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 PERIOD beginning

january 1, 2003, and ended March 31, 2003,

TOGETHER WITH THE LIMITED REVIEW

REPORT AND THE STATUTORY AUDIT COMMITTEE’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)

LIMITED REVIEW REPORT ON INTERIM FINANCIAL STATEMENTS

To the Chairman and Directors of

Mirgor Sociedad Anónima, Comercial, Industrial, Financiera,

Inmobiliaria y Agropecuaria

We have performed a limited review of the accompanying balance sheet of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria as of March 31, 2003, and the related statements of income, changes in shareholders’ equity and cash flows for the three-month period then ended. In addition, we have performed a limited review of the accompanying consolidated balance sheet of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria and its subsidiary as of March 31, 2003, and the related consolidated statements of income and cash flows for the three-month period then ended, which are disclosed as supplementary information. These financial statements are the responsibility of the Company’s Management.
Our review was performed in accordance with Technical Resolution No. 7 of the FACPCE (Argentine Federation of Professional Councils in Economic Sciences) applicable to the limited review of interim financial statements. According to such standards, a limited review mainly consists in applying analytical procedures to accounting information and making inquiries of people in charge of accounting and financial issues. The scope of a review is substantially smaller than that of a financial statement audit, the purpose of which is to issue an opinion on the financial statements taken as a whole. Accordingly, we do not express such opinion.
As indicated in note 11 to the abovementioned financial statements, the Company carries taxes receivable and receivables from the Government, the recoverability of which is affected by the economic crisis mentioned in such note. In addition, the Company is currently implementing the agreements with financial institutions; such procedure has not concluded as of the issuance date of this report. The valuation and/or disclosure may differ from that indicated in the financial statements mentioned in paragraph (1).

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

As indicated in note 1 to the financial statements mentioned in paragraph (1), as of March 31, 2003, Interclima Sociedad Anónima -the Company’s subsidiary- has not accrued income tax since it understands that the tax adjustment for inflation provided for in Income Tax Law should be applied taking into account current Argentine macroeconomic conditions. Had the adjustment for inflation not been made, Interclima Sociedad Anónima should have booked income tax liabilities amounting to about ARS 310,000.
As indicated in note 1 to the accompanying financial statements, and according to the standards of the corporate enforcement entity, the Company has not recognized in the books the effects of the variations in the currency purchasing power generated as from March 1, 2003, as required by professional accounting standards effective in the city of Buenos Aires, Argentina. The effects of the lack of recognition of such variations have not been significant with respect to the accompanying financial statements.
Based on our review, except as indicated in paragraph 4 and note 1 to the financial statements, regarding the adequacy of the information submitted for comparative purposes, we have not become aware of any significant modification that should be made to the financial statements mentioned in paragraph 1 for them to be presented in conformity with professional accounting standards effective in the City of Buenos Aires, Argentina, as well as Argentine Business Associations Law and CNV (Argentine Securities Commission) regulations. This representation should be read taking into account the uncertainties described in paragraph (3) above, which cannot be resolved as of the date of this report.
Regarding the balance sheet of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria and of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria and its subsidiary as of December 31, 2002, and the related statements of income, changes in shareholders’ equity, and cash flows of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria and of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria and its subsidiary for the three-month period ended March 31, 2002, presented for comparative purposes, we report that:
On March 10, 2003, we issued an audit report on the financial statements of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria and of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria and its subsidiary as of December 31, 2002, with an except-for qualification due to the inconsistency in the method to value the subsidiary’s income tax accrual and the qualifications for unresolved uncertainties due to the recoverability of taxes receivable and receivables from the Argentine Government and the renegotiation of financial payables. Such financial statements do not take into account the effects of the variations in the currency purchasing power as from March 1, 2003. We have not audited any financial statements as of any date and for any period subsequent to December 31, 2002.
On May 22, 2002, we issued a limited review report for the financial statements of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria and of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria and its subsidiary for the three-month period ended March 31, 2002, with an except-for qualification due to the lack of recognition of variations in the currency purchasing power from January 1 to March 31, 2002, as required by professional accounting standards. In addition, such financial statements have not been modified by the Company’s Management to include the changes mentioned in note 1 and they have not been adjusted based on the changes in the currency purchasing power in the abovementioned period, which was required by subsequent regulations issued by the enforcement entity. Neither do they consider the effects of the abovementioned variations as from March 1, 2002.
In compliance with current regulations, we further report that:
The financial statements mentioned in paragraph (1) are disclosed in the inventory and financial statements book.
The financial statements of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuariaas of March 31, 2003, result from books kept, in their formal respects, pursuant to current regulations, except as indicated in note 10.
The information contained in points (2) and (3) of the “Summary of events for the period ended March 31, 2003” submitted by the Company in compliance with CNV regulations derives from the accompanying financial statements as of March 31, 2003, and as of March 31, 2002, 2001, 2000, and 1999 (after its restatement in constant pesos as mentioned in note 1), not included herein, on which we based our limited review reports dated May 22, 2002, May 11, 2001, and May 11, 1999, respectively, to which we refer and should be read with this report as a whole. Such information for the periods ended March 31, 2002, 2001, 2000, and 1999, has not been modified by the Company’s Management to include the changes mentioned in note 1 and, in addition, they do not consider the effects of variations in the currency purchasing power generated as from March 1, 2003. Furthermore, the information contained in points (3), (4) and (5) of “Supplementary notes to the financial statements as of March 31, 2003, required by section 68 of the regulations issued by the Buenos Aires Stock Exchange”, submitted by the Company to comply with BCBA’s (Buenos Aires Stock Exchange) regulations, derives from the accompanying financial statements as of March 31, 2003, and December 31, 2002.

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

As of March 31, 2003, liabilities accrued in employee and employer contributions to the Integrated Pension Fund System, as recorded in the Company’s books, total ARS 84,959.08, none of which was due and payable as of that date.

Buenos Aires,

May 19, 2003


HENRY MARTIN, LISDERO Y ASOCIADOS C.P.C.E.C.A.B.A. - R.A.P.U. Vol. I Fo. 7

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. 32 beginning january 1, 2003,

summary OF EVENTS

For the period ended March 31, 2003

(Figures stated in pesos – see Note 1)

overview of the company’s activities during the PERIOD

Regarding the automotive industry, the industry and Mirgor’s data should be carefully analyzed to avoid drawing conclusions that may lead to errors.

The current situation shows a significant improvement as compared to the deep crisis that affected Argentina in the same period the prior year. During the first-half of the year the automotive production increased by 40.8%. However, if compared to the average for the last six years, the volume produced decreased by 40%. The most important factor to analyze is the domestic demand that decreased by 20% as compared with the same period in 2002 and 66% with respect to average sales recorded in the first quarter of the last six years. This serious circumstance is the result of the significant decrease in the salary purchasing power, as related to vehicles, and the complete lack of loans (in this case, there is a combination of supply and demand).

Consumers’ trust (or lack thereof), a very important aspect upon analyzing the domestic demand of durable goods, is strongly determined by the pre-electoral uncertainty. This leads to the postponement of purchases by those consumers that maintain certain purchasing power.

The companies that form part of the automotive value chain have explained this situation to the current government as well as the candidates with the best possibilities of success in the next elections. The sector has prepared some policy proposals to encourage the sales of vehicles, which have been reduced, as shown by statistics. This may be easily observed by understanding that current sales would take more than eighty years to restore the vehicle fleet, when replacement rates in countries such as Argentina should be lower than 20 years.

Within the previous context, the units sold by Mirgor increased significantly. The total amount of air conditioners sold increased from 4,495 units sold in Q1 2002 to 5,578 units sold in Q1 2003, thus representing a 24.1% increase. On the other hand, the units for vehicles without air conditioning reached 4,979 in the first half of the year as compared to 2,075 units sold in the same prior-year period, i.e. 140% more. The delivery of dashboards exceeded units sold by 92% as compared to the same period the prior year. However, all this information should be analyzed taking into account the circumstances that affect them.

The actions taken last year to incorporate new products enabled the Company to increase its market share from 25% of total vehicle production in Q1 2002 to 34% in the same period in 2003. The presence of Renault as demander is also significant during 2003 while the premises remained closed last year. This year’s sales include our new product, the Clio.

On the other hand, there has been a significant decrease in air conditioning sales with respect to the Company’s sales mix from 68% in 2002 to 51% in 2003. This situation shows once more that in an impoverished market consumers choose cheaper versions, to which we should add that the increase in the sale of SUVS (related to the improvement of the agricultural industry) as a high-growth product is detected upon analyzing the domestic demand qualitatively.

In addition, there has been a significant change in the proportion of sales as there has been an increase in the sales of systems for air-conditioned vehicles.

Vehicles exports have also contributed to domestic production growth; however, the latter has increased by a smaller proportion. Specifically, there have been increases in certain terminals, such as Volkswagen, and decreases in others that are not Mirgor’s customers, such as Ford.

The abovementioned events inevitably lead to losses during Q1, which has been traditional in our Company as well as in the other companies of the sector, since customers have holidays in January.

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


	03/31/03	03/31/02 (1)	03/31/01	03/31/00	03/31/99

Current assets	64,443,113	89,294,740	67,119,368	79,542,970	82,698,762
Noncurrent assets	37,501,188	42,709,339	36,668,750	37,778,041	38,198,449
Total assets	101,944,301	132,004,079	103,788,118	117,321,011	120,897,211

Current liabilities	31,422,702	75,820,464	42,865,565	46,986,053	39,090,086
Noncurrent liabilities	13,091,835	-	-	-	9,426,019
Total noncurrent liabilities	44,514,537	75,820,464	42,865,565	46,986,053	48,516,105

Minority interest	3,789	4,474	4,143	4,317	13

Shareholders' equity	57,425,975	56,179,141	60,918,410	70,330,641	72,381,093
Total liabilities and Shareholders’ equity	101,944,301	132,004,079	103,788,118	117,321,011	120,897,211

Originally presented in historical currency and restated until 02/28/03.
income structure (figures related to the consolidated statements and stated in constant pesos – see note 1)


	03/31/03	03/31/02	03/31/01	03/31/00	03/31/99
Ordinary operating income (loss)	(453,103)	(397,172)	(795,855)	(158,103)	(1,066,235)
Financial expense	182,667	1,988,155	(2,125,785)	(707,973)	(1,427,922)
Other (expenses) / revenues	(985,552)	(111,152)	22,712	(151,156)	(398,881)
Minority interest gain (loss)	(259)	(368)	33	15	377
Ordinary income (loss), net	(1,256,247)	1,479,463	(2,898,895)	(1,017,217)	(2,892,661)
Extraordinary items	-	-	-	-	-
Minority interest loss	-	-	-	-	-
Income (loss), net	(1,256,247)	1,479,463	(2,898,895)	(1,017,217)	(2,892,661)

Originally presented in historical currency and restated until 02/28/03.
STATISTICAL DATA (1)



Number of units	03/31/03		03/31/02 (1)		03/31/01		03/31/00			03/31/99
	Quarter	Accum	Quarter	Accum	Quarter	Accum.	Quarter	Accum.	Quarter		Accum

Production (2)	37,810	37,810	23,367	23,367	56,327	56,327	41,213	41,213	42,600		42,600

Sales (3)	38,270	38,270	8,400	8,400	16,627	16,627	29,440	29,440	20,986		20,986


* Local	14,064	14,064	8,400	8,400
Equipment with air	5,578	5,578	4,495	4,495
Equipment without air	4,979	4,979	2,075	2,075
Dashboard	3,507	3,507	1,830	1,830
* Exports	24,206	24,206

As from this period, 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


	03/31/03	03/31/02	03/31/01	03/31/00	03/31/99
Current ratio	2.05	1.18	1.57	1.69	2.12
Equity to debt ratio	0.78	1.35	0.70	0.67	0.67
Fixed asset-to-equity capital ratio	0.37	0.32	0.35	0.32	0.32

CHANGES IN THE MARKET PRICE OF SHARES


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

perspectives

Vehicle factories are very concerned about the rebound of the Argentine peso with respect to the U.S. dollar. This situation is worsened by the euro appreciation since many companies still depend on the import of products of such origin significantly. Higher costs in U.S. dollars adversely affect exports growth of last year’s vehicles.

However, during the last few days, there was a relief since the Brazilian currency exchange rate drew closer to the Argentine peso, thus allowing to improve expectations with respect to the opportunities to begin exporting to that country again. Regarding condensator exports, there have been certain increases in schedules that permit us to be optimistic with respect to the activity of our plant for the rest of the year.

In addition, the Company has received the approval for the samples submitted to GM Argentina with respect to the products used to equip the Corsa II, which will permit to increase deliveries to this customer significantly, once certain pending commercial aspects have been agreed upon. However, we have already planned certain initial deliveries for May. Once the final agreements have been entered into, Mirgor’s market share could reach 45/50%.

Anyway, the most important fact that the Company needs to consolidate its recovery is a domestic market growth since current vehicle sales figures do not enable companies to renew their models, which is necessary for the industry to keep the current significant export volume.

Río Grande, May 19, 2003.



	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 three-month period beginning January 1, 2003, and ended March 31, 2003, presented comparatively with the prior year and with the same period 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 7 to the stand-alone financial statements.

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


	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

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

Supplementary information

consolidated balance sheet as of march 31, 2003, and DECEMBER 31, 2002

Figures stated in pesos – See note 1


	2003	2002
ASSETS
CURRENT ASSETS
Cash	7,809,220	8,949,955
Short-term investments	1,547	5,064,959
Trade receivables	14,082,408	8,806,415
Taxes receivable	859,961	1,076,940
Other receivables	1,473,782	2,166,336
Inventories	40,216,195	40,815,727
TOTAL CURRENT ASSETS	64,443,113	66,880,332

NONCURRENT ASSETS
Other receivables	4,782,516	5,007,792
Taxes receivable	6,167,469	5,566,640
Other	21,465	31,435
Intangible assets – Note 1(e)b	252,004	366,168
Property, plant and equipment – Note 1(e)a	26,277,734	27,485,463
TOTAL NONCURRENT ASSETS	37,501,188	38,457,498
TOTAL ASSETS	101,944,301	105,337,830

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.

Supplementary information

consolidated balance sheet as of march 31, 2003, and DECEMBER 31, 2002

Figures stated in pesos – See note 1


	2003	2002
LIABILITIES
CURRENT LIABILITIES
Payables
Trade payables	13,045,241	11,636,916
Salaries, payroll and other taxes payable	779,305	1,096,562
Customer prepayments	7,596,989	6,423,746
Loans	9,746,117	9,457,954
Other	91,270	154,602
Total Liabilities	31,258,922	28,722,780
Provisions	163,780	1,042,593
TOTAL CURRENT LIABILITIES	31,422,702	29,815,373

NONCURRENT LIABILITIES
Loans	13,091,835	16,836,705
	13,091,835	16,836,705
TOTAL LIABILITIES	44,514,537	46,652,078

Minority interest in subsidiaries	3,789	3,530

SHAREHOLDERS’ EQUITY	57,425,975	58,682,222
TOTAL LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS’ EQUITY	101,944,301	105,337,830

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

Supplementary information

Consolidated statement of income for the three-month period ended March 31, 2003, presented comparatively with the same period the prior year

Figures stated in pesos – See note 1


	2003	2002
Net sales (including VAT benefits amounting to 2,183,344 and 2,156,864)	20,058,235	18,759,863
Cost of goods sold	(18,289,993)	(16,704,078)
GROSS REVENUES	1,768,242	2,055,785

Administrative expenses - Exhibit H	(1,797,341)	(2,023,825)
Selling expenses – Exhibit H	(413,327)	(421,180)
Other expense / income	(985,552)	(111,152)
Financial expense and holding losses
From assets	(2,960,000)	41,259,679
From liabilities	3,142,667	(39,271,525)
Loss from long-term investments	(10,677)	(7,951)
SUBTOTAL	(1,255,988)	1,479,831
Minority interest in subsidiaries	(259)	(368)
(LOSS) INCOME FOR THE PERIOD	(1,256,247)	1,479,463

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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, 2003, presented comparatively with the same period the prior year

Figures stated in pesos – See note 1


	2003	2002
CHANGES IN CASH
Cash at beginning of year	14,014,323	3,722,768
Cash at end of period	7,810,180	9,298,266
Cash (decrease) increase	(6,204,143)	5,575,498

SOURCES OF CHANGES IN CASH

OPERATING ACTIVITIES
Ordinary income (loss) for the period	(1,256,247)	1,479,463

Adjustments to reach net cash flows deriving from operating activities
PP&E depreciation and intangible assets amortization	1,389,577	1,024,581
Gain (loss) from PP&E sale	10,000	-
Minority interest	259	368
Allowance for impairment in value of inventories (net effect)	(1,044,651)	3,932,468
Income from long-term investments	10,677	7,951
Contingency provision	11,108	5,651,606
Impairment in value of PP&E advances from exposure to inflation	1,618	-
Changes in operating assets and liabilities:
Trade receivables	(5,275,993)	(7,056,391)
Inventories	1,692,952	(35,296,407)
Trade payables	1,405,325	14,583,075
Loans	(2,395,243)	19,681,785
Salaries, payroll and other taxes (net of receivables)	(701,107)	(1,238,277)
Customer prepayments	1,173,243	3,681,358
Other	805,019	(811,001)
Allowances and provisions	(889,921)	-
Net cash flow (used in) provided by operating activities	(5,063,384)	5,640,579

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

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

Additional information

Consolidated statement of cash flows for the three-month period ended March 31, 2003, presented comparatively with the same period the prior year

Figures stated in pesos – See note 1


	2003	2002
INVESTMENT ACTIVITIES
PP&E acquisition	(69,295)	(65,081)
Revenues from PP&E sales	(10,000)	-
Net cash flow (used in) provided by investment activities	(79,295)	(65,081)

FINANCING ACTIVITIES
Loan repayment	(1,061,464)	-
NET CASH FLOW (USED IN) PROVIDED BY FINANCING ACTIVITIES	(1,061,464)	-
Net cash (decrease) increase	(6,204,143)	5,575,498

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

Supplementary information

notes to the consolidated financial statements as of MARCH 31, 2003, and 2002

Figures stated in pesos – See note 1

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

Applicable accounting standards

The financial statements as of March 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 March 31, 2003, December 31, 2002, and March 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 03/31/03		Period-end
Interclima Sociedad Anónima		99.9667%		03/31/03

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

Supplementary information

notes to the consolidated financial statements as of MARCH 31, 2003, and 2002 - Continued

Figures stated in pesos – See note 1

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES - Continued

Financial statements used in consolidation

To prepare the financial statements as of March 31, 2003, and 2002, and those as of December 31, 2002, Interclima Sociedad Anónima’s financial statements as of March 31, 2003, and 2002, were used, which rely on the limited review report issued by Pistrelli, Henry Martin y Asociados S.R.L. and Henry Martin, Lisdero y Asociados, respectively, and as of December 31, 2002, with Henry Martin, Lisdero y Asociados’ audit, which have issued the related limited review report -dated May 19, 2003, with except-for qualifications and qualifications for unresolved uncertainties dated May 22, 2002-, and the audit report with except-for qualifications and qualifications for unresolved uncertainties dated March 10, 2003.

Changes in significant assets


	03/31/03 ARS	12/31/02 ARS
1. PP&E
Balance at beginning of year	27,485,464	38,586,113
Additions	76,494	530,341
Retirements (net of depreciation)	(8,818)	(6,395,002)
Depreciation	(1,275,406)	(5,235,989)
Balance at end of year	26,277,734	27,485,463


	ARS	ARS
1. Intangible assets
Balance at beginning of year	366,175	774,116
Amortization	(114,171)	(407,948)
Balance at end of year	252,004	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 MARCH 31, 2003, and 2002 - Continued

Figures stated in pesos – See note 1

NOTE 2 – MAIN ACCOUNT BREAKDOWN


	2003	2002
ASSETS
CURRENT ASSETS
Cash
On hand and imprest fund in Argentine currency	14,446	17,899
On hand in foreign currency	658,561	848,257
In banks in Argentine currency	1,307,671	7,789,049
In banks in foreign currency	5,828,542	294,750
	7,809,220	8,949,955
Short-term investments
Securities and shares	587	591
Savings account and other in foreign currency	-	5,063,401
Savings account in Argentine currency and other	960	967
	1,547	5,064,959
Trade receivables
In Argentine currency	13,640,733	8,225,134
In foreign currency	527,092	666,395
Allowance for doubtful accounts	(85,417)	(85,114)
	14,082,408	8,806,415
Taxes receivable
VAT credit	783,261	1,006,753
Other	76,700	70,187
	859,961	1,076,940
Other receivables
Notes receivable	1,059,680	1,513,368
Interest to be accrued	(105,143)	(78,248)
Miscellaneous receivables	-	284,635
Other	519,245	446,581
	1,473,782	2,166,336

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Supplementary information

notes to the consolidated financial statements as of MARCH 31, 2003, and 2002 - Continued

Figures stated in pesos – See note 1

NOTE 2 - MAIN ACCOUNT BREAKDOWN - Continued


	2003	2002
Inventories
Manufactured products	9,785,646	11,336,141
Raw material	28,433,680	31,804,395
Raw material in transit	6,033,371	3,303,341
Stock at end of period	44,252,697	46,443,877
Prepayments to vendors in Argentine currency	509,036	804,366
Prepayments to vendors in foreign currency	1,601,594	759,267
Allowance for impairment in value	(6,147,132)	(7,191,783)
	40,216,195	40,815,727

NONCURRENT ASSETS
Taxes receivable
Compulsory savings	8,378	7,900
VAT credit	3,465,179	2,984,289
Minimum presumed income tax	1,391,731	1,273,669
Promotional benefits receivable	875,073	925,103
Other	427,108	375,679
	6,167,469	5,566,640
Other receivables
Reimbursements in Argentine currency receivable	2,277,954	2,067,247
Notes receivable	2,863,800	3,410,035
Interest to be accrued	(359,238)	(469,490)
	4,782,516	5,007,792

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Supplementary information

notes to the consolidated financial statements as of MARCH 31, 2003, and 2002 - Continued

Figures stated in pesos – See note 1

NOTE 2 - MAIN ACCOUNT BREAKDOWN - Continued


	2003	2002
LIABILITIES
CURRENT LIABILITIES
Payables
Trade payables
In local currency	5,955,508	6,359,492
In foreign currency	7,089,733	5,280,424
	13,045,241	11,639,916
Salaries, payroll and other taxes
Employee benefits	340,388	494,668
Taxes payable	438,917	601,894
	779,305	1,096,562
Loans
Financial loans in local currency	4,475,804	4,948,206
Financial loans in foreign currency	5,270,313	4,509,748
	9,746,117	9,457,954

Other	91,270	154,602
	91,270	154,602

NONCURRENT LIABILITIES
Payables
Loans
Financial loans in local currency	2,647,135	2,807,948
Financial loans in foreign currency	10,444,700	14,028,757
	13,091,835	16,836,705

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 three-month period ended March 31, 2003, presented comparatively WITH THE PRIOR FISCAL YEAR

Figures stated in pesos – See Note 1(a)


	2003												2002
							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

Current investments:

BAESA	1.0	246	326,425			587							591

Total current investments						587							591

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

INTERCLIMA Sociedad Anónima	1	11,996	8,815,917	11,277,692	21,465	11,299,157	Auto-part manufacturing and interchanges for air conditioning and heating equipment	12/31/02	12,000	(5,911,084)	10,600,948	99.97%	10,533,388

Total noncurrent investments						11,299,157							10,533,388
Total investments						11,299,744							10,533,979

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EXHIBIT H

INFORMATION REQUIRED BY LAW No. 19,550, section 64 b(i) for the three-month period ended March 31, 2003, presented comparatively with the same period the prior year

Figures stated in pesos – See Note 1(a)


	2003				2002
Accounts	Production costs	Administrative expenses	Selling expenses	Total	Total

Salaries and wages	897,756	485,569	86,136	1,469,461	2,100,302
Payroll taxes and employee benefits	165,376	139,784	22,811	327,971	527,241
Insurance	122,537	24,281	1,294	148,112	83,840
Fees and training expenses	35,050	75,035	6,585	116,670	170,230
Taxes, rates, and assessments	93,178	117,192	59,737	270,107	239,945
Other administrative expenses	-	372,759	-	372,759	581,322
PP&E depreciation	794,694	491,666	12,162	1,298,522	997,064
Intangible asset amortization	-	91,055	-	91,055	27,517
Other production expenses	311,381	-	-	311,381	363,855
Customs clearance and taxes	460,494	-	-	460,494	429,795
Shipping, handling and freight	1,571,668	-	125,984	1,697,652	1,161,794
Other selling expenses	-	-	98,618	98,618	119,664
Total 2003	4,452,134	1,797,341	413,327	6,662,802
Total 2002	4,357,564	2,023,825	421,180		6,802,569

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balance sheet as of MARCH 31, 2003, and 2002

Figures stated in pesos – See note 1(a)


	2003	2002
ASSETS
CURRENT ASSETS
Cash – Note 2	7,155,056	8,140,586
Short-term investments – Note 2	1,547	5,064,959
Trade receivables – Note 2	13,465,288	8,120,841
Taxes receivable – Note 2	675,802	906,803
Other receivables – Note 2	1,459,691	1,864,324
Inventories – Note 2	38,316,458	38,774,595
TOTAL CURRENT ASSETS	61,073,842	62,872,108

NONCURRENT ASSETS
Long-term investments	11,299,157	10,533,388
Taxes receivable – Note 2	2,768,521	2,643,206
Other receivables – Note 2	3,487,288	3,867,128
Property, plant and equipment	23,847,688	24,926,314
Intangible assets	175,136	266,185
TOTAL NONCURRENT ASSETS	41,577,790	42,236,221
TOTAL ASSETS	102,651,632	105,108,329

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

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balance sheet as of MARCH 31, 2003, and 2002 ‑ Continued

Figures stated in pesos – See note 1(a)


	2002	2001
LIABILITIES
CURRENT LIABILITIES
Payables
Trade payables– Note 2	12,039,957	10,190,234
Salaries, payroll and other taxes– Note 2	697,705	1,015,461
Loans – Note 2	9,746,117	9,457,954
Customer prepayments	7,596,989	6,423,746
Other – Note 2	1,889,274	1,459,414
Total Liabilities	31,970,042	28,546,809
Provisions	163,780	1,042,593
TOTAL CURRENT LIABILITIES	32,133,822	29,589,402

NONCURRENT LIABILITIES
Payables
Loans – Note 2	13,091,835	16,836,705
TOTAL NONCURRENT LIABILITIES	13,091,835	16,836,705
TOTAL LIABILITIES	45,225,657	46,426,107

SHAREHOLDERS’ EQUITY	57,425,975	58,682,222
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	102,651,632	105,108,329

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

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statement of income FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2003, PRESENTED COMPARATIVELY WITH THE SAME PERIOD THE PRIOR YEAR

Figures stated in pesos – See note 1(a)


	2003	2002
Net sales (including VAT benefits amounting to 2,183,344 and 2,156,864) – Note 5(e)	17,765,999	15,502,123
Cost of goods sold	(16,859,730)	(14,150,512)
GROSS REVENUES	906,269	1,351,611

Administrative expenses	(1,759,598)	(1,982,661)
Selling expenses	(407,642)	(420,108)
Other (expense) / income – Note 2	(835,383)	133,625
Financial income (expense) and holding gains (losses)
From assets – Note 4	(3,025,544)	39,716,008
From liabilities – Note 4	3,099,882	(38,428,344)
Ordinary income (loss) from long-term investments	765,769	1,109,332
NET (LOSS) INCOME FOR THE PERIOD	(1,256,247)	1,479,463
NET (LOSS) EARNINGS PER SHARE – NOTE 14	(0.0628)	0.0740

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 THE THREE-MONTH PERIOD ENDED MARCH 31, 2003, PRESENTED COMPARATIVELY WITH THE SAME PERIOD THE PRIOR YEAR

Figures stated in pesos – See note 1(a)


	2003											2002
							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	54,699,676

Balance modification-Note 15										(1,928,327)	(1,928,327)
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	44,927,659	58,682,222	54,699,676

										(1,256,247)	(1,256,247)	1,479,463
Balances as of March 31, 2003	2,000,000	4,155,936	497	717	5,243,562	11,400,712	2,280,143	73,708	2,353,851	43,671,412	57,425,975
Balances as of March 31, 2002	2,000,000	2,584,244	497	407	3,904,814	8,489,962	1,697,993	54,889	1,752,882	45,936,295		56,179,139

(*) See note 3(b)

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

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statement of cash flows for the three-month period ended March 31, 2003, presented comparatively with the same period the prior year

Figures stated in pesos – See note 1(a)


	2003	2002
CHANGES IN CASH
Cash at beginning of year	13,204,954	3,716,706
Cash at end of period	7,156,016	9,273,800
Cash (decrease) increase	(6,048,938)	5,557,094

SOURCES OF CHANGES IN CASH

OPERATING ACTIVITIES
Ordinary (loss) income for the period	(1,256,247)	1,479,463

Adjustments to reach net cash flows deriving from operating activities
PP&E depreciation and intangible assets amortization	1,234,967	906,775
Gain (loss) from PP&E sale	10,000	-
Allowance for impairment in value of inventories (net effect)	(1,049,516)	2,576,070
Income from long-term investments	(765,769)	(1,109,332)
Contingency provision	11,108	5,651,606
Impairment in value of PP&E advances from exposure to inflation	1,585	-
Changes in operating assets and liabilities:
Trade receivables	(5,344,447)	(5,430,389)
Inventories	1,507,653	(33,180,994)
Trade payables	1,849,723	12,654,613
Loans	(2,395,243)	19,681,785
Salaries, payroll and other taxes (net of receivables)	(212,070)	(1,035,909)
Customer prepayments	1,173,243	3,681,358
Other	1,214,331	(263,817)
Allowances and provisions	(889,921)	-
NET CASH FLOW (USED IN) PROVIDED BY OPERATING ACTIVITIES	(4,910,603)	5,611,229

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statement of cash flows for the three-month period ended March 31, 2003, presented comparatively with the same period the prior year Figures stated in pesos – See note 1(a)


	2003	2002
INVESTMENT ACTIVITIES
PP&E acquisition	(66,871)	(54,135)
Revenues from PP&E sales	(10,000)	-
NET CASH FLOW USED IN INVESTMENT ACTIVITIES	(76,871)	(54,135)

FINANCING ACTIVITIES
Loan repayment	(1,061,464)	-
NET CASH FLOW USED IN FINANCING ACTIVITIES	(1,061,464)	-
Net cash (decrease) increase	(6,048,938)	5,557,094

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

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

Figures stated in pesos – See Note 1.a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

Restatement in constant pesos

The financial statements recognize the effects of the changes in the currency purchasing power until February 28, 2003, following the restatement method under FACPCE (Argentine Federation of Professional Councils in Economic Sciences) Technical Resolution No. 6 through the use of adjustment rates deriving from the domestic wholesale price index (domestic WPI) of the INDEC (Argentine Institute of Statistics and Censuses). Based on Executive Order No. 664/03 and CNV (Argentine Securities Commission) General Resolution No. 441, the Company stopped applying such method and, consequently, it did not recognize the effects of variations in the currency purchasing power occurred as from March 1, 2003. Under professional accounting standards this method is still effective. The effects of failing to recognize such variations have not been significant with respect to the financial statements as of March 31, 2003.

Under the abovementioned method, the accounting measurements were restated based on the changes in the purchasing power of the currency through August 31, 1995. As from such date, based on the economic stability conditions prevailing in Argentina and as required by CNV General Resolution No. 272 and accepted by professional accounting standards, the accounting measurements were not restated until December 31, 2001. Under CNV General Resolution No. 415, the restatement method was reinstated for periods as from January 1, 2002, considering the measurements taken before such date as stated in December 31, 2001, currency and, according to CNV Resolution No. 441, it was discontinued as from March 1, 2003.

The information submitted for comparative purposes with respect to the financial statements as of March 31, 2002 (statements of income, changes in shareholders’ equity and cash flows), has not considered the effects of the variations in the currency purchasing power since the CNV did not admit the recognition of inflation effects at that time, which was regulated by Resolution No. 415 dated July 25, 2002. On the other hand, such information has been restated based on the domestic WPI variation between March 31, 2002, and February 28, 2003, as set forth by CNV Resolution No. 415. Consequently, the information submitted for comparative purposes with respect to the financial statements as of March 31, 2002, is inaccurate due to the effects of the decrease in the currency purchasing power during the abovementioned period (January 1 to March 31, 2002).

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

Figures stated in pesos – See Note 1.a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

New accounting standards applied to financial statements preparation and presentation

On January 14, 2003, the CNV issued General Resolution No. 434, effective for fiscal years beginning as from January 1, 2003, which adopted, subject to certain exceptions, the new accounting standards issued by the CPCECABA (Professional Council in Economic Sciences of the City of Buenos Aires), which approved FACPCE Technical Resolutions Nos. 16 through 20, as amended by Resolutions CD Nos. 238/01, 243/01, 261/01, 262/01 and 187/02 and CPCECABA Resolution MD No. 32/02.

Such accounting standards introduce changes in the methods to measure the Company’s financial position and results of operations as well as new disclosure requirements. The changes that may be more relevant to the Company are: the determination of the current value of its tax credits, income tax quantification through the deferred tax method, restrictions on the recognition of intangible assets and other disclosure aspects, such as earnings per share, as explained in each related item.

The effects of the changes in the accounting standards at the beginning of the first year of their application have been retroactively booked, i.e. prior-year income (loss) have been affected, as indicated in note 15.

Accounting disclosure methods

As from this period, and as required by FACPCE Technical Resolution No. 19, the Company changed the presentation of comparative financial statements since, until the prior fiscal year, the comparison was made with the same prior-year period. Now the balance sheet is presented comparatively with that as of the last fiscal year-end (December 31, 2002) and the statements of income, changes in shareholders’ equity and cash flows with those of the same period the prior year (March 31, 2002). Although new professional standards require adjusting the financial statements presented for comparative purposes to the new accounting standards adopted, based on practicality and timeliness, the Company’s Management decided to disregard such effects as of March 31, 2002. Consequently, the information comparability is affected.

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

Figures stated in pesos – See Note 1.a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

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,as the case may be, which has been determined by calculating the discounted value of cash flows, following the methods under CPCECABA Resolution MD No. 32/02.

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 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.

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 reproduction cost at end of the period limited by the net realization value thereof.

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

Figures stated in pesos – See Note 1.a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

Long-term investments:

Companies subsidiaries and affiliates under Argentine Business Associations Law No. 19,550 section 33: at their equity value as set forth by Technical Resolution No. 5 of the FACPCE, as amended by Technical Resolution no. 19, which was calculated based on Interclima S.A.’s financial statements as of March 31, 2003, audited by Pistrelli, Henry Martín y Asociados S.R.L.on which, a limited review report was issued on May 19, 2003.

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´s 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 using the GWPI (general wholesale price index) through August 31, 1995, and WPI for the period from January 1, 2002, 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.

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

Figures stated in pesos – See Note 1.a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

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 in constant pesos by using the GWPI through August 31, 1995, and WPI for the period from January 1, 2002, through 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 three-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.

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.
Provisions:

Contingencies: see note 11.

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.

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

Figures stated in pesos – See Note 1.a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES – Continued

Statement-of-income accounts

Statement-of-income accounts have been aged by monthly period and subsequently adjusted until February 28, 2003, as indicated in note 1(a).

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.

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)
1. 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.

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

Figures stated in pesos – See Note 1.a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

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.

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 discount on shareholders’ equity as of March 31, 2003, and income (loss) for the three-month period then ended has not been significant with respect to these financial statements, taking into account the comments below.

Considering the existence of NOLs, the Company carries deferred tax assets amounting to ARS 3,624,378, the value of which has been impaired by 100%, taking into account the difficulties of the current market to guarantee the possibility to recover such assets, with taxable income.

Such deferred taxes expire as follows:


Year of origin	NOL	Deferred tax	Expiration year
1998	59,517	20,830	2003
2000	323,527	113,234	2005
2001	119,008	41,653	2006
2002	9,853,317	3,448,661	2007
Total	10,355,369	3,624,378

The Company did not accrue TOMPI since it was included in the system under Competitiveness Law (see note 5), whereby the Company was exempted from such tax through June 30, 2003.

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

Figures stated in pesos – See Note 1.a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

- 1. Status of the subsidiary ICSA

Interclima S.A. has accrued income tax since it understands 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.

Should the tax adjustment for inflation not be made, the Company would have determined income tax amounting to about ARS 260,000 (after computing prior-year NOLs) and ARS 50,000 for the current period.

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 310,000) have not been booked in the financial statements as of March 31, 2003; thus, such lower value is not considered in the investment.

- 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).

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

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

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

Figures stated in pesos – See Note 1.a)

note 2 – MAIN ACCOUNT BREAKDOWN


	2003	2002
CURRENT ASSETS
Cash
On hand and imprest fund in Argentine currency	11,249	10,236
On hand in foreign currency	7,594	46,551
In banks in Argentine currency	1,307,671	7,789,049
In banks in foreign currency	5,828,542	294,750
	7,155,056	8,140,586

Short-term investments
Securities and shares	587	591
Savings account and other in foreign currency	0	5,063,401
Savings account and in Argentine currency and other	960	967
	1,547	5,064,959

Trade receivables
Trade receivables	13,550,705	8,205,955
Allowance for doubtful accounts	(85,417)	(85,114)
	13,465,288	8,120,841

Taxes receivable
VAT credit	655,132	883,273
Other	20,670	23,530
	675,802	906,803

Other receivables
Notes receivables	1,059,680	1,513,368
Interest to be accrued	(105,143)	(78,248)
Other	505,154	429,204
	1,459,691	1,864,324

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

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

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

Figures stated in pesos – See Note 1.a)

note 2 – MAIN ACCOUNT BREAKDOWN - Continued


		2003		2002
Inventories
Manufactured products		9,384,907		11,096,316
Raw material		27,092,657		30,047,273
Raw material in transit		5,666,967		2,915,940
Stock at end of period		42,144,531		44,059,529
Prepayments to vendors in Argentine currency – Note 8		488,065		785,426
Prepayments to vendors in foreign currency		1,463,973		759,267
Allowance for impairment in value		(5,780,111)		(6,829,627)
		38,316,458		38,774,595
NONCURRENT ASSETS
Taxes receivable
Compulsory savings		8,355			7,879
VAT credit		342,443			321,286
Minimum presumed income tax		1,391,731			1,273,669
Promotional benefits receivable – Note 5(c)		875,073			925,103
Other		150,919			115,269
		2,768,521			2,643,206
Other receivables
Reimbursements in Argentine currency receivable – Note 5	982,726		926,583
Notes receivable	2,863,800		3,410,035
Interest to be accrued	(359,238)		(469,490)
	3,487,288		3,867,128

CURRENT LIABILITIES
Payables
Trade payables
In local currency	5,105,120			5,307,147
Companies under Section 33, Law No. 19,550 (subsidiaries and affiliates) – Note 8	234,450			-
In foreign currency	6,700,387			4,883,087
	12,039,957			10,190,234

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

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

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

Figures stated in pesos – See Note 1.a)

note 2 – MAIN ACCOUNT BREAKDOWN - Continued


	2003	2002
Salaries, payroll and other taxes
Employee benefits	310,130	468,278
Taxes payable	387,575	547,183
	697,705	1,015,461
Loans
Financial loans in local currency	4,475,804	4,948,206
Financial loans in foreign currency	5,270,313	4,509,748
	9,746,117	9,457,954
Other payables
Companies under Section 33, Law No. 19,550 (subsidiaries and affiliates) – Note 8	1,798,004	1,304,812
Other	91,270	154,602
	1,889,274	1,459,414
NONCURRENT LIABILITIES

Loans
Financial loans in local currency	2,647,135	2,807,948
Financial loans in foreign currency	10,444,700	14,028,757
	13,091,835	16,836,705
OTHER EXPENSE / INCOME
Inventory difference	(890,743)	-
Other	55,360	133,625
	(835,383)	133,625

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.

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

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

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

Figures stated in pesos – See Note 1.a)

note 3 –capital structure – SHAREHOLDERS’ equity - Continued

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 March 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.

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

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

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

Figures stated in pesos – See Note 1.a)

NOTE 4 – BREAKDOWN OF FINANCIAL INCOME (EXPENSE) AND HOLDING GAINS (LOSSES)

For the periods ended March 31, 2003, and 2002, this account breaks down as follows:


	2003 Provided by		2002 Provided by
	Assets	Liabilities	Assets	Liabilities
	(Expense)/(loss)	(Expense)/(loss)	(Expense)/(loss)	(Expense)/(loss)
	Income/gain	Income/gain	Income/gain	Income/gain
Interest	428,579	(540,478)	16,026	(1,469,188)
Foreign exchange difference	(589,169)	3,700,075	4,135,107	(36,959,156)
Holding gains (losses) - Inventories	(3,388,718)	-	40,106,534	-
Allowances / provisions	411,248	-	(5,294,589)	-
Gain (loss) on exposure to inflation	155,743	(59,715)	-	-
Current investments and tax credits – Note 5(c)	(43,227)	-	752,930	-
Subtotal	(3,025,544)	3,099,882	39,716,008	(38,428,344)
Total	74,338		1,287,664

note 5 – tax system

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:

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

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

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

Figures stated in pesos – See Note 1.a)

note 5 – tax system – Continued

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.

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.

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

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

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

Figures stated in pesos – See Note 1.a)

note 5 – tax system – Continued

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:


	Periods ended
	March 31, 2003	March 31, 2002
Value-added tax	2,183,344	2,156,864
Customs duties and statistical rate (approximate amounts)	1,948,229	572,325

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.

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.

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

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

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

Figures stated in pesos – See Note 1.a)

note 5 – tax system – Continued

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.

note 6 – major customers and license agreements

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


	2003	2002

Volkswagen Argentina S.A.	58%	60%
Renault Argentina S.A.	16%	-
General Motor Argentina	11%	12%
Mercedes Benz	7%	7%
Peugeot Citroen Argentina S.A.	4%	12%

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

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

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

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

Figures stated in pesos – See Note 1.a)

note 7 – 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 Tevers 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%.

note 8 – transactions with companies under law no. 19,550, section 33 (SUBSIDIARIES AND AFFILIATES)

During the course of the fiscal years ended March 31, 2003, and 2002, the Company performed merchandise purchase transactions and other transactions with its subsidiary in the amount of (155,700) and 43,356, 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 March 31, 2003, and 2002, the balances in favor of MIRGOR and/or INTERCLIMA S.A. amounted to:


	2003	2002
Prepayments to vendors - Current	‑	49,476
Current trade payables	(234,450)	‑
Other payables – Current	(1,798,004)	(1,304,812)
Payables to companies under Law No. 19,550, Section 33 – Noncurrent	‑	‑
Total	(2,032,454)	(1,255,336)

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

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

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

Figures stated in pesos – See Note 1.a)

note 9 – 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 10 – stamped and sealed books

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


Journal No.	Stamped and sealed	Period transactions
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 05/15/02
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

Owing to administrative issues, the transactions related to the period January 1 through March 31, 2003, have not as yet been transcribed in loose-leaf pages meeting the requirements provided for in Regulation No. 105/94 issued by the DPJ (regulatory agency of business associations of the Province of Tierra del Fuego).

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

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

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

Figures stated in pesos – See Note 1.a)

NOTE 11 – 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.

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.

Upon preparing the financial statements, Management especially took into account Presidential Decrees Nos. 214/2002, 410/2002 and Resolution (A) 3,561 of the BCRA (amending Resolution (A) 3,507) regarding the currency to settle liabilities in U.S. dollars. However, the abovementioned regulations give rise to different interpretations regarding the method used to determine the liabilities that became subject to the conversion into pesos.

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

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

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

Figures stated in pesos – See Note 1.a)

NOTE 11 – RECENT SIGNIFICANT ECONOMIC EVENTS - Continued

In this regard, as of the issuance date of these financial statements, the Company is documenting (signing final agreements) certain contracts.

Taking into account the comments in the previous paragraphs and considering the development expected for negotiations with financial institutions, the Company’s Management decided to book a reserve for financial contingencies amounting to ARS 164,000, which should not differ significantly from expected final income (loss). Such contingency has been booked in income (loss) for the year 2002 and included in financial income (expense) and holding gains (losses) -actual interest-, with contra to contingency provisions in current liabilities.

At the same time, the Company and its subsidiary carry tax credits, reimbursements receivable and other receivables from Government amounting to ARS 8.0 million disclosed in noncurrent assets, the future recoverability of which depends both on the Government’s possibilities to revert the declaration of its payment default and the generation of taxable income, which are affected by the Argentine market uncertainty in general.

NOTE 12 – BANK LOANS – RESTRICTION ON EARNINGS ALLOCATION

The Company was granted a loan by Citibank N.A. amounting to USD 840,000, over a 28-month term. Interest will be paid at LIBOR plus a monthly 6% spread p.a. and from Banco Francés BBVA amounting to USD 1,000,000 to be paid in 14 monthly installments with interest at LIBOR over 30 days plus 500bp. These loans taken by the Company imply that it should meet certain terms and conditions, especially those related to keeping some 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 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. In the opinion of Management, the Company is meeting with repayment agreements, as referred to above.

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

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

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

Figures stated in pesos – See Note 1.a)

NOTE 13 – INCOME TAX

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

The reconciliation between income tax expenses applicable 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 period ended March 31, 2003, was as follows:


		$
Loss from operating activities before income tax		(1,256,247)

At the income tax statutory rate		439,686

Income (loss) not subject to income tax
Permanent differences:
Special customs area activity		(763,305)
Income from long-term investments		268,019

Assets from recovered NOLs		55,600
Income tax		-

Deferred income tax

Deferred income tax as of March 31, 2003, is related to:


		$
Tax Payable		-

Current deferred assets

Allowance for impairment in the value of stock		184,906
Allowance for bad debts		2,732
NOLs		(187,638)
Current deferred assets		-

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

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

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

Figures stated in pesos – See Note 1.a)

NOTE 14 – 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.

NOTE 15 – 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 financial assets and liabilities at the current net value of the amount receivable or payable, as the case may be, and with the recognition of payables to vendors.

NOTE 16 – EXPLANATION ADDED FOR TRANSLATION INTO ENGLISH

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

AI assistant

Mirgor Interim / Quarterly Report 2003

vice-Chairperson

Expiry of the articles of incorporation: May 31, 2070

summary OF EVENTS

For the period ended March 31, 2003

consolidated balance sheet as of march 31, 2003, and DECEMBER 31, 2002

consolidated balance sheet as of march 31, 2003, and DECEMBER 31, 2002

Consolidated statement of income for the three-month period ended March 31, 2003, presented comparatively with the same period the prior year

Consolidated statement of cash flows for the three-month period ended March 31, 2003, presented comparatively with the same period the prior year

Consolidated statement of cash flows for the three-month period ended March 31, 2003, presented comparatively with the same period the prior year

NOTE 2 – MAIN ACCOUNT BREAKDOWN

balance sheet as of MARCH 31, 2003, and 2002

balance sheet as of MARCH 31, 2003, and 2002 ‑ Continued

note 2 – MAIN ACCOUNT BREAKDOWN

note 3 – capital STRUCTURE – SHAREHOLDERS’ equity

note 6 – major customers and license agreements

AI assistant

Mirgor — Interim / Quarterly Report 2003

vice-Chairperson

Expiry of the articles of incorporation: May 31, 2070

summary OF EVENTS

For the period ended March 31, 2003

consolidated balance sheet as of march 31, 2003, and DECEMBER 31, 2002

consolidated balance sheet as of march 31, 2003, and DECEMBER 31, 2002

Consolidated statement of income for the three-month period ended March 31, 2003, presented comparatively with the same period the prior year

Consolidated statement of cash flows for the three-month period ended March 31, 2003, presented comparatively with the same period the prior year

Consolidated statement of cash flows for the three-month period ended March 31, 2003, presented comparatively with the same period the prior year

NOTE 2 – MAIN ACCOUNT BREAKDOWN

balance sheet as of MARCH 31, 2003, and 2002

balance sheet as of MARCH 31, 2003, and 2002 ‑ Continued

note 2 – MAIN ACCOUNT BREAKDOWN

note 3 – capital STRUCTURE – SHAREHOLDERS’ equity

note 6 – major customers and license agreements

More from Mirgor

Mirgor Interim / Quarterly Report 2003