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Mirgor — Interim / Quarterly Report 2002
Jan 8, 2003
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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 fiscal period beginning
january 1, 2002 and ended SEPTEMBER 30, 2002,
limited review report
U.S. SEC File
No. 82‑3941
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 INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH
LIMITED REVIEW REPORT
To the Shareholders 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 September 30, 2002, and 2001, and the related statements of income, changes in shareholders' equity and cash flows, notes 1 to 12, for the interim nine-month periods then ended. In addition, our limited review included testing the related Summary of Events and the consolidated balance sheets as of September 30, 2002, and 2001, as well as the consolidated statements of income and cash flows including the notes and exhibits C and H for the nine-month periods then ended. The referred financial statements are the responsibility of the Company's Board of Directors.
Our limited review was made in accordance with auditing standards effective in Argentina for such purpose as provided for in FACPCE (Argentine Federation of Professional Councils in Economic Science) Technical Resolution No. 7 and, therefore, it did not include all the procedures necessary to perform a complete audit of the abovementioned 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 current auditing standards, the objective of which is to express an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
As explained in Note 11 to the accompanying financial statements, the Argentine Government has introduced significant changes to the economic policy and it mainly resolved to change the exchange system established by Convertibility Law (currency board) 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, including financial liability restructuring. 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.
TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH
Based on the limited review performed, we report 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 professional accounting principles in force in Argentina. This representation should be read considering the uncertainties described in the prior paragraph and in note 1 related to the issues applicable to the financial statements as of September 30, 2002, the resolution of which may not be foreseen as of the date of this report:
In addition, we have no observations to make on matters within our competence regarding the information additional to the financial statements as required by Section 68 of Buenos Aires Stock Exchange Regulations and the Summary of Events prepared by the Company’s Board of Directors.
Additional information:
- The auditing standards and the professional accounting principles effective in Argentina, mentioned in the preceding paragraphs, are applicable in the City of Buenos Aires.
- The financial statements mentioned in the first paragraph result from accounting books kept in their formal aspects in accordance with legal regulations and are recorded in the Inventories and Financial Statements Book, except as indicated in Note 10.
- The referred financial statements have been prepared in accordance with the format and contents established in Law No. 19,550 and CNV (Argentine Securities Commission) General Resolution No. 368, as amended.
- As of September 30, 2002, liabilities accrued in employer and employee contributions to the pension fund system under the Federal social Security Administration, as recorded in the Company’s books, totaled ARS 85,922.30, none of which was due and payable as of that date.
Buenos Aires
November 8, 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
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.
Date of termination of the articles of incorporation: May 31, 2070
fiscal year no. 32 beginning january 1, 2002,
summary of events
For the fiscal period ended September 30, 2002
(Figures stated in pesos – see Note 1)
- brief comment on the company’s activities during the period
The tight control policy to monetary expansion and foreign exchange control managed to slow down price hikes and at the same time muffled the inflationary impact brought about by the devaluation that took place after the currency board was lifted.
However, no banks fell during this period, as had been expected by sector specialists.
All these effects occurred even before the agreement with the International Monetary Fund was postponed and under serious political events blurring the outcome of next year’s presidential elections.
In this framework, the members of the auto manufacturing industry held dramatic discussions with the Ministry of Economy to allow for the use of rescheduled deposits to acquire cars; which was only achieved in October and after many delays.
The comings and goings in making the system effective almost brought sales to a standstill in the domestic market, showing the lowest level in Argentine history.
Exports enabled production values to remain at less grave levels representing over 80% of the cars manufactured by auto-plants. In 2002, car production was reduced by 40% as compared to the same period the prior year while total auto-plan sales fell by 56%.
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During the current year, Mirgor air conditioning equipment sales decreased by 32% (measured in units) but during Q3 2002 they increased by 7% as compared to Q3 2001. The sales recovery occurred during the period results from the increase in the market share of Mirgor’s customers.
In pesos, consolidated billings exceeded that for the same quarter the prior year by 47% (calculated in constant pesos) as a result of the price increase agreed upon with customers to set off the effect of the devaluation on our costs.
After the reshuffling made by the Company when conditions changed, the due dates of payables to foreign vendors were rescheduled since they showed understanding of the difficulties posed by the devaluation and they believed in our promises.
Likewise, negotiations carried out with creditor banks were reasonable. As mentioned in note 11, such negotiations have not as yet been concluded.
- equity structure (figures related to the consolidated statements, stated in constant pesos – see note 1)
| 09/30/02 | 09/30/01 | 09/30/00 | 09/30/99 | 09/30/98 | ||||||
| Current assets | 76,675,381 | 78,352,612 | 103,689,360 | 108,118,532 | 154,916,691 | |||||
| Noncurrent assets | 43,044,582 | 49,800,482 | 51,713,833 | 55,039,124 | 53,164,399 | |||||
| Total assets | 119,719,963 | 128,153,094 | 155,403,193 | 163,157,656 | 208,081,090 | |||||
| Current liabilities | 54,239,332 | 48,461,186 | 63,364,742 | 65,960,039 | 90,428,163 | |||||
| Noncurrent liabilities | 3,824,878 | ‑ | ‑ | ‑ | 12,736,975 | |||||
| Total noncurrent liabilities | 58,064,210 | 48,461,186 | 63,364,742 | 65,960,039 | 103,165,138 | |||||
| Minority interest | 3,690 | 5,687 | 5,738 | 223 | 973 | |||||
| Shareholders' equity | 61,652,063 | 79,686,221 | 92,032,713 | 97,197,394 | 104,914,979 | |||||
| Total liabilities and Shareholders’ equity | 119,719,963 | 128,153,094 | 155,403,193 | 163,157,656 | 208,081,090 |
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No. 82‑3941
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- income structure (figures related to the consolidated statements and stated in constant pesos – see note 1)
| 09/30/02 | 09/30/01 | 09/30/00 | 09/30/99 | 09/30/98 | ||||||
| Ordinary operating income (loss) | 1,467,639 | (2,177,362) | 4,450,527 | 2,489,445 | 30,365,588 | |||||
| Financial expense | (13,917,610) | (3,661,608) | (4,958,744) | (3,455,351) | (2,176,491) | |||||
| Other (expenses) / revenues | 186,844 | (708,364) | 334,373 | 319,849 | 1,066,629 | |||||
| Minority interest gain (loss) | 1,858 | (42) | 115 | 305 | 838 | |||||
| Ordinary income (loss), net | (12,261,269) | (6,547,376) | (173,729) | (645,752) | 29,256,564 | |||||
| Extraordinary item | ‑ | ‑ | ‑ | ‑ | ‑ | |||||
| Minority interest loss | ‑ | ‑ | ‑ | ‑ | (210,880) | |||||
| Income (loss), net | (12,261,269) | (6,547,376) | (173,729) | (645,752) | 29,045,684 |
- STATISTICAL DATA
| Number of units | 09/30/02 | 09/30/01 | 09/30/00 | 09/30/99 | 09/30/98 | ||||||||||||||
| Quarter | Accum | Quarter | Accum | Quarter | Accum. | Quarter | Accum. | Quarter | Accum | ||||||||||
| Production (1) | 42,760 | 94,750 | 47,674 | 150,823 | 59,826 | 169,697 | 88,082 | 187,149 | 98,453 | 252,540 | |||||||||
| Sales | 21,068 | 47,257 | 15,141 | 54,682 | 55,468 | 124,230 | 60,011 | 109,994 | 48,612 | 131,017 |
- ratios
| 09/30/02 | 09/30/01 | 09/30/00 | 09/30/99 | 09/30/98 | ||||||
| Current ratio | 1.46 | 1.62 | 1.64 | 1.64 | 1.71 | |||||
| Debt-to-equity ratio | 0.94 | 0.61 | 0.69 | 0.68 | 0.98 | |||||
| Gross profit margin | -0.1659 | -0.0809 | -0.0020 | -0.0060 | 0.3800 |
(1) Including the one related to Interclima S.A.
- EVOLUTION OF MARKET PRICE OF SHARES
| January 2002 | January 2001 | February 2002 | February 2001 | March 2002 | March 2001 | |||||
| 4.10 | 4.30 | 4.10 | 4.20 | 4.10 | 4.20 |
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| April 2002 | April 2001 | May 2002 | May 2001 | June 2002 | June 2001 | |||||
| 4.50 | 4.00 | 4.60 | 3.95 | 4.30 | 4.10 |
| July 2002 | July 2001 | August 2002 | August 2001 | September 2002 | September 2001 | |||||
| 5.40 | 4.10 | 5.20 | 4.10 | 6.00 | 4.10 |
- perspectives
The air conditioning equipment for Renault Clio has already started to be delivered and we have been provided with confirmation of firm exports to Volkswagen and General Motors, providing us with planning perspectives which will enable us to compensate the weakness of the domestic market.
The launch of the new system whereby cars may be purchased with Boden should boost sales (a 10,000 car unit sale increase is expected through the end of 2002); however, we expect demand to be met with units in stock.
While the above is taking place, business opportunities for substituting imports are being defined enabled by the foreign exchange rate thus allowing customers to analyze new proposals.
Río Grande, November 8, 2002.
| MIRGOR S.A.C.I.F.I.A. | |
| Lic. Roberto G. Vázquez | |
| Chairman | |
U.S. SEC File
No. 82‑3941
TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH
MIRGOR SOCIEDAD ANONIMA, COMERCIAL, INDUSTRIAL, FINANCIERA, INMOBILIARIA Y AGROPECUARIA
financial statements of fiscal year No. 32 for the nine-month period beginning january 1, 2002, and ended september 30, 2002, presented comparatively 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 |
U.S. SEC File
No. 82‑3941
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MIRGOR S.A.C.I.F.I.A.
Supplementary information
consolidated balance sheet as of SEPTEMBER 30, 2002, and 2001
Figures stated in pesos – See note 1
| 2002 | 2001 | |||
| ASSETS | ||||
| CURRENT ASSETS | ||||
| Cash | 3,055,140 | 1,249,952 | ||
| Investments | 2,228,553 | 3,360,641 | ||
| Trade receivables | 18,452,650 | 16,224,629 | ||
| Taxes receivable | 914,684 | 5,105,449 | ||
| Other receivables | 958,390 | 7,143,643 | ||
| Inventories | 51,065,964 | 45,268,299 | ||
| TOTAL CURRENT ASSETS | 76,675,381 | 78,352,613 | ||
| NONCURRENT ASSETS | ||||
| Other receivables | 2,146,070 | ‑ | ||
| Taxes receivable | 6,003,678 | 9,035,785 | ||
| Investments | 43,088 | 86,070 | ||
| Intangible assets – Note 1(e)b | 483,353 | 828,464 | ||
| Property, plant and equipment – Note 1(e)a | 34,368,393 | 39,850,162 | ||
| TOTAL NONCURRENT ASSETS | 43,044,582 | 49,800,481 | ||
| TOTAL ASSETS | 119,719,963 | 128,153,094 |
U.S. SEC File
No. 82‑3941
TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH
MIRGOR S.A.C.I.F.I.A.
Supplementary information
consolidated balance sheet as of SEPTEMBER 30, 2002, and 2001
Figures stated in pesos – See note 1
| 2002 | 2001 | |||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||
| CURRENT LIABILITIES | ||||
| Trade payables | 18,670,099 | 44,350,819 | ||
| Financial payables | 26,774,345 | ‑ | ||
| Employee benefits and taxes payable | 1,310,090 | 2,614,177 | ||
| Customer prepayments | 4,099,786 | ‑ | ||
| Other payables | 189,613 | 1,496,194 | ||
| Allowances | 1,282,899 | ‑ | ||
| TOTAL CURRENT LIABILITIES | 52,326,832 | 48,461,190 | ||
| NONCURRENT LIABILITIES | ||||
| Customer prepayments | 3,273,214 | ‑ | ||
| Financial payables | 2,464,164 | ‑ | ||
| 5,737,378 | ‑ | |||
| TOTAL LIABILITIES | 58,064,210 | 48,461,190 | ||
| Minority interest | 3,690 | 5,687 | ||
| SHAREHOLDERS’ EQUITY | 61,652,063 | 79,686,217 | ||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 119,719,963 | 128,153,094 |
The notes to the consolidated and stand-alone financial statements of MIRGOR S.A.C.I.F.I.A. are integral part of and should 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.
Supplementary information
CONSOLIDATED STATEMENT OF INCOME RELATED TO THE NINE-MONTH
PERIOD ENDED SEPTEMBER 30, 2002, PRESENTED COMPARATIVELY WITH
THE SAME PERIOD THE PRIOR YEAR
Figures stated in pesos – See note 1
| 2002 | 2001 | |||
| Net sales (including VAT benefits amounting to 11,152,533 and 11,352,468) | 90,145,765 | 77,095,031 | ||
| Cost of goods sold | (80,206,443) | (67,529,672) | ||
| GROSS REVENUES | 9,939,322 | 9,565,359 | ||
| Administrative expenses | (6,679,705) | (9,323,940) | ||
| Selling expenses | (1,759,744) | (2,386,550) | ||
| Other expenses / revenues | 186,844 | (708,364) | ||
| Financial expense and holding losses | ||||
| From assets | (2,903,749) | (517,361) | ||
| From liabilities | (11,013,861) | (3,144,246) | ||
| Loss from long-term investments | (32,234) | (32,232) | ||
| SUBTOTAL | (12,263,127) | (6,547,334) | ||
| Income (loss) from third-party interest | 1,858 | (42) | ||
| ORDINARY INCOME FOR THE PERIOD, NET | (12,261,269) | (6,547,376) | ||
| (12,261,269) | (6,547,376) |
The notes to the consolidated and stand-alone financial statements of MIRGOR S.A.C.I.F.I.A. are integral part of and should 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 RELATED TO THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2002, PRESENTED COMPARATIVELY WITH THE SAME PERIOD THE PRIOR YEAR
Figures stated in pesos – See note 1
| 2002 | 2001 | ||||||
| CASH PROVIDED BY (USED IN) OPERATIONS | |||||||
| Ordinary income (loss) for the period | (12,261,269) | (6,547,376) | |||||
| Adjustments to reconcile income (loss) for the period with cash provided by (used in) operations | |||||||
| Amortization/depreciation | 4,266,410 | 4,570,145 | |||||
| Loss from PP&E sale | (29,109) | (20,393) | |||||
| Minority interest | (1,858) | 42 | |||||
| Allowance for impairment in value of inventories | 4,163,930 | 174,027 | |||||
| Gain from short-term investments | 711 | ‑ | |||||
| Gain from long-term investments | 32,236 | 32,232 | |||||
| Contingency provision | 1,282,899 | ‑ | |||||
| Impairment in value of PP&E paid in advance from exposure to inflation | 711,567 | ‑ | |||||
| Changes in assets and liabilities: | |||||||
| Trade receivables | (2,396,327) | 7,199,081 | |||||
| Inventories | (17,158,375) | (3,640,678) | |||||
| Trade payables | 6,868,029 | (9,028,882) | |||||
| Financial payables | (421,343) | ‑ | |||||
| Employee benefits and taxes (net of credits) payable | 7,086,014 | (320,800) | |||||
| Customer prepayments | 7,373,000 | ‑ | |||||
| Other | 930,013 | (176,580) | |||||
| CASH PROVIDED BY (USED IN) OPERATIONS | 446,528 | (7,759,182) |
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 RELATED TO THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2002, PRESENTED COMPARATIVELY WITH THE SAME PERIOD THE PRIOR YEAR
Figures stated in pesos – See note 1
| 2002 | 2001 | ||||
| CASH USED IN INVESTMENT ACTIVITIES | |||||
| PP&E acquisition | (285,285) | (1,703,392) | |||
| Revenues from PP&E sales | 91,449 | 45,900 | |||
| Development investment | ‑ | (245,491) | |||
| (193,836) | (1,902,983) | ||||
| FUNDS USED IN INVESTMENT ACTIVITIES | |||||
| Changes in cash, net | 252,692 | (9,662,165) | |||
| Cash at beginning of period | 5,030,416 | 14,271,459 | |||
| Cash at end of period | 5,283,108 | 4,609,294 |
The notes to the consolidated and stand-alone financial statements of MIRGOR S.A.C.I.F.I.A. are integral part of and should 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.
Supplementary information
notes to the consolidated financial statements as of SEPTEMBER 30, 2002, and 2001
Figures stated in pesos – See note 1
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES
- Applicable accounting standards
The financial statements as of September 30, 2002, and 2001, 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 Exhibit I to Book No. 7 “Informative System” of such resolution.
- 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 methods of FACPCE Technical Resolutions with the applicable deletions.
- Consolidation bases
Following the procedure established in FACPCE Technical Resolution No. 4, MIRGOR S.A.C.I.F.I.A. has consolidated its financial statements as of September 30, 2002, and 2001, 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 09/30/2002 | Period-end | ||
| Interclima Sociedad Anónima | 99.9667% | 09/30/2002 |
U.S. SEC File
No. 82‑3941
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MIRGOR S.A.C.I.F.I.A.
Supplementary information
notes to the consolidated financial statements as of SEPTEMBER 30, 2002, and 2001 - Continued
Figures stated in pesos – See note 1
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES - Continued
- Financial statements used in consolidation
The financial statements of Interclima Sociedad Anónima were used to prepare the consolidated financial statements as of September 30, 2002, and September 30, 2001. The former financial statements had been reviewed by Henry Martin, Lisdero y Asociados, who have issued the related limited review report on November 8, 2002.
- Changes in significant assets
| 09/30/02 $ | 09/30/01 $ | |||
| 1. PP&E | ||||
| Balance at beginning of year | 38,116,245 | 42,506,976 | ||
| Additions | 285,285 | 1,703,392 | ||
| Retirements (net of depreciation) | (62,340) | (275,403) | ||
| Depreciation | (3,970,797) | (4,084,803) | ||
| Balance at end of year | 34,368,393 | 39,850,162 |
| $ | $ | |||
| 1. Intangible assets | ||||
| Balance at beginning of year | 778,966 | 1,068,315 | ||
| Additions | ‑ | 245,491 | ||
| Amortization | (295,613) | (485,342) | ||
| Balance at end of year | 483,353 | 828,464 |
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MIRGOR S.A.C.I.F.I.A.
EXHIBIT c
shares, debentures, other securities issued in series, and interest in the company for the nine-month
period ended september 30, 2002, presented comparatively with the prior year
Figures stated in pesos – See Note 1(a)
| 2002 | 2001 | |||||||||||||||||||||||||
| 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 | 716,754 | - | - | 587 | - | - | - | - | - | 1,298 | ||||||||||||||
| Total current investments | 587 | 1,298 | ||||||||||||||||||||||||
| Companies under Law No. 19,550, Section 33 (subsidiaries and affiliates) | ||||||||||||||||||||||||||
| INTERCLIMA Sociedad Anónima | 0.0001 | 11,996 | 8,871,139 | 10,980,768 | 43,088 | 11,023,856 | Auto-part manufacturing and interchanges for air conditioning and heating equipment | 09/30/02 | 12,000 | (5,578,288) | 11,081,233 | 99.97% | 17,046,778 | |||||||||||||
| Total noncurrent investments | 11,023,856 | 17,046,778 | ||||||||||||||||||||||||
| Total investments | 11,024,443 | 17,048,076 |
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MIRGOR S.A.C.I.F.I.A.
EXHIBIT H
INFORMATION REQUIRED BY LAW No. 19,550, section 64, subsection b(i) for the nine-moth period
ended september 30, 2002, presented comparatively with the same period the prior year
Figures stated in pesos – See Note 1(a)
| 2002 | 2001 | |||||||||
| Accounts | Production costs | Administrative expenses | Selling expenses | Total | Total | |||||
| Salaries and wages | 3,803,230 | 1,811,245 | 379,390 | 5,993,865 | 11,853,192 | |||||
| Payroll taxes and employee benefits | 682,679 | 552,128 | 89,683 | 1,324,490 | 2,024,333 | |||||
| Insurance | 300,546 | 89,171 | 7,244 | 396,961 | 528,021 | |||||
| Fees and training expenses | 138,151 | 325,797 | 29,884 | 493,832 | 961,292 | |||||
| Taxes, rates, and assessments | 289,201 | 343,972 | 241,941 | 875,114 | 1,546,351 | |||||
| Other administrative expenses | ‑ | 1,763,117 | ‑ | 1,763,117 | 2,399,653 | |||||
| PP&E depreciation | 2,400,770 | 1,568,443 | 71,365 | 4,040,578 | 4,154,586 | |||||
| Intangible asset amortization | ‑ | 225,832 | ‑ | 225,832 | 415,559 | |||||
| Other production expenses | 1,139,024 | ‑ | ‑ | 1,139,024 | 2,612,773 | |||||
| Customs clearance and dispatch expenses | 3,278,550 | ‑ | ‑ | 3,278,550 | 3,281,685 | |||||
| Shipping, handling and freight | 7,292,814 | ‑ | 381,419 | 7,674,233 | 7,624,117 | |||||
| Other selling expenses | ‑ | ‑ | 558,818 | 558,818 | 605,496 | |||||
| Total 2002 | 19,324,965 | 6,679,705 | 1,759,744 | 27,764,414 | ||||||
| Total 2001 | 24,476,569 | 9,323,939 | 2,386,550 | 38,187,058 |
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balance sheet as of SEPTEMBER 30, 2002, and 2001
Figures stated in pesos – See note 1(a)
| 2002 | 2001 | |||
| ASSETS | ||||
| CURRENT ASSETS | ||||
| Cash – Note 2 | 2,078,700 | 1,234,253 | ||
| Investments – Note 2 | 2,228,553 | 3,360,641 | ||
| Trade receivables - Note 2 | 17,338,151 | 14,775,833 | ||
| Taxes receivable - Note 2 | 709,257 | 4,029,150 | ||
| Other receivables - Note 2 | 942,678 | 5,268,186 | ||
| Inventories - Note 2 | 47,989,298 | 42,774,917 | ||
| TOTAL CURRENT ASSETS | 71,286,637 | 71,442,980 | ||
| NONCURRENT ASSETS | ||||
| Interests under Law No. 19,550, Section 33 (related companies) – Exhibit C | 11,023,856 | 17,046,778 | ||
| Taxes receivable - Note 2 | 2,793,603 | 4,721,170 | ||
| Other receivables - Note 2 | 1,004,226 | ‑ | ||
| PP&E – Exhibit A | 31,668,651 | 36,843,522 | ||
| Intangible assets – Exhibit B | 359,479 | 611,548 | ||
| TOTAL NONCURRENT ASSETS | 46,849,815 | 59,223,018 | ||
| TOTAL ASSETS | 118,136,452 | 130,665,998 |
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balance sheet as of SEPTEMBER 30, 2002, and 2001 ‑ Continued
Figures stated in pesos – See note 1(a)
| 2002 | 2001 | |||
| liabilities and shareholders’ equity | ||||
| current liabilities | ||||
| trade payables – Note 2 | 16,718,788 | 44,076,942 | ||
| Employee benefits and taxes payable – Note 2 | 1,204,572 | 2,394,708 | ||
| Financial payables – Note 2 | 26,774,345 | ‑ | ||
| Customer prepayments – Exhibit G | 4,099,786 | ‑ | ||
| Other payables – Note 2 | 666,621 | 3,708,224 | ||
| Accruals – Exhibit E | 1,282,899 | ‑ | ||
| TOTAL CURRENT LIABILITIES | 50,747,011 | 50,179,874 | ||
| NONCURRENT LIABILITIES | ||||
| Customer prepayments – Exhibit G | 3,273,214 | ‑ | ||
| Financial payables – Note 2 | 2,464,164 | ‑ | ||
| Other payables – Note 2 | ‑ | 799,907 | ||
| TOTAL NONCURRENT LIABILITIES | 5,737,378 | 799,907 | ||
| TOTAL LIABILITIES | 56,484,389 | 50,979,781 | ||
| SHAREHOLDERS’ EQUITY (as per related statement) | 61,652,063 | 79,686,217 | ||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 118,136,452 | 130,665,998 |
The accompanying notes 1 to 11 are an integral part of these financial statements.
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statement of income for the nine-month period ended september 30, 2002, presented comparatively with the same period the prior year
Figures stated in pesos – See note 1(a)
| 2002 | 2001 | |||
| Net sales (including VAT benefits amounting to 11,152,533 and 11,341,381) – Note 5(e) | 81,206,219 | 71,538,266 | ||
| Cost of goods sold – Exhibit F | (73,629,451) | (63,345,699) | ||
| GROSS REVENUES | 7,576,768 | 8,192,567 | ||
| Administrative expenses – Exhibit H | (6,514,256) | (9,159,731) | ||
| Selling expenses – Exhibit H | (1,742,004) | (2,371,276) | ||
| Other revenues | 813,356 | 259,916 | ||
| Financial income (expense) and holding gains (losses) | ||||
| From assets – Note 4 | 4,706,747 | (452,465) | ||
| From liabilities – Note 4 | (11,507,781) | (3,119,337) | ||
| Ordinary income (loss) from long-term investments | (5,594,099) | 102,950 | ||
| ORDINARY LOSS FOR THE PERIOD, NET | (12,261,269) | (6,547,376) | ||
| LOSS FOR THE PERIOD, NET | (12,261,269) | (6,547,376) |
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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2002, PRESENTED COMPARATIVELY WITH THE SAME PERIOD THE PRIOR YeAR
Figures stated in pesos – See note 1(a)
| 2002 | 2001 | |||||||||||||||||||||||
| 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 | 4,194,496 | 1,099 | 122 | 5,276,408 | 11,472,125 | 2,294,425 | 74,169 | 2,368,594 | 60,072,613 | 73,913,332 | 86,233,593 | ||||||||||||
| Loss for the year, net | ‑ | ‑ | ‑ | ‑ | ‑ | ‑ | ‑ | ‑ | ‑ | (12,261,269) | (12,261,269) | (6,547,376) | ||||||||||||
| Balances as of September 30, 2002 | 2,000,000 | 4,194,496 | 1,099 | 122 | 5,276,408 | 11,472,125 | 2,294,425 | 74,169 | 2,368,594 | 47,811.344 | 61,652,063 | |||||||||||||
| Balances as of September 30, 2001 | 2,000,000 | 4,194,496 | 1,099 | 122 | 5,276,408 | 11,472,125 | 2,294,425 | 74,169 | 2,368,594 | 65,845,498 | 79,686,217 |
(*) See note 3(b)
The accompanying notes 1 to 11 are an integral part of these financial statements.
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STATEMENT OF cash flows for the nine-month PERIOD ended SEPTEMBER 30, 2002, presented comparatively with the same period the prior year
Figures stated in pesos – See note 1(a)
| 2002 | 2001 | ||||
| CASH USED IN OPERATIONS | |||||
| ORDINARY LOSS FOR THE PERIOD, NET | (12,261,269) | (6,547,376) | |||
| Adjustments to reconcile net loss for the period to cash provided by (used in) operations: | |||||
| Amortization / depreciation | 3,794,076 | 4,140,044 | |||
| Loss from PP&E sales | (29,109) | (20,393) | |||
| Allowance for impairment in value of inventories | 3,731,292 | 145,308 | |||
| Gain from short-term investments | 711 | ‑ | |||
| Gain from long-term investments | 5,594,101 | (102,950) | |||
| Contingency provision | 1,282,899 | ‑ | |||
| Impairment in value of PP&E paid in advance from exposure to inflation | 705,484 | ‑ | |||
| Changes in assets and liabilities: | |||||
| Trade receivables | (1,737,480) | 7,505,441 | |||
| Inventories | (15,807,178) | (3,804,357) | |||
| Trade payables | 5,492,897 | (8,399,611) | |||
| Financial payables | (421,343) | ‑ | |||
| Employee benefits and taxes (net of credits) payable | 4,251,479 | 621,500 | |||
| Customer prepayments | 7,373,000 | ‑ | |||
| Other | (2,512,855) | (1,408,922) | |||
| CASH USED IN OPERATIONS | (543,295) | (7,871,316) |
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MIRGOR S.A.C.I.F.I.A.
cash flows for the nine-month PERIOD ended SEPTEMBER 30, 2002, presented comparatively with the same period the prior year
Figures stated in pesos – See note 1(a)
| 2002 | 2001 | ||||
| CASH USED IN INVESTMENT ACTIVITIES | |||||
| PP&E acquisition | (263,712) | (1,505,468) | |||
| Revenues from PP&E sales | 91,449 | 45,900 | |||
| Development investment | ‑ | (245,491) | |||
| FUNDS USED IN INVESTMENT ACTIVITIES | (172,263) | (1,705,059) | |||
| Changes in cash, net | (715,558) | (9,576,375) | |||
| Cash at beginning of period | 5,022,225 | 14,169,970 | |||
| Cash at end of period | 4,306,667 | 4,593,595 |
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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MIRGOR S.A.C.I.F.I.A.
NOTES TO THE FINANCIAL STATEMENTS AS OF september 30, 2002 AND 2001
Amounts expressed in Pesos – See Note 1.a)
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES
- Restatement in constant pesos
The Company discloses its financial statements in constant pesos following the restatement method provided for in FACPCE (Argentine Federation of Professional Councils in Economic Science) Technical Resolution No. 6 by using adjustment coefficients resulting from the domestic WPI (wholesale price index) INDEC (Argentine Institute of Statistics and Census) and as provided for in CNV (Argentine Securities Commission) General Resolution No. 415.
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 figures 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.
- Disclosure methods
As from the period ended June 30, 2001, and as a result of the issuance of CNV Resolution No. 368, as amended, the Company has modified the formal presentation of the financial statements disclosing firstly the consolidated financial statements and then the stand-alone financial statements. Such change does not mean considering the consolidated financial statements as main information but they are still taken as supplementary information, as provided for in Law No. 19,550, Section 62.
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 september 30, 2002 AND 2001 - Continued
Amounts expressed 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 face value at period-end including, as the case may be, interest accrued as of such date.
In foreign currency: at nominal value in foreign currency plus accrued interest as of period-end converted at the exchange rates effective as of such dates to convert such transactions. The exchange differences were charged to income for the period.
- Inventories
Raw material (including those in transit) were valued at replacement cost as of period-end. The valuation as of period-end does not exceed market values as of such date.
The products manufactured were valued at reproduction cost as of period-end limited by the net realization value thereof.
- Noncurrent investments
Companies under Section 33 of Law No. 19,550 (related companies): at value by the equity method as provided for in FACPCE Technical Resolution No. 5, calculated on the basis of the financial statements as of September 30, 2002, of Interclima S.A., which were examined by Henry Martin, Lisdero y Asociados, who issued a limited review report on November 8, 2002.
U.S. SEC File
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MIRGOR S.A.C.I.F.I.A.
NOTES TO THE FINANCIAL STATEMENTS AS OF september 30, 2002 AND 2001 - Continued
Amounts expressed in Pesos – See Note 1.a)
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued
On the other hand, the adjustments necessary to adapt the Subsidiary’s valuation methods and the difference between the amount effectively paid and the abovementioned equity value in assessing the value by the equity method were allocated as follows:
- The portion related to the increased market value of the subsidiary’s PP&E regarding the book value was included as value of the investment.
Income from the interest in the subsidiary is included in a separate line in the statement of income.
- 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 January through September 2002 less the related accumulated depreciation. Depreciation is calculated applying constant rates calculated on the basis of the estimated useful life of the related assets. The assets subject to lease have been included in this account.
The values so determined do not exceed, for each homogeneous group of assets, their recoverable value.
- Intangible assets
Research and development expenses; licenses related to new products, restated in constant pesos by using the GWPI through August 31, 1995, and WPI for the January through September 2002 period 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.
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 september 30, 2002 AND 2001 - Continued
Amounts expressed in Pesos – See Note 1.a)
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued
- Allowances:
- Doubtful accounts: to offset and make trader 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.
- Accruals:
Contingencies: see note 11.
- Shareholders’ equity accounts:
Restated 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 September 30, 2002, is disclosed in the “Capital adjustment” account.
- Statement-of-income accounts
Statement-of-income accounts have been aged by monthly period and subsequently adjusted as indicated in note 1(a).
U.S. SEC File
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MIRGOR S.A.C.I.F.I.A.
NOTES TO THE FINANCIAL STATEMENTS AS OF september 30, 2002 AND 2001 - Continued
Amounts expressed in Pesos – See Note 1.a)
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued
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 with those of the subsidiary.
Financial income (expense) and holding gains (losses), as well as gain (loss) from inventory holdings, interest, and gains (losses) from exposure to inflation.
- Income tax – Tax on minimum presumed income (TOMPI)
During the current period, the Company did not accrue income tax since taxable income resulted in a NOL under current regulations.
The effect which could result form applying the deferred tax method was not considered since it was not compulsory under current professional accounting standards.
TOMPI was not accrued since under Competitiveness Law, to which the Company adhered (see note 5), the Company was exempted from such tax through June 30, 2003.
- Cash-flow statement
Under CNV Resolution No. 368, the cash-flow statement is included as an individual statement. The Company prepared such statement following the indirect methods on the basis of net income (loss) for the period 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 cash “provided by” or “used in” “investment” and “financing” activities. The Company has considered as a cash item the “Cash” account plus readily convertible investments (original placements lower of less than three months).
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 september 30, 2002 AND 2001 - Continued
Amounts expressed in Pesos – See Note 1.a)
note 2 – COMPOSITION OF THE PRINCIPAL ACCOUNTS
| 2002 | 2001 | |||
| CURRENT ASSETS | ||||
| Cash | ||||
| On hand and imprest fund in Argentine currency | 53,594 | 35,972 | ||
| On hand in foreign currency – Exhibit G | 37,141 | 5,882 | ||
| In banks in Argentine currency | 1,001,276 | 910,121 | ||
| In banks in foreign currency – Exhibit G | 986,689 | 282,278 | ||
| 2,078,700 | 1,234,253 | |||
| Investments | ||||
| Securities and shares – Exhibit C | 587 | 1,298 | ||
| Savings account and other in foreign currency – Exhibit G | 2,227,009 | 3,359,334 | ||
| Savings account and in Argentine currency and other | 957 | 9 | ||
| 2,228,553 | 3,360,641 | |||
| Trade receivables | ||||
| In Argentine currency | 17,423,874 | 14,940,222 | ||
| In foreign currency – Exhibit G | ‑ | 25,233 | ||
| Allowance for doubtful accounts – Exhibit E | (85,723) | (189,622) | ||
| 17,338,151 | 14,775,833 | |||
| Taxes receivable | ||||
| Promotional benefits receivable – Note 5(c) | ‑ | 2,604,008 | ||
| VAT credit | 701,674 | 265,444 | ||
| Other | 7,583 | 1,159,698 | ||
| 709,257 | 4,029,150 | |||
| Other receivables | ||||
| Reimbursements in Argentine currency receivable – Note 5 | ‑ | 2,221,382 | ||
| Other | 942,678 | 3,046,804 | ||
| 942,678 | 5,268,186 |
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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 september 30, 2002 AND 2001 - Continued
Amounts expressed in Pesos – See Note 1.a)
note 2 – COMPOSITION OF THE PRINCIPAL ACCOUNTS - Continued
| 2002 | 2001 | |||||||
| Inventories | ||||||||
| Manufactured products | 11,862,289 | 15,081,289 | ||||||
| Raw material | 35,521,077 | 27,079,057 | ||||||
| Raw material in transit | 5,569,644 | 3,092,476 | ||||||
| Stock as of period-end – Exhibit F | 52,953,010 | 45,252,822 | ||||||
| Prepayments to vendors in Argentine currency | 533,543 | 153,308 | ||||||
| Prepayments to vendors in foreign currency – Exhibit G | 1,563,785 | 742,819 | ||||||
| Allowance for impairment in value – Exhibit E | (7,061,040) | (3,374,032) | ||||||
| 47,989,298 | 42,774,917 | |||||||
| NONCURRENT ASSETS | ||||||||
| Taxes receivable | ||||||||
| Compulsory savings | 8,539 | 18,889 | ||||||
| VAT credit | 342,538 | 1,737,729 | ||||||
| Income tax prepayment | 1,382,007 | 2,964,552 | ||||||
| Promotional benefits receivable – Note 5(c) | 935,591 | ‑ | ||||||
| Other | 124,928 | ‑ | ||||||
| 2,793,603 | 4,721,170 | |||||||
| Other receivables | ||||||||
| Reimbursements in Argentine currency receivable – Note 5 | 1,004,226 | ‑ | ||||||
| 1,004,226 | ‑ | |||||||
| CURRENT LIABILITIES | ||||||||
| Trade payables | ||||||||
| In local currency | 7,016,695 | 2,490,256 | ||||||
| Companies under Section 33, Law No. 19,550 (related companies) – Note 8 | 32,227 | 571,979 | ||||||
| In foreign currency – Exhibit G | 9,669,866 | 41,489,876 | ||||||
| Interest to be accrued – Exhibit G | ‑ | (475,169) | ||||||
| 16,718,788 | 44,076,942 |
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No. 82‑3941
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MIRGOR S.A.C.I.F.I.A.
NOTES TO THE FINANCIAL STATEMENTS AS OF september 30, 2002 AND 2001 - Continued
Amounts expressed in Pesos – See Note 1.a)
note 2 – COMPOSITION OF THE PRINCIPAL ACCOUNTS - Continued
| 2002 | 2001 | |||
| Employee benefits and taxes payable | ||||
| Employee benefits | 499,768 | 1,565,476 | ||
| Taxes payable | 704,804 | 829,232 | ||
| 1,204,572 | 2,394,708 | |||
| Financial payables | ||||
| In local currency | ||||
| Financial loans | 8,264,187 | ‑ | ||
| In foreign currency | ||||
| Financial loans – Exhibit G | 18,510,158 | ‑ | ||
| 26,774,345 | ‑ | |||
| Other payables – Exhibit G | ||||
| Companies under Section 33, Law No. 19,550 (related companies) – Note 8 | 477,008 | 2,212,034 | ||
| Other | 189,613 | 1,496,190 | ||
| 666,621 | 3,708,224 | |||
| NONCURRENT LIABILITIES | ||||
| Financial payables | ||||
| In local currency | ||||
| Financial loans | 551,664 | ‑ | ||
| In foreign currency | ||||
| Financial loans – Exhibit G | 1,912,500 | ‑ | ||
| 2,464,164 | ‑ | |||
| Other payables – Exhibit G | ||||
| Companies under Section 33, Law No. 19,550 (related companies) – Note 8 | ‑ | 799,907 | ||
| ‑ | 799,907 |
note 3 – statement of capital – SHAREHOLDERS’ equity
- Statement of capital
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.
U.S. SEC File
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MIRGOR S.A.C.I.F.I.A.
NOTES TO THE FINANCIAL STATEMENTS AS OF september 30, 2002 AND 2001 - Continued
Amounts expressed in Pesos – See Note 1.a)
note 3 – statement of capital – 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 structures as of September 30, 2002, and 2001, 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 18,902,105, 7,335,050, and 8,405,743, 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 9.426,776; 9,401,160; 3,871,066; 4,202,872; and 4,202,872, 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 september 30, 2002 AND 2001 - Continued
Amounts expressed in Pesos – See Note 1.a)
NOTE 4 – BREAKDOWN OF FINANCIAL INCOME (EXPENSE) AND HOLDING GAINS (LOSSES)
For the periods ended September 30, 2002, and 2001, this account breaks down as follows:
| 2002 Provided by | 2001 Provided by | |||||||
| Assets | Liabilities | Assets | Liabilities | |||||
| (Expense)/(loss) | (Expense)/(loss) | (Expense)/(loss) | (Expense)/(loss) | |||||
| Income/gain | Income/gain | Income/gain | Income/gain | |||||
| Interest (1) | 61,370 | 2,303,319 | 1,207,206 | (2,151,179) | ||||
| Foreign exchange difference | (4,184,890) | (16,271,132) | ‑ | (968,158) | ||||
| Holding gains (losses) - Inventories - Exhibit F | 19,072,485 | ‑ | 125,367 | ‑ | ||||
| Allowances / accruals - Exhibit E | (2,991,002) | ‑ | ‑ | ‑ | ||||
| Gain (loss) on exposure to inflation | (6,853,461) | 2,460,032 | ‑ | ‑ | ||||
| Current investments and tax credits – Note 5(c) | (397,755) | ‑ | (1,785,038) | ‑ | ||||
| Subtotal | 4,706,747 | (11,507,781) | (452,465) | (3,119,337) | ||||
| Total | (6,801,034) | (3,571,802) |
(1) Including ARS 1,282,899 – See Exhibit E.
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:
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 september 30, 2002 AND 2001 - Continued
Amounts expressed 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 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.
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 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) 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 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 the Debt Consolidation Bonds issued under Law No. 23,982, as supplemented.
On May 19, 1997, the DGI provisionally recognized the amount indicated above.
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 september 30, 2002 AND 2001 - Continued
Amounts expressed 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 | ||
| September 30, 2002 | September 30, 2001 | |
| Value-added tax | 11,152,533 | 11,341,381 |
| Customs duties and statistical rate (approximate amounts) | 6,860,393 | 5,766,867 |
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, trips, etc.
Decree No. 615/97 dated July 7, 1997, amending 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 in mainland Argentina are 100% income-tax exempt, as provided for in Law No. 19,640, Section 4(a).
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, such claim is still pending resolution.
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 september 30, 2002 AND 2001 - Continued
Amounts expressed in Pesos – See Note 1.a)
note 5 – tax system – Continued
-
Competitiveness: established by Executive Order 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 periods ended September 30, 2002, and 2001, the Company’s sales to its most important customers were:
| 2002 | 2001 | |||
| Volkswagen Argentina S.A. | 56% | 34% | ||
| General Motor Argentina | 14% | 0% | ||
| Peugeot Citroen Argentina S.A. | 8% | 29% | ||
| Mercedes Benz | 8% | 21% | ||
| Renault Argentina S.A. | 6% | 4% |
A significant portion of the Company’s products are carried out under license agreements executed 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 september 30, 2002 AND 2001 - Continued
Amounts expressed 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 (related companies)
During the course of the fiscal years ended September 30, 2002, and 2001, the Company performed merchandise purchase transactions and other transactions with its subsidiary in the amount of 677,233 and 1,801,936, 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 September 30, 2002, and 2001, the balances in favor of MIRGOR and/or INTERCLIMA S.A. amounted to:
| 2002 | 2001 | |||
| Current trade payables | (32,227) | (571,979) | ||
| Payables to companies under Law No. 19,550, Section 33 – Current | (477,008) | (2,212,034) | ||
| Payables to companies under Law No. 19,550, Section 33 – Noncurrent | ‑ | (799,907) | ||
| Total | (509,235) | (3,583,920) |
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 september 30, 2002 AND 2001 - Continued
Amounts expressed 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 |
| 25 | April 23, 2001 | 02/21/01 to 06/30/01 |
| 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 05/15/02 |
Owing to administrative issues, the transactions related to the period June 1 through September 30, 2002, 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).
NOTE 11 - MARKET RISK FACTORS AS A RESULT OF THE ECONOMIC SITUATION
During the last months of 2001, the Argentine economic activity decreased sharply, consequently impairing domestic markets. At the same time, interest rates required by investors in Argentine Government bonds significantly increased, the listed market prices of these bonds decreased considerably, and the volume of bank deposits as well as foreign credit availability decreased. Under these circumstances, the federal authorities implemented several measures, which included, among others: a) the federal and provincial public debt-restructuring program, negotiating a voluntary debt swap with bondholders, which contemplates a substantial decrease in interest rates and security of the new debt with future tax collection; 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 september 30, 2002 AND 2001 - Continued
Amounts expressed in Pesos – See Note 1.a)
NOTE 11 - MARKET RISK FACTORS AS A RESULT OF THE ECONOMIC SITUATION - Continued
Subsequently, the Federal Government declared the default on the payment of the country’s external debt and on January 6, 2002, the Public Emergency and Foreign Exchange System Reform Law No. 25,561 was enacted, whereby the Federal Executive was empowered to establish a system that will determine the exchange rate between the peso and foreign currencies and put into place foreign exchange regulations. Also, the referred law amended Law No. 23,928 (currency board), and, accordingly, the economic model in force since 1991.
On February 8, 2002, the Federal Executive issued Executive Order No. 260/02, whereby the foreign exchange system was amended, replacing it with a free foreign exchange market, where all the transactions in foreign currencies will be freely traded. These transactions are subject to the requirements and regulations of the B.C.R.A.
In preparing the financial statements, management has given special consideration to the provisions of Executive Orders Nos. 214/2002 and 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 dedollarization, which results in an environment of uncertainty regarding the ultimate valuation of the referred liabilities.
This additional information reveals all the effects arising from the new economic and foreign 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 such measures, as stated in the following paragraph. The effects that future additional or supplementary measures may have on the Company will be booked upon the acknowledgment thereof by management.
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 a provision for financial contingencies in the amount of ARS 1.3 million, which has been charged to income for the period and included in the Financial income (expense) and holding gains (losses) – actual interest, being the provision for contingencies included in current liabilities its contra account.
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 september 30, 2002 AND 2001 - Continued
Amounts expressed in Pesos – See Note 1.a)
NOTE 11 - MARKET RISK FACTORS AS A RESULT OF THE ECONOMIC SITUATION - Continued
Also, the Company has certain tax and refunds receivable in the amount of ARS 3.8 million disclosed in noncurrent assets, whose future recovery depends on the probabilities of the Federal Government reversing its default situation, and on the generation of income subject to tax.
The situations mentioned in the paragraphs above do not allow us to ensure that the net income (loss) agrees with the balances booked by the Company. Therefore, the information included in these financial statements, and other related documentation, do not illustrate the potential impact that might derive from the situation depicted above in this note and, accordingly, should be analyzed considering that circumstance.
NOTE 12 – BANK LOANS – RESTRICTION ON THE DISTRIBUTION OF EARNINGS
Subsequent to the period-end, the Company refinanced a bank loan taken from Citibank N.A. in the amount of USD 840,000, for a 28-month term, accruing interest at LIBOR, plus 6% per month. The loan taken by the Company implies that it should meet certain terms and requirements, especially those related to keeping some equations in its quarterly financial statements, highlighting those aimed at measuring the rate of some liabilities to interest paid, as well as those related to keeping limits on the Company’s indebtedness, which should not exceed USD 25 million. Additionally, the Company agreed not to distribute dividends during the term of the loan. In the opinion of management, the Company is complying with repayment agreements, as referred to above.