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 April 30, 2003
Durango Corporation
(f/k/a Grupo Industrial Durango, S.A. de C.V.)
-------------------------------------------------------------------
(Translation of registrant's name into English)
Torre Corporativa Durango, Potasio 150, Cuidad Industrial,
Durango, Durango, Mexico
-------------------------------------------------------------------
(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-_____________.
FIRST QUARTER 2003 RESULTS
Durango, Mexico, April 30, 2003 - Corporacion Durango, S.A. de C.V., (NYSE: CDG,
BMV: CODUSA) ("Durango" or the "Company"), the largest integrated paper producer
in Mexico, today announced its unaudited consolidated results for the first
quarter ended March 31, 2003. All figures were prepared in accordance with
Mexican generally accepted accounting principles, and are stated in constant
Mexican pesos as of March 31, 2003 and converted into U.S. dollars using the
exchange rate at the end of the period. All comparative figures for the first
quarter of 2002 were prepared on a pro-forma basis after excluding the results
of the Georgia mill operations.
HIGHLIGHTS FIRST QUARTER 2003/2002
Item
(Us Millions) Positive Negative Impact on EBITDA (*)
Total Shipments 14% -- $4.3
Unit Pricing -- -15% -$28.8
Unit Cost -1% -- $2.2
SG&A Expenses -7% -- $0.9
EBITDA -- -57% -$21.4
(*) On a pro-forma basis after excluding results of the Georgia mill for the
first quarter of 2002.
"In spite of extremely difficult circumstances, operationally, our performance
in the first quarter was very good, however, internationally prices that were
15% lower than year ago impacted our results in an outstanding way, but we are
beginning to see signs of strengthening in the business fundamentals. We will
continue exercising operating and expending discipline across our business with
the aim of delivering improved results in the coming quarters" said Miguel
Rincon, Corporacion Durango's Chairman and Chief Executive Officer.
"Regarding the Company's consensual financial restructuring in progress, our
intention is to move as fast and smoothly as possible. On the other hand, the
Company is carrying out deep operational and organizational restructuring to
complement the stakeholders efforts on its financial restructuring, which
combined should allow Durango to surge ahead as a world class company on the
operating and financial side", Rincon concluded.
COMPANY OVERVIEW
During the first quarter of 2003, Durango was severely affected by a combination
of negative macroeconomic factors, including a significant decline in world
paper prices, a global economic recession, a drastic reduction in the demand for
the Company's products from the manufacturing sector, fierce competition
manifested in a flood of imported products and increases in the cost of raw
materials, energy, oil and labor.
SHIPMENTS
In spite of a very difficult market environment, on a pro-forma basis, after
excluding shipments made by the Georgia mill for the first quarter of 2002,
total shipments increased 14% from 292.5 thousand of short tons in the first
quarter of 2002 to 334.4 thousand of short tons in the first quarter of 2003
in spite of difficult environment in the industry.
PRICE
Due to the decline in world paper pricing, weak demand in Mexico and the strong
competition from imported products, the average price, on a pro-forma basis, for
the Company's finished products, declined by 15% during the period from
US$575/short-ton in the first quarter of 2002 to US$489/short-ton during the
same period 2003, representing a decrease of US$28.8 MM in EBITDA.
SALES
Sales on a pro-forma basis, declined during the first quarter of 2003 by 3% from
US$168.3 MM in the first quarter of 2002 to US$163.7 MM in the first quarter of
2003, mainly due to a decrease in price which was partially compensated by an
increase of shipments.
COST OF SALES
The unit cost of sales, notwithstanding extraordinary increases in the price of
energy, raw materials and production costs, was reduced on a pro-forma basis by
1% from US$435/short-ton in the first quarter of 2002 to US$428/short-ton in the
first quarter of 2003.
SG&A EXPENSES
On a pro-forma basis, SG&A expenses decreased 7%, from US$14.3 MM in the first
quarter of 2002 to US$13.4 MM in the first quarter of 2003, reflecting the
Company's capacity to react to adverse changes in the difficult economic
environment.
EBITDA
EBITDA on a pro-forma basis, represented a reduction of US$21.4 MM from
US$37.5 MM in the first quarter of 2002 to US$16.1 MM in the first quarter of
2003. This reduction was primarily due to a US$28.8 MM decrease in price,
partially offset by an increase in shipments, unit cost reductions and SG&A
savings.
RELEVANT DEVELOPMENTS
During the first quarter of 2003, the Company concluded the divestiture of
its non-strategic molded carton division. The net proceeds of the sale were
US$43.5 million. On April 7, 2003, the Company signed a forbearance agreement
with the Steering Group members of an Ad Hoc Bondholders Committee. Under
the terms of the agreement, the Steering Group members of the Ad Hoc
Bondholders Committee agreed to continue consensual discussions regarding the
terms of a recapitalization of the Company's balance sheet.
HIGHLIGHTS FIRST QUARTER 2003/2002
Item 1Q03 1Q02(*) 1Q02
Total Shipments ('000 Short tons) 334.4 292.5 368.6
Pricing (US$/Short-ton) 489 575 589
Net Sales (US$Millions) 163.7 168.3 217.0
Unit Cost (US$/Short-ton) 428 435 486
EBITDA (US$Millions) 16.1 37.5 33.6
EBITDA Margin 10% 22% 15%
Shipments (000 Short tons) 1Q03 1Q02(*) 1Q02
Paper 151.1 118.8 194.9
Packaging 160.1 155.5 155.5
Other 23.2 18.3 18.3
Total 334.4 292.5 368.6
Prices (US$/Short ton) 1Q03 1Q02(*) 1Q02
Paper 440 504 557
Packaging 565 658 658
Other 285 334 334
Total 489 575 589
(*) On a pro-forma basis after excluding results of the Georgia mill for
the first quarter of 2002.
Net Sales (US$ millions) 1Q03 1Q02(*) 1Q02
Paper 66.5 59.9 108.5
Packaging 90.5 102.4 102.4
Other 6.6 6.1 6.1
Total 163.7 168.3 217.0
Unit Cost (US$/ short ton) 1Q03 1Q02(*) 1Q02
Total 428 435 486
EBITDA (US$ millions) 1Q03 Margin 1Q02(*) Margin 1Q02
Paper 3.4 5% 19.0 32% 15.1
Packaging 13.0 14% 18.9 18% 18.9
Other -0.3 -5% -0.4 -6% -0.4
Total 16.1 10% 37.5 22% 33.6
(*) On a pro-forma basis after excluding results of the Georgia mill for the
first quarter of 2002.
This release contains forward-looking statements that involve risks and
uncertainties. The actual results achieved by the Company may differ
significantly from the results discussed in the forward looking statements.
Factors that may cause such differences include general economic, market, or
business conditions, the opportunities (or lack thereof) that may be
presented to and pursued by the Company and its subsidiaries, the
availability of raw materials used by the Company and its subsidiaries,
competitive actions by other companies, changes in laws or regulations,
and other factors, many of which are beyond the control of the Company
and its subsidiaries.
CORPORACION DURANGO, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
AS OF DECEMBER 31, 2002 AND MARCH 31, 2003 (UNAUDITED)
EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS
AS OF MARCH 31, 2003
(Stated in thousands of Pesos and Dollars)
US$ DLLS.
December 31, March 31, March 31,
2002 2003 2003
(Audited) (Unaudited) (Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ........................ $261,995 $711,694 65,965
Accounts receivable, net ......................... 1,967,621 1,939,959 179,811
Taxes recoverable and other assets ............... 39,305 33,625 3,117
Inventories, net ................................. 1,297,995 1,154,391 106,998
Prepaids ......................................... 29,488 30,063 2,786
Total current assets ................... 3,596,404 3,869,732 358,677
PROPERTY, PLANT AND EQUIPMENT, net ................. 13,263,975 13,078,768 1,212,243
OTHER ASSETS, net .................................. 721,411 787,998 73,038
Total assets .......................... $17,581,790 $17,736,498 1,643,958
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank loans and current portion of long-term debt . 7,683,151 7,829,860 725,733
Interest payable ................................. 459,702 691,079 64,055
Trade accounts payable ........................... 917,418 733,319 67,970
Notes payable .................................... 50,639 40,576 3,761
Accrued liabilities .............................. 499,407 586,610 54,372
Employee profit-sharing .......................... 2,371 2,270 210
Total current liabilities ............. 9,612,688 9,883,714 916,100
LONG-TERM DEBT ..................................... 1,097,564 1,078,085 99,925
NOTES PAYABLE ...................................... 140,753 142,321 13,191
OTHER LIABILITIES .................................. 0 0 0
DEFERRED TAXES...................................... 2,038,484 2,021,051 187,327
LIABILITY FOR EMPLOYEE BENEFITS..................... 184,886 181,680 16,840
DEFERRED CREDITS.................................... 0 0 0
Total long term liabilities ............ 3,461,687 3,423,137 317,283
Total liabilities ..................... 13,074,375 13,306,851 1,233,383
STOCKHOLDERS' EQUITY:
Majority interest ................................ 4,438,101 4,359,642 404,086
Minority interest ................................ 69,314 70,005 6,489
Total stockholders' equity ............. 4,507,415 4,429,647 410,574
Total liabilities and stockholders' equi $17,581,790 $17,736,498 1,643,958
Exchange rate: $ 10.7889 per Dollar
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 MARCH 31, 2003
(Stated in thousands of Pesos and Dollars)
*
Full Year Acum.Mar Acum.Mar
2002 2003 US$ 2003
(Audited) (Unaudited)
OPERATING ACTIVITIES:
Net income (loss) .............................................. $-3,621,306 $-186,500 -17,286
Add (deduct)- Charges (credits) to income which do
not require (provide) cash-
Depreciation and amortization ........................... 485,625 97,577 9,044
Provision for employee benefits ......................... 12,800 -728 -67
Special items ........................................... 1,470,445 0 0
Amortization of Financial Comissions .................... 122,961 28,561 2,647
Provision for deferred taxes ............................ -681,772 -59,370 -5,503
Impairment .............................................. 1,605,890 0 0
Other.................................................... 4,113 0 0
Total items which do not require cash.................... 3,020,062 66,040 6,121
Net resources generated from income .......................... -601,244 -120,460 -11,165
Changes in operating assets and liabilities:
Decrease (Increase) in inventories ......................... -377,774 143,604 13,310
Decrease (Increase) in current assets ...................... -5,967 5,105 473
Decrease (increase) in account receivables, net ............ -40,747 27,662 2,564
(Decrease) increase in accounts payable and
accrued liabilities ...................................... 881,633 124,317 11,523
Resources generated by operating activities .................. -144,099 180,228 16,705
FINANCING ACTIVITIES:
Increase (Decrease) in bank loans and others ............ 745,375 162,517 15,063
Increase (Decrease) in capital .......................... 0 0 0
Net resources generated from financing activities ............ 745,375 162,517 15,063
INVESTMENT ACTIVITIES:
Additions to property, plant and equipment............... -459,812 -24,074 -2,231
Divestiture to property, plant and equipment............. 148,047 233,144 21,610
Disposition of subsidiaries ............................. -207,452 0 0
Increase in deferred assets ............................. -369,596 -102,116 -9,465
Minority interest ....................................... 23,737 0 0
Net resources applied to investing activities ................ -865,076 106,954 9,913
INCREASE IN CASH AND CASH EQUIVALENTS .......................... -263,800 449,699 41,682
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD............ 525,795 261,995 24,284
CASH & CASH EQUIVALENTS AT END OF THE PERIOD ................... $261,995 $711,694 US65,965
* The exchange rate of 10.7889 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 MARCH 31, 2003
Thousands of Pesos Thousands of Dollars
1Q 1Q 1Q 1Q
2002 2003 Var 2002 2003 Var
(Audited) (Unaudited) (Audited) (Unaudited)
NET SALES ............................... $2,181,311 $1,765,824 -19% 216,998 163,670 -25%
COST OF SALES ........................... 1,824,264 1,545,799 -15% 179,216 143,277 -20%
Gross profit........................ 357,047 220,025 -38% 37,782 20,393 -46%
Selling and Administrative expenses 164,729 144,186 -12% 16,738 13,364 -20%
Operating income ................... 192,318 75,839 -61% 21,044 7,029 -67%
FINANCIAL EXPENSE:
Interest expense ........................ 240,825 319,111 33% 24,659 29,578 20%
Interest income ......................... -9,301 -8,684 -7% -932 -804 -14%
Exchange (gain) loss, net ............... -122,244 343,360 N/A -12,835 31,825 N/A
Gain on monetary position ............... -97,994 -111,664 14% -10,175 -10,350 2%
Total financial expense ............... 11,286 542,123 4703% 717 50,249 6908%
OTHER INCOME (EXPENSES):
Other income (expense), net ............. -21,821 -57,461 163% -2,253 -5,326 136%
Total other income (expense) .......... -21,821 -57,461 163% -2,253 -5,326 136%
Income (loss) before income and asset t 159,211 -523,745 N/A 18,074 -48,546 N/A
Provisions for income and asset taxes ... 71,408 38,182 -47% 7,445 3,539 -52%
Provision for deferred income taxes ..... -42,062 -59,370 41% -4,985 -5,503 10%
Net income after taxes ................ 129,865 -502,557 N/A 15,614 -46,582 N/A
Extraordinary items ..................... 0 -316,057 N/A 0 -29,295 N/A
Impairment .............................. 0 0 N/A 0 0 N/A
Net income before minority interest...... $129,865 $-186,500 N/A 15,614 -17,287 N/A
Minority interest...................... 3,378 295 -91% 356 28 -92%
Majority net income.................... $126,487 $-186,795 N/A 15,258 -17,315 N/A
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: April 30, 2003 By /s/ Mayela Rincon de Velasco
Durango, Mexico --------------------------------
Name: Mayela Rincon de Velasco
Title: Chief Financial Officer