Mirgor — Interim / Quarterly Report 2004

Jul 29, 2004

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

MIRGOR

SOCIEDAD ANONIMA, COMERCIAL, INDUSTRIAL, FINANCIERA,

INMOBILIARIA Y AGROPECUARIA

EINSTEIN 1111 ‑ RIO GRANDE

TIERRA DEL FUEGO

ARGENTINA

financial statements for the PERIOD beginning

january 1, 2004, and ended MARCH 31, 2004,

TOGETHER WITH THE AUDITOR’S REPORT

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

BOARD OF DIRECTORS

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

Chairperson

Lic. Roberto Gustavo Vázquez

vice-Chairperson

Mr. José Fara

directors

Mr. Sergio Vélez

Mr. André Gold

Mr. Alejandro Carrera

alternate directors

Mr. José Luis Caputo

Mr. Bernard Clapaud

Mr.Emmanuel Lemaitre

Mr. Eduardo García Terán

Mr. Martín Basaldúa

(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

1. 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, 2004, and the related statement of income, statement of changes in shareholders’ equity and statement of cash flows for the three-month period then ended. We have also performed a limited review of the accompanying balance sheet of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria consolidated with its subsidiary as of March 31, 2004, and the respective consolidated statements of income and cash flows for the three-month period then ended, which are presented as supplementary information. Such financial statements are the responsibility of the Company’s Management.

2. Our review was performed in accordance with the standards set in FACPCE (Argentine Federation of Professional Councils in Economic Sciences) Technical Resolution No. 7 for the limited review of interim financial statements. Under such standards, a limited review mainly consists in applying analytical information to accounting information and making inquiries of the persons in charge of accounting and financial matters. The scope of a limited review is substantially less than that of a financial statements audit, the purpose of which is to express an opinion on the financial statements overall. Accordingly, we de not express any such opinion.

3. As indicated in Note 10 to the financial statements mentioned in Paragraph 1, the Company and its Subsidiary carry, as of March 31, 2004, Tax on Minimum Presumed Income and Value-Added Tax credits totaling ARS 4,992,000 and receivables from the Government amounting to ARS 3,226,000. The valuation and recoverability of such receivables depend on the Companies generating income in the future and on the debt restructuring to be made by the Argentine Government, in the context of the evolving crisis referred to in Note 10. As of the date of issuance of the accompanying financial statements, it is not possible to determine the valuation and recoverability of the abovementioned receivables.

4. Based on our review, we have not become aware of any significant change 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 Buenos Aires City, Argentina, the provisions of the Argentine Business Associations Law and CNV (Argentine National Securities Commission) regulations. This statement is to be read considering the uncertainties described in paragraph 3 above, the outcome of which cannot be determined as of the date of this report.

5. Regarding the balance sheet of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria and of such company consolidated with its subsidiary, both as of December 31, 2003, and the statement of income, statement of changes in shareholders’ equity and statement of cash flows of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria and the statement of income and statement of cash flows of such company consolidated with its subsidiary, all for the three-month period ended March 31, 2003, presented for comparative purposes, we hereby report that:

6. 1. On March 10, 2004, we issued an auditors’ report on the financial statements of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria and on those of such company consolidated with its subsidiary, both as of December 31, 2003, which included (a) qualifications for unresolved uncertainties regarding the recoverability of certain tax credits and other receivables from the Argentine Federal Government, (b) quantified qualifications for not having recognized the effects of the changes in the purchasing power of the Argentine peso over the period March 1 through September 30, 2003, in calculating the income(loss) for such fiscal year and the related changes in shareholders’ equity and cash flows, and (c) uniformity qualifications in connection with the changes of method required by the new accounting standards, with which we agree. We have not audited any financial statements as of any date or for any period after December 31, 2003.

7. On May 19, 2003, we issued our limited review report on the financial statements of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria and of such company consolidated with its subsidiary for the three-month period ended March 31, 2003, which included: (a) a quanitified exception for the subsidiary not having accrued for income tax, and (b) emphasis paragraphs for unresolved uncertainties related to (b.1) the recoverability of certain tax credits and other receivables from the Argentine Federal Government, and (b.2) the possible effects of the renegotiation process with financial institutions to which the Company was indebted and the formalization and implementation of any agreements reached thereby. The uncertainty mentioned in (b.2) was resolved during the fiscal year ended December 31, 2003, given that the Company the process of renegotiations and formalization of the agreements with financial insitutions and, additionally, the Company has considered the contingent liability mentioned in (a) in valuing its investment in the subsidiary company and amended the financial statements as of Mach 31, 2003, which are now presented for comparative purposes.

8. In compliance with current legal requirements, we further report that:

9. The financial statements mentioned in paragraph 1 have been duly transcribed into the Financial Statements Statutory Book.

10. The financial statements of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria have been taken from accounting records kept, in all formal respects, in accordance with current legislation, except for the matter set forth in Note 9 to the accompanying financial statements.
11. The information contained in points (2) and (3) of the “Summary of Events for the three-month period ended March 31, 2004”, presented by the Company to comply with the regulations of the CNV (Argentine National Securities Commission) and the Buenos Aires Stock Exchange, has been taken from the financial statements as of March 31, 2004 and 2003, included in the accompanying document, and from those as of March 31, 2002, 2001, and 2000 (after effecting the restatement into constant pesos through February 28, 2003, as detailed in Note 1(a) to the accompanying financial statements), which are not included in the accompanying document and on which we issued our reports dated May 22, 2002, May 11, 2001, and May 11, 2000, respectively, to which we refer and which are to be read jointly with this report. The Company has not modified the information for the periods ended March 31, 2002, 2001 and 2000 to incorporate the changes in the measurement methods required by the accounting standards in effect as from January 1, 2003.
12. As of March 31, 2004, the debt accrued in employer and employee contributions to the Integrated Retirement and Survivors’ Pensions System, as shown by the Company’s accounting records, amounted to ARS 116,022, none of which was due and payable as of such date.

Buenos Aires City,

May 11, 2004

PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L. C.P.C.E.C.A.B.A. – R.A.P.U. (Buenos Aires City Professional Council – Unified Professionals Registry) Vol. I Fo. 13
Adolfo Lázara (Partner) CPA (U.B.A.) C.P.C.E.C.A.B.A. (Buenos Aires City Professional Council) - Vol. LXIX Fo. 174

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. 34 beginning january 1, 2004,

summary OF EVENTS

For the three-month period ended March 31, 2004

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

1. brief comment on the company’s activities over the period. (*)

The good performance of the Argentine economy, in terms of the rebound in the level of activity, has also reached the automobile industry. The increased consumer confidence is supported by the reappearance of credit at rates lower than during the effectiveness of “convertibility”, the currency board whereby the Argentine peso was pegged at par with the US dollar.

Vehicle manufacture statistics for the first quarter of the year show a 48% increase, while the sector’s sales grew by 225% in the same period. The difference between these two figures reflects the strong increase in vehicle imports, mainly from Brazil. Meanwhile, Argentine exports increased by 0.98%. Particularly striking is the fact that Mexico has become the main automobile export destination, driven by the penetration of the models Nuevo Corsa and Polo (which is called Derby in Mexico).

The sector’s good performance in the first few months of the year has led automobile manufacturers and dealers to revise their plans for the rest of the year, and the domestic-market sales volume is now forecast at 250,000 units. In this context, the automobile production could be growing at a rate higher than 35% this year.

These rises have had a strong impact on Mirgor’s sales, both in physical units and in revenue amounts. The production of automobile air conditioning and heating systems grew by 178% during the first quarter. This increase has two causes of similarly powerful impact on Mirgor’s sales: the increased production described above and the market share achieved by the Nuevo Corsa.

It is important to note that the proportion of air-conditioned units in our customers’ production has gone from 53% to 71%.

The growth in systems for automobiles without air conditioning was 24%, attributable exclusively to the added sales of the Nuevo Corsa without air conditioning.

In the case of instrument panels, the increase was 19% because Volkswagen’s production increase has been very moderate.

In this context of strong increases in sales, the Company has been able to turn production scale into profits, even considering that during the first quarter of the year our customers have shut down their plants, fully or partly, on vacation.

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

		03/31/2004		03/31/2003		03/31/2002		03/31/2001		03/31/2000
Current assets		69,542,984		64,443,113		89,294,740		67,119,368		79,542,970
Noncurrent assets		32,084,992		37,501,188		42,709,339		36,668,750		37,778,041
Total assets		101,627,976		101,944,301		132,004,079		103,788,118		117,321,011
Current liabilities		38,950,678		31,856,899		75,820,464		42,865,565		46,986,053
Noncurrent liabilities		6,921,002		13,091,835		-		-		-
Total liabilities		45,871,680		44,948,734		75,820,464		42,865,565		46,986,053
Minority interest		4,316		3,789		4,474		4,143		4,317
Shareholders' equity		55,751,980		56,991,778		56,179,141		60,918,410		70,330,641
Total liabilities and Shareholders’ equity		101,627,976		101,944,301		132,004,079		103,788,118		117,321,011

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

		03/31/2004		03/31/2003		03/31/2002		03/31/2001		03/31/2000
Ordinary operating income (loss)		1,796,625		(453,103)		(397,172)		(795,855)		(158,103)
Financial expense		(1,142,689)		182,667		1,988,155		(2,125,785)		(707,973)
Other (expenses) / revenues		(34,916)		(985,552)		(111,152)		22,712		(151,156)
Income tax		(257,623)		(49,983)		-		-		-
Minority interest gain (loss)		(198)		(259)		(368)		33		15
Ordinary income (loss), net		361,199		(1,306,230)		1,479,463		(2,898,895)		(1,017,217)
		-		-		-		-		-
Income (loss), net		361,199		(1,306,230)		1,479,463		(2,898,895)		(1,017,217)

1. STATISTICAL DATA (1)

Number of units	03/31/2004				03/31/2003					03/31/2002					03/31/2001					03/31/2000
	Quarter		Accum		Quarter		Accum			Quarter		Accum.			Quarter		Accum.		Quarter			Accum.
Production (2)	48,844		48,844		37,810		37,810			23,367		23,367			56,327		56,327		41,213			41,213
Sales (3)	42,811		42,811		38,270		38,270			8,400		8,400			16,627		16,627		29,440			29,440

* Local	25,893		25,893		14,064		14,064		8,400		8,400
Equipment with air conditioning.	15,506		15,506		5,578		5,578		4,495		4,495
Equipment without air conditioning	6,199		6,199		4,979		4,979		2,075		2,075
Dashboards	4,188		4,188		3,507		3,507		1,830		1,830
* Exports	16,918		16,918		24,206		24,206

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

4. ratios (*)

5. CHANGES IN THE MARKET PRICE OF SHARES (*) (1)

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

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

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

January 2004		January 2003		February 2004		February 2003		March 2004		March 2003
24.50		9.40		23.10		10.10		24.10		4.30

• 1. Considering $1.00 per share.

• prospects (*)

Even though cost increases have been passed on to customers in the last few months, this situation is not expected to have negative effects on the behavior of domestic sales.

The favorable trend in new businesses has allowed the Company to achieve a 45% share of the domestic market, which will be maintained during the rest of the year, with the consequent impact on Company’s sales.

In addition, there continue to be good prospects of closing new deals that have been under analysis for some time.

In this respect, we also await the announcement of the launch of a new VW project. Such company announced this project during the Frankfurt automobile fair in 2003, but it could now be confirmed with the concrete announcement that the model will produced in the Pacheco Plant in 2006. If this comes to fruition, such project would become our Company’s absolute priority for the next few months.

(*) Information not covered by the auditors’ limited review report

Buenos Aires, May 11, 2004.

	MIRGOR S.A.C.I.F.I.A.
	Lic. Roberto G. Vázquez
	Chairman

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

Financial statements related to fiscal year No. 34 for the period beginning January 1, 2004, and ended MARCH 31, 2004, presented comparatively with the same period of the prior fiscal year

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

Main business: Manufacture of air conditioning equipment for vehicles.

Registration date with the Public Registry of Commerce:

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

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

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

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

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

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

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

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

Supplementary information

CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2004,

AND AS OF DECEMBER 31, 2003

Figures stated in Argentine pesos – See note 1

		2004		2003
ASSETS
CURRENT ASSETS
Cash – Note 2		8,781,194		13,781,162
Short-term investments – Note 2		1,547		1,547
Trade receivables – Note 2		17,586,783		15,502,566
Taxes receivable – Note 2		362,084		278,422
Other receivables – Note 2		1,244,595		1,284,985
Inventories – Note 2		41,566,781		36,699,074
TOTAL CURRENT ASSETS		69,542,984		67,547,756
NONCURRENT ASSETS
Other receivables – Note 2		3,366,927		3,499,885
Taxes receivable – Note 2		6,472,222		6,036,894
Intangible assets – Note 1(e)b		440,013		32,903
Property, plant and equipment – Note 1(e)a		21,805,830		22,822,091
TOTAL NONCURRENT ASSETS		32,084,992		32,391,773
TOTAL ASSETS		101,627,976		99,939,529

Notes 1 through 4 to the consolidated financial statements and notes 1 through 15 to the stand-alone financial statements of MIRGOR S.A.C.I.F.I.A. are an integral part of and should be read together with these statements.

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

Supplementary information

CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2004,

AND AS OF DECEMBER 31, 2003

Figures stated in Argentine pesos – See note 1

		2004		2003
LIABILITIES
CURRENT LIABILITIES
Payables
Trade payables – Note 2		22,732,061		20,238,645
Salaries, payroll and other taxes payable – Note 2		3,125,360		3,044,863
Customer prepayments - Note 2		4,077,883		4,050,543
Loans – Note 2		8,794,058		5,568,642
Other		221,316		230,388
Total Liabilities		38,950,678		33,133,081
Provisions		-		-
TOTAL CURRENT LIABILITIES		38,950,678		33,133,081
NONCURRENT LIABILITIES
Payables
Customer prepayments		-		1,761,404
Loans – Note 2		6,921,002		9,650,144
TOTAL NONCURRENT LIABILITIES		6,921,002		11,411,548
TOTAL LIABILITIES		45,871,680		44,544,629
Minority interest in subsidiaries		4,316		4,119
		55,751,980		55,390,781
SHAREHOLDERS’ EQUITY
TOTAL LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS’ EQUITY		101,627,976		99,939,529

Notes 1 through 4 to the consolidated financial statements and notes 1 through 15 to the stand-alone financial statements of MIRGOR S.A.C.I.F.I.A. are an integral part of and should be read together with these statements.

CONSOLIDATED STATEMENT OF INCOME

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2004,

PRESENTED COMPARATIVELY WITH THE SAME PERIOD OF THE PRIOR YEAR

		2004		2003
Net sales (including VAT benefits amounting to 5,070,788 and 2,183,344)		34,700,574		20,123,857
Cost of goods sold		(30,147,837)		(18,289,993)
GROSS REVENUES		4,552,737		1,833,864
Administrative expenses - Exhibit H		(1,882,109)		(1,797,341)
Selling expenses – Exhibit H		(874,003)		(478,949)
Other expense / income		(34,916)		(985,552)
Financial expense and holding losses from assets
Interest		75,179		932,539
Foreign exchange difference		(217,899)		(795,520)
Holding gains (losses) – Inventories		(1,183,790)		(3,568,439)
Allowances / provisions		151,850		409,453
Gain on exposure to inflation		-		69,315
Current investments and tax credits		138,327		(43,227)
Financial expense and holding losses from liabilities
Interest		(593,291)		(552,330)
Foreign exchange difference		486,935		3,754,712
(loss) on exposure to inflation		-		(23,836)
Loss from long-term investments		-		(10,677)
Loss before income tax		619,020		(1,255,988)
Income tax		(257,623)		(49,983)
Loss after income tax		361,397		(1,305,971)
Minority interest in subsidiaries		(198)		(259)
INCOME (LOSS) FOR THE YEAR		361,199		(1,306,230)

Additional information

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2004,

PRESENTED COMPARATIVELY WITH THE SAME PERIOD OF THE PRIOR YEAR

		2004		2003
CHANGES IN CASH
Cash at beginning of year		13,782,122		14,014,323
Cash at end of year		8,782,154		7,810,180
Cash (decrease)		(4,999,968)		(6,204,143)
SOURCES OF CHANGES IN CASH
OPERATING ACTIVITIES
Ordinary income (loss) for the year		361,199		(1,306,230)
Interest and foreign exchange difference accrued		40,282		(1,557,082)
Income tax		257,623		49,983
Adjustments to reach net cash flows deriving from operating activities
PP&E depreciation and intangible assets amortization		1,243,943		1,389,577
Minority interest		198		259
Allowance for impairment in value of inventories (net effect)		(462,887)		(1,044,651)
Loss from long-term investments		-		10,677
Contingency provision		-		(878,813)
Impairment in value of PP&E advances from exposure to inflation		-		1,618
Changes in operating assets and liabilities:
Trade receivables		(2,084,217)		(5,275,993)
Inventories		(4,404,820)		1,692,952
Trade payables		2,493,416		1,405,325
Salaries, payroll and other taxes (net of receivables)		(696,115)		(701,107)
Customer prepayments		(1,734,064)		1,173,243
Other		164,274		805,019
Interest repayment		(208,847)		(838,161)
Net cash flow provided by operating activities		(5,030,015)		(5,073,384)

Additional information

CONSOLIDATED STATEMENT OF CASH FLOWS

pRESENTED COMPARATIVELY WITH THE SAME PERIOD OF THE PRIOR YEAR

		2004		2003
INVESTMENT ACTIVITIES
PP&E acquisition		(199,613)		(69,295)
Intangible additions		(435,179)		-
Net cash flow used in investment activities		(634,792)		(69,295)
FINANCING ACTIVITIES
Loan repayment		(2,335,161)		(1,061,464)
Inflows from new debts		3,000,000		-
NET CASH FLOW USED IN FINANCING ACTIVITIES		664,839		(1,061,464)
Net cash (decrease)		(4,999,968)		(6,204,143)

notes to the consolidated financial statements as of march 31, 2004 AND DECEMBER 31, 2003.

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

1. Applicable accounting standards

The financial statements as of March 31, 2004, December 31, 2003, and March 31, 2003, 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. 459, 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 individual financial statements.

1. 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.

1. Consolidation bases

Following the procedure established in FACPCE Technical Resolution No. 21, MIRGOR S.A.C.I.F.I.A. has consolidated its financial statements as of March 31, 2004, December 31, 2003 and March 31, 2003, as the case may be, line by line with those of its subsidiary, Interclima Sociedad Anónima, in which it holds majority voting rights.

Corporate control is as follows:

Subsidiary		Interest in the common stock and voting rights as of 03/31/04		Year-end
Interclima Sociedad Anónima		99.9667		03/31/2004

notes to the consolidated financial statements as of march 31, 2004 AND DECEMBER 31, 2003- Continued

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES - Continued

1. Financial statements used in consolidation

The consolidated financial statements as of March 31, 2004, have been prepared using the financial statements of Interclima Sociedad Anónima as of such date, which carry a limited review report – dated May11 , 2004 -- including quantified exceptions due to discrepancies in the quantification of income tax; the adjustment in question has been considered in the consolidated financial statements.

The consolidated balance sheet as of December 31, 2003, was prepared using the Balance Sheet of Interclima Sociedad Anónima as of such date, which carries an auditors’ report - dated March 10, 2004 – including quantified qualifications and qualifications for unresolved uncertainties; the latter regarding the recoverability of tax credits and of other receivables from the Argentine Federal Government.

The rest of the financial statements as of March 31, 2003, were prepared using the financial statements of Interclima Sociedad Anónima as of such date, which carry a limited review report – dated May 19, 2003 – including a quantified exception due to discrepancies in the quantification of income tax; the adjustment in question has been considered in the consolidated financial statements

1. Changes in significant assets

		03/31/04 ARS		12/31/03 ARS
1. PP&E
Balance at beginning of year		22,822,091		27,485,464
Additions		199,613		417,225
Retirements (net of depreciation)		-		(11,811)
Depreciation		(1,215,874)		(5,068,787)
Balance at end of period		21,805,830		22,822,091

		ARS		ARS
1. Intangible assets
Balance at beginning of year		32,903		366,168
Additions		435,179		-
Amortization		(28,069)		333,265
Balance at end of period		440,013		32,903

notes to the consolidated financial statements as of march 31, 2004 AND DECEMBER 31, 2003 - Continued

NOTE 2 – MAIN ACCOUNT BREAKDOWN

		03/31/04		12/31/03
ASSETS
CURRENT ASSETS
Cash
On hand and imprest fund in Argentine currency		23,771		41,658
On hand in foreign currency		325,602		105,476
In banks in Argentine currency		2,606,938		4,461,304
In banks in foreign currency		5,824,883		9,172,724
		8,781,194		13,781,162
Short-term investments
Savings account and other in foreign currency
Savings account in Argentine currency and other		1,547		1,547
		1,547		1,547
Trade receivables
Trade receivables		17,208,564		15,015,866
Trade receivables in foreign currency		463,396		571,877
Allowance for doubtful accounts		(85,177)		(85,177)
		17,586,783		15,502,566
Taxes receivable
VAT credit		327,711		232,808
Other		34,373		45,614
		362,084		278,422
Other receivables
Notes receivable
Interest to be accrued		727,560		749,597
Miscellaneous receivables		(92,303)		(95,109)
Other		609,338		630,497
		1,244,595		1,284,985

notes to the consolidated financial statements as of march 31, 2004 AND DECEMBER 31, 2003 - Continued

NOTE 2 - MAIN ACCOUNT BREAKDOWN - Continued

		03/31/04		12/31/03
Inventories
Manufactured products		12,521,206		11,433,737
Raw material		25,060,874		22,932,903
Raw material in transit		9,487,045		7,771,539
Stock at end of period		47,069,125		42,138,179
Prepayments to vendors in Argentine currency		648,827		371,927
Prepayments to vendors in foreign currency		1,306,945		2,109,971
Allowance for impairment in value		(7,458,116)		(7,921,003)
		41,566,781		36,699,074
NONCURRENT ASSETS
Other receivables
Reimbursements in Argentine currency receivable		2,308,165		2,254,264
Notes receivable		1,212,600		1,426,633
Interest to be accrued		(153,838)		(181,012)
Other
		3,366,927		3,499,885
Taxes receivable
Compulsory savings
VAT credit		3,369,907		3,266,016
Minimum presumed income tax		1,622,014		1,503,330
Promotional benefits receivable		918,300		779,973
Other		562,001		487,575
		6,472,222		6,036,894

notes to the consolidated financial statements as of MARCH 31, 2004 AND DECEMBER 31, 2003 - Continued

NOTE 2 - MAIN ACCOUNT BREAKDOWN - Continued

		03/31/04		12/31/03
LIABILITIES
CURRENT LIABILITIES
Payables
Trade payables
In local currency		7,890,457		7,650,958
In foreign currency		14,841,604		12,587,687
		22,732,061		20,238,645
Salaries, payroll and other taxes
Employee benefits		441,460		722,493
Taxes payable		2,683,900		2,322,370
		3,125,360		3,044,863
Customer prepayments
In local currency		-		1,798,553
In foreign currency		4,077,883		2,251,990
		4,077,883		4,050,543
Loans
Financial loans in local currency		5,825,551		2,216,748
Financial loans in foreign currency		2,968,507		3,351,894
		8,794,058		5,568,642
NONCURRENT LIABILITIES
Payables
Loans
Financial loans in local currency		2,001,802		2,782,244
Financial loans in foreign currency		4,919,200		3,867,900
		6,921,002		9,650,144

notes to the consolidated financial statements as of MARCH 31, 2004 AND DECEMBER 31, 2003 – Continued

NOTE 3 – RELATED - PARTY INFORMATION

As of March 31, 2004, and over the three-month period then ended, the receivables from, payables to and transactions entered into with related companies, were as follows:

		Transactions				Balances
Company		Transaction type		Amount		Trade receivables		Other current payables		Trade payables
Related companies		Merchandise Importation		645,308		-		-		347,117
Valeo Sistemas Automotivos Ltd.		Merchandise Importation		197,024		-		-		259,044
Valeo Autoklimatizace S.R.O.		Merchandise Importation		35,287		-		-		(5,313)
Valeo Climatización S.A. (Euro)		Merchandise Importation		24,769		-		-		22,478
Valeo Klimasysteme GMBH		Merchandise Importation		166,409		-		-		132,818
Valeo Componentes Automóviles		Merchandise Importation		203,786		-		-		124,602
Valeo Sistemas Automotivos (wiper systems)		Merchandise Importation		126,413		-		-		208,827
Valeo Climate Control Mexico		Merchandise Importation		76,399		-		-		80,383
Valeo Autosystemiy SP Z.O.O.		Merchandise Importation		1,079,459		-		-		462,803
Valeo Vymeniky Tepla S.R.O.		Merchandise Importation		178,907		-		-		111,841
Valeo Securite Habitacle		Merchandise Importation		117,266		-		-		118,797
Valeo Thermique Francia		Services received		98,977		-		-		-
Valeo Thermique Moteur		Merchandise Importation		944,168		-		-		595,333
Valeo Zaragoza		Merchandise Importation		1,150,056		-		-		605,240
VCC Up Echangeurs		Merchandise Importation		748,100		-		-		471,512
Vcc Up-Echangeurs		Royalties		226,622		-		226,622		-
Valeo Sist. Automotivos		Merchandise sold		(1,132,976)		(364,959)		-		-
Valeo Sist. Automotivos		Merchandise Importation		303,141		-		-		161,589

NOTE 4 – 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.

EXHIBIT c

shares, debentures, other securities issued in series, and interest in OTHER company for the YEAR ended MARCH 31, 2004, presented comparatively WITH THE PRIOR FISCAL YEAR

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

		03/31/04																								03/31/03
														Information on the issuer
																Latest financial statements issued
Securities name and features		Face values		Amounts		Cost values		Value by the equity method		Highest investment value		Book values		Main business		Date		Capital		Return for period		Equity		Interest % on capital stock		Book value
Companies under Law No. 19,550, Section 33 (subsidiaries and affiliates)
INTERCLIMA Sociedad Anónima		1		11,996		8,815,917		11,397,617		11,397,617		11,397,617		Auto-part manufacturing and interchanges for air conditioning and heating equipment		12/31/03		12,000		593,189		12,962,319		99.97%		11,082,333
Total noncurrent investments												11,397,617														11,082,333
Total investments												11,397,617														11,082,333

EXHIBIT H

INFORMATION REQUIRED BY LAW No. 19,550, section 64 b(i) for the YEAR ended MARCH 31, 2004, presented comparatively with the prior FISCAL year

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

		03/31/04								03/31/03
Accounts		Production costs		Administrative expenses		Selling expenses		Total		Total
Salaries and wages		1,211,728		528,571		92,104		1,832,403		1,469,461
Payroll taxes and employee benefits		254,999		170,249		24,367		449,615		327,971
Insurance		153,077		31,439		1,486		186,002		148,112
Fees and training expenses		65,504		100,949		758		167,211		116,670
Taxes, rates, and assessments		285,080		109,745		170,168		564,993		270,107
Other administrative expenses		-		468,180		-		468,180		372,759
PP&E depreciation		759,419		444,907		11,548		1,215,874		1,298,522
Intangible asset amortization		-		28,069		-		28,069		91,055
Other production expenses		430,793		-		-		430,793		311,381
Customs clearance and taxes		773,454		-		-		773,454		460,494
Shipping, handling and freight		2,647,205		-		276,616		2,923,821		1,697,652
Export tax		-		-		50,313		50,313		65,622
Other selling expenses		-		-		246,643		246,643		98,618
Total 2003		6,581,259		1,882,109		874,003		9,337,371
Total 2002		4,452,134		1,797,341		478,949				6,728,424

balance sheet as of march 31, 2004 and as of december 31, 2003.

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

		03/31/04		12/31/03
ASSETS
CURRENT ASSETS
Cash – Note 2		8,420,897		13,674,837
Short-term investments – Note 2		1,547		1,547
Trade receivables – Note 2		17,043,709		14,828,548
Taxes receivable – Note 2		205,069		110,166
Other receivables – Note 2		1,215,651		1,266,005
Inventories – Note 2		38,780,315		34,421,150
TOTAL CURRENT ASSETS		65,667,188		64,302,253
NONCURRENT ASSETS
Long-term investments		11,397,617		11,082,333
Taxes receivable – Note 2		2,762,448		2,495,602
Other receivables – Note 2		1,978,532		2,165,391
Property, plant and equipment		19,701,576		20,690,057
Intangible assets		440,013		25,384
TOTAL NONCURRENT ASSETS		36,280,186		36,458,767
TOTAL ASSETS		101,947,374		100,761,020

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

balance sheet as of march 31, 2004 and as of december 31, 2003

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

		03/31/04		12/31/03
LIABILITIES
CURRENT LIABILITIES
Payables
Trade payables– Note 2		20,317,075		18,313,122
Salaries, payroll and other taxes– Note 2		1,441,803		1,628,652
Loans – Note 2		8,794,058		5,568,642
Customer prepayments – Note 2		4,077,883		4,050,543
Other payables – Note 2		1,643,573		1,397,732
Total Liabilities		36,274,392		30,958,691
TOTAL CURRENT LIABILITIES		36,274,392		30,958,691
NONCURRENT LIABILITIES
Payables
Loans – Note 2		6,921,002		9,650,144
Customer prepayments		-		1,761,404
Other payables – Note 2		3,000,000		3,000,000
TOTAL NONCURRENT LIABILITIES		9,921,002		14,411,548
TOTAL LIABILITIES		46,195,394		45,370,239
SHAREHOLDERS’ EQUITY		55,751,980		55,390,781
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		101,947,374		100,761,020

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

statement of income for the three-month period march 31, 2004, presented comparatively with the same period of the prior year

		03/31/04		03/31/03
Net sales (including VAT benefits amounting to 5,070,788 and 2,183,344) – Note 4(e)		33,395,202		17,765,999
Cost of goods sold		(29,942,576)		(16,859,730)
GROSS REVENUES		3,452,626		906,269
Administrative expenses		(1,833,754)		(1,759,598)
Selling expenses		(788,342)		(407,642)
Other (expense) / income – Note 2		294,432		(835,383)
Ordinary income from long-term investments		315,283		715,786
Financial expense and holding losses from assets
Interest		89,930		428,579
Foreign exchange difference		(222,913)		(589,169)
Holding (losses) – Inventories		(1,123,919)		(3,388,718)
Allowances / provisions		127,510		411,248
Gain on exposure to inflation		-		155,743
Current investments and tax credits		138,327		(43,227)
Financial expense and holding losses from liabilities
Interest		(583,795)		(540,478)
Foreign exchange difference		495,814		3,700,075
(loss) on exposure to inflation		-		(59,715)
NET (LOSS) INCOME FOR THE PERIOD		361,199		(1,306,230)
NET (LOSS) EARNINGS PER SHARE – NOTE 13
BASIC ORDINARY		0.0181		(0.0653)
DILUTED ORDINARY		0.0181		(0.0653)

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

statement of income for the three-month period ended march 31, 2004,

presented comparatively with the same period of the prior year

		03/31/04																						03/31/03
														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		41,636,218		55,390,781		60,610,549
Balance modification-Note 14																						-		(2,312,541)
Modified balances at beginning of year		2,000,000		4,155,936		497		717		5,243,562		11,400,712		2,280,143		73,708		2,353,851		41,636,218		55,390,781		58,298,008
Net income(loss) for the year																				361,199		361,199		(1,306,230)
Balances as of March 31, 2004		2,000,000		4,155,936		497		717		5,243,562		11,400,712		2,280,143		73,708		2,353,851		41,997,417		55,751,980
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		43,237,215				56,991,778

(*) See note 3(b)

statement of cash flows for the three-month period ended march 31, 2004, presented comparatively with the same period of the prior year

		03/31/04		03/31/03
CHANGES IN CASH (1)
Cash at beginning of year		13,675,797		13,204,954
Cash at end of year		8,421,857		7,156,016
Cash (decrease)		(5,253,940)		(6,048,938)
SOURCES OF CHANGES IN CASH
OPERATING ACTIVITIES
Ordinary (loss) income for the year		361,199		(1,306,230)
Interest and foreign exchange difference accrued		40,282		(1,557,082)
Adjustments to reach net cash flows deriving from operating activities
PP&E depreciation and intangible assets amortization		1,127,220		1,234,967
Allowance for impairment in value of inventories (net effect)		(373,795)		(1,049,516)
Income (Loss) from long-term investments		(315,283)		(715,786)
Contingency provision		-		(878,813)
Impairment in value of PP&E advances from exposure to inflation		-		1,585
Changes in operating assets and liabilities:
Trade receivables		(2,215,161)		(5,344,447)
Inventories		(3,985,370)		1,507,653
Trade payables		2,003,953		1,849,723
Salaries, payroll and other taxes (net of receivables)		(548,598)		(212,070)
Customer prepayments		(1,734,064)		1,173,243
Other		483,053		1,214,331
Interest repayment		(208,847)		(838,161)
NET CASH FLOW (USED IN) OPERATING ACTIVITIES		(5,365,411)		(4,920,603)

statement of cash flows for the three-month period ended MARCH 31, 2004, presented comparatively with the same period of the prior year

		03/31/04		03/31/03
INVESTMENT ACTIVITIES
PP&E acquisition		(118,189)		(66,871)
Intangible additions		(435,179)		-
NET CASH FLOW USED IN INVESTMENT ACTIVITIES		(553,368)		(66,871)
FINANCING ACTIVITIES
Loan repayment		(2,335,161)		(1,061,464)
Inflows from new debts		3,000,000		-
NET CASH FLOW USED IN FINANCING ACTIVITIES		664,839		(1,061,464)
Net cash (decrease)		(5,253,940)		(6,048,938)

(1) Not considering the temporary investments in shares

NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2004

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

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

1. Restatement into constant pesos

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

The Company’s financial statements recognize the changes in the purchasing power of the peso through February 28, 2003, in accordance with Federal Executive Decree No. 664/2003 and CNV (Argentine National Securities Commission) No. 441. Under professional accounting standards the restatement method established in TR No. 6 should have been discontinued only as from October 1, 2003. The effects of not recognizing such changes in the purchasing power of the Argentine peso through this last date have not been significant in relation to these financial statements.

1. New accounting standards applied to financial statements preparation and presentation

The CNV (Argentine National Securities Commission) issued General Resolution No. 459, dated March 18, 2004, whereby it adopted, with certain exceptions: (a) FACPCE (Argentine Federation of Professional Councils in Economic Sciences) Technical Resolutions Nos. 16 through 20, with the amendments introduced by CPCECABA (Buenos Aires City Professional Council) Resolution CD No.87/03, effective for fiscal years initiated January 1, 2003, or thereafter, and (b) FACPCE Technical Resolution No. 21, mandatory for fiscal years beginning April 1, 2004 (which has been applied in advance in these financial statements).

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

NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2004 - Continued

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

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

The effects of the changes in the new accounting standards at the beginning of the first fiscal year of their effectiveness have been booked retroactively, which is to say that the Prior-year Income at the beginning of the fiscal year 2003 as indicated in Note 14.

1. Valuation methods

The main valuation methods used to prepare the financial statements:

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

In Argentine pesos: at nominal value at end of the period including, as the case may be, explicit and imputed interest accrued as of such dates, which has been determined by calculating the discounted value of cash flows, following the methods provided in FACPCE Technical Resolution No. 17, Section 4 (as amended by CPCECABA Resolution CD No. 87/03), considering the present economic circumstances due to the current characteristics of the financial market; for such purpose, the interest rate on financing obtained by the company has been considered.

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

NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2004 - Continued

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

convert such transactions. The foreign exchange differences were charged to income for the fiscal period or year, as the case may be.

Other receivables and payables in local currency (except for deferred tax amounts): they have been valued at their estimated value deducted from the amount receivable or payable taking into account the methods provided in FACPCE Technical Resolution No. 17, Section 4 (as amended by CPCECABA Resolution CD No. 87/03), as mentioned in the first paragraph (Cash, Trade Receivables, Other Receivables and Liabilities)

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

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

• Inventories

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

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

• Long-term investments:

Companies covered by Argentine Business Associations Law No. 19,550, Section 33 (Subsidiaries and affiliates): by the equity method as established by Technical Resolution No. 21 of the FACPCE, which was calculated on the basis of the financial statements of Interclima as of March 31, 2004, which have been reviewed by Pistrelli, Henry Martin y Asociados S.R.L., who – on May 11,2004 -- issued their related limited review report that includes quantified exceptions and an emphasis paragraph for unresolved uncertainty.

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

In addition, the adjustment to reflect the income tax liability has been taken into account when determining the value by the equity method.

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

• PP&E

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

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

• Intangible assets

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

NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31 - Continued

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

The licenses to sell products acquired by the Company have been considered in this account, taking into account their capacity to generate earnings in the future, and have been depreciated over three years counted as from their initial economic use.

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

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

• Statement-of-income accounts

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)
• 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.

Income tax is booked following the liabilities deferred tax method for all the temporary differences existing as of the balance sheet date between assets and liabilities tax bases and their amounts booked in these financial statements, as set forth under FACPCE Technical Resolution No. 17.

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

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

NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2004 AND 2003 - Continued

The professional accounting standards approved by the CPCECABA set forth that deferred taxes receivable and payable should be valued at their discounted value using market rates effective at end of the period or fiscal year. The effect of such discounting, taking into account the considerations of the following paragraph, on the shareholders’ equity as of March 31, 2004, and the income (loss) for the period then ended has not been significant in relation to these financial statements.

Taking into account that the Company is carrying forward NOLs amounting to ARS 9,809,161 (out of which ARS 9,485,675 can be used until December 31, 2007, and the rest until December 31, 2009), there would be a deferred tax asset of ARS 3,433,206, which the Company has written off entirely because it considers that current market difficulties do not provide any assurance that it is likely that sufficient taxable income will be obtained to allow recovery of such asset.

For the period ended March 31, 2004, the tax on minimum presumed income (TOMPI) amount was higher than that of income tax. Accordingly, the accrual amounts to ARS 129,582, which was entered with a balancing entry in noncurrent tax credits.

The tax on minimum presumed income is supplementary to income tax in that, whereas the latter is charged on taxable income for the year, tax on minimum presumed income is the floor tax that is levied on the potential income generated by certain productive assets and is calculated at the rate of 1% of the taxable assets, and in such way that the tax the Company is required to pay in shall be the higher of these two taxes. However, if in any given tax year, tax on minimum presumed income exceeds income tax, such excess may be computed as payment on account of any excess of income tax over tax on minimum presumed income that may arise in any of the ten subsequent years.

As of March 31, 2004, the tax credit from TOMPI amounts to ARS 1,622,014, which is disclosed under the “tax credits” account in Noncurrent Assets in view of the fact that Company Management considers that it is likely to be recovered by applying it against future taxable income.

• 1. Status of the subsidiary ICSA

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

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

Had the tax-purposes adjustment-for-inflation not been made, the Company would have determined income tax amounting to about ARS 384,342 (after computing prior-year NOLs) and ARS 854,892 for fiscal year 2003 and of ARS 195,629 for the period ended March 31, 2004.

Interclima S.A. filed a legal remedy to obtain judicial protection since it understands that due to the high inflation that affected fiscal year 2002, section 39 of Law No. 24,073 dated 1992 should be abrogated. This section established an index applicable to the tax adjustment for inflation amounting to 1.00 (one) and suspended the application of such adjustment on taxable income in practice, as it had been regulated within an economic context that differed completely from fiscal year’s 2002. Consequently, these liabilities (ARS 1,434,863) have not been booked in the financial statements as of March 31, 2004, however, since fiscal year 2003 the company has considered such contingency for the evaluation of the investment. Such decreased value as of the beginning of fiscal year 2003 (ARS 384,342) was considered an Adjustment to Prior-Year Income (see Note 14).

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

• Statement of cash-flows

Under FACPCE Technical Resolutions No. 8 and 9, 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).

note 2 – MAIN ACCOUNT BREAKDOWN

		03/31/04		12/31/03
CURRENT ASSETS
Cash
On hand and imprest fund in Argentine currency		21,051		36,532
On hand in foreign currency		325,602		105,476
In banks in Argentine currency		2,249,361		4,360,105
In banks in foreign currency		5,824,883		9,172,724
		8,420,897		13,674,837
Short-term investments
Savings account and other in foreign currency
Savings account and in Argentine currency and other		1,547		1,547
		1,547		1,547
Trade receivables
		17,027,547		14,913,725
Trade receivables		101,339		-
Allowance for doubtful accounts		(85,177)		(85,177)
		17,043,709		14,828,548
Taxes receivable
VAT credit		205,069		110,166
Other		-		-
		205,069		110,166

note 2 – MAIN ACCOUNT BREAKDOWN - Continued

			03/31/04					12/31/03
Other receivables
Notes receivables			727,560					749,597
Interest to be accrued			(92,303)					(95,109)
Other			580,394					611,517
			1,215,651					1,266,005
Inventories
Manufactured products			11,725,990					10,420,164
Raw material			23,860,375					22,064,611
Raw material in transit			8,409,009					7,110,837
Stock at end of period			43,995,374					39,595,612
Prepayments to vendors in Argentine currency			595,517					366,500
Prepayments to vendors in foreign currency			1,306,945					1,950,354
Allowance for impairment in value			(7,117,521)					(7,491,316)
			38,780,315					34,421,150
NONCURRENT ASSETS
Taxes receivable
Compulsory savings			7,821						7,821
VAT credit			93,481						93,481
Minimum presumed income tax			1,622,014						1,503,330
Promotional benefits receivable – Note 4(c)			918,300						779,973
Other			120,832						110,997
			2,762,448						2,495,602
Other receivables
Reimbursements in Argentine currency receivable – Note 4		919,770					919,770
Notes receivable		1,212,600					1,426,633
Interest to be accrued		(153,838)					(181,012)
		1,978,532					2,165,391
CURRENT LIABILITIES
Payables
Trade payables
In local currency		7,023,242						6,762,362
In foreign currency		13,293,833						11,550,760
		20,317,075						18,313,122

note 2 – MAIN ACCOUNT BREAKDOWN – Continued

			03/31/04			12/31/03
Salaries, payroll and other taxes
Employee benefits			407,309			662,491
Taxes payable			1,034,494			966,161
			1,441,803			1,628,652
Loans
Financial loans in local currency			5,825,551			2,216,748
Financial loans in foreign currency			2,968,507			3,351,894
			8,794,058			5,568,642
Customer prepayments
In local currency			-				1,798,553
In foreign currency			4,077,883				2,251,990
			4,077,883				4,050,543
Other payables
Companies under Section 33, Law No. 19,550 (subsidiaries and affiliates) – Note 7			1,422,257			1,167,343
Other			221,316			230,389
			1,643,573			1,397,732
NONCURRENT LIABILITIES
Loans
Financial loans in local currency			2,001,802			2,782,244
Financial loans in foreign currency			4,919,200			6,867,900
			6,921,002			9,650,144

Other payables
Companies under Section 33, Law No. 19,550 (subsidiaries and affiliates) – Note 7		3,000,000		3,000,000
		3,000,000		3,000,000
		03/31/04		03/31/03
OTHER EXPENSE / INCOME
Inventory difference		-		(890,743)
Other		294,432		55,360
		294,432		(835,383)

note 3 – capital STRUCTURE – SHAREHOLDERS’ equity

1. Capital structure

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

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

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

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

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

The capital stock structure as of March 31, 2004, December 31, 2003, and March 31, 2003, was:

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

1. 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.

note 4 – tax system

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

• Industrial promotion system under Law No. 19,640 of 1972 to operate in the Province of Tierra del Fuego. In this sense, the Company is entitled to certain tax and customs benefits through 2013. Such benefits include:

• Income tax: The Federal Executive issued Decree No. 1,395/94 whereby, as from September 1, 1994, 85% (see effect of Presidential Decree No. 615/97) of the price paid by customers out of the earnings related to the Province of Tierra del Fuego would be income-tax exempt (whose rate is 35%).

• Value-added tax (VAT): as from April 1995, the Company’s sales would be subject to 21% VAT to be charged to the customers of Mirgor S.A.C.I.F.I.A.

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

1. 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.

note 4 – tax system – Continued

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

Considering that, on May 2, 1996, the Ministry of Economy issued Resolution No. 580/96 and that the credits are previous to April 1, 1991, the Company decided to book the recognized credit at the listed price effective as of each period-end of BOCONS (Debt Consolidation Bonds) issued under Law No. 23,982, as supplemented, which amounted to ARS 918,300 as of March 31, 2004, and to ARS 779,973, as of March 31, 2003.

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

1. 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.
2. The amounts saved by the Company considering the items mentioned in points (b) and (d) are:

	Years ended
	March 31, 2004	March 31, 2003
V.A.T.	5,070,788	2,183,344
Customs duties and statistical rate (approximate amounts)	3,608,727	1,948,229

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.

note 4 – tax system – Continued

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

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

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

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

• Competitiveness: established by Presidential Decree No. 730/01 to improve competitiveness and foster employment in Argentina. The main benefits established by the companies adhering to such system are:

• Full corporate indebtedness tax exemption;

• Full TOMPI exemption;
• Computation as VAT credit of the amounts paid on account of employer contributions to the SUSS (Single Social Security System).

The benefits mentioned in (a) became effective as from August 31, 2001; those in (b) and (c) became effective as from July 1, 2001. In the case of (a) and (b), the benefits remained in effect through June 30, 2003, while those under (c) ended on November 30, 2001.

note 5 – major customers and license agreements

For the years ended March 31, 2004, and 2003, the Company’s sales to its most important customers were:

		31/03/2004		31/03/2003
Volkswagen Argentina S.A.		35%		58%
General Motor Argentina		32%		11%
Renault Argentina S.A.		19%		16%
Mercedes Benz		8%		7%
Peugeot Citroen Argentina S.A.		4%		4%

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

note 6 – parent company

Parent Company: Il Tevere S.A.

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

Main business: holding company

Voting rights: 76.47%

Shareholdings: 52%

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

note 7 – RELATED-PARTY INFORMATION

As of March 31, 2004, and over the three-month period then ended, the receivables from, payables to and transactions entered into with related companies, were as follows:

		Transactions					Balances
									Other payables
Company		Transaction type		Amount		Trade payables			Current		No current
Related companies		Merchandise Importation		645,308		347,117			-		-
Valeo Sistemas Automotivos Ltd.		Merchandise Importation		197,024		259,044			-		-
Valeo Autoklimatizace S.R.O.		Merchandise Importation		35,287		(5,313)			-		-
Valeo Climatización S.A. (Euro)		Merchandise Importation		24,769		22,478			-		-
Valeo Klimasysteme GMBH		Merchandise Importation		166,409		132,818			-		-
Valeo Componentes Automóviles		Merchandise Importation		203,786		124,602			-		-
Valeo Sistemas Automotivos		Merchandise Importation		126,413		208,827			-		-
Valeo Climate Control Mexico		Merchandise Importation		76,399		80,383			-		-
Valeo Autosystemiy SP Z.O.O.		Merchandise Importation		337,432		124,478			-		-
Valeo Vymeniky Tepla S.R.O.		Merchandise Importation		178,907		111,841			-		-
Valeo Securite Habitacle		Merchandise Importation		117,266		118,797			-		-
Valeo Thermique Francia		Services received		98,977		-			-		-
Valeo Thermique Moteur		Merchandise Importation		944,168		595,333			-		-
Valeo Zaragoza		Merchandise Importation		1,150,056		605,240			-		-
VCC Up Echangeurs		Merchandise Importation		748,100		471,512			-		-
Subsidiary		Royalties		226,622		-			226,622		-
Interclima S.A.		Merchandise purchased		2,338,415		-			-		-
Interclima S.A.		Other services		300,000		-			-		-
Interclima S.A.		Financing Transactions		254,914		-			1,422,257		3,000,000

note 8 – income tax withholding on dividends

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

note 9 – stamped and sealed books

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

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

NOTE 10 – RECENT SIGNIFICANT ECONOMIC EVENTS

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

NOTE 10 – RECENT SIGNIFICANT ECONOMIC EVENTS - Continued

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

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

Taking into account the above considerations, the Company and its subsidiary carry tax credits, reimbursements receivable and other receivables from the Government amounting to ARS 8.2 million, disclosed in noncurrent assets, the future recoverability of which depends both on the Government’s possibilities of lifting its declaration of default and generating sufficient fiscal revenues, which are affected by the Argentine market uncertainty in general; furthermore, the Company currently lacks elements of judgment to determine when and how such receivables would be collected.

NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2004 AND - Continued

NOTE 11 – BANK LOANS – RESTRICTION ON EARNINGS ALLOCATION

The Company has received loans as follows: from Citibank N.A. amounting to USD 330,000, with an 11-month term and accruing interest at 30-day LIBOR plus a 6% spread p.a.; from Banco Francés BBVA for an amount of USD 90,000 accruing interest at 30-day LIBOR plus 500 b.p. ; and from BNP bank in the amounts of USD 2,280,000 and ARS 1,998,500, repayable in three annual installments and eleven quarterly installments, respectively, accruing interest at 180-day LIBOR plus 6% and “Baibor” (Buenos Aires preferential rate) plus 4%.

These loans taken by the Company imply that it should meet certain terms and conditions, especially those related to meeting certain ratios in its quarterly financial statements, especially those aimed at measuring the liabilities-to-interest-paid ratio, as well as those related to keeping limits on the Company’s indebtedness, which should not exceed USD 25 million, as stipulated in the case of the loan from Citibank N.A. Additionally, the Company agreed not to distribute dividends during the term of the loan and not to make annual repayments to the BNP exceeding 25% of the Company’s total payable to such bank upon the restructuring. Additionally, the Company has assumed certain commitments normal in this kind of restructuring.

NOTE 12 – INCOME TAX

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

The reconciliation between income tax expenses charged to income generated by operating activities before income tax at the statutory rate and the income tax expense at the actual income tax rate for the period ended March 31, 2004, was as follows:

		$
Operating loss before income tax		361,199
Permanent differences
* Gain (loss) from investments in other companies		(315,283)
* Gain from special customs activities in Tierra del Fuego		(761,800)
* Other permanent differences		503,330
Taxable income (loss)		(212,554)
Result of applying the effective income tax rate		74,394
Changes in temporary differences
Allowance for impairment in value		(33,875)
Deferred foreign exchange differences		12,345
Subtotal		52,864
Unrecoverability allowance		(52,864)
Book charge for Income Tax		-

NOTE 12 – INCOME TAX - Continued

The temporary differences changed as follows:
DEFERRED ASSET AS OF 12.31.03		545,562
Changes in temporary differences		(21,880)
DEFERRED ASSET AS OF 03.31.04		523,682
Impairment in value		(523,682)
Current deferred assets		-
The deferred asset at year-end comprises the following items:
Allowance for impairment in value of Inventories		651,680
Allowance for uncollectible accounts		7,799
Capitalizable exchange differences		(135,797)
		523,682

NOTE 13 – EARNINGS PER SHARE

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

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

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

The total loss amounted to ARS 1,928,327, which is mostly related to the valuation of receivables and payables at the net present value of the amount receivable or payable, as the case may be, and with the recognition of payables to vendors. ARS 384,214 should be added to that amount due to the adjustment mentioned in note 1(b) (Long-term investments – Equity interests in other companies – Income tax).

NOTE 15 – 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.