SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16
OR 15D-16 OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of February, 2006
Durango Corporation
(f/k/a Grupo Industrial Durango, S.A. de C.V.)
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(Translation of registrant's name into English)
Torre Corporativa Durango, Potasio 150, Cuidad Industrial,
Durango, Durango, Mexico
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(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F. Form 20-F [x] Form 40-F
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934. Yes No [x]
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82-_____________.
CORPORACION DURANGO, S.A. DE C.V.
INDIVIDUAL BALANCE SHEETS
AS OF DECEMBER 31, 2005 AND MARCH 31, 2006 (UNAUDITED)
EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS
AS OF MARCH 31, 2006
(Stated in thousands of Pesos and Dollars)
US$ DLLS.
December 31, Mar 31, Mar 31,
2005 2006 2006
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ........................$ 293,774$ 33,921 3,114
Due from related parties ......................... 97,820 307,958 28,270
Taxes recoverable and other assets ............... 43,222 51,812 4,756
Total current assets ................... 434,816 393,691 36,140
LONG-TERM RELATED PARTIES .......................... 8,735,073 9,101,617 835,509
INVESTMENT IN SUBSIDIARIES ......................... 3,472,776 3,419,877 313,937
OTHER ASSETS, net .................................. 31,454 28,320 2,600
Total assets ..........................$ 12,674,119$ 12,943,505 1,188,186
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank loans and current portion of long-term debt . 149,476 151,812 13,936
Interest payable ................................. 234 247 23
Trade accounts payable ........................... 877 157 14
Accrued liabilities .............................. 209,569 201,863 18,531
Total current liabilities ............. 360,156 354,079 32,504
LONG-TERM DEBT ..................................... 5,686,381 5,737,305 526,672
LONG-TERM RELATED PARTIES .......................... 1,915,889 2,138,446 196,305
Total long term liabilities ............ 7,602,270 7,875,751 722,977
Total liabilities ..................... 7,962,426 8,229,830 755,481
STOCKHOLDERS' EQUITY:
Total stockholders' equity ............. 4,711,693 4,713,675 432,705
Total liabilities and stockholders' equi$ 12,674,119$ 12,943,505 1,188,186
Exchange rate: $ 10.8935
CORPORACION DURANGO, S.A. DE C.V.
INDIVIDUAL STATEMENT OF CHANGES IN FINANCIAL POSITION (UNAUDITED)
EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS
AS OF MARCH 31, 2006
(Stated in thousands of Pesos and Dollars)
*
Full Year Acum. Mar Acum. Mar
2005 2006 US$ 2006
OPERATING ACTIVITIES:
Net income (loss) ..............................................$ 180,707$ -110,824 -10,173
Add (deduct)- Charges (credits) to income which do
not require (generate) resources:
Depreciation and amortization ........................... 10,369 0 0
Loss in subsidiaries .................................... 891,572 146,710 13,468
Deferred income taxes ................................... 319,794 22,245 2,042
Other.................................................... 0 0 0
Total items which do not require cash.................... 1,221,735 168,955 15,510
Net resources generated from income .......................... 1,402,442 58,131 5,336
Changes in operating assets and liabilities:
Decrease (Increase) in inventories ......................... 4,330 0 0
Decrease (Increase) in current assets ...................... 36,385 -8,590 -789
Decrease (increase) in account receivables, net ............ -52,783 -210,138 -19,290
(Decrease) increase in accounts payable and
accrued liabilities ...................................... 4,537 -8,413 -772
Resources generated by operating activities .................. 1,394,911 -169,010 -15,515
FINANCING ACTIVITIES:
Increase (Decrease) in bank loans and others ............ -4,109,387 -90,843 -8,339
Increase (Decrease) in capital .......................... 293,227 0 0
Gain on shares acquisition .............................. 2,999,298 0 0
Net resources generated from financing activities ............ -816,862 -90,843 -8,339
INVESTMENT ACTIVITIES:
Acquisition and sale of property, plant and equipment.... 399,560 0 0
Investment in subsidiaries .............................. -691,124 0 0
Net resources applied to investing activities ................ -291,564 0 0
INCREASE IN CASH AND CASH EQUIVALENTS .......................... 286,485 -259,853 -23,854
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD............ 7,289 293,774 26,968
CASH & CASH EQUIVALENTS AT END OF THE PERIOD ...................$ 293,774$ 33,921US 3,114
* The exchange rate of 10.8935 was used for translation purposes.
CORPORACION DURANGO, S.A. DE C.V.
INDIVIDUAL STATEMENTS OF INCOME (UNAUDITED)
EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS
AS OF MARCH 31, 2006
Thousands of Pesos Thousands of Dollars
1Q 1Q 1Q 1Q
2005 2006 Var 2005 2006 Var
Gain (Loss) in subsidiaries .............$ -1,082,14$ -146,710 -86% -93,597 -13,466 -86%
Selling and Administrative expenses ..... 1,441 1,335 -7% 125 123 -2%
Operating income ................... -1,083,58 -148,045 -86% -93,722 -13,589 -86%
FINANCIAL EXPENSE:
Interest expense ........................ 127,402 174,423 37% 11,021 16,012 45%
Interest income ......................... -1,257,942 -190,847 -85% -108,823 -17,519 -84%
Exchange (gain) loss, net ............... -2,167 412 N/A -188 38 N/A
Gain on monetary position ............... -29,201 10,268 N/A -2,526 943 N/A
Total financial expense ............... -1,161,90 -5,744 -100% -100,516 -526 -99%
OTHER INCOME (EXPENSES):
Other income (expense), net ............. -69,744 53,722 N/A -6,034 4,932 N/A
Total other income (expense) .......... -69,744 53,722 N/A -6,034 4,932 N/A
Income (loss) before income and asset t 8,581 -88,579 N/A 760 -8,131 N/A
Provision for deferred income taxes ..... 82,193 22,245 -73% 7,110 2,042 -71%
Net income ..............................$ -73,612$ -110,824 51% -6,350 -10,173 60%
CORPORACION DURANGO, S.A. DE C.V.
COMPLEMENTARY NOTES TO THE FINANCIAL INFORMATION
SUMMARY OF SIGNIFICANT ACCOUNTING AND FINANCIAL POLICIES:
FOLLOWING IS A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOLLOWED BY THE
COMPANY IN THE PREPARATION OF THE UNCONSOLIDATED FINANCIAL STATEMENTS.
1.1 BASIS OF PRESENTATION:
THE UNCONSOLIDATED FINANCIAL STATEMENTS HAVE BEEN PREPARED IN ACCORDANCE
WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN MEXICO ("MEXICAN GAAP")
ISSUED BY THE MEXICAN INSTITUTE OF PUBLIC ACCOUNTANTS ("MIPA").
AS OF JUNE 1, 2004, THE MEXICAN COUNSEL FOR INVESTIGATION AND DEVELOPMENT
OF FINANCIAL INFORMATION STANDARDS (CIFIS) TOOK THE RESPONSIBILITY OF THE
MEXICAN ACCOUNTING ISSUE. AS PART OF THIS RESPONSIBILITY AND AFTER AN
AUSCULTATION PROCESS DURING 2004 AND 2005, THE CIFIS ISSUED SEVERAL
FINANCIAL INFORMATION STANDARDS (FIS),THAT CAME INTO FORCE AS OF JANUARY 1,
2006.
THE OBJECTIVE OF THE FIS IS TO OBTAIN A MATCH BETWEEN THE LOCAL STANDARDS
USED BY ALL THE ECONOMIC ENTITIES OF OUR ECONOMY AND THE FINANCIAL
INFORMATION INTERNATIONAL STANDARDS (FIIS).
THE STRUCTURE OF THE FIS, FORCED AS OF JANUARY 1ST, 2006, IS AS FOLLOWS:
FIS'S AND FIS INTERPRETATION ISSUED BY THE CIFIS.
THE STATEMENTS ISSUED BY THE ACCOUNTING PRINCIPLES COMMISSION ("APC") OF
THE MEXICAN INSTITUTE OF PUBLIC ACCOUNTANTS ("MIPA") THAT ARE NOT MODIFIED,
SUBSTITUTED OR DEROGATED BY THE NEW FIS'S.
THE FIIS APPLIED AS A SUPPLEMENTARY.
THE STATEMENTS OF THE ACCOUNTING PRINCIPLES COMMISSION ("APC"), WILL BE
RECOMMENDATIONS AND PART OF THE FIS AS LONG AS THEY MAINTAIN ITS FUNCTION,
UNLESS THEY ARE DEROGATED OR ARE INCLUDED WITHIN A FIS.
THE FIS WITH NO SUBSTANTIAL EFFECT IN THE FINANCIAL INFORMATION ARE LISTED
BELOW:
FIS A-1 "FINANCIAL INFORMATION STANDARDS STRUCTURE".
FIS A-2 "BASIC POSTULATES".
FIS A-3 "USERS REQUIREMENTS AND FINANCIAL STATEMENTS OBJECTIVES".
FIS A-4 "FINANCIAL STATEMENTS QUALITATIVE CHARACTERISTICS".
FIS A-5 "FINANCIAL STATEMENTS BASIC ELEMENTS".
FIS A-6 "ACKNOWLEDGEMENT AND VALUATION".
FIS A-7 "PRESENTATION AND REVELATION".
FIS A-8 "SUPPLEMENTARIES".
FIS B-1 "ACCOUNTING CHANGES AND ERROR CORRECTIONS".
1.2 BASIS FOR COMPARISSON EFFECTS IN THE FINANCIAL STATEMENTS:
THE CONSOLIDATED FINANCIAL STATEMENTS HAVE BEEN PREPARED IN ACCORDANCE WITH
MEXICAN GAAP AND REFLECT THE PURCHASING POWER OF THE MEXICAN PESO AS OF THE
MOST RECENT REPORTING DATE. FOR COMPARISON PURPOSES, CONSOLIDATED FINANCIAL
STATEMENTS OF PRIOR YEARS HAVE ALSO BEEN RESTATED TO REFLECT IDENTICAL
PURCHASING POWER, USING FACTORS DERIVED FROM CHANGES IN THE NCPI ISSUED BY
BANCO DE MEXICO.
1.3 INVESTMENTS IN SUBSIDIARIES:
INVESTMENTS IN AFFILIATED AND ASSOCIATED COMPANIES STOCKS ARE VALUED BY THE
PARTICIPATION METHOD. THE ACQUISITION COST OF THE STOCKS IS MODIFIED BY THE
PROPORTIONAL PART OF THE CHANGES IN THE CAPITAL STOCK OF AFFILIATED AND
ASSOCIATED COMPANIES AFTER THE ACQUISITION DATE. PARTICIPATION OF THE COMPANY
IN THE AFFILIATED AND ASSOCIATED COMPANIES' INCOME IS PRESENTED SEPARATELY
IN THE STATEMENTS OF OPERATIONS.
1.4 FINANCIAL INSTRUMENTS:
FINANCIAL INSTRUMENTS HELD FOR TRADING OR AVAILABLE FOR SALE ARE VALUED AT
FAIR VALUE (WHICH IS SIMILAR TO MARKET VALUE) WITH GAINS OR LOSSES RECOGNIZED
IN THE STATEMENT OF OPERATIONS. FAIR VALUE IS THE AMOUNT FOR WHICH A
FINANCIAL ASSET CAN BE EXCHANGED OR A FINANCIAL LIABILITY CAN BE PAID IN AN
ARM'S-LENGTH TRANSACTION BETWEEN INTERESTED AND WILLING PARTIES.
1.5 RIGHTS AND LIABILITIES VALUATION IN FOREIGN CURRENCY:
FOREIGN CURRENCY TRANSACTIONS ARE RECORDED AT THE APPLICABLE EXCHANGE RATE
IN EFFECT AT THE TRANSACTION DATE. MONETARY ASSETS AND LIABILITIES
DENOMINATED IN FOREIGN CURRENCY ARE TRANSLATED INTO MEXICAN PESOS AT THE
APPLICABLE EXCHANGE RATE IN EFFECT AT THE BALANCE SHEET DATE. DIFFERENCES
DUE TO EXCHANGE RATE FLUCTUATIONS FROM TRANSACTIONS AND PAYMENT DATES OR
VALUATIONS AS OF THE MOST RECENT BALANCE SHEET DATE ARE RECOGNIZED IN INCOME.
EXCHANGE RATE AS OF MARCH 31st.,2006 WAS $10.8935.
STOCK INVESTMENT:
THE INVESTMENT IN SUBSIDIARIES' STOCK IS PRESENTED VALUED UNDER THE EQUITY
METHOD, TO FULFILL THE LEGAL DISPOSITIONS REQUIRING THE PRESENTATION OF
"CODUSA'S" FINANCIAL STATEMENTS AS A LEGAL ENTITY. MOST SIGNIFICANT
SUBSIDIARIES ARE AS FOLLOWS:
GROUP (OR COMPANY) OWNERSHIP PERCENTAGE ACTIVITY
INDUSTRIAS CENTAURO, S.A. DE C.V. 99% MANUFACTURING OF PAPER FOR
CORRUGATED BOXES
COMPANIA PAPELERA DE ATENQUIQUE, 98% MANUFACTURING OF PAPER FOR
S.A. DE C.V. CORRUGATED BOXES
DURANGO INTERNATIONAL, INC. 100% MANUFACTURING OF PAPER FOR
CORRUGATED BOXES AND
CORRUGATED BOXES
EMPAQUES DE CARTON TITAN, 100% MANUFACTURING OF CORRUGATED
S.A. DE C.V. BOXES AND MULTI-WALL SACKS
GRUPO PIPSAMEX, S.A. DE C.V. 100% MANUFACTURING OF NEWSPRINT
AND BOND PAPER
DURANGO INTERNACIONAL, S.A. DE C.V. 100% ADVISORY, ADMINISTRATIVE
AND ORGANIZATION SERVICES
PORTEADORES DE DURANGO, S.A. DE 100% HAULING FREIGHT
C.V.
ADMINISTRACION CORPORATIVA DE 100% ADMINISTRATIVE SERVICES
DURANGO, S.A. DE C.V.
PONDEROSA INDUSTRIAL DE MEXICO, 100% MANUFACTURING OF PLYWOOD
S.A. DE C.V.
COMPANIA FORESTAL DE DURANGO, 100% ADMINISTRATIVE SERVICES
S.A. DE C.V.
STOCKHOLDERS' EQUITY:
CAPITAL STOCK, STOCK SALE PREMIUM, STATUTORY LEGAL RESERVE AND RETAINED
EARNINGS, INCLUDE THE RESTATED EFFECT, ACCORDING WITH THE NATIONAL
CONSUMER PRICE INDEX (NCPI) FROM THE DATE THE CAPITAL WAS CONTRIBUTED
AND FROM THE YEAR THE RESULTS AND PREMIUMS WERE DETERMINED RESPECTIVELY.
THE RESTATED AMOUNTS REPRESENT THE REQUIRED AMOUNT TO MAINTAIN THE
CONTRIBUTIONS AND ACCUMULATED RESULTS IN CONSTANT PESOS AS OF SEPTEMBER
30st,2005.
FIXED AND VARIABLE EQUITY COMPONENTS:
AMOUNT NUMBER OF SHARES
FIXED PORTION 982,074 65,419,089
VARIABLE PORTION 678,873 45,222,022
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1,660,947 110,641,111
DEFERRED TAXES:
AS OF JANUARY 1st.,2000, WITH THE ISSUANCE OF BULLETIN D-4 ("DEFERRED
TAXES") THE COMPANY RECOGNIZED TO THAT DATE (JANUARY 1st.,2000) THE
INITIAL EFFECT OF DEFERRED TAXES DERIVED FROM TEMPORARY DIFFERENCES AS
A GAIN OR A LOSS,IN SUBSECUENT PERIODS THE COMPANY IS IN COMPLIANCE
WITH THE BULLETIN.
IN ORDER TO RECOGNIZE THE DEFERRED INCOME TAX, THE HOLDING COMPANY AND
ITS SUBSIDIARIES USE THE INTEGRAL ASSETS AND LIABILITIES METHOD, WHICH
CALCULATES SUCH TAX, USING THE APPLICABLE STATUTORY TAX RATE TO THE
TEMPORARY DIFFERENCES BETWEEN BOOK AND TAX VALUES OF THE ASSETS AND
LIABILITIES AS OF THE END OF THE PERIOD.
INTERNAL CONTROL:
THE COMPANY HAS STARTED IMPLEMENTATION OF THE SARBANES OXLEY ACT
WITH ADVISE FROM EXPERT ADVISORS.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized. CORPORACION DURANGO, S.A. DE C.V.
Date: May 22, 2006 By /s/ Mayela Rincon de Velasco
--------------------------------
Name: Mayela Rincon de Velasco
Title: Chief Financial Officer