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 AND REPORTING GUARANTOR GROUP PARTIALLY CONSOLIDATED CONDENSED 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 ........................$ 513,505$ 303,757 27,631 Accounts receivable, net ......................... 1,108,194 1,243,279 113,092 Taxes recoverable and other assets ............... 66,947 42,869 3,899 Inventories, net ................................. 808,737 827,642 75,285 Prepaid expenses ................................. 4,888 16,370 1,489 Total current assets ................... 2,502,271 2,433,917 221,396 LONG-TERM RELATED PARTIES .......................... 292,457 313,906 28,554 PROPERTY, PLANT AND EQUIPMENT, net ................. 7,356,100 7,642,205 695,157 INVESTMENT IN SUBSIDIARIES ......................... 3,628,952 3,676,268 334,404 OTHER ASSETS, net .................................. 204,195 189,953 17,279 Total assets ..........................$ 13,983,975$ 14,256,249 1,296,789 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Bank loans and current portion of long-term debt . 192,857 173,960 15,824 Interest payable ................................. 2,708 825 75 Trade accounts payable ........................... 402,773 345,604 31,437 Notes payable .................................... 27,725 25,043 2,278 Accrued liabilities .............................. 284,020 448,907 40,834 Employee profit-sharing .......................... 291 24,552 2,233 Total current liabilities ............. 910,374 1,018,891 92,681 LONG-TERM DEBT ..................................... 5,928,885 5,767,267 524,607 LONG-TERM RELATED PARTIES .......................... 792,125 856,355 77,896 LONG-TERM NOTES PAYABLE ............................ 21,093 17,596 1,601 DEFERRED TAXES...................................... 1,195,046 1,310,980 119,250 LIABILITY FOR EMPLOYEE BENEFITS..................... 308,338 303,502 27,607 Total long term liabilities ............ 8,245,487 8,255,700 750,962 Total liabilities ..................... 9,155,861 9,274,591 843,643 STOCKHOLDERS' EQUITY: Majority interest ................................ 4,799,993 4,953,214 450,558 Minority interest ................................ 28,121 28,444 2,587 Total stockholders' equity ............. 4,828,114 4,981,658 453,146 Total liabilities and stockholders' equi$ 13,983,975$ 14,256,249 1,296,789 Exchange rate: $ 10.9935 CORPORACION DURANGO AND REPORTING GUARANTOR GROUP PARTIALLY CONSOLIDATED CONDENSED 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) ..............................................$ 182,990$ -59,427 -5,406 Add (deduct)- Charges (credits) to income which do not require (generate) resources: Loss in subsidiaries .................................... 347,999 -47,885 -4,356 Depreciation and amortization ........................... 266,372 193,103 17,565 Loss (gain) on sale of property, plant and equipment .... 10,786 6,350 578 Deferred income taxes ................................... -197,173 76,845 6,990 Other.................................................... -26,291 19,404 1,765 Total items which do not require cash.................... 401,693 247,817 22,542 Net resources generated from income .......................... 584,683 188,390 17,136 Changes in operating assets and liabilities: Decrease (Increase) in inventories ......................... -95,941 -18,905 -1,720 Decrease (Increase) in current assets ...................... 26,877 12,597 1,146 Decrease (increase) in account receivables, net ............ -1,467 -135,086 -12,288 (Decrease) increase in accounts payable and accrued liabilities ...................................... -161,166 127,414 11,590 Resources generated by continued operating .................. 352,986 174,410 15,865 Assets and liabilities discontinued .......................... -23,735 0 0 Resources generated by operating activities .................. 329,251 174,410 15,865 FINANCING ACTIVITIES: Increase (Decrease) in bank loans and others ............ -4,645,024 -198,149 -18,024 Increase (Decrease) in capital .......................... 297,879 0 0 Gain on shares sales .................................... 3,046,878 0 0 Net resources generated from financing activities ............ -1,300,267 -198,149 -18,024 INVESTMENT ACTIVITIES: Acquisition and sale of property, plant and equipment.... 5,395 -178,211 -16,211 Acquisition of shares ................................... 681,430 -3,945 -359 Increase in deferred assets ............................. -6,445 -3,853 -350 Net resources applied to investing activities ................ 680,380 -186,009 -16,920 INCREASE IN CASH AND CASH EQUIVALENTS .......................... -290,636 -209,748 -19,079 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD............ 804,141 513,505 46,710 CASH & CASH EQUIVALENTS AT END OF THE PERIOD ...................$ 513,505$ 303,757US 27,631 * The exchange rate of 10.9935 was used for translation purposes. CORPORACION DURANGO AND REPORTING GUARANTOR GROUP PARTIALLY CONSOLIDATED CONDENSED 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 NET SALES ...............................$ 1,166,254$ 1,429,698 23% 103,833 130,049 25% COST OF SALES ........................... 976,195 1,170,456 20% 86,912 106,468 23% Gross profit........................ 190,059 259,242 36% 16,921 23,581 39% Selling and Administrative expenses 114,152 122,033 7% 10,163 11,100 9% Operating income ................... 75,907 137,209 81% 6,758 12,481 85% FINANCIAL EXPENSE: Interest expense ........................ 173,354 163,877 -5% 15,434 14,907 -3% Interest income ......................... -19,152 -13,432 -30% -1,705 -1,222 -28% Exchange (gain) loss, net ............... 8,637 -184,040 N/A 769 -16,741 N/A Gain on monetary position ............... -30,994 -116,118 275% -2,759 -10,562 283% Total financial expense ............... 131,845 -149,713 N/A 11,739 -13,618 N/A OTHER INCOME (EXPENSES): Other income (expense), net ............. 23,750 -15,323 N/A 2,115 -1,394 N/A Total other income (expense) .......... 23,750 -15,323 N/A 2,115 -1,394 N/A Income (loss) before income and asset t -32,188 271,599 N/A -2,866 24,705 N/A Provisions for income and asset taxes ... 8,199 -506 -106% 730 -46 -106% Provision for deferred income taxes ..... -183,208 135,359 N/A -16,311 12,313 N/A Net income after taxes ................ 142,821 136,746 -4% 12,715 12,438 -2% Discontinued operations ................. 175,603 0 -100% 15,634 0 -100% Loss (Gain) in subsidiaries ............. -152,803 -45,396 -70% -13,643 -4,129 -70% Net income before minority interest......$ 120,021$ 182,142 52% 10,724 16,567 54% Minority interest...................... -14,080 587 N/A -1,254 53 N/A Majority net income....................$ 134,101$ 181,555 35% 11,978 16,514 38% CORPORACION DURANGO AND REPORTING GUARANTOR GROUP PARTIALLY CONSOLIDATED CONDENSED 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 NET SALES ...............................$ 3,495,389$ 3,973,139 14% 305,962$ 355,438 16% COST OF SALES ........................... 2,947,971 3,227,552 9% 258,002 288,736 12% Gross profit........................ 547,418 745,587 36% 47,960 66,702 39% Selling and Administrative expenses 334,222 350,811 5% 29,264 31,389 7% Operating income ................... 213,196 394,776 85% 18,696 35,313 89% FINANCIAL EXPENSE: Interest expense ........................ 441,458 494,541 12% 38,676 44,245 14% Interest income ......................... -403,591 -37,984 -91% -34,488 -3,407 -90% Exchange (gain) loss, net ............... -230,783 242,498 N/A -20,464 20,985 N/A Gain on monetary position ............... -92,094 -162,835 77% -7,968 -14,806 86% Total financial expense ............... -285,010 536,220 N/A -24,244 47,017 N/A OTHER INCOME (EXPENSES): Other income (expense), net ............. -103,655 116,352 N/A -8,942 10,254 N/A Total other income (expense) .......... -103,655 116,352 N/A -8,942 10,254 N/A Income (loss) before income and asset t 394,551 -25,092 N/A 33,998 -1,450 N/A Provisions for income and asset taxes ... 11,478 5,375 -53% 1,020 471 -54% Provision for deferred income taxes ..... 105,354 76,845 -27% 8,895 7,214 -19% Net income after taxes ................ 277,719 -107,312 N/A 24,083 -9,135 N/A Discontinued operations ................. 131,320 0 -100% 11,762 0 -100% Loss (Gain) in subsidiaries ............. 69,782 -47,885 N/A 5,187 -4,250 N/A Net income before minority interest......$ 76,617$ -59,427 N/A 7,134$ -4,885 N/A Minority interest...................... -1,888 -577 -69% -173 -49 -72% Majority net income....................$ 78,505$ -58,850 N/A 7,307$ -4,836 N/A CORPORACION DURANGO, S.A. DE C.V. AND REPORTING GUARANTOR GROUP 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 PARTIALLY - CONSOLIDATED FINANCIAL STATEMENTS. 1.1 CONSOLIDATION BASIS: THE PARTIALLY - CONSOLIDATED FINANCIAL STATEMENTS INCLUDE THE FINANCIAL STATEMENTS OF CORPORACION DURANGO, S.A. DE C.V. AND THE FOLLOWING SUBSIDIARIES: COMPANIA PAPELERA DE ATENQUIQUE, S.A. DE C.V. EMPAQUES DE CARTON TITAN, S.A. DE C.V. ADMINISTRACION CORPORATIVA DE DURANGO, S.A. DE C.V. PONDEROSA INDUSTRIAL DE MEXICO, S.A. DE C.V. ALL SIGNIFICANT INTERCOMPANY BALANCES AND TRANSACTIONS HAVE BEEN ELIMINATED FOR CONSOLIDATION PURPOSES. THE PARTIALLY - CONSOLIDATED FINANCIAL STATEMENTS INCLUDE THE ASSETS, LIABILITIES AND INCOME OR LOSS OF THE PARENT COMPANY AND THE SUBSIDIARIES WITH MORE THAN 50% OF OWNERSHIP. 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: A) THE PARTIALLY CONSOLIDATED FINANCIAL STATEMENTS HAVE BEEN PREPARED IN ACCORDANCE WITH MEXICAN GAAP AND REFLECT THE PURCHASING POWER OF THE MEXICAN PESO AS OF THE MOST RECENT REPORTIND DATE. FOR COMPARISON PURPOSES, PARTIALLY CONSOLIDATED FINANCIAL STATEMENTS OR PRIOR YEAR 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. B) CONVERSION FIGURES OF FOREIGN SUBSIDIARIES IS DONE IN ACCORDANCE WITH BULLETIN B-15 "FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION OF FINANCIAL STATEMENTS OF FOREIGN OPERATIONS" ACCORDINGLY , THE TRANSLATION IS DONE UNDER THE "FOREIGN ENTITIES" 1.3 VALUATION OF TEMPORARY INVESTMENTS: THESE INVESTMENTS ARE REALIZABLE WITHIN THREE MONTHS AND ARE VALUED AT MARKET PRICE. THE INCOME OR LOSS GENERATED IS INCLUDED IN THE STATEMENTS OF OPERATIONS. 1.4 RIGHTS AND LIABILITIES VALUATION IN FOREIGN CURRENCY: ASSETS AND LIABILITIES IN FOREIGN CURRENCY, MAINLY IN AMERICAN DOLLARS, ARE EXPRESSED IN MEXICAN PESOS AT THE CLOSING OF THE YEAR`S EXCHANGE RATE. THE EXCHANGE RATE ON SEPTEMBER 30st, 2006 WAS $10.9935. 1.5 INVENTORY VALUATION: INVENTORIES ARE STATED AT AVERAGE COST, AND DO NOT EXCEED MARKET VALUE. THE AVERAGE COST APROXIMATES THE LAST PURCHASE OR PRODUCTION COST. PROPERTY, PLANT AND EQUIPMENT: PROPERTY, PLANT AND EQUIPMENT OF MEXICAN ORIGIN ARE RECORDED AT ACQUISITION COST AND ARE RESTATED TO REFLECT MEXICAN PESOS OF CONSTANT PURCHASING POWER USING FACTORS DERIVED FROM CHANGES IN THE NATIONAL CONSUMER PRICE INDEX (NCPI). PLANT AND EQUIPMENT OF NON-MEXICAN ORIGIN ARE RECORDED AT ACQUISITION COST AND THE ACQUISITION COST IS RESTATED TO CONSTANT CURRENCY USING THE INFLATION OF THE COUNTRY OF ORIGIN, THEN CONVERTED INTO MEXICAN PESOS AT THE EXCHANGE RATE IN EFFECT AT THE BALANCE SHEET DATE. DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT, IS CALCULATED BASED ON UNITS PRODUCED IN THE PERIOD IN RELATION TO THE TOTAL ESTIMATED PRODUCTION OF THE ASSETS OVER THEIR SERVICE LIVES. ASSETS ARE DEPRECIATED AS FOLLOWS: YEARS BUILDINGS 25-50 MACHINERY & EQUIPMENT 23-40 OFFICE EQUIPMENTS 5-10 TRANSPORTATION VEHICLES 1-5 COMPUTER EQUIPMENT 1-3 THESE ASSETS ARE EVALUATED ANNUALLY FOR POTENTIAL IMPAIRMENT. RECURRING MAINTENANCE AND REPAIR EXPENDITURES ARE CHERGED TO OPERATING EXPENSES AS INCURRED. MAJOR OVERHAULS TO FIXED ASSETS ARE CAPITALIZED AND AMORTIZED OVER THE PERIOD IN WHICH BENEFITS ARE EXPECTED TO BE RECEIVED. NET COMPREHENSIVE FINANCING COST INCURRED DURING THE PERIOD OF CONSTRUCTION AND INSTALLATION OF PROPERTY, PLANT AND EQUIPMENT IS CAPITALIZED AND RESTATED APPLIYING FACTORS DERIVED FROM CHANGES IN THE NCPI. CONTINGENCY LIABILITIES: LABOR OBLIGATIONS: THE COMPANY ADOPTED THE NORMATIVE DISPOSITIONS RELATED TO BULLETIN D-3 "LABOR OBLIGATIONS" ISSUED BY THE MEXICAN INSTITUTE OF PUBLIC ACCOUNTANTS, THIS NORMATIVITY MODIFIES THE BASIS FOR CUANTIFICATION, RECOGNITION AND DISCLOSURE OF EXPENSES AND LIABILITIES RELATED TO RETIREMENT AND SENIORITY PREMIUMS, INCLUDING FORMAL AND INFORMAL, REQUIRING ITS VALUATION USING THE ACTUARIAL METHOD OF "PROJECTED UNITARY CREDIT" WICH STATES THE OBLIGATION TO RECOGNIZE A LIABILITY (ASSET) OF TRANSITION AT THE MOMENT OF THE APPLICATION OF THIS BULLETIN, WHICH IS AMORTIZED IN DIRECT LINE OVER THE REMAINIG AVERAGE LABOR LIFE OF THE EMPLOYEES EXPECTED TO RECEIVE SUCH BENEFITS FROM THE RETIREMENT PLANS, REQUIRES AN ADDITIONAL LIABILITY IN CASE THE ACTUAL LIABILITY IS LARGER THAN THE PROJECTED NET LIABILITY (ASSET). THE COST OF THE EMPLOYEE RETIREMENT PLANS (PENSIONS AND SENIORITY PREMIUMS), ARE RECOGNIZED AS COST IN THE YEARS IN WHICH THE SERVICES ARE PAID IN ACCORDANCE WITH CALCULATION PERFORMED BY INDEPENDENT ACTUARIES. IN THE COMPANIES ESTABLISHED IN THE UNITED STATES OF AMERICA, THERE IS A BENEFIT AND RETIREMENT PLAN (THE PLAN), WHICH COVERS ALL THE EMPLOYEES THAT MEET CERTAIN ELEGIBILITY REQUIREMENTS. THE BENEFITS OF THE PLAN ARE MAINLY BASED IN THE YEARS OF SERVICE AND THE COMPENSATION OF SUCH EMPLOYEES. CORPORACION DURANGO, S.A. DE C.V. AND SUBSIDIARIES (THREE SUBSIDIARY COMPANIES) RECOGNIZES "MODIFICATIONS TO THE BULLETIN D-3 ON 2004" A NEW 2004 PLAN "ADDITIONAL BENEFITS AT RETIREMENT" IN ACCORDANCE TO MODIFICATIONS TO BULLETIN D-3. 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 AMOUNT REPRESENTS 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. DISCONTINUED OPERATIONS: THE COMPANY REPORTS ON DISCONTINUED OPERATIONS THE RESULT OF THE PARTICLEBOARD PLANT FROM PONDEROSA INDUSTRIAL DE MEXICO, S.A. DE C.V., FOR 2005. BUSINESS SEGMENTS INFORMATION: SEGMENT REPORTING INFORMATION IS PREPARED IN ACCORDANCE WITH BULLETIN B-5 "FINANCIAL INFORMATION BY SEGMENT". THE SEGMENTS REPORT BASED ON THE INTERNAL REPORT METHOD USED BY THE COMPANY. THE COMPANY PRESENTS THE FOLLOWING BUSINESS SEGMENTS: 1. PACKAGING. THIS SEGMENT INCLUDES THE PRODUCTION AND SALES OF CORRUGATED CONTAINER, MULTI-WALL SACKS AND PAPER TUBES. 2. PAPER. THIS SEGMENT INCLUDES THE PRODUCTION AND SALES OF KRAFT AND SEMI-KRAFT PAPER PRODUCED FROM VIRGIN FIBERS OR RECYCLED FIBERS. 3. OTHERS. THIS SEGMENT INCLUDES THE PRODUCTION AND SALE OF PLYWOOD. AS OF SEPTEMBER 30st., 2006 AND 2005, THE SEGMENT INFORMATION IS PRESENTED AS FOLLOWS: PROPERTY PLANT AND TOTAL EQUIPMENT SEGMENT 2006 INCOME ACQUISITION, NET ASSETS ------ --------- ---------------- -------------- PACKAGING 3,539,704 65,827 30,785,134 PAPER 2,430,146 51,826 9,072,790 OTHERS 91,562 60,558 669,960 ELIMINATONS (2,088,273) (26,271,635) ---------- ------------ -------------- TOTAL 3,973,139 178,211 14,256,249 ========== ============ ============== PROPERTY PLANT AND TOTAL EQUIPMENT SEGMENT 2005 INCOME ACQUISITION, NET ASSETS ------ --------- ---------------- -------------- PACKAGING 3,428,872 10,578 27,957,674 PAPER 2,174,986 41,448 8,616,926 OTHERS 69,210 (47,001) 1,129,277 ELIMINATIONS (2,177,679) (22,977,200) ---------- ------------ -------------- TOTAL 3,495,389 5,025 14,726,677 ========== ============ ============== THE FINANCIAL INFORMATION PRESENTED ABOVE IS USED IN THE DECISITION MAKING PROCESS BY THE COMPANY. INTERNAL CONTROL: THE COMPANY HAS STARTED IMPLEMENTATION ON THE SARBANES OXLEY ACT WITH THE ADVISE OF 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