TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

MIRGOR

SOCIEDAD ANONIMA, COMERCIAL, INDUSTRIAL, FINANCIERA,

INMOBILIARIA Y AGROPECUARIA

EINSTEIN 1111 ‑ RIO GRANDE

TIERRA DEL FUEGO

ARGENTINA

financial statements for the PERIOD beginning

january 1, 2003, and ended december 31, 2003,

TOGETHER WITH THE AUDITOR’S REPORT

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

BOARD OF DIRECTORS

MIRGOR S.A.C.I.F.I.A.

Chairperson

Lic. Roberto Gustavo Vázquez

vice-Chairperson

Mr. José Luis Caputo

directors

Mr. Pablo Plesko

Mr. André Gold

Mr. Alejandro Carrera

alternate directors

Dr. Diego García Villanueva

Mr. Bernard Clapaud

Mr. Jean Francois Vingre

Mr. Eduardo García Terán

Mr. Jorge Antonio Caputo

(Translation of the report originally issued in Spanish)

AUDITOR’S REPORT

To the Chairman and Directors of

Mirgor Sociedad Anónima, Comercial, Industrial, Financiera,

Inmobiliaria y Agropecuaria

We have audited the accompanying balance sheets of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria as of December 31, 2003, and 2002, and the related statements of income, changes in shareholders’ equity and cash flow for the years then ended. We have also audited the accompanying consolidated balance sheets of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria and its subsidiary as of December 31, 2003, and 2002, and the related consolidated statements of income, changes in shareholders’ equity and cash flows for the years then ended, which are disclosed as supplementary information. Such financial statements are the responsibility of the Company’s Board of Directors. Our responsibility is to express an opinion on such financial statements based on our audits.
We performed our audit in accordance with auditing standards effective in Argentina. An audit requires that the auditor plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements and errors. An audit also includes assessing, on a selective test basis, the evidence supporting the information disclosed in the financial statements, the accounting principles used and the significant estimates made by the Company’s Management, as well as evaluating the overall financial statements presentation. We believe that our audits provide a reasonable basis for our opinion.
In our report dated March 10, 2003, our opinion on the financial statements as of December 31, 2002, included: (a) a qualification for unresolved uncertainty due to the possible effects that may arise from the negotiation and final implementation of the agreements with financial institutions that hold claims against the Company, and (b) a qualification for unresolved uncertainty due to failure to recognize the income tax provision of the subsidiary Interclima Sociedad Anónima, as explained in note 1 to the accompanying financial statements. In the year ended December 31, 2003, the uncertainty mentioned in (a) was resolved since the Company completed the negotiation and implementation process related to the agreements with the financial institutions. On the other hand, the Company has considered that contingency mentioned in (b) and the valuation of its investment in the subsidiary and booked the effect as of December 31, 2002, as an amendment to unappropriated retained earnings as of such dated, thus adjusting the financial statements for the period then ended. Consequently, our opinion on the financial statements as of December 31, 2002, as we will express in this report, does not included the abovementioned qualifications.
As disclosed in Note 10 to the financial statements mentioned in paragraph (1), the Company and its subsidiary have tax credits and receivables from the Government, the recoverability of which is affected by the economic crisis described in such note. Such recoverability may be affected by the manner in which the Argentine Government restructures its public debt. As a consequence, as of the date of issuance of this report we cannot determine the manner in which and time at which such receivables will be settled by the Argentine Government.
As stated in note 1 to the accompanying financial statements and in accordance with the rules of the companies’ controlling authorities, the Company has not recognized for accounting purposes the effects of changes in the currency purchasing power from March 1 through September 30, 2003; such recognition is required by the professional accounting standards effective in the City of Buenos Aires, Argentina. Had the effects of such changes been recognized, (a) the loss for the year ended December 31, 2003, would have decreased and the remaining components of shareholders’ equity would have decreased, as a whole, by about ARS 740,000 and (b) the balance of accounts as of December 31, 2002, presented for comparative purposes, would have been restated to recognize such effects.
The Company has prepared its financial statements as of December 31, 2003, considering the changes in the measurement methods required by the new accounting standards described in Note 1(b) to the accompanying financial statements, affecting unappropriated retained earnings as of the beginning of such year, as described in Note 14 to such financial statements. At the same time and as explained in Note 1(c) to the accompanying financial statements, the Company’s Management computed the abovementioned effects on the financial position as of December 31, 2002, and charged the aggregate accumulated effect deriving from the change to income for such year. The Company should have assigned a portion of such effect to accumulated earnings as of the beginning of such year. This action affects the amounts included in the statements of income, changes in shareholders’ equity and cash flows for the year ended December 31, 2002.
In our opinion, subject to the effect of the adjustments that might have been required had we known the resolution of the uncertainty mentioned in paragraph 4, and except for (i) not restating the financial statements as of December 31, 2002, and the statements of income, changes in shareholders’ equity and cash flows for the year ended December 31, 2003, as mentioned in paragraphs 5(b) and (a) respectively, and (ii) not changing the statements of income, changes in shareholder’s equity and cash flows for the year ended December 31, 2002, in order to segregate the accumulated effect as of the beginning of such year due to the criteria changes mentioned in paragraph (6), the financial statements mentioned in paragraph (1) present fairly, in all material aspects, the financial position of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria and the consolidated financial position of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria with its subsidiary as of December 31, 2003, and 2002, and the related results of its operations and

cash flows for the years then ended, in accordance with the professional accounting standards effective in the City of Buenos Aires, Argentina. Furthermore, in our opinion, except for the changes in the measurement criteria mentioned in paragraph (6), with which we agree, such standards were applied consistently.

In compliance with current regulations, we report that:
The financial statements mentioned in paragraph 1 have been transcribed into the Inventory and Financial Statements Book and, except for the matter mentioned in paragraph 7(ii) above have been prepared, in all significant respects, in accordance with the applicable provisions of the Argentine Business Associations Law and CNV (Argentine National Securities Commission) regulations.
The financial statements of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria have been taken from accounting records carried, in all formal respects in accordance with current legislation, except as indicated in note 9 to the accompanying financial statements, and in accordance with provisions established in Disposition No. 1000/00 of the Inspección General de Justicia de Tierra del Fuego (Tierra del Fuego Province regulatory agency of business associations) dated December 13, 2000.
The information contained in points (2) and (3) of the “Summary of Events for the Fiscal Year Ended December 31, 2003”, which the Company presents in compliance with CNV and Buenos Aires Stock Exchange regulations, is taken from the accompanying financial statements as of December 31, 2003, and 2002, as well as those as of December 31, 2001, 2000, and 1999 (after having been restated into constant pesos through February 28, 2003, as detailed in note 1(a) to the accompanying financial statements), which are not included in the accompanying document and on which we issued our reports dated March 8, 2002, March 9, 2001, and March 9, 2000, respectively, to which we refer and which are to be read in conjunction with this report. The information related to the fiscal years ended December 31, 2001, 2000, and 1999, has not been amended by Company Management to incorporate the measurement method changes mentioned in paragraph 6, or to reflect the restatement required by professional accounting standards as mentioned in paragraph 5 above.
During the fiscal year ended December 31, 2003, we have billed professional fees for audit. services rendered to the issuer of these financial statements that represent 100% of total billings to the issuer on all accounts, 75% of the audit services billed to the issuer, its parent and its subsidiary, and 75% of total billings to the issuer, its parent and its subsidiary on all accounts.
As of December 31, 2003, the debt accrued in employer and employee contributions to the SIJP (Integrated Retirement and Survivors’ Pension System) as shown in the Company’s financial records amounts to ARS 216,507, none of which was due and payable as of such date.

Buenos Aires City,

March 10, 2004


PISTRELLI, HENRY MARTIN, Y ASOCIADOS S.R.L. C.P.C.E.C.A.B.A. Vol. I Fo. 13

Adolfo Lázara (Partner) Certified Public Accountant (U.B.A.) C.P.C.E.C.A.B.A. Vol. LXIX Fo. 174

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

MIRGOR SOCIEDAD ANONIMA, COMERCIAL, INDUSTRIAL, FINANCIERA, INMOBILIARIA Y AGROPECUARIA

registered office: Einstein 1111 – Río Grande – Tierra del Fuego, Argentina

Main business: Manufacture of air conditioning equipment for vehicles.

Registration date with the Public Registry of Commerce:

Of the articles of incorporation: June 1, 1971.
Of the last amendment to of the articles of incorporation: August 22, 1997.

Expiry of the articles of incorporation: May 31, 2070

fiscal year no. 33 beginning january 1, 2003,

summary OF EVENTS

For the fiscal year ended December 31, 2003

(Figures stated in Argentine pesos, “ARS”– see Note 1)

BRIEF DESCRIPTION OF THE COMPANY’S ACTIVITIES DURING THE FISCAL YEAR.

The results of operations for the fiscal year ended December 31, 2003, were a loss of 2,907,227, which represented 2.53% of sales revenues for the year, as compared with the prior year’s loss of 15,155,221, which represented 12.42% of sales revenues. This improvement is due to the stabilization of the economy and the Company’s achievements as to its competitiveness .

During 2003 there was a gradual consolidation of the economic changes resulting from the government measures taken during 2002 and ratified by the new government administration, which gave economic players a further signal of reassurance by keeping on the same Minister of Economy

Although there were important developments in this period, it is also true that many issues remain pending, such as the new Employment Contracts Law, definition on structural reforms, the conflicts with the privatized utility companies regarding their rates, and other issues, resolution of which would provide greater certainty as to the path Argentina will take.

As regards our industry in particular, it recovered significantly in 2003 but it is still far below the levels once achieved. This recovery was due to an increase in domestic demand in comparison with the prior year, but also due to a very significant development, namely the increase of exports, not to Brazil, but rather to Mexico and Chile.

This was less turbulent than the previous year as a result of price-change guidelines having been fixed and the stabilization of cost factors, which allowed the Company to concentrate its efforts on improving productivity, logistics and the quality of our products.

Two developments occurred this fiscal year definitely deserve highlighting: the increase in the market share of Mirgor products; and the addition of new products to the General Motors line in the second half of the year, the effects of which will be fully felt only next year.

equity structure (figures related to the consolidated statements, stated in constant pesos – see note 1)


	12/31/2003	12/31/2002	12/31/2001	12/31/2000	12/31/1999

Current assets	67,547,756	66,879,625	60,949,060	93,547,581	110,131,652
Noncurrent assets	32,391,773	38,458,205	56,790,548	49,575,217	51,740,269
Total assets	99,939,529	105,337,830	117,739,608	143,122,798	161,871,921

Current liabilities	33,133,081	30,199,587	44,280,865	57,420,394	66,056,935
Noncurrent liabilities	11,411,548	16,836,705	-	-	-
Total liabilities	44,544,629	47,036,292	44,280,865	57,420,394	66.056.935

Minority interest	4,119	3,530	5,514	5,608	5.819

Shareholders' equity	55,390,781	58,298,008	73,453,229	85,696,796	95.809.167
Total liabilities and Shareholders’ equity	99,939,529	105,337,830	117,739,608	143,122,798	161.871.921

income structure (figures related to the consolidated statements and stated in constant pesos – see note 1)


	12/31/2003	12/31/2002	12/31/2001	12/31/2000	12/31/1999
Ordinary operating income (loss)	610,119	1,723,633	(3,175,913)	3,224,474	4,413,067
Financial expense	(1,189,193)	(16,139,916)	(6,666,470)	(5,062,135)	(5,163,189)
Other (expenses) / revenues	(1,535,015)	(356,707)	(935,779)	78,478	633,197
Income tax	(792,549)	(384,214)	-	-	-
Minority interest gain (loss)	(589)	1,983	97	214	195
Ordinary income (loss), net	(2,907,227)	(15,155,221)	(10,778,065)	(1,758,969)	(116,730)
	-	-	(1,465,501)	-	2,538,779
Income (loss), net	(2,907,227)	(15,155,221)	(12,243,566)	(1,758,969)	2,422,049

STATISTICAL DATA (1)



Number of units	12/31/2003		12/31/2002		12/31/2001		12/31/2000			12/31/1999
	Quarter	Accum	Quarter	Accum	Quarter	Accum.	Quarter	Accum.	Quarter		Accum

Production (2)	63,595	215,288	43,303	147,618	26,995	178,250	63,164	232,861	39,540		226,689

Sales (3)	51,810	186,643	41,063	137,478	23,990	123,219	62,452	186,682	42,551		152,545


* Local	27,582	84,255	20,333	67,590	17,172	73,093
Equipment with air	16,274	41,451	12,346	35,839	11,442	47,004
Equipment without air	6,487	25,065	4,857	19,056	5,730	26,089
Dashboard	4,821	17,739	3,130	12,695	-	-
* Exports	24,228	102,388	2,0730	69,888	6,818	50,126

As from this fiscal year, ICSA discloses the units sold as statistical information.
It includes the one related to Interclima S.A.
The units sold among companies are not included.
ratios


	12/31/2003	12/31/2002	12/31/2001	12/31/2000	12/31/1999

Current ratio	2.04	2.21	1.38	1.63	1.67
Equity to debt ratio	1.24	1.24	1.66	1.49	1.45
Fixed asset-to-equity capital ratio	0.32	0.37	0.48	0.35	0.32

CHANGES IN THE MARKET PRICE OF SHARES


December 2003		December 2002		November 2003		November 2002		October 2003		October 2002
19.75		10.20		18.20		10.00		16.50		7.30


September 2003		September 2002		August 2003		August 2002		July 2003		July 2002
15.70		6.00		14.70		5.20		15.80		5.40


June 2003		June 2002		May 2003		May 2002		April 2003		April 2002
16.10		4.30		15.50		4.60		12.60		4.50


January 2003		January 2002		February 2003		February 2002		March 2003		March 2002
9.40		4.10		10.10		4.10		9.30		4.10

prospects

For the next fiscal year, the Company is projecting an increase in the volume sold to General Motors, as the result of the agreement signed in late 2003, deliveries under which began in such fiscal year. As regards other automobile manufacturers, Renault and Volkswagen especially, the Company is in expectation of announcements as to the renewal of the models currently in production.

Meanwhile, the expected improvement in the internal demand for cars manufactured domestically enables us to foresee a general increase in the sale of our equipment due to an increased demand from automobile manufacturers overall .

As regards our subsidiary Interclima S.A., its business volume is also expected to increase due to both the introduction of new products, expected to take place in the first quarter of 2004, and the recovery of activity in its plant in Río Grande, Tierra del Fuego, resulting from the authorization for product substitution obtained from the Industry Department.

Buenos Aires, March 10, 2004.


	MIRGOR S.A.C.I.F.I.A.


	Lic. Roberto G. Vázquez
	Chairman

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

MIRGOR SOCIEDAD ANONIMA, COMERCIAL, INDUSTRIAL, FINANCIERA, INMOBILIARIA Y AGROPECUARIA

Financial statements related to fiscal year No. 33 for the YEAR beginning January 1, 2003, and ended DECEMBER 31, 2003, presented comparatively with the prior year.

registeredoffice:Einstein 1111 – Río Grande – Tierra del Fuego, Argentina

Main business: Manufacture of air conditioning equipment for vehicles.

Registration date with the Public Registry of Commerce:

Of the articles of incorporation: June 1, 1971.
Of the first amendment to the articles of incorporation: July 1, 1994.
Of the last amendment to the articles of incorporation: August 22, 1997.

Registration number with the IGJ (regulatory agency of business associations): 40,071

Expiry of the articles of incorporation: April 13, 2070.

Parent company: disclosed in note 6 to the stand-alone financial statements.

Capital structure: see note 3 to the stand-alone financial statements.

The Company is not enrolled in the Statutory Optional System for the Mandatory Acquisition of Public Offerings.


	PESOS
20,000,000 shares of common stock, face value, ARS 0.10 per share Subscribed, paid-in, issued, and registered with the Public Registry of Commerce	2,000,000

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

MIRGOR S.A.C.I.F.I.A.

Supplementary information

consolidated balance sheet as of DECEMBER 30, 2003, comparatively with the prior year

Figures stated in Argentine pesos – See note 1


	2003	2002
ASSETS
CURRENT ASSETS
Cash – Note 2	13,781,162	8,949,955
Short-term investments – Note 2	1,547	5,064,959
Trade receivables – Note 2	15,502,566	8,806,415
Taxes receivable – Note 2	278,422	1,076,940
Other receivables – Note 2	1,284,985	2,166,336
Inventories – Note 2	36,699,074	40,815,020
TOTAL CURRENT ASSETS	67,547,756	66,879,625

NONCURRENT ASSETS
Other receivables – Note 2	3,499,885	5,039,934
Taxes receivable – Note 2	6,036,894	5,566,639
Intangible assets – Note 1(e)b	32,903	366,168
Property, plant and equipment – Note 1(e)a	22,822,091	27,485,464
TOTAL NONCURRENT ASSETS	32,391,773	38,458,205
TOTAL ASSETS	99,939,529	105,337,830

Notes 1 through 3 to the consolidated financial statements and notes 1 through 15 to the stand-alone financial statements of MIRGOR S.A.C.I.F.I.A. are an integral part of and should be read together with these statements.

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

MIRGOR S.A.C.I.F.I.A.

Supplementary information

consolidated balance sheet as of DECEMBER 30, 2003, comparatively with the prior year

Figures stated in Argentine pesos – See note 1


	2003	2002
LIABILITIES
CURRENT LIABILITIES
Payables
Trade payables – Note 2	20,238,645	11,639,916
Salaries, payroll and other taxes payable – Note 2	3,044,863	1,480,776
Customer prepayments - Note 2	4,050,543	6,423,746
Loans – Note 2	5,568,642	9,457,954
Other	230,388	154,602
Total Liabilities	33,133,081	29,156,994
Provisions	-	1,042,593
TOTAL CURRENT LIABILITIES	33,133,081	30,199,587

NONCURRENT LIABILITIES
Payables
Customer prepayments	1,761,404	-
Loans – Note 2	9,650,144	16,836,705
TOTAL NONCURRENT LIABILITIES	11,411,548	16,836,705
TOTAL LIABILITIES	44,544,629	47,036,292

Minority interest in subsidiaries	4,119	3,530

SHAREHOLDERS’ EQUITY	55,390,781	58,298,008
TOTAL LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS’ EQUITY	99,939,529	105,337,830

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MIRGOR S.A.C.I.F.I.A.

Supplementary information

Consolidated statement of income for the YEAR ended DECEMBER 31, 2003, presented comparatively with the prior year

Figures stated in Argentine pesos – See note 1


	2003	2002
Net sales (including VAT benefits amounting to 14,068,442 and 15,208,391)	114,705,458	121,981,311
Cost of goods sold	(103,001,015)	(109,044,570)
GROSS REVENUES	11,704,443	12,936,741

Administrative expenses - Exhibit H	(7,970,008)	(8,571,295)
Selling expenses – Exhibit H	(3,287,313)	(2,641,813)
Other expense / income	(1,535,015)	(356,707)
Financial expense and holding losses from assets
Interest	228,304	(2,019,570)
Foreign exchange difference	(871,228)	(5,079,030)
Holding gains (losses) – Inventories	(2,526,086)	16,741,014
Allowances / provisions	(8,582)	(2,806,762)
Gain (loss) on exposure to inflation	(346,836)	(14,172,893)
Current investments and tax credits	(138,327)	(399,944)
Financial expense and holding losses from liabilities
Interest	(1,143,778)	2,423,411
Foreign exchange difference	3,420,162	(13,530,337)
Gain (loss) on exposure to inflation	392,315	2,746,906
Loss from long-term investments	(32,140)	(42,711)
Loss before income tax	(2,114,089)	(14,772,990)
Income tax	(792,549)	(384,214)
Loss after income tax	(2,906,638)	(15,157,204)
Minority interest in subsidiaries	(589)	1,983
(LOSS) INCOME FOR THE YEAR	(2,907,227)	(15,155,221)

Notes 1 through 3 to the consolidated financial statements and notes 1 through 16 to the stand-alone financial statements of MIRGOR S.A.C.I.F.I.A. are an integral part of and should be read together with these statements.

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MIRGOR S.A.C.I.F.I.A.

Additional information

Consolidated statement of cash flows for the YEAR ended DECEMBER 31, 2003, comparatively with the prior year

Figures stated in Argentine pesos – See note 1


	2003	2002
CHANGES IN CASH
Cash at beginning of year	14,014,326	4,999,102
Cash at end of year	13,782,122	14,014,326
Cash (decrease) increase	(232,204)	9,015,224

SOURCES OF CHANGES IN CASH

OPERATING ACTIVITIES
Ordinary income (loss) for the year	(2,907,227)	(15,155,221)
Interest and foreign exchange difference accrued	(957,741)	426,234
	792,549	384,214

Adjustments to reach net cash flows deriving from operating activities
PP&E depreciation and intangible assets amortization	5,402,052	5,643,937
Minority interest	589	(1,983)
Allowance for impairment in value of inventories (net effect)	729,220	3,829,783
Loss from long-term investments	32,140	42,711
Loss from current investments	-	699
Contingency provision	(1,042,593)	1,042,593
Impairment in value of PP&E advances from exposure to inflation	1,618	697,812
Changes in operating assets and liabilities:
Trade receivables	(6,696,151)	7,149,957
Inventories	3,386,725	(6,810,279)
Trade payables	8,598,729	(88,687)
Salaries, payroll and other taxes (net of receivables)	1,099,802	7,068,248
Customer prepayments	(611,799)	6,423,746
Other	2,463,539	2,364,438
Interest repayment	(2,062,094)	(2,133,299)
Net cash flow provided by operating activities	8,229,358	10,884,903

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

MIRGOR S.A.C.I.F.I.A.

Additional information

Consolidated statement of cash flows for the YEAR ended DECEMBER 31, 2003, comparatively with the prior year

Figures stated in Argentine pesos – See note 1


	2003	2002
INVESTMENT ACTIVITIES
PP&E acquisition	(405,525)	(396,180)
Net cash flow used in investment activities	(405,525)	(396,180)

FINANCING ACTIVITIES
Loan repayment	(8,056,037)	(1,473,499)
NET CASH FLOW USED IN FINANCING ACTIVITIES	(8,056,037)	(1,473,499)
Net cash (decrease) increase	(232,204)	9,015,224

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MIRGOR S.A.C.I.F.I.A.

Supplementary information

notes to the consolidated financial statements as of DECEMBER 31, 2003 AND 2002.

Figures stated in Argentine pesos – See note 1

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

Applicable accounting standards

The financial statements as of December 31, 2003, and 2002, have been prepared following CNV (Argentine Securities Commission) General Resolution No. 368 guidelines, within effective professional accounting standards with the restrictions and additions provided for in Resolution No. 434, which amended Exhibit I to Book No. 7 “Informative System” of such resolution and the discontinuance of the effects of changes in the currency purchasing power set forth by CNV General Resolution No. 441, as indicated in note 1 to the basic financial statements.

Valuation and disclosure method summary

The valuation and disclosure methods used in the consolidated financial statements are similar to those disclosed in note 1 to the stand-alone financial statements, except for the valuation of interests in subsidiaries, which in the current statements have been incorporated line by line following the method of FACPCE (Argentine Federation of Professional Councils in Economic Sciences) Technical Resolution No. 4 as amended by FACPCE Technical Resolution No. 19 with the applicable deletions.

Consolidation bases

Following the procedure established in FACPCE Technical Resolution No. 4 amended by Technical Resolution No. 19, MIRGOR S.A.C.I.F.I.A. has consolidated its financial statements as of December 31, 2003 and December 31, 2002, as the case may be, line by line with those of its subsidiary, Interclima Sociedad Anónima, where it holds majority voting rights.

Corporate control is as follows:


Subsidiary		Interest in the common stock and voting rights as of 12/31/03		Year-end
Interclima Sociedad Anónima		99.9667%		12/31/03

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MIRGOR S.A.C.I.F.I.A.

Supplementary information

notes to the consolidated financial statements as of DECEMBER 31, 2003 AND 2002- Continued

Figures stated in Argentine pesos – See note 1

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES - Continued

Financial statements used in consolidation

The consolidated financial statements as of December 31, 2003, and December 31, 2002, were prepared using the financial statements of Interclima Sociedad Anónima as of December 31, 2003, audited by Pistrelli, Henry Martin y Asociados S.R.L., and as of December 31, 2002, audited by Henry Martin, Lisdero y Asociados, with their respective auditors’ reports dated March 10, 2004, carrying “except for” qualifications and qualifications for unresolved uncertainties, and March 10, 2003, also carrying “except for” qualifications and qualifications for unresolved uncertainties.

Changes in significant assets


	12/31/03 ARS	12/31/02 ARS
1. PP&E
Balance at beginning of year	27,485,464	38,586,113
Additions	417,225	530,342
Retirements (net of depreciation)	(11,811)	(6,395,002)
Depreciation	(5,068,787)	(5,235,989)
Balance at end of year	22,822,091	27,485,464


	ARS	ARS
1. Intangible assets
Balance at beginning of year	366,168	774,116
Amortization	(333,265)	(407,948)
Balance at end of year	32,903	366,168

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

MIRGOR S.A.C.I.F.I.A.

Supplementary information

notes to the consolidated financial statements as of DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See note 1

NOTE 2 – MAIN ACCOUNT BREAKDOWN


	12/31/03	12/31/02
ASSETS
CURRENT ASSETS
Cash
On hand and imprest fund in Argentine currency	41,658	17,899
On hand in foreign currency	105,476	848,257
In banks in Argentine currency	4,461,304	7,789,049
In banks in foreign currency	9,172,724	294,750
	13,781,162	8,949,955
Short-term investments
Savings account and other in foreign currency	-	5,063,401
Savings account in Argentine currency and other	1,547	1,558
	1,547	5,064,959
Trade receivables
Trade receivables	15,015,866	8,225,134
Trade receivables in foreign currency	571,877	666,395
Allowance for doubtful accounts	(85,177)	(85,114)
	15,502,566	8,806,415
Taxes receivable
VAT credit	232,808	1,006,753
Other	45,614	70,187
	278,422	1,076,940
Other receivables
Notes receivable	749,597	1,513,368
Interest to be accrued	(95,109)	(78,248)
Miscellaneous receivables	-	284,635
Other	630,497	446,581
	1,284,985	2,166,336

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Supplementary information

notes to the consolidated financial statements as of DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See note 1

NOTE 2 - MAIN ACCOUNT BREAKDOWN - Continued


	12/31/03	12/31/02
Inventories
Manufactured products	11,433,737	11,335,434
Raw material	22,932,903	31,804,395
Raw material in transit	7,771,539	3,303,341
Stock at end of period	42,138,179	46,443,170
Prepayments to vendors in Argentine currency	371,927	804,366
Prepayments to vendors in foreign currency	2,109,971	759,267
Allowance for impairment in value	(7,921,003)	(7,191,783)
	36,699,074	40,815,020

NONCURRENT ASSETS
Other receivables
Reimbursements in Argentine currency receivable	2,254,264	2,067,247
Notes receivable	1,426,633	3,410,035
Interest to be accrued	(181,012)	(469,490)
Other	-	32,142
	3,499,885	5,039,934
Taxes receivable
Compulsory savings	7,842	7,900
VAT credit	3,266,016	2,984,289
Minimum presumed income tax	1,503,330	1,273,669
Promotional benefits receivable	779,973	925,103
Other	479,733	375,678
	6,036,894	5,566,639

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Supplementary information

notes to the consolidated financial statements as of DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See note 1

NOTE 2 - MAIN ACCOUNT BREAKDOWN - Continued


	12/31/03	12/31/02
LIABILITIES
CURRENT LIABILITIES
Payables
Trade payables
In local currency	6,828,975	6,359,492
In foreign currency	13,409,670	5,280,424
	20,238,645	11,639,916
Salaries, payroll and other taxes
Employee benefits	722,493	494,668
Taxes payable	2,322,370	986,108
	3,044,863	1,480,776
Customer prepayments
In local currency	1,798,553	-
In foreign currency	2,251,990	6,423,746
	4,050,543	6,423,746
Loans
Financial loans in local currency	2,216,748	4,948,206
Financial loans in foreign currency	3,351,894	4,509,748
	5,568,642	9,457,954

NONCURRENT LIABILITIES
Payables
Loans
Financial loans in local currency	2,782,244	2,807,948
Financial loans in foreign currency	6,867,900	14,028,757
	9,650,144	16,836,705

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Supplementary information

notes to the consolidated financial statements as of DECEMBER 31, 2003 AND 2002 - Continued

NOTE 3 – EXPLANATION ADDED FOR TRANSLATION INTO ENGLISH

These financial statements are the English translation of those originally issued in Spanish.

They are presented in accordance with generally accepted accounting principles in Argentina. The effects of the differences between Argentine generally accepted accounting principles and the accounting principles generally accepted in the countries in which the accompanying financial statements may be used have not been quantified.

Accordingly, these financial statements are not intended to present financial position, results of operations and changes in financial position in accordance with accounting principles generally accepted in the countries of users of the financial statements, other than Argentina.

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EXHIBIT c

shares, debentures, other securities issued in series, and interest in the company for the YEAR ended DECEMBER 31, 2003, presented comparatively WITH THE PRIOR FISCAL YEAR

Figures stated in Argentine pesos – See Note 1(a)


	12/31/03												12/31/02
							Information on the issuer
								Latest financial statements issued
Securities name and features	Face values	Amounts	Cost values	Value by the equity method	Highest investment value	Book values	Main business	Date	Capital	Return for period	Equity	Interest % on capital stock	Book value

Companies under Law No. 19,550, Section 33 (subsidiaries and affiliates)

INTERCLIMA Sociedad Anónima	1	11,996	8,815,917	11,082,333		11,082,333	Auto-part manufacturing and interchanges for air conditioning and heating equipment	12/31/03	12,000	1,768,182	12,369,130	99.97%	10,149,174

Total noncurrent investments						11,082,333							10,149,174
Total investments						11,082,333							10,149,174

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EXHIBIT H

INFORMATION REQUIRED BY LAW No. 19,550, section 64 b(i) for the YEAR ended DECEMBER 31, 2003, presented comparatively with the prior FISCAL year

Figures stated in Argentine pesos – See Note 1(a)


	12/31/03				12/31/02
Accounts	Production costs	Administrative expenses	Selling expenses	Total	Total

Salaries and wages	4,539,132	2,397,871	429,574	7,366,577	7,670,005
Payroll taxes and employee benefits	1,006,356	764,784	110,984	1,882,124	1,773,065
Insurance	478,066	100,889	5,203	584,158	599,249
Fees and training expenses	199,164	437,636	4,314	641,114	658,435
Taxes, rates, and assessments	713,897	462,681	1,158,798	2,335,376	1,172,604
Other administrative expenses	-	1,618,854	-	1,618,854	2,132,764
PP&E depreciation	3,166,635	1,946,492	48,124	5,161,251	5,328,455
Intangible asset amortization	-	240,801	-	240,801	315,482
Other production expenses	1,598,485	-	-	1,598,485	1,639,906
Customs clearance and taxes	2,456,420	-	-	2,456,420	4,311,971
Shipping, handling and freight	9,109,211	-	695,734	9,804,945	9,960,132
	-	-	172,446	172,446	314,027
Other selling expenses	-	-	662,136	662,136	785,564
Total 2003	23,267,366	7,970,008	3,287,313	34,524,687
Total 2002	25,448,551	8,571,295	2,641,813		36,661,659

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balance sheet as of DECEMBER 31, 2003, presented comparatively with

the prior FISCAL year

Figures stated in Argentine pesos – See note 1(a)


	12/31/03	12/31/02
ASSETS
CURRENT ASSETS
Cash – Note 2	13,674,837	8,140,586
Short-term investments – Note 2	1,547	5,064,959
Trade receivables – Note 2	14,828,548	8,120,841
Taxes receivable – Note 2	110,166	906,803
Other receivables – Note 2	1,266,005	1,864,324
Inventories – Note 2	34,421,150	38,774,595
TOTAL CURRENT ASSETS	64,302,253	62,872,108

NONCURRENT ASSETS
Long-term investments	11,082,333	10,149,174
Taxes receivable – Note 2	2,495,602	2,643,206
Other receivables – Note 2	2,165,391	3,867,128
Property, plant and equipment	20,690,057	24,926,314
Intangible assets	25,384	266,185
TOTAL NONCURRENT ASSETS	36,458,767	41,852,007
TOTAL ASSETS	100,761,020	104,724,115

The accompanying notes 1 to 16 are an integral part of these financial statements.

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balance sheet as of DECEMBER 31, 2003, presented comparatively with the prior FISCAL year

Figures stated in Argentine pesos – See note 1(a)


	12/31/03	12/31/02
LIABILITIES
CURRENT LIABILITIES
Payables
Trade payables– Note 2	18,313,122	10,190,234
Salaries, payroll and other taxes– Note 2	1,628,652	1,015,461
Loans – Note 2	5,568,642	9,457,954
Customer prepayments – Note 2	4,050,543	6,423,746
Other payables – Note 2	1,397,732	1,459,414
Total Liabilities	30,958,691	28,546,809
Provisions	-	1,042,593
TOTAL CURRENT LIABILITIES	30,958,691	29,589,402

NONCURRENT LIABILITIES
Payables
Loans – Note 2	9,650,144	16,836,705
Customer prepayments	1,761,404	-
Other payables – Note 2	3,000,000	-
TOTAL NONCURRENT LIABILITIES	14,411,548	16,836,705
TOTAL LIABILITIES	45,370,239	46,426,107

SHAREHOLDERS’ EQUITY	55,390,781	58,298,008
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	100,761,020	104,724,115

The accompanying notes 1 to 15 are an integral part of these financial statements.

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statement of income FOR THE YEAR ENDED DECEMBER 31, 2003, PRESENTED COMPARATIVELY WITH THE PRIOR YEAR

Figures stated in Argentine pesos – See note 1(a)


	12/31/03	12/31/02
Net sales (including VAT benefits amounting to 14,068,442 and 15,208,391) – Note 4(e)	106,727,042	110,044,649
Cost of goods sold	(98,564,314)	(100,374,000)
GROSS REVENUES	8,162,728	9,670,649

Administrative expenses	(7,754,753)	(8,353,417)
Selling expenses	(3,056,400)	(2,305,763)
Other (expense) / income – Note 2	(702,267)	415,239
Ordinary income (loss) from long-term investments	933,161	(6,365,335)
Financial expense and holding losses from assets
Interest	286,238	(1,332,444)
Foreign exchange difference	(619,331)	(4,358,049)
Holding gains (losses) – Inventories	(2,413,197)	16,513,371
Allowances / provisions	9,549	(2,542,522)
Gain (loss) on exposure to inflation	(260,408)	(7,243,121)
Current investments and tax credits	(138,327)	(399,944)
Financial expense and holding losses from liabilities
Interest	(1,109,573)	2,403,262
Foreign exchange difference	3,398,917	(13,371,909)
Gain (loss) on exposure to inflation	356,436	2,114,762

NET (LOSS) INCOME FOR THE PERIOD	(2,907,227)	(15,155,221)
NET (LOSS) EARNINGS PER SHARE – NOTE 13
BASIC ORDINARY	(0.1454)	(0.7578)
DILUTED ORDINARY	(0.1454)	(0.7578)

The accompanying notes 1 to 15 are an integral part of these financial statements.

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STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY FOR YEAR ENDED DECEMBER 31, 2003, PRESENTED COMPARATIVELY WITH THE PRIOR YEAR

Figures stated in Argentine pesos – See note 1(a)


	12/31/03											12/31/02
							Appropriated retained earnings
Detail	Capital stock	Capital stock adjustment	Noncapitalized contributions	Noncapitalized contribution adjustments	Issuance premiums	Total	Legal reserve	*Other reserves ()**	Total	Unappropriated retained earnings	Total	Total

Balances at beginning of year	2,000,000	4,155,936	497	717	5,243,562	11,400,712	2,280,143	73,708	2,353,851	46,855,986	60,610,549	73,453,229

Balance modification-Note 14	-	-	-	-	-	-	-	-	-	(2,312,541)	(2,312,541)	-
Modified balances at beginning of year	2,000,000	4,155,936	497	717	5,243,562	11,400,712	2,280,143	73,708	2,353,851	44,543,445	58,298,008	73,453,229

Net income(loss) for the year	-	-	-	-	-	-	-	-	-	(2,907,227)	(2,907,227)	(15,155,221)
Balances as of December 31, 2003	2,000,000	4,156,936	497	717	5,243,562	11,400,712	2,280,143	73,708	2,353,851	41,636,218	55,390,781
Balances as of December 31, 2002	2,000,000	4,155,936	497	717	5,243,562	11,400,712	2,280,143	73,708	2,353,851	44,543,445		58,298,008

(*) See note 3(b)

The accompanying notes 1 to 15 are an integral part of these financial statements.

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statement of cash flows for year ended december 31, 2003, presented comparatively with the prior year

Figures stated in Argentine pesos – See note 1(a)


	12/31/03	12/31/02
CHANGES IN CASH (1)
Cash at beginning of year	13,204,957	4,990,962
Cash at end of year	13,675,797	13,204,957
Cash (decrease) increase	470,840	8,213,995

SOURCES OF CHANGES IN CASH

OPERATING ACTIVITIES
Ordinary (loss) income for the year	(2,907,227)	(15,155,221)
Interest and foreign exchange difference accrued	(957,741)	426,234

Adjustments to reach net cash flows deriving from operating activities
PP&E depreciation and intangible assets amortization	4,784,699	5,020,293
Allowance for impairment in value of inventories (net effect)	661,689	3,520,607
Income (Loss) from long-term investments	(933,161)	6,365,335
Loss from current investments	-	699
Contingency provision	(1,042,593)	1,042,593
Impairment in value of PP&E advances from exposure to inflation	1,585	691,572
Changes in operating assets and liabilities:
Trade receivables	(6,707,707)	7,382,716
Inventories	3,691,756	(6,605,347)
Trade payables	8,122,888	(965,777)
Salaries, payroll and other taxes (net of receivables)	1,557,432	3,974,447
Customer prepayments	(611,799)	6,423,746
Other	5,236,868	66,100
Interest repayment	(2,062,094)	(2,133,300)
NET CASH FLOW (USED IN) PROVIDED BY OPERATING ACTIVITIES	8,834,595	10,054,697

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statement of cash flows for the year ended december 31, 2003, presented comparatively with the prior year

Figures stated in Argentine pesos – See note 1(a)


	12/31/03	12/31/02
INVESTMENT ACTIVITIES
PP&E acquisition	(307,718)	(367,203)
NET CASH FLOW USED IN INVESTMENT ACTIVITIES	(307,718)	(367,203)

FINANCING ACTIVITIES
Loan repayment	(8,056,037)	(1,473,499)
NET CASH FLOW USED IN FINANCING ACTIVITIES	(8,056,037)	(1,473,499)
Net cash (decrease) increase	470,840	8,213,995

(1) Not considering the temporary investments in shares

The accompanying notes 1 to 15 are an integral part of these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002

Figures stated in Argentine pesos – See Note 1.(a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

Restatement into constant pesos

Professional accounting standards provide that financial statements are to be stated in constant pesos and that, in inflationary or deflationary conditions, the financial statements are to be restated into pesos with the purchasing power of the date of issuance of such statements, recognizing in accounts the changes in the “IPIM”, i.e. the wholesale price index published in the INDEC (Argentine Statistics and Census Bureau), in accordance with the restatement method established in Technical Resolution (TR) No. 6 of the FACPCE (Argentine Federation of Professional Councils in Economic Sciences).

The Company’s financial statements as of December 31, 2003, and 2002, recognize the changes in the purchasing power of the peso through February 28, 2003, in accordance with Federal Executive Decree No. 664/2003 and CNV (Argentine National Securities Commission) No. 441. Under professional accounting standards the restatement method established in TR No. 6 should have been discontinued only as from October 1, 2003. Had the changes in the purchasing power of the peso been recognized through September 30, 2003, (a) the loss for the fiscal year ended December 31, 2003, would have decreased by about 743,353, and (b) the accounts presented for comparative purposes would have been restated. The effects of such non-recognition on shareholders’ equity are not significant.

New accounting standards applied to financial statements preparation and presentation

The CNV(Argentine National Securities Commission) issued General Resolution No. 434, dated January 14, 2003, whereby it adopted, with certain exceptions and mandatory effectiveness as from January 1, 2003, the new professional accounting standards approved by the CPCECABA (Buenos Aires City Professional Council in Economic Sciences) (FACPCE – Argentine Federation of Professional Councils in Economic Sciences - Technical Resolutions Nos. 16 through 20, with the amendments incorporated by CPCECABA resolutions CD 238/01, 243/01, 261/01, 262/01, 187/02 and MD 32/02).

Such accounting standards incorporated changes in the methods for measuring shareholders’ equity and determining income (loss), as well as new disclosure requirements. The changes that could be most significant to the Company are the determination of net present value of tax receivables, the quantification of income tax by the deferred tax method, restrictions on the recognition of intangible assets and other disclosure aspects such as earnings per share, as explained in each of the accounts or items in question.

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NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See Note 1.(a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

The effects of the changes in the new accounting standards at the beginning of the first fiscal year of their effectiveness have been booked retroactively, that is to say that they have affected Prior-year Income(loss) as indicated in Note 14.

Comparability

The balances as of December 31, 2002, presented comparatively are those resulting from restating the amounts of the financial statements as of such dates into pesos of February 28, 2003, following the method described in point (a) above. Such financial statements for comparative purposes have been amended applying the new standards mentioned in this note and include the effects of the adjustments mentioned in Note 14. It should be noted that, although the new professional accounting standards require that the financial statements presented for comparative purposes be adapted to the newly adopted accounting methods, Company Management, for reasons of practicality, timeliness and cost-benefit balance decided to compute the abovementioned effects on the financial position as of December 31, 2002, without considering the impact of the new standards on the determination of the income (loss) for the fiscal year then ended.

The situation described in the preceding paragraph affects the financial statements comparability.

Valuation methods

The main valuation methods used to prepare the financial statements:

Cash, current investments, trade receivables, other receivables and liabilities:

In Argentine pesos: at nominal value at end of the period including, as the case may be, explicit and imputed interest accrued as of such dates, which has been determined by calculating the discounted value of cash flows, following the methods under CPCECABA Resolution MD No. 32/02, considering the present economic circumstances due to the current characteristics of the financial market; for such purpose, the interest rate on financing obtained by the company has been considered.

In foreign currency: at nominal value in foreign currency plus explicit and imputed interest accrued as of period – end, converted at the exchange rates effective as of such dates to

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NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See Note 1.(a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

convert such transactions. The foreign exchange differences were charged to income for the fiscal period or year, as the case may be. Other receivables and payables in local currency (except for deferred tax amounts): they have been valued at their estimated value deducted from the amount receivable or payable taking into account the methods under CPCECABA Resolution MD No. 32/02, as mentioned in the first paragraph (Cash, Trade Receivables, Other Receivables and Liabilities)

Credit risk: In its usual course of business the Company grants credit to customers, including car plants, that represent about 99% of the total sales. The company evaluates permanently the financial capacity of its customers in order to reduce the possible risk of significant losses due to bad debts.

Financial instruments: the Company does not use derivative financial instruments. Receivables and payables related to usual business transactions are valued as stated in the previous paragraphs and, in the opinion of the management of MIRGOR, such valuation does not differ from their current value.

Inventories

Raw materials (including those in transit) were valued at replacement cost at end of the period, considering the cash prices for usual purchase amounts. In addition, imported goods are valued at replacement cost at the foreign exchange rate effective at end of the period.

The products manufactured were valued at cash reproduction cost at end of the period limited by the net realization value thereof.

Long-term investments:

Companies falling under Argentine Business Associations Law No. 19,550, i.e. subsidiaries and affiliates: by the equity method as established by Technical Resolution No. 5 of the FACPCE as amended by Technical Resolution No. 19, which was calculated on the basis of the financial statements of Interclima as of December 31, 2003, audited by Pistrelli, Henry Martin y Asociados S.R.L., whose auditor’s report dated March 10, 2004, carries “except for” qualifications and qualifications for unresolved uncertainties.

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NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See Note 1.(a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

On the other hand, the adjustments necessary to adopt the valuation methods used by the subsidiary to those used by the Company, including an increase in the market value of the former PP&E as compared to the books, which was included as investment value, were carried out upon calculating the value by the equity method.

Income from the interest in the subsidiary is included in a separate line in the statement of income. Refer to income tax paragraph b).

PP&E

PP&E have been valued at cost restated to February 28, 2003, as mentioned in note 1(a), less the related accumulated depreciation. Depreciation is calculated applying constant rates on the basis of the estimated useful life of the related assets. The assets subject to lease have been included in this account.

The net book value of PP&E was reviewed to verify whether it has been impaired whenever there were events or changes in circumstances indicating that the value booked cannot be recovered. Should there be any hint and book values exceed the estimated recoverable value, the assets or activities generating cash would be reduced up to the recoverable amount. The PP&E recoverable amount is equivalent to the higher of net realization value end the value in use. Upon determining the value in use, a first comparison should be made with the estimated future cash flows without any deduction. Should the value of cash flows exceed its net realization value and be lower than the net book value, the discounted flow and the net realization value should be compared again to determine the PP&E recoverable value and determine the impairment in value to be booked, as the case may be. Losses from impairment in value are recognized in the statement of income.

Intangible assets

Until December 31, 2002, research and development expenses and licenses related to new products were included in this item, valued at their replacement cost restated as of February 28, 2003, as mentioned in note 1(a), less the related accumulated amortization. These amounts are amortized applying constant rates to extinguish such values over a NINE-year period as from the launch of the new products, which will be amortized based on alternative a(2) set forth under section 8(2)3 of Technical Resolution No. 17, i.e. during the remaining useful life.

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NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See Note 1(a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

As from the effective date of the new technical resolutions mentioned in note 1(b), research and development expenses will be charged to income for the period in which they are incurred.

Allowances:
Doubtful accounts: to offset and make trade receivables adequate on an individual analysis basis of those presenting uncollectibility rates.
Impairment in value: calculated on the basis of the recoverable value of deteriorated, obsolete or slow-moving items.
Shareholders’ equity accounts:

Restated until February 28, 2003, in accordance with the method described in point (a) of this note, except for the “Capital stock – Face value” account, which was booked at original value. The adjustment resulting from the restatement as of August 31, 1995, and February 28, 2003, is disclosed in the “Capital stock adjustment” account.

Statement-of-income accounts

Statement of income accounts for the period from January 1 to February 28, 2003, are adjusted up to the latter date. Transactions from March 1 to December 31, 2003, are restated at historical currency.

Income (loss) from long-term investments was calculated by the equity method using the Company’s interest percentage on the subsidiary’s income (loss) for the same period deducting intercompany gains (losses). In addition, this account includes the adjustments necessary to make the valuation methods of the abovementioned company consistent with those of the subsidiary.

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NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See Note 1(a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

Financial income (expense) and holding gains (losses) include both foreign exchange differences, as well as gain (loss) from inventory holdings, interest, and gains (losses) from exposure to inflation.

Imputed financial components included in income-statement accounts were segregated.

Income tax – Tax on minimum presumed income (TOMPI)
Status of Mirgor S.A.

During the current period, the Company did not accrue income tax since taxable income resulted in a NOL under current regulations.

As from this period and as a result of the implementation of the new accounting standards mentioned in paragraph (b) of this note, income tax is booked following the liabilities deferred tax method for all the temporary differences existing as of the balance sheet date between assets and liabilities tax bases and their amounts booked in these financial statements, as set forth under FACPCE Technical Resolution No. 17.

Deferred income tax assets are recognized whenever there are differences that reduced future taxes and accumulated prior-year NOLs that have not been used, to the extent that there could be taxable income available to be offset against them. The book value of deferred income tax assets is reviewed upon preparing the financial statements and it is reduced to the extent that there was no possibility of sufficient taxable income that could be fully or partially offset against deferred income tax assets.

Based on the enforcement entity’s regulations, deferred income tax assets and liabilities have been valued at nominal value and quantified at the rates expected to be applied to the period in which assets are realized and liabilities are settled considering the regulations enacted as of the date of the financial statements, and they are disclosed in noncurrent liabilities or assets, as the case may be.

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

MIRGOR S.A.C.I.F.I.A.

NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See Note 1(a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

The professional accounting standards approved by the CPCECABA set forth that deferred taxes receivable and payable should be valued at their discounted value using market rates effective at end of the period or fiscal year. The effect of such discounting, taking into account the considerations of the following paragraph, on the shareholders’ equity as of December 31, 2003, and the income (loss) for the fiscal year then ended has not been significant in relation to these financial statements.

Taking into account that the Company is carrying forward NOLs in the amount of ARS 9,485,675, there would be a deferred tax asset of ARS 3,319,986, which the Company has written off entirely because it considers that current market difficulties do not provide any assurance that it is likely that sufficient taxable income will be obtained to allow recovery of such asset.

Such deferred-tax assets expire as follows:


Year of origin	NOL	Deferred tax	Expiration year
1998	256,985	89,945	2003
1999	(38,614)	(13,515)
2000	323,527	113,234	2005
2001	119,008	41,653	2006
2002	9,853,317	3,448,661	2007
2003	(1,028,548)	(359,992)
Total	9,485,675	3,319,986

During the year ended December 31, 2003, the TOMPI amount was higher than that of income tax. Accordingly, the accrual amounts to ARS 471.264, which was entered with a balancing entry in noncurrent tax credits.

1. Status of the subsidiary ICSA

Interclima S.A. has accrued income tax since it understood that the tax adjustment for inflation set forth in Income Tax Law should be applied taking into account Argentine current macroeconomic conditions.

The Company prepared and filed the 2002 income tax return, containing such adjustment, by which NOLs amounting to about ARS 5,200,000 were determined.

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NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See Note 1.(a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

Should the tax adjustment for inflation not be made, the Company would have determined income tax amounting to about ARS 384,342 (after computing prior-year NOLs) and ARS 792,813 for fiscal year 2003.

Interclima S.A. filed a legal remedy to obtain judicial protection since it understands that due to the high inflation that affected fiscal year 2002, section 39 of Law No. 24,073 dated 1992 should be abrogated. This section established an index applicable to the tax adjustment for inflation amounting to 1.00 (one) and suspended the application of such adjustment on taxable income in practice, as it had been regulated within an economic context that differed completely from fiscal year’s 2002. Consequently, these liabilities (ARS 1,177,155) have not been booked in the financial statements as of December 31, 2003, however, since this year the company considered such contingency for the evaluation of the investment. Since this is a change in the measurement criterion, such decreased value as of the beginning of the year (ARS 384,342) was considered an Adjustment to Prior-Year Income (see Note 14).

On July 17, 2003, the court hearing the case granted the precautionary measure requested by the company and ordering the Federal Company to refrain from commencing any administrative or legal proceeding or from filing any claim or making any request, as well as from applying any penalty based on the alleged prohibition to apply the adjustment for inflation.

1. Statement of cash-flows

Under FACPCE Technical Resolution No. 19, the statement of cash flows is included as an individual statement. The Company prepared such statement following the indirect methods on the basis of net income (loss) adding or subtracting, as the case may be, the accounts involved in the assessment thereof but not affecting the cash and changes in assets and liabilities as well as the net cash flow “provided by” or “used in” “investment” and “financing” activities. The Company has considered “Cash” to be formed by cash plus readily convertible investments (original placements of less than three months).

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NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See Note 1.(a)

note 2 – MAIN ACCOUNT BREAKDOWN


	12/31/03	12/31/02
CURRENT ASSETS
Cash
On hand and imprest fund in Argentine currency	36,532	10,236
On hand in foreign currency	105,476	46,551
In banks in Argentine currency	4,360,105	7,789,049
In banks in foreign currency	9,172,724	294,750
	13,674,837	8,140,586

Short-term investments
Savings account and other in foreign currency	-	5,063,401
Savings account and in Argentine currency and other	1,547	1,558
	1,547	5,064,959

Trade receivables
Trade receivables	14,913,725	8,205,955
Allowance for doubtful accounts	(85,177)	(85,114)
	14,828,548	8,120,841

Taxes receivable
VAT credit	110,166	883,273
Other	-	23,530
	110,166	906,803

Other receivables
Notes receivables	749,597	1,513,368
Interest to be accrued	(95,109)	(78,248)
Other	611,517	429,204
	1,266,005	1,864,324

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NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See Note 1(a)

note 2 – MAIN ACCOUNT BREAKDOWN - Continued


		12/31/03		12/31/02
Inventories
Manufactured products		10,420,164		11,096,316
Raw material		22,064,611		30,047,273
Raw material in transit		7,110,837		2,915,940
Stock at end of period		39,595,612		44,059,529
Prepayments to vendors in Argentine currency – Note 7		366,500		785,426
Prepayments to vendors in foreign currency		1,950,354		759,267
Allowance for impairment in value		(7,491,316)		(6,829,627)
		34,421,150		38,774,595
NONCURRENT ASSETS
Taxes receivable
Compulsory savings		7,821			7,879
VAT credit		93,481			321,286
Minimum presumed income tax		1,503,330			1,273,669
Promotional benefits receivable – Note 4(c)		779,973			925,103
Other		110,997			115,269
		2,495,602			2,643,206
Other receivables
Reimbursements in Argentine currency receivable – Note 4	919,770		926,583
Notes receivable	1,426,633		3,410,035
Interest to be accrued	(181,012)		(469,490)
	2,165,391		3,867,128

CURRENT LIABILITIES
Payables
Trade payables
In local currency	6,762,362			5,307,147
In foreign currency	11,550,760			4,883,087
	18,313,122			10,190,234

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MIRGOR S.A.C.I.F.I.A.

NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See Note 1(a)

note 2 – MAIN ACCOUNT BREAKDOWN – Continued


	12/31/03	12/31/02
Salaries, payroll and other taxes
Employee benefits	662,491	468,278
Taxes payable	966,161	547,183
	1,628,652	1,015,461
Loans
Financial loans in local currency	2,216,748	4,948,206
Financial loans in foreign currency	3,351,894	4,509,748
	5,568,642	9,457,954
Customer prepayments
In local currency	1,798,553		-
In foreign currency	2,251,990		6,423,746
	4,050,543		6,423,746
Other payables
Companies under Section 33, Law No. 19,550 (subsidiaries and affiliates) – Note 7	1,167,343	1,304,812
Other	230,389	154,602
	1,397,732	1,459,414
NONCURRENT LIABILITIES

Loans
Financial loans in local currency	2,782,244	2,807,948
Financial loans in foreign currency	6,867,900	14,028,757
	9,650,144	16,836,705


Other payables
Companies under Section 33, Law No. 19,550 (subsidiaries and affiliates) – Note 7	3,000,000	-
	3,000,000	-


OTHER EXPENSE / INCOME
Inventory difference	(890,743)	-
Other	188,476	415,239
	(702,267)	415,239

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MIRGOR S.A.C.I.F.I.A.

NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See Note 1(a)

note 3 – capital STRUCTURE – SHAREHOLDERS’ equity

Capital structure

As provided for in the amendments to the Company’s articles of incorporation approved by the Special Shareholders Meeting held May 27, 1994, the Company’s capital stock was increased from 3.20 to 2,000,000.

The capital stock is represented by 20,000,000, registered, subscribed, paid-in, book-entry shares of common stock, face value 0.10.

The Company’s shares were converted into three classes as detailed below:


Class
A B C	Entitled to three (3) votes each Entitled to three (3) votes each Entitled to one (1) votes each

Class A, B, and C shares are entitled to the same dividend collection rights.

The capital structure as of December 31, 2003, and 2002, was:


Class	Number
A B C	5,200,000 5,200,000 9,600,000
TOTAL	20,000,000

Other reserves - For future dividends

This account includes the decisions made by the Shareholders’ Meetings held May 24, 1995, May 22, 1998, and April 29, 1999, approving the setting of reserves for future dividends in the amounts of 18,784,406, 7,693,924, and 8,353,403, respectively. The Board of Directors would thus be free to allocate such amounts to cash dividend payments, as deemed appropriate. On July 14, 1995, May 12, 1998, December 13, 1999, July 18, 2000, and December 15, 2002, the Board of Directors approved the payment of 9,368,077; 9,342,622; 3,846,962; 4,176,701; and 4,176,701, respectively.

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NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See Note 1(a)

note 4 – tax system

Due to the goods and operations carried out in the Province of Tierra del Fuego the Company has been included in the following systems:

Industrial promotion system under Law No. 19,640 of 1972 to operate in the Province of Tierra del Fuego. In this sense, the Company is entitled to certain tax and customs benefits through 2013. Such benefits include:
Income tax: The Federal Executive issued Decree No. 1,395/94 whereby, as from September 1, 1994, 85% (see effect of Presidential Decree No. 615/97) of the price paid by customers out of the earnings related to the Province of Tierra del Fuego would be income-tax exempt (whose rate is 35%).
Value-added tax (VAT): as from April 1995, the Company’s sales would be subject to 21% VAT to be charged to the customers of Mirgor S.A.C.I.F.I.A.

Presidential Decree No. 1,395/94 provided that presumed VAT credits computable as from September 1, 1994, would be equivalent to the amount resulting from applying the VAT rate on 61.11% (see effect of Presidential Decree No. 615/97) of the net sales price to customers. Therefore, the tax obligation shrank by 8% thereof as from April 1995.

Under Law No. 23,697, the Federal Government suspended the tax benefits during 1989 and 1990. Thus, the Company made payments on account of capital tax and VAT which, under such law, would be reimbursed to the Company through negotiable tax credit certificates.

DGI (Argentine tax bureau) General Resolution No. 3,838/94 provided for the procedure to obtain the tax credit certificates mentioned above. The Company booked such credits in the amount of 1,511,787.90 based on the difference of the amount originally booked and that requested on July 27, 1995, under the valuation methods disclosed in the resolution.

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NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See Note 1(a)

note 4 – tax system – Continued

On September 17, 1996, the DGI issued an opinion recognizing a larger amount in favor of the Company (2,194,141.37) (un-restated historical value) as a result of the adjustment rate for the prior month used by the Company in the original filing. In addition, the Company booked a 148,853.37 (un-restated historical value) credit related to the reimbursement of VAT – Vendors to be requested under the VAT on exports recovery system.

Considering that, on May 2, 1996, the Ministry of Economy issued Resolution No. 580/96 and that the credits are previous to April 1, 1991, the Company decided to book the recognized credit at the listed price effective as of each period-end of BOCONS (Debt Consolidation Bonds) issued under Law No. 23,982, as supplemented.

On May 19, 1997, the DGI provisionally recognized the amount indicated above.

Customs duties (amounting to about 15% for the Company) and the statistical rate (equivalent to 3%) of all imported inputs used for operation in Tierra del Fuego which, under the benefits granted by Law No. 19,640, are not paid by the Company.
The amounts saved by the Company considering the items mentioned in points (b) and (d) are:


	Years ended
	December 31, 2003	December 31, 2002

Value-added tax	14,068,442	15,208,391
Customs duties and statistical rate (approximate amounts)	8,465,081	9,084,875

Although the Tierra del Fuego location provides the Company with certain promotional benefits, as described above, such situation means incurring increased costs such as: salaries, communications, freight, leases and trips, among others.

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NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See Note 1(a)

note 4 – tax system – Continued

Presidential Decree No. 615/97 dated July 7, 1997, amending Presidential Decree No. 1,395/94 reinstated certain tax benefits granted under Industrial Promotion Law. Based on such decree, the presumed VAT credit computable as from August 1, 1997, is equivalent to the amount resulting from applying the VAT rate (effective at the time of sale) on the net sale price to the customer. In addition, the income tax method was amended as well since the sales carried out from the Province of Tierra del Fuego to the Argentine continental territory are 100% income-tax exempt, as provided for in Law No. 19,640, Section 4(a).

Considering the benefits deriving from this note, the Company does not need to meet additional requirements, except for performing the related activities in Tierra del Fuego.

As regards the rebates to be collected in Argentine currency on account of exports from the mainland to the Tierra del Fuego island, owing to delays in payment by the Federal Government, the Company filed a series of requests with the Customs Authority (Promotional Systems Section) to collect such amounts. As of the date of issuance of these financial statements, although unfavorable administrative resolutions were issued, the Company’s legal counsel understands that the transactions carried out by virtue of Law

No. 19,640 and, therefore, the collection of rebates set forth by regulations is applicable. Such unfavorable resolutions were challenged; thus, the proceedings are in the Customs Legal and Technical Department in order to issue an opinion thereon.

Competitiveness: established by Presidential Decree No. 730/01 to improve competitiveness and foster employment in Argentina. The main benefits established by the companies adhering to such system are:
Full corporate indebtedness tax exemption;
Full TOMPI exemption;
Computation as VAT credit of the amounts paid on account of employer contributions to the SUSS (Single Social Security System).

The benefits mentioned in (a) have been effective since August 31, 2001; those in (b) and (c) have been effective since July 1, 2001. In the case of (a) and (b), the benefits will remain in effect through June 30, 2003, while those under (c) ended on November 30, 2001.

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NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See Note 1(a)

note 5 – major customers and license agreements

For the years ended December 31, 2003, and 2002, the Company’s sales to its most important customers were:


	2003	2002

Volkswagen Argentina S.A.	50%	44%
Renault Argentina S.A.	16%	8%
General Motor Argentina	17%	16%
Mercedes Benz	7%	5%
Peugeot Citroen Argentina S.A.	7%	6%

A significant portion of the Company’s products are carried out under license agreements executed with Valeo Thermique Habitacle.

note 6 – parent company

Parent Company: Il Tevere S.A.

Registered office: Paseo Colón 221, Piso 2 – Buenos Aires

Main business: holding company

Voting rights: 76.47%

Shareholdings: 52%

On July 15, 1996, the transfer of 40% of Il Tevere S.A.’s shares in favor of Valeo Climatisation, indirect shareholders of 20.8% of the capital stock and 30.59% of the voting rights of MIRGOR S.A.C.I.F.I.A. On March 6, 1998, 10% of the shares of Il Tevere S.A. was transferred to Valeo Climatisation; thus the interest in MIRGOR S.A.C.I.F.I.A. was increased to 26%.

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NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See Note 1(a)

note 7 – transactions with companies under law no. 19,550, section 33 (SUBSIDIARIES AND AFFILIATES)

During the course of the fiscal years ended December 31, 2003, and 2002, the Company performed merchandise purchase transactions and other transactions with its subsidiary in the amount of ARS (3,134,436) and ARS (765,852), respectively.

On August 20, 1998, the Company’s Board of Directors decided to make irrevocable contributions on account of future capital increases totaling 3,000,000 in INTERCLIMA S.A. through part of the receivable from such company.

In addition, on November 29, 1999, the Company’s Board of Directors decided to make another irrevocable contribution on account of future capital increases in the amount of 4,500,000 in INTERCLIMA S.A. through the receivable from such company.

As of December 31, 2003, and December 31, 2002, the balances in favor of MIRGOR and/or INTERCLIMA S.A. amounted to:


	2003	2002

Prepayments to vendors – Current	-	49,476
Other payables – Current	(1,167,343)	(1,304,812)
Other payables – Noncurrent	(3,000,000)	-
Total	(4,167,343)	(1,255,336)

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NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See Note 1(a)

note 8 – income tax withholding on dividends

When dividends are paid in excess of taxable income as provided for in Income Tax Law, a single and definitive 35% amount shall be withheld. Based on the unnumbered section subsequent to Section 69 of Income Tax Law, the Company need not withhold any amount on such account.

note 9 – stamped and sealed books

The books which were stamped and sealed after the related transactions are:


Journal No.	Stamped and sealed	Period transactions
37	February 21, 2003	07/01/02 to 08/28/02
38	February 21, 2003	08/28/02 to 09/30/02
39	March 11, 2003	10/01/02 to 11/22/02
40	March 11, 2003	11/23/02 to 12/31/02
41	May 6, 2003	01/01/03 to 02/28/03
42	July 1, 2003	02/28/03 to 04/14/03
43	July 1, 2003	04/14/03 to 05/30/03
44	July 23, 2003	05/30/03 to 07/22/03
45	July 23, 2003	07/22/03 to 09/02/03
46	September 22, 2003	09/02/03 to 10/09/03
47	September 22, 2003	10/09/03 to 11/22/03
48	December 22, 2003	11/22/03 to 12/31/03

NOTE 10 – RECENT SIGNIFICANT ECONOMIC EVENTS

Since early December 2001, Argentine authorities implemented a number of monetary and foreign exchange control measures that mainly included restrictions on the free disposition of funds deposited with banks and the practical impossibility of making transfers abroad, with the exception of transfers related to foreign trade and other authorized transactions, which in some cases are subject to the approval from the BCRA (Central Bank of Argentina). Later, the Federal Government declared the official default on foreign debt payments and, on January 6, 2002, the Argentine Congress approved Public Emergency and Foreign Exchange System Reform Law No. 25,561, which introduced dramatic changes to the economic model implemented until that date and that amended Convertibility Law (the currency board that pegged the Argentine peso at parity with the US dollar) approved in March 1991. The new law empowers the Federal Executive to implement, among other things, additional monetary, financial and foreign exchange measures to overcome the economic crisis in the medium term.

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NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See Note 1(a)

NOTE 10 – RECENT SIGNIFICANT ECONOMIC EVENTS - Continued

Presidential Decree No. 71/2002 and BCRA Communiqué “A” 3,425, as amended, established an “official” foreign exchange system, mainly for exports, certain imports, and bank debts, and a “freely-floating” foreign exchange market for the rest of the transactions. The “official” exchange rate was fixed at ARS 1.4 to USD 1, and the “freely-floating” exchange rate as of the closing of business of the first day the exchange market, which had been suspended since December 23, 2001, reopened (January 11, 2002), ranged from ARS 1.60 to ARS 1.70 to USD 1 (selling rate).

Other regulations were issued subsequently, which further amended the new regulations then in effect, such as: consolidation of exchange markets into a “free” market; de-dollarization of U.S. dollar-denominated deposits with Argentine financial institutions at the ARS 1.40-to-USD 1 exchange rate, and of all U.S. dollar-denominated obligations assumed as of January 6, 2002, in Argentina at the ARS 1-to-USD 1 exchange rate; de-dollarization of utility rates which were formerly agreed upon in US dollars, and subsequent renegotiation thereof on a case-by-case basis; prior authorization from the B.C.R.A. to transfer funds abroad to service the principal and interest of financial loans; suspension of unjustified dismissals, to expire in early 2003; and suspension of dissolution causes due to loss of capital stock and mandatory reduction thereof provided by Argentine Business Associations Law.

Taking into account the above considerations, the Company and its subsidiary carry tax credits, reimbursements receivable and other receivables from the Government amounting to ARS 8.3 million, disclosed in noncurrent assets, the future recoverability of which depends both on the Government’s possibilities of lifting its declaration of default and generating sufficient fiscal revenues, which are affected by the Argentine market uncertainty in general; furthermore, the Company currently lacks elements of judgment to determine when and how such receivables would be collected.

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NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See Note 1(a)

NOTE 11 – BANK LOANS – RESTRICTION ON EARNINGS ALLOCATION

The Company has received loans as follows: from Citibank N.A. amounting to USD 840,000, with a 28-month term and interest accrued at LIBOR plus a monthly 6% spread p.a.; from Banco Francés BBVA amounting to USD 1,000,000 to be paid in 14 monthly installments with interest at 30-day LIBOR plus 500bp; and from BNP bank in the amounts of USD 2.7 million and ARS 1,998,500, repayable in four annual installments and eleven quarterly installments, respectively, accruing interest at 180-day LIBOR plus 6% and “Baibor” (Buenos Aires preferential rate) plus 4%. These loans taken by the Company imply that it should meet certain terms and conditions, especially those related to meeting certain ratios in its quarterly financial statements, especially those aimed at measuring the liabilities-to-interest-paid ratio, as well as those related to keeping limits on the Company’s indebtedness, which should not exceed USD 25 million, as stipulated in the case of the loan from Citibank N.A. Additionally, the Company agreed not to distribute dividends during the term of the loan and not to make annual repayments to the BNP exceeding 25% of the Company’s total payable to such bank upon the restructuring. Additionally, the Company has assumed certain commitments normal in this kind of restructuring.

NOTE 12 – INCOME TAX

The applicable income tax rate has not varied in the period under analysis.

The reconciliation between income tax expenses charged to income generated by operating activities before income tax at the statutory rate and the income tax expense at the actual income tax rate for the year ended December 31, 2003, was as follows:


		$
Operating loss before income tax		(2,907,227)
Permanent differences
* Gain (loss) from investments in other companies		(933,161)
* Gain from special customs activities in Tierra del Fuego		2,688,808
* Other permanent differences		2,136,783
Taxable income (loss)		985,203
Result of applying the effective income tax rate		(344,821)
Changes in temporary differences
Allowance for impairment in value		(64,551)
Deferred foreign.exchange differences		49,381
Subtotal		(359,991)
Unrecoverability allowance		359,991
Book charge for Income Tax		-

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NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See Note 1(a)

NOTE 12 – INCOME TAX - Continued


The temporary differences changed as follows:
DEFERRED ASSET AS OF 12.31.02		(471,185)
Effect of the change in equity interest in the taxable activity		(1,030,796)
DEFERRED ASSET 12.31.02 updated and adjusted		(1,501,981)
Temporary differences converted in permanent differences		270,737
Changes in temporary differences		(327,504)
DEFERRED ASSET AS OF 31.12.03		(1,558,748)
Impairment in value		1,558,748
Current deferred assets		-

The deferred asset at year-end comprises the following items:
Allowance for impairment in value of Inventories		(1,958,728)
Allowance for uncollectible accounts		( 23,283)
Capitalizable exchange differences		423,263
		(1,558,748)

NOTE 13 – EARNINGS PER SHARE

Earnings per share (basic and diluted) are calculated by dividing the net income (loss) for the period related to common shares by the weighted average cost of outstanding common shares during the same period. No transactions involving common shares or possible common shares have been performed as from the information issuance date until the conclusion of these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002 - Continued

Figures stated in Argentine pesos – See Note 1(a)

NOTE 14 – CHANGES IN PRIOR-YEAR INCOME (LOSS)

During this period, as a result of applying new accounting standards effective as from January 1, 2003, as indicated in note 1(b), the Company booked such impact on accumulated income (loss) as from December 31, 2002.

The total loss amounted to ARS 1,928,327, which is mostly related to the valuation of receivables and payables at the current net value of the amount receivable or payable, as the case may be, and with the recognition of payables to vendors. ARS 384,342 should be added to that amount due to the adjustment mentioned in note 1(b).

NOTE 15 – EXPLANATION ADDED FOR TRANSLATION INTO ENGLISH

These financial statements are the English translation of those originally issued in Spanish.

AI assistant

Mirgor Annual Report 2003

vice-Chairperson

AUDITOR’S REPORT

Expiry of the articles of incorporation: May 31, 2070

summary OF EVENTS

For the fiscal year ended December 31, 2003

consolidated balance sheet as of DECEMBER 30, 2003, comparatively with the prior year

consolidated balance sheet as of DECEMBER 30, 2003, comparatively with the prior year

Consolidated statement of income for the YEAR ended DECEMBER 31, 2003, presented comparatively with the prior year

Consolidated statement of cash flows for the YEAR ended DECEMBER 31, 2003, comparatively with the prior year

Consolidated statement of cash flows for the YEAR ended DECEMBER 31, 2003, comparatively with the prior year

NOTE 2 – MAIN ACCOUNT BREAKDOWN

balance sheet as of DECEMBER 31, 2003, presented comparatively with

the prior FISCAL year

balance sheet as of DECEMBER 31, 2003, presented comparatively with the prior FISCAL year

note 2 – MAIN ACCOUNT BREAKDOWN

note 3 – capital STRUCTURE – SHAREHOLDERS’ equity

note 5 – major customers and license agreements

AI assistant

Mirgor — Annual Report 2003

vice-Chairperson

AUDITOR’S REPORT

Expiry of the articles of incorporation: May 31, 2070

summary OF EVENTS

For the fiscal year ended December 31, 2003

consolidated balance sheet as of DECEMBER 30, 2003, comparatively with the prior year

consolidated balance sheet as of DECEMBER 30, 2003, comparatively with the prior year

Consolidated statement of income for the YEAR ended DECEMBER 31, 2003, presented comparatively with the prior year

Consolidated statement of cash flows for the YEAR ended DECEMBER 31, 2003, comparatively with the prior year

Consolidated statement of cash flows for the YEAR ended DECEMBER 31, 2003, comparatively with the prior year

NOTE 2 – MAIN ACCOUNT BREAKDOWN

balance sheet as of DECEMBER 31, 2003, presented comparatively with

the prior FISCAL year

balance sheet as of DECEMBER 31, 2003, presented comparatively with the prior FISCAL year

note 2 – MAIN ACCOUNT BREAKDOWN

note 3 – capital STRUCTURE – SHAREHOLDERS’ equity

note 5 – major customers and license agreements

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Mirgor Annual Report 2003