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 August, 2006 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-_____________. CORPORACION DURANGO, S.A. DE C.V. INDIVIDUAL BALANCE SHEETS AS OF DECEMBER 31, 2005 AND JUNE 30, 2006 (UNAUDITED) EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS AS OF JUNE 30, 2006 (Stated in thousands of Pesos and Dollars) US$ DLLS. December 31, Jun 30, Jun 30, 2005 2006 2006 ASSETS CURRENT ASSETS: Cash and cash equivalents ........................$ 293,162$ 902 80 Due from related parties ......................... 97,616 225,262 19,984 Taxes recoverable and other assets ............... 43,132 45,333 4,022 Total current assets ................... 433,910 271,497 24,085 LONG-TERM RELATED PARTIES .......................... 8,716,886 9,568,468 848,848 INVESTMENT IN SUBSIDIARIES ......................... 3,504,522 3,605,878 319,888 OTHER ASSETS, net .................................. 31,389 27,260 2,418 Total assets ..........................$ 12,686,707$ 13,473,103 1,195,240 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Bank loans and current portion of long-term debt . 149,164 157,091 13,936 Interest payable ................................. 234 0 0 Trade accounts payable ........................... 876 162 14 Accrued liabilities .............................. 209,133 200,685 17,803 Total current liabilities ............. 359,407 357,938 31,754 LONG-TERM DEBT ..................................... 5,674,541 5,897,536 523,188 LONG-TERM RELATED PARTIES .......................... 1,911,900 2,304,310 204,422 Total long term liabilities ............ 7,586,441 8,201,846 727,611 Total liabilities ..................... 7,945,848 8,559,784 759,364 STOCKHOLDERS' EQUITY: Total stockholders' equity ............. 4,740,859 4,913,319 435,875 Total liabilities and stockholders' equi$ 12,686,707$ 13,473,103 1,195,240 Exchange rate: $ 11.2723 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 JUNE 30, 2006 (Stated in thousands of Pesos and Dollars) * Full Year Acum. Jun Acum. Jun 2005 2006 US$ 2006 OPERATING ACTIVITIES: Net income (loss) ..............................................$ 180,305$ -236,255 -20,959 Add (deduct)- Charges (credits) to income which do not require (generate) resources: Depreciation and amortization ........................... 10,348 0 0 Loss in subsidiaries .................................... 889,716 288,563 25,599 Deferred income taxes ................................... 319,128 23,178 2,056 Other.................................................... 0 0 0 Total items which do not require cash.................... 1,219,192 311,741 27,655 Net resources generated from income .......................... 1,399,497 75,486 6,697 Changes in operating assets and liabilities: Decrease (Increase) in inventories ......................... 4,321 0 0 Decrease (Increase) in current assets ...................... 36,309 -2,201 -195 Decrease (increase) in account receivables, net ............ -52,673 -127,646 -11,324 (Decrease) increase in accounts payable and accrued liabilities ...................................... 4,528 -9,396 -834 Resources generated by operating activities .................. 1,391,982 -63,757 -5,656 FINANCING ACTIVITIES: Increase (Decrease) in bank loans and others ............ -4,100,830 -228,503 -20,271 Increase (Decrease) in capital .......................... 292,617 0 0 Gain on shares acquisition .............................. 2,993,053 0 0 Net resources generated from financing activities ............ -815,160 -228,503 -20,271 INVESTMENT ACTIVITIES: Acquisition and sale of property, plant and equipment.... 398,728 0 0 Investment in subsidiaries .............................. -689,685 0 0 Net resources applied to investing activities ................ -290,957 0 0 INCREASE IN CASH AND CASH EQUIVALENTS .......................... 285,865 -292,260 -25,927 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD............ 7,297 293,162 26,007 CASH & CASH EQUIVALENTS AT END OF THE PERIOD ...................$ 293,162$ 902US 80 * The exchange rate of 11.2723 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 JUNE 30, 2006 Thousands of Pesos Thousands of Dollars 2Q 2Q 2Q 2Q 2005 2006 Var 2005 2006 Var Gain (Loss) in subsidiaries .............$ -124,793$ -142,495 14% -11,229 -12,640 13% Selling and Administrative expenses ..... 2,039 1,836 -10% 183 163 -11% Operating income ................... -126,832 -144,331 14% -11,412 -12,803 12% FINANCIAL EXPENSE: Interest expense ........................ 116,668 186,721 60% 10,494 16,565 58% Interest income ......................... -283,744 -208,407 -27% -25,521 -18,488 -28% Exchange (gain) loss, net ............... -19,315 718 N/A -1,737 64 N/A Gain on monetary position ............... 4,699 -2,796 N/A 423 -248 N/A Total financial expense ............... -181,692 -23,764 -87% -16,341 -2,107 -87% OTHER INCOME (EXPENSES): Other income (expense), net ............. -42,907 -4,445 -90% -3,859 -394 -90% Total other income (expense) .......... -42,907 -4,445 -90% -3,859 -394 -90% Income (loss) before income and asset t 11,953 -125,012 N/A 1,070 -11,090 N/A Provision for deferred income taxes ..... -21,892 982 N/A -1,969 87 N/A Net income ..............................$ 33,845$ -125,994 N/A 3,039 -11,177 N/A CORPORACION DURANGO, S.A. DE C.V. INDIVIDUAL STATEMENTS OF INCOME (UNAUDITED) EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS AS OF JUNE 30, 2006 Thousands of Pesos Thousands of Dollars Ac Ac Ac Ac 2005 2006 Var 2005 2006 Var Gain (Loss) in subsidiaries .............$ -1,204,05$ -288,563 -76% -104,826 -26,106 -75% Selling and Administrative expenses ..... 3,476 3,168 -9% 308 286 -7% Operating income ................... -1,207,52 -291,731 -76% -105,134 -26,392 -75% FINANCIAL EXPENSE: Interest expense ........................ 243,787 360,761 48% 21,515 32,577 51% Interest income ......................... -1,538,888 -398,834 -74% -134,344 -36,007 -73% Exchange (gain) loss, net ............... -21,477 1,128 N/A -1,925 102 N/A Gain on monetary position ............... -24,437 7,450 N/A -2,103 695 N/A Total financial expense ............... -1,341,01 -29,495 -98% -116,857 -2,633 -98% OTHER INCOME (EXPENSES): Other income (expense), net ............. -112,496 49,159 N/A -9,893 4,538 N/A Total other income (expense) .......... -112,496 49,159 N/A -9,893 4,538 N/A Income (loss) before income and asset t 20,991 -213,077 N/A 1,830 -19,221 N/A Provision for deferred income taxes ..... 60,119 23,178 -61% 5,141 2,129 -59% Net income ..............................$ -39,128$ -236,255 504% -3,311 -21,350 545% 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 BOARD FOR RESEARCH AND DEVELOPMENT OF FINANCIAL REPORTING STANDARDS, OR CINIF, ASSUMED THE RESPONSIBILITY OF ESTABLISHING MEXICAN ACCOUNTING AND REPORTING STANDARDS. AS PART OF ITS RESPONSIBILITY, AND AFTER DUE EXPOSURE IN 2004 AND 2005, THE CINIF ISSUED SEVERAL FINANCIAL REPORTING STANDARDS (NORMAS DE INFORMACION FINANCIERA, OR NIFS) THAT BECAME EFFECTIVE ON JANUARY 1, 2006. THE PRINCIPAL OBJECTIVE OF THE CINIF IN ISSUING THE NIFS IS TO ACHIEVE GREATER CONCURRENCE BETWEEN MEXICAN GAAP AND INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSS). THE STRUCTURE OF THE NIFS IS AS FOLLOWS: - NEW BULLETINS AND INTERPRETATIONS TO THE BULLETINS ISSUED BY CINIF. - EXISTING BULLETINS ISSUED BY THE ACCOUNTING PRINCIPLES BOARD OF THE MEXICAN INSTITUTE OF PUBLIC ACCOUNTANTS THAT HAVE NOT BEEN AMENDED, REPLACED OR REPEALED BY THE NEW NIFS. - IFRSS THAT ARE SUPPLEMENTARY GUIDANCE TO BE USED WHEN MEXICAN GAAP DOES NOT PROVIDE PRIMARY GUIDANCE. THE CIRCULARS ISSUED BY THE ACCOUNTING PRINCIPLES BOARD WILL CONTINUE TO HAVE THE STATUS OF RECOMMENDATIONS AND WILL BE PART OF THE NIFS UNTIL SUCH TIME AS THEY ARE REPLACED OR REPEALED BY NIFS. THE NIFS ISSUED TO DATE ARE NOT EXPECTED TO HAVE A SIGNIFICANT EFFECT ON FINANCIAL INFORMATION REPORTING. THEY ARE THE FOLLOWING: NIF A-1 "FINANCIAL INFORMATION STANDARDS STRUCTURE". NIF A-2 "BASIC PRINCIPLES". NIF A-3 "USERS REQUIREMENTS AND FINANCIAL STATEMENTS OBJECTIVES". NIF A-4 "FINANCIAL STATEMENTS QUALITATIVE CHARACTERISTICS". NIF A-5 "FINANCIAL STATEMENTS BASIC ELEMENTS". NIF A-6 "RECOGNITION AND VALUATION". NIF A-7 "PRESENTATION AND DISCLOSURE". NIF A-8 "SUPPLEMENTARY STANDARDS TO MEXICAN GAAP". NIF B-1 "ACCOUNTING CHANGES AND ERROR CORRECTIONS". 1.2 BASIS FOR COMPARISSON EFFECTS IN THE FINANCIAL STATEMENTS: THE UNCONSOLIDATED 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, 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 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 JUNE 30st,2006 WAS $11.2723. 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 JUNE 30st,2006. FIXED AND VARIABLE EQUITY COMPONENTS: AMOUNT NUMBER OF SHARES FIXED PORTION 982,074 65,419,089 VARIABLE PORTION 678,873 45,222,022 -------- ----------- 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: Aug 8, 2006 By /s/ Mayela Rincon de Velasco -------------------------------- Name: Mayela Rincon de Velasco Title: Chief Financial Officer