SECURITIES AND EXCHANGE COMMISSION
(Exact name of registrant as specified in its charter)
(Translation of Registrant's name into English)
Santiago, Chile
Form 20-F or Form 40-F.Form 20-F ___X___ Form 40-F _______
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____
Indicate by check mark whether the registrant by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under Securities Exchange Act of 1934.
CONSOLIDATED BALANCE SHEETS
At december 31, 2005 y 2004 | ||||
ASSETS | 2005 | 2004 | ||
ThUS$ | ThUS$ | |||
TOTAL CURRENT ASSETS | 527,287 | 472,228 | ||
Cash & banks | 11,987 | 13,126 | ||
Time deposits | 82,906 | 44,139 | ||
Marketable securities (net) (note 4) | 2,424 | 1,265 | ||
Trade accounts receivable (net)(note 5) | 100,072 | 109,453 | ||
Notes receivable (net) (note 5) | 13,165 | 8,771 | ||
Sundry debtors (net) (note 5) | 20,371 | 26,288 | ||
Notes & accounts receivable from related companies (note 6) | 5,296 | 9,290 | ||
Inventories (net) (note 7) | 222,465 | 196,445 | ||
Recoverable taxes (note 8) | 53,222 | 49,729 | ||
Prepaid expenses | 10,341 | 10,475 | ||
Deferred taxes (note 8) | 2,138 | 2,673 | ||
Other current assets (note 9) | 2,900 | 574 | ||
PROPERTY, PLANT AND EQUIPMENT (note 10) | 1,455,997 | 1,410,209 | ||
Land | 132,130 | 126,217 | ||
Buildings & infrastructure | 224,661 | 220,158 | ||
Machinery & equipment | 824,958 | 809,598 | ||
Other fixed assets | 641,686 | 579,028 | ||
Technical reappraisal of property, plant and equipment | 7,390 | 7,390 | ||
Less: Accumulated depreciation | -374,828 | -332,182 | ||
TOTAL OTHER ASSETS | -17,363 | 2,578 | ||
Investments in unconsolidated affiliates (note 11) | 4,060 | 3,340 | ||
Investments in foreign subsidiaries | 207 | 176 | ||
Goodwill (net) (note 12) | 1,249 | 2,040 | ||
Negative goodwill (net) (note 12) | -53,460 | -44,959 | ||
Long-term receivables (note 5) | 4,901 | 5,779 | ||
Notes and accounts receivable from related companies – long term (note 6) | 0 | 597 | ||
Intangible assets | 122 | 122 | ||
Amortization (less) | -22 | -18 | ||
Others (note 13) | 25,580 | 35,501 | ||
TOTAL ASSETS | 1,965,921 | 1,885,015 | ||
76 |ANNUAL REPORT 2005 MASISA
At december 31, 2005 y 2004 | ||||
LIABILITIES AND SHAREHOLDERS EQUITY | 2005 | 2004 | ||
ThUS$ | ThUS$ | |||
TOTAL CURRENT LIABILITIES | 475,767 | 233,104 | ||
Short- term bank borrowings (note14) | 115,121 | 48,791 | ||
Current portion of long term bank borrowings (note14) | 76,032 | 62,697 | ||
Current portion of bonds and promissory notes (note 16) | 185,286 | 25,034 | ||
Current portion of other long-term borrowings | 1 | 111 | ||
Dividends payable | 323 | 242 | ||
Accounts payable | 52,441 | 55,120 | ||
Notes payable | 881 | 557 | ||
Sundry creditors | 1,406 | 2,640 | ||
Notes & accounts payable to related companies (note 6) | 3,450 | 5,830 | ||
Provisions (note17) | 21,574 | 17,910 | ||
Withholdings | 11,324 | 6,509 | ||
Income tax (note 8) | 7,455 | 5,108 | ||
Unearned income | 231 | 2,547 | ||
Other current liabilities | 242 | 8 | ||
TOTAL LONG-TERM LIABILITIES | 333,806 | 533,941 | ||
Long-term bank obligations (note 15) | 135,524 | 190,185 | ||
Bonds and promissory notes (note 16) | 137,961 | 294,685 | ||
Long- term Sundry creditors | 244 | 357 | ||
Long- term Provisions (note 17) | 1,418 | 631 | ||
Deferred taxes (note 8) | 38,694 | 31,152 | ||
Other long-term liabilities (note 19) | 19,965 | 16,931 | ||
MINORITY INTEREST (note 20) | 60,116 | 339,831 | ||
TOTAL SHAREHOLDERS EQUITY | 1,096,232 | 778,139 | ||
Paid in capital (note 21) | 769,834 | 583,739 | ||
Other reserves (note 21) | 188,477 | 122,643 | ||
Retained earnings (sum 5.24.51.00 to 5.24.56.00) | 137,921 | 71,757 | ||
Reserve future dividends (note 21) | 51,424 | 0 | ||
Accumulated gains (note 21) | 60,128 | 14,979 | ||
Net income (loss) for the year (note 21) | 26,369 | 56,778 | ||
TOTAL LIABILITIES & SHAREHOLDERS EQUITY | 1,965,921 | 1,885,015 | ||
ANNUAL REPORT 2005 MASISA|77
CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31, | ||||
2005 | 2004 | |||
ThUS$ | ThUS$ | |||
OPERATING RESULTS | 81,898 | 95,117 | ||
GROSS MARGIN | 194,492 | 189,222 | ||
Net Sales | 743,993 | 651,000 | ||
Cost of sales (less) | -549,501 | -461,778 | ||
Administrative & selling expenses (less) | -112,594 | -94,105 | ||
NON-OPERATING RESULT | -50,986 | -14,535 | ||
Financial income | 3,939 | 1,920 | ||
Share on income (loss) form unconsolidated affiliates | 720 | 1,333 | ||
Other non-operating income (note 22) | 2,799 | 46,265 | ||
Amortization goodwill (less) (note 12) | -791 | -792 | ||
Financial expenses (less) | -38,756 | -39,294 | ||
Other non-operating expenses (less) (note 22) | -8,489 | -20,780 | ||
Foreign exchange (losses) gains (note 23) | -10,408 | -3,187 | ||
INCOME BEFORE INCOME TAX & EXTRAORDINARY ITEMS | 30,912 | 80,582 | ||
INCOME TAX (note 8) | -13,621 | -11,728 | ||
INCOME (LOSS) BEFORE MINORITY INTEREST AND INCOME TAX (EXPENSE) BENEFIT | 17,291 | 68,854 | ||
MINORITY INTEREST (note 20) | 5,690 | -15,401 | ||
NET INCOME | 22,981 | 53,453 | ||
Amortization of negative goodwill (note 12) | 3,388 | 3,325 | ||
NET INCOME FOR THE YEAR | 26,369 | 56,778 | ||
78 |ANNUAL REPORT 2005 MASISA
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, | ||||
2005 | 2004 | |||
ThUS$ | ThUS$ | |||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 103,762 | 49,824 | ||
Collection of trade receivable | 879,940 | 733,997 | ||
Financial revenues received | 2,592 | 2,196 | ||
Other income received (note 25) | 31,001 | 20,939 | ||
Payments to suppliers and employees (less) | -748,178 | -650,495 | ||
Interest paid (less) | -27,764 | -31,525 | ||
Income taxes paid (less) | -11,550 | -6,897 | ||
Other expenses paid (less) | -4,305 | -3,133 | ||
VAT and other taxes paid (less) | -17,974 | -15,258 | ||
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | 36,610 | -86,176 | ||
Proceeds form sale of common shares | 75,383 | 0 | ||
Borrowings from banks and other | 125,121 | 138,894 | ||
Other loans received from related companies | 1,396 | 0 | ||
Other sources of financing | 0 | 2 | ||
Dividend payments (less) | -52,111 | -1,809 | ||
Loan repayments (less) | -82,901 | -211,874 | ||
Payments of bonds (less) | -26,594 | -9,000 | ||
Payment of loans from related companies (less) | -71 | -2,262 | ||
Payment of share issue and placement costs (less) | -3,613 | 0 | ||
Other financing activities (less) | 0 | -127 | ||
NET CASH FROM OPERATING, FINANCING AND INVESTMENT ACTIVITIES | -101,044 | 60,296 | ||
Proceeds from sales of property, plant and equipment | 2,193 | 77,707 | ||
Other investment income | 0 | 28,736 | ||
Acquisition of fixed assets (less) | -67,289 | -42,362 | ||
Payment of capitalized interest (less) | -5,877 | -3,703 | ||
Permanent investments (less) | -29,890 | 0 | ||
Other loans to related companies (less) | 0 | -82 | ||
Other investment disbursements (less) | -181 | 0 | ||
NET TOTAL CASH FROM OPERATING, FINANCING AND INVESTING ACTIVITIES | 39,328 | 23,944 | ||
INFLATION EFFECT ON CASH AND CASH EQUIVALENTS | 0 | -29 | ||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 39,328 | 23,915 | ||
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEARS (note 25) | 58,530 | 34,615 | ||
CASH AND CASH EQUIVALENTS AT END OF YEAR | 97,858 | 58,530 | ||
ANNUAL REPORT 2005 MASISA | 79
RECONCILIATION OF NET INCOME TO NET CASH
For the years ended December 31, | ||||
2005 | 2004 | |||
ThUS$ | ThUS$ | |||
Net income (loss) | 26,369 | 56,778 | ||
Gains on sales of asset | -60 | -44,300 | ||
Loss on sale of fixed assets | -767 | -44,284 | ||
Gain on sale of investments (less) | 0 | -16 | ||
Loss on the sale of other assets | 707 | 0 | ||
Charges (Credits) to income not representing cash flows | 87,599 | 85,813 | ||
Depreciation for the year | 50,952 | 48,618 | ||
Amortization of intangible assets | 874 | 808 | ||
Write-offs & provisions | 3,085 | 16,398 | ||
Share of income from unconsolidated affiliates | -720 | -1,333 | ||
Amortization of goodwill | 791 | 792 | ||
Amortization of negative goodwill (less) | -3,388 | -3,325 | ||
Foreign exchanges losses (net) | 10,408 | 3,187 | ||
Other credits to income not representing cash flows (less) | -30 | -2,141 | ||
Other charges to income not representing cash flows | 25,627 | 22,809 | ||
Changes in assets affecting cash flows (increase) decrease | -15,139 | -69,890 | ||
Trade accounts receivable | 8,034 | -32,682 | ||
Inventories | -25,363 | -35,053 | ||
Other assets | 2,190 | -2,155 | ||
Changes in liabilities affecting cash flows –increase (decrease) | 10,683 | 6,022 | ||
Accounts payable relating to operating income | 5,572 | -1,349 | ||
Interest payable | -3,160 | 3,309 | ||
Income taxes payable (net) | 5,467 | 1,967 | ||
Other accounts payable related to non-operating result | 332 | -1,048 | ||
Value added and other taxes payable (net) | 2,472 | 3,143 | ||
Profit (Loss) of the minority interest | -5,690 | 15,401 | ||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 103,762 | 49,824 | ||
80 | ANNUAL REPORT 2005 MASISA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: INSCRIPTION IN THE SECURITIES REGISTER
The extraordinary shareholders’ meeting of the former Te-rranova S.A., held on April 13, 2005, agreed and approved the merger by incorporation of the former Masisa S.A., acquiring all its assets and liabilities and succeeding it in all its rights and obligations. All the shareholders and equity of the absorbed company were thus incorporated, and the company then dissolved. The merger took effect for accounting and financial purposes on January 1, 2005, for which the unconsolidated financial statements at Decem-ber 31, 2004 have been used.
The Company booked the acquisition of the former Masisa S.A. in accordance with regulations contained in Bulletin 72 of the Chilean Institute of Accountants, using the unification of interest method.
It was also agreed to replace the Company’s name “Terra-nova S.A.” by that of “Masisa S.A.”.
Masisa S.A. is an open corporation whose shares are listed on the stock market. It was inscribed in the Securities Register with the number 0825 on March 24, 2004 and is subject to the regulatory authority of the Chilean Superintendency of Securities and Insurance and the United States Securities and Exchange Commission.
The extraordinary shareholders’ meeting held on April 13, 2005 resolved to modify the objects of the former Terra-nova S.A. in order to include the objects of the former Masisa S.A., replacing the third clause of its bylaws with the following:
The objects of the Company are:
a) The forestation or reforestation of own or third-party land preferably suitable for forestry.
b) The management, harvesting or exploitation of native or planted forests.
c) The industrialization and transformation of timber, including the manufacture of wood-particle boards in all the forms and ways that technology permits.
d) The sale in Chile and abroad of all kinds of own or third-party forestry, wood and wood particle products.
e) The purchase, sale, distribution, import and export, for its own or third-party’s account, of all kinds of wood and forestry, and livestock and agricultural, resources and products, and all kinds of machinery, equipment, vehicles, spares, raw materials and inputs for the timber industry and agricultural, forestry and livestock activities.
f) Invest capital in forestry or agricultural businesses and in companies related to these, and to form, constitute, participate, modify and manage companies of any kind that exploit the above activities or businesses.
g) The purchase, sale, investment and carrying out of all kinds of transactions related to shares, commercial paper, securities, currencies or foreign exchange, bonds, debentures, mortgage-funding notes, derivative instruments and any other investment security or instrument in the capital markets.
h) The acquisition, disposal and carrying out of transactions related to real estate or property rights.
i) Provide management services in technical advisories, financial, legal and other matters and coordinate the management of companies in which it is a shareholder or partner.
ANNUAL REPORT 2005 MASISA | 81
NOTE 2: SIGNIFICANT ACCOUNTING PRINCIPLES APPLIED
a) Accounting period
The consolidated financial statements cover the years ended December 31, 2005 and 2004.
b) Preparation
These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Chile and the instructions of the Superintendency of Securities and Insurance. In the event of differences between the two, the instructions of the Superintendency of Securities and Insurance prevail.
c) Presentation
These financial statements are presented in United States dollars. The figures for the previous year are not therefore restated for comparison purposes.
Certain reclassifications have been made in 2004 for a better interpretation of these financial statements.
d) Consolidation
These consolidated financial statements comprise the assets, liabilities, results and cash flows at each year-end of the Parent company and its consolidated subsidiaries. The effects of transactions and unrealized results between the consolidated companies have been eliminated and the participation of the minority investors has been recognized as Minority Interest.
e) Price-Level Restatements
The indirect subsidiaries that maintain their books in pesos have restated their financial statements to reflect the effects of variations in the purchasing power of the local currency during each year. For this, it has applied current principles that state that non-monetary assets and liabilities should be restated against income. The restatement rate used was the Consumer Price Index as published by the National Institute of Statistics, with a one-month time lag, which showed a change of 3.6% in 2005 (2.5% in 2004).
f) Currency translation
The Parent company and its direct subsidiaries are authorized to keep their accounts in United States dollars. The dollar is used as the common unit of account so the balances of assets and liabilities in different currencies have been expressed in US dollars at the exchange rates at the end of each year. Exchange differences are charged/credited to income.
At December 31, 2005 and 2004, the principal exchange rates against the US dollar were:
2005 | 2004 | |||
per US dollar | per US dollar | |||
Chilean peso | 512.5000 | 557.4000 | ||
Brazilian reais | 2.3364 | 2.6540 | ||
Venezuelan bolivars | 2,150.0000 | 1,920.0000 | ||
Argentine peso | 3.0250 | 2.9790 | ||
Colombian peso | 2,284.2200 | 2,389.7500 | ||
Mexican peso | 10.6108 | 11.2180 | ||
Euro | 0.847 | 0.733 | ||
Unidad de Fomento | 0.0285 | 0.0322 | ||
82 | ANNUAL REPORT 2005 MASISA
g) Time deposits and Marketable securities
Time deposits are shown at their investment value plus indexation adjustments and accrued interest to the end of the year. Marketable securities relate to investments in mutual funds units shown at their respective redemption values at the year-end.
h) Inventories
• Products being processed and finished products are shown at their production cost, under the cost-by-absorp-tion method. |
• Forests are shown at the forestry appraisal value of the plantations that are expected to be harvested during the following year. |
• Wood pieces, pulp wood and native wood are shown at average production cost or at cost, as the case may be. |
• Materials, spares, supplies, etc at their average cost acquisition. |
• Imports in transit at cost acquisition. |
The value of the inventories does not exceed their net estimated realization or replacement value, as the case may be.
It is the Company’s policy to make allowances for the obsolescence of materials and spares and for the reduced value of finished products when they show certain aspects like:
• Replacement of old machinery or spares for unused machines. |
• Little alternative use of materials or spares with a low stock turnover. |
• Possible loss of commercial value of finished products due to deterioration in lengthy storage, |
as compared to the standards demanded by the market.
i) Estimate of doubtful accounts
The Company’s policy is to make allowances for all accounts in judicial recovery and specific allowances for accounts outstanding.
j) Fixed Assets
FOREST PLANTATIONS
Forest plantations are valued in accordance with the technical appraisal made by forestry engineers. Any incremental value so determined over the book value, that includes the financing cost during the growth period, has been credited to Forest reserve in Shareholders’ equity. The appraisal values have been determined on the basis of a formation cost value for young plantations and the estimated commercial value of standing timber for adult plantations.
The harvesting age for establishing these criteria depends on the natural growth rates of plantations in each country.
Plantations expected to be harvested during the following year, based on a production plan, are shown in Inventories in Current assets.
Fixed assets, excluding plantations
Fixed assets are shown at their cost of acquisition or construction or at their technical appraisal value, as the case may be, which includes financing costs during the construction period and the principal renovations or improvements. Maintenance and repair costs are charged to income in the year in which they are incurred.
Relatively expensive spares are depreciated over the expected useful lives of the associated principal assets, while those that are consumed periodically are charged to production costs as soon as they are utilized.
Fixed assts that are temporally not in use at the year-end have been shown in other fixed assets.
Unused fixed assets that are disposable have been classified in other assets and are shown at their estimated realization value.
ANNUAL REPORT 2005 MASISA | 83
TECHNICAL APPRAISAL
The technical appraisals were made in the form and periods set out in Circulars 1529, 1571 and 428 of the Superintendency of Securities and Insurance. No other technical appraisals have been booked.
k) Depreciation of fixed assets
Fixed assets, excluding the plantations, are depreciated under the straight-line method over the estimated useful lives of the assets.
l) Leased assets
Assets acquired under financial leases are shown at the present value of the agreement, after discounting the value of the periodic installments and the purchase option at the interest rate implicit or explicit in the respective agreement. The respective obligation is shown in its short and long-term portions, net of non-accrued interest. These assets are not legally owned by the company until it has exercised its respective purchase option and meanwhile the company may not freely dispose of them. They are shown in other fixed assets.
m) Intangible assets
The Company’s intangible assets, mainly water rights, are shown at their cost and are being amortized over a period of 40 years, as established in Technical Bulletin 55 of the Chilean Institute of Accountants.
n) Investments in related companies
Investments in unconsolidated related companies are shown at their proportional equity value, determined on the basis of their respective financial statements at the end of each year.
Foreign investments are adjusted to accounting principles generally accepted in Chile and translated to the company’s functional currency, as required by Technical Bulletin 64 of the Chilean Institute of Accountants.
Investments in indirect Chilean related companies that maintain their accounts in Chilean pesos are controlled in that currency and expressed in US dollars at the end of each year. Valuation differences due to translation to dollars not arising from the business are adjusted through
the equity account Reserve for Translation Difference in Other reserves.
ñ) Goodwill and negative goodwill
This represents the difference between the acquisition cost and proportional equity value of the investment at the time of purchase. These differences are amortized over the term indicated in the Note - Goodwill and negative goodwill.
o) Financial transactions under resale agreements
Purchases of securities under resale agreements are shown at their present value calculated using the discount rate used for determining the price of each instrument at the time of its acquisition, and are shown in Current assets under Other assets.
p) Bonds payable
These relate to the placement of bonds in Chile by the Company and its foreign subsidiary Masisa Overseas Ltd. These are valued at their initial face value plus indexation and interest accrued to the end of the year. The difference between the initial face value and the placement value is shown as a deferred asset which is being amortized on a straight-line basis over the term of the obligation.
q) Income tax and deferred taxes
The Company and its subsidiaries have recognized for income tax in accordance with current tax legislation
The effects of deferred taxes resulting from timing differences between the financial and tax balance sheet are shown taking into account the tax rate current at the estimated time of reversal, as established in Technical Bulletin 60 of the Chilean Institute of Accountants. The effects of deferred taxes at the time of the implementation of that bulletin (January 2000) and not previously recognized, have been deferred and are being amortized against income over the estimated term for the reversal of the item originating the timing difference.
The Forest Reserve is shown net of deferred taxes, in accordance with Technical Bulletin 69 of the Chilean Institute of Accountants.
84 | ANNUAL REPORT 2005 MASISA
r) Severance payments
Provisions are made for the severance payments that the Company has to pay in any event under individual or group work contracts, according to the present value of the benefit using the accrued cost method, with an annual discount rate of 6% and a permanence ratio in line with years of service with the Company.
s) Sales
Sales are recorded at the time of the transfer of the goods or provision of services and relate to sales of products made by the Company and third parties. Sales prices are determined by conditions in the destination markets and are shown net of related taxes, price discounts and other things that directly affect their determination.
t) Derivative contracts
The Company has interest rate and currency swap contracts with financial institutions. These were defined as hedging of forecasted transactions and are shown as established in Technical Bulletin 57 of the Chilean Institute of Accountants.
The fair value of these instruments has been shown in other assets or other liabilities depending on whether they are receivable from or payable to the respective financial institution.
The gains corresponding to outstanding contracts of existing items have been shown in other liabilities and the results realized have been taken to financial expenses or Exchange differences, depending on the nature of the swap hedge.
In those cases where it is confirmed that the hedge taken was ineffective, the contracts have been treated as investment instruments.
u) Computer software
The software currently used by the company was acquired from SAP Chile S.A. and consists of the SAP R/3 system, version 4.6 C, which is being amortized over 4 years.
v) Research and developments costs
Research and development costs are charged to income in the year in which they are incurred. The Company has made no significant disbursements in this respect since its creation.
w) Statement of cash flows
Cash and cash equivalents are considered to be its low-risk, short-term investments made as part of its normal cash management and which can be quickly converted into known amounts of cash, with the intention to make such conversion within 90 days.
Cash flows from operating activities include all such cash flows related to the Company’s business, including interest paid and received, dividends received and in general all those flows that are not otherwise defined as related to investment or financing. The operating concept used in this statement is broader than that used in the Statement of income.
x) Share issue costs
In accordance with the instructions given in Circular 1370 of the Superintendency of Securities and Insurance and its later modification (Circular 1736), share issue and placement costs were shown in an account called “Share issue and placement costs”, deducted from Reserves in Shareholders’ equity.
ANNUAL REPORT 2005 MASISA | 85
Tax No | Company | Percentage Holding | ||||||||
12-31-2005 | 12-31-2004 | |||||||||
Direct | Indirect | Total | Total | |||||||
99537270-3 | INVERSIONES INTERNACIONALES TERRANOVA S.A. | 60.0000 | 0.0000 | 60.0000 | 60.0000 | |||||
92257000-0 | MASISA S.A. (ANTIGUA) | 0.0000 | 0.0000 | 0.0000 | 52.4340 | |||||
81507700-8 | FORESTAL TORNAGALEONES S.A. | 94.9061 | 0.0000 | 94.9061 | 31.6980 | |||||
79959070-0 | MASISA INVERSIONES LIMITADA | 99.9973 | 0.0027 | 100.0000 | 52.4340 | |||||
79616940-0 | MASISA CONCEPCION LIMITADA | 0.0100 | 99.9900 | 100.0000 | 52.4340 | |||||
79554560-3 | INVERSIONES CORONEL LIMITADA | 99.9842 | 0.0158 | 100.0000 | 52.4340 | |||||
77790860-K | MASISA PARTES Y PIEZAS LIMITADA | 99.8000 | 0.2000 | 100.0000 | 52.4340 | |||||
0-E | MASISA OVERSEAS LTD. | 100.0000 | 0.0000 | 100.0000 | 52.4340 | |||||
0-E | MADERAS Y SINTETICOS DEL PERÚ S.A.C. | 99.0114 | 0.8897 | 99.9011 | 52.3820 | |||||
0-E | MASISA USA, INC | 25.1200 | 44.9280 | 70.0480 | 70.0480 | |||||
0-E | MADERAS Y SINTETICOS SERVICIOS S.A. DE C.V. | 1.0000 | 99.0000 | 100.0000 | 52.4340 | |||||
0-E | MASISA ECUADOR S.A. | 0.1000 | 99.9000 | 100.0000 | 52.4340 | |||||
0-E | MASISA DO BRASIL LTDA. | 0.0010 | 99.9990 | 100.0000 | 52.4340 | |||||
0-E | MADERAS Y SINTETICOS MEXICO S.A. DE C.V. | 0.0002 | 99.9998 | 100.0000 | 52.4340 | |||||
0-E | TERRANOVA PANAMA S.A. | 0.0000 | 60.0000 | 60.0000 | 60.0000 | |||||
0-E | TERRANOVA DE VENEZUELA S.A. | 0.0000 | 60.0000 | 60.0000 | 60.0000 | |||||
0-E | COFORVEN S.A. | 0.0000 | 99.9500 | 99.9500 | 99.9500 | |||||
0-E | FORESTAL TERRANOVA MEXICO S.A. DE C.V. | 0.0000 | 59.9940 | 59.9940 | 59.9940 | |||||
0-E | COR.FORESTAL GUAYAMURE C.A. | 0.0000 | 51.0000 | 51.0000 | 51.0000 | |||||
0-E | MASISA MADEIRAS LTDA. | 0.0000 | 59.9940 | 59.9940 | 59.9940 | |||||
0-E | MASISA COLOMBIA S.A. | 0.0000 | 59.9940 | 59.9940 | 59.9940 | |||||
0-E | COR.FORESTAL IMATACA C.A. | 0.0000 | 60.0000 | 60.0000 | 60.0000 | |||||
0-E | ANDINOS C.A. | 0.0000 | 60.0000 | 60.0000 | 60.0000 | |||||
0-E | FORESTAL ARGENTINA S.A. | 0.0000 | 47.5480 | 47.5480 | 15.8810 | |||||
0-E | MASISA ARGENTINA S.A. | 0.0000 | 100.0000 | 100.0000 | 52.4340 | |||||
0-E | FIBRANOVA C.A. | 0.0000 | 60.0000 | 60.0000 | 60.0000 | |||||
0-E | MASNOVA S.A, | 0.0000 | 80.0000 | 80.0000 | 56.2170 |
NOTE 3: ACCOUNTING CHANGES
During the year ended December 31, 2005, no changes have been made in the application of accounting principles, nor any relevant changes made to any accounting estimate or changes relating to the previous year that might signifi-cantly affect an interpretation of these financial statements.
NOTE 4: MARKETABLE SECURITIES
Instruments | Book Value | |||
12-31-2005 | 12-31-2004 | |||
ThUS$ | ThUS$ | |||
Mutual fund units | 2,424 | 1,265 | ||
Total Marketable Securities | 2,424 | 1,265 | ||
NOTE 5: SHORT AND LONG-TERM DEBTORS
The detail of the Company’s Trade accounts receivable, by country, is as follows:
2005 | 2004 | |||
ThUS$ | ThUS$ | |||
Chile | 25,628 | 22,712 | ||
Venezuela | 7,578 | 2,583 | ||
Brasil | 15,924 | 23,218 | ||
Argentina | 4,419 | 11,246 | ||
México | 24,706 | 31,311 | ||
Colombia | 3,441 | 2,530 | ||
United States | 15,601 | 13,360 | ||
Ecuador | 1,698 | 1,630 | ||
Peru | 1,077 | 863 | ||
Total | 100,072 | 109,453 | ||
86 | ANNUAL REPORT 2005 MASISA
SHORT AND LONG TERM DEBTORS (ThUS$) | ||||||||||||||||||
ACCOUNT | CURRENT | Long Term | ||||||||||||||||
Up to 90 days | 90 days to 1 year | Sub total | Total Current (net) | |||||||||||||||
12-31-2005 | 12-31-2004 | 12-31-2005 | 12-31-2004 | 12-31-2005 | 12-31-2005 | 12-31-2004 | 12-31-2005 | 12-31-2004 | ||||||||||
Trade accounts receivable | 92,231 | 95,411 | 12,136 | 14,042 | 104,367 | 100,072 | 109,453 | 1,101 | 656 | |||||||||
Est.doubtful accounts | 4,295 | |||||||||||||||||
Notes receivabler | 11,717 | 7,304 | 2,440 | 1,467 | 14,157 | 13,165 | 8,771 | 0 | 1,381 | |||||||||
Est.doubtful accounts | 992 | |||||||||||||||||
Sundry debtors | 14,328 | 18,357 | 6,349 | 7,931 | 20,677 | 20,371 | 26,288 | 3,800 | 3,742 | |||||||||
Est.doubtful accounts | 306 | |||||||||||||||||
Total long-term debtors | 4,901 | 5,779 | ||||||||||||||||
NOTE 6: BALANCES AND TRANSACTIONS WITH RELATED ENTITIES
Accounts receivable from unconsolidated related companies relate principally to financing granted to subsidiaries for their business activities. These are denominated in US dollars and in some cases accrue interest at LIBOR for 180 days plus a market spread for similar transactions.
Payment terms are conditioned to the cash generation of each company.
Accounts receivable and payable of a business nature are subject to usual market conditions and terms.
NOTES AND ACCOUNTS RECEIVABLE (ThUS$) | ||||||||||
Tax No. | Company | Short | Term | Long | Term | |||||
12-31-2005 | 12-31-2004 | 12-31-2005 | 12-31-2004 | |||||||
96626060-2 | FORESTAL RIO CALLE CALLE S.A. | 0 | 3 | 0 | 597 | |||||
0-E | OXINOVA C.A | 4,862 | 8,564 | 0 | 0 | |||||
0-E | PLYCEM CONSTRUSISTEMAS COSTA RICA S.A. | 140 | 373 | 0 | 0 | |||||
0-E | PLYCEM CONSTRUSISTEMAS HONDURAS | 112 | 51 | 0 | 0 | |||||
0-E | PLYCEM CONSTRUSISTEMAS EL SALVADOR | 55 | 49 | 0 | 0 | |||||
0-E | PLYCEM CONSTRUSISTEMAS GUATEMALA S.A. | 117 | 160 | 0 | 0 | |||||
0-E | PLYCEM CONSTRUSISTEMAS NICARAGUA | 10 | 90 | 0 | 0 | |||||
TOTAL | 5,296 | 9,290 | 0 | 597 | ||||||
NOTES AND ACCOUNTS PAYABLE (ThUS$) | ||||||||||
Tax No. | Company | Short | Term | Long | Term | |||||
12-31-2005 | 31-12-2004 | 12-31-2005 | 12-31-2004 | |||||||
0-E | OXINOVA C.A | 3,033 | 5,830 | 0 | 0 | |||||
0-E | TEK BOARD OVERSEAS INC. AMANCO | 417 | 0 | 0 | 0 | |||||
TOTAL | 3,450 | 5,830 | 0 | 0 | ||||||
ANNUAL REPORT 2005 MASISA | 87
TRANSACTIONS (ThUS$) | ||||||||||||||
Company | Tax No. | Relationship | Transaction | 12-31-2005 | 12-31-2004 | |||||||||
Amount | Effect on | Amount | Effect on | |||||||||||
results | results | |||||||||||||
(charge)/ | (charge)/ | |||||||||||||
credit) | credit) | |||||||||||||
FORESTAL RIO CALLE CALLE S.A | 96626060-2 | ASSOCIATE | ASSOCIATE | 0 | 0 | 34 | 34 | |||||||
OXINOVA C.A | 0-E | ASSOCIATE | ASSOCIATE | 82 | 82 | 72 | 72 | |||||||
OXINOVA C.A | 0-E | ASSOCIATE | ASSOCIATE | 18,230 | -18,230 | 17,655 | -17,655 | |||||||
OXINOVA C.A | 0-E | ASSOCIATE | ASSOCIATE | 0 | 0 | 1 | 1 | |||||||
OXINOVA C.A | 0-E | ASSOCIATE | ASSOCIATE | 0 | 0 | 20 | 20 | |||||||
OXINOVA C.A | 0-E | ASSOCIATE | ASSOCIATE | 14 | 14 | 12 | 12 | |||||||
PLYCEM CONSTRUSISTEMAS GUATEMALA S.A. | 0-E | COMMON PARENT | COMMON PARENT | 278 | 106 | 268 | 88 | |||||||
PLYCEM CONSTRUSISTEMAS COSTA RICA S.A. | 0-E | COMMON PARENT | COMMON PARENT | 798 | 279 | 721 | 238 | |||||||
PLYCEM CONSTRUSISTEMAS HONDURAS S.A. | 0-E | COMMON PARENT | COMMON PARENT | 0 | 0 | 58 | 19 | |||||||
PLYCEM CONSTRUSISTEMAS NICARAGUA S.A. | 0-E | COMMON PARENT | COMMON PARENT | 82 | 29 | 163 | 54 | |||||||
PLYCEM CONSTRUSISTEMAS EL SALVADOR S.A. | 0-E | COMMON PARENT | COMMON PARENT | 95 | 35 | 317 | 105 | |||||||
NOTE 7: INVENTORIES
Inventories at December 31, 2005 and 2004 comprise:
2005 | 2004 | |||
ThUS$ | ThUS$ | |||
Standing timber | 30,857 | 33,821 | ||
Finished products & in process | 114,658 | 105,292 | ||
Products for resale | 26,870 | 17,345 | ||
Raw materials, materials & spares | 50,080 | 39,987 | ||
TOTAL | 222,465 | 196,445 | ||
At December 31, inventories are shown net of allowances for obsolescence of ThUS$2,489 (ThUS$4,061 in 2004) and allowances for the reduced value of inventories of ThUS$2,887 (ThUS$1,437 in 2004).
NOTE 8: DEFERRED TAXES AND INCOME TAXES
a) Income tax
At December 31, 2005 the Parent company made no provision for income tax as it has total accumulated tax losses of ThUS$ 292,235 (ThUS$ 293,204 at December 31, 2004).
Provisions for income tax made by the subsidiaries during 2005 are as follows, detailed by country:
Country | ThUS$ | |
Argentina | 3,493 | |
Mexico | 1,333 | |
Chile | 1,285 | |
Colombia | 894 | |
Ecuador | 124 | |
Peru | 178 | |
Venezuela | 148 | |
Total | 7,455 | |
88 | ANNUAL REPORT 2005 MASISA
b) Deferred taxes
As required by Technical Bulletins 60, 68, 69 and 71 of the Chilean Institute of Accountants and Circular 1,466 of the Superintendency of Securities and Insurance, the Company showed deferred taxes arising from timing differences, tax losses and other events that create differences between the accounting and tax treatment of assets and liabilities, shown in the following table.
The table also shows the charges or credits to income for each year for deferred taxes and income tax.
As a result of the merger in 2003 and as the companies absorbed (Andinos S.A., Sociedad Forestal Millalemu S.A. and Forestal Terranova S.A.) recorded un-distributed taxed earnings in previous years, a right arose to recover proportionately the tax paid on those earnings, which are absorbed by the Company’s current accumulated tax losses.
Based on the above, the amount shown for this concept at December 31, 2005 is ThUS$ 15,158 (ThUS$ 11,681 in 2004) and is shown in Recoverable taxes.
Recoverable taxes | 2005 | 2004 | ||
ThUS$ | ThUS$ | |||
Monthly tax prepayments | 4,944 | 5,554 | ||
Provisional payment of absorbed | 15,158 | 11,681 | ||
earnings | ||||
VAT fiscal credit | 24,679 | 24,916 | ||
Donations | 54 | 48 | ||
Training expenses | 372 | 216 | ||
Other credits | 8,015 | 7,314 | ||
Total | 53,222 | 49,729 | ||
DEFERRED TAXES | ||||||||||||||||
Item | 12-31-2005 | 12-31-2004 | ||||||||||||||
Deferred Tax Assets | Deferred Tax Liabilities | Deferred Tax Assets | Deferred Tax Liabilities | |||||||||||||
Short Term | Long Term | Short Term | Long Term | Short Term | Long Term | Short Term | Long Term | |||||||||
Timing Differences | ||||||||||||||||
Allowance for doubtful accounts | 1,173 | 0 | 0 | 0 | 723 | 647 | 0 | 0 | ||||||||
Unearned income | 0 | 130 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||
Provision for vacations | 656 | 0 | 0 | 0 | 509 | 0 | 0 | 0 | ||||||||
Leased assets | 0 | 0 | 0 | 0 | 0 | 19 | 0 | 0 | ||||||||
Manufacturing expenses | 0 | 0 | 1,115 | 0 | 0 | 0 | 1,013 | 2,901 | ||||||||
Depreciation fixed assets | 0 | 0 | 0 | 31,769 | 0 | 0 | 0 | 27,975 | ||||||||
Severance payments | 18 | 0 | 0 | 6 | 0 | 0 | 0 | 6 | ||||||||
Other events | 1,231 | 2,444 | 18 | 228 | 1,828 | 1,138 | 63 | 555 | ||||||||
Allowance for obsolescence | 340 | 0 | 0 | 0 | 282 | 99 | 0 | 0 | ||||||||
Prepaid expenses | 0 | 0 | 130 | 283 | 0 | 0 | 149 | 413 | ||||||||
Unrealized income | 0 | 346 | 422 | 0 | 191 | 135 | 0 | 178 | ||||||||
Tax losses | 504 | 107,762 | 0 | 0 | 1,207 | 123,604 | 0 | 0 | ||||||||
Capitalized financing costs | 0 | 0 | 0 | 7,021 | 0 | 0 | 486 | 2,111 | ||||||||
Allowance for board line | 0 | 1.049 | 0 | 0 | 0 | 1,528 | 0 | 0 | ||||||||
Prepaid plantation expenses | 0 | 0 | 64 | 17,730 | 0 | 0 | 394 | 17,883 | ||||||||
Forest reserve | 0 | 0 | 0 | 48,682 | 0 | 0 | 0 | 43,771 | ||||||||
Complementary accounts –net of | 35 | 1,469 | 0 | 28,584 | 29 | 1,456 | 67 | 29,940 | ||||||||
amortization | ||||||||||||||||
Valuation allowance | 0 | 71,821 | 0 | 0 | 0 | 91,013 | 0 | 0 | ||||||||
Total | 3,887 | 38,441 | 1,749 | 77,135 | 4,711 | 34,701 | 2,038 | 65,853 | ||||||||
ANNUAL REPORT 2005 MASISA | 89
INCOME TAXES (ThUS$) | |||||
Item | 12-31-2005 | 12-31-2004 | |||
Current tax charge (provision for tax) | -11,240 | -6,117 | |||
Tax charge adjustment (previous year) | -954 | -987 | |||
Effect on deferred tax assets or liabilities for the year | -4,371 | -1,418 | |||
Tax credit for tax losses | -16,545 | -20,420 | |||
Amortization of deferred tax complementary asset & liability accounts | -1,442 | -3,173 | |||
Deferred tax assets or liabilities arising from valuation allowances | 19,192 | 22,008 | |||
Other charges or credits | 1,739 | -1,621 | |||
Total | -13,621 | -11,728 | |||
NOTE 9: OTHER CURRENT ASSETS
These comprise the following:
2005 | 2004 | ||||
ThUS$ | ThUS$ | ||||
Derivative transactions (*) | 385 | 372 | |||
Resale agreements | 541 | - | |||
Own-issued shares (**) | 1,842 | - | |||
Others | 132 | 202 | |||
Total | 2,900 | 574 | |||
(*) Relate to the compensation of investment derivative contracts. | |||||
(**) Relates to the balance of own-issued shares bought from shareholders who exercised their right to withdraw at the time of the merger between the former Masisa S.A. and the former Terranova S.A. |
90 | ANNUAL REPORT 2005 MASISA
NOTE 10: FIXED ASSETS
The fixed assets are valued as described in Note 2 j) and comprise the following:
2005 | 2004 | |||||||||||
Book Value ThUS$ | Accum. Deprecn. ThUS$ | Net Fixed Assets ThUS$ | Book Value ThUS$ | Accum. Deprecn. ThUS$ | Net Fixed Assets ThUS$ | |||||||
Land | 132,130 | - | 132,130 | 126,217 | - | 126,217 | ||||||
Buildings & infras, | 224,661 | (67,469) | 157,192 | 220,158 | (58,799) | 161,359 | ||||||
Machinery & equipt, | 824,958 | (262,286) | 562,672 | 809,598 | (233,217) | 576,381 | ||||||
Other Fixed Assets | 641,686 | (40,795) | 600,891 | 579,028 | (35,918) | 543,110 | ||||||
Plantations | 564,236 | - | 564,236 | 505,083 | - | 505,083 | ||||||
Furniture & fittings | 20,791 | (18,391) | 2,400 | 21,756 | (17,461) | 4,295 | ||||||
Works in progress | 16,378 | - | 16,378 | 13,852 | - | 13,852 | ||||||
Other fixed assets | 40,281 | (22,404) | 17,877 | 38,337 | (18,457) | 19,880 | ||||||
Incremental value | ||||||||||||
Technical appraisal | 7,390 | (4,278) | 3,112 | 7,390 | (4,248) | 3,142 | ||||||
Land | 2,671 | - | 2,671 | 2,671 | - | 2,671 | ||||||
Buildings & infras, | 4,719 | (4,278) | 441 | 4,719 | (4,248) | 471 | ||||||
Total | 1,830,825 | (374,828) | 1,455,997 | 1,742,391 | (332,182) | 1,410,209 | ||||||
Depreciation for the year: | 2005 | 2004 | ||
ThUS$ | ThUS$ | |||
Effect on income | ||||
Cost of sales | 46,065 | 43,302 | ||
Administration expenses | 3,974 | 4,501 | ||
Non-operating result | 652 | 575 | ||
Capitalized | ||||
Incremental value plantations | 261 | 240 | ||
Total | 50,952 | 48,618 | ||
The Company has made an allowance for adjusting the book value of one of its board lines as its business projections indicate that the line’s future cash flows would not cover the respective depreciation charges. This allowance is shown deducted from the related assets.
Plantations:
The book value includes the forest appraisals made by forestry engineers. This value is distributed among plantations under the heading of Fixed assets and standing timber classified as Inventories.
The Company and its subsidiaries in the forestry business have shown at the end of each year the incremental value of their forests and plantations, which is included in Forest plantations and credited to Forest reserve in Shareholders’ equity. This has been calculated by comparison with the valuation described in Note 2 j).
The increased value of fixed assets due to the real financing costs related to the plantations, as indicated in Note 2, amounted to ThUS$5,182 at December 31, 2005 (ThUS$4,363 in 2004). There was also a capitalization of exchange differences of ThUS$1,275 (ThUS$1,546 in 2004).
ANNUAL REPORT 2005 MASISA | 91
Forestry subsidies:
The forestry subsidies received by Masisa S.A. and subsidiaries are credits to forestry subsidies which is shown deducted from Plantations, and amounts to ThUS$5,686 at December 31, 2005 (ThUS$5,372 in 2004).
Temporarily unused fixed assets:
At December 31, 2005 and 2004, the Company has temporarily unused fixed assets at some of its plants. The Company makes allowances for these assets and their depreciation is shown in Other non-operating expenses.
NOTE 11: INVESTMENTS IN RELATED COMPANIES
In order to calculate the book value of the investments, unrealized income on transactions with associate companies has been eliminated.
The Company included in its investments during 2003, liabilities in Unidades de Fomento amounting to U.F. 1,108,969, in accordance with Technical Bulletin 64 of the Chilean Institute of Accountants, which generated an accumulated translation adjustment at December 31, 2005 of ThUS$12,553(ThUS$8,112 in 2004).
Closure of companies:
The subsidiaries Terranova C&R S.A. and Forestal Terrano-va Guatemala S.A., in Costa Rica and Guatemala respectively, were closed during 2004.
Sale of investments
- - On June 10, 2005, the subsidiary Masisa Inversiones Ltd. sold to Puertos del Pacífico S.A. its complete shareholding in Inversiones Industriales S.A. for $10,000.
- - On June 10, 2005, the subsidiary Inversiones Coronel Ltd. sold to Puertos del Pacífico S.A. its complete shareholding in Sociedad Forestal Calle Calle S.A. for US$1.
The valuation of these companies at their proportional equity value had been discontinued as their equities were negative; their results were therefore recognized up to the amount of the investment. The sale value was fully credited to income without producing any significant effect.
DETAIL OF INVESTMENTS (ThUS$) | ||||||||||||||||||||
Tax No. | Company | Country of origin | Invest. control currency | No. of shares | Percentage holding | Company equity | Result for the year | |||||||||||||
31-12-2005 | 31-12-2004 | 31-12-2005 | 31-12-2004 | 31-12-2005 | 31-12-2004 | |||||||||||||||
0-E | OXINOVA S.A. | VENEZUELA | DOLLARS | 1,963,564 | 49.00 | 49.00 | 8,285 | 6,816 | 1,493 | 2,720 | ||||||||||
99511350-3 | INVERSIONES | CHILE | PESOS | 100,000 | 50.00 | 50.00 | 0 | 0 | 0 | 0 | ||||||||||
CALLE CALLE S.A. | ||||||||||||||||||||
0-E | COMERCIALIZADORA | VENEZUELA | DOLLARS | 50 | 0.00 | 50.00 | 0 | -237 | 0 | 0 | ||||||||||
T&T S.A. | ||||||||||||||||||||
99505640-2 | FORESTAL | CHILE | PESOS | 0 | 0.00 | 9.00 | 0 | 0 | 0 | 0 | ||||||||||
CALLE CALLE S.A. | ||||||||||||||||||||
96652640-8 | INVERSIONES | CHILE | PESOS | 0 | 0.00 | 50.00 | 0 | 0 | 0 | 0 | ||||||||||
INDUSTRIALES S.A. | ||||||||||||||||||||
TOTAL | ||||||||||||||||||||
92 | ANNUAL REPORT 2005 MASISA
DETAIL OF INVESTMENTS (ThUS$) continuation | ||||||||||||||||||||||
Fair value of equity | Result for the year at fair | Accrued results | VP / VPP | Result | Book value of the | |||||||||||||||||
value | unrealized | investment | ||||||||||||||||||||
12-31-2005 | 12-31-2004 | 12-31-2005 | 12-31-2004 | 12-31-2005 | 12-31-2004 | 12-31-2005 | 12-31-2004 | 12-31-2005 | 12-31-2004 | 12-31-2005 | 12-31-2004 | |||||||||||
0 | 0 | 0 | 0 | 720 | 1,333 | 4,060 | 3,340 | 0 | 0 | 4,060 | 3,340 | |||||||||||
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||
4,060 | 3,340 | 0 | 0 | 4,060 | 3,340 | |||||||||||||||||
NOTE 12: GOODWILL AND NEGATIVE GOODWILL
Goodwill
The purchase of the subsidiary Masisa Cabrero S.A., ex-Fi-branova S.A., by the former Masisa S.A. generated goodwill which it is intended to amortize over a period of 20 years, taking into account the expected return of that subsidiary.
Negative goodwill
The purchase of 43.16% of the former Masisa S.A. by Forestal Terranova S.A. (company merged with the former Te-rranova S.A.) in July 2002 and of 0.544% in June 2003, generated a negative goodwill for the Company which it is intended to amortize over 15 years, taking into account that the assets of that company are mainly industrial and have an average useful life similar to that period.
The purchase by Forestal Terranova S.A. (company merged with the former Terranova S.A.) in October 2003 of 40.00% of Terranova S.A. generated a negative goodwill which it is intended to amortize over 20 years.
The participation of the former Masisa S.A. in the capital increase of June 27, 2002 of Forestal Tornagaleones S.A., generated a negative goodwill which it is intended to amortize over 20 years.
On November 15, 2005, Masisa S.A. bought 9,987,400 shares, equivalent to 34.35% of Forestal Tornagaleones S.A., generating a negative goodwill that it is intended to amortize over the remaining period of 20 years originally set.
GOODWILL (ThUS$) | ||||||||||
Tax No. | Company | 12-31-2005 | 12-31-2004 | |||||||
Amount amortized in the year | Balance goodwill | Amount amortized in the year | Balance goodwill | |||||||
96623490-3 | MASISA CABRERO S.A. | 85 | 1,249 | 85 | 1,334 | |||||
0-E | TERRANOVA FOREST PRODUCTS INC. | 706 | 0 | 707 | 706 | |||||
TOTAL | 791 | 1,249 | 792 | 2,040 | ||||||
ANNUAL REPORT 2005 MASISA | 93
NEGATIVE GOODWILL (ThUS$) | ||||||||||
Tax No. | Company | 12-31-2005 | 12-31-2004 | |||||||
Amount amortized in the year | Balance negative goodwill | Amount amortized in the year | Balance negative goodwill | |||||||
81507700-8 | FORESTAL TORNAGALEONES S.A. | 163 | 13,480 | 100 | 1,754 | |||||
92257000-0 | MASISA S.A. | 2,766 | 32,067 | 2,766 | 34,833 | |||||
96802690-9 | TERRANOVA S.A. | 335 | 6,039 | 335 | 6,374 | |||||
0-E | CORPORACIÓN FORESTAL GUAYAMURE C.A. | 124 | 1,874 | 124 | 1,998 | |||||
TOTAL | 3,388 | 53,460 | 3,325 | 44,959 | ||||||
NOTE 13: OTHERS (ASSETS)
Other assets at December 31, 2005 and 2004 comprise the following:
2005 | 2004 | |||
ThUS$ | ThUS$ | |||
Market value currency swaps | 2,350 | 8,377 | ||
Market value interest rate swaps | 20 | 1,026 | ||
Discount on bond placement | 7,443 | 8,359 | ||
Bond issue & placement costs (Note 24) | 2,416 | 3,020 | ||
Recoverable fees & taxes | 463 | 786 | ||
Exploitation rights (1) | 10,759 | 11,237 | ||
Judicial deposits | 613 | 613 | ||
Others | 1,516 | 2,083 | ||
TOTAL | 25,580 | 35,501 | ||
(1) In May 1997, the subsidiary Terranova de Venezue-la S.A. prepaid the lease of a CVG-Proforca sawmill for US$ 10 million in order to enter the forestry business in Venezuela. As the lease of that sawmill was essential in the negotiation of the sale contract for 59,000 hectares of Caribbean-pine timber plantations and for entering the Venezuelan forestry business, the Company’s management classified the prepaid rental as a Forest exploitation right. This is being amortized based on the cubic meters (M3) of forestry product obtained from the forests of Terranova de Venezuela S.A. over 20 years (starting 1997), estimated at 13,168,000 M3.
Exploitation rights of Coforven S.A.:
During the year ended December 31, 2000, Terranova de Venezuela S.A. acquired from its subsidiary Coforven S.A. exploitation rights to 236,000 M3 of timber annually and a sawmill for ThUS$ 3,324. The exploitation rights are being amortized as a function of the volume of forestry products that the forests produce for supplying the plants. The accounting balance of goodwill relating to the investment in Coforven S.A. amounted to ThUS$987 at the time of purchase, which was included as part of the cost of the exploitation right, as Terranova de Venezuela S.A. is acquiring a significant part of the productive assets of Coforven S.A. The value of the assets and exploitation rights was transferred at reasonable market values and unrealized income was eliminated.
94 | ANNUAL REPORT 2005 MASISA
NOTE 14: BORROWINGS FROM BANKS AT SHORT TERM (ThUS$)
CURRENCY OR INDEXATION UNIT | ||||||||||||||||||||||||||||||
RUT | Bank | Dollars | Euros | Yen | Other foreign currencies | UF | Non-indexed Ch$ | TOTAL | ||||||||||||||||||||||
12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | |||||||||||||||||
2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | |||||||||||||||||
Short term | ||||||||||||||||||||||||||||||
BANKBOSTON N.A. | 23,143 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 23,143 | 0 | ||||||||||||||||
BANCO CORPBANCA | 9,064 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 9,064 | 0 | ||||||||||||||||
BANCO DEL ESTADO DE CHILE | 0 | 7,077 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 7,077 | ||||||||||||||||
BANCO DE CHILE | 5,030 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 5,030 | 0 | ||||||||||||||||
BANCO DEL DESARROLLO | 3,042 | 5,454 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 3,042 | 5,454 | ||||||||||||||||
CITIBANK N.A. | 13,372 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 13,372 | 0 | ||||||||||||||||
ABN AMRO BANK | 8,046 | 0 | 0 | 0 | 0 | 0 | 16 | 0 | 0 | 0 | 0 | 0 | 8,062 | 0 | ||||||||||||||||
WESTDEUTSCHE LANDESBANK | 0 | 10,111 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 10,111 | ||||||||||||||||
BANCO BBVA | 3,022 | 3,036 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 3,022 | 3,036 | ||||||||||||||||
HSBC BANK BRASIL S/A | 0 | 3,615 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 3,615 | ||||||||||||||||
HSBC BANK USA | 4,668 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 4.668 | 0 | ||||||||||||||||
BANCO ITAU | 0 | 1,723 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 1,723 | ||||||||||||||||
BANCO MERCANTIL | 0 | 0 | 0 | 0 | 0 | 0 | 16,339 | 1,306 | 0 | 0 | 0 | 0 | 16.339 | 1,306 | ||||||||||||||||
CORPBANCA VENEZUELA | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 7,657 | 0 | 0 | 0 | 0 | 0 | 7,657 | ||||||||||||||||
BANCO DE VENEZUELA S.A. | 0 | 0 | 0 | 0 | 0 | 0 | 24,293 | 0 | 0 | 0 | 0 | 0 | 24.293 | 0 | ||||||||||||||||
BANCO ABN AMRO BANK | 0 | 0 | 0 | 0 | 0 | 0 | 5,086 | 8,812 | 0 | 0 | 0 | 0 | 5.086 | 8,812 | ||||||||||||||||
Others | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||
TOTAL | 69,387 | 31,016 | 0 | 0 | 0 | 0 | 45,734 | 17,775 | 0 | 0 | 0 | 0 | 115,121 | 48,791 | ||||||||||||||||
Principal out-standing | 68,800 | 30,912 | 0 | 0 | 0 | 0 | 45,456 | 17,558 | 0 | 0 | 0 | 0 | 114,256 | 48,470 | ||||||||||||||||
CURRENCY OR INDEXATION UNIT | ||||||||||||||||||||
Dollars | Euros | Yen | Other foreign | UF | Non-indexed | TOTAL | ||||||||||||||
currencies | Ch$ | |||||||||||||||||||
12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | |||||||
2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | |||||||
Avge. annual interest rate | 4.64% | 15.52% | 14.28% | 3.01% | ||||||||||||||||
Percentage in foreign currency (%) | 27.56 | |
Percentage in local currency (%) | 72.44 | |
ANNUAL REPORT 2005 MASISA | 95
CURRENCY OR INDEXATION UNIT | ||||||||||||||||||||||||||||||
Tax No. | Bank | Dollars | Euros | Yen | Other foreign currencies | UF | Non-indexed Ch$ | TOTAL | ||||||||||||||||||||||
12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | |||||||||||||||||
2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | |||||||||||||||||
Long term Current portion | ||||||||||||||||||||||||||||||
97006000-6 | BANCO DE CREDITO E | 6,938 | 2,453 | 0 | 0 | 0 | 0 | 0 | 0 | 3,056 | 1,414 | 0 | 0 | 9,994 | 3,867 | |||||||||||||||
INVERSIONES | ||||||||||||||||||||||||||||||
97030000-7 | BANCO DEL ESTADO DE CHILE | 4,456 | 2,925 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 4,456 | 2,925 | |||||||||||||||
97053000-2 | BANCO SECURITY | 1,905 | 1,195 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 1,905 | 1,195 | |||||||||||||||
97023000-9 | BANCO CORPBANCA | 9,771 | 2,219 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 9,771 | 2,219 | |||||||||||||||
97039000-6 | BANCO SANTANDER | 5,900 | 10,624 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 5,900 | 10,624 | |||||||||||||||
96658480-7 | RABOINVESTMENTS CHILE S.A. | 833 | 3,106 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 833 | 3,106 | |||||||||||||||
97032000-8 | BANCO BBVA | 1,521 | 1,508 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 1,521 | 1,508 | |||||||||||||||
0-E | CORPBANCA VENEZUELA | 0 | 0 | 0 | 0 | 0 | 0 | 718 | 0 | 0 | 0 | 0 | 0 | 718 | 0 | |||||||||||||||
0-E | ABN/CORP BANCA VZLA. | 0 | 0 | 0 | 0 | 0 | 0 | 3,171 | 0 | 0 | 0 | 0 | 0 | 3,171 | 0 | |||||||||||||||
0-E | WESTDEUTSCHE LANDESBANK | 2,960 | 2,945 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 2,960 | 2,945 | |||||||||||||||
0-E | SECURITY BANK | 0 | 955 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 955 | |||||||||||||||
0-E | DRESDNER BANK | 0 | 2,106 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 2,106 | ||||||||||||||||
0-E | CITIBANK N.A. | 0 | 67 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 67 | |||||||||||||||
0-E | COMERICA BANK | 4,357 | 4,360 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 4,357 | 4,360 | |||||||||||||||
0-E | BANCO CHILE NEW YORK | 4,410 | 4,399 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 4,410 | 4,399 | |||||||||||||||
0-E | THE BANK OF NOVA SCOTIA | 7,996 | 4,045 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 7,996 | 4,045 | |||||||||||||||
0-E | RABOBANK NEDERLAND | 2,571 | 1,299 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 2,571 | 1,299 | |||||||||||||||
0-E | KREDITANSTALT FUR | 13,458 | 11,433 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 13,458 | 11,433 | |||||||||||||||
WIEDERAUFBAU | ||||||||||||||||||||||||||||||
0-E | BANCO ITAU BBA | 2,011 | 4,000 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 2,011 | 4,000 | |||||||||||||||
0-E | HSBC BANK | 0 | 1,000 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 1,000 | |||||||||||||||
0-E | HSBC BDES | 0 | 628 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 628 | |||||||||||||||
0-E | BANK BOSTON | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 16 | 0 | 0 | 0 | 0 | 0 | 16 | |||||||||||||||
Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||
TOTAL | 69,087 | 61,267 | 0 | 0 | 0 | 0 | 3,889 | 16 | 3,056 | 1,414 | 0 | 0 | 76,032 | 62,697 | ||||||||||||||||
Principal out-standing | 66,320 | 61,203 | 0 | 0 | 0 | 0 | 3,844 | 0 | 2,990 | 1,324 | 0 | 0 | 83,555 | 62,527 | ||||||||||||||||
CURRENCY OR INDEXATION UNIT | ||||||||||||||||||||
Dollars | Euros | Yen | Other foreign | UF | Non-indexed | TOTAL | ||||||||||||||
currencies | Ch$ | |||||||||||||||||||
12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | 12-31- | |||||||
2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | |||||||
Avge. annual interest rate | 4.02% | 2.94% | 15.01% | 3.00% | 6.70% | 6.70% | ||||||||||||||
Percent-age in foreign currency (%) | 27.56 |
Percent-age in local currency (%) | 72.44 |
96 | ANNUAL REPORT 2005 MASISA
NOTE 15: BORROWINGS FROM BANKS AT LONG TERM
The loans granted by Masisa Inversiones Limited to the subsidiary Masisa do Brasil Limited, through Banco Itaú BBA S.A., amounting to US$104,523,218.88, evidenced by notes issued by Banco Itaú BBA S.A in favor of Masisa Inversiones Limited, are shown deducted from the corresponding debts of equal amount that the subsidiary Masisa do Brasil Limited has with Banco Itaú BBA S.A., evidenced by “Cédulas de Crédito Bancario - Res.2770” in favor of Banco Itaú BBA S.A., as the documents mentioned for these transactions permit offsetting them with a simple notice to the bank within the period of notice stated in the respective documents.
In addition, and as a result of the above, the interest accrued on the notes and “Cédulas de Crédito Bancario - Res.2770” is shown net in the Statement of income.
On December 20, 2005, a syndicated loan agreement was signed between the subsidiary Masisa Overseas Ltd., as debtor, and Cooperative Central Reiffeisen-Boerenleen-bank S.A. “Rabobank International, New York Branch”, here called “Rabobank”, as agent bank and creditor, for a sum of US$ 110,000,000.
This loan has a term of 6 years and carries the guarantees of the parent Masisa S.A. and its subsidiaries Masisa Ar-gentina S.A. and Masisa do Brasil Ltda.
At the date of issue of these financial statements, these loans have been fully drawn, on the following dates:
January 17, 2006 | US$ 22 million | |||||||||
January 19, 2006 | US$ 74 million | |||||||||
February 28, 2006 | US$14 million |
The proceeds are to be used to refinance the Company’s financial debt.
ANNUAL REPORT 2005 MASISA | 97
Years to maturity | Close of present year | Close of previous year | ||||||||||||||||
Tax No. | Bank | Currency or index unit | 1 to 2 | 2 to 3 | 3 to 5 | 5 to 10 | More than 10 | Total long term | Average annual interest rate | Total long term | ||||||||
Amount | Term | |||||||||||||||||
97006000-6 | BANCO DE CREDITO E INVERSIONES | Dollars | 5,278 | 5,278 | 4,167 | 14,723 | Libor 180 + 1,10 | 20,000 | ||||||||||
Euro | ||||||||||||||||||
Yen | ||||||||||||||||||
UF | 2,648 | |||||||||||||||||
Non-indexed Ch$ | ||||||||||||||||||
Other currencies | ||||||||||||||||||
96658480-7 | RABOINVESTMENTS CHILE S.A. | Dollars | 2,000 | 1,500 | 3,000 | 6,000 | 12,500 | LIBOR 180+0.90 | 10,000 | |||||||||
Euro | ||||||||||||||||||
Yen | s | |||||||||||||||||
UF | ||||||||||||||||||
Non-indexed Ch$ | ||||||||||||||||||
Other currencies | ||||||||||||||||||
97030000-7 | BANCO DEL ESTADO DE CHILE | Dollars | 4,232 | 4,232 | 8,464 | LIBOR 180+1.1 | 8,334 | |||||||||||
Euro | ||||||||||||||||||
Yen | �� | |||||||||||||||||
UF | ||||||||||||||||||
Non-indexed Ch$ | ||||||||||||||||||
Other currencies | ||||||||||||||||||
97023000-9 | BANCO CORPBANCA | Dollars | 9,193 | 9,193 | 18,386 | LIBOR 180+1.10 | 6,500 | |||||||||||
Euro | ||||||||||||||||||
Yen | ||||||||||||||||||
UF | ||||||||||||||||||
Non-indexed Ch$ | ||||||||||||||||||
Other currencies | ||||||||||||||||||
97053000-2 | BANCO SECURITY | Dollars | 1,164 | 1,167 | 2,331 | LIBOR 180+1.10 | 4,434 | |||||||||||
Euro | ||||||||||||||||||
Yen | ||||||||||||||||||
UF | ||||||||||||||||||
Non-indexed Ch$ | ||||||||||||||||||
Other currencies | ||||||||||||||||||
97036000-k | BANCO SANTANDER | Dollars | 1,738 | 1,741 | 3,479 | LIBOR 180 + 1,1 | 30,666 | |||||||||||
Euro | ||||||||||||||||||
Yen | ||||||||||||||||||
UF | ||||||||||||||||||
Non-indexed Ch$ | ||||||||||||||||||
Other currencies | ||||||||||||||||||
97032000-8 | BANCO BBVA | Dollars | 1,445 | 1,445 | 2,890 | LIBOR 180 + 1,1 | 4,334 | |||||||||||
Euro | ||||||||||||||||||
Yen | ||||||||||||||||||
UF | ||||||||||||||||||
Non-indexed Ch$ | ||||||||||||||||||
Other currencies | ||||||||||||||||||
0-E | DRESDNER BANK LANTINOAMERICA | Dollars | 3,000 | |||||||||||||||
Euro | ||||||||||||||||||
Yen | ||||||||||||||||||
UF | ||||||||||||||||||
Non-indexed Ch$ | ||||||||||||||||||
Other currencies | ||||||||||||||||||
0-E | COMERICA BANK | Dollars | 2,143 | 2,143 | LIBOR 180+1.35 | 6,427 | ||||||||||||
Euro | ||||||||||||||||||
Yen | ||||||||||||||||||
UF | ||||||||||||||||||
Non-indexed Ch$ | ||||||||||||||||||
Other currencies |
98 | ANNUAL REPORT 2005 MASISA
Years to maturity | Close of present year | Close of previous year | ||||||||||||||||
Tax No. | Bank | Currency or index unit | 1 to 2 | 2 to 3 | 3 to 5 | 5 to 10 | More than 10 | Total long term | Average annual | Total long term | ||||||||
interest rate | ||||||||||||||||||
Amount | Term | |||||||||||||||||
0-E | BANCO CHILE NEW YORK | Dollars | 4,250 | 4,250 | LIBOR 180+1.25 | 8,550 | ||||||||||||
Euro | ||||||||||||||||||
Yen | ||||||||||||||||||
UF | ||||||||||||||||||
Non-indexed Ch$ | ||||||||||||||||||
Other currencies | ||||||||||||||||||
0-E | THE BANK OF NOVA SCOTIA | Dollars | 7,500 | 6,250 | 13,750 | LIBOR 180+1.15 | 21,250 | |||||||||||
Euro | ||||||||||||||||||
Yen | ||||||||||||||||||
UF | ||||||||||||||||||
Non-indexed Ch$ | ||||||||||||||||||
Other currencies | ||||||||||||||||||
0-E | CITIBANK N.A. | Dollars | 5% | 272 | ||||||||||||||
Euro | ||||||||||||||||||
Yen | ||||||||||||||||||
UF | ||||||||||||||||||
Non-indexed Ch$ | ||||||||||||||||||
Other currencies | ||||||||||||||||||
0-E | RABOBANK NEDERLAND | Dollars | 2,860 | 3,040 | 5,009 | 3,060 | 13,969 | LIBOR 180+1 | 11,250 | |||||||||
Euro | ||||||||||||||||||
Yen | ||||||||||||||||||
UF | ||||||||||||||||||
Non-indexed Ch$ | ||||||||||||||||||
Other currencies | ||||||||||||||||||
0-E | KREDITANSTALT FUR WIEDERAUFBAU | Dollars | 7,130 | 7,130 | 12,360 | 26,620 | LIBOR 180+2.20 | 39,746 | ||||||||||
Euro | ||||||||||||||||||
Yen | ||||||||||||||||||
UF | ||||||||||||||||||
Non-indexed Ch$ | ||||||||||||||||||
Other currencies | ||||||||||||||||||
0-E | WESTDEUTSCHE LANDESBANK | Dollars | 2,912 | 4,082 | 870 | 7,864 | LIBOR 180+0.45 | 10,774 | ||||||||||
Euro | ||||||||||||||||||
Yen | ||||||||||||||||||
UF | ||||||||||||||||||
Non-indexed Ch$ | ||||||||||||||||||
Other currencies | ||||||||||||||||||
0-E | BANCO ITAU BBA | Dollars | LIBOR 180+3,9 | 2,000 | ||||||||||||||
Euro | ||||||||||||||||||
Yen | ||||||||||||||||||
UF | ||||||||||||||||||
Non-indexed Ch$ | ||||||||||||||||||
Other currencies | ||||||||||||||||||
0-E | BANCO CORPBANCA VENEZUELA | Dollars | LIBOR 180+1,10 | |||||||||||||||
Euro | ||||||||||||||||||
Yen | ||||||||||||||||||
UF | ||||||||||||||||||
Non-indexed Ch$ | ||||||||||||||||||
Other currencies | 2,077 | 2,078 | 4,155 | LIBOR 180+1,35 | ||||||||||||||
TOTAL | 53,922 | 47,136 | 25,406 | 9,06 | 135,524 | 190,185 | ||||||||||||
Percentage in foreign currency (%) | 0.0300 | |
Percentage in local currency (%) | 99.9700 | |
ANNUAL REPORT 2005 MASISA | 99
NOTE 16: PROMISSORY NOTES AND BONDS PAYABLE
The bond obligations are:
a) Bearer bonds issued by the former Terranova S.A., inscribed under No.336 on June 30, 2003 in the Securities Register of the Superintendency of Securities and Insurance.
Characteristics:
The Series A1 bonds consist of 3,000 certificates of UF500 each and the Series A2 bonds of 500 certificates of UF 5,000. Repayments of principal are due on December 15 and June 15, starting in 2005 and finishing in 2009. They accrue compound interest in arrears at 5.00% annually, calculated on the basis of equal semi-annual 180-day periods starting on December 15, 2003.
The Series B bonds consist of 2,000 certificates of UF500 each. Repayments of principal are due on December 15 and June 15, starting in 2009 and finishing in 2024. They accrue compound interest in arrears at 6.00% annually, calculated on the basis of equal semi-annual 180-day periods starting on December 15, 2003.
On December 22, 2005, the holders of the Series A1, A2 an B bonds were notified of their prepayment planned for January 23, 2006. As a result, the Company classified them as Bonds payable – current portion.
The Series C1 bonds consist of 1,000 certificates of US$10,000 each and the Series C2 bonds of 200 certificates of US$100,000. Repayment of principal is due on June 15, 2008. They accrue compound interest in arrears at 5.00% annually, calculated on the basis of equal semi-annual 180-day periods starting on December 15, 2003.
b) Bearer bonds issued by the former Masisa S.A., inscribed under No.355 and 356 on September 30, 2004 in the Securities Register of the Superintendency of Securities and Insurance.
Characteristics:
The Series A bonds consist of 5,000 certificates of UF500 each for a 7-year term and a two-year grace period for the repayment of principal. They accrue compound interest in arrears at 5.00% annually, calculated on the basis of equal semi-annual 180-day periods starting on December 15, 2003, with payments due on June 15 and December 15 each year. Repayments of principal are due in ten semi-annual payments starting on June 15, 2006.
- - This bond is partially covered against dollar exchange risks against the United Foment by swap contracts with Citibank N.A., Agency in Chile, and Morgan Stanley Capital Services Inc. (see Note 26) and has therefore been valued as required by paragraph 11 of Technical Bulletin 57 of the Chilean Institute of Accountants.
The Series B bonds consist of 1,404 certificates of UF500 each for a 21-year term and a seven-year grace period for the repayment of principal. They accrue compound interest in arrears at 6.25% annually, calculated on the basis of equal semi-annual 180-day periods starting on December 15, 2003, with payments due on June 15 and December 15 each year. Repayments of principal are due in twenty-eight semi-annual payments starting on June 15, 2011.
100 | ANNUAL REPORT 2005 MASISA
c) Private Placement:
These relate to privately-placed bonds issued by the subsidiary Masisa Overseas Ltd., which were acquired by Ame-rican investment funds and insurance companies.
The principal is repayable at a rate of US$9 million annually, on May 15 each year, with the final maturity in 2008. Interest is payable semi-annually in May and November each year.
On January 12, 2006, the Company issued two new lines of bonds which are inscribed in the Securities Register of the Superintendency of Securities and Insurance under numbers 439 and 440, on November 14 and 15, 2005 respectively. The detail of these is as follows:
1. Bonds of the E Series for UF 2,750,000 were placed against the line No.439, with a 21-year term and 1 year’s grace and an interest rate of 4.79% .
2. Bonds of the D Series for UF 2,000,000 were placed against the line No.440, with a 7-year term and 2 year’s grace and an interest rate of 4.59% .
The proceeds of these placements will be used to pay fi-nancial debts of the Company and/or its subsidiaries.
Also, on January 23, 2006, the Company prepaid the bearer bonds issued by the former Terranova S.A. These were the Series A and B bonds inscribed under No.336 on June 30, 2003 in the Securities Register of the Superintendency of Securities and Insurance.
Bonds (ThUS$) | |||||||||||||||||||
Inscription numberor identification | Series | Nominal amount out-standing | Index unit | Interest rate | Final maturity | Payment dates | Par value | Placement in | |||||||||||
Chile or abroad | |||||||||||||||||||
Interests | Principal | 12-31-2005 | 12-31-2004 | ||||||||||||||||
Long-term bonds – current portion | |||||||||||||||||||
336 | SERIES A | 3,500 | U.F. | 5 | Semi-annual | 2005 | 123,007 | 15,308 | Chile | ||||||||||
336 | SERIES B | 1,000 | U.F. | 6 | Semi-annual | 2009 | 35,160 | 77 | Chile | ||||||||||
336 | SERIES C | 0 | USD | 5 | Semi-annual | 2008 | 62 | 62 | Chile | ||||||||||
356 | SERIES A | 500 | U.F. | 5 | Semi-annual | 2006 | 17,716 | 160 | Chile | ||||||||||
355 | SERIES B | 0 | U.F. | 6,25 | Semi-annual | 2011 | 63 | 56 | Chile | ||||||||||
PRIVATE | SERIES B | 9,000 | USD | 8,06 | Semi-annual | 2006 | 9,278 | 9,371 | Abroad | ||||||||||
PLACE-MENT | |||||||||||||||||||
Total – current portion | 185.286 | 25,034 | |||||||||||||||||
Long term bonds | |||||||||||||||||||
336 | SERIES A | 0 | U.F. | 5 | Semi-annual | 2005 | 0 | 108,320 | Chile | ||||||||||
336 | SERIES B | 0 | U.F. | 6 | Semi-annual | 2009 | 0 | 31,068 | Chile | ||||||||||
336 | SERIES C | 30,000 | USD | 5 | Semi-annual | 2008 | 30,000 | 30,000 | Chile | ||||||||||
356 | SERIES A | 2,000 | U.F. | 5 | Semi-annual | 2006 | 65,340 | 76,488 | Chile | ||||||||||
355 | SERIES B | 702 | U.F. | 6,25 | Semi-annual | 2011 | 24,621 | 21,809 | Chile | ||||||||||
PRIVATE | SERIES B | 18,000 | USD | 8,06 | Semi-annual | 2008 | 18,000 | 27,000 | Abroad | ||||||||||
PLACE-MENT | |||||||||||||||||||
Total long term | 137,961 | 294,685 | |||||||||||||||||
ANNUAL REPORT 2005 MASISA | 101
NOTE 17: ALLOWANCES, PROVISIONS AND WRITE-OFFS | ||||
Short-term provisions and write-offs | ||||
2005 | 2004 | |||
ThUS$ | ThUS$ | |||
Relating to personnel: | ||||
Vacations | 5,256 | 3,705 | ||
Bonuses | 256 | 513 | ||
Profit sharing | 1,010 | 1,136 | ||
Other benefits | 1,940 | 1,121 | ||
Other provisions: | ||||
Consultancy & services | 925 | 2,857 | ||
Major repairs | 1,382 | 970 | ||
Import & export expenses | 787 | 1,109 | ||
Fees | 1,508 | 1,702 | ||
Goods & services receivable | 2,003 | 2,434 | ||
Contingent liabilities | 1,784 | 89 | ||
Other taxes | 3,087 | - | ||
Other provisions | 1,636 | 2,274 | ||
TOTAL | 21,574 | 17,910 | ||
Long-term provisions and write-offs | ||||
2005 | 2004 | |||
ThUS$ | ThUS$ | |||
Judicial deposit | 397 | 618 | ||
Allowance Proforca | 1,000 | - | ||
Severance payments | 21 | 13 | ||
TOTAL | 1,418 | 631 | ||
Allowances shown deducted from their respective assets: | ||||
2005 | 2004 | |||
ThUS$ | ThUS$ | |||
Doubtful accounts | 5,593 | 7,717 | ||
Inventories | 2,887 | 1,437 | ||
Inventory obsolescence | 2,489 | 4,061 | ||
Fixed assets | 14,353 | 16,015 | ||
TOTAL | 25,322 | 29,230 | ||
NOTE 18: SEVERANCE PAYMENTS
The movement in the provision for severance payments is as follows:
2005 | 2004 | |||
ThUS$ | ThUS$ | |||
Balance at January 1 | 13 | 163 | ||
Provision for the year | 8 | 64 | ||
Payments during the year | - | (214) | ||
Balance at December 31 | 21 | 13 | ||
The charge to income for the year for this concept was ThUS$8 (ThUS$64 in 2004).
102 | ANNUAL REPORT 2005 MASISA
NOTE 19: OTHER LONG-TERM LIABILITIES
The balance at December 31 comprises the following:
Maturities | Values | |||||||||
2007 | 2008 | 2009 | 2005 | 2004 | ||||||
(thousands of US dollars) | ||||||||||
ICMS tax payable at long term | 4,660 | 5,438 | 3,636 | 13,734 | 14,191 | |||||
Unrealized income from hedging Transactions of existing items | 3,588 | - | - | 3,588 | 1,527 | |||||
Market value currency swaps | 2,631 | - | - | 2,631 | 460 | |||||
Market value interest rate swaps | 12 | - | - | 12 | 753 | |||||
TOTAL | 10,891 | 5,438 | 3,636 | 19,965 | 16,931 | |||||
NOTE 20: MINORITY INTEREST
The detail of the minority interest recognized by the Company in its liabilities and result, is as follows:
LIABILITIES | RESULT FOR THE YEAR | ||||||||
2005 | 2004 | 2005 | 2004 | ||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ||||||
Forestal Tornagaleones S.A, | 6,602 | 44,893 | (1,165) | (701) | |||||
Forestal Argentina S.A. | 35,373 | 31,182 | (1,769) | (418) | |||||
Maderas y Sintéticos del Perú S.A. | 3 | 1 | ( 2) | (1) | |||||
Corporación Forestal Guayamure C.A. | 1,946 | 1,923 | 13 | 14 | |||||
Invers,Internacionales Terranova S.A. | 16,186 | 23,781 | 8,613 | 5,478 | |||||
Masisa S.A. | - | 238,051 | - | (19,773) | |||||
Masisa Madeiras Ltda. | 6 | - | - | - | |||||
Total | 60,116 | 339,831 | 5,690 | (15,401) | |||||
NOTE 21: CHANGES IN SHAREHOLDERS EQUITY
a) Paid capital
The subscribed and paid capital at December 31, 2005 amounts to US$769,834,479, divided into 5,437,018,860 shares of no par value.
- - 2005
The extraordinary shareholders’ meeting held on August 29, 2005 resolved to increase the Company’s capital by US$ 150,000,000 through the issue, subscription and payment
of 650,000,000 shares of no par value, of the one and same series and with no privileges, of which 387,958,843 shares were subscribed and paid during the year.
Extraordinary shareholders’ meetings of the former Masisa S.A. and the former Terranova S.A. held on April 12 and 13, 2005 respectively approved the merger by absorption of the former Masisa S.A. into the former Terranova S.A.
ANNUAL REPORT 2005 MASISA | 103
The extraordinary shareholders’ meeting of the former Te-rranova S.A. approved modifications to its bylaws, the principal ones being:
- - To change the company’s name to Masisa S.A.
- - To expand the corporate objects to include those of the former Masisa S.A.
- - To increase the capital of the company from ThUS$583,739, divided into 3,918,427,856 shares of no par value, of the one and same series and without any privileges, to ThUS$696.481, divided into 5,049,060,017 shares of no par value, of the one and same series and without any privileges, through the issue of 1,130,632,161 new shares of no par value, of the one and same series and without any privileges, to be issued fully to shareholders of the former Masisa S.A. in the appropriate proportion according to the agreed share exchange.
- -2004
On October 31, 2004, the capital was reduced by ThUS$16,828 by force of law, the equivalent of 87,871,054 shares.
On December 26, 2004, the capital was reduced by ThUS$1,550 by force of law, the equivalent of 13,538,394 shares.
Both share reductions relate to the Company’s own shares which it held as a result of the merger of the former Terra-nova S.A. with Forestal Terranova S.A.
b) Earnings distribution
The dividend policy established by Masisa S.A. is to distribute annually to shareholders a sum, to be defined at the ordinary shareholders’ meeting, of no less than 30% and no more than 50% of the consolidated net income for each year, without the payment of interim dividends.
The following shows the dividends per share that the shareholders’ meeting agreed to during 2005, shown in dollars at the date of payment:
Paid by: | ||||||||
Dividend | Month paid | Dividend per share US$ | No. of third party shares | |||||
Antigua Masisa S.A.: | ||||||||
Eventual | Year 2004 No.36 | May-2005 | 0.026894326 | 441,653,188 | ||||
Additional | Year 2004 No.35 | May-2005 | 0.031263070 | 441,653,188 | ||||
Final | Year 2004 No.34 | Apr-2005 | 0.013398459 | 441,653,188 | ||||
Former Terranova S.A: | ||||||||
Additional | Year 2004 No.10 | Apr-2005 | 0.001141276 | 3,918,427,856 | ||||
Final | Year 2004 No.10 | Apr-2005 | 0.004092497 | 3,918,427,856 | ||||
104 | ANNUAL REPORT 2005 MASISA
c) Other Reserves comprises the following:
Forest Reserve:
The forest reserve amounts to ThUS$174,848 (ThUS$130,156 in 2004), corresponding to the difference between the appraisal value of the forest plantations and their respective historic cost, which includes the real cost of financing. The forest reserve is shown net of deferred tax, in accordance with Technical Bulletins 60 and 69 of the Chilean Institute of Accountants.
Other Reserves:
Other reserves arose from the translation to US dollars of the equity of certain subsidiary and associate companies that maintain or maintained their accounts in Chilean pesos, amounting to ThUS$17,028 (ThUS$7,613 negative in 2004), for the constitution of a Legal reserve in foreign subsidiaries of ThUS$100 (ThUS$100 in 2004)and the costs of the issue and placement of shares related to the last capital increase of ThUS$3,613 (nil in 2004) are shown deducted from Shareholder’s equity.
d) Own-issued shares
The following was taken into account in quantifying the number of shares in the table 21 “Acquisition and holding of own shares”:
- For rights to withdraw: the 2,121,766 shares of the former Masisa S.A. bought from shareholders who exercised their right to withdraw was multiplied by the exchange factor of 2.56, resulting in the sum of 5,431,721 shares.
CHANGES IN SHAREHOLDERS’ EQUITY (ThUS$) | |||||||||||||||||
12-31-2005 | |||||||||||||||||
Movement | Paid capital | Restatement of capital reserve | Share premium | Other reserves | Reserve for future dividends | Retained earnings | Interim dividends | Development period deficit | Result for the year | ||||||||
Opening balance | 583,739 | 0 | 0 | 122,643 | 0 | 14,979 | 0 | 0 | 56,778 | ||||||||
Distribution previous year’s results | 0 | 0 | 0 | 0 | 26,425 | 30,353 | 0 | 0 | -56,778 | ||||||||
Final dividend previous year | 0 | 0 | 0 | 0 | -38,304 | -13,807 | 0 | 0 | 0 | ||||||||
Capital increase | 73,353 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||
Capitalization reserves &/or earnings | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||
Accumulated development period deficit | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||
Equity effects of merger | 112,742 | 0 | 0 | 33,403 | 63,303 | 28,603 | 0 | 0 | 0 | ||||||||
Forest reserve | 0 | 0 | 0 | 32,842 | 0 | 0 | 0 | 0 | 0 | ||||||||
Reserve for translation adjustment | 0 | 0 | 0 | 3,202 | 0 | 0 | 0 | 0 | 0 | ||||||||
Legal reserve (foreign subsidiaries) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||
Share issue & placement costs | 0 | 0 | 0 | -3,613 | 0 | 0 | 0 | 0 | 0 | ||||||||
Capital reduction | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||
Restatement of capital | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||
Result for the year | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 26,369 | ||||||||
Closing balance | 769,834 | 0 | 0 | 188,477 | 51,424 | 60,128 | 0 | 0 | 26,369 | ||||||||
Restated balances |
ANNUAL REPORT 2005 MASISA | 105
(Continuation) | |||||||||||||||||
12-31-2005 | |||||||||||||||||
Movement | Paid capital | Restatement | Share | Other | Reserve | Retained | Interim | Deficit | Result for | ||||||||
of capital | premium | reserves | for future | earnings | dividends | Development | the year | ||||||||||
reserve | dividends | period | |||||||||||||||
Opening balance | 602,117 | 0 | 0 | 113,551 | 0 | 39,122 | 0 | -4,133 | -20,010 | ||||||||
Distribution previous year’s results | 0 | 0 | 0 | 0 | 0 | -24,143 | 0 | 4,133 | 20,010 | ||||||||
Final dividend previous year | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||
Capital increase | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||
Capitalization reserves &/or earnings | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||
Accumulated development period deficit | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||
Equity effects of merger | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||
Forest reserve | 0 | 0 | 0 | 9,695 | 0 | 0 | 0 | 0 | 0 | ||||||||
Reserve for translation adjustment | 0 | 0 | 0 | -703 | 0 | 0 | 0 | 0 | 0 | ||||||||
Legal reserve (foreign subsidiaries) | 0 | 0 | 0 | 100 | 0 | 0 | 0 | 0 | 0 | ||||||||
Share issue & placement costs | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||
Capital reduction | -18,378 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||
Restatement of capital | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||
Result for the year | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 56,778 | ||||||||
Closing balance | 583,739 | 0 | 0 | 122,643 | 0 | 14,979 | 0 | 0 | 56,778 | ||||||||
Restated balances | 583,739 | 0 | 0 | 122,643 | 0 | 14,979 | 0 | 0 | 56,778 |
NUMBER OF SHARES | ||||||
Series | No. of shares subscribed | No. of paid shares | No. of shares with voting rights | |||
SOLE | 5,437,018,860 | 5,437,018,860 | 5,429,746,815 |
CAPITAL (AMOUNT – ThUS$) | ||||
Series S | Capital subscribed | Capital paid | ||
SOLE | 769,834 | 769,834 |
ACQUISITION AND HOLDING OF OWN SHARES | |||||||
Shares repurchased | |||||||
Reason for share repurchase | Date of share repurchase | No. of shares | Series | Amount | |||
(ThUS$) | |||||||
MERGER | 07/01/2003 | 87,871,054 | SOLE | 16,828 | |||
RIGHT TO WITHDRAW | 12/26/2003 | 13,538,394 | SOLE | 1,550 | |||
RIGHT TO WITHDRAW FORMER TERRANOVA S.A. | 05/27/2005 | 12,647,263 | SOLE | 3,202 | |||
RIGHT TO WITHDRAW FORMER MASISA S.A. | 05/27/2005 | 5,431,721 | SOLE | 1,379 |
106 | ANNUAL REPORT 2005 MASISA
DISPOSALS OF OR REDUCTIONS IN OWN SHARE PORTFOLIO | ||||||
Reason | Date | Reduction in portfolio | ||||
No. of shares | Amount (ThUS$) | |||||
3: Capital reduction | 10/31/2004 | 87,871,054 | 16,828 | |||
3: Capital reduction | 12/26/2004 | 13,538,394 | 1,550 | |||
2: Rights offering | 12/12/2005 | 10,806,939 | 2,738 |
NOTE 22: OTHER NON-OPERATING INCOME AND EXPENSES
The detail of these at December 31, 2005 and 2004 is as follows:
2005 | 2004 | |||
ThUS$ | MUS$ | |||
Other non-operating income: | ||||
Rentals of plants, offices & others | 110 | 474 | ||
Insurance claim | - | 133 | ||
Gain on sale of assets, goods & services | 2,149 | 44,648 | ||
Others | 540 | 1,010 | ||
Total | 2,799 | 46,265 |
2005 | 2004 | |||
Other non-operating expenses: | ThUS$ | ThUS$ | ||
Allowance for unused assets | - | 9,190 | ||
Temporary plant stoppage expenses | 1,019 | 155 | ||
Extraordinary allowance for debtors | - | 2,762 | ||
Loss on sales of assets, goods & services | 996 | 63 | ||
Severance payments | 449 | 2,094 | ||
Asset rentals | 50 | 1,376 | ||
Depreciation | 652 | 575 | ||
Claims expenses | 288 | - | ||
Taxation advice expenses | - | 500 | ||
Permits, taxes & fees | 962 | 385 | ||
Donations | 118 | 350 | ||
Amortization | 529 | 429 | ||
Loss on sale of shares | 707 | - | ||
Provision legal contingencies | 470 | - | ||
Others | 2,249 | 2,901 | ||
Total | 8,489 | 20,780 |
NOTE 23: EXCHANGE DIFFERENCES (ThUS$)
ASSETS (CHARGES) / CREDITS | Currency | 12-31-2005 | 12-31-2004 | |
CASH & BANKS | ARGENTINE PESO | 6 | 0 | |
CASH & BANKS | CHILEAN PESO | 585 | 803 | |
CASH & BANKS | MEXICAN PESO | 108 | -312 | |
CASH & BANKS | US DOLLAR | -164 | 0 | |
CASH & BANKS | REAL | 760 | 423 | |
CASH & BANKS | BOLIVAR | -196 | -271 | |
CASH & BANKS | OTHER CURRENCIES | -53 | -39 | |
MARKETABLE SECURITIES | BOLIVAR | -44 | 0 | |
MARKETABLE SECURITIES | CHILEAN PESO | -27 | -178 | |
MARKETABLE SECURITIES | REAL | 0 | -3 | |
BANK BORROWINGS SHORT | CHILEAN PESO | -86 | 0 | |
TERM | ||||
TRADE ACCOUNTS RECEIVABLE | ARGENTINE PESO | 8 | 0 | |
TRADE ACCOUNTS RECEIVABLE | CHILEAN PESO | -158 | 1,272 | |
TRADE ACCOUNTS RECEIVABLE | MEXICAN PESO | 2 | 43 | |
TRADE ACCOUNTS RECEIVABLE | US DOLLAR | 21 | 0 | |
TRADE ACCOUNTS RECEIVABLE | REAL | 1,547 | 1,930 | |
TRADE ACCOUNTS RECEIVABLE | BOLIVAR | -11 | -474 | |
TRADE ACCOUNTS RECEIVABLE | OTHER CURRENCIES | 266 | 298 | |
NOTES RECEIVABLE | CHILEAN PESO | 2,507 | 15 | |
NOTES RECEIVABLE | ARGENTINE PESO | 2 | 0 | |
NOTES RECEIVABLE | US DOLLAR | -104 | 0 | |
NOTES RECEIVABLE | REAL | 53 | 61 | |
NOTES RECEIVABLE | MEXICAN PESO | 1,519 | -205 | |
NOTES RECEIVABLE | BOLIVAR | -618 | -232 | |
SUNDRY DEBTORS | CHILEAN PESO | 511 | 21 | |
SUNDRY DEBTORS | BOLIVAR | -366 | -58 | |
SUNDRY DEBTORS | MEXICAN PESO | 0 | 40 | |
SUNDRY DEBTORS | OTHER CURRENCIES | 15 | 44 |
ANNUAL REPORT 2005 MASISA | 107
(Continuation) | ||||
ASSETS (CHARGES) / CREDITS | Currency | 12-31-2005 | 12-31- 2004 | |
SUNDRY DEBTORS | US DOLLAR | -25 | 0 | |
SUNDRY DEBTORS | REAL | 770 | 7 | |
INVENTORIES | US DOLLAR | -1 | 0 | |
INVENTORIES | MEXICAN PESO | 4 | 244 | |
INVENTORIES | REAL | -175 | 0 | |
INVENTORIES | BOLIVAR | 0 | -5 | |
RECOVERABLE TAXES | CHILEAN PESO | 1,364 | 1,883 | |
RECOVERABLE TAXES | US DOLLAR | -139 | 0 | |
RECOVERABLE TAXES | MEXICAN PESO | 61 | 878 | |
RECOVERABLE TAXES | REAL | 281 | 526 | |
RECOVERABLE TAXES | BOLIVAR | -1,713 | -2,505 | |
RECOVERABLE TAXES | OTHER CURRENCIES | 44 | 302 | |
RECOVERABLE TAXES | ARGENTINE PESO | 11 | 0 | |
TAXES PAYABLE | MEXICAN PESO | 292 | 0 | |
PREPAID EXPENSES | CHILEAN PESO | 40 | 78 | |
PREPAID EXPENSES | BOLIVAR | -2 | -6 | |
PREPAID EXPENSES | REAL | 27 | 203 | |
PREPAID EXPENSES | US DOLLAR | -6 | 0 | |
OTHER CURRENT ASSETS | CHILEAN PESO | 33 | 729 | |
OTHER CURRENT ASSETS | MEXICAN PESO | -1 | 142 | |
OTHER CURRENT ASSETS | REAL | 77 | 448 | |
OTHER CURRENT ASSETS | US DOLLAR | -1 | 0 | |
OTHER CURRENT ASSETS | OTHER CURRENCIES | 2 | -13 | |
LONG-TERM DEBTORS | CHILEAN PESO | 13 | 16 | |
LONG | US DOLLAR | -2 | 0 | |
LONG | REAL | 245 | 261 | |
OTHER ASSETS | ARGENTINE PESO | 1 | 0 | |
OTHER ASSETS | CHILEAN PESO | 4,926 | 0 | |
OTHER ASSETS | REAL | 0 | 239 | |
OTHER ASSETS | OTHER CURRENCIES | 0 | 292 | |
Total (Charges) Credits | 12,209 | 6,897 | ||
LIABILITIES (CHARGES) / | ||||
CREDITS | ||||
SHORT-TERM FINANCIAL DEBT | CHILEAN PESO | 0 | -17 |
(Continuation) | ||||
LIABILITIES (CHARGES) / CREDITS | Currency | 12-31-2005 | 12-31-2004 | |
SHORT-TERM FINANCIAL DEBT | BOLIVAR | 0 | 849 | |
LONG-TERM FINANCIAL DEBT | US DOLLAR | -10 | 0 | |
LONG-TERM FINANCIAL DEBT | REAL | 0 | -2,689 | |
LONG-TERM FINANCIAL DEBT | OTHER | 0 | -324 | |
CURRENCIES | ||||
LONG-TERM FINANCIAL DEBT | CHILEAN PESO | 2,382 | 149 | |
BANK BORROWINGS | CHILEAN PESO | -2,746 | 0 | |
BANK BORROWINGS | BOLIVAR | 1,646 | 0 | |
BANK BORROWINGS | OTHER | -5 | 0 | |
CURRENCIES | ||||
BONDS PAYABLE | U.F. | -116 | -3,753 | |
DIVIDENDS PAYABLE | CHILEAN PESO | 0 | -3 | |
ACCOUNTS PAYABLE | ARGENTINE PESO | -4 | 0 | |
ACCOUNTS PAYABLE | MEXICAN PESO | -491 | 69 | |
ACCOUNTS PAYABLE | CHILEAN PESO | -19 | 96 | |
ACCOUNTS PAYABLE | REAL | -1,545 | -507 | |
ACCOUNTS PAYABLE | EURO | -80 | 0 | |
ACCOUNTS PAYABLE | US DOLLAR | -55 | 0 | |
ACCOUNTS PAYABLE | BOLIVAR | 137 | 436 | |
ACCOUNTS PAYABLE | OTHER | -2 | -156 | |
CURRENCIES | ||||
NOTES PAYABLE | CHILEAN PESO | 0 | -371 | |
NOTES PAYABLE | REAL | 20 | -308 | |
SUNDRY CREDITORS | CHILEAN PESO | 20 | -7 | |
SUNDRY CREDITORS | US DOLLAR | -40 | 0 | |
SUNDRY CREDITORS | CHILEAN PESO | 0 | 81 | |
SUNDRY CREDITORS | REAL | -6 | 0 | |
SUNDRY CREDITORS | BOLIVAR | 141 | 42 | |
SUNDRY CREDITORS | OTHER | 119 | 0 | |
CURRENCIES | ||||
PROVISIONS | CHILEAN PESO | -96 | -149 | |
PROVISIONS | BOLIVAR | 115 | 36 | |
PROVISIONS | REAL | -765 | -126 | |
PROVISIONS | MEXICAN PESO | -7 | -45 | |
PROVISIONS | US DOLLAR | 192 | 0 | |
WITHHOLDINGS | CHILEAN PESO | 0 | -2 |
108 | ANNUAL REPORT 2005 MASISA
(Continuation) | ||||
LIABILITIES (CHARGES) / CREDITS | Currency | 12-31-2005 | 12-31-2004 | |
WITHHOLDINGS | BOLIVAR | 363 | 0 | |
WITHHOLDINGS | US DOLLAR | 121 | 0 | |
INCOME TAX | CHILEAN PESO | -211 | -83 | |
INCOME TAX | REAL | -37 | -205 | |
INCOME TAX | BOLIVAR | 0 | 144 | |
INCOME TAX | OTHER CURRENCIES | -33 | -123 | |
TAX PAYABLE | CHILEAN PESO | 122 | 0 | |
TAX PAYABLE | OTHER CURRENCIES | -26 | 0 | |
TAX PAYABLE | MEXICAN PESO | -17 | 0 | |
RECOVERABLE TAX | MEXICAN PESO | -38 | 0 | |
OTHER CURRENT LIABILITIES | CHILEAN PESO | -2,234 | -192 | |
OTHER CURRENT LIABILITIES | REAL | 203 | -515 | |
OTHER CURRENT LIABILITIES | OTHER CURRENCIES | -3 | -74 | |
OTHER CURRENT LIABILITIES | MEXICAN PESO | -2 | -549 | |
LONG-TERM FINANCIAL DEBT | CHILEAN PESO | 5 | 0 | |
BANK BORROWINGS LONG TERM | BOLIVAR | 271 | 409 | |
BONDS PAYABLE LONG TERM | U.F. | -9,309 | -4,014 | |
PROVSIONS LONG TERM | CHILEAN PESO | 0 | -19 | |
OTHER LONG-TERM FINANCIAL | CHILEAN PESO | -4,383 | 2,277 | |
DEBT | ||||
OTHER LONG-TERM LIABILITIES BOLIVAR | -4,065 | 0 | ||
OTHER LONG-TERM LIABILITIES | CHILEAN PESO | 372 | 0 | |
OTHER LONG-TERM LIABILITIES | US DOLLAR | 93 | 0 | |
OTHER LONG-TERM LIABILITIES REAL | -2,594 | -441 | ||
Total (Charges) Credits | -22,617 | -10,084 | ||
(Loss) for exchange differences | -10,408 | -3,187 |
NOTE 24: SHARE AND BOND ISSUE AND PLACEMENT COSTS
Bonds placement
The costs incurred in bond issues are being amortized on a straight-line basis over the term of the obligation and consist of the following items:
2005 | 2004 | |||
ThUS$ | ThUS$ | |||
Stamp taxes | 4,145 | 3,940 | ||
Placement fees | 112 | 99 | ||
Bond tender fees | 322 | 322 | ||
Credit rating advisers | 116 | 111 | ||
Registration & inscription charges | 22 | 20 | ||
Legal advice | 14 | 12 | ||
Printing costs | 13 | 13 | ||
Other expenses | 88 | 88 | ||
Total expenses | 4,832 | 4,605 | ||
Accumulated amortization | (1,744) | ( 951) | ||
Balance to be amortized | 3,088 | 3,654 |
These expenses are shown in Current assets as Prepaid expenses for the short-term portion of ThUS$672 (ThUS$634 in 2004) and in Long-term assets as Others for the long-term portion of ThUS$2,416(ThUS$3,020 in 2004).
Share placement
The expenses incurred in the issue and placements of share in 2005 consist of the following items:
2005 | ||
ThUS$ | ||
Financial advice | 2,860 | |
Placement fees | 352 | |
Publications | 184 | |
Legal advice | 149 | |
Printing & other expenses | 68 | |
Total expenses | 3,613 |
This amount is shown deducted from Reserves in the Shareholders’ equity.
ANNUAL REPORT 2005 MASISA | 109
NOTE 25: STATEMENT OF CASH FLOWS
The balances at December 31, 2005 and 2004 are as follows:
2005 | ||||
Opening balance | Closing balance | |||
ThUS$ | ThUS$ | |||
Cash & banks | 13,126 | 11,987 | ||
Time deposits | 44,139 | 82,906 | ||
Marketable securities | 1,265 | 2,424 | ||
Securities acquired under | - | 541 | ||
resale agreements | ||||
Total | 58,530 | 97,858 |
2004 | ||||
Opening balance | Closing balance | |||
ThUS$ | ThUS$ | |||
Cash & banks | 19,609 | 13,126 | ||
Time deposits | 3,584 | 44,139 | ||
Marketable securities | 302 | 1,265 | ||
Other placements | 11,120 | - | ||
Total | 34,615 | 58,530 |
Other income received relates to:
2005 | 2004 | |||
ThUS$ | ThUS$ | |||
Recovery of VAT for exports | 19,663 | 8,466 | ||
Customs rebates | 1,865 | 1,570 | ||
Income tax refunds | 4,353 | - | ||
Insurance claims received | 84 | 4,831 | ||
Sundry debtors | 129 | 509 | ||
Other income | 4,907 | 5,563 | ||
Total | 31,001 | 20,939 |
Other charges or credits to income not representing cash flows relate to:
2005 | 2004 | |||
ThUS$ | ThUS$ | |||
Consumption of own raw | 2,837 | 2,532 | ||
materials Argentina | ||||
Consumption of own raw | 7,278 | 5,536 | ||
materials Brazil | ||||
Consumption of own raw | 10,335 | 10,213 | ||
materials Chile | ||||
Consumption of own raw | 4,157 | 3,805 | ||
materials Venezuela | ||||
Other income | 1,020 | 723 | ||
Total | 25,627 | 22,809 |
110 | ANNUAL REPORT 2005 MASISA
NOTE 26: DERIVATIVE CONTRACTS
1. The Company has the following swap contracts:
a) Currency swap contracts | ||||||||||||
Receivable | Payable | |||||||||||
Currency | Amount | Rate | Currency | Amount | Rate | |||||||
Banco Citibank N.A. | UF | 701,619 | 4.940 | ThUS$ | 23,277 | 7.06 | ||||||
Morgan Stanley Capital Services | UF | 1,403,237 | 4.939 | ThUS$ | 46,553 | 7.09 |
b) Interest rate hedging contracts: | ||||||
Amount | Rate receivable | Rate payable | ||||
Santander Chile | ThUS$ 2,125 | Libor 180 days | 4.50% | |||
Santander Chile | ThUS$ 1,771 | Libor 180 days | 4.47% | |||
Citibank N.A. | ThUS$ 1,771 | Libor 180 days | 4.12% | |||
Santander Chile | ThUS$ 1,771 | Libor 180 days | 4.23% | |||
Citibank N.A. | ThUS$ 1,771 | Libor 180 days | 4.35% | |||
Citibank N.A. | ThUS$ 4,674 | Libor 180 days | 4.45% | |||
Citibank N.A. | ThUS$ 5,996 | Libor 180 days | 4.77% | |||
Santander Chile | ThUS$ 1,416 | Libor 180 days | 4.73% | |||
Citibank N.A. | ThUS$ 6,122 | Libor 180 days | 4.99% | |||
Citibank N.A. | ThUS$ 6,000 | Libor 180 days | 5.22% |
c) Investment contract | ||||||||||||
Receivable | Payable | |||||||||||
Currency | Amount | Rate | Currency | Amount | Rate | |||||||
Morgan Stanley Capital Services | ThUS$ | 20,000 | 6.20 | MXN | 229,000 | 11.75 |
The Company uses derivative contracts to reduce risks due to currency fluctuations and to fix interest rates. In Sept-ember 2005, the Company sold certain currency contracts with a nominal amount of approximately US$130 million which generated a gain of ThUS$5,135. This gain was booked as non-operating income, deducted from exchange difference losses.
2. On December 14, 2005, the Company concluded a forward contract with Citibank N.A., Agency in Chile. The transaction was for US$70,000,000 and the agreed price was ThCh$36,080,100, with maturity on January 19, 2006.
ANNUAL REPORT 2005 MASISA | 111
DERIVATIVE CONTRACTS(ThUS$) | ||||||||||||
DESCRIPTION OF THE CONTRACTS | Protection Value | |||||||||||
Derivative | Kind of Contract | Value of the Contract | Term or maturity date | Specific Item | Position Purchase / Sale | Item or transaction hedged | Protection Value | Asset / Liability | Effect in the Result | |||
Name | Amount | Name | Amount | Realized | No Realized | |||||||
S | CCPE | 0 | I-2006 | INTEREST RATE | P | DOLLAR LOANS | 14,875 | 2,125 | OTHER CURRENT LIABILITIES/ | 5 | -5 | 0 |
LONG TERM | ||||||||||||
S | CCPE | 0 | I-2006 | INTEREST RATE | C | DOLLAR LOANS | 12,396 | 1,771 | OTHER CURRENT LIABILITIES/ | 4 | -4 | 0 |
LONG TERM | ||||||||||||
S | CCPE | 0 | I-2006 | INTEREST RATE | C | DOLLAR LOANS | 12,396 | 1,771 | OTHER CURRENT LIABILITIES/ | 0 | 0 | 0 |
LONG TERM | ||||||||||||
S | CCPE | 0 | I-2006 | INTEREST RATE | C | DOLLAR LOANS | 12,396 | 1,771 | OTHER CURRENT LIABILITIES/ | 2 | -2 | -0 |
LONG TERM | ||||||||||||
S | CCPE | 0 | I-2006 | INTEREST RATE | C | DOLLAR LOANS | 12,396 | 1,771 | OTHER CURRENT LIABILITIES/ | 3 | -3 | -0 |
LONG TERM | ||||||||||||
S | CCPE | 0 | II-2006 | INTEREST RATE | C | DOLLAR LOANS | 8,180 | 4,674 | OTHER CURRENT LIABILITIES/ | 6 | 6 | 0 |
LONG TERM | ||||||||||||
S | CCPE | 0 | II-2006 | INTEREST RATE | C | DOLLAR LOANS | 26,982 | 5,996 | OTHER CURRENT LIABILITIES/ | 3 | -3 | 0 |
LONG TERM | ||||||||||||
S | CCPE | 0 | I-2006 | INTEREST RATE | C | DOLLAR LOANS | 9,914 | 1,416 | OTHER CURRENT LIABILITIES/ | 5 | -5 | 0 |
LONG TERM | ||||||||||||
S | CCPE | 0 | II-2006 | INTEREST RATE | C | DOLLAR LOANS | 11,369 | 6,122 | OTHER CURRENT LIABILITIES/ | 8 | -8 | 0 |
LONG TERM | ||||||||||||
S | CCPE | 0 | IV-2010 | FOREIGN EXCHANGE | C | BONDS IN UF | 23,277 | 24,607 | OTHER LONG TERM ASSETS | 738 | -577 | 1,196 |
S | CCPE | 0 | IV-2010 | FOREIGN EXCHANGE | C | BONDS IN UF | 46,553 | 49,215 | OTHER LONG TERM ASSETS | 1,611 | -1,156 | 2,392 |
S | CI | 0 | IV-2010 | FOREIGN EXCHANGE | C | FUTURE FLOWS | 20,000 | 21,582 | OTHER LONG TERM ASSETS | 2,632 | -2,632 | 0 |
FR | CI | 0 | I-2006 | FOREIGN EXCHANGE | C | FUTURE FLOWS | 70,000 | 71,955 | OTHER CURRENT ASSETS | 385 | 385 | 0 |
S | CI | 0 | IV-2006 | INTEREST RATE | C | DOLLAR LOANS | 6,000 | 6,000 | OTHER CURRENT LIABILILITIES | 30 | -30 | 0 |
112 | ANNUAL REPORT 2005 MASISA
NOTE 27: CONTINGENCIES AND RESTRICTIONS
The following are the contingencies and commitments outstanding at the end of the year:
a) Covenants.
All the Company’s covenants are being met at the date of these financial statements.
Masisa S.A.
- Domestic issue and placement of bonds
The issue and placement indenture for the bonds made in December 2003 by the former Masisa S.A. on the domestic market, for ThUF 2,500 at 7 years with 2 year’s grace, and for ThUF 702 at 21 years with 7 year’s grace, sets out certain obligations (today assumed by Masisa S A.) and/or its subsidiaries that are normal in this kind of transaction. These include the following:
- Maintenance of insurance cover over the principal assets in line with industry standards;
- Provide the Bond-Holders’ Representative with quarterly and annual unconsolidated and consolidated financial statements of the issuer and its subsidiaries, subject to the standards applicable to open corporations, and copies of credit-rating agency reports;
- Maintenance of the accounting books of the parent and its subsidiaries up-to-date;
- Carry out transactions with subsidiaries on market conditions;
- Prohibition on providing financing to any entity in the business group that is neither the issuer nor any of its subsidiary or associate companies;
- Maintain in its quarterly financial statements, effective from December 31, 2003, a debt ratio (defined as total liabilities to shareholders’ equity) of no higher than 0.9:1, measured on the figures in its unconsolidated and consolidated financial statements.
- On August 6 and 13, 2003, Masisa S.A. (formerly Terra-nova S.A.) placed bonds for ThUF 4,000 at 6 years term with 2 year’s grace, ThUF 1,000 at 21 years with 6 year’s grace and ThUS$ 30,000 for 5 years with a bullet repayment. This placement commits the company to:
- Maintain the inscription in the Securities Register of the SVS continuously and uninterruptedly. Maintain insurance cover that reasonably protects the operating assets in line with normal practices for companies of the Company’s nature and business.
- Carry out transactions between related parties on market conditions.
- Maintain minimum forest reserves of 60,000 hectares of radiates pine forest planted in Chile with an average age of over 8 years
- Maintain shareholders’ equity (account 5.24.00.00 of the “FECU”) at over ThUS$ 600,000.
- Maintain a ratio of debt (account 5.21.00.00 plus account 5.22.00.00 of the “FECU”) to shareholders’ equity (account 5.23.00.00 plus 5.24.00.00 of the “FECU”), also known as the leverage, at a consolidated and unconsolidated level of no more than:
i. 0.95:1 between March 31, 2004 and December 31, 2004; and
ii. 0.85:1 between March 31, 2005 and the maturity of the bonds.
Masisa Overseas Ltd.
The Parent company and the subsidiaries Masisa Argenti-na S.A. and Maderas y Sintéticos de México S.A. de C.V. have guaranteed loans granted to the subsidiary Masisa Overseas Ltd. These include compliance with certain obligations that are normal for this kind of transaction, which are set out below. The financial ratios have to be calculated on the basis of the consolidated financial statements of Masisa S.A..
ANNUAL REPORT 2005 MASISA | 113
- Private Placement
Resulting from private loans obtained abroad through the subsidiary Masisa Overseas Ltd., Masisa S.A. is subject to compliance with certain obligations that are normal for this kind of transaction, including the following, as set out in the respective loan agreements: compliance with current legislation; maintenance of insurance cover; maintenance of its properties; compliance with certain financial ratios, including a maximum debt ratio (leverage) of 1:1, a consolidated net tangible equity of no less than ThUS$255,467 and a financial expense ratio of no lower than 1.5:1 (income for the year before financial expenses and taxes to financial expenses); maintenance of a 100% holding in the capital of Masisa Overseas Ltd. and 66.6% holding in Masisa Argen-tina S.A.; prohibition on certain transactions with related parties; extend to the bond-holders any new collateral that Masisa S.A. and/or its subsidiaries grant in favor of third parties to cover new debts or debts existing at the date of the contract, with certain exceptions including those that have to be granted in the normal course of their business to cover the payment terms for new acquisitions and those related to letters of credits, among others.
- Comerica Bank
The loan for US$15 million, which at December 31, 2005 amounts to US$6,429 million, granted by Comerica Bank, sets certain obligations normal for this kind of transaction for the Comapny and/or its subsidiaries. These include the following, as per the terms and conditions of the respective loan agreement: the maintenance of insurance cover for the principal assets in line with industry standards; the maintenance of the accounting books of the parent and its subsidiaries up to date; compliance with prevailing laws and regulations; compliance with and payment of all the obligations under loan agreements; maintenance of the company’s business; prohibition on granting certain collateral over its assets except for those existing at the time of the signing of the agreement and others such as pledges over new assets acquired in the company’s ordinary course of business; carry out transactions with subsidiaries on market conditions; prohibition on merging the company with any other company, liquidating or dissolving it, and selling or renting all or an important part of its assets, properties or businesses, except on the conditions foreseen in the agreement; limits on contracting debt and granting loans, in accordance with the conditions contained in the agreement; maintain a consolidated equity of no less than US$321 million; maintain an financial expenses coverage of no less than 3:1 and maintain a leverage of no more than 1:1.
This loan was fully repaid in January 2006.
- Banco de Chile
The loan of US$15 million granted by Banco de Chile, which amounts to ThUS$8,550 million at December 31, 2005, states that the parent and/or its subsidiaries must meet certain obligations that are normal for this kind of transaction, including the following, as per the terms and conditions of the respective loan agreement: maintain a leverage of no more than 1:1; maintain a financial expense coverage ratio of no more than 3:1; maintain a consolidated equity of no less than US$345 million; prohibition on selling, transferring, disposing of, committing to sell or dispose of in any way its present holdings in its subsidiaries, except on the conditions foreseen in the agreement; prohibition on granting liens on essential assets for its normal business apart from the exceptions set out in the agreement.
This loan was fully repaid in January 2006.
- The Bank of Nova Scotia
The loan of US$25 million granted by The Bank of Nova Sco-tia which at December 31, 2005 amounts to US$17,500 million, in which Scotiabank Sud Americano acted as agent, states that the parent and/or its subsidiaries are subject to certain obligations that are normal for this kind of transaction, including the following, as per the terms and conditions of the respective loan agreement: maintain a leverage of no more than 1:1; maintain a financial expense coverage ratio of no less than 3:1; maintain a consolidated equity of no less than US$700 million; prohibition on selling, transferring, disposing of, committing to sell or dispose of in any way its present holdings in its subsidiaries, except on the conditions foreseen in the agreement; prohibition on gran-
114 | ANNUAL REPORT 2005 MASISA
ting liens on essential assets for its normal business apart from the exceptions set out in the agreement; prohibition on granting credits to its shareholders for transactions outside the normal course of the business.
This loan was fully repaid in January 2006.
Masisa Argentina S.A.
The Parent company has guaranteed loans obtained by the subsidiary Masisa Argentina S.A. These contemplate compliance with certain obligations normal in this type of transaction, as per the terms and conditions of the respective loan agreements. Those related to financial ratios should be calculated on the basis of the consolidated financial statements.
- Rabobank Nederland
The loan of US$12.5 million granted by Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank Neder-land) to Masisa Argentina S.A. states that the parent and/or its subsidiaries are subject to certain obligations that are normal for this kind of transaction, including the following, as per the terms and conditions of the respective loan agreement: maintain the company’s present business and legal existence; maintain the fixed assets necessary for the company’s ordinary business; comply with applicable laws and regulations; send financial information on the company without delay; contract and maintain insurance to suitably cover the risks common to the industry; maintain a debt level no higher than 0.9:1; maintain a financial expense coverage ratio of no less than 3:1; maintain a consolidated equity of no less than US$345 million; prohibition on charging assets, except on the terms set out in the agreement; carry out transactions with related parties at market prices; prohibition on providing financing to any entity in the business group that is neither the borrower nor any of its subsidiary or associate companies.
- Banco de Crédito e Inversiones
The loan of US$12.5 million granted by Banco de Crédito e Inversiones to Masisa Argentina S.A. states that the parent and/or its subsidiaries are subject to certain obligations that are normal for this kind of transaction, including the following, as per the terms and conditions of the respective loan agreement: maintain the company’s present business and legal existence; send financial information on the company without delay; contract and maintain insurance to suitably cover the risks common to the industry; maintain a debt level no higher than 0.9:1; maintain a financial expense coverage ratio of no less than 3:1; maintain a consolidated equity of no less than US$345 million; prohibition on charging assets, except on the terms set out in the agreement.
Inversiones Internacionales Terranova S.A.
- The loan agreements signed by Inversiones Internaciona-les Terranova S.A. with the German banks KfW and WestLB imply that Masisa S.A., as guarantor, must comply with certain obligations referring mainly to not significantly changing its business, providing financial information periodically, maintaining current its obligation to third parties, obtaining the prior consent of those banks for disposing of, transferring or selling a substantial part of its assets or granting security over them. The loan agreement with KfW also commits the Company to comply with certain financial ratios, on the basis of its consolidated financial statements:
Debt ratio, maximum: 0.85:1
Maximum financial debt to cash generation ratio: 5.5:1
Minimum cash generation to financial expense ratio: 2.0:1
Minimum tangible net equity: ThUS$ 500,000
Fibranova C.A., Andinos C.A. and Masisa Madeiras Ltda.
- The syndicated loan agreement signed on February 2, 2001 by the foreign subsidiaries Andinos C.A., Fibranova C.A. and Masisa Madeiras Ltda. (formerly Terranova Bra-sil Ltda.) with the Chilean banks Banco Santander-Chile, Banco del Estado and Banco BBVA, for a total sum of ThUS$ 85,000, provides that Masisa S.A., as guarantor, must comply with certain obligations referring mainly to not significantly changing its business, providing financial information periodically, maintaining current its obligation to third parties, obtaining the prior consent of those banks for disposing of, transferring or selling a substantial part of its assets or granting security over them.
ANNUAL REPORT 2005 MASISA | 115
The loan agreement also commits the Company to compliance with certain financial ratios, on the basis of its consolidated financial statements:
Debt ratio, maximum: 0.85:1
Maximum financial debt to cash generation ratio: 5.5:1 (2004); 5.0:1 (2005); 4.5:1 (2006); 4.0:1 (2007).
Minimum cash generation to financial expense ratio: 2.5:1 (2004); 2.65:1 (2005); 3.0:1 (2006); 3.25:1 (2007)
Minimum tangible net equity: ThUS$ 700,000
Fibranova C.A. y Andinos C.A.
- The loan agreement signed on February 26, 2004 by the foreign subsidiaries Fibranova C.A. and Andinos C.A., of Venezuela, with the German bank KfW, for a total sum of ThUS$ 19,000, provide that Masisa S.A., as guarantor, must comply with certain obligations referring mainly to not significantly changing its business, maintaining indirect control over both debtors, providing financial information periodically, maintaining current its obligation to third parties, obtaining the prior consent of those banks for disposing of, transferring or selling a substantial part of its assets or granting security over them.
Fibranova C.A.
- The syndicated loan agreement signed on April 15, 2002 by the foreign subsidiary Fibranova C.A., in Venezuela, with the Chilean banks Banco Santander-Chile, Banco de Cré-dito e Inversiones, Banco Corpbanca and Banco Security, for the total sum of ThUS$65,000, provides that Masisa S.A., as guarantor, must comply with certain obligations referring mainly to not significantly changing its business, providing financial information periodically, maintaining current its obligation to third parties, obtaining the prior consent of those banks for disposing of, transferring or selling a substantial part of its assets or granting security over them. The loan agreement also commits the Company to comply with certain financial ratios, on the basis of its consolidated financial statements:
Debt ratio, maximum: 0.85:1
Maximum financial debt to cash generation ratio: 5.5:1 (2004); 5.0:1 (2005); 4.5:1 (2006); 4.0:1 (2007).
Minimum cash generation to financial expense ratio: 2.5:1 (2004); 2.65:1 (2005); 3.0:1 (2006); 3.25:1 (2007)
Minimum tangible net equity: ThUS$ 700,000
Forestal Argentina S.A.
- On September 2, 2005, Masisa S.A. became a joint and several guarantor in favor of Banco Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank Nederland) for the loan granted by that bank the same year to the subsidiary Forestal Argentina S.A. This loan was to be used to restructure its financial debt. The loan agreement states that Masisa S.A., as guarantor, should comply with certain obligations normal to this type of transaction. The loan agreement also obliges Masisa.S.A. to comply with the certain financial ratios, on the basis of its consolidated financial statements:
Minimum installed board production capacity: 1,200,000
Maximum debt level: 0.9:1
Minimum interest coverage: 3:1
Minimum forestry asset coverage: 1.5:1
Minimum net tangible equity: ThUS$ 700,000
Forestal Tornagaleones S.A.
- On October 15, 1998, Forestal Tornagaleones S.A. signed a loan agreement with Rabobank Investments Chile S.A. and granted security in the form of a mortgage over land and plantations for the term of the loan. The loan was renewed on August 9, 2005. The book value of the plantations mortgaged at December 31, 2005 is ThUS$22,830 and the land ThUS$5,019.
116 | ANNUAL REPORT 2005 MASISA
b) Deferred customs duties
At December 31, 2005, the Company owed deferred customs duties of ThUS$195 (ThUS$1,160 in 2004). These duties ThUS$ 195 (ThUS$978 in 2004) are not shown as liabilities as it is expected to take advantage of export incentives that provide exemption from the payment of these. The balance is shown in Long-term liabilities.
Expiry | ThUS$ | |
2006 | 118 | |
2007 | 72 | |
2008 | 5 | |
Total | 195 | |
c) Insurance cover
The principal insurance cover contracted by the Parent company and its subsidiaries at December 31, 2005 is as follows:
- Plantations of the Chilean subsidiaries: ThUS$315,592.
- Physical assets and inventories of the Chilean subsidiaries: approximately ThUS$247,811 and ThUS$87,496 for fixed costs in the event of plant stoppages.
- Corporate civil liability, including personal accidents and damages to third parties for ThUS$10,000.
- Regarding the Brazilian subsidiaries, cover for plantations of ThUS$ 71,194, physical assets and inventories of ThUS$197,154 and ThUS$54,750 for fixed costs in the event of plant stoppages.
- The companies in Venezuela have contracted cover for their physical assets and inventories for ThUS$236,902 and ThUS$ 22,508 for fixed costs in the event of plant stoppages.
- The companies in Mexico have contracted cover for their physical assets and inventories for ThUS$42,429 and ThUS$9,310 for fixed costs in the event of plant stoppages.
- The companies in Argentina have the following cover: forest plantations ThUS$40,086, physical assets and inventories ThUS$178,015 and ThUS$31,438 for fixed costs in the event of plant stoppages.
- The subsidiary in the USA has cover for its physical assets and inventories ThUS$21,441 and ThUS$3,500 for fixed costs in the event of plant stoppages.
d) Other contingencies
- By Resolution 203 of August 26, 2003, the Internal Tax Service notified the Company that it is incorrect to recognize in Chile, for determining taxable income for income tax, the results of any of its foreign agencies. According to the information in the hands of the Company, Resolution 203 would affect losses for which the Company has booked US$39.2 million for deferred tax, recoverable taxes and not-yet-used tax losses.
The Company has appealed against the terms of Resolution 203 in accordance with the procedure set out in clause 123 onward of the Tax Code. Based on the information in the Company’s possession, the opinion of its legal advisers and administrative jurisprudence of the Internal Tax Service, which affects the terms of Resolution 203, it is believed that the probability is remote that the definitive sentence in the appeal process would unfavorably affect the concept of deferred tax, recoverable taxes and tax losses of U$39.2 million booked by the Company.
e) Sale of Shares and Shareholders Agreement
- On the constitution of the indirect subsidiary Oxinova C.A. in Venezuela, the subsidiary Inversiones Internaciona-les Terranova S.A. signed a shareholders agreement with the company Oxiquim S.A., mainly referring to restricting the sale of shares, not granting pledges or any lien over any shares held and maintaining control of Fibranova C.A., either directly or through Masisa S.A.
ANNUAL REPORT 2005 MASISA | 117
- The Chilean subsidiary Inversiones Internacionales Te-rranova S.A., on May 23, 2002, signed a shareholders’ agreement with the autonomous state entity, Corporación Venezolana de Guayana (CVG), to regulate the principles, rights and obligations of the parties in a Venezuelan corporation to be formed for the construction, management and operation of a river port on the north bank of the Orinoco River, Macapaima, Venezuela.
For various reasons, the constitution of this company has still not been completed at the close of these financial statements.
f) Timber purchase contract
At the end of the year, the subsidiary Terranova de Vene-zuela S.A. (TDVSA) has a timber purchase contract covering Caribbean pine wood, signed in May 1997. The plantation subject to the contract covers a total of 59,000 hectares in the State of Monagas, Venezuela, comprising two areas of 30,000 and 29,000 hectares each. The exploitation period for these forest plantations is 30 years and the reserves not used will be returned to CVG Proforca C.A
The contract includes the following conditions:
1. The plots of land where the plantations are located are owned by CVG Proforca C.A. and form no part of the sale.
2. The procedures, obtaining and related costs of future permits required shall be for the account of TDVSA.
3. CVG Proforca C.A. should indemnify TDVSA in all cases where the latter incurs expenses and costs for non-compliance by CVG Proforca C.A. as the owner, possessor and operator of these resources.
4. TDVSA should comply with the rules for environmental protection, fire prevention, industrial hygiene and safety, the harvesting of standing timber and maintenance of roadways and infrastructure, as well as analyze risks to avoid fires and prepare an operating plan to combat fires.
5. TDVSA should contract insurance cover for third-party costs, the beneficiary being CVG Proforca C.A
g) Uverito sawmill rental agreement
In May 1997, the subsidiary Terranova de Venezuela S.A. (TDVSA) signed a sawmill rental agreement with CVG Pro-forca C.A. against the sole payment of ThUS$ 10,000, for a term of 15 years from 1997. It has to comply with the following conditions during the term of the agreement:
1. Maintain and repair the equipment for its proper functioning shall be for the account of TDVSA.
2. Improvements shall belong to TDVSA and may be withdrawn by it provided this causes no damage to the assets rented.
3. The cost of electricity, water, telephone and other services for the commercial operation shall be for the account of TDVSA.
4. Property taxes shall be for the account of CVG Proforca C.A. and those relating to the operation for the account of TDVSA.
5. Effective January 1998, the equipment should be insured against all risks, with the beneficiary being CVG Pro-forca C.A.
h) Usufruct agreement over 30,000 hectares
In May 1997, the subsidiary Terranova de Venezuela S.A. (TDVSA) signed an agreement with CVG Proforca C.A. whereby the latter granted the water rights over a plot of land of 30,000 hectares, being one of the two plots referred to in the timber purchase contract.
The term of the contract is 30 years, but the usage rights shall cease once TDVSA has exploited all the forest resources following the twentieth year. In consideration, TDVSA shall transfer to CVG Proforca C.A. the ownership of forest plantations planted at its expense, which shall be aged at least 10 years, in an area of no less than 7,500 hectares and with no fewer than 400 plants per hectare of the Cari-bbean pine species.
118 | ANNUAL REPORT 2005 MASISA
TDVSA has also committed to:
- Reforest at its cost and for its benefit (except for the consideration to CVG Proforca C.A. referred to above) the portions of the property that have been harvested by TDVSA during the first twenty years of this agreement.
- Provide a performance bond for the obligations assumed under this agreement in favor of CVG Proforca C.A. for an amount of ThUS$ 300.
i) Annual sales contract with CVG PROFORCA C.A
During April 2000, Terranova de Venezuela, S.A. (TDVSA) signed an annual sales contract with CVG Proforca C.A. for 400,000 m3 SSC of commercial Caribbean pine timber. The contract includes 236,000 m3 SSC from the bilateral cancellation of the contract signed on 05/29/1992 between CVG Proforca C.A. and Coforven S.A., which contemplated the harvesting of that volume.
In addition, for the purposes of the disposal of the commercial timber, CVG Proforca C.A. and TDVSA agreed to set unit prices for thick and thin timber for the year 2000, to be indexed annually according to changes in the Consumer Price Index (CPI) of the United States of America during the preceding year.
INDIRECT GUARANTEES (ThUS$) | ||||||||||||||
Creditor | Debtor | Type of | Assets affected | Balance outstanding at end of the year | Guarantees release | |||||||||
guarantee | ||||||||||||||
Name | Relationship | Type | Book | 12-2005 | 12-2004 | 12-2006 | Assets | 12-2007 | Assets | 12-2008 | Assets | |||
Value | ||||||||||||||
BANCO SANTANDER LONDON | OXINOVA C.A. | ASSOCIATE | GUARANTEE | EQUITY | 0 | 0 | 858 | - | - | - | - | 0 | - | |
BANCO DE CHILE | OXINOVA C.A. | ASSOCIATE | GUARANTEE | EQUITY | 4,900 | 4,900 | 4,900 | 10,000 | - | - | - | 0 | - |
NOTE 28: GUARANTEES RECEIVED FFOM THIRD PARTIES
At the close of these financial statements and to guarantee the payment and compliance of customer obligations related to business operations, guarantees have been received for ThUS$3,542 (ThUS$5,732 in 2004), consisting of pledges, mortgages, credit insurance policy endorsements, special mandates and personal guarantees.
ANNUAL REPORT 2005 MASISA | 119
NOTE 29: LOCAL AND FOREIGN CURRENCIES
ASSETS (ThUS$) | |||||
Amount | Amount | ||||
Account | Currency | 12-31-2005 | 12-31-2004 | ||
Current assets | |||||
CASH & BANKS | CHILEAN PESO | 654 | 887 | ||
CASH & BANKS | EURO | 26 | 0 | ||
CASH & BANKS | US DOLLAR | 2,232 | 3,996 | ||
CASH & BANKS | ARGENTINE PESO | 182 | 366 | ||
CASH & BANKS | BRAZILIAN REAL | 2,945 | 2,828 | ||
CASH & BANKS | MEXICAN PESO | 1,947 | 1,937 | ||
CASH & BANKS | BOLIVARES | 3,752 | 2,025 | ||
CASH & BANKS | OTHER CURRENCIES | 249 | 1,087 | ||
TIME DEPOSITS | US DOLLAR | 69,694 | 43,586 | ||
TIME DEPOSITS | BOLIVARES | 2,073 | 553 | ||
TIME DEPOSITS | BRAZILIAN REAL | 11,139 | 0 | ||
MARKETABLE SECURITIES | CHILEAN PESO | 2,229 | 90 | ||
MARKETABLE SECURITIES | OTHER CURRENCIES | 195 | 1,175 | ||
TRADE ACCOUNTS RECEIVABLE | CHILEAN PESO | 23,561 | 17,662 | ||
TRADE ACCOUNTS RECEIVABLE | EURO | 46 | 0 | ||
TRADE ACCOUNTS RECEIVABLE | US DOLLAR | 32,529 | 42,828 | ||
TRADE ACCOUNTS RECEIVABLE | ARGENTINE PESO | 2,689 | 2,628 | ||
TRADE ACCOUNTS RECEIVABLE | BRAZILIAN REAL | 16,818 | 14,284 | ||
TRADE ACCOUNTS RECEIVABLE | BOLIVARES | 5,534 | 892 | ||
TRADE ACCOUNTS RECEIVABLE | OTHER CURRENCIES | 3,441 | 7,154 | ||
TRADE ACCOUNTS RECEIVABLE | MEXICAN PESO | 15,454 | 24,005 | ||
NOTES RECEIVABLE | CHILEAN PESO | 5,166 | 3,262 | ||
NOTES RECEIVABLE | US DOLLAR | 2,856 | 616 | ||
NOTES RECEIVABLE | ARGENTINE PESO | 2,934 | 2,242 | ||
NOTES RECEIVABLE | OTHER CURRENCIES | 4 | 1,478 | ||
NOTES RECEIVABLE | BRAZILIAN REAL | 7 | 0 | ||
NOTES RECEIVABLE | MEXICAN PESO | 2,198 | 1,173 | ||
SUNDRY DEBTORS | EURO | 288 | 0 | ||
SUNDRY DEBTORS | US DOLLAR | 4,938 | 8,959 | ||
SUNDRY DEBTORS | BOLIVARES | 3,082 | 1,780 | ||
SUNDRY DEBTORS | CHILEAN PESO | 4,594 | 5,279 | ||
SUNDRY DEBTORS | ARGENTINE PESO | 1,070 | 1,123 | ||
SUNDRY DEBTORS | BRAZILIAN REAL | 2,452 | 3,724 | ||
SUNDRY DEBTORS | MEXICAN PESO | 3,429 | 4,822 |
120 | ANNUAL REPORT 2005 MASISA
ASSETS (ThUS$) continuation | |||||
Amount | Amount | ||||
Account | Currency | 12-31-2005 | 12-31-2004 | ||
SUNDRY DEBTORS | OTHER CURRENCIES | 518 | 601 | ||
NOTES & ACCOUNTS RECEIVABLE RELATED COMPANIES | US DOLLAR | 5,296 | 9,290 | ||
INVENTORIES | US DOLLAR | 222,465 | 196,445 | ||
RECOVERABLE TAXES | CHILEAN PESO | 19,908 | 18,640 | ||
RECOVERABLE TAXES | US DOLLAR | 3,220 | 6,541 | ||
RECOVERABLE TAXES | ARGENTINE PESO | 5,117 | 5,021 | ||
RECOVERABLE TAXES | BRAZILIAN REAL | 7,355 | 3,294 | ||
RECOVERABLE TAXES | MEXICAN PESO | 3,269 | 1,320 | ||
RECOVERABLE TAXES | BOLIVARES | 12,909 | 13,734 | ||
RECOVERABLE TAXES | OTHER CURRENCIES | 1,444 | 1,179 | ||
PREPAID EXPENSES | DOLLARS | 4,187 | 4,833 | ||
PREPAID EXPENSES | ARGENTINE PESO | 188 | 20 | ||
PREPAID EXPENSES | BOLIVARES | 279 | 220 | ||
PREPAID EXPENSES | CHILEAN PESO | 3,557 | 4,088 | ||
PREPAID EXPENSES | BRAZILIAN REAL | 1,582 | 1,306 | ||
PREPAID EXPENSES | MEXICAN PESO | 55 | 8 | ||
PREPAID EXPENSES | OTHER CURRENCIES | 493 | 0 | ||
DEFERRED TAXES | US DOLLAR | 2,138 | 2,656 | ||
DEFERRED TAXES | OTHER CURRENCIES | 0 | 17 | ||
OTHER CURRENT ASSETS | OTHER CURRENCIES | 105 | 0 | ||
OTHER CURRENT ASSETS | CHILEAN PESO | 707 | 0 | ||
OTHER CURRENT ASSETS | US DOLLAR | 2,086 | 534 | ||
OTHER CURRENT ASSETS | BRAZILIAN REAL | 0 | 40 | ||
OTHER CURRENT ASSETS | MEXICAN PESO | 2 | 0 | ||
Fixed assets | |||||
FIXED ASSETS | US DOLLAR | 1,455,997 | 1,410,209 | ||
Other assets | |||||
INVESTMENT IN RELATED COMPANIES | US DOLLAR | 4,060 | 3,340 | ||
INVESTMENT IN OTHER COMPANIES | CHILEAN PESO | 7 | 7 | ||
INVESTMENT IN OTHER COMPANIES | BOLIVARES | 40 | 26 | ||
INVESTMENT IN OTHER COMPANIES | US DOLLAR | 160 | 143 | ||
GOODWILL | US DOLLAR | 1,249 | 2,040 | ||
NEGATIVE GOODWILL | US DOLLAR | -53,460 | -44,959 | ||
LONG-TERM DEBTORS | US DOLLAR | 1,017 | 3,983 | ||
LONG-TERM DEBTORS | CHILEAN PESO | 2,783 | 1,005 |
ANNUAL REPORT 2005 MASISA | 121
ASSETS (ThUS$) continuation | |||||
Amount | Amount | ||||
Account | Currency | 12-31-2005 | 12-31-2004 | ||
LONG-TERM DEBTORS | ARGENTINE PESO | 0 | 134 | ||
LONG-TERM DEBTORS | BRAZILIAN REAL | 1,101 | 657 | ||
NOTES & ACCOUNTS RECEIVABLE RELATED COMPANIES | US DOLLAR | 0 | 597 | ||
INTANGIBLE ASSETS | US DOLLAR | 122 | 122 | ||
AMORTIZATION (LESS) | US DOLLAR | -22 | -18 | ||
OTHERS | CHILEAN PESO | 8,370 | 9,153 | ||
OTHERS | ARGENTINE PESO | 45 | 142 | ||
OTHERS | DOLLARS | 16,044 | 25,299 | ||
OTHERS | BRAZILIAN REAL | 1,008 | 520 | ||
OTHERS | MEXICAN PESO | 113 | 387 | ||
Total Assets | |||||
CHILEAN PESO | 71,536 | 60,073 | |||
EURO | 360 | 0 | |||
US DOLLAR | 1,776,808 | 1,721,040 | |||
ARGENTINE PESO | 12,225 | 11,676 | |||
BRAZILIAN REAL | 44,407 | 26,653 | |||
MEXICAN PESO | 26,467 | 33,652 | |||
BOLIVARES | 27,669 | 19,230 | |||
OTHER CURRENCIES | 6,449 | 12,691 |
122 | ANNUAL REPORT 2005 MASISA
CURRENT LIABILITIES (ThUS$) | ||||||||||||||||||
ACCOUNT | Currency | Up to 90 days | 90 days to 1 year | |||||||||||||||
12-31-2005 | 12-31-2004 | 12-31-2005 | 12-31-2004 | |||||||||||||||
Amount | Avg. | Amount | Avg. | Amount | Avg. | Amount | Avg. | |||||||||||
annual | annual | annual | annual | |||||||||||||||
interest | interest | interest | interest | |||||||||||||||
rate | rate | rate | rate | |||||||||||||||
BORROWINGS FROM BANKS-SHORT TERM | CHILEAN PESO | 16 | ||||||||||||||||
BORROWINGS FROM BANKS-SHORT TERM | US DOLLAR | 58,655 | 4.02% | 8,632 | 3.30% | 10,732 | 4.02% | 19,251 | 3.30% | |||||||||
BORROWINGS FROM BANKS-SHORT TERM | BRAZILIAN REAL | 14,808 | 5.19% | 4,594 | 5.19% | |||||||||||||
BORROWINGS FROM BANKS-SHORT TERM | BOLIVARES | 45,718 | 14.50% | |||||||||||||||
BORROWINGS FROM BANKS-SHORT TERM | MEXICAN PESO | 1,506 | 4.71% | |||||||||||||||
BORROWINGS FROM BANKS-CURRENT PORTION L/T | U.F. | 1,562 | 6.70% | 1,494 | 6.70% | 1,414 | 6,70% | |||||||||||
BORROWINGS FROM BANKS-CURRENT PORTION L/T | US DOLLAR | 9,372 | 3.83% | 3,503 | 3.30% | 59,715 | 3.83% | 57,764 | 3.30% | |||||||||
BORROWINGS FROM BANKS-CURRENT PORTION L/T | BOLIVARES | 3,889 | 17.25% | |||||||||||||||
BORROWINGS FROM BANKS-CURRENT PORTION L/T | OTHER CURRENCIES | 16 | 3.00% | |||||||||||||||
BONDS PAYABLE CURRENT PORTION | U.F. | 175,946 | 5.20% | 15,601 | 5.00% | |||||||||||||
BONDS PAYABLE CURRENT PORTION | US DOLLAR | 9,340 | 8.05% | 9,433 | 5.00% | |||||||||||||
CURRENT PORTION LONG TERM LIABILITIES | US DOLLAR | 1 | 22 | 89 | ||||||||||||||
DIVIDENDS PAYABLE | CHILEAN PESO | 323 | 242 | |||||||||||||||
ACCOUNTS PAYABLE | CHILEAN PESO | 21,461 | 18,745 | |||||||||||||||
ACCOUNTS PAYABLE | US DOLLAR | 17,337 | 16,443 | |||||||||||||||
ACCOUNTS PAYABLE | CHILEAN PESO | 1,300 | 3,187 | |||||||||||||||
ARGENTIN | ||||||||||||||||||
ACCOUNTS PAYABLE | BRAZILIAN REAL | 5,965 | 2,142 | |||||||||||||||
ACCOUNTS PAYABLE | BOLIVARES | 1,595 | 3,064 | |||||||||||||||
ACCOUNTS PAYABLE | MEXICAN PESO | 3,193 | 9,059 | |||||||||||||||
ACCOUNTS PAYABLE | EURO | 167 | ||||||||||||||||
ACCOUNTS PAYABLE | OTHER | 1,423 | 2,480 | |||||||||||||||
CURRENCIES | ||||||||||||||||||
NOTES PAYABLE | CHILEAN PESO | 6 | ||||||||||||||||
NOTES PAYABLE | ARGENTINE PESO | 875 | 557 | |||||||||||||||
SUNDRY CREDITORS | CHILEAN PESO | 36 | 90 | |||||||||||||||
SUNDRY CREDITORS | US DOLLAR | 1,250 | 2,346 | 3 | ||||||||||||||
SUNDRY CREDITORS | ARGENTINE PESO | 57 | 168 |
ANNUAL REPORT 2005 MASISA | 123
CURRENT LIABILITIES (ThUS$) continuation | |||||||||||||
ACCOUNT | Currency | Up to 90 days | 90 days to 1 year | ||||||||||
12-31-2005 | 12-31-2004 | 12-31-2005 | 12-31-2004 | ||||||||||
Amount | Avg. | Amount | Avg. | Amount | Avg. | Amount | Avg. | ||||||
annual | annual | annual | annual | ||||||||||
interest | interest | interest | interest | ||||||||||
rate | rate | rate | rate | ||||||||||
SUNDRY CREDITORS | MEXICAN PESO | 19 | |||||||||||
SUNDRY CREDITORS | OTHER | 44 | 33 | ||||||||||
CURRENCIES | |||||||||||||
NOTES & ACCOUNTS PAYABLE RELATED | DOLARES | 417 | 5,830 | 3,033 | |||||||||
COMPANIES | |||||||||||||
PROVISIONS | CHILEAN PESO | 4,726 | 5,126 | ||||||||||
PROVISIONS | US DOLLAR | 5,341 | 6,508 | 1,068 | 1,761 | ||||||||
PROVISIONS | ARGENTINE PESO | 4,102 | 751 | 116 | |||||||||
PROVISIONS | BOLIVARES | 1,634 | 1,615 | ||||||||||
PROVISIONS | BRAZILIAN REAL | 3,011 | 951 | ||||||||||
PROVISIONS | PESOS MEXICANO | 1,589 | 853 | ||||||||||
PROVISIONS | OTHER | 103 | 229 | ||||||||||
CURRENCIES | |||||||||||||
WITHHOLDINGS | CHILEAN PESO | 2,412 | 1,139 | ||||||||||
WITHHOLDINGS | US DOLLAR | 816 | 781 | 21 | 147 | ||||||||
WITHHOLDINGS | BOLIVARES | 1,148 | 1,064 | ||||||||||
WITHHOLDINGS | ARGENTINE PESO | 748 | 589 | ||||||||||
WITHHOLDINGS | BRAZILIAN REAL | 5,029 | 1,024 | ||||||||||
WITHHOLDINGS | MEXICAN PESO | 1,104 | 1,755 | ||||||||||
WITHHOLDINGS | OTHER | 46 | 10 | ||||||||||
CURRENCIES | |||||||||||||
INCOME TAX | CHILEAN PESO | 1,227 | 1,405 | ||||||||||
INCOME TAX | DOLARES | 461 | 274 | ||||||||||
INCOME TAX | ARGENTINE PESO | 3,493 | |||||||||||
INCOME TAX | BOLIVARES | 148 | 596 | ||||||||||
INCOME TAX | MEXICAN PESO | 286 | 946 | ||||||||||
INCOME TAX | OTHER | 894 | 1,389 | 1,444 | |||||||||
CURRENCIES | |||||||||||||
UNEARNED INCOME | CHILEAN PESO | 16 | 670 | ||||||||||
UNEARNED INCOME | US DOLLAR | 710 | |||||||||||
UNEARNED INCOME | ARGENTINE PESO | 175 | 396 | ||||||||||
UNEARNED INCOME | BRAZILIAN REAL | 445 | |||||||||||
UNEARNED INCOME | MEXICAN PESO | 40 | 72 | ||||||||||
UNEARNED INCOME | OTHER | 254 | |||||||||||
CURRENCIES | |||||||||||||
OTHER CURRENT LIABILITIES | CHILEAN PESO | 8 | |||||||||||
OTHER CURRENT LIABILITIES | ARGENTINE PESO | 97 | |||||||||||
OTHER CURRENT LIABILITIES | PESOS MEXICANO | 145 |
124 | ANNUAL REPORT 2005 MASISA
CURRENT LIABILITIES (ThUS$) continuation | ||||||||||||
ACCOUNT | Currency | Up to 90 days | 90 days to 1 year | |||||||||
12-31-2005 | 12-31-2004 | 12-31-2005 | 12-31-2004 | |||||||||
Amount | Avg. | Amount | Avg. | Amount | Avg. | Amount | Avg. | |||||
annual | annual | annual | annual | |||||||||
interest | interest | interest | interest | |||||||||
rate | rate | rate | rate | |||||||||
OTHER CURRENT LIABILITIES | ||||||||||||
CHILEAN PESO | 28,996 | 26,020 | 1,227 | 1,405 | ||||||||
US DOLLAR | 93,189 | 44,775 | 84.370 | 88,722 | ||||||||
BRAZILIAN REAL | 14,005 | 19,370 | 0 | 4,594 | ||||||||
BOLIVARES | 4,525 | 5,743 | 49,607 | 596 | ||||||||
MEXICAN PESO | 6,376 | 11,739 | 946 | 1,506 | ||||||||
U.F. | 1,562 | 0 | 177,440 | 17,015 | ||||||||
OTHER | 2,510 | 4,411 | 0 | 1,444 | ||||||||
CURRENCIES | ||||||||||||
ARGENTINE PESO | 7,354 | 5,648 | 3,493 | 116 | ||||||||
EURO | 167 | 0 | 0 | 0 |
LONG-TERM LIABILITIES 12-31-2005 (ThUS$) | ||||||||||||||
ACCOUNT | Currency | 1 to 3 years | 3 to 5 years | 5 to 10 years | More than 10 years | |||||||||
Amount | Avg. | Amount | Avg. | Amount | Avg. | Amount. | Avg. | |||||||
annual | annual | annual | annual | |||||||||||
interest | interest | interest | interest | |||||||||||
rate | ratel | rate | rate | |||||||||||
BORROWINGS FROM BANKS LONG TERM | DOLLARS | 95,934 | 3.83% | 26,378 | 3.83% | 9,060 | 3.83% | |||||||
BORROWINGS FROM BANKS LONG TERM | BOLIVARES | 4,152 | 17.25% | |||||||||||
BONDS PAYABLE | U.F. | 32,668 | 5.24% | 32,672 | 5.24% | 8,793 | 5.24% | 15,828 | 5.24% | |||||
BONDS PAYABLE | DOLLARS | 48,000 | 5.00% | |||||||||||
SUNDRY CREDITORS | CHILEAN PESO | 28 | ||||||||||||
SUNDRY CREDITORS | DOLLARS | 216 | ||||||||||||
PROVISIONS | CHILEAN PESO | 4 | 21 | |||||||||||
PROVISIONS | DOLLARS | 1,000 | ||||||||||||
PROVISIONS | REAL | 393 | ||||||||||||
DEFERRED TAXES | DOLLARS | 457 | 38,237 | |||||||||||
OTHER L/T LIABILITIES | CHILEAN PESO | 1,682 | 633 | 316 | ||||||||||
OTHER L/T LIABILITIES | REAL | 10,097 | 3,637 | |||||||||||
OTHER L/T LIABILITIES | DOLLARS | 3,600 | ||||||||||||
TOTAL LONG-TERM LIABILITIES | ||||||||||||||
DOLLARS | 147,750 | 26,378 | 9.517 | 39,237 | ||||||||||
BOLIVARES | 4,152 | 0 | 0 | 0 | ||||||||||
U.F. | 32,668 | 32,672 | 8,793 | 15,828 | ||||||||||
CHILEAN PESO | 1,714 | 633 | 337 | 0 | ||||||||||
REAL | 10,49 | 3,637 | 0 | 0 |
ANNUAL REPORT 2005 MASISA | 125
LONG-TERM LIABILITIES 12-31-2004 (ThUS$) | ||||||||||||||
ACCOUNT | Currency | 1 to 3 years | 3 to 5 years | 5 to 10 years | More than 10 years | |||||||||
Amount | Avg. | Amount | Avg. | Amount | Avg. | Amount | Avg. | |||||||
annual | annual | annual | annual | |||||||||||
interest | interest | interest | interest | |||||||||||
rate | ratel | rate | rate | |||||||||||
BORROWINGS FROM BANKS LONG TERM | U.F. | 2,648 | 6.70% | |||||||||||
BORROWINGS FROM BANKS LONG TERM | DOLLARS | 124,078 | 3.30% | 54,479 | 3.30% | 8,980 | 3.30% | |||||||
BONDS PAYABLE | U.F. | 62,135 | 5.00% | 62,135 | 5.00% | 99,433 | 5.53% | 13,982 | 6.11% | |||||
BONDS PAYABLE | DOLLARS | 18,000 | 8.06% | 39,000 | 6.15% | |||||||||
SUNDRY CREDITORS | CHILEAN PESO | 119 | ||||||||||||
SUNDRY CREDITORS | DOLLARS | 238 | ||||||||||||
PROVISIONS | CHILEAN PESO | 13 | ||||||||||||
PROVISIONS | REAL | 618 | ||||||||||||
OTHER L/T LIABILITIES | DOLLARS | 2,740 | ||||||||||||
OTHER L/T LIABILITIES | REAL | 9,071 | 5,120 | |||||||||||
INCOME TAXES | DOLLARS | 31,152 | ||||||||||||
TOTAL LONG-TERM LIABILITIES | ||||||||||||||
U.F. | 64,783 | 62,135 | 99,433 | 13,982 | ||||||||||
DOLLARS | 145,056 | 93,479 | 8,980 | 31,152 | ||||||||||
CHILEAN PESO | 132 | 0 | 0 | 0 | ||||||||||
REAL | 9,689 | 5,120 | 0 | 0 |
NOTE 30: SANCTIONS
Neither the Company nor its directors or managers have received sanctions during 2005 from the Superintendency of Securities and Insurance or other administrative authorities.
NOTE 31: SUBSEQUENT EVENTS
-On January 5, 2006, the preemptive rights option period closed for the subscription of shares issued as part of the capital increase made in December 2005. 619,627,070 shares were finally placed for an amount of approximately US$117.5 million.
On the dame day, the preemptive rights option period closed for the subscription of own-issued shares. 13,545,374 shares were placed for an amount of approximately US$2.6 million.
-An extraordinary board meeting held on January 11, 2006, resolved the following:
1.- To call a bond-holders’ meeting for the month of March 2006 to submit for their consideration the following modifications to the bond issue indenture inscribed in the Securities Register of the Superintendency under number 440, on November 15, 2005, under which the Series D bonds were issued to be placed on January 12, 2006.
126 | ANNUAL REPORT 2005 MASISA
a) Modify No.14 of clause 4a., replacing its third paragraph with the following:
“The bonds shall be redeemed, except for the Series D bonds corresponding to the first issue under the Line which shall be governed in this respect by the provisions of No.8 of clause 7a. of this indenture, at a value equivalent to the outstanding balance of principal plus accrued interest for the period between the day following the maturity of the last interest payment made and the date set for the redemption”.
b) Modify No.8 of clause 7a. of the indenture:
“Eight/Redemption in advance.- The bonds of the Series D may be redeemed as from April 15, 2008 in the form set out in No.14 of clause a of this instrument. These bonds shall be redeemed at a value equivalent to the present value of the future bond cash flows corresponding to the outstanding balance of principal and interest, discounted at a rate of 4.0% per annum, compounded, calculated on equal semi-annual periods of 180 days”.
2.- Call a bond-holders’ meeting to be held on the same date as that status in No.1 above, to approve the following modifications of the bond issue indenture inscribed in the Securities Register of the Superintendency under number 439, on November 14, 2005, under which the Series E bonds were issued to be placed on January 12, 2006.
a) Modify No.14 of clause 4a., replacing its third paragraph with the following:
“The bonds shall be redeemed, except for the Series E bonds corresponding to the first issue under the Line which shall be governed in this respect by the provisions of No.8 of clause 7a. of this indenture, at a value equivalent to the outstanding balance of principal plus accrued interest for the period between the day following the maturity of the last interest payment made and the date set for the redemption”.
b) Modify No.8 of clause 7a. of the indenture for the issue for the Series E bonds, replacing its as follows:
“Eight/Redemption in advance.- The bonds of the Series E may be redeemed as from April 15, 2008 in the form set out in No.4a, No.18 of this instrument. These bonds shall be redeemed at a value equivalent to the present value of the future bond cash flows corresponding to the outstanding balance of principal and interest, discounted at a rate of 4.4% per annum, compounded, calculated on equal semi-annual periods of 180 days”.
On January 12, 2006, the Chief Executive Officer reported as material information that, with respect to the two lines of bonds inscribed in the Securities Register of the Superintendency under numbers 439 and 440, on November 14 and 15, 2005, respectively:
1.- Against Line No.439, bonds were placed for UF 2,750,000 of the Series E, with a term of 21 years with 1 year’s grace and an interest rate of 4.79% per annum.
2.- Against Line No.440, bonds were placed for UF 2,000,000 of the Series D, with a term of 7 years with 2 year’s grace and an interest rate of 4.59% per annum.
The proceeds of these placements will be used to repay financial debt of the Company and/or its subsidiaries. In fact, the Series A and B bonds issued by the former Terranova S.A. were prepaid on January 23, 2006 for a total amount of UF 4,500,000.
The Company is unaware of any other subsequent significant events occurring between December 31, 2005 and the date of issue of these financial statements that might affect the financial position of the Company.
ANNUAL REPORT 2005 MASISA | 127
NOTE 32: THE ENVIRONMENT
The Company’s environmental policy is managed from the following two perspectives:
1. – Legal aspect:
This includes everything related to requests for permits, authorizations and certificated related to the environment and the correction of aspects that might be outstanding.
2. – Environmental management and eco-efficiency:
In the belief that every process can be improved through responsible and proper environmental management, the Company has been concerned to evaluate and develop projects that provide cost savings, reductions in losses in the processes for achieving an efficient use of resources and, finally, the introduction of certified environmental management systems in line with international standards.
The Company has committed to and made investments in the operative areas associated with the environmental management system. The amounts invested by the Company and subsidies are:
Company | Budget | Invested | Invested | ||
ThUS$ | Accumulated | 2005 | |||
ThUS$ | ThUS$ | ||||
Total Masisa Chile | 4,095 | 3,818 | 1,540 | ||
Total Terranova | 290 | 2,702 | 1,250 | ||
Venezuela | |||||
Total Terranova Brazil | 286 | 138 | 29 | ||
Total Masisa | 1,640 | 866 | 464 | ||
Argentina | |||||
Total Masisa Brasil | 1,946 | 1,542 | 5 | ||
Total Masisa Mexico | 996 | 986 | 1 | ||
Total Forestal | 80 | 155 | 121 | ||
Argentina | |||||
Total Forestal | 638 | 798 | 186 | ||
Tornagaleones | |||||
Global total | 9,971 | 11,005 | 3,596 |
128 | ANNUAL REPORT 2005 MASISA
REASONED ANALYSIS
MANAGEMENT ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2005 (thousands of US$)
A. Comparative analysis of the principal trends noted:
2005 | 2004 | |||
Jan-Dec | Jan-Dec | |||
Liquidity Ratios | ||||
------------------- | ||||
Current Ratio | 1.11 | 2.03 | ||
Acid Test | 0.03 | 0.06 |
The negative change in the current ratio compared to December 2004 is due to the increase in short-term financial debt (transfers from long-term debt), principally resulting from the current portion due on bonds Series A1, A2 and B that were redeemed in December 2005 and prepaid in January 2006. On the other hand, the increase in cash and equivalents explains the improvement in the acid test ratio at December 2005.
2005 | 2004 | |||
Jan-Dec | Jan-Dec | |||
Debt Ratios | ||||
----------- | ||||
Debt Ratio (times) | 0.72 | 0.96 | ||
Short-term Debt / Total Debt | 58.77% | 30.39% | ||
Long-Term Debt / Total Debt | 41.23% | 69.61% | ||
Financial Expense Coverage (times) | 1.80 | 3.05 |
The debt ratio is lower than at December 2004 as a result of the capital increase following the merger of Masisa S.A. with Terranova S.A., while the proportion of short-term to total debt increased for the reasons explained in the previous paragraph.
The reduction in the financial expense coverage is basically due to the decline in the result for the year due to, among other things, a gain on the sale of forestry assets in December 2004.
2005 | 2004 | |||
Jan-Dec | Jan-Dec | |||
Activity | ||||
-------------------- | ||||
1.Total Assets | 1,965,921 | 1,885,015 | ||
Investments during the year | ||||
- in Fixed Assets | 67,289 | 42,362 | ||
Disposals: | ||||
- Sales of Fixed Assets | 2,193 | 77,707 | ||
2.Inventory Turnover | 2.47 | 2.35 | ||
3.Permanence of Inventories | 145.75 | 153.15 | ||
4.Accounts Payable Turnover | 11.22 | 8.38 | ||
5.Permanence of Accounts Payable | 32.09 | 42.95 | ||
6.Accounts Receivable Turnover | 3.71 | 3.01 | ||
7.Permanence of Accounts Receivable | 96.96 | 119.59 |
Both turnover and permanence showed improvements during the year.
2005 | 2004 | |||
Jan-Dec | Jan-Dec | |||
Results Ratios | ||||
--------------------- | ||||
Sales | 743,993 | 651,000 | ||
- Domestic Market | 683,331 | 528,988 | ||
- External Market | 60,662 | 122,012 | ||
Cost of Sales | (549,501) | (461,778) | ||
- Domestic Market | (524,551) | (382,672) | ||
- External Market | (24,950) | (79,106) | ||
Operating Income | 81,898 | 95,117 | ||
Financial Expenses | (38,756) | (39,294) | ||
Non-Operating Result | (50,986) | (14,535) | ||
EBITDA | 122,285 | 170,094 | ||
Net income after tax | 22,981 | 53,453 |
The Company’s sales in 2005 amounted to US$744.0 million, an increase of approximately 14.3% over the previous year.
Operating income was US$81.9 million, a decline of 13.9% from the year before.
The non-operating result was -US$51.0 million, which compares negatively with -US$14.5 million in 2004. This is partly explained by exchange differences of -US$10.4 million in 2005, compared to -US$3.2 million the year before. These differences were produced in both years by the effect of changes in the exchange rate on the Company’s debt in UF.
Net income for 2005 was US$ 26.4 million, compared to US$ 56.8 million in 2004. These figures are not directly comparable because of the change in the level of the minority interest brought about by the merger of the old Masisa S.A. and Terranova S.A. in May 2005.
The consumption of own raw material in the two years was as follows:
2005 | 2004 | |||
Jan-Dec | Jan-Dec | |||
Consumption of Own Raw Material: | ||||
Argentina | 2,837 | 2,532 | ||
Brazil | 7,278 | 5,536 | ||
Chile | 10,335 | 10,213 | ||
Venezuela | 4,157 | 3,805 | ||
-------- | ------- | |||
TOTAL | 24,607 | 22,086 | ||
======== | ======= |
2005 | 2004 | |||
Jan-Dec | Jan-Dec | |||
Profitability | ||||
----------------------- | ||||
1.Return on Equity | 2.85% | 7.34% | ||
2.Return on Assets | 1.40% | 3.04% | ||
3.Return on Operating Assets | 4.13% | 5.06% | ||
4.Earnings per Share (dollars) | 0.0048 | 0.0145 | ||
5.Dividend Yield | 2.79% | 0.00% |
The return on equity shows a slight fall, explained by the greater equity following the Masisa - Terranova merger and a similar net income for both years.
Earnings per share for the two years are not directly comparable because of the changes in the number of shares resulting from the merger on May 31, 2005.
B.- Principal components and analysis of net cash flow
2005 | 2004 | |||
Jan-Dec Jan-Dec | ||||
Net positive flow from operating activities | 103.762 | 49.824 | ||
- Collection of trade accounts receivable | 879,940 | 733,997 | ||
- Payments to Suppliers and Personnel | (748,178) | (650,495) | ||
- Others | (28,000) | (33,678) | ||
Net cash flow from financing activities | 36,610 | (86,176) | ||
- Loans drawn | 125,121 | 138,894 | ||
- Loans repaid | (82,901) | (211,874) | ||
- Others | (5,610) | (13,196) | ||
Net cash flow from investment activities | (101,044) | 60,296 | ||
- Sales of fixed assets | 2,193 | 77,707 | ||
- Acquisition of fixed assets | (73,166) | (46,065) | ||
- Others | (30,071) | 28,654 | ||
Net total cash flow for the year | 39,328 | 23,944 | ||
Effect of inflation | - | ( 29) | ||
Opening balance of cash & cash equivalents | 58,530 | 34,615 | ||
Closing balance of cash & cash equivalents | 97,858 | 58,530 |
There was an important increase in the collection of trade accounts receivable, mainly due to increased sales and a reduction in the permanence of receivables. There was also an increase in payments to suppliers caused by the greater activity. Other income received relates to VAT refunds on exports.
C. Book and economic value of the assets and liabilities
The Company’s principal assets are its production plants in Chile, Argentina, Brazil, Venezuela, United States and Mexico, and its forest plantations in Chile, Argentina, Brazil and Venezuela, all of which are valued according to generally accepted accounting principles. Studies regularly made by the Company of the economic value of its production plants show that these cover their book values.
D. Most relevant changes occurring during the year
The Company carries out its business in various markets, principally in Chile, Argentina, Venezuela, Brazil, Mexico and United States. Both the Company’s sales and financial results are therefore exposed to each market’s conditions. The following table shows the distribution of consolidated sales, by end market.
2005 | 2004 | |||
Jan-Dec | Jan-Dec | |||
USA | 28.0% | 29.4% | ||
Chile | 16.5% | 16.8% | ||
Mexico | 15.0% | 15.9% | ||
Brazil | 14.0% | 14.1% | ||
Venezuela | 8.3% | 6.0% | ||
Argentina | 7.6% | 6.7% | ||
Others | 10.6% | 11.1% | ||
------- | ------- | |||
Total | 100.0% | 100.0% |
The table shows that shares of sales have been maintained or slightly declined in the markets of the United States, Chile, Mexico and Brazil, with slight increases in Venezuela and Argentina as a result of the greater activity in those countries.
In recent years, Masisa S.A. has increased the diversification of market risk by expanding its productive and commercial operations to other countries. It now has plants in Chile, Argentina, Brazil, Venezuela, United States and Mexico, plus its own commercial operations in Colombia, Peru and Ecuador, and exports to many countries in the Americas, Asia and Europe. The Company is therefore not exposed to any particular market risk.
The Company also faces potential increased competition or the appearance of new competitors in the boards, wood and forestry products markets. Masisa S.A. believes it has solid positions in each of the markets in which it participates directly which provide it with profitable and growing businesses. But the Company cannot be sure that these conditions will not change in the future through the entry of new competitors or the intensification of competition in its markets. To mitigate these risks, the Company focuses its efforts on actions for maintaining its leadership in costs and a strong distribution chain, constantly improving the supply of products and obtaining brand recognition, among others.
The Company is exposed to foreign exchange rate fluctuations against its functional currency (US dollar) on both its assets and liabilities. Assets and liabilities in non-dollar currencies are mainly due to the Company’s businesses in its domestic markets, domestic sales, investments in assets bought on the local market and local financing. Balances in currencies other than the dollar and/or denominated in a currency other than the functional currency in the years analyzed were as follows:
Summary of assets and liabilities in currency other than the dollar
(expressed in thousands of US dollars)
2005 | 2004 | |||
Jan-Dec | Jan-Dec | |||
Assets | 189,113 | 163,975 | ||
Liabilities | 407,689 | 471,363 | ||
Position (liability) | (218,576) | (307,388) |
Based on the market conditions, the Company’s management sets policies for obtaining loans, investing in deposits and marketable securities under resale agreements and the use of derivative instruments. Depending on the amounts, the board also approves these transactions prior to carrying them out. New long-term debt for financing new investments or refinancing existing debt have to be approved by the Company’s board. In the countries where Masisa S.A. operates, the local management can arrange short-term loans for their working capital needs in the ordinary course of business.
E.- Risk Factors
In the ordinary course of its business, the Company is faced by various risks, market, financial and operations, among others.
Financial and exchange rate risks:
The Company’s management sets policies for managing financial risk through the use of derivative instruments like swaps, forwards, options or futures contracts, in order to hedge both exchange and interest rate fluctuation risks.
The Company does not use derivative instruments for speculative purposes.
Operational risk:
Masisa S.A. faces raw material supply risks, especially of chemical resins and wood that are essential elements for making its products. To mitigate this, the Company has long-term agreements with chemical resin suppliers. In addition to the forests and plantations the Company owns directly in Chile, Brazil and Venezuela, it is also the principal shareholder in Forestal Tornagaleones S.A. which has plantations in Chile and Argentina.
It also follows a policy of diversifying its supplies of wood residues to reduce its dependence on individual suppliers.
The Company also faces the risk of damage to its plants, the loss of its warehouses, damages to third parties legal contingencies, commercial and other risks. The Company’s management tries to identify these risks in order to avoid their possible occurrence, reduce their potential adverse effects and/or obtain insurance cover for eventual losses in these circumstances.
Date: May 9, 2006 | |||
Masisa S.A. | |||
By: | |||
/s/ Patricio Reyes | |||
Patricio Reyes | |||
General Counsel |