UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of February , 2004
------------------------
Commission File Number: 001-13196
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DESC, S.A. DE C.V.
------------------
(Translation of registrant's name into English)
PASEO DE LOS TAMARINDOS 400-B, BOSQUES DE LAS LOMAS, 05120 MEXICO, D.F., MEXICO
--------------------------------------------------------------------------------
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F X Form 40-F
--- ---
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): ____
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): ____
Indicate by check mark whether 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 the Securities Exchange Act of 1934.
Yes No X
--- ---
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-___________
The following are included in this report on Form 6-K:
Item
----
1. Press Release, dated February 17, 2004, announcing Registrant's
Shareholders Meeting
2. Press Release, dated February 17, 2004, announcing Registrant's Fourth
Quarter 2003 Results
3. Consolidated Financial Statements of Registrant as of December 31,
2003 and 2002, in the format required to be filed with the Mexican
Stock Exchange
Item 1
[Desc Logo]
Contacts:
---------
In Mexico: In New York:
Arturo D'Acosta Ruiz Maria Barona
Marisol Vazquez Mellado Melanie Carpenter
Jorge Padilla Ezeta Phone: 212-406-3690
Tel: 5255-5261-8044 bhirani@i-advize.com
jorge.padilla@desc.com.mx desc@i-advize.com
www.desc.com.mx
---------------
DESC CALLS SHAREHOLDERS TO RELEVANT MEETINGS REGARDING AN INCREASE IN CAPITAL
AND CAPITAL RESTRUCTURING
Mexico City, February 17, 2004. DESC, S.A. de C.V. (NYSE: DES; BMV: DESC)
announces that its Board of Directors has resolved to propose an Increase in
Capital and one Capital Restructuring. For these purposes the board will call
shareholders to a corresponding meeting, which is tentatively scheduled to be
held sometime during the first two weeks of March 2004.
In its meeting today, the Board of Directors, among other matters, examined a
refinancing strategy to recover the company's financial strength after
successfully concluding the debt restructuring last December.
The purpose of this Meeting will be, among other subjects, to discuss financial
strategy and authorize an increase in capital of approximately 2.738 billion
pesos (approximately $248 million dollars) by issuing approximately 912,719,584
shares of common stock. The company's shareholders, by exercising their right of
preference, will be authorized in Mexico to subscribe to 2 new shares for every
3 common shares in circulation, at a price of $3.00 pesos per share.
In order to assimilate the rights of current holders of Series "C" shares,
simplify the company's capital structure and increase the marketability of its
stock, a proposal will be made (prior to the capital increase) to restructure
the company's capital, by which all Series "C" shares would be converted into
Series "B" shares and, thus, the capital stock would be represented by only two
series of shares ("A" and "B").
With respect to the proposed Increase in Capital, DESC has entered into a Stock
Subscription Cooperation Agreement with Inversora Bursatil, S.A. de C.V., Casa
de Bolsa, Grupo Financiero Inbursa. Subject to certain conditions, this
Agreement establishes that, if shareholders do not exercise their entire right
of preference to the shares resulting from the increase, DESC will be obligated
to offer and Inbursa (on its own or through third parties) will be obligated to
subscribe to the equivalent of up to $2 billion pesos in available stock at the
same price of $3.00 per share. By virtue that Mr. Fernando Senderos Mestre and
his family have declared that they will participate in the subscription, they
will continue to maintain control of the company.
The funds resulting from the increase in capital, if approved, will be used to
reduce the company's debt. This will be a further measure reflecting the
commitment of its shareholders to strengthen the company's financial structure,
translating into better financial ratios, reduced leveraging and financing
expenses, and in the end the recovery of DESC's traditional financial strength
and another step toward recovering profitability.
A further proposal will be made to the company's Meeting of Shareholders to
amend the Bylaws to allow the different series of the company's stock to be more
liquid.
That amendment, if approved, would include the possibility of voluntary
conversion of Series "B" stock into Series "A", and Series "A" into Series "B",
to assure that the total of Series "A" stock represents at least 51% of the
capital stock as established in the company's Bylaws. It must be noted that for
all conversion mentioned in this document, the exchange rate will be one for
one. In addition, as a result of the capital restructuring, ADR's will now be
based on the Series "B" shares. The details of these conversions will be
determined in the corresponding Regular and Special Meeting of Shareholders.
It should be stressed that the preferred subscription rights are offered solely
in Mexico. The exercise of these rights may be restricted by applicable law in
jurisdictions outside Mexico. The company has made it clear that the
subscription rights offered or sold have not been and will not be registered in
the US under the Securities Act of 1933, as amended. For this reason, any ADR
holders or holders in the US will not be offered an opportunity to participate
in the rights offering, unless an exemption from registration exists under US
securities laws.
DESC, S.A. de C.V. (NYSE: DES; BMV: DESC) is one of the largest industrial
groups in Mexico, with 2003 sales of approximately US$ 2 billion and nearly
14,000 employees, which through its subsidiaries is a leader in the Automobile
Parts, Chemical, Food and Property sectors.
This announcement is not an offer for sale of securities or a tender offer in
the United States, and securities may not be offered or sold in the United
States absent registration under the Securities Act of 1933 or an exemption from
registration. Any public offering of securities to be made in the United States
will be made by means of a prospectus that will contain detailed information
about Desc and management, as well as financial statements.
--------------------------------------------------------------------------------
This press release contains forward-looking statements (pursuant to the Private
Securities Litigation Reform Act of 1995) which reflect the current opinions of
DESC's management regarding future events. The words "anticipate," "believe,"
"expect," "hope," "have the intention of," "might," "plan," "should" and similar
expressions generally indicate comments on expectations. These comments are
subject to risks, uncertainties and changing circumstances. The final results
may be materially different from current expectations due to several factors,
which include, but are not limited to, global and local changes in politics, the
economy, business, competition, market and regulatory factors, cyclical trends
in the automobile parts and chemical sectors; as well as other factors that are
highlighted under the title "Risk Factors" on the annual Form 20F report
submitted by DESC to the US Securities and Exchange Commission. DESC has no
obligation whatsoever to update these comments on expectations. Any comment on
expectations is valid only on the date on which it is made.
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Item 2
[Desc logo]
DESC ANNOUNCES FOURTH QUARTER 2003 RESULTS
------------------------------------------
Mexico City, February 17, 2004 - DESC, S.A. de C.V. (NYSE: DES; BMV: DESC)
announced today its results for the fourth quarter ended December 31, 2003
(4Q03). All figures were prepared according to generally accepted accounting
principles in Mexico.
HIGHLIGHTS
----------
o Sales, EBITDA and exports improved in 4Q03 when compared to 4Q02.
o As part of the restructuring plan to regain financial stability and
profitability, Desc did the following:
o Successfully concluded the financial restructure
o An administrative restructure was held at every level of the
organization
o Applied Bulletin C-15 in advance
o Today the Board voted to call the Relevant Shareholders Meeting
to propose a Capital Increase and Capital Restructuring.
o During 4Q03 there was a nonrecurring charge in extraordinary expenses
and a large foreign exchange loss that caused a net loss of US $152
million and of US $207 million for the full year of 2003.
DESC, S.A. DE C.V. AND SUBSIDIARIES
-----------------------------------
TABLE 1. CONSOLIDATED FIGURES
Figures in millions of constant pesos (Ps.) and U.S. dollars (US$)
-------------------------------------------------------------------------------------------
4Q03 2003 4Q03
vs. vs. vs.
4Q03 4Q02 4Q02 FY2003 FY2002 2002 3Q03 3Q03
-------------------------------------------------------------------------------------------
Sales (Ps.)(3) 5,175 4,568 13.3% 21,687 20,362 6.5% 5,348 -3.2%
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SALES (US$)(1) 460 429 7.2% 1,969 1,978 -0.4% 488 -5.8%
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EXPORTS (US$)(2) 214 188 14.3% 859 902 -4.8% 217 -1.1%
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Operating Income (Ps.)(3) 30 -173 N/A 856 1,081 -20.8% 148 -79.4%
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OPERATING INCOME (US$)(1) 3 -16 N/A 78 106 -26.5% 13 -79.7%
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Operating Margin 0.6% -3.8% 4.0% 5.4% 2.7%
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EBITDA (Ps.)(3) 366 202 81.3% 2,224 2,401 -7.4% 499 -26.5%
-------------------------------------------------------------------------------------------
EBITDA (US$)(1) 33 19 71.6% 202 234 -13.6% 45 -28.2%
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Net Majority Income (Ps.)(3) -1,713 -764 N/A -2,307 -1,085 N/A -390 N/A
-------------------------------------------------------------------------------------------
NET MAJORITY INCOME (US$)(1) -152 -72 N/A -207 -103 N/A -36 N/A
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(1)Figures in U.S. dollars for sales, operating income, EBITDA and net income
are calculated using monthly figures in current pesos divided by the average
monthly exchange rate.
(2)All export figures are based on real sales invoiced in U.S. dollars.
(3)All figures in this report are expressed in constant pesos as of December 31,
2003.
(4)"EBITDA" as used in this press release is Operating Income (Loss) plus the
sum of Depreciation and Amortization (in Mexican GAAP), and is presented since
it provides useful information regarding Desc's ability to service debt.
"EBITDA" should not be considered as a substitute for profitability or liquidity
in the consolidated income statements or other financials prepared in Mexican
GAAP.
NOTE: Please refer to the table Non-GAAP Financial Reconciliation Schedule at
the end of this release.
FOURTH QUARTER 2003 RESULTS
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SALES
-----
During 4Q03, total sales in dollars increased 7.2% when compared to 4Q02, from
US $429 million to US $460 million. This was primarily due to the revenue
increases in the Automotive, Food and Real Estate Sectors.
[Graph 1. Net Sales 4Q03]
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SECTOR SALES
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Automotive 39%
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Chemical Sector 36%
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Food Sector 21%
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Real Estate 4%
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The Automotive Sector experienced a 7.0% recovery in sales over 4Q02 due to
increased demand from the Tractor Project. However, sales for the full year of
2003 decreased 16.5% when compared to full year 2002.
In the Food Sector, sales volume in the domestic market increased 7.9% over
4Q02. These results are attributed to the 4-point increase in market share of
"Zuko" in the powdered beverage category. The Food Sector registered an annual
growth of 1.1% over full-year 2002.
Conversely, 4Q03 sales in the Chemical Sector declined 7.6% when compared to
4Q02. This decrease was caused mainly by the divestiture of the adhesives and
waterproofing business, by the decline in sales of the specialty and nitrile
rubber businesses, as well as by pressure from greater competition in the
market. However, sales for full year 2003 increased 1.5% when compared to the
previous year.
Sales for the Real Estate Sector reached US $16 million. This was mainly due to
the sales increase in the North C Building of the Arcos Bosques Project and in
the Bosques de Santa Fe Project. It should be noted that annual sales in the
Real Estate Sector registered an increase of 132.1% when compared to the full
year 2002.
EXPORTS
-------
Total exports during 4Q03 reached US $214 million, representing a 14.3% increase
when compared to 4Q02. This was mainly due to an 18.8% increase in export sales
for the Automotive Sector. Exports represented 46.6% and 43.7% of the total
sales mix during 4Q03 and 4Q02, respectively.
OPERATING INCOME AND MARGIN
---------------------------
Consolidated operating income reached US $3 million in 4Q03, representing a
significant increase over the US $16 million loss reported in 4Q02. This
increase stemmed mainly from the strong performance of the Automotive and Food
Sectors, and was only partially offset by the US $8 million loss in the Real
Estate Sector that resulted from a lower-margin sales mix.
EXTRAORDINARY EXPENSES
----------------------
As part of the financial restructuring, during 4Q03, Desc accelerated the
adoption of Bulletin C-15, which is effective as of January 1, 2004 and
establishes the recognition and calculation of deterioration of long term asset,
both tangible and intangible, including goodwill amortization. This application
resulted in a one-time charge of US$125.9 million net of deferred taxes.
WWW.DESC.COM.MX
FOURTH QUARTER 2003 RESULTS
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Extraordinary expenses reached US$152.9 million in 4Q03, which is US$30.3
million higher when compared to 4Q02.
Additionally during 4Q03, Desc reported US$27 million in other extraordinary
expenses for the following:
o Indemnities: US$15.11 million
o Phenol Business Shutdown: US$3.5 million
o Other: US$8.4 million
TAXES
-----
During the quarter, tax provisions reached US$8.2 million which included income
and asset taxes and employee profit sharing, and a benefit of US$21.4 million in
deferred taxes.
NET MAJORITY INCOME (LOSS)
--------------------------
Net majority loss for 4Q03 was US$152 million primarily due to the early
adoption of Bulletin C-15 as part of the restructuring plan mentioned above.
DEBT STRUCTURE
--------------
Desc registered a US$23 million increase in net debt in 4Q03 when compared to
4Q02. This 4.7% increase to US$990 million was due to the adoption of the
administrative expenses savings plan and the increase of working capital of the
Automotive Sector.
The debt profile improved due to the successful restructure of approximately
US$720 million and the prepayment of US$40 million of debt. The details of the
transaction are described below.
WWW.DESC.COM.MX
FOURTH QUARTER 2003 RESULTS
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TABLE 2. DEBT BREAKDOWN
-----------------------
(Figures in millions of U.S. dollars)
-----------------------------------------------------------------------------------------------------------------------------------
SEP 30 DEC 31 MAR 31 JUN 30 SEP 30 DEC 31
02 02 03 03 03 03
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Cash 163 232 103 82 117 61
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Total Debt 1,083 1,178 1,082 1,069 1,084 1,052
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Net Debt 920 946 979 987 967 990
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Interest Coverage 3.5x 2.8x 2.6x 2.45x 2.7x 2.9x
-----------------------------------------------------------------------------------------------------------------------------------
Leverage Ratio* 3.6x 4.8x 4.9x 4.8x 5.5x 4.9x
-----------------------------------------------------------------------------------------------------------------------------------
*TOTAL DEBT - MINIMUM BETWEEN CASH AND US $50 MILLION / EBITDA OF THE LAST 12
MONTHS.
SINCE 4Q03 THE CALCULATION FORMULA CHANGED FOR THE LEVERAGE RATIO SO TO MAKE
COMPARABLE THE DATA WAS RECALCULATED FOR THE PAST QUARTERS.
At the end of 4Q03, the debt composition was 70% dollar-denominated, 11%
peso-denominated and 19% in UDIS. Desc's debt profile was 97% in long-term debt
and 3% in short-term debt. The average cost of debt was 5.19% for
dollar-denominated debt and 8.24% for peso-denominated debt.
RELEVANT NEWS
-------------
FINANCIAL RESTRUCTURE
---------------------
As part of the 2003 restructuring plan, Desc reached an agreement with all of
its creditors to refinance its syndicated loans and the majority of its
short-term debt. Approximately US$720 million of debt was refinanced (US$479
million in dollar-denominated long-term debt, Ps.1,300 million in
peso-denominated long-term debt and US$112 million in revolving debt and letters
of credit). This sum represents almost 70% of the Company's US $1,052 million
consolidated debt, and US $990 million net debt in 4Q03.
The terms of the agreement are a five-year maturity with a 30-month grace period
for principal payments beginning January 2004. The new interest rates assigned,
beginning 1Q04, to dollar-denominated debt are LIBOR plus 350 basis points, TIIE
plus 350 basis points for peso-denominated debt and LIBOR plus 300 basis points
for all revolving credit.
Among the negotiated conditions, some of Desc's operating subsidiaries and
sub-holdings became guarantors and a package of certain fixed assets, shares and
accounts receivables of the Real Estate Sector was applied as collateral.
Also, under the terms of the agreement, Desc and its subsidiaries must adhere to
a series of obligations and restrictions including the limitation of any
fundamental change, asset sale, capital expenditures, sale of collateral, liens,
and payment of dividends, among others.
[Graph 2. Debt Profile 2004-2009]
------------------------- ------------------------ ----------------------------
YEAR PRE-RESTRUCTURE (IN US$ POST-RESTRUCTURE (IN US$
MILLION) MILLION)
------------------------- ------------------------ ----------------------------
2004 396 37
------------------------- ------------------------ ----------------------------
2005 183 18
------------------------- ------------------------ ----------------------------
2006 209 399
------------------------- ------------------------ ----------------------------
2007 258 381
------------------------- ------------------------ ----------------------------
2008 17 201
------------------------- ------------------------ ----------------------------
2009 16 15
------------------------- ------------------------ ----------------------------
WWW.DESC.COM.MX
FOURTH QUARTER 2003 RESULTS
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ADMINISTRATIVE RESTRUCTURE
--------------------------
Also as part of the restructuring plan, during 4Q03 Desc initiated an
administrative restructure at every level of the organization. The restructure
aims to improve the Company's efficiency, competitiveness and flexibility within
the current business environment, by reducing operating expenses. The objective
is to reach operating expenses of 15.5% of sales approximately.
The extraordinary charges from this restructuring are fully reflected in the
4Q03 results. These charges include the downsizing of 950 employees, of which
141 took early retirement and the cost is registered within the Pension Fund
Trust.
TABLE 3. COMPARISON OF PERSONNEL INDICATORS
-------------------------------------------
SECTOR TOTAL 2002 TOTAL 2003
---------------------------------------------------
Food 4824 4386
---------------------------------------------------
Real Estate 121 42
---------------------------------------------------
Chemical 3698 2309
---------------------------------------------------
Automotive 7280 6728
---------------------------------------------------
Desc Corporate 401 389
---------------------------------------------------
Total Desc 16324 13854
---------------------------------------------------
Also, as part of these efforts, Juan Marco Gutierrez Wanless took place as CEO
of the Corporate Area (Desc Corporativo), reporting directly to the Chairman of
the Board. Mr. Gutierrez was CEO and CFO of Pegaso before joining Desc.
SALE OF ALUMINUM WHEEL BUSINESS
-------------------------------
Recently, Desc announced the sale of its aluminum wheel business to Hayes
Lemmerz International, Inc. and the simultaneous purchase of their stake in
Hayes Wheels Acero, S.A. de C.V. With this transaction, Desc concluded its
association with Hayes Lemmerz International, Inc.
The proceeds from this transaction will mainly be used to decrease debt between
the business and Desc and to reinvest in fix assets.
This transaction generated an extraordinary expense of close to US$15 million in
2003 as part of the early adoption of Bulletin C-15. Desc's cash flow is
expected to improve immediately as a result of this transaction considering
Hayes Wheels Aluminio, S.A. de C.V. operated at a loss.
CLOSING OF THE PHENOL BUSINESS
------------------------------
During 4Q03 Desc decided to close the Phenol Business, effective December 29,
2003. The business was running at a loss and given the global industry
conditions, it was believed the division could not compete successfully in the
international market. As part of the closing, the Company withdrew its
bankruptcy petition "Concurso Mercantil," (similar to "Chapter 11" in the U.S.)
which was submitted to the courts in 2002.
WWW.DESC.COM.MX
FOURTH QUARTER 2003 RESULTS
--------------------------------------------------------------------------------
In addition, the phenol business reached an agreement with Sales Nacionales to
end their dispute, thereby ending over nine years of litigation.
Desc reported the financial impact to be nearly US$3.5 million in extraordinary
expenses, all of which were recognized in the 4Q03 results.
"PUT" OPTION FOR BRANDED PRODUCTS DIVISION
------------------------------------------
Desc was notified on November 11, 2003 that the minority partner of the Branded
Products division exercised a sell option ("PUT"), and on January 30, 2004 Desc
made payments of US$12.3 million and US$2 million for the 18.6% of Corfuerte and
ASF, respectively. As a result, Desc increased its stake to 96.1% of Corfuerte
and 99.9% of ASF.
CAPITAL INCREASE AND SHAREHOLDER RESTRUCTURE
--------------------------------------------
The Board of Directors has authorized an Increase in Capital and a Capital
Restructuring. For these purposes the board will convene the Relevant Meeting of
Shareholders, scheduled for the first two weeks of March 2004. Please make
reference to the press release published earlier today.
WWW.DESC.COM.MX
FOURTH QUARTER 2003 RESULTS
--------------------------------------------------------------------------------
RESULTS BY SECTOR
-----------------
AUTOMOTIVE SECTOR
The following table provides the figures obtained in the Automotive Sector.
TABLE 4. DESC AUTOMOTIVE FIGURES
--------------------------------
Figures in millions of constant pesos (Ps.) and U.S. dollars (US$)
------------------------------------------------------------------------------------------
4Q03 2003 4Q03
vs. vs. vs.
4Q03 4Q02 4Q02 FY2003 FY2002 2002 3Q03 3Q03
------------------------------------------------------------------------------------------
Sales (Ps.) 1,993 1,761 13.2% 7,825 8,732 -10.4% 1,941 2.7%
------------------------------------------------------------------------------------------
SALES (US$) 177 165 7.0% 710 850 -16.5% 177 0.0%
------------------------------------------------------------------------------------------
EXPORTS (US$) 121 102 18.8% 479 555 -13.8% 121 0.6%
------------------------------------------------------------------------------------------
Operating Income (Ps.) 62 -97 N/A 227 644 -64.8% 2 2537.8%
------------------------------------------------------------------------------------------
OPERATING INCOME (US$) 6 -9 N/A 20 64 -68.2% 0 N/A
------------------------------------------------------------------------------------------
Operating Margin 3.1% -5.5% 2.9% 7.5% 0.1%
------------------------------------------------------------------------------------------
EBITDA (Ps.) (1) 249 113 119.9% 977 1,377 -29.0% 191 30.8%
------------------------------------------------------------------------------------------
EBITDA (US$) (1) 22 11 108.0% 88 135 -34.4% 17 27.7%
------------------------------------------------------------------------------------------
(1)EBITDA, as used in this press release, is Operating Income (Loss) plus the
sum of Depreciation and Amortization (in Mexican GAAP), and is presented since
it provides useful information regarding Desc's ability to service debt.
"EBITDA" should not be considered as a substitute for profitability or liquidity
in the consolidated income statements or other financials prepared in Mexican
GAAP.
NOTE: Please refer to the table Non-GAAP Financial Reconciliation Schedule at
the end of this release.
During 4Q03 dollar sales grew by 7.0% when compared to 4Q02 and operating income
reached US$6 million. This resulted from higher demands by the Tractor Project
for forging, propeller shafts and axles, as well as improved part sales in the
gear business to BMW North America for the production of the front traction axel
for the X5 platform.
The increase in 4Q03 sales resulted in an operating income of US$6 million, an
operating margin of 3.1% and EBITDA of US $22 million.
The Tractor Project, which consists of the manufacturing and sale of parts for
axles, semi-axles and output-shafts to Dana, and has been launched gradually
since 2002, increased its sales by US$22.4 million from 4Q02 to 4Q03. In 2002,
phase I of the project was implemented and included propeller shafts and
forging. During 2003, phase II was implemented and included the platform and
axle businesses. The total sales of this project during 2003 reached US$65.8
million. As of today, the project is operating as planned.
Export sales reached US$121 million during the quarter; an 18.8% increase over
the same period in 2002, which is in-line with the increase in demand from the
North American market. Export sales for full year 2003 declined by 13.8% when
compared to 2002.
The administrative restructuring and increased productivity largely compensated
for the 10.4% decline in annual sales in 2003. Sales per employee for the year
decreased slightly to US$104 thousand from US$112 thousand reported in 2002.
WWW.DESC.COM.MX
FOURTH QUARTER RESULTS
--------------------------------------------------------------------------------
The above-mentioned factors helped offset the following:
a) The 6% decline in Mexico's total vehicle production to 363,556 cars
and light trucks
b) Lower sales of transmissions and cv joints due to the decline in
demand from foreign markets
c) Lower sales of pistons and joints due to the decline in demand from
the domestic parts market, and
d) The termination of contracts with General Motors for stamping and with
Ford and Volkswagen for steel wheels.
For the full year of 2003 Desc reported a 16.5% decrease in sales and a 68.2%
drop in operating income in dollars due to the following factors:
a) The pressure caused by the OEMs on prices by means of constant
discounts
b) A 13% decline in annual production of cars and light trucks in Mexico
to 1,518,628 units, and a 1.35% drop in the United States to
11,825,151 units
c) Temporary technical and labor shutdowns of some assembly plants of GM,
Ford, Renault Nissan, VW and DCX in order to reduce inventory levels
d) Lower sales in the axle, transmission, piston, wheel and pick-up box
businesses due to decreased demand from OEMs in the United States and
Mexico, such as DCX, GM, Eaton and Renault Nissan
e) The impact on operating income of preemptive expenses for
installations in the Tractor Project for the propeller shaft, axle and
forge businesses, and
f) The non-recurring charges associated with the write-off of inventory,
pension reserves and guarantees, asset value adjustments, and
administrative restructuring costs.
The average capacity utilization of the Automotive Sector businesses reached 57%
in the fourth quarter of 2003; meanwhile the investments in assets were US$13.8
million.
WWW.DESC.COM.MX
FOURTH QUARTER 2003 RESULTS
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CHEMICAL SECTOR
Table 5 shows the figures obtained in the Chemical Sector.
TABLE 5. CHEMICAL SECTOR RESULTS
--------------------------------
Figures in millions of constant pesos (Ps.) and U.S. dollars (US$)
--------------------------------------------------------------------------------------------
4QO3 2003 4Q03
vs. ACUM ACUM vs. vs.
4Q03 4Q02 4Q02 2003 2002 2002 3Q03 3Q03
--------------------------------------------------------------------------------------------
Sales (Ps.) 1,793 1,835 -2.3% 7,810 7,212 8.3% 2,003 -10.5%
--------------------------------------------------------------------------------------------
SALES (US$) 159 172 -7.6% 709 699 1.5% 183 -13.0%
--------------------------------------------------------------------------------------------
EXPORTS (US$) 68 64 6.6% 277 248 11.8% 69 -1.8%
--------------------------------------------------------------------------------------------
Operating Income (Ps.) 53 3 1922.9% 203 341 -40.7% 53 0.6%
--------------------------------------------------------------------------------------------
OPERATING INCOME (US$) 5 0 N/A 18 33 -44.6% 5 -3.2%
--------------------------------------------------------------------------------------------
Operating Margin 3.0% 0.1% 2.6% 4.8% 2.7%
--------------------------------------------------------------------------------------------
EBITDA (1) (Ps.) 130 113 15.1% 549 698 -21.4% 142 -7.9%
--------------------------------------------------------------------------------------------
EBITDA (1) (US$) 12 11 8.8% 50 68 -26.3% 13 -10.8%
--------------------------------------------------------------------------------------------
(1) EBITDA, as used in this press release, is Operating Income (Loss) plus the
sum of Depreciation and Amortization (in Mexican GAAP), and is presented since
it provides useful information regarding Desc's ability to service debt.
"EBITDA" should not be considered as a substitute for profitability or liquidity
in the consolidated income statements or other financials prepared in Mexican
GAAP.
NOTE: Please refer to the table Non-GAAP Financial Reconciliation Schedule at
the end of this release. The 4Q02 numbers include the impact of the adhesive and
waterproofing business that were sold during the 3Q03.
Taking into account that the adhesives and waterproofing businesses are no
longer part of Desc and considering that its sales were US$16.2 million,
comparable annual sales in dollars increased slightly over the previous year.
Notably, the carbon black and phosphate businesses posted excellent results, and
to a lesser degree so did the acrylic business.
The chemical sector businesses posted improvements, reaching 90% of installed
capacity in practically all our products, due to the slight recovery of our
markets, mainly in Europe and the United States. Inventory repositioning by some
clients and the seasonal increase in demand at year end were the primary reasons
for the volume growth.
The businesses that experienced a decrease in sales were:
o Nitrile Rubber which suffered the effects of a slow recovery in the
automobile industry
o Specialty Rubber which was negatively affected by the strength of the
Euro and greater competition in the European market.
Prices during 2003 were negatively affected due to the difficult global economy
and the continued presence of integrated competition with very low pricing. This
situation resulted in oversupply conditions on a global level.
The rapid price increase of monomers during the first part of the year had a
negative impact on the operating margin in most of the businesses. Although
these prices stabilized by mid-year, our sales prices continue to lag
considerably.
During 4Q03, capex reached US$2.1 million, allocated to meeting future demand in
the polystyrene sector.
WWW.DESC.COM.MX
FOURTH QUARTER 2003 RESULTS
--------------------------------------------------------------------------------
FOOD SECTOR
Table 6 presents the results obtained in the Food Sector.
TABLE 6. FOOD SECTOR RESULTS
----------------------------
Figures in millions of constant pesos (Ps.) and U.S. dollars (US$)
------------------------------------------------------------------------------------------
4Q03 2003 4Q03
vs. vs. vs.
4Q03 4Q02 4Q02 FY2003 FY2002 2002 3Q03 3Q03
------------------------------------------------------------------------------------------
Sales (Ps.) 1,059 929 14.1% 3,879 3,582 8.3% 973 8.9%
------------------------------------------------------------------------------------------
SALES (US$) 94 87 7.9% 352 348 1.1% 89 5.8%
------------------------------------------------------------------------------------------
EXPORTS (US$) 25 22 15.4% 104 100 3.8% 27 -6.6%
------------------------------------------------------------------------------------------
Operating Income (Ps.) 56 -3 N/A 132 102 28.7% 40 39.1%
------------------------------------------------------------------------------------------
OPERATING INCOME (US$) 5 0 N/A 12 10 23.4% 4 35.7%
------------------------------------------------------------------------------------------
Operating Margin 5.3% -0.3% 3.4% 2.8% 4.1%
------------------------------------------------------------------------------------------
EBITDA1 (Ps.) 102 42 140.3% 300 274 9.8% 83 22.9%
------------------------------------------------------------------------------------------
EBITDA1 (US$) 9 4 127.5% 27 26 3.3% 8 19.7%
------------------------------------------------------------------------------------------
(1) EBITDA, as used in this press release, is Operating Income (Loss) plus the
sum of Depreciation and Amortization (in Mexican GAAP), and is presented since
it provides useful information regarding Desc's ability to service debt.
"EBITDA" should not be considered as a substitute for profitability or liquidity
in the consolidated income statements or other financials prepared in Mexican
GAAP.
NOTE: Please refer to the table Non-GAAP Financial Reconciliation Schedule at
the end of this release.
TABLE 7. FOOD SECTOR - RELEVANT FIGURES
---------------------------------------
4Q03
-------------------------------------------------
Branded Products
-------------------------------------------------
Sales (US$ millions) 55
-------------------------------------------------
Operating Margin 3.5%
-------------------------------------------------
Pork Business
-------------------------------------------------
Sales (US$ millions) 39
-------------------------------------------------
Operating Margin 7.90%
-------------------------------------------------
The results by division are as follows:
BRANDED PRODUCTS
During 4Q03 sales volume in the domestic market grew 7.9% over 4Q02 and 5.8%
over 3Q03. However, with the exception of a 4-point increase in "Zuko", the
market share of our main products remained flat in both Mexico and the United
States. Sales in the U.S. were affected by a strike at Southern California's
three main convenience store chains, but were offset by higher sales in Mexico.
WWW.DESC.COM.MX
FOURTH QUARTER 2003 RESULTS
--------------------------------------------------------------------------------
In addition, improved plant operations and strict cost controls resulted in an
improved operating margin.
Capex increased to US$2.8 million in 2003, which was mainly allocated to
improving plants and relocating the coffee production plant.
PORK BUSINESS
Even though during 4Q03, dollar based costs of raw materials used in the
production of balanced feed continued to be negatively affected by the
devaluation of the peso, a high operating margin of 7.9% was achieved.
4Q03 sales volume declined by 19.8% when compared to 4Q02, and discontinued
operations in three Bajio locations deteriorated our margins.
Capacity utilization remained at 100% in the Southeast region due to strong
demand.
Capex for the quarter reached US$0.11 million, allocated to farm equipment and
infrastructure.
Pork prices in Mexico increased by Ps. 0.49 per kilogram, from Ps. 14.11 to Ps.
14.60. This translated into a sales price increase of Ps. 0.53, from Ps. 15.56
to Ps. 16.09. The price increase was generally accepted due to the low supply of
pork in the market and the high end-of-year seasonal demand.
Current pork prices have not been affected by the Mad Cow problem in the U.S.,
nor has it affected Mexican pork sales prices. The trend toward higher pork
prices is due to the low supply of domestic pork and has continued through
January and February 2004.
WWW.DESC.COM.MX
FOURTH QUARTER 2003 RESULTS
--------------------------------------------------------------------------------
REAL ESTATE SECTOR
Following are the results for the Real Estate Sector:
TABLE 8. REAL ESTATE SECTOR FIGURES
-----------------------------------
Figures in millions of constant pesos (Ps.) and U.S. dollars (US$)
------------------------------------------------------------------------------------------
4Q03 2003 4Q03
vs. vs. vs.
4Q03 4Q02 4Q02 FY2003 FY2002 2002 3Q03 3Q03
------------------------------------------------------------------------------------------
Sales (Ps.) 177 38 362.1% 1,970 799 146.5% 399 -55.6%
------------------------------------------------------------------------------------------
SALES (US$) 16 4 337.3% 180 78 132.1% 36 -56.2%
------------------------------------------------------------------------------------------
Operating Income (Ps.) -91 -31 N/A 422 90 368.9% 101 N/A
------------------------------------------------------------------------------------------
OPERATING INCOME (US$) -8 -3 N/A 39 9 348.3% 9 N/A
------------------------------------------------------------------------------------------
Operating Margin -51.4% -80.9% 21.6% 11.2% 24.9%
------------------------------------------------------------------------------------------
EBITDA (1) (Ps.) -81 -30 N/A 452 113 298.3% 107 N/A
------------------------------------------------------------------------------------------
EBITDA (1) (US$) -7 -3 N/A 42 11 279.8% 10 N/A
------------------------------------------------------------------------------------------
(1) EBITDA, as used in this press release, is Operating Income (Loss) plus the
sum of Depreciation and Amortization (in Mexican GAAP), and is presented since
it provides useful information regarding Desc's ability to service debt.
"EBITDA" should not be considered as a substitute for profitability or liquidity
in the consolidated income statements or other financials prepared in Mexican
GAAP.
NOTE: Please refer to the table Non-GAAP Financial Reconciliation Schedule at
the end of this release.
Sales in 4Q03 reached US$16 million, an increase of 300% in real terms when
compared to 4Q02. This increase was driven by sales in the North C building
projects of the Arcos Bosques and Bosques de Santa Fe developments. Annual sales
in the Real Estate Sector increased 132% over 2002.
The sales distribution was 76% in Arcos Bosques, 15% Bosques de Santa Fe and 9%
related to the Punta Mita project as well as completed inventory.
During 4Q03, an operating loss of US$8 million was reported compared to a US$3
million loss in 4Q02. This loss was mainly the result of higher costs in the
Bosques de Santa Fe project, greater selling expenses and a lower-margin sales
mix.
Among the projects under development, Bosques de Santa Fe, an exclusive
residential development located west of Mexico City, sold 3 residential lots.
This has brought our single-family residential lot sales to 88% and multi-family
residential lot sales to 57%. The construction of the Club House is on-schedule
and will be completed in mid-2004. Total 4Q03 investment in this project reached
US$7.3 million.
In Punta Mita, a tourist development located in Bahia de Banderas, Nayarit, Desc
sold 1 beachfront lot and continues the commercialization and urbanization of
other beachfront and golf club residential lots. Total 4Q03 investment in this
project reached US$2.6 million.
In the North C building of Arcos Bosques, Desc completed the sale of 5,808 m2 in
4Q03. With this sale, 52% of the project has been sold. The construction remains
within budget and is expected to be completed during 1Q04. Total 4Q03 investment
in this project reached US $1.7 million.
CONTACTS: MARISOL VAZQUEZ-MELLADO MOLLON
JORGE PADILLA EZETA
TEL: (5255) 5261 8044
JORGE.PADILLA@DESC.COM.MX
-------------------------
** Financial tables follow **
WWW.DESC.COM.MX
FOURTH QUARTER 2003 RESULTS
--------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
FINANCIAL INDICATORS
------------------------------------------------------------------------------------------------
4Q03 3Q03 2Q03 1Q03 4Q02 3Q02
------------------------------------------------------------------------------------------------
Interest Coverage 2.91x 2.7x 3.0x 3.0x 3.3x 3.8x
------------------------------------------------------------------------------------------------
Short-term debt 3% 29% 27% 23% 28% 20%
------------------------------------------------------------------------------------------------
Long-term debt 97% 71% 73% 77% 72% 80%
------------------------------------------------------------------------------------------------
Peso-denominated debt 30% 30% 32% 31% 39% 32%
------------------------------------------------------------------------------------------------
Dollar-denominated debt 70% 70% 68% 69% 61% 68%
------------------------------------------------------------------------------------------------
-------------------------------------------------------
SHARES OUTSTANDING
-------------------------------------------------------
"A" Shares 587,479,900 42.9%
-------------------------------------------------------
"B" Shares 506,257,866 37.0%
-------------------------------------------------------
"C" Shares 275,341,610 20.1%
-------------------------------------------------------
TOTAL 1,369,079,376 100.0%
-------------------------------------------------------
To reconcile all non-GAAP items, the following tables which include Depreciation
and Amortization figures are provided:
NON-GAAP RECONCILIATION SCHEDULE TABLES
---------------------------------------
DESC, S.A. DE C.V. AND SUBSIDIARIAS
(figures in milions of constant pesos and dollars)
-------------------------------------------------------------------------------------------------------------------------
4Q03 4Q03
vs. vs.
4Q03 4Q02 4Q02 3Q03 3Q03
-------------------------------------------------------------------------------------------------------------------------
Operating Income (Ps.) 30 -173 N/A 148 -79.4%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
Operating Income (US$) 3 -16 N/A 13 -79.7%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
Depreciation and Amortization (Ps.) 336 375 -10.4% 351 -4.3%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
Depreciation and Amortization (US$) 30 35 -15.3% 32 -6.9%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
EBITDA (Ps.) 366 202 81.3% 499 -26.5%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
EBITDA (US$) 33 19 71.6% 45 -28.2%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
WWW.DESC.COM.MX
FOURTH QUARTER 2003 RESULTS
--------------------------------------------------------------------------------
AUTOMOTIVE SECTOR
(figures in millions of constant pesos and dollars)
-------------------------------------------------------------------------------------------------------------------------
4Q03 4Q03
vs. vs.
4Q03 4Q02 4Q02 3Q03 3Q03
-------------------------------------------------------------------------------------------------------------------------
Operating Income (Ps.) 62 -97 N/A 2 2537.8%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
Operating Income (US$) 6 -9 N/A 0 N/A
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
Depreciation and Amortization (Ps.) 187 210 -11.2% 189 -0.6%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
Depreciation and Amortization (US$) 16 20 -16.0% 17 -3.5%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
EBITDA (Ps.) 249 113 119.9% 191 30.8%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
EBITDA (US$) 22 11 108.0% 17 27.7%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
CHEMICAL SECTOR
(figures in millions of constant pesos and dollars)
-------------------------------------------------------------------------------------------------------------------------
4Q03 4Q03
vs. vs.
4Q03 4Q02 4Q02 3Q03 3Q03
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
Operating Income (Ps.) 53 3 1922.9% 53 0.6%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
Operating Income (US$) 5 0 N/A 5 -3.2%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
Depreciation and Amortization (Ps.) 77 110 -3.4% 89 -13.1%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
Depreciation and Amortization (US$) 7 11 -34.2% 8 -15.3%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
EBITDA (Ps.) 130 113 15.1% 142 -7.9%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
EBITDA (US$) 12 11 8.8% 13 -10.8%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
FOOD SECTOR
(figures in millions of constant pesos and dollars)
-------------------------------------------------------------------------------------------------------------------------
4Q03 4Q03
vs. vs.
4Q03 4Q02 4Q02 3Q03 3Q03
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
Operating Income (Ps.) 56 -3 N/A 40 39.1%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
Operating Income (US$) 5 0 N/A 4 35.7%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
Depreciation and Amortization (Ps.) 46 45 0.7% 43 7.4%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
Depreciation and Amortization (US$) 4 4 -4.8% 4 4.4%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
EBITDA (Ps.) 102 42 140.3% 83 22.9%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
EBITDA (US$) 9 4 127.5% 8 19.7%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
WWW.DESC.COM.MX
FOURTH QUARTER 2003 RESULTS
--------------------------------------------------------------------------------
REAL ESTATE SECTOR
(figures in millions of constant pesos and dollars)
-------------------------------------------------------------------------------------------------------------------------
4T03 4T03
vs. vs.
4T03 4T02 4T02 3T03 3T03
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
Operating Income (Ps.) -91 -31 N/A 101 N/A
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
Operating Income (US$) -8 -3 N/A 9 N/A
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
Depreciation and Amortization (Ps.) 10 1 831.8% 6 59.4%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
Depreciation and Amortization (US$) 1 0 788.5% 1 55.3%
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
EBITDA (Ps.) -81 -30 N/A 107 N/A
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
EBITDA (US$) -7 -3 N/A 10 N/A
-------------------------------------------- ---------- ----------- ------------------ -------------- -------------------
WWW.DESC.COM.MX
FOURTH QUARTER 2003 RESULTS
--------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
DESC, S.A. DE C.V. AND SUBSIDIARIES
Consolidated Balance Sheet
(in millions of constant pesos as of December 31, 2003)
2003 2002 %
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Current Assets:
Cash and Short-term Investments 690 2,502 -72.4%
Accounts and Documents Receivable 6,222 3,826 35.2%
Inventory and Other Assets 3,148 3,352 -6.1%
------------------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 10,061 9,680 -6.9%
------------------------------------------------------------------------------------------------------------------------------------
Land Held for Development and Real Estate Projects 3,721 4,290 11.2%
Fixed Assets 11,865 13,685 -13.3%
Investments in shares of Subsidiaries Non-consolidated 293 17 1623.0%
Other Assets 1,782 2,799 -36.3%
------------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 27,722 30,471 -9.0%
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Current Liabilities:
Bank Loans 414 3,642 -88.6%
Suppliers 2,021 2,088 -3.2%
Taxed to be paid 838 106 690.8%
Other Liabilities 1,371 1,840 -25.5%
------------------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 4,645 7,676 -39.5%
------------------------------------------------------------------------------------------------------------------------------------
Long-term Debt 11,360 9,052 25.5%
Deferred Taxes 1,077 1,339 -19.6%
Others 610 578 5.6%
------------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 17,692 18,645 -5.1%
------------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Capital Stock 18 18 0.0%
Paid-in Surplus 1,170 1,170 0.0%
Retained Earnings and Capital Reserve 14,365 20,111 -28.6%
Others -9,280 -13,381 -30.6%
------------------------------------------------------------------------------------------------------------------------------------
TOTAL MAJORITY INTEREST 6,273 7,918 -20.8%
------------------------------------------------------------------------------------------------------------------------------------
Minority Interest 3,757 3,908 -3.9%
TOTAL STOCKHOLDERS' EQUITY 10,030 11,826 -15.2%
------------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 27,722 30,471 -9.0%
------------------------------------------------------------------------------------------------------------------------------------
WWW.DESC.COM.MX
FOURTH QUARTER 2003 RESULTS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
DESC, S.A. DE C.V. AND SUBSIDIARIES
Consolidated Income Statement
(in millions of constant pesos as of December 31, 2003)
4Q03 4Q02 Var.
Sales 5,175 4,568 13.3%
Cost of Sales 4,236 3,772 12.3%
--------------------------------------------------------------------------------------------------------------
GROSS PROFIT 939 796 18.0%
--------------------------------------------------------------------------------------------------------------
Operating Expenses:
Administrative and Selling 909 969 -6.2%
--------------------------------------------------------------------------------------------------------------
OPERATING INCOME 30 (173) NA
--------------------------------------------------------------------------------------------------------------
Interest Expense 320 309 3.5%
Interest Income (16) 21 NA
Exchange Gain (Loss), Net 196 134 NA
Gain on Monetary Position (115) (115) -0.2%
--------------------------------------------------------------------------------------------------------------
COMPREHENSIVE FINANCIAL RESULT 385 349 10.3%
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
OTHER EXTRAORDINARY INCOME OR EXPENSES 1,708 329 419.1%
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
INCOME BEFORE PROVISIONS (2,063) (851) NA
--------------------------------------------------------------------------------------------------------------
Provisions for:
Income and Asset Tax 67 (288) N/A
Employee Profit Sharing 26 (2) N/A
Deferred Income Taxes (240) 362 N/A
--------------------------------------------------------------------------------------------------------------
TOTAL TAXES (147) 72 N/A
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
NET CONSOLIDATED INCOME (1,916) (923) 107.6%
--------------------------------------------------------------------------------------------------------------
Minority Interest (203) (159) 27.6%
--------------------------------------------------------------------------------------------------------------
MAJORITY NET INCOME (1,714) (764) 124.2%
--------------------------------------------------------------------------------------------------------------
12-month Earnings Per Share (1.68) (0.79) NA
Number of Shares Outstanding:
(Millions of Shares) 1,369 1,369 NA
EBITDA 366 202 81.3%
--------------------------------------------------------------------------------------------------------------
WWW.DESC.COM.MX
FOURTH QUARTER 2003 RESULTS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
FY
4Q03 3Q03 2Q03 1Q03 2003
--------------------------------------------------------------------------------------------------------
SALES (US $)
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Consolidated 460 488 550 471 1,969
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Automotive Sector 177 177 176 179 710
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Chemical Sector 159 183 179 187 709
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Food Sector 94 89 85 83 352
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Real Estate Sector 16 36 107 21 180
--------------------------------------- --------------- ----------- ----------- ----------- ------------
EXPORTS (US $)
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Consolidated 214 217 212 216 859
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Automotive Sector 121 121 120 117 479
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Chemical Sector 68 69 66 73 277
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Food Sector 25 27 26 26 104
--------------------------------------- --------------- ----------- ----------- ----------- ------------
OPERATING INCOME (US $)
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Consolidated 3 13 42 20 78
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Automotive Sector 6 0 4 11 20
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Chemical Sector 5 5 5 4 18
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Food Sector 5 4 2 1 12
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Real Estate Sector -8 9 33 5 39
--------------------------------------- --------------- ----------- ----------- ----------- ------------
OPERATING MARGIN
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Consolidated 0.6% 2.8% 7.7% 4.2% 4.0%
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Automotive Sector 3.1% 0.1% 2.3% 6.0% 2.9%
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Chemical Sector 3.0% 2.7% 2.9% 2.0% 2.6%
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Food Sector 5.3% 4.1% 2.8% 1.0% 3.4%
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Real Estate Sector -51.4% 24.9% 30.5% 24.7% 21.6%
--------------------------------------- --------------- ----------- ----------- ----------- ------------
EBITDA (US $)
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Consolidated 33 45 74 51 202
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Automotive Sector 22 17 21 28 88
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Chemical Sector 12 13 13 12 50
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Food Sector 9 8 6 5 27
--------------------------------------- --------------- ----------- ----------- ----------- ------------
Real Estate Sector -7 10 33 6 42
--------------------------------------- --------------- ----------- ----------- ----------- ------------
--------------------------------------------------------------------------------
This press release contains "forward-looking statements" (within the meaning of
the Private Securities Litigation Reform Act of 1995) that reflect the current
views of Desc's management with respect to future events. The words
"anticipate," "believe," "estimate," "expect," "intend," "may," "plan,"
"project," and "should" and similar expressions generally are intended to
identify forward-looking statements. These statements are subject to risks,
uncertainties and changes in circumstances. Actual results may differ materially
from present expectations as a result of many factors, including, but not
limited to, changes in global and domestic political, economic, business,
competitive, market and regulatory factors, the cyclicality of the autoparts and
chemicals industries and other factors which are described under the heading
"Risk Factors" in Desc's most recent Annual Report on Form 20-F filed with the
Securities and Exchange Commission. Desc does not assume any obligation to
update these forward-looking statements. Any forward-looking statement speaks
only as of the date on which it is made.
--------------------------------------------------------------------------------
WWW.DESC.COM.MX
Item 3
General Data of the Issuer:
---------------------------
Corporate Name: Desc, S.A. de C.V.
Address: Paseo de los Tamarindos 400-B
City: Bosques de las Lomas
Zip Code: 5120
State: Mexico, D.F.
Telephone: 52-61-80-00
Fax: 52-61-80-98
E-Mail: eloy.vega@desc.com.mx
---------------------
Internet Address www.desc.com.mx
Fiscal Data of the Issuer:
--------------------------
RFC of Company: DES9405182F1
Domicile: Paseo de los Tamarindos 400-B
City: Bosques de las Lomas
Zip Code: 5120
State: Mexico, D.F.
Responsibility for Payments:
----------------------------
Name: Lic. Jorge Francisco Padilla Ezeta
Address: Paseo de los Tamarindos 400-B
City: Bosques de las Lomas
Zip Code: 5120
State: Mexico, D.F.
Telephone: 52-61-80-00
Fax: 52-61-80-98
E-Mail: jorge.padilla@desc.com.mx
Data with respect to officers:
------------------------------
Mexican Stock
Exchange equivalent: Chairman of the Board of Directors
Title at company: Chairman and Chief Executive Officer
Name: Mr. Fernando Senderos Mestre
Address: Paseo de los Tamarindos 400-B
City: Bosques de las Lomas
Zip Code: 5120
State: Mexico, D.F.
Telephone: 52-61-80-00
Fax: 52-61-80-98
Mexican Stock
Exchange equivalent: General Manager
Title at company: Chief Executive Corporate Area
Name: Ing. Juan Marco Gutierrez Wanless
Address: Paseo de los Tamarindos 400-B
City: Bosques de las Lomas
Zip Code: 5120
State: Mexico, D.F.
Telephone: 52-61-80-00
Fax: 52-61-80-98
E-Mail: juan.gwanless@desc.com.mx
Mexican Stock
Exchange equivalent: Chief Financial Officer
Title at company: Director of Finance
Name: Lic. Arturo D'Acosta Ruiz
Address: Paseo de los Tamarindos 400-B
City: Bosques de las Lomas
Zip Code: 5120
State: Mexico, D.F.
Telephone: 52-61-80-00
Fax: 52-61-80-98
E-Mail: arturo.dacosta@.desc.com.mx
---------------------------
Mexican Stock
Exchange equivalent: Officer in Charge of Sending Quarterly Financial Information
Title at company: Corporate Manager of Financial Information
Name: Lic. Jorge Francisco Padilla Ezeta
Address: Paseo de los Tamarindos 400-B
City: Bosques de las Lomas
Zip Code: 5120
State: Mexico, D.F.
Telephone: 52-61-80-00
Fax: 52-61-80-98
E-Mail: jorge.padilla@desc.com.mx
Mexican Stock
Exchange equivalent: Alternate Officer in Charge of Sending Quarterly Financial Information
Title at company: Corporate Comptroller
Name: Lic. Eduardo Philibert Garza
Address: Paseo de los Tamarindos 400-B
City: Bosques de las Lomas
Zip Code: 5120
State: Mexico, D.F.
Telephone: 52-61-80-00
Fax: 52-61-80-96
E-Mail: eduardo.philibert@desc.com.mx
Mexican Stock
Exchange equivalent: Officer Responsible for Legal Affairs
Title at company: General Counsel
Name: Lic. Ramon Estrada Rivera
Address: Paseo de los Tamarindos 400-B
City: Bosques de las Lomas
Zip Code: 5120
State: Mexico, D.F.
Telephone: 52-61-80-00
Fax: 52-61-80-97
E-Mail: ramon.estrada@desc.com.mx
Mexican Stock
Exchange equivalent: Secretary of the Board of Directors
Title at company: Secretary of the Board of Directors
Name: C.P. Ernesto Vega Velasco
Address: Bosque de Ciruelos No. 130 Room 1203
City: Bosques de las Lomas
Zip Code: 11700
State: Mexico, D.F.
Telephone: 52-61-80-00
Fax: 52-61-80-60
E-Mail: ernesto.vega@desc.com.mx
Mexican Stock
Exchange equivalent: Officer in Charge of Providing Information to Investors
Title at company: Corporate Manager of Financial Information
Name: Lic. Jorge Francisco Padilla Ezeta
Address: Paseo de los Tamarindos 400-B
City: Bosques de las Lomas
Zip Code: 5120
State: Mexico, D.F.
Telephone: 52-61-80-00
Fax: 52-61-80-97
E-Mail: jorge.padilla@desc.com.mx
Mexican Stock
Exchange equivalent: Officer Authorized to Send Information via Emisnet
Title at company: Chief Financial Officer
Name: Lic. Arturo D'Acosta Ruiz
Address: Paseo de los Tamarindos 400-B
City: Bosques de las Lomas
Zip Code: 5120
State: Mexico, D.F.
Telephone: 52-61-80-00
Fax: 52-61-80-98
E-Mail: arturo.dacosta@desc.com.mx
Mexican Stock
Exchange equivalent: Officer Authorized to Send Relevant Events via Emisnet
Title at company: Secretary of the Board of Directors
Name: C.P. Ernesto Vega Velasco
Address: Bosque de Ciruelos No. 130 Room 1203
City: Bosques de las Lomas
Zip Code: 11700
State: Mexico, D.F.
Telephone: 52-61-80-00
Fax: 52-61-80-60
E-Mail: ernesto.vega@desc.com.mx
CONSOLIDATED BALANCE SHEET
AT DECEMBER THE 31th OF 2003 AND 2002
(Thousands of Pesos)
FOURTH QUARTER FOURTH QUARTER
REF S CONCEPTS OF 2003 OF 2002
AMOUNT % AMOUNT %
1 TOTAL ASSETS 27,721,485 100% 30,471,616 100%
2 CURRENT ASSETS 10,060,579 36% 9,679,429 32%
3 CASH AND SHORT-TERM INVESTMENTS 690,215 2% 2,501,720 8%
4 ACCOUNTS AND DOCUMENTS RECEIVABLE (NET) 4,783,644 17% 2,823,480 9%
5 OTHER ACCOUNTS AND DOCUMENTS RECEIVABLE 1,438,269 5% 1,002,110 3%
6 INVENTORIES 3,073,671 11% 3,193,323 12%
7 OTHER CURRENT ASSETS 74,780 0% 158,796 1%
8 LONG-TERM 4,013,857 14% 4,307,993 16%
9 ACCOUNTS AND DOCUMENTS RECEIVABLE (NET) 0 0% 0 0%
10 INVESTMENT IN SHARES OF SUBSIDIARIES AND
NON-CONSOLIDATED ASSOCIATED 292,906 1% 17,196 0%
11 OTHER INVESTMENTS 3,720,951 13% 4,290,797 15%
12 PROPERTY, PLANT AND EQUIPMENT 11,865,149 43% 13,685,282 45%
13 PROPERTY 6,753,574 24% 7,328,498 24%
14 MACHINERY AND INDUSTRIAL EQUIPMENT (NET) 15,711,107 57% 17,111,203 56%
15 OTHER EQUIPMENT 2,682,503 10% 1,238,000 4%
16 ACCUMULATED DEPRECIATION 13,919,551 50% 12,909,293 42%
17 CONSTRUCTION IN PROGRESS 637,516 2% 916,874 3%
18 DEFERRED ASSETS (NET) 737,151 3% 1,381,649 5%
19 OTHER ASSETS 1,044,749 4% 1,417,263 5%
20 TOTAL LIABILITIES 17,691,784 100% 18,645,390 100%
21 CURRENT LIABILITIES 4,644,564 26% 7,676,051 41%
22 SUPPLIERS 2,021,262 11% 2,087,843 11%
23 BANK LOANS 414,325 2% 3,642,056 20%
24 STOCK MARKET LOANS 0 0% 0 0%
25 TAXES TO BE PAID 838,284 5% 106,418 1%
26 OTHER CURRENT LIABILITIES 1,370,693 8% 1,839,734 10%
27 LONG-TERM LIABILITIES 11,359,951 64% 9,052,217 49%
28 BANK LOANS 9,078,684 51% 6,769,554 36%
29 STOCK MARKET LOANS 2,281,267 13% 2,282,663 12%
30 OTHER LOANS 0 0% 0 0%
31 DEFERRED LOANS 1,077,247 6% 1,339,199 7%
32 OTHER LIABILITIES 610,022 3% 577,923 3%
33 CONSOLIDATED STOCK HOLDERS' EQUITY 10,029,701 100% 11,826,227 100%
34 MINORITY INTEREST 3,757,225 37% 3,908,093 33%
35 MAJORITY INTEREST 6,272,476 63% 7,918,134 67%
36 CONTRIBUTED CAPITAL 12,887,214 128% 13,540,742 114%
37 PAID-IN CAPITAL STOCK (NOMINAL) 17,798 0% 17,798 0%
38 RESTATEMENT OF PAID-IN CAPITAL STOCK 11,699,026 117% 12,352,554 104%
39 PREMIUM ON SALES OF SHARES 1,170,390 12% 1,170,390 10%
40 CONTRIBUTIONS FOR FUTURE CAPITAL INCREASES
41 CAPITAL INCREASE (DECREASE) -6,614,738 -66% -5,622,608 -48%
42 RETAINED EARNINGS AND CAPITAL RESERVE 15,763,774 157% 20,288,368 172%
43 REPURCHASE FUND OF SHARES 907,079 9% 907,079 8%
44 EXCESS (SHORTFALL) IN RESTATEMENT OF
HOLDER'S EQUIT -20,978,783 -209% -25,733,443 -218%
45 NET INCOME FOR THE YEAR -2,306,808 -23% -1,084,612 -9%
CONSOLIDATED BALANCE SHEET
BREAKDOWN OF MAIN CONCEPTS
(Thousands of Pesos)
REF S CONCEPTS FOURTH QUARTER OF 2003 FOURTH QUARTER OF 2002
----- -------- ---------------------- ----------------------
AMOUNT % AMOUNT %
------ - ------ -
3 CASH AND SHORT-TERM INVESTMENTS 690,215 100% 2,501,720 100%
46 CASH 227,584 33% 436,742 17%
47 SHORT-TERM INVESTMENTS 462,631 67% 2,064,978 83%
18 DEFERRED ASSETS (NET) 737,151 100% 1,381,649 100%
48 AMORTIZED OR REDEEMED EXPENSES 0 0% 0 0%
49 GOODWILL 737,151 100% 1,381,649 100%
50 DEFERRED TAXES 0 0% 0 0%
51 OTHERS 0 0% 0 0%
21 CURRENT LIABILITIES 4,644,564 100% 7,676,051 100%
52 FOREIGN CURRENCY LIABILITIES 1,711,030 37% 5,103,262 66%
53 MEXICAN PESOS LIABILITIES 2,933,534 63% 2,572,789 34%
24 STOCK MARKET LOANS 0 0% 0 0%
54 COMMERCIAL PAPER 0 0% 0 0%
55 CURRENT MATURITIES OF MEDIUM TERM NOTES 0 0% 0 0%
56 CURRENT MATURITIES OF BONDS 0 0% 0 0%
26 OTHER CURRENT LIABILITIES 1,370,693 100% 1,839,734 100%
57 OTHER CURRENT LIABILITIES WITH COST 0 0% 0 0%
58 OTHER CURRENT LIABILITIES WITHOUT COST 1,370,693 100% 1,839,734 100%
27 LONG-TERM LIABILITIES 11,359,951 100% 9,052,217 100%
59 FOREIGN CURRENCY LIABILITIES 7,837,784 69% 5,391,148 60%
60 MEXICAN PESOS LIABILITIES 3,522,167 31% 3,661,069 40%
29 STOCK MARKET LOANS 2,281,267 100% 2,282,663 100%
61 BONDS 0 0% 0 0%
62 MEDIUM TERM NOTES 2,281,267 100% 2,282,663 100%
30 OTHER LOANS 0 0% 0 0%
63 OTHER LOANS WITH COST 0 0% 0 0%
64 OTHER LOANS WITHOUT COST 0 0% 0 0%
31 DEFERRED LOANS 1,077,247 100% 1,339,199 100%
65 NEGATIVE GOODWILL 0 0% 0 0%
66 DEFERRED TAXES 1,077,247 100% 1,339,199 100%
67 OTHERS 0 0% 0 0%
32 OTHER LIABILITIES 610,022 100% 577,923 100%
68 RESERVES 0 0% 0 0%
69 OTHERS LIABILITIES 610,022 100% 577,923 100%
44 EXCESS (SHORTFALL) IN RESTATEMENT OF STOCK HOLDERS' EQUITY -20,978,783 100% -25,733,443 100%
70 ACCUMULATED INCOME DUE TO MONETARY POSITION 0 0% 0 0%
71 INCOME FROM NON-MONETARY POSITION ASSETS -20,978,783 100% -25,733,443 100%
CONSOLIDATED BALANCE SHEET
OTHER CONCEPTS
(Thousands of Pesos)
REF S CONCEPTS FOURTH QUARTER OF 2003 FOURTH QUARTER OF 2002
----- -------- ---------------------- ----------------------
AMOUNT AMOUNT
------ ------
72 WORKING CAPITAL 5,416,015 2,003,378
73 PENSIONS FUND AND SENIORITY PREMIUMS 450,323 555,819
74 EXECUTIVES (*) 0 0
75 EMPLOYERS (*) 4,692 5,982
76 WORKERS (*) 9,162 10,342
77 CIRCULATION SHARES (*) 1,369,079,376 1,369,079,376
78 REPURCHASED SHARES (*) 0 0
(*) THESE CONCEPTS SHOULD BE EXPRESSED IN UNITS
CONSOLIDATED INCOME STATEMENT
FROM JANUARY THE 1st TO DECEMBER THE 31th OF 2003 AND 2002
(Thousands of Pesos)
REF R CONCEPTS FOURTH QUARTER OF 2003 FOURTH QUARTER OF 2002
----- -------- ---------------------- ----------------------
AMOUNT % AMOUNT %
------ - ------ -
1 NET SALES 21,687,196 100% 20,361,657 100%
2 COST OF SALES 17,058,768 79% 15,573,131 76%
3 GROSS INCOME 4,628,428 21% 4,788,526 24%
4 OPERATING EXPENSES 3,772,270 17% 3,707,158 18%
5 OPERATING INCOME 856,158 4% 1,081,368 5%
6 TOTAL FINANCING COST 1,353,776 6% 1,273,912 6%
7 INCOME AFTER FINANCING COST -497,618 -2% -192,544 -1%
8 OTHER FINANCIAL OPERATIONS 346,723 2% 135,315 1%
9 INCOME BEFORE TAXES AND WORKERS' PROFIT SHARING -844,341 -4% -327,859 -2%
10 RESERVE FOR TAXES AND WORKERS' PROFIT SHARING 189,278 1% 251,740 1%
11 NET INCOME AFTER TAXES AND WORKERS' PROFIT SHARING -1,033,619 -5% -579,599 -3%
12 SHARE IN NET INCOME OF SUBSIDIARIES AND NON-CONSOLIDATED
ASSOCIATES 11,164 0% -5,407 0%
13 CONSOLIDATED NET INCOME OF CONTINUOUS -1,022,455 -5% -585,006 -3%
14 INCOME OF DISCONTINUOUS OPERATIONS -23,855 0% 629,907 3%
15 CONSOLIDATED NET INCOME BEFORE EXTRAORDINARY ITEMS -998,600 -5% -1,214,913 -6%
16 EXTRAORDINARY ITEMS NET EXPENSES (INCOME) 0 0% 0 0%
17 NET EFFECT AT THE BEGINNING OF THE YEAR BY CHANGES IN
ACCOUNTING PRINCIPLES 1,415,828 7% 0 0%
18 NET CONSOLIDATED INCOME -2,414,428 -11% -1,214,913 -6%
19 NET INCOME OF MINORITY INTEREST -107,620 0% -130,301 -1%
20 NET INCOME OF MAJORITY INTEREST -2,306,808 -11% -1,084,612 -5%
CONSOLIDATED INCOME STATEMENT
BREAKDOWN OF MAIN CONCEPTS
(Thousands of Pesos)
REF R CONCEPTS FOURTH QUARTER OF 2003 FOURTH QUARTER OF 2002
----- -------- ---------------------- ----------------------
AMOUNT % AMOUNT %
------ - ------ -
1 NET SALES 21,687,196 100% 20,361,657 100%
21 DOMESTIC 12,214,955 56% 11,074,376 54%
22 FOREIGN 9,472,241 44% 9,287,281 46%
23 TRANSLATED INTO DOLLARS (***) 859,110 4% 902,039 4%
6 TOTAL FINANCING COST 1,353,776 100% 1,273,913 100%
24 INTEREST PAID 1,086,686 80% 985,814 77%
25 EXCHANGE LOSSES 561,547 41% 649,749 51%
26 INTEREST EARNED 43,548 3% 68,196 5%
27 EXCHANGE PROFITS 0 0% 0 0%
28 GAIN DUE TO MONETARY POSITION -307,265 -23% -414,109 -33%
29 LOSS IN UDI's ACTUALIZATION 56,356 4% 120,655 19%
29 PROFIT IN UDI's ACTUALIZATION 0 0% 0 0%
8 OTHER FINANCIAL OPERATIONS 346,723 100% 135,315 100%
29 OTHER NET EXPENSES (INCOME) NET 346,723 100% 135,315 100%
30 (PROFIT) LOSS ON SALE OF OWN SHARES 0 0% 0 0%
31 (PROFIT) LOSS ON SALE OF SHORT-TERM INVESTMENTS 0 0% 0 0%
10 RESERVE FOR TAXES AND WORKERS' PROFIT SHARING 189,278 100% 251,740 100%
32 INCOME TAX 286,643 151% 226,105 90%
33 DEFERRED INCOME TAX -181,693 -96% -83,154 -33%
34 WORKERS' PROFIT SHARING 84,328 45% 108,789 43%
35 DEFERRED WORKERS' PROFIT SHARING 0 0% 0 0%
CONSOLIDATED INCOME STATEMENT
OTHER CONCEPTS
(Thousands of Pesos)
REF R CONCEPTS FOURTH QUARTER OF 2003 FOURTH QUARTER OF 2002
----- -------- ---------------------- ----------------------
AMOUNT AMOUNT
------ ------
36 TOTAL SALES 22,743,130 21,013,888
37 NET INCOME OF THE YEAR 0 0
38 NET SALES (**) 21,687,196 20,361,657
39 OPERATION INCOME (**) 856,158 1,081,368
40 NET INCOME OF MAJORITY INTEREST (**) -2,306,808 -1,084,613
41 NET CONSOLIDATED INCOME (**) -2,414,428 -1,214,914
(**) THE RESTATED INFORMATION ON THE LAST TWELVE MONTHS SHOULD BE USED
CONSOLIDATED INCOME STATEMENT
FROM OCTOBER THE 1st TO DECEMBER THE 31th OF 2003 AND 2002
(Thousands of Pesos)
REF R CONCEPTS FOURTH QUARTER OF 2003 FOURTH QUARTER OF 2002
----- -------- ---------------------- ----------------------
AMOUNT % AMOUNT %
------ - ------ -
1 NET SALES 5,175,373 100% 4,568,129 100%
2 COST OF SALES 4,236,216 82% 3,771,627 83%
3 GROSS INCOME 939,157 18% 796,502 17%
4 OPERATING EXPENSES 908,731 18% 969,608 21%
5 OPERATING INCOME 30,426 1% -173,106 -4%
6 TOTAL FINANCING COST 385,255 7% 349,271 8%
7 INCOME AFTER FINANCING COST -354,829 -7% -522,377 -11%
8 OTHER FINANCIAL OPERATIONS 285,407 6% -230,650 -4%
9 INCOME BEFORE TAXES AND WORKERS' PROFIT SHARING -640,236 -12% -291,727 -6%
10 RESERVE FOR TAXES AND WORKERS' PROFIT SHARING -147,509 -3% 71,862 2%
11 NET INCOME AFTER TAXES AND WORKERS' PROFIT SHARING -492,727 -10% -363,589 -8%
12 SHARE IN NET INCOME OF SUBSIDIARIES AND NON-CONSOLIDATED
ASSOCIATES 12,263 0% -5,226 0%
13 CONSOLIDATED NET INCOME OF CONTINUOUS -480,464 -9% -368,815 -8%
14 INCOME OF DISCONTINUOUS OPERATIONS 19,127 0% 553,934 12%
15 CONSOLIDATED NET INCOME BEFORE EXTRAORDINARY ITEMS -499,591 -10% -922,749 -20%
16 EXTRAORDINARY ITEMS NET EXPENSES (INCOME) 0 0% 0 0%
17 NET EFFECT AT THE BEGINNING OF THE YEAR BY CHANGES IN
ACCOUNTING PRINCIPLES 1,415,827 27% 0 0%
18 NET CONSOLIDATED INCOME -1,915,418 -37% -922,749 -20%
19 NET INCOME OF MINORITY INTEREST -202,531 -4% -158,710 -3%
20 NET INCOME OF MAJORITY INTEREST -1,712,887 -33% -764,039 -17%
CONSOLIDATED INCOME STATEMENT
BREAKDOWN OF MAIN CONCEPTS
(Thousands of Pesos)
REF R CONCEPTS FOURTH QUARTER OF 2003 FOURTH QUARTER OF 2002
----- -------- ---------------------- ----------------------
AMOUNT % AMOUNT %
------ - ------ -
1 NET SALES 5,175,373 100% 4,568,129 100%
21 DOMESTIC 2,761,392 53% 2,564,897 56%
22 FOREIGN 2,413,981 47% 2,003,232 44%
23 TRANSLATED INTO DOLLARS (***) 214,451 4% 187,663 4%
6 TOTAL FINANCING COST 385,255 100% 349,271 100%
24 INTEREST PAID 319,997 83% 309,134 89%
25 EXCHANGE LOSSES 155,955 40% 93,494 27%
26 INTEREST EARNED 15,989 4% -21,284 -6%
27 EXCHANGE PROFITS 0 0% 0 0%
28 GAIN DUE TO MONETARY POSITION -115,111 -30% -115,287 -33%
29 LOSS IN UDI's ACTUALIZATION 40,403 10% 40,646 12%
PROFIT IN UDI's ACTUALIZATION 0 0% 0 0%
8 OTHER FINANCIAL OPERATIONS 285,407 100% -230,650 100%
29 OTHER NET EXPENSES (INCOME) NET 285,407 100% -230,650 100%
30 (PROFIT) LOSS ON SALE OF OWN SHARES 0 0% 0 0%
31 (PROFIT) LOSS ON SALE OF SHORT-TERM INVESTMENTS 0 0% 0 0%
10 RESERVE FOR TAXES AND WORKERS' PROFIT SHARING -147,509 100% 71,862 100%
32 INCOME TAX 67,161 -46% -287,889 -401%
33 DEFERRED INCOME TAX -241,007 163% 361,618 503%
34 WORKERS' PROFIT SHARING 26,337 -18% -1,867 -3%
35 DEFERRED WORKERS' PROFIT SHARING 0 0% 0 0%
CONSOLIDATED CASH FLOW STATEMENT
FROM OCTOBER THE 1st TO DECEMBER THE 31th OF 2003 AND 2002
(Thousands of Pesos)
REF C CONCEPTS FOURTH QUARTER OF 2003 FOURTH QUARTER OF 2002
----- -------- ---------------------- ----------------------
AMOUNT AMOUNT
------ ------
1 CONSOLIDATED NET INCOME -2,414,428 -1,214,913
2 +(-) ITEMS ADDED TO INCOME WHICH DO NOT REQUIRE USING CASH 2,671,067 1,438,209
3 CASH FLOW FROM NET INCOME OF THE YEAR 256,639 223,295
4 CASH FLOW FROM CHANGE IN WORKING CAPITAL -712,242 687,975
5 CASH GENERATED (USED) IN OPERATING ACTIVITIES -455,603 911,270
6 CASH FLOW FROM EXTERNAL FINANCING -919,998 1,422,063
7 CASH FLOW FROM INTERNAL FINANCING -561,577
8 CASH FLOW GENERATED (USED) BY FINANCING -919,998 860,486
9 CASH FLOW GENERATED (USED) IN INVESTMENT ACTIVITIES -435,904 -762,903
10 NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS -1,811,505 1,008,853
11 CASH AND SHORT-TERM INVESTMENTS AT THE BEGINNING OF PERIOD 2,501,720 1,492,867
12 CASH AND SHORT-TERM INVESTMENTS AT THE END OF PERIOD 690,215 2,501,720
CONSOLIDATED CASH FLOW STATEMENT
BREAKDOWN OF MAIN CONCEPTS
(Thousands of Pesos)
REF C CONCEPTS FOURTH QUARTER OF 2003 FOURTH QUARTER OF 2002
----- -------- ---------------------- ----------------------
AMOUNT AMOUNT
------ ------
2 + (-) ITEMS ADDED TO INCOME WHICH DO NOT REQUIRE 2,671,067 1,438,209
13 DEPRECIATION AND AMORTIZATION FOR THE YEAR 1,368,139 1,319,612
14 + (-) NET INCREASE (DECREASE) IN PENSIONS FUND AND SENIORITY PREMIUMS 0 0
15 + (-) NET LOSS (PROFIT) IN MONEY EXCHANGE 0 0
16 + (-) NET LOSS (PROFIT) IN ASSETS AND LIABILITIES ACTUALIZATION 0 0
17 + (-) OTHER ITEMS 1,302,928 118,597
4 CASH FLOW FROM CHANGE IN WORKING CAPITAL -712,242 687,975
18 + (-) DECREASE (INCREASE) IN ACCOUNT RECEIVABLE -1,960,164 -53,958
19 + (-) DECREASE (INCREASE) IN INVENTORIES 293,912 53,607
20 + (-) DECREASE (INCREASE) IN OTHER ACCOUNT RECEIVABLE 950,973 564,014
21 + (-) INCREASE (DECREASE) IN SUPPLIER ACCOUNT -151,807 -140,610
22 + (-) INCREASE (DECREASE) IN OTHER LIABILITIES 154,844 264,922
6 CASH FLOW FROM EXTERNAL FINANCING -919,998 1,422,063
23 + SHORT-TERM BANK AND STOCK MARKET FINANCING -3,226,068 -1,591,248
24 + LONG-TERM BANK AND STOCK MARKET FINANCING 2,306,070 3,191,185
25 + DIVIDEND RECEIVED 0 0
26 + OTHER FINANCING 0 0
27 (-) BANK FINANCING AMORTIZATION 0 0
28 (-) STOCK MARKET AMORTIZATION 0 0
29 (-) OTHER FINANCING AMORTIZATION 0 -177,874
7 CASH FLOW FROM INTERNAL FINANCING 0 -561,577
30 + (-) INCREASE (DECREASE) IN CAPITAL STOCKS 0 0
31 (-) DIVIDENDS PAID 0 -561,577
32 + PREMIUM ON SALE OF SHARES 0 0
33 + CONTRIBUTION FOR FUTURE CAPITAL INCREASES 0 0
9 CASH FLOW GENERATED (UTILIZED) IN INVESTMENT ACTIVITIES -435,904 -762,903
34 + (-) DECREASE (INCREASE) IN STOCK INVESTMENTS OF A PERMANENT NATURE 0 29,138
35 (-) ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT 19,506 -1,148,976
36 (-) INCREASE IN CONSTRUCTIONS IN PROGRESS -455,410 -36,782
37 + SALE OF OTHER PERMANENT INVESTMENTS 0 327,243
38 + SALE OF TANGIBLE FIXED ASSETS 0 0
39 + (-) OTHER ITEMS 0 66,474
RATIOS
CONSOLIDATED
REF P CONCEPTS FOURTH QUARTER OF 2003 FOURTH QUARTER OF 2002
----- -------- ---------------------- ----------------------
YIELD
-----
1 NET INCOME TO NET SALES -11.13 % -5.97 %
2 NET INCOME TO STOCK HOLDERS' EQUITY (**) -36.78 % -13.70 %
3 NET INCOME TO TOTAL ASSETS (**) -8.71 % -3.99 %
4 CASH DIVIDENDS TO PREVIOUS YEAR NET INCOME 0 % 2.29 %
5 INCOME DUE TO MONETARY POSITION TO NET INCOME -12.73 % -34.09 %
ACTIVITY
6 NET SALES TO NET ASSETS (**) 0.78 TIME 0.67 TIME
7 NET SALES TO FIXED ASSETS (**) 1.83 TIME 1.49 TIME
8 INVENTORIES ROTATION (**) 5.55 TIME 4.88 TIME
9 ACCOUNTS RECEIVABLE IN DAYS OF SALES 69 DAYS 44 DAYS
10 PAID INTEREST TO TOTAL LIABILITIES WITH COST (**) 9.23 % 7.77 %
LEVERAGE
11 TOTAL LIABILITIES TO TOTAL ASSETS 63.82 % 61.19 %
12 TOTAL LIABILITIES TO STOCK HOLDERS' EQUITY 1.76 TIME 1.58 TIME
13 FOREIGN CURRENCY LIABILITIES TO TOTAL LIABILITIES 53.97 % 56.28 %
14 LONG-TERM LIABILITIES TO FIXED ASSETS 95.74 % 66.15 %
15 OPERATING INCOME TO INTEREST PAID 0.79 TIME 1.1 TIME
16 NET SALES TO TOTAL LIABILITIES (**) 1.23 TIME 1.09 TIME
LIQUIDITY
17 CURRENT ASSETS TO CURRENT LIABILITIES 2.17 TIME 1.26 TIME
18 CURRENT ASSETS LESS INVENTORY TO CURRENT LIABILITIES 1.5 TIME 0.84 TIME
19 CURRENTS ASSETS TO TOTAL LIABILITIES 0.57 TIME 0.52 TIME
20 AVAILABLE ASSETS TO CURRENT LIABILITIES 14.86 % 32.59 %
CASH FLOW
21 CASH FLOW FROM NET INCOME TO NET SALES 1.18 % 1.10 %
22 CASH FLOW FROM CHANGES IN WORKING CAPITAL TO NET SALES -3.28 % 3.38 %
23 CASH GENERATED (USED) IN OPERATING TO INTEREST PAID -0.42 TIME 0.92 TIME
24 EXTERNAL FINANCING TO CASH GENERATED (USED) IN FINANCING 100 % 165.26 %
25 INTERNAL FINANCING TO CASH GENERATED (USED) IN FINANCING 0.00 % -65.26 %
26 ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT TO CASH GENERATED (USED)
IN INVESTMENT ACTIVITIES -4.47 % 150.61 %
(**) IN THESE RATIOS FOR THE DATA TAKE INTO CONSIDERATION THE LAST TWELVE MONTHS
DATA PER SHARE
REF D CONCEPTS FOURTH QUARTER OF 2003 FOURTH QUARTER OF 2002
----- -------- ---------------------- ----------------------
AMOUNT AMOUNT
------ ------
1 BASIC PROFIT PER ORDINARY SHARE (**) -1.68 -0.76
2 BASIC PROFIT PER PREFERENT SHARE (**) 0 0
3 DILUTED PROFIT PER ORDINARY SHARE (**) 0 0
4 CONTINUOUS OPERATING PROFIT PER COMMON SHARE(**) -0.75 -0.76
5 EFFECT OF DISCONTINUOUS OPERATING ON CONTINUOUS OPERATING
PROFIT PER SHARE (**) $0.02 $0.00
6 EFFECT OF EXTRAORDINARY PROFIT AND LOSS ON CONTINUOUS OPERATING
PROFIT PER SHARE (**) 0 0
7 EFFECT BY CHANGES IN ACCOUNTING POLICIES ON CONTINUOUS OPERATING
PROFIT PER SHARE (**) -1.03 0
8 CARRYING VALUE PER SHARE 4.58 5.78
9 CASH DIVIDEND ACCUMULATED PER SHARE 0 0.29
10 DIVIDEND IN SHARES PER SHARE 0 SHARES 0 SHARES
11 MARKET PRICE TO CARRYING VALUE 1.17 TIMES 0.73 TIMES
12 MARKET PRICE TO BASIC PROFIT PER ORDINARY SHARE (**) -3.18 TIMES -5.38 TIMES
13 MARKET PRICE TO BASIC PROFIT PER PREFERENT SHARE (**) 0 0
(**) TO CALCULATE THE DATA PER SHARE USE THE NET INCOME FOR THE LAST TWELVE
MONTHS
AUDITORS' NOTES
SIGNIFICANT ACCOUNTING POLICIES
THE ACCOUNTING POLICIES FOLLOWED BY THE COMPANY ARE IN CONFORMITY WITH MEXICAN
GAAP, WHICH REQUIRE MANAGEMENT TO MAKE CERTAIN ESTIMATES AND USE CERTAIN
ASSUMPTIONS TO DETERMINE THE VALUATION OF SOME OF THE BALANCES INCLUDED IN THE
FINANCIAL STATEMENTS AND TO MAKE THE DISCLOSURES REQUIRED FOR INCLUSION THEREIN.
ALTHOUGH ACTUAL RESULTS MAY DIFFER FROM THOSE ESTIMATES, MANAGEMENT BELIEVES
THAT THE ESTIMATES AND ASSUMPTIONS USED WERE APPROPRIATE UNDER THE
CIRCUMSTANCES.
THE SIGNIFICANT ACCOUNTING POLICIES FOLLOWED BY THE COMPANY ARE AS FOLLOWS:
NEW ACCOUNTING POLICIES - IN JANUARY 2003, THE NEW BULLETIN C-9 "LIABILITIES,
PROVISIONS, CONTINGENT ASSETS AND LIABILITIES AND COMMITMENTS" WENT INTO EFFECT,
WHICH ESTABLISHES ADDITIONAL GUIDELINES CLARIFYING THE ACCOUNTING FOR
LIABILITIES, PROVISIONS AND CONTINGENT ASSETS AND LIABILITIES, AND ESTABLISHES
NEW STANDARDS FOR THE USE OF PRESENT VALUE TECHNIQUES TO MEASURE LIABILITIES AND
ACCOUNTING FOR THE EARLY SETTLEMENT OF OBLIGATIONS.
IN JANUARY 2003, THE NEW BULLETIN C-8 "INTANGIBLE ASSETS" WENT INTO EFFECT. THIS
BULLETIN ESTABLISHES THAT PROJECT DEVELOPMENT COSTS SHOULD BE CAPITALIZED IF
THEY FULFILL THE CRITERIA ESTABLISHED FOR RECOGNITION OF ASSETS. ANY
PREOPERATING COSTS INCURRED AFTER THE EFFECTIVE DATE OF THIS BULLETIN SHOULD BE
RECORDED AS AN EXPENSE, UNLESS THEY MEET CERTAIN CRITERIA. THE UNAMORTIZED
BALANCE OF CAPITALIZED PREOPERATING COSTS UNDER THE FORMER BULLETIN C-8 WILL
CONTINUE TO BE AMORTIZED.
IN MARCH 2003, BULLETIN C-15 "IMPAIRMENT OF LONG-LIVED ASSETS AND THEIR RELATED
DISPOSAL" WAS ISSUED, WHOSE APPLICATION IS MANDATORY FOR FINANCIAL STATEMENTS OF
PERIODS BEGINNING JANUARY 1, 2004, ALTHOUGH EARLY APPLICATION IS ENCOURAGED AND
WAS ADOPTED BY THE COMPANY SINCE 2003. AMONG OTHER THINGS, THE NEW RULES PROVIDE
FOR THE CALCULATION AND RECOGNITION OF LOSSES FROM IMPAIRMENT OF SUCH ASSETS AND
THEIR REVERSAL, AND PRESENT EXAMPLES OF INDICATIONS OF POSSIBLE IMPAIRMENT IN
THE VALUE OF LONG-LIVED INTANGIBLE OR TANGIBLE ASSETS IN USE, INCLUDING
GOODWILL. COMPANIES MUST TEST FOR IMPAIRMENT UNLESS THERE IS CONCLUSIVE EVIDENCE
THAT THE INDICATORS OF IMPAIRMENT ARE TEMPORARY.
IN DECEMBER 2002, THE NEW BULLETIN E-1 "AGRICULTURE" WENT INTO EFFECT. THE
OBSERVANCE OF WHICH IS ALSO COMPULSORY FOR FISCAL YEARS BEGINNING ON OR AFTER
JANUARY 1, 2003. BULLETIN E-1 ESTABLISHES THE RULES FOR VALUING, PRESENTING AND
DISCLOSING BIOLOGICAL ASSETS AND AGRICULTURAL PRODUCTS, WHICH INCLUDES THE
ADMINISTRATION CARRIED OUT BY A RELATED PARTY WITH THE RESPECT TO BIOLOGICAL
TRANSFORMATION OF LIVE ANIMALS OR PLANTS (BIOLOGICAL ASSETS) THAT ARE DESTINED
TO BE SOLD AS AN AGRICULTURAL PRODUCT OR AS A COMPREHENSIVE PART OF A BIOLOGICAL
ASSET. BULLETIN E-1 REQUIRES BIOLOGICAL ASSETS AND AGRICULTURAL PRODUCTS TO BE
VALUED AT THEIR FAIR MARKET VALUE, LESS THE ESTIMATED COSTS AT THE POINT OF
SALE. BULLETIN E-1 ALSO STATES THAT WHEN THE FAIR MARKET VALUE CANNOT BE
DETERMINED IN A RELIABLE AND OBJECTIVE MANNER, THE AFOREMENTIONED ASSETS SHOULD
BE VALUED AT PRODUCTION COST, LESS ACCUMULATED DEPRECIATION.
IN 2001, THE NEW BULLETIN C-2 "FINANCIAL INSTRUMENTS", WENT INTO EFFECT. THIS
BULLETIN ESTABLISHES THE METHODOLOGY FOR VALUING AND RECORDING FINANCIAL
INSTRUMENTS, AND REQUIRES RECOGNITION OF ALL EFFECTS OF THE FINANCIAL
INSTRUMENTS CONTRACTED ON THE BALANCE SHEET AS EITHER ASSETS OR LIABILITIES,
UNDER NET COMPREHENSIVE FINANCIAL RESULT. THE FINANCIAL INSTRUMENTS THAT HAVE
BEEN DESIGNATED AND EFFECTIVELY FUNCTION AS HEDGING OF ASSETS AND LIABILITIES OR
FUTURE TRANSACTIONS WILL AFFECT THE ASSETS, LIABILITIES OR THE RESPECTIVE
TRANSACTIONS WHEN THEY ARE REALIZED, SETTLED OR TAKE PLACE, RESPECTIVELY.
AS OF 2001, INTERNATIONAL ACCOUNTING STANDARD 40, "INVESTMENT PROPERTIES,"
ENTERED INTO EFFECT ON A SUPPLEMENTAL BASIS, ESTABLISHING VALUATION CRITERIA FOR
PROPERTIES WHOSE PURPOSE IS TO GENERATE PROFITS OR INCREASE VALUE OR BOTH.
PURSUANT TO CIRCULAR 55 ISSUED BY THE MEXICAN INSTITUTE OF PUBLIC ACCOUNTANTS,
THE VALUATION MODEL APPLICABLE TO MEXICO IS THE COST MODEL, WHICH ESTABLISHES
THAT SUCH PROPERTIES MUST BE VALUED AT ACQUISITION AND/OR CONSTRUCTION COST AND
ARE RESTATED BY APPLYING THE NPCI, LESS THE RESPECTIVE ACCUMULATED DEPRECIATION.
BEGINNING JANUARY 2000, THE COMPANY ADOPTED THE PROVISIONS OF NEW BULLETIN D-4,
"ACCOUNTING FOR INCOME AND ASSET TAXES AND EMPLOYEE PROFIT SHARING". THE EFFECT
OF THE ADOPTION WAS TO RECOGNIZE, AN INITIAL LONG-TERM LIABILITY FOR DEFERRED
INCOME TAXES AFFECTING STOCKHOLDERS' EQUITY UNDER "CUMULATIVE EFFECT OF INITIAL
RECOGNITION OF DEFERRED INCOME TAXES"
AS A RESULT OF THE IMPLEMENTATION OF THE ADOPTION OF BULLETIN D-4 MENTIONED
ABOVE, THE COMPANY CHANGED ITS METHOD FOR RECORDING THE EFFECT FROM TAX
CONSOLIDATION. UNTIL 1999, IT WAS RECORDED IN THE YEAR IN WHICH THE RESPECTIVE
ANNUAL CONSOLIDATED TAX RETURN WAS FILED. BEGINNING IN 2000, THIS BENEFIT IS
RECORDED IN RESULTS OF THE YEAR IN WHICH THE BENEFIT IS GENERATED.
BASIS OF CONSOLIDATION - THE ACCOMPANYING CONSOLIDATED FINANCIAL STATEMENTS
INCLUDE THOSE OF DESC AND THE SUBSIDIARIES IN WHICH THERE IS STOCKHOLDING AND
ADMINISTRATIVE CONTROL. ALL SIGNIFICANT INTERCOMPANY TRANSACTIONS AND BALANCES
HAVE BEEN ELIMINATED IN THE ACCOMPANYING CONSOLIDATED FINANCIAL STATEMENTS.
THE EQUITY IN NET INCOME (LOSS) AND CHANGES IN STOCKHOLDERS' EQUITY OF THOSE
SUBSIDIARIES THAT WERE ACQUIRED OR SOLD, HAS BEEN INCLUDED IN THE FINANCIAL
STATEMENTS AS OF OR UP TO THE DATE ON WHICH THE TRANSACTIONS TOOK PLACE AND WAS
RESTATED IN TERMS OF THE PURCHASING POWER AS OF THE END OF THE LATEST PERIOD.
INVESTMENTS IN SHARES OF ASSOCIATED COMPANIES AND UNCONSOLIDATED SUBSIDIARIES
ARE RECORDED USING THE EQUITY METHOD.
TRANSLATION OF FINANCIAL STATEMENTS OF SUBSIDIARIES - THE FINANCIAL STATEMENTS
OF FOREIGN SUBSIDIARIES, WHOSE OPERATIONS ARE NOT AN INTEGRAL PART OF THE
MEXICAN COMPANIES ("FOREIGN ENTITIES"), ARE RESTATED FOR THE INFLATION RATE OF
THE RESPECTIVE FOREIGN COUNTRY AND ARE TRANSLATED INTO MEXICAN PESOS AT THE
EXCHANGE RATE IN EFFECT AT THE END OF THE YEAR. THE FINANCIAL STATEMENTS OF
FOREIGN SUBSIDIARIES, WHOSE OPERATIONS ARE AN INTEGRAL PART OF THE MEXICAN
COMPANIES ("INTEGRATED FOREIGN OPERATIONS"), ARE TRANSLATED USING YEAR-END
EXCHANGE RATES FOR MONETARY ITEMS AND HISTORICAL EXCHANGE RATES FOR NONMONETARY
ITEMS, AND THE TRANSLATED FINANCIAL STATEMENTS ARE THEN RESTATED USING THE
NATIONAL CONSUMER PRICE INDEX (NCPI) OF MEXICO. THE EFFECTS OF TRANSLATING
FOREIGN ENTITIES ARE RECORDED DIRECTLY IN STOCKHOLDERS' EQUITY IN THE
"CUMULATIVE EFFECT OF RESTATEMENT" ACCOUNT. THE EFFECTS OF TRANSLATING
INTEGRATED FOREIGN OPERATIONS ARE INCLUDED IN THE "INTEGRAL FINANCING RESULT" OF
THE YEAR IN THE "MONETARY POSITION GAIN" ACCOUNT. SUCH EFFECTS ARE NOT
SIGNIFICANT.
RECOGNITION OF THE EFFECTS OF INFLATION - THE COMPANIES RESTATE ALL OF THEIR
FINANCIAL STATEMENTS IN TERMS OF THE PURCHASING POWER OF THE MEXICAN PESO AS OF
THE END OF THE LATEST PERIOD, THEREBY COMPREHENSIVELY RECOGNIZING THE EFFECTS OF
INFLATION. THE PRIOR YEAR AMOUNTS PRESENTED HEREIN DIFFER FROM THOSE ORIGINALLY
REPORTED IN TERMS OF MEXICAN PESOS OF THE RESPECTIVE YEAR. CONSEQUENTLY, ALL
FINANCIAL STATEMENT AMOUNTS ARE COMPARABLE, BOTH FOR THE CURRENT AND THE PRIOR
YEAR, BECAUSE ALL ARE STATED IN TERMS OF MEXICAN PESOS OF THE SAME PURCHASING
POWER.
CASH EQUIVALENTS - INVESTMENTS IN MARKETABLE SECURITIES CONSIST MAINLY OF
ACCEPTANCES, BANK PROMISSORY NOTES, AND PAPER ISSUED BY THE MEXICAN AND UNITED
STATES OF AMERICA GOVERNMENTS, AT MARKET (COST PLUS ACCRUED INTEREST).
INVENTORIES AND COST OF SALES - INVENTORIES ARE ORIGINALLY RECORDED AT THEIR
ACQUISITION OR MANUFACTURING COST AND RESTATED TO THEIR SPECIFIC NET REPLACEMENT
COST WITHOUT EXCEEDING NET REALIZABLE VALUE. SUBSTANTIALLY ALL SUBSIDIARIES
COMPUTE COST OF SALES USING THE REPLACEMENT COST AT THE TIME OF SALE.
LAND HELD FOR DEVELOPMENT AND REAL ESTATE PROJECTS - UNDEVELOPED LAND REPRESENTS
LAND RESERVES THAT, TOGETHER WITH DEVELOPED LAND AND ONGOING AND COMPLETED
PROJECTS, ARE CONSIDERED NON-CURRENT INVENTORIES, SINCE THEY ARE HELD FOR SALE.
THEY INCLUDE ACQUISITION, DEVELOPMENT AND CONSTRUCTION COSTS AND ARE RESTATED IN
U.S. DOLLARS BASED ON THE SLIPPAGE OF THE MARKET EXCHANGE RATE FOR THE PURPOSE
OF SHOWING VALUES IN ACCORDANCE WITH THE CURRENT SITUATION OF THE REAL ESTATE
MARKET.
THE COMPANY CAPITALIZES THE NET COMPREHENSIVE FINANCING COST ON DEBT USED TO
FINANCE REAL ESTATE PROJECTS IN PROGRESS, IN ADDITION TO THEIR CONSTRUCTION AND
DEVELOPMENT COSTS.
INVESTMENT IN SHARES - INVESTMENT IN SHARES HAS BEEN RECORDED USING THE EQUITY
METHOD, BASED ON THE FINANCIAL STATEMENTS PREPARED ON THE SAME BASIS AS THOSE OF
THE COMPANY, AND IS PRESENTED UNDER OTHER ASSETS IN THE BALANCE SHEET.
PROPERTY, PLANT AND EQUIPMENT - THESE ITEMS ARE RECORDED AT ACQUISITION COST AND
IS RESTATED BY USING NCPI FACTORS. FOR FOREIGN FIXED ASSETS, THEIR ACQUISITION
COST IS RESTATED FOR INFLATION OF THE COUNTRY OF ORIGIN AND THE FLUCTUATION OF
THE MEXICAN PESO AGAINST SUCH CURRENCY IS CONSIDERED.
DEPRECIATION IS CALCULATED BY THE STRAIGHT-LINE METHOD BASED ON THE REMAINING
USEFUL LIVES OF THE ASSETS.
THE COMPANIES CAPITALIZE THE NET COMPREHENSIVE FINANCING COST ON DEBT USED TO
FINANCE CONSTRUCTION IN PROGRESS AND THE INSTALLATION OF EQUIPMENT, UNTIL THEY
ARE PLACED IN SERVICE.
IMPAIRMENT OF FIXED ASSETS - THE AMOUNTS SHOWN IN THE ACCOMPANYING CONSOLIDATED
STATEMENTS OF INCOME BASICALLY REFER TO THE REDUCTION IN VALUE OF PROPERTY AND
EQUIPMENT OF SOME PRODUCTION FACILITIES, IN ORDER TO REFLECT THEIR REALIZABLE
VALUE IN ACCORDANCE WITH THE CURRENT SITUATION OF SUCH BUSINESSES.
GOODWILL - THE GOODWILL RESULTING FROM ACQUISITIONS MADE IN EXCESS OF BOOK VALUE
IS AMORTIZED OVER PERIODS RANGING FROM FIVE TO 20 YEARS, THE TERMS OVER WHICH
THE BENEFITS FROM THE INVESTMENT WILL BE REALIZED.
FINANCIAL INSTRUMENTS - FINANCIAL ASSETS AND LIABILITIES RESULTING FROM ANY TYPE
OF FINANCIAL INSTRUMENT, EXCEPT FOR INVESTMENTS IN FINANCIAL INSTRUMENTS HELD TO
MATURITY, ARE PRESENTED IN THE BALANCE SHEET AT FAIR VALUE. THE EFFECTS OF THE
VALUATION OF A FINANCIAL ASSET OR LIABILITY ARE RECOGNIZED IN RESULTS OF
OPERATIONS OF THE RESPECTIVE PERIOD. INVESTMENTS IN FINANCIAL INSTRUMENTS HELD
TO MATURITY ARE VALUED AT ACQUISITION COST. THE COSTS AND YIELDS OF FINANCIAL
INSTRUMENTS ARE RECOGNIZED IN RESULTS OF THE PERIOD IN WHICH THEY OCCUR.
DERIVATE FINANCIAL INSTRUMENTS - THE INTERNAL CONTROL SYSTEM ESTABLISHED BY THE
COMPANY INCLUDES POLICIES AND PROCEDURES TO MANAGE ITS EXPOSURE TO FLUCTUATIONS
IN FOREIGN CURRENCY EXCHANGE RATES USING DERIVATIVE FINANCIAL INSTRUMENTS. THESE
INSTRUMENTS ARE TRADED ONLY WITH AUTHORIZED INSTITUTIONS AND READING LIMITS HAVE
BEEN ESTABLISHED FOR EACH INSTITUTION. THE COMPANY DOES NOT CARRY OUT
TRANSACTIONS WITH DERIVATIVE FINANCIAL INSTRUMENTS FOR THE PURPOSE OF
SPECULATION.
THE DERIVATIVE FINANCIAL INSTRUMENTS CURRENTLY USED BY THE COMPANY ARE PRIMARILY
HEDGE CONTRACTS TO REDUCE ITS EXPOSURE TO EXCHANGE RATE FLUCTUATIONS. PREMIUMS
PAID ARE AMORTIZED OVER THE TERM OF THE DERIVATIVE FINANCIAL INSTRUMENT USING
THE UNPAID BALANCE OF THE LIABILITY BEING HEDGED.
DERIVATIVE FINANCIAL INSTRUMENTS IDENTIFIED AS HEDGES ARE VALUED BY APPLYING THE
SAME VALUATION CRITERIA USED FOR THE ASSETS OR LIABILITIES HEDGED, AND THE
EFFECTS OF THEIR VALUATION ARE RECOGNIZED IN RESULTS OF OPERATIONS, NET OF
COSTS, EXPENSES, OR REVENUE FROM THE ASSETS OR LIABILITIES WHOSE RISKS ARE BEING
HEDGED. THE FINANCIAL ASSETS OR LIABILITIES GENERATED BY THESE INSTRUMENTS ARE
PRESENTED IN THE BALANCE SHEET AS A REDUCTION OF THE LIABILITIES OR ASSETS WHOSE
RISKS ARE BEING HEDGED.
INCOME TAX, ASSET TAX AND EMPLOYEE PROFIT SHARING - INCOME TAX (ISR) AND
EMPLOYEE STATUTORY PROFIT-SHARING (PTU) ARE RECORDED IN RESULTS OF THE YEAR IN
WHICH THEY ARE INCURRED. DEFERRED INCOME TAX ASSETS AND LIABILITIES ARE
RECOGNIZED FOR TEMPORARY DIFFERENCES RESULTING FROM COMPARING THE BOOK AND TAX
VALUES OF ASSETS AND LIABILITIES, PLUS ANY FUTURE BENEFITS FROM TAX LOSS
CARRYFORWARDS DEFERRED INCOME TAX ASSETS ARE REDUCES BY ANY BENEFITS THAT, IN
THE OPINION OF MANAGEMENT, WILL PROBABLY NOT BE REALIZED. DEFERRED PTU IS
DERIVED FROM TEMPORARY DIFFERENCES BETWEEN THE BOOK RESULT AND INCOME FOR PTU
PURPOSES AND IS RECOGNIZED ONLY WHEN IT CAN BE REASONABLY ASSUMED THAT THEY WILL
GENERATE A LIABILITY OR BENEFIT, AND THERE IS NO INDICATION THAT THIS SITUATION
WILL CHANGE IN SUCH A WAY THAT THE LIABILITIES WILL NOT BE PAID OR BENEFITS WILL
NOT BE REALIZED.
THE ASSET TAX PAID THAT IS EXPECTED TO BE RECOVERABLE IS RECORDED AS AN ADVANCE
PAYMENT OF INCOME TAX AND IS PRESENTED ON THE BALANCE SHEET WITH DEFERRED ISR.
EMPLOYEE RETIREMENT OBLIGATIONS - THE LIABILITY FROM SENIORITY PREMIUMS,
PENSIONS AND RETIREMENT PAYMENTS, WHICH IS SIMILAR TO A PENSION, IS RECORDED AS
ACCRUED, AND IS CALCULATED BY INDEPENDENT ACTUARIES BASED ON THE PROJECTED
CREDIT UNIT METHOD, AT REAL INTEREST RATES. THEREFORE, THE LIABILITY IS BEING
RECOGNIZED WHICH, AT PRESENT VALUE, IS EXPECTED TO COVER THE OBLIGATION FOR
THESE BENEFITS AT THE ESTIMATED RETIREMENT DATE OF ALL THE COMPANIES' EMPLOYEES.
SEVERANCE PAYMENTS ARE CHARGED TO RESULTS WHEN THEY ARE DETERMINED TO BE
PAYABLE.
RESTATED STOCKHOLDERS' EQUITY - THIS ITEM CONSISTS OF MONETARY POSITION RESULT
ACCUMULATED THROUGH THE FIRST RESTATEMENT OF THE FINANCIAL STATEMENTS AND THE
GAIN (LOSS) FROM HOLDING MONETARY ASSETS, BECAUSE PRICE LEVELS INCREASED ABOVE
(BELOW) INFLATION.
REVENUE RECOGNITION - REVENUES OF THE SUBSIDIARIES OF THE AUTOPARTS, CHEMICAL
AND FOOD SECTORS ARE RECOGNIZED WHEN THE INVENTORIES ARE DELIVERED OR SHIPPED TO
CUSTOMERS AND CUSTOMERS ASSUME RESPONSIBILITY FOR THEM.
THE REAL ESTATE SECTOR RECOGNIZES THE REVENUES AND COSTS FROM SALES OF URBANIZED
PLOTS OF LAND IN RESULTS WHEN THE SALES ARE FORMALIZED AND THE DEPOSITS SECURING
THE TRANSACTION ARE RECEIVED. THE INDIVIDUAL ASSIGNMENT OF THE COST OF THE LAND
AND REAL ESTATE PROJECT TAKES INTO CONSIDERATION THE RELATIVE SELLING PRICE OF
THE TOTAL PROJECT SO AS TO MAINTAIN THE SAME PROFIT MARGIN THROUGHOUT THE
PROJECT.
REVENUES AND COSTS FROM REAL ESTATE PROJECTS ARE RECORDED ORIGINALLY AS A
DEFERRED CREDIT FOR CONSTRUCTION COMMITMENTS AND AS REAL ESTATE PROJECTS IN
PROCESS, AND ARE RECOGNIZED IN RESULTS BASED ON THE "PERCENTAGE OF COMPLETION"
METHOD. THEREFORE, REVENUE IS MATCHED WITH COSTS INCURRED TO REACH THE STAGE OF
COMPLETION TO TERMINATE THE PROJECT. IF THE LAST ESTIMATED COSTS DETERMINED
EXCEED THE TOTAL REVENUES CONTRACTED, THE RESPECTIVE PROVISION IS CHARGED TO
RESULTS OF THE YEAR.
INTEGRAL FINANCIAL RESULT - THIS REPRESENTS THE NET EFFECT OF INTEREST EARNED
AND INCURRED, EXCHANGE GAINS AND LOSSES AND MONETARY POSITION GAIN OR LOSS ON,
WHICH IS THE RESULT OF MAINTAINING MONETARY ASSETS AND LIABILITIES WHOSE REAL
PURCHASING POWER IS MODIFIED BY THE EFFECTS OF INFLATION.
FOREIGN CURRENCY TRANSACTIONS ARE RECORDED AT THE EFFECTIVE EXCHANGE RATE AT THE
DATE THE TRANSACTIONS ARE CARRIED OUT AND FOREIGN CURRENCY ASSETS AND
LIABILITIES ARE ADJUSTED TO THE EXCHANGE RATE EFFECTIVE AT YEAR-END.
INCOME PER SHARE - BASIC INCOME (LOSS) PER ORDINARY SHARE IS CALCULATED BY
DIVIDING CONSOLIDATED NET INCOME (LOSS) OF MAJORITY STOCKHOLDERS BY THE WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING DURING THE YEAR.
COMPREHENSIVE INCOME (LOSS) - COMPREHENSIVE INCOME (LOSS) IS COMPRISED OF THE
NET CONSOLIDATED INCOME FOR THE PERIOD PLUS (LESS) ANY GAINS OR LOSSES THAT
UNDER SPECIFIC ACCOUNTING REGULATIONS ARE RECORDED DIRECTLY IN STOCKHOLDERS'
EQUITY, SUCH AS THE GAIN OR LOSS FROM HOLDING NONMONETARY ASSETS.
SHARE OWNERSHIP
COMPANY NAME MAIN ACTIVITIES NUMBER OF SHARES OWNERSHIP TOTAL AMOUNT
(THOUSANDS OF PESOS)
SUBSIDIARIES ACQUISITION PRESENT
COST VALUE
BOSQUES DE LAS LOMAS, S.A. DE C.V. REAL ESTATE SECTOR 43,189,000 100.00 70,882 70,882
OPERADORA NAYARIT, S.A. DE C.V. REAL ESTATE SECTOR 49 78.00 5,249 5,249
PROMOCIONES BOSQUES, S.A. DE C.V. REAL ESTATE SECTOR 100,402,106 100.00 432,248 432,248
CORPORATIVO DINE, S.A. DE C.V REAL ESTATE SECTOR 2,344,119,922 100.00 (10,663) (10,663)
HOLDING DICOMEX, S.A. DE C.V REAL ESTATE SECTOR 70,870,000 50.00 89,389 89,389
TURISTICA AKKO, S.A. DE C.V. REAL ESTATE SECTOR 9,998 100.00 (1,765) (1,765)
BOSQUES DE SANTA FE, S.A. DE C.V. REAL ESTATE SECTOR 1,361 98.00 (50,682) (50,682)
CANA DE SANTA FE, S.A DE C.V. REAL ESTATE SECTOR 202,939,999 73.00 889,975 889,975
INMOBILIARIA DINE, S.A. DE C.V. REAL ESTATE SECTOR 36,710,199 100.00 87,639 87,639
CANTILES DE MITA REAL ESTATE SECTOR 115,003,237 95.90 2,081,157 2,081,157
CLUB DE GOLF PUNTA MITA, S.A. DE C.V. REAL ESTATE SECTOR 12,410,869 87.69 129,304 129,304
DESC AUTOMOTRIZ, S.A. DE C.V. AUTOPARTS SECTOR 700,968,215 100.00 3,177,132 3,177,132
CORFUERTE, S.A. DE C.V. FOOD SECTOR 872,193,685 77.59 464,608 464,608
AGROKEN, S.A. DE C.V. FOOD SECTOR 703,480,668 100.00 543,613 543,613
AUTHENTIC SPECIALITY FOODS FOOD SECTOR 291,101 81.34 356,800 356,800
AGROBIOS CORPORATIVO FOOD SECTOR 550,000 100.00 33,964 33,964
CID CENTRO DE INVESTIGACION Y DESARROLLO CHEMICAL SECTOR 190,386,960 100.00 31,409 31,409
DIRECCION IRSA, S.A. DE C.V. CHEMICAL SECTOR 4,201,800 100.00 (61,827) (61,827)
FENOQUIMIA, S.A. DE C.V. CHEMICAL SECTOR 4,998,994 100.00 (263,382) (263,382)
FORESTACIONES OPERATIVAS DE MEXICO, S.A. CHEMICAL SECTOR 31,658 100.00 13,156 13,156
GIRSA CORPORATIVO, S.A. DE C.V. CHEMICAL SECTOR 41,509,998 100.00 16,320 16,320
GIRSA INMOBILIARIA, S.A. DE C.V. CHEMICAL SECTOR 615,124,721 100.00 757,666 757,666
H2ORIZONTES, S.A. DE C.V. CHEMICAL SECTOR 49,949 100.00 (8,266) (8,266)
INMOBILIARIA THIERS, S.A. DE C.V. CHEMICAL SECTOR 904,995 100.00 9,696 9,696
QUIMIR, S.A. DE C.V. CHEMICAL SECTOR 1,930,987 100.00 97,016 97,016
RESIRENE, S.A. DE C.V. CHEMICAL SECTOR 236,059,002 100.00 179,594 179,594
TECNO INDUSTRIA RF, S.A. DE C.V. CHEMICAL SECTOR 10,673,496 100.00 8,756 8,756
REXCEL, S.A. DE C.V. CHEMICAL SECTOR 1,000,997 100.00 106,352 106,352
DYNASOL ELASTOMEROS, S.A. (ESPANA) CHEMICAL SECTOR 1 50.00 428,150 428,150
DYNASOL GESTION, S.A. CHEMICAL SECTOR 1 50.00 2,748 2,748
DYNASOL, L.L.C. CHEMICAL SECTOR 1 50.00 11,427 11,427
INDUSTRIAS NEGROMEX, S.A. DE C.V. CHEMICAL SECTOR 585,833,830 99.99 714,430 714,430
PLASTIGLAS DE MEXICO, S.A. DE C.V. CHEMICAL SECTOR 200,778,201 95.00 86,030 86,030
PARATEC ELASTOMERS, L.L.C. CHEMICAL SECTOR 1 100.00 38,455 38,455
BIOQUIMEX CHEMICAL SECTOR 419,841,899 100.00 15,804 15,804
AEROPYCSA, S.A. DE C.V. SERVICE COMPANY 458,329,279 100.00 120,360 120,360
CORPORATIVO ARCOS, S.A. DE C.V. SERVICE COMPANY 260,524,996 100.00 57,669 57,669
DESC CORPORATIVO, S.A. DE C.V. SERVICE COMPANY 266,253,830 100.00 (162,473) (162,473)
BIG SOFT, S.A. DE C.V. SERVICE COMPANY 8,612,508 100.00 7,544 7,544
PACIFIC INTERNATIONAL AIRWAYS, S.A. DE C.V. SERVICE COMPANY 244,498 100.00 1,200 1,200
SERVICIOS CORPORATIVOS ARCOS, S.A.DE C.V. SERVICE COMPANY 449 100.00 543 543
OTHER SUBSIDIARIES (4) (NO. OF SUBS.:) 1 0.00 25,047 25,047
Associates
1. Others 0,532,274 10,532,274
SERVICE 0 292,906 292,906
Other Permanent Investments 3,720,951
Total 14,546,131
LOANBREAKDOWN
(THOUSANDS OF PESOS)
-----------------------------------------------------------------------------------------------------------------------------------
CREDIT TYPE / INSTITUTION AMORTIZATION DATE RATE OF INTEREST DENOMINATED IN PESOS
------------------------------------------
---------------------------------------------- ------------------------------------------
BANKS UNTIL 1 YEAR MORE THAN 1 YEAR
-----------------------------------------------------------------------------------------------------------------------------------
LT
-----------------------------------------------------------------------------------------------------------------------------------
WITH WARRANTY
-----------------------------------------------------------------------------------------------------------------------------------
DEUTSCHE BANK 15-Oct-07 8.75000
IFC 15-Feb-04 3.31
IFC 15-Feb-06 3.31
IFC 15-Sep-09 4.93
IFC 15-Sep-09 10.35
DEG 28-Dec-06 4.13
CITIBANK NA (SIND) 23-Jun-06 4.15
CITIBANK NA (SIND) 23-Dec-08 4.65
BBVA BANCOMER (SIND) 23-Dec-08 9.51 1,222,553
VARIOUS SUPPLIERS 31-Dec-10 8.40
BANCO SANTANDER MEXICANO 31-Jan-07 10.02 1,216 2,737
BANCO SANTANDER MEXICANO 31-Jan-07 10.02 2,037 4,598
BANCO SANTANDER MEXICANO 31-Jan-07 7.80 1,040 2,151
BANAMEX-CITIBANK 16-May-08 8.06 1,551 8,860
COMERICA BANK 20-Mar-04 2.18
COMERICA BANK 27-Jan-04 2.63
COMERICA BANK 21-Dec-08 3.22
COMERICA BANK 6-Feb-04 3.22
COMERICA BANK 28-Feb-04 7.75
COMERICA BANK 16-Jan-04 3.22
COMERICA BANK 6-Feb-04 3.22
0
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL BANKS 5,844 1,240,899
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
LISTED IN THE MEXICAN STOCK EXCHANGE AMORTIZATION DATE RATE OF INTEREST DENOMINATED IN PESOS
------------------------------------------
------------------------------------------
UNTIL 1 YEAR MORE THAN 1 YEAR
-----------------------------------------------------------------------------------------------------------------------------------
UNSECURED DEBT
UDIBONOS 10/21/2006 9.00 1,086,049
UDIBONOS 7/13/2007 8.20 1,195,219
-------------------------------------------------------------------------------------------------------------
0 2,281,268
------------------------------------------------------------------------------------------------------------------------------------
TOTAL STOCK EXCHANGE
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
SUPPLIERS 901,884
------------------------------------------------------------------------------------------------------------------------------------
OTHERS 0
------------------------------------------------------------------------------------------------------------------------------------
TOTAL SUPPLIERS 901,884
------------------------------------------------------------------------------------------------------------------------------------
OTHERS 1,187,522
---------------------------------------------
OTHER CURRENT LIABILITIES AND OTHER CREDITS 2,095,250 3,522,167
------------------------------------------------------------------------------------------------------------------------------------
** TABLE CONTINUED **
------------------------------------------------------------------------------------------------------------------------------------
AMORTIZATION OF LOANS IN FOREIGN CURRENCY WITH NATIONAL ENTITIES (THOUSANDS OF $)
------------------------------------------------------------------------------------------------------------------------------------
TIME INTERVAL
------------------------------------------------------------------------------------------------------------------------------------
CURRENT YEAR UNTIL 1 YEAR UNTIL 2 YEARS UNTIL 3 YEARS UNTIL 4 YEARS UNTIL 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
WITH WARRANTY ST LP
------------------------------------------------------------------------------------------------------------------------------------
DEUTSCHE BANK
IFC
IFC
IFC
IFC
DEG
CITIBANK NA (SIND)
CITIBANK NA (SIND)
BBVA BANCOMER (SIND)
VARIOUS SUPPLIERS
BANCO SANTANDER MEXICANO
BANCO SANTANDER MEXICANO
BANCO SANTANDER MEXICANO
BANAMEX-CITIBANK
COMERICA BANK
COMERICA BANK
COMERICA BANK
COMERICA BANK
COMERICA BANK
COMERICA BANK
COMERICA BANK
0 0
------------------------------------------------------------------------------------------------------------------------------------
TOTAL BANKS 0 0 0 0 0 0
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
AMORTIZATION OF LOANS IN FOREIGN CURRENCY WITH NATIONAL ENTITIES (THOUSANDS OF $)
------------------------------------------------------------------------------------------------------------------------------------
TIME INTERVAL
------------------------------------------------------------------------------------------------------------------------------------
CURRENT YEAR UNTIL 1 YEAR UNTIL 2 YEARS UNTIL 3 YEARS UNTIL 4 YEARS UNTIL 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
UNSECURED DEBT
UDIBONOS
UDIBONOS
------------------------------------------------------------------------------------------------------------------------------------
0 0 0 0 0
------------------------------------------------------------------------------------------------------------------------------------
TOTAL STOCK EXCHANGE
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
SUPPLIERS
------------------------------------------------------------------------------------------------------------------------------------
OTHERS
------------------------------------------------------------------------------------------------------------------------------------
TOTAL SUPPLIERS
------------------------------------------------------------------------------------------------------------------------------------
OTHERS
------------------------------------------------------------------------------------------------------------------------------------
OTHER CURRENT LIABILITIES
AND OTHER CREDITS 0 0 0 0 0
------------------------------------------------------------------------------------------------------------------------------------
** TABLE CONTINUED **
------------------------------------------------------------------------------------------------------------------------------------
AMORTIZATION OF LOANS IN FOREIGN CURRENCY WITH FOREING ENTITIES (THOUSANDS OF $)
------------------------------------------------------------------------------------------------------------------------------------
TIME INTERVAL
-----------------------------------------------------------------------------------------------------------------------------------
CURRENT YEAR UNTIL 1 UNTIL 2 UNTIL 3 UNTIL 4 UNTIL 5
YEAR YEARS YEARS YEARS YEARS
-----------------------------------------------------------------------------------------------------------------------------------
ST LP
-----------------------------------------------------------------------------------------------------------------------------------
WITH WARRANTY
------------------------------------------------------------------------------------------------------------------------------------
DEUTSCHE BANK 818,157 0
IFC 33,598
IFC 16,000 16,000 8,001
IFC 71,999 71,999 71,999 71,999 143,998
IFC 96,145 95,998 95,998 95,998 191,996
DEG 4,645 2,344 2,344
CITIBANK NA (SIND) 1,119,980
CITIBANK NA (SIND) 1,664,104 3,328,207
BBVA BANCOMER (SIND)
VARIOUS SUPPLIERS 12,909 6,481 7,142 7,870 17,169
BANCO SANTANDER MEXICANO
BANCO SANTANDER MEXICANO
BANCO SANTANDER MEXICANO
BANAMEX-CITIBANK
COMERICA BANK 5,600
COMERICA BANK 55,999
COMERICA BANK 89,598
COMERICA BANK 9,568
COMERICA BANK 74
COMERICA BANK 8,688
COMERICA BANK 3,658
0 0 0 0 0 0 0
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL BANKS 0 408,481 192,822 185,484 3,778,108 3,681,370
------------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
AMORTIZATION OF LOANS IN FOREIGN CURRENCY WITH FOREING ENTITIES (THOUSANDS OF $)
-----------------------------------------------------------------------------------------------------------------------------------
TIME INTERVAL
-----------------------------------------------------------------------------------------------------------------------------------
CURRENT YEAR UNTIL 1 YEAR UNTIL 2 YEARS UNTIL 3 YEARS UNTIL 4 YEARS UNTIL 5 YEARS
-----------------------------------------------------------------------------------------------------------------------------------
UNSECURED DEBT
UDIBONOS
UDIBONOS
------------------------------------------------------------------------------------------------------------------------------------
0 0 0 0 0 0
------------------------------------------------------------------------------------------------------------------------------------
TOTAL STOCK EXCHANGE
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
SUPPLIERS 1,119,378
------------------------------------------------------------------------------------------------------------------------------------
OTHERS
------------------------------------------------------------------------------------------------------------------------------------
TOTAL SUPPLIERS 1,119,378
------------------------------------------------------------------------------------------------------------------------------------
OTHERS 183,171
------------------------------------------------------------------------------------------------------------------------------------
OTHER CURRENT LIABILITIES
AND OTHER CREDITS 1,711,030 192,822 185,484 3,778,108 3,681,370
------------------------------------------------------------------------------------------------------------------------------------
** TABLE COMPLETE **
MONETARY POSITION IN FOREIGN EXCHANGE
(Thousands of Pesos)
DOLLARS (1) OTHER CURRENCIES TOTAL
TRADE BALANCE THOUSANDS OF THOUSANDS OF THOUSANDS OF THOUSANDS OF THOUSANDS OF
DOLLARS PESOS DOLLARS PESOS PESOS
TOTAL ASSETS 336,577 3,769,595 0 0 3,769,595
LIABILITIES POSITION 877,215 9,824,633 0 0 9,824,633
SHORT TERM LIABILITIES POSITION 152,773 1,711,027 0 0 1,711,027
LONG TERM LIABILITIES POSITION 724,442 8,113,606 0 0 8,113,606
NET BALANCE -540,638 -6,055,038 0 0 -6,055,038
INTEGRATION AND INCOME CALCULATION BY MONETARY POSITION
(Thousands of Pesos)
(ASSET)
LIABLITIES MONTHLY
MONTH MONETARY ASSETS MONETARY MONETARY MONTHLY (PROFIT)
LIABILITIES POSITION INFLATION AND LOSS
JANUARY 7,547,767 17,932,309 -10,384,542 0.4 41,538.00
FEBRUARY 7,353,633 18,695,312 -11,341,679 0.28 31,757.00
MARCH 6,550,172 17,713,494 -11,163,322 0.63 70,329.00
APRIL 7,050,003 17,712,066 -10,662,063 0.17 18,126.00
MAY 6,566,551 17,214,802 -10,648,251 -0.32 (34,074.00)
JUNE 6,347,401 16,913,474 -10,566,073 0.08 8,453.00
JULY 7,512,235 17,415,797 -9,903,562 0.14 13,865.00
AUGUST 7,477,354 17,510,539 -10,033,185 0.3 30,100.00
SEPTEMBER 7,709,716 17,918,166 -10,208,450 0.6 61,251.00
OCTOBER 8,635,406 18,032,877 -9,397,471 0.37 34,771
NOVEMBER 8,922,929 18,515,326 -9,592,397 0.83 79,617
DECEMBER 8,726,858 18,539,290 -9,812,432 0.43 42,193
ACTUALIZATION 0 0 0 0 0
CAPITALIZATION 0 0 0 0 -90,661
FOREIGN CORP. 0 0 0 0 0
OTHER 0 0 0 0 0
TOTAL 307,265
STOCK EXCHANGE CODE: DESC QUARTER 4 YEAR 2003
BONDS AND MEDIUM TERM NOTES LISTING IN STOCK MARKET (1)
ANNEX 8
FINANCIAL LIMITATIONS BASED ON ISSUANCES OR INSTRUMENTS
-1 Interest Coverage Ratio
Shall mean, flor any period, the ratio of (i) Consolidated EBITDA for such
period to (ii) Consolidated Interest Expense for souch perido. The borrower will
not permit the ratio to be less than 2.25 ti 1.00 (for each period of four
consecutive fiscal quarters)
-2 Consolidated Net Indebtedness to Consolidated Ebitda Ratio
Shall mean, at any time amound of cash and Cash equival EBITDA for the then most
recently concluded period of four consecutive fiscal quarters or the Borrower.
The borrower will not permit the ratio to be higher tha 5.35 to 1.00
-3 Consolidated Net Indebtedness to Total Capitalization Ratio
Shall mean, at any time, the ratio of (i) Consolidated Net Indebtedness at such
time to (ii) Total Capitalization at such time. The borower will not permit the
ratio to be higher than .55 to 1.00
CURRENT STATUS OF FINANCIAL LIMITATIONS
(1) Interest Coverage. 2.91
(2) Capitalization. 0.53
(3) Leverage Ratio. 4.95
MEXICAN STOCK EXCHANGE
SIFIC/ICS
STOCK EXCHANGE CODE: DESC QUARTER 4 YEAR 2003
PLANTS, COMMERCE CENTERS OR DISTRIBUTION CENTERS
ANNEX 9 CONSOLIDATED
-----------------------------------------------------------------------------------------------------------------------------------
PLANT PLANT
OR ECONOMIC CAPACITY UTILIZATION
CENTER ACTIVITY (1) %
------------------------------------------------------------------------------------------------------------------------------------
EJES TRACTIVOS, S.A. DE C.V. REAR AXLES 320 60%
PISTONES MORESA, S.A. DE C.V. PISTONS (PIECES) 11,800 25%
MORESTANA, S.A. DE C.V. TAPPETS (PIECES) 16,788 81%
PISTONES MORESA, S.A. DE C.V. PISTON PINS (PIECES) 23,500 35%
ENGRANES CONICOS, S.A. DE C.V. GEARS (SETS) 879 78%
PRODUCTOS ESTAMPADOS DE MEXICO, S.A. DE C.V. PICK-UP BOXES (PIECES) 330 25%
VELCON, S.A. DE C.V. CONSTANT VELOCITY JOINTS (PIECES) 2,939 76%
TRANSMISIONES TSP, S.A DE C.V. TRANSMISSIONS (TRANS.) 69 25%
TREMEC, S.A. DE C.V. TRANSMISSIONS (TRANS.) 400 70%
CARDANES, S.A. DE C.V. PROPELLER SHAFTS (PIECES) 760 43%
HAYES WHEELS CHIHUAHUA, S.A. DE C.V. ALUMINUM WHEELS (PIECES) 650 50%
HAYES WHEELS ACERO, S.A. DE C.V. STEEL WHEELS (PIECES) 6,100 37%
AUTOMETALES, S.A. DE .CV. IRON FOUNDRY (TONS.) 20 75%
TF VICTOR, S.A. DE C.V. GASKETS, SEALS, MOTOR PARTS (PIECES) 20,000 52%
FORJAS SPICER, S.A. DE C.V. PRECISION FORGES (TONS.) 54 55%
COATZACOALCOS, VER. POLYSTYRENE (TONS) 75,000 90%
XICOHTZINGO,TLAX. POLYSTYRENE (TONS) 65,000 61%
ALTAMIRA, TAMPS. (Dynasol) SYNTHETIC RUBBER (TONS) 85,500 90%
ALTAMIRA, TAMPS. (INSA) SYNTHETIC RUBBER (TONS) 96,000 84%
ALTAMIRA, TAMPS. (PARATEC) SYNTHETIC RUBBER (TONS) 24,000 75%
COATZACOALCOS, VER. PHOSPHATE (TONS) 100,000 100%
TULTITLAN, EDO. MEX. PHOSPHATE (TONS) 85,000 69%
LECHERIA, EDO. MEX. PHOSPHATE (TONS) 40,000 20%
ALTAMIRA, TAMPS. CARBON BLACK (TONS) 120,000 93%
COSOLEACAQUE, VER. METHYL METHACRYLATE (TONS) 24,000 97%
OCOYOACAC, EDO. MEX. ACRYLC SHEET (TONS) 7,855 100%
SAN LUIS POTOSI. S.L.P. ACRYLC SHEET (TONS) 4,806 92%
LERMA, EDO. MEX. MELAMINE LAMINATES (K M2) 4,700 77%
ZITACUARO, MICH. PARTICLE BOARD (K M3) 164 89%
LECHERIA, EDO. MEX. ORTHOPHOSPHATE (TONS) 120,000 32%
-----------------------------------------------------------------------------------------------------------------------------------
MEXICAN STOCK EXCHANGE
SIFIC/ICS
STOCK EXCHANGE CODE: DESC QUARTER 4 YEAR 2003
PLANTS, COMMERCE CENTERS OR DISTRIBUTION CENTERS
ANNEX 9
-----------------------------------------------------------------------------------------------------------------------------------
PLANT PLANT
OR ECONOMIC CAPACITY UTILIZATION
CENTER ACTIVITY (1) %
------------------------------------------------------------------------------------------------------------------------------------
MERIDA MILL (ton/month) 25,000 75%
IRAPUATO MILL (ton/month) 12,000 15%
PENINSULA HOG (thousands) 35 100%
MERIDA SLAUGHTER HOUSE 222 90%
CANCUN SLAUGHTER HOUSE 27 40%
PENJAMO SLAUGHTER HOUSE 111 70%
MOCHIS (SANTA ROSA) FRESH TOMATO PROCESSING
(TONS/DAY IN 100 DAYS) 3,000 8%
TOMATO PRODUCTS IN TETRABRIK
CONTAINER (MILLION OF CASES) 6 85%
TOMATO PASTE (TONS IN 100 DAYS) 44,500 0%
DEHYDRATED PRODUCTS
(TONS/YEAR IN 100 DAYS OF SEASON) 384 0%
MOCHIS (LA CORONA) CANNED VEGETABLES (TONS) 72,567 41%
CANNED VEGETABLES (MILLIONS OF CASES) 7 41%
MAZATLAN TUNA (thousands boxes) 2,500 62%
OAXACA COFFEE (TONS/MONTH) 212 57%
ROSEMED, CALIFORNIA SALSA & CANNED VEGETABLES (thousands lb) 166,226 37%
------------------------------------------------------------------------------------------------------------------------------------
MEXICAN STOCK EXCHANGE SIFIC / ICS
STOCK EXCHANGE CODE:DESC QUARTER: 4 YEAR: 2003
MAIN RAW MATERIALS
ANNEX 10 CONSOLIDATED
------------------------------------------------------------------------------------------------------------------------------------
MAIN MAIN DOM. COST
DOMESTIC SUPPLIERS FOREIGN SUPPLIERS SUBST. PRODUCTION
%
------------------------------------------------------------------------------------------------------------------------------------
LAMINATE HYLSA, S. A. DE C.V. STEEL MC STEEL NO
STEEL INDUSTRIAS CH, S. A. STEEL MITSUBISHI YES
ALUMINUM NACOBRE LAMINATE NISHO OWAI NO
COLOR PAINTS P.P.G. INDUSTRIAS DE
MEXICO,S. A. DE C.V. STEEL TOTH INDUSTRIES NO
LAMINATE AHMSA AUTOMOTIVE PARTS DANA CO. NO
COLOR PAINTS DUPONT DE MEXICO FORGE GSB FORJA NO
RODAMIENTOS KOYO DE MEXICO LAMINATE DAEWOO CORP. NO
RODAMIENTOS TIMKEM ALUMINUM REYNOLDS METAL YES
LAMINATE GENERAL MOTORS RODAMIENTOS THE TIMKEN CO. NO
FORGE THYSSEN PRECISION FORGE NO
STYRENE PEMEX STYRENE STERLING, MITSUI
BUTADIEN PEMEX BUTADIENE SHELL, POLIMERI EUROPA ,
BP CHEMICAL,
EQUISTAR, SABIC, REPSOL
QUIMICA
ACRYLONITRILE BP PETROCHEMICALS
METHANOL PEMEX METHANOL CELANESE, PETROCEL
SULPHUR PEMEX
CARBON BLACK
FEEDSTOCK PEMEX
NATURAL GAS PEMEX
PHOSPHORIC ACID
COMMERCIAL RHODIA MEXICANA
PHOSPHORIC ACID
(TECHNICAL) RHODIA MEXICANA
ACETONE CYANOHIDRIN BP PETROCHEMICALS
FRESH JALAPENO PEPPERS OWN PRODUCTION &
FRESH MARKET (VARIOUS) SEED JALAPENO SEMINIS
FRESH JALAPENO PEPPERS VICTOR MERCADO AVILA
JALAPENO SEED SEMILLAS RIO FUERTE JALAPENO SEED SEMINIS
FRESH TOMATO OWN PRODUCTION &
FRESH MARKET (VARIOUS)
TETRABRIK CONTAINER TETRA PACK, S.A DE C.V.
METALLIC CAN ENVASES DE SINALOA, S.A.
METALLIC CAN ZAPATA ENVASES
CORN OIL ARANCIA CORN PRODUCTS
SHIPPING CARTON CELULOSA Y CORRUGADOS
SHIPPING CARTON EMPAQUES TITAN
TOMATO PASTE MORNING STAR YES
VEGETABLES PS INTERNATIONAL
DRINK MIX CORPORA TREMONTES
DIESEL PEMEX
FRESH JALAPENO PEPPERS RIO FARMS
FRESH JALAPENO PEPPERS EDMUND OGAS FARMS
FRESH JALAPENO PEPPERS KNORR FARMS
PACKAGING MATERIAL -
GLASS OWENS BROCKWAY
PACKAGING MATERIAL -
PLASTIC BOT PECHINEY PLASTIC COMPANY
HOG GENETIC PIC
GRAIN CARGILL YES
------------------------------------------------------------------------------------------------------------------------------------
SALES DISTRIBUTION BY PRODUCT
DOMESTIC SALES
------------------------------------------------------------------------------------------------------------------------------------
MAIN PRODUCTS TOTAL PRODUCTION SALES
--------------------------------------------------------------------------------------------
VOLUME AMOUNT VOLUME AMOUNT
------------------------------------------------------------------------------------------------------------------------------------
AUTOPARTS SECTOR 2,549,747
CHEMICAL SECTOR 4,758,068
FOOD SECTOR 2,734,992
REAL ESTATE SECTOR 1,970,373
COMPANIES OF OTHER SERVICES 201,775
TOTAL
------------------------------------------------------------------------------------------------------------------------------------
TOTAL 12,214,955
------------------------------------------------------------------------------------------------------------------------------------
** TABLE CONTINUED **
--------------------------------------------------------------------------------
MAIN PRODUCTS MARKET SHARES (%) MAIN
-----------------------------
TRADEMARKS CUSTOMERS
--------------------------------------------------------------------------------
AUTOPARTS SECTOR
CHEMICAL SECTOR
FOOD SECTOR
REAL ESTATE SECTOR
COMPANIES OF OTHER SERVICES
TOTAL
--------------------------------------------------------------------------------
TOTAL
--------------------------------------------------------------------------------
** TABLE COMPLETE **
SALES DISTRIBUTION BY PRODUCT
FOREIGN SALES
-----------------------------------------------------------------------------------------------------------------------------------
MAIN PRODUCTS TOTAL PRODUCTION SALES
----------------------------------------------------------------------------------------------------
VOLUME AMOUNT VOLUME AMOUNT
-----------------------------------------------------------------------------------------------------------------------------------
AUTOPARTS SECTOR 5,275,595
CHEMICAL SECTOR 3,052,177
FOOD SECTOR 1,144,469
TOTAL
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL 9,472,241
-----------------------------------------------------------------------------------------------------------------------------------
** TABLE CONTINUED **
-------------------------------------------------------------------------------------
MAIN PRODUCTS MARKET SHARES (%) MAIN
------------------------------------
TRADEMARKS CUSTOMERS
-------------------------------------------------------------------------------------
AUTOPARTS SECTOR
CHEMICAL SECTOR
FOOD SECTOR
TOTAL
-------------------------------------------------------------------------------------
TOTAL
-------------------------------------------------------------------------------------
** TABLE COMPLETE **
STOCK EXCHANGE CODE:DESC QUARTER: 4 YEAR: 2003
INTEGRATION OF THE PAID SOCIAL CAPITAL STOCK
CHARACTERISTICS OF THE SHARES
----------------------------------------------------------------------------------------------------------------------
SERIES NOMINAL NUMBER OF SHARES CAPITAL STOCK
(THOUSANDS OF PESOS)
VALID ------------------------------------------------------------------------------------
CUPON PORTION PORTION MEXICAN SUSCRIPTION FIXED VARIABLE
----------------------------------------------------------------------------------------------------------------------
A 0.01300 20 587,479,900 587,479,900 7,637
----------------------------------------------------------------------------------------------------------------------
B 0.01300 20 506,257,866 506,257,866 6,581
----------------------------------------------------------------------------------------------------------------------
C 0.01300 20 275,341,610 275,341,610 3,580
----------------------------------------------------------------------------------------------------------------------
Total 587,479,900 781,599,476 1,093,737,766 275,341,610 7,637 10,161
----------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER OS SHARES REPRESENTING THE PAID-IN CAPITAL STOCK ON
THE DATE OF SENDING THE SHARES:
1,369,079,376
SHARES PROPORTION BY:
CPO's:
UNITS:
ADRS's:
GDRS's:
ADS's:
GDS's:
Repurchased own shares
Market value of the share
Series Number of Shares At repurchase At Quarter
-------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Desc, S.A. de C.V.
(Registrant)
Date: February 18, 2004 By /s/ Arturo D'Acosta Ruiz
------------------------------ -------------------------------
(Signature)
Name: Arturo D'Acosta Ruiz
Title:Chief Financial Officer