CORPORACION DURANGO, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
AS OF DECEMBER 31, 2003 AND DECEMBER 31, 2004 (UNAUDITED)
EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS
AS OF DECEMBER 31, 2004
(Stated in thousands of Pesos and Dollars)
 
 US$ DLLS.
 December 31,December 31,December 31,
 2003 2004 2004
 
 ASSETS
CURRENT ASSETS:
 Cash and cash equivalents ........................$ 684,081$ 840,524 75,387
 Accounts receivable, net ......................... 1,864,337 1,727,129 154,906
 Taxes recoverable and other assets ............... 98,039 103,124 9,249
 Inventories, net ................................. 1,174,115 1,107,293 99,313
 Prepaid expenses ................................. 23,841 13,689 1,228
 Total current assets ................... 3,844,413 3,791,759 340,083
RESTRICTED CASH .................................... 165,678 0 0
PROPERTY, PLANT AND EQUIPMENT, net ................. 12,636,639 11,746,404 1,053,536
OTHER ASSETS, net .................................. 567,986 388,091 34,808
 Total assets ..........................$ 17,214,716$ 15,926,254 1,428,428
 
 LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
 Bank loans and current portion of long-term debt . 9,136,178 199,480 17,891
 Interest payable ................................. 1,464,725 17,344 1,556
 Trade accounts payable ........................... 993,715 791,466 70,987
 Notes payable .................................... 54,471 48,818 4,378
 Accrued liabilities .............................. 487,512 764,328 68,553
 Employee profit-sharing .......................... 2,537 1,283 115
 Total current liabilities ............. 12,139,138 1,822,719 163,480
LONG-TERM DEBT ..................................... 532,845 7,047,925  632,129
LIABILITY FOR CAPITALIZATION........................ 0 3,158,973 283,329
LONG-TERM NOTES PAYABLE ............................ 104,965 88,942 7,977
DEFERRED TAXES...................................... 2,246,103 1,629,957 146,191
LIABILITY FOR EMPLOYEE BENEFITS..................... 210,896 306,582 27,497
 Total long term liabilities ............ 3,094,809 12,232,379 1,097,124
 Total liabilities ..................... 15,233,947 14,055,098 1,260,603
STOCKHOLDERS' EQUITY:
 Majority interest ................................ 1,909,475 1,798,020 161,265
 Minority interest ................................ 71,294 73,136 6,560
 Total stockholders' equity ............. 1,980,769 1,871,156 167,824
 Total liabilities and stockholders' equi$ 17,214,716$ 15,926,254 1,428,428
 
 Exchange rate: $ 11.1495
 
CORPORACION DURANGO, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN FINANCIAL POSITION
EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS
AS OF DECEMBER 31, 2004
(Stated in thousands of Pesos and Dollars)
 
  
 Full Year Acum. Dec Acum. Dec
  2003 2004 US$ 2004
 
OPERATING ACTIVITIES:
Net income (loss) ..............................................$ -3,209,356$ -173,794 -15,588
 Add (deduct)- Charges (credits) to income which do
 not require (generate) resources:
 Depreciation and amortization ........................... 428,754 437,659 39,254
 Amortization of debt issuance cost and other
 financing costs ..................................... 97,109 327,464 29,370
 Loss on sale of property, plant and equipment ........... 210,027 21,613 1,938
 Impairment of long-lived assets ......................... 531,130 492,558 44,178
 Deferred income taxes ................................... -44,595 -381,288 -34,198
 Other.................................................... 355,458 9,743 874
 Total items which do not require cash.................... 1,577,883 907,749 81,416
 Net resources generated from income .......................... -1,631,473 733,955 65,829
 Changes in operating assets and liabilities:
 Decrease (Increase) in inventories ......................... 66,019 66,822 5,993
 Decrease (Increase) in current assets ...................... 50,003 5,067 454
 Decrease (increase) in account receivables, net ............ 34,704 137,208 12,306
 (Decrease) increase in accounts payable and
 accrued liabilities ...................................... 1,073,005 -1,379,721 -123,747
 Resources generated by continued operating .................. -407,742 -436,669 -39,165
 Assets and liabilities discontinued .......................... -89,523 0 0
 Resources generated by operating activities .................. -497,265 -436,669 -39,165
FINANCING ACTIVITIES:
 Increase (Decrease) in bank loans and others ............ -58,731 693,917 62,237
  Increase (Decrease) in capital .......................... 0 47 4
 Net resources generated from financing activities ............ -58,731 693,964 62,242
INVESTMENT ACTIVITIES:
 Restricted cash.......................................... -165,678 165,678 14,860
 Acquisition of property, plant and equipment............. -111,813 -196,955 -17,665
 Sale of property, plant and equipment.................... 243,063 16,783 1,505
 Revenues from sale of discontinued operations ........... 972,608 0 0
 Increase in deferred assets ............................. 19,571 -86,358 -7,745
 Net resources applied to investing activities ................ 957,751 -100,852 -9,045
INCREASE IN CASH AND CASH EQUIVALENTS .......................... 401,755 156,443 14,031
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD............  282,326 684,081 61,355
CASH & CASH EQUIVALENTS AT END OF THE PERIOD ...................$ 684,081$ 840,524US 75,387
 
 
* The exchange rate of 11.1495 was used for translation purposes.
 
 
CORPORACION DURANGO, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS
AS OF DECEMBER 31, 2004
 
 
  Thousands of Pesos Thousands of Dollars
 4Q 4Q 4Q 4Q
 2003 2004 Var  2003 2004 Var
 
NET SALES ...............................$ 1,902,645$ 2,113,139 11% 161,755 189,528 17%
COST OF SALES ........................... 1,668,912 1,775,432 6% 141,914 159,239 12%
 Gross profit........................ 233,733 337,707 44% 19,841 30,289 53%
 
 Selling and Administrative expenses 205,032 200,811 -2% 17,386 18,011 4%
 Operating income ................... 28,701 136,896 377% 2,455 12,278 400%
FINANCIAL EXPENSE:
Interest expense ........................ 253,395 75,780 -70% 21,446 6,797 -68%
Interest income ......................... -13,805 -11,654 -16% -1,177 -1,046 -11%
Exchange (gain) loss, net ............... 253,791 -229,913 N/A 21,471 -20,621 N/A
Gain on monetary position ............... -175,774 -191,349  9% -14,879 -17,162 15%
 Total financial expense ............... 317,607 -357,136 N/A 26,861 -32,032 N/A
OTHER INCOME (EXPENSES):
Other income (expense), net ............. -659,516 -37,420 -94%  -55,810 -3,356 -94%
 Total other income (expense) .......... -659,516 -37,420 -94% -55,810 -3,356 -94%
 Income (loss) before income and asset t -948,422 456,612 N/A -80,216 40,954 N/A
Provisions for income and asset taxes ... -72,084 -69,573 -3% -6,089 -6,240 2%
Provision for deferred income taxes ..... 22,354 -53,144 N/A 1,979 -4,767 N/A
 Net income after taxes ................ -898,692 579,329 N/A -76,106 51,961 N/A
Special items ........................... 0 0   0 0 0   0
Impairment .............................. 531,130 -38,000 N/A  44,968 -3,408 N/A
Discontinued operations ................. 487,813 0 -100% 41,269 0 -100%
Net income before minority interest......$ -1,917,63$ 617,329 N/A -162,343 55,369 N/A
 Minority interest...................... -14,257 -6,646 -53% -1,207 -596 -51%
 Majority net income....................$ -1,903,37$ 623,975 N/A -161,136 55,965 N/A
 
 Operating income  28,701 136,896 377% 2,455 12,278 400%
 Depreciation & amortization 112,147 101,298 -10% 9,521 9,085 -5%
 Interest income 13,805 11,654 -16% 1,177 1,046 -11%
 Employee retirement obligations -7,953 5,016 -163% -673 450 -167%
 Allowance for doubtful accounts 50,096 28,762 -43% 4,242  2,580 -39%
 EBITDA 196,796 283,626 44% 16,722 25,439 52%
 
 
 
CORPORACION DURANGO, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS
AS OF DECEMBER 31, 2004
 
 
 Thousands of Pesos Thousands of Dollars
 Ac Ac Ac Ac
 2003 2004 Var 2003 2004 Var
 
NET SALES ...............................$ 7,384,290$ 8,185,407 11% 636,022 712,617 12%
COST OF SALES ........................... 6,396,978 7,026,976 10% 550,965 611,824 11%
 Gross profit........................ 987,312 1,158,431  17% 85,057 100,793 19%
 
 Selling and Administrative expenses 705,877 707,689 0% 60,707 61,568 1%
 Operating income ................... 281,435 450,742 60% 24,350 39,225 61%
FINANCIAL EXPENSE:
Interest expense ........................ 1,252,610 1,594,682 27% 107,890 136,990 27%
Interest income ......................... -44,131 -30,897 -30% -3,804 -2,694  -29%
Exchange (gain) loss, net ............... 935,317 -59,002 N/A 78,536 -6,825 N/A
Gain on monetary position ............... -408,433 -492,106 20% -34,705 -42,992 24%
 Total financial expense ............... 1,735,363 1,012,677 -42% 147,917 84,479 -43%
OTHER INCOME (EXPENSES):
Other income (expense), net ............. -1,029,05 -69,628 -93% -88,149 -6,055 -93%
 Total other income (expense) .......... -1,029,05 -69,628 -93% -88,149 -6,055 -93%
 Income (loss) before income and asset t -2,482,98 -631,563 -75% -211,716 -51,309 -76%
Provisions for income and asset taxes ... 77,257 51,740 -33% 6,654 4,173 -37%
Provision for deferred income taxes ..... -44,595 -381,288 755% -4,066 -33,343 720%
 Net income after taxes ................ -2,515,646 -302,015  -88% -214,304 -22,139 -90%
Special items ........................... 0 -620,779   0 0 -53,567 0
Impairment .............................. 531,130 492,558 -7% 44,968 43,524  -3%
Discontinued operations ................. 162,580 0 -100% 13,369 0 -100%
Net income before minority interest......$ -3,209,35$ -173,794 -95% -272,641 -12,096 -96%
 Minority interest...................... -6,139 -13,968 128% -518 -1,223 136%
 Majority net income....................$ -3,203,21$ -159,826 -95% -272,123 -10,873 -96%
 
 Operating income 281,435 450,742 60% 24,350 39,225 61%
 Depreciation & amortization 417,108 426,082 2% 35,911 37,018 3%
 Interest income 44,131 30,897 -30%  3,804 2,694 -29%
 Employee retirement obligations 24,014 9,743 -59% 2,096 855 -59%
 Allowance for doubtful accounts 67,981 44,114 -35% 5,791 3,893  -33%
 EBITDA 834,669 961,578 15% 71,952 83,685 16%