities in important oil and gas
producing and industrial regions around the world;
our ability to develop, design and manufacture
technologically advanced products;
our solid and diversified customer base and
historic relationships with major international
oil and gas companies around the world, and our
strong and stable market shares in the countries in
which we have manufacturing operations;
our proximity to our customers;
our human resources around the world with their
diverse knowledge and skills;
our low-cost operations, primarily at state-of-the-
art, strategically located production facilities with
favorable access to raw materials, energy and labor,
and more than 60 years of operating experience; and
our strong financial condition.

•

•
•

•

Business Segments
Tenaris has one major business segment, Tubes,
which is also the reportable operating segment.

The Tubes segment includes the production and
sale of both seamless and welded steel tubular
products and related services mainly for the oil
and gas industry, particularly oil country tubular
goods (OCTG) used in drilling operations, and
for other industrial applications with production
processes that consist in the transformation of steel
into tubular products. Business activities included
in this segment are mainly dependent on the oil
and gas industry worldwide, as this industry is a
major consumer of steel pipe products, particularly

Annual Report12.

OCTG used in drilling activities. Demand for steel
pipe products from the oil and gas industry has
historically been volatile and depends primarily
upon the number of oil and natural gas wells being
drilled, completed and reworked, and the depth and
drilling conditions of these wells. Sales are generally
made to end users, with exports being done through
a centrally managed global distribution network
and domestic sales made through local subsidiaries.
Corporate general and administrative expenses have
been allocated to the Tubes segment.

Others include all other business activities and
operating segments that are not required to be
separately reported, including the production and
selling of sucker rods, welded steel pipes for electric
conduits, industrial equipment, coiled tubing, energy
and raw materials that exceed internal requirements.

For more information on our business segments,
see accounting policy C “Segment information”
to our audited restated consolidated financial
statements included in this restated annual report.

Our Products
Our principal finished products are seamless
and welded steel casing and tubing, line pipe and
various other mechanical and structural steel pipes
for different uses. Casing and tubing products are
also commonly referred to as OCTG products.
We manufacture our steel pipe products in a wide
range of specifications, which vary in diameter,
length, thickness, finishing, steel grades, threading
and coupling. For most complex applications,
including high pressure and high temperature
applications, seamless steel pipes are usually

specified and, for some standard applications,
welded steel pipes can also be used.

Casing
Steel casing is used to sustain the walls of oil and
gas wells during and after drilling.

Tubing
Steel tubing is used to conduct crude oil and natural
gas to the surface after drilling has been completed.

Line pipe
Steel line pipe is used to transport crude oil and
natural gas from wells to refineries, storage tanks
and loading and distribution centers.

Mechanical and structural pipes
Mechanical and structural pipes are used by
general industry for various applications, including
the transportation of other forms of gas and
liquids under high pressure.

Cold-drawn pipe
The cold-drawing process permits the production of
pipes with the diameter and wall thickness required
for use in boilers, superheaters, condensers, heat
exchangers, automobile production and several other
industrial applications.

Premium joints and couplings
Premium joints and couplings are specially designed
connections used to join lengths of steel casing
and tubing for use in high temperature or high
pressure environments. A significant portion of our
steel casing and tubing products are supplied with
premium joints and couplings. We own an extensive
range of premium connections, and following the

Tenaris13.

integration of the premium connections business
of Hydril , we market our premium connection
products under the TenarisHydril brand name. In
addition, we hold licensing rights to manufacture
and sell the Atlas Bradford range of premium
connections outside of the United States.

Coiled tubing
Coiled tubing is used for oil and gas drilling and
well workovers and for subsea pipelines.

Other Products
We also manufacture sucker rods used in oil
extraction activities, industrial equipment of
various specifications and diverse applications,
including liquid and gas storage equipment, and
welded steel pipes for electric conduits used in
the construction industry. In addition, we sell raw
materials that exceed our internal requirements.

In addition, our global technical sales team is made
up of experienced engineers who work with our
customers to identify solutions for each particular
oil and gas drilling environment.

Product development and research currently
being undertaken are focused on the increasingly
challenging energy markets and include:

•

•
•

proprietary premium joint products including
Dopeless® technology;
heavy wall deep water line pipe, risers and
welding technology;
proprietary steels;
tubes and components for the car industry
and mechanical applications;
tubes for boilers;
welded pipes for oil and gas and other
applications;
sucker rods; and
coatings.

Research and Development
Research and development, or R&D, of new
products and processes to meet the increasingly
stringent requirements of our customers is an
important aspect of our business.

R&D activities are carried out primarily at our
specialized research facilities located at Campana
in Argentina, at Veracruz in Mexico, at Dalmine in
Italy, at the product testing facilities of NKKTubes
in Japan and at the new R&D center at Ilha do
Fundao, Rio de Janeiro, Brazil (which commenced
operations in 2014). We strive to engage some of
the world’s leading industrial research institutions
to solve the problems posed by the complexities of
oil and gas projects with innovative applications.

In addition to R&D aimed at new or improved
products, we continuously study opportunities
to optimize our manufacturing processes. Recent
projects in this area include modeling of rolling and
finishing process and the development of different
process controls, with the goal of improving
product quality and productivity at our facilities.

We seek to protect our intellectual property, from
R&D and innovation, through the use of patents
and trademarks that allow us to differentiate
ourselves from our competitors.

We spent $107 million for R&D in 2014, compared
to $106 million in 2013 and $83 million in 2012.

Annual Report
NET SALES

EARNINGS PER SHARE

NET SALES BY

BUSINESS SEGMENT

NET SALES BY

REGIONAL AREA

N
O
I
L
L
I
M

D
S
U

12000

10000

8000

7712

6000

10834

10597

10338

9972

D
S
U

1.6

1.4

1.2

1.0

0.8

1.44

1.31

1.13

0.95

0.98

4000

Tenaris in numbers

2000

0.4

0.6

0.2

2010 2011 2012 2013

2014

2010 2011 2012 2013

2014

Trend information

Leading indicators

RIG COUNT INTERNATIONAL
EARNINGS PER SHARE

NET SALES BY
NET SALES BY
BUSINESS SEGMENT
BUSINESS SEGMENT
MISC
GAS

OIL

RIG COUNT USA AND CANADA
NET SALES
NET SALES
NET SALES BY
NET SALES BY
NET SALES BY
BUSINESS SEGMENT
REGIONAL AREA
REGIONAL AREA
GAS

OIL

TUBES
93%

OTHER
7%

MIDDLE EAST
& AFRICA
18%

FAR EAST

& OCEANIA

PERSONNEL EMPLOYED

PER COUNTRY

ROMANIA

COLOMBIA

INDONESIA

CANADA

JAPAN

OTHER

COUNTRIES

EUROPE
9%

SOUTH
AMERICA
21%

NORTH

AMERICA

48%

UNITED

STATES

13%

ITALY

ARGENTINA

23%

BRAZIL

14%

MEXICO

20%

LOST TIME ACCIDENTS INDEX
EARNINGS PER SHARE
EARNINGS PER SHARE
PERSONNEL EMPLOYED
PERSONNEL EMPLOYED
NET SALES BY
REGIONAL AREA
PER COUNTRY
PER COUNTRY

RETURN ON EQUITY
NET SALES BY
NET SALES BY
PERSONNEL EMPLOYED
BUSINESS SEGMENT
BUSINESS SEGMENT
PER COUNTRY

EBITDA MARGIN

NET SALES BY

REGIONAL AREA

NET SALES

EARNINGS PER SHARE

14.

D
S
U

12000

1.6

10000

9972

10834

10597

10338

8000

7712

10000

8000

1.4

1.2
7712
1.0

1.4
9972
1.2

10834

1.44
10597

1.44
10338
1.31

1.31

1.13

1.0

0.95

0.98

6000

0.8

4000

2000

0.6

0.4

0.2

0
2014
2010 2011 2012 2013

2010 2011 2012 2013

2010 2011 2012 2013
2014

2014

S
D
G
S
I
U
R
1200
1.6

1000
1.4

1.2
800
1.0
600
0.8

400
0.6

0.4
200
0.2
0
0

TUBES
93%

226
1.44

960

228

1.13
897

238

825
0.95

248

242

1.31
1004

1050

0.98

2010 2011 2012 2013
2010 2011 2012 2013

2014
2014

OTHER
7%

TUBES
OTHER
93%
7%

S
G
R

MIDDLE EAST
MIDDLE EAST
& AFRICA
& AFRICA
N
N
18%
18%
O
O
I
I
L
L
L
L
I
I
M
M

D
S
U

FAR EAST
& OCEANIA
OTHER
4%
7%

FAR EAST
MIDDLE EAST
N
S
& OCEANIA
& AFRICA
R
S
O
U
T
I
L
N
4%
18%
O
L
E
H
I
M
D
N
C
R
A
C
E
M
A
P

COLOMBIA
2%
TUBES
93%

D
S
U

COLOMBIA
ROMANIA
ROMANIA
2%
6%
6%
INDONESIA
INDONESIA
2%
2%
D
S
CANADA
CANADA
U
4%
4%
1.6
1.6
3.7
1.4

1.44

COLOMBIA
2%

JAPAN
ROMANIA
JAPAN
FAR EAST
6%
2%
2%
& OCEANIA
OTHER
OTHER
4%
COUNTRIES
COUNTRIES
5%
5%

TUBES
93%
INDONESIA
2%
%
CANADA
4%
30

1.4
3.2
1.2

1.2

1.0

3.0
1.13

1.13

1.0

0.95

2.2

0.8

0.6

1.44
1.31

2.7

1.31

0.98

0.5
EUROPE
0
9%

0.4
0.4
UNITED
UNITED
0.2
0.2
STATES
STATES
13%
13%
MEXICO
MEXICO
BRAZIL
BRAZIL
NORTH
SOUTH
0
0
20%
20%
14%
14%
AMERICA
AMERICA
ITALY
ITALY
2014
2010 2011 2012 2013
2010 2011 2012 2013
2010 2011 2012 2013
2014
48%
21%
9%
9%

ARGENTINA
ARGENTINA
23%
23%

UNITED
STATES
13%
0
ITALY
9%

BRAZIL
14%

MEXICO

20%

2014

2010 2011 2012 2013

12000

10000

1027

1092
8000

8000

7712

6000

1263

4000
790
2000

4000

2000

10597
10338

10338

658
9972

10834
9972
503

10834
10597
494

7712
1621

1745

1606

3.5

2.5

1.5

EUROPE
0
9%
2010

NORTH
NORTH
SOUTH
EUROPE
SOUTH
0
AMERICA
AMERICA
AMERICA
AMERICA
9%
2011
2012
2013 2014
2010 2011 2012 2013
2014
2010 2011 2012 2013
2014
48%
48%
21%
21%

Source: Baker Hughes

RIG COUNT INTERNATIONAL

RIG COUNT USA AND CANADA

LOST TIME ACCIDENTS INDEX

RIG COUNT INTERNATIONAL
RIG COUNT INTERNATIONAL
LOST TIME ACCIDENTS INDEX
RETURN ON EQUITY
RETURN ON EQUITY

RETURN ON EQUITY

RIG COUNT USA AND CANADA
EBITDA MARGIN

EBITDA MARGIN

LOST TIME ACCIDENTS INDEX

OIL

GAS

MISC

OIL

OIL
GAS

GAS

MISC
GAS

OIL

GAS

OIL

GAS

MISC

OIL

GAS

248

242

248

1050

1004

1050

1200

1000

242

226

1004

960

226

228

960

897

228

238

897

825

S
G
R

238

825

226
1027

960
1092

228

1092
897

248

242

S
G
R

1027
658
1004

658
1050
503

494
503

494

1621

1621
1606

1745
1606

1745

1263

790

N
O
I
L
L
I
M
R
E
P

S
R
U
O
H
N
A
M

S
T
N
E
D
C
C
A

N
O
I
L
L
I
M
R
E
P

S
R
U
O
H
N
A
M

S
T
N
E
D
C
C
A

3.7

658
3.2

3.2
503
3.0

494
3.0

2.7

1621

1606

1745
2.2

2.2

3.5

3
1092
2.5

1.5

1
790

4
3.7
3.5
1027

2.5

2
1263
1.5

0.5

2010 2011 2012 2013
2012
2011

2010
2011

2010

2014
2013 2014
2012

2013 2014

0
2010

0
2010 2011 2012 2013
2010 2011 2012 2013
2014
2013 2014
2011
2012

2014

N
O
I
L
L
I
M
R
E
P

S
R
U
O
H
N
A
M

S
T
N
E
D
C
C
A

3.5

2.5

1.5

0.5

38
50
248
242

248

1050
1004

1050

50
48
242
226

1004
960
2.7

48
41
226
228

960
897

2.2

S
G
R

1200
30
3.7
1000
25

1200
30
31

1000
238
25
3.2

800
20

825

41
31
228
238

3.0
897
825

600
15

400
10

200
5

0
0

0
0
2010 2011 2012 2013
2010 2011 2012 2013
2014

2010 2011 2012 2013
2014
2010 2011 2012 2013
2014

2010 2011 2012 2013

2014
2014

S
G
R

1027

1027
658

658
503

494
503

494

1092

1092
20

1621

1621
1606

1745
1606

1745

1263

10
790

790

0
2013 2014
2010
2011
2012
2013 2014
2010
2011
2012
2010 2011 2012 2013
2014
2010 2011 2012 2013 2014
2010 2011 2012 2013 2014

Source: Baker Hughes

N
O
I
L
L
I
M
R
E
P

S
R
U
O
H
N
A
M

S
T
N
E
D
C
C
A

N
O
I
L
L
I
M
R
E
P

S
R
U
O
H
N
A
M

S
T
N
E
D
C
C
A

3.2

3.0

2.7

2.2

4
3.7

3.5

3.7

3.2

2.5

1.5

0.5

0
2010 2011 2012 2013
2010 2011 2012 2013 2014

2010 2011 2012 2013

NET SALES

12000

6000

4000

2000

2010 2011 2012 2013

2014

RIG COUNT INTERNATIONAL

1200

1000

238

800

825

600

400

200

800

600

400

200

2010 2011 2012 2013

2014

Source: Baker Hughes

OTHER

COUNTRIES

ARGENTINA

23%

2014

JAPAN

OTHER

MIDDLE EAST

& AFRICA

18%

FAR EAST

& OCEANIA

PERSONNEL EMPLOYED

PER COUNTRY

ROMANIA

COLOMBIA

JAPAN

INDONESIA

CANADA

OTHER

COUNTRIES

EUROPE

SOUTH

NORTH

AMERICA

2010 2011 2012 2013 2014

21%

48%

ITALY

UNITED

STATES

ARGENTINA

23%

13%

BRAZIL

MEXICO

14%

20%

RETURN ON EQUITY

EBITDA MARGIN

2014

2010 2011 2012 2013

2014

2010 2011 2012 2013 2014

Tenaris

NET SALES

EARNINGS PER SHARE

NET SALES

NET SALES BY
NET SALES BY
EARNINGS PER SHARE
BUSINESS SEGMENT
BUSINESS SEGMENT

NET SALES BY
REGIONAL AREA

NET SALES BY
NET SALES BY
REGIONAL AREA
BUSINESS SEGMENT

TUBES
93%

D
S
U

1.6

1.4

1.2

1.0

0.8

0.6

0.4

0.2

OTHER
7%

MIDDLE EAST
MIDDLE EAST
& AFRICA
& AFRICA
TUBES
18%
18%
93%

FAR EAST
FAR EAST
& OCEANIA
& OCEANIA
OTHER
4%
4%
7%

1.44

1.31

1.13

0.95

0.98

2010 2011 2012 2013

2014

EUROPE
EUROPE
9%
9%

SOUTH
SOUTH
AMERICA
AMERICA
21%
21%

NORTH
NORTH
AMERICA
AMERICA
48%
48%

ROMANIA
6%

PERSONNEL EMPLOYED
PERSONNEL EMPLOYED
NET SALES BY
PER COUNTRY
PER COUNTRY
REGIONAL AREA
ROMANIA
COLOMBIA
COLOMBIA
2%
2%
6%
MIDDLE EAST
INDONESIA
INDONESIA
& AFRICA
2%
2%
18%
CANADA
CANADA
4%
4%

JAPAN
JAPAN
2%
2%
FAR EAST
& OCEANIA
OTHER
OTHER
4%
COUNTRIES
COUNTRIES
5%
5%

UNITED
STATES
13%

UNITED
STATES
13%
EUROPE
ITALY
9%
9%

ITALY
9%

BRAZIL
14%

ARGENTINA
23%

MEXICO
20%

MEXICO
SOUTH
20%
AMERICA
21%

NORTH
AMERICA
48%

15.
PERSONNEL EMPLOYED
PER COUNTRY

ROMANIA
6%

COLOMBIA
2%

INDONESIA
2%
CANADA
4%

JAPAN
2%
OTHER
COUNTRIES
5%

UNITED
STATES
13%

ITALY
9%

ARGENTINA
23%

MEXICO
20%

BRAZIL
14%

NET SALES

EARNINGS PER SHARE

RIG COUNT INTERNATIONAL

NET SALES BY

RIG COUNT USA AND CANADA

RIG COUNT USA AND CANADA
RIG COUNT INTERNATIONAL

NET SALES BY

LOST TIME ACCIDENTS INDEX
RIG COUNT USA AND CANADA

LOST TIME ACCIDENTS INDEX
PERSONNEL EMPLOYED
PER COUNTRY

RETURN ON EQUITY

RETURN ON EQUITY
LOST TIME ACCIDENTS INDEX

EBITDA MARGIN

EBITDA MARGIN
RETURN ON EQUITY

EBITDA MARGIN

S
T
N
E
D
C
C
A

N
O
I
L
L
I
M
R
E
P

S
R
U
O
H
N
A
M
30
4

494
2.7

1745

25
3.5

3
20
2.5
15
2

10
1.5

3.7

3.2

3.0

2.7

2.2

ARGENTINA
23%

2014

2014
2013 2014

1
5
0.5
0
0
2010 2011 2012 2013

2010 2011 2012 2013
2010 2011 2012 2013

2014

2014
2014

%
%

30
30

25
25

20
20

15
15

10
10

5
5

0
0
2010 2011 2012 2013 2014

2010 2011 2012 2013 2014
2010 2011 2012 2013
2014

2010 2011 2012 2013 2014

2014
2014

2010 2011 2012 2013

2010 2011 2012 2013
2014
2010 2011 2012 2013

10000

9972

10834

10597

10338

8000

7712

1.44

10834

1.31

10597
1.31

10338

9972

1.13

1.0

8000

1.0

0.95

7712

0.95

0.98

10834

10597

10338

9972

8000

7712

1.44

1.31

1.13

0.95

0.98

2010 2011 2012 2013

2014

2010 2011 2012 2013

2014

2010 2011 2012 2013

2014

MISC
FAR EAST
& OCEANIA
4%

248

242

494

503
1004

494
1050

1745

1606

1745

1200

1000

1027

228

658

1027

238

226

658

503

960

1092

897

825

1621

1606

1263

800

600

400

200

790

EUROPE

SOUTH

AMERICA

2010

2011

2012

21%

2012

2013 2014
2010 2011 2012 2013

NORTH
AMERICA
2013 2014
48%
2014

2010 2011 2012 2013

2014

BUSINESS SEGMENT

OIL

GAS

MISC

REGIONAL AREA

OIL

MIDDLE EAST

GAS

OTHER

248

& AFRICA

18%

242

226

228

1000

238

800

897

825

1050

1004

960

12000

6000

4000

2000

TUBES

93%

1200

600

400

200

3.5

2.5

1.5

0.5

1.6

12000

1.4

10000

1.2

0.8

6000

0.6

4000

0.4

0.2

2000

0.2

1.6

1.4

1.2

1.0

0.8

0.6

0.4

0.2

12000

10000

6000

4000

2000

1200

1000

800

600

400

200

Source: Baker Hughes

RIG COUNT INTERNATIONAL

RIG COUNT USA AND CANADA

LOST TIME ACCIDENTS INDEX

RETURN ON EQUITY

EBITDA MARGIN

OIL

GAS

MISC

OIL

GAS

248

242

1050

1004

226

960

228

897

238

825

1027

658

494

503

1621

1606

1745

1092

790

1263

3.7

3.2

3.0

2.7

2.2

2010 2011 2012 2013

2014

2010

2011

2012

2013 2014

2010 2011 2012 2013

2014

2010 2011 2012 2013

2014

2010 2011 2012 2013 2014

Source: Baker Hughes

MEXICO
0
20%
2010 2011 2012 2013
2012

ROMANIA
6%
N
N
S
S
R
R
S
O
O
INDONESIA
U
U
T
I
I
L
L
N
O
O
L
L
2%
E
H
H
I
I
M
M
D
N
N
C
R
R
A
A
CANADA
C
S
E
E
M
M
G
A
P
P
4%
R
4

BRAZIL
14%
2010 2011 2012 2013
2010

1
1
UNITED
0.5
0.5
STATES
13%
0
ITALY
9%

3.7

3.2

3.2
1027
3.0

658
3.0

1263

790

3.5

1.5

2.5

1092

2.2
1621

2.2
1606

S
T
N
E
D
C
C
A

4
3.7

503
2.7

2011

OIL

COLOMBIA
2%

GAS

JAPAN
2%
OTHER
COUNTRIES
5%

Annual Report

16.

Principal risks
and uncertainties

We face certain risks associated to our business
and the industry in which we operate. We are a
global steel pipe manufacturer with a strong focus
on manufacturing products and related services for
the oil and gas industry. Demand for our products
depends primarily on the level of exploration,
development and production activities of oil and
gas companies which is affected by current and
expected future prices of oil and natural gas.
Several factors, such as the supply and demand
for oil and gas, and political and global economic
conditions, affect these prices. For example, the
current fall in oil and gas prices and in drilling
activity is resulting in a decline in consumption and
demand of OCTG products which will negatively
affect our revenues and profitability. Performance
may be further affected by changes in governmental
policies (including imposition or strengthening of
trade restrictions), the impact of credit restrictions
on our customers’ ability to perform their payment
obligations with us and any adverse economic,
political or social developments in our major
markets. Furthermore, competition in the global
market for steel pipe products may cause us to lose
market share and hurt our sales and profitability.
Our profitability may also be hurt if increases in
the cost of raw materials and energy could not be
offset by higher selling prices. In addition, there
is an increased risk of unfairly-traded steel pipe
imports in markets in which Tenaris produces and
sells its products. A recession in the developed
countries, a cooling of emerging market economies
or an extended period of below-trend growth in the
economies that are major consumers of steel pipe
products would likely result in reduced demand
of our products, adversely affecting our revenues,
profitability and financial condition.

We have significant operations in various countries,
including Argentina, Brazil, Canada, Colombia,

Italy, Japan, Mexico, Nigeria, Romania and
the United States, and we sell our products and
services throughout the world. Therefore, like other
companies with worldwide operations, our business
and operations have been, and could in the future
be, affected from time to time to varying degrees
by political, economical and social developments
and changes in, laws and regulations. These
developments and changes may include, among
others, nationalization, expropriations or forced
divestiture of assets; restrictions on production,
imports and exports, interruptions in the supply of
essential energy inputs; exchange and/or transfer
restrictions, inability or increasing difficulties to
repatriate income or capital or to make contract
payments; inflation; devaluation; war or other
international conflicts; civil unrest and local security
concerns, including high incidences of crime and
violence involving drug trafficking organizations
that threaten the safe operation of our facilities
and operations; direct and indirect price controls;
tax increases and changes in the interpretation,
application or enforcement of tax laws and other
retroactive tax claims or challenges; changes in laws,
norms and regulations; cancellation of contract
rights; and delays or denials of governmental
approvals. As a global company, a portion of our
business is carried out in currencies other than
the U.S. dollar, which is the Company’s functional
currency. As a result, we are exposed to foreign
exchange rate risk, which could adversely affect our
financial position and results of operations.

Beginnig in 2009, Venezuela nationalized our
investments in Tubos de Acero de Venezuela S.A.
or Tavsa, Matesi, Materiales Siderúrgicos S.A., or
Matesi, and Complejo Siderurgico de Guayana,
C.A., or Comsigua, and Venezuela formally
assumed exclusive operational control over the
assets of the aforementioned companies. Our

Tenarisinvestments in Tavsa, Matesi and Comsigua are
protected under applicable bilateral investment
treaties, including the bilateral investment treaty
between Venezuela and the Belgian-Luxembourgish
Union, and Tenaris continues to reserve all of its
rights under contracts, investment treaties and
Venezuelan and international law. Tenaris has
consented to the jurisdiction of the International
Centre for Settlement of Investment Disputes,
or ICSID, in connection with the nationalization
process. Tenaris and its wholly-owned subsidiary
Talta - Trading e Marketing Sociedad Unipessoal
Lda, or Talta, initiated arbitration proceedings
against Venezuela before the ICSID seeking
adequate and effective compensation for the
expropriation of their investments in Matesi and
Tavsa and Comsigua. However, we can give no
assurance that the Venezuelan government will
agree to pay a fair and adequate compensation for
our interest in Tavsa, Matesi and Comsigua, or that
any such compensation will be freely convertible
into or exchangeable for foreign currency. For
further information on the nationalization
of the Venezuelan subsidiaries, see note 30
“Nationalization of Venezuelan Subsidiaries” to our
audited restated consolidated financial statements
included in this restated annual report.

A key element of our business strategy is to
develop and offer higher value-added products
and services and to continuously identify and
pursue growth-enhancing strategic opportunities.
We must necessarily base any assessment
of potential acquisitions, joint ventures and
investments, on assumptions with respect to
operations, profitability and other matters that
may subsequently prove to be incorrect. Failure to
successfully implement our strategy, or to integrate
future acquisitions and strategic investments, or
to sell acquired assets or business unrelated to our

business under favorable terms and conditions,
could affect our ability to grow, our competitive
position and our sales and profitability.

17.

We may be required to record a significant charge
to earnings if we must reassess our goodwill or
other assets as a result of changes in assumptions
underlying the carrying value of certain assets,
particularly as a consequence of deteriorating
market conditions. At December 31, 2014 we
had $1,745 million in goodwill corresponding
mainly to the acquisition of Hydril, in 2007 ($920
million) and Maverick, in 2006 ($675 million). As
of December 31, 2014, we recorded an impairment
charge of $206 million on the value of our welded
pipe assets in Colombia and Canada ($96 million
on goodwill and the rest on other assets, including
customer relationships), reflecting the decline in
oil prices, and their impact on drilling activity and
the demand outlook for welded pipe products in
the regions served by these facilities. Additionally,
as of September 30, 2014 we also recorded a $161
million impairment on the carrying value of our
investment in Usiminas. This action follows the
conclusion of a discussion with the SEC Staff
after which the Company revised the carrying
value of its Usiminas investment and restated its
financial statements to reduce the carrying amount
of the Usiminas investment to $122 million as of
September 30, 2014. As a result of this restatement,
the financial statements at December 31, 2014 and
March 31, 2015 were also restated to reflect the lower
carrying value of the Usiminas investment. The
Company recalculated value in use as of September
30, 2014, based primarily on the assumptions in
a more conservative scenario, including, among
other revisions, a lower operating income, an
increase in the discount rate and a decrease in the
perpetuity growth rate. If our management were to
determine in the future that the goodwill or other

Annual Report18.

assets were impaired, particularly as a consequence
of deteriorating market conditions, we would be
required to recognize a non-cash charge to reduce the
value of these assets, which would adversely affect
our results of operations.

Potential environmental, product liability and other
claims arising from the inherent risks associated
with the products we sell and the services we render,
including well failures, line pipe leaks, blowouts,
bursts and fires, that could result in death, personal
injury, property damage, environmental pollution or
loss of production could create significant liabilities
for us. Environmental laws and regulations may, in
some cases, impose strict liability (even joint and
several strict liability) rendering a person liable for
damages to natural resources or threats to public
health and safety without regard to negligence or
fault. In addition, we are subject to a wide range
of local, provincial and national laws, regulations,
permit requirements and decrees relating to the
protection of human health and the environment,
including laws and regulations relating to
hazardous materials and radioactive materials and
environmental protection governing air emissions,
water discharges and waste management. Laws
and regulations protecting the environment have
become increasingly complex and more stringent
and expensive to implement in recent years. The
cost of complying with such regulations is not
always clearly known or determinable since some
of these laws have not yet been promulgated or are
under revision. These costs, along with unforeseen
environmental liabilities, may increase our operating
costs or negatively impact our net worth.

We conduct business in certain countries known
to experience governmental corruption. Although
we are committed to conducting business in a
legal and ethical manner in compliance with
local and international statutory requirements
and standards applicable to our business, there
is a risk that our employees or representatives
may take actions that violate applicable laws and
regulations that generally prohibit the making
of improper payments to foreign government
officials for the purpose of obtaining or keeping
business, including laws relating to the 1997
OECD Convention on Combating Bribery of
Foreign Public Officials in International Business
Transactions such as the U.S. Foreign Corrupt
Practices Act, or FCPA.

As a holding company, our ability to pay expenses,
debt service and cash dividends depends on the
results of operations and financial condition of
our subsidiaries, which could be restricted by
legal, contractual or other limitations, including
exchange controls or transfer restrictions, and other
agreements and commitments of our subsidiaries.

The Company’s controlling shareholder may be
able to take actions that do not reflect the will or
best interests of other shareholders.

Our financial risk management is described in
Section III. Financial Risk Management, and our
provisions and contingent liabilities are described
in accounting policy P and notes 22, 23 and 25
of our audited restated consolidated financial
statements included in this restated annual report.

Tenaris19.

Operating and financial
review and prospects

The following discussion and analysis of our
financial condition and results of operations
are based on, and should be read in conjunction
with, our audited restated consolidated financial
statements and the related notes included elsewhere
in this restated annual report. This discussion and
analysis presents our financial condition and results
of operations on a consolidated basis. We prepare our
consolidated financial statements in conformity with
IFRS, as issued by the IASB and adopted by the E.U.

Certain information contained in this discussion
and analysis and presented elsewhere in this
restated annual report, including information with
respect to our plans and strategy for our business,
includes forward looking statements that involve
risks and uncertainties. See “Cautionary Statement
Concerning Forward-Looking Statements”. In
evaluating this discussion and analysis, you should
specifically consider the various risk factors
identified in “Principal Risks and Uncertainties”,
other risk factors identified elsewhere in this
restated annual report and other factors that
could cause results to differ materially from those
expressed in such forward looking statements.

Overview
We are a leading global manufacturer and supplier
of steel pipe products and related services for the
energy industry and other industries.
We are a leading global manufacturer and supplier
of steel pipe products and related services for the
world’s energy industry as well as for other industrial
applications. Our customers include most of the

world’s leading oil and gas companies as well as
engineering companies engaged in constructing oil
and gas gathering and processing and power facilities.
We operate an integrated worldwide network of steel
pipe manufacturing, research, finishing and service
facilities with industrial operations in the Americas,
Europe, Asia and Africa and a direct presence in most
major oil and gas markets.

Our 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.
Demand for our products and services from
the global oil and gas industry, particularly for
tubular products and services used in drilling
operations, represents a substantial majority of
our total sales. Our sales, therefore, depend on
the condition of the oil and gas industry and our
customers’ willingness to invest capital in oil and
gas exploration and development as well as in
associated downstream processing activities. The
level of these expenditures is sensitive to oil and
gas prices as well as the oil and gas industry’s
view of such prices in the future. In the past few
months, crude oil prices have fallen from over $100
per barrel in June 2014 to their current levels of
around $50 per barrel, as rapid production growth
in the U.S. and Canada, slowing global demand
growth and OPEC’s decision not to cut production
levels have combined to create an excess of
supply in the market. Natural gas prices have also
fallen on increased supply and limited demand
growth. In this context, oil and gas operators
are substantially cutting their exploration and

Annual Report20.

production budgets for the year 2015, particularly
in North America, and are focused on reducing
costs throughout their operations.

In 2014, worldwide drilling activity increased
5% compared to the level of 2013. In the United
States the rig count in 2014 increased by 6% and
in Canada by 7%. In the rest of the world, the rig
count increased 3% in 2014. However, due to the
significant decline in oil and gas prices in the past
few months, drilling activity is being reduced rapidly
in North America, with the U.S. rig count falling
573 rigs (31%) sequentially in the first two months
of the year and the Canadian rig count falling 200
rigs (35%) year on year in the same period.

Our business is highly competitive.
The global market for steel pipes is highly
competitive, with the primary competitive factors
being price, quality, service and technology. We
sell our products in a large number of countries
worldwide and compete primarily against
European and Japanese producers in most
markets outside North America. In the United
States and Canada we compete against a wide
range of local and foreign producers. Competition
in markets worldwide has been increasing,
particularly for products used in standard
applications, as producers in countries like China
and Russia increase production capacity and enter
export markets.

A growing proportion of exploration and
production spending by oil and gas companies
has been directed at offshore, deep drilling and
non-conventional drilling operations in which
high-value tubular products, including special
steel grades and premium connections, are usually
specified. Technological advances in drilling
techniques and materials are opening up new areas
for exploration and development. More complex
drilling conditions are expected to continue to
demand new and high value products and services
in most areas of the world.

In addition, there is an increased risk of unfairly-
traded steel pipe imports in markets in which we
produce and sell our products. In August 2014,
the U.S. imposed anti-dumping duties on OCTG
imports from various countries, including Korea.
However, despite the trade case ruling, imports
from Korea continue at a very high level. Similarly,
in Canada, an investigation is underway and while
the final determination on injury is still pending,
in March 2015 the Canada Border Services Agency
introduced anti-dumping duties on OCTG imports
from Korea and other countries.

TenarisOur production costs are sensitive to prices of
steelmaking raw materials and other steel products.
We purchase substantial quantities of steelmaking
raw materials, including ferrous steel scrap,
direct reduced iron (DRI), pig iron, iron ore and
ferroalloys, for use in the production of our
seamless pipe products. In addition, we purchase
substantial quantities of steel coils and plate for use
in the production of our welded pipe products. Our
production costs, therefore, are sensitive to prices
of steelmaking raw materials and certain steel
products, which reflect supply and demand factors
in the global steel industry and in the countries
where we have our manufacturing facilities.

The costs of steelmaking raw materials and of steel
coils and plates declined during 2014, particularly
at the end of the year.

Restatement of Previously Issued Financial
Statements – Carrying value of Usiminas investment
Subsequent to the issuance of the Company’s
audited annual consolidated financial statements
for the years ended December 31, 2014, 2013
and 2012 and following the approval of such
consolidated financial statements by the board of
directors and the general meeting of shareholders,
the Company has restated such consolidated

financial statements to reduce the carrying amount
of the Company’s investment in Usiminas.

21.

This restatement follows the conclusion of
previously disclosed discussions with the SEC
Staff regarding Staff comments relating to the
carrying value of the Company’s investment
in Usiminas under IFRS as of September 30,
2014 and subsequent periods. The Staff had
requested information regarding Tenaris’s
value in use calculations and the differences
between the carrying amounts and certain other
indicators of value, including the purchase
price of BRL12 (approximately $4.8) per share
which the Company’s affiliate Ternium paid in
October 2014 for the acquisition of 51.4 million
additional Usiminas ordinary shares from Caixa de
Previdência dos Funcionários do Banco do Brazil
– PREVI (“PREVI”), and indicated that the PREVI
transaction price provided objective evidence of
the value of the Usiminas investment.

Annual Report22.

combined the assumptions used in two different
projected scenarios. For the purposes of the restated
consolidated financial statements, however, the
Company recalculated value in use as of September
30, 2014 based primarily on the assumptions in the
most conservative scenario, including, among other
revisions, a lower operating income, an increase in
the discount rate and a decrease in the perpetuity
growth rate. As a result, the Company recorded an
impairment of $161.2 million as of September 30,
2014, resulting in a carrying value for the Usiminas
investment of BRL12 per share. In addition,
the Company’s investment in Ternium was also
adjusted to reflect the change in carrying value of
that company’s participation in Usiminas. Because
of this impairment and adjustment as of September
30, 2014, the Company did not record a further
impairment or adjustment as of December 31, 2014.

Accordingly, the Company’s 2014 annual
consolidated financial statements have been
amended and restated to reduce the carrying
amount of the Company’s investment in Usiminas.
The restatement, which is treated as the correction

of an error under accounting rules, impacts the
consolidated statement of financial position, the
consolidated statement of changes in equity, the
consolidated income statement, the consolidated
statement of other comprehensive income and
the consolidated statement of cash flows for the
year ended December 31, 2014. The restatement
impacts only the year ended December 31, 2014.
No impact was recorded on the consolidated
financial statements for the years ended December
31, 2013 and 2012.

Outlook
While the extent and duration of the decline in
drilling activity remains unclear, we expect demand
for OCTG products to decline around 30% in 2015
compared to 2014. We expect that the decline in
drilling activity and demand for OCTG will be
more rapid and pronounced in the United States and
Canada and more gradual in the rest of the world.

For 2015, we expect our sales in the United States
and Canada to be affected by the aforementioned
reduced drilling activity and by the uncertainty

Tenaris23.

concerning the still very high level of unfairly-
traded steel pipe imports and its impact on OCTG
inventories in the United States. In the Eastern
Hemisphere, our sales will be affected by OCTG
destocking in Saudi Arabia and lower offshore
drilling activity in sub-Saharan Africa, the North
Sea and the Far East. However, we expect our
sales in South America to be supported by sales
for pipeline projects in Argentina and Brazil.
The reduction in demand for OCTG is putting
downward pressure on prices.

We are adjusting our operations to face the new
environment, making certain adjustments in our
workforce worldwide and optimizing allocation
among our plants to take advantage of differences
in operating costs and currency movements. We
are also reviewing our fixed costs with a view to
making our structure more efficient. The costs of
our metallic load have been declining, which will
ultimately help to soften the reduction in operating
margins. Additionally, we will continue to focus
on working capital efficiencies, primarily on
inventories and receivables.

Annual Report24.

Results of Operations

Millions of U.S. dollars (except number of shares and per share amounts)

FOR THE YEAR ENDED DECEMBER 31

Selected consolidated income statement data

CONTINUING OPERATIONS

Net sales

Cost of sales

Gross profit

Selling, general and administrative expenses

Other operating income (expenses), net

Operating income

Finance income

Finance cost

Other financial results

Income before equity in earnings of non-consolidated companies and income tax

Equity in earnings (losses) of non-consolidated companies

Income before income tax

Income tax

Income for the year (2)

INCOME ATTRIBUTABLE TO (2)

Owners of the parent

Non-controlling interests

Income for the year (2)

Depreciation and amortization

Weighted average number of shares outstanding

Basic and diluted earnings per share

Dividends per share (3)

(1) The consolidated financial statements for the year ended December 31, 2014, included in the previously
issued annual report, have been restated to reduce the carrying amount of the Company’s investment in
Usiminas. For more information, see “I General Information” to our audited restated consolidated
financial statements included in this restated annual report.

(2) International Accounting Standard No. 1 (“IAS 1”) (revised), requires that income for the year as shown
on the income statement does not exclude non-controlling interests. Earnings per share, however,
continue to be calculated on the basis of income attributable solely to the owners of the parent.

(3) Dividends per share correspond to the dividends paid in respect of the year.

2014

Restated(1)

2013

10,338

(6,287)

4,051

(1,964)

(188)

1,899

(44)

1,932

(165)

1,767

(586)

1,181

1,159

1,181

10,597

(6,457)

4,140

(1,941)

(14)

2,185

(70)

2,156

2,202

(628)

1,574

1,551

1,574

(616)

(610)

1,180,536,830

0.98

0.45

1.31

0.43

Tenaris

Millions of U.S. dollars (except number of shares)

AT DECEMBER 31

Selected consolidated financial position data

Current assets

Property, plant and equipment, net

Other non-current assets

Total assets

Current liabilities

Non-current borrowings

Deferred tax liabilities

Other non-current liabilities

Total liabilities

Capital and reserves attributable to the owners of the parent

Non-controlling interests

Total Equity

Total liabilities and equity

Share capital

Number of shares outstanding

25.

2014

Restated(1)

7,396

5,160

3,955

2013

6,904

4,674

4,353

16,511

15,931

2,603

714

357

3,704

12,654

152

12,806

2,120

246

751

344

3,461

12,290

179

12,470

16,511

15,931

1,181

1,180,536,830

Annual Report

26.

The following table sets forth our operating and
other costs and expenses as a percentage of net
sales for the periods indicated.

Percentage of net sales

FOR THE YEAR ENDED DECEMBER 31

CONTINUING OPERATIONS

Net sales

Cost of sales

Gross profit

Selling, general and administrative expenses

Other operating income (expenses), net

Operating income

Finance income

Finance cost

Other financial results

Income before equity in earnings of non-consolidated companies and income tax

Equity in (losses) earnings of non-consolidated companies

Income before income tax

Income tax

Income for the year

INCOME ATTRIBUTABLE TO

Owners of the parent

Non-controlling interests

2014

Restated(1)

2013

100.0

(60.8)

39.2

(19.0)

(1.8)

18.4

0.4

(0.4)

0.4

18.7

(1.6)

17.1

(5.7)

11.4

11.2

0.2

(60.9)

39.1

(18.3)

(0.1)

20.6

0.3

(0.7)

0.1

20.3

0.4

20.8

(5.9)

14.9

14.6

0.2

TenarisFiscal Year Ended December 31, 2014,
Compared to Fiscal Year Ended December 31, 2013

The following table shows our net sales by business
segment for the periods indicated below:

27.

Millions of U.S. dollars

FOR THE YEAR ENDED DECEMBER 31

Tubes

Others

Total

2014

93%

100%

9,812

784

10,597

2013

93%

100%

Increase /
(Decrease)

(2%)

(4%)

(2%)

9,582

756

10,338

Tubes
The following table indicates, for our Tubes
business segment, sales volumes of seamless and
welded pipes for the periods indicated below:

Thousands of tons

FOR THE YEAR ENDED DECEMBER 31

2014

2013

Seamless

Welded

Total

2,790

885

3,675

2,612

1,049

3,661

Increase /
(Decrease)

(16%)

Annual Report
28.

The following table indicates, for our Tubes business
segment, net sales by geographic region, operating
income and operating income as a percentage of net
sales for the periods indicated below:

Millions of U.S. dollars

FOR THE YEAR ENDED DECEMBER 31

2014

2013

NET SALES

North America

South America

Europe

Middle East & Africa

Far East & Oceania

Total net sales

Operating income

Operating income (% of sales)

4,609

1,823

924

1,817

408

9,582

1,866

19.5%

4,077

2,237

890

2,094

513

9,812

2,097

21.4%

Operating income in 2014 includes an impairment charge of $206 million on our welded pipe operations

in Colombia and Canada.

Increase /
(Decrease)

13%

(19%)

(13%)

(20%)

(2%)

(11%)

Tenaris29.

Net sales of tubular products and services
decreased 2% to $9,582 million in 2014, compared
to $9,812 million in 2013, reflecting flat overall
volumes and a 3% decrease in average selling
prices, driven by a less rich mix of products sold
both for seamless and welded pipes. In North
America, sales increased due to higher sales in the
U.S. shale plays reflecting higher drilling activity
and improved pricing conditions following the final
determination of anti-dumping duties on imports
from Korea and other countries, as well as higher
levels of sales to deepwater projects in the Gulf of
Mexico. In South America, sales decreased due to
a virtual halt of shipments for pipeline products
in Brazil and Argentina, due to our customers
financial and operating constraints. In Europe,
sales increased mainly due to a higher level of sales
of OCTG products in continental Europe. In the
Middle East and Africa, sales decreased mainly due

to lower levels of sales in the Middle East reflecting
the onset of OCTG destocking in Saudi Arabia in
the second half and lower sales in the United Arab
Emirates, partially offset by an increase in sales to
offshore projects in sub-Saharan Africa. In the Far
East and Oceania, sales decreased mainly due to
lower sales of OCTG products in Indonesia and
China and of line pipe products to offshore and
Hydrocarbon Processing Industry projects.

Operating income from tubular products and
services, decreased 11% to $1,866 million in
2014, from $2,097 million in 2013. Operating
income in 2014 includes an impairment charge
of $206 million on our welded pipe operations in
Colombia and Canada. Excluding the impairment
charge operating income and margins would have
been relatively flat as the decline in average selling
prices was offset by a similar decline in costs.

Annual Report30.

Others
The following table indicates, for our Others
business segment, net sales, operating income and
operating income as a percentage of net sales for
the periods indicated below:

Millions of U.S. dollars

FOR THE YEAR ENDED DECEMBER 31

2014

2013

Net sales

Operating income

Operating income (% of sales)

756

4.4%

784

11.2%

Increase /
(Decrease)

(4%)

(62%)

Net sales of other products and services decreased
4% to $756 million in 2014, compared to $784
million in 2013, mainly due to lower sales of
industrial equipment in Brazil, partially offset by
higher levels of sales of coiled tubes and pipes for
electric conduit in the United States.

Operating income from other products and
services, decreased 62% to $33 million in 2014,
from $88 million in 2013, reflecting the reduction
in activity levels in our industrial equipment
business in Brazil, which had a negative impact in
operating performance and margins.

Selling, general and administrative expenses, or
SG&A, increased as a percentage of net sales to
19.0% in 2014 compared to 18.3% in 2013, mainly
due to the effect of a 3% increase in labor costs on
lower sales.

Other operating income and expenses resulted in
expenses of $188 million in 2014, compared to $14
million in 2013, mainly due to an asset impairment
charge in 2014, amounting to $206 million. These
charges mainly reflect the decline in oil prices, and

its impact on drilling activity and therefore on the
expected demand for OCTG products, particularly on
our welded pipe operations in Colombia and Canada.

Financial results amounted to a gain of $33 million
in 2014, compared to a loss of $29 million in 2013.
The improvement in financial results was mainly due
to lower financial costs due to a lower average debt
position compared to the previous year in addition
to a lower proportion of unhedged Argentine peso-
denominated debt (which has higher interest rates).

Equity in earnings (losses) of non-consolidated
companies generated a loss of $165 million in 2014,
compared to a gain of $46 million in 2013. Our 2014
results were negatively affected by a $161 million
impairment charge on our Usiminas investment. See
“General Information-Restatement of previously
issued financial statements” and note 12 “Investments
in non-consolidated companies – Usiminas S.A.”,
to our audited restated consolidated financial
statements included in this restated annual report.

Income tax charges totalled $586 million in 2014,
equivalent to 30.3% of income before equity in

Tenaris31.

earnings of non-consolidated companies and income
tax, compared to $628 million in 2013, equivalent
to 29.1% of income before equity in earnings of
non-consolidated companies and income tax.
During 2014, excluding the part of the impairment
on goodwill ($96 million), which has no effect on
deferred tax, the tax rate would have been 28.9%.

Net income decreased 25% during the year,
to $1,181 million in 2014, compared to
$1,574 million in 2013. This decline is mostly
attributable to a $206 million impairment charge
($171 million after tax) at our Colombian and
Canadian welded pipe operations, plus the $161
million impairment charge at our investment in
Usiminas in Brazil discussed elsewhere in this
restated annual report.

Income attributable to owners of the parent was
$1,159 million, or $0.98 per share ($1.96 per ADS),

in 2014, compared to $1,551 million, or $1.31 per
share ($2.63 per ADS), in 2013. This decline is
mostly attributable to a $206 million impairment
charge ($171 million after tax) at our Colombian
and Canadian welded pipe operations, plus the
$161 million impairment charge at our investment
in Usiminas in Brazil discussed elsewhere in this
restated annual report.

Income attributable to non-controlling interest
was $23 million in 2014, like in 2013. These
results are mainly attributable to NKKTubes, our
Japanese subsidiary.

Liquidity and Capital Resources
The following table provides certain information
related to our cash generation and changes in our
cash and cash equivalents position for each of the
last two years:

Millions of U.S. dollars

FOR THE YEAR ENDED DECEMBER 31

Net cash provided by operating activities

Net cash used in investing activities

Net cash used in financing activities

Decrease in cash and cash equivalents

Cash and cash equivalents at the beginning of year (excluding overdrafts)

Effect of exchange rate changes

Decrease in cash and cash equivalents

Cash and cash equivalents at the end of year (excluding overdrafts)

Bank overdrafts

Other investments

Borrowings

Net cash / (debt)

2014

2013

2,044

(1,786)

(424)

(165)

598

(16)

(165)

416

1,838

(999)

1,257

2,377

(1,309)

(1,217)

(149)

773

(26)

(149)

598

1,227

(931)

911

Annual Report32.

Our financing strategy aims at maintaining adequate
financial resources and access to additional liquidity.
During 2014 we generated $2.0 billion of operating
cash flow, our capital expenditures amounted to $1.1
billion and we paid dividends amounting to $531
million. At the end of the year we had a net cash
position of $1.3 billion, compared to $911 million at
the beginning of the year.

We believe that funds from operations, the availability
of liquid financial assets and our access to external
borrowing through the financial markets will be
sufficient to satisfy our working capital needs, to
finance our planned capital spending program, to
service our debt in the foreseeable future and to
address short-term changes in business conditions.

We have a conservative approach to the management
of our liquidity, which consists mainly of cash and

cash equivalents and other current investments,
comprising cash in banks, liquidity funds and highly
liquid short and medium-term securities. These assets
are carried at fair market value, or at historical cost
which approximates fair market value.

At December 31, 2014, liquid financial assets as
a whole (i.e., cash and cash equivalents and other
current investments) were 13.7% of total assets
compared to 11.6% at the end of 2013.

We hold primarily investments in liquidity
funds and variable or fixed-rate securities from
investment grade issuers. We hold our cash and
cash equivalents primarily in U.S. dollars and in
major financial centers. As of December 31, 2014,
U.S. dollar denominated liquid assets represented
83%, of total liquid financial assets compared to
76% at the end of 2013.

TenarisOperating activities
Net cash provided by operations during 2014
was $2.0 billion, compared to $2.4 billion during
2013. This 14% decrease was mainly attributable
to an increase in working capital needs. During
2014 working capital increased $72 million, while
during 2013 it decreased $189 million. The main
yearly variation was related to an increase in
inventories during 2014, amounting to $73 million,
which compares with a decrease in inventory of
$288 million in 2013. For more information on
cash flow disclosures and changes to working
capital, see note 27 “Cash flow disclosures” to our
audited restated consolidated financial statements
included in this restated annual report.

Investing activities
Net cash used in investing activities was $1.8
billion in 2014, compared to $1.3 billion in 2013.
Capital expenditures increased $336 million,
reaching $1.1 billion in 2014, as we advanced with
the construction of the greenfield seamless mill in
Bay City, Texas.

Financing activities
Net cash used in financing activities, including
dividends paid, proceeds and repayments of
borrowings and acquisitions of non-controlling
interests, was $424 million in 2014, compared to
$1.2 billion in 2013.

Dividends paid during 2014 amounted to $531
million, compared to $508 million in 2013.

33.

During 2014 we had net proceeds from borrowings
of $156 million, mainly related to the renewal
of short-term facilities, while in 2013 we had net
repayments of borrowings of $683 million.

Our total liabilities to total assets ratio was 0.22:1
as of December 31, 2014 and 2013.

Principal Sources of Funding
During 2014, we funded our operations with operating
cash flows and bank financing. Short-term bank
borrowings were used as needed throughout the year.

Financial liabilities
During 2014, borrowings increased by $68 million,
to $999 million at December 31, 2014, from $931
million at December 31, 2013.

Borrowings consist mainly of bank loans. As
of December 31, 2014 U.S. dollar-denominated
borrowings plus borrowings denominated in other
currencies swapped to the U.S. dollar represented
92% of total borrowings.

For further information about our financial debt,
please see note 19 “Borrowings” to our audited
restated consolidated financial statements included
in this restated annual report.

Annual Report34.

The following table shows the composition of our
financial debt at December 31, 2014 and 2013:

Millions of U.S. dollars

Bank borrowings

Bank overdrafts

Finance lease liabilities

Total borrowings

Our weighted average interest rates before tax
(considering hedge accounting), amounted to 1.9%
at December 31, 2014 and to 7.5% at December
31, 2013. The decrease in our weighted average
interest rates is explained by a lower proportion
of unhedged, Argentine peso-denominated debt
(which has higher interest rates).

2014

2013

997

999

913

931

TenarisThe maturity of our financial debt is as follows:

Millions of U.S. dollars

AT DECEMBER 31, 2014

Borrowings

Interests to be accrued

Total

1 year
or less

968

988

1-2
years

2-3
years

3-4
years

4-5
years

Over
5 years

35.

Total

999

1,027

Our current borrowings to total borrowings ratio
increased from 0.74:1 as of December 31, 2013
to 0.97:1 as of December 31, 2014. However, our
liquid financial assets exceed our total borrowings,
we had a net cash position (cash and other current
investments less total borrowings) of $1.3 billion at
December 31, 2014, compared with $911 million
at December 31, 2013.

For information on our derivative financial
instruments, please see “Quantitative and

Qualitative Disclosure about Market Risk –
Accounting for Derivative Financial Instruments
and Hedging Activities” and note 24 “Derivative
financial instruments” to our audited restated
consolidated financial statements included
in this restated annual report.

For information regarding the extent to which
borrowings are at fixed rates, please see
“Quantitative and Qualitative Disclosure about
Market Risk”.

Annual Report

36.

Significant borrowings
Our most significant borrowings as of December 31,
2014 were as follows:

Millions of U.S. dollars

Disbursement date

Borrower

Type

2014

Mainly 2014

December 2014

Tamsa

Siderca

Tubocaribe

Bank loans

(*) The main covenant on this loan agreement is compliance with financial ratios (i.e., leverage ratio).

As of December 31, 2014, Tenaris was in compliance
with all of its covenants.

Original
& Outstanding

Final Maturity

522

183

180

2015

Mainly 2015

December 2015 (*)

Tenaris

Quantitative and Qualitative
Disclosure about Market Risk

The multinational nature of our operations and
customer base expose us to a variety of risks,
including the effects of changes in foreign currency
exchange rates, interest rates and commodity
prices. In order to reduce the impact related to
these exposures, management evaluates exposures
on a consolidated basis to take advantage
of natural exposure netting. For the residual
exposures, we may enter into various derivative
transactions in order to reduce potential adverse
effects on our financial performance. Such
derivative transactions are executed in accordance
with internal policies and hedging practices. We do
not enter into derivative financial instruments for

In millions of U.S. dollars

EXPECTED MATURITY DATE

trading or other speculative purposes, other than
non-material investments in structured products.

37.

The following information should be read together
with section III, “Financial risk management” to our
audited restated consolidated financial statements
included elsewhere in this restated annual report.

Debt Structure
The following tables provide a breakdown of our
debt instruments at December 31, 2014 and 2013
which included fixed and variable interest rate
obligations, detailed by maturity date:

AT DECEMBER 31, 2014

2015

2016

2017

2018

2019

Thereafter

Total (1)

NON-CURRENT DEBT

Fixed rate

Floating rate

CURRENT DEBT

Fixed rate

Floating rate

–

725

243

968

–

725

243

999

AT DECEMBER 31, 2013

2014

2015

2016

2017

2018

Thereafter

Total (1)

EXPECTED MATURITY DATE

NON-CURRENT DEBT

Fixed rate

Floating rate

CURRENT DEBT

Fixed rate

Floating rate

–

616

685

–

219

616

931

(1) As most borrowings are based on short-term fixed rates, or floating rates that approximate market rates, with interest rate

resetting every 3 to 6 months, the fair value of the borrowings approximates its carrying amount and is not disclosed separately.

Annual Report
38.

Our financial liabilities (other than trade payables
and derivative financial instruments) consist
mainly of bank loans. As of December 31, 2014
U.S. dollar denominated financial debt plus debt
denominated in other currencies swapped to the
U.S. dollar represented 92% of total financial debt.
For further information about our financial debt,
please see note 19 “Borrowings” to our audited
restated consolidated financial statements included
in this restated annual report.

Interest Rate Risk
Fluctuations in market interest rates create a degree
of risk by affecting the amount of our interest
payments. At December 31, 2014, we had variable
interest rate debt of $244 million and fixed rate
debt of $755 million ($725 million of the fixed rate

debt are short-term). This risk is to a great extent
mitigated by our investment portfolio.

In addition, in the past, we have entered into foreign
exchange derivative contracts and/or interest rate
swaps in order to mitigate the exposure to changes
in interest rates, but there were no interest rate
derivatives outstanding at December 31, 2014, nor
at December 31, 2013.

Foreign Exchange Rate Risk
We manufacture and sell our products in a
number of countries throughout the world and
consequently we are exposed to foreign exchange
rate risk. Since the Company’s functional currency
is the U.S. dollar, the purpose of our foreign
currency hedging program is mainly to reduce the
risk caused by changes in the exchange rates of
other currencies against the U.S. dollar.

Most of our revenues are determined or
influenced by the U.S. dollar. In addition, most of
our costs correspond to steelmaking raw materials
and steel coils and plates, also determined or
influenced by the U.S. dollar. However, outside

Tenaris39.

the United States, a portion of our expenses is
incurred in foreign currencies (e.g. labor costs).
Therefore, when the U.S. dollar weakens in
relation to the foreign currencies of the countries
where we manufacture our products, the U.S.
dollar-reported expenses increase. In 2014, a 5%
weakening of the U.S. dollar average exchange rate
against the currencies of the countries where we
have labor costs would have decreased operating
income by approximately 4%.

Our consolidated exposure to currency fluctuations
is reviewed on a periodic basis. A number of
hedging transactions are performed in order to
achieve an efficient coverage in the absence of
operative or natural hedges. Almost all of these
transactions are forward exchange rate contracts.

Because certain subsidiaries have functional
currencies other than the U.S. dollar, the results
of hedging activities as reported in the income
statement under IFRS may not reflect entirely
management’s assessment of its foreign exchange risk
hedging needs. Also, intercompany balances between
our subsidiaries may generate exchange rate results
to the extent that their functional currencies differ.

The value of our financial assets and liabilities is
subject to changes arising out of the variation of
foreign currency exchange rates. The following
table provides a breakdown of our main financial
assets and liabilities (including foreign exchange
derivative contracts) that impact our profit and
loss as of December 31, 2014.

All amounts in millions of U.S. dollars

CURRENCY EXPOSURE / FUNCTIONAL CURRENCY

Argentine Peso / U.S. dollar

Euro / U.S. dollar

U.S. dollar / Brazilian real

Long / (Short)
Position

(191)

(189)

(150)

The main relevant exposures as of December 31,
2014 corresponds to Argentine peso-denominated
trade, social and fiscal payables at our Argentine
subsidiaries which functional currency is the
U.S. dollar, and Euro-denominated liabilities at
certain subsidiaries which functional currency is
the U.S. dollar.

Annual Report40.

Foreign Currency Derivative Contracts
The fair value of our foreign currency derivative
contracts amounted to ($31) million at December
31, 2014 and $1 million at December 31, 2013. For
further detail on our foreign currency derivative
contracts, please see note 24 “Derivative financial
instruments – Foreign exchange derivative
contracts and hedge accounting” to our audited
restated consolidated financial statements included
in this restated annual report.

Accounting for Derivative Financial Instruments

and Hedging Activities
Derivative financial instruments are classified as
financial assets (or liabilities) at fair value through
profit or loss. Their fair value is calculated using
standard pricing techniques and, as a general rule, we

recognize the full amount related to the change in its
fair value under financial results in the current period.

We designate for hedge accounting certain
derivatives that hedge risks associated with
recognized assets, liabilities or highly probable
forecast transactions. These instruments are
classified as cash flow hedges. The effective portion
of the fair value of such derivatives is accumulated in
a reserve account in equity. Amounts accumulated in
equity are then recognized in the income statement
in the same period than the offsetting losses and
gains on the hedged item are recorded. The gain or
loss relating to the ineffective portion is recognized
immediately in the income statement. The fair value
of our derivative financial instruments (assets or
liabilities) continues to be reflected on the restated
consolidated statement of financial position.

TenarisAt December 31, 2014, the effective portion of
designated cash flow hedges, included in other
reserves in shareholders’ equity amounted to a
loss of $8 million.

Concentration of credit risk
There is no significant concentration of credit
from customers. No single customer comprised
more than 10% of our net sales in 2014.

Our credit policies related to sales of products
and services are designed to identify customers
with acceptable credit history, and to allow us
to use credit insurance, letters of credit and
other instruments designed to minimize credit
risk whenever deemed necessary. We maintain
allowances for potential credit losses.

41.

Commodity Price Sensitivity
We use commodities and raw materials that
are subject to price volatility caused by supply
conditions, political and economic variables and
other unpredictable factors. As a consequence, we
are exposed to risk resulting from fluctuations in
the prices of these commodities and raw materials.
Although we fix the prices of such raw materials
and commodities for short-term periods, typically
not in excess of one year, in general we do not
hedge this risk. In the past we have occasionally
used commodity derivative instruments to hedge
certain fluctuations in the market prices of raw
material and energy.

Annual ReportRecent
developments

Environmental
regulation

42.

Annual Dividend Approval
On May 6, 2015, the annual general meeting of
shareholders approved an annual dividend of
$0.45 per share ($0.90 per ADS), or approximately
$531 million, which includes the interim
dividend of $0.15 per share ($0.30 per ADS) or
approximately $177 million, paid in November
2014. The dividend of $0.30 per share ($0.60 per
ADS), or approximately $354 million was paid on
May 20, 2015.

We are subject to a wide range of local,
provincial and national laws, regulations,
permit requirements and decrees relating to the
protection of human health and the environment,
including laws and regulations relating to
hazardous materials and radioactive materials and
environmental protection governing air emissions,
water discharges and waste management. Laws
and regulations protecting the environment have
become increasingly complex and more stringent
and expensive to implement in recent years.
International environmental requirements vary.

The ultimate impact of complying with existing
laws and regulations is not always clearly known
or determinable since regulations under some of
these laws have not yet been promulgated or are
undergoing revision. The expenditures necessary
to remain in compliance with these laws and
regulations, including site or other remediation
costs, or costs incurred from potential environmental
liabilities, could have a material adverse effect on our
financial condition and profitability. While we incur
and will continue to incur expenditures to comply
with applicable laws and regulations, there always
remains a risk that environmental incidents or
accidents may occur that may negatively affect our
reputation or our operations.

Compliance with applicable environmental laws
and regulations is a significant factor in our
business. We have not been subject to any material
penalty for any material environmental violation
in the last five years, and we are not aware of
any current material legal or administrative
proceedings pending against us with respect
to environmental matters which could have an
adverse material impact on our financial condition
or results of operations.

TenarisRelated party
transactions

Tenaris is a party to several related party
transactions, which include, among others,
purchases and sales of goods (including steel pipes,
flat steel products, steel bars, raw materials, gas
and electricity) and services (including engineering
services and related services) from or to entities
controlled by San Faustin or in which San Faustin
holds significant interests. Material related
party transactions, as explained in Corporate
Governance – Audit Committee, are subject to the
review of the audit committee of the Company’s
board of directors and the requirements of the
Company’s articles of association and Luxembourg
law. For further detail on Tenaris’s related
party transactions, see Note 28 “Related party
transactions” to our audited restated consolidated
financial statements, included in this restated
annual report.

43.

Annual ReportEmployees

44.

The following table shows the number of persons
employed by Tenaris:

AT DECEMBER 31

Argentina

Mexico

Brazil

United States

Italy

Romania

Canada

Indonesia

Colombia

Japan

Other Countries

Total employees

2014

6,421

5,518

3,835

3,549

2,352

1,725

1,225

677

614

588

1,312

27,816

At December 31, 2013 and December 31, 2012,
the number of persons employed by Tenaris was
26,825 and 26,673 respectively.

The number of our employees increased 991 (4%),
at year end 2014, mainly in Brazil, at our industrial
equipment business and due to the incorporation
of the employees of Socotherm (after acquiring
50% of the share capital that was not yet owned by
Tenaris). The number of employees also increased
in Mexico, related to higher production and in
the United States due to the industrial expansion
project in Bay City, Texas.

Approximately 55% of our employees are
unionized. We believe that we enjoy good or
satisfactory relations with our employees and
their unions in each of the countries in which
we have manufacturing facilities, and we have
not experienced any major strikes or other labor
conflicts with a material impact on our operations
over the last five years. In some of the countries in
which we have significant production facilities (e.g.,
Argentina and Brazil), significant fluctuations in
exchange rates, together with inflationary pressures,
affect our costs, increase labor demands and could
eventually generate higher levels of labor conflicts.

Tenaris45.

Corporate Governance

The Company’s corporate governance practices
are governed by Luxembourg Law (including,
among others, the law of August 10, 1915 on
commercial companies, the law of January
11, 2008, implementing the European Union’s
transparency directive, and the law of May
24, 2011, implementing the European Union’s
directive on the exercise of certain shareholders’
rights in general meetings of listed companies)
and the Company’s articles of association. As a
Luxembourg company listed on the New York
Stock Exchange (the NYSE), the Bolsa Mexicana
de Valores, S.A. de C.V. (the Mexican Stock
Exchange), the Bolsa de Comercio de Buenos Aires
(the Buenos Aires Stock Exchange) and Borsa
Italiana S.p.A. (the Italian Stock Exchange), the
Company is required to comply with some, but
not all, of the corporate governance standards of
these exchanges. The Company, however, believes
that its corporate governance practices meet, in
all material respects, the corporate governance
standards that are generally required for controlled
companies by all of the exchanges on which the
Company’s securities trade.

For a summary of the significant ways in which the
Company’s corporate governance practices differ
from the corporate governance standards required
for controlled companies by the exchanges on
which the Company’s shares trade, please visit our
website at http://www.tenaris.com/investors/

Shareholders’ Meetings; Voting Rights;

Election of Directors
Each Share entitles the holder to one vote at
the Company’s general shareholders’ meetings.
Shareholder action by written consent is not
permitted, but proxy voting is permitted. Notices
of general shareholders’ meetings are governed
by the provisions of Luxembourg law. Pursuant

to applicable Luxembourg law, the Company
must give notice of the calling of any general
shareholders’ meeting at least 30 days prior to
the date for which the meeting is being called,
by publishing the relevant convening notice
in the Luxembourg Official Gazette and in a
leading newspaper having general circulation
in Luxembourg and by issuing a press release
informing of the calling of such meeting. If an
extraordinary general shareholders’ meeting is
adjourned for lack of a quorum, a new convening
notice must be published at least 17 days prior
to the date for which the second-call meeting is
being called. In case Shares are listed on a foreign
regulated market, notices of general shareholders’
meetings shall also comply with the requirements
(including as to content and publicity) and follow
the customary practices of such regulated market.

Pursuant to our articles of association, for as long
as the Shares or other securities of the Company
are listed on a regulated market within the
European Union. (as they currently are), and unless
as may otherwise be provided by applicable law,
only shareholders holding shares of the Company
as of midnight, central European time, on the day
that is fourteen days prior to the day of any given
general shareholders’ meeting can attend and
vote at such meeting. The board of directors may
determine other conditions that must be satisfied
by shareholders in order to participate in a general
shareholders’ meeting in person or by proxy,
including with respect to deadlines for submitting
supporting documentation to or for the Company.

No attendance quorum is required at ordinary
general shareholders’ meetings, and resolutions may
be adopted by a simple majority vote of the Shares
represented and voted at the meeting. Unless as may
otherwise be provided by applicable Luxembourg
law, an extraordinary general shareholders’ meeting

Annual Report46.

may not validly deliberate on proposed amendments
to the Company’s articles of association unless a
quorum of at least 50% of the issued share capital
is represented at the meeting. If a quorum is not
reached, such meeting may be reconvened at a later
date with no quorum requirements by means of the
notification procedures described above. In both
cases, the Luxembourg Companies Law and the
Company’s articles of association require that any
resolution of an extraordinary general shareholders’
meeting as to amendments to the Company’s articles
of association be adopted by a two-thirds majority
votes of the Shares represented at the meeting.
If a proposed resolution consists of changing
the Company’s nationality or of increasing the
shareholders’ commitments, the unanimous consent
of all shareholders is required. Directors are elected
at ordinary general shareholders’ meetings.

Cumulative voting is not permitted. The
Company’s articles of association do not provide
for staggered terms and directors are elected for
a maximum of one year and may be reappointed
or removed by the general shareholders’ meeting
at any time, with or without cause, by resolution
passed by a simple majority vote of the Shares
represented and voted at the meeting. In the case
of a vacancy occurring in the Board of Directors,
the remaining directors may temporarily fill such
vacancy with a temporary director appointed by
resolution adopted with the affirmative vote of a
majority of the remaining directors; provided that
the next general shareholder’s meeting shall be
called upon to ratify such appointment. The term
of any such temporary director shall expire at the
end of the term of office of the director whom
such temporary director replaced.

The Company’s annual general shareholders’
meeting held on May 6, 2015, approved, among
other things, our previously issued audited
consolidated financial statements. (Our audited
restated consolidated financial statements
included in this annual report will be submitted
to the consideration of our next annual general
shareholders’ meeting to be held on May 4, 2016).
On May 6, 2015, the Company also held an
extraordinary general meeting of shareholders,
which decided to renew for a five-year period the
authorization granted to its board of directors to
issue shares within the limits of the authorized
share capital without shareholder approval.

The rights of the shareholders attending the
meetings are governed by the Luxembourg law
of 24 May 2011 on the exercise of certain rights
of shareholders in general meetings of listed
companies. For a description of the items of the
agenda of the meetings and the procedures for
attending and voting the meetings, please see
the “Notice of the Annual General Meeting of
Shareholders” on the Company’s website at www.
tenaris.com/investors.

Board of Directors
Management of the Company is vested in a
board of directors with the broadest power to act
on behalf of the Company and accomplish or
authorize all acts and transactions of management
and disposal that are within its corporate purpose
and not specifically reserved in the articles of
association or by applicable law to the general
shareholders’ meeting. The Company’s articles
of association provide for a board of directors

Tenaris47.

consisting of a minimum of three and a maximum
of fifteen directors; however, for as long as the
Company’s shares are listed on at least one stock
exchange, the minimum number of directors must
be five. The Company’s current board of directors
is composed of ten directors.

The board of directors is required to meet as often
as required by the interests of the Company and
at least four times per year. A majority of the
members of the board of directors in office present
or represented at the board of directors’ meeting
constitutes a quorum, and resolutions may be
adopted by the vote of a majority of the directors
present or represented. In the case of a tie, the
chairman is entitled to cast the deciding vote.

Directors are elected at the annual ordinary
general shareholders’ meeting to serve one-year
renewable terms, as determined by the general
shareholders’ meeting. The general shareholders’
meeting also determines the number of
directors that will constitute the board and their
compensation. The general shareholders’ meeting
may dismiss all or any one member of the board
of directors at any time, with or without cause,
by resolution passed by a simple majority vote,
irrespective of the number of shares represented
at the meeting.

Under the Company’s articles of association the
board of directors is authorized until 2020, to
increase the issued share capital in whole or in
part from time to time, through issues of shares
within the limits of the authorized share capital
against compensation in cash, compensation
in kind at a price or if shares are issued by way

of incorporation of reserves, at an amount,
which shall not be less than the par value and
may include such issue premium as the board
of directors shall decide. Under the Company’s
articles of association, however, the Company’s
existing shareholders shall have a preferential right
to subscribe for any new Shares issued pursuant to
the authorization granted to its board of directors,
except in the following cases (in which cases no
preferential subscription rights shall apply):

•

any issuance of Shares (including, without
limitation, the direct issuance of Shares or upon
the exercise of options, rights convertible into
shares, or similar instruments convertible or
exchangeable into Shares) against a contribution
other than in cash;
any issuance of Shares (including by way of
free Shares or at discount), up to an amount of
1.5% of the issued share capital of the Company,
to directors, officers, agents, employees of the
Company, its direct or indirect subsidiaries, or
its affiliates (collectively, the “Beneficiaries”),
including, without limitation, the direct issuance
of Shares or upon the exercise of options, rights
convertible into Shares, or similar instruments
convertible or exchangeable into Shares, issued
for the purpose of compensation or incentive of
the Beneficiaries or in relation thereto (which the
board of directors shall be authorized to issue
upon such terms and conditions as it deems fit).

Amendment of the Company’s articles of
association requires the approval of shareholders
at an extraordinary shareholders’ meeting with a
two-thirds majority vote of the Shares present or
represented at the meeting.

Annual Report48.

The following table sets forth the name of the
Company’s current directors, their respective
positions on the board, their principal occupation,
their years of service as board members and their age.

Name

Position

Principal Occupation

Years as Director

Age at
December 31, 2014

Roberto Bonatti (1)

Carlos Condorelli

Carlos Franck

Roberto Monti

Gianfelice Mario Rocca (1)

Paolo Rocca (1)

Jaime Serra Puche

Alberto Valsecchi

Director

Amadeo Vázquez y Vázquez

Director

President of San Faustin

Director of Tenaris and Ternium

President of Santa María

Member of the board of directors of Petrobras Energia

Chairman of the board of directors of San Faustin

Chairman and chief executive officer of Tenaris

Chairman of SAI Consultores

Director of Tenaris

Guillermo Vogel

Director

Vice chairman of Tamsa

(1) Paolo Rocca and Gianfelice Rocca are brothers, and Roberto Bonatti is Paolo and Gianfelice Rocca’s first cousin.

Tenaris

49.

Carlos Franck
Mr. Franck is a member of the
Company’s board of directors.
He is president of Santa María
S.A.I.F. and Inverban S.A. and a
member of the board of directors
of Siderca, Techint Financial
Corporation N.V., Techint Holdings
S.à r.l. and Siderar. He has financial
planning and control responsibilities
in subsidiaries of San Faustin. He
serves as treasurer of the board of
the Di Tella University. Mr. Franck
is an Argentine citizen.

Roberto Monti
Mr. Monti is a member of the
Company’s board of directors. He is
a member of the board of directors
of Petrobras Energia. He has served
as vice president of Exploration and
Production of Repsol YPF and as
chairman and chief executive officer
of YPF. He was also the president of
Dowell, a subsidiary of Schlumberger
and the president of Schlumberger
Wire & Testing division for East
Hemisphere Latin America.
Mr. Monti is an Argentine citizen.

Gianfelice Mario Rocca
Mr. Rocca is a member of the
Company’s board of directors.
He is a grandson of Agostino Rocca.
He is the chairman of the board of
directors of San Faustin, a member
of the board of directors of Ternium,
the president of the Humanitas
Group and the president of Tenova
S.p.A. In addition, he sits on the
board of directors or executive
committees of several companies,
including Allianz S.p.A., Brembo
and Buzzi Unicem. He is president of
Assolombarda, the largest territorial
association of entrepreneurs in Italy
and part of Confindustria (Italian
employers’ organization).
In addition, he is member of the EIT
Governing Board (European Institute
of Innovation and Technology).
He is board member of Bocconi
University. He is a member of the
Advisory Board of Politecnico di
Milano, the Allianz Group, the
Aspen Institute Executive Committee,
the Trilateral Commission, and
the European Advisory Board of
Harvard Business School.
Mr. Rocca is an Italian citizen.

Roberto Bonatti
Mr. Bonatti is a member of the
Company’s board of directors.
He is a grandson of Agostino Rocca,
founder of the Techint group, a
group of companies controlled
by San Faustin. Throughout his
career in the Techint group he has
been involved specifically in the
engineering and construction and
corporate sectors. He was first
employed by the Techint group in
1976, as deputy resident engineer
in Venezuela. In 1984, he became a
director of San Faustin, and since
2001 he has served as its president.
In addition, Mr. Bonatti currently
serves as president of Sadma
Uruguay S.A. He is also a member
of the board of directors of Ternium.
Mr. Bonatti is an Italian citizen.

Carlos Condorelli
Mr. Condorelli is a member of the
Company’s board of directors. He
served as our chief financial officer
from October 2002 until September
2007. He is also a board member of
Ternium. He began his career within
the Techint group in 1975 as an analyst
in the accounting and administration
department of Siderar S.A.I.C., or
Siderar. He has held several positions
within Tenaris and other Techint
group companies, including finance
and administration director of
Tamsa and president of the board of
directors of Empresa Distribuidora
La Plata S.A., or Edelap, an Argentine
utilities company. Mr. Condorelli is an
Argentine citizen.

Annual Report50.

Paolo Rocca
Mr. Rocca is the chairman of
the Company’s board of directors
and our chief executive officer.
He is a grandson of Agostino
Rocca. He is also chairman of the
board of directors of Tamsa. He
is also the chairman of the board
of directors of Ternium, a director
and vice president of San Faustin,
and a director of Techint Financial
Corporation N.V. He is a member
of the Executive Committee of the
World Steel Association. Mr. Rocca
is an Italian citizen.

Jaime Serra Puche
Mr. Serra Puche is a member of
the Company’s board of directors.
He is the chairman of SAI
Consultores, a Mexican consulting
firm, and a member of the board of
directors of the Mexico Fund, Grupo
Vitro, Grupo Modelo and Alpek.
Mr. Serra Puche served as Mexico’s
Undersecretary of Revenue, Secretary
of Trade and Industry, and Secretary
of Finance. He led the negotiation
and implementation of NAFTA.
Mr. Serra Puche is a Mexican citizen.

Alberto Valsecchi
Mr. Valsecchi is a member of the
Company’s board of directors. He
served as our chief operating officer
from February 2004 until July 2007.
He joined the Techint group in 1968
and has held various positions within
Tenaris and other Techint group
companies. He has retired from his
executive positions. He is also a
member of the board of directors
of San Faustin and chairman of the
board of directors of Dalmine, a
position he assumed in May 2008.
Mr. Valsecchi is an Italian citizen.

Amadeo Vázquez y Vázquez
Mr. Vázquez y Vázquez is a member
of the Company’s board of directors.
He is a member of the Asociación
Empresaria Argentina, of the
Fundación Mediterránea, and of
the Advisory Board of the Fundación
de Investigaciones Económicas
Latinoamericanas. He served as
chief executive officer of Banco
Río de la Plata S.A. until August
1997 and was also the chairman of
the board of directors of Telecom
Argentina S.A. until April 2007.
Mr. Vázquez y Vázquez is a Spanish
and Argentine citizen.

Guillermo Vogel
Mr. Vogel is vicepresident of
finance of the Company’s board of
directors. He is the vice chairman
of Tamsa, the chairman of
Grupo Collado, Exportaciones
IM Promoción and Canacero, a
member of the board of directors
of each of Alfa, the American Iron
and Steel Institute, the Universidad
Panamericana – IPADE, SANLUIS
Corporación, Estilo y Vanidad,
Innovare, Novopharm, Corporación
Mexicana de Inversiones de
Capital and the European Network
Business Solutions. In addition,
he is a member of The Trilateral
Commission and member of
the International Board of The
Manhattan School of Music.
Mr. Vogel is a Mexican citizen.

Messrs. Monti, Serra Puche and
Vázquez y Vázquez qualify as
independent directors under the
Company’s articles of association.

TenarisDirector Liability
Each director must act in the interest of the
Company, and in accordance with applicable
laws, regulations, and the Company’s articles of
association. Directors are also bound by a general
duty of care owed to the Company.

Under Luxembourg law, a director may be liable
to the Company for any damage caused by
management errors, such as wrongful acts committed
during the execution of his or her mandate, and to
the Company, its shareholders and third parties in
the event that the Company, its shareholders or third
parties suffer a loss due to an infringement of either
the Luxembourg law on commercial companies or
the Company’s articles of association.

Under Luxembourg law, any director having a
conflict of interest in respect of a transaction
submitted for approval to the board of directors
may not take part in the deliberations concerning
such transaction and must inform the board of
such conflict and cause a record of his statement
to be included in the minutes of the meeting.
Subject to certain exceptions, transactions in which
any directors may have had an interest conflicting
with that of the Company must be reported at the
next general shareholders’ meeting following any
such transaction.

A director will not be liable for acts committed
pursuant to a board resolution if, notwithstanding
his or her presence at the board meeting at which
such resolution was adopted, such director advised
the board of directors that he or she opposed the

resolution and caused a record of such opposition
to be included in the minutes of the meeting.

51.

Causes of action against directors for damages
may be initiated by the Company upon a resolution
of the general shareholders’ meeting passed by a
simple majority vote, irrespective of the number of
shares represented at the meeting. Causes of action
against directors who misappropriate corporate
assets or commit a breach of trust may be brought
by any shareholder for personal losses different
from those of the Company.

It is customary in Luxembourg that the
shareholders expressly discharge the members
of the board of directors from any liability
arising out of or in connection with the exercise
of their mandate when approving the annual
accounts of the Company at the annual general
shareholders meeting. However, such discharge
will not release the directors from liability for
any damage caused by wrongful acts committed
during the execution of their mandate or due to
an infringement of either the Luxembourg law on
commercial companies or the Company’s articles
of association vis-à-vis third parties.

Audit Committee
Pursuant to the Company’s articles of association,
as supplemented by the audit committee’s charter,
for as long as the Company’s shares are listed on at
least one stock exchange, the Company must have
an audit committee composed of three members,
all of which must qualify as independent directors
under the Company’s articles of association.

Annual Report52.

Under the Company’s articles of association, an
independent director is a director who:

•

is not and has not been employed by us or our
subsidiaries in an executive capacity for the
preceding five years;
is not a person that controls us, directly or indirectly,
and is not a member of the board of directors of a
company controlling us, directly or indirectly;
does not have (and is not affiliated with a
company or a firm that has) a significant business
relationship with us, our subsidiaries or our
controlling shareholder;
is not and has not been affiliated with or
employed by a present or former auditor of us, our
subsidiaries or our controlling shareholder for the
preceding five years; and
is not a spouse, parent, sibling or relative up to the
third degree of any of the above persons.

The Company’s board of directors has an audit
committee consisting of three members. On
May 7, 2014, the Company’s board of directors
reappointed Jaime Serra Puche, Amadeo Vázquez
y Vázquez and Roberto Monti as members of our
audit committee. All three members of the audit
committee qualify as independent directors under
the Company’s articles of association.

Under the Company’s articles of association, the
audit committee is required to report to the board of
directors on its activities from time to time, and on
the adequacy of the systems of internal control over

financial reporting once a year at the time the annual
accounts are approved. In addition, the charter of the
audit committee sets forth, among other things, the
audit committee’s purpose and responsibilities. The
audit committee assists the board of directors in its
oversight responsibilities with respect to our financial
statements, and the independence, performance
and fees of our independent auditors. The audit
committee also performs other duties entrusted to it
by the Company’s board of directors.

In addition, the audit committee is required by
the Company’s articles of association to review
“material transactions”, as such term is defined
under the Company’s articles of association, to be
entered into by the Company or its subsidiaries
with “related parties”, as such term is defined in
the Company’s articles of association, in order
to determine whether their terms are consistent
with market conditions or are otherwise fair to the
Company and/or its subsidiaries. In the case of
material transactions entered into by the Company’s
subsidiaries with related parties, the Company’s
audit committee will review those transactions
entered into by those subsidiaries whose boards of
directors do not have independent members.

Under the Company’s articles of association, as
supplemented by the audit committee’s charter,
a material transaction is:

•

any transaction between the Company or its
subsidiaries with related parties (x) with an

Tenaris53.

individual value equal to or greater than $10 million,
or (y) with an individual value lower than $10 million,
when the aggregate sum – as reflected in the financial
statements of the four fiscal quarters of the Company
preceding the date of determination- of any series of
transactions for such lower value that can be deemed
to be parts of a unique or single transaction (but
excluding any transactions that were reviewed and
approved by Company’s audit committee or board of
directors, as applicable, or the independent members
of the board of directors of any of its subsidiaries)
exceeds 1.5% of the Company’s consolidated net
sales made in the fiscal year preceding the year on
which the determination is made;
any corporate reorganization transaction (including
a merger, spin-off or bulk transfer of a business)
affecting the Company for the benefit of, or
involving, a related party; and
any corporate reorganization transaction (including
a merger, spin-off or bulk transfer of a business) not
reviewed and approved by the independent members
of the board of directors of any of the Company’s
direct or indirect subsidiaries, affecting any of the
Company’s direct or indirect subsidiaries for the
benefit of, or involving, a related party.

•

The audit committee has the power (to the
maximum extent permitted by applicable laws) to
request that the Company or relevant subsidiary
provide any information necessary for it to
review any material transaction. A related party
transaction shall not be entered into without prior
review by the Company’s audit committee and
approval by the board of directors unless (i) the
circumstances underlying the proposed transaction
justify that it be entered into before it can be
reviewed by the Company’s audit committee or
approved by the board of directors and (ii) the
related party agrees to unwind the transaction
if the Company’s audit committee or board of
directors does not approve it.

The audit committee has the authority to
engage independent counsel and other advisors
to review specific issues as the committee may
deem necessary to carry out its duties and to
conduct any investigation appropriate to fulfill
its responsibilities, and has direct access to the
Company’s internal and external auditors as well
as to the Company’s management and employees
and, subject to applicable laws, its subsidiaries.

Annual Report54.

Senior management
Our current senior management as of the date
of this restated annual report consists of:

Name

Position

Age at
December 31, 2014

Paolo Rocca

Edgardo Carlos

Chairman and Chief Executive Officer

Chief Financial Officer

Gabriel Casanova

Supply Chain Director

Alejandro Lammertyn

Planning Director

Carlos Pappier

Marco Radnic

Marcelo Ramos

Chief Process and Information Officer

Human Resources Director

Technology Director

Vincenzo Crapanzano

Industrial Director

Germán Curá

Sergio de la Maza

Renato Catallini

North American Area Manager

Central American Area Manager

Brazilian Area Manager

Javier Martínez Alvarez

Southern Cone Area Manager

Gabriel Podskubka

Eastern Hemisphere Area Manager

Sergio Tosato

European Area Manager

Tenaris

Paolo Rocca
Mr. Rocca is the chairman of the
Company’s board of directors and
our chief executive officer. He is a
grandson of Agostino Rocca. He
is also the chairman of the board
of directors of Ternium, a director
and vice president of San Faustin,
and a director of Techint Financial
Corporation N.V. He is a member
of the Executive Committee of the
World Steel Association. Mr. Rocca
is an Italian citizen.

Edgardo Carlos
Mr. Carlos currently serves as our
chief financial officer, a position
that he assumed on July 1, 2013.
He joined the Techint Group in
1987 in the accounting department
of Siderar. After serving as financial
manager for Sidor, in Venezuela,
in 2001 he joined Tenaris as our
financial director. In 2005 he
was appointed administration
and financial manager for North
America and in 2007 he became
administration and financial director
for Central America. In 2009 he was
appointed economic and financial
planning director, until he assumed
his current position. Mr. Carlos is
an Argentine citizen.

Gabriel Casanova
Mr. Casanova currently serves as
our supply chain director, with
responsibility for the execution of
all contractual deliveries to
customers. After graduating as a
marine and mechanical engineer, he
joined Siderca’s export department
in 1987. In 1995 he became Siderca’s
Chief Representative in China and
from 1997 to 2009 he held several
positions in the commercial area
in Dalmine. In 2009 he became the
head of our supply chain network
and in October 2012 he assumed his
current position. Mr. Casanova is an
Argentine citizen.

Alejandro Lammertyn
Mr. Lammertyn currently serves as
our planning director, a position
he assumed in April 2013. Mr.
Lammertyn began his career with
Tenaris in 1990. Previously he
served as assistant to the CEO for
marketing, organization and mill
allocation, supply chain director,
commercial director and Eastern
Hemisphere area manager. Mr.
Lammertyn is an Argentine citizen.

55.

Carlos Pappier
Mr. Pappier currently serves as our
chief process and information officer.
Previously, he served as planning
director. He began his career within
the Techint group in 1984 as a cost
analyst in Siderar. After holding
several positions within Tenaris
and other Techint group companies
in 2002, he became chief of staff
of Tenaris. He assumed his current
position in May 2010. Mr. Pappier
is an Argentine citizen.

Marco Radnic
Mr. Radnic currently serves as
our human resources director. He
began his career within the Techint
group in the Industrial Engineering
Department of Siderar in 1975.
Later he held various positions
in the technical departments of
Siderca and other companies within
the Techint group. After holding
several positions in the marketing
and procurement areas in Europe, in
1996 he became commercial director
of Dalmine. In 1998, he became the
director of our Process and Power
Services business unit. In 2001, he
was appointed chief of staff for
Paolo Rocca in Buenos Aires. He
assumed his current position in
December 2002. Mr. Radnic is an
Argentine citizen.

Annual Report56.

Marcelo Ramos
Mr. Ramos currently serves as
our technology director, with
responsibility over technology
and quality. Previously he served
as corporate quality director and
managing director of NKKTubes
in our Japanese operations. He
joined the Techint group in 1987
and has held various positions
within Tenaris. He assumed his
current position in April 2010, when
both, the quality and technology
departments were combined. Mr.
Ramos is an Argentine citizen.

Vincenzo Crapanzano
Mr. Crapanzano currently serves as
our industrial director, a position he
assumed in April 2011. Previously
he served as our European area
manager, Mexican area manager
and executive vice president of
Tamsa. Prior to joining Tenaris,
he held various positions at Grupo
Falck from 1979 to 1989. When
Dalmine acquired the tubular assets
of Grupo Falck in 1990, he was
appointed managing director of
the cold drawn tubes division.
Mr. Crapanzano is an Italian citizen.

Germán Curá
Mr. Curá currently serves as our
North American area manager.
He is a marine engineer and was
first employed with Siderca in 1988.
Previously, he served as Siderca’s
exports director, Tamsa’s exports
director and commercial director,
sales and marketing manager of
our Middle East office, president
of Algoma Tubes, president and
chief executive officer of Maverick
Tubulars and president and chief
executive officer of Hydril, director
of our Oilfield Services business unit
and Tenaris commercial director.
He was also a member of the board
of directors of API. He assumed his
current position in October 2006.
Mr. Curá is a U.S. citizen.

Sergio de la Maza
Mr. de la Maza currently serves as
our Central American area manager
and also serves as a director and
executive vice-president of Tamsa.
Previously he served as our Mexican
area manager. He first joined Tamsa
in 1980. From 1983 to 1988, Mr. de
la Maza worked in several positions
in Tamsa and Dalmine. He then
became manager of Tamsa’s new
pipe factory and later served as
manufacturing manager and quality
director of Tamsa. Subsequently, he
was named manufacturing director
of Siderca. He assumed his current
position in 2006. Mr. de la Maza
is a Mexican citizen.

Renato Catallini
Mr. Catallini currently serves as our
Brazilian area manager, a position
that he assumed in October 2012,
after having served as our supply
chain director since August 2007. He
joined Tenaris in 2001 in the supply
management area, as a general
manager of Exiros Argentina. In July
2002, he was appointed operations
director and subsequently, in January
2005, became managing director of
Exiros. Before joining Tenaris, he
worked for ten years in the energy
sector, working for TGN, Nova Gas
Internacional, TransCanada Pipelines
and TotalFinaElf, among others.
Mr. Catallini is an Argentine and
Italian citizen.

Javier Martínez Alvarez
Mr. Martínez Alvarez currently
serves as our Southern Cone area
manager, a position he assumed
in June 2010, having previously
served as our Andean area manager.
He began his career in the Techint
group in 1990, holding several
positions including planning
manager of Siderar and commercial
director of Ternium-Sidor. In 2006,
he joined Tenaris as our Venezuela
area manager. Mr. Martínez Alvarez
is an Argentine citizen.

Tenaris57.

Gabriel Podskubka
Mr. Podskubka currently serves
as our Eastern Hemisphere area
manager, based in Dubai. He
assumed his current position in
April 2013 after serving as the head
of our operations in Eastern Europe
for 4 years. After graduating as an
industrial engineer Mr. Podskubka
joined the Techint group in 1995
in the marketing department of
Siderca. He held various positions
in the marketing, commercial,
and industrial areas until he was
appointed as oil & gas sales director
in the United States in 2006.
Mr. Podskubka is an Argentine citizen.

Sergio Tosato
Mr. Tosato currently serves as our
European Area Manager, a position
he assumed in April 2015. Mr. Tosato
first joined Dalmine in 1974 in the
personnel organization area, and has
held many positions within Tenaris,
including industrial coordination
director, director of operations
in Siderca and manufacturing
director in Dalmine. Since 2013,
he was the director for industrial
expansion, with responsibility over
the greenfield seamless mill project
in Bay City, Texas, until he assumed
his current position. Mr. Tosato is an
Italian citizen.

Annual Report58.

Directors’ and senior management compensation
The compensation of the members of the
Company’s board of directors is determined at the
annual ordinary general shareholders’ meeting.
Each member of the board of directors received
as compensation for their services for the year
2014 a fee of $85,000. The chairman of the audit
committee received as additional compensation
a fee of $65,000 while the other members of
the audit committee received an additional fee
of $55,000. Under the Company’s articles of
association, the members of the audit committee
are not eligible to participate in any incentive
compensation plan for employees of the Company
or any of its subsidiaries.

During the years ended December 31, 2014, 2013
and 2012, the cash compensation of directors and
senior managers amounted to $26.0 million, $28.1
million and $24.1 million respectively. In addition,
directors and senior managers received 567, 534
and 542 thousand units for a total amount of $6.2
million, $5.6 million and $5.2 million, respectively,
in connection with the Employee retention and
long term incentive program described in note O
(2) “Employee benefits –Other long term benefits”
to our audited restated consolidated financial
statements included in this restated annual report.

There are no service contracts between any
director and Tenaris that provide for material
benefits upon termination of employment.

Auditors
The Company’s articles of association require
the appointment of an independent audit firm
in accordance with applicable law. The primary
responsibility of the auditor is to audit the

Company’s annual accounts and to submit a
report on the accounts to shareholders at the
annual shareholders’ meeting. In accordance
with applicable law, auditors are chosen from
among the members of the Luxembourg Institute
of Independent Auditors (Institut des réviseurs
d’entreprises). Auditors are appointed by the general
shareholders’ meeting upon recommendation from
our audit committee through a resolution passed by
a simple majority vote, irrespective of the number
of Shares represented at the meeting, to serve one-
year renewable terms. Auditors may be dismissed
by the general shareholders meeting at any time,
with or without cause. Luxembourg law does not
allow directors to serve concurrently as independent
auditors. As part of their duties, the auditors report
directly to the audit committee.

The Company’s audit committee is responsible for,
among other things, the oversight of the Company’s
independent auditors. The audit committee has
adopted in its charter a policy of pre-approval of
audit and permissible non-audit services provided
by its independent auditors. Under the policy,
the audit committee makes its recommendations
to the shareholders’ meeting concerning the
continuing appointment or termination of the
Company’s independent auditors. On a yearly
basis, the audit committee reviews together with
management and the independent auditor, the
audit plan, audit related services and other non-
audit services and approves, ad-referendum of
the general shareholders’ meeting, the related
fees. The general shareholders’ meeting normally
approves such audit fees and authorizes the audit
committee to approve any increase or reallocation
of such audit fees as may be necessary, appropriate
or desirable under the circumstances. The audit
committee delegates to its Chairman the authority

Tenaris59.

to consider and approve, on behalf of the audit
committee, additional non-audit services that were
not recognized at the time of engagement, which
must be reported to the other members of the audit
committee at its next meeting. No services outside
the scope of the audit committee’s approval can be
undertaken by the independent auditor.

Our independent auditor for the fiscal year
ended December 31, 2014, appointed by the
shareholders’ meeting held on May 7, 2014, was
PricewaterhouseCoopers Société Coopérative.,
Cabinet de révision agréé, in connection with all
of our annual accounts and financial statements.

Audit-Related Fees
Audit-related fees are typically services that are
reasonably related to the performance of the audit
or review of the consolidated financial statements
of the Company and the statutory financial
statements of the Company and its subsidiaries
and are not reported under the audit fee item
above. This item includes fees for attestation
services on financial information of the Company
and its subsidiaries included in their annual reports
that are filed with their respective regulators.

Tax Fees
Fees paid for tax compliance professional services.

Fees Paid to the Company’s Independent Auditor
In 2014, PwC served as the principal external
auditor for the Company. Fees payable to PwC in
2014 are detailed below.

All Other Fees
Fees paid for the support in the development of
training courses.

Thousands of U.S. dollars

FOR THE YEAR ENDED DECEMBER 31

Audit Fees

Audit-Related Fees

Tax Fees

All Other Fees

Total

2014

5,231

142

5,497

Share Ownership
To our knowledge, the total number of Shares (in
the form of ordinary shares or ADSs) beneficially
owned by our directors and senior management
as of February 28, 2015, was 1,401,103, which
represents 0.12% of our outstanding Shares.

The following table provides information
regarding share ownership by our directors and
senior management:

Audit Fees
Audit fees were paid for professional services
rendered by the auditors for the audit of the
consolidated financial statements and internal
control over financial reporting of the Company,
the statutory financial statements of the Company
and its subsidiaries, and any other audit services
required for the SEC or other regulatory filings.

Director or Officer

Guillermo Vogel

Carlos Condorelli

Edgardo Carlos

Gabriel Podskubka

Carlos Pappier

Total

Number of
Shares Held

1,325,446

67,211

4,000

3,946

500

1,401,103

Annual Report
60.

Major shareholders
The following table shows the beneficial ownership
of the Shares by (1) the Company’s major
shareholders (persons or entities that have notified
the Company of holdings in excess of 5% of the
Company’s share capital), (2) non-affiliated public
shareholders, and (3) the Company’s directors and
senior management as a group. The information
below is based on the most recent information
provided to the Company.

Identity of Person or Group

Number

Percent

San Faustin (1)

Aberdeen Asset

Management PLC (2)

Directors and senior

management as a group

Public

Total

713,605,187

123,207,852

60.45%

10.44%

1,401,103

0.12%

342,322,688

29.00%

1,180,536,830

100.00%

(1) San Faustin owns all of its shares in the Company through its wholly-owned subsidiary Techint

Holdings S.à r.l. The Dutch private foundation (Stichting) Rocca & Partners Stichting
Administratiekantoor Aandelen San Faustin ("RP STAK") holds shares in San Faustin sufficient in
number to control San Faustin. No person or group of persons controls RP STAK.

(2) On January 5, 2015, Aberdeen Asset Management PLC filed a Schedule 13(G) with the SEC informing
that, as of December 31, 2014, it is deemed to be the beneficial owner of 61,603,926 ADSs of
Tenaris, (representing 123,207,852 Shares par value US$ 1.00 per Share), representing 10.44% of
Tenaris’s issued and outstanding capital share. Aberdeen Asset Management PLC informed Tenaris
that, as of December 31, 2014, it held 8.17% of Tenaris's votes.

The voting rights of the Company’s major
shareholders do not differ from the voting rights
of other shareholders. None of its outstanding
shares have any special control rights. There are
no restrictions on voting rights, nor are there, to

the Company’s knowledge, any agreements among
shareholders of the Company that might result
in restrictions on the transfer of securities or the
exercise of voting rights.

The Company does not know of any significant
agreements or other arrangements to which the
Company is a party and which take effect, alter
or terminate in the event of a change of control
of the Company. The Company does not know
of any arrangements, the operation of which may
at a subsequent date result in a change of control
of the Company.

Information required under the Luxembourg Law

on takeovers of May 19, 2006
The Company has an authorized share capital of a
single class of 2,500,000,000 shares with a par value
of $ 1.00 per share. Our authorized share capital is
fixed by the Company’s articles of association as
amended from time to time with the approval of
our shareholders in an extraordinary shareholders’
meeting. There were 1,180,536,830 shares issued as of
December 31, 2014. All issued shares are fully paid.

The Company’s articles of association authorize
the board of directors until 2020, to increase
the issued share capital in whole or in part
from time to time, through issues of shares
within the limits of the authorized share capital
against compensation in cash, compensation
in kind at a price or if shares are issued by way
of incorporation of reserves, at an amount,
which shall not be less than the par value and

Tenaris

61.

may include such issue premium as the board
of directors shall decide. However, under the
Company’s articles of association, the Company’s
existing shareholders shall have a preferential right
to subscribe for any new Shares issued pursuant to
the authorization granted to its board of directors,
except in the following cases (in which cases no
preferential subscription rights shall apply):

•

any issuance of Shares (including, without
limitation, the direct issuance of Shares or upon
the exercise of options, rights convertible into
shares, or similar instruments convertible or
exchangeable into Shares) against a contribution
other than in cash;
any issuance of Shares (including by way of free
Shares or at discount), up to an amount of 1.5%
of the issued share capital of the Company, to
directors, officers, agents or employees of the
Company, its direct or indirect subsidiaries, or
its affiliates (collectively, the “Beneficiaries”),
including, without limitation, the direct issuance
of Shares or upon the exercise of options, rights
convertible into Shares, or similar instruments
convertible or exchangeable into Shares, issued
for the purpose of compensation or incentive of
the Beneficiaries or in relation thereto (which the
board of directors shall be authorized to issue
upon such terms and conditions as it deems fit).

The Company is controlled by San Faustin, which
owns 60.45% of the Company’s outstanding
shares, through its wholly owned subsidiary Techint
Holdings S.à r.l. The Dutch private foundation
(Stichting) RP STAK holds shares in San Faustin
sufficient in number to control San Faustin. No
person or group of persons controls RP STAK.

Our directors and senior management as a group
own 0.12% of the Company’s outstanding shares,
while the remaining 39.44% are publicly traded.
The Company’s shares trade on the Italian Stock
Exchange, the Buenos Aires Stock Exchange and the
Mexican Stock Exchange; in addition, the Company’s
ADSs trade on the New York Stock Exchange. See
“Corporate Governance – Major Shareholders”.

None of the Company’s outstanding securities has
any special control rights. There are no restrictions
on voting rights, nor are there, to our knowledge,
any agreements among our shareholders that
might result in restrictions on the transfer of
securities or the exercise of voting rights.

The Company’s articles of association do not
contain any redemption or sinking fund provisions,
nor do they impose any restrictions on the transfer
of the Company’s shares.

There are no significant agreements to which the
Company is a party and which take effect, alter or
terminate in the event of a change in the control
of the Company following a takeover bid, thereby

Annual Report62.

materially and adversely affecting the Company,
nor are there any agreements between us and
members of our board of directors or employees
that provide for compensation if they resign or
are made redundant without reason, or if their
employment ceases pursuant to a takeover bid.

Management is vested in a board of directors.
Directors are elected at the annual ordinary
shareholders’ meeting to serve one-year
renewable terms. See “Corporate Governance –
Board of Directors”.

Internal control over financial reporting
Management is responsible for establishing and
maintaining adequate internal control over financial
reporting. Tenaris’s internal control over financial
reporting was designed by management to provide
reasonable assurance regarding the reliability of
financial reporting and the preparation and fair
presentation of its consolidated financial statements
for external purposes in accordance with IFRS.

In addition, under the Company’s articles of
association, the audit committee is required to
report to the board of directors on its activities from
time to time, and on the adequacy of the systems of
internal control over financial reporting once a year
at the time the annual accounts are approved.

Because of its inherent limitations, internal
control over financial reporting may not prevent
or detect misstatements or omissions. In addition,
projections of any evaluation of effectiveness to
future periods are subject to the risk that controls
may become inadequate because of changes in
conditions, or that the degree of compliance with
the policies or procedures may deteriorate.

On a yearly basis, management conducts its
assessment of the effectiveness of Tenaris’s

internal control over financial reporting
based on the framework in Internal Control-
Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway
Commission.

On February 17, 2015, management reported to
the audit committee of the Company’s board
of directors that the Chief Executive Officer
and Chief Financial Officer had reached the
conclusion that, as of December 31, 2014,
the Company’s internal control over financial
reporting was effective. However, the Chief
Executive Officer and Chief Financial Officer
have subsequently revised that assessment
and concluded that, as a result of the material
weakness referred to below, the Company’s
internal control over financial reporting was not
effective as of December 31, 2014.

More specifically, management has concluded
that the Company’s controls for evaluating and
monitoring relevant indicators of value for its equity
investments, such as the prices of comparable arm’s
length transactions did not operate effectively. This
control deficiency resulted in the restatement of
the Company’s consolidated financial statements
for the year ended December 31, 2014. Accordingly,
management has determined that this control
deficiency constitutes a material weakness. A
material weakness is a deficiency, or combination
of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility
that a material misstatement of the Company’s
annual or interim financial statements will not be
prevented or detected on a timely basis. Because of
this material weakness, management concluded that
the Company did not maintain effective internal
control over financial reporting as of December
31, 2014, based on criteria in Internal Control -
Integrated Framework issued by the COSO.

TenarisManagement
certification

We confirm, to the best of our knowledge, that:

63.

the restated consolidated financial statements prepared in conformity with
International Financial Reporting Standards, included in this restated annual report,
give a true and fair view of the assets, liabilities, financial position and profit or loss of
Tenaris S.A. and its consolidated subsidiaries, taken as a whole; and

the consolidated management report for Tenaris S.A., included in this restated annual
report, gives a fair review of the development and performance of the business and
the position of Tenaris S.A., or Tenaris S.A. and its consolidated subsidiaries, taken
as a whole, as applicable, together with a description of the principal risks and
uncertainties they face.

/s/ Paolo Rocca

Chief Executive Officer
Paolo Rocca

May 29, 2015

/s/ Edgardo Carlos

Chief Financial Officer
Edgardo Carlos

May 29, 2015

Annual Report64.

TenarisTenaris S.A.
Restated Consolidated
Financial Statements

For the years ended December 31, 2014, 2013 and 2012

65.

Annual Report66.

TenarisAudit report

To the Shareholders

of Tenaris S.A.

67.

Report on the consolidated financial statements
We have audited the accompanying consolidated financial statements of Tenaris S.A.
and its subsidiaries, which comprise the consolidated statement of financial position
as at 31 December 2014, and the consolidated income statement, consolidated
statement of comprehensive income, consolidated statement of changes in equity
and consolidated statement of cash flows for the year then ended and a summary
of significant accounting policies and other explanatory information.

Board of Directors’ responsibility for the consolidated financial statements
The Board of Directors is responsible for the preparation and fair presentation of
these consolidated financial statements in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board
as adopted by the European Union, and for such internal control as the Board of
Directors determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.

Responsibility of the “Réviseur d’entreprises agréé”
Our responsibility is to express an opinion on these consolidated financial statements
based on our audit. We conducted our audit in accordance with International Standards
on Auditing as adopted for Luxembourg by the “Commission de Surveillance du Secteur
Financier”. Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement. An audit involves performing procedures
to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the judgment of the “Réviseur d’entreprises
agréé” including the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk assessments,
the “Réviseur d’entreprises agréé” considers internal control relevant to the entity’s
preparation and fair presentation of the consolidated financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the entity’s internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness
of accounting estimates made by the Board of Directors, as well as evaluating the overall
presentation of the consolidated financial statements.

Annual Report68.

We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.

Opinion
In our opinion, these consolidated financial statements give a true and fair view of the
consolidated financial position of Tenaris S.A. and its subsidiaries as of 31 December
2014, and of its consolidated financial performance and its consolidated cash flows for the
year then ended in accordance with International Financial Reporting Standards as issued
by the International Accounting Standards Board as adopted by the European Union.

Emphasis of matter
We draw attention to Notes I and IV.12.b to the consolidated financial statements,
which describes the reasons for the restatement and reissuance of the Company’s 2014
consolidated financial statements. Our original audit report dated 31 March 2015 was
on the previously issued consolidated financial statements. Due to this restatement, we
provide this new audit report on the reissued consolidated financial statements.

Report on other legal and regulatory requirements
The management report, including the corporate governance statement, which is the
responsibility of the Board of Directors, is consistent with the consolidated financial
statements and includes the information required by the law with respect to the
corporate governance statement.

Luxembourg,
29 May 2015

PricewaterhouseCoopers, Société coopérative
Represented byRepresented by

/s/ Mervyn R. Martins

Mervyn R. Martins

PricewaterhouseCoopers, Société coopérative, 2, rue Gerhard Mercator, B.P. 1443, L-1014 Luxembourg
T: +352 494848 1, F: +352 494848 2900, www.pwc.lu

Cabinet de révision agréé. Expert-comptable (autorisation gouvernementale n°10028256)
R.C.S. Luxembourg B 65 477 - TVA LU25482518

TenarisRestated Consolidated Income Statement

All amounts in thousands of U.S. dollars, unless otherwise stated

YEAR ENDED DECEMBER 31

CONTINUING OPERATIONS

Net sales

Cost of sales

Gross profit

Selling, general and administrative expenses

Other operating income

Other operating expenses

Operating income

Finance income

Finance Cost

Other financial results

Income before equity in earnings of non-consolidated companies and income tax

Equity in earnings (losses) of non-consolidated companies

Income before income tax

Income tax

Income for the year

ATTRIBUTABLE TO

Owners of the parent

Non-controlling interests

Notes

2014

(Restated)

2013

2012

69.

10,337,962

10,596,781

10,834,030

(6,287,460)

(6,456,786)

(6,637,293)

4,050,502

4,139,995

4,196,737

(1,963,952)

(1,941,213)

(1,883,789)

27,855

(215,589)

14,305

(28,257)

71,380

(27,721)

1,898,816

2,184,830

2,356,607

38,211

(44,388)

39,214

34,767

(70,450)

7,004

36,932

(55,507)

(31,529)

1,931,853

2,156,151

2,306,503

(164,616)

46,098

(63,206)

1,767,237

2,202,249

2,243,297

(586,061)

(627,877)

(541,558)

1,181,176

1,574,372

1,701,739

1,158,517

1,551,394

1,699,375

22,659

22,978

2,364

1,181,176

1,574,372

1,701,739

EARNINGS PER SHARE ATTRIBUTABLE TO THE OWNERS

OF THE PARENT DURING THE PERIOD

Weighted average number of ordinary shares (thousands)

1,180,537

CONTINUING OPERATIONS

Basic and diluted earnings per share (U.S. dollars per share)

Basic and diluted earnings per ADS (U.S. dollars per ADS) (*)

0.98

1.96

1.31

2.63

1.44

2.88

(*) Each ADS equals two shares.

The accompanying notes are an integral part of these Restated Consolidated Financial Statements.

Annual Report

Restated Consolidated Statement of comprehensive income

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

Income for the year

70.

ITEMS THAT WILL NOT BE RECLASSIFIED TO PROFIT OR LOSS

Remeasurements of post employment benefit obligations

Income tax on items that will not be reclassified

ITEMS THAT MAY BE SUBSEQUENTLY RECLASSIFIED TO PROFIT OR LOSS

Currency translation adjustment

Change in value of available for sale financial instruments and cash flow hedges

Share of other comprehensive income of non-consolidated companies:

Currency translation adjustment

Changes in the fair value of derivatives held as cash flow hedges and others

Income tax relating to components of other comprehensive income (*)

Other comprehensive loss for the year, net of tax

Total comprehensive income for the year

ATTRIBUTABLE TO

Owners of the parent

Non-controlling interests

(*) Relates to Cash flow hedges.

The accompanying notes are an integral part of these Restated Consolidated Financial Statements.

2014

(Restated)

2013

2012

1,181,176

1,574,372

1,701,739

1,850

(513)

1,337

(197,711)

(10,483)

(54,688)

(3,857)

400

(266,339)

(265,002)

18,314

(4,865)

13,449

(1,941)

2,941

(13,443)

3,715

(9,728)

(4,547)

5,631

(87,666)

(108,480)

2,682

478

(83,506)

(70,057)

951

(618)

(107,063)

(116,791)

916,174

1,504,315

1,584,948

894,929

21,245

1,480,572

1,588,447

23,743

(3,499)

916,174

1,504,315

1,584,948

Tenaris

Restated Consolidated Statement of financial position

All amounts in thousands of U.S. dollars

AT DECEMBER 31

Notes

2014

(Restated)

2013

ASSETS

NON-CURRENT ASSETS

Property, plant and equipment, net

Intangible assets, net

Investments in non-consolidated companies

Available for sale assets

Other investments

Deferred tax assets

Receivables

CURRENT ASSETS

Inventories

Receivables and prepayments

Current tax assets

Trade receivables

Other investments

Cash and cash equivalents

Total assets

EQUITY

Capital and reserves attributable to owners of the parent

Non-controlling interests

Total equity

LIABILITIES

NON-CURRENT LIABILITIES

Borrowings

Deferred tax liabilities

Other liabilities

Provisions

CURRENT LIABILITIES

Borrowings

Current tax liabilities

Other liabilities

Provisions

Customer advances

Trade payables

Total liabilities

Total equity and liabilities

21 (I)

22 (II)

21 (II)

23 (II)

Contingencies, commitments and restrictions to the distribution of profits are disclosed in Note 25.

The accompanying notes are an integral part of these Restated Consolidated Financial Statements.

71.

9,027,070

5,159,557

2,757,630

643,630

21,572

1,539

268,252

262,176

2,779,869

267,631

129,404

1,963,394

1,838,379

9,114,356

4,673,767

3,067,236

912,758

21,572

2,498

197,159

152,080

2,702,647

220,224

156,191

1,982,979

1,227,330

417,645

7,396,322

614,529

6,903,900

16,510,678

15,930,970

12,654,114

152,200

12,806,314

12,290,420

179,446

12,469,866

30,833

714,123

285,865

70,714

968,407

352,353

296,277

20,380

133,609

831,803

1,101,535

1,341,375

246,218

751,105

277,257

66,795

684,717

266,760

250,997

25,715

56,911

2,602,829

3,704,364

16,510,678

834,629

2,119,729

3,461,104

15,930,970

Annual Report

Restated Consolidated Statement of changes in equity

All amounts in thousands of U.S. dollars

ATTRIBUTABLE TO OWNERS OF THE PARENT

72.

Balance at December 31, 2013

1,180,537

118,054

609,733

(406,744)

(305,758)

Share
Capital (1)

Legal
Reserves

Share
Premium

Currency
Translation
Adjustment

Other
Reserves

Income for the year

Currency translation adjustment

Remeasurements of post employment benefit

obligations, net of taxes

Change in value of available for sale financial

instruments and cash flow hedges net of tax

Share of other comprehensive income of

non-consolidated companies

Other comprehensive (loss) income for the year

Total comprehensive income for the year

Acquisition of non-controlling interests

Dividends paid in cash

–

(196,852)

–

1,503

(9,694)

–

(54,688)

(3,857)

–

(251,540)

(12,048)

–

Balance at December 31, 2014 (Restated)

1,180,537

118,054

609,733

(658,284)

(317,799)

(1) The Company has an authorized share capital of a single class of 2.5 billion shares having a nominal value of $1.00 per share. As

of December 31, 2014 there were 1,180,536,830 shares issued. All issued shares are fully paid.

(2) The Distributable Reserve and Retained Earnings calculated according to Luxembourg Law are disclosed in Note 25.

The accompanying notes are an integral part of these Restated Consolidated Financial Statements.

Tenaris

ATTRIBUTABLE TO OWNERS OF THE PARENT

Retained
Earnings (2)

Total

Non-controlling
Interests

Total
(Restated)

11,094,598

12,290,420

179,446

12,469,866

1,158,517

22,659

1,181,176

–

(196,852)

1,503

(859)

(166)

(197,711)

1,337

(9,694)

(389)

(10,083)

–

(58,545)

–

(58,545)

–

(263,588)

1,158,517

894,929

(1,414)

21,245

(265,002)

916,174

–

(152)

(145)

(531,242)

(48,339)

(579,581)

11,721,873

12,654,114

152,200

12,806,314

73.

Annual Report

Restated Consolidated Statement of changes in equity (cont.)

All amounts in thousands of U.S. dollars

ATTRIBUTABLE TO OWNERS OF THE PARENT

74.

Balance at December 31, 2012 (*)

1,180,537

118,054

609,733

(316,831)

(314,297)

Share
Capital (1)

Legal
Reserves

Share
Premium

Currency
Translation
Adjustment

Other
Reserves

Income for the year

Currency translation adjustment

Effect of adopting IAS 19R

Hedge reserve, net of tax

Share of other comprehensive income of

non-consolidated companies

Other comprehensive (loss) income for the year

Total comprehensive income for the year

Acquisition and increase of non-controlling interests

Dividends paid in cash

–

(2,247)

–

(87,666)

(89,913)

–

13,449

2,960

2,682

19,091

(10,552)

–

Balance at December 31, 2013

1,180,537

118,054

609,733

(406,744)

(305,758)

Balance at December 31, 2011 (*)

1,180,537

118,054

609,733

(210,772)

(40,911)

Income for the year

Currency translation adjustment

Effect of adopting IAS 19R

Hedge reserve, net of tax

Share of other comprehensive income of

non-consolidated companies

Other comprehensive loss for the year

Total comprehensive income for the year

Acquisition and increase of non-controlling interests

Dividends paid in cash

–

2,421

–

(108,480)

(106,059)

–

(9,664)

3,925

870

(4,869)

–

(268,517)

–

Balance at December 31, 2012

1,180,537

118,054

609,733

(316,831)

(314,297)

(1) The Company has an authorized share capital of a single class of 2.5 billion shares having a nominal value of $1.00 per share. As

of December 31, 2013 and 2012 there were 1,180,536,830 shares issued. All issued shares are fully paid.

(*) See section II.A. for changes in presentation due to the application of IAS19R.

The accompanying notes are an integral part of these Restated Consolidated Financial Statements.

Tenaris

ATTRIBUTABLE TO OWNERS OF THE PARENT

Total

75.

Retained
Earnings

Total

Non-controlling
Interests

10,050,835

11,328,031

171,561

11,499,592

1,551,394

22,978

1,574,372

–

(2,247)

13,449

2,960

(84,984)

306

–

459

–

(1,941)

13,449

3,419

(84,984)

(70,822)

765

(70,057)

1,551,394

1,480,572

23,743

1,504,315

–

(10,552)

2,784

(7,768)

(507,631)

(18,642)

(526,273)

11,094,598

12,290,420

179,446

12,469,866

8,800,064

10,456,705

666,031

11,122,736

1,699,375

2,364

1,701,739

–

2,421

(9,664)

3,925

(107,610)

(6,968)

(64)

1,088

(4,547)

(9,728)

5,013

(107,529)

–

(110,928)

1,699,375

1,588,447

(5,863)

(3,499)

(116,791)

1,584,948

–

(448,604)

(268,517)

(448,604)

(490,066)

(905)

(758,583)

(449,509)

10,050,835

11,328,031

171,561

11,499,592

Annual Report

Restated Consolidated Statement of cash flows

76.

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

CASH FLOWS FROM OPERATING ACTIVITIES

Income for the year

ADJUSTMENTS FOR:

Depreciation and amortization

Impairment charge

Income tax accruals less payments

Equity in (earnings) losses of non-consolidated companies

Interest accruals less payments, net

Changes in provisions

Changes in working capital

Other, including currency translation adjustment

Net cash provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures

Advance to suppliers of property, plant and equipment

Investment in non-consolidated companies

Acquisition of subsidiaries and non-consolidated companies

Net loan to non-consolidated companies

Proceeds from disposal of property, plant and equipment and intangible assets

Increase due to sale of non-consolidated company

Dividends received from non-consolidated companies

Changes in investments in short terms securities

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid

Dividends paid to non-controlling interest in subsidiaries

Acquisitions of non-controlling interests

Proceeds from borrowings (*)

Repayments of borrowings (*)

Net cash used in financing activities

Decrease in cash and cash equivalents

MOVEMENT IN CASH AND CASH EQUIVALENTS

At the beginning of the year

Effect of exchange rate changes

Decrease in cash and cash equivalents

At December 31

CASH AND CASH EQUIVALENTS

Cash and bank deposits

Bank overdrafts

(*) Mainly related to the renewal of short-term local facilities carried out during the years 2014, 2013 and 2012.

The accompanying notes are an integral part of these Restated Consolidated Financial Statements.

Notes

2014

(Restated)

2013

2012

10 & 11

27 (ii)

27 (iii)

27 (i)

1,181,176

1,574,372

1,701,739

615,629

205,849

79,062

164,616

(37,192)

(4,982)

(72,066)

(88,025)

610,054

567,654

–

125,416

(46,098)

(29,723)

(1,800)

188,780

(43,649)

–

(160,951)

63,206

(25,305)

(12,437)

(303,012)

25,104

2,044,067

2,377,352

1,855,998

10 & 11

(1,089,373)

(63,390)

(1,380)

(28,060)

(21,450)

11,156

–

17,735

(753,498)

(22,234)

–

33,186

–

16,334

(789,731)

4,415

–

(510,825)

–

8,012

3,140

18,708

(611,049)

(582,921)

(213,633)

(1,785,811)

(1,309,133)

(1,479,914)

(531,242)

(48,339)

(145)

(507,631)

(448,604)

(18,642)

(7,768)

(905)

(758,583)

2,054,090

3,046,837

2,460,409

(2,890,717)

(3,143,241)

(1,271,537)

(423,606)

(1,216,873)

(425,539)

(165,350)

(148,654)

(49,455)

598,145

(16,350)

(165,350)

416,445

417,645

(1,200)

416,445

772,656

(25,857)

(148,654)

598,145

614,529

(16,384)

598,145

815,032

7,079

(49,455)

772,656

828,458

(55,802)

772,656

27 (iv)

Tenaris

Index to the notes to the
Restated Consolidated Financial Statements

General Information

IV.

Other notes to the Restated Consolidated Financial Statements

II.

Accounting policies (“AP”)

Basis of presentation

Group accounting

Segment information

Foreign currency translation

Property, plant and equipment

Intangible assets

Impairment of non-financial assets

Other investments

Inventories

Trade and other receivables

Cash and cash equivalents

Equity

Borrowings

Current and Deferred income tax

Employee benefits

Provisions

Trade payables

Revenue recognition

Cost of sales and sales expenses

Earnings per share

Financial instruments

III.

Financial risk management

Segment information

Cost of sales

Selling, general and administrative expenses

Labor costs (included in Cost of sales and in Selling,

general and administrative expenses)

Other operating income and expenses

Financial results

Equity in earnings (losses) of non-consolidated companies

77.

Income tax

Dividends distribution

10.

Property, plant and equipment, net

11.

Intangible assets, net

12.

Investments in non-consolidated companies

13.

Receivables - non current

14.

Inventories

15.

Receivables and prepayments

16.

Current tax assets and liabilities

17.

Trade receivables

18.

Other investments and Cash and cash equivalents

19.

Borrowings

20.

Deferred income tax

21.

Other liabilities

22.

Non-current allowances and provisions

23.

Current allowances and provisions

24.

Derivative financial instruments

Financial Risk Factors

25.

Contingencies, commitments and restrictions

Financial instruments by category

on the distribution of profits

Fair value hierarchy

Fair value estimation

26.

Business combinations

27.

Cash flow disclosures

Accounting for derivative financial instruments

28.

Related party transactions

and hedging activities

29.

Principal subsidiaries

30.

Nationalization of Venezuelan Subsidiaries

31.

Fees paid to the Company's principal accountant

32.

Subsequent event

Annual Report

I. General information

78.

Tenaris S.A. (the “Company”) was established as a
public limited liability company (Societé 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
Restated Consolidated 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 these Restated
Consolidated Financial Statements.

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.

This restatement follows the conclusion of
previously disclosed discussions with the Staff of the
U.S. Securities and Exchange Commission regarding
Staff comments relating to the carrying value of the
Company’s investment in Usiminas under IFRS as
of September 30, 2014 and subsequent periods. The
Staff had requested information regarding Tenaris’s
value in use calculations and the differences
between the carrying amounts and certain other
indicators of value, including the purchase price of
BRL12 (approximately $4.8) per share which the
Company’s affiliate Ternium S.A. (“Ternium”) paid
in October 2014 for the acquisition of 51.4 million
additional Usiminas ordinary shares from Caixa de
Previdência dos Funcionários do Banco do Brazil
– PREVI (“PREVI”), and indicated that the PREVI
transaction price provided objective evidence of the
value of the Usiminas investment.

Restatement of Previously Issued Financial

Statements – Carrying value of Usiminas

investment
Subsequent to the issuance of the Company’s
audited annual Consolidated Financial Statements
for the years ended December 31, 2014, 2013
and 2012 and following the approval of such
Consolidated Financial Statements by the Board of
Directors and the General Meeting of Shareholders,
the Company has restated such Consolidated
Financial Statements to reduce the carrying amount
of the Company’s investment in Usinas Siderúrgicas
de Minas Gerais S.A. – Usiminas (“Usiminas”).

As a result of these discussions, the Company has
re-evaluated and revised the assumptions used
to calculate the carrying value of the Usiminas
investment at September 30, 2014. In calculating
the value in use of the Usiminas investment initially
reported at September 30, 2014, the Company had
combined the assumptions used in two different
projected scenarios. For the purposes of these
Restated Consolidated Financial Statements,
however, the Company recalculated value in use
as of September 30, 2014 based primarily on the
assumptions in the most conservative scenario,
which includes a lower operating income, an

Tenarisincrease in the discount rate and a decrease in the
perpetuity growth rate (see Note 12). As a result, the
Company recorded an impairment of $161.2 million
as of September 30, 2014, reaching a carrying value
for the Usiminas investment of BRL12 per share. In
addition, the Company’s investment in Ternium was
also adjusted to reflect the change in value of that
company’s participation in Usiminas. As a result
of the impairment and adjustment as of September
30, 2014, the Company did not record a further
impairment or adjustment as of December 31, 2014.

Accordingly, the Company’s 2014 annual
Consolidated Financial Statements have been
amended and restated to reduce the carrying
amount of the Company’s investment in Usiminas.
The restatement, which is treated as the correction
of an error under accounting rules, impacts the
Consolidated Statement of Financial Position, the
Consolidated Statement of Changes in Equity, the
Consolidated Income Statement, the Consolidated
Statement of Other Comprehensive Income and
the Consolidated Statement of Cash Flows for the
year ended December 31, 2014. The restatement
impacts only the year ended December 31, 2014.

(all amounts in thousands of U.S. dollars, unless otherwise stated)

No impact was recorded on the Consolidated
Financial Statements for the years ended December
31, 2013 and 2012.

79.

As a result of the restatement, non-current assets
have decreased by $165.0 million, accumulated
income has decreased by $184.8 million and
cumulative currency translation adjustment (of
non-consolidated companies) has increased by
$19.7 million. The 2014 basic and diluted earnings
per share for profit attributable to the owners of
the parent have decreased from $1.14 gain per
share to $0.98 gain per share.

Following the restatement, these Restated
Consolidated Financial Statements for the years
ended December 31, 2014, 2013 and 2012 of the
Company have been approved and authorized for
issue by the Board of Directors on May 28, 2015.

The effect of this restatement on the Company’s
previously issued Consolidated Financial
Statements (comprising the effects on Tenaris’s
direct investment in Usiminas and on its indirect
investment through Ternium) is as follows:

YEAR ENDED DECEMBER 31, 2014

As reported

Adjustment

Restated

CONSOLIDATED INCOME STATEMENT

Equity in earnings (losses) of non-consolidated companies

Income for the year

Income for the year attributable to owners of the parent

Earnings per share (U.S. dollars per share)

Earnings per ADS (U.S. dollars per share) (*)

(*) Each ADS equals two shares.

20,141

1,365,933

1,343,274

1.14

2.28

(184,757)

(0.16)

(0.32)

(164,616)

1,181,176

1,158,517

0.98

1.96

Annual Report80.

As of December 31, 2014, from the total
adjustment of $184.8 million, $108.6 million are
related to the Company’s direct participation in
Usiminas and $76.2 million through Ternium’s
participation in Usiminas.

(all amounts in thousands of U.S. dollars, unless otherwise stated)

YEAR ENDED DECEMBER 31, 2014

As reported

Adjustment

Restated

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Income for the year

1,365,933

(184,757)

1,181,176

SHARE OF OTHER COMPREHENSIVE INCOME OF NON-CONSOLIDATED COMPANIES:

Currency translation adjustment

Other comprehensive income (loss) for the year, net of tax

Total comprehensive income for the year

Total comprehensive income for the year attributable to owners of the parent

(74,412)

(284,726)

1,081,207

1,059,962

19,724

(165,033)

(54,688)

(265,002)

916,174

894,929

YEAR ENDED DECEMBER 31, 2014

As reported

Adjustment

Restated

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Investments in non-consolidated companies

Total assets

808,663

(165,033)

643,630

16,675,711

(165,033)

16,510,678

Capital and reserves attributable to owners of the parent

Total equity

12,819,147

12,971,347

(165,033)

12,654,114

(165,033)

12,806,314

Tenaris

81.

As of December 31, 2014, from the total
adjustment of $165.0 million, $96.2 million are
related to the Company’s direct participation in
Usiminas and $68.8 million through Ternium’s
participation in Usiminas.

(all amounts in thousands of U.S. dollars, unless otherwise stated)

YEAR ENDED DECEMBER 31, 2014

As reported

Adjustment

Restated

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Currency Translation Adjustment

Retained Earnings

Total equity

(678,008)

19,724

(658,284)

11,906,630

12,971,347

(184,757)

11,721,873

(165,033)

12,806,314

YEAR ENDED DECEMBER 31, 2014

As reported

Adjustment

Restated

CONSOLIDATED STATEMENT OF CASH FLOW

Income for the year

Equity in earnings (losses) of non-consolidated companies

1,365,933

(184,757)

1,181,176

(20,141)

184,757

164,616

Annual ReportII. Accounting policies

82.

The principal accounting policies applied in
the preparation of these Restated Consolidated
Financial Statements are set out below. These
policies have been consistently applied to all the
years presented, unless otherwise stated.

reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at
the reporting dates, and the reported amounts of
revenues and expenses during the reporting years.
Actual results may differ from these estimates.

A. Basis of presentation
The Restated Consolidated Financial Statements
of Tenaris have been prepared in accordance
with International Financial Reporting Standards
(“IFRS”), as issued by the International
Accounting Standards Board (“IASB”) and
adopted by the European Union, under the
historical cost convention, as modified by the
revaluation of available for sale financial assets
and financial assets and liabilities (including
derivative instruments) at fair value through profit
or loss. The Restated Consolidated Financial
Statements are, unless otherwise noted, presented
in thousands of U.S. dollars (“$”).

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

As further described below, as from January 1,
2013, the Company adopted IAS 19 (amended
2011). The effect of these changes in the
recognition and measurement of pension
obligations and other post-employment
obligations was $60.7 million ($77.0 million in
other long term liabilities net of a deferred income
tax of $22.3 million and $6.0 million related
to the adoption of IAS 19 in non-consolidated
companies) for 2012.

The preparation of Restated Consolidated
Financial Statements in conformity with IFRS
requires management to make certain accounting
estimates and assumptions that might affect the

•

1. New and amended standards not yet adopted

and relevant for Tenaris
IFRS 15, “Revenue from contracts with customers”
In May 2014, the IASB issued IFRS 15, “Revenue
from contracts with customers”, which sets out
the requirements in accounting for revenue arising
from contracts with customers and which is based
on the principle that revenue is recognized when
control of a good or service is transferred to the
customer. IFRS 15 must be applied on annual
periods beginning on or after January 1, 2017.

IFRS 9, “Financial instruments”
In July 2014, the IASB issued IFRS 9, “Financial
instruments”, which replaces the guidance in IAS 39.
It includes requirements on the classification and
measurement of financial assets and liabilities,
as well as an expected credit losses model that
replaces the current incurred loss impairment
model. IFRS 9 must be applied on annual periods
beginning on or after January 1, 2018.

Amendments to IFRS 10, “Consolidated financial
statements” and IAS 28, “Investments in associates
and joint ventures”
In September 2014, the IASB issued the
Amendments to IFRS 10, “Consolidated
financial statements” and IAS 28, “Investments
in associates and joint ventures”, which addresses
an acknowledged inconsistency between the
requirements of both standards in dealing with
the sale or contribution of assets between an
investor and its associate or joint venture. These
amendments must be applied annual periods
beginning on or after January 1, 2016.

TenarisThese standards are not effective for the financial
year beginning January 1, 2014 and have not been
early adopted.

These standards have not been endorsed by the EU.

The Company's management has not yet assessed
the potential impact that the application of these
standards may have on the Company's financial
condition or results of operations.

•

2. New and amended standards adopted

for Tenaris
Amendments to IAS 32, ‘Financial instruments:
Presentation’, IAS 36, ‘Impairment of assets' and
IAS 39, ‘Financial instruments: Recognition and
measurement’
All the amendments to the standards IAS 32,
‘Financial instruments: Presentation’ – Offsetting
ﬁnancial assets and ﬁnancial liabilities, IAS 36,
‘Impairment of assets’ – Recoverable amount
disclosures for non-ﬁnancial assets and IAS 39,
‘Financial instruments: Recognition and
measurement’ – Novation of derivatives and
continuation of hedge accounting have been
analyzed by the Company. The application of these
standards did not materially affect the Company’s
financial condition or results of operations.

B. Group accounting

1. Subsidiaries and transactions with

non-controlling interests
Subsidiaries are all entities over which Tenaris
has control. Tenaris controls an entity when it is
exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to
affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on

which control is exercised by the Company and are
no longer consolidated from the date control ceases.

83.

The purchase method of accounting is used to
account for the acquisition of subsidiaries by Tenaris.
The cost of an acquisition is measured as the fair
value of the assets given, equity instruments issued
and liabilities incurred or assumed at the date of
exchange. Acquisition-related costs are expensed
as incurred. Identifiable assets acquired, liabilities
and contingent liabilities assumed in a business
combination are measured initially at their fair values
at the acquisition date. Any non-controlling interest
in the acquiree is measured either at fair value or at
the non-controlling interest’s proportionate share of
the acquiree’s net assets. The excess of the aggregate
of the consideration transferred and the amount
of any non-controlling interest in the acquiree over
the fair value of the identifiable net assets acquired
is recorded as goodwill. If this is less than the fair
value of the net assets of the subsidiary acquired, the
difference is recognized directly in the Consolidated
Income Statement.

Transactions with non-controlling interests that
do not result in a loss of control are accounted as
transactions with equity owners of the Company.
For purchases from non-controlling interests, the
difference between any consideration paid and the
relevant share acquired of the carrying value of net
assets of the subsidiary is recorded in equity. Gains
or losses on disposals to non-controlling interests
are also recorded in equity.

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

Annual Report84.

inter-company transactions are generated. These
are included in the Consolidated Income Statement
under Other financial results.

result the Company’s investment in Ternium has
been accounted for under the equity method:

2. Non-consolidated companies
Non-consolidated companies are all entities in
which Tenaris has significant influence but not
control, generally accompanying a shareholding
of between 20% and 50% of the voting rights.
Investments in non- consolidated companies
(associated and joint ventures) are accounted
for by the equity method of accounting and
are initially recognized at cost. The Company’s
investment in non-consolidated companies
includes goodwill identified in acquisition, net
of any accumulated impairment loss.

Unrealized results on transactions between
Tenaris and its non-consolidated companies are
eliminated to the extent of Tenaris’s interest in
the non-consolidated companies. Unrealized
losses are also eliminated unless the transaction
provides evidence of an impairment indicator of
the asset transferred. Financial statements of non-
consolidated companies have been adjusted where
necessary to ensure consistency with IFRS.

The Company’s pro-rata share of earnings in
non-consolidated companies is recorded in the
Consolidated Income Statement under Equity in
earnings (losses) of non-consolidated companies.
The Company’s pro-rata share of changes in other
reserves is recognized in the Consolidated Statement
of Changes in Equity under Other Reserves.

At December 31, 2014, Tenaris holds 11.46% of
Ternium’s common stock. The following factors and
circumstances evidence that Tenaris has significant
influence (as defined by IAS 28, “Investments in
associates companies”) over Ternium, and as a

•

Both the Company and Ternium are under the
indirect common control of San Faustin S.A.;
Four out of the nine members of Ternium’s
Board of Directors (including Ternium’s chairman)
are also members of the Company’s Board
of Directors;
Under the shareholders agreement by and between
the Company and Techint Holdings S.à r.l, a
wholly owned subsidiary of San Faustin S.A. and
Ternium’s main shareholder, dated January 9,
2006, Techint Holdings S.à r.l, is required to take
actions within its power to cause (a) one of the
members of Ternium’s Board of Directors to be
nominated by the Company and (b) any director
nominated by the Company to be only removed
from Ternium’s Board of Directors pursuant to
previous written instructions of the Company.

The Company’s investment in Ternium is carried at
incorporation cost plus proportional ownership of
Ternium’s earnings and other shareholders’ equity
accounts. Because the exchange of its holdings in
Amazonia and Ylopa for shares in Ternium was
considered to be a transaction between companies
under common control of San Faustin S.A.
(formerly San Faustin N.V.), Tenaris recorded its
initial ownership interest in Ternium at $229.7
million, the carrying value of the investments
exchanged. This value was $22.6 million less than
Tenaris’s proportional ownership of Ternium’s
shareholders’ equity at the transaction date. As
a result of this treatment, Tenaris’s investment in
Ternium will not reflect its proportional ownership
of Ternium’s net equity position. Ternium carried
out an initial public offering (“IPO”) of its shares
on February 1, 2006, listing its ADS on the New
York Stock Exchange.

Tenaris

85.

At December 31, 2014, Tenaris holds through
its Brazilian subsidiary Confab Industrial S.A.
(“Confab”), 5.0% of the shares with voting rights
and 2.5% of Usiminas’s total share capital. For the
factors and circumstances that evidence that Tenaris
has significant influence over Usiminas to account it
for under the equity method (as defined by IAS 28,
“Investments in Associates companies”), see Note 12.

Tenaris reviews investments in non-consolidated
companies for impairment whenever events or
changes in circumstances indicate that the asset’s
carrying amount may not be recoverable, such as a
significant or prolonged decline in fair value below
the carrying value.

Tenaris carries its investment in Ternium at its
proportional equity value, with no additional
goodwill or intangible assets recognized. At
December 31, 2014, 2013 and 2012, no impairment
provisions were recorded on Tenaris’s investment
in Ternium.

Tenaris carries its investment in Usiminas at its
proportional equity value, with no additional
goodwill or intangible assets recognized. During
the years ended December 31, 2014 and 2012, an
impairment charge was recorded on Tenaris’s
investment in Usiminas. See Note 7.

C. Segment information
The Company is organized in one major business
segment, Tubes, which is also the reportable
operating segment.

The Tubes segment includes the production and
sale of both seamless and welded steel tubular
products and related services mainly for the oil
and gas industry, particularly oil country tubular

goods (OCTG) used in drilling operations, and
for other industrial applications with production
processes that consist in the transformation of steel
into tubular products. Business activities included
in this segment are mainly dependent on the oil
and gas industry worldwide, as this industry is a
major consumer of steel pipe products, particularly
OCTG used in drilling activities. Demand for steel
pipe products from the oil and gas industry has
historically been volatile and depends primarily
upon the number of oil and natural gas wells being
drilled, completed and reworked, and the depth and
drilling conditions of these wells. Sales are generally
made to end users, with exports being done through
a centrally managed global distribution network
and domestic sales made through local subsidiaries.
Corporate general and administrative expenses have
been allocated to the Tubes segment.

Tenaris’s Chief Operating Decision Maker (CEO)
holds monthly meetings with senior management,
in which operating and financial performance
information is reviewed, including financial
information that differs from IFRS principally
as follows:

•

The use of direct cost methodology to calculate
the inventories, while under IFRS it is at full cost,
including absorption of production overheads
and depreciations;
The use of costs based on previously internally
defined cost estimates, while, under IFRS, costs
are calculated at historical cost;

Annual Report

86.

•

Other timing and no significant differences.
Tenaris groups its geographical information
in five areas: North America, South America,
Europe, Middle East and Africa, and Far East and
Oceania. For purposes of reporting geographical
information, net sales are allocated to geographical
areas based on the customer’s location; allocation
of assets, capital expenditures and associated
depreciations and amortizations are based on the
geographical location of the assets.

D. Foreign currency translation

1. Functional and presentation currency
IAS 21 (revised) defines the functional currency as
the currency of the primary economic environment
in which an entity operates.

The functional and presentation currency of the
Company is the U.S. dollar. The U.S. dollar is the
currency that best reflects the economic substance
of the underlying events and circumstances
relevant to Tenaris global operations.

Starting January 1, 2012, the Company changed
the functional currency of its Mexican, Canadian
and Japanese subsidiaries from their respective
local currencies to the U.S. dollar.

Except from the Brazilian and Italian subsidiaries
whose functional currencies are their local
currencies, Tenaris determined that the functional
currency of its other subsidiaries is the U.S. dollar,
based on the following principal considerations:

•

Prices of their critical raw materials and inputs are
priced and settled in U.S. dollars;
Transaction and operational environment and the
cash flow of these operations have the U.S. dollars
as reference currency;
Significant level of integration of the local
operations within Tenaris’s international global
distribution network;
Net financial assets and liabilities are mainly
received and maintained in U.S. dollars;
The exchange rate of certain legal currencies
has long-been affected by recurring and severe
economic crises.

2. Transactions in currencies other than the

functional currency
Transactions in currencies other than the functional
currency are translated into the functional currency
using the exchange rates prevailing at the date
of the transactions or valuation where items are
re-measured.

At the end of each reporting period: (i) monetary
items denominated in currencies other than the
functional currency are translated using the closing
rates; (ii) non-monetary items that are measured
in terms of historical cost in a currency other
than the functional currency are translated using
the exchange rates prevailing at the date of the
transactions; and (iii) non-monetary items that
are measured at fair value in a currency other than
the functional currency are translated using the
exchange rates prevailing at the date when the fair
value was determined.

•

Sales are mainly negotiated, denominated and settled
in U.S. dollars. If priced in a currency other than
the U.S. dollar, the sales price considers exposure to
fluctuation in the exchange rate versus the U.S. dollar;

Foreign exchange gains and losses resulting from
the settlement of such transactions and from
the translation at year-end exchange rates of
monetary assets and liabilities denominated in
currencies other than the functional currency are

Tenaris

87.

recorded as gains and losses from foreign exchange
and included in “Other financial results” in the
Consolidated Income Statement, except when
deferred in equity as qualifying cash flow hedges
and qualifying net investment hedges. Translation
differences on non-monetary financial assets
and liabilities such as equities held at fair value
through profit or loss are recognized in profit or
loss as part of the “fair value gain or loss,” while
translation differences on non-monetary financial
assets such as equities classified as available for
sale are included in the “available for sale reserve”
in equity. Tenaris had no such assets or liabilities
for any of the periods presented.

3. Translation of financial information in

currencies other than the functional currency
Results of operations for subsidiaries whose
functional currencies are not the U.S. dollar are
translated into U.S. dollars at the average exchange
rates for each quarter of the year. Financial
Statement positions are translated at the end-of-year
exchange rates. Translation differences are
recognized in a separate component of equity as
currency translation adjustments. In the case of a
sale or other disposal of any of such subsidiaries,
any accumulated translation difference would be
recognized in income as a gain or loss from the sale.

Major overhaul and rebuilding expenditures are
capitalized as property, plant and equipment only
when it is probable that future economic benefits
associated with the item will flow to the group
and the investment enhances the condition of
assets beyond its original condition. The carrying
amount of the replaced part is derecognized.
Ordinary maintenance expenses on manufacturing
properties are recorded as cost of products sold in
the year in which they are incurred.

Borrowing costs that are attributable to the
acquisition or construction of certain capital assets
are capitalized as part of the cost of the asset, in
accordance with IAS 23(R) (“Borrowing Costs”).
Assets for which borrowing costs are capitalized
are those that require a substantial period of time
to prepare for their intended use.

Depreciation method is reviewed at each year end.
Depreciation is calculated using the straight-line
method to depreciate the cost of each asset to its
residual value over its estimated useful life,
as follows:

Land

Buildings and improvements

Plant and production equipment

Vehicles, furniture and fixtures, and other equipment

No Depreciation

30-50 years

10-40 years

4-10 years

E. Property, plant and equipment
Property, plant and equipment are recognized
at historical acquisition or construction cost
less accumulated depreciation and impairment
losses. Historical cost includes expenditure that
is directly attributable to the acquisition of the
items. Property, plant and equipment acquired
through acquisitions accounted for as business
combinations have been valued initially at the fair
market value of the assets acquired.

The asset’s residual values and useful lives of
significant plant and production equipment are
reviewed and adjusted, if appropriate, at each
year-end date.

Management’s re-estimation of assets useful lives,
performed in accordance with IAS 16 (“Property
plant and equipment”), did not materially affect
depreciation expenses for 2014, 2013 and 2012.

Annual Report88.

Tenaris depreciates each significant part of an item
of property, plant and equipment for its different
production facilities that (i) can be properly
identified as an independent component with a
cost that is significant in relation to the total cost
of the item, and (ii) has a useful operating life that
is different from another significant part of that
same item of property, plant and equipment.

Gains and losses on disposals are determined by
comparing the proceeds with the carrying amount
of assets and are recognized under Other operating
income or Other operating expenses in the
Consolidated Income Statement.

F. Intangible assets

1. Goodwill
Goodwill represents the excess of the acquisition
cost over the fair value of Tenaris’s share of net
identifiable assets acquired as part of business
combinations determined mainly by independent
valuations. Goodwill is tested annually for
impairment and carried at cost less accumulated
impairment losses. Impairment losses on goodwill
are not reversed. Goodwill is included on the
Consolidated Statement of Financial Position
under Intangible assets, net.

For the purpose of impairment testing, goodwill
is allocated to a subsidiary or group of subsidiaries
that are expected to benefit from the business
combination which generated the goodwill
being tested.

2. Information systems projects
Costs associated with maintaining computer
software programs are generally recognized as
an expense as incurred. However, costs directly

related to the development, acquisition and
implementation of information systems are
recognized as intangible assets if it is probable they
have economic benefits exceeding one year.

Information systems projects recognized as assets
are amortized using the straight-line method over
their useful lives, not exceeding a period of 3 years.
Amortization charges are mainly classified as
Selling, general and administrative expenses in the
Consolidated Income Statement.

Management’s re-estimation of assets useful lives,
performed in accordance with IAS 38 (“Intangible
Assets”), did not materially affect depreciation
expenses for 2014.

3. Licenses, patents, trademarks and

proprietary technology
Licenses, patents, trademarks, and proprietary
technology acquired in a business combination are
initially recognized at fair value at the acquisition
date. Licenses, patents, proprietary technology
and those trademarks that have a finite useful life
are carried at cost less accumulated amortization.
Amortization is calculated using the straight-line
method to allocate the cost over their estimated
useful lives, and does not exceed a period of 10 years.

The balance of acquired trademarks that have
indefinite useful lives according to external
appraisal amounts to $86.7 million at December
31, 2014 and 2013, included in Hydril CGU. Main
factors considered in the determination of the
indefinite useful lives, include the years that they
have been in service and their recognition among
customers in the industry.

Management’s re-estimation of assets useful lives,
performed in accordance with IAS 38 (“Intangible

Tenaris
Assets”), did not materially affect depreciation
expenses for 2014.

4. Research and development
Research expenditures as well as development costs
that do not fulfill the criteria for capitalization are
recorded as Cost of sales in the Consolidated Income
Statement as incurred. Research and development
expenditures included in Cost of sales for the years
2014, 2013 and 2012 totaled $106.9 million, $105.6
million and $83.0 million, respectively.

5. Customer relationships
In accordance with IFRS 3 and IAS 38, Tenaris
has recognized the value of customer relationships
separately from goodwill attributable to the
acquisition of Maverick and Hydril.

Customer relationships acquired in a business
combination are recognized at fair value at the
acquisition date, have a finite useful life and are
carried at cost less accumulated amortization.
Amortization is calculated using the straight line
method over the expected life of approximately
14 years for Maverick and 10 years for Hydril.

G. Impairment of non-financial assets
Long-lived assets including identifiable intangible
assets are reviewed for impairment at the lowest
level for which there are separately identifiable
cash flows (cash generating units, or CGU). Most
of the Company’s principal subsidiaries that
constitute a CGU have a single main production
facility and, accordingly, each of such subsidiary
represents the lowest level of asset aggregation that
generates largely independent cash inflows.

Assets that are subject to amortization are reviewed
for impairment whenever events or changes in

circumstances indicate that the carrying amount
may not be recoverable. Intangible assets with
indefinite useful life, including goodwill, are subject
to at least an annual impairment test.

89.

In assessing whether there is any indication that
a CGU may be impaired, external and internal
sources of information are analyzed. Material
facts and circumstances specifically considered in
the analysis usually include the discount rate used
in Tenaris’s cash flow projections and the business
condition in terms of competitive and economic
factors, such as the cost of raw materials, oil
and gas prices, competitive environment, capital
expenditure programs for Tenaris’s customers and
the evolution of the rig count.

An impairment loss is recognized for the amount
by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is
the higher of the asset’s value in use and fair value
less costs to sell. Any impairment loss is allocated
to reduce the carrying amount of the assets of the
CGU in the following order:

(a) first, to reduce the carrying amount of any
goodwill allocated to the CGU; and
(b) then, to the other assets of the unit (group
of units) pro rata on the basis of the carrying
amount of each asset in the unit (group of units),
considering not to reduce the carrying amount of
the asset below the highest of its fair value less cost
to sell, its value in use or zero.

The value in use of each CGU is determined on
the basis of the present value of net future cash
flows which would be generated by such CGU.
Tenaris uses cash flow projections for a five year
period with a terminal value calculated based on
perpetuity and appropriate discount rates.

Annual Report
90.

For purposes of calculating the fair value less costs
to sell Tenaris uses the estimated value of future
cash flows that a market participant could generate
from the corresponding CGU.

(ii) designated as such upon initial recognition
because they are managed and its performance is
evaluated on a fair value basis. The results of these
investments are recognized in Financial Results in
the Consolidated Income Statement.

Management judgment is required to estimate
discounted future cash flows. Actual cash flows
and values could vary significantly from the
forecasted future cash flows and related values
derived using discounting techniques.

Non-financial assets other than goodwill that
suffered an impairment are reviewed for possible
reversal at each reporting date.

H. Other investments
Other investments consist primarily of investments
in financial instruments and time deposits with
a maturity of more than three months at the date
of purchase.

Certain fixed income financial instruments
purchased by the Company have been categorized
as available for sale if designated in this category
or not classified in any of the other categories. The
results of these financial investments are recognized
in “Financial Results” in the Consolidated Income
Statement using the effective interest method.
Unrealized gains and losses other than impairment
and foreign exchange results are recognized in “Other
comprehensive income”. On maturity or disposal,
net gain and losses previously deferred in “Other
comprehensive income” are recognized in “Financial
Results” in the Consolidated Income Statement.

All other investments in financial instruments and
time deposits are categorized as financial assets
“at fair value through profit or loss” because
such investments are both (i) held for trading and

Purchases and sales of financial investments are
recognized as of their settlement date.

The fair values of quoted investments are generally
based on current bid prices. If the market for a
financial investment is not active or the securities
are not listed, Tenaris estimates the fair value by
using standard valuation techniques (see Section III
Financial Risk Management).

I. Inventories
Inventories are stated at the lower of cost and net
realizable value. The cost of finished goods and
goods in process is comprised of raw materials,
direct labor and utilities (based on FIFO method)
and other direct costs and related production
overhead costs. It excludes borrowing costs.
Tenaris estimates net realizable value of inventories
by grouping, where applicable, similar or related
items. Net realizable value is the estimated selling
price in the ordinary course of business, less
any estimated costs of completion and selling
expenses. Goods in transit at year end are valued
based on supplier’s invoice cost.

Tenaris establishes an allowance for obsolete
or slow-moving inventory related to finished
goods, supplies and spare parts. For slow moving
or obsolete finished products, an allowance is
established based on management’s analysis of
product aging. An allowance for obsolete and
slow-moving inventory of supplies and spare parts
is established based on management's analysis

Tenarisof such items to be used as intended and the
consideration of potential obsolescence due to
technological changes.

J. Trade and other receivables
Trade and other receivables are recognized initially
at fair value, generally the original invoice amount.
Tenaris analyzes its trade receivables on a regular
basis and, when aware of a specific counterparty’s
difficulty or inability to meet its obligations,
impairs any amounts due by means of a charge to
an allowance for doubtful accounts. Additionally,
this allowance is adjusted periodically based on the
aging of receivables.

K. Cash and cash equivalents
Cash and cash equivalents are comprised of cash in
banks, liquidity funds and short-term investments
with a maturity of less than three months at the date
of purchase which are readily convertible to known
amounts of cash. Assets recorded in cash and cash
equivalents are carried at fair market value or at
historical cost which approximates fair market value.

In the Consolidated Statement of Financial
Position, bank overdrafts are included in
Borrowings in current liabilities.

For the purposes of the Consolidated Statement
of Cash Flows, cash and cash equivalents includes
overdrafts.

L. Equity

•

The value of share capital, legal reserve, share
premium and other distributable reserves calculated
in accordance with Luxembourg Law;
The currency translation adjustment, other
reserves, retained earnings and non-controlling
interest calculated in accordance with IFRS.

91.

2. Share capital
The Company has an authorized share capital of a
single class of 2.5 billion shares having a nominal
value of $1.00 per share. Total ordinary shares
issued and outstanding as of December 31, 2014,
2013 and 2012 are 1,180,536,830 with a par value
of $1.00 per share with one vote each. All issued
shares are fully paid.

3. Dividends distribution by the Company to

shareholders
Dividends distributions are recorded in the
Company’s financial statements when Company’s
shareholders have the right to receive the payment,
or when interim dividends are approved by the
Board of Directors in accordance with the by-laws
of the Company.

Dividends may be paid by the Company to the
extent that it has distributable retained earnings,
calculated in accordance with Luxembourg law
(see Note 25).

M. Borrowings
Borrowings are recognized initially at fair value
net of transaction costs incurred and subsequently
measured at amortized cost.

1. Equity components
The Consolidated Statement of Changes in Equity
includes:

N. Current and Deferred income tax
The tax expense for the period comprises current
and deferred tax. Tax is recognized in the

Annual Report
92.

Consolidated Income Statement, except for tax
items recognized in the Consolidated Statement of
Other Comprehensive Income.

it has become probable that future taxable income
will allow the deferred tax asset to be recovered.

The current income tax charge is calculated on
the basis of the tax laws enacted or substantively
enacted at the reporting date in the countries
where the Company’s subsidiaries operate and
generate taxable income. Management periodically
evaluates positions taken in tax returns with
respect to situations in which applicable tax
regulations are subject to interpretation and
establishes provisions when appropriate.

Deferred income tax is recognized applying the
liability method on temporary differences arising
between the tax basis of assets and liabilities and
their carrying amounts in the financial statements.
The principal temporary differences arise from fair
value adjustments of assets acquired in business
combinations, the effect of currency translation
on fixed assets and inventories, depreciation
on property, plant and equipment, valuation of
inventories and provisions for pension plans.
Deferred tax assets are also recognized for net
operating loss carry-forwards. Deferred tax assets
and liabilities are measured at the tax rates that
are expected to apply in the time period when the
asset is realized or the liability is settled, based on
tax laws that have been enacted or substantively
enacted at the reporting date.

Deferred tax assets are recognized to the extent
it is probable that future taxable income will be
available against which the temporary differences
can be utilized. At the end of each reporting
period, Tenaris reassesses unrecognized deferred
tax assets. Tenaris recognizes a previously
unrecognized deferred tax asset to the extent that

In 2013, Argentina enacted a law that amends
its income tax law, including a 10% withholding
tax on dividend distributions made by Argentine
companies to foreign beneficiaries. Accordingly,
as of September 30, 2013, the Company recorded
an income tax provision of $45.4 million, for the
deferred tax liability on reserves for future dividends
at Tenaris’s Argentine subsidiaries. As of December
31, 2014, the balance amounted to $17.7 million.

In 2014, Mexico enacted a tax reform which
included a withholding tax on the distribution of
results generated as from 2014. If 2014 net income
were to be distributed as dividend, the estimated
amount of withholding tax would amount to
approximately $30 million. Tenaris estimates that
given the balance of results prior to 2014 pending to
be distributed, which are not subject to withholding
tax, there will be no tax withholding during 2015,
consequently, no income tax provision was recorded.

O. Employee benefits

1. Post employment benefits
The Company has defined benefit and defined
contribution plans. A defined benefit plan is a
pension plan that defines an amount of pension
benefit that an employee will receive on retirement,
usually dependent on one or more factors such as
age, years of service and compensation.

The Company applied IAS 19 (amended 2011),
“Employee benefits”, as from January 1, 2013.
In accordance with the amended standard, post-
employment benefits are accounted as follows:

TenarisThe liability recognized in the statement of
financial position in respect of defined benefit
pension plans is the present value of the defined
benefit obligation at the end of the reporting
period less the fair value of plan assets, if any. The
defined benefit obligation is calculated annually
(at year end) by independent actuaries using the
projected unit credit method. The present value
of the defined benefit obligation is determined by
discounting the estimated future cash outflows
using interest rates of high-quality corporate
bonds that are denominated in the currency in
which the benefits will be paid, and that have terms
to maturity approximating to the terms of the
related pension obligation.

Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions
are charged or credited to equity in “Other
comprehensive income” in the period in which they
arise. Past-service costs are recognized immediately
in income statement.

For defined benefit plans, net interest income/
expense is calculated based on the surplus or
deficit derived by the difference between the
defined benefit obligations less plan assets. For
defined contribution plans, the Company pays
contributions to publicly or privately administered
pension insurance plans on a mandatory,
contractual or voluntary basis. The Company
has no further payment obligations once the
contributions have been paid. The contributions
are recognized as employee benefit expense when
they are due. Prepaid contributions are recognized
as an asset to the extent that a cash refund or a
reduction in the future payments is available. As
required by IAS 19, comparative figures have been
adjusted to reflect the retrospective application.

Tenaris sponsors funded and unfunded defined
benefit pension plans in certain subsidiaries. The
most significant are:

93.

•

An unfunded defined benefit employee retirement
plan for certain senior officers. The plan is
designed to provide certain benefits to those
officers (additional to those contemplated under
applicable labor laws) in case of termination of the
employment relationship due to certain specified
events, including retirement. This unfunded plan
provides defined benefits based on years of service
and final average salary.
Employees’ service rescission indemnity: the cost
of this obligation is charged to the Consolidated
Income Statement over the expected service lives
of employees. This provision is primarily related
to the liability accrued for employees at Tenaris’s
Italian subsidiary. As from January 1, 2007 as a
consequence of a change in an Italian law, employees
were entitled to make contributions to external
funds, thus, Tenaris’s Italian subsidiary pays every
year the required contribution to the funds with no
further obligation. As a result, the plan changed
from a defined benefit plan to a defined contribution
plan effective from that date, but only limited to the
contributions of 2007 onwards.
Funded retirement benefit plans held in Canada for
salary and hourly employees hired prior a certain
date based on years of service and, in the case of
salaried employees, final average salary. Both plans
were replaced for defined contribution plans.
Funded retirement benefit plan held in the US
for the benefit of some employees hired prior
a certain date and is frozen for the purposes of
credited service as well as determination of final
average pay for the retirement benefit calculation.
Plan assets consist primarily of investments in
equities and money market funds. Additionally, an

Annual Report94.

unfunded postretirement health and life plan that
offers limited medical and life insurance benefits to
the retirees, hired before a certain date.

3. Other compensation obligations
Employee entitlements to annual leave and
long-service leave are accrued as earned.

2. Other long term benefits
During 2007, Tenaris launched an employee
retention and long term incentive program (the
“Program”) applicable to certain senior officers
and employees of the Company, who will be
granted a number of Units throughout the
duration of the Program. The value of each of
these Units is based on Tenaris’ shareholders’
equity (excluding non-controlling interest). Also,
the beneficiaries of the Program are entitled to
receive cash amounts based on (i) the amount
of dividend payments made by Tenaris to its
shareholders, and (ii) the number of Units held by
each beneficiary to the Program. Units vest ratably
over a period of four years and will be redeemed by
the Company ten years after grant date, with the
option of an early redemption at seven years after
grant date. As the cash payment of the benefit is
tied to the book value of the shares, and not to
their market value, Tenaris valued this long-term
incentive program as a long term benefit plan as
classified in IAS 19.

As of December 31, 2014 and 2013, the outstanding
liability corresponding to the Program amounts to
$98.1 million and $82.4 million, respectively. The
total value of the units granted to date under the
program, considering the number of units and the
book value per share as of December 31, 2014 and
2013, is $108.8 million and $88.6 million, respectively.

Compensation to employees in the event of
dismissal is charged to income in the year in which
it becomes payable.

P. Provisions
Tenaris is subject to various claims, lawsuits
and other legal proceedings, including customer
claims, in which a third party is seeking payment
for alleged damages, reimbursement for losses or
indemnity. Tenaris’s potential liability with respect
to such claims, lawsuits and other legal proceedings
cannot be estimated with certainty. Management
periodically reviews the status of each significant
matter and assesses potential financial exposure.
If, as a result of past events, a potential loss from a
claim 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 Tenaris’
litigation and settlement strategies. These estimates
are primarily constructed with the assistance
of legal counsel. As the scope of liabilities
become better defined, there may be changes in
the estimates of future costs which could have a
material adverse effect on its results of operations,
financial condition and cash flows.

TenarisIf Tenaris expects to be reimbursed for an accrued
expense, as would be the case for an expense or
loss covered under an insurance contract, and
reimbursement is considered virtually certain, the
expected reimbursement is recognized as a receivable.

have been specifically identified and are ready
for delivery; (c) the sales contract specifically
acknowledges the deferred delivery instructions;
(d) the usual payment terms apply.

95.

Q. Trade payables
Trade payables are recognized initially at fair value,
generally the nominal invoice amount.

R. Revenue recognition
Revenue comprises the fair value of the
consideration received or receivable for the sale
of goods and services in the ordinary course of
Tenaris’s activities. Revenue is shown net of value-
added tax, returns, rebates and discounts and after
eliminating sales within the group.

Tenaris’ products and services are sold based
upon purchase orders, contracts or upon other
persuasive evidence of an arrangement with
customers, including that the sales price is known
or determinable. Sales are recognized as revenue
upon delivery, when neither continuing managerial
involvement nor effective control over the products
is retained by Tenaris and when collection is
reasonably assured. Delivery is defined by the
transfer of risk and may include delivery to a
storage facility located at one of the Company’s
subsidiaries. For bill and hold transactions revenue
is recognized only to the extent (a) it is highly
probable delivery will be made; (b) the products

The percentage of total sales that were generated
from bill and hold arrangements for products
located in Tenaris’s storage facilities that have not
been shipped to customers amounted to 1.1%,
1.3% and 2.2% as of December 31, 2014, 2013
and 2012, respectively. The Company has not
experienced any material claims requesting the
cancellation of bill and hold transactions.

Other revenues earned by Tenaris are recognized
on the following basis:

•

•
•

Construction contracts (mainly applicable to
Tenaris Brazilian subsidiaries and amounted to
1.1% of total sales). The revenue recognition of
the contracts follows the IAS 11 guidance, that
means, when the outcome of a construction
contract can be estimated reliably and it is
probable that the contract will be profitable,
contract revenue is recognized over the period
of the contract by reference to the stage of
completion (measured by reference to the contract
costs incurred up to the end of the reporting
period as a percentage of total estimated costs for
each contract).
Interest income: on the effective yield basis.
Dividend income from investments in other
companies: when Tenaris’ right to receive payment
is established.

Annual Report96.

S. Cost of sales and sales expenses
Cost of sales and sales expenses are recognized in
the Consolidated Income Statement on the accrual
basis of accounting.

Commissions, freight and other selling expenses,
including shipping and handling costs, are
recorded in “Selling, general and administrative
expenses” in the Consolidated Income Statement.

T. Earnings per share
Earnings per share are calculated by dividing the
income attributable to owners of the parent by the
daily weighted average number of common shares
outstanding during the year.

U. Financial instruments
Non derivative financial instruments comprise
investments in financial debt instruments and
equity, time deposits, trade and other receivables,
cash and cash equivalents, borrowings, and trade
and other payables. Tenaris’s non derivative
financial instruments are classified into the
following categories:

•

Loans and receivables: comprise trade receivables
and other receivables and are measured at
amortized cost using the effective interest rate
method less any impairment.
Available for sale assets: comprise certain fixed
income financial instruments purchased by the
Company that have been categorized as available
for sale if designated in this category or not
classified in any of the other categories. It also
includes the Company’s interest in the Venezuelan
Companies (see Note 30).
Other financial liabilities: comprise borrowings, trade
and other payables and are measured at amortized
cost using the effective interest rate method.

The categorization depends on the nature and
purpose of the financial instrument and is
determined at the time of initial recognition.

Financial assets and liabilities are recognized and
derecognized on their settlement date.

In accordance with IAS 39 (“Financial Instruments:
Recognition and Measurement”) embedded
derivatives are accounted separately from their host
contracts. The result has been recognized under
“Foreign exchange derivatives contracts results”.

•

Financial instruments at fair value through profit
and loss: comprise mainly cash and cash equivalents
and investments in certain financial debt instruments
and time deposits held for trading.

Accounting for derivative financial instruments and
hedging activities is included within the Section III,
Financial Risk Management.

TenarisIII. Financial risk management

97.

The multinational nature of Tenaris’s operations and
customer base exposes the Company to a variety of
risks, mainly related to market risks (including the
effects of changes in foreign currency exchange rates
and interest rates), credit risk and capital market
risk. In order to manage the volatility related to these
exposures, the management evaluates exposures on
a consolidated basis, taking advantage of logical
exposure netting. The Company or its subsidiaries
may then enter into various derivative transactions
in order to prevent potential adverse impacts on
Tenaris’ financial performance. Such derivative
transactions are executed in accordance with internal
policies and hedging practices. The Company’s
objectives, policies and processes for managing these
risks remained unchanged during 2014.

A. Financial risk factors

I. Capital Market Risk
Tenaris seeks to maintain a low debt to total
equity ratio considering the industry and the
markets where it operates. The year-end ratio
of debt to total equity (where “debt” comprises
financial borrowings and “total equity” is the
sum of financial borrowings and equity) is 0.07 as
of December 31, 2014 same as of December 31,
2013. The Company does not have to comply with
regulatory capital adequacy requirements as known
in the financial services industry.

II. Foreign exchange risk
Tenaris manufactures and sells its products in a
number of countries throughout the world and
consequently is exposed to foreign exchange rate
risk. Since the Company’s functional currency is
the U.S. dollar the purpose of Tenaris’s foreign
currency hedging program is mainly to reduce the
risk caused by changes in the exchange rates of
other currencies against the U.S. dollar.

Tenaris’s exposure to currency fluctuations is
reviewed on a periodic consolidated basis. A
number of derivative transactions are performed in
order to achieve an efficient coverage in the absence
of operative or natural hedges. Almost all of these
transactions are forward exchange rates contracts
(see Note 24 Derivative financial instruments).

Tenaris does not enter into derivative financial
instruments for trading or other speculative
purposes, other than non-material investments in
structured products.

Because certain subsidiaries have functional
currencies other than the U.S. dollar, the results
of hedging activities, reported in accordance with
IFRS, may not reflect entirely the management’s
assessment of its foreign exchange risk hedging
program. Inter-company balances between Tenaris’s
subsidiaries may generate financial gains (losses) to
the extent that functional currencies differ.

Annual Report
98.

The value of Tenaris’s financial assets and
liabilities is subject to changes arising out of the
variation of foreign currency exchange rates.
The following table provides a breakdown of
Tenaris’s main financial assets and liabilities
(including foreign exchange derivative contracts)
which impact the Company’s profit and loss as of
December 31, 2014 and 2013:

All amounts Long / (Short) in thousands of U.S.dollars

AS OF DECEMBER 31

2014

2013

CURRENCY EXPOSURE / FUNCTIONAL CURRENCY

Argentine Peso / U.S. dollar

Euro / U.S. dollar

U.S. dollar / Brazilian Real

(191,095)

(189,366)

(150,486)

(368,985)

(137,599)

(51,321)

The main relevant exposures correspond to:

Argentine Peso / U.S. dollar
As of December 31, 2014 and 2013 consisting
primarily of Argentine Peso-denominated financial,
trade, social and fiscal payables at certain Argentine
subsidiaries which functional currency was the U.S.
dollar. A change of 1% in the ARS/USD exchange
rate would have generated a pre-tax gain / loss of
$1.9 million and $3.7 million as of December 31,
2014 and 2013, respectively.

Euro / U.S. dollar
As of December 31, 2014 and 2013, consisting
primarily of Euro-denominated liabilities at certain
subsidiaries which functional currency was the U.S.
dollar. A change of 1% in the EUR/USD exchange

rate would have generated a pre-tax gain / loss of
$1.9 million and $1.4 million as of December 31,
2014 and 2013, respectively, which would have been
to a large extent offset by changes to Tenaris’ net
equity position.

Considering the balances held as of December
31, 2014 on financial assets and liabilities exposed
to foreign exchange rate fluctuations, Tenaris
estimates that the impact of a simultaneous 1%
favorable / unfavorable movement in the levels of
foreign currencies exchange rates relative to the
U.S. dollar, would be a pre-tax gain / loss of $7.5
million (including a gain / loss of $2.8 million due
to foreign exchange derivative contracts), which
would be partially offset by changes to Tenaris’s
net equity position of $1.8 million. For balances
held as of December 31, 2013, a simultaneous 1%
favorable / unfavorable movement in the foreign
currencies exchange rates relative to the U.S. dollar,
would have generated a pre-tax gain / loss of $6.7
million (including a loss / gain of $0.3 million due
to foreign exchange derivative contracts), which
would have been partially offset by changes to
Tenaris’ net equity position of $0.8 million.

III. Interest rate risk
Tenaris is subject to interest rate risk on its
investment portfolio and its debt. The Company
uses a mix of variable and fixed rate debt in
combination with its investment portfolio strategy.
From time to time, the Company may choose to
enter into foreign exchange derivative contracts
and / or interest rate swaps to mitigate the
exposure to changes in the interest rates.

Tenaris
The following table summarizes the proportions of
variable-rate and fixed-rate debt as of each year end.

99.

AS OF DECEMBER 31

Fixed rate

Variable rate

Total (*)

Amount in
thousands of
U.S. dollars

755,498

243,742

999,240

2014

Percentage

76%

24%

Amount in
thousands of
U.S. dollars

643,005

287,930

930,935

2013

Percentage

69%

31%

(*) As of December 31, 2014 approximately 73% of the total debt balance corresponded to fixed-rate
borrowings where the original period was nonetheless equal to or lesser than 360 days. This
compares to approximately 65% of the total outstanding debt balance as of December 31, 2013.

The Company estimates that, if market interest
rates applicable to Tenaris’s borrowings had been
100 basis points higher, then the additional pre-tax
loss would have been $6.3 million in 2014 and
$10.8 million in 2013.

including outstanding receivables and committed
transactions. The Company also actively monitors
the creditworthiness of its treasury, derivative and
insurance counterparties in order to minimize its
credit risk.

Tenaris’s exposure to interest risk associated
with its debt is also mitigated by its investment
portfolio. Tenaris estimates that, if interest rates
on the benchmark rates for Tenaris portfolio had
been 100 basis points higher, then the additional
pre-tax gain would have been $5.7 million in 2014
and $3.7 million in 2013, partially offsetting the
net losses to Tenaris’s borrowing costs.

IV. Credit risk
Credit risk arises from cash and cash equivalents,
deposits with banks and financial institutions,
as well as credit exposures to customers,

There is no significant concentration of credit risk
from customers. No single customer comprised
more than 10% of Tenaris’s net sales in 2014, 2013
and 2012.

Tenaris’s credit policies related to sales of products
and services are designed to identify customers
with acceptable credit history, and to allow Tenaris
to require the use of credit insurance, letters of
credit and other instruments designed to minimize
credit risks whenever deemed necessary. Tenaris
maintains allowances for impairment for potential
credit losses (See Section II J).

Annual Report

100.

As of December 31, 2014 and 2013 trade receivables
amount to $1,963.4 million and $1,983.0 million
respectively. Trade receivables have guarantees
under credit insurance of $460.5 million and $537.5
million, letter of credit and other bank guarantees
of $98.4 million and $36.5 million, and other
guarantees of $12.3 million and $55.0 million as of
December 31, 2014 and 2013 respectively.

Management maintains sufficient cash and
marketable securities to finance normal operations
and believes that Tenaris also has appropriate access
to market for short-term working capital needs.

Liquid financial assets as a whole (comprising
cash and cash equivalents and other current
investments) were 13.7% of total assets at the end
of 2014 compared to 11.6% at the end of 2013.

As of December 31, 2014 and 2013 past due
trade receivables amounted to $350.1 million and
$431.0 million, respectively. Out of those amounts
$75.8 million and $147.9 million are guaranteed
trade receivables while $69.0 million and $51.2
million are included in the allowance for doubtful
accounts. Past due receivable not provisioned
relate to a number of customers for whom there
is no recent history of default. The allowance for
doubtful accounts and the existing guarantees are
sufficient to cover doubtful trade receivables.

V. Counterparty risk
Tenaris has investment guidelines with specific
parameters to limit issuer risk on marketable
securities. Counterparties for derivatives and cash
transactions are limited to high credit quality
financial institutions, normally investment grade.

Approximately 88.6% of Tenaris’s liquid
financial assets correspond to Investment Grade-
rated instruments as of December 31, 2014, in
comparison with approximately 98.1% as of
December 31, 2013.

VI. Liquidity risk
Tenaris financing strategy aims to maintain
adequate financial resources and access to
additional liquidity. During 2014, Tenaris has
counted on cash flows from operations as well as
additional bank financing to fund its transactions.

Tenaris has a conservative approach to the
management of its liquidity, which consists of
cash in banks, liquidity funds and short-term
investments mainly with a maturity of less than
three months at the date of purchase.

Tenaris holds primarily investments in money
market funds and variable or fixed-rate securities
from investment grade issuers. As of December
31, 2014 and 2013, Tenaris does not have direct
exposure to financial instruments issued by
European sovereign counterparties.

Tenaris holds its cash and cash equivalents
primarily in U.S. dollars. As of December 31, 2014
and 2013, U.S. dollar denominated liquid assets
represented approximately 83% and 76% of total
liquid financial assets respectively.

VII. Commodity price risk
In the ordinary course of its operations, Tenaris
purchase commodities and raw materials that
are subject to price volatility caused by supply
conditions, political and economic variables and
other factors. As a consequence, Tenaris is exposed
to risk resulting from fluctuations in the prices of
these commodities and raw materials. Tenaris fixes
the prices of such raw materials and commodities
for short-term periods, typically not in excess of
one year, in general Tenaris does not hedge this risk.

Tenaris
B. Financial instruments by category
Accounting policies for financial instruments have
been applied to the line items below:

DECEMBER 31, 2014

Assets at fair
value through
profit and loss

Loans
and
receivables

Available
for
sale

Total

101.

ASSETS AS PER STATEMENT OF FINANCIAL POSITION

Derivative financial instruments

25,588

–

Trade receivables

Other receivables

Available for sale assets (See note 30)

Other investments

Cash and cash equivalents

Total

DECEMBER 31, 2014

LIABILITIES AS PER STATEMENT OF FINANCIAL POSITION

Borrowings

Derivative financial instruments

Trade and other payables (*)

Total

(*) The maturity of most of trade payables is less than one year.

1,963,394

172,190

–

21,572

387,759

–

25,588

1,963,394

172,190

21,572

1,839,918

–

1,452,159

296,873

120,772

–

417,645

1,774,620

2,256,356

409,331

4,440,307

Liabilities at
fair value
through profit
and loss

Other
financial
liabilities

Total

–

999,240

56,834

–

866,688

999,240

56,834

866,688

56,834

1,865,928

1,922,762

Annual Report

102.

DECEMBER 31, 2013

Assets at fair
value through
profit and loss

Loans
and
receivables

Available
for
sale

Total

ASSETS AS PER STATEMENT OF FINANCIAL POSITION

Derivative financial instruments

9,273

–

Trade receivables

Other receivables

Available for sale assets

Other investments

Cash and cash equivalents

Total

DECEMBER 31, 2013

LIABILITIES AS PER STATEMENT OF FINANCIAL POSITION

Borrowings

Derivative financial instruments

Trade and other payables (*)

Total

(*) The maturity of most of trade payables is less than one year.

–

1,184,448

491,367

1,982,979

105,950

–

21,572

45,380

9,273

1,982,979

105,950

21,572

1,229,828

123,162

–

614,529

1,685,088

2,212,091

66,952

3,964,131

Liabilities at
fair value
through profit
and loss

Other
financial
liabilities

Total

–

8,268

–

930,935

–

869,933

930,935

8,268

869,933

8,268

1,800,868

1,809,136

C. Fair value by hierarchy
IFRS 13 requires for financial instruments that are
measured in the statement of financial position at
fair value, 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).

Tenaris

The following table presents the assets and
liabilities that are measured at fair value as of
December 31, 2014 and 2013.

103.

DECEMBER 31, 2014

Level 1

Level 2

Level 3 (*)

Total

ASSETS

Cash and cash equivalents

Other investments

Derivatives financial instruments

Available for sale assets (*)

Total

LIABILITIES

Derivatives financial instruments

Total

417,645

1,277,465

–

560,914

25,588

–

1,695,110

586,502

–

417,645

1,539

1,839,918

–

21,572

23,111

25,588

21,572

2,304,723

–

56,834

–

56,834

DECEMBER 31, 2013

Level 1

Level 2

Level 3 (*)

Total

ASSETS

Cash and cash equivalents

Other investments

Derivatives financial instruments

Available for sale assets (*)

Total

LIABILITIES

Derivatives financial instruments

Total

(*) For further detail regarding Available for sale assets, see Note 30.

614,529

866,382

–

360,948

9,273

–

1,480,911

370,221

–

614,529

2,498

1,229,828

–

21,572

24,070

9,273

21,572

1,875,202

–

8,268

–

8,268

Annual Report
104.

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 when 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. Main balances included in this
level correspond to Available for sale assets related
to Tenaris’s interest in Venezuelan companies
under process of nationalization (see Note 30).

TenarisThe following table presents the changes in Level 3
assets and liabilities:

105.

YEAR ENDED DECEMBER 31

At the beginning of the period

Currency translation adjustment and others

At the end of the year

Assets / Liabilities

2014

2013

24,070

(959)

23,111

24,175

(105)

24,070

D. Fair value 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.

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.

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.

Annual Report
106.

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 amortized cost.
Tenaris estimates that the fair value of its main
financial liabilities is approximately 100.1% of
its carrying amount including interests accrued in
2014 as compared with 100.2% in 2013. Tenaris
estimates that a change of 100 basis points in the
reference interest rates would have an estimated
impact of approximately 0.4% in the fair value of
borrowings as of December 31, 2014 and 0.3% in
2013. Fair values were calculated using standard
valuation techniques for floating rate instruments
and comparable market rates for discounting flows.

E. Accounting for derivative financial

instruments and hedging activities
Derivative financial instruments are initially
recognized in the statement of financial position
at fair value through profit and loss on each
date a derivative contract is entered into and are
subsequently remeasured at fair value. Specific
tools are used for calculation of each instrument’s

fair value and these tools are tested for consistency
on a monthly basis. Market rates are used for all
pricing operations. These include exchange rates,
deposit rates and other discount rates matching
the nature of each underlying risk.

As a general rule, Tenaris recognizes the full
amount related to the change in fair value of
derivative financial instruments in Financial
results in the Consolidated Income Statement.

Tenaris designates certain derivatives as hedges
of particular risks associated with recognized
assets or liabilities or highly probable forecast
transactions. These transactions (mainly
currency forward contracts on highly probable
forecast transactions) are classified as cash flow
hedges. The effective portion of the fair value
of derivatives that are designated and qualify as
cash flow hedges is recognized in equity. Amounts
accumulated in equity are then recognized in the
income statement in the same period than the
offsetting losses and gains on the hedged item.
The gain or loss relating to the ineffective portion
is recognized immediately in the income statement.
The fair value of Tenaris’s derivative financial

Tenaris
107.

instruments (assets or liabilities) continues to be
reflected on the statement of financial position.
The full fair value of a hedging derivative is
classified as a current or non current asset or
liability according to its expiry date.

For transactions designated and qualifying for
hedge accounting, Tenaris documents at the
inception of the transaction the relationship
between hedging instruments and hedged items, as
well as its risk management objectives and strategy
for undertaking various hedge transactions. Tenaris
also documents its assessment on an ongoing basis,
of whether the derivatives that are used in hedging
transactions are highly effective in offsetting
changes in the fair value or cash flow of hedged
items. At December 31, 2014 and 2013, the effective
portion of designated cash flow hedges which is
included in “Other Reserves” in equity amounts to
$7.9 million debit and $0.1 million credit (see Note
24 Derivative financial instruments).

The fair values of various derivative instruments
used for hedging purposes are disclosed in Note 24.
Movements in the hedging reserve included within
“Other Reserves” in equity are also shown in Note 24.

Annual ReportIV. Other notes to the Restated
Consolidated financial statements

In the notes all amounts are shown in thousands of U.S. dollars, unless otherwise stated.

108.

1. Segment information
As mentioned in section II. AP – C, the Segment
Information is disclosed as follows:

Reportable operating segments

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31, 2014

IFRS - Net Sales (*)

MANAGEMENT VIEW

Operating income

Differences in cost of sales and others

Depreciation and amortization / Impairment

IFRS - Operating income

Financial income (expense), net

Income before equity in earnings of non-consolidated companies and income tax

Equity in earnings of non-consolidated companies

Income before income tax

Capital expenditures

Depreciation and amortization

Tubes

Other

Total

(Restated)

9,581,615

756,347

10,337,962

2,022,429

(35,463)

(121,289)

27,735

5,197

207

2,050,164

(30,266)

(121,082)

1,865,677

33,139

1,898,816

33,037

1,931,853

(164,616)

1,767,237

1,051,148

593,671

38,225

21,958

1,089,373

615,629

(*) In 2014, the company aligned the presentation of sales between Management and IFRS view.

Transactions between segments, which were eliminated in consolidation, mainly related to sales of
scrap, energy, surplus raw materials and others from the Other segment to the Tubes segment for
$233,863, $276,388 and $345,285 in 2014, 2013 and 2012, respectively.

Net income under Management view amounted to $1,154.2 million, while under IFRS amounted to
$1,181.2 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.

Tenaris

109.

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31, 2013

IFRS - Net Sales (*)

MANAGEMENT VIEW

Operating income

Differences in cost of sales and others

Depreciation and amortization

IFRS - Operating income

Financial income (expense), net

Income before equity in earnings of non-consolidated companies and income tax

Equity in losses of non-consolidated companies

Income before income tax

Capital expenditures

Depreciation and amortization

Tubes

Other

Total

9,812,295

784,486

10,596,781

2,098,160

(1,855)

711

91,265

(3,337)

(114)

2,189,425

(5,192)

597

2,097,016

87,814

2,184,830

(28,679)

2,156,151

46,098

2,202,249

721,869

589,482

31,629

20,572

753,498

610,054

YEAR ENDED DECEMBER 31, 2012

Tubes

Other

Total

IFRS - Net Sales (*)

MANAGEMENT VIEW

Operating income

Differences in cost of sales and others

Depreciation and amortization

IFRS - Operating income

Financial income (expense), net

Income before equity in earnings of non-consolidated companies and income tax

Equity in losses of non-consolidated companies

Income before income tax

Capital expenditures

Depreciation and amortization

10,023,323

810,707

10,834,030

2,198,704

109,385

2,308,089

(58,385)

111,509

(1,147)

(3,459)

(59,532)

108,050

2,251,828

104,779

2,356,607

(50,104)

2,306,503

(63,206)

2,243,297

771,734

549,130

17,997

18,524

789,731

567,654

(*) In 2014, the company aligned the presentation of sales between Management and IFRS view.

Annual Report

110.

Geographical information

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31, 2014

Net sales

Total assets

Trade receivables

Property, plant and

equipment, net

Capital expenditures

Depreciation and amortization

YEAR ENDED DECEMBER 31, 2013

Net sales

Total assets

Trade receivables

Property, plant and

equipment, net

Capital expenditures

Depreciation and amortization

YEAR ENDED DECEMBER 31, 2012

Net sales

Total assets

Trade receivables

Property, plant and

equipment, net

Capital expenditures

Depreciation and amortization

North

America

South

America

Europe

Middle East
& Africa

Far East &
Oceania

Unallocated
(*)

Total

(Restated)

4,977,239

9,550,349

733,864

2,125,984

3,340,973

554,542

2,953,763

1,303,162

610,252

345,185

338,995

120,905

979,042

1,843,778

1,857,285

259,115

683,283

111,232

119,226

598,175

340,880

60,354

10,891

10,154

958,178

2,119,896

4,412,263

8,130,812

613,735

2,586,496

3,150,000

506,044

2,561,557

364,806

2,292,811

1,098,733

1,059,887

285,413

327,344

283,265

110,496

151,550

140,180

5,270,062

7,780,873

528,443

2,717,234

3,824,931

867,223

2,222,906

1,003,871

338,827

316,158

237,456

103,537

1,092,642

2,327,901

273,824

985,617

185,354

116,771

562,206

373,844

59,196

5,048

10,594

1,271,585

449,056

286,212

64,632

9,720

7,989

411,919

498,694

74,993

158,995

18,003

20,159

519,948

592,065

124,550

163,140

28,222

21,440

482,507

578,199

115,076

157,944

18,374

23,199

–

10,337,962

665,202

16,510,678

–

1,963,394

5,159,557

1,089,373

615,629

–

10,596,781

934,330

15,930,970

–

1,982,979

4,673,767

753,498

610,054

–

10,834,030

998,583

15,959,543

–

2,070,778

4,434,970

789,731

567,654

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 USA (32.6%); “South America” comprises principally Argentina
(10.7%), 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, Congo and; “Far East and Oceania” comprises
principally China and Indonesia.

(*) Includes Investments in non-consolidated companies and Available for sale assets for $21.6

million in 2014, 2013 and 2012 (see Note 12 and 30).

Tenaris

2. Cost of sales

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

111.

2014

2013

2012

INVENTORIES AT THE BEGINNING OF THE YEAR

2,702,647

2,985,805

2,806,409

PLUS: CHARGES OF THE PERIOD

Raw materials, energy, consumables and other

Increase in inventory due to business combinations

Services and fees

Labor cost

Depreciation of property, plant and equipment

Amortization of intangible assets

Maintenance expenses

Allowance for obsolescence

Taxes

Other

LESS: INVENTORIES AT THE END OF THE YEAR

3,944,283

3,749,921

4,330,547

4,338

453,818

–

422,142

1,486

433,944

1,204,720

1,199,351

1,256,041

366,932

17,324

217,694

4,704

20,024

130,845

368,507

8,263

202,338

70,970

4,956

147,180

333,466

7,091

260,274

49,907

6,793

137,140

6,364,682

6,173,628

6,816,689

(2,779,869)

(2,702,647)

(2,985,805)

6,287,460

6,456,786

6,637,293

Annual Report
112.

3. Selling, general and administrative expenses

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

Services and fees

Labor cost

Depreciation of property, plant and equipment

Amortization of intangible assets

Commissions, freight and other selling expenses

Provisions for contingencies

Allowances for doubtful accounts

Taxes

Other

2014

2013

2012

178,700

594,660

20,197

211,176

598,138

35,557

21,704

165,675

138,145

177,996

575,588

19,132

214,152

600,239

31,429

23,236

170,659

128,782

213,073

570,950

15,023

212,074

550,611

21,163

3,840

170,582

126,473

1,963,952

1,941,213

1,883,789

Tenaris113.

4. Labor costs
(included in Cost of sales and in Selling, general
and administrative expenses)

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

Wages, salaries and social security costs

Employees' service rescission indemnity (including those classified as defined contribution plans)

Pension benefits - defined benefit plans

Employee retention and long term incentive program

At the year-end, the number of employees was 27,816 in 2014, 26,825 in 2013 and 26,673 in 2012.

The following table shows the geographical
distribution of the employees:

COUNTRY

Argentina

Mexico

Brazil

USA

Italy

Romania

Canada

Indonesia

Colombia

Japan

Other

2014

2013

2012

1,743,253

1,714,471

1,772,399

17,431

18,645

20,051

10,978

32,112

17,378

13,939

20,808

19,845

1,799,380

1,774,939

1,826,991

2014

2013

2012

6,421

5,518

3,835

3,549

2,352

1,725

1,225

677

614

588

6,379

5,290

3,309

3,449

2,352

1,637

1,280

711

627

565

6,621

4,930

3,161

3,522

2,493

1,534

1,334

752

623

593

1,312

27,816

1,226

26,825

1,110

26,673

Annual Report114.

5. Other operating income and expenses

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

(I) OTHER OPERATING INCOME

Reimbursement from insurance companies and other third parties agreements (*)

Net income from other sales

Net rents

Other

(II) OTHER OPERATING EXPENSES

Contributions to welfare projects and non-profits organizations

Provisions for legal claims and contingencies

Loss on fixed assets and material supplies disposed / scrapped

Impairment charge

Allowance for doubtful receivables

Other

2014

2013

2012

490

8,843

4,041

14,481

27,855

9,961

(760)

203

205,849

336

–

148

10,663

3,494

–

49,495

12,314

2,988

6,583

14,305

71,380

21,147

22,226

(2)

–

1,708

5,365

(668)

227

–

5,936

–

215,589

28,257

27,721

(*) In 2012, Confab Industrial S.A., a Tenaris subsidiary organized in Brazil (“Confab”) collected from

the Brazilian government an amount, net of attorney fees and other related expenses, of
approximately Brazilian reais (“BRL”) 99.8 million (approximately $49.2 million), recorded in other
operating income. The income tax effect on this gain amounted to approximately $17.1 million.

This payment was ordered by a final court judgment that represents Confab’s right to interest and
monetary adjustment over a tax benefit that had been paid to Confab in 1991 and determined
the amount of such right.

Tenaris

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.

activity and the expected demand for OCTG
products. Tenaris conducted an impairment test
over its main assets and determined a charge of
$206 million during the fourth quarter of 2014,
which affected its welded pipe assets in Colombia
and Canada.

115.

In the past few months, oil prices have fallen from
over $100/bbl in June 2014 to less than $50/bbl
in January 2015. This decline is affecting drilling

At December 31, 2014, the carrying value of the
assets impaired (i.e., property, plant and equipment
and intangible assets) was as follows:

All amounts in thousands of U.S. dollars

AT DECEMBER 31, 2014

Tubocaribe – Colombia

Prudential – Canada

Total

Assets
before
impairment

Impairment

255,060

261,497

(174,239)

(31,610)

516,557

(205,849)

Assets
after
impairment

80,821

229,887

310,708

Annual Report

116.

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 rates used are based on the respective
weighted average cost of capital (WACC) which is
considered to be a good indicator of capital cost.
For each CGU where assets are allocated, a specific
WACC was determined taking into account the
industry, country and size of the business. In
2014, the main discount rates used were in a range
between 9% and 13%.

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.

Following the requirements of IAS 36, Tenaris has
determined that the CGU for which a reasonable
possible change in a key assumptions would
cause the CGUs’ carrying amount to exceed its
recoverable amount was the welded OCTG CGU
in the USA. An increase of 100 Bps in the discount
rate would generate an impairment of $179
million; a decline of 100 Bps in the growth rate
would generate an impairment of $116 million;
and a decline of 5% in the cash flow projections
would generate an impairment of $73 million.

For Prudential an increase of 100 Bps in the
discount rate would generate an impairment of
$35 million; a decline of 100 Bps in the growth
rate would generate an impairment of $19 million;
and a decline of 5% in the cash flow projections
would generate an impairment of $12 million.
For Tubocaribe an increase of 100 Bps in the
discount rate would generate an impairment of
$12 million; a decline of 100 Bps in the growth rate
would generate an impairment of $7 million; and
a decline of 5% in the cash flow projections would
generate an impairment of $1 million.

Tenaris117.

2014

2013

2012

34,582

4,992

(1,478)

115

38,211

34,046

191

540

(10)

34,767

31,693

–

5,239

–

36,932

(44,388)

(70,450)

(55,507)

50,298

(4,733)

(6,351)

39,214

37,179

4,414

(34,589)

7,004

(10,929)

(3,195)

(17,405)

(31,529)

33,037

(28,679)

(50,104)

6. Financial results

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

Interest Income

Interest from available-for-sale financial assets

Net result on changes in FV of financial assets at FVTPL

Net result on available-for-sale financial assets

Finance Income

Finance Cost

Net foreign exchange transactions results (*)

Foreign exchange derivatives contracts results

Other

Other financial results

Net financial results

(*) In 2014 include the positive impact from the Argentine peso devaluation against the U.S. dollar

on the Argentine peso denominated borrowings and liabilities.

Tenaris has categorized as available for sale certain
fixed income financial instruments. Following is a
summary of the available for sale financial assets
reserve on Other Comprehensive Income.

Equity Reserve
Dec-12

Movements
2013

Equity Reserve
Dec-13

Movements
2014

Equity Reserve
Dec-14

Available for sale

Total Available for sale reserve

–

(39)

(2,447)

(2,486)

Annual Report118.

7. Equity in earnings (losses) of non-consolidated

companies

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

From non-consolidated companies

Gain on equity interest / others (*)

Impairment loss on non-consolidated companies (**)

(*) For 2014 see note 26.

(**) Impairments in 2014 and 2012 correspond to the investment in Usiminas. See Note 12.

8. Income tax

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

Current tax

Deferred tax

2014

(Restated)

(24,696)

21,302

(161,222)

(164,616)

2013

2012

46,098

–

46,098

4,545

5,899

(73,650)

(63,206)

2014

2013

2012

695,136

(109,075)

586,061

594,179

33,698

627,877

636,624

(95,066)

541,558

TenarisThe tax on Tenaris’s income before tax differs
from the theoretical amount that would arise using
the tax rate in each country as follows:

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

119.

2014

(Restated)

2013

2012

Income before income tax

1,767,237

2,202,249

2,243,297

Tax calculated at the tax rate in each country

Non taxable income / Non deductible expenses, net

Changes in the tax rates

Effect of currency translation on tax base (*)

Utilization of previously unrecognized tax losses

Tax charge

312,714

132,551

3,249

138,925

(1,378)

586,061

465,029

72,768

8,287

92,695

(10,902)

627,877

456,530

80,527

4,707

5,214

(5,420)

541,558

(*) Tenaris applies the liability method to recognize deferred income tax on temporary differences
between the tax basis of assets and their carrying amounts in the financial statements. By
application of this method, Tenaris recognizes gains and losses on deferred income tax due to
the effect of the change in the value on the tax basis in subsidiaries (mainly Argentinian and

Mexican), which have a functional currency different to their local currency. These gains and
losses are required by IFRS even though the revalued / devalued tax basis of the relevant
assets will not result in any deduction / obligation for tax purposes in future periods.

9. Dividends distribution
On November 5, 2014, 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, on November 27, 2014,
with an ex-dividend date of November 24, 2014.

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.

On May 2, 2013, 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 2012, 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 23,
2013. In the aggregate, the interim dividend paid in
November 2012 and the balance paid in May 2013
amounted to approximately $507.6 million.

On May 2, 2012, the Company’s shareholders
approved an annual dividend in the amount of
$0.38 per share ($0.76 per ADS). The amount
approved included the interim dividend previously
paid in November 2011, in the amount of $0.13 per
share ($0.26 per ADS). The balance, amounting
to $0.25 per share ($0.50 per ADS), was paid
on May 24, 2012. In the aggregate, the interim
dividend paid in November 2011 and the balance
paid in May 2012 amounted to approximately
$449 million.

Annual Report120.

10. Property, plant and equipment, net

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31, 2014

COST

Land,
building and
improvements

Plant and
production
equipment

Vehicles,
furniture and
fixtures

Work in
progress

Spare
parts and
equipment

Total

Values at the beginning of the year

1,498,188

8,073,413

339,314

Translation differences

Additions (*)

Disposals / Consumptions

Increase due to business combinations

Transfers / Reclassifications

Values at the end of the year

DEPRECIATION

(15,137)

(241,044)

56,078

(2,179)

5,059

91,788

3,359

(32,567)

20,803

409,938

(4,445)

4,959

(6,436)

2,758

23,404

1,633,797

8,233,902

359,554

Accumulated at the beginning of the year

373,304

5,131,501

197,555

Translation differences

Depreciation charge

Transfers / Reclassifications

Increase due to business combinations

Impairment charge (See Note 5)

Disposals / Consumptions

(5,996)

47,132

2,044

3,019

(1,316)

(134,723)

313,745

(38)

12,745

7,905

(29,370)

Accumulated at the end of the year

418,210

5,301,765

(3,677)

25,088

603

2,291

–

(4,878)

216,982

441,902

(7,719)

937,927

–

859

(526,431)

846,538

–

37,754

10,390,571

(854)

5,823

(4,922)

243

(269,199)

1,008,146

(46,104)

29,510

(1,058)

38,075

11,111,866

14,444

5,716,804

(256)

1,164

–

(144,652)

387,129

588

17,080

10,924

(35,564)

15,352

5,952,309

At December 31, 2014

1,215,587

2,932,137

142,572

846,538

22,723

5,159,557

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

Tenaris

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31, 2013

COST

Land,
building and
improvements

Plant and
production
equipment

Vehicles,
furniture and
fixtures

Work in
progress

Spare
parts and
equipment

Total

121.

Values at the beginning of the year

1,417,994

7,503,358

321,271

Translation differences

Additions

Disposals / Consumptions

Increase due to the consolidation of joint operations

Transfers / Reclassifications

Values at the end of the year

(7,616)

10,121

(17,388)

–

36,436

5,242

(30,156)

–

95,077

558,533

(3,348)

4,963

(8,973)

1,301

24,100

1,498,188

8,073,413

339,314

DEPRECIATION

Accumulated at the beginning of the year

331,806

4,811,325

182,169

Translation differences

Depreciation charge

Transfers / Reclassifications

Increase due to the consolidation of joint operations

(1,581)

43,469

1,511

–

22,046

317,242

3,339

–

Disposals / Consumptions

(1,901)

(22,451)

(2,402)

25,678

(1,655)

392

(6,627)

Accumulated at the end of the year

373,304

5,131,501

197,555

489,894

(7,776)

641,235

–

608

(682,059)

441,902

–

43,674

348

5,308

(6,783)

142

(4,935)

9,776,191

18,044

666,869

(63,300)

2,051

(9,284)

37,754

10,390,571

15,921

458

1,250

(3,187)

105

(103)

5,341,221

18,521

387,639

497

(31,082)

14,444

5,716,804

At December 31, 2013

1,124,884

2,941,912

141,759

441,902

23,310

4,673,767

Property, plant and equipment include capitalized interests for net amounts at December 31, 2014 and 2013
of $3,323 and $3,782 (there were no capitalized interests during the years 2014 and 2013), respectively.

Annual Report

122.

11. Intangible assets, net

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31, 2014

COST

Values at the beginning of the year

Translation differences

Additions

Transfers / Reclassifications

Increase due to business combinations

Disposals

Values at the end of the year

AMORTIZATION AND IMPAIRMENT

Accumulated at the beginning of the year

Translation differences

Amortization charge

Impairment charge (See Note 5)

Accumulated at the end of the year

Information
system
projects

Licenses,
patents and
trademarks (*)

Goodwill

Customer
relationships

Total

400,488

492,829

2,147,242

2,059,946

5,100,505

(9,590)

79,983

1,090

(64)

(63)

1,244

556

–

(552)

(6,481)

–

41,243

–

(16,134)

81,227

1,646

41,271

(616)

471,935

494,014

2,182,004

2,059,946

5,207,899

249,916

(6,425)

40,188

302,444

340,488

1,140,421

2,033,269

–

30,379

–

96,137

–

157,933

98,788

(6,425)

228,500

194,925

283,679

332,823

436,625

1,397,142

2,450,269

At December 31, 2014

188,256

161,191

1,745,379

662,804

2,757,630

Tenaris

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31, 2013

COST

Values at the beginning of the year

Translation differences

Additions

Transfers / Reclassifications

Disposals

123.

Information
system
projects

Licenses,
patents and
trademarks (*)

Goodwill

Customer
relationships

Total

310,524

493,822

2,147,433

2,059,946

5,011,725

(1,362)

85,974

5,820

(468)

655

(1,249)

(419)

–

(252)

–

(1,281)

86,629

4,571

(1,139)

Values at the end of the year

400,488

492,829

2,147,242

2,059,946

5,100,505

AMORTIZATION

Accumulated at the beginning of the year

218,531

273,443

340,488

979,347

1,811,809

Translation differences

Amortization charge

Disposals

Transfers / Reclassifications

Accumulated at the end of the year

(779)

31,104

(171)

1,231

–

30,237

–

(1,236)

–

(779)

161,074

222,415

–

(171)

(5)

249,916

302,444

340,488

1,140,421

2,033,269

At December 31, 2013

150,572

190,385

1,806,754

919,525

3,067,236

(*) Includes Proprietary Technology.

The geographical allocation of goodwill for
the year ended December 31, 2014 was $1.614.5
million for North America, $128.2 million for
South America $2.0 million for Europe, and $0.7
million for Middle East & Africa.

Annual Report

124.

The carrying amount of goodwill allocated by
CGU, as of December 31, 2014, was as follows:

All amounts in million U.S.dollars

As of December 31, 2014

Tubes Segment

Other Segment

Total

CGU

OCTG (USA)

Tamsa (Hydril and other)

Siderca (Hydril and other)

Hydril

Electric Conduits

Coiled Tubing

Other

Total

Maverick
Acquisition

Hydril
Acquisition

Other

Maverick
Acquisition

625.4

–

45.8

–

345.9

265.0

309.0

–

671.2

919.9

–

19.4

93.3

–

37.6

150.3

–

4.0

–

4.0

625.4

365.3

358.3

309.0

45.8

4.0

37.6

1,745.4

Tenaris

12. Investments in non-consolidated companies

125.

YEAR ENDED DECEMBER 31

At the beginning of the year

Translation differences

Equity in earnings of non-consolidated companies

Impairment loss in non-consolidated companies

Dividends and distributions received

Additions (c)

Decrease due to consolidation (*)

Decrease / increase in equity reserves

At the end of the period

(*) See Note 26

2014

(Restated)

912,758

(54,688)

(24,696)

(161,222)

(17,735)

1,380

(8,310)

(3,857)

2013

977,011

(87,666)

46,098

–

(16,334)

–

(9,033)

2,682

643,630

912,758

The principal non-consolidated companies are:

Company

Country of incorporation

% ownership - voting rights
at December 31

Value at
December 31

Ternium

Usiminas

Others

Luxembourg

Brazil

–

(*) Including treasury shares

2014

2013

2014

2013

11.46% (*)

2.5% - 5%

–

(Restated)

527,080

113,099

3,451

643,630

602,303

298,459

11,996

912,758

a) Ternium
Ternium is a steel producer in Latin America
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 December 31, 2014, the closing price of Ternium’s
ADSs as quoted on the New York Stock Exchange
was $17.6 per ADS, giving Tenaris’s ownership stake
a market value of approximately $405.2 million
(Level 1). At December 31, 2014, the carrying
value of Tenaris’s ownership stake in Ternium,
based on Ternium’s IFRS financial statements, was
approximately $527.1 million. See Section II.B.2.

Annual Report

126.

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.

The Company reviews periodically the
recoverability of its investment in Usiminas.
To determine the recoverable value, the Company
estimates the value in use of the investment by
calculating the present value of the expected cash
flows. There is a significant interaction among
the principal assumptions made in estimating
Usiminas’ cash flow projections, which include
iron ore and steel prices, foreign exchange
and interest rates, Brazilian GDP and steel
consumption in the Brazilian market. The key
assumptions used by the Company are based on
external and internal sources of information, and
management judgment based on past experience
and expectations of future changes in the market.

Value-in-use was calculated by discounting the
estimated cash flows over a six year period based
on forecasts approved by management. For the
subsequent years beyond the six-year period, a
terminal value was calculated based on perpetuity
considering a nominal growth rate of 2%. The
discount rates used are based on the respective
weighted average cost of capital (WACC), which is
considered to be a good indicator of capital cost.

The discount rate used to test the investment in
Usiminas for impairment was 10.4%.

As mentioned in Note 1 (General Information),
following discussions with the Staff of the
U.S. Securities and Exchange Commission,
the Company re-evaluated and revised the
assumptions used to calculate the carrying value
of the Usiminas investment at September 30, 2014
and, as a result, wrote down the carrying value
of its investment in Usiminas by $161.2 million in
2014. In addition, the Company’s investment in
Ternium was adjusted to reflect the change in value
of that company’s participation in Usiminas.

The main factors that could result in impairment
charges in future periods would be an increase in
the discount rate or a decrease in steel prices. The
Company estimates that a change of 10 bps in
the discount rate would have resulted in a change
of 1.8% in the value in use, and a change of $10
per ton in the steel price would have resulted in a
change of 4.8% in the value in use.

At December 31, 2014, the closing price of the
Usiminas’ ordinary shares as quoted on the
BM&FBovespa Stock Exchange was BRL12.3
(approximately $4.63) per share, giving Tenaris’s
ownership stake a market value of approximately
$115.7 million (Level 1). At that date, the restated
carrying value of the Usiminas investment
amounted to $113.1 million.

Tenaris
127.

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. As of February 2014, Tenaris,
Ternium and Tecpetrol International S.A. (a
wholly-owned subsidiary of San Faustin S.A.,
the controlling shareholder of both Tenaris and
Ternium) completed their initial investments in
Techgen. Techgen is currently owned 48% by
Ternium, 30% by Tecpetrol and 22% by Tenaris.
Tenaris and Ternium also agreed to enter into
power supply and transportation agreements with
Techgen, pursuant to which Ternium and Tenaris
will contract 78% and 22%, respectively, of
Techgen’s power capacity of between 850 and
900 megawatts.

During 2014, each of Techgen’s shareholders made
additional investments in Techgen, primarily in
the form of subordinated loans. Tenaris’s total
investments in Techgen totaled $0.5 million.

•

Techgen is a party to transportation capacity
agreements with Kinder Morgan Gas Natural
de Mexico, S. de R.L. de C.V., Kinder Morgan
Texas Pipeline LLC and Kinder Morgan Tejas
Pipeline LLC for a purchasing capacity of 150,000
MMBtu/Gas per day starting on June 1, 2016
and ending on May 31, 2036. As of December 31,
2014, the outstanding value of this commitment

was approximately $285 million. Tenaris’s
exposure under the guarantee in connection
with these agreements amounts to $62.7 million,
corresponding to the 22% of the agreements’
outstanding value as of December 31, 2014.

•

Techgen is a party to a contract with GE Power
Systems, Inc. and General Electric International
Operations Company, Inc. Mexico Branch for
the purchase of power generation equipment
and other services related to the equipment for
an outstanding amount of approximately $238
million. These agreements required Techgen to
issue stand-by letters of credit up to an amount
of $47.5 million. Tenaris’s exposure under the
guarantee in connection with these stand-by letters
of credit issued by Techgen is of $7.2 million.

Tenaris issued a Corporate Guarantee covering
22% of the obligations of Techgen under a
syndicated loan agreement between Techgen and
several banks led by Citigroup Global Markets
Inc., Credit Agricole Corporate and Investment
Bank, and Natixis, New York Branch acting as
joint bookrunners. The loan agreement amounted
to $800 million and the proceeds will be used
by Techgen in the construction of the facility.
As of December 31, 2014, disbursements under
the loan agreement amounted $440 million, as
a result the amount guaranteed by Tenaris was
approximately $96.8 million. If the loan is disbursed
in full, the amount guaranteed by Tenaris will be

Annual Report128.

approximately $176 million. The main covenants
under the Corporate Guarantee are limitations
on the sale of certain assets and compliance with
financial ratios (e.g. leverage ratio).

Summarized selected financial information of
Ternium and Usiminas, including the aggregated
amounts of assets, liabilities, revenues and profit
or loss is as follows:

Non-current assets

Current assets

Total assets

Non-current liabilities

Current liabilities

Total liabilities

2014

(Restated)

2013

Usiminas

Ternium

Total

Usiminas

Ternium

Total

8,372,431

3,104,137

6,257,290

14,629,721

3,348,869

6,453,006

9,347,605

4,038,373

7,153,162

16,500,767

3,219,462

7,257,835

11,476,568

9,606,159

21,082,727

13,385,978

10,372,624

23,758,602

2,617,657

1,795,583

1,880,070

2,091,386

4,497,727

3,886,969

3,174,490

2,171,729

2,185,421

1,849,159

5,359,911

4,020,888

4,413,240

3,971,456

8,384,696

5,346,219

4,034,580

9,380,799

Non-controlling interests

768,749

937,502

1,706,251

905,847

998,009

1,903,856

Revenues

Gross profit

Net (loss) income for the year attributable to owners

of the parent

5,016,528

8,726,057

13,742,585

5,970,626

8,530,012

14,500,638

447,311

61,531

1,800,888

2,248,199

(198,751)

(137,220)

676,960

(74,459)

1,929,720

2,606,680

455,425

380,966

Total comprehensive income (loss) for the year, net

(495,603)

98,856

of tax, attributable to owners of the parent

Tenaris

13. Receivables – non current

YEAR ENDED DECEMBER 31

Government entities

Employee advances and loans

Tax credits

Receivables from related parties

Legal deposits

Advances to suppliers and other advances

Others

Allowances for doubtful accounts – see Note 22 (I)

129.

2014

2013

21,697

12,214

29,997

43,093

21,313

119,970

35,588

263,872

(1,696)

262,176

2,232

12,841

18,396

20,716

23,589

44,986

32,299

155,059

(2,979)

152,080

Annual Report130.

14. Inventories

YEAR ENDED DECEMBER 31

Finished goods

Goods in process

Raw materials

Supplies

Goods in transit

Allowance for obsolescence – see Note 23 (I)

15. Receivables and prepayments

2014

2013

1,012,297

1,024,571

622,365

396,847

554,946

386,954

650,567

363,611

572,167

320,496

2,973,409

2,931,412

(193,540)

(228,765)

2,779,869

2,702,647

YEAR ENDED DECEMBER 31

2014

2013

Prepaid expenses and other receivables

Government entities

Employee advances and loans

Advances to suppliers and other advances

Government tax refunds on exports

Receivables from related parties

Derivative financial instruments

Miscellaneous

Allowance for other doubtful accounts – see Note 23 (I)

40,377

3,189

16,478

42,832

16,956

63,733

25,588

66,470

57,410

3,948

15,356

70,412

25,502

11,313

9,273

36,406

275,623

229,620

(7,992)

(9,396)

267,631

220,224

Tenaris
16. Current tax assets and liabilities

131.

YEAR ENDED DECEMBER 31

CURRENT TAX ASSETS

V.A.T. credits

Prepaid taxes

CURRENT TAX LIABILITIES

Income tax liabilities

V.A.T. liabilities

Other taxes

17. Trade receivables

YEAR ENDED DECEMBER 31

Current accounts

Receivables from related parties

Allowance for doubtful accounts – see Note 23 (I)

2014

2013

74,129

55,275

69,926

86,265

129,404

156,191

239,468

27,156

85,729

352,353

149,154

39,984

77,622

266,760

2014

2013

2,002,867

2,005,209

29,505

28,924

2,032,372

2,034,133

(68,978)

(51,154)

1,963,394

1,982,979

Annual Report132.

The following table sets forth details of the aging
of trade receivables:

AT DECEMBER 31, 2014

Trade Receivables

Not Due

Past due

Guaranteed

Not guaranteed

Guaranteed and not guaranteed

Allowance for doubtful accounts

Net Value

AT DECEMBER 31, 2013

Guaranteed

Not guaranteed

Guaranteed and not guaranteed

Allowance for doubtful accounts

Net Value

1 - 180 days

> 180 days

571,170

1,461,202

2,032,372

495,336

1,186,958

1,682,294

(68,978)

–

1,963,394

1,682,294

628,929

1,405,204

2,034,133

481,079

1,122,078

1,603,157

(51,154)

–

1,982,979

1,603,157

70,239

203,116

273,355

(902)

272,453

130,316

227,317

357,633

(64)

357,569

5,595

71,128

76,723

(68,076)

8,647

17,534

55,809

73,343

(51,090)

22,253

Tenaris

18. Other investments and Cash and cash equivalents

YEAR ENDED DECEMBER 31

OTHER INVESTMENTS

Fixed Income (time-deposit, zero cupon bonds, commercial papers)

Bonds and other fixed Income

Fund Investments

CASH AND CASH EQUIVALENTS

Cash at banks

Liquidity funds

Short – term investments

133.

2014

2013

718,877

817,823

301,679

639,538

513,075

74,717

1,838,379

1,227,330

120,772

110,952

185,921

123,162

95,042

396,325

417,645

614,529

Annual Report

134.

19. Borrowings

YEAR ENDED DECEMBER 31

NON-CURRENT

Bank borrowings

Finance lease liabilities

Costs of issue of debt

CURRENT

Bank borrowings and other loans including related companies

Bank overdrafts

Finance lease liabilities

Costs of issue of debt

Total Borrowings

The maturity of borrowings is as follows:

2014

2013

30,104

247,056

729

–

1,471

(2,309)

30,833

246,218

966,741

1,200

486

(20)

968,407

999,240

668,132

16,384

575

(374)

684,717

930,935

AT DECEMBER 31, 2014

1 year or less

1 - 2 years

2 - 3 years

3 - 4 years

4 - 5 years

Over 5 years

Total

Financial lease

Other borrowings

Total borrowings

Interest to be accrued (*)

Total

AT DECEMBER 31, 2013

Financial lease

Other borrowings

Total borrowings

Interest to be accrued (*)

Total

(*)

Includes the effect of hedge accounting.

487

967,920

968,407

19,398

987,805

575

684,142

684,717

26,643

711,360

392

7,117

7,509

2,586

10,095

520

98,891

99,411

7,244

106,655

219

1,147

1,366

1,074

2,440

490

91,202

91,692

3,924

95,616

1,259

1,356

1,057

2,413

274

45,860

46,134

891

47,025

1,207

1,228

1,055

2,283

131

7,066

7,197

251

7,448

–

19,374

2,168

21,542

1,728

1,784

1,805

1,216

998,024

999,240

27,338

1,026,578

2,046

928,889

930,935

38,974

969,909

Tenaris

Significant borrowings include:

In million of $

Disbursement date

Borrower

Type

Original &
Outstanding

Final maturity

2014

Mainly 2014

December 2014

Tamsa

Siderca

Bank loans

Tubocaribe (*)

Bank loan

522

183

180

2015

Mainly 2015

Dec - 15

135.

(*) The main covenant on this loan agreement is in compliance with financial ratios (i.e., leverage ratio).

As of December 31, 2014, Tenaris was in
compliance with all of its covenants.

The weighted average interest rates before tax
shown below were calculated using the rates set for
each instrument in its corresponding currency as
of December 31, 2014 and 2013 (considering hedge
accounting where applicable).

Total borrowings (*)

(*) The decrease in weighted average interest rates is explained mainly by ARS-denominated debt, which as of December 31,

2014 was almost fully hedged; whereas as of December 31, 2013 was fully unhedged.

2014

2013

1.89%

7.50%

Annual Report136.

Breakdown of long-term borrowings by currency
and rate is as follows:

Non current borrowings

Currency

USD

ARS

EUR

Others

Interest rates

Year ended December 31

Variable

Fixed

Variable

Fixed

2014

2013

–

218,134

21,079

4,933

3,981

840

–

20,778

–

1,347

5,959

Total non current borrowings

30,833

246,218

Breakdown of short-term borrowings by currency
and rate is as follows:

Current borrowings

Currency

Interest rates

Year ended December 31

USD

EURO

MXN

ARS

BRL

ARS

Others

Variable

Fixed

Variable

Fixed

Variable

Fixed

2014

184,103

14,577

24,030

1,272

522,225

184,791

34,446

252

2,640

2013

24,823

25,019

38,279

8,432

366,380

215,429

–

4,394

953

1,008

Total current borrowings

968,407

684,717

Tenaris

20. Deferred income tax
Deferred income taxes are calculated in full on
temporary differences under the liability method
using the tax rate of each country.

Deferred tax liabilities

The evolution of deferred tax assets and
liabilities during the year are as follows:

137.

At the beginning of the year

Translation differences

Charged directly to Other Comprehensive Income

Income statement credit / (charge)

At December 31, 2014

At the beginning of the year

Translation differences

Charged directly to Other Comprehensive Income

Income statement charge

At December 31, 2013

(*)

Includes the effect of currency translation on tax base explained in Note 8.

Fixed
assets

360,208

(3,067)

–

(10,756)

346,385

335,484

(1,703)

–

26,427

360,208

Inventories

Intangible
and Other (*)

Total

21,526

548,219

929,953

–

682

22,026

44,234

849

(906)

(65,716)

482,446

(2,218)

(224)

(54,446)

873,065

15,269

530,437

881,190

–

6,257

21,526

(223)

11,441

6,564

(1,926)

11,441

39,248

548,219

929,953

Annual Report

138.

Deferred tax assets

Provisions and
allowances

Inventories

Tax
losses

Other

Total

At the beginning of the year

Translation differences

Increase due to business combinations

Charged directly to Other Comprehensive Income

Income statement charge / (credit)

At December 31, 2014

(53,636)

(162,242)

(25,810)

(134,319)

(376,007)

4,317

(1,255)

979

4,259

2,334

(297)

(682)

(28,822)

(45,336)

(189,709)

1,500

(3,535)

–

(13,807)

(41,652)

322

(281)

8,473

(5,368)

337

(16,259)

(54,629)

(150,497)

(427,194)

At the beginning of the year

Translation differences

Increase due to business combinations

Charged directly to Other Comprehensive Income

Income statement charge / (credit)

At December 31, 2013

(56,406)

6,104

(17)

753

(183,560)

(23,141)

(105,409)

(368,516)

1,311

–

(843)

(1,442)

(7,807)

(4,070)

20,007

(2,669)

(18,818)

(53,636)

(162,242)

(25,810)

(134,319)

(376,007)

6,572

(1,459)

(7,054)

(5,550)

Tenaris

The recovery analysis of deferred tax assets and
deferred tax liabilities is as follows:

YEAR ENDED DECEMBER 31

Deferred tax assets to be recovered after 12 months

Deferred tax liabilities to be recovered after 12 months

139.

2014

2013

(119,192)

868,289

(119,488)

877,524

Deferred income tax assets and liabilities are offset
when (1) there is a legally enforceable right to set-
off current tax assets against current tax liabilities
and (2) when the deferred income taxes relate
to the same fiscal authority on either the same

taxable entity or different taxable entities where
there is an intention to settle the balances on a net
basis. The following amounts, determined after
appropriate set-off, are shown in the Consolidated
Statement of Financial Position:

YEAR ENDED DECEMBER 31

Deferred tax assets

Deferred tax liabilities

The movement on the net deferred income tax
liability account is as follows:

YEAR ENDED DECEMBER 31

At the beginning of the year

Translation differences

Charged directly to Other Comprehensive Income

Income statement credit

Increase due to business combinations / Joint operations

At the end of the period

2014

2013

(268,252)

714,123

445,871

(197,159)

751,105

553,946

2014

2013

553,946

512,674

6,255

113

(109,075)

(5,368)

445,871

4,646

4,387

33,698

(1,459)

553,946

Annual Report140.

21. Other liabilities

I. Other liabilities – Non current

YEAR ENDED DECEMBER 31

Post-employment benefits

Other-long term benefits

Miscellaneous

Post-employment benefits
Unfunded

YEAR ENDED DECEMBER 31

Values at the beginning of the period

Current service cost

Interest cost

Curtailments and settlements

Remeasurements (*)

Translation differences

Benefits paid from the plan

Other

At the end of the year

(*) For 2014, gain of $12.2 and for 2013, loss of $3.0 million attributable to demographic

assumptions and a loss of $2.4 and a gain of $6.4 million attributable to financial assumptions.

2014

2013

164,217

98,069

23,579

169,215

82,439

25,603

285,865

277,257

2014

2013

136,931

7,582

9,254

(236)

(9,824)

(8,665)

(8,006)

(303)

126,733

131,475

18,373

7,220

1,212

(3,403)

(1,561)

(15,299)

(1,086)

136,931

TenarisThe principal actuarial assumptions used
were as follows:

YEAR ENDED DECEMBER 31

Discount rate

Rate of compensation increase

141.

2014

2013

2% - 7%

2% - 3%

3% - 7%

As of December 31, 2014, an increase / (decrease)
of 1% in the discount rate assumption would
have generated an impact on the defined benefit
obligation of $8.2 million and $9.5 million and
an increase / (decrease) of 1% in the rate of
compensation assumption would have generated
an impact on the defined benefit obligation of $6.6
million and $6.1 million. The above sensitivity
analysis are based on a change in an assumption

while holding all other assumptions constant. In
practice, this is unlikely to occur, and changes in
some of the assumptions may be correlated.

Funded
The amounts recognized in the statement of
financial position for the current annual period
and the previous annual period are as follows:

YEAR ENDED DECEMBER 31

Present value of funded obligations

Fair value of plan assets

(Assets) / Liability (*)

(*) In 2014 and 2013, $2.4 million and $0.6 million corresponding to an overfunded plan were

reclassified within other non-current assets, respectively.

2014

2013

183,085

(147,991)

35,094

177,433

(145,777)

31,656

Annual Report142.

The movement in the present value of funded
obligations is as follows:

YEAR ENDED DECEMBER 31

At the beginning of the year

Translation differences

Current service cost

Interest cost

Remeasurements (*)

Benefits paid

Movement in the fair value of plan assets

(*) For 2014, a loss of $1.5 and for 2013, gain of $7.5 million attributable to demographic assumptions

and a loss of $14.6 and $ 14.7 million attributable to financial assumptions, respectively.

The movement in the fair value of plan assets
is as follows:

YEAR ENDED DECEMBER 31

At the beginning of the year

Expected return on plan assets

Remeasurements

Translation differences

Contributions paid to the plan

Benefits paid from the plan

Other

At the end of the year

2014

2013

177,433

(10,000)

2,266

7,621

16,104

(10,339)

183,085

191,154

(3,208)

430

7,366

(7,174)

(11,135)

177,433

2014

2013

(145,777)

(140,550)

(7,842)

(8,130)

8,911

(5,548)

10,339

(2,489)

(7,737)

1,632

(7,821)

11,135

(147,991)

(145,777)

TenarisThe major categories of plan assets as a percentage
of total plan assets are as follows:

143.

AT DECEMBER, 31

Equity instruments

Debt instruments

Others

The principal actuarial assumptions used
were as follows:

YEAR ENDED DECEMBER 31

Discount rate

Rate of compensation increase

2014

2013

52.7%

43.7%

3.6%

47.5%

52.5%

0.0%

2014

2013

4% - 4%

2% - 3%

4% - 5%

3% - 4%

The expected return on plan assets is determined
by considering the expected returns available on
the assets underlying the current investment policy.
Expected return on plan assets is determined based
on long-term, prospective rates of return as of the
end of the reporting period.

on the defined benefit obligation of $0.3 million
and $0.3 million. The above sensitivity analyses are
based on a change in an assumption while holding
all other assumptions constant. In practice, this
is unlikely to occur, and changes in some of the
assumptions may be correlated.

As of December 31, 2014, an increase / (decrease)
of 1% in the discount rate assumption would
have generated an impact on the defined benefit
obligation of $20.4 million and $24 million and an
increase / (decrease) of 1% in the compensation
rate assumption would have generated an impact

The employer contributions expected to be paid for
the year 2015 amounts approximately to $5.8 million.

The methods and types of assumptions used in
preparing the sensitivity analysis did not change
compared to the previous period.

Annual Report144.

The expected maturity of undiscounted
post- employment benefits is as follows:

AT 31 DECEMBER 2014

Less than
1 year

1 - 2 years

2 - 3 years

3 - 4 years

4 - 5 years

Over 5
years

Unfunded Post-employment

20,896

10,531

18,224

8,076

8,085

406,281

benefits

Funded Post-employment benefits

Total

8,329

29,225

8,661

19,192

9,041

27,265

9,453

17,529

9,742

17,827

349,241

755,522

II. Other liabilities – current

YEAR ENDED DECEMBER 31

Payroll and social security payable

Liabilities with related parties

Derivative financial instruments

Miscellaneous

22. Non-current allowances and provisions

I. Deducted from non current receivables

YEAR ENDED DECEMBER 31

Values at the beginning of the year

Translation differences

Additional provisions

Used

Values at the end of the year

2014

2013

204,558

207,425

5,305

56,834

29,580

8,268

35,282

296,277

250,997

2014

2013

(2,979)

(2,995)

534

–

749

740

(752)

(1,696)

(2,979)

Tenaris

II. Liabilities

YEAR ENDED DECEMBER 31

Values at the beginning of the year

Translation differences

Additional provisions

Reclassifications

Used

Increase due to business combinations

Values at the end of the year

23. Current allowances and provisions

I. Deducted from assets

145.

2014

2013

66,795

(10,253)

18,029

(2,276)

(5,146)

3,565

70,714

67,185

(8,065)

20,852

(3,387)

(9,840)

66,795

YEAR ENDED DECEMBER 31, 2014

Values at the beginning of the year

Translation differences

Additional allowances

Increase due to business combinations

Used

At December 31, 2014

YEAR ENDED DECEMBER 31, 2013

Values at the beginning of the year

Translation differences

Additional allowances

Increase due to business combinations

Used

At December 31, 2013

Allowance for doubtful
accounts - Trade receivables

Allowance for other doubtful
accounts - Other receivables

Allowance for inventory
obsolescence

(51,154)

384

(21,704)

(88)

3,584

(68,978)

(29,143)

(17)

(23,236)

(7)

1,249

(51,154)

(9,396)

1,335

(336)

(38)

443

(7,992)

(10,516)

1,282

(956)

–

794

(9,396)

(228,765)

5,141

(4,704)

(875)

35,663

(193,540)

(185,168)

1,589

(70,970)

–

25,784

(228,765)

Annual Report146.

II. Liabilities

YEAR ENDED DECEMBER 31, 2014

Values at the beginning of the year

Translation differences

Additional allowances

Reclassifications

Used

At December 31, 2014

YEAR ENDED DECEMBER 31, 2013

Values at the beginning of the year

Translation differences

Additional allowances

Reclassifications

Used

Increase due to the consolidation of joint operations

At December 31, 2013

Sales risks

Other claims and
contingencies

9,670

(747)

14,100

–

(15,818)

7,205

14,112

(335)

8,512

366

(12,985)

–

9,670

16,045

(1,777)

2,668

2,275

(6,036)

13,175

12,846

490

2,063

3,021

(2,492)

117

16,045

Total

25,715

(2,524)

16,768

2,275

(21,854)

20,380

26,958

155

10,575

3,387

(15,477)

117

25,715

24. Derivative financial instruments

Net fair values of derivative financial instruments
The net fair values of derivative financial
instruments disclosed within Other Receivables and
Other Liabilities at the reporting date, in accordance
with IAS 39, are:

YEAR ENDED DECEMBER 31

2014

2013

Foreign exchange derivatives contracts

Contracts with positive fair values

Foreign exchange derivatives contracts

Contracts with negative fair values

Total

25,588

(56,834)

(31,246)

9,273

(8,268)

1,005

Tenaris
147.

Foreign exchange derivative contracts

and hedge accounting
Tenaris applies hedge accounting to certain cash
flow hedges of highly probable forecast transactions.
The net fair values of exchange rate derivatives,
including embedded derivatives and those derivatives
that were designated for hedge accounting as of
December 2014 and 2013, were as follows:

Purchase currency

Sell currency

USD

MXN

USD

EUR

BRL

USD

KWD

USD

BRL

CNH

GBP

MXN

USD

EUR

USD

EUR

JPY

USD

ARS

USD

Others

Total

Term

2015

Fair Value

Hedge Accounting Reserve

2014

2013

(45,061)

18,105

(6,186)

982

(96)

(5,079)

1,908

1,632

1,089

438

927

(3,285)

(510)

–

(456)

411

(675)

–

5,604

–

(55)

(29)

2014

120

(66)

(6,186)

–

138

(1,797)

630

(1,245)

–

403

–

2013

(101)

(2)

–

(21)

244

–

(31,246)

1,005

(7,916)

120

Following is a summary of the hedge
reserve evolution:

Equity Reserve Dec-12

Movements 2013

Equity Reserve Dec-13

Movements 2014

Equity Reserve Dec-14

Foreign Exchange

Total Cash flow Hedge

(2,860)

2,980

120

(8,036)

(7,916)

Tenaris estimates that the cash flow hedge reserve
at December 31, 2014 will be recycled to the
Consolidated Income Statement during 2015.

Annual Report148.

25. Contingencies, commitments and restrictions

on the distribution of profits

effect on Tenaris’s results of operations, financial
condition, net worth and cash flows.

Contingencies
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, the 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 (Notes 22
and 23) 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

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

Tax assessment in Italy
A Tenaris Italian company 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
$342 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 $11 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 December 24, 2013, the company 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 December 31, 2014, of EUR248
million (approximately $301 million), comprising
principal, interest and penalties. On February 20,
2014, the assessment for 2008 was appealed with

Tenaris149.

the tax court in Milan. The hearing on this appeal
will be held on June 22, 2015.

Based on the tax court decision 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.

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 within 2015.

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
formally closed the file.

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.

Tenaris believes that all of CSN's claims and
allegations are groundless and without merit, as
confirmed by several opinions of Brazilian counsel

Annual Report150.

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 Restated Consolidated Financial Statements.

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 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. As of December 31, 2014,

the estimated aggregate contract amount through
December 31, 2015, calculated at current prices, is
approximately $248 million.

•

A Tenaris company entered into a contract with
Siderar, a subsidiary of Ternium S.A. for the
supply of steam generated at the power generation
facility that Tenaris owns in the compound of the
Ramallo facility of Siderar. Under this contract,
Tenaris is required to provide to Siderar 250 tn/
hour of steam through to 2018, and Siderar has the
obligation to take or pay this volume. The amount
of this gas supply agreement totals approximately
$52.5 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 $502.1 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.

TenarisRestrictions 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

Legal reserve

Share premium

Retained earnings including net income for the year ended December 31, 2014

Total equity in accordance with Luxembourg law

151.

1,180,537

118,054

609,733

21,072,180

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 December 31, 2014, 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.

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

Other income and expenses for the year ended December 31, 2014

Dividends approved

Retained earnings at December 31, 2014 under Luxembourg law

Share premium

Distributable amount at December 31, 2014 under Luxembourg law

21,899,189

(295,767)

(531,242)

21,072,180

609,733

21,681,913

Annual Report152.

26. Business combinations

In September 2014, Tenaris closed the acquisition
of 100% of the shares of Socobras Participações
Ltda. (“Socobras”), a holding company that
owned 50% of the shares of Socotherm Brasil
S.A.(“Socotherm”). Tenaris already owned the
other 50% interest in Socotherm, following
completion of this transaction, Tenaris now owns
100% of Socotherm.

Tenaris accounted for this transaction as a
step-acquisition whereby Tenaris’s ownership
interest in Socotherm held before the acquisition
was remeasured to fair value at that date. As a
result, Tenaris recorded a result of approximately
$21.3 million resulting from the difference
between carrying value of its initial investments in
Socotherm and the fair value which was included
in “Equity in earnings (losses) of non-consolidated
companies” on the Consolidated Income Statement.

The purchase price amounted to $29.6 million, net
assets acquired (including PPE, inventories and
cash and cash equivalents) amount to $9.6 million
and goodwill for $20 million.

Had the transaction been consummated on
January 1, 2014, then Tenaris’s unaudited pro
forma net sales and net income from continuing
operations would not have changed materially.

Tenaris27. Cash flow disclosures

153.

YEAR ENDED DECEMBER 31

2014

2013

2012

(I) CHANGES IN WORKING CAPITAL

Inventories

Receivables and prepayments

Trade receivables

Other liabilities

Customer advances

Trade payables

(II) INCOME TAX ACCRUALS LESS PAYMENTS

Tax accrued

Taxes paid

(III) INTEREST ACCRUALS LESS PAYMENTS, NET

Interest accrued

Interest received

Interest paid

(IV) CASH AND CASH EQUIVALENTS

Cash at banks, liquidity funds and short - term investments

Bank overdrafts

As of December 31, 2014, 2013 and 2012, the
components of the line item “other, including
currency translation adjustment” are immaterial to
net cash provided by operating activities.

(72,883)

(31,061)

20,886

(61,636)

76,383

(3,755)

287,874

62,114

129,939

(151,578)

(77,099)

(62,470)

(174,670)

(26,285)

(166,985)

6,202

78,446

(19,720)

(72,066)

188,780

(303,012)

586,061

(506,999)

79,062

6,174

31,306

(74,672)

(37,192)

417,645

(1,200)

416,445

627,877

(502,461)

125,416

37,356

42,091

(109,170)

(29,723)

614,529

(16,384)

598,145

541,558

(702,509)

(160,951)

22,048

41,996

(89,349)

(25,305)

828,458

(55,802)

772,656

Annual Report

154.

28. Related party transactions

As of December 31, 2014:

(Stichting) (“RP STAK”) held shares in San Faustin
sufficient in number to control San Faustin.

•

No person or group of persons controls RP STAK.

•

San Faustin S.A., a Luxembourg public limited
liability company (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 private limited
liability company (Société à Responsabilité
Limitée) (“Techint”).

•

Rocca & Partners Stichting Administratiekantoor
Aandelen San Faustin, a Dutch private foundation

Based on the information most recently available
to the Company, Tenaris’s directors and senior
management as a group owned 0.12% 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”.

TenarisThe following transactions were carried out with
related parties:

155.

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

I. TRANSACTIONS

A. SALES OF GOODS AND SERVICES

Sales of goods to non-consolidated parties

Sales of goods to other related parties

Sales of services to non-consolidated parties

Sales of services to other related parties

B. PURCHASES OF GOODS AND SERVICES

Purchases of goods to non-consolidated parties

Purchases of goods to other related parties

Purchases of services to non-consolidated parties

Purchases of services to other related parties

2014

2013

2012

33,342

103,377

10,932

3,264

35,358

115,505

15,439

5,035

43,501

77,828

14,583

4,000

150,915

171,337

139,912

302,144

44,185

27,304

90,652

464,285

320,000

14,828

56,820

100,677

492,325

444,742

19,745

112,870

87,510

664,867

AT DECEMBER 31

2014

2013

II. PERIOD-END BALANCES

A. ARISING FROM SALES / PURCHASES OF GOODS / SERVICES

Receivables from non-consolidated parties

Receivables from other related parties

Payables to non-consolidated parties

Payables to other related parties

B. FINANCIAL DEBT

Borrowings from associated parties

104,703

31,628

(53,777)

(28,208)

54,346

(200)

30,416

30,537

(33,503)

(8,323)

19,127

–

Directors’ and senior management compensation
During the years ended December 31, 2014, 2013
and 2012, the cash compensation of Directors and
Senior managers amounted to $26.0 million, $28.1
million and $24.1 million respectively. In addition,

Directors and Senior managers received 567, 534
and 542 thousand units for a total amount of $6.2
million, $5.6 million and $5.2 million respectively
in connection with the Employee retention and long
term incentive program mentioned in Note O (2).

Annual Report156.

29. Principal subsidiaries

The following is a list of Tenaris’s principal
subsidiaries and its direct and indirect percentage
of ownership of each controlled company at
December 31, 2014.

Company

Country of
Incorporation

Main activity

Percentage of ownership
at December 31 (*)

Algoma Tubes Inc.

Confab Industrial S.A. and subsidiaries

Canada

Brazil

Manufacturing of seamless steel pipes

Manufacturing of welded steel pipes

Dalmine S.p.A.

Hydril Company and subsidiaries (except detailed) (a)

Inversiones Berna Limitada

Maverick Tube Corporation and subsidiaries

(except detailed)

NKKTubes

PT Seamless Pipe Indonesia Jaya

Prudential Steel ULC

S.C. Silcotub S.A.

Siat S.A.

Italy

USA

Chile

USA

Japan

Indonesia

Canada

Romania

Argentina

and capital goods

Manufacturing of seamless steel pipes

Manufacturing and marketing of

premium connections

Financial Company

Manufacturing of welded steel pipes

Manufacturing of seamless steel pipes

Manufacturing of seamless steel products

Manufacturing of welded steel pipes

Manufacturing of seamless steel pipes

Manufacturing of welded and seamless

steel pipes

2014

2013

2012

100%

99%

100%

51%

77%

100%

99%

100%

51%

77%

100%

99%

100%

51%

77%

100%

Siderca S.A.I.C. and subsidiaries

Argentina

Manufacturing of seamless steel pipes

100%

(except detailed) (b)

Tenaris

Company

Country of
Incorporation

Main activity

Percentage of ownership
at December 31 (*)

157.

Talta - Trading e Marketing Sociedade Unipessoal Lda.

Madeira

Trading and holding Company

Tenaris Bay City

Tenaris Financial Services S.A.

Tenaris Global Services (Canada) Inc.

USA

Uruguay

Canada

Manufacturing of seamless steel pipes

Financial Company

Marketing of steel products

Tenaris Global Services (Panama) S.A. - Suc. Colombia

Colombia

Marketing of steel products

Tenaris Global Services (U.S.A.) Corporation

Tenaris Global Services Nigeria Limited

Tenaris Global Services Norway A.S.

Tenaris Global Services S.A. and subsidiaries (c)

USA

Nigeria

Norway

Uruguay

Marketing of steel products

Holding company and marketing of

steel products

Tenaris Global Services (Uk) Ltd

United Kingdom

Marketing of steel products

Tenaris Investments S.ar.l.

Luxembourg

Holding Company

Tenaris Investments S.ar.l., Zug Branch

Switzerland

Financial services

Tenaris Investments Switzerland AG and subsidiaries

Switzerland

Holding Company

(except detailed)

Tubos de Acero de Mexico S.A.

Tenaris TuboCaribe Ltda.

Mexico

Colombia

Manufacturing of seamless steel pipes

Manufacturing of welded steel pipes

(*) All percentages rounded.

(a) Tenaris holds 100% of Hydril's subsidiaries shares except for Technical Drilling & Production

Services Nigeria. Ltd where it holds 80% for 2014 and 2013, and 60% for 2012.

(b) For 2014 and 2013, Tenaris holds 100% of Siderca's subsidiaries. For 2012, Tenaris holds 100%

of Siderca's subsidiaries except for Scrapservice S.A where it holds 75%.

(c) Tenaris holds 97.5% of Tenaris Supply Chain S.A, 95% of Tenaris Saudi Arabia Limited, 60% of
Gepnaris S.A. and 40% of Tubular Technical Services and Pipe Coaters, and 49% of Amaja
Tubular Services Limited.

2014

2013

2012

100%

–

100%

Annual Report

158.

30. Nationalization of Venezuelan Subsidiaries

In May 2009, within the framework of Decree
Law 6058, Venezuela’s President announced
the nationalization of, among other companies,
the Company’s majority-owned subsidiaries
TAVSA - Tubos de Acero de Venezuela S.A.
(“Tavsa”) and, Matesi Materiales Siderúrgicos
S.A (“Matesi”), and Complejo Siderúrgico
de Guayana, C.A (“Comsigua”), in which
the Company has a non-controlling interest
(collectively, the “Venezuelan Companies”).

In August 2009, Venezuela, acting through the
transition committee appointed by the Minister
of Basic Industries and Mines of Venezuela,
unilaterally assumed exclusive operational
control over Matesi, and in November, 2009,
Venezuela, acting through PDVSA Industrial S.A.
(a subsidiary of Petróleos de Venezuela S.A.),
formally assumed exclusive operational control
over the assets of Tavsa. Venezuela did not pay any
compensation for these assets.

Tenaris’s investments in the Venezuelan companies
are protected under applicable bilateral investment
treaties, including the bilateral investment treaty
between Venezuela and the Belgium-Luxembourg
Economic Union, and Tenaris continues to reserve
all of its rights under contracts, investment treaties
and Venezuelan and international law. Tenaris
has also consented to the jurisdiction of the
International Centre for Settlement of Investment
Disputes (“ICSID”) in connection with the
nationalization process.

In August 2011, Tenaris and its wholly-owned
subsidiary Talta - Trading e Marketing Sociedad
Unipessoal Lda (“Talta”), initiated arbitration
proceedings against Venezuela before the ICSID
in Washington D.C., pursuant to the bilateral
investment treaties entered into by Venezuela with
the Belgium-Luxembourg Economic Union and
Portugal. In these proceedings, Tenaris and Talta
seek adequate and effective compensation for
the expropriation of their investment in Matesi.
The parties to the arbitration have had several
exchanges of written pleadings on jurisdiction
and the merits. An oral hearing on jurisdiction
and the merits was held from January 31, 2013 to
February 7, 2014. An additional two day hearing
was held on 9-10 July 2014 in London, England
to hear the testimony of the Parties’ experts on
Luxembourg and Portuguese law. On August 8,
2014, both parties submitted their post-hearing
briefs analyzing the testimony proffered at both
hearings; Tenaris and Talta updated their pre-
expropriation damages claim (to a principal sum
of US$299.3 million plus pre-award interest for
US$489.8 million, plus post-award interest). The
tribunal will deliberate and issue the award. There
is no procedural deadline by which the award must
be rendered.

In July 2012, Tenaris and Talta initiated separate
arbitration proceedings against Venezuela before the
ICSID, seeking adequate and effective compensation
for the expropriation of their respective investments
in Tavsa and Comsigua. The tribunal in these
proceedings was constituted in July 2013. Tenaris

Tenaris159.

and Talta submitted their memorial on jurisdiction
and the merits in October 2013. Thereafter, the
proceedings on the merits were suspended in
order for the tribunal to separately consider one
of Venezuela’s jurisdictional objections. After
exchanging one round of written jurisdictional
submissions on 1 April and 16 June 2014, the
suspension of the merits phase of the arbitration
was lifted (by agreement of the parties) such that
the jurisdictional and merits issues will be pleaded
together. Following the exchange of further
written submissions by the Parties (scheduled to be
completed by April 2015), an oral hearing will take
place in June 2015; finally, the tribunal will deliberate
and issue its award. There is no procedural deadline
within the award must be rendered.

Based on the facts and circumstances described
above and following the guidance set forth by IAS
27R, the Company ceased consolidating the results
of operations and cash flows of the Venezuelan
Companies as from June 30, 2009, and classified
its investments in the Venezuelan Companies as
financial assets based on the definitions contained
in paragraphs 11(c)(i) and 13 of IAS 32.

The Company classified its interests in the
Venezuelan Companies as available-for-sale
investments since management believes they do not
fulfill the requirements for classification within
any of the remaining categories provided by IAS
39 and such classification is the most appropriate
accounting treatment applicable to non-voluntary
dispositions of assets.

Tenaris or its subsidiaries have net receivables with
the Venezuelan Companies as of December 31, 2014,
for a total amount of approximately $26.8 million.

The Company records its interest in the
Venezuelan Companies at its carrying amount
at June 30, 2009, and not at fair value, following
the guidance set forth by paragraphs 46(c), AG80
and AG81 of IAS 39.

31. Fees paid to the Company’s principal accountant

Total fees accrued for professional services
rendered by PwC Network firms to Tenaris S.A.
and its subsidiaries are detailed as follows:

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

Audit Fees

Audit-Related Fees

Tax Fees

All Other Fees

Total

2014

2013

2012

5,231

142

5,723

143

117

5,446

335

137

5,497

6,034

5,950

Annual Report160.

32. Subsequent events

Annual Dividend Proposal
On February 18, 2015 the Company’s Board of
Directors proposed, for the approval of the Annual
General Shareholders' meeting, the payment of
an annual dividend of $0.45 per share ($0.90 per
ADS), or approximately $531.2 million, which
includes the interim dividend of $0.15 per share
($0.30 per ADS) or approximately $177.1 million,
paid on November 27, 2014.

On May 6, 2015 the Annual General Shareholders'
meeting approved the payment of such annual
dividend. As a result, a dividend of $0.30 per
share ($0.60 per ADS), or approximately $354.1
million was paid on May 20, 2015, with an
ex-dividend date of May 18, 2015. These Restated
Consolidated Financial Statements do not reflect
this dividend payable.

/s/ Edgardo Carlos

Chief Financial Officer
Edgardo Carlos

TenarisInvestor information

Investor Relations Director
Giovanni Sardagna

General inquiries
investors@tenaris.com

161.

ADS depositary bank
Deutsche Bank
CUSIP No. 88031M019

Internet
www.tenaris.com

Luxembourg Office
29 avenue de la Porte-Neuve
3rd Floor
L-2227 Luxembourg
(352) 26 47 89 78 tel
(352) 26 47 89 79 fax

Phones
USA 1 888 300 5432
Argentina (54) 11 4018 2928
Italy (39) 02 4384 7654
Mexico (52) 55 5282 9929

Stock information
New York Stock Exchange (TS)
Mercato Telematico Azionario (TEN)
Mercado de Valores de Buenos Aires (TS)
Bolsa Mexicana de Valores, S.A. de C.V. (TS)

Annual Reportwww.tenaris.com