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.)
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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, S.A. DE C.V.
INDIVIDUAL BALANCE SHEETS
AS OF DECEMBER 31, 2005 AND SEPTEMBER 30, 2006 (UNAUDITED)
EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS
AS OF SEPTEMBER 30, 2006
(Stated in thousands of Pesos and Dollars)
US$ DLLS.
December 31, Sep 30, Sep 30,
2005 2006 2006
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ........................$ 298,434$ 11,460 1,042
Due from related parties ......................... 99,372 227,232 20,670
Taxes recoverable and other assets ............... 43,907 22,189 2,018
Inventories, net ................................. 0 932 85
Total current assets ................... 441,713 261,813 23,815
LONG-TERM RELATED PARTIES .......................... 8,873,643 9,580,448 871,465
INVESTMENT IN SUBSIDIARIES ......................... 3,541,422 3,627,609 329,978
OTHER ASSETS, net .................................. 31,953 26,007 2,366
Total assets ..........................$ 12,888,731$ 13,495,877 1,227,623
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank loans and current portion of long-term debt . 151,847 153,205 13,936
Interest payable ................................. 238 264 24
Trade accounts payable ........................... 891 393 36
Accrued liabilities .............................. 212,893 196,482 17,873
Total current liabilities ............. 365,869 350,344 31,868
LONG-TERM DEBT ..................................... 5,776,587 5,713,370 519,704
LONG-TERM RELATED PARTIES .......................... 1,946,282 2,478,949 225,492
Total long term liabilities ............ 7,722,869 8,192,319 745,197
Total liabilities ..................... 8,088,738 8,542,663 777,065
STOCKHOLDERS' EQUITY:
Total stockholders' equity ............. 4,799,993 4,953,214 450,558
Total liabilities and stockholders' equi$ 12,888,731$ 13,495,877 1,227,623
Exchange rate: $ 10.9935
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 SEPTEMBER 30, 2006
(Stated in thousands of Pesos and Dollars)
*
Full Year Acum. Sep Acum. Sep
2005 2006 US$ 2006
OPERATING ACTIVITIES:
Net income (loss) ..............................................$ 183,567$ -58,850US -5,353
Add (deduct)- Charges (credits) to income which do
not require (generate) resources:
Depreciation and amortization ........................... 10,534 0 0
Loss in subsidiaries .................................... 905,716 106,340 9,673
Deferred income taxes ................................... 324,867 25,775 2,345
Other.................................................... 0 0 0
Total items which do not require cash.................... 1,241,117 132,115 12,018
Net resources generated from income .......................... 1,424,684 73,265 6,664
Changes in operating assets and liabilities:
Decrease (Increase) in inventories ......................... 4,399 -932 -85
Decrease (Increase) in current assets ...................... 36,962 21,718 1,976
Decrease (increase) in account receivables, net ............ -53,621 -127,860 -11,631
(Decrease) increase in accounts payable and
accrued liabilities ...................................... 4,609 -16,883 -1,536
Resources generated by operating activities .................. 1,417,033 -50,692 -4,611
FINANCING ACTIVITIES:
Increase (Decrease) in bank loans and others ............ -4,174,575 -240,227 -21,852
Increase (Decrease) in capital .......................... 297,879 0 0
Gain on shares acquisition .............................. 3,046,878 0 0
Net resources generated from financing activities ............ -829,818 -240,227 -21,852
INVESTMENT ACTIVITIES:
Acquisition and sale of property, plant and equipment.... 405,899 0 0
Investment in subsidiaries .............................. -702,088 3,945 359
Net resources applied to investing activities ................ -296,189 3,945 359
INCREASE IN CASH AND CASH EQUIVALENTS .......................... 291,026 -286,974 -26,104
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD............ 7,408 298,434 27,146
CASH & CASH EQUIVALENTS AT END OF THE PERIOD ...................$ 298,434$ 11,460US 1,042
* The exchange rate of 10.9935 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 SEPTEMBER 30, 2006
Thousands of Pesos Thousands of Dollars
3Q 3Q 3Q 3Q
2005 2006 Var 2005 2006 Var
Gain (Loss) in subsidiaries .............$ 232,493$ 187,318 -19% 20,738 17,038 -18%
Selling and Administrative expenses ..... 2,679 2,657 -1% 239 242 1%
Operating income ................... 229,814 184,661 -20% 20,499 16,796 -18%
FINANCIAL EXPENSE:
Interest expense ........................ 202,943 186,972 -8% 18,068 17,008 -6%
Interest income ......................... -303,468 -211,595 -30% -27,018 -19,247 -29%
Exchange (gain) loss, net ............... -1,502 -728 -52% -134 -67 -50%
Gain on monetary position ............... 21,013 23,166 10% 1,871 2,107 13%
Total financial expense ............... -81,014 -2,185 -97% -7,213 -199 -97%
OTHER INCOME (EXPENSES):
Other income (expense), net ............. 36,089 -3,112 N/A 3,213 -283 N/A
Total other income (expense) .......... 36,089 -3,112 N/A 3,213 -283 N/A
Income (loss) before income and asset t 346,917 183,734 -47% 30,925 16,712 -46%
Provision for deferred income taxes ..... 212,816 2,179 -99% 18,947 198 -99%
Net income ..............................$ 134,101$ 181,555 35% 11,978 16,514 38%
CORPORACION DURANGO, S.A. DE C.V.
INDIVIDUAL STATEMENTS OF INCOME (UNAUDITED)
EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS
AS OF SEPTEMBER 30, 2006
Thousands of Pesos Thousands of Dollars
Ac Ac Ac Ac
2005 2006 Var 2005 2006 Var
Gain (Loss) in subsidiaries .............$ -1,009,10$ -106,340 -89% -85,448 -9,068 -89%
Selling and Administrative expenses ..... 6,217 5,882 -5% 547 528 -3%
Operating income ................... -1,015,31 -112,222 -89% -85,995 -9,596 -89%
FINANCIAL EXPENSE:
Interest expense ........................ 451,131 554,233 23% 39,583 49,585 25%
Interest income ......................... -1,870,183 -617,616 -67% -161,362 -55,254 -66%
Exchange (gain) loss, net ............... -23,367 420 N/A -2,059 35 N/A
Gain on monetary position ............... -3,867 30,750 N/A -232 2,802 N/A
Total financial expense ............... -1,446,28 -32,213 -98% -124,070 -2,832 -98%
OTHER INCOME (EXPENSES):
Other income (expense), net ............. -78,439 46,934 N/A -6,680 4,255 N/A
Total other income (expense) .......... -78,439 46,934 N/A -6,680 4,255 N/A
Income (loss) before income and asset t 352,530 -33,075 N/A 31,395 -2,509 N/A
Provision for deferred income taxes ..... 274,025 25,775 -91% 24,088 2,327 -90%
Net income ..............................$ 78,505$ -58,850 N/A 7,307 -4,836 N/A
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 SEPTEMBER 30st, 2006 WAS $10.9935.
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
ADMINISTRACION CORPORATIVA DE 100% ADMINISTRATIVE SERVICES
DURANGO, S.A. DE C.V.
COMPANIA FORESTAL DE DURANGO, 100% ADMINISTRATIVE SERVICES
S.A. DE C.V.
COMPANIA PAPELERA DE ATENQUIQUE, 98% MANUFACTURING OF PAPER FOR
S.A. DE C.V. CORRUGATED BOXES
DURANGO INTERNACIONAL, S.A. DE C.V. 100% ADVISORY, ADMINISTRATIVE
AND ORGANIZATION SERVICES
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
INDUSTRIAS CENTAURO, S.A. DE C.V. 99% MANUFACTURING OF PAPER FOR
CORRUGATED BOXES
PONDEROSA INDUSTRIAL DE MEXICO, 100% MANUFACTURING OF PLYWOOD
S.A. DE C.V.
PORTEADORES DE DURANGO, S.A. DE 100% HAULING FREIGHT
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 SEPTEMBER 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: November 17, 2006 By /s/ Mayela Rincon de Velasco
--------------------------------
Name: Mayela Rincon de Velasco
Title: Chief Financial Officer