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 May, 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 AND REPORTING GUARANTOR GROUP
PARTIALLY CONSOLIDATED CONDENSED BALANCE SHEETS
AS OF DECEMBER 31, 2006 AND MARCH 31, 2007 (UNAUDITED)
EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS
AS OF MARCH 31, 2007
(Stated in thousands of Pesos and Dollars)
US$ DLLS.
December 31, Mar 31, Mar 31,
2006 2007 2007
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ........................$ 346,819$ 262,636 23,806
Accounts receivable, net ......................... 1,376,483 1,426,071 129,264
Other assets ..................................... 2,178 2,156 195
Inventories, net ................................. 874,321 898,134 81,410
Prepaid expenses ................................. 15,721 13,321 1,207
Total current assets ................... 2,615,522 2,602,318 235,884
LONG-TERM RELATED PARTIES .......................... 26,189 16,940 1,536
PROPERTY, PLANT AND EQUIPMENT, net ................. 7,367,475 7,421,824 672,742
INVESTMENT IN SUBSIDIARIES ......................... 3,897,416 3,762,290 341,028
OTHER ASSETS, net .................................. 207,630 206,483 18,716
Total assets ..........................$ 14,114,232$ 14,009,855 1,269,906
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank loans and current portion of long-term debt . 171,201 172,950 15,677
Interest payable ................................. 1,959 676 61
Trade accounts payable ........................... 448,117 434,384 39,374
Notes payable .................................... 45,310 47,529 4,308
Accrued liabilities .............................. 507,211 501,983 45,502
Employee profit-sharing .......................... 886 876 79
Total current liabilities ............. 1,174,684 1,158,398 105,002
LONG-TERM DEBT ..................................... 5,607,252 5,506,290 499,111
LONG-TERM RELATED PARTIES .......................... 650,118 614,510 55,701
LONG-TERM NOTES PAYABLE ............................ 122,864 142,253 12,894
DEFERRED TAXES...................................... 1,388,370 1,412,415 128,027
LIABILITY FOR EMPLOYEE BENEFITS..................... 303,002 301,056 27,289
Total long term liabilities ............ 8,071,606 7,976,524 723,022
Total liabilities ..................... 9,246,290 9,134,922 828,024
STOCKHOLDERS' EQUITY:
Majority interest ................................ 4,846,732 4,847,218 439,370
Minority interest ................................ 21,210 27,715 2,512
Total stockholders' equity ............. 4,867,942 4,874,933 441,882
Total liabilities and stockholders' equi$ 14,114,232$ 14,009,855 1,269,906
Exchange rate: $ 11.0322
CORPORACION DURANGO AND REPORTING GUARANTOR GROUP
PARTIALLY CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN FINANCIAL POSITION (UNAUDITED)
EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS
AS OF MARCH 31, 2007
(Stated in thousands of Pesos and Dollars)
*
Full Year Acum. Mar Acum. Mar
2006 2007 US$ 2007
OPERATING ACTIVITIES:
Net income (loss) ..............................................$ -69,905$ -17,947 -1,627
Add (deduct)- Charges (credits) to income which do
not require (generate) resources:
Loss (Gain) in subsidiaries ............................. -219,211 1,035 94
Depreciation and amortization ........................... 258,955 69,918 6,338
Impairment of long-lived assets ......................... 229,807 0 0
Deferred income taxes ................................... 186,226 15,967 1,447
Other.................................................... 42,528 10,997 997
Total items which do not require cash.................... 498,305 97,917 8,876
Net resources generated from income .......................... 428,400 79,970 7,249
Changes in operating assets and liabilities:
Decrease (Increase) in inventories ......................... -44,739 -23,813 -2,158
Decrease (Increase) in current assets ...................... 55,788 -14,270 -1,293
Decrease (increase) in account receivables, net ............ -239,726 -32,896 -2,982
(Decrease) increase in accounts payable and
accrued liabilities ...................................... 267,471 -18,035 -1,635
Resources generated by operating activities .................. 467,194 -9,044 -820
FINANCING ACTIVITIES:
Increase (Decrease) in bank loans and others ............ -392,133 -37,625 -3,410
Net resources generated from financing activities ............ -385,296 -37,625 -3,410
INVESTMENT ACTIVITIES:
Acquisition and sale of property, plant and equipment.... -221,141 -33,854 -3,069
Investment in subsidiaries .............................. 1,046 0 0
Increase in deferred assets ............................. -41,722 -3,660 -332
Net resources applied to investing activities ................ -261,817 -37,514 -3,400
INCREASE IN CASH AND CASH EQUIVALENTS .......................... -179,919 -84,183 -7,631
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD............ 526,738 346,819 31,437
CASH & CASH EQUIVALENTS AT END OF THE PERIOD ...................$ 346,819$ 262,636US 23,806
* The exchange rate of 11.0322 was used for translation purposes.
CORPORACION DURANGO AND REPORTING GUARANTOR GROUP
PARTIALLY CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS
AS OF MARCH 31, 2007
Thousands of Pesos Thousands of Dollars
1Q 1Q 1Q 1Q
2006 2007 Var 2006 2007 Var
NET SALES ...............................$ 1,190,190$ 1,383,436 16% 104,853 125,400 20%
COST OF SALES ........................... 955,397 1,089,266 14% 84,168 98,735 17%
Gross profit........................ 234,793 294,170 25% 20,685 26,665 29%
Selling and Administrative expenses 111,942 120,294 7% 9,862 10,904 11%
Operating income ................... 122,851 173,876 42% 10,823 15,761 46%
FINANCIAL EXPENSE:
Interest expense ........................ 166,191 180,076 8% 14,641 16,323 11%
Interest income ......................... -14,509 -13,899 -4% -1,278 -1,260 -1%
Exchange (gain) loss, net ............... 176,580 153,215 -13% 15,557 13,888 -11%
Gain on monetary position ............... -55,159 -77,212 40% -4,859 -6,999 44%
Total financial expense ............... 273,103 242,180 -11% 24,061 21,952 -9%
OTHER INCOME (EXPENSES):
Other income (expense), net ............. 55,084 67,359 22% 4,853 6,106 26%
Total other income (expense) .......... 55,084 67,359 22% 4,853 6,106 26%
Income (loss) before income and asset t -95,168 -945 -99% -8,385 -85 -99%
Provisions for income and asset taxes ... 1,258 0 -100% 111 0 -100%
Provision for deferred income taxes ..... -127 15,967 N/A -11 1,447 N/A
Net income after taxes ................ -96,299 -16,912 -82% -8,485 -1,532 -82%
Loss (Gain) in subsidiaries ............. 19,285 1,035 N/A 1,695 94 N/A
Net income before minority interest......$ -115,584$ -17,947 -84% -10,180 -1,626 -84%
Minority interest...................... -79 21,793 N/A -7 1,975 N/A
Majority net income....................$ -115,505$ -39,740 -66% -10,173 -3,601 -65%
CORPORACION DURANGO, S.A.B. DE C.V. AND REPORTING GUARANTOR
GROUP
COMPLEMENTARY NOTES TO THE FINANCIAL INFORMATION
THE ENTITY:
CORPORACION DURANGO, S. A. B. DE C. V. ("CODUSA") AND
SUBSIDIARIES (COLLECTIVELY, THE "COMPANY") ARE PRIMARILY
ENGAGED IN THE MANUFACTURING AND SELLING OF PACKAGING
(CORRUGATED BOXES AND MULTI-WALL SACKS), PAPER
(CONTAINERBOARD, NEWSPRINT AND BOND) AND OTHER WOOD PRODUCTS
(PLYWOOD) IN MEXICO AND IN THE UNITED STATES OF AMERICA.
ON DECEMBER 8, 2006, THE BOARD OF DIRECTOR'S DECIDED TO
MODIFY THE SOCIAL DENOMINATION OF COPORACION DURANGO, S. A.
DE C. V. TO CORPORACION DURANGO, S. A. B. DE C. V.; ALSO,
THEY MODIFIED ITS SOCIAL STATUTES TO REFLECT THE NEW
INTEGRATION, ORGANIZATION AND OPERATION OF ITS SOCIAL ORGANS
AND THE NEW RIGHTS OF THE MINORITY STOCKHOLDERS, IN
ACCORDANCE TO MEXICAN LAW OF STOCK MARKET, PUBLISHED ON
DECEMBER 30, 2005.
SUMMARY OF SIGNIFICANT ACCOUNTING AND FINANCIAL POLICIES:
FOLLOWING IS A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FOLLOWED BY THE COMPANY IN THE PREPARATION OF THE
PARTIALLY - CONSOLIDATED FINANCIAL STATEMENTS.
1.1 CONSOLIDATION BASIS:
THE PARTIALLY - CONSOLIDATED FINANCIAL STATEMENTS INCLUDE
THE FINANCIAL STATEMENTS OF CORPORACION DURANGO, S.A.B. DE
C.V. AND THE FOLLOWING SUBSIDIARIES:
ADMINISTRACION CORPORATIVA DE DURANGO, S.A. DE C.V.
EMPAQUES DE CARTON TITAN, S.A. DE C.V.
PONDEROSA INDUSTRIAL DE MEXICO, S.A. DE C.V.
ALL SIGNIFICANT INTERCOMPANY BALANCES AND TRANSACTIONS HAVE
BEEN ELIMINATED FOR CONSOLIDATION PURPOSES. THE PARTIALLY -
CONSOLIDATED FINANCIAL STATEMENTS INCLUDE THE ASSETS,
LIABILITIES AND INCOME OR LOSS OF THE PARENT COMPANY AND THE
SUBSIDIARIES WITH MORE THAN 50% OF OWNERSHIP.
BEGINNING JANUARY 1, 2007, THE DISPOSITIONS OF THE FOLLOWING
MEXICAN FINANCIAL REPORTING STANDARDS (NIFS) ISSUED BY THE
MEXICAN FINANCIAL REPORTING STANDARDS BOARD (CINIF) BECAME
EFFECTIVE. THESE DISPOSITIONS WILL NOT HAVE A SIGNIFICANT
IMPACT ON THE FINANCIAL INFORMATION:
NIF B-3 "INCOME STATEMENT' - INCORPORATES, AMONG OTHERS, A
NEW APPROACH TO CLASSIFY INCOME COSTS AND EXPENSES IN
ORDINARY AND NON-ORDINARY, ELIMINATES SPECIAL AND
EXTRAORDINARY ITEMS AND ESTABLISHES EMPLOYEES' PROFIT
SHARING AS ON ORDINARY EXPENSE AND NOT AS A PROFIT TAX.
NIF B-13 "SUBSEQUENT EVENTS" - REQUIRES, AMONG OTHERS,
RECOGNITION OF ASSETS AND LIABILITIES RESTRUCTURING IN THE
PERIODS IN WHICH THEY ACTUALLY TAKE PLACE AND THE
RECOGNITION OF CREDITORS' WAIVERS TO ENFORCE THEIR RIGHT TO
DEMAND DEBTS IN THE EVENT OF LACK OF COMPLIANCE OF THE
ENTITY WITH DEBT AGREEMENT COMMITMENTS. THESE ISSUES WILL
ONLY BE DISCLOSED IN THE NOTES TO THE FINANCIAL STATEMENTS.
NIF C-13 "RELATED PARTIES" - EXTENDS, AMONG OTHERS, THE
DEFINITION (SCOPE) OF THE RELATED PARTIES' CONCEPT AND
INCREASES THE DISCLOSURE REQUIREMENTS IN THE NOTES TO THE
FINANCIAL STATEMENTS.
NIF D-6 "CAPITALIZATION OF THE FINANCING INTEGRAL RESULT" -
ESTABLISHES, AMONG OTHERS, THE OBLIGATION OF CAPITALIZATION
OF THE FINANCING INTEGRAL RESULT AND THE RULES FOR ITS
CAPITALIZATION.
1.2 BASIS FOR COMPARISSON EFFECTS IN THE FINANCIAL
STATEMENTS:
A) THE PARTIALLY CONSOLIDATED FINANCIAL STATEMENTS HAVE
BEEN PREPARED IN ACCORDANCE WITH THE MEXICAN FINANCIAL
REPORTING STANDARDS ("NIFS"), ISSUED BY THE MEXICAN
BOARD FOR RESEARCH AND DEVELOPMENT OR FINANCIAL
REPORTING STANDARDS ("CINIF").
B) FOR COMPARATIVE PURPOSES UNCONSOLIDATED FINANCIAL
STATEMENTS OF PRIOR YEARS HAVE ALSO BEEN RESTATED TO
REFLECT IDENTICAL PURCHASING POWER, USING FACTORS
DERIVED FROM CHANGES IN THE NATIONAL CONSUMER PRODUCTS
INDEX ("NCPI") ISSUED BY BANCO DE MEXICO.
1.3 VALUATION OF TEMPORARY INVESTMENTS:
THESE INVESTMENTS ARE REALIZABLE WITHIN THREE MONTHS AND ARE
VALUED AT MARKET PRICE. THE INCOME OR LOSS GENERATED IS
INCLUDED IN THE STATEMENTS OF OPERATIONS.
1.4 RIGHTS AND LIABILITIES VALUATION IN FOREIGN CURRENCY:
ASSETS AND LIABILITIES IN FOREIGN CURRENCY, MAINLY IN
AMERICAN DOLLARS, ARE EXPRESSED IN MEXICAN PESOS AT THE
CLOSING OF THE YEAR`S EXCHANGE RATE.
THE EXCHANGE RATE ON MARCH 31st, 2007 WAS $11.0322.
1.5 INVENTORY VALUATION:
INVENTORIES AND COST OF SALES ARE STATED USING THE AVERAGE
COST METHOD AND ARE LATER RESTATED USING FACTORS DERIVED
FROM CHANGES IN THE NCPI AT ITS REPOSITION COST BASED ON THE
MOST RECENT PURCHASE PRICE OR PRODUCTION COST. THE VALUE
SHOULD NOT EXCEED ITS MARKET VALUE.
PROPERTY, PLANT AND EQUIPMENT:
PROPERTY, PLANT AND EQUIPMENT OF MEXICAN ORIGIN ARE RECORDED
AT ACQUISITION COST AND ARE RESTATED TO REFLECT MEXICAN
PESOS OF CONSTANT PURCHASING POWER USING FACTORS DERIVED
FROM CHANGES IN THE NATIONAL CONSUMER PRICE INDEX (NCPI).
MACHINERY AND EQUIPMENT OF NON-MEXICAN ORIGIN ARE RECORDED
AT ACQUISITION COST AND THE ACQUISITION COST IS RESTATED TO
CONSTANT CURRENCY USING THE INFLATION OF THE COUNTRY OF
ORIGIN, THEN CONVERTED INTO MEXICAN PESOS AT THE EXCHANGE
RATE IN EFFECT AT THE BALANCE SHEET DATE.
DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT, IS CALCULATED
BASED ON UNITS PRODUCED IN THE PERIOD IN RELATION TO THE
TOTAL ESTIMATED PRODUCTION OF THE ASSETS OVER THEIR SERVICE
LIVES. ASSETS ARE DEPRECIATED AS FOLLOWS:
YEARS
BUILDINGS 25-50
MACHINERY & EQUIPMENT 23-40
OFFICE EQUIPMENTS 5-10
TRANSPORTATION EQUIPMENT 1-5
COMPUTER EQUIPMENT 1-3
THESE ASSETS ARE EVALUATED ANNUALLY FOR POTENTIAL
IMPAIRMENT.
RECURRING MAINTENANCE AND REPAIR EXPENDITURES ARE CHERGED TO
OPERATING EXPENSES AS INCURRED. MAJOR OVERHAULS TO FIXED
ASSETS ARE CAPITALIZED AND AMORTIZED OVER THE PERIOD IN
WHICH BENEFITS ARE EXPECTED TO BE RECEIVED.
NET COMPREHENSIVE FINANCING COST INCURRED DURING THE PERIOD
OF CONSTRUCTION AND INSTALLATION OF PROPERTY, PLANT AND
EQUIPMENT IS CAPITALIZED AND RESTATED APPLIYING FACTORS
DERIVED FROM CHANGES IN THE NCPI.
LABOR OBLIGATIONS:
AS OF JANUARY 1, 2005, THE COMPANY ADOPTED AMENDMENTS TO
STATEMENT D-3, "LABOR OBLIGATIONS", WHICH, ESTABLISHES RULES
FOR ESTIMATING AND RECORDING LIABILITIES RELATED TO
SEVERANCE PAYMENTS DUE TO EMPLOYEES UPON DISMISSAL FOR
CAUSES OTHER THAN FINANCIAL RESTRUCTURING. THESES EFFECTS
ARE RECOGNIZED THROUGH ACTUARIAL CALCULATIONS USING THE
PROJECTED CREDIT UNIT METHOD.
OTHER COMPENSATION BASED ON SENORITY TO WHICH EMPLOYEES ARE
ENTITLED IN THE EVENT OF DISMISSAL OR DEATH, IN ACCORDANCE
WITH THE MEXICAN FEDERAL LABOR LAW, ARE CHARGED TO INCOME IN
THE YEAR IN WHICH THEY BECOME PAYABLE.
STOCKHOLDERS' EQUITY:
COMMON STOCK, LEGAL RESERVE, PREMIUM IN ISSUANCE OF SHARES
AND RETAINED EARNINGS REPRESENT THE VALUE OF THOSE ITEMS IN
TERMS OF PURCHASING POWER OF THE MEXICAN PESO AS OF THE
MOEST RECENT BALANCE SHEET DATE, AND ARE DETERMINED BY
APPLYING FACOTRS DERIVED FROM THE NCPI TO THE HISTORICAL
VALUES.
SHARES OF COMMON STOCK AT PAR VALUE, ARE COMPRISED AS
FOLLOWS:
AMOUNT NUMBER OF SHARES
FIXED PORTION 982,074 65,419,089
VARIABLE PORTION 678,873 45,222,022
---------- ------------
1,660,947 110,641,111
INCOME TAX:
INCOME TAX IS RECORDED BY THE COMPREHENSIVE METHOD OF ASSETS
AND LIABILITIES, WHICH CONSISTS OF RECORDING DEFERRED TAX
FOR ALL TEMPORARY DIFFERENCES BETWEEN THE BOOK AND TAX
VALUES AF ASSETS AND LIABILITIES.
BUSINESS SEGMENTS INFORMATION:
THE PROVISIONS CONTAINED IN STATEMENT B-5, "FINANCIAL
INFORMATION BY SEGMENT", ISSUED BY MIPA ARE MANDATORY FOR
PUBLIC ENTITIES LISTED ON THE MEXICAN STOCK EXCHANGE.
STATEMENT B-5 REQUIRES THAT COMPANIES LOOK TO THEIR INTERNAL
ORGANIZATIONAL STRUCTURE AND INTERNAL REPORTING SYSTEM FOR
PURPOSES OF IDENTIFYING SEGMENTS.
THE COMPANY OPERATES THE FOLLOWING BUSINESS SEGMENTS:
1. PACKAGING. THIS SEGMENT INCLUDES THE PRODUCTION AND SALES
OF CORRUGATED CONTAINERS, MULTI-WALL SACKS AND PAPER TUBES.
2. PAPER. THIS SEGMENT INCLUDES THE PRODUCTION AND SALES OF
CONTAINERBOARD (LINERBOARD AND CORRUGATING MEDIUM).
3. OTHER. THIS SEGMENT INCLUDES THE PRODUCTION AND SALE OF
PLYWOOD.
AS OF MARCH 31st., 2007 AND 2006, THE SEGMENT INFORMATION IS
PRESENTED AS FOLLOWS:
ACQUISITION
AND SALE OF
TOTAL PROPERTY, PLANT SEGMENT
2007 INCOME AND EQUIPMENT ASSETS
------ --------- ---------------- -----------
---
PACKAGING 1,330,210 32,222 21,119,746
PAPER 460,215 1,566 10,029,509
OTHERS 46,008 66 482,314
ELIMINATONS (452,997) (17,621,714)
---------- ------------ -----------
TOTAL 1,383,436 33,854 14,009,855
========== ============ ==============
ACQUISITION
AND SALE OF
TOTAL PROPERTY, PLANT SEGMENT
2006 INCOME AND EQUIPMENT ASSETS
------ --------- ---------------- ------------
--
PACKAGING 1,075,275 25,269 29,645,623
PAPER 719,652 15,139 9,107,074
OTHERS 29,200 122,884 1,205,149
ELIMINATIONS (633,937) (25,726,392)
---------- ------------ ------------
TOTAL 1,190,190 163,292 14,231,454
========== ============ ==============
THE FINANCIAL INFORMATION PRESENTED ABOVE IS USED IN THE
DECISITION MAKING PROCESS BY THE COMPANY.
INTERNAL CONTROL:
THE COMPANY HAS STARTED IMPLEMENTATION ON THE SARBANES OXLEY
ACT WITH THE ADVISE OF 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 18, 2007 By /s/ Mayela Rincon de Velasco
--------------------------------
Name: Mayela Rincon de Velasco
Title: Chief Financial Officer