SECURITIES AND EXCHANGE COMMISSION
Pursuant to Rule 13a-16 or 15d-16
(formerly known as Terranova S.A.)
(Exact name of Registrant as specified in its charter)
(formerly known as Terranova S.A.)
(Translation of Registrant's name into English)
Republic of Chile
(Jurisdiction of incorporation or organization)
Santiago, Chile
Form 20-F or Form 40-F.Form 20-F ___X___ Form 40-F _______
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.
OnMarch 1st, 2005 the registrant filed a report with the Superintendencia de Valores y Seguros de Chile (Chilean Superintendent of Securities and Insurance) which included information of the registrant’s financial statements and results of its operations for the three month period ended on December 31, 2005. Attached is a free translation of the financial statements and results of operations from the original document in Spanish. The financial information included in this report was prepared according to the generally accepted accounting principles in Chile and does not include reconciliation to generally accepted accounting principles in the United States.
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MASISA S.A.
( Free translation from the original in Spanish)
As of March 31st, | ||
2006 | 2005 | |
CONSOLIDATED BALANCE SHEET | THUS$ | THUS$ |
ASSETS | ||
CURRENTS ASSETS | ||
Cash and Banks | 13,927 | 21,259 |
Time deposits | 85,473 | 38,422 |
Marketable securities (net) | 10,856 | 1,673 |
Accounts receivable (net) | 121,242 | 111,885 |
Notes receivable (net) | 12,690 | 8,866 |
Sundry debtors | 18,948 | 25,590 |
Notes and accounts receivable from related companies | 6,096 | 6,458 |
Inventories (net) | 207,189 | 202,109 |
Recoverable taxes | 60,693 | 47,254 |
Prepaid expenses | 12,391 | 11,055 |
Deferred taxes | 2,430 | 2,311 |
Other current assets | 3,790 | 1,609 |
Total current assets | 555,725 | 478,491 |
FIXED ASSETS | ||
Lands | 131,997 | 124,603 |
Buildings and infrastructure | 211,076 | 222,597 |
Machinery and equipment | 830,624 | 812,478 |
Other fixed assets | 670,928 | 583,758 |
Goodwill from technical reappraisal of fixed asset | 7,390 | 7,390 |
Depreciation (less) | (386,903) | (344,087) |
Total fixed assets | 1,465,112 | 1,406,739 |
OTHER ASSETS | ||
Investments in related companies | 4,212 | 3,508 |
Investments in other companies | 205 | 185 |
Goodwill | 1,228 | 1,843 |
Negative goodwill (less) | (61,876) | (44,127) |
Long term debtors | 5,519 | 5,389 |
Long term notes and accounts receivable from related companies | 0 | 597 |
Long term deferred taxes | 0 | 0 |
Intangible assets | 121 | 121 |
Amortization (less) | (21) | (18) |
Others | 30,023 | 28,500 |
Total other assets | (20,589) | (4,002) |
TOTAL ASSETS | 2,000,248 | 1,881,228 |
The accompanying Notes N° 1 to 32 are a fundamental part of these consolidated financial statements.
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MASISA S.A.
(Free translation from the original in Spanish)
As of March 31st, | ||
CONSOLIDATED BALANCE SHEET | 2006 | 2005 |
THUS$ | THUS$ | |
LIABILITIES | ||
Short term obligations to banks and financial institutions | 51,412 | 36,285 |
Short term portion of long term obligations to banks and financial institutions | 55,051 | 74,508 |
Obligations to the public -short-term portion (bonds) | 32,261 | 28,858 |
Long term obligations due within one year | - | 28 |
Dividends payable | 561 | 235 |
Accounts payable | 58,063 | 59,240 |
Notes payable | 822 | 503 |
Sundry creditors | 2,138 | 2,611 |
Notes and accounts payable to related companies | 3,566 | 3,097 |
Provisions | 19,994 | 13,785 |
Withholdings | 18,346 | 11,306 |
Income tax | 10,258 | 6,237 |
Revenue received in advance | 759 | 1,897 |
Other current liabilities | 539 | 8 |
Total current liabilities | 253,770 | 238,598 |
LONG-TERM LIABILITIES | ||
Obligations to banks and financial institutions | 219,622 | 176,816 |
Long term obligations to the Public (bonds) | 297,978 | 281,810 |
Long term sundry creditors | 227 | 299 |
Long term Provisions | 1,422 | 630 |
Long term Deferred taxes | 45,523 | 33,844 |
Other long term liabilities | 22,225 | 17,372 |
Total long-term liabilities | 586,997 | 510,771 |
Minority interest | 22,665 | 99,993 |
SHAREHOLDERS' EQUITY | ||
Paid/up capital stock | 813,846 | 696,481 |
Capital revaluation reserve | 0 | 0 |
Overcharge in company share sales | 0 | 0 |
Other reserves | 185,816 | 157,292 |
Retained Earnings | 139,022 | 178,093 |
Reserves future dividends | 51,424 | 63,302 |
Accumulated profits | 84,563 | 100,360 |
Accumulated losses (less) | 0 | 0 |
Net income (loss) for the period | 1,167 | 14,431 |
Interim dividends (less) | 0 | 0 |
Accumulated deficit for development period | 0 | 0 |
Total shareholders' equity | 1,136,816 | 1,031,866 |
Total liabilities | 2,000,248 | 1,881,228 |
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MASISA S.A.
(Free translation from the original in Spanish)
As of March 31st, | ||
2006 | 2005 | |
CONSOLIDATED INCOME STATEMENT | THUS$ | THUS$ |
GROSS MARGIN | 47,267 | 51,534 |
Operating Income | 212,575 | 178,126 |
Operating costs (less) | (165,232) | (126,592) |
Selling and administrative expenses (less) | (28,072) | (23,157) |
OPERATING RESULT | 19,271 | 28,377 |
Financial Income | 1,536 | 639 |
Net income on investments in related companies | 153 | 168 |
Other non operating income | 298 | 967 |
Loss on investments in related companies (less) | 0 | 0 |
Amortization of goodwill (less) | (21) | (198) |
Financial expenses (less) | (10,558) | (9,556) |
Other non/operating expenses (less) | (3,182) | (1,048) |
Price/level restatements | 0 | 0 |
Exchange Differences | (337) | (147) |
NON /OPERATING RESULT | (12,111) | (9,175) |
Result before income taxes and extraordinary items | 7,160 | 19,202 |
Income taxes | (9,826) | (5,456) |
Extraordinary Items | ||
Net income (loss) before minority interests | (2,666) | 13,746 |
Minority interests | 2,694 | (146) |
Net Income (Loss) | (28) | 13,600 |
Amortization negative goodwill | 1,139 | 831 |
NET INCOME (LOSS) FOR THE PERIOD | 1,167 | 14,431 |
The accompanying Notes N° 1 to 32 are a fundamental part of these consolidated financial statements.
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MASISA S.A.
(Free translation from the original in Spanish)
As of March 31st, | ||
CONSOLIDATED STATEMENT OF CASH FLOW -DIRECT | 2006 | 2005 |
THUS$ | THUS$ | |
Collection of accounts receivable | 230,721 | 208,828 |
Financial income received | 1,668 | 430 |
Dividends and other distributions received | 0 | 0 |
Other income received | 4,520 | 9,596 |
Payments of suppliers and personnel (less) | (202,366) | (177,143) |
Interest paid (less) | (15,442) | (1,738) |
Income tax paid (less) | (4,201) | (1,424) |
Other expenses paid (less) | (788 ) | (800) |
V.A.T. and similar paid (less) | (11,099) | (3,845) |
Net cash flow from operating activities | 3,013 | 33,904 |
Cash flow from financing activities | ||
Placement of shares | 44,011 | 0 |
Loans drawn | 115,236 | 0 |
Bonds | 172,720 | 0 |
Documented loans from related companies | 0 | 0 |
Other loans from related companies | 0 | 0 |
Other financing sources | 877 | 0 |
Dividends paid (less) | 0 | 0 |
Distribution of capital (less) | 0 | 0 |
Loans repaid (less) | (116,582 ) | (13,616) |
Bonds paid (less) | (151,893) | 0 |
Repayment of documented loans from related companies (less) | 0 | 0 |
Repayment of other loan form related companies (less) | (344) | 0 |
Stock issuance and placement expenses (less) | 0 | 0 |
Bond issuance and placement expenses (less) | (4,243) | 0 |
Other financing disbursements (less) | 0 | 0 |
Cash flow from financing activities | 59,782 | (13,616) |
Cash flow from investment activities | ||
Sales of fixed assets | 1,615 | 1,093 |
Sales of permanent investments | 0 | 0 |
Sales of other investments | 195 | 0 |
Collection of documented loans to related companies | 0 | 614 |
Collection of other loans to related companies | 0 | 0 |
Other investment income | 0 | 0 |
Acquisition of fixed assets (less) | (18,130) | (16,942) |
Interest capitalized repaid (less) | (1,152) | (1,183) |
Permanent investments (less) | (24,340) | 0 |
Investments in financial instruments (less) | 0 | 0 |
Documented loans to related companies (less) | 0 | 0 |
Other loans to related companies (less) | 0 | 0 |
Other investment disbursements (less) | 0 | (850) |
Net cash flow from investment activities | (41,812) | (17,268) |
Net total cash flow for the period | 20,983 | 3,020 |
Effect of inflation on cash and cash equivalents | (5,884) | 0 |
Net variation in cash and cash equivalents | 15,099 | 3,020 |
Initial balance of cash and cash equivalents | 97,530 | 58,530 |
Final balance of cash and cash equivalents | 112,629 | 61,550 |
The accompanying Notes N° 1 to 32 are a fundamental part of these consolidated financial statements.
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MASISA S.A.
(Free translation from the original in Spanish)
As of March 31st, | ||
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY | 2006 | 2005 |
OPERATING ACTIVITIES | THUS$ | THUS$ |
Net income (loss) for the period | 1,167 | 14,431 |
Results on sales of assets: | ||
(Profit) loss on sales of fixed assets | (51) | (487) |
Profit on sales of investments (less) | 0 | 0 |
Loss on sales of investments | 0 | 0 |
(Profit) loss on sales of other assets | 0 | 0 |
Charges (credits) to income not affecting cash flow: | ||
Depreciation for the period | 12,590 | 12,601 |
Amortization of intangible assets | 162 | 92 |
Write/off and provisions | 3,517 | 240 |
Income from investment in related companies (less) | (153) | (168) |
Loss on investment in related companies | 0 | 0 |
Amortization of goodwill | 21 | 198 |
Amortization of negative goodwill (less) | (1,139) | (831) |
Net price/level restatements | 0 | 0 |
Net exchange difference | 337 | 147 |
Other credit to income not affecting cash flow (less) | 0 | 0 |
Other charges to income not affecting cash flow | 7,025�� | 6,517 |
Changes in assets affecting cash flow (increases) decreases: | ||
Accounts receivable | (21,238) | (2,039) |
Inventories | 7,984 | (2,085) |
Other assets | (12,046) | (3,373) |
Changes in liabilities affecting cash flow (increases) decreases: | ||
Accounts payable related to operating income | (3,056) | (666) |
Interest payable | 249 | 6,895 |
Net income taxes payable | 2,642 | 3,005 |
Other accounts payable related to non/operating income | 1,722 | (1,108) |
Net value added tax and similar payable | 5,974 | 389 |
Profit (loss) of minority interest | (2,694) | 146 |
Net cash flow from operating activities | 3,013 | 33,904 |
The accompanying Notes N° 1 to 32 are a fundamental part of these consolidated financial statements.
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MASISA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31ST, 2006 AND 2005
(Free translation from the original in Spanish)
NOTE 1: INSCRIPTION IN THE SECURITIES REGISTER
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 of the former Terranova S.A., held on April 13, 2005, agreed and approved the merger by absorption 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 December 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 interests method.
It was also agreed to replace the Company’s name "Terranova S.A." by that of "Masisa S.A.".
The extraordinary shareholders’ meeting held on April 13, 2005 resolved to modify the objects of the former Terranova 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.
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i) Provide management services in technical, financial, legal and other matters and coordinate the management of companies in which it is a shareholder or partner.
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NOTE 2: SIGNIFICANT ACCOUNTING PRINCIPLES APPLIED
a) Accounting period
The consolidated financial statements cover the periods from January 1 to March 31, 2006 and 2005.
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
The consolidated and individual Financial Statements of March 31, 2006, previously reported to the Values and Securities Superintendency in April 28, 2006, have been re emited to reflect an adjustment on the costs of certain inventories costs, as was informed to this Superintendency in a important event dated July 3, 2006.
These financial statements are presented in United States dollars. The figures for the previous year are not therefore restated for comparison purposes.
For comparison purposes, the figures of March 2005 reflect the merger agreed by the shareholders’ meetings in the second quarter of that year with effect from January 1, 2005.
Certain reclassifications have been made in 2005 for a better interpretation of these financial statements.
d) Basis of Consolidation
These consolidated financial statements include assets, liabilities, results, and cash flows at the closing of each period related to the Parent Company and its subsidiaries. The effects of transactions and unrealized results among the consolidating companies have been eliminated, and the ownership interest of minority investors is shown as Minority Interest.
e) Price-level Restatement
The indirect subsidiaries that carry their accounting figures in Chilean pesos, have adjusted their financial statements in order to recognize the effects on the variation of the price level restatement of that currency in the respective period. For these effects, the current legal dispositions have been applied, which establish that non currency assets and liabilities must be updated with effects on results. The applied index was the official Consumer Price Index, published by the National Statistics Institute (Instituto Nacional de Estadísticas) on a previous month basis, had a variation of –0.3% in 2006 (-0.8% in 2005).
f) Currency translation
The Company is authorized to keep its 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 period. Exchange differences are charged/credited to income.
At March 31, 2006 and 2005, the principal exchange rates against the US dollar were:
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2006 | 2005 | |
per US dollar | per US dollar | |
Chilean peso | 526.18 | 585.93 |
Reales | 2.1724 | 2.6662 |
Bolivares | 2,150.00 | 2,150.00 |
Peso Argentino | 3.0820 | 2.9170 |
Peso Colombiano | 2,289.98 | 2,376.48 |
Peso Mexicano | 10.9228 | 11.2293 |
Unidad de Fomento | 0.0294 | 0.0341 |
Euro | 0.8253 | 0.7714 |
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 period. Marketable securities relate to investments in mutual funds units shown at their respective redemption values at the period-end.
h) Inventories
- - Products being processed and finished products are shown at their production cost, under the cost-by-absorption method.
- - Standing 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.
- - Imports in transit at cost
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
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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.
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 period 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 assets that are temporally not in use at the period-end have been shown in Other fixed assets.
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 and are current at the date of these financial statements. 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) 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.
m) Investments in related companies
Investments in related companies are shown at their proportional equity value, determined on the basis of their respective financial statements at the end of each period. Unrealized income has been eliminated.
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.
n) 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 terms indicated in the Note - Goodwill and negative goodwill.
ñ) Financial transactions under resale agreements
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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.
o) Bonds payable
These relate to the placement of bearer bonds in Chile, valued at their initial face value plus indexation and interest accrued to the end of each period. 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.
p) Income tax and deferred taxes
The Company records its tax liabilities 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 taxes, in accordance with Technical Bulletin 69 of the Chilean Institute of Accountants.
q) 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.
r) 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.
s) 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.
Unrealized 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.
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t) 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.
u) Research and Development expenses
Research and development expenses are charged to the results of the year in which they are incurred. No significant disbursements have been made by the Company for this purpose, since the creation of the Company.
v) 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.
w) 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.
The following is a list of the consolidated subsidiaries:
Ownership as of | |||||
03/31/2006 | 03/31/2005 | ||||
RUT | Company | Direct | Indirect | Total | Total |
99,537,270-3 | Inversiones Internacionales Terranova S.A. | 60.0000 | 0.0000 | 60.0000 | 60.0000 |
92,257,000-0 | Old Masisa S.A. | 0.0000 | 0.0000 | 0.0000 | 52.4300 |
81,507,700-8 | Forestal Tornagaleones S.A. | 94.9100 | 0.0000 | 94.9100 | 31.7000 |
79,959,070-0 | Masisa Inversiones Limitada | 100.0000 | 0.0000 | 100.0000 | 52.4300 |
79,616,940-0 | Masisa Concepción Limitada | 0.0100 | 99.9900 | 100.0000 | 52.4300 |
79,554,560-3 | Inversiones Coronel Limitada | 99.9800 | 0.0200 | 100.0000 | 52.4300 |
77,790,860-K | Masisa Partes y Piezas Limitada | 99.8000 | 0.2000 | 100.0000 | 52.4300 |
Foreign | Masisa Overseas Ltd. | 100.0000 | 0.0000 | 100.0000 | 52.4300 |
Foreign | Maderas y Sinteticos del Perú S.A.C. | 99.0100 | 0.8900 | 99.9000 | 52.3800 |
Foreign | Masisa USA Inc | 25.1200 | 44.9300 | 70.0500 | 70.0500 |
Foreign | Maderas y Sinteticos Servicios S.A. de C.V. | 0.1000 | 99.9000 | 100.0000 | 52.4300 |
Foreign | Masisa Ecuador S.A. | 0.1000 | 99.9000 | 100.0000 | 52.4300 |
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Ownership as of | |||||
03/31/2006 | 03/31/2005 | ||||
RUT | Company | Direct | Indirect | Total | Total |
Foreign | Masisa do Brasil Ltda. | 0.0000 | 100.000 | 100.0000 | 52.4300 |
Foreign | Maderas y Sinteticos Mexico S.A. de C.V. | 0.0000 | 100.000 | 100.0000 | 52.4300 |
Foreign | Terranova Panama S.A. | 0.0000 | 60.0000 | 60.0000 | 60.0000 |
Foreign | Terranova de Venezuela S.A. y filial | 0.0000 | 60.0000 | 60.0000 | 60.0000 |
Foreign | Corporacion Forestal Venezuela S.A. | 0.0000 | 59.9700 | 59.9700 | 59.9700 |
Foreign | Forestal Terranova Mexico S.A. de C.V. | 0.0000 | 59.9900 | 59.9900 | 59.9900 |
Foreign | Cor.Forestal Guayamure C.A. | 0.0000 | 51.0000 | 51.0000 | 51.0000 |
Foreign | Masisa Madeiras Ltda. | 0.0000 | 59.9900 | 59.9900 | 59.9900 |
Foreign | Masisa Colombia S.A. | 0.0000 | 59.9900 | 59.9900 | 59.9900 |
Foreign | Cor.Forestal Imataca C.A. | 0.0000 | 60.0000 | 60.0000 | 60.0000 |
Foreign | Andinos C.A. | 0.0000 | 60.0000 | 60.0000 | 60.0000 |
Foreign | Forestal Argentina S.A. | 0.0000 | 93.6500 | 93.6500 | 15.8800 |
Foreign | Masisa Argentina S.A. | 0.0000 | 100.0000 | 100.0000 | 52.4300 |
Foreign | Fibranova C.A. | 0.0000 | 60.0000 | 60.0000 | 60.0000 |
Foreign | Masnova S.A. | 0.0000 | 80.0000 | 80.0000 | 56.2200 |
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NOTE 03 - CHANGES IN ACCOUNTING PRINCIPLES
During the period ended on March 31st, 2005, there have been no changes in the use of accounting principles, relevant changes in any accounting estimate or changes related to the reporting entity with regard to the previous year that may significantly affect the interpretation of these consolidated financial statements.
NOTE 04 – MARKETABLE SECURITIES
BOOK VALUE | ||
INSTRUMENTS | 31/03/2006 | 31/03/2005 |
Shares | 0 | 0 |
Bonds | 0 | 0 |
Mutual fund fees | 10,856 | 1,673 |
Investment fund fees | 0 | 0 |
Public offering promissory note | 0 | 0 |
Mortgage bills | 0 | 0 |
Total Marketable Securities | 10,856 | 1,673 |
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NOTE 05 – SHORT AND LONG TERM ACCOUNTS RECEIVABLE
The detail of debtors for sales, detailed by the country of the corporation that has the account to be collected is:
2006 | 2005 | ||
MUS$ | MUS$ | ||
- Chile | 31,041 | 22,590 | |
- Venezuela | 9,541 | 8,086 | |
- Brasil | 24,060 | 18,730 | |
- Argentina | 5,172 | 6,177 | |
- México | 26,009 | 34,188 | |
- Colombia | 4,073 | 2,842 | |
- United States | 18,148 | 16,393 | |
- Ecuador | 1,953 | 1,734 | |
- Perú | 1,245 | 1,145 | |
Total | 121,242 | 111,885 |
Short-term | |||||||||
Less than 90 days | More than 90 and less than 1 year | Sub- Total | Short-term Total (net) | Long-term | |||||
31/03/2006 | 31/03/2005 | 31/03/2006 | 31/03/2005 | 31/03/2006 | 31/03/2005 | 31/03/2006 | 31/03/2005 | ||
Account receivable | 116,398 | 102,328 | 9,603 | 9,557 | 126,001 | 121,242 | 111,885 | 1,974 | 99 |
Uncorrectable receivables estimate | 0 | 0 | 0 | 0 | 4,759 | ||||
Notes receivable | 9,999 | 6,372 | 3,665 | 2,494 | 13,664 | 12,690 | 8,866 | 0 | 0 |
Uncorrectable receivables estimate | 0 | 0 | 0 | 0 | 974 | ||||
Sundry debtors | 15,878 | 15,930 | 3,490 | 9,660 | 19,368 | 18,948 | 25,590 | 3,545 | 5,290 |
Uncorrectable receivables estimate | 0 | 0 | 0 | 0 | 420 | ||||
Total Long Term receivable | 5,519 | 5,389 |
18
NOTE 06 – BALANCES AND TRANSACTIONS WITH RELATED COMPANIES
Accounts receivable from related companies mainly correspond to funding granted to its subsidiaries for the development of their activities; they are expressed in United States dollars and in some cases they accrue an interest equivalent to an 180-day LIBOR rate plus market spread for this type of operations.
Payment conditions are subject to cash flows from the respective companies. Commercial accounts receivable are subject to normal market conditions and terms.
a) Notes and Accounts Receivable
RUT | Company | short-term | long-term | ||
31/03/2006 | 31/03/2005 | 31/03/2006 | 31/03/2005 | ||
96626060-2 | FORESTAL RIO CALLE CALLE S.A. | 0 | 2 | 0 | 597 |
Foreign | Oxinova C.A. | 4,867 | 4,931 | 0 | 0 |
Foreign | Plycem Construsistemas Costa Rica S.A. | 723 | 1,106 | 0 | 0 |
Foreign | Plycem Construsistemas Honduras S.A. | 1 | 170 | 0 | 0 |
Foreign | Plycem Construsistemas El Salvador S.A. | 129 | 22 | 0 | 0 |
Foreign | Plycem Construsistemas Guatemala S.A. | 208 | 198 | 0 | 0 |
Foreign | Plycem Construsistemas Nicaragua S.A. | 168 | 29 | 0 | 0 |
TOTAL | 6,096 | 6,458 | 0 | 597 |
b)Notes and accounts payables from related companies:
RUT | Company | short-term | long-term | ||
31/03/2006 | 31/03/2005 | 31/03/2006 | 31/03/2005 | ||
Foreign | Oxinova C.A | 3,305 | 3,097 | - | - |
Foreign | TEK BOARD OVERSEAS INC. AMANCO | 261 | 0 | - | - |
TOTAL | 3,566 | 3,097 | - | - |
19
c)Related Party Transactions and balance:
Company | RUT | Relationship Nature | Description of Transaction | 31/03/2006 | 31/03/2005 | ||
Amount | Effect on Income, Charge (credit) | Amount | Effect on Income, Charge (credit) | ||||
Oxinova C.A | Foreign | Merged | Buys of products | 5,338 | (5,338) | 4,334 | (4,334) |
Oxinova C.A | Foreign | Merged | Services rendered | 18 | 18 | ||
Oxinova C.A | Foreign | Merged | Land Rental | 3 | 3 | 3 | 3 |
Plycem Construsistemas Guatemala S.A. | Foreign | Common Parent | Sales of products | 165 | 59 | 97 | 16 |
Plycem Construsistemas Costa Rica S.A. | Foreign | Common Parent | Sales of products | 604 | 211 | 699 | 118 |
Plycem Construsistemas Honduras S.A. | Foreign | Common Parent | Sales of products | 128 | 22 | ||
Plycem Construsistemas Colombia S.A. | Foreign | Common Parent | Sales of products | 106 | 18 | ||
Plycem Construsistemas Nicaragua S.A. | Foreign | Common Parent | Sales of products | 131 | 46 | ||
Plycem Construsistemas El Salvador S.A. | Foreign | Common Parent | Sales of products | 101 | 29 | 82 | 14 |
NOTE 07 – INVENTORIES
Inventories as of March 31, 2006 and 2005 include the following:
2006 | 2005 | ||
THUS$ | THUS$ | ||
Standing Timber | 34,549 | 40,440 | |
Finished and process products | 81,291 | 91,381 | |
Products for re-sale | 25,388 | 14,886 | |
Materials, spares, supplies & others | 44,722 | 39,109 | |
Imports in Transit | 21,239 | 16,293 | |
TOTAL | 207,189 | 202,109 | |
On March 31, Inventories are shown net of allowance for ThUS$ 6,126 (ThUS$ 6,409 in 2005).
NOTE 08 – DEFERRED TAXES AND INCOME TAXES
a) Income tax
At March 31, 2006 the Company made no provision for income tax as it has total accumulated tax losses of ThUS$290,241 (ThUS$354,423 at March 31, 2005).
b) Deferred taxes
20
As required by Technical Bulletins 60, 68, 69 and 71 of the Chilean Institute of Accountants and Circular 1,466 of the Superintendency of Securities and Insurance, the Company showed deferred taxes arising from timing differences, tax losses and other events that create differences between the accounting and tax treatment of assets and liabilities, shown in the following table.
The table also shows the charges or credits to income for each year for deferred taxes and income tax.
c) As a result of the merger in 2003 and as the companies absorbed (Andinos S.A., Sociedad Forestal Millalemu S.A. and Forestal Terranova S.A.) recorded undistributed taxed earnings in previous years, a right was generated to recover proportionately the tax paid on those earnings, which are absorbed by the Company’s current accumulated tax losses. In addition, the Company in 2005 received dividends from the former Masisa S.A. which permitted an increase in the amount of Recoverable taxes.
On March 31, 2006, the balance of the tax credits mentioned above is THUS$ 14,827.
The result of income tax, generated by each country, is as follows:
Country | 2006 | 2005 | ||
THUS$ | THUS$ | |||
Chile | (1,611) | (1,149) | ||
Argentina | (1,869) | (1,634) | ||
Brasil (1) | (5,289) | (1,355) | ||
Mexico | ( 501) | - | ||
USA | 30 | (356) | ||
Ecuador | ( 94) | (67) | ||
Perú | ( 258) | (129) | ||
Colombia | ( 234) | (522) | ||
Venezuela | - | (244) | ||
Total | (9,826) | (5,456) |
The income tax in the Brazilian companies is strongly influenced by the variation between the Real currency and the US dollar, which generates exchange difference in the local accounting, when reevaluating the liabilities in US dollars (nearly THUS$ 150,000).
Deferred Taxes.
31/03/2006 | 31/03/2005 | |||||||
Assets deferred taxes | Liabilities deferred taxes | Assets deferred taxes | Liabilities deferred taxes | |||||
Short Term | Long Term | Short Term | Long Term | Short Term | Long Term | Short Term | Long Term | |
Temporary Differences | ||||||||
Provision for uncollectable accounts | 1,256 | 0 | 0 | 0 | 956 | 431 | 0 | 0 |
Anticipated income | 0 | 0 | �� 0 | 0 | 0 | 0 | 0 | 0 |
Vacation provisions | 401 | 0 | 0 | 0 | 371 | 0 | 0 | 0 |
Amortization of intangible assets | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
Leasing assets | 0 | 0 | 0 | 0 | 0 | 5 | 0 | 0 |
21
31/03/2006 | 31/03/2005 | |||||||
Assets deferred taxes | Liabilities deferred taxes | Assets deferred taxes | Liabilities deferred taxes | |||||
Short Term | Term Term | Short Long | Long Term | Short Term | Long Term | Short Term | Long Term | |
Manufacturing expenses | 0 | 0 | 604 | 0 | 0 | 0 | 1,115 | 2,898 |
Fixed assets depreciation | 0 | 0 | 0 | 33,960 | 0 | 0 | 0 | 29,730 |
Severance payment | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 6 |
Others events | 886 | 144 | 17 | 184 | 439 | 526 | 0 | 540 |
Other provisions | 665 | 1,128 | 0 | 49 | 1,350 | 0 | 0 | 0 |
Obsolescence provision | 225 | 40 | 0 | 0 | 306 | 0 | 0 | 0 |
Expenses paid in advance | 0 | 0 | 106 | 271 | 0 | 0 | 194 | 379 |
Non realized profits | 0 | 342 | 558 | 0 | 289 | 153 | 0 | 178 |
Tax losses | 378 | 116,735 | 0 | 0 | 813 | 119,222 | 0 | 0 |
Cost of activated funding | 0 | 0 | 0 | 6,989 | 0 | 0 | 486 | 2,061 |
Particleboard line provision | 0 | 2,012 | 0 | 0 | 0 | 1,503 | 0 | 0 |
Exchange Variation Brasil | 0 | 0 | 0 | 14,898 | 0 | 0 | 0 | 2,645 |
Activated expenses, | 0 | 0 | 62 | 17,938 | 0 | 0 | 454 | 17,843 |
plantations | ||||||||
reservoir Forestal | 0 | 0 | 0 | 48,682 | 0 | 0 | 0 | 43,771 |
Others | ||||||||
Balance for Complementary | 34 | 1,431 | 0 | 28,196 | 31 | 1,385 | 67 | 29,495 |
assets amortization | ||||||||
Valuation provisions | 0 | 69,718 | 83,743 | |||||
Totals | 3,777 | 49,252 | 1,347 | 94,775 | 4,493 | 36,712 | 2,182 | 70,556 |
Income Taxes:
Items | 31/03/2006 | 31/03/2005 |
Regular tax expense (tax provision) | (2,653) | (2,213) |
Tax expenses adjustment (previous period) | 0 | 0 |
Effect for assets and liabilities for deferred taxes of the period | (2,734) | (5,452) |
Tax credit due to tax loss | (6,051) | 2,087 |
Effect for amortization of deferred assets and liabilities complementary accounts | (349) | (98) |
Effect on assets and liabilities of deferred taxes for the changes in the vaulting provisions | 2,103 | 425 |
Other charges and credits in the account | (142) | (205) |
Total | (9,826) | (5,456) |
22
NOTE 09 – OTHER CURRENT ASSETS
Other current assets were as follows:
Items: | 2006 | 2005 |
THUS$ | THUS$ | |
Derivative operations (*) | - | 216 |
Agreements with sell back agreements | 2,373 | 196 |
Shares issued by the Company (**) | 966 | - |
Roads being amortized | 380 | 1,047 |
Others | 71 | 150 |
Total | 3,790 | 1,609 |
(*) In 2005, relates to the unrealized short-term loss arising from interest rate swaps which have been defined by the Company as hedging instruments.
(**)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.
23
NOTE 10 - FIXED ASSETS
Goods related to fixed assets are valued as described in note 2 and are summarized as follows:
2006 | 2005 | |||||
Book value | Cummulative Depreciation | Net Fixed Assets | Book value | Cummulative Depreciation | Net Fixed Assets | |
Fixed assets | THUS$ | THUS$ | THUS$ | THUS$ | THUS$ | THUS$ |
Lands | 131,997 | - | 131,997 | 124,603 | - | 124,603 |
Building and infrastructure | 211,076 | (66,343) | 144,733 | 222,597 | (60,507) | 162,090 |
Machinery and equipment | 830,624 | (273,700) | 556,924 | 812,478 | (239,937) | 572,541 |
Other fixed assets | 670,928 | (42,575) | 628,353 | 583,758 | (39,387) | 544,371 |
-Plantations | 562,448 | - | 562,448 | 504,572 | - | 504,572 |
-Other fixed assets | 108,480 | (42,575) | 65,905 | 79,186 | (39,387) | 39,799 |
Negative Goodwill Technical Reappraisal: | 7,390 | (4,285) | 3,105 | 7,390 | (4,256) | 3,134 |
- Land | 2,671 | - | 2,671 | 2,671 | - | 2,671 |
- Building and | ||||||
infrastructure | 4,719 | (4,285) | 434 | 4,719 | (4,256) | 463 |
Total | 1,852,015 | (386,903) | 1,465,112 | 1,750,826 | (344,087) | 1,406,739 |
2006 | 2005 | |
Depreciation for the year | THUS$ | THUS$ |
Effect on Income Operation | 11,415 | 11,410 |
Administrative Expenses | 827 | 1,074 |
Non-operating | 275 | 74 |
Activated | ||
Negative Goodwill | 73 | 43 |
Plantations | ||
Total | 12,590 | 12,601 |
The company has made a provision to adjust the book value of one of its particle board lines due to the fact that the operational projections show that the flows this line would generate in the future will not cover the respective depreciation costs. This provision is presented net from the assets that originated it.
Plantations:
In the case of plantations, the book value includes forest appraisals conducted by forestry engineers. This value is distributed among plantations under fixed assets and forests in exploitation classified as inventories.
24
The Company and its subsidiaries in its forestry line of business, have recognized as of closing of their business periods a greater value of their forests and plantations, which is included in the forest plantation with payoff in the forest reserve presented under the Net Assets and has been determined though a comparison of the valorization described in Note 2.
Greater value of fixed assets due to real financial costs regarding plantations’ financing according to what is indicated in note 2 reached the amount of THUS$942 as of March 31st, 2006,(THUS$641 in 2005) in addition, there was a activation by currency exchange difference of THUS$555 (THUS$800 in 2005).
Forestry subsidies:
The forestry subsidies received by Masisa S.A. are credited to the forestry subsidies account which is shown deducted from Plantations, and amounts to ThUS$5,492 at March 31, 2006 (5,364 at March 31, 2005).
Temporarily inactive fixed assets:
As of March 31, 2006 and 2005, the company has temporarily inactive goods in some of its plants. For these assets the company maintains a provision, depreciation is shown under other non-operating expenses.
25
NOTE 11 - INVESTMENTS IN RELATED COMPANIES
In order to establish the book value of investments, unrealized profits from operations with related companies have been eliminated.
In 2003, the Company included in its investments, liabilities in Fu’s equivalent to 1,108,969, according to what is established in Technical Bulletin No. 64 of the Chilean Institute of Accountants, resulting in an accumulated restatement of THUS$11,418 (THUS$6,210 in 2005).
Investment sales
- - Dated June 10th, 2005, the subsidiary Masisa Inversiones Ltda. sells, gives, and transfers to Puerto’s del Pacific S.A. the totality of shares that it held in Inversiones Industrials S.A. for an amount of US$10,000.
- - Dated June 10th, 2005, the subsidiary Inversiones Coronel Ltda. sells, gives, and transfers to Puerto’s del Pacific S.A. the totality of shares that it held in the company Forestal Calle Calle S.A. for the amount of US$1.
These companies discontinued its proportional value method due to the fact that their net worth were negative and, by which, their results were recognized until they covered the investment. Therefore, the value of this sale was entirely recorded in the result.
26
NOTE 11 - INVESTMENTS IN RELATED COMPANIES
Company | Country | Investment Control urrency | Number ofshares | Participation% | Shareholder's Equity | |||
31/03/2006 | 31/03/ 2005 | 31/03/2006 | 31/03/ 2005 | |||||
Foreign | Oxinova S.A. | Venezuela | Dollar | 1,963,564 | 49 | 49 | 8,553 | 7,159 |
99511350-3 | Inversiones Calle Calle S.A | Chile | Pesos | 100,000 | 50 | 50 | 0 | 0 |
99505640-2 | Forestal Calle Calle S.A. | Chile | Pesos | 0 | 0 | 9 | 0 | 0 |
96652640-8 | Inversiones Industriales S.A. | Chile | Pesos | 0 | 0 | 50 | 0 | 0 |
TOTALS |
Net Income for the period | Shareholder' s Equity fair value | Net Income fair value | ||||||
31/03/2006 | 31/03/ 2005 | 31/03/ 2006 | 31/03/2005 | 31/03/2006 | 31/03/ 2005 | |||
Csompany | Country | |||||||
Foreign | Oxinova S.A. Venezuela | 311 | 367 | 0 | 0 | 0 | 0 | |
99511350-3 | Inversiones Calle Calle S.A | Chile | 0 | 0 | 0 | 0 | 0 | 0 |
99505640-2 | Forestal Calle Calle S.A. | Chile | 0 | 0 | 0 | 0 | 0 | 0 |
96652640-8 | Inversiones Industriales S.A. | Chile | 0 | 0 | 0 | 0 | 0 | 0 |
Company | Country | Earned Net Income | VP/VPP | Unrealized Results | Book value of investment | |||||
31/03/ 2006 | 31/03/ 2005 | 31/03/ 2006 | 31/03/ 2005 | 31/03/ 2006 | 31/03/ 2005 | 31/03/ 2006 | 31/03/ 2005 | |||
Foreign | Oxinova S.A. | Venezuela | 153 | 168 | 4,212 | 3,508 | 0 | 0 | 4,212 | 3,508 |
99511350-3 | Inversiones Calle Calle S.A | Chile | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
99505640-2 | Forestal Calle Calle S.A. | Chile | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
96652640-8 | Inversiones Industriales S.A. | Chile | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Total | 4,212 | 3,508 | 0 | 0 | 4,212 | 3,508 |
27
NOTE 12 – GOODWILL AND NEGATIVE GOODWILL
Goodwill
The purchase of the subsidiary Masisa Cabrero S.A., formerly Fibranova S.A., by the former Masisa S.A., generated goodwill for the Company which it is expected to amortize over 20 years in view of the expected returns from 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 Terranova 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 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 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 negative goodwill that it is being amortized over the remaining period of the original term.
In January Forestal Tornagaleones S.A. purchased 22,406,455 shares, equivalent to 48.6% of Forestal Argentina, generating a Negative goodwill that it is being amortized in 20 years.
Goodwill
RUT | Company | 31/03/2006 | 31/03/2005 | ||
Amortization Amount for the Period | Goodwill Balance | Amortization Amount for the Period | GoodwillBalance | ||
96623490-3 | Masisa Cabrero S.A. | 21 | 1,228 | 21 | 1,313 |
Foreign | Terranova Forest Product Inc. | 0 | 0 | 177 | 530 |
TOTAL | 21 | 1,228 | 198 | 1,843 |
Negative Goodwill
RUT | Company | 31/03/2006 | 31/03/2005 | ||
Amortization Amount for the Period | Negative Goodwill | Amortization Amount for the Period | Negative Goodwill | ||
81507700-8 | Forestal Tornagaleones S.A. | 214 | 13,262 | 25 | 1,729 |
92257000-0 | Masisa S.A | 691 | 31,376 | 691 | 34,141 |
96802690-9 | Terranova S.A. | 84 | 5,955 | 84 | 6,290 |
Foreign | Corporación Forestal Guayamure C.A | 31 | 1,843 | 31 | 1,967 |
Foreign | Forestal Argentina | 119 | 9,440 | 0 | 0 |
TOTAL | 1,139 | 61,876 | 831 | 44,127 |
28
NOTE 13 - OTHER (ASSETS)
As of March 31th, 2005 and 2004, respectively, the following are the balances of Other Assets:
2006 | 2005 | |
THUS$ | THUS$ | |
Market value of currency swaps | 3,965 | 3,500 |
Market value of rate swaps | 3 | - |
Goodwill and expenses for placing bonds (1) | 6,344 | 7,581 |
Bond issue & placement costs (1) | 6,564 | 2,780 |
Loan commissions and taxes to be refunded | 451 | 684 |
Exploitation rights (2) | 10,679 | 11,110 |
Legal deposits | 697 | - |
Others | 1,320 | 2,845 |
Total | 30,023 | 28,500 |
(1) Net of Amortization
(2) In May 1997, subsidiary Terranova de Venezuela S.A. pre-paid the lease of a CVG-Proforca sawmill amounting to US$10 millions to enter the forestry business in Venezuela. Since the lease of the above sawmill was critical for negotiating purchase agreements for 59,000 hectares of Caribbean wood plantations and thus enter the forestry business in Venezuela, the Company’s Management classified the pre-paid lease as a forest exploitation right, since it considered it as part of the exploitation rights. The items described will be amortized based on the cubic meters (m3) obtained from the forest product that will be produced by the Terranova de Venezuela S.A.’s forest over a period of 20 years (starting from 1997), estimated in 13,168,000 m3.
Coforven S.A. exploitation rights:
In fiscal year ended December 31, 2000, Terranova de Venezuela S.A. acquired from its subsidiary Coforven S.A., exploitation rights for 236,000 m3/year of wood and a sawmill for THUS$ 3,324. Exploitation rights will be amortized based on the volume of m3 of forest products that will be produced by the forest for supplying the plants. Goodwill balance from the investment in Coforven recorded in the accounting books amounted to THUS$987 as of the sale date, which was included as part of the cost of exploitation rights, since Terranova de Venezuela S.A. is acquiring a significant share of Coforven S.A.’s productive assets. The asset value and exploitation rights were sold at reasonable market values and unrealized results were eliminated.
29
NOTE 14 – BANK ANDFINANCIALINSTITUTIONS SHORT-TERMOBLIGATIONS
RUT | Bank or financial institution | US Dollar | Other foreign currency | UF | ThCh$ no adjustment | Total | |||||
31/03/2006 | 31/03/2005 | 31/03/2006 | 31/03/2005 | 31/03/2006 | 31/03/2005 | 31/03/2006 | 31/03/2005 | 31/03/2006 | 31/03/2005 | ||
Short Term | |||||||||||
97051000-1 | BANCO DEL DESARROLLO | 0 | 5,469 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 5,469 |
97919000-K | ABN AMRO BANK | 0 | 0 | 0 | 8,380 | 0 | 0 | 0 | 0 | 0 | 8,380 |
97032000-8 | BANCO BBVA | 1,393 | 3,028 | 0 | 0 | 0 | 0 | 0 | 0 | 1,393 | 3,028 |
Foreign | WESTDEUTSCHE LANDESBANK | 0 | 10,198 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 10,198 |
Foreign | HSBC BANK BRASIL S/A | 0 | 1,696 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 1,696 |
Foreign | HSBC BANK USA | 2,519 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 2,519 | 0 |
Foreign | BANCO ITAU BBA | 1,182 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 1,182 | 0 |
Foreign | BANCO MERCANTIL | 0 | 0 | 16,282 | 1,171 | 0 | 0 | 0 | 0 | 16,282 | 1,171 |
Foreign | BANCO DE VENEZUELA S.A. | 0 | 0 | 24,302 | 6,343 | 0 | 0 | 0 | 0 | 24,302 | 6,343 |
Foreign | BANCO ABN AMRO BANK | 0 | 0 | 5,225 | 0 | 0 | 0 | 0 | 0 | 5,225 | 0 |
Foreign | BANCO ALFA DE INVESTIMENTOS | 509 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 509 | 0 |
Others | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
Total | 5,603 | 20,391 | 45,809 | 15,894 | 0 | 0 | 0 | 0 | 51,412 | 36,285 | |
Principal owed | 4,390 | 20,000 | 45,455 | 15,687 | 0 | 0 | 0 | 0 | 49,845 | 35,687 | |
-------- | Interest Rate | 5,33% | 3,88% | 14,31% | 17,0% |
30
RUT | Bank or financial institution | US Dollar | Other foreign urrency | UF | ThCh$ no adjustment | Total | |||||
31/03/2006 | 31/03/2005 | 31/03/2006 | 31/03/2005 | 31/03/2006 | 31/03/2005 | 31/03/2006 | 31/03/2005 | 31/03/2006 | 31/03/2005 | ||
Long Term | |||||||||||
97006000-6 | BANCO DE CREDITO E INVERSIONES | 7,249 | 2,678 | - | - | - | 2,524 | - | - | 7,249 | 5,202 |
97030000-7 | BANCO DEL ESTADO DE CHILE | 6,530 | 6,476 | - | - | - | - | - | - | 6,530 | 6,476 |
97053000-2 | BANCO SECURITY | 1,964 | 2,171 | - | - | - | - | - | - | 1,964 | 2,171 |
97023000-9 | BANCO CORPBANCA | 13,296 | 2,299 | - | - | - | - | - | - | 13,296 | 2,299 |
97039000-6 | BANCO SANTANDER | 4,361 | 10,957 | - | - | - | - | - | - | 4,361 | 10,957 |
96658480-7 | RABOINVESTMENTS CHILE S.A. | 1,099 | 3,238 | - | - | - | - | - | - | 1,099 | 3,238 |
97919000-K | ABN AMRO BANK | 106 | - | - | - | - | - | - | - | 106 | - |
97032000-8 | BANCO BBVA | 2,189 | 2,196 | - | - | - | - | - | - | 2,189 | 2,196 |
Foreign | CORPBANCA VENEZUELA | - | - | 2,105 | - | - | - | - | - | 2,105 | - |
Foreign | ABN/CORP BANCA VENEZUELA | - | - | 1,828 | - | - | - | - | - | 1,828 | - |
Foreign | WESTDEUTSCHE LANDESBANK | 3,333 | 3,047 | - | - | - | - | - | - | 3,333 | 3,047 |
Foreign | DRESDNER BANK | - | 2,052 | - | - | - | - | - | - | - | 2,052 |
Foreign | CITIBANK N.A. | 240 | 155 | - | - | - | - | - | - | 240 | 155 |
Foreign | COMERICA BANK | - | 4,456 | - | - | - | - | - | - | - | 4,456 |
Foreign | BANCO CHILE NEW YORK | - | 4,509 | - | - | - | - | - | - | - | 4,509 |
Foreign | THE BANK OF NOVA SCOTIA | 240 | 7,712 | - | - | - | - | - | - | 240 | 7,712 |
Foreign | RABOBANK NEDERLAND | 2,969 | 1,410 | - | - | - | - | - | - | 2,969 | 1,410 |
Foreign | KREDITANSTALT FUR IEDERAUFBAU | 5,482 | 13,446 | - | - | - | - | - | - | 5,482 | 13,446 |
Foreign | BANCO ITAU BBA | 2,060 | 4,182 | - | - | - | - | - | - | 2,060 | 4,182 |
Foreign | HSBC BANK | - | 1,000 | - | - | - | - | - | - | - | 1,000 |
Others | - | - | - | - | - | - | - | - | - | - | |
TOTALES | 51,118 | 71,984 | 3,933 | - | - | 2,524 | - | - | 55,051 | 74,508 | |
Liability Amount | 47,156 | 68,491 | 3,844 | - | - | 2,501 | - | - | 51,000 | 70,992 | |
Rate | 3,44% | 2,90% | 16,10% | 0,00% |
31
Total amount of liabilities in foreign currency(%): | 46.7200 |
Total amount of liabilities in local currency(%): | 53.2800 |
32
NOTE 15 – BANK ANDFINANCIALINSTITUTIONS LONG-TERM
RUT | Bank o financial institution | Currency | More 1 year Up to 2 year | More 2 year up to 3 year | More 3 year Up to 5 year | More 5 year Up to 10 year | Date close actual period | Date close past period | ||
Total Long Term to close The financialStatements | Rate | Total Long Term to close The financial Statements | ||||||||
97006000-6 | BANCO DE CREDITO E INVERSIONES | Dollar | 20,000 | |||||||
UF | 5,278 | 5,278 | 4,166 | - | 14,722 | LIBOR 180+1.10 | 1,251 | |||
96658480-7 | RABOINVESTMENTSCHILE S.A. | Dollar | 2,000 | 1,500 | 3,000 | 6,000 | 12,500 | LIBOR 180+0.90 | 10,000 | |
97030000-7 | BANCO DEL ESTADO DE CHILE | Dollar | 4,242 | 2,116 | - | - | 6,358 | LIBOR 180+1.1 | 10,580 | |
97023000-9 | BANCO CORPBANCA | Dollar | 8,010 | 6,997 | - | - | 15,007 | LIBOR 180+1.10 | 6,500 | |
97053000-2 | BANCO SECURITY | Dollar | 1,167 | 1,167 | - | - | 2,334 | LIBOR 180+1.10 | 3,967 | |
97039000-6 | BANCO SANTANDER SANTIAGO | Dollar | 2,923 | 2,053 | - | - | 4,976 | LIBOR 180+1.10 | 24,418 | |
Foreign | DRESDNER BANK LANTEIAMERICA | Dollar | - | - | - | - | 2,000 | |||
Foreign | COMERICA BANK | Dollar | - | - | - | - | - | LIBOR 180+1.15 | 6,429 | |
Foreign | BANCO CHILE NEW YORK | Dollar | LIBOR 180+1.25 | 8,550 | ||||||
Foreign | THE BANK OF NOVA SCOTIA | Dollar | - | - | 12,375 | 12,375 | 24,750 | LIBOR 180+0.49 | 17,500 |
33
RUT | Bank o financial institution | Currency | More 1 year Up to 2 year | More 2 year up to 3 year | More 3 year Up to 5 year | More 5 year Up to 10 year | Date close actual period | Date close past period | ||
Total Long Term to close The financial Statements | Rate | Total Long Term to close The financial Statements | ||||||||
Foreign | CITIBANK N.A. | Dollar | - | - | 12,375 | 12,375 | 24,750 | LIBOR 180+0.49 | 138 | |
Foreign | RABOBANK NEDERLAND | Dollar | 2,860 | 3,040 | 17,385 | 15,435 | 38,720 | LIBOR 180+0.49 | 11,250 | |
Foreign | KREDITANSTALT FUR WIEDERAUFBAU | Dollar | 7,130 | 7,130 | 12,351 | - | 26,611 | LIBOR 180+2.20 | 37,847 | |
Foreign | WESTDEUTSCHE LANDESBANK | Dollar | 2,911 | 2,911 | 14,417 | 12,375 | 32,614 | LIBOR 180+0.45 | 10,774 | |
Foreign | BANCO BBVA | Dollar | 1,445 | 721 | - | - | 2,166 | LIBOR 180+1.1 | 3,612 | |
Foreign | BANCO ITAU BBA | Dollar | - | - | - | - | - | LIBOR 180+5 | 2,000 | |
Foreign | ABN AMRO BANK | Dollar | - | - | 5,500 | 5,500 | 11,000 | LIBOR 180+1.10 | ||
Foreign | BANCO CORPBANCA VENEZUELA | Other Currencies | - | 2,076 | 1,038 | - | 3,114 | LIBOR 180+1.10 | ||
Total | 37,966 | 34,989 | 82,607 | 64,060 | 219,622 | 176,816 |
2006 | |
% | |
Total amount of liabilities in foreign currency: | 1.4200 |
Total amount of liabilities in local currency: | 98.5800 |
34
The loans granted by Masisa Inversiones Limitada to the subsidiary Masisa do Brasil Limitada through Banco Itaú BBA S.A., that rise to the amount of US$104,523,218.88, as shown in “Notes” issued by Banco Itaú BBA S.A., of which are holders Masisa Inversiones Limitada and that are record, besides, and in ¨Cédulas de Crédito Bancário - Res.2770¨ which beneficiary is Banco Itaú BBA S.A., are presented reducing the corresponding debts for the same amount that the subsidiary Masisa do Brasil Limitada maintains with Banco Itaú BBA S.A., in consideration that the documents in which this operations are established allowed to settle them with only the notification to the bank with the anticipation established in the respective documents.
Additionally and as consequence of the previously mentioned, the interests generated by the “Notes” and “Cédulas de Crédito Bancário – Res.2770” are presented net in the statement of income.
35
NOTE 16 – SHORT AND LONG TERM OBLIGATIONS WITH THE PUBLIC (PROMISSORY NOTES AND BONDS)
The bond obligations are:
Series C1 bonds
- - Relate to 1,000 certificates of US$10,000 and 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.
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.
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.
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 with the numbers 439 and 440, on November 14 and 15, 2005 respectively, detailed as follows:
Series E bonds
- - UF 2,750,000 was placed against the line No.439, with a 21-year term and 1 year’s grace and an interest rate of 4.79% .
Series D bonds
- - UF 2,000,000 was placed against the line No.440, with a 7-year term and 2 year’s grace and an interest rate of 4.59% .
- - The Series A and D bonds are partially covered against the dollar exchange rate exposure against the Unidad de Fomento by swap contracts with Citibank N.A., Agency in Chile, Morgan Stanley Capital Services Inc. and Banco Santander Santiago (see Note 25) and have therefore been valued as required by paragraph 11 of Technical Bulletin 57 of the Chilean Institute of Accountants.
The subsidiary Masisa Overseas has outstanding bonds for THUS$27,000 plus interests, they were acquired by Insurance and Fund Companies in the United States. The amortization is THUS$9,000 per year, and the payment day is May 15, of each year, ending the year 2008. The interest rate is paid semi annually, in May and November.
36
Registration Number or Instrument Identification | Series | Nominal amount Valid placement | Currency of bond adjustment | Interest rate | Final maturity | Periodicity | Par Value | Place of the transaction Chile or Foreign | ||
Short term Portion of Long Term Bond | ||||||||||
336 | A | 0 | U.F. | 5 | 6 Months | 2005 | 0 | 16,397 | Local | |
336 | B | 0 | U.F. | 6 | 6 Months | 2009 | 0 | 506 | Local | |
356 | A | 500 | U.F. | 5 | 6 Months | 2006 | 18,250 | 1,057 | Local | |
355 | B | 0 | U.F. | 6.25 | 6 Months | 2011 | 429 | 370 | Local | |
336 | C | 0 | USD | 5 | 6 Months | 2008 | 432 | 432 | Local | |
440 | D | 0 | U.F. | 4.25 | 6 Months | 2008 | 1,313 | 0 | Local | |
439 | E | 0 | U.F. | 4.75 | 6 Months | 2007 | 2,015 | 0 | Local | |
PRIVATE PLACEMENT | B | 9,000 | USD | 8.06 | 6 Months | 2006 | 9,822 | 10,096 | Foreign | |
Total Short Term Portion | 32,261 | 28,858 | ||||||||
-------- | ||||||||||
Long Term Bond | ||||||||||
336 | A | 0 | U.F. | 5 | 6 Months | 2005 | 0 | 102,010 | Local | |
336 | B | 0 | U.F. | 6 | 6 Months | 2009 | 0 | 29,353 | Local | |
356 | A | 2,000 | U.F. | 5 | 6 Months | 2006 | 64,834 | 72,841 | Local | |
355 | B | 702 | U.F. | 6.25 | 6 Months | 2011 | 23,902 | 20,606 | Local | |
336 | C | 30,000 | USD | 5 | 6 Months | 2008 | 30,000 | 30,000 | Local | |
440 | D | 2,000 | U.F. | 4.25 | 6 Months | 2008 | 67,609 | 0 | Local | |
439 | E | 2,750 | U.F. | 4.75 | 6 Months | 2007 | 93,633 | 0 | Local | |
PRIVATE PLACEMENT | B | 18,000 | USD | 8.06 | 6 Months | 2008 | 18,000 | 27,000 | Foreign | |
Total Long Term | 297,978 | 281,810 |
37
NOTE 17- PROVISIONS AND WRITE-OFFS
Short-term Provisions | 2006 | 2005 |
THUS$ | THUS$ | |
Related to the Personnel: | ||
Vacations | 4,119 | 2,817 |
Gratification | 303 | 485 |
Other benefits | 2,401 | 1,464 |
Other Provisions: | ||
Consultancy and services | 905 | 2,800 |
Major repairs and plant shutdowns | 559 | 511 |
Imports and exports expenses | 163 | 34 |
Commissions | 1,607 | 1,398 |
Goods and services receivable | 2,671 | 2,747 |
Contingencies liabilities | 1,141 | 80 |
Other Taxes | 3,835 | - |
Other Provisions | 2,290 | 1,449 |
Total | 19,994 | 13,785 |
Long-term Provisions | 2006 | 2005 |
THUS$ | THUS$ | |
Judicial deposit provision | 422 | 615 |
Proforca provision | 1,000 | - |
IAS Provision | - | 15 |
Total | 1,422 | 630 |
Provisions presented net from assets | 2006 | 2005 |
THUS$ | THUS$ | |
Provisions presented net from assets that originate them: | ||
Provision for doubtful accounts | 6,153 | 5,546 |
Provision for inventory | 6,126 | 6,409 |
Provision for fix assets | 13,165 | 16,015 |
Total | 25,444 | 27,970 |
38
NOTE 18– SEVERANCE PAYMENT
Severance payments are as follows:
2006 | 2005 | |
THUS$ | THUS$ | |
Balances as of January 1st | 21 | 13 |
Provision for the period | - | 2 |
Payments for the period | (21) | - |
Balances as of March 31st | - | 15 |
Charges to income for the year amounted to THUS$0 (THUS$2 in 2005).
39
NOTE 19– OTHER LONG TERM LIABILITIES
Balance as of March 31st is set forth in detail (THUS$):
Expire | Values | ||||
2008 | 2009 | 2010 | 2006 | 2005 | |
ICMS Tax payable on long term | 9,512 | 3,553 | 682 | 13,747 | 12,550 |
Unrealized profit cover operations of existing entries | 6,484 | - | 6,484 | 3,825 | |
Swap Currency market value | 1,985 | - | - | 1,985 | 844 |
Swap rate i market value interest | 9 | - | - | 9 | 153 |
Total t | 17,990 | 3,553 | 682 | 22,225 | 17,372 |
40
NOTE 20– MINORITY INTEREST
The breakdown of the minority interest recorded by the Company, both in liabilities and net income is as follows:
Liabilities | Net income for the period | |||
2006 THUS$ | 2005 THUS$ | 2006 THUS$ | 2005 THUS$ | |
Forestal Tornagaleones S.A. | 6,536 | 43,331 | (27) | (178) |
Forestal Argentina S.A. | 939 | 31,355 | - | (253) |
Maderas y Sintéticos de Perú S.A.C | 4 | 1 | - | - |
Corporación Forestal Guayamure C.A. | 1,912 | 1,941 | 75 | 12 |
Inversiones Internacionales Terranova | 13,268 | 23,365 | 2,646 | 273 |
Masisa Madeiras Ltda. | 6 | - | - | - |
Total | 22,665 | 99,993 | 2,694 | (146) |
41
NOTE 21 - SHAREHOLDERS' EQUITY VARIATIONS
a) Paid capital
The subscribed and paid capital at March 31, 2006 amounts to US$813,845,619, divided into 5,671,563,085 shares of no par value.
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.
The extraordinary shareholders’ meeting of the former Terranova 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$696.481, divided into 5,049,060,017 shares of no par value, of the one and same series and without any privileges, through the issue of 1,130,632,161 new shares of no par value, of the one and same series and without any privileges, to be issued fully to shareholders of the former Masisa S.A. in the appropriate proportion according to the agreed share exchange.
The extraordinary shareholders’ meeting held on August 29, 2005 resolved to increase the Company’s capital by US$ 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.
b) Distribution of earnings
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:
Former Masisa S.A.:
Dividend | Month | Dividend | No. of third |
paid | per share | party shares | |
US$ | |||
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: | |||
Dividend | Month | Dividend | Number of |
paid | per share | third party |
42
US$ | shares | ||
Additional Year 2004 No.10 | Apr-2005 | 0.001141276 | 3,918,427,856 |
Final Year 2004 No.0 | Apr-2005 | 0.004092497 | 3,918,427,856 |
c) Other reserves comprise the following:
Forest Reserve:
The forest reserve amounts to ThUS$172,798 (ThUS$144,076 in 2005), corresponding to the difference between the plantations’ appraisal value and their respective historic cost which includes the real cost of financing. This reserve is booked 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 conversion to US dollars of the equity of some subsidiary and associate companies that maintained or maintain their accounts in Chilean pesos, amounting to ThUS$16,531 (ThUS$13,116 in 2005), for the constitution of a legal reserve in foreign subsidiaries of ThUS$100 (ThUS$100 in 2005) and, shown deducted from Shareholders’ equity, the costs of the issue and placement of shares related to the last capital increase US$ 3,613 (nil in 2005)
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.
e)Previous Net Income for the period adjustment
THE Company detected an inventorie missing which affects the amount of the Packaging Materials account which happened as a result of parametrizing error in the tariffs used to value this materials consumption in the Company´s costs system. This error which, has its origin, mainly, in the 2005 exercise, was registered against accumulated results in the company´s shareholder´s equity for an amount of ThUS$1,935 and, the portion corresponding to the period from January to March, 2006, has been registered with a credit of ThUS$67 in the results of this period.
The effects in the consolidated financial statements have been registered to March 31, 2006, in the following accounts:
General Balance | Income Statement | |||||||
Charge | Credit | Loss | Earnings | |||||
Invetories(Current) | 0 | 2.353 | 0 | 0 | ||||
Deferred Taxes(Current) | 485 | 0 | 0 | 0 | ||||
Accumulated Profits | ||||||||
(Shareholder´s Equity) | 1.935 | 0 | 0 | 0 | ||||
Operating costs | 0 | 0 | 0 | 76 | ||||
Income Tax | 0 | 0 | 9 | 0 | ||||
Total | 2.420 | 2.353 | 9 | 76 | ||||
43
31/03/2005 | |||||||||
Paid-in capital | Reserve for Capital Revaluation | Overpricin g on sales of shares | Other Reserves | Reserve for future dividends | Accumulate d income | Interim Dividends | Deficit during development period | Period Income | |
Initial Balance | 769,834 | - | - | 188,477 | 51,424 | 60,129 | - | - | 26,369 |
Previous period income distribution | - | - | - | - | - | 26,369 | - | - | (26,369) |
Definitive dividend of previous period | - | - | - | - | - | - | - | - | - |
Capital Increase with shares issue | 44,012 | - | - | - | - | - | - | - | - |
Capitalization of reserves and/or profits | - | - | - | - | - | - | - | - | - |
Deficit accumulated during development period | - | - | - | - | - | - | - | - | - |
Capital effects due to merger | - | - | - | - | - | - | - | - | - |
Forestry reserve | - | - | - | (2,164) | - | - | - | - | - |
Conversion adjustment Reserve | - | - | - | (497) | - | - | - | - | - |
Previous Net income period adjustments | - | - | - | - | - | (1,935) | - | - | - |
Equity capital revaluation | - | - | - | - | - | - | - | - | - |
Net income for the period | - | - | - | - | - | - | - | - | 1,167 |
Interim dividends | - | - | - | - | - | - | - | - | - |
Final Balance | 813,846 | - | - | 185,816 | 51,424 | 84,563 | - | - | 1,167 |
Current Balance |
44
31/03/2005 | |||||||||
Paid-in capital | Reserve for Capital Revaluation | Overpricin g on sales of shares | Other Reserves | Reserve for future dividends | Accumulate d income | Interim Dividends | Deficit during development period | Period Income | |
Initial Balance | 583,739 | - | - | 122,643 | - | 14,979 | - | - | 56,778 |
Previous period income distribution | - | - | - | - | - | 56,778 | - | - | (56,778) |
Definitive dividend ofprevious period | - | - | - | - | - | - | - | - | - |
Capital Increase with shares issue | - | - | - | - | - | - | - | - | - |
Capitalization of reserves and/or profits | - | - | - | - | - | - | - | - | - |
Deficit accumulated during development period | - | - | - | - | - | - | - | - | - |
Capital effects due to merger | 112,742 | - | - | 33,403 | 63,302 | 28,603 | - | - | - |
Forestry reserve | - | - | - | 1,956 | - | - | - | - | - |
Conversion adjustment Reserve | - | - | - | (710) | - | - | - | - | - |
Equity capital revaluation | - | - | - | - | - | - | - | - | - |
Net income for the period | - | - | - | - | - | - | - | - | 14,431 |
Interim dividends | - | - | - | - | - | - | - | - | - |
Final Balance | 696,481 | - | - | 157,292 | 63,302 | 100,360 | - | - | 14,431 |
Current Balance | 696,481 | - | - | 157,292 | 63,302 | 100,360 | - | - | 14,431 |
45
a) Numbers of shares | ||||||||||||
Series | Numbers shares | Numbers paid | Outstanding shares | |||||||||
subscribed | shares | |||||||||||
Unique | 5,671,563,085 | 5,671,563,085 | 5,667,750,881 | |||||||||
b) Capital (Amount THUS$) | ||||||||||||
Series | Subscribed Capital | Paid Capital | ||||||||||
Unique | 813,846 | 813,846 | ||||||||||
c) Acquisition and ownership of company shares | ||||||||||||
Share repurchase reason | Share repurchase | Share repurchase | ||||||||||
date | N° of Shares | Series | Amount | |||||||||
Merger | 07-01-2003 | 87,871,054 | Unique | 16,828 | ||||||||
Withdrawal right | 12-26-2003 | 13,538,394 | Unique | 1,550 | ||||||||
Withdrawal right old Terranova S.A. | 05-27-2005 | 12,647,263 | Unique | 3,202 | ||||||||
Withdrawal right old Masisa S.A. | 05-27-2005 | 5,431,721 | Unique | 1,379 | ||||||||
d) Disposals or reductions in own share portfolio
Date | Portfolio Decrease | ||
Number of shares | Amount THUS$ | ||
Capital decrease | 10-31-04 | 87,871,054 | 16,828 |
Capital decrease | 12-26-04 | 13,538,394 | 1,550 |
Preemptive right offering | 12-12-05 | 10,806,939 | 2,738 |
Preemptive right offering | 01-06-06 | 3,459,841 | 877 |
46
NOTE 22 – OTHER NON OPERATING INCOME AND EXPENSES
Other income and non-operating income as of March 31st, 2006 and 2005 is as follows:
Other non-operating income | 2006 | 2005 | ||
THUS$ | THUS$ | |||
Lease of plants, offices and others | - | 74 | ||
Insurance Compensation | 36 | 274 | ||
Gain on sale of goods & services | 242 | 395 | ||
Others | 20 | 224 | ||
Total | 298 | 967 | ||
Other non-operating expenses:
2006 | 2005 | |||
THUS$ | THUS$ | |||
Severance | 1,098 | - | ||
Lease of assets | 13 | 13 | ||
Write-off | 151 | - | ||
Depreciation | 203 | 117 | ||
Costs of siniestros | 25 | 263 | ||
Patents, taxes and commissions | 310 | 165 | ||
Donations | 73 | 26 | ||
Plant stoppage costs | 345 | - | ||
Forestry fire provisions | 670 | - | ||
Legal contingencies | 110 | - | ||
Others | 184 | 464 | ||
Total | 3,182 | 1,048 | ||
47
NOTE 23 – EXCHANGE DIFFERENCES - FOREIGN CURRENCY
The breakdown of all foreign currency accounts is as follows:
Account | Currency | Amount | |
31/03/2006 | 31/03/2005 | ||
Cash | Bolivars | -3 | -133 |
Cash | U.S. Dollars | -38 | -33 |
Cash | Other currencies | -284 | -200 |
Cash | Argentinean pesos | 11 | -73 |
Cash | Chilean pesos | -6,635 | -153 |
Cash | Mexican pesos | -63 | 9 |
Cash | Real | -44 | 73 |
Marketable securities | Bolivars | 0 | -44 |
Marketable securities | Chilean pesos | 717 | -56 |
Marketable securities | Real | 992 | 0 |
Accounts receivable | Bolivars | 0 | -11 |
Accounts receivable | U.S. Dollars | 23 | 0 |
Accounts receivable | Other currencies | 268 | 236 |
Accounts receivable | Argentinean pesos | -1 | 83 |
Accounts receivable | Chilean pesos | -95 | -1,019 |
Accounts receivable | Mexican pesos | 22 | -84 |
Accounts receivable | Real | 1,265 | -271 |
Accounts receivable | U.F. | 0 | -27 |
Notes receivable | Bolivars | 1 | -618 |
Notes receivable | U.S. Dollars | -70 | -54 |
Notes receivable | Argentinean pesos | -8 | 0 |
Notes receivable | Chilean pesos | -1,219 | -56 |
Notes receivable | Mexican pesos | -367 | 0 |
Notes receivable | Real | 34 | 0 |
Sundry debtors | Bolivars | 0 | -325 |
Sundry debtors | U.S. Dollars | -19 | 0 |
Sundry debtors | Other currencies | -2 | 5 |
Sundry debtors | Argentinean pesos | -1 | 0 |
Sundry debtors | Chilean pesos | 15 | -62 |
Sundry debtors | Mexican pesos | -12 | 12 |
Sundry debtors | Real | 13 | -7 |
Inventories | Mexican pesos | -1 | 0 |
Inventories | Real | -186 | 0 |
Recoverable taxes | Bolivars | 0 | -1,696 |
Recoverable taxes | U.S. Dollars | -88 | 0 |
Recoverable taxes | Other currencies | -6 | 0 |
Recoverable taxes | Argentinean pesos | -92 | 223 |
Recoverable taxes | Chilean pesos | -377 | -951 |
Recoverable taxes | Mexican pesos | -250 | -272 |
Recoverable taxes | Real | 911 | -68 |
Prepaid expenses | Bolivars | 0 | 1 |
Prepaid expenses | U.S. Dollars | 1 | 0 |
Prepaid expenses | Argentinean pesos | 4 | 0 |
Prepaid expenses | Chilean pesos | -127 | -51 |
Prepaid expenses | Real | 43 | 31 |
Others current assets | Other currencies | 0 | 34 |
48
Account | Currency | Amount | |
31/03/2006 | 31/03/2005 | ||
Others current assets | Chilean pesos | -7 | -125 |
Others current assets | Mexican pesos | -5 | 1 |
Others current assets | Real | 13 | -112 |
Others current assets | U.F. | 0 | -533 |
Long term debtors | U.S. Dollars | -1 | 0 |
Long term debtors | Chilean pesos | -6 | -9 |
Long term debtors | Real | 175 | -1 |
Others assets | Bolivars | -4 | -12 |
Others assets | Other currencies | -10 | 0 |
Others assets | Argentinean pesos | 1 | 0 |
Others assets | Chilean pesos | -277 | 0 |
Others assets | Real | 177 | -2 |
Total (debit) / credit | -5,612 | -6,350 | |
-------- | |||
LIABILITIES | |||
(DEBIT)/CREDIT | |||
Short-term financial liabilities | Bolivars | -574 | 0 |
Short-term financial liabilities | Chilean pesos | -7 | 0 |
Short-term financial liabilities | Chilean pesos | 1 | 0 |
Long Term Obligations with Banksand Financial Institutions | U.F. | -339 | 68 |
Obligations with Banksand Financial Institutions | Bolivars | 0 | -339 |
Obligations with Banksand Financial Institutions | Other currencies | 0 | -50 |
Obligations with Banksand Financial Institutions | Chilean pesos | 0 | -123 |
Obligations with Banksand Financial Institutions | Mexican pesos | 0 | 50 |
Obligations with Banksand Financial Institutions | Bolivars | 0 | 1,915 |
Obligations with thepublic | U.F. | 8,302 | 2,784 |
Accounts payable | Bolivars | 2 | 38 |
Accounts payable | U.S. Dollars | 71 | 200 |
Accounts payable | EURO | -57 | 0 |
Accounts payable | Other currencies | -9 | 26 |
Accounts payable | Argentinean pesos | -3 | -97 |
Accounts payable | Chilean pesos | 145 | 129 |
Accounts payable | Mexican pesos | 19 | -161 |
Accounts payable | Real | -441 | -262 |
Notes payable | Bolivars | 0 | -10 |
Notes payable | REAL | -3 | 0 |
49
Account | Currency | Amount | |
31/03/2006 | 31/03/2005 | ||
Sundry creditors | Bolivars | 0 | 140 |
Sundry creditors | U.S. Dollars | -1 | 0 |
Sundry creditors | Other currencies | 5 | 111 |
Sundry creditors | Chilean pesos | 3 | 1 |
Sundry creditors | REAL | -6 | 0 |
Accounts payable from related companies | Bolivars | 0 | 728 |
Provisions | Bolivars | 0 | 103 |
Provisions | U.S. Dollars | 64 | 3 |
Provisions | Argentinean pesos | 11 | 0 |
Provisions | Chilean pesos | 122 | 75 |
Provisions | Mexican pesos | -47 | 0 |
Provisions | REAL | -329 | -1 |
Withholdings | Bolivars | 0 | 359 |
Withholdings | U.S. Dollars | 79 | 0 |
Withholdings | Chilean pesos | 0 | -3 |
Income taxes (Income tax) | Other currencies | -2 | -115 |
Income taxes (Income tax) | REAL | -17 | -2 |
Income taxes (Taxes to be paid) | Bolivars | 1 | 0 |
Income taxes (Taxes to be paid) | Argentinean pesos | 76 | 0 |
Income taxes (Taxes to be paid) | Chilean pesos | 46 | 0 |
Income taxes (Taxes to be paid) | Mexican pesos | 48 | 0 |
Other current liabilities | Chilean pesos | -210 | -6 |
Other current liabilities | REAL | -512 | -1 |
Obligations with the public | U.F. | 0 | 888 |
Other long-term liabilities | U.S. Dollars | 64 | 0 |
Other long-term liabilities | Argentinean pesos | 0 | -221 |
Other long-term liabilities | Chilean pesos | 85 | 2,543 |
Other long-term liabilities | Mexican pesos | 17 | 50 |
Other long-term liabilities | REAL | -1,329 | -2,617 |
Total (debit) / credit | 5,275 | 6,203 | |
(Loss) Profits from exchange difference | -337 | -147 |
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NOTE 24 – DEBT AND EQUITY ISSUANCE AND PLACEMENT EXPENSES
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:
2006 | 2005 | |||
ThUS$ | ThUS$ | |||
Stamp taxes | 7,479 | 3,851 | ||
Placement & auction commissions | 867 | 93 | ||
Bond auction commission | 283 | 322 | ||
Credit rating advice | 229 | 109 | ||
Registration & inscription fees | 42 | 19 | ||
Legal advice | 28 | 11 | ||
Printing costs | 20 | 13 | ||
Other costs | 127 | 87 | ||
Total costs | 9,075 | 4,505 | ||
Accumulated amortization | (1,353) | (1,109) | ||
Balance to be amortized | 7,722 | 3,396 |
These expenses are shown in Current assets as Prepaid expenses for the short-term portion of ThUS$1,158 (ThUS$616 in 2005) and in Long-term assets as Others for the long-term portion of ThUS$6,564(ThUS$2,780 in 2005).
Share placement
------------------------------
The expenses incurred in the issue and placement of shares in 2005 consist of the following items:
ThUS$ | |
Financial advice | 2,860 |
Placement commission | 352 |
Publications | 184 |
Legal advice | 149 |
Printing & other costs | 68 |
Total costs | 3,613 |
This amount is shown deducted from Reserves in the Shareholders’ equity.
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NOTE 25 – CASH FLOW STATEMENT
The balances at March 31, 2006 and 2005 are as follows:
2006 | ||||
Opening | Closing | |||
Balance | Balance | |||
ThUS$ | ThUS$ | |||
Cash & banks | 11,987 | 13,927 | ||
Time deposits | 82,906 | 85,473 | ||
Marketable securities | 2,424 | 10,856 | ||
Securities resale agreement commitments | 541 | 541 | ||
Total | 97,858 | 110,797 | ||
2005 | ||||
Opening | Closing | |||
Balance | Balance | |||
ThUS$ | ThUS$ | |||
Cash & banks | 13,126 | 21,259 | ||
Time deposits | 44,139 | 38,422 | ||
Marketable securities | 1,265 | 1,673 | ||
Securities resale agreement commitments | - | 196 | ||
Total | 58,530 | 61,550 | ||
Fecu Code 5.50.30.55 Other charges to results that do not represent cash flow are:
Detail | 2006 | 2005 | ||||
Country | THUS$ | THUS$ | ||||
Depletion | Argentina | 362 | 460 | |||
Depletion | Brazil | 1,853 | 1,886 | |||
Depletion | Chile | 3,137 | 2,062 | |||
Depletion | Venezuela | 903 | 1,044 | |||
Others | 770 | 1,065 | ||||
TOTAL | 7,025 | 6,517 | ||||
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NOTE 26 –DERIVATIVECONTRACTS
The company has entered into the following Swap Agreements:
Description of the contract | Protected Value | Affected Account | ||||||||||
Assets / Liabilities | Effect On Income | |||||||||||
Type | Contract | Value | Maturity | Class | Buy/Sal e | Name | Amount | Name | Amount | Realized | Unrealized | |
S | CCPE | 8,180 | II-2006 | Interest Rate | C | Loans in US Dollars | 8,180 | 4,674 | Other currency/long- term liabilities | 12 | 12 | - |
S | CCPE | 26,982 | II-2006 | Interest Rate | C | Loans in US Dollars | 26,982 | 5,996 | Other currency/long- term liabilities | 3 | (3) | - |
S | CCPE | 11,369 | II-2006 | Interest Rate | C | Loans in US Dollars | 11,369 | 6,122 | Other currency/long- term liabilities | 9 | (9) | - |
S | CCPE | 23,277 | IV-2010 | Currency exchange | C | U.F. Bonds | 23,277 | 23,889 | Other long-term assets | 547 | - | - |
S | CCPE | 46,553 | IV-2010 | Currency exchange | C | U.F. Bonds | 46,553 | 47,778 | Other long-term assets | 1,650 | - | - |
S | CCPE | 33,523 | IV-2012 | Currency exchange | C | U.F. Bonds | 33,523 | 34,049 | Other long-term assets | 761 | - | 700 |
S | CCPE | 33,523 | IV-2012 | Currency exchange | C | U.F. Bonds | 33,523 | 34,049 | Other long-term assets | 1,006 | - | 1,036 |
S | CI | 20,000 | IV-2010 | Currency exchange | C | Future Flows | 20,000 | 21,582 | Other long-term liabilities | 1,984 | (1,984) | - |
S | CCPE | 6,000 | IV-2006 | Interest Rate | C | Loans in US Dollars | 6,000 | 6,000 | Obligations to banks and financial institutions | 25 | (25) | - |
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NOTE 27: CONTINGENCIES AND RESTRICTIONS
The following are the contingencies and commitments outstanding at the end of the period:
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 to date of the accounting books of the parent and its subsidiaries;
- - 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, 2005, 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 Terranova 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 radiata pine forest planted in Chile with an average age of over 8 years
- - Maintain shareholders’ equity at over ThUS$ 600,000.
- - Maintain a ratio of debt to shareholders’ equity 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.
- - On January 12, 2006, Masisa S.A. placed bonds for ThUF 2,000 at 7 year’s term with 2 year’s grace, and ThUF 2,750 at 21 years with 1 year’s grace. This placement obliges the Company to comply with the following covenants:
- - 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.
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- - Maintain minimum forest reserves of 30,000 hectares of radiata pine forest planted in Chile with an average age of over 8 years
- - Maintain shareholders’ equity at over ThUS$ 600,000.
- - Maintain a ratio of debt to shareholders’ equity, also known as the leverage, at a consolidated and unconsolidated level of no more than:
i. 0.90 times between March 31, 2006 and the maturity of the bonds.
Masisa Overseas Ltd.
The Parent company and the subsidiaries Masisa Argentina 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..
- - 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$255,467 and a financial expense ratio of no lower than 1.5:1 (income for the year before financial expenses and taxes to financial expenses); maintenance of a 100% holding in the capital of Masisa Overseas Ltd. and 66.6% holding in Masisa Argentina S.A.; prohibition on certain transactions with related parties; extend to the bond-holders any new collateral that Masisa S.A. and/or its subsidiaries grant in favor of third parties to cover new debts or debts existing at the date of the contract, with certain exceptions including those that have to be granted in the normal course of their business to cover the payment terms for new acquisitions and those related to letters of credits, among others.
- - Rabobank Syndicated Loan
The syndicated loan agreement signed on December 20, 2005 with Rabobank Curacao N.V., West LB AG, New York branch, The Bank of Nova Scotia, Citibank N.A., Nassau, Bahamas branch and ABN Amro Bank N.V., commits Masisa S.A., as the guarantor, to comply with certain covenants, mainly referring to compliance with legislation, maintenance of insurance cover, maintenance of its properties, and compliance with certain financial covenants based on its consolidated financial statements, like:
Minimum board installed production capacity: 1,200,000
Interest cover greater than 3.0
Net shareholders’ equity greater than US$ 980 million.
Net debt to equity ratio no higher than 0.9:1
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 granted by Cooperative Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank Nederland) 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
55
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 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$345 million; prohibition on charging assets, except on the terms set out in the agreement.
Inversiones Internacionales Terranova S.A.
- - The loan agreements signed by Inversiones Internacionales Terranova S.A. with the German banks KfW and WestLB commit Masisa S.A., as guarantor, to comply with certain obligations referring mainly to not significantly changing its business, providing financial information periodically, maintaining current its obligation to third parties, obtaining the prior consent of those banks for disposing of, transferring or selling a substantial part of its assets or granting security over them. The loan agreement with KfW also commits the Company to comply with certain financial ratios, on the basis of its consolidated financial statements:
Debt ratio, maximum: 0.85:1
Maximum financial debt to cash generation ratio: 5.5:1
Minimum cash generation to financial expense ratio: 2.0:1
Minimum tangible net equity: ThUS$ 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 Brasil 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. 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
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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, commits Masisa S.A., as guarantor, to 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 Crédito e Inversiones, Banco Corpbanca and Banco Security commits Masisa S.A., as guarantor, to 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 Cooperative 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.
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b) Deferred customs duties
At March 31, 2006, the Company owed deferred customs duties of ThUS$60 (ThUS$439 in 2005).
Expiry | ThUS$ | |
2007 | 55 | |
2008 | 5 | |
---- | ||
Total | 60 |
c) Insurance
As of March 31, 2006, the main insurance taken out by the Parent Company and its subsidiaries is as follows:
- - Insurance for plantations of local subsidiaries THUS$325,283.
- - Insurance on physical assets and inventories from local subsidiaries amount to approximately THUS$217,960 and THUS$ 118,695 for fixed costs in case of shutdown of the plants.
- - Corporate civil liability insurance, including coverage for personal accidents and third-party damages for THUS$10,000.
- - With regard to its subsidiaries in Brazil, insurance for plantations amount to THUS$96,805; for physical assets and inventories to THUS$205,380 and to THUS$59,374 for fixed costs in case of shutdown of plants.
- - The companies in Venezuela have taken out insurance for physical assets and inventories amounting to THUS$227,870 and THUS$39,200 for fixed costs in case of shutdown of plants. There is no insurance for plantations, since there is no market for this kind of insurance in Venezuela.
- - The subsidiaries in Mexico have taken out insurance for physical assets and inventories amounting to THUS$46,770 and THUS$6,567 for fixed costs in case of shutdown of plants.
- - The companies in Argentina have taken out the following insurance: for forest plantations THUS$41,935, for physical assets and inventories THUS$178,800 and THUS$31,438 for fixed costs in case of shutdown of plants.
- - The US subsidiary has insurance for physical assets and inventories for THUS$21,441 and THUS$3,500, for fixed costs en case of plant shutdown.
d) Other Contingencies
Through Resolution No.203, dated August 29th, 2003, the Internal Revenue Service notified the company that it is not applicable to record in Chile (and for the purpose of establishing its first-category taxable income), the income of some of its foreign agencies. According to the background information that the company has, Resolution No. 203 would have an effect on the losses recorded by the company which amount to US$ 39.2 million as a result of deferred taxes, recoverable taxes and tax losses already used.
58
The Company refuted Resolution No. 203 pursuant to the procedure established in articles 123 and following of the Tax Code. Based on the background information that the company has, as well as the opinion of its legal advisors and the administrative law of the “Servicio de Impuestos Internos” (Internal Revenue Service) which has a bearing on the judgment of Resolution No. 203, it seems unlikely that the final judgment of the claim process will have an unfavorable effect on deferred taxes, recoverable taxes and tax losses for US$ 39.2 million recorded by the company.
e) Bargain and Sale of shares and Shareholders Agreement
- - By the incorporation of Oxinova C.A. an affiliate in the Republic of Venezuela, the affiliate Inversiones Internacionales Terranova S.A. signed a shareholders agreement with the company Oxiquim S.A., mainly for the purpose of restricting the sale of shares, in order not to establish a pledge, levy or any share that is of its property and to maintain the control of Fibranova C.A., whether through Masisa S.A. or directly.
- - Chilean affiliate Inversiones Internacionales Terranova S.A. signed on the 23rd of may, 2002, a shareholders agreement with Corporación Venezolana de Guayana (CVG) a self governing state owned organization in order to regulate the principles, the rights and obligations of the Parties in and Venezuelan corporation that they would incorporate for the construction, administration and operation of a fluvial port in the northern riverbank of Orinoco River, Macapaima, Venezuela.
To the closing date of these financial statements, due to diverse considerations, the previously mentioned corporation has not yet been incorporated.
f) Contract for Wood Purchasing.
As of the end of the fiscal year, the affiliate company Terranova de Venezuela S.A.(“TDVSA”) maintains a contract for the purchase of Caribbean Pine wood which was signed on May, 1997. The plantation that is the object of the contract covers a total of 59,000 hectares in the State of Monagas in Venezuela, which is made up of two sites of 30,000 and 29,000 hectares. The exploitation term for such man made plantations is 30 years and the resources that are not used shall be returned to CVG Proforca C.A.
59
The signed contract takes the following conditions into account:
1. The land sites where the plantations are located are the property of the company CVG Proforca C.A., and they are not part of the sale.
2. The processing of the documents and obtaining future permits that may be required and its costs, shall be on the account for TDVSSA.
3. CVG.Proforca C.A. shall compensate TDVSA in the event that the latter incurred expenses and costs due to the non compliance of CVG Proforca C.A. as owner, holder and operator of the mentioned goods.
4. TDVSA is bound to comply with environmental protection regulations in order to prevent fires, industrial hygiene and safety, current lumbering and maintenance of feasibility and infrastructure, as well as how to carry out the risk analysis in order to prevent fires and the creation of an operational plan for fighting fires.
5. TDVSA shall have the required insurance policies in order to cover third party expenditures, while the beneficiary shall be CVG Proforca C.A.
On March 20, 2006, Terranova Venezuela agreed to provide THUS$740 to CVG Proforca to prevent fires that could affect the plantations.
g) Rental contract of Sawmill Uverito
In May 1997, the affiliate company Terranova de Venezuela S.A.(“TDVSA”) signed a contract for the rental of a sawmill with CVG Proforca C.A., with the single payment of THUS$ 10,000 during a 15 year term as of 1997, where it is bound to the following conditions during the term the mentioned contract is in force:
1. All maintenance and repair work that the equipment may require for its proper operation shall be to the account of TDVSA.
2. All improvements shall be the property of TDVSA and may be removed by the same, as long as no part of the rented property or goods is damaged.
3. All expenses related to energy and water supply and phone services for the commercial operation shall be on the account of TDVSA.
4. All property taxes shall be on the account of CVG Proforca C.A. , as well as those related to the operation by TDVSA.
5. As of January, 1998, all equipment should have been insured against all risks and the beneficiary of such policy shall be CVG Proforca C.A.
On March 20, 2006, Terranova Venezuela agreed the following:
- -Terminate in advance the rent contract of Uverito sawmill, without having CVG Proforca to do any payment for the termination of the contract.
- -Terranova Venezuela commits to do a series of tasks described in a cronogram which is part of the agreement, with the purpose of placing the sawmill in similar operational conditions to the valid ones at the moment of its reception in 1997.
- -At the end the reconditioning, Terranova Venezuela will have to entregar consign a guarantee for the equipments functioning for 4 months, which will not include tha bad use nor outware of the equipments, nor implicate the un fulfillment of the reconditioning tasks by Terranova de Venezuela.
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h) Beneficial interest contract of 30,000 hectares
In May 1997, the affiliate company Terranova de Venezuela S.A.(“TDVSA”) signed a contract with CVG Proforca C.A. a contract whereby the latter company assigns the rights of use of a site of land of 30,000 hectares, which corresponds to one of the two sites that the contract for the purchase of wood mentions.
This contract shall be in force for 30 years, nevertheless, the rights of use shall cease after TDVSA has exploited all forestry resources as of the twentieth year. In consideration, TDVSA shall transfer to CVG Proforca C.A. the property over such forestry resources that have been planted on their account, which shall have less than 10 years, in a surface that is not less than 7,500 hectares and no less than 400 plants by hectare of Caribbean Pine.
TDVSA committed itself among other things, to the following:
- - To reforest on its account for its benefit (except for the previously mentioned consideration to CVG Proforca C.A.) the parts that have been planted by TDVSA during the first twenty years this contract is valid.
- - To establish a bond for the true compliance of obligations assumed under this contract in favor of CVG Proforca C.A. for the total amount of THUS$ 300.
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Institution | Debtor | Guaranty Type | Compromised Assets | Outstanding amount as of the end of the period | Liberation of guarantees | ||||||||
Name | Relation | Type | Account value | 31/03/2006 | 31/03/2005 | 31/03/2007 | Assets | 31/03/2008 | Assets | 31/03/2009 | Assets | ||
ABN AMRO BANK | ANDINOS C.A. | Subsidiary | Suretyship | Net Worth | 1,396 | 1,396 | - | 1,396 | - | - | - | - | - |
BANCO BBVA | ANDINOS C.A. | Subsidiary | Suretyship | Net Worth | 894 | 894 | - | 461 | - | 289 | - | 144 | - |
BANCO DEL ESTADO DE CHILE | ANDINOS C.A. | Subsidiary | Suretyship | Net Worth | 1,719 | 1,719 | - | 885 | - | 555 | - | 278 | - |
BANCO SANTANDER | ANDINOS C.A. | Subsidiary | Suretyship | Net Worth | 3,232 | 3,232 | - | 1,665 | - | 1,044 | - | 522 | - |
WESTDEUTSCHE LANDESBANK | ANDINOS C.A. | Subsidiary | Suretyship | Net Worth | 3,210 | 3,210 | - | 3,210 | - | - | - | - | - |
CORPBANCA VENEZUELA | ANDINOS C.A. | Subsidiary | Suretyship | Net Worth | 1,427 | 1,427 | - | 576 | - | 568 | - | 284 | - |
KREDITANSTALT FUR WIEDERAUFBAU | ANDINOS C.A. | Subsidiary | Suretyship | Net Worth | 1,520 | 1,520 | - | 190 | - | 380 | - | 380 | - |
RABOBANK NEDERLAND | FORESTAL ARGENTINA S.A. | Subsidiary | Suretyship | Net Worth | 5,514 | 5,514 | - | 294 | - | 360 | - | 540 | - |
ABN AMRO BANK | FIBRANOVA C.A. | Subsidiary | Suretyship | Net Worth | 5,659 | 5,659 | - | 5,659 | - | - | - | - | |
BANCO BBVA | FIBRANOVA C.A. | Subsidiary | Suretyship | Net Worth | 2,980 | 2,980 | - | 1,535 | - | 963 | - | 482 | - |
BANCO CORPBANCA | FIBRANOVA C.A. | Subsidiary | Suretyship | Net Worth | 28,309 | 28,309 | - | 13,302 | - | 8,011 | - | 6,997 | - |
BANCO DE CRÉDITO E INVERSIONES | FIBRANOVA C.A. | Subsidiary | Suretyship | Net Worth | 9,207 | 9,207 | - | 4,207 | - | 2,500 | - | 2,500 | - |
BANCO DE VENEZUELA S.A. | FIBRANOVA C.A. | Subsidiary | Suretyship | Net Worth | 24,294 | 24,294 | - | 24,294 | - | - | - | - | - |
BANCO DEL ESTADO DE CHILE | FIBRANOVA C.A. | Subsidiary | Suretyship | Net Worth | 10,230 | 10,230 | - | 5,271 | - | 3,306 | - | 1,653 | - |
BANCO MERCANTIL | FIBRANOVA C.A. | Subsidiary | Suretyship | Net Worth | 16,283 | 16,283 | - | 16,283 | - | - | - | - | - |
BANCO SANTANDER | FIBRANOVA C.A. | Subsidiary | Suretyship | Net Worth | 4,358 | 4,358 | - | 1,991 | - | 1,183 | - | 1,183 | - |
BANCO SECURITY | FIBRANOVA C.A. | Subsidiary | Suretyship | Net Worth | 4,297 | 4,297 | - | 1,963 | - | 1,167 | - | 1,167 | - |
WESTDEUTSCHE LANDESBANK | FIBRANOVA C.A. | Subsidiary | Suretyship | Net Worth | 19,403 | 19,403 | - | 10,172 | - | 6,154 | - | 3,077 | - |
BNP PARIBAS | FIBRANOVA C.A. | Subsidiary | Suretyship | Net Worth | 11,297 | 11,297 | - | 11,297 | - | - | - | - | - |
CORPBANCA VENEZUELA | FIBRANOVA C.A. | Subsidiary | Suretyship | Net Worth | 3,440 | 3,440 | - | 1,387 | - | 1,369 | - | 684 | - |
KREDITANSTALT FUR WIEDERAUFBAU | FIBRANOVA C.A. | Subsidiary | Suretyship | Net Worth | 13,670 | 13,670 | - | 1,710 | - | 3,420 | - | 3,420 | - |
BANCO DE CRÉDITO E INVERSIONES | MASISA ARGENTINA S.A. | Subsidiary | Suretyship | Net Worth | 12,765 | 12,765 | - | 3,042 | - | 2,778 | - | 2,778 | - |
62
Institution | Debtor | Guaranty Type | Compromised Assets | Outstanding amount as of the end of the period | Liberation of guarantees | ||||||||
Name | Relation | Type | Account value | 31/03/2006 | 31/03/2005 | 31/03/2007 | Assets | 31/03/2008 | Assets | 31/03/2009 | Assets | ||
RABOBANK NEDERLAND | MASISA ARGENTINA S.A. | Subsidiary | Suretyship | Net Worth | 11,479 | 11,479 | - | 2,729 | - | 2,500 | - | 2,500 | - |
ABN AMRO BANK | MASISA OVERSEAS LIMITED | Subsidiary | Suretyship | Net Worth | 11,107 | 11,107 | - | 107 | - | - | - | - | - |
CITIBANK N.A. | MASISA OVERSEAS LIMITED | Subsidiary | Suretyship | Net Worth | 24,990 | 24,990 | - | 240 | - | - | - | - | - |
RABOBANK NEDERLAND | MASISA OVERSEAS LIMITED | Subsidiary | Suretyship | Net Worth | 24,990 | 24,990 | - | 240 | - | - | - | - | - |
THE BANK OF NOVA SCOTIA | MASISA OVERSEAS LIMITED | Subsidiary | Suretyship | Net Worth | 24,990 | 24,990 | - | 240 | - | - | - | - | - |
WESTDEUTSCHE LANDESBANK | MASISA OVERSEAS LIMITED | Subsidiary | Suretyship | Net Worth | 24,990 | - | 240 | - | - | - | - | - | |
PRIVATE PLACEMENT | MASISA OVERSEAS LIMITED | Subsidiary | Suretyship | Net Worth | 27,822 | 27,822 | - | 9,822 | - | 9,000 | - | 9,000 | - |
BANCO BBVA | MASISA MADEIRAS LIMITADA | Subsidiary | Suretyship | Net Worth | 483 | 483 | - | 195 | - | 193 | - | 96 | - |
BANCO DEL ESTADO DE CHILE | MASISA MADEIRAS LIMITADA | Subsidiary | Suretyship | Net Worth | 930 | 930 | - | 374 | - | 370 | - | 185 | - |
BANCO ITAU BBA | MASISA MADEIRAS LIMITADA | Subsidiary | Suretyship | Net Worth | 2,060 | 2,060 | - | 2,060 | - | - | - | - | - |
BANCO SANTANDER | MASISA MADEIRAS LIMITADA | Subsidiary | Suretyship | Net Worth | 1,748 | 1,748 | - | 704 | - | 696 | - | 348 | - |
HSBC | TERRANOVA FOREST PRODCUT INC | Subsidiary | Suretyship | Net Worth | 2,519 | 2,519 | - | 2,519 | - | - | - | - | - |
KREDITANSTALT FUR WIEDERAUFBAU | INVERSIONES INTERNACIONALES TERRANOVA | Subsidiary | Suretyship | Net Worth | 16,903 | 16,903 | - | 3,582 | - | 3,330 | - | 3,330 | - |
WESTDEUTSCHE LANDESBANK | INVERSIONES INTERNACIONALES TERRANOVA | Subsidiary | Suretyship | Net Worth | 6,174 | 6,174 | - | 1,821 | - | 1,741 | - | 1,741 | - |
BANCO BBVA NEW YORK | TERRANOVA VENEZUELA S.A. | Subsidiary | Suretyship | Net Worth | 1,393 | 1,393 | - | 1,393 | - | - | - | - | - |
WESTDEUTSCHE LANDESBANK | TERRANOVA VENEZUELA S.A. | Subsidiary | Suretyship | Net Worth | 12,078 | 12,078 | - | 6,332 | - | 3,831 | - | 1,915 | - |
CORPBANCA VENEZUELA | TERRANOVA VENEZUELA S.A. | Subsidiary | Suretyship | Net Worth | 349 | 349 | - | 140 | - | 140 | - | 69 | - |
BANCO DE CHILE | OXINOVA C.A. | Joined | Suretyship | Net Worth | 4,900 | 4,900 | - | 4,900 | - | - | - | - | - |
63
NOTE 28: GUARANTEES RECEIVED FROM THIRD PARTIES
At the closing of these financial statements and to guarantee the payment and fulfillment of client obligations related to business operations, guarantees for THU$3,667 (THUS$5,952 in 2005) have been received, consisting of pledges, mortgages, endorsement of loan insurance policies, special commands, guarantees and joint debts.
64
NOTE 29 – NATIONAL AND FOREIGN CURRENCY
a) Assets
The breakdown of all foreign currency accounts is as follows:
Amount | |||
Account | Currency | 31/03/2006 | 31/03/2005 |
Cash | Bolivars | 1,960 | 1,617 |
Cash | Dollar | 3,523 | 5,560 |
Cash | Euro | 22 | |
Cash | Euro | 0 | |
Cash | Nuevo sol | 0 | |
Cash | Other currencies | 639 | 956 |
Cash | Argentinean pesos | 268 | 252 |
Cash | Chilean pesos | 803 | 2,480 |
Cash | Mexican pesos | 3,423 | 3,342 |
Cash | Real | 3,289 | 7,052 |
Time deposit | Bolivars | 482 | 250 |
Time deposit | Dollar | 84,991 | 37,317 |
Time deposit | Euro | 0 | |
Time deposit | Other currencies | 0 | 855 |
Time deposit | Argentinean pesos | 0 | |
Time deposit | Chilean pesos | 0 | |
Time deposit | Real | 0 | |
Marketable securities | Other currencies | 0 | |
Marketable securities | Chilean pesos | 0 | 1,673 |
Marketable securities | Real | 10,856 | |
Accounts receivable | Bolivars | 8,041 | 6,974 |
Accounts receivable | Dollar | 39,412 | 32,593 |
Accounts receivable | Euro | 179 | |
Accounts receivable | Nuevo sol | 0 | |
Accounts receivable | Other currencies | 4,073 | 8,183 |
Accounts receivable | Argentinean pesos | 2,436 | 1,526 |
Accounts receivable | Chilean pesos | 27,827 | 19,789 |
Accounts receivable | Mexican pesos | 16,718 | 27,932 |
Accounts receivable | Real | 22,278 | 14,888 |
Accounts receivable | SUCRE | 278 | |
Notes receivable | Dollar | 2,696 | 2,000 |
Notes receivable | Other currencies | 2 | |
Notes receivable | Argentinean pesos | 2,718 | 2,085 |
65
Amount | |||
Account | Currency | 31/03/2006 | 31/03/2005 |
Notes receivable | Chilean pesos | 3,437 | 2,964 |
Notes receivable | Mexican pesos | 2,461 | 1,721 |
Notes receivable | Real | 0 | |
Notes receivable | U.F. | 1,376 | 96 |
Sundry debtors | Bolivars | 2,471 | 3,267 |
Sundry debtors | Bolivars | 0 | |
Sundry debtors | Dollar | 5,430 | 5,768 |
Sundry debtors | Euro | 172 | |
Sundry debtors | Nuevo sol | 15 | 6,752 |
Sundry debtors | Other currencies | 1,349 | 633 |
Sundry debtors | Argentinean pesos | 53 | 984 |
Sundry debtors | Chilean pesos | 5,661 | 3,407 |
Sundry debtors | Mexican pesos | 1,722 | 4,779 |
Sundry debtors | Real | 1,945 | |
Sundry debtors | U.F. | 130 | |
Notes and accounts receivable from related companies | Bolivars | 0 | |
Notes and accounts receivable from related companies | Dollar | 6,096 | 6,458 |
Notes and accounts receivable from related companies | Other currencies | 0 | |
Notes and accounts receivable from related companies | Argentinean pesos | 0 | |
Notes and accounts receivable from related companies | Chilean pesos | 0 | |
Notes and accounts receivable from related companies | Mexican pesos | 0 | |
Notes and accounts receivable from related companies | Real | 0 | |
Inventories | Bolivars | 0 | |
Inventories | Dollar | 207,189 | 202,109 |
Inventories | Argentinean pesos | 0 | |
Inventories | Chilean pesos | 0 | |
Inventories | Mexican pesos | 0 | |
Inventories | Real | 0 | |
Recoverable taxes | Bolivars | 13,479 | 14,858 |
66
Amount | |||
Account | Currency | 31/03/2006 | 31/03/2005 |
Recoverable taxes | Dollar | 5,881 | 4,246 |
Recoverable taxes | Nuevo sol | 74 | |
Recoverable taxes | Other currencies | 1,505 | 1,423 |
Recoverable taxes | Argentinean pesos | 5,397 | 5,595 |
Recoverable taxes | Chilean pesos | 21,539 | 16,390 |
Recoverable taxes | Mexican pesos | 1,508 | 1,667 |
Recoverable taxes | Real | 11,310 | 3,075 |
Recoverable taxes | SUCRE | 0 | |
Prepaid expenses | Bolivars | 1,010 | |
Prepaid expenses | Dollar | 3,643 | 3,311 |
Prepaid expenses | Euro | 0 | |
Prepaid expenses | Other currencies | 604 | 135 |
Prepaid expenses | Argentinean pesos | 298 | 421 |
Prepaid expenses | Chilean pesos | 3,638 | 4,777 |
Prepaid expenses | Mexican pesos | 145 | 96 |
Prepaid expenses | Real | 1,077 | 1,121 |
Prepaid expenses | U.F. | 1,976 | 1,194 |
Deferred taxes | Dollar | 2,430 | 2,311 |
Deferred taxes | Other currencies | 0 | |
Deferred taxes | Argentinean pesos | 0 | |
Deferred taxes | Chilean pesos | 0 | |
Deferred taxes | Mexican pesos | 0 | |
Others currents assets | Dollar | 1,226 | 1,270 |
Others currents assets | Other currencies | 0 | 197 |
Others currents assets | Chilean pesos | 2,373 | |
Others currents assets | Mexican pesos | 32 | 16 |
Others currents assets | Real | 0 | 0 |
Others currents assets | U.F. | 159 | 126 |
Fixed Assets | Dollar | 1,465,112 | 1,406,739 |
Investments in related companies | Dollar | 4,212 | 3,508 |
Investments in other companies | Bolivars | 40 | 26 |
Investments in other companies | Dollar | 158 | 159 |
Investments in other companies | Other currencies | 0 | |
Investments in other companies | Chilean pesos | 7 | |
Goodwill | Dollar | 1,228 | 1,843 |
Goodwill | Chilean pesos | 0 | |
Negative goodwill | Dollar | -61,876 | -44,127 |
67
Amount | |||
Account | Currency | 31/03/2006 | 31/03/2005 |
Long term receivables | Dollar | 2,469 | 4,209 |
Long term receivables | Other currencies | 0 | 1 |
Long term receivables | Argentinean pesos | 0 | 137 |
Long term receivables | Chilean pesos | 976 | |
Long term receivables | Real | 1,974 | 99 |
Long term receivables | U.F. | 100 | 943 |
Notes and accounts receivable from related companies | Dollar | 0 | 597 |
Notes and accounts receivable from related companies | Chilean pesos | 0 | |
Long-term deferred taxes | Dollar | 0 | |
Long-term deferred taxes | Chilean pesos | 0 | |
Long-term deferred taxes | Mexican pesos | 0 | |
Long-term deferred taxes | Real | 0 | |
Intangible | Dollar | 121 | 121 |
Intangible | Real | ||
Amortization | Dollar | -21 | -18 |
Amortization | Other currencies | 0 | |
Amortization | Real | 0 | |
Others | Bolivars | 72 | |
Others | Dollar | 15,574 | 23,271 |
Others | Other currencies | 0 | |
Others | Argentinean pesos | 45 | 115 |
Others | Chilean pesos | 292 | 558 |
Others | Mexican pesos | 75 | 72 |
Others | Real | 1,056 | 518 |
Others | U.F. | 12,909 | 3,966 |
Bolivars | 27,555 | 26,992 | |
Dollar | 1,791,742 | 1,699,245 | |
Euro | 373 | 0 | |
Nuevo sol | 89 | 6,752 | |
Argentinean pesos | 11,215 | 11,115 | |
Chilean pesos | 66,553 | 52,038 | |
Mexican pesos | 26,084 | 39,625 | |
Real | 53,785 | 26,753 | |
Other currencies | 8,172 | 12,383 | |
Sucre | 278 | 0 | |
U.F. | 16,650 | 6,235 | |
68
b) Short Term Liabilities
Account | Currency | Until 90 days | 90 days to 1 year | ||||||
31/03/2006 | 31/03/2005 | 31/03/2006 | 31/03/2005 | ||||||
Amount | Annual Rate | Amount | Annual Rate | Amount | Annual Rate | Amount | Annual Rate | ||
Obligations to banks and financial institutions short/term | Dollar | 10 | 3.10% | 5,603 | 4.63% | 20,381 | 3.10% | ||
Obligations to banks and financial institutions short/term | Real | 13,226 | |||||||
Obligations to banks and financial institutions short/term | Bolivars | 45,809 | 14.50% | 2,668 | 4.71 | ||||
Short/term portion of long/term liabilities to banks and financial institutions | U.F. | 2,524 | |||||||
Short/term portion of long/term liabilities to banks and financial institutions | Dollar | 1,985 | 3.83% | 15,651 | 3.10% | 49,133 | 3.83% | 56,333 | 3.10% |
Short/term portion of short/term liabilities to banks and financial institutions | Bolivars | 3,933 | 17.25% | ||||||
Short/term portion of long/term liabilities to banks and financial institutions | U.F. | 1,427 | 14,676 | ||||||
Short/term portion of long/term liabilities to banks and financial institutions | Dollar | 2,659 | 32,261 | 8.05% | 10,096 | ||||
Long/term liabilities due within one year | Dollar | 28 | |||||||
Dividends payable | Chilean pesos | 561 | 69 | ||||||
Dividends payable | Dollar | 0 | 166 | ||||||
Accounts payable | Chilean pesos | 16,377 | 26,631 | ||||||
Accounts payable | Dollar | 23,359 | 17,974 | ||||||
Accounts payable | Argentinean pesos | 2,492 | 3,197 | ||||||
Accounts payable | Real | 7,159 | 5,094 | ||||||
Accounts payable | Bolivars | 1,930 | 2,608 | ||||||
Accounts payable | Mexican pesos | 3,866 | |||||||
Accounts payable | Other currencies | 2,880 | 3,736 | ||||||
Notes payable | Chilean | 5 |
69
Account | Currency | Until 90 days | 90 days to 1 year | ||||||
31/03/2006 | 31/03/2005 | 31/03/2006 | 31/03/2005 | ||||||
Amount | Annual Rate | Amount | Annual Rate | Amount | Annual Rate | Amount | Annual Rate | ||
pesos | |||||||||
Notes payable | Argentinean pesos | 817 | 503 | ||||||
Sundry creditors | U.F. | 182 | |||||||
Sundry creditors | Chilean pesos | 36 | 77 | ||||||
Sundry creditors | Dollar | 1,822 | 1,346 | ||||||
Sundry creditors | Argentinean pesos | 75 | |||||||
Sundry creditors | Bolivars | 6 | 1,171 | ||||||
Sundry creditors | Mexican pesos | 11 | |||||||
Sundry creditors | Other currencies | 6 | 17 | ||||||
Notes and accounts payable to related companies | Chilean pesos | 720 | |||||||
Notes and accounts payable to related companies | Dollar | 261 | 322 | ||||||
Notes and accounts payable to related companies | Bolivars | 3,305 | 696 | ||||||
Notes and accounts payable to related companies | Mexican pesos | 1,359 | |||||||
Provisions | Chilean pesos | 3,418 | 3,414 | ||||||
Provisions | Dollar | 4,652 | 4,941 | 1,068 | 1,068 | ||||
Provisions | Argentinean pesos | 4,748 | 704 | ||||||
Provisions | Bolivars | 2,018 | 1,445 | ||||||
Provisions | Real | 3,680 | 1,219 | ||||||
Provisions | Mexican pesos | 330 | 596 | ||||||
Provisions | Other currencies | 80 | 398 | ||||||
Withholdings | Chilean pesos | 622 | 2,888 | ||||||
Withholdings | Dollar | 704 | 454 | 67 | |||||
Withholdings | Bolivars | 1,619 | 3,137 | ||||||
Withholdings | Argentinean | 770 | 774 |
70
Account | Currency | Until 90 days | 90 days to 1 year | ||||||
31/03/2006 | 31/03/2005 | 31/03/2006 | 31/03/2005 | ||||||
Amount | Annual Rate | Amount | Annual Rate | Amount | Annual Rate | Amount | Annual Rate | ||
pesos | |||||||||
Withholdings | Real | 12,427 | 3,956 | ||||||
Withholdings | Mexican pesos | 1,768 | |||||||
Withholdings | Other currencies | 369 | 97 | ||||||
Income tax | Chilean pesos | 1,579 | 1,818 | 362 | |||||
Income tax | Dollar | 2,046 | 233 | ||||||
Income tax | Argentinean pesos | 0 | 3,656 | 1,742 | |||||
Income tax | Bolivars | 148 | |||||||
Income tax | Real | 234 | |||||||
Income tax | Mexican pesos | 1,526 | |||||||
Income tax | Other currencies | 1,070 | 2,081 | ||||||
Income received in advance | Chilean pesos | 16 | 619 | 3 | |||||
Income received in advance | Dollar | 406 | |||||||
Income received in advance | Bolivars | 518 | 27 | ||||||
Income received in advance | Argentinean pesos | 203 | |||||||
Income received in advance | Real | 434 | |||||||
Income received in advance | Mexican pesos | 22 | 154 | ||||||
Income received in advance | Other currencies | 254 | |||||||
Other current liabilities | Dollar | 8 | |||||||
Other current liabilities | Argentinean pesos | 405 | |||||||
Other current liabilities | |||||||||
Dollar | 34,829 | 43,965 | 88,365 | 87,878 | |||||
Real | 23,266 | 24,163 | 0 | 0 | |||||
Bolivars | 9,544 | 9,084 | 49,742 | 2,668 | |||||
U.F. | 182 | 3,951 | 0 | 14,676 |
71
Account | Currency | Until 90 days | 90 days to 1 year | ||||||
31/03/2006 | 31/03/2005 | 31/03/2006 | 31/03/2005 | ||||||
Amount | Annual Rate | Amount | Annual Rate | Amount | Annual Rate | Amount | Annual Rate | ||
Chilean pesos | 22,614 | 36,236 | 0 | 365 | |||||
Argentinean pesos | 9,510 | 5,178 | 3,656 | 1,742 | |||||
Mexican pesos | 7,523 | 2,109 | 0 | 0 | |||||
Other currencies | 4,405 | 6,583 | 0 | 0 |
72
long-term Liabilities as of March 31st, 2006
Present period
The breakdown of all foreign currency accounts is as follows:
Account | Currency | 1 to 3 year | 3 to 5 year | 5 to 10 year | More of 10 year | ||||
Amount | Rate | Amount | Rate | Amount | Rate | Amount Rate | Rate | ||
Obligations to banks and financial institutions | Dollar | 69,709 | 3.83% | 27,739 | 3.83% | 119,060 | 3.83% | ||
Obligations to banks and financial institutions | Bolivars | 2,360 | 17.25% | 754 | 17.25% | ||||
Bonds | U.F. | 55,115 | 5.24% | 68,952 | 5.24% | 59,048 | 5.24% | 66,863 | 5.24% |
Bonds | Dollar | 48,000 | 5.00% | ||||||
Sundry creditors | Chilean pesos | 27 | |||||||
Sundry creditors | Dollar | 200 | |||||||
Provisions | Dollar | 1,422 | |||||||
Deferred taxes | Dollar | 686 | 731 | 44,106 | |||||
Other long-term liabilities | Real | 13,065 | 682 | ||||||
Other long-term liabilities | Dollar | 8,478 | |||||||
Total long-term liabilities: | |||||||||
Dollar | 127,073 | 29,892 | 163,166 | 0 | |||||
Bolivars | 2,360 | 754 | 0 | 0 | |||||
U.F. | 55,115 | 68,952 | 59,048 | 66,863 | |||||
Chilean | 27 | 0 | 0 | 0 | |||||
pesos | |||||||||
Real | 13,065 | 682 | 0 | 0 |
73
Past period
The breakdown of all foreign currency accounts is as follows:
Account | Currency | 1 to 3 year | 3 to 5 year | 5 to 10 year | More of 10 year | ||||
Amount | Rate | Amount | Rate | Amount | Rate | Amount Rate | Amount Rate | ||
Obligations to banks and financial institutions | U.F. | 1,251 | 6.70% | ||||||
Obligations to banks and financial institutions | Chilean pesos | 18,479 | 11,611 | 3,330 | |||||
Obligations to banks and financial institutions | Dollar | 106,425 | 3.30% | 33,082 | 3.30% | 2,638 | 3.30% | ||
Bonds | U.F. | 58,706 | 5.00% | 117,848 | 5.00% | 9,785 | 5.53% | 38,471 6.11% | 6.11% |
Bonds | Dollar | 27,000 | 8.06% | 30,000 | 6.15% | ||||
Sundry creditors | Dollar | 1,548 | 93 | ||||||
Provisions | Chilean pesos | 15 | |||||||
Provisions | Real | 615 | |||||||
Deferred taxes | Dollar | 33,844 | |||||||
Other long-term liabilities | Dollar | 10,901 | 5,129 | ||||||
Total long-term liabilities | |||||||||
U.F. | 59,957 | 117,848 | 9,785 | 38,471 | |||||
Chilean pesos | 18,479 | 11,611 | 3,345 | 0 | |||||
Dollar | 145,874 | 68,304 | 2,638 | 33,844 | |||||
Real | 615 | 0 | 0 | 0 |
NOTE 30:SANCTIONS
Neither the Company nor its directors or managers have received sanctions during the period covered by these financial statements from the Superintendency of Securities and Insurance or other administrative authorities.
74
NOTE 31: SUBSEQUENT EVENTS
The ordinary shareholders’ meeting held on April 19, 2006 agreed top the payment of the minimum obligatory final dividend and an additional final dividend, against the net distributable income for the year ended December 31, 2005. The total amount to be distributed is the sum of ThUS$ 11,491, equivalent to 50% of the net distributable income for 2005. This dividend will be paid on May 16, 2006 in Chilean pesos at the "dólar observado" exchange rate as published in the Official Gazette on May 12, 2006.
The Company is unaware of any other subsequent significant events occurring between March 31, 2006 and the date of issue of these financial statements that might affect the financial position of the Company.
NOTE 32 – ENVIRONMENTAL
The company focuses its environmental policies through the following 2 perspectives,
1) Legal Aspects
This includes all what relates to requests of permits, authorizations and certificates connected to environmental matters as well as regularization of pending aspects.
2) Environmental management and Eco-Efficiency
Under the concept that each process may be improved through a responsible and adequate environmental management, the company is constantly evaluating and developing projects to reduce cost and wastes in its production processes to accomplish the efficient manage of the resources, and finally, the implementation of the Environmental Management System Certification under international standards.
The company has committed to the following investments in its operating processes related to the environmental subject, the amounts invested into the company and subsidiaries are:
Company | Budget | Investment | Invested | |||
Accumulated | Accumulated | During 2006 | ||||
2006 | 2006 | |||||
Masisa Chile | 4,155 | 4,586 | 892 | |||
Masisa Argentina | 1,640 | 910 | 44 | |||
Masisa Brasil | 1,946 | 1,542 | - | |||
Masisa México | 996 | 986 | - | |||
Forestal Argentina | 90 | 165 | 10 | |||
Forestal Tornagaleones | 638 | 829 | 31 | |||
Terranova Brasil | 286 | 138 | - | |||
Terranova Venezuela | 290 | 2,702 | - | |||
Total Consolidate | 10,041 | 11,858 | 977 |
75
MANAGEMENT ANALYSIS
MANAGEMENT ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS AT MARCH 31, 2006 (thousands of US$)
A. Comparative analysis of the principal trends noted:
2006 | 2005 | 2005 | ||||
Jan-March | Jan-March | Jan-Dec | ||||
Liquidity Ratios | ||||||
Current Ratio | 2.19 | 2.01 | 1.11 | |||
Acid Test | 0.05 | 0.09 | 0.03 |
Current assets have increased by approximately 16.1%, mainly in time deposits and trade accounts receivable which are directly related to higher sales in this quarter compared to the same period of the year before, and the share placement completed in January 2006. Current liabilities, on the other hand, increased by 6.4% .
2006 | 2005 | 2005 | ||||
Jan-March | Jan-March | Jan-Dec | ||||
Debt Ratios | ||||||
Debt Ratio (times) | 0.72 | 0.71 | 0.72 | |||
Short-Term/Total Debt | 30.18% | 31.84% | 58.77% | |||
Long-Term/Total Debt | 69.82% | 68.16% | 41.23% | |||
Financial Expense Coverage (times) | 1.68 | 3.01 | 1.80 |
The debt ratios show no important changes.
The fall in the financial expense coverage ratio reflects the lower income before tax and minority interest in the first quarter of 2006 compared to the same quarter of 2005, as explained below in this section.
2006 | 2005 | 2005 | ||||
Jan-March | Jan-March | Jan-Dec | ||||
Activity Indicators | ||||||
1.Total Assets | 2,000,248 | 1,881,228 | 1,965,921 | |||
Investments in the period | ||||||
- in Fixed Assets | 18,130 | 16,942 | 67,289 | |||
Disposals: | ||||||
- Sales of Fixed Assets | 1,615 | 1,093 | 2,193 | |||
2.Inventory Turnover | 0.80 | 0.63 | 2.47 | |||
3.Inventory Permanence | 112.85 | 143.69 | 145.75 | |||
4.Accounts Payable Turnover | 11.68 | 8.59 | 11.22 | |||
5.Accounts Payable Permanence | 30.81 | 41.93 | 32.09 | |||
6.Accounts Receivable Turnover | 3.77 | 3.25 | 3.71 | |||
7.Accounts Receivable Permanence | 95.44 | 110.91 | 96.96 |
76
2006 | 2005 | 2005 | ||||
Jan-March | Jan-March | Jan-Dec | ||||
Results Indicators | ||||||
Sales | 212,575 | 178,126 | 743,993 | |||
- Domestic market | 195,273 | 155,321 | 683,331 | |||
- External market | 17,302 | 22,805 | 60,662 | |||
Cost of Sales | (165,232) | (126,592) | (549,501) | |||
- Internal market | (155,136) | (110,927) | (524,551) | |||
- External market | (10,096) | (15,665) | (24,950) | |||
Operating Income | 19,271 | 28,377 | 81,898 | |||
Financial Expenses | (10,558) | (9,556) | (38,756) | |||
Non-Operating Result | (12,111) | (9,175) | (50,986) | |||
EBITDA | 30,329 | 41,557 | 122,285 | |||
Net income (loss) alter tax | 28 | 13,600 | 22,981 |
Sales increased during the first quarter by 19.3% with respect to the same period the year before. Despite this, operating income fell by 32% as a result of finer margins due to currency appreciation and higher administrative and selling expenses.
The consumption of own raw material for the periods analyzed was as follows:
2006 | 2005 | 2005 | ||||
Jan-March | Jan-March | Jan-Dec | ||||
Argentina | 362 | 460 | 2,837 | |||
Brazil | 1,853 | 1,886 | 7,278 | |||
Chile | 3,137 | 2,062 | 10,335 | |||
Venezuela | 903 | 1,044 | 4,157 | |||
Total | 6,255 | 5,452 | 24,607 |
2006 | 2005 | 2005 | ||||
Jan-March | Jan-March | Jan-Dec | ||||
Profitability Indicators | ||||||
1.Return on Equity | 0.10% | 1.59% | 2.85% | |||
2.Return on Assets | 0.06% | 0.77% | 1.40% | |||
3.Return on Operating Assets | 0.95% | 1.51% | 4.13% | |||
4.Earnings per Share (dollars) | 0.0002 | 0.0029 | 0.0048 | |||
5.Dividend Yield | N/A | N/A | 2.79% |
The profitability indicators show the fall in the results commented on above.
B.- Description and analysis of the principal net cash flow components
2006 | 2005 | 2005 | ||||
Jan-March | Jan-March | Jan-Dec | ||||
Net positive cash flow from | ||||||
operating activities | 3,013 | 33,904 | 103,762 | |||
- Collection of trade receivables | 230,721 | 208,828 | 879,940 | |||
- Payments to suppliers & personnel | ( 202,366) | ( 177,143) | (748,178) | |||
- Others | ( 25,342) | 2,219 | (28,000) | |||
Net cash flow from financing activities | 59,782 | ( 13,616) | 36,610 | |||
- Share placement | 44,011 | - | 75,383 | |||
- Loans drawn | 115,236 | - | 125,121 | |||
- Bonds issued | 172,720 | - | - |
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- Dividends paid | - | - | (52,111) | |||
- Loans repaid | (116,582) | (13,616) | (82,901) | |||
- Repayment of bonds | (151,893) | - | (26,594) | |||
- Others | (3,710) | - | (2,282) | |||
Net cash flow from investment activities | (41,812) | (17,268) | (101,044) | |||
- Sales of fixed assets | 1,615 | 1,093 | 2,193 | |||
- Acquisitions of fixed assets | (19,282) | (18,125) | (73,166) | |||
- Others | (24,145) | (236) | (30,071) | |||
Total net cash flow for the period | 20,983 | 3,020 | 39,328 | |||
Effect of inflation | (5,884) | - | - | |||
Opening balance of cash and cash equivalents | 97,530 | 58,530 | 58,530 | |||
Closing balance of cash and cash equivalents | 112,629 | 61,550 | 97,858 |
The cash flows show the acquisition of new resources through the capital increase made in January 2006, the debt restructuring ending with the placement of bonds denominated in UF in January 2006 and the payment of a dividend of US$52.1 million during 2005.
C. Book and economic value of the assets and liabilities
The Company’s principal assets are its production plants in Chile and its investments abroad through its subsidiaries Masisa Inversiones Limitada and Inversiones Internacionales Terranova S.A., in Argentina, Brazil, United States, Mexico and Venezuela, 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 respective book values.
D. Most relevant changes occurring during the year
The Company carries out its business in various markets, mainly concentrated in Chile, United States and Mexico. 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.
2006 | 2005 | 2005 | ||||
Jan-March | Jan-March | Jan-Dec | ||||
USA | 27.0% | 26.5% | 28.0% | |||
Chile | 17.7% | 16.5% | 16.5% | |||
Mexico | 14.4% | 16.7% | 15.0% | |||
Brazil | 16.3% | 13.2% | 14.0% | |||
Venezuela | 8.0% | 8.4% | 8.3% | |||
Argentina | 6.9% | 6.6% | 7.6% | |||
Others | 9.7% | 12.1% | 10.6% | |||
Total | 100.0% | 100.0% | 100.0% |
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, United States, Venezuela 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.
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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 that 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, maintaining a strong distribution chain, constantly improving the range of its products and obtaining brand recognition.
The Company is exposed to foreign exchange rate fluctuations against its functional and accounting currency (US dollar) affecting 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 periods analyzed, were as follows:
Summary of assets and liabilities in currency other than the dollar
(expressed in thousands of US dollars)
2006 | 2005 | 2005 | ||||
Jan-March | Jan-March | Jan-Dec | ||||
Assets | 210,754 | 181,983 | 189,113 | |||
Liabilities | 520,454 | 219,971 | 407,689 | |||
Net assets (liabilities) | (309,700) | ( 37,988) | (218,576) |
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 has 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 Analysis
Risk Analysis Factors
In the ordinary course of its business, the Company is faced by various risks, market, financial and operational, including:
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.
Operating risk:
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Masisa S.A. faces raw material supply risks, especially of chemical and wood resins 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, 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 in order to reduce its dependence on individual suppliers.
As part of its normal course of business, the Company 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.
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Date: July 10, 2006 | |||
Masisa S.A. | |||
By: | |||
/s/ Patricio Reyes U. | |||
Name: | Patricio Reyes U. | ||
General Counsel |
This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will a ctually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.