6-K 1 panelessale.txt PANELES SALE SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 OF THE SECURITIES EXCHANGE ACT OF 1934 For the month of July, 2005 Durango Corporation (f/k/a Grupo Industrial Durango, S.A. de C.V.) - ------------------------------------------------------------------- (Translation of registrant's name into English) Torre Corporativa Durango, Potasio 150, Cuidad Industrial, Durango, Durango, Mexico - ------------------------------------------------------------------- (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F [x] Form 40-F Indicate by check mark whether the registrant by furnishing the information contained in this Form 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-_____________. CORPORACION DURANGO, S.A. DE C.V. * Concludes program to divest of non strategic assets * Strengthens financial structure * Highly focused on paper sector Durango, Durango, Mexico, June 15, 2005 - Corporacion Durango, S.A. de C.V., the largest papermaker in Mexico, announced today, through its subsidiary Ponderosa Industrial de Mexico, S.A. de C.V., that it successfully closed on the divestiture of a particleboard plant, located in the State of Chihuahua. With this transaction, Corporacion Durango concludes its program to divest non strategic assets, particularly those with minimal impact to the overall business and strategic vision. This permits the Company to reinvest in its core paper business where there is better value and growth potential. The divested operation was not a central business for Corporacion Durango, the paper industry nor its products. Sales from the business only represented 2.5% of the Company's total sales. Corporacion Durango is one of the leading industrial groups in Mexico and is the largest paper and container maker nationwide. Special Note Regarding Forward-Looking Statements This press release contains statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are only predictions and are not guarantees of future performance. Investors are cautioned that any such forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the operations and business environments of Corporacion Durango and its subsidiaries that may cause the actual results of the companies to be materially different from any future results expressed or implied in such forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: the ability of Corporacion Durango and its subsidiaries to continue as going concerns; the success of Corporacion Durango to negotiate a restructuring with its creditors; their ability to obtain and maintain normal terms with vendors and service providers; their ability to maintain contracts that are critical to their operations; their ability to fund and execute their business plan; their ability to attract, motivate and/or retain key executives and associates; their ability to attract and retain customers; general economic, market, or business conditions; the opportunities (or lack thereof) that may be presented to and pursued by the Company and its subsidiaries; the availability of raw materials used by the Company and its subsidiaries; competitive actions by other companies; changes in laws or regulations, and other factors, many of which are beyond the control of the Company and its subsidiaries. Additionally, other factors should be considered in connection with any Forward Looking Statements, including other risks and uncertainties set forth from time to time in Corporacion Durangos reports filed with the United States Securities and Exchange Commission. Although Corporacion Durango believes that the expectations and assumptions reflected in the forward-looking statements are reasonable based on information currently available to its management, Corporacion Durango cannot guarantee future results or events. Corporacion Durango expressly disclaims a duty to update any of the forward-looking statement. CONTACTS Corporacion Durango, S.A. de C.V. Mayela R. Velasco +52 (618) 829 1008 mrinconv@corpdgo.com.mx Miguel Antonio R. +52 (618) 829 1070 rinconma@corpdgo.com.mx The Global Consulting Group Kevin Kirkeby (646) 284-9416 kkirkeby@hfgcg.com 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. CORPORACION DURANGO, S.A. DE C.V. Date: July 15, 2005 By /s/ Mayela Rincon de Velasco -------------------------------- Name: Mayela Rincon de Velasco Title: Chief Financial Officer

Year 2005 2006 2007 2008 2009 2010 2011 2012 Thereafter TOTAL -US$- Million 17.9 24.0 27.3 26.4 23.6 24.2 32.0 458.8 15.8 650.0

CORPORACION DURANGO, S.A. DE C.V. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS AS OF DECEMBER 31, 2003 AND DECEMBER 31, 2004 (UNAUDITED) EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS AS OF DECEMBER 31, 2004 (Stated in thousands of Pesos and Dollars) US$ DLLS. December 31,December 31,December 31, 2003 2004 2004 ASSETS CURRENT ASSETS: Cash and cash equivalents ........................$ 684,081$ 840,524 75,387 Accounts receivable, net ......................... 1,864,337 1,727,129 154,906 Taxes recoverable and other assets ............... 98,039 103,124 9,249 Inventories, net ................................. 1,174,115 1,107,293 99,313 Prepaid expenses ................................. 23,841 13,689 1,228 Total current assets ................... 3,844,413 3,791,759 340,083 RESTRICTED CASH .................................... 165,678 0 0 PROPERTY, PLANT AND EQUIPMENT, net ................. 12,636,639 11,746,404 1,053,536 OTHER ASSETS, net .................................. 567,986 388,091 34,808 Total assets ..........................$ 17,214,716$ 15,926,254 1,428,428 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Bank loans and current portion of long-term debt . 9,136,178 199,480 17,891 Interest payable ................................. 1,464,725 17,344 1,556 Trade accounts payable ........................... 993,715 791,466 70,987 Notes payable .................................... 54,471 48,818 4,378 Accrued liabilities .............................. 487,512 764,328 68,553 Employee profit-sharing .......................... 2,537 1,283 115 Total current liabilities ............. 12,139,138 1,822,719 163,480 LONG-TERM DEBT ..................................... 532,845 7,047,925 632,129 LIABILITY FOR CAPITALIZATION........................ 0 3,158,973 283,329 LONG-TERM NOTES PAYABLE ............................ 104,965 88,942 7,977 DEFERRED TAXES...................................... 2,246,103 1,629,957 146,191 LIABILITY FOR EMPLOYEE BENEFITS..................... 210,896 306,582 27,497 Total long term liabilities ............ 3,094,809 12,232,379 1,097,124 Total liabilities ..................... 15,233,947 14,055,098 1,260,603 STOCKHOLDERS' EQUITY: Majority interest ................................ 1,909,475 1,798,020 161,265 Minority interest ................................ 71,294 73,136 6,560 Total stockholders' equity ............. 1,980,769 1,871,156 167,824 Total liabilities and stockholders' equi$ 17,214,716$ 15,926,254 1,428,428 Exchange rate: $ 11.1495

CORPORACION DURANGO, S.A. DE C.V. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN FINANCIAL POSITION EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS AS OF DECEMBER 31, 2004 (Stated in thousands of Pesos and Dollars) * Full Year Acum. Dec Acum. Dec 2003 2004 US$ 2004 OPERATING ACTIVITIES: Net income (loss) ..............................................$ -3,209,356$ -173,794 -15,588 Add (deduct)- Charges (credits) to income which do not require (generate) resources: Depreciation and amortization ........................... 428,754 437,659 39,254 Amortization of debt issuance cost and other financing costs ..................................... 97,109 327,464 29,370 Loss on sale of property, plant and equipment ........... 210,027 21,613 1,938 Impairment of long-lived assets ......................... 531,130 492,558 44,178 Deferred income taxes ................................... -44,595 -381,288 -34,198 Other.................................................... 355,458 9,743 874 Total items which do not require cash.................... 1,577,883 907,749 81,416 Net resources generated from income .......................... -1,631,473 733,955 65,829 Changes in operating assets and liabilities: Decrease (Increase) in inventories ......................... 66,019 66,822 5,993 Decrease (Increase) in current assets ...................... 50,003 5,067 454 Decrease (increase) in account receivables, net ............ 34,704 137,208 12,306 (Decrease) increase in accounts payable and accrued liabilities ...................................... 1,073,005 -1,379,721 -123,747 Resources generated by continued operating .................. -407,742 -436,669 -39,165 Assets and liabilities discontinued .......................... -89,523 0 0 Resources generated by operating activities .................. -497,265 -436,669 -39,165 FINANCING ACTIVITIES: Increase (Decrease) in bank loans and others ............ -58,731 693,917 62,237 Increase (Decrease) in capital .......................... 0 47 4 Net resources generated from financing activities ............ -58,731 693,964 62,242 INVESTMENT ACTIVITIES: Restricted cash.......................................... -165,678 165,678 14,860 Acquisition of property, plant and equipment............. -111,813 -196,955 -17,665 Sale of property, plant and equipment.................... 243,063 16,783 1,505 Revenues from sale of discontinued operations ........... 972,608 0 0 Increase in deferred assets ............................. 19,571 -86,358 -7,745 Net resources applied to investing activities ................ 957,751 -100,852 -9,045 INCREASE IN CASH AND CASH EQUIVALENTS .......................... 401,755 156,443 14,031 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD............ 282,326 684,081 61,355 CASH & CASH EQUIVALENTS AT END OF THE PERIOD ...................$ 684,081$ 840,524US 75,387 * The exchange rate of 11.1495 was used for translation purposes.

CORPORACION DURANGO, S.A. DE C.V. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED) EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS AS OF DECEMBER 31, 2004 Thousands of Pesos Thousands of Dollars 4Q 4Q 4Q 4Q 2003 2004 Var 2003 2004 Var NET SALES ...............................$ 1,902,645$ 2,113,139 11% 161,755 189,528 17% COST OF SALES ........................... 1,668,912 1,775,432 6% 141,914 159,239 12% Gross profit........................ 233,733 337,707 44% 19,841 30,289 53% Selling and Administrative expenses 205,032 200,811 -2% 17,386 18,011 4% Operating income ................... 28,701 136,896 377% 2,455 12,278 400% FINANCIAL EXPENSE: Interest expense ........................ 253,395 75,780 -70% 21,446 6,797 -68% Interest income ......................... -13,805 -11,654 -16% -1,177 -1,046 -11% Exchange (gain) loss, net ............... 253,791 -229,913 N/A 21,471 -20,621 N/A Gain on monetary position ............... -175,774 -191,349 9% -14,879 -17,162 15% Total financial expense ............... 317,607 -357,136 N/A 26,861 -32,032 N/A OTHER INCOME (EXPENSES): Other income (expense), net ............. -659,516 -37,420 -94% -55,810 -3,356 -94% Total other income (expense) .......... -659,516 -37,420 -94% -55,810 -3,356 -94% Income (loss) before income and asset t -948,422 456,612 N/A -80,216 40,954 N/A Provisions for income and asset taxes ... -72,084 -69,573 -3% -6,089 -6,240 2% Provision for deferred income taxes ..... 22,354 -53,144 N/A 1,979 -4,767 N/A Net income after taxes ................ -898,692 579,329 N/A -76,106 51,961 N/A Special items ........................... 0 0 0 0 0 0 Impairment .............................. 531,130 -38,000 N/A 44,968 -3,408 N/A Discontinued operations ................. 487,813 0 -100% 41,269 0 -100% Net income before minority interest......$ -1,917,63$ 617,329 N/A -162,343 55,369 N/A Minority interest...................... -14,257 -6,646 -53% -1,207 -596 -51% Majority net income....................$ -1,903,37$ 623,975 N/A -161,136 55,965 N/A Operating income 28,701 136,896 377% 2,455 12,278 400% Depreciation & amortization 112,147 101,298 -10% 9,521 9,085 -5% Interest income 13,805 11,654 -16% 1,177 1,046 -11% Employee retirement obligations -7,953 5,016 -163% -673 450 -167% Allowance for doubtful accounts 50,096 28,762 -43% 4,242 2,580 -39% EBITDA 196,796 283,626 44% 16,722 25,439 52%

CORPORACION DURANGO, S.A. DE C.V. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED) EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS AS OF DECEMBER 31, 2004 Thousands of Pesos Thousands of Dollars Ac Ac Ac Ac 2003 2004 Var 2003 2004 Var NET SALES ...............................$ 7,384,290$ 8,185,407 11% 636,022 712,617 12% COST OF SALES ........................... 6,396,978 7,026,976 10% 550,965 611,824 11% Gross profit........................ 987,312 1,158,431 17% 85,057 100,793 19% Selling and Administrative expenses 705,877 707,689 0% 60,707 61,568 1% Operating income ................... 281,435 450,742 60% 24,350 39,225 61% FINANCIAL EXPENSE: Interest expense ........................ 1,252,610 1,594,682 27% 107,890 136,990 27% Interest income ......................... -44,131 -30,897 -30% -3,804 -2,694 -29% Exchange (gain) loss, net ............... 935,317 -59,002 N/A 78,536 -6,825 N/A Gain on monetary position ............... -408,433 -492,106 20% -34,705 -42,992 24% Total financial expense ............... 1,735,363 1,012,677 -42% 147,917 84,479 -43% OTHER INCOME (EXPENSES): Other income (expense), net ............. -1,029,05 -69,628 -93% -88,149 -6,055 -93% Total other income (expense) .......... -1,029,05 -69,628 -93% -88,149 -6,055 -93% Income (loss) before income and asset t -2,482,98 -631,563 -75% -211,716 -51,309 -76% Provisions for income and asset taxes ... 77,257 51,740 -33% 6,654 4,173 -37% Provision for deferred income taxes ..... -44,595 -381,288 755% -4,066 -33,343 720% Net income after taxes ................ -2,515,646 -302,015 -88% -214,304 -22,139 -90% Special items ........................... 0 -620,779 0 0 -53,567 0 Impairment .............................. 531,130 492,558 -7% 44,968 43,524 -3% Discontinued operations ................. 162,580 0 -100% 13,369 0 -100% Net income before minority interest......$ -3,209,35$ -173,794 -95% -272,641 -12,096 -96% Minority interest...................... -6,139 -13,968 128% -518 -1,223 136% Majority net income....................$ -3,203,21$ -159,826 -95% -272,123 -10,873 -96% Operating income 281,435 450,742 60% 24,350 39,225 61% Depreciation & amortization 417,108 426,082 2% 35,911 37,018 3% Interest income 44,131 30,897 -30% 3,804 2,694 -29% Employee retirement obligations 24,014 9,743 -59% 2,096 855 -59% Allowance for doubtful accounts 67,981 44,114 -35% 5,791 3,893 -33% EBITDA 834,669 961,578 15% 71,952 83,685 16%

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