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 Februray 27th, 2004 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-_____________. 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: February 27th, 2004 By /s/ Mayela Rincon de Velasco Durango, Mexico -------------------------------- Name: Mayela Rincon de Velasco Title: Chief Financial Officer HIGHLIGHTS BUSINESS ENVIRONMENT 2003 Nadir in paper industry cycle Lower pricing compounded by lower demand Rising raw material and energy prices A Mexican recession that is deeper than that of the U.S. Continued strength of the Mexican Peso Fierce foreign competition in the Mexican paper markets DURANGO RESPONSE IN 2003 Divested non-strategic assets for US$95 million Increased shipments by 7% Reduced unit production costs by 2% despite an average increase in raw material and energy costs INDUSTRY OUTLOOK Industry has announced price increases beginning in 2Q04 Increased prices, if effective, will be reflected in the results of 2H04 Price increases in raw materials and energy could affect expected profitability Durango, Mexico, February 27th, 2004 - 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 full year 2003. All figures were prepared in accordance with Mexican generally accepted accounting principles and are stated in constant Mexican pesos as of the end of each period and converted into U.S. dollars using the exchange rate at the end of each period. All comparative figures for the full years 2002 and 2003 were prepared on a pro-forma basis after excluding the results of the Georgia, San Luis Potosi and Molded Pulp operations as well as discontinued operations. INDUSTRY AND BUSINESS ENVIRONMENT During 2003, the North American paper and packaging industry was characterized by a challenging business environment. Companies in the industry faced the most severe market conditions in recent years. This low point in the industry s cycle was reflected in lower prices, continued price pressure and weak demand. At the same time, raw material prices and energy prices increased. In addition, the Company was impacted by unanticipated macroeconomic factors beyond its control, including fluctuations in the exchange rate for the Peso against the U.S. dollar. COMPANY'S PERFORMANCE The Company s results for 2003 reflected anemic economic growth in Mexico, the effects of the low point in the industry cycle, which resulted in lower prices and weak demand, and the effects of higher energy and raw material prices. The increase in volume and lower unit costs achieved by the Company were offset by lower product pricing. Item FY03 FY02 4Q03 4Q02 Total Shipments( 000 Short Tons) 1,245.4 1,166.7 339.2 305.3 Pricing (US$/ShortTon) 498.0 541.0 473.0 520.0 Net Sales (US$Million) 620.0 630.7 160.3 158.7 Unit Cost (US$/Short Ton) 435.0 442.0 414.0 436.0 EBITDA (US$Million) 65.0 105.2 15.5 21.7 EBITDA Margin 10% 17% 10% 14% Operating Performance The Company s EBITDA in 2003 was US$65.0 million, compared to the US$105.2 million achieved in 2002. The Company s EBITDA declined principally as a result of (i) an 8% decrease in average sales prices generated by a change in the Company s product mix, which produced a US$50.0 million reduction in the Company s EBITDA, and (ii) an 8% devaluation of the Mexican Peso to 11.23 Ps./US$ in 2003 from 10.43 Ps./US$ in 2002, which produced a US$5.0 million reduction in the Company s EBITDA. These negative effects were partially offset by (i) a 7% increase in shipments with a US$5.0 million positive effect on EBITDA, and (ii) a 2% decrease in the Company s unit production cost with a US$8.0 million positive effect on EBITDA. 2004 OUTLOOK The Company expects that the recently announced price increases will be implemented in the second quarter and that the benefit will be reflected in the second half of the year. In addition, the Company believes that the signs of economy recovery and the better outlook for manufacturing and growth in the U.S. and world economies should lead to a general improvement in demand and pricing for packaging and paper. The current paper industry outlook provides support for the Company s belief that results should improve during the year. FINANCIAL RESTRUCTURING The Company continues to make progress in its ongoing discussions with certain of its bank lenders and members of the Ad Hoc Bondholders Committee, who collectively hold a substantial portion of its outstanding unsecured indebtedness. The discussions regarding the financial and legal framework of the restructuring are ongoing and the Company believes that these discussions are relatively advanced. HIGHLIGHTS FULL YEAR 2003 AND FOURTH QUARTER 2003 Shipments(000 Short tons) FY03 FY02 4Q03 4Q02 Paper 582.6 518.0 162.7 142.3 Packaging 652.0 632.8 173.7 159.7 Other 10.8 15.9 2.8 3.3 Total 1,245.4 1,166.7 339.2 305.3 Net Sales (US$Million) FY03 FY02 4Q03 4Q02 Paper 256.6 250.1 68.9 66.6 Packaging 356.0 371.7 89.6 90.0 Other 7.4 8.9 1.9 2.1 Total 620.0 630.7 160.3 158.7 Prices (US$/Short Ton) FY03 FY02 4Q03 4Q02 Paper 440.0 483.0 423.0 468.0 Packaging 546.0 587.0 516.0 563.0 Other 681.0 561.0 656.0 623.0 Total 498.0 541.0 473.0 520.0 Unit Cost (US$/Short Ton) FY03 FY02 4Q03 4Q02 Total 435 442 414 436 EBITDA FY03 Margin FY02 Margin 4Q03 4Q02 (US$Million) Paper 15.9 6% 45.4 18% 3.5 10.6 Packaging 48.9 14% 58.9 16% 11.8 11.0 Other 0.2 3% 0.9 10% 0.3 0.1 Total 65.0 10% 105.2 17% 15.5 21.7 Special Note Regarding Forward-Looking Statements This press release contains statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are only predictions and are not guarantees of future performance. Investors are cautioned that any such forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the operations and business environments of Corporacion Durango and its subsidiaries that may cause the actual results of the companies to be materially different from any future results expressed or implied in such forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: the ability of Corporacion Durango and its subsidiaries to continue as going concerns; their ability to obtain and maintain normal terms with vendors and service providers; their ability to maintain contracts that are critical to their operations; their ability to fund and execute their business plan; their ability to attract, motivate and/or retain key executives and associates; their ability to attract and retain customers; 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. Additionally, other factors should be considered in connection with any Forward Looking Statements, including other risks and uncertainties set forth from time to time in Corporacion Durango s reports filed with the United States Securities and Exchange Commission. Although Corporacion Durango believes that the expectations and assumptions reflected in the forward-looking statements are reasonable based on information currently available to its management, Corporacion Durango cannot guarantee future results or events. Corporacion Durango expressly disclaims a duty to update any of the forward-looking statement. CONTACTS Corporacion Durango, S.A. de C.V. The Global Consulting Group Mayela R. Velasco Mariana Crespo +52 (618) 829 1008 (646) 284 9407 mrinconv@corpdgo.com.mx mcrespo@hfgcg.com Miguel Antonio R. +52 (618) 829 1070 rinconma@corpdgo.com.mx CORPORACION DURANGO, S.A. DE C.V. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS AS OF DECEMBER 31, 2002 AND DECEMBER 31, 2003 (UNAUDITED) EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS AS OF DECEMBER 31, 2003 (Stated in thousands of Pesos and Dollars) US$ DLLS. December 31,December 31,December 31, 2002 2003 2003 (Proforma) (Unaudited) (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents ........................$ 270,934$ 579,571 51,576 Restricted cash .................................. 0 160,901 14,319 Accounts receivable, net ......................... 2,022,940 2,060,131 183,331 Taxes recoverable and other assets ............... 40,337 16,562 1,474 Inventories, net ................................. 1,334,764 1,164,901 103,665 Prepaids ......................................... 30,660 34,959 3,111 Total current assets ................... 3,699,635 4,017,025 357,476 PROPERTY, PLANT AND EQUIPMENT, net ................. 13,632,694 11,580,526 1,030,553 OTHER ASSETS, net .................................. 740,817 587,819 52,310 Total assets ..........................$ 18,073,146$ 16,185,370 1,440,338 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Bank loans and current portion of long-term debt . 7,890,187 8,090,253 719,953 Interest payable ................................. 472,271 1,479,395 131,652 Trade accounts payable ........................... 945,835 935,518 83,252 Notes payable .................................... 52,226 52,734 4,693 Accrued liabilities .............................. 514,936 432,443 38,483 Employee profit-sharing .......................... 2,433 715 64 Total current liabilities ............. 9,877,888 10,991,058 978,096 LONG-TERM DEBT ..................................... 1,126,382 1,088,409 96,858 NOTES PAYABLE ...................................... 145,871 102,906 9,158 DEFERRED TAXES...................................... 2,094,036 2,008,944 178,776 LIABILITY FOR EMPLOYEE BENEFITS..................... 189,801 168,903 15,031 Total long term liabilities ............ 3,556,090 3,369,162 299,822 Total liabilities ..................... 13,433,978 14,360,220 1,277,918 STOCKHOLDERS' EQUITY: Majority interest ................................ 4,568,035 1,761,169 156,727 Minority interest ................................ 71,133 63,981 5,694 Total stockholders' equity ............. 4,639,168 1,825,150 162,420 Total liabilities and stockholders' equi$ 18,073,146$ 16,185,370 1,440,338 Exchange rate: $ 11.2372 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 DECEMBER 31, 2003 (Stated in thousands of Pesos and Dollars) * Full Year Acum.Dec Acum.Dec 2002 2003 US$ 2003 (Proforma) (Unaudited) OPERATING ACTIVITIES: Net income (loss) ..............................................$ -3,738,924$ -3,278,040 -291,713 Add (deduct)- Charges (credits) to income which do not require (provide) cash- Depreciation and amortization ........................... 384,304 402,055 35,779 Provision for employee benefits ......................... 13,138 -12,902 -1,148 Special items ........................................... 1,509,053 283,933 25,267 Amortization of Financial Comissions .................... 126,244 92,502 8,232 Provision for deferred taxes ............................ -841,947 -203,911 -18,146 Impairment .............................................. 1,344,812 520,459 46,316 Other.................................................... 583,010 780,613 69,467 Total items which do not require cash.................... 3,118,614 1,862,749 165,766 Net resources generated from income .......................... -620,310 -1,415,291 -125,947 Changes in operating assets and liabilities: Decrease (Increase) in inventories ......................... -387,693 196,626 17,498 Decrease (Increase) in current assets ...................... -6,124 19,476 1,733 Decrease (increase) in account receivables, net ............ -41,817 94,116 8,375 (Decrease) increase in accounts payable and accrued liabilities ...................................... 914,680 702,333 62,501 Resources generated by operating activities .................. -141,264 -402,740 -35,840 FINANCING ACTIVITIES: Increase (Decrease) in bank loans and others ............ 764,945 149,899 13,340 Increase (Decrease) in capital .......................... 0 -34,337 -3,056 Net resources generated from financing activities ............ 764,945 115,562 10,284 INVESTMENT ACTIVITIES: Additions to property, plant and equipment............... -467,083 -87,504 -7,787 Divestiture to property, plant and equipment............. 145,369 592,375 52,716 Disposition of subsidiaries ............................. -212,899 318,622 28,354 Increase in deferred assets ............................. -379,382 -66,777 -5,942 Minority interest ....................................... 24,360 0 0 Net resources applied to investing activities ................ -889,635 756,716 67,340 INCREASE IN CASH AND CASH EQUIVALENTS .......................... -265,954 469,538 41,784 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD............ 536,888 270,934 24,110 CASH & CASH EQUIVALENTS AT END OF THE PERIOD ...................$ 270,934$ 740,472US 65,895 * The exchange rate of 11.2372 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, 2003 Thousands of Pesos Thousands of Dollars 4Q 4Q 4Q 4Q 2002 2003 Var 2002 2003 Var (Proforma) (Unaudited) (Proforma) (Unaudited) NET SALES ...............................$ 1,738,895$ 1,801,432 4% 158,693 160,310 1% COST OF SALES ........................... 1,459,877 1,576,934 8% 133,154 140,331 5% Gross profit........................ 279,018 224,498 -20% 25,539 19,979 -22% Selling and Administrative expenses 138,790 161,871 17% 12,671 14,406 14% Operating income ................... 140,228 62,627 -55% 12,868 5,573 -57% FINANCIAL EXPENSE: Interest expense ........................ 251,672 268,763 7% 23,167 23,917 3% Interest income ......................... -10,288 -12,689 23% -923 -1,130 22% Exchange (gain) loss, net ............... 201,383 219,279 9% 18,554 19,514 5% Gain on monetary position ............... -137,881 -173,873 26% -12,698 -15,473 22% Total financial expense ............... 304,886 301,480 -1% 28,100 26,828 -5% OTHER INCOME (EXPENSES): Other income (expense), net ............. 835 -4,704 N/A 84 -418 N/A Total other income (expense) .......... 835 -4,704 N/A 84 -418 N/A Income (loss) before income and asset t -163,823 -243,557 49% -15,148 -21,673 43% Provisions for income and asset taxes ... -33,589 5,458 N/A -3,089 485 N/A Provision for deferred income taxes ..... -434,087 -140,514 -68% -38,688 -12,504 -68% Net income after taxes ................ 303,853 -108,501 N/A 26,629 -9,654 N/A Special items ........................... -12,136 482,086 N/A -1,118 42,901 N/A Extraordinary items ..................... 0 3,127 0% 0 278 0% Impairment .............................. 1,344,812 520,459 -61% 120,361 46,316 -62% Discontinued operations ................. 129,554 936,139 623% 11,879 83,307 601% Net income before minority interest......$ -1,158,37$ -2,050,312 77% -104,493 -182,456 75% Minority interest...................... 1,206 -15,447 N/A 109 -1,375 N/A Majority net income....................$ -1,159,58$ -2,034,865 75% -104,602 -181,081 73% Depreciation & amortization 96,496 111,875 16% 8,815 9,956 13% EBITDA 236,724 174,502 -26% 21,683 15,529 -28% 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, 2003 Thousands of Pesos Thousands of Dollars Ac Ac Ac Ac 2002 2003 Var 2002 2003 Var (Proforma) (Unaudited) (Proforma) (Unaudited) NET SALES ...............................$ 6,745,186$ 6,876,231 2% 630,733 619,973 -2% COST OF SALES ........................... 5,538,671 6,005,431 8% 515,799 541,329 5% Gross profit........................ 1,206,515 870,800 -28% 114,934 78,644 -32% Selling and Administrative expenses 486,456 552,956 14% 45,851 49,894 9% Operating income ................... 720,059 317,844 -56% 69,083 28,750 -58% FINANCIAL EXPENSE: Interest expense ........................ 940,673 1,152,955 23% 88,971 104,341 17% Interest income ......................... -40,159 -41,880 4% -3,667 -3,757 2% Exchange (gain) loss, net ............... 988,276 822,051 -17% 91,081 72,594 -20% Gain on monetary position ............... -376,620 -373,459 -1% -35,794 -33,397 -7% Total financial expense ............... 1,512,170 1,559,667 3% 140,591 139,781 -1% OTHER INCOME (EXPENSES): Other income (expense), net ............. -50,134 -41,828 -17% -4,882 -3,705 -24% Total other income (expense) .......... -50,134 -41,828 -17% -4,882 -3,705 -24% Income (loss) before income and asset t -842,245 -1,283,651 52% -76,390 -114,736 50% Provisions for income and asset taxes ... 115,973 146,862 27% 11,432 13,149 15% Provision for deferred income taxes ..... -841,947 -203,911 -76% -77,983 -18,476 -76% Net income after taxes ................ -116,271 -1,226,602 955% -9,839 -109,409 1012% Special items ........................... 1,509,053 742,606 -51% 139,527 67,098 -52% Extraordinary items ..................... 0 57,251 0 0% 5,114 0% Impairment .............................. 1,344,812 520,459 -61% 120,361 46,316 -62% Discontinued operations ................. 768,788 731,122 -5% 67,932 64,815 -5% Net income before minority interest......$ -3,738,92$ -3,278,040 -12% -337,659 -292,752 -13% Minority interest...................... 3,245 -7,736 N/A 329 -684 N/A Majority net income....................$ -3,742,16$ -3,270,304 -13% -337,988 -292,068 -14% Depreciation & amortization 384,304 402,055 5% 36,106 36,262 0% EBITDA 1,104,363 719,899 -35% 105,189 65,012 -38%