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Mirgor — Interim / Quarterly Report 2002
Aug 26, 2002
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Download source fileUnited States Securities
and Exchange Commission
(U.S. "SEC")
File No. 82‑3941
TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH
MIRGOR
SOCIEDAD ANONIMA, COMERCIAL, INDUSTRIAL, FINANCIERA,
INMOBILIARIA Y AGROPECUARIA
EINSTEIN 1111 ‑ RIO GRANDE
TIERRA DEL FUEGO
FINANCIAL STATEMENTS FOR
THE THREE-MONTH PERIOD BEGINNING
JANUARY 1, 2002 AND ENDED MARCH 31, 2002
LIMITED REVIEW REPORT
U.S. SEC File
No. 82‑3941
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BOARD OF DIRECTORS
MIRGOR S.A.C.I.F.I.A.
CHAIRMAN
Lic. Roberto Gustavo Vázquez
VICECHAIRMAN
Mr. José Luis Caputo
REGULAR 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 INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH
LIMITED REVIEW REPORT
To the President and Directors of
Mirgor Sociedad Anónima, Comercial, Industrial, Financiera,
Inmobiliaria y Agropecuaria
We have reviewed the accompanying balance sheets of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria as of March 31, 2002 and 2001, and the related statements of operations, changes in shareholders' equity and cash flows, notes 1 to 11, and the related Reporting Summary and the consolidated balance sheets as of March 31, 2002 and 2001, as well as the consolidated statements of operations and cash flows and exhibits C and H for the three-month periods then ended. The referred financial statements are the responsibility of the Company's Board of Directors. Our responsibility is to express an opinion on these financial statements, taken as a whole, based on our audit.
Our review was made in accordance with auditing standards in force in Argentina for the review of interim financial statements established by Technical Resolution No. 7 of the Argentine Federation of Professional Councils of Economic Sciences and, therefore, did not include all the procedures necessary for performing a complete audit of said financial statements. A limited review of interim financial statements consists principally in applying analytical review procedures and making inquiries of executives and officers responsible for the Company’s accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards in force, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
As explained in Note 1 a) to the accompanying financial statements, the Company has not reflected for accounting purposes the effects of the variations in the currency purchasing power occurred since January 1, 2002, as required by Resolution M.D. 3/2002 of the Professional Council of Economic Sciences of the City of Buenos Aires. Had those Resolutions been applied, (a) the Company’s shareholders’ equity as of March 31, 2002 would have amounted to approximately $ 39,976,904 and the result for the three-month period then ended would have amounted to approximately $ 4,146,379 (loss), and (b) all of the account balances as of March 31, 2001, presented for comparative purposes, would have been restated by applying the adjustment rate for the period January-March 2002.
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As explained in Note 11 to the accompanying financial statements, the National Government has introduced significant changes to the economic policy and it mainly resolved to change the exchange regime established by the Convertibility Law in force since 1991. Also, the same note describes other measures known to date, which significantly affect the economic environment, some of which are still in the process of being drafted and regulated. The overall economic environment and regulations in force are subject to future changes as a result of the evolution of events. The accompanying financial statements should be read considering the circumstances described above.
Based on our review and subject to the effects that might derive from the situations mentioned in the preceding paragraph and in note 11 in connection with the applicable matters to the financial statements as of March 31, 2002, we inform that:
- We are not aware of any material modifications that should be made to the financial statements mentioned in the first paragraph for them to be in conformity with the applicable standards of the Comisión Nacional de Valores (National Securities Commission) and, except for the failure to reflect the effects of the variations in the currency purchasing power mentioned in the third paragraph, with professional accounting principles in force in Argentina.
- With respect to the information for which we have the competence to review, we have no observations to make regarding the additional information to the financial statements required by Section 68 of the Regulations of the Buenos Aires Stock Exchange and the Reporting Summary prepared by the Company’s Board of Directors.
Additional information:
- The auditing standards and the professional accounting principles prevailing in Argentina, mentioned in the preceding paragraphs, are applicable in the City of Buenos Aires.
- The financial statements mentioned in the first paragraph are derived from the accounting records, kept in their formal aspects in accordance with legal regulations, and are recorded in the Detail of Assets and Liabilities and Balance Sheet Book, except what is stated in Note 10.
- The referred financial statements have been prepared in accordance with the format and contents established in Law No. 19550 (in conformity with the interpretation of its Section 62 by Executive Order No. 316/95 of the National Executive Branch) and General Resolution No. 368 of the National Securities Commission.
TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH
- As of March 31, 2002, the accrued liability for retirement and pension contributions owed to the National Social Security Administration arising from the accounting records was $ 89,940.15. This amount was not past due.
Buenos Aires
May 22, 2002
| HENRY MARTIN, LISDERO Y ASOCIADOS | |
| C.P.C.E.C.F.‑R.A.P.U. Vol. I Fo. 7 | |
| Adolfo Lázara (Partner) | |
| Public Accountant (U.B.A.) | |
| C.P.C.E.C.F. Vol. LXIX Fo. 174 |
U.S. SEC File
No. 82‑3941
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MIRGOR SOCIEDAD ANONIMA, COMERCIAL, INDUSTRIAL, FINANCIERA, INMOBILIARIA Y AGROPECUARIA
LEGAL ADDRESS: Einstein 1111 ‑ Río Grande ‑ Tierra del Fuego
Principal activity: Manufacturer of automotive air climatic systems.
Registration date with the Public Registry of Commerce:
- By-laws: June 1, 1971
- Last modification to the By-laws: August 22, 1997
Expiration date: May 31, 2070
FISCAL YEAR No. 32 BEGINNING JANUARY 1, 2002
REPORTING SUMMARY
For the three-month period ended March 31, 2002
(Amounts in pesos)
- EXECUTIVE SUMMARY OF THE COMPANY'S ACTIVITIES DURING THE THREE-MONTH PERIOD
The net income for the three-month period beginning January 1, 2002 and ended March 31, 2002 was 903,755.
The serious Argentine institutional conflict that caused the devaluation and the destruction of the economy contractual bases stagnated sales of automobiles during a great part of the quarter ended March 31, 2002. Despite the crisis, the production of vehicles could be roughly maintained given the exports to countries outside Mercosur and that were arranged before the devaluation. However, the total amounts for the automotive industry shows a 44% decline, as compared to those produced during the first quarter of the prior year.
As a result of the chaos where the Argentine economy developed, every known credit form completely disappeared, from that granted by foreign suppliers, the payment term granted by local suppliers to that granted by financial institutions, hindering financings.
Another factor that affected the activity level were the changes in relative prices caused by devaluations and that, in the case of Argentina, give rise to panic conditions as a result of the experience gained in the 80’s.
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Under these circumstances, the Company’s main effort was to rapidly agree price adjustment plans, which ensure the replacement cost coverage. This element is essential to ensure the Company’s continuity from keeping an unchanged working capital.
The situation depicted above was coupled with the difficult task of convincing foreign suppliers and banks that the Company’s trustworthiness is not comparable to the situation related to the default announced by the Government in connection with the Argentine public debt service. The prohibition to make payments abroad, which lasted over two months, and the subsequent obligation not to make transfers of funds abroad before 45 days after shipment have been other factors that hindered cash management.
Mirgor’s sales of climatization systems in terms of units decreased by 60.3%, whereas in terms of historical costs, they decreased by 7.7%. The reasons for this difference are the following three:
- Increases were negotiated with customers, who accounted for the devaluation effects on the Company’s costs. In this case, the rule that changes in prices would only result from those effects was respected.
- A strong change in sales proportion was noted, increasing sales of air-conditioning systems for automobiles.
- In February, sales of instrument panels began being made to Volkswagen Argentina. The volume for the period was 1,830 units and it is expected that during the next months sales will become stable in 1,200 units per month.
2. BALANCE SHEET DATA (Amounts relate to the consolidated balance sheets and are stated in pesos)
| 03/31/02 | 03/31/01 | 03/31/00 | 03/31/99 | 03/31/98 | ||||||
| Current assets | 54,547,166 | 41,000,974 | 48,590,136 | 50,517,904 | 55,313,889 | |||||
| Noncurrent assets | 26,089,705 | 22,399,711 | 23,077,340 | 23,334,153 | 23,082,008 | |||||
| Total assets | 80,636,871 | 63,400,685 | 71,667,476 | 73,852,057 | 78,395,897 | |||||
| Current liabilities | 46,316,182 | 26,185,138 | 28,702,206 | 23,878,824 | 31,649,786 | |||||
| Noncurrent liabilities | - | - | - | 5,758,039 | 5,758,039 | |||||
| Total liabilities | 46,316,182 | 26,185,138 | 28,702,206 | 29,636,863 | 37,407,825 | |||||
| Minority interest | 2,733 | 2,531 | 2,637 | 8 | 597 | |||||
| Shareholders' equity | 34,317,956 | 37,213,016 | 42,962,633 | 44,215,186 | 40,987,475 | |||||
| Total liabilities and Shareholders’ equity | 80,636,871 | 63,400,685 | 71,667,476 | 73,852,057 | 78,395,897 |
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3. STATEMENT OF OPERATIONS DATA (Amounts relate to the consolidated statements of operations and are stated in pesos)
| 03/31/02 | 03/31/01 | 03/31/00 | 03/31/99 | 03/31/98 | ||||||
| Ordinary operating (loss) | ||||||||||
| income | (242,619) | (486,161) | (96,580) | (651,327) | 3,036,947 | |||||
| Financial income (losses) | 1,214,497 | (1,298,571) | (432,477) | (872,270) | (695,911) | |||||
| Other (expenses)/income | (67,898) | 13,874 | (92,336) | (243,663) | 97,779 | |||||
| Minority interest | (225) | 20 | 9 | 230 | 223 | |||||
| Ordinary income (loss), net | 903,755 | (1,770,838) | (621,384) | (1,767,030) | 2,439,038 | |||||
| Extraordinary income | - | - | - | - | - | |||||
| Minority interest | - | - | - | - | - | |||||
| Net income/(loss) | 903,755 | (1,770,838) | (621,384) | (1,767,030) | 2,439,038 |
- STATISTICAL DATA
| Units | |||||||||||||||||||
| 03/31/02 | 03/31/01 | 03/31/00 | 03/31/99 | 03/31/98 | |||||||||||||||
| Quarter | Accum | Quarter | Accum | Quarter | Accum. | Quarter | Accum. | Quarter | Accum | ||||||||||
| Production volume (1) | 23,367 | 23,367 | 56,327 | 56,327 | 41,213 | 41,213 | 42,600 | 42,600 | 54,140 | 54,140 | |||||||||
| Sales volume | 8,400 | 8,400 | 16,627 | 16,627 | 29,440 | 29,440 | 20,986 | 20,986 | 31,656 | 31,656 |
5. INDEXES
| 03/31/02 | 03/31/01 | 03/31/00 | 03/31/99 | 03/31/98 | ||||||
| Liquidity | 1.18 | 1.57 | 1.69 | 2.12 | 1.75 | |||||
| Indebtedness | 1.35 | 0.70 | 0.67 | 0.67 | 0.90 | |||||
| Ordinary (loss)/income before income tax | 0.0270 | (0.0500) | (0.0140) | 0.0380 | 0.0623 |
- Includes that related to Interclima S.A.
- EVOLUTION OF MARKET PRICES OF SHARES
| Jan. 2002 | Jan. 2001 | Feb. 2002 | Feb. 2001 | Mar. 2002 | Mar. 2001 |
| 4.10 | 4.30 | 4.10 | 4.20 | 4.10 | 4.20 |
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No. 82‑3941
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7. PROSPECTS
By mid-March, the Government authorized the use of certificates of deposit that were frozen as a result of the “corralito” system. This helped reactivate domestic sales, although the impact stopped since April 15, date on which the authorization to apply this payment term became due.
Automotive industry companies continue to take the necessary actions to obtain again the authorization for this payment term, although no news are anticipated until the Government defines the new Bonex plan.
It should be highlighted that the current production is fostered by exports. Ninety-five percent (95%) of the vehicles manufactured in the first quarter were sent abroad. The Argentine government is aware of this situation and in March an agreement was reached with Mexico, which increases the number of vehicles that may be exported to that country from 19,000 to 50,000. A few hours ago, a similar agreement was reached with Chile, which will allow to increase the vehicles to be sent to that country from 7,000 to 27,000. In order to complete the outlook, it is essential that an automotive agreement may be reached with the Mercosur, which definitively solves the issue of fines applied to Argentine-source import imbalances experienced by Brazilian car manufacturers.
For Mirgor, the agreements with Mexico and Chile allow to ensure an acceptable production base, since its customers GM Argentina and Volkswagen Argentina have signed agreements effective beyond year 2002.
The devaluation has allowed to decrease the values of the Company’s products in US dollars, so its products become more competitive, as compared to imports made by some Argentine car manufacturers.
In this regard, the terms to begin deliveries of climatization systems for Renault Clio are being accelerated and a local system to satisfy the needs of Corsa Diesel of General Motors has been developed, which is expected to begin being supplied during June.
Río Grande
May 22, 2002
| MIRGOR S.A.C.I.F.I.A. | |
| Lic. Roberto G. Vázquez | |
| Chairman | |
U.S. SEC File
No. 82‑3941
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MIRGOR SOCIEDAD ANONIMA, COMERCIAL, INDUSTRIAL, FINANCIERA, INMOBILIARIA Y AGROPECUARIA
FINANCIAL STATEMENTS FOR FISCAL YEAR No. 32 RELATED TO THE THREE-MONTH PERIOD BEGINNING JANUARY 1, 2002 AND ENDED MARCH 31, 2002, COMPARATIVELY PRESENTED WITH THE PRIOR YEAR’S EQUIVALENT PERIOD
Legal address: Einstein 1111 ‑ Río Grande ‑ Tierra del Fuego
Principal activity: Manufacturer of automotive air climatic systems
Registration date with the Public Registry of Commerce:
- By‑laws: June 1, 1971
- First modification to the By‑laws: July 1, 1994
- Last modification to the By‑laws: August 22, 1997
Registration number with the General Inspectorate of Companies (I.G.J.): 40071
Expiration date: April 13, 2070
Controlling shareholder: See Note 7 to the basic financial statements
Capital Structure - See Note 3 to the basic financial statements
| Pesos | ||
| 20,000,000 of common stock, par value $ 0.10 per share | ||
| - Subscribed, paid-in, issued capital registered with the Public Registry of Commerce | 2,000,000 |
U.S. SEC File
No. 82‑3941
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MIRGOR S.A.C.I.F.I.A.
Additional information
CONSOLIDATED BALANCE SHEET
As of March 31, 2002 and 2001
Amounts expressed in Pesos
| 2002 | 2001 | |||
| ASSETS | ||||
| CURRENT ASSETS | ||||
| Cash and banks | 1,406,484 | 267,442 | ||
| Investments | 4,274,101 | 6,147,096 | ||
| Accounts receivable | 11,569,138 | 10,032,558 | ||
| Tax receivables | 432,759 | 3,189,347 | ||
| Other receivables | 494,409 | 3,161,974 | ||
| Inventories | 36,370,275 | 18,202,557 | ||
| Total current assets | 54,547,166 | 41,000,974 | ||
| NON‑CURRENT ASSETS | ||||
| Other receivables | 1,943,171 | - | ||
| Tax receivables | 6,798,320 | 3,055,970 | ||
| Investments | 29,196 | 48,624 | ||
| Intangible assets – Note 1.e.b) | 324,824 | 478,463 | ||
| Property, plant and equipment – Note 1.e.a) | 16,994,194 | 18,816,654 | ||
| Total non‑current assets | 26,089,705 | 22,399,711 | ||
| Total assets | 80,636,871 | 63,400,685 |
U.S. SEC File
No. 82‑3941
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MIRGOR S.A.C.I.F.I.A.
Additional information
CONSOLIDATED BALANCE SHEET ‑ Continued
As of March 31, 2002 and 2001
Amounts expressed in Pesos
| 2002 | 2001 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
| CURRENT LIABILITIES | ||||
| Accounts payable | 14,243,706 | 24,239,829 | ||
| Bank debt | 25,431,353 | - | ||
| Payroll, benefits and tax liabilities | 735,917 | 1,158,156 | ||
| Advances from customers | 2,248,818 | - | ||
| Other liabilities | 204,011 | 787,153 | ||
| Allowances | 3,452,377 | - | ||
| Total current liabilities | 46,316,182 | 26,185,138 | ||
| Total liabilities | 46,316,182 | 26,185,138 | ||
| Minority interest | 2,733 | 2,531 | ||
| SHAREHOLDERS' EQUITY | 34,317,956 | 37,213,016 | ||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 80,636,871 | 63,400,685 |
The accompanying notes to the consolidated financial statements and the basic financial statements of MIRGOR S.A.C.I.F.I.A. are an integral part and must be read together with these statements.
U.S. SEC File
No. 82‑3941
TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH
MIRGOR S.A.C.I.F.I.A.
Additional information
CONSOLIDATED STATEMENT OF OPERATIONS
For the three-month period ended March 31, 2002
Comparatively presented with the prior year’s equivalent period
Amounts expressed in Pesos
| 2002 | 2001 | |||
| Net sales (including VAT benefits in an amount of | ||||
| $ 1,317,556 and $ 1,539,357, respectively) | 11,459,772 | 10,811,318 | ||
| Cost of goods sold | (10,203,962) | (9,570,234) | ||
| Gross profit | 1,255,810 | 1,241,084 | ||
| Administrative expenses | (1,236,287) | (1,375,598) | ||
| Selling expenses | (257,285) | (346,790) | ||
| Other (expenses)/income | (67,898) | 13,874 | ||
| Financial and holding results | ||||
| Generated by assets | 25,204,156 | (756,462) | ||
| Generated by liabilities | (23,989,659) | (542,109) | ||
| Permanent investments – loss | (4,857) | (4,857) | ||
| Subtotal | 903,980 | (1,770,858) | ||
| (Loss) gain on minority interest | (225) | 20 | ||
| Net ordinary income/(loss) for the period | 903,755 | (1,770,838) | ||
| Net income/(loss) for the period | 903,755 | (1,770,838) |
The accompanying notes to the consolidated financial statements and the basic financial statements of MIRGOR S.A.C.I.F.I.A. are an integral part and must be read together with these statements.
U.S. SEC File
No. 82‑3941
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MIRGOR S.A.C.I.F.I.A.
Additional information
CONSOLIDATED STATEMENT OF CASH FLOWS
For the three-month period ended March 31, 2002
Comparatively presented with the prior year’s equivalent period
Amounts expressed in Pesos
| 2002 | 2001 | ||||||
| CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES | |||||||
| Net income/(loss) for the period | 903,755 | (1,770,838) | |||||
| Adjustments to reconcile net income/(loss) for the period to net cash provided by (used in) operating activities | |||||||
| Depreciation and amortization | 625,882 | 720,213 | |||||
| (Proceeds) from sale of property, plant and equipment | - | (6,575) | |||||
| Minority interest | 225 | (20) | |||||
| Allowance for unrecoverable inventories | 2,402,213 | 19,003 | |||||
| Gain on permanent investments | 4,857 | 4,857 | |||||
| Allowance for contingencies | 3,452,377 | - | |||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable | (4,310,513) | 556,662 | |||||
| Inventories | (21,561,393) | 675,823 | |||||
| Accounts payable | 8,908,312 | 108,323 | |||||
| Bank debt | 12,022,943 | - | |||||
| Payroll, benefits and tax liabilities (receivables), net | (756,422) | (21,118) | |||||
| Advances from customers | 2,248,818 | - | |||||
| Other | (495,414) | (14,561) | |||||
| Net cash (used in) provided by operating activities | 3,445,640 | 271,769 |
U.S. SEC File
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MIRGOR S.A.C.I.F.I.A.
Additional information
CONSOLIDATED STATEMENT OF CASH FLOWS - Continued
For the three-month period ended March 31, 2002
Comparatively presented with the prior year’s equivalent period
Amounts expressed in Pesos
| 2002 | 2001 | ||||
| CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES | |||||
| Purchases of property, plant and equipment | (39,756) | (250,563) | |||
| Proceeds from sale of property, plant and equipment | - | 7,800 | |||
| Investment in development | - | (66,792) | |||
| Net cash used in investing activities | (39,756) | (309,555) | |||
| Net increase/(decrease) in cash and cash equivalents | 3,405,884 | (37,786) | |||
| Cash and cash equivalents at beginning of period | 2,274,114 | 6,451,737 | |||
| Cash and cash equivalents at end of period | 5,679,998 | 6,413,951 |
The accompanying notes to the consolidated financial statements and the basic financial statements of MIRGOR S.A.C.I.F.I.A. are an integral part and must be read together with these statements.
U.S. SEC File
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MIRGOR S.A.C.I.F.I.A.
Additional information
NOTE TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2002 AND 2001
Amounts expressed in Pesos
NOTE 1 – BASIS FOR PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
- Applicable accounting principles
The financial statements as of March 31, 2002 and 2001 have been prepared in accordance with the provisions of General Resolution No. 368, as amended, of the National Securities Commission, which are aligned with the professional accounting principles in force, with the limitations and additional information established in exhibit I of book No. 7 “Informative Regime” of that resolution.
- Summary of valuation and disclosure criteria
The valuation and disclosure criteria applied to the consolidated financial statements are similar to those disclosed in Note 1 to the basic financial statements, except for the valuation of investments in subsidiaries, which have been included in these consolidated financial statements on a line-by-line basis following the criteria established by Technical Resolution No. 4 of the FACPCE, with the appropriate eliminations.
- Basis of Consolidation
In accordance with the procedures established by Technical Resolution No. 4 of the Argentine Federation of Professional Councils of Economic Sciences, Mirgor S.A.C.I.F.I.A. has consolidated on a line‑by‑line basis its financial statements as of March 31, 2002 and 2001 with those of Interclima Sociedad Anónima, in which it has a controlling interest.
Specific data with respect to the controlled company follows:
| Controlled Company | % interest in capital stock and possible voting rights as of March 31, 2002 | End of period date | ||
| Interclima Sociedad Anónima | 99.9667 | 03/31/02 |
U.S. SEC File
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MIRGOR S.A.C.I.F.I.A.
Additional information
NOTE TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2002 AND 2001 - Continued
Amounts expressed in Pesos
NOTE 1 – BASIS FOR PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS - Continued
- Financial Statements Subject to Consolidation
The consolidated financial statements include the financial statements of Interclima Sociedad Anónima, which contained a limited review report issued by Henry Martin, Lisdero y Asociados on May 22, 2002.
- Rollforward of significant assets
| $ | ||
| a) Property, plant and equipment: | ||
| Balance at beginning of period | 17,552,994 | |
| Additions | 39,757 | |
| Disposals (net of accumulated depreciation) | - | |
| Depreciation | (598,557) | |
| Balance at end of period | 16,994,194 |
| $ | ||
| b) Intangible assets: | ||
| Balance at beginning of period | 352,149 | |
| Additions | - | |
| Disposals | - | |
| Amortization | (27,325) | |
| Balance at end of period | 324,824 |
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MIRGOR S.A.C.I.F.I.A.
Exhibit "C"
SHARES, DEBENTURES AND OTHER SECURITIES ISSUED IN SERIES
INTERESTS IN OTHER COMPANIES
As of March 31, 2002 and 2001
Amounts expressed in Pesos
| 2002 | 2001 | |||||||||||||||||||||||||||
| Information on the issuer | ||||||||||||||||||||||||||||
| Most recent financial statements | ||||||||||||||||||||||||||||
| Principal accounts and characteristics of securities | Par value | Shares | Cost value | Equity value | Higher investment value (Note 1.c) | Book value | Principal activity | Date | Capital | Results for the period | Shareholders’ equity | Ownership interest in capital stock | Book value | |||||||||||||||
| Short-term investments: | ||||||||||||||||||||||||||||
| BAESA | 1.0 | 246 | 324,025 | - | - | 587 | - | - | - | - | - | - | 587 | |||||||||||||||
| Total short-term investments | 587 | 587 | ||||||||||||||||||||||||||
| Long-term investments: | ||||||||||||||||||||||||||||
| Companies Section 33 Law | ||||||||||||||||||||||||||||
| No. 19550: | ||||||||||||||||||||||||||||
| Interclima Sociedad Anónima | 1 | 11,996 | 4,010,400 | 8,160,986 | 29,195 | 8,190,181 | (*) | 03/31/02 | 12,000 | 676,151 | 8,207,466 | 99.97% | 7,597,777 | |||||||||||||||
| Total long-term investments | 8,190,181 | 7,597,777 | ||||||||||||||||||||||||||
| Total investments | 8,190,768 | 7,598,364 |
(*) Manufacturer of auto-parts and interchanges for air conditioning and heating equipment.
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MIRGOR S.A.C.I.F.I.A.
Exhibit “H”
INFORMATION REQUIRED BY LAW No. 19550 (SECTION 64, CLAUSE b), FIRST PARAGRAPH)
For the three-month period ended March 31, 2002
Comparatively presented with the prior year’s equivalent period
Amounts expressed in Pesos
| 2002 | 2001 | |||||||||||
| Items | Manufacturing expenses | Administrative expenses | Selling expenses | Total | Total | |||||||
| Salaries and wages | 843,735 | 357,888 | 81,381 | 1,283,004 | 1,774,503 | |||||||
| Social contributions and benefits | 175,185 | 125,565 | 21,324 | 322,074 | 378,583 | |||||||
| Insurance | 40,386 | 9,802 | 1,027 | 51,215 | 81,756 | |||||||
| Fees and training expenses | 31,404 | 61,881 | 10,703 | 103,988 | 130,118 | |||||||
| Taxes, duties and contributions | 53,816 | 72,398 | 20,360 | 146,574 | 225,691 | |||||||
| Miscellaneous administrative expenses | - | 355,111 | - | 355,111 | 334,900 | |||||||
| Depreciation of property, plant and equipment | 362,760 | 236,833 | 9,480 | 609,073 | 659,444 | |||||||
| Amortization of intangible assets | - | 16,809 | - | 16,809 | 60,769 | |||||||
| Other manufacturing expenses | 222,267 | - | - | 222,267 | 499,276 | |||||||
| Other variable costs | 262,547 | - | - | 262,547 | 391,250 | |||||||
| Transportation, freight and shipping | 669,790 | - | 39,911 | 709,701 | 961,779 | |||||||
| Other marketing expenses | - | - | 73,099 | 73,099 | 76,783 | |||||||
| Total 2002 | 2,661,890 | 1,236,287 | 257,285 | 4,155,462 | ||||||||
| Total 2001 | 3,852,464 | 1,375,598 | 346,790 | 5,574,852 |
U.S. SEC File
No. 82‑3941
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MIRGOR S.A.C.I.F.I.A.
BALANCE SHEET
As of March 31, 2002 and 2001
Amounts expressed in Pesos
| 2002 | 2001 | |||
| ASSETS | ||||
| CURRENT ASSETS | ||||
| Cash and banks – Note 2 | 1,391,539 | 244,357 | ||
| Investments – Note 2 | 4,274,101 | 6,142,556 | ||
| Accounts receivable – Note 2 | 10,369,880 | 9,570,480 | ||
| Tax receivables – Note 2 | 256,869 | 2,780,901 | ||
| Other receivables ‑ Note 2 | 477,126 | 2,412,837 | ||
| Inventories ‑ Note 2 | 34,930,997 | 16,947,827 | ||
| Total current assets | 51,700,512 | 38,098,958 | ||
| NON‑CURRENT ASSETS | ||||
| Investments (Companies Section 33 Law No. 19550) | 8,190,181 | 7,597,777 | ||
| Tax receivables – Note 2 | 3,994,557 | 1,355,403 | ||
| Other receivables – Note 2 | 1,004,226 | - | ||
| Property, plant and equipment | 15,653,495 | 17,292,449 | ||
| Intangible assets | 247,794 | 359,370 | ||
| Total non‑current assets | 29,090,253 | 26,604,999 | ||
| Total assets | 80,790,765 | 64,703,957 |
U.S. SEC File
No. 82‑3941
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MIRGOR S.A.C.I.F.I.A.
BALANCE SHEET ‑ Continued
As of March 31, 2002 and 2001
Amounts expressed in Pesos
| 2002 | 2001 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
| CURRENT LIABILITIES | ||||
| Accounts payable ‑ Note 2 | 12,805,198 | 23,987,212 | ||
| Payroll, benefits and tax liabilities ‑ Note 2 | 657,654 | 1,056,617 | ||
| Bank debt – Note 2 | 25,431,353 | - | ||
| Advances from customers | 2,248,818 | - | ||
| Other liabilities – Note 2 | 1,204,011 | 1,676,096 | ||
| Allowances | 3,452,377 | - | ||
| Total current liabilities | 45,799,411 | 26,719,925 | ||
| NON‑CURRENT LIABILITIES | ||||
| Other liabilities ‑ Note 2 | 673,398 | 771,016 | ||
| Total non‑current liabilities | 673,398 | 771,016 | ||
| Total liabilities | 46,472,809 | 27,490,941 | ||
| SHAREHOLDERS' EQUITY (As per related | ||||
| statement) | 34,317,956 | 37,213,016 | ||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 80,790,765 | 64,703,957 |
The accompanying Notes 1 to 11 are an integral part of these financial statements.
U.S. SEC File
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STATEMENT OF OPERATIONS
For the three-month period ended March 31, 2002
Comparatively presented with the prior year’s equivalent period
Amounts expressed in Pesos
| 2002 | 2001 | |||
| Net sales (including VAT benefits in an amount of | ||||
| $ 1,317,556 and $ 1,537,642, respectively) – Note 5.e | 9,469,728 | 10,264,163 | ||
| Cost of goods sold | (8,644,074) | (9,152,751) | ||
| Gross profit | 825,654 | 1,111,412 | ||
| Administrative expenses | (1,211,141) | (1,352,782) | ||
| Selling expenses | (256,630) | (345,100) | ||
| Other income | 81,627 | 151,217 | ||
| Financial and holding results | ||||
| Generated by assets – Note 4 | 24,261,179 | (736,832) | ||
| Generated by liabilities – Note 4 | (23,474,588) | (536,688) | ||
| Permanent investments income/(loss) | 677,654 | (62,065) | ||
| Ordinary income/(loss) for the period | 903,755 | (1,770,838) | ||
| Net income/(loss) for the period | 903,755 | (1,770,838) |
The accompanying Notes 1 to 11 are an integral part of these financial statements.
U.S. SEC File
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STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the three-month period ended March 31, 2002
Comparatively presented with the prior year’s equivalent period
Amounts expressed in Pesos
| 2002 | 2001 | |||||||||||||||||||||||||||||
| Appropriated retained earnings | ||||||||||||||||||||||||||||||
| Description | Capital stock | Adjustments to capital | Noncapitalized contributions | Adjustments to noncapitalized contributions | Additional paid-in capital | Total | Legal reserve | Other reserves (*) | Total | Unappropriated retained earnings | Total | Total | ||||||||||||||||||
| Balances at January 1, 2002 | 2,000,000 | 800,363 | 497 | 55 | 2,385,320 | 5,186,235 | 1,037,247 | 33,530 | 1,070,777 | 27,157,189 | 33,414,201 | 38,983,854 | ||||||||||||||||||
| Net income/(loss) for the period | ‑ | ‑ | ‑ | ‑ | ‑ | ‑ | ‑ | ‑ | ‑ | 903,755 | 903,755 | (1,770,838) | ||||||||||||||||||
| Balances at March 31, 2002 | 2,000,000 | 800,363 | 497 | 55 | 2,385,320 | 5,186,235 | 1,037,247 | 33,530 | 1,070,777 | 28,060,944 | 34,317,956 | |||||||||||||||||||
| Balances at March 31, 2001 | 2,000,000 | 800,363 | 497 | 55 | 2,385,320 | 5,186,235 | 1,037,247 | 33,530 | 1,070,777 | 30,956,004 | 37,213,016 |
(*) See Note 3.b).
The accompanying Notes 1 to 11 are an integral part of these financial statements.
U.S. SEC File
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STATEMENT OF CASH FLOWS
For the three-month period ended March 31, 2002
Comparatively presented with the prior year’s equivalent period
Amounts expressed in Pesos
| 2002 | 2001 | ||||
| CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES | |||||
| Net income/(loss) for the period | 903,755 | (1,770,838) | |||
| Adjustments to reconcile net income/(loss) for the period to net cash provided by (used in) operating activities | |||||
| Depreciation and amortization | 553,918 | 653,229 | |||
| (Proceeds) from sale of property, plant and equipment | - | (6,575) | |||
| Allowance for unrecoverable inventories, net | 1,573,635 | 13,444 | |||
| Gain on permanent investments | (677,654) | 62,065 | |||
| Allowance for contingencies | 3,452,377 | - | |||
| Changes in operating assets and liabilities: | |||||
| Accounts receivable | (3,317,243) | 502,276 | |||
| Inventories | (20,269,158) | 721,946 | |||
| Accounts payable | 7,730,279 | 263,994 | |||
| Bank debt | 12,022,943 | - | |||
| Payroll, benefit and tax liabilities (receivables), net | (632,802) | 74,475 | |||
| Advances from customers | 2,248,818 | - | |||
| Other | (161,157) | (259,060) | |||
| Net cash (used in) provided by operating activities | 3,427,711 | 254,956 |
U.S. SEC File
No. 82‑3941
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MIRGOR S.A.C.I.F.I.A.
STATEMENT OF CASH FLOWS ‑ Continued
For the three-month period ended March 31, 2002
Comparatively presented with the prior year’s equivalent period
Amounts expressed in Pesos
| 2002 | 2001 | ||||
| CASH FLOWS USED IN INVESTING ACTIVITIES | |||||
| Purchases of property, plant and equipment | (33,069) | (215,495) | |||
| Proceeds from sale of property, plant and equipment | - | 7,800 | |||
| Investment in development | - | (66,792) | |||
| Net cash used in investing activities | (33,069) | (274,487) | |||
| Net decrease in cash and cash equivalents | 3,394,642 | (19,531) | |||
| Cash and cash equivalents at beginning of period | 2,270,411 | 6,405,857 | |||
| Cash and cash equivalents at end of period | 5,665,053 | 6,386,326 |
The accompanying Notes 1 to 11 are an integral part of these financial statements.
U.S. SEC File
No. 82‑3941
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NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2002 AND 2001
Amounts expressed in Pesos
NOTE 1 ‑ BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
- Restatement in constant currency
The financial statements reflect all of the effects of the variations in the currency purchasing power through August 31, 1995, through the application of the restatement method in constant currency established in Technical Resolution No. 6 of the FACPCE. Since September 1, 1995, based on the prevailing economic stability conditions and as required by General Resolution No. 368/01 (former 290/97) of the National Securities Commission, the Company discontinued the application of the restatement method, keeping the restatements made through that date. This criterion has been accepted by the professional accounting principles through December 31, 2001.
Considering the existing new inflationary environment – the increase in the applicable rate for the restatement of financial statements was 32% for the period January-March 2002 and the conditions created by the new regime established by the Public Emergency and Exchange Regime Reform Law, which are described in Note 9, on March 5, 2002, the Professional Council of Economic Sciences of the City of Buenos Aires approved Resolution M.D. No. 3/2002 (similar criterion to Resolution 240 of the FACPCE), which set forth, among other issues, the resumption of the inflation adjustment in the years or interim periods ending since March 31, 2002, inclusive, establishing that both the accounting measurements restated for the change in the currency purchasing power through the time of discontinuance of the adjustments, and those whose original date in the stability period are considered as stated in the December 2001 currency.
The Company should apply the standards of Resolution M.D. No. 3/2002 of the CPCECABA or Resolution 240 of the FACPCE once they are approved by the National Securities Commission. Had that Resolution been applied, (a) the Company’s shareholders’ equity as of March 31, 2002 would have amounted to approximately $ 39,976,904 and the result for the three-month period then ended would have amounted to approximately $ 4,146,379 (loss), and (b) all of the account balances as of March 31, 2001, presented for comparative purposes, would have been restated by applying the adjustment rate for the period January-March 2002.
U.S. SEC File
No. 82‑3941
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MIRGOR S.A.C.I.F.I.A.
NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2002 AND 2001 - Continued
Amounts expressed in Pesos
NOTE 1 ‑ BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS - Continued
- Accounting disclosure criteria
As from the period ended June 30, 2001, and as a result of the enactment of Resolution No. 368, as amended, of the National Securities Commission, the Company has changed the formal order of the financial statements, by disclosing the consolidated financial statements first and then presenting the basic financial statements. Such change does not imply that the consolidated financial statements should be considered as basic information, but, on the contrary, they continue to be additional information, as required by the second paragraph of section 62 of Law No. 19550.
- Valuation criteria
The main valuation criteria used in the preparation of the financial statements are as follows:
- Cash and banks, short‑term investments, accounts receivable, other receivables and payables
- In local currency: nominal value at the end of the period, including, if applicable, interest accrued as of that date.
- In foreign currency: nominal value in foreign currency plus interest accrued at the end of the period, converted at the exchange rates prevailing as of that date for the settlement of these transactions. Exchange differences were charged to the gain/loss for the period.
- Inventories
- Raw materials (including raw materials in transit) were valued at replacement cost at the end of the period not exceeding market prices as of that date.
- Finished goods were valued at production cost at the end of the period, not exceeding its net realizable value.
U.S. SEC File
No. 82‑3941
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MIRGOR S.A.C.I.F.I.A.
NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2002 AND 2001 - Continued
Amounts expressed in Pesos
NOTE 1 ‑ BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS – Continued
- Long‑term investments
Companies Section 33 ‑ Law No. 19550: This investment has been valued by applying the equity method in accordance with Technical Resolution No. 5 of the FACPCE, calculated on the basis of the financial statements as of March 31, 2002 of Interclima S.A. These financial statements have been audited by Henry Martin, Lisdero y Asociados, which issued a qualified limited review report on May 22, 2002.
On the other hand, to determine the equity method, consideration has been given to the adjustments necessary to conform the valuation criteria of the controlled company to those of the Company, and the difference between the actual amount paid and that resulting from applying the equity method has been allocated as follows:
- The portion associated with the excess of fair value over book value of the property, plant and equipment of the controlled company has been reflected as the carrying value of the investment.
The gain/loss on the interest in the controlled company is included in a separate line item of the statement of operations.
- Property, Plant and Equipment
Property, plant and equipment acquired prior to August 31, 1995 are valued at cost restated in constant pesos at August 31, 1995, as stated in b) of this note, less accumulated depreciation. Assets acquired subsequent to August 31, 1995 have been valued at cost, less applicable accumulated depreciation. Depreciation is calculated applying the straight-line method over the estimated useful lives of the respective assets. Assets under leases are included in this account.
The book values of each group of assets do not exceed their recoverable value.
- Intangible Assets
The intangible assets include:
U.S. SEC File
No. 82‑3941
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MIRGOR S.A.C.I.F.I.A.
NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2002 AND 2001 - Continued
Amounts expressed in Pesos
NOTE 1 ‑ BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS – Continued
- Research and development expenses associated with the licenses of new products. These expenses are amortized by applying the straight-line method over 3 years, and are not amortized until the new products are launched.
- Allowances
-
Deducted from assets
-
Uncollectible receivables: an allowance has been established based on an overall review of each customer amount that presents a risk of uncollectibility.
-
Unrecoverable inventories: Calculated considering the recoverable value of damaged, obsolete and slow-moving items.
-
Included in liabilities
- For contingencies: see Note 11.
- Shareholders’ equity
Shareholders’ equity is restated as mentioned in a) of this note, except “Capital stock - Nominal value”, which has been maintained at its original value. The adjustment resulting from the restatement in constant currency as of August 31, 1995 is disclosed in “Adjustments to capital”.
- Statement of operations accounts
- Long-term investments have been calculated using the equity method, applying the Company’s ownership interest in the gain/loss of the controlled company, for the same period of time as that of the Company, and deducting the gain/loss not related to third parties. In addition, the adjustments necessary to conform the valuation criteria of the referred company to those of the controlled company are included.
U.S. SEC File
No. 82‑3941
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NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2002 AND 2001 - Continued
Amounts expressed in Pesos
NOTE 1 ‑ BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS – Continued
- Financial and holding results include exchange rate differences, as well as holding results on inventories and interest.
- Income Tax – Minimum Presumed Income Tax
Due to a tax loss carryforward and in accordance with current regulations, no provision for income taxes has been recorded during the current period.
No consideration has been given to the effect of deferred income tax, as the use of this method is not required in conformity with professional accounting principles in Argentina.
Due to the Competition law, which excludes companies from payment of the minimum presumed income tax until April 30, 2002, no provision has been recorded for such tax.
- Statement of Cash Flows
In accordance with Resolution No. 368 of the National Securities Commission, the Statement of Cash Flows is included as part of the basic financial statements. In preparing the Statement of Cash Flows, the Company used the indirect method, considering the net result for the period and adding or deducting, as the case may be, those items involved in its determination, but which did not affect the funds and changes in assets and liabilities, as well as the funds “provided by” or “used in” “investing” and “financing” activities. The Company considered cash to be cash and banks and short‑term investments (original investments maturing within three months).
U.S. SEC File
No. 82‑3941
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MIRGOR S.A.C.I.F.I.A.
NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2002 AND 2001 - Continued
Amounts expressed in Pesos
NOTE 2 ‑ COMPOSITION OF THE PRINCIPAL ACCOUNTS
| 2002 | 2001 | |||
| CURRENT ASSETS | ||||
| Cash | ||||
| Cash and petty cash in local currency | 18,065 | 17,456 | ||
| Cash in foreign currency | 3,965 | 2,654 | ||
| Banks in local currency | 1,157,515 | 35,555 | ||
| Banks in foreign currency | 211,994 | 188,692 | ||
| 1,391,539 | 244,357 | |||
| Investments | ||||
| Bonds and shares | 587 | 587 | ||
| Savings account and other in foreign currency | 4,272,435 | 6,096,583 | ||
| Savings account in local currency and other | 1,079 | 45,386 | ||
| 4,274,101 | 6,142,556 | |||
| Accounts Receivable | ||||
| Trade receivables | 10,455,603 | 9,560,728 | ||
| Trade receivables in foreign currency | - | 95,475 | ||
| Allowance for uncollectible receivables | (85,723) | (85,723) | ||
| 10,369,880 | 9,570,480 | |||
| Taxes receivable | ||||
| Promotion benefits receivable - Note 5 c) | - | 1,388,544 | ||
| Input VAT | 240,328 | 1,086,065 | ||
| Other | 16,541 | 306,292 | ||
| 256,869 | 2,780,901 | |||
| Other Receivables | ||||
| Reimbursements receivable in local currency - Note 5 | - | 1,004,227 | ||
| Other | 477,126 | 1,408,610 | ||
| 477,126 | 2,412,837 |
U.S. SEC File
No. 82‑3941
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MIRGOR S.A.C.I.F.I.A.
NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2002 AND 2001 - Continued
Amounts expressed in Pesos
NOTE 2 ‑ COMPOSITION OF THE PRINCIPAL ACCOUNTS - Continued
| 2002 | 2001 | |||||||
| Inventories | ||||||||
| Finished goods | 11,597,940 | 7,014,100 | ||||||
| Raw materials | 27,308,338 | 8,893,782 | ||||||
| Raw materials in transit | 1,365,121 | 2,198,817 | ||||||
| Inventories at end of period | 40,271,399 | 18,106,699 | ||||||
| Advances to suppliers in local currency | 133,316 | 113,623 | ||||||
| Advances to suppliers in foreign currency | 839,492 | 200,567 | ||||||
| Allowance for unrecoverable inventories | (6,313,210) | (1,473,062) | ||||||
| 34,930,997 | 16,947,827 | |||||||
| NONCURRENT ASSETS | ||||||||
| Tax receivables | ||||||||
| Mandatory savings | 8,539 | 8,539 | ||||||
| Input VAT | 1,102,472 | - | ||||||
| Income tax advances | 1,382,007 | 1,346,864 | ||||||
| Promotional benefits receivable - Note 5.c) | 1,255,473 | - | ||||||
| Other | 246,066 | - | ||||||
| 3,994,557 | 1,355,403 | |||||||
| Other receivables | ||||||||
| Refunds receivable in local currency - Note 5 | 1,004,226 | - | ||||||
| 1,004,226 | - | |||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | ||||||||
| In local currency | 1,928,555 | 1,468,177 | ||||||
| Accounts payable – Companies Section 33 – Law No. 19550 – Note 8 | 7,244 | 150,856 | ||||||
| In foreign currency | 10,869,399 | 22,766,542 | ||||||
| Accrued interest | - | (398,363) | ||||||
| 12,805,198 | 23,987,212 | |||||||
U.S. SEC File
No. 82‑3941
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NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2002 AND 2001 - Continued
Amounts expressed in Pesos
NOTE 2 ‑ COMPOSITION OF THE PRINCIPAL ACCOUNTS - Continued
| 2002 | 2001 | |||
| Payroll, benefits and tax liabilities | ||||
| Payroll and benefit liabilities | 240,419 | 566,317 | ||
| Tax liabilities | 417,235 | 490,300 | ||
| 657,654 | 1,056,617 | |||
| Bank debt | ||||
| In local currency | ||||
| Financial loans | 8,425,364 | - | ||
| Interest to accrue | (61,156) | - | ||
| In foreign currency | - | |||
| Financial loans | 17,123,940 | - | ||
| Interest to accrue | (56,795) | - | ||
| 25,431,353 | - | |||
| Other liabilities | ||||
| Companies Section 33 Law No. 19550 - Note 8 | 1,000,000 | 1,000,000 | ||
| Miscellaneous provisions | 204,011 | 676,096 | ||
| 1,204,011 | 1,676,096 | |||
| NONCURRENT LIABILITIES | ||||
| Other liabilities | ||||
| Companies Section 33 Law No. 19550 - Note 8 | 673,398 | 771,016 | ||
| 673,398 | 771,016 |
NOTE 3 ‑ CAPITAL STRUCTURE ‑ SHAREHOLDERS' EQUITY
a) Capital Structure
In accordance with the modification to the Company's By‑laws approved at the Special Shareholders' meeting held on May 27, 1994, the capital of the Company was increased from $ 3.20 to $ 2,000,000.
This capital, which is totally registered, subscribed, and paid‑in, is represented by 20,000,000 registered common shares with a par value of $ 0.10.
U.S. SEC File
No. 82‑3941
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MIRGOR S.A.C.I.F.I.A.
NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2002 AND 2001 - Continued
Amounts expressed in Pesos
NOTE 3 ‑ CAPITAL STRUCTURE ‑ SHAREHOLDERS' EQUITY - Continued
The shares of the Company were converted into three classes, as follows:
| Class of shares | Votes |
| Class "A" | Three (3) votes each |
| Class "B" | Three (3) votes each |
| Class "C" | One (1) vote each |
On a per share basis, the Class A, B and C Shares participate equally in dividends.
The capital structure as of March 31, 2002 and 2001 is as follows:
| Class of shares | Number |
| Class "A" shares | 5,200,000 |
| Class "B" shares | 5,200,000 |
| Class "C" shares | 9,600,000 |
| Total | 20,000,000 |
b) Other Reserves ‑ Reserve for Future Dividends
This account includes the decisions taken by the Shareholders at the Meetings held on May 24, 1995, May 22, 1998 and April 29, 1999, whereby it was approved that a reserve for future dividends be recorded in the sum of $ 8,545,110, $ 3,500,000 and $ 3,800,000, respectively. This reserve remained at the Board of Directors' discretion. On July 14, 1995, May 12, 1998, July 12, 1999, December 13, 1999, July 18, 2000 and December 15, 2000, the Board of Directors approved the payments of $ 4,261,580, $ 4,250,000, $ 1,750,000, $ 1,750,000, $ 1,900,000 and $ 1,900,000, respectively.
U.S. SEC File
No. 82‑3941
TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH
MIRGOR S.A.C.I.F.I.A.
NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2002 AND 2001 - Continued
Amounts expressed in Pesos
NOTE 4 - COMPOSITION OF FINANCIAL AND HOLDING RESULTS
The composition of Financial and Holding Results for the three-month periods ended March 31, 2002 and 2001, is as follows:
| 2002 | 2001 | |||||||
| Generated by | Generated by | |||||||
| Assets | Liabilities | Assets | Liabilities | |||||
| (Loss) | (Loss) | (Loss) | (Loss) | |||||
| Gain | Gain | Gain | Gain | |||||
| Nominal interest | 9,790 | (897,478) | 106,371 | (381,430) | ||||
| Exchange differences | 2,525,998 | (22,577,110) | - | (155,258) | ||||
| Holding results on: | ||||||||
| - inventories | 24,499,738 | - | (520,581) | - | ||||
| - allowances | (3,234,287) | - | - | - | ||||
| - short‑term investments and tax receivables - Note 5 c) | 459,940 | - | (322,622) | - | ||||
| Subtotal | 24,261,179 | (23,474,588) | (736,832) | (536,688) | ||||
| Total | 786,591 | (1,273,520) |
NOTE 5 ‑ TIERRA DEL FUEGO TAX REGIME
The Company is included in the following regimes:
-
Industrial Promotion Regime established by the 1972 National Law No. 19640 for developing activities in the Province of Tierra del Fuego. In this regard, the Company is entitled to certain tax and customs duty benefits until 2013. The benefits include the following:
-
Income tax: In accordance with Executive Order No. 1395/94, the national government established that, as of September 1, 1994, 85% (see effect of Executive Order No. 615/97) of the sales price to customers shall not be subject to income tax (of which the current rate is 35%) on profits generated within said province.
- Value Added Tax (VAT): The Company's sales are subject to a 21% rate as of April 1995. This tax is collected from MIRGOR S.A.C.I.F.I.A.'s customers.
U.S. SEC File
No. 82‑3941
TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH
MIRGOR S.A.C.I.F.I.A.
NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2002 AND 2001 - Continued
Amounts expressed in Pesos
NOTE 5 ‑ TIERRA DEL FUEGO TAX REGIME - Continued
Executive Order No. 1395/94 established that the presumed tax receivable, to be calculated as from September 1, 1994, results from applying the tax rate on 61.11% (see effect of Executive Order No. 615/97) of the net sales price to customers. Therefore, the tax payable is reduced to 8% thereof as of April 1995.
- In accordance with Law No. 23697 the national government suspended certain tax benefits during fiscal years 1989 and 1990. The resulting VAT and capital taxes paid in connection with this law were to be reimbursed to the Company in the form of government bonds.
D.G.I.'s Resolution No. 3838/94, established the procedure by which Mirgor can obtain the bonds (tax credit certificates). Consequently, Mirgor recorded tax receivables amounting to $ 1,511,787.90 due to the difference between the amount originally recorded and that applied for on June 27, 1995 in accordance with the valuation criteria set forth in Resolution No. 3838/94.
On September 17, 1996, the Tax Authorities notified the Company of their decision whereby they acknowledged a higher amount in favor of the Company ($ 2,194,141.99) due to the application of an adjusted index of the month prior to that used by the Company in the original filing. Likewise, with regard to the Suppliers' VAT refund, a receivable amounting to $ 148,853.37 has been recorded, and will be recovered under the export VAT refund regime.
Considering that on May 2, 1996, the Ministry of Economy and Public Works and Utilities issued Resolution No. 580/96, which includes receivables prior to April 1, 1991, the Company decided to record the acknowledged receivable of the Debt Consolidation Bonds, issued pursuant to Law No. 23982 and its regulatory provisions, at the market value prevailing at the end of each period.
On May 19, 1997, the Tax Authorities notified the Company of their provisional approval of the amounts stated in the preceding paragraphs.
- Pursuant to Law No. 19640, the Company does not pay customs duties (which for the Company would amount to approximately 15%) and no import tax rate (which is currently equivalent to 3%) on the total value of imported materials used in the Company's operations in Tierra del Fuego.
U.S. SEC File
No. 82‑3941
TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH
MIRGOR S.A.C.I.F.I.A.
NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2002 AND 2001 - Continued
Amounts expressed in Pesos
NOTE 5 ‑ TIERRA DEL FUEGO TAX REGIME - Continued
- Certain of the benefits obtained by the Company for b) and d) above are as follows:
| Periods ended March 31 | ||||
| 2002 | 2001 | |||
| Value added tax (VAT) | 1,317,556 | 1,537,642 | ||
| Customs duties and import rate (estimated) | 349,614 | 657,048 |
Even though the operation in Tierra del Fuego enjoys the above‑mentioned promotional tax benefits, it has, on the other hand, incurred higher costs such as wages, communications, freight, leasing, travel expenditures, etc.
Subsequently, Executive Order No. 615/97 of July 7, 1997, which amended Executive Order No. 1395/94, reimplemented certain tax benefits granted under the Industrial Promotion Regime. In light of the new Executive Order, the presumed tax receivable, to be calculated as of August 1, 1997, for VAT purposes, will result from applying the tax rate (prevailing upon sale) to the net sales price to customers.
In regards to income tax, the sales made to continental Argentina will enjoy a 100% exemption from the tax provided for in clause a), Section. 4 of Law No. 19640.
In regards to the refunds receivable in local currency for exports from continental Argentina to Tierra del Fuego, due to delays in payments incurred by the National Government, the Company filed several applications for their collection with the General Customs Administration (Promotional Regimes Division).
To the date of issuance of these financial statements, such claims continue to be under administrative proceedings.
U.S. SEC File
No. 82‑3941
TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH
MIRGOR S.A.C.I.F.I.A.
NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2002 AND 2001 - Continued
NOTE 5 ‑ TIERRA DEL FUEGO TAX REGIME - Continued
Amounts expressed in Pesos
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Competitiveness regime, established by National Executive Order No. 730/01 to improve competitiveness and employment generation in the country. The main benefits established for those companies adhered thereto are as follows:
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Full exemption from the tax on interest paid and the financial cost of corporate indebtedness;
- Full exemption from the minimum presumed income tax;
- Computation as VAT credit of the amounts paid for employers’ contributions on the payroll owed to the Unified Social Security System (SUSS).
The benefits referred to in a) above are effective as of August 31, 2001 and those referred to in b) and c) above as of July 1, 2001. In cases a) and b), these benefits will no longer be enjoyed on April 30, 2002; and in case c), on November 30, 2001.
NOTE 6 ‑ SIGNIFICANT CUSTOMERS AND LICENSE AGREEMENTS
For the three-month periods ended March 31, 2002 and 2001, the Company's sales to its most significant customers were as follows:
| 2002 | 2001 | |||
| Volkswagen Argentina S.A. | 60% | 37% | ||
| Peugeot Citroen Argentina S.A. | 12% | 32% | ||
| General Motor Argentina | 12% | 0% | ||
| Mercedes Benz | 7% | 2% | ||
| Renault Argentina S.A. | 0% | 16% |
A significant portion of the Company’s products is manufactured under license agreements with Valeo Thermique Habitacle.
U.S. SEC File
No. 82‑3941
TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH
MIRGOR S.A.C.I.F.I.A.
NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2002 AND 2001 - Continued
Amounts expressed in Pesos
NOTE 7 ‑ CONTROLLING SHAREHOLDER
Controlling shareholder: Il Tevere S.A.
Legal Address: Paseo Colón 221, 2nd Floor, Buenos Aires
Principal Activity: Investor in shares of other corporations
Voting percentage: 76.47%
Share percentage: 52%
On July 15, 1996, 40% of the shares of Il Tevere S.A. was transferred to Valeo Climatisation, which indirectly owns 20.8% of the capital stock of MIRGOR S.A.C.I.F.I.A. and is entitled to 30.59% of votes. On March 6, 1998, 10% of the shares of Il Tevere S.A. was transferred to Valeo Climatisation; accordingly, its ownership interest in the capital stock of MIRGOR S.A.C.I.F.I.A. increased to 26%.
NOTE 8 ‑ TRANSACTIONS WITH SECTION 33 COMPANIES ‑ LAW No. 19550
During the three-month periods ended March 31, 2002 and 2001, the Company had made transactions related to the purchase of goods and other transactions with its controlled company in the amounts of $ (26,485) and $ 275,907, respectively.
On August 20, 1998, the Company’s Board of Directors decided to make irrevocable contributions for future capital increases in Interclima S.A. of 4,500,000, through the debt held by Interclima S.A. with the Company.
As of March 31, 2002 and 2001, the liabilities for Mirgor and/or Interclima S.A. amounted to:
| 2002 | 2001 | |||
| Current Liabilities | (7,244) | (150,856) | ||
| Liabilities (Companies Section 33 - Law No. 19550) - Current | (1,000,000) | (1,000,000) | ||
| Liabilities (Companies Section 33 - Law No. 19550) - Noncurrent | (673,398) | (771,016) | ||
| Total | (1,680,642) | (1,921,872) |
U.S. SEC File
No. 82‑3941
TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH
MIRGOR S.A.C.I.F.I.A.
NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2002 AND 2001 - Continued
Amounts expressed in Pesos
NOTE 9 - INCOME TAX WITHHOLDINGS ON DIVIDENDS
When the payment of dividends is made in excess of the taxable income, estimated as set forth in the income tax law, 35% of such amount in excess should be withheld as sole and final payment.
In accordance with the unnumbered section following section 69 of the referred Law, the Company is not compelled to make any withholding in this regard.
NOTE 10 - STATUTORY BOOKS
The books that were legalized subsequent to the date of the related transactions are as follows:
| Journal No. | Legalization date | Period’s transactions |
| 25 | April 23, 2001 | 02/21/01 to 03/31/01 |
| 26 | April 23, 2001 | 04/01/01 to 04/30/01 |
| 27 | August 6, 2001 | 05/01/01 to 06/01/01 |
| 28 | August 8, 2001 | 06/02/01 to 07/02/01 |
| 29 | October 23, 2001 | 07/03/01 to 08/01/01 |
| 30 | October 24, 2001 | 08/02/01 to 08/31/01 |
| 31 | November 2, 2001 | 08/31/01 to 10/03/01 |
| 32 | November 2, 2001 | 10/04/01 to 10/31/01 |
| 33 | March 14, 2002 | 11/20/01 to 12/31/01 |
| 34 | March 14, 2002 | 01/01/02 to 03/15/02 |
| 35 | May 15, 2002 | 03/15/02 to 03/31/02 |
NOTE 11 - MARKET RISK FACTORS AS A RESULT OF THE ECONOMIC SITUATION
During the last months of 2001, Argentine economic activity decreased impairing domestic markets. At the same time, interest rates required by investors in Argentine Government bonds significantly increased, the quoted market prices of these bonds decreased, and the level of bank deposits as well as foreign credit availability decreased. Under these circumstances, the national authorities implemented several measures, which included, among others: a) the national and provincial public debt-restructuring program, negotiating a voluntary debt swap with the bondholders, which contemplates a substantial decrease in interest rates and guarantee of the new debt with future tax collections; and b) restrictions on the availability of bank deposits and transfers of funds abroad that are not related to certain commercial transactions.
U.S. SEC File
No. 82‑3941
TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH
MIRGOR S.A.C.I.F.I.A.
NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2002 AND 2001 - Continued
Amounts expressed in Pesos
NOTE 11 - MARKET RISK FACTORS AS A RESULT OF THE ECONOMIC SITUATION - Continued
Subsequently, the National Government declared the default of the payment of the country’s external debt and on January 6, 2002, the Public Emergency and Exchange Regime Reform Law No. 25561 was enacted, whereby the Executive Branch was empowered to establish a system that will determine the exchange rate between the peso and foreign currencies and put into place exchange regulations. Also, the referred law amended Law No. 23928 (“Convertibility Law”), which had been in force since 1991.
On January 10, 2002, the Central Bank of Argentina (B.C.R.A.) issued Notice A 3425, which set forth the terms of the official exchange market beginning on January 11, 2002 (basically for exports and certain imports) and a free exchange market for the remaining transactions. The exchange rate for the US dollar in the official market was $ 1.40 = US$ 1 and the currency selling exchange rate in the free exchange market on January 11, 2002 ranged from 1.60 to 1.70 pesos per dollar.
On February 3, 2002, the Executive Branch, through Executive Order 214/2002 – which partially amends Law No. 25561 – established, among other relevant issues, the conversion into pesos of payable obligations denominated in US dollars or other foreign currencies as of January 6, 2002 (Law No. 25561 enactment date), according to the following regime:
-
- All of the deposits denominated in US dollars or other foreign currencies in the financial system shall be converted into pesos at the exchange rate of $ 1.40 = US$ 1, or its equivalent in other foreign currency.
- All of the debts denominated in US dollars or other foreign currencies held with the financial system shall be converted into pesos at the exchange rate of $ 1 = US$ 1, or its equivalent in other foreign currency.
- The obligations denominated in US dollars or other foreign currency, not related to the financial system, shall be converted at the exchange rate of $ 1 = US$ 1. Any of the parties may require a fair price readjustment, if the application of this rule leads to a contractual unfairness. If no agreement is reached between the parties, a court shall decide thereon.
U.S. SEC File
No. 82‑3941
TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH
MIRGOR S.A.C.I.F.I.A.
NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2002 AND 2001 - Continued
Amounts expressed in Pesos
NOTE 11 - MARKET RISK FACTORS AS A RESULT OF THE ECONOMIC SITUATION - Continued
In the three cases described above, the amounts shall be adjusted to the so-called “Reference Stability Rate” (CER), which shall be periodically published by the B.C.R.A. In addition, a minimum interest rate shall be applied to deposits and a maximum rate to loans.
On February 8, 2002, the Executive Branch issued Executive Order 260/02, whereby the foreign exchange regime was amended, replacing it with a free exchange market whereby all of the transactions in foreign currencies could be freely traded. These transactions are subject to the requirements and regulations of the B.C.R.A. According to subsequent regulations of the B.C.R.A., the transfers abroad for financial loan principal services and profits and dividends made in the 90-day period after February 11, 2002 shall require the prior consent of the B.C.R.A., whatever the payment term may be. Due to the complexity of the matter, the B.C.R.A. will surely issue new regulations in the future.
It is noteworthy that in preparing the financial statements, management has given special consideration to the provisions of Executive Orders Nos. 214/2002, 410/2002 and Resolution A3561 of the B.C.R.A. (which amends A3507) as regards the currency in which US-dollar denominated liabilities should be settled. However, the referred regulations give rise to different interpretations as to the criterion to determine liabilities that were comprised in the debt pesification, which results in an environment of uncertainty regarding the ultimate valuation of the referred liabilities.
This additional information reveals all of the effects arising from the new economic and exchange measures known as of the date of issuance of these financial statements. In this regard, the Company’s management has made its estimations taking into account said measures, as stated in the following paragraph. The effects that future additional or supplementary measures may have on the Company will be recorded upon the acknowledgment thereof by management.
U.S. SEC File
No. 82‑3941
TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH
MIRGOR S.A.C.I.F.I.A.
NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2002 AND 2001 - Continued
Amounts expressed in Pesos
NOTE 11 – MARKET RISK FACTORS AS A RESULT OF THE ECONOMIC SITUATION - Continued
Considering the comments made in the preceding paragraphs and the expected evolution of the negotiations with financial institutions, the Company’s management has decided to book an allowance for financial contingencies in the amount of $ 3.5 million, which has been recorded against a P&L charge for the period and included in the Financial and holding results, being the allowances for contingencies included in current liabilities its contra account.
Also, the Company has certain tax and refunds receivable in the amount of $ 5 million disclosed in noncurrent assets, whose future recovery depends on the probabilities of the National Government reversing its default situation, and on the generation of income which would be subject to tax.
The situations mentioned in the paragraphs above do not allow us to ensure that the final results agree with the balances booked by the Company. Therefore, the information included in these financial statements, and other related documentation, does not illustrate the potential impact that might derive from the situation depicted above in this note and, accordingly, should be analyzed considering that possibility.