EX-99.1 2 d275913dex991.htm UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS Unaudited Consolidated Financial Statements
Table of Contents

Exhibit 99.1

ARAUCO AND CONSTITUTION PULP INC

TABLE OF CONTENTS

 

Item        Page  

1.

  Ratio Analysis of the Consolidated Financial Statement      1   

2.

  Unaudited Consolidated Financial Statement      8   

3.

  Unaudited Consolidated Financial Income Statement      10   

4.

  Unaudited Consolidated Statement of Changes in Net Equity      12   

5.

  Unaudited Consolidated Statement of Cash Flow      13   

6.

  Unaudited Notes to the Consolidated Financial Statement      14   

7.

  Annex: Press Release   


Table of Contents

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

1. VALUATION OF ASSETS AND LIABILITIES

The financial statements of Celulosa Arauco y Constitución S.A., a Chilean corporation (the “Company”) and its subsidiaries (the Company, together with its subsidiaries, “Arauco”) have been prepared on the basis of International Financial Reporting Standards (IFRS). In management’s opinion there is no material difference between the Company’s economic value and the valuation reflected in the Company’s financial statements.

 

2. ANALYSIS OF FINANCIAL POSITION

 

a) Analysis of the Financial Statement

The principal components of assets and liabilities as of September 30, 2011 and December 31, 2010 are as follows:

 

Assets

   09/30/2011
ThU.S.$
     12/31/2010
ThU.S.$
 

Current assets

     2,633,025         3,152,116   

Non-current assets

     9,584,752         9,354,216   
  

 

 

    

 

 

 

Total assets

     12,217,777         12,506,332   
  

 

 

    

 

 

 

 

Liabilities and Shareholders’ Equity

   09/30/2011
ThU.S.$
     12/31/2010
ThU.S.$
 

Current liabilities

     984,219         1,209,061   

Non-current liabilities

     4,281,704         4,456,696   

Non-parent participation

     95,162         108,381   

Net equity attributable to parent company Shareholders’ equity

     6,856,692         6,732,194   
  

 

 

    

 

 

 

Total net equity and liabilities

     12,217,777         12,506,332   
  

 

 

    

 

 

 

As of September 30, 2011, total assets decreased by 2.31% or U.S.$ 289 million compared to December 31, 2010. This decrease is mainly attributable to an increase in the balance of Cash and Cash equivalent compensated by an increase in Trade and Account receivables from related entities, inventories, investments in affiliates, Property, Plant and Equipment.

Total liabilities decreased by U.S.$ 400 million. This drop is mainly attributable to a decrease in the category Financial Liabilities for payments of issued bonds.

The main financial and operating ratios are as follows:

 

Liquidity ratios

   09/30/2011      12/31/2010  

Current ratio

     2.68         2.61   

Acid ratio

     1.58         1.72   

 

Debt indicators

   09/30/2011      12/31/2010  

Debt to equity ratio

     0.76         0.83   

Short-term debt to total debt

     0.19         0.21   

Long-term debt to total debt

     0.81         0.79   

 

     09/30/2011      09/30/2010  

Financial expenses covered

     4.64         4.31   

 

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Table of Contents

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

2. ANALYSIS OF FINANCIAL POSITION, continued

 

a) Analysis of the Balance Sheet, continued

 

Operational ratios

   09/30/2011      12/31/2010  

Inventory turnover

     2.66         2.30   

Inventory turnover (excluding biological assets)

     3.69         3.41   

Inventory permanence-days

     135.58         156.84   

Inventory permanence (excluding biological assets)

     97.59         105.55   

The liquidity ratio for the current period has increased compared to the period 2010. This is due to a minor proportional decrease in current assets compared to a proportional reduction in the variation of current liabilities, which in turn is explained by a decrease in short-term liabilities by payment of bonds issued.

As of September 30, 2011, the short-term debt represented 19% of total liabilities compared to 21% as of December 31, 2010.

The ratio of financial expenses covered increased from 4.31 to 4.64. This increase is attributable to lower financial costs.

 

b) Analysis of the Income Statement

Profit before Income Tax

Profit before Income Tax registers a profit of U.S.$551 million in 2011 compared to U.S.$ 560 million in 2010, a decrease of U.S.$ 9 million. The change was attributable to the factors described in the following table:

 

Item

   Million
U.S.$
 

Gross margin

     108   

Other operating income

     25   

Administration cost

     (150

Other expenses

     (15

Financial costs

     18   

Others net

     5   
  

 

 

 

Net change in income before income tax

     (9
  

 

 

 

Gross Margin presents a profit of U.S.$ 1,199 million in 2011, an increase of U.S.$108 million compared to U.S.$ 1,091 million in 2010, caused by a proportional increase in revenues due to an increase in sales price and volume.

 

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Table of Contents

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

2. ANALYSIS OF FINANCIAL POSITION, continued

The main indicators related to result accounts and the details of revenues and operation costs are as follows:

 

Revenues

   09/30/2011
ThU.S$
     09/30/2010
ThU.S$
 

Pulp

     1,662,132         1,345,710   

Sawn timber

     554,307         447,252   

Panels

     987,322         813,481   

Forestry

     116,415         110,980   

Other

     18,341         15,953   
  

 

 

    

 

 

 

Total revenues

     3,338,517         2,733,376   
  

 

 

    

 

 

 

 

Sales costs

   09/30/2011
ThU.S$
     09/30/2010
ThU.S$
 

Wood

     563,740         414,946   

Forestry work

     440,216         338,585   

Depreciation

     159,956         113,663   

Other costs

     975,736         754,887   
  

 

 

    

 

 

 

Total sales costs

     2,139,648         1,642,081   
  

 

 

    

 

 

 

 

Profitability index

   09/30/2011      12/31/2010  

Profitability on equity

     10.31         10.60   

Profitability on assets

     5.68         5.86   

Return on operating assets

     7.29         7.04   

 

Profitability ratios

   09/30/2011     09/30/2010  

Income per share (U.S.$) (1)

     3.82        3.85   

EBITDA( MThU.S.$)

     963,061        986,551   

Income after tax (ThU.S.$) (2)

     440,884        436,376   

Gross margin (ThU.S.$)

     1,198,869        1,091,295   

Financial costs (ThU.S.$)

     (151,372     (169,185

 

(1) Earnings per share refer to the profit to net equity to parent company.
(2) Includes interest.

 

3. DIFFERENCE BETWEEN ECONOMIC VALUES AND BOOK ASSETS

Assets and liabilities are presented in the Financial Statements according to International Financial Reporting Standards and instructions issued by the Chilean Securities Commission.

We believe that there are no substantial differences between the economic value of our assets and the value reflected in these Financial Statements.

 

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Table of Contents

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

4. MARKET SITUATION

Pulp

Pulp sales reached U.S.$ 522.6 million for the third quarter of 2011, a decrease of 14.2% compared to the previous quarter. This decrease was mainly due to lower sales volume of 5.3%. together with a decrease in average prices of 7.1%.

When compared to the U.S.$ 531.0 million reached in the same quarter of 2010, pulp sales decreased by 1.6%. This decrease is mainly attributable to lower average prices of 3.5%, partially offset by higher sales volume of 4.0%.

The third quarter of 2011 experienced lower demand and lower activity in general. This weakness in the market is mainly a seasonal effect observed in the Northern Hemisphere during summer. As a consequence of this seasonality, July and August suffered price cuts, especially during August. However, there was an important recovery of long fiber prices during September. This recovery was not on a global basis, it was specifically in Asia and driven by China. World pulp production continues near full capacity levels and shipments to Asia have increased significantly when compared to year 2010.

China continues to be the main player in terms of driving demand, new investments in paper mills, etc., however, some signs of overcapacity in specific commodity paper grades are appearing for example in printing & writing, coated wood free, printing paper, paper used for advertising, etc. This overcapacity does not apply to tissue paper nor to specialties. Overcapacity has eroded sales prices in the paper market, and consequently margins of paper fabrics. Credit restrictions imposed by the Chinese government have also impacted the ability of clients to open letters of credit as a measure to control inflation. Despite the latter, we have been able to sell all our production during this quarter maintaining inventories at normal levels.

The situation in Asia and Europe is similar. However, the uncertainty in Europe is significantly affecting the demand for paper. In contrast with what occurred in China, this market did not benefit from a price increase during September and there were announcements of capacity closings for some types of paper. Some paper mills with low margins had to close operations. In other cases, paper mills planned production cuts due to weak order volumes. This situation impacts the Asian markets since the pulp oversupply is reallocated to China. Inventories levels at European ports increased during this quarter, bringing pressure over less competitive pulp producers. This situation impacts especially European pulp producers that prefer having prices cuts in Europe instead of exporting to China in order to avoid freight and logistic costs.

Latin America has continued with an attractive market, and sales prices have only trimmed prices following other markets such as Asia and Europe. In North America we still do not foresee a recovery, and, therefore, there is an amount of pulp normally sold in North America that is now sold in Asia.

 

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

Sawn Timber

During the third quarter of 2011, sawn timber sales increased by 3.1%, reaching sales of U.S.$ 191.2 million compared to the U.S.$ 185.5 million sold during the second quarter of 2011. This increase was mainly due to higher average prices of 5.4% partially offset by lower sales volume of 2.2%.

Sawn timber and remanufactured wood products sales increased by 10.8% or U.S.$ 18.6 million during the third quarter of 2011, when compared to the same period in 2010. This increase was mainly due to an increase in average prices of 3.1% and sales volume of 7.5%.

The real estate and construction markets in the United States remained at low levels during the third quarter of 2011. The Housing Starts index reached 658,000 units per year in September, 2011. The current levels of construction remain low when compared to the historical 10 year average. During the third quarter of this year, the sales prices of moldings continued to recover when compared to the previous quarter, due to a stronger demand in the market.

During most of this third quarter, sawn timber products continued to have a favorable demand in most markets in which we participate, especially in Asia. As a consequence, sales prices increased in China, Korea, Japan and Taiwan. However, since September, 2011, there have been some signs of weakness in these markets.

In particular, logs and sawn timber stocks in China, have increased beginning on this third quarter. As a consequence, sales prices and demand for these products began to decrease during the end of September, 2011.

Panels

Panels sales reached U.S.$ 346.0 million in the third quarter of this year, an increase of 1.1% when compared to the U.S.$ 342.3 million obtained in the second quarter of 2011. This increase was mainly due to higher average prices of 7.2%, partially offset by lower sales volume of 5.7%.

Panel sales were 21.3% higher than the U.S.$ 285.2 million reached during the third quarter of 2010. This increase in sales was due to higher sales volume of 24.6%, partially offset by a decrease in average prices of 2.6%.

During the third quarter of 2011 we were able to maintain an important recovery in all markets, together with an increase in sales volumes.

Plywood sales volumes increased by 34%, strongly driven by an increase in the shipments to Europe and Asia along with important price increases. The U.S. market also experienced a strong increase in sales volume, but the price levels remained stable.

Sales volume of MDF panels segment increased 3% mainly due to a higher demand from the United States and Mexico and a strong increase in shipments to Japan. Particleboard sales volume increased 2% when compared to the same period last year, mainly due to a strong demand in Peru and a sustained growth in the local Argentinean market.

 

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Table of Contents

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

Our MDF moldings products decreased its sales volume by 12% during this third quarter, however, this was partially offset by a sales price increase of 3%. The MDF moldings market has not been able to recover towards historical average sales mainly due to the still weak construction sector in the United States.

Our Hard Board business segment experienced a drop in sales volume of 11% mainly due to a lower supply, together with a strong price increase of 17% compared to the same period last year. Nonetheless, demand for our Hard Board products has continued to increase driven by a lower global supply.

 

5. ANALYSIS OF CASH FLOW

The main components of net cash flow as of September 30, 2011 and 2010 are as follows:

 

     09/30/2011
MUS$
    09/30/2010
MUS$
 

Positive (negative) Cash flow

    

Cash flow from operating activities

     597,606        592,856   

Cash flow from financing activities:

    

Loan and bond payments

     (327,577     212,456   

Dividend payments

     (200,672     (67,233

Others

     1,175        849   

Cash flow from investment activities:

    

Purchase and sales of permanent investments

     (121,660     (41,082

Incorporation and sale of property, plant and equipment

     (406,099     (253,126

Incorporation and sale of biological assets

     (103,355     (88,526

Loan to related companies

     (80,701     0   

Other

     (4,921     (2,282
  

 

 

   

 

 

 

Net cash flow for the period

     (646,204     (353,912
  

 

 

   

 

 

 

We had a positive operating cash flow of U.S.$ 598 million in the current period compared to a positive balance of U.S.$593 million in 2010.

Cash flow from financing activities as of September 30, 2011 had a negative balance of U.S.$ 527 million compared to a positive balance of U.S.$146 million for the same period in 2010. This variation resulted from higher dividend payments in the year 2011 compared to the same period last year.

The investment cash flow decreased U.S.$ 717 million (U.S.$ 385 million in period 2010) at the end of the current period mainly due to an increase in capital contributions loans made to affiliated companies and payments for acquisition of property, plant and equipment.

 

6. MARKET RISK ANALYSIS

In respect of the economic risks resulting from interest rate variations, the Company maintains, as of September 30, 2011, a ratio of fixed rate debt to total consolidated debt of approximately 90.2%, which it believes is consistent with industry standards. The Company does not engage in futures against variations in the selling prices of pulp and forest products because it believes that risks resulting from price variations are limited, in large part because the Company maintains one of the lowest cost structures in the industry.

 

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Table of Contents

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

The Company and most of its subsidiaries maintain their accounting records and prepare their financial statements in U.S. dollars. Both the accounts receivable and most financial liabilities are denominated in U.S. dollars or are covered by an exchange rate swap, as well as most of their revenues. As a result, exposure to changes in the exchange rate has decreased significantly.

 

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

UNAUDITED CONSOLIDATED INTERIM BALANCE SHEET

 

     Note      09/30/2011
ThU.S.$
     12/31/2010
ThU.S.$
 

Assets

        

Current Assets

        

Cash and cash equivalents

     4         377,465         1,043,834   

Other financial current assets

     23         —           2,909   

Other current non-financial assets

        221,159         177,140   

Trade and Other receivables-net

     23         815,900         774,289   

Related party receivables

     13         87,461         18,074   

Inventories

     3         819,133         727,535   

Biological assets, current

     20         258,079         344,096   

Tax receivables

        39,720         50,131   

Total Current Assets other than assets or disposal groups classified as held for sale or as held for distribution to owners

        2,618,917         3,138,008   

Assets or disposal groups classified as held for sale

     22         14,108         14,108   

Non-Current Assets or disposal groups classified as held for sale or as held for distribution to owners

        14,108         14,108   

Total Current Assets

        2,633,025         3,152,116   

Other non-current financial assets

     23         —           53,407   

Other non-current and non-financial assets

        66,926         52,352   

Trade receivables, non current

     23         8,236         11,965   

Investment in associates accounted for using equity method

     15         606,337         498,204   

Intangible assets

     19         17,474         11,127   

Goodwill

        59,774         66,231   

Property, plant and equipment

     7         5,198,446         5,088,745   

Biological assets, non-current

     20         3,498,735         3,446,862   

Deferred tax assets

     6         128,824         125,323   

Total non-current assets

        9,584,752         9,354,216   

Total Assets

        12,217,777         12,506,332   

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

UNAUDITED CONSOLIDATED INTERIM BALANCE SHEET (continued)

 

     Note      09/30/2011
ThU.S.$
    12/31/2010
ThU.S.$
 

Liabilities

       

Current Liabilities

       

Other current financial liabilities

     23         276,567        554,673   

Trade and Other payables

     23         401,772        362,182   

Related party payables

     13         10,966        9,209   

Other provisions, current

     18         8,068        5,842   

Tax liabilities

        59,508        62,887   

Current provision for employee benefits

     10         3,161        3,312   

Other current non financial liabilities

     25         224,177        210,956   

Total current liabilities other than liabilities included in disposal groups classified as held for sale

        984,219        1,209,061   

Total Current Liabilities

        984,219        1,209,061   

Non-Current Liabilities

       

Other non-current financial liabilities

     23         2,787,596        2,909,429   

Other non-current provisions

     18         8,783        7,609   

Deferred tax liabilities

     6         1,330,268        1,369,489   

Non-current provision for employee benefits

     10         34,490        35,964   

Other non-current non financial liabilities

        120,567        134,205   

Total non-current liabilities

        4,281,704        4,456,696   

Total liabilities

        5,265,923        5,665,757   

Net Equity

       

Issued capital stock

        353,176        353,176   

Accumulated earnings

        6,576,564        6,320,264   

Other reserves

        (73,048     58,754   

Net equity attributable to parent company

        6,856,692        6,732,194   

Non-controlling interest

        95,162        108,381   

Total net equity

        6,951,854        6,840,575   

Total net equity and liabilities

        12,217,777        12,506,332   

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

UNAUDITED CONSOLIDATED INTERIM STATEMENTS OF INCOME

 

     Note      January-September     July- September  
      2011
ThU.S.$
    2010
ThU.S.$
    2011
ThU.S.$
    2010
ThU.S.$
 

Income Statement

           

Revenue

     9         3,338,517        2,733,376        1,103,697        1,035,107   

Cost of sales

        (2,139,648     (1,642,081     (757,984     (614,134

Gross Income

        1,198,869        1,091,295        345,713        420,973   

Other operating income

     2         200,715        175,990        63,191        79,472   

Distribution costs

     2         (348,624     (271,167     (118,841     (103,361

Administrative expenses

     2         (299,565     (226,844     (106,750     (74,773

Other operating expenses

     2         (51,759     (37,057     (20,238     (141

Other income (loss)

        18        134        19        3,298   

Financial income

        21,119        14,026        9,713        (61,622

Financial costs

     2         (151,372     (169,185     (47,277     (57,628

Participation in (loss) income in associates and joint ventures accounted through equity method

     15         (6,515     (3,038     (1,762     (919

Exchange rate differences

        (11,982     (14,112     (29,638     11,878   

Income before income tax

        550,904        560,042        97,654        263,431   

Income tax

     6         (110,020     (123,666     (16,369     (64,332

Income from continuing operations

        440,884        436,376        81,285        199,099   
     

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

        440,884        436,376        81,285        199,099   
     

 

 

   

 

 

   

 

 

   

 

 

 

Income attributable to equity holders

           

Income attributable to parent company

        432,294        435,347        78,229        198,818   

Income attributable to non-controlling interest

        8,590        1,029        3,056        281   

Net Income

        440,884        436,376        81,285        199,099   

Basic earnings per share

           

Earnings per share from continuing operations

        0.0038205        0.0038474        0.0006914        0.0017571   
     

 

 

   

 

 

   

 

 

   

 

 

 
        0.0038205        0.0038474        0.0006914        0.0017571   
     

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per diluted shares

           

Earnings per diluted share from continuing operations

        0.0038205        0.0038474        0.0006914        0.0017571   
     

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings per diluted share

        0.0038205        0.0038474        0.0006914        0.0017571   
     

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

UNAUDITED CONSOLIDATED INTERIM COMPREHENSIVE INCOME STATEMENTS

 

     Note      January-September     July- September  
      2011
ThU.S.$
    2010
ThU.S.$
    2011
ThU.S.$
    2010
ThU.S.$
 

Net Income

        440,884        237,277        183,096        174,749   

Other comprehensive income, net of tax

           

Exchange difference on conversion

           

Gain (loss) for exchange differences, before tax

     11         (117,443     (30,719     48,827        (11,251

Cash flow hedges

           

Gain (loss) for cash flow hedges, before tax

        (16,823     (23,118     (12,640     (21,222

Participation in Other comprehensive income in associates and joint ventures accounted for using equity method

        (4,155     928        (3,821     887   

Other comprehensive income, before tax

           

Comprehensive income statement

        (138,421     6,585        (207,066     39,159   

Income tax related to Other comprehensive income

           

Income tax related to Cash flow hedges on Other comprehensive income

     6         1,562        3,930        519        3,608   

Other comprehensive income

        (136,859     10,515        (206,547     42,767   

Total comprehensive income

        304,025        446,891        (125,262     241,866   

Comprehensive Income Statement attributable to:

           

Comprehensive income statement attributable to parent company

        300,492        444,772        (119,913     238,715   

Comprehensive income statement attributable to non-controlling interest

        3,533        2,119        (5,349     3,151   

Total comprehensive income

        304,025        446,891        (125,262     241,866   

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

UNAUDITED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

 

09/30/2011

  Share
Capital
ThU.S.$
    Conversion
Reserves
ThU.S.$
    Hedge
Reserves
ThU.S.$
    Participation in
Other
Comprehensive
Income in
Associates and
Joint Venture
ThU.S.$
    Other
Reserves

Total
ThU.S.$
    Accumulated
Earnings
ThU.S.$
    Equity
attributable
to Parent
Company
ThU.S.$
    Non-
controlling
interest
ThU.S.$
    Equity Total
ThU.S.$
 

Opening balance at 01/01/2011

    353,176        72,699        (14,079     134        58,754        6,320,264        6,732,194        108,381        6,840,575   

Comprehensive income statement

                 

Net income

              432,294        432,294        8,590        440,884   

Other comprehensive income, net of tax

      (112,386     (15,261     (4,155     (131,802       (131,802     (5,057     (136,859

Comprehensive income

      (112,386     (15,261     (4,155     (131,802     432,294        300,492        3,533        304,025   

Dividends

              (175,994     (175,994     (16,752     (192,746

Total Changes in equity

    —          (112,386     (15,261     (4,155     (131,802     256,300        124,498        (13,219     111,279   

Closing balance at 09/30/2011

    353,176        (39,687     (29,340     (4,021     (73,048     6,576,564        6,856,692        95,162        6,951,854   

09/30/2011

  Share
Capital
ThU.S.$
    Conversion
Reserves
ThU.S.$
    Hedge
Reserves
ThU.S.$
    Participation in
Other
Comprehensive
Income in
Associates and
Joint Venture
ThU.S.$
    Other
Reserves

Total
ThU.S.$
    Accumulated
Earnings
ThU.S.$
    Equity
attributable
to Parent
Company
ThU.S.$
    Non-controlling
interest
ThU.S.$
    Equity Total
ThU.S.$
 

Opening balance at 01/01/2011

    353,176        27,551        (4,820     (1,113     21,618        5,893,799        6,268,593        113,840        6,382,433   

Comprehensive income statement

                 

Net income

              435,347        435,347        1,029        436,376   

Other comprehensive income, net of tax

      27,685        (19,188     928        9,425          9,425        1,090        10,515   

Comprehensive income

      27,685        (19,188     928        9,425        435,347        444,772        2,199        446,891   

Dividends

              (171,029     (171,029     (11,705     (182,734

Total Changes in equity

    —          27,685        (19,188     928        9,425        264,318        273,743        (9,586     264,157   

Closing balance at 09/30/2010

    353,176        55,236        (24,008     (185     31,043        6,158,117        6,542,336        104,254        6,646,590   

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

UNAUDITED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS-DIRECT METHOD

 

     09/30/2011
ThU.S.$
    09/30/2010
ThU.S.$
 

Cash Flows from (used in) Operating Activities

    

Classes of cash receipts from operating activities

    

Receipts from sales of goods and rendering of services

     3,647,060        2,766,001   

Receipts from premiums and claims, annuities and other policy benefits

     2,052        100,000   

Other cash receipts from operating activities

     199,675        119,598   

Classes of cash payments

    

Payments to suppliers for goods and services

     (2,764,373     (2,112,995

Payments to and behalf of employees

     (231,111     (159,211

Other cash payments from operating activities

     (7,891     (2,694

Dividends received

     1,720        6,353   

Interest paid

     (157,380     (151,001

Interest received

     13,112        5,220   

Income taxes (paid) refund

     (104,621     21,221   

Other (outflows) inflows of cash, net

     (637     364   

Net Cash flows from Operating Activities

     597,606        592,856   

Cash flows from (used in) Investing Activities

    

Cash flows used to obtain control of subsidiaries or other businesses

     —          (7,523

Cash flows used in the acquisition of non-controlling interests

     (981     —     

Other cash payments to acquire interests in joint ventures

     (120,679     (33,559

Capital contributions to joint ventures

     (127,130     —     

Proceeds from sale of property, plant and equipment

     9,684        4,652   

Purchase of property, plant and equipment

     (415,783     (257,778

Purchase of intangible assets

     (7,455     (1,705

Proceeds from other long-term assets

     4,734        829   

Purchase of other long-term assets

     (108,089     (89,355

Cash receipts from repayment of advances and loans made to other parties

     46,429        —     

Other outflows of cash, net

     2,534        (577

Cash flows used in Investing Activities

     (716,736     (385,016

Cash flows (used in) from Financing Activities

    

Loans obtained in long term

     —          612,403   

Proceeds from short-term borrowings

     218,301        158,145   

Total Loans obtained

     218,301        770,548   

Repayments of borrowings

     (545,878     (558,092

Dividends paid

     (200,672     (67,233

Other inflows of cash, net

     1,175        849   

Cash flows (used in) from Financing Activities

     (527,074     146,072   

Net increase (decrease) in Cash and Cash Equivalents before effect of exchange rate changes

     (646,204     353,912   

Effect of exchange rate changes on cash and cash equivalents

     (20,165     1,442   

Net (decrease) increase of Cash and Cash equivalents

     (666,369     355,354   

Cash and cash equivalents, at the beginning of the period

     1,043,834        534,199   

Cash and cash equivalents, at the end of the period

     377,465        889,553   

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

UNAUDITED NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS 

NOTE 1. PRESENTATION OF FINANCIAL STATEMENTS

Entity Information

Name of Reporting Entity

Celulosa Arauco y Constitución S.A. (Arauco), Tax No. 93,458,000-1, Closed Company, was registered in the Securities Registry (the “Registry”) of the Superintendency of Securities and Insurance (the “Superintendency”) as No. 042 on June 14, 1982. Forestal Cholguán S.A., a subsidiary of Arauco, is also registered on the Registry as No. 030. Arauco is controlled by Empresas Copec S.A., which owns 99.9779% of Arauco, and is registered in the Registry as No. 0028. Each of the above companies is subject to audit by the Superintendency.

The Company’s head office address is El Golf Avenue 150, floor 14, Las Condes, Santiago, Chile.

Celulosa Arauco y Constitución S.A. and subsidiaries (hereinafter “Arauco”) is principally engaged in the production and sale of forestry and wood products. Its main operations are focused on the following business areas: Pulp, Plywood and Fiberboard Panels, Sawn Timber and Forestry.

The current controllers of the Company are Mrs. Maria Noseda Zambra of Angelini, Mr.Roberto Angelini Rossi and Mrs. Patricia Angelini Rossi through Inversiones Angelini y Cia. Ltda., which owns 63.4015% of the shares of AntarChile S.A., the controller of our parent company Empresas Copec S.A.

Arauco’s Interim Consolidated Financial Statements were prepared on a going concern basis.

Presentation of Financial Statements

The Financial Statements presented by Arauco cover the following periods:

 

   

Consolidated Balance Sheet as of September 30, 2011 and December 31, 2010.

 

   

Consolidated Statements of Income for the three-month and nine-month periods ended September 30, 2011 and 2010.

 

   

Consolidated Comprehensive Income Statements for the three-month and nine-month periods ended September 30, 2011 and 2010.

 

   

Consolidated Statements of Changes in Net Equity for the nine-month periods ended September 30, 2011 and 2010.

 

   

Consolidated Statements of Cash Flows – Direct Method for the nine-month periods ended September 30, 2011 and 2010.

 

   

Disclosure of Explanatory Information (notes).

Date of Approval of Financial Statements

The issuance of these consolidated interim financial statements for the period between January 1, 2011 and September 30, 2011 was approved by the Board of Directors of the Company (the “Board”) in Extraordinary Session No. 457 of November 22, 2011.

 

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AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

Functional and Reporting Currency

Arauco has defined the U.S. Dollar as its functional currency, as most of the Company’s operations are a result of exports, and its costs to a large extent are related to or index-linked to the U.S. Dollar.

For the pulp segment, most of the sales operations are exports, and the costs are related mainly to plantation costs, which are settled in U.S. Dollars.

For the sawmill and panel segments, although total sales include a mix of domestic sales and exports, the prices for the products are established in U.S. Dollars, as is also the case for the cost structure of the related raw materials.

Although the costs of labor and services are generally billed and paid in local currency, these costs are not as significant as the costs of raw materials and depreciation of equipment, which are driven mainly by global conditions and therefore, influenced mostly by the U.S. Dollar.

The financial information included herein is presented in thousands of U.S. Dollars without decimals.

Additional Information Relevant to the Understanding of the Financial Statements

The company Fondo de Inversión Bío Bío and its subsidiary Forestal Río Grande S.A. qualify as Special Purpose Entities. These entities are considered to be controlled by Arauco, which is determined, by the fact that they maintain exclusive contracts with Arauco for wood provision, forward purchase of land and forest administration. Consequently, the financial information of these companies is consolidated with the financial information of the Company and is included in these consolidated financial statements of Arauco.

Compliance and Adoption of IFRS

The accompanying consolidated financial statements of Arauco include the Balance Sheet, Statement of Income, Comprehensive Income Statement, Statement of Changes in Net Equity and Statement of Cash Flows in accordance with IFRS.

This presentation is required to give a faithful representation of the effects of transactions, as well as other events and conditions, according to the definitions and criteria established within the conceptual framework of IFRS for the recognition of assets, liabilities, income and expenses.

IFRS Compliance Declaration

These interim consolidated financial statements were prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standard Board (“IASB”), which have been adopted in Chile under the title “Financial Reporting Standards in Chile” (NIFCH) and represent the wholesale adoption, explicitly and without reservation, of IFRS.

 

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

Information on Objectives, Policies and Processes applied by the Company regarding Capital Management

Arauco’s policies on capital management have the objective of:

 

  a) Guaranteeing business continuity and normal operations in the long term;

 

  b) Providing all financing needs for new investments to achieve sustainable growth over time;

 

  c) Maintenance of an adequate capital structure considering all economic cycles that impact the business and the nature of the industry; and

 

  d) Maximizing the Company’s value, as well as providing an adequate return to shareholders.

Qualitative Information on Objectives, Policies and Processes applied by the Company regarding Capital Management

Arauco determines and manages its capital structure based on its equity at book value plus its financial liabilities (bank borrowings and bonds).

Quantitative Information on Capital Management

Financial covenants of the Company are as follows:

 

Instrument

   Amount at
09/30/2011
(ThU.S. $)
     Amount at
12/31/2010
(ThU.S. $)
     Interest
Coverage
>= 2.0x
    Debt
Level(1)
<= 1.2x
     Debt  Level(2)
<= 0.75x
 

Local Bonds

     624,377         677,362         N/A        Ö           N/A   

Forestal Río Grande S.A. Loan

     78,120         104,144         Ö   (3)       N/A         Ö   (3)  

Bilateral Bank Loan

     216,017         240,260         Ö          Ö           N/A   

Other Loans

     160,378         53,152         No Financial Covenants Required   

Foreign Bonds

     1,973,821         2,374,258         No Financial Covenants Required   

 

N/A: Not applicable for the instrument

 

(1) Debt Level (financial debt divided by: equity plus minority interest)
(2) Debt Level (financial debt divided by: total assets)
(3) Financial covenants on credits taken by Forestal Río Grande S.A. only apply to financial statements of that company

As of September 30, 2011 and 2010, Arauco has complied with all financial covenants.

Debt instruments ratings as of September 30, 2011 are as follows:

 

Instrument

   Standard
& Poor’s
   Fitch
Ratings
   Moody’s    Feller Rate

Local bonds

   —      AA    —      AA

Foreign bonds

   BBB    BBB+    Baa2    —  

Financial obligations other than bonds do not have ratings.

Capital requirements are established based on the Company’s financial needs and on maintaining an adequate liquidity level and complying with financial covenants established in current debt contracts. The company manages its capital structure and makes adjustments based on the prevailing economic conditions in order to mitigate the risks associated with adverse market conditions, and based on opportunities that may arise to improve the Company’s level of liquidity.

 

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

Capital (in Thousands of U.S. Dollars) as of September 30 2011, and December 31, 2010, are as follow:

 

In ThU.S.$

   09/30/2011      12/31/2010  

Equity

     6,951,854         6,840,575   

Bank Loans

     454,515         397,556   

Financial Leases

     113         393   

Bonds

     2,598,198         3,051,620   
  

 

 

    

 

 

 

Capital

     10,004,680         10,290,144   
  

 

 

    

 

 

 

The nature of external capital requirements is determined by the obligation to maintain certain financial ratios that ensure compliance with either bank loans or bond payments, which provide guidelines on the capital ranges required for compliance with these requirements. Arauco has fulfilled all its external requirements.

Arauco considers it unlikely that future uncertainty risks will result in any significant adjustment to the book value of assets and liabilities within the current financial period. In the case of the fair value of biological assets, no risks are foreseen in which the value of forests will change significantly. Notably, the data used to make the foregoing determination contemplates the long-term realization of such risks, and therefore the estimates provided are also relevant for the long term.

Summary of significant accounting policies

The accompanying interim consolidated financial statements as of September 30, 2011 were prepared in accordance with Arauco’s accounting policies, uniformly applied to all items in these interim consolidated financial statements.

 

a) Basis for Presentation of financial statements

These condensed consolidated interim financial statements are unaudited.

These interim consolidated financial statements have been prepared under IAS 34.

The interim consolidated financial statements have been prepared under the historic cost convention, as modified for the revaluation of biological assets, financial assets and financial liabilities (including derivative instruments) at fair value.

There have been some minor reclassifications to prior period financial statements, for presentation purposes.

 

b) Critical accounting estimates and judgments

The preparation of consolidated financial statements in accordance with IFRS requires management to make subjective estimates and assumptions that affect the amounts reported. Estimates are based on historical experience and various other assumptions that are believed to be reasonable, though actual results and timing could differ from the estimates. Management believes that the accounting policies below take into account those matters that require the exercise of judgment, but acknowledge that different judgments could result in substantially different results.

 

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

   

Property, Plant and Equipment

In a businness acquisition, management prepared the corresponding valuations based on a report issued by a third party expert.

The carrying amounts of fixed assets are reviewed whenever events or changes in circumstances indicate that the carrying amount of an asset may be impaired. The recoverable amount of an asset is estimated as the higher of fair value less the cost to sell and the value in use, with an impairment charge being recognized whenever the carrying amount exceeds the recoverable amount. The value in use is calculated using a discounted cash flow model, which is most sensitive to the discount rate as well as the expected future cash inflows.

 

   

Fair Value of Financial Instruments

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. Arauco uses its judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at each balance sheet date.

Detailed financial information of Fair Value of Financial Instruments is presented in Note 23 including sensitivity analysis.

 

   

Biological Assets

The recovery of forest plantations is based on discounted cash flow models which mean that the fair value of biological assets is calculated using cash flows from continuing operations on a discounted basis, on our sustainable forest management plans and the estimated growth of forests.

These discounted cash flows require estimates in growth, harvest, sales prices and costs. It is therefore important that management make appropriate estimates of future levels and trends for sales and costs, as well as conduct regular surveys of the forests to establish the volumes of wood available for harvesting and their current growth rates. The main considerations used to calculate the valuation of forest plantations are presented in Note 20 including sensitivity analysis.

 

   

Lawsuits and Contingencies

Arauco and its subsidiaries are subject to certain ongoing lawsuits. Future effects on Arauco’s financial condition resulting from these lawsuits are estimated by the management of the Company, in collaboration with its legal advisors. Arauco reserves appropriate contingency estimates on each balance sheet and/or upon each substantial modification to an underlying cause of any such litigation, which decisions are based on the reports of its legal advisors. Detailed lawsuits information is presented in Note 18.

 

c) Consolidation

The interim consolidated financial statements include all entities over which Arauco has the power to govern the financial and operating policies, which usually requires holding shares with more than one half of the voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are de-consolidated from the date that control ceases.

 

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

The intercompany transactions and unrealized earnings from subsidiary operations have been eliminated from the interim consolidated financial statements and non-controlling interest is recognized in the equity balance.

Interim consolidated financial statements for the period ended September 30, 2011 and 2010, include subsidiary balances shown in Note 13 and balances of the Fondo de Inversión Bío Bío, and its subsidiary Forestal Río Grande S.A., both of which qualify as Special Purpose Entities.

Certain consolidated subsidiaries report statutory financial statements in Brazilian Reales and Chilean Pesos, their main functional currencies. For consolidation purposes, they have been translated as indicated in Note 1 (e) (ii).

Accounting policies for subsidiaries will be adjusted if necessary to ensure consistency with the policies adopted by Arauco. Non-controlling interest is presented as a separate component of equity.

 

d) Segments

Arauco has defined its operating segments according to its business areas, which are defined by products and services sold to customers. This is consistent with the management, resource allocation and performance assessment made by key personnel responsible for making relevant decisions related to the Company’s operation. The Chief Executive Officer and Corporate Managing Directors of each segment are responsible for these decisions.

Detailed financial information by segment is presented in Note 24.

 

e) Functional currency

(i) Functional currency

Arauco’s entities are measured using the currency of the primary economic environment in which the Company operates (the functional currency). The interim consolidated financial statements are presented in U.S. Dollars, which is Arauco’s functional and presentation currency.

(ii) Group companies

The results and financial position of all the group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

 

   

assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

 

   

income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

 

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

   

all resulting exchange differences are recognised in other comprehensive income.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in equity.

(iii) Foreign Currency Transactions

Transactions in foreign currencies are recorded at the rate of exchange prevailing on the transaction date. Gains and losses on foreign currency resulting from the settlement of such transactions and from the conversion at the closing exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement, except when deferred in other comprehensive income as qualifyng cash flow hedges.

 

f) Cash and cash equivalents

Cash and cash equivalents include cash-in-hand, deposits held on call at banks and other liquid investments with an original maturity of less than three months.

 

g) Financial Instruments

(i) Financial assets-liabilities at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if it was acquired principally for the purpose of selling in the short term.

Derivatives are also classified as acquired for trading unless they are designated as hedges. Assets in this category are classified as current assets and the obligation for these instruments is presented under Other Financial Liabilities within the Financial Statement.

Regular purchases and sales of financial assets are recognized on the trade-date, which is the date on which the Company commits to purchase or sell the asset.

The financial assets and liabilities carried at fair value through profit or loss are initially recognized at fair value and transaction costs are expensed in the income statement. They are subsequently recorded at fair value with the effect of the change in value recorded in income.

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months from the balance sheet date, which are classified as non-current assets. Loans and receivables include trade receivables and other receivables.

 

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

Loans and receivables are initially recorded at fair value and subsequently at amortized cost according to the effective interest rate method. A provision of bad debts is recorded to reflect uncollectable amounts.

Regular purchases and sales of financial assets are recognized on the trade-date, which is the date on which the Company commits to purchase or sell the asset.

(iii) Financial liabilities valued at amortized cost

Loans, bond obligations and liabilities of a similar nature are recognized initially at fair value, net of transaction costs incurred. In subsequent periods, they are stated at amortized cost and any difference between proceeds (net of transaction costs), and redemption value is recognized in the income statement over the life of the debt according to the effective interest rate method.

Financial obligations are classified as current liabilities unless the Company has an unconditional right to defer settlement for at least 12 months after the balance sheet date.

(iv) Creditors and other payables

These instruments are initially recorded at fair value and subsequently at amortized cost using the effective interest rate method.

(v) Hedging instruments

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in the Comprehensive Income Statement. The gain or loss relating to the ineffective portion is recognized immediately in the Income Statement within Other Operating Income by activity or Operating Expenses by activity, respectively.

When a hedging instrument expires or is sold, or when it ceases to meet the criteria to be recognized through the hedge accounting treatment, any cumulative gain or loss in equity at that time recognized in the Income Statement. When a possible transaction is no longer expected to occur, the cumulative gain or loss in equity is immediately transferred to the Income Statement.

 

h) Inventories

Inventories are reported at the lower of cost or net realizable value. Cost is determined using the weighted average cost method.

The cost of finished goods and work in progress includes the cost of raw materials, direct labor, other direct costs and general manufacturing expenses, excluding interest expenses.

Initial costs of harvested wood are determined at fair value less cost of sale at the point of harvest.

Biological assets are transferred to inventories when forests are harvested.

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

 

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

When market conditions result in the manufacturing costs of a product exceeding its net realizable value, a valuation allowance is made. This provision also includes obsolescence amounts resulting from slow moving inventories and technical obsolescence.

 

i) Assets held for sale

Non-current assets held for sale are measured at the lower of book and fair value, less costs for sale. Assets are classified in this line when the book value may be recovered through a sale transaction that is highly likely to be carried out. Management must be committed to a plan to sell the asset and should have initiated an active program to find a buyer and complete the plan. Likewise, management must also expect that the sale will be qualified for full recognition within one year following the date of its classification.

Non-current assets classified as held for sale are not depreciated.

 

j) Business Combinations

Subsidiaries are all entities over which Arauco has the power to manage financial and operational policies. This generally means holding more than one half of the voting rights of such entities. Stock held in an entity and the effect of the potential voting rights that are currently being exercised or converted are considered when evaluating whether the Company controls another entity. Subsidiaries are consolidated as of the date on which control is transferred to the Company, and are excluded when control is terminated.

Arauco applies the purchase method to record a business combination. Acquisition cost is the fair value of assets delivered, of equity instruments issued and of the liabilities incurred or committed at the date of exchange, plus all direct costs attributable to the acquisition. Identifiable acquired assets and liabilities as well as the contingencies committed to in business combinations are initially recognized at fair value at the date of acquisition, despite minority interest scope. Excess of acquisition cost over the Fair Value of the Company’s share of the identifiable net assets acquired is recorded as goodwill. If this is less than Fair Value of the net assets of the subsidiary acquired, the difference is recognized directly in the statement of income.

The group recognises any non-controlling interest in the acquiree on an acquisition- by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.

All intercompany transactions, accounts receivable, accounts payable and intercompany unrealized income are eliminated.

Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

The goodwill acquired in a business combination is initially measured at the cost of the business combination less the interest of the company in the net fair value of identifiable assets, liabilities and contingent liabilities of the acquisition. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For purposes of impairment testing, goodwill acquired in a business combination is allocated as of the acquisition date to the cash generating unit of the group or groups of cash generating units expected to benefit from the synergies of the combination without prejudice to whether other assets or liabilities of Arauco are assigned to those units or groups of units.

 

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the income statement as Other income (loss).

Arauco measures the fair value of the acquired company in the business combination on a step by step basis, recognizing the effects of variation in the income statement.

 

k) Investments in associates

Associates are entities over which Arauco exercises significant influence but not control, generally holding between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method and are initially recognized at cost. Their book net equity is increased or decreased proportionately in the profit or loss and comprehensive income statement of the period as a result of adjustments of conversion arising from the financial statement conversion into other currencies. Arauco’s investment in associates includes goodwill (net of any accumulated impairment loss).

If the cost of acquisition is less than the fair value of the net assets of the associate acquired, the difference is recognized directly in the income statement as Other income (loss).

 

l) Intangible assets

(i) Computer Software

Computer software programs are capitalized in terms of the costs incurred to make them compatible with specific programs. These costs are amortized over the estimated useful lives.

(ii) Rights

This item includes water-rights, right of way and other acquired rights recognized at historical cost and have an unlimited useful life as the expected cash flow generating period is unpredictable. These rights are not amortized as they are perpetual and will not require renewal, but are subject to annual impairment tests.

 

m) Goodwill

The excess of the cost of acquisition over the fair value of the group’s share of the identifiable net assets acquired is recorded as goodwill. Goodwill is not amortized but is tested for impairment on annual basis.

The goodwill recorded in Brazilian subsidiary whose functional currency is the real, is converted to U.S. dollars at the closing exchange rate. At the date of these financial statements, the currency conversion is the only movement that has the amount of goodwill.

 

n) Property, Plant and Equipment

Property, plant and equipment are stated at historical cost less depreciation and accumulated impairment losses. Historical cost includes expenditures that are directly attributable to the acquisition.

 

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably.

Asset depreciation is calculated by components using the straight-line method, considering any adjustments for impairment.

The useful life of property, plant and equipment is determined according to expected use of the assets.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, on an annual basis.

 

o) Leases

Fixed asset leases in which Arauco substantially holds all ownership risks and advantages are classified as Financial Leases. Financial leases are capitalized at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments.

Leases in which significant risks and rewards are not transferred to the lessee are classified as operating leases. Payments under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

 

p) Biological Assets

IAS 41 requires that biological assets, such as standing trees, are presented in the Balance Sheet at fair value. The forests are thus accounted for at fair value less estimated point-of sale costs at harvest, assuming that the fair value of these assets can be measured reliably.

The valuation of forest plantation assets is based on discounted cash flow models whereby the fair value of the biological assets is calculated using cash flows from continuous operations, which are discounted based on our sustainable forest management plans and the estimated growth of the forests. This valuation is performed on the basis of each identifiable farm block basis and for each type of tree.

Forest plantations shown as current assets are those that will be harvested and sold in the short term.

Biological growth and changes in fair value are recognized in the income statement within Other income by activity.

The Company holds fire insurance policies for its forestry plantations, which together with company resources and efficient protection measures for these forestry assets allow financial and operational risks to be minimized.

 

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AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

q) Deferred income tax

Deferred income tax is recognized using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not recognized if it arises from the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable income. Deferred income tax is determined using tax rates (and laws) that have been enacted as of the balance sheet date that are expected to apply when the related deferred income tax asset or the deferred income tax liability is settled.

The deferred income tax assets are recognized to the extent that it is probable that future taxable benefits will be available.

 

r) Provisions

Provisions are recognized when the Company has a current legal or constructive obligation as a result of past events; it is probable that an outflow will be required to settle the obligation; and the amount has been reliably estimated. This amount is quantified and recognized with the best possible estimate at the end of each period.

 

s) Revenue recognition

Revenues are recognized after Arauco has transferred the risks and rewards of ownership to the buyer and Arauco retains neither a continuing right to dispose of the goods, nor effective control of those goods; this means that generally revenues are recorded upon delivery of goods to customers in accordance with agreed terms of delivery.

Segment revenues mentioned in Note 24 comply with the conditions indicated above.

Revenues from inter-segment sales (which are made at prices that approximate market prices) are eliminated in the consolidated financial statements.

 

t) Minimum dividend

Article No. 79 of the Private Limited Companies Law of Chile provides that, unless otherwise unanimously agreed or adopted by the shareholders, a dividend must be distributed annually in cash to shareholders in proportion to their shares or in the proportion established by the statutes for preferred shares, if any, in the amount of at least 30% of net income for the current year, except where necessary to absorb accumulated losses from prior years.

The General Shareholders’ Meeting of Arauco resolved to maintain annual dividends at 40% of net distributable income, including a provisional dividend share distribution at year-end. Dividends payable are recognized as a liability in the financial statements in the period they are declared and approved by the Company’s shareholders or when configuring the corresponding obligation on the basis of existing legislation or distribution policies established by the Shareholders’ Meeting.

The interim and final dividends are recorded in equity upon their approval by the relevant groups, which include the Company’s Board and the shareholders.

The amount of these dividends is presented in this interim consolidated financial statement under Other non-current Financial Liabilities.

 

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

Dividends are paid only if profits in society and do not affect taxes.

 

u) Impairment

Non-financial Assets

The carrying amounts of tangible and intangible assets are subject to impairment tests whenever some event or change in business circumstances indicates that the book value of assets may not be recoverable, whereas goodwill is tested annually. The recoverable amount of an asset is estimated as the higher of net selling price and value in use. An impairment loss is recognized whenever the carrying amount exceeds the recoverable amount.

A previously recognized impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount, however, not to an extent higher than the carrying amount that would have been determined and recognized in prior years. For goodwill, however, a recognized impairment loss is not reversed.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose.

“Cash-generating units” are the smallest identifiable groups of assets whose use generates continuous funds largely independent of those produced by the use of other assets or groups of assets.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The distribution is made between cash-generating units or groups of cash generating units expected to benefit from the business combination that resulted in the goodwill.

Financial Assets

At the end of each period, an evaluation is performed in order to measure the existence of any objective evidence that assets or a group of financial assets have been adversely affected. Impairment effects will be recognized in the Consolidated Income Statement only if there is objective evidence that one or more events will occur after initial recognition of financial asset impairment and if these events will affect associated future cash flows.

The provision for doubtful trade receivables is established when there is objective evidence that Arauco will not receive payments under the original terms of sale. Provisions are made when the client is a party to a bankruptcy court agreement or cessation of payments, and are written-off when Arauco has exhausted all levels of recovery of debt in a reasonable time.

The impairment loss is measured as the difference between the book value of assets and the current value of estimated future cash flows. The asset value will be presented net of the loss recognized directly in income. If the impairment loss decreases in later periods, it is reversed either directly or by adjusting the provision for doubtful accounts, with effect in income.

 

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AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

v) Employee Benefit Costs

The Company has severance payment obligations for voluntary cessation services. These are paid to certain workers that have more than 5 years seniority within the Company in accordance with conditions established within collective or individual contracts.

Actuarial gains and losses are recognized in income in the year they are incurred.

These obligations are treated as post-employment benefits in accordance with current standards.

 

w) Employee Vacations

Arauco recognizes the expense for employee vacation on an accrual basis and it is recorded at face value.

This obligation is presented in the Consolidated Balance Sheet in the line Trade and Other payables.

 

x) Joint Venture Equity

Joint venture equity is recognized using the equity method.

 

y) Recent accounting pronouncements

At the date of issuance of these interim consolidated financial statements, the following accounting pronouncements were issued by the IASB .

a) New standards, interpretations, amendments and improvements mandatory since January 1, 2011 which currently are not applicable or relevant to the Company.

 

Rules and

interpretations

  

Content

   Mandatory application
date

IFRIC 19

  

Extinguishing financial liabilities with equity instruments

   July 1, 2010

Rules and
amendments

  

Content

   Mandatory application
date

IAS 1

   Filing of financial statements    January 1, 2011

IAS 32

   Classification for issuance rights    February 1, 2010

IAS 34

   Interim financial reporting    January 1, 2011

IFRIC 14

   Pre-payments of minimum funding requirement    January 1, 2011

IFRS 7

   Financial instruments: disclosures    January 1, 2011

 

b) New issued standards, interpretations and amendments not in effect for year 2011, for which Arauco is evaluating the impact of their adoption.

 

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Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

Rules and
interpretations

  

Content

   Mandatory
application
date

IAS 27 (reviewed)

  

Separated financial statements

   January 1, 2013

IAS 28 (reviewed)

   Investments in associates and joint ventures    January 1, 2013

IFRS 9

   Financial instruments    January 1, 2013

IFRS 10

   Consolidated financial statements    January 1, 2013

IFRS 11

   Joint Agreement    January 1, 2013

IFRS 12

   Disclosure of shareholdings in other entities    January 1, 2013

IFRS 13

   Fair value measurement    January 1, 2013

Rules and amendments

  

Content

   Mandatory
application
date

IAS 12

  

Income tax

   January 1, 2012

IAS 19

   Benefits to employees    January 1, 2013

IFRS 7

   Disclosure of financial instruments    July 1, 2011

IAS 1

   Filing of financial statements    July 1, 2012

Arauco believes that the adoption of standards, amendments and interpretations described above will have no significant impact on the financial statements of the Company in the period of initial application.

The rules in force since 2010 had no significant impact on Arauco’s financial statements.

NOTE 2. DISCLOSURE OF OTHER INFORMATION

 

a) Disclosure of Information on Capital Issued

Subscribed and paid-in Capital amounts to ThU.S. $353,176.

100% of capital corresponds to ordinary shares.

 

    

09/30/2011

  

12/31/2010

Description of Ordinary Capital Share Types

   100% of Capital corresponds to ordinary shares

Number of Authorized Shares by Type of Capital in Ordinary Shares

   113,152,446

Nominal Value of Shares by Type of Capital in Ordinary Shares

   ThU.S.$ 0.0031211 per share

Amount of Capital in Shares by Type of Ordinary Shares that Constitute Capital

   ThU.S.$ 353,176

Restrictions by Type of Capital in Ordinary Shares

Debt restrictions

Liabilities presented under Other Financial Liabilities current and non-current, have certain financial restrictions the Parent Company must comply with; otherwise, debt under these contracts can become payable.

Financial restrictions are the following:

 

i) Debt ratio must not exceed 1.2

 

ii) Interest hedging index cannot be less than 2.0

At closing date Arauco complied with the totality of these restrictions.

 

    

09/30/2011

  

12/31/2010

Number of Shares Issued and Completely Paid by Type of Capital in Ordinary Shares

   113,152,446

 

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Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

b) Disclosure of information on Dividends paid to Ordinary Shares

The interim dividend paid each year is equivalent to 20% of the distributable net income calculated as of the end of September of each year and presented in the Consolidated Statement of Changes in Net Equity.

Dividend paid each year corresponds to the spread between the 40% of net income distributable at the end of last year and the amount of interim dividend paid at the end of last fiscal year.

The ThUS$ 175,994 (ThUS$ 171,029 as of September, 2010) presented in Consolidated Statement of Changes in Net Equity corresponds to the provision of minimum dividend registered (see Note 25).

Dividends paid during years 2011 and 2010 and the corresponding amount per share

 

Detail of Dividend Paid, Ordinary Shares

  

Dividend Paid, Ordinary Shares

   Final Dividend

Type of Shares for which there is a Dividend Paid, Ordinary Shares

   Unlisted Ordinary Shares

Date of Dividend Paid, Ordinary Shares

   05-10-2011

Amount of Dividend, Ordinary Shares, Gross

   ThU.S.$ 182,770

Number of Shares for which Dividends are Paid, Ordinary Shares

   113,152,446

Dividend per Share, Ordinary Share

   U.S.$ 1.61525

Detail of Dividend Paid, Ordinary Shares

  

Dividend Paid, Ordinary Shares

   Provisional Dividend

Type of Shares for which there is a Dividend Paid, Ordinary Shares

   Unlisted Ordinary Shares

Date of Dividend Paid, Ordinary Shares

   12-15-2010

Amount of Dividend, Ordinary Shares, Gross

   ThU.S.$ 182,770

Number of Shares for which Dividends are Paid, Ordinary Shares

   113,152,446

Dividend per Share, Ordinary Share

   U.S.$ 0.7557

Detail of Dividend Paid, Ordinary Shares

  

Dividend Paid, Ordinary Shares

   Final Dividend

Type of Shares for which there is a Dividend Paid, Ordinary Shares

   Unlisted Ordinary Shares

Date of Dividend Paid, Ordinary Shares

   05-10-2010

Amount of Dividend, Ordinary Shares, Gross

   ThU.S.$ 56,758

Number of Shares for which Dividends are Paid, Ordinary Shares

   113,152,446

Dividend per Share, Ordinary Share

   U.S.$ 0.50161

 

c) Disclosure of Information on Reserves

Other Reserves

Other reserves consist of Conversion Reserves, Hedge Reserves and Other.

Arauco does not have restrictions associated with these reserves.

Conversion Reserves

This corresponds to foreign currency translation of those Arauco’s subsidiaries that do not use the U.S. Dollar as their functional currency.

 

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Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

Hedge Reserves

This corresponds to Arauco’s portion of gains or swap net losses resulting from hedging as of the end of each fiscal year.

The effective portion of the hedge is shown in equity.

Other

This mainly corresponds to the value in Other comprehensive income of investment in associates and joint ventures.

 

d) Disclosures of other Information

Below are balances of Other Income by activity, Other Expenses by activity, Financing Costs and Participation in income (loss) of associates and joint venture as of September 30, 2011 and 2010, respectively.

 

     January- September     July - September  
     2011     2010     2011     2010  
     ThU.S.$     ThU.S.$     ThU.S.$     ThU.S.$  

Classes of Other Income by activity

        

Other Operating Income, Total

     200,715        175,990        63,191        79,472   

Gain from changes in fair value of biological assets

     172,538        146,692        57,569        74,065   

Revenue from export promotion

     4,558        4,650        1,326        1,637   

Earthquake insurance net effect

     1,120        7,471        (800     (2,179

Leases received

     3,321        1,729        1,626        501   

Gain on sale of fixed assets

     3,020        1,802        (222     1,344   

Gain on sale of biological assets

     1,539        239        265        179   

Consulting Uruguay project

     1,399        617        1,399        617   

Other operating results

     13,220        12,790        2,028        3,308   

Classes of Other Expenses by activity

        

Total of other expenses by activity

     (51,759     (37,057     (20,238     (11,374

Depreciations

     (868     (1,546     (370     (252

Trial provision

     (3,978     (1,749     (1,001     (544

Assets provision

     (8,791     (39     (8,175     (18

Costs associated with plants stops

     (6,232     (1,825     (2,428     (419

Fines, readjustments and interests

     (485     (2,887     18        (579

Loss of forest due to fires

     (4,214     (6,768     (469     (254

Other Taxes

     (4,438     (3,716     (2,064     (1,324

Research and development expenses

     (2,611     (2,075     (1,023     (863

Termination payout

     (2,458     (742     (642     (203

Other expenses

     (17,684     (15,710     (4,084     (6,918

Classes of financing Costs

        

Financing Costs, Total

     (151,372     (169,185     (47,277     (61,622

Interest costs

     (135,912     (158,177     (44,184     (60,275

Bank loans and interest bearing bonds issues

     (135,912     (158,177     (44,184     (60,275

Other financing costs

     (15,460     (11,008     (3,093     (1,347

Classes of Participation in Income (Loss) of associates and joint ventures accounted througt Equity Method

        

Total

     (6,515     (3,038     1,762        (919

Investments in associates

     (1,018     1,876        (78     1,593   

Joint ventures

     (5,497     (4,914     1,840        (2,512

Balance of Expenses by nature:

 

     January - September      July - September  
Distribution expenses    2011      2010      2011      2010  
     ThU.S.$      ThU.S.$      ThU.S.$      ThU.S.$  

Sale costs

     42,346         35,940         13,823         13,261   

Commissions

     10,715         7,344         2,842         2,777   

Insurances

     2,887         1,768         1,239         621   

Other sales expenses

     28,744         26,828         9,742         9,863   

Shipping and freight costs

     306,278         235,227         105,018         90,100   

Port services

     2,231         3,408         560         1,150   

Freights

     288,368         219,720         99,939         84,389   

Otrher shipping and freight costs

     15,679         12,099         4,519         4,561   

Total

     348,624         271,167         118,841         103,361   

 

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

     January - September      July - September  
     2011      2010      2011      2010  
Administration expenses    MUS$      MUS$      MUS$      MUS$  

Wage and salaries

     118,086         98,612         38,446         33,695   

Marketing, advertising, promotion and publications expenses

     5,477         5,189         2,669         1,799   

Insurances

     13,596         6,240         6,512         1,937   

Depreciations and amortizacion not paid

     7,830         7,391         3,091         2,461   

Computer services

     6,579         5,503         1,576         413   

Office, warehouse and machinery leases

     8,528         7,484         2,649         3,482   

External audits

     2,578         3,128         1,051         777   

Donations, contribitions, grants

     9,341         10,393         3,927         2,755   

Fees (advices technical. Legal )

     32,914         26,223         15,594         12,905   

Property taxes, patents and municipal rigths

     13,942         12,410         4,935         4,670   

Other administration expenses

     80,694         44,271         26,300         9,879   

Total

     299,565         226,844         106,750         74,773   

 

            January - September      July - September  

Expenses for

   Note      2011
ThU.S.$
     2010
ThU.S.$
     2011
ThU.S.$
     2010
ThU.S.$
 

Depreciations

     7         169,345         165,925         55,353         56,613   

Employee benefits

     10         249,235         183,955         91,097         79,678   

Amortization

     19         1,192         1,234         565         351   

NOTE 3. INVENTORIES

 

Components of Inventory

   09/30/2011
ThU.S.$
     12/31/2010
ThU.S.$
 

Raw Materials

     114,543         86,617   

Production Supplies

     76,929         65,154   

Work in progress

     55,832         62,612   

Finished goods

     456,455         426,447   

Parts

     115,174         86,532   

Other Inventories

     200         173   

Total Inventories

     819,133         727,535   

As of September 30, 2011, a cost of sales of inventories amounted to ThU.S.$ 2,129,623 (ThU.S.$ 1,605,969 as of September 30, 2010).

As of September 30, 2011, a net increase in the provision for obsolescence effects of ThU.S.$ 991 was recognized (ThU.S.$ 324 as of December 31, 2010); therefore, the provision balance as of September 30, 2011 amounted to ThU.S.$ 8,191 (ThU.S.$ 7,200 as of December 31, 2010).

The inventories write-off amounted to ThU.S.$ 326 as of September 30, 2011.

As of the date of the issuance of these financial statements, no inventories have been pledged as collateral or guarantees.

NOTE 4. CASH FLOW STATEMENT

Cash and cash equivalents includes cash flow, bank account balances, fixed term deposits, repurchase agreements and mutual funds. They are short-term investments that are readily convertible into cash, and are subject to an immaterial change in value.

 

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Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

The objective of fixed term deposits is to maximize earnings on short-term cash flow surpluses. This instrument is authorized by Arauco’s Investment Policy, which establishes a mandate that allows investments in fixed income securities. These instruments have a maturity period of less than ninety days.

Arauco invests in local mutual funds to maximize the profitability of cash flow surpluses in Chilean Pesos, or in international mutual funds in foreign currencies such as U.S. Dollars or Euros. These instruments are acceptable under Arauco’s Investment Policy.

As of the date of these consolidated financial statements, there are no significant amounts of cash on hand.

 

     09/30/2011      12/31/2010  

Components of Cash and Cash Equivalents

   ThU.S.$      ThU.S.$  

Cash on hand

     255         263   

Banks

     55,509         69,692   

Short term deposit

     105,169         705,694   

Mutual Funds

     216,532         267,811   

Other cash and cash equivalents

     —           374   

Total

     377,465         1,043,834   

The following tables detail the value of the cost of the investment in Dynea Brasil S.A. dated March 15, 2010, Savitar (see Note 14), and the net value of assets and liabilities of each acquired entity, discounting both the amount of cash and cash equivalents acquired in order to distinguish those cash flows from those that arise from other operating, investing or financing activities.

 

2010

Purchase of Investments

   ThU.S.$  

Acquisition: Dynea Brasil S.A.

  

Cash paid for acquisitions and cash equivalents

     15,000   

Cash and cash equivalents held by acquired entities

     (8,023

Net cash paid to acquire entities

     6,977   

 

     ThU.S.$  

Net Assets less Cash and Cash equivalents of acquired entity

     22,613   

NOTE 5. ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES

Changes in Accounting Policies

These policies have been designed in accordance with IFRS in effect as of September 30, 2011 and applied uniformly to all items presented in these interim consolidated financial statements.

Changes in the Treatment of Accounting Policy

The financial statements as of September 30, 2011 do not show changes in accounting policies compared to the same period last year.

 

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AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

NOTE 6. TAXES

The tax rate applicable to the major companies in which Arauco participates is 17% in Chile, 35% in Argentina and 34% in Brazil.

Deferred Tax Assets

The following table details deferred tax assets:

 

     09/30/2011      12/31/2010  

Deferred Tax Assets

   ThU.S.$      ThU.S.$  

Deferred Tax Assets related to Provisions

     8,196         4,658   

Deferred Tax Assets related to accrued liabilities

     4,291         4,601   

Deferred Tax Assets related to Post-Employment obligations

     6,324         6,616   

Deferred Tax Assets related to Revaluation of Property, Plant and equipment

     2,450         2,339   

Deferred Tax Assets related to Financial Instruments Restatements

     807         1,370   

Deferred Tax Assets related to tax losses

     79,473         56,724   

Valuation of biological assets

     5,106         8,805   

Valuation of inventory

     3,215         9,034   

Income provision

     4,008         2,765   

Trade debtors and receivables

     4,325         3,940   

Defferred tax Assets related to Others

     10,629         24,471   

Deferred Tax Assets Total

     128,824         125,323   

As of the date of the present financial statement some of Arauco’s subsidiaries present tax losses of ThU.S.$ 246,292 (ThU.S.$ 260,701 as of December 31, 2010) which are mainly due to operational and financial losses.

Arauco believes that the projections of future earnings in subsidiaries that have generated tax losses will allow the recovery of these assets.

Deferred Tax Liability

Deferred tax liability corresponds to income tax amounts payable in future periods related to taxable temporary differences.

 

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Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

The following table details deferred tax liabilities:

 

Deferred Tax Liabilities

   09/30/2011
ThU.S.$
     12/31/2010
ThU.S.$
 

Deferred Tax Liabilities related to Revaluated Property, Plant and equipment

     739,165         686,408   

Deferred Tax Liabilities related to Financial Instrument restatement

     2,429         13,751   

Valuation of biological asset

     432,331         511,401   

Valuation of inventory

     15,414         12,450   

Differences of prepaid income

     74,927         76,539   

Differences in valuation of deferred expenditures

     38,976         35,130   

Deferred Tax Liabilities related to Others

     27,026         33,810   
  

 

 

    

 

 

 

Deferred Tax Liabilities Total

     1,330,268         1,369,489   
  

 

 

    

 

 

 

Deferred tax liabilities related to financial instrument restatement include a total of ThU.S.$ 1,562 for deferred tax items from the Other Comprehensive Income.

From the deferred tax assets and deferred tax liabilities listed in the above tables, approximately ThU.S.$ 16,009 and ThU.S.$ 157,868 respectively, will be used in a period of 12 months.

Arauco does not offset deferred tax assets and deferred tax liabilities since there is no legal right to offset amounts recognized in these items that correspond to different fiscal jurisdictions.

The effect of deferred taxes related to financial hedging instruments corresponds to a credit (subscription) of ThU.S.$ 1,562 as of September 30, 2011 (ThU.S.$ 3,930 as of September 30, 2010), which presents net in Hedge reserves in the Statement of Changes in Net Equity.

Temporary Differences

The following tables summarize current asset and liability temporary differences:

 

     09/30/2011     12/31/2010  

Detail of classes of Deferred Tax Temporary Differences

   Deductible
Difference
ThU.S.$
    Taxable
Difference
ThU.S.$
    Deductible
Difference
ThU.S.$
    Taxable
Difference
ThU.S.$
 

Deferred Tax Assets

     49,351          68,599     

Tax Loss

     79,473          56,724     

Deferred Tax Liabilities

       1,330,268          1,369,489   

Total

     128,824        1,330,268        125,323        1,369,489   
     January - September     July - September  

Detail of Temporary Difference Income and Loss Amounts

   2011
ThU.S.$
    2010
ThU.S.$
    2011
ThU.S.$
    2010
ThU.S.$
 

Deferred Tax Assets

     (7,084     5,482        5,221        4,312   

Tax Loss

     22,310        1,933        10,060        (2,692

Deferred Tax Liabilities

     (1,900     (42,725     (356     508   

Total

     13,326        (35,310     14,925        2,128   

 

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AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

Income Tax Expense (Income)

Income Tax consists of the following:

 

     January - September     July - September  

Income Tax composition

   2011
ThU.S.$
    2010
ThU.S.$
    2011
ThU.S.$
    2010
ThU.S.$
 

Current income tax expense

     (126,081     (93,237     (31,210     (66,073

Tax benefit derived from carry loss forwards

     (261     5,824        (314     143   

Previous period current tax adjustments

     2,316        (519     0        (250

Other current tax expenses

     680        (424     230        (280

Current Tax Expense, Net

     (123,346     (88,356     (31,294     (66,460

Deferred expense from taxes relative to the creation and reversal of temporary differences

     (17,337     (27,943     1,773        14,120   

Deferred income related to changes in the income tax rate

     7,878        (9,300     2,617        (9,300

Tax benefit derived from carry loss forwards

     22,785        1,933        10,535        (2,692

Total deferred Tax Expense, Net

     13,326        (35,310     14,925        2,128   

Income Tax Expense, Total

     (110,020     (123,666     (16,369     (64,332

The following table details the income tax for foreign and national companies as of September 30, 2011 and 2010 respectively:

 

     January - September     July - September  
      2011
ThU.S.$
    2010
ThU.S.$
    2011
ThU.S.$
    2010
ThU.S.$
 

Foreign current tax

     (36,916     (39,179     (8,502     (16,595

National current tax

     (86,430     (49,177     (22,792     (49,865

Current tax, Total

     (123,346     (88,356     (31,294     (66,460

Foreign deferred tax

     20,114        11,708        11,112        2,773   

National deferred tax

     (6,788     (47,018     3,813        (645

Deferred tax, Total

     13,326        (35,310     14,925        2,128   

Income (expense) due to Income Tax, Total

     (110,020     (123,666     (16,369     (64,332

Income Tax Expense Reconciliation using the Effective Rate method

Income tax expenditure reconciliation is as follows:

 

     January - September     July - September  

Reconciliation of Income tax from Statutory Rate to Effective Tax Rate

   2011
ThU.S.$
    2010
ThU.S.$
    2011
ThU.S.$
    2010
ThU.S.$
 

Tax Expense Using Statutory Rate

     (110,223     (95,207     (19,573     (44,783

Tax effect of rates in other jurisdictions

     (9,141     (15,260     (2,969     (10,765

Tax effect of non taxable ordinary income

     2,431        5,833        (4,218     (1,121

Tax effect of non tax deductible expenses

     (10,793     (13,020     (2,703     (5,156

Tax effect of tax loses unrecognized for previous periods

     (93     —          221        —     

Tax effect of tax rates changes

     7,878        (9,300     2,644        (9,300

Tax effect of excess tax for previous periods

     2,316        (519     —          (250

Other Increases (Decreases) Legal Taxes

     7,605        3,807        10,229        7,043   

Adjustment to Tax Expense using the Statutory Rate, Total

     203        (28,459     3,204        (19,549

Tax Expenses Using the Effective Rate

     (110,020     (123,666     (16,369     (64,332

On July 30, 2010 Law N. 20.455 for national reconstruction financing was published in the Chilean Official Gazette (Diario Oficial de Chile). One of the most important changes such law introduced was the increase in the First Category Taxes for revenues received and /or accrued during commercial years 2011 and 2012, with rates of 20% and 18.5%, respectively.

The effect on the change in tax rates caused an adjustment to the assets and liabilities accounts for deferred taxes, according to the profile projected for temporary reverse differences, in tax losses benefits and in other events that create differences between book and tax basis of assets and liabilities.

 

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Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

NOTE 7. PROPERTY, PLANT AND EQUIPMENT

 

     09/30/2011
ThU.S.$
    12/31/2010
ThU.S.$
 

Properties, Plant and Equipment, Net

    

Construction in progress

     633,242        562,309   

Land

     801,002        821,288   

Buildings

     1,427,448        1,417,684   

Plant and equipment

     2,245,359        2,188,323   

Information technology equipment

     16,724        16,963   

Fixed facilities and accessories

     6,082        3,657   

Motorized vehicles

     9,355        10,057   

Others

     59,234        68,464   

Total Net

     5,198,446        5,088,745   

Properties, Plant and Equipment, Gross

    

Construction in progress

     633,242        562,309   

Land

     801,002        821,288   

Buildings

     2,579,706        2,523,397   

Plant and equipment

     4,247,022        4,180,142   

Information technology equipment

     47,699        43,614   

Fixed facilities and accessories

     23,895        17,339   

Motorized vehicles

     33,269        32,328   

Others

     90,363        110,076   

Total Gross

     8,456,198        8,290,493   

Accumulated depreciation and impairment

    

Buildings

     (1,152,258     (1,105,713

Plant and equipment

     (2,001,663     (1,991,819

Information technology equipment

     (30,975     (26,651

Fixed facilities and accessories

     (17,813     (13,682

Motorized vehicles

     (23,914     (22,271

Others

     (31,129     (41,612

Total

     (3,257,752     (3,201,748

 

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Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

Description of Property, Plant and Equipment Pledged as Guarantee

Regarding Forestal Río Grande S.A, an affiliate of Fondo de Inversión Bío Bío, a special purpose entity, we note that in October 2006, first and second degree mortgages were executed in favor of JPMorgan Chase Bank N.A. and Arauco, respectively, which prohibited the sale of any property currently belonging to the aforementioned special purpose entity, in order to ensure fulfillment of payments to Fondo de Inversión Bío Bío.

In September 2007, Forestal Río Grande S.A acquired real estate in Yungay, located in Chile’s Region VIII, for which the company executed a first mortgage with prohibition to sell and encumber in favor of, among others, JPMorgan. Similarly, a second mortgage with prohibition to sell and encumber was executed in favor of Arauco.

 

     09/30/2011
ThU.S.$
     12/31/2010
ThU.S.$
 

Collateral amount of property, plant and equipament

     56,815         56,272   

Commitments for project disbursements or for the acquisition of property, plant and equipment

 

     09/30/2011
MUS$
     12/31/2010
MUS$
 

Amount committed for the acquisition of property, plant and equipment

     123,346         268,391   

 

     09/30/2011
MUS$
     12/31/2010
MUS$
 

Disbursements for property, plant and equipment under construction

     370,881         361,598   

 

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Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

Movement on Property, Plant and Equipment

The following tables detail the movement of Property, Plant and Equipment as of September 30, 2011 and December 31, 2010:

 

Movement of
Fixed Assets

   Construction in
progress
ThU.S.$
    Land
ThU.S.$
    Buildings
ThU.S.$
    Plant and
equipments
ThU.S.$
    IT
Equipment
ThU.S.$
    Fixed Facilities
and accesories
ThU.S.$
    Motorized
Vehicles
ThU.S.$
    Other
Property, Plant
and Equipment
ThU.S.$
    TOTAL
ThU.S.$
 

Opening Balance 01/01/2011

     562,309        821,288        1,417,684        2,188,323        16,963        3,657        10,057        68,464        5,088,745   

Changes

                  

Additions

     370,881        3,943        3,516        4,056        25        729        732        4,810        388,692   

Dispositions

     —          (150     (203     (475     —          209        (52     (5,676     (6,347

Withdrawals

     (3,258     (47     (125     (2,599     (3     (7     (3     (1,513     (7,555

Depreciation costs

     —          —          (55,249     (124,379     (1,610     (1,079     (1,772     (452     (184,541

Net movement of replacement of assets damaged by the earthquake

     (61,209     —          (1,254     62,557        252        (2     (344     —          —     

Exchange rate increase (decrease) of foreign currency

     (12,876     (25,491     (8,692     (29,351     (79     (469     (394     (3,196     (80,548

Transfers

     (222,605     1,459        71,771        147,227        1,176        3,044        1,131        (3,203     —     

Total changes

     70,933        (20,286     9,764        57,036        (239     2,425        (702     (9,230     109,701   

Closing balance 09/30/2011

     633,242        801,002        1,427,448        2,245,359        16,724        6,082        9,355        59,234        5,198,446   

Movement of
Fixed Assets

   Construction in
progress
ThU.S.$
    Land
ThU.S.$
    Buildings
ThU.S.$
    Plant and
equipments
ThU.S.$
    IT
Equipment
ThU.S.$
    Fixed Facilities
and accesories
ThU.S.$
    Motorized
Vehicles
ThU.S.$
    Other
Property, Plant
and Equipment
ThU.S.$
    TOTAL
ThU.S.$
 

Opening Balance 01/01/2010

     433,269        743,950        1,353,461        2,328,457        18,178        5,207        9,791        77,440        4,969,753   

Changes

                  

Additions

     361,598        81,610        18,463        14,086        186        234        2,265        4,758        483,200   

Acquisitions of business

     216        660        4,244        21,420        —          —          14        1,137        27,691   

Dispositions

     (142     (14,107     (3,499     (3,132     (3     (1     (215     (4,375     (25,474

Withdrawals

     (1,024     (6     (1,020     (4,315     (11     (39     (2     (408     (6,825

Depreciation costs

     —          —          (68,237     (160,894     (1,966     (810     (1,892     (1,708     (235,507

Impairment loss recognized in the Income Statement (note 17)

     —          —          (24,198     (110,408     (63     —          (102     (9,341     (144,112

Exchange rate increase (decrease) of foreign currency

     1,394        9,350        3,902        19,986        2        (1,395     64        824        34,127   

Reclassification of assets held for sale

     —          (5,003     (5,877     (3,228     —          —          —          —          (14,108

Transfers

     (233,002     4,834        140,445        86,351        640        461        134        137        —     

Total changes

     129,040        77,338        64,223        (140,134     (1,215     (1,550     266        (8,976     118,992   

Closing balance 12/31/2010

     562,309        821,288        1,417,684        2,188,323        16,963        3,657        10,057        68,464        5,088,745   

 

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Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

The depreciation charged to income as of September 30, 2011 and 2010 is as follows:

 

     January - September      July - September  

Depreciation for the period

   2011
ThU.S.$
     2010
ThU.S.$
     2011
ThU.S.$
     2010
ThU.S.$
 

Cost of sale

     159,956         133,663         52,524         49,551   

Administration expenses

     6,571         6,083         2,489         1,242   

Other operating expenses (*)

     2,818         26,179         340         5,820   

Total

     169,345         165,925         55,353         56,613   

 

(*) The balance of 2010, refers to the cost of depreciation of plants detained product of the earthquake.

The useful lives of property, plant and equipment according to expected use of the assets are as follows:

 

            Minimum      Maximum      Average  

Buildings

     Useful Life in Years         16         89         39   

Plant and equipment

     Useful Life in Years         8         67         29   

Information technology equipment

     Useful Life in Years         6         18         5   

Fixed facilities and accesories

     Useful Life in Years         6         12         10   

Motorized vehicles

     Useful Life in Years         6         26         13   

Others properties, plants and equipment

     Useful Life in Years         5         27         16   

 

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Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

NOTE 8. LEASES

When assets are leased under finance lease, the present value of lease payments is recognized as a financial account receivables. Interest income which is the difference between the gross receivable and the present value of such amount is recognized as the capital’s financial performance.

Disclosure of Financial Leases Classified by Type of Asset, Leases

 

     09-30-2011
ThU.S.$
     12-31-2010
ThU.S.$
 

Property, Plant & Equipment Financial Leasing

     96         440   

Plant and equipment

     96         440   

Reconciliation of Financial Lease Minimum Payments, Lessee

 

     09/30/2011  

Minimum lease payments, lease payment obligations

   Gross
ThU.S.$
     Interest
ThU.S.$
     Present Value
ThU.S.$
 

Due within one year

     115         2         113   

Total

     115         2         113   
     12/31/2010  
     Gross
ThU.S.$
     Interest
ThU.S.$
     Present Value
ThU.S.$
 

Due within one year

     354         10         344   

Due within one and five years

     50         1         49   

Total

     404         11         393   

Leasing obligations that accrue interest are presented in the Consolidated Balance Sheet under Other Financial Liabilities Current and Non-current depending on the maturities stated above.

Reconciliation of Financial Lease Minimum Payments, Lessor

 

     09/30/2011  

Minimum Financial Lease Payments Receivable, Financial Lease

   Gross
ThU.S.$
     Interest
ThU.S.$
     Present Value
ThU.S.$
 

Due within one year

     3,681         296         3,385   

Due within one and five years

     3,523         230         3,293   

Total

     7,204         526         6,678   
     12/31/2010  

Minimum Financial Lease Payments Receivable, Financial Lease

   Gross
ThU.S.$
     Interest
ThU.S.$
     Present Value
ThU.S.$
 

Due within one year

     4,767         450         4,317   

Due within one and five years

     5,957         358         5,599   

Total

     10,724         808         9,916   

Accounts receivable in leasing are presented in the Consolidated Balance Sheet under Trade and Other Receivables current and non-current depending on the maturities stated above.

Significant Financial Lease Agreements

Arauco holds financial leases as a lessor and lessee detailed within the previous tables, and therefore, there are no contingent payments or restrictions to note.

 

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Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

NOTE 9. ORDINARY REVENUE

 

(a) Policy on Revenue recognition from the Sale of Goods

Revenue from the sale of goods is recognized when an Arauco entity has transferred to the buyer the significant risks and rewards of ownership, when the amount of revenue can be reliably measured, when Arauco cannot influence the management of the sold goods and when it is probable that the economic benefits associated with the transaction will flow to the entity.

Sales are recognized in terms of the arranged price stated in the sales contract, net of volume discounts and estimated refunds at the date of the sale. Volume discounts are evaluated in terms of estimated annual purchases. There is no significant financing component given that receivables for sales are collected within a low average time period, which is in line with market practices.

 

(b) Policy on Revenue recognition from Rendering of Services

Arauco mainly has electric power, port and pest control services whose incomes are derived from fixed price service contracts, generally recognized during the period of the service contract on a straight-line basis throughout the duration of the contract.

 

     January - September      July - September  

Types of Ordinary Revenue

   2011
ThU.S.$
     2010
ThU.S.$
     2011
ThU.S.$
     2010
ThU.S.$
 

Sale of goods

     3,252,229         2,664,067         1,084,974         1,004,810   

Service Contracts

     86,288         69,309         18,723         30,297   

Total

     3,338,517         2,733,376         1,103,697         1,035,107   

NOTE 10. EMPLOYEE BENEFITS

This refers to severance payment obligations for years of service due to termination of service contracts that arise from benefits stated in work contracts and/or as severance payments stated in the Labor Law.

This is an estimate of the years of service-based severance payments to be recognized as a future termination payment liability, in accordance with in force work contracts held with workers and pursuant to actuarial valuation criteria for this type of liability.

The main factors considered for calculating the actuarial value of severance payments for years of service are employee turnover, salary increases and life expectancy of the workers included in this benefit.

 

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Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

Classes of Benefits and Expenses by Employee

 

     January - September      July - September  
     2011
ThU.S.$
     2010
ThU.S.$
     2011
ThU.S.$
     2010
ThU.S.$
 

Personnel Expenses

     249,235         183,955         91,097         79,678   

Wages and salaries

     239,529         173,544         87,399         74,762   

Compensation for years of service

     9,706         10,411         3,698         4,916   

The following tables detail the balances and the movement of payments for years of service provisioned as of September 30, 2011 and December 31, 2010:

 

     09/30/2011
ThU.S.$
    12/31/2010
ThU.S.$
 

Current

     3,161        3,312   

Non-current

     34,490        35,964   

Total

     37,651        39,276   

Roll- forward

   09/30/2011
ThU.S.$
    12/31/2010
ThU.S.$
 

Opening balance

     39,276        27,667   

Current service cost

     1,223        1,851   

Interest cost

     1,899        1,798   

Actuarial gains

     5,039        11,256   

Benefits paid

     (6,153     (5,537

Increase (decrease) for currency exchange

     (3,633     2,241   

Closing balance

     37,651        39,276   

 

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

NOTE 11. EFFECT OF FOREIGN CURRENCY RATE VARIATIONS

Local and foreign currency

Currency assets and liabilities as of September 30, 2011 and December 31, 2010 are as follows:

 

     09-30-2011
ThU.S.$
     12-31-2010
ThU.S.$
 

Total Current Assets

     2,633,025         3,152,116   

Cash and Cash Equivalents

     377,465         1,043,834   

U.S Dollar

     208,727         513,303   

Euro

     67,287         73,573   

Real

     37,257         41,598   

Argentine Pesos

     6,730         —     

Other currencies

     8,411         6,902   

$ not adjustable

     49,053         408,458   

Other Financial Assets, Current

     —           2,909   

U.S Dollar

     —           2,909   

Other current financial assets

     221,159         177,140   

U.S Dollar

     123,179         119,184   

Real

     22,316         9,104   

Argentine Pesos

     10,822         11,426   

Other currencies

     11,487         15,023   

$ not adjustable

     53,355         22,403   

Trade and Other receivables-net

     815,900         774,289   

U.S Dollar

     556,169         528,657   

Euro

     32,655         31,651   

Real

     85,075         26,748   

Argentine Pesos

     29,104         14,027   

Other currencies

     31,076         52,300   

$ not adjustable

     77,491         115,338   

U.F.

     4,330         5,568   

Related party receivables, Current

     87,461         18,074   

U.S Dollar

     73,875         12,657   

Euro

     67         —     

Real

     3,008         854   

$ not adjustable

     10,511         4,563   

Inventories

     819,133         727,535   

U.S Dollar

     695,081         614,509   

Real

     104,946         87,869   

$ not adjustable

     19,106         25,157   

Biological assets, current

     258,079         344,096   

U.S Dollar

     203,685         254,524   

Real

     54,394         89,572   

Tax receivables

     39,720         50,131   

U.S Dollar

     3,694         13,449   

Real

     8,206         9,156   

Argentine Pesos

     6         0   

Other currencies

     15,974         10,113   

$ not adjustable

     5,256         7,668   

U.F.

     6,584         9,745   

Non-Current Assets or disposal groups classified as held for sale

     14,108         14,108   

U.S Dollar

     14,108         14,108   

 

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

     09-30-2011
MUS$
     12-31-2010
MUS$
 

Total Non Current Assets

     9,584,752         9,354,216   

Other non-current financial assets

     —           53,407   

U.S Dollar

     —           53,407   

Other non-current and non-financial assets

     66,926         52,352   

U.S Dollar

     59,461         43,873   

Real

     5,598         6,701   

Argentine Pesos

     567         301   

Other currencies

     356         434   

$ not adjustable

     944         1,043   

Trade receivables, non current

     8,236         11,965   

U.S Dollar

     893         4,389   

Other currencies

     102         205   

$ not adjustable

     2,099         4,589   

U.F.

     5,142         2,782   

Investment in associates accounted for using equity method

     606,337         498,204   

U.S Dollar

     544,802         428,033   

Euro

     699         1,336   

Real

     60,836         68,835   

Intangible assets

     17,474         11,127   

U.S Dollar

     12,276         10,699   

Real

     5,036         269   

Other currencies

     26         28   

$ not adjustable

     136         131   

Goodwill

     59,774         66,231   

U.S Dollar

     2,858         2,857   

Real

     56,916         63,374   

Property, plant and equipment

     5,198,446         5,088,745   

U.S Dollar

     4,520,842         4,354,417   

Real

     668,761         728,492   

$ not adjustable

     8,843         5,836   

Biological assets, non-current

     3,498,735         3,446,862   

U.S Dollar

     3,102,701         3,038,042   

Real

     396,034         408,820   

Deferred tax assets

     128,824         125,323   

U.S Dollar

     73,873         72,512   

Real

     42,037         40,370   

Argentine Pesos

     10,929         9,789   

Other currencies

     1,609         1,898   

$ not adjustable

     376         754   

 

44


Table of Contents

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statement

September 30, 2011

Amounts in thousands of U.S. dollars, except as indicated

 

 

     09-30-2011      12-31-2010  
     Up tp 90 days
ThU.S.$
     From 91 days to
1  year

ThU.S.$
     Total
ThU.S.$
     Up tp 90 days
ThU.S.$
     From 91 days
to 1 year
ThU.S.$
     Total
ThU.S.$
 

Total Liabilities, current

     861,724         122,494         984,218         722,165         486,896         1,209,061   

Other financial liabilities, current

     175,406         101,161         276,567         109,051         445,622         554,673   

U.S Dollar

     158,908         97,577         256,485         95,871         440,318         536,189   

Real

     10,558         2,815         13,373         9,980         2,501         12,481   

U.F.

     5,940         769         6,709         3,200         2,803         6,003   

Bank Loans

     160,216         76,545         236,761         50,602         52,214         102,816   

U.S Dollar

     149,658         73,730         223,388         40,622         49,713         90,335   

Real

     10,558         2,815         13,373         9,980         2,501         12,481   

Financial Leases

     68         45         113         94         250         344   

U.F.

     68         45         113         94         250         344   

Other Loans

     15,122         24,571         39,693         58,355         393,158         451,513   

U.S Dollar

     9,250         23,847         33,097         55,249         390,605         445,854   

U.F.

     5,872         724         6,596         3,106         2,553         5,659   

Trade and Other payables

     395,978         5,793         401,771         342,805         19,377         362,182   

U.S Dollar

     87,044         864         87,909         71,273         2,335         73,608   

Euro

     4,954         —           4,954         5,648         —           5,648   

Real

     45,469         —           45,469         39,308         —           39,308   

Argentine Pesos

     52,489         —           52,489         39,085         —           39,085   

Other currencies

     1,652         —           1,652         1,530         3,020         4,550   

$ not adjustable

     204,256         2,837         207,093         185,896         11,876         197,772   

U.F.

     115