Mirgor - Interim / Quarterly Report 2007


Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria	Financial Statements for the period beginning January 1, 2007 and ended March 31, 2007, presented jointly with the Limited Review report and the Statutory Audit Committee’s Report (Translation into English originally issued in Spanish)

LIMITED REVIEW REPORT ON INTERIM FINANCIAL STATEMENTS

To the Chairman and Directors of

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

(C.U.I.T. (Argentine taxpayer identification number): 30-57803607-1)

We have performed a limited review of the balance sheet of MIRGOR S.A.C.I.F.I.A. as of March 31, 2007, and the related statements of income, changes in shareholders’ equity, and cash flows for the three-month period then ended. We also performed a limited review of the accompanying consolidated balance sheet of MIRGOR S.A.C.I.F.I.A. and its subsidiaries as of March 31, 2007, and the related consolidated statements of income and cash flows for the three-month period then ended, which are disclosed as supplementary information. Such financial statements are the responsibility of the Company’s Management.
Except as stated in paragraph (3), our review was performed in accordance with F.A.C.P.C.E. (Argentine Federation of Professional Councils in Economic Sciences) Technical Resolution No. 7 applicable to the limited review of interim financial statements. Under such standards, a limited review consists primarily in applying analytical procedures to the accounting information and making inquiries of the persons in charge of accounting and financial matters. A limited review is substantially less in scope than an audit of financial statements, the objective of which is to express an opinion on the financial statements taken as a whole. Therefore, we do not express such an opinion.
We did not perform any limited review of the financial statements of subsidiary Capdo S.A. as of March 31, 2007, which are used to value the equity interest in such company by the equity method and included in the consolidated financial statements of MIRGOR S.A.C.I.F.I.A. with its subsidiaries as of that date. As of March 31, 2007, this equity interest represented 3.7% of the total assets of MIRGOR S.A.C.I.F.I.A., 1.0% of the total income as of such date of MIRGOR S.A.C.I.F.I.A, and 3.2% of the consolidated assets of MIRGOR S.A.C.I.F.I.A. and its subsidiaries.
As of March 31, 2007, the Company and its subsidiaries booked noncurrent minimum presumed income tax and value-added tax credits amounting to ARS 6,417,075, the recoverability of which depends on the companies’ possibility of carrying enough taxable income to absorb them. As of the date of issuance of this report, it is not possible to estimate the recoverable amount of such credits.
2 -
Based on our review, except for the effect of adjustments, if any, that might have been required, if our work scope limitation described in paragraph (3) had not taken place, 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 the City of Buenos Aires, Argentina, and the applicable provisions of Argentine Business Associations Law and CNV (Argentine securities commission) regulations. This representation should be read considering the uncertainties described above in paragraph (4), the resolution of which may not be determined as of the date of this report.
Regarding the balance sheet of MIRGOR S.A.C.I.F.I.A. and of MIRGOR S.A.C.I.F.I.A. and its subsidiaries as of December 31, 2006, and the statements of income, changes in shareholders’ equity, and cash flows of MIRGOR S.A.C.I.F.I.A. and MIRGOR S.A.C.I.F.I.A. and its subsidiary for the three-month period ended March 31, 2006, presented for comparative purposes, we report that:
On March 09, 2007, we issued an auditors’ report on the financial statements of MIRGOR S.A.C.I.F.I.A. and of MIRGOR S.A.C.I.F.I.A. and its subsidiaries as of December 31, 2006, which included qualifications for (a) a scope limitation related to the investment in the affiliate Capdo S.A and (b) an unresolved uncertainty related to the recoverability of certain tax credits amounting to ARS 6,079,408. We have not audited any financial statements as of any date for any period subsequent to December 31, 2006.
On May 11, 2006, we issued a limited review report on the financial statements of MIRGOR S.A.C.I.F.I.A. and of MIRGOR S.A.C.I.F.I.A. and its subsidiary for the three-month period ended March 31, 2006, which included a qualification for unresolved uncertainty regarding the recoverability of certain tax credits amounting to ARS 5,998,669.
In compliance with current legal requirements, we further report that:
The financial statements mentioned in paragraph (1) have been transcribed into the Inventory and Financial Statements book.
3 -
Except as mentioned in note 9 to the accompanying financial statements, the financial statements of MIRGOR S.A.C.I.F.I.A. result from books kept, in all formal respects, pursuant to current regulations

The information included in points 2, 3 and 5 of the “Summary of events for the three-month period ended March 31, 2007", filed by the Company to meet CNV and BCBA regulations, results from the accompanying financial statements as of March 31, 2007, and as of March 31, 2006, 2005, 2004 and 2003, (the latter of which after being restated in constant pesos through February 28, 2003, as detailed in note 1(b) to the stand-alone financial statements attached hereto), not included in the document attached hereto, on which we have issued our limited review reports dated May 11, 2006, May 11, 2005, May 11, 2004 and May 19, 2003, respectively, to which we refer and are to be read jointly with this report.

As of March 31, 2007, liabilities accrued in employer and employee contributions to the Integrated Pension Fund System resulting from the Company’s accounting books amount to ARS 222,695, none of which was due and payable as of that date.

Buenos Aires,
May 11, 2007

PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L.

C.P.C.E.C.A.B.A. Vol.1 – Fo. 13

KARÉN GRIGORIAN

(Partner)

Certified Public Accountant (U.B.A.)

C.P.C.E.C.A.B.A. - Vol. 175 Fo. 031

BOARD OF DIRECTORS

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

CHAIRMAN

Lic. Roberto G. Vazquez (*)

VICE-CHAIRMAN

Dr. José Luis Caputo

DIRECTORS

Ing. Jorge Antonio Caputo

Sr. José Fara (*)

Ing. Alejandro Carrera (*)

ALTERNATE DIRECTORS

Dr. Diego García Villanueva

Dr. Mauricio Blacher

Dr. Fabio Rozemblun

Lic. Martín Basaldúa

Dr. Eduardo Garcia Terán

STATUTORY AUDIT COMMITTEE

Statutory Auditors

Dr. Julio Cueto Rua

Dr. Mario Volman

Dr. Andrés Mercau Saavedra

Alternate Statutory Auditors

Dra.Maria Andrea Rabal

Dr. Hugo Kaplan

Dra. Maria Eugenia Ramirez

(*) Audit Committee members.

Registered office: Einstein 1111 – Río Grande – Tierra del Fuego.

Main business: Manufacturing air conditioning equipment for vehicles.

Date of registration with the Public Registry of Commerce:

Of the articles of incorporation: June 1, 1971.
Of the last amendment to by-laws: August 12, 2004.

Expiration date of the articles of incorporation: May 31, 2070.

FISCAL YEAR No. 37 BEGINNING January 01, 2007

SUMMARY OF EVENTS (*)

FOR THE PERIOD ENDED MARCH 31, 2007

(Figures stated in Argentine pesos - Note 1.2)

BRIEF COMMENT ON THE COMPANY'S ACTIVITIES FOR THE PERIOD

The growth trend seen through the end of 2007, was kept during the first quarter of the year.

Despite a series of not altogether favorable political news and an atmosphere deeply related to the year's elections, consumers' trust remained stable.

The price and relative price struggle situation affecting a significant sector of our economy is still a concern. In this regard, major concerns are the salaries and the threshold set for 2007 negotiations. Many nominal values which appear as agreements on salary increases are actually overcome by other factors that modify the guidelines published.

During this term the Company’s sales volumes were consistent with the growth seen in auto production.

Increases were also seen in residential air quality and temperature control, although the percentages were lower than those of the auto industry.

Although good results were expected for domestic sales of vehicles, performance during the first months of the year was surprising.

There were certain increases in automobile prices after the struggles between the terminals and the Domestic Trade Secretary.

The most important news in Mirgor’s business was the launch of Citroen C4 in April.

Additionally, the Company successfully negotiated with Daimler Chrysler to supply its new project in Argentina. The Company is working towards the launch and the first deliveries are expected to occur during the year.

Auto production in the first quarter grew by 26.5% and it was announced that production will exceed the 500,000 units included in Mirgor’s projections.

The local market remains increasing the absorption of locally produced cars thanks to the residents’ increased purchasing power.

Mirgor’s sales of air conditioning systems, in the quarter, in units, increased by 32.3% as compared to the first quarter in 2006, a similar amount to the one seen in the first quarter in 2006 as compared to the one related to the first quarter in 2005. Some Mirgor’s products have increased by more than 80% in the period.

The sales of air quality and temperature control systems for cars with air conditioning increased by 47.5% during Q1 2007, as compared to the Q1 2006; thus maintaining the growing trend in the production of cars with air conditioning in Argentina. These products have exceeded its 80% share in Migor's sales mix for four consecutive quarters.

Instrument panels decreased by 36.6% due to the production replacement experienced by the Volkswagen products thanks to the success of the Suran model.

The sales of residential air conditioning appliances also increased from 16,731 units in the first quarter of the prior year to 20,217 this quarter; thus representing a 20.8% increase.

CONSOLIDATED BALANCE SHEET STRUCTURE


	03/31/2007	03/31/2006	03/31/2005	03/31/2004	03/31/2003

Current assets	201,501,070	154,029,930	88,637,108	69,542,984	64,443,113
Noncurrent assets	53,890,288	25,400,097	25,663,150	32,084,992	37,501,188
Total assets	255,391,358	179,430,027	114,300,258	101,627,976	101,944,301

Current liabilities	119,054,671	90,101,654	47,188,002	38,950,678	31,856,899
Noncurrent liabilities	5,852,374	769,137	3,705,127	6,921,002	13,091,835
Total liabilities	124,907,045	90,870,791	50,893,129	45,871,680	44,948,734

Minority interest	11,720	7,689	5,492	4,316	3,789
Shareholder´s equity	130,472,593	88,551,547	63,401,637	55,751,980	56,991,778
Total liabilities and Shareholder´s equity	255,391,358	179,430,027	114,300,258	101,627,976	101,944,301

CONSOLIDATED STATEMENT OF INCOME STRUCTURE


	03/31/2007	03/31/2006	03/31/2005	03/31/2004	03/31/2003

Ordinary operating income (loss) from recurring operations	8,704,644	5,247,898	3,895,796	1,333,738	(453,103)
Financial expense	(419,492)	987,185	(3,054,086)	(679,802)	182,667
Other (expenses) / revenues	251,997	14,068	85,970	(34,916)	(985,552)
Income tax	(479,617)	(109,295)	(216,385)	(257,623)	(49,983)
Minority interest income (loss)	432	(373)	(296)	(198)	(259)
Net income (loss)	8,057,964	6,139,483	710,999	361,199	(1,306,230)

3 -
STATISTICAL DATA (1)


	03/31/2007		03/31/2006		03/31/2005		03/31/2004		03/31/2003
Volume of units	Quarter.	Accum.	Quarter.	Accum.	Quarter.	Accum.	Quarter.	Accum.	Quarter.	Accum.

Production (2)	104,078	104,078	87,045	87,045	35,812	35,812	48,844	48,844	37,810	37,810

Sales (3)	73,140	73,140	66,450	66,450	46,470	46,470	42,811	42,811	38,270	38,270
* Local	69,383	69,383	56,240	56,240	33,414	33,414	25,893	25,893	14,064	14,064
Equipment with air conditioning	40,085	40,085	27,150	27,150	18,198	18,198	15,506	15,506	5,578	5,578
Equipment without air conditioning	6,203	6,203	7,817	7,817	7,503	7,503	6,199	6,199	4,979	4,979
Instrument Panels	2,878	2,878	4,542	4,542	4,899	4,899	4,188	4,188	3,507	3,507
Residential air conditioning	20,217	20,217	16,731	16,731	2,814	2,814
* Exports	3,757	3,757	10,210	10,210	13,056	13,056	16,918	16,918	24,206	24,206

(1) As from fiscal 2004, the units sold by Interclima S.A. are disclosed as statistical information.

(2) Including the one related to Interclima S.A.

(3) The units sold among companies are not included.

RATIOS


	03/31/2007	03/31/2006	03/31/2005	03/31/2004	03/31/2003

Liquidity	1.69	1.71	1.88	1.79	2.02
Solvency	1.04	0.97	1.25	1.22	1.27
Fixed asset-to-equity capital ratio	0.21	0.14	0.22	0.32	0.37

LISTED PRICE (VALUES PER ARS1 NOMINAL VALUE)


Jan 06	Jan 07	Febr 06	Febr 07	Mar 06	Mar 07

40.20	88.50	48.90	98.00	53.00	88.00

PROSPECTS

Our customers production projections are expected to evolve favorably together with the addition of new products, both in the residential and the automotive segments.

Buenos Aires,
May 11, 2007

DR. JOSÉ LUIS CAPUTO

Vice-Chairman acting as Chairman

(*) Information not covered by the auditor’s report, except for 2, 3 and 5.

FINANCIAL STATEMENTS FOR FISCAL YEAR No. 37

FOR THE THREE-MONTH PERIOD BEGINNING JANUARY 1 AND ENDED MARCH 31, 2007,

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR AND

WITH THE SAME PERIOD OF THE PRIOR YEAR

Registered office: Einstein 1111 – Río Grande – Tierra del Fuego.

Main business: Manufacturing air conditioning equipment for vehicles.

Date of registration with the Public Registry of Commerce:

Of the articles of incorporation: June 1, 1971.
Of the first amendment to by-laws: July 1, 1994.
Of the last amendment to by-laws: August 12, 2004.

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

Expiration date of articles of incorporation: May 31, 2070.

Parent company: See 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.


	Argentine pesos

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

CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2007

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

(Figures stated in Argentine pesos - Note 1.2)


	03/31/2007	12/31/2006
ASSETS

CURRENT ASSETS
Cash - Note 2	7,841,021	19,019,000
Trade receivables - Note 2	83,745,813	134,965,182
Tax credits - Note 2	2,581,678	2,468,448
Other receivables - Note 2	724,719	733,456
Inventories - Note 2	106,607,839	95,283,236
Total current assets	201,501,070	252,469,322

NONCURRENT ASSETS
Tax credits - Note 2	8,768,111	7,049,188
Other receivables - Note 2	677,228	677,228
Property & equipment - Note 1.6.a	35,347,241	35,527,012
Investments - Note 2	8,570,043	8,612,700
Intangible assets - Note 1.6.b	6,528	34,621
Subtotal noncurrent assets	53,369,151	51,900,749
Goodwill	521,137	521,137
Total noncurrent assets	53,890,288	52,421,886
Total assets	255,391,358	304,891,208


LIABILITIES

CURRENT LIABILITIES
Trade payables - Note 2	86,762,803	138,988,759
Salaries, payroll taxes and taxes payable - Note 2	9,548,871	10,413,234
Customer advances - Note 2	1,914,109	1,900,930
Loans - Note 2	16,512,275	22,265,485
Other liabilities - Note 2	4,316,613	3,456,416
Total current liabilities	119,054,671	177,024,824

NONCURRENT LIABILITIES
Loans - Note 2	4,945,266	4,825,493
Taxes payable - Note 2	270,463	405,695
Other liabilities - Note 2	636,645	208,415
Total noncurrent liabilities	5,852,374	5,439,603
Total liabilities	124,907,045	182,464,427

MINORITY INTEREST IN SUBSIDIARIES	11,720	12,152
SHAREHOLDERS’ EQUITY	130,472,593	122,414,629
Total liabilities, minority interest and shareholders´equity	255,391,358	304,891,208

Notes 1 through 4, and exhibit H to the consolidated financial statements and notes 1 through 13, and exhibit C to the stand-alone financial statements of MIRGOR S.A.C.I.F.I.A. are an integral part of these consolidated financial statements and should be read together with these statement.

CONSOLIDATED STATEMENT OF INCOME

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2007,

PRESENTED COMPARATIVELY WITH THE SAME PERIOD OF THE PRIOR FISCAL YEAR

(Figures stated in Argentine pesos - Note 1.2)


	03/31/2007	03/31/2006

Net sales (including VAT benefits amounting to 18,143,056 and 12,165,232, respectively)	114,955,606	79,119,408
Cost of goods sold	(97,126,729)	(65,986,493)
Gross income	17,828,877	13,132,915

Administrative expenses - Exhibit H	(5,786,167)	(4,057,601)
Selling expenses - Exhibit H	(3,338,066)	(3,827,416)
Financial income (expense) and holding gains (losses) from assets:
Interest	504,930	346,610
Foreign exchange difference	(1,640)	98,555
Inventories holding gains	1,316,129	914,235
Allowance for impairment in value of tax credits	-	841,010
Allowance for obsolescence and impairment in value of inventories	(213,799)	(61,736)
Financial income (expense) and holding gains (losses) from liabilities:
Interest	(1,310,699)	(937,723)
Foreign exchange difference	(714,413)	(213,766)
Other income, net	251,997	14,068
Income before income tax	8,537,149	6,249,151
Income tax	(479,617)	(109,295)
Income after income tax	8,057,532	6,139,856
Minority interest in subsidiaries	432	(373)
Net income for the period	8,057,964	6,139,483

CONSOLIDATED STATEMENT OF CASH FLOWS (1)

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2007,

PRESENTED COMPARATIVELY WITH THE SAME PERIOD OF THE PRIOR FISCAL YEAR

(Figures stated in Argentine pesos - Note 1.2)


	03/31/2007	03/31/2006

CHANGES IN CASH

Cash at beginning of year	19,019,000	19,024,378
Cash at end of period	7,841,021	12,906,861
(Decrease) in cash, net	(11,177,979)	(6,117,517)

CAUSES OF CHANGES IN CASH OPERATING ACTIVITIES:

Net income for the period	8,057,964	6,139,483
Interest and foreign exchange difference accrued	642,843	325,755
Income tax	479,617	109,295
Adjustments to arrive at net cash flows (used in) operating activities:
P&E depreciation and intangible assets amortization	845,621	706,168
Depreciation of investments	42,657	-
Gain from the sale of P&E	-	(29,424)
Minority interest	(432)	373
Increase in the allowance for obsolescence and impairment in value of inventories	213,799	61,736
(Decrease) in the allowance for impairment in value of tax credits	-	(841,010)
Changes in operating assets and liabilities:
Decrease in trade receivables	51,219,369	27,109,680
(Increase) in inventories	(11,538,402)	(24,693,810)
Decrease in other receivables	8,737	-
(Decrease) in trade payables	(52,225,956)	(8,529,148)
(Decrease) increase in salaries, payroll taxes and taxes payable (net of tax credits)	(3,481,365)	1,436,250
Increase (decrease) in customer advances	13,179	(8,695,358)
Increase (decrease) in other liabilities	1,288,427	(319,192)
Interest paid	(468,760)	(257,547)
NET CASH FLOWS (USED IN) OPERATING ACTIVITIES	(4,902,702)	(7,476,749)

INVESTING ACTIVITIES:
P&E additions	(637,757)	(1,042,192)
P&E sales	-	29,424
NET CASH FLOWS (USED IN) INVESTING ACTIVITIES	(637,757)	(1,012,768)

FINANCING ACTIVITIES:
Loan repayment	(14,637,520)	(3,628,000)
Inflows from loans	9,000,000	6,000,000
NET CASH FLOWS (USED IN) PROVIDED BY
FINANCING ACTIVITIES	(5,637,520)	2,372,000
(DECREASE) IN CASH, NET	(11,177,979)	(6,117,517)

(1) Cash comprises cash on hand and cash in banks.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2007,

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

AND THE SAME PERIOD OF THE PRIOR FISCAL YEAR

(Figures stated in Argentine pesos - Nota 1.2)

SIGNIFICANT ACCOUNTING POLICIES
Accounting standards applied to financial statements preparation and presentation:

As established by CNV (Argentine Securities Commission) Resolution No. 368, the consolidated financial statements are required to be presented preceding the issuer’s stand-alone financial statements. This regulation only implies a change in the place of consolidated information, and it does not modify the fact that individual financial statements constitute the main information and consolidated financial statements are supplementary, as set forth by Argentine Business Associations Law and current professional accounting standards. Therefore, the correct interpretation of these consolidated financial statements requires that they be read together with the individual financial statements.

1. Restatement into constant pesos

Professional accounting standards establish that the financial statements should be stated in constant pesos. In a monetary stability context, the nominal currency is used as constant currency, but, in an inflationary or deflationary context, the financial statements should be stated in pesos reflecting the purchasing power as of their closing date by recognizing the changes in the Domestic Wholesale Price Index (WPI) published by the INDEC (Argentine Institute of Statistics and Censuses), in accordance with the restatement method set by FACPCE (Argentine Federation of Professional Councils in Economic Sciences) Technical Resolution No. 6.

The Company’s financial statements recognize the changes in the purchasing power of the peso through February 28, 2003, in accordance with Presidential Decree No. 664/2003 and CNV General Resolution No. 441. Under professional accounting standards the restatement method established in Technical Resolution No. 6 should have been discontinued only as from October 1, 2003. The effects of failing to recognize variations in the currency purchasing power until such date were immaterial with respect to the accompanying 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 consolidated statements have been incorporated on a line-by-line basis following the method of FACPCE Technical Resolution No. 21, with the applicable eliminations, and the investments in real property which were valued at their current value as of the acquisition date (Note 11) net of the depreciations for the year in the amount of 42,657.

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 December 31, 2006, and March 31, 2007 and 2006, as appropriate, line by line with those of its subsidiary, Interclima Sociedad Anónima. In addition, for the year ended December 31, 2006, and March 31, 2007, after acquiring CAPDO S.A., the consolidated financial statements as of that date include the consolidation of such company.

The following information reflects the parent-subsidiary relationship:


	Equity interest in
Subsidiary	common and in possible votes as of 03/31/07, 12/31/06 and 03/31/06	Period-end – latest financial statements issued

Interclima Sociedad Anónima	99,9667% - 99,9667% - 99,9667%	03/31/2007
CAPDO Sociedad Anónima	95,00% - 95,00% - -	03/31/2007

In the consolidation, the amounts invested in the subsidiaries and the share in income (loss) and cash flows are replaced by all the subsidiaries’ assets, liabilities, income (loss) and cash flows, separately disclosing the third-party minority interests in subsidiaries. Receivables, payables, and transactions performed among members of the consolidated group were eliminated from the consolidation. Unrealized intercompany profits and losses contained in period-end assets and liabilities have been fully eliminated.

1. Financial statements used in the consolidation

The following financial statements were used to prepare the consolidated financial statements as of December 31, 2006, and March 31, 2007: 1) The financial statements of Interclima Sociedad Anónima as of those dates, on which the auditor’s report was issued on March 9, 2007, and a limited review report on May 11, 2007, and 2006, respectively, including an “except for” qualification related to the income tax payable quantification (such adjustment was considered for the interest valuation and, consequently, in these consolidated financial statements), and with a qualification for uncertainty related to the recoverability of certain tax credits. 2) The financial statements of CAPDO Sociedad Anónima as of December 31, 2006, on which an unqualified auditor’s report was issued on February 26, 2007 and a limited review report on May 10, 2007.

1. Changes in P&E and intangible assets


	03/31/2007	12/31/2006
1. P&E:

Balance at beginning	35,527,012	17,908,861
Additions	637,757	20,911,952
Additions for society acquisition	-	108,078
Depreciation	(817,528)	(3,401,879)
Balance at period-end	35,347,241	35,527,012


	03/31/2007	12/31/2006
1. Intangible assets:

Balance at beginning	34,621	195,345
Amortization	(28,093)	(160,724)
Balance at period-end	6,528	34,621

1. Comparative financial statements

The amounts as of December 31, 2006, and March 31, 2006, include minor disclosure changes to adjust the presentation thereof to the period ended March 31, 2007.

MAIN ACCOUNT BREAKDOWN


	03/31/2007	12/31/2006
CURRENT ASSETS
Cash
Cash on hand in Argentine pesos	33,745	175,194
Cash on hand in foreign currency	68,082	12,263
Cash in banks in Argentine pesos	5,781,136	16,975,903
Cash in banks in foreign currency	1,958,058	1,855,640
	7,841,021	19,019,000

Trade receivables
Trade receivables	83,980,446	135,208,985
Trade receivables in foreign currency	614,222	605,052
Allowance for doubtful accounts	(848,855)	(848,855)
	83,745,813	134,965,182

Tax credits
VAT credit	292,302	120,370
Withholdings and additional withholdings	2,289,376	1,954,704
Other	-	393,374
	2,581,678	2,468,448

Other receivables
Unaccrued insurance	48,722	193,659
Loans and advances to personnel	159,838	150,063
Other	516,159	389,734
	724,719	733,456


	03/31/2007	12/31/2006

Inventories
Manufactured products	30,303,480	28,235,117
Raw material	73,293,310	55,759,170
Subtotal	103,596,790	83,994,287
Raw material in transit	11,152,260	20,429,903
Prepayments to vendors in Argentine pesos	3,178,813	1,239,334
Prepayments to vendors in foreign currency	1,666,646	2,392,583
Allowance for obsolescence and impairment in value of inventories	(12,986,670)	(12,772,871)
	106,607,839	95,283,236

NONCURRENT ASSETS
Tax credits
VAT credit	4,447,223	4,248,440
Minimum presumed income tax	1,969,852	1,853,274
Income tax withholding	1,354,245	929,750
Turnover tax withholdings and additional withholdings	917,752	-
Rebates receivable in Argentine pesos	1,896,293	1,882,494
Promotional benefits receivable	1,229,537	1,229,537
Other	80,458	32,942
Allowance for impairment in value of tax credits	(3,127,249)	(3,127,249)
	8,768,111	7,049,188

Other receivables
Payables to companies under section 33, Law No. 19,550 (subsidiaries and affiliates) and other related companies - Note 3	677,228	677,228
	677,228	677,228

Investments
Shares in companies under section 33, Law No. 19,550	8,570,043	8,612,700
	8,570,043	8,612,700

CURRENT LIABILITIES
Trade payables
Suppliers	46,785,719	103,353,666
Vendors in foreign currency	39,977,084	35,635,093
	86,762,803	138,988,759

Salaries, payroll taxes and taxes payable
Salaries and payroll taxes	2,190,190	3,190,825
Vacation and annual statutory bonus accrual	1,037,899	829,685
Income tax accrual	152,067	-
Health and safety assessment	571,604	720,794
Turnover tax payable	666,557	756,122
Withholdings and additional withholdings	350,787	462,282
Other taxes payable	4,579,767	4,453,526
	9,548,871	10,413,234


	03/31/2007	12/31/2006

Customer advances
In Argentine pesos	1,914,109	1,900,930
	1,914,109	1,900,930

Loans
Financial loans in Argentine pesos	15,065,728	17,598,806
Financial loans in foreign currency	1,446,547	4,666,679
	16,512,275	22,265,485

Other liabilities
Directors' fees accrual	3,386,281	2,526,281
Royalties payable	867,887	857,640
Other	62,445	72,495
	4,316,613	3,456,416

NONCURRENT LIABILITIES
Loans
Financial loans in foreign currency	4,945,266	4,825,493
	4,945,266	4,825,493

Taxes payable
Turnover tax payable	270,463	405,695
	270,463	405,695

Other liabilities
Deferred income tax liability (1)	636,645	208,415
	636,645	208,415

As of March 31, 2007 and December 31, 2006, respectively, net of 2,574,459 and 2,659,953, respectively, related to the allowance for impairment in value of deferred income tax credit.
INFORMATION ON RELATED PARTIES

Receivables from/payables to related companies as of March 31, 2007 and for the year ended December 31, 2006, are as follows:


	03/31/2007	12/31/2006
Other receivables (Noncurrent)

IL TEVERE S.A. (1)	677,228	677,228
Total	677,228	677,228

- 1. Parent Company.
INFORMATION BY SEGMENT

The Company and its subsidiary Interclima S.A. operate in the automotive and residential air quality and temperature control business segments. The valuation methods applicable to prepare the information by business segment are described in Note 1 to these financial statements.


	Air conditioning
Revenues	Automotive	Residential	Total

Sales (net of imputed interest)	73,738,702	23,073,848	96,812,550
Tax benefit	13,297,548	4,845,508	18,143,056
Total	87,036,250	27,919,356	114,955,606

BALANCE-SHEET INFORMATION

Allocated assets	213,455,859	41,935,499	255,391,358
P&E additions	491,452	146,305	637,757

EXHIBIT H

INFORMATION REQUIRED UNDER SECTION 64 (I) b, LAW No. 19,550

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2007,

PRESENTED COMPARATIVELY WITH THE SAME PERIOD THE PRIOR FISCAL YEAR

(Figures stated in Argentine pesos - Note 1.2)


	03/31/2007				03/31/2006
Accounts	Production costs	Administrative expenses	Selling expenses	Total	Total

Salaries & wages	7,069,684	1,840,192	186,392	9,096,268	5,011,931
Contributions and employee benefits	1,439,262	497,425	56,994	1,993,681	1,756,522
Insurance	410,838	25,009	2,023	437,870	319,166
Training fees and expenses	342,863	661,011	-	1,003,874	714,310
Taxes, rates and assessments	923,629	256,114	776,516	1,956,259	2,492,559
Maintenance	396,804	337,367	-	734,171	231,765
P&E depreciation	543,685	267,099	6,744	817,528	665,987
Intangible assets amortization	3,916	24,177	-	28,093	40,181
Leases and rentals	717,973	-	-	717,973	557,029
Customs clearing and dispatch expenses	1,834,792	-	-	1,834,792	1,561,444
Royalties	-	-	679,678	679,678	500,843
Transportation, shipping and handling	5,969,655	-	1,458,465	7,428,120	7,054,491
Bank expenses	-	1,310,060	-	1,310,060	816,481
Electric Power	126,906	-	-	126,906	87,346
Traveling expenses	-	82,577	-	82,577	77,975
Other	724,338	485,136	171,254	1,380,728	1,161,570
Total as of 03-31-2007	20,504,345	5,786,167	3,338,066	29,628,578
Total as of 03-31-2006	15,164,583	4,057,601	3,827,416		23,049,600

BALANCE SHEET AS OF MARCH 31, 2007

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

(Figures stated in Argentine pesos - Note 1.2)


	03/31/2007	12/31/2006
ASSETS

CURRENT ASSETS

Cash - Note 2	5,683,560	9,009,116
Trade receivables - Note 2	51,522,758	45,721,545
Tax credits - Note 2	813,528	393,374
Other receivables - Note 2	510,679	477,759
Inventories - Note 2	96,388,803	74,440,593
Total current assets	154,919,328	130,042,387

NONCURRENT ASSETS

Long-term investments in companies - Exhibit C	38,030,448	39,476,191
Tax credits - Note 2	2,124,117	1,960,026
Other receivables - Note 2	677,228	8,233,902
P&E	30,602,981	30,837,889
Intangible assets	-	24,177
Subtotal noncurrent assets	71,434,774	80,532,185
Goodwill	495,080	495,080
Total noncurrent assets	71,929,854	81,027,265
Total assets	226,849,182	211,069,652

LIABILITIES

CURRENT LIABILITIES

Trade payables - Note 2	57,467,756	51,525,136
Salaries, payroll taxes and taxes payable - Note 2	4,080,102	4,936,660
Loans - Note 2	16,512,275	22,265,485
Customer advances - Note 2	1,586,540	1,586,540
Other liabilities - Note 2	4,178,637	3,297,639
Total current liabilities	83,825,310	83,611,460

NONCURRENT LIABILITIES

Taxes payable - Note 2	145,380	218,070
Loans - Note 2	4,945,266	4,825,493
Other liabilities - Note 2	7,460,633	-
Total noncurrent liabilities	12,551,279	5,043,563
Total liabilities	96,376,589	88,655,023

SHAREHOLDERS’ EQUITY (As per respective statement)	130,472,593	122,414,629
Total liabilities and Shareholders’ equity	226,849,182	211,069,652

Notes 1 through 13 and exhibit C are an integral part of these financial statements.

STATEMENT OF INCOME FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2007,

PRESENTED COMPARATIVELY WITH THE SAME PERIOD THE PRIOR YEAR

(Figures stated in Argentine pesos - Note 1.2)


	03/31/2007	03/31/2006

Net sales (including VAT benefits amounting to
13,297,548 and 8,867,442, respectively) - Note 4(e)	85,646,213	58,085,503
Cost of goods sold	(70,279,218)	(47,692,996)
Gross Income	15,366,995	10,392,507

Administrative expenses	(4,529,743)	(3,362,009)
Selling expenses	(2,093,521)	(2,593,297)
Income (loss) from long-term investments - Note 1	(1,445,744)	980,258
Financial income and holding gains from assets
Interest	214,740	114,272
Foreign exchange difference	8,561	115,069
Inventories holding gains (losses)	1,259,844	772,310
Allowance for obsolescence and impairment in value of inventories	335,415	142,098
Financial (expense) and holding (losses) from liabilities
Interest	(649,572)	(327,316)
Foreign exchange difference	(659,647)	(428,441)
Other income, net - Note 2	250,636	334,032
Net income for the period	8,057,964	6,139,483

Earnings per share - Note 12
BASIC - ORDINARY	0.4029	0.3070
DILUTED - ORDINARY	0.4029	0.3070

Notes 1 through 13 and exhibit C are an integral part of these financial statements.

STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2007,

PRESENTED COMPARATIVELY WITH THE SAME PERIOD THE PRIOR FISCAL YEAR

(Figures stated in Argentine pesos - Note 1.2)


	03/31/2007
	Owners' contributions
Breakdown	Capital stock	Adjustment to capital stock	Premium on capital stock	Subtotal

Balances at beginning of year	2,000,000	4,155,936	5,243,562	11,399,498

Net income for the period	-	-	-	-
Balances as of March 31, 2007	2,000,000	4,155,936	5,243,562	11,399,498
Balances as of March 31, 2006	2,000,000	4,155,936	5,243,562	11,399,498


	03/31/2007					03/31/2006
	Retained earnings / Accumulated losses
	Appropriated retained earnings
Breakdown	Legal reserve	*Other reserves ()**	Total	Unappropriated retained earnings (accumulated losses)	Total	Total

Balances at beginning of year	2,280,143	73,708	2,353,851	108,661,280	122,414,629	82,412,064

Net income for the year	-	-	-	8,057,964	8,057,964	6,139,483
Balances as of March 31, 2007	2,280,143	73,708	2,353,851	116,719,244	130,472,593
Balances as of March 31, 2006	2,280,143	73,708	2,353,851	74,798,198		88,551,547

(*) See Note 3 (b).

Notes 1 through 13 and exhibit C are an integral part of these financial statements.

STATEMENT OF CASH FLOWS (1)

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2007,

PRESENTED COMPARATIVELY WITH THE SAME PERIOD THE PRIOR FISCAL YEAR

(Figures stated in Argentine pesos - Note 1.2)


	03/31/2007	03/31/2006
CHANGES IN CASH

Cash at beginning of year	9,009,116	17,137,992
Cash at end of period	5,683,560	11,353,190
(Decrease) in cash, net	(3,325,556)	(5,784,802)

CAUSES OF CHANGES IN CASH

OPERATING ACTIVITIES

Net income for the period	8,057,964	6,139,483
Interest and foreign exchange difference accrued	472,843	155,755

Adjustments to arrive at net cash flows provided by (used in) operating activities
P&E depreciation and intangible assets amortization	622,218	572,253
Gain from the sale of P&E	-	(29,424)
(Decrease) in the allowance for obsolescence and impairment in value of inventories	(335,415)	(142,098)
Income (loss) from long-term investments	1,445,744	(980,258)
Changes in operating assets and liabilities
(Increase) in trade receivables	(5,801,213)	(9,227,081)
(Increase) in inventories	(21,612,795)	(22,145,212)
Decrease in other credits	7,523,754	-
Increase in trade payables	5,942,620	15,145,653
(Decrease) increase in salaries, payroll taxes and taxes payable (net of tax credits)	(1,513,493)	486,903
Increase in other liabilities	8,341,631	2,517,151
Interest paid	(468,761)	(257,547)

NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES	2,675,097	(7,764,422)

(1) Cash comprises cash on hand and cash in banks

Notes 1 through 13 and exhibit C are an integral part of these financial statements.

STATEMENT OF CASH FLOWS (1)

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2007,

PRESENTED COMPARATIVELY WITH THE SAME PERIOD OF THE PRIOR FISCAL YEAR

(Figures stated in Argentine pesos - Note 1.2)


	31/03/2007	31/03/2006
INVESTING ACTIVITIES

Net P&E acquisitions	(363,133)	(421,804)
P&E sale	-	29,424
NET CASH FLOWS (USED IN) INVESTING ACTIVITIES	(363,133)	(392,380)

FINANCING ACTIVITIES

Loan repayment	(14,637,520)	(3,628,000)
Inflows from loans	9,000,000	6,000,000

NET CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES	(5,637,520)	2,372,000

(DECREASE) IN CASH, NET	(3,325,556)	(5,784,802)

1. Cash comprises cash on hand and cash in banks

Notes 1 through 13 and exhibit C are an integral part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2007,

PRESENTED COMPARATIVELY WITH THE SAME PERIOD OF THE PRIOR FISCAL YEAR

(Figures stated in Argentine pesos - Note 1.2)

SIGNIFICANT ACCOUNTING POLICIES
Accounting standards applied to financial statements preparation and presentation

The financial statements of the Company have been prepared in accordance with CNV regulations.

Pursuant to the agreement signed in July 2004 between the FACPCE and the CPCECABA (Professional Council in Economic Sciences of the City of Buenos Aires) with the purpose of unifying professional accounting standards, in April 2005, the FACPCE issued Resolution No. 312/05 approving a series of changes to its Technical Resolutions (“TRs”) and Interpretations. Subsequently, in August 2005, the CPCECABA issued Resolution CD No. 93/2005, whereby it approved the FACPCE's TRs (with the amendments dated April 1, 2005), and established that such accounting standards shall become generally effective and mandatory for the full years or interim periods belonging to the fiscal years beginning January 1, 2006, or thereafter, although earlier application is allowed. CPCECABA Resolution CD No. 93/2005 also provided a transition period for certain changes related to the comparison with recoverable values and the disclosure of certain supplementary information regarding income tax booking, which will become mandatory for the fiscal years beginning January 1, 2008, or thereafter.

On December 29, 2005, and January 26, 2006, the CNV (Argentine Securities Commission) issued General Resolutions No. 485 and 487, respectively, which adopted (with certain amendments) and applied, for full fiscal years or interim periods related to the fiscal years beginning as from January 1, 2006, Technical Resolutions Nos. 6, 8, 9, 11, 14, 16, 17, 18, 21 and 22 and Interpretations Nos. 1, 2, 3 and 4 issued by the FACPCE (Argentine Federation of Professional Councils in Economic Sciences) and adopted by the CPCECABA (Professional Council in Economic Sciences of the City of Buenos Aires) through Resolution C.D. No. 93/2005, as mentioned in the previous paragraph. The most significant changes for the Company as a result of CNV General Resolutions Nos. 485 and 487, are as follows:

Comparison with recoverable value, for property & equipment and intangible assets. Such comparison is required to be made in a single step and an impairment in value shall be recorded whenever the expected presented value of the cash flows (and the net realizable value) are lower than the book value. In addition, the comparison is to be made asset by asset or, if there are objective reasons that make this impossible, at the level of each cash-generating unit. If information is presented by business segment, the same grouping method should be used.
It is established that the difference between the P&E book value adjusted for inflation (and other nonmonetary assets) and their tax base is a temporary difference that results in the recognition of a deferred income tax liability. However, it is acceptable to continue to consider it as a permanent difference. In the latter case, the financial statements are required to present certain supplementary information regarding the amount and reversal term of the deferred income tax liability that the issuer chose not to recognize otherwise.
For matters not contemplated in general or specific accounting standards and that cannot be resolved by using the general framework of accounting standards, effective International Financial Reporting Standards and interpretations approved by the International Accounting Standards Board shall be also applied in the year when such supplementary standards are applicable.

As regards the change mentioned in point (b) above, the total taxation effect of the difference resulting from restating into constant pesos the P&E items and intangible assets as of these financial statements’ closing is 333,031. Had such difference been recognized as temporary, the Company’s shareholders’ equity at the beginning of the year would have decreased by 344,729, and the effect on income for the three-month period ended March 31, 2007, would have been a 11,698 decrease in the income tax charge.

Also, had the abovementioned temporary difference been recognized, the impact on the deferred income tax charge for the coming fiscal years would be reduced as follows:


Terms and amounts
Fiscal year		Amount

2007		35,094
2008		27,483
2009		20,671
2010		11,848
2011 and forward		237,935
Total		333,031

Preparing the financial statements in accordance with current professional accounting standards requires Company Management to consider the estimates and assumptions impacting on the assets and liabilities amounts reported, the disclosure of contingent liabilities and assets as of the date of such financial statements, as well as the revenues and expenses for each year.

The final results may differ from such estimates.

1. Restatement into constant pesos

Professional accounting standards establish that the financial statements should be stated in constant pesos. In a monetary stability context, the face and constant value of Argentine pesos is the same, but, in an inflationary or deflationary context, the financial statements should be stated in pesos reflecting the purchasing power as of their closing date by recognizing the changes in the domestic WPI published by the INDEC (Argentine Institute of Statistics and Censuses), in accordance with the restatement method set by FACPCE (Argentine Federation of Professional Council in Economic Sciences) Technical Resolution No. 6.

1. Valuation methods

The main valuation methods used to prepare these financial statements are:

Cash:
- In Argentine pesos: at nominal value.
- In foreign currency: converted at the exchange rate effective as of each period-end or year-end for the settlement of such transactions. Foreign exchange differences were charged to the statement of income for each period or year.
Receivables and payables:
- In Argentine pesos: at the present value of the cash flows they will generate, discounted (only if effects are significant) using imputed, explicit or market rates, as the case may be, effective at the time of each transaction.
- In foreign currency: at the present value of the cash flows they will generate, discounted (only if effects are significant) using imputed, explicit or market rates, as the case may be, effective at the time of each transaction. These amounts were converted into Argentine pesos at the exchange rate effective as of each period-end or year-end for the settlement of the respective types of transactions. Foreign exchange differences were charged to income for each period or year.
- Credit risk: In its usual course of business the Company grants credit to customers, including car manufacturers, that represent about 99% of the Company’s total sales revenues. The Company continuously performs credit assessments of its customers’ financial capacity in order to reduce the potential risk of significant credit losses.
- Labor cost liabilities: labor cost liabilities accrue in the periods in which employees have rendered the service that gave rise to such consideration.
- Financial instruments: The Company has not used derivative financial instruments during the period ended March 31, 2007, or for the fiscal year ended December 31, 2006. Receivables and payables related to usual business and financial transactions are valued as stated in the previous paragraphs and, in the opinion of the Company’s Management, such valuation does not differ from their current value.
Inventories:
- Raw materials (including those in transit) were valued at replacement cost at the end of each period or year, considering the cash prices for the usual purchase volumes. In addition, imported goods are valued at replacement cost at the foreign exchange rate effective at the end of the period or year.
- The products manufactured were valued at cash reproduction cost at the end of each period or year, with the cap of their respective net realization values.
- Prepayments to vendors are stated at nominal value, and those related to amounts in foreign currency were converted at the foreign exchange rate effective at the end of each period or fiscal year.

The value of inventories, as of each period or year-end and after considering the allowance for impairment in value and obsolescence, does not exceed the recoverable value thereof.

Long-term investments in subsidiaries:

Interclima S.A.: at equity value as established by FACPCE Technical Resolution No. 21, which was calculated based on Interclima S.A.’s financial statements as of March 31, 2007, December 31, 2006, and March 31, 2006, which include a limited review report dated May 11, 2007, and 2006, and an auditor’s report dated March 09, 2007, containing except-for qualifications related to discrepancies in the valuation of income tax payables and a qualification for unresolved uncertainties about the recoverability of tax credits.

In addition, upon determining the value by the equity method, an adjustment to the subsidiary’s book value was taken into account to disclose the effects of not booking certain income tax payables (see “Income tax – Situation in Interclima S.A.”)

Income (loss) from the equity interest in the subsidiary is disclosed in the statement of income under "Income (loss) from long-term investments".

Capdo S.A.: at equity value as established by FACPCE Technical Resolution No. 21, which was calculated based on Capdo S.A.’s financial statements as of March 31, 2007 and December 31, 2006, which include an unqualified limited review report dated May 10, 2007 and February 26, 2007.

Income (loss) from the equity interest in the subsidiary is disclosed in the statement of income under "Income (loss) from long-term investments".

P&E:
- P&E has been valued at original cost restated as mentioned in note 1.2), net of accumulated depreciation until the end of each period or year.
- P&E depreciation is calculated by the straight-line method, applying annual rates sufficient to extinguish P&E by the end of their estimated useful lives.
- The valuation of P&E items is checked for impairment in value whenever there is any indication that their book value could exceed their recoverable value. The losses from impairment in value and related recoveries are recognized in the statement of income under “Financial income (expense) and holding gains (losses)”.
- The value of P&E, at cash-generating-unit level, does not exceed the recoverable value thereof.
Intangible assets:
- Intangible assets have been valued at original cost restated as mentioned in Note 1, net of accumulated depreciation until the end of each period or year.
- Amortization is calculated following the straight-line method.
- The valuation of intangible assets is checked to verify whether their value was impaired when there is any indication that their book value could exceed their recoverable value. The losses from impairment in value and related recoveries are recognized in the statement of income under “Financial income (expense) and holding gains (losses)”.
- The book value of intangible assets, considered as a whole, does not exceed the recoverable value thereof.
- The licenses to sell products acquired by the Company have been amortized by the straight-line method over three years counted as from their initial economic use, taking into account their capacity to generate earnings in the future.
Goodwill:

Goodwill resulted from the acquisition of CAPDO S.A. The Company considered that this intangible has an indefinite useful life, since it is not subject to a contractual or legal utilization term, and it is believed that it will generate cash flows in the future within an indefinite term.

Goodwill is reviewed to verify whether it has suffered any impairment in value when there is any indication that its book value could exceed its recoverable value.

Allowances and provisions:
- Allowances:
- For doubtful accounts: set to correct and make adequate the valuation of trade receivables at the estimated recoverable value; it was set on the basis of an individual analysis thereof.
- For obsolescence and impairment in value of inventories: it was booked to adjust the value of certain finished products and other obsolete or slow-moving inventories to their estimated recoverable value.
- For impairment in value of tax credits: it was set to reduce the book value of such credits at the estimated recoverable value thereof; the estimates made by Company Management and the opinion of its legal counsel were considered in the assessment thereof.
- For impairment in value of deferred income tax assets: it was booked to reduce the value of such assets at their estimated recoverable value. For that purpose, the Company’s tax situation and estimates were considered.
Shareholders’ equity accounts:

They were restated as mentioned in note 1.2), except for the “Capital stock” account, which remained at original value. The adjustment deriving from the restatement thereof is disclosed under the “Adjustment to capital stock” account.

Statement-of-income accounts:
- At nominal value, except for the following cases:
- Income (loss) from long-term investments was calculated by the equity method applying the Company’s equity interest percentage to the subsidiaries’ income (loss) for the same period, deducting unrealized intercompany profits and losses. In addition, this account includes the adjustments necessary to make the valuation methods of the subsidiary consistent with those of the Company and the adjustment for not booking an income-tax payable (see “Income tax – Situation in Interclima S.A.”).
- The depreciation of P&E and the amortization of intangible assets were calculated based on the value of the respective assets after being restated as described in note 1.2).
- The cost of goods sold was determined based on the replacement costs for each month. Holding gains (losses) are disclosed in the account “Financial income (expense) and holding gains (losses)”.
- The account “Financial income (expense) and holding gains (losses)” includes: (a) income and financial costs, (b) inventories holding gains (losses), (c) foreign exchange differences and (d) charges and reversals related to doubtful accounts, impairments in value and obsolescence of inventories, impairments in the value of P&E and other assets in general.
- The Company has segregated the imputed financial components accrued during each period or year provided that they were significant.
Income tax and minimum presumed income tax
- Status of Mirgor S.A.C.I.F.I.A.

The Company assesses the income tax charge by the deferred income tax method, which consists in recognizing (as asset or liability) the tax effect of temporary differences between the book and tax valuation of assets and liabilities, and the subsequent charge to income for the periods in which such assets or liabilities are reversed, and considering the possibility of using net operating losses in the future. Temporary differences determine deferred income tax assets or liabilities when their future reversal decreases or increases the taxes assessed, respectively.

Minimum presumed income tax is supplementary to income tax: while the latter is levied on taxable income for the year, minimum presumed income tax is a minimum levy determined by applying the current 1% rate on the potential income of certain assets. Therefore, the Company’s tax obligations shall be the higher of these two taxes. However, should minimum presumed income tax exceed income tax in any given fiscal year, such excess may be computed as payment on account of any excess of income tax over minimum presumed income tax occurring in any of the ten subsequent fiscal years.

The Company carries net operating losses amounting to 5,335,444 (out of which 5,106,878 may be used until December 31, 2007, and the remainder, until December 31, 2009). As of March 31, 2007, there were deferred income tax assets amounting to 2,574,459, covered by an allowance for impairment in value for the full amount, based on current expectations about the possibility of using them against taxable income and the Company’s tax situation as described in note 4.

The changes in deferred income tax credit and the charge to income for the three-month period ended March 31, 2007, and the year ended December 31, 2006, were as follows:


	03/31/2007		12/31/2006
	Deferred tax credit	Income tax - Income / (loss)	Deferred tax credit	Income tax - Income / (loss)

Balance at beginning of year, less provision	-	-	-	-
Consumption of NOLs	(79,682)	(79,682)	(438,579)	(438,579)
(Decrease) in temporary asset differences	(5,812)	(5,812)	(96,062)	(96,062)
Change in the allowance for impairment in value of deferred assets	85,494	85,494	534,641	534,641
Balance as of period-end, less provision	-	-	-	-

The reconciliation between the income tax charge recognized and that resulting from applying to the period book income the 35% rate established by current tax regulations is as follows:


	03/31/2007	03/31/2006

Earnings for the period before income tax	8,057,964	6,139,483
Permanent differences (*)	(7,813,695)	(5,395,823)
Earnings for the period less permanent differences	244,269	743,660
Tax rate	35%	35%
Tax assessed	(85,494)	260,281
Change in the allowance for impairment in value of deferred assets	85,494	(260,281)
Income-tax book charge	-	-

(*) It includes the income exempt under the industrial promotion system effective for the Province of Tierra del Fuego.

The items included in the deferred income tax credits as of March 31, 2007 and December 31, 2006 are shown in detail below:


Temporally differences in assets	03/31/2007	12/31/2006

Nondeductible allowances	510,791	559,127
Diverses	196,262	153,738
NOLs	1,867,406	1,947,088

Deferred tax credit before the allowance	2,574,459	2,659,953
Allowances for impairment in value of deferred tax assets	(2,574,459)	(2,659,953)
Deferred tax credit at period-end net of the allowance	-	-

The minimum presumed income tax amount for the three-month period ended March 31, 2007, exceeded income tax and amounted to 116,578. Such amount was booked under noncurrent tax credits, the amount of which accumulated to date totals 1,969,852. The Company’s Management, based on the Company’s business plan for the future, understands that such amounts will be recoverable.

- - Situation in the subsidiary Interclima S.A.

In view of the economic crisis resulting from abandoning the currency board, the Management of the subsidiary considered that the conditions required to apply the tax-purposes adjustment for inflation were present. Consequently, it prepared and filed the income tax return for the year ended December 31, 2002, based on adjusted amounts, using the coefficients determined according to domestic WPI variations, which led to the assessment of NOLs amounting to about 5,200,000.

Interclima S.A.’s Management, seeking appropriate jurisdictional protection, filed before the courts a request for an injunction because it believed that section 39, Law No. 24,073 dated 1992, which had set the index applicable to the tax adjustment for inflation at one, should be abrogated due to the high inflation that affected tax year 2002 and because it had been introduced to legislation in an economic context differing completely from year 2002.

On July 17, 2003, the judge hearing the case granted the injunction requested by the subsidiary and instructed the Argentine Government to refrain from filing any administrative or judicial proceeding, making any claim, demand or accusation and imposing penalties based on the alleged prohibition to apply the adjustment for inflation.

On October 15, 2004, the trial court judge hearing on the constitutional protection action filed by the subsidiary ruled that the AFIP should accept the legitimacy of the adjustment for inflation provided for in Income Tax Law No. 20,628, Title VI, and resolved to declare the unconstitutionality of section 4, Law No. 25,561, amending sections 7 and 10, Law No. 23,928, and section 5, Presidential Decree 214/02, and section 39, Law No. 24,073, since they disregard sections 14 and 17 of the Argentine Constitution, and it has ordered the AFIP to compute the adjustment for inflation in the fiscal year ended December 31, 2002, and filed on May 8, 2003, which was appealed by Argentine tax authorities. The Court of Appeals dismissed such appeal. As a result, the AFIP filed an extraordinary appeal, which was denied by the Court of Appeals. The Argentine Attorney General held in a recent opinion that the sentence entered by the Court of Appeals of Comodoro Rivadavia which had dismissed the appeal filed with the Supreme Court of Justice by the AFIP, in view of the first and second instance sentence in favor of Interclima.

Considering the denial mentioned in the preceding paragraph, the AFIP filed a remedy of complaint for appeal denied with the Argentine Supreme Court. To date, whether such remedy was sustained or not has not been resolved.

Had the tax adjustment for inflation not been made, Interclima S.A. would have assessed income tax amounting to about 384,342 for 2002 (after computing prior-period NOLs), to 854,892 for the fiscal year ended December 31, 2003, to 1,279,585 for the fiscal year ended December 31, 2004, and 39,793 for fiscal year ended December 31, 2005, plus interest accrued amounting to 1,809,100 calculated through March 31, 2007. The abovementioned amounts total December 4,367,712 as of March 31, 2007.

BREAKDOWN OF MAIN ACCOUNTS


	03/31/2007	12/31/2006
CURRENT ASSETS
Cash
Cash in Argentine pesos	29,625	12,472
Cash on hand in foreign currency	68,082	12,263
In banks in Argentine pesos	3,627,795	7,128,741
In banks in foreign currency	1,958,058	1,855,640
	5,683,560	9,009,116
Trade receivables
Trade receivables in Argentine pesos	51,961,420	46,221,906
Trade receivables in foreign currency	410,193	348,494
Allowance for doubtful accounts	(848,855)	(848,855)
	51,522,758	45,721,545
Tax credits
VAT credit balance	171,932	-
Withholdings and additional withholdings	641,596	393,374
	813,528	393,374
Other receivables
Unaccrued insurance	26,275	104,439
Loans and advances to personnel	159,838	150,063
Other	324,566	223,257
	510,679	477,759
Inventories
Manufactured products	27,528,761	22,467,694
Raw material	64,712,014	45,037,886
Subtotal	92,240,775	67,505,580
Raw material in transit	10,578,196	14,611,092
Prepayments to vendors in Argentine pesos	2,696,595	850,319
Prepayments to vendors in foreign currency	1,343,180	2,278,960
Allowance for obsolescence and impairment in value of inventories	(10,469,943)	(10,805,358)
	96,388,803	74,440,593

NONCURRENT ASSETS
Tax credits
VAT credit balance - Note 4	93,481	93,481
Minimum presumed income tax - Note 4	1,969,852	1,853,274
Promotional benefits receivable - Note 4	1,229,537	1,229,537
Rebates receivable in Argentine pesos - Note 4	1,016,393	1,016,393
Deferred income tax asset	2,574,459	2,659,953
Allowance for impairment in value of deferred income tax asset	(2,574,459)	(2,659,953)
Other	80,436	32,923
Allowance for impairment in value of tax credits	(2,265,582)	(2,265,582)
	2,124,117	1,960,026


	03/31/2007	12/31/2006
Other receivables
Companies under section 33, Law No. 19,550 (subsidiaries and affiliates) and other related companies – Note 7	677,228	8,233,902
	677,228	8,233,902

CURRENT LIABILITIES
Trade payables
Suppliers	18,458,004	16,532,834
Financial payables in foreign currency	39,009,752	34,992,302
	57,467,756	51,525,136
Salaries, payroll taxes and taxes payable
Salaries and payroll taxes	2,022,999	2,808,365
Annual statutory bonus and vacation accrual	733,225	552,266
Health and safety assessment	481,113	604,780
Turnover tax payable	351,178	383,350
Withholdings and additional withholdings	350,787	462,282
Other taxes payable	140,800	125,617
	4,080,102	4,936,660
Loans
Financial loans in Argentine pesos	15,065,728	17,598,806
Financial loans in foreign currency	1,446,547	4,666,679
	16,512,275	22,265,485
Customer advances
In Argentine pesos	1,586,540	1,586,540
	1,586,540	1,586,540
Other liabilities
Royalties payable	807,422	786,424
Directors' fees accrual	3,370,000	2,510,000
Other	1,215	1,215
	4,178,637	3,297,639
NONCURRENT LIABILITIES
Taxes payable
Turnover tax payable	145,380	218,070
	145,380	218,070
Loans
Financial loans in foreign currency	4,945,266	4,825,493
	4,945,266	4,825,493
Other liabilities
Payables to companies under section 33, Law No. 19,550 (subsidiaries and affiliates) and other related companies – Note 7	7,460,633	-
	7,460,633	-


	Income/(Loss)
	03/31/2007	03/31/2006
Other income, net
Leases and rentals	300,000	300,000
Other	(49,364)	34,032
	250,636	334,032

CAPITAL STRUCTURE – SHAREHOLDERS’ EQUITY
Capital stock status

The Company’s capital stock consists of 20,000,000 book-entry shares of common stock, 0.10 face value each and it is fully registered, subscribed issued and paid-in, according to the following breakdown:


Class	Votes	Number

“A”	Entitled to three (3) votes each	5,200,000
“B”	Entitled to three (3) votes each	5,200,000
“C”	Entitled to one (1) vote each	9,600,000
Total		20,000,000

Each Class “A”, Class “B” or Class “C” shares have the same rights to collect dividends.

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; 3,846,962; 4,176,701; and 4,176,701, respectively.

TAX SITUATION OF THE COMPANY: TAX SYSTEM – TAX CREDITS

The Company enjoys the benefits of the Industrial Promotion System provided by Law No. 19,640 as regards the assets and for the activities performed in the Province of Tierra del Fuego. Accordingly, the Company is entitled to certain tax and customs benefits through 2013, including:

Income tax: Presidential Decree No. 1,395/94 established, as from September 1, 1994, that 85% 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%). Subsequently, under Presidential Decree 615/97, the Argentine Government reinstated certain tax benefits granted by Industrial Promotion Law introducing amendments effective August 1, 1997, that provided that the exemption granted to such activities would amount to 100% as established by Law No. 19,640, section 4(a).
Value-added tax: The Company’s sales are subject to VAT at the 21% rate; such tax is collected from customers. 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% of the net sales price to customers so that the tax obligation was reduced to 8% thereof as from April 1995. Presidential Decree No. 615/97 provided that the presumed VAT credit computable as from August 1, 1997, is equivalent to the one resulting from applying 100% on the VAT rate at the bet sale price to customers.
Tax credit certificates: 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 Debt Consolidation Bonds.

DGI (Argentine tax bureau) General Resolution No. 3838/94 regulated the way in which the abovementioned bonds would be obtained; based on that, the Company booked credits in the amount of 1,511,788 (historical value).

On September 17, 1996, the DGI advised the Company of the recognition of a larger amount in favor of the Company (2,194,142) (un-restated historical value) as a result of the application of the adjustment rate for the prior month used by the Company in the original filing. In addition, the Company booked a 148,853 (un-restated historical value) credit related to the reimbursement of VAT to be requested by other procedures.

The Ministry of Economy and Public Services and Works established through Resolution No. 580/96 that the credits against the Federal Government emerging from the suspension of the industrial promotion established in Law No. 23,697 and prior to April 1, 1991, will be settled through the delivery of Debt Consolidation Bonds.

On May 19, 1997, the Company was advised that the DGI provisionally recognized the amount indicated above.

As a result thereof, the Company booked the credit recognized at the listed price effective as of each fiscal period- or year-end which, as of March 31, 2007, and December 31, 2006, amounted to 1,229,537. An accrual has been booked for the full amount thereof.

Customs duties and statistical rate: Not paid by the Company for all the inputs imported and used in its operations in Tierra del Fuego under Law No. 19,640.
Reimbursements in Argentine pesos: Under Law No. 19,640, exports from the continent to Tierra del Fuego enjoy the benefit of these reimbursements.

Owing to the delay in payment by the Federal Government, the Company filed collection requests before Customs Authorities although such requests had unfavorable resolutions at administrative stages, (the proceedings are currently in the Customs Legal and Technical Department awaiting the issuance of the respective formal opinions) the Company’s legal counsel and Management understand that the transactions were carried out within the regulatory framework of Law No. 19,640 and, consequently, it would be entitled to collect the rebates that the regulation then effective barred.

Following with the comments included in the previous points, the benefits related during the three-month period ended March 31, 2007, and 2006, amounted to:


	Periods ended March 31,
	2007	2006

Value-added tax	13,297,548	8,867,442
Custom duties and statistical rate (estimated)	13,423,172	7,476,126

In addition and considering the tax system to which the Company is subject, as indicated above, as of March 31, 2007, the Company carried minimum presumed income tax credits in the amount of 1.9 million, and the Company and its subsidiary (Interclima S.A.) carried VAT credits in the amount of 4.4 million disclosed in noncurrent assets. The recoverability of such credits totaling 6.4 million in the consolidated financial statements and 1.9 million in the stand-alone financial statement depends, among other issues on whether the Companies are able to generate income subject to tax during the coming years. In this respect, the Company’s Management understands that, based on its future business plan, such credits will be recoverable.

MAJOR CUSTOMERS

Sales with major customers as of the three-month periods ended March 31, 2007, and 2006, are:


	03/31/2007	03/31/2006

Volkswagen Argentina S.A.	30%	34%
Peugeot Citröen Argentina S.A.	23%	14%
Renault Argentina S.A.	21%	23%
General Motors Argentina	20%	19%
Mercedes Benz	5%	8%
Others	1%	2%

PARENT COMPANY

Parent company: II Tevere S.A.

Registered office: Paseo Colón 221, Piso 4° - Buenos Aires, Argentina

Main business: holding company.

Voting rights: 76,47%

Shareholding percentage: 52%

INFORMATION ON RELATED PARTIES

For the three-month period ended March 31, 2007, and for the fiscal year ended December 31, 2006, the Company was engaged in transactions with its subsidiary, parent, and other related companies, being the receivable and payable amounts as follows:


	03/31/2007	12/31/2006
Other receivables
IL TEVERE S.A. (2)	677,228	677,228
INTERCLIMA S.A. (1)	-	7,556,674
Total	677,228	8,233,902

Other liabilities (Noncurrent)
INTERCLIMA S.A. (1)	7,460,633	-
Total	7,460,633	-

The transactions carried out with its subsidiary, parent, and other related companies, for the periods ended March 31, 2007 and 2006 are as follows:


	03/31/2007
	Purchase of merchandise	Loans	Other Services

INTERCLIMA S.A. (1)	1,728,234	15,017,307	300,000
IL TEVERE S.A. (2)	-	-	-
	1,728,234	15,017,307	300,000


	03/31/2006
	Purchase of merchandise	Loans	Other Services

INTERCLIMA S.A. (1)	934,738	2,629,152	300,000
IL TEVERE S.A. (2)	-	990	-
	934,738	2,630,142	300,000

- 1. Subsidiary.
- Parent company.
INCOME TAX WITHHOLDING ON CASH DIVIDENDS

When dividends are paid in cash, in excess of taxable income as provided for in Income Tax Law, such excess shall be subject to a 35% withholding, as single and definitive payment. Earnings which are not subject to income tax as a result of the benefits provided by Law No. 19,640 are not subject to equalization tax.

OFFICIALLY STAMPED BOOKS

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


Journal No.	Officially stamped on	Transaction for the period

69	29-Aug-06	04/19/06 to 05/23/06
70	29-Aug-06	05/23/06 to 06/23/06
71	25-Sep-06	06/23/06 to 07/24/06
72	25-Sep-06	07/24/06 to 08/29/06
73	24-Nov-06	08/29/06 to 09/28/06
74	24-Nov-06	09/28/06 to 10/16/06
75	21-Dec-06	10/16/06 to 11/23/06
76	21-Dec-06	11/23/06 to 12/21/06

SUBSEQUENT EVENTS

As of April 30, 2007, the Shareholders' Meeting approved based on the majority of votes the distribution of dividends in cash in the amount of 4,000,000.

SHAREHOLDING ACQUISITION

On December 21, 2006, the Company acquired a 95% equity interest in Capdo S.A., an affiliate of the group to which the parent company belongs, in the amount of 7,792,470, which was fully paid as of December 31, 2006. Such company owns a real property unit in the Province of Buenos Aires, which will allow, among other things, extending and improving the provision of goods produced to one of the car manufacturers with which the Company operates.

EARNINGS PER SHARE

Net income per share (basic and diluted) is calculated by dividing net income for each period allocable to common shares by the weighted average of outstanding common shares during the same periods. No transactions involving shares of common stock or possible shares of common stock have been performed as from the end of the year reported through the issuance of these financial statements.

FOREIGN INVESTOR INFORMATION REGULATIONS

These financial statements have been prepared in accordance with the foreign investors information regulations established by the CNV (Argentine Securities Commission) in Resolution No. 368, as amended, Chapter XXIII, Exhibit III; and based on the above, have been prepared in accordance with professional accounting standards effective in Argentina. The effects of differences between professional accounting standards effective in Argentina and those effective in other countries where these financial statements may be used have not been quantified.

EXHIBIT “C”

SHARES, DEBENTURES, OTHER SECURITIES ISSUED IN SERIES,

AND INTEREST IN ANOTHER COMPANY

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2007,

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

(Figures stated in Argentine pesos - Note 1.2)


	2007
Securities name and characteristics	Face value	Amounts	Cost value	Value obtained by the equity method	Book value

Noncurrent investments: Companies under section 33, Law No. 19,550 - Subsidiaries and affiliates

INTERCLIMA S.A.	1	11,996	8,815,917	30,644,700	30,644,700

CAPDO S.A.	1	6,650,000	7,792,470	7,385,748	7,385,748
Total noncurrent investments					38,030,448


	2007						2006
	Information on the issuer
		Last financial statements issued
Securities name and characteristics	Main business activity	Date	Capital	Income (loss) for the year	Shareholders' equity	Equity interest %	Book value

Noncurrent investments: Companies under section 33, Law No. 19,550 - Subsidiaries and affiliates

INTERCLIMA S.A.	Manufacturing of autoparts and exchangers for air conditioning and heating systems	03/31/07	12,000	(1,297,473)	35,195,874	99.97%	32,178,801

CAPDO S.A.	Real estate broker	03/31/07	7,000,000	93,009	6,482,945	95.00%	7,297,390
Total noncurrent investments							39,476,191

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