EX-99.1 2 d376861dex991.htm UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES, MARCH 31, 2012 Unaudited consolidated financial statements and notes, March 31, 2012

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

  


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statement

March 31, 2012

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

 

1. ANALYSIS OF FINANCIAL POSITION

 

a) Analysis of the Financial Statement

The principal components of assets and liabilities as of March 31, 2012 and December 31, 2011, are as follows:

 

Assets

   03/31/2012
ThU.S.$
     12/31/2011
ThU.S.$
 

Current assets

     2,847,225         2,462,660   

Non-current assets

     10,199,980         9,995,062   
  

 

 

    

 

 

 

Total assets

     13,047,205         12,457,722   
  

 

 

    

 

 

 

Liabilities and Shareholders’ Equity

   03/31/2012
ThU.S.$
     12/31/2011
ThU.S.$
 

Current liabilities

     1,008,064         1,031,945   

Non-current liabilities

     4,937,780         4,395,627   

Non –parent participation

     92,407         90,543   

Net equity attributable to parent company Shareholders’ equity

     7,008,954         6,939,607   
  

 

 

    

 

 

 

Total net equity and liabilities

     13,047,205         12,457,722   
  

 

 

    

 

 

 

As of March 31, 2012, total assets increased by 4.73% or U.S.$ 589 million compared to December 31, 2011. This increase is mainly attributable to an increase in the balance of Cash and cash equivalents, in commercial debtors and other accounts receivables, and Properties, Plant and Equipment.

Moreover, liabilities increased by U.S.$ 518 million, mainly attributable to an increase in Financial Liabilities as a result of bonds issued in January 2012.

The main financial and operating ratios are as follows:

 

Liquidity ratios

   03/31/2012      12/31/2011  

Current ratio

     2.82         2.39   

Acid ratio

     1.76         1.34   

Debt indicators

   03/31/2012      12/31/2011  

Debt to equity ratio

     0.84         0.77   

Short-term debt to total debt

     0.17         0.19   

Long-term debt to total debt

     0.83         0.81   
     12/31/2012      12/31/2011  

Financial expenses covered

     2.06         5.34   

 

1


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statement

March 31, 2012

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

 

 

ANALYSIS OF FINANCIAL POSITION, continued

 

a) Analysis of the Balance Sheet, continued

 

Operational ratios

   03/31/2012      31/12/2011  

Inventory turnover

     2.72         2.71   

Inventory turnover (excluding biological assets)

     3.68         3.82   

Inventory permanence-days

     132.19         132.95   

Inventory permanence (excluding biological assets)

     97.88         94.23   

The liquidity ratio for the current period has increased this year compared to the period 2011. This is due to a major proportional increase in current assets compared to a proportional reduction in the variation of current liabilities, which in turn is explained by an increase in the Cash and cash equivalents, trade and other receivables.

As of March 31, 2012, the short-term debt represented 17% of total liabilities compared to 19% as of December 2011.

The ratio of financial expenses covered decreased from 5.34 to 2.06. This drop is mainly attributable to a lower net income in 2012, compared to the same period of 2011.

 

b) Analysis of the Income Statement

Profit before Income Tax

Profit before Income Tax registered a profit of U.S.$ 61 million for the three-month period compared to U.S.$ 224 million the same period of the previous year, a decrease of U.S.$ 162 million. The change is explained by the factors described in the following table:

 

Item

   Million
U.S.$
 

Gross margin

     (119

Administrative expenses and Distribution costs

     (10

Other operating expenses

     (22

Financial costs

     (7

Others net

     (4
  

 

 

 

Net change in income before income tax

     (162
  

 

 

 

Gross Margin presents a profit of U.S.$ 280 million, a decrease of U.S.$ 119 million compared to last year (U.S.$ 398 million) caused by a proportional increase in Cost of sales and a decrease in sales prices, despite the increase in sales volumes, mainly in the cellulose business.

 

2


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statement

March 31, 2012

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

 

 

ANALYSIS OF FINANCIAL POSITION, continued

 

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

 

Revenues

   03/31/2012
ThU.S$
    03/31/2011
ThU.S$
 

Pulp

     474,645        526,894   

Sawn timber

     188,844        177,438   

Panels

     304,496        297,243   

Forestry

     33,975        34,559   

Other

     8,469        5,587   
  

 

 

   

 

 

 

Total revenues

     1,010,429        1,041,721   
  

 

 

   

 

 

 

Sales costs

   03/31/2012
ThU.S$
    03/31/2011
ThU.S$
 

Wood

     219,447        187,864   

Forestry work

     141,517        126,304   

Depreciation

     53,431        51,993   

Other costs

     316,456     
  

 

 

   

 

 

 

Total sales costs

     730,850        643,629   
  

 

 

   

 

 

 

Profitability index

   03/31/2012     12/31/2011  

Profitability on equity

     2.95        8.95   

Profitability on assets

     1.63        4.97   

Return on operating assets

     2.71        5.23   

Profitability ratios

   03/31/2012     03/31/2011  

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

     0.45        1.52   

EBITDA( MThU.S.$)

     191.60        331.99   

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

     52,062        176,503   

Gross margin (ThU.S.$)

     279,579        398,092   

Financial costs (ThU.S.$)

     (58,082     (51,575

 

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

2. 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.

 

3


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statement

March 31, 2012

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

 

 

3. MARKET SITUATION

Pulp Division

Pulp sales reached U.S.$ 474.6 million (including energy sales) for the first quarter of 2012, a decrease of 4.9% compared to the previous quarter. This decrease was mainly due to lower sales volume of 8.9%. and partially offset by higher average prices of 0.6%.

When compared with the U.S.$ 526.9 million (including energy sales) reached in the same quarter of 2011, pulp sales decreased 9.9%. This decrease is mainly explained by lower average prices of 18.7%, partially offset by higher sales volume of 11.0%.

In line with our estimations for the end of 2011, the bottom of the down cycle occurred in December. In January of this year, we began to see a recovery in demand and prices of both long fiber and short fiber. This recovery lasted throughout the first quarter of 2012 for almost all markets. The main price recovery was for short fiber, while in long fiber the recovery was moderate.

In Asia, and particularly in China, there was a recovery of 5% in long fiber and 9% in short fiber. Short fiber inventory levels were at low levels, and paper manufacturers had to restock at levels that would give them security, especially those which depend on pulp imports. At the same time, many importers and traders took advantage of low import prices and increasing local prices. In long fiber, the situation was different due to a less regular but important amount of supply coming from Scandinavia during this quarter. This additional supply limited further price increases and was due to low container freight from Europe to Asia and excess of installed capacity in Europe caused by the closure of paper production, introducing extra pulp to the market. Other Asian markets have followed the same price trend but maintaining normal import volumes.

In Europe, there was a more complex scenario than in Asia. On the one hand, the pulp producers have put pressure for price increases following the trend of other markets, and on the other hand the paper market was down, explaining the demand for pulp. This situation was seen especially for pine long fiber. Supply has increased, mainly caused by additional supply from integrated paper producers who have stopped paper production but continued producing pulp and selling to the market instead of for internal consumption. As a consequence, long fiber price increased only 3% in the quarter in which short fiber increased 12%. These pulp price increases, along with less demand for paper and a decline in paper prices, have eroded margins even for tissue paper, which in general has had a positive growth trend.

North America did not show important recovery signs in terms of pulp consumption, but did not show signs of deterioration. In terms of price, the North American market followed the global trend at a slower pace and only for eucalyptus short fiber with an 8% increase. There were no increases in long fiber.

Latin America has been very stable, with positive levels of demand and with better market prices.

 

4


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statement

March 31, 2012

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

 

 

Sawn Timber Division

Compared to the U.S. $180.6 million sold during the fourth quarter of 2011, sawn timber sales increased by 4.6% during the first quarter of 2012, reaching sales of U.S. $188.8 million. This increase was mainly due to higher sales volume of 0.8% and higher average prices of 3.7%.

When compared with the same period of 2011, sawn timber and remanufactured wood products sales increased by 6.4% or U.S.$ 11.4 million during the first quarter of 2012, mainly due to an increase in average prices of 11.3%, partially offset by lower sales volume of 4.5%.

The real estate and construction markets in the United States remained at low levels during the first quarter of 2012. In March, the housing starts index reached 654,000 units per year. Current construction levels remain low when compared to the historical ten year average. During the first quarter of 2012, the sales price of remanufactured moldings improved compared to the previous quarter.

During the first quarter of 2012, markets have slightly declined, especially in Asia. As a consequence, we have had price cuts and lower sales volume in China, Korea, Japan and Taiwan. Stocks of lumber in China have been at high levels. As a consequence, demand has been lower, and there was pressure to lower prices. We do not expect significant changes in the price of sawn timber products for the next months.

Panels Division

Panel’s sales (including energy sales and consolidation of Moncure) reached U.S.$ 304.5 million in the first quarter of this year, an increase of 0.7% when compared to the U.S.$ 302.4 million obtained in the fourth quarter of 2011. Compared with the previous quarter, prices remained relatively stable with an increase of 0.7%. Without considering volume sales of our new Moncure unit, sales volume decreased 12.3% mainly explained by the closure of our Curitiba mill and the destruction of our Nueva Aldea plywood mill in January of this year. Compared with the same quarter of 2011, sales were 2.4% higher. This increase in sales can be explained by higher average prices 0.3% and the consolidation of our Moncure unit during this first quarter. Sales volume declined 9.2% (without considering volume sales of Moncure).

Our plywood sales had a 24% drop in sales volume, mainly explained by the fire that affected our mill in Nueva Aldea this year on January 1st. In contrast, prices have shown increases of up to 11%, especially in North and South America and our domestic markets.

Our MDF sales had an increase in terms of volume, mainly due to a higher demand within South America and Asia, and an increase in sales prices of 10%.

For particleboard, sales volume dropped 18% when compared to the same quarter of 2011. This decrease is mainly explained by the closure of our Curitiba particleboard mill in December of 2011.

Our MDF moldings had an 18% increase in sales volume, which is explained by a recovery in North American demand with a 16% increase in sales. An additional driver that sustains this increase is the sales of moldings to Russia and Holland, being both new markets for Arauco in this product segment. Prices have also shown an increase of 3%.

 

5


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statement

March 31, 2012

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

 

 

Sales volume of hardboard panels were in line with the first quarter of 2011. However, prices have continued increasing, reaching a 5% increase on a year over year comparison. In general, there has been a strong demand for this product, which has been affected by lower supply from other competitors.

 

6


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statement

March 31, 2012

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

 

 

4. ANALYSIS OF CASH FLOW

The main components of net cash flow as of March 31, 2012 and March 31, 2011 are as follows:

 

     03/31/2012
thU.S.$
    03/31/2011
thU.S.$
 

Positive (negative) Cash flow

    

Cash flow from operating activities

     112,787        118,910   

Cash flow from financing activities:

    

Loan and bond payments

     409,506        (43,029

Dividend payments

     —          (2,646

Others

     346        266   

Cash flow from investment activities:

    

Purchase and sales of permanent investments

     (37,155     (19,000

Incorporation and sale of property, plant and equipment

     (215,398     (110,142

Incorporation and sale of biological assets

     (30,117     (27,345

Loan to related companies

     (25,500     (43,717

Other

     3,264        1,306   
  

 

 

   

 

 

 

Net cash flow for the period

     217,733        (125,397
  

 

 

   

 

 

 

We had a positive operating cash flow of U.S.$ 113 million for the current period compared to U.S.$ 119 million for the same period last year. This decrease was mainly due to an increase in payments for income tax and an increase in payments to suppliers and employees, partially offset by the increase in collection from customers.

Cash flow from financing activities had a positive balance of U.S.$ 410 million in the current period, compared to a negative balance of U.S.$ 45 million for the same period in 2011. This variation resulted from the issuance of bonds in the amount of U.S.$ 500 million during the current period.

The investment cash flow, at the end of the current period, decreased U.S.$ 305 million (U.S.$ 199 million in 2011), mainly due to an increase in capital contributions, loans, and higher payments for acquisition of property, plant, equipment and biological assets in 2012.

5. MARKET RISK ANALYSIS

In respect of the economic risks resulting from interest rate variations, the Company maintains, as of March 31, 2012, a ratio of fixed rate debt to total consolidated debt of approximately 88,9%, 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.

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.

 

7


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

March 31, 2012

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

 

 

CONSOLIDATED BALANCE SHEET

 

          03-31-2012      12-31-2011  
     Note    ThU.S.$      ThU.S.$  

Assets

        

Current Assets

        

Cash and cash equivalents

   4      537,970         315,901   

Other financial current assets

   23      149         —     

Other current non-financial assets

   25      233,769         207,196   

Trade and Other receivables -net

   23      840,630         740,416   

Related party receivables

   13      99,123         70,179   

Inventories

   3      794,647         795,104   

Biological assets, current

   20      275,805         281,418   

Tax receivables

        49,839         37,153   

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

        2,831,932         2,447,367   

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

   22      15,293         15,293   

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

        15,293         15,293   

Total Current Assets

        2,847,225         2,462,660   

Non-Current Assets

        

Other non-current financial assets

   23      48,430         1,162   

Other non-current and non-financial assets

   25      105,912         99,901   

Trade receivables, non current

   23      7,044         7,332   

Investment in associates accounted for using equity method

   15-16      934,807         886,706   

Intangible assets

   19      16,745         17,609   

Goodwill

        60,782         59,124   

Property, plant and equipment

   7      5,407,672         5,324,172   

Biological assets, non-current

   20      3,479,590         3,463,166   

Deferred tax assets

   6      138,998         135,890   

Total non-Current Assets

        10,199,980         9,995,062   

Total Assets

        13,047,205         12,457,722   

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

 

8


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

March 31, 2012

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

 

 

CONSOLIDATED BALANCE SHEET (continued)

 

          03-31-2012     12-31-2011  
     Note    ThU.S.$     ThU.S.$  

Equity and liabilities

       

Liabilities

       

Current Liabilities

       

Other current financial liabilities

   23      185,066        248,992   

Trade and other payables

   23      423,797        397,073   

Related party payables

   13      12,339        9,785   

Other provisions, current

   18      8,965        8,607   

Tax liabilities

        128,306        144,989   

Current provision for employee benefits

   10      3,534        3,307   

Other current non financial liabilities

   25      246,057        219,192   

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

        1,008,064        1,031,945   

Total Current Liabilities

        1,008,064        1,031,945   

Non-Current Liabilities

       

Other non-current financial liabilities

   23      3,484,661        2,969,015   

Other non-current provisions

   18      10,954        9,688   

Deferred tax liabilities

   6      1,277,705        1,256,233   

Non-current provision for employee benefits

   10      38,635        36,102   

Other non-current non financial liabilities

   25      125,825        124,589   

Total non-current liabilities

        4,937,780        4,395,627   

Total liabilities

        5,945,844        5,427,572   

Net Equity

       

Issued capital stock

        353,176        353,176   

Accumulated earnings

        6,713,327        6,683,252   

Other reserves

        (57,549     (96,821

Net equity attributable to parent company

        7,008,954        6,939,607   

Non-controlling interest

        92,407        90,543   

Total net equity

        7,101,361        7,030,150   

Total net equity and liabilities

        13,047,205        12,457,722   

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

 

9


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

March 31, 2012

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

 

 

CONSOLIDATED STATEMENTS OF INCOME

 

          January-March  
          2012     2011  
     Nota    ThU.S.$     ThU.S.$  

Income Statement

       

Revenue

   9      1,010,429        1,041,721   

Cost of sales

        (730,850     (643,629

Gross Income

        279,579        398,092   

Other operating income

   2      61,725        64,575   

Distribution costs

   2      (99,033     (106,538

Administrative expenses

   2      (102,823     (85,037

Other operating expenses

   2      (34,137     (12,410

Financial income

        3,797        7,286   

Financial costs

   2      (58,082     (51,575

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

   15      (429     (3,896

Exchange rate differences

        10,793        13,166   

Income before income tax

        61,390        223,663   

Income Tax

   6      (9,328     (47,160

Income from continuing operations

        52,062        176,503   

Net Income

        52,062        176,503   
     

 

 

   

 

 

 

Income attributable to equity holders

       

Income attributable to parent company

        51,425        172,487   

Income attributable to non-parent company

        637        4,016   

Net Income

        52,062        176,503   
     

 

 

   

 

 

 

Basic earnings per share

       

Earnings per share from continuing operations

        0.0004545        0.0015244   
     

 

 

   

 

 

 
        0.0004545        0.0015244   
     

 

 

   

 

 

 

Earnings per diluted shares

       

Earnings per diluted share from continuing operations

        0.0004545        0.0015244   
     

 

 

   

 

 

 

Basic earnings per diluted share

        0.0004545        0.0015244   
     

 

 

   

 

 

 

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

 

10


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

March 31, 2012

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

 

 

CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS

 

          January-March  
          2012     2011  
     Nota    ThU.S.$     ThU.S.$  

Net Income

        52,062        176,503   

Other comprehensive income, net of tax

       

Exchange difference on conversion

       

Gain (loss) for exchange differences, before tax

   11      38,474        24,335   

Cash flow hedges

       

Gain (loss) for cash flow hedges, before tax

   23      (2,087     (4,293

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

        3,061        (714

Other comprehensive income, net of tax

        39,448        19,328   

Income tax related to Cash flow hedges on Other comprehensive income

   6-23      1,098        455   

Other comprehensive income

        40,546        19,783   

Total comprehensive income

        92,608        196,286   

Resultado Integral Atribuible a

       

Comprehensive income statement attributable to parent company

        90,697        191,131   

Comprehensive income statement attributable to non-controlling interest

        1,911        5,155   

Total comprehensive income

        92,608        196,286   

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

 

11


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

March 31, 2012

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

 

 

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

 

03-31-2012

  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
ThU.S.$
    Accumulated
Earnings
ThU.S.$
    Equity
attributable
to parent
Company
T.hU.S.$
    Non -
controlling
interest
ThU.S.$
    Equity
Total
ThU.S.$
 

Opening balance at 01/01/2011

    353,176        (67,539     (25,914     (3,368     (96,821     6,683,252        6,939,607        90,543        7,030,150   

Comprehensive income statement

                 

Net income

              51,425        51,425        637        52,062   

Other comprehensive income, net of tax

      37,200        (989     3,061        39,272        0        39,272        1,274        40,546   

Comprehensive income

      37,200        (989     3,061        39,272        51,425        90,697        1,911        92,608   

Dividens

              (21,350     (21,350     0        (21,350

Increase (decrease) for transfer and other changes

                0        (47     (47

Total Changes in equity

    0        37,200        (989     3,061        39,272        30,075        69,347        1,864        71,211   

Closing balance at 03/31/2012

    353,176        (30,339     (26,903     (307     (57,549     6,713,327        7,008,954        92,407        7,101,361   

03/31/2011

  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
ThU.S.$
    Accumulated
Earnings
ThU.S.$
    Equity
attributable
to parent
Company
T.hU.S.$
    Non -
controlling
interest
ThU.S.$
    Equity
Total
ThU.S.$
 

Opening balance at 01/01/2010

    353,176        72,699        (14,079     134        58,754        6,320,264        6,732,194        108,381        6,840,575   
                0       

Comprehensive income statement

                0       

Net income

              172,487        172,487        4,016        176,503   

Other comprehensive income, net of tax

      23,196        (3,838     (714     18,644          18,644        1,139        19,783   

Comprehensive income

      23,196        (3,838     (714     18,644        172,487        191,131        5,155        196,286   

Dividens

              (66,438     (66,438     0        (66,438

Increase (decrease) for transfer and other changes

                0        (2,654     (2,654

Total Changes in equity

    0        23,196        (3,838     (714     18,644        106,049        124,693        2,501        127,194   

Closing balance at 03/31/2011

    353,176        95,895        (17,917     (580     77,398        6,426,313        6,856,887        110,882        6,967,769   

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

 

12


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

March 31, 2012

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

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS-DIRECT METHOD

 

      03/31/2012
ThU.S.$
    03/31/2011
ThU.S.$
 

STATEMENTS OF CASH FLOWS

    

Cash Flows from (used in) Operating Activities

    

Classes of cash receipts from operating activities

    

Receipts from sales of goods and rendering of services

     1,122,262        1,023,890   

Receipts from premiums and claims, annuities and other policy benefits

     545        —     

Other cash receipts from operating activities

     82,024        60,958   

Classes of cash payments

    

Payments to suppliers for goods and services

     (930,447     (819,690

Payments to and behalf of employees

     (89,856     (75,821

Other cash payments from operating activities

     (4,864     (489

Interest paid

     (49,359     (61,002

Interest received

     2,389        5,251   

Income taxes refund (paid)

     (19,768     (14,187

Other (outflows) inflows of cash, net

     (139     —     

Net Cash flows from Operating Activities

     112,787        118,910   

Cash flows from (used in) Investing Activities

    

Cash flow used to contributions in associates

     (13,490     —     

Capital contributions to joint ventures

     (23,665     (19,000

Loans to related parties

     (25,500     (54,276

Proceeds from sale of property, plant and equipment

     1,382        6,720   

Purchase of property, plant and equipment

     (216,780     (116,862

Importes Procedentes de Ventas de Activos Intangibles

     3,250        —     

Purchase of intangible assets

     —          (71

Proceeds from other long-term assets

     644        2,061   

Purchase of biological assets

     (30,761     (29,406

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

     —          10,559   

Other outflows of cash, net

     14        1,377   

Cash flows used in Investing Activities

     (304,906     (198,898

Cash flows from (used in) Financing Activities

    

Loans obtained in long term

     491,350        —     

Proceeds from short-term borrowings

     32,602        8,199   

Total Loans obtained

     523,952        8,199   

Repayments of borrowings

     (114,446     (51,228

Dividends paid by the parent company

     —          (2,646

Other inflows of cash, net

     346        266   

Cash flows from (used in) Financing Activities

     409,852        (45,409

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

     217,733        (125,397

Effect of exchange rate changes on cash and cash equivalents

     4,336        (6,157

Net increase (decrease) of Cash and Cash equivalents

     222,069        (131,554

Cash and cash equivalents, at the beginning of the period

     315,901        1,043,834   

Cash and cash equivalents, at the end of the period

     537,970        912,280   

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

 

13


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

 

NOTE 1. PRESENTATION OF FINANCIAL STATEMENTS

Entity Information

Name of Reporting Entity

Celulosa Arauco y Constitución S.A. (the “Company” and together its subsidiaries, “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.

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 99.9780 % of the shares of AntarChile S.A., the controller of our parent company Empresas Copec S.A.

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

Presentation of Financial Statements

The Financial Statements presented by Arauco as of March 31, 2012 are:

 

   

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

 

   

Consolidated Statements of Income for the year ended 2011 and 2010.

 

   

Consolidated Comprehensive Income Statements for the year ended 2011 and 2010.

 

   

Consolidated Statements of Changes in Net Equity for the year ended 2011 and 2010.

 

   

Consolidated Statements of Cash Flows – Direct Method for the year ended 2011 and 2010.

 

   

Disclosure of Explanatory Information (notes).

 

14


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

Date of Approval of Financial Statements

The issuance of these consolidated interim financial statements for the period from January 1 to March 31, 2012, was approved by the Board of Directors of the Company (the “Board”) in Extraordinary Session No. 467 of May 25, 2012.

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.

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 interim 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 as issued by the IASB.

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.

 

15


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

Summary of significant accounting policies

The accompanying consolidated interim financial statements as of March 31, 2012 were prepared in accordance with Arauco’s accounting policies, uniformly applied to all items in these consolidated interim financial statements.

 

a) Basis for Presentation of financial statements

The actual Consolidated interim financial statements have been prepared according to international basis of financial information issued by the International Accounting Standards Board (IASB) and they represent the integral, explicit and unreserved adoption of the mentioned international standards.

The consolidated interim 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 year 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.

- Property, Plant and Equipment

In a business 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.

Sensitivity analysis associated to the estimated useful lifes are disclosed in Note 7.

 

16


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

- 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 makes assumptions that are mainly based on market conditions existing at each balance sheet date.

Detailed financial information of Fair Value of Financial Instruments and sensitivity analysis are presented in Note 23.

-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 consolidated interim 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.

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

The consolidated interim financial statements for the periods from January 1 to March 31, 2012 and 2011, 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).

 

17


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

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.

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

 

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.

In line with the above, the Company established operating segments according to the following business units:

 

   

Pulp

 

   

Panels

 

   

Sawn Timber

 

   

Forestry

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 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

 

   

all resulting exchange differences are recognised in other comprehensive income.

 

18


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

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 qualifying 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.

Swaps: These are valued using the discounted cash flow method at a discount rate consistent with the risk of the operation.

Forwards: These instruments are initially recognized at fair value at the date on which the contract is entered into and are subsequently re-measured at fair value. The forwards are recorded as assets when fair value is positive and, as liabilities when fair value is negative.

The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles.

The fair value of forward rate contracts is calculated by reference to differential of the existing interest rates between the rate agreed and the market interest rate deadlines.

Mutual Funds: Given their nature, they are recognized at fair value at the closing date for the period.

 

19


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles.

(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.

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.

Repurchased Agreements: These are valued at the initial cost of the investment plus accrued interest investment cost of the short term instrument.

(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.

The fair value estimate of bank obligations is determined using specific valuation techniques using cash flow discounted at rates consistent with the risk of the operation, while bonds are valued at market price.

(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

 

20


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

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.

These financial instruments are measured using the discount cash flow method at a rate consistent with the operational risk using the information given by each bank as counterparty.

 

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.

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.

Replacement parts that will be consumed in less than a period of 12 months, are presented in Inventories and record as an expense within the period consumed.

 

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, except for the existence of facts or circumstances (beyond the entity control) that extend the period of sale beyond one year.

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

 

j) Business Combinations

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

 

21


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

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 goodwill 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 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.

The transaction costs are treated as expenses when incurred.

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 and in joint ventures

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 and in joint ventures 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).

These investments are presented in the Consolidated Balance Sheet together with Investments in associates and measured by using the equity method.

If any of these investments incurs negative equity as a result of legal or implicit obligations of its associate, or has made payments on behalf of its associate or joint venture, then it must recognize a liability by reducing the value of the investment to zero until this generates income that would reverse the negative equity previously generated due to the losses. Otherwise, a liability is not recognized but the investment left at zero equally.

 

l) Intangible assets

After initial recognition, intangible assets are carried at cost, including any accumulated amortization and impairment losses.

Amortization of an intangible asset with a finite useful life shall be carried on a systematic basis over the asset’s useful life. Amortization begins when the asset is available for use, which is when it complies with all the necessary conditions to operate in the manner foreseen by the Company.

 

22


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

(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.

Subsequent costs, such as improvements and replacement of components, 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. The value of the replaced part is capitalized as part of the property, plant & equipment, the remaining costs associated with repairs and maintenance are charged to the income statement for the period in which the costs are incurred.

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.

 

23


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

When assets are leased under a finance lease, the present value of lease payments are recognized as 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.

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.

The assessment of new plantations during the current year, is made at the least economic cost, which corresponds to the fair value to that date. After 12 months, the valuation methodology is as explained in the previous paragraph.

Forest plantations shown as current assets are those that will be harvested 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.

 

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. 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.

 

24


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

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.

(i) 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.

(ii) Policy on Revenue recognition from Rendering of Services

Arauco, mainly provides power supply services which are trade in the spot market of the Interconnected Central System. According current laws, the prices on that market called “Marginal Costs” are calculated by Load Economical Dispatch Center of the Interconnected Central System (CDEC-SIC). And are generally recognized in the period in which the services are provided.

Electrical energy is generated as a by-product of the pulp process and is a complementary business to it, which at first is supplied to the group’s subsidiaries and the surplus is sold to the central grid.

Arauco provides other services such as port and pest control 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.

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

Revenues from inter-segment sales (arising from prices similar to market prices) are eliminated in the consolidated interim 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.

 

25


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

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 consolidated financial statement under Other non-current Financial Liabilities.

Dividends paid do not affect taxes.

 

u) Impairment

Non-financial Assets

The recoverable amount of property, plant and equipment is measured whenever there is an indication that the asset may have suffered deterioration of its value. Among the factors to consider as evidence of impairment are the diminution in market value of assets, significant changes in the technological environment, obsolescence or physical impairment of assets and changes in the way the asset is used or expected to be used (which could involve its disuse). Arauco evaluates at the end of each reporting period whether there is any evidence of the factors above mentioned.

For this evaluation, assets are grouped into the smallest group of assets that generates cash inflows independently.

The goodwill and intangible assets with indefinite useful life are tested annually or whenever circumstances indicate. 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.

 

26


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

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.

 

v) Employee Benefits

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.

This is an estimate of the years of service-based severance payments to be recognized as a future termination payment liability, in accordance with contracts between Arauco and its employees 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 the employee turnover, salary increases and life expectancy of the workers included in this benefit.

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.

 

27


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

x) Recent accounting pronouncements

The following accounting pronouncements were effective as of January 1, 2012:

 

Amendments and improvements

  

Contents

  

Obligatory application for
years beginning after

IAS 12

  

Income

 

tax This amendment, issued in December 2010, provides an exception to the general principles of IAS 12 for investment property is measured using the fair value model in IAS 40 “Investment Property”, the exception also applies to investment property acquired in a business combination if, after the business combination the acquirer applies the fair value model in IAS 40 content. The amendment incorporates the assumption that investment property valued at fair value, are made through their sale, thus requiring apply to these temporary differences arising from the tax rate for sales operations. Early adoption is permitted.

   January 01, 2012

IFRS 7

  

 

Disclosures of Financial Instruments Issued in October 2010, increases the disclosure requirements for transactions involving transfers of financial assets.

   July 01, 2011

IFRS 1

  

First-time Adoption of International Financial Reporting Standards

 

Issued in December 2010, covers the following topics: i) Exemption for severe hyperinflation: allows companies whose transition date is after the normalization of its functional currency, valuing assets and liabilities at fair value as deemed cost, ii) Removal of requirements for fixed dates: adapts the fixed date included in IFRS 1 at the transition date for those operations that involve lower financial assets and liabilities at fair value on initial recognition results.

   July 01, 2011

At the date of issuance of these consolidated financial statements, the following accounting pronouncements were issued by the IASB, but are not mandatory:

 

Standards and interpretations

  

Content

  

Obligatory application for
years beginning after

IAS 19 revised

  

Employee Benefit

 

Issued in June 2011, replaces IAS 19 (1998). This revised standard changes the recognition and measurement of the cost of defined benefit plans and termination benefits. Additionally, it includes modifications to the revelations of all employee benefits.

   January 01, 2013

IAS 27

  

Separate Financial Statements

 

Issued in May 2011, replaces IAS 27 (2008). The scope of this standard is restricted from this change only separate financial statements, as aspects relating to the definition of control and consolidation were removed and included in the IFRS 10. Early adoption is permitted in conjunction with IFRS 10, IFRS 11 and IFRS 12 and the amendment to IAS 28.

  

January 01, 2013

 

28


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

Standards and interpretations

  

Content

  

Obligatory application for
years beginning after

IFRS 9

  

Financial Instruments

 

Issued in December 2009, amending the classification and measurement of financial assets. Later this rule was amended in November 2010 to include treatment and classification of liabilities. Early adoption is permitted.

   January 01, 2015

IFRS 10

  

Consolidated Financial Statements

 

Issued in May 2011, replaces the SIC 12 “Consolidation of special purpose entities and parts of IAS 27” Consolidated Financial Statements. “Clarifications and establishing new parameters for the definition of control, and the principles for the preparation of consolidated financial statements. Early adoption is permitted in conjunction with IFRS 11, 12 and IFRS amendments to IAS 27 and 28.

   January 01, 2013

IFRS 11

  

Joint Arrangements

 

Issued in May 2011, replaces IAS 31 “Interests in Joint Ventures” and SIC 13 “jointly controlled entities”. Among its modifications include eliminating the concept of jointly controlled assets and the possibility of proportional consolidation of entities under common control. Early adoption is permitted in conjunction with IFRS 10, 12 and IFRS amendments to IAS 27 and 28.

   January 01, 2013

IFRS 12

   Disclosure of shareholdings in other entities Issued in May 2011, applies to those entities that hold investments in subsidiaries, joint ventures, associates. Early adoption is permitted in conjunction with IFRS 10, 11 and IFRS amendments to IAS 27 and 28.    January 01, 2013

IFRS 13

  

Fair Value Measurement

 

Issued in May 2011, brings together in one standard way to measure the fair value of assets and liabilities and the disclosures necessary on it, and incorporates new concepts and explanations for measurement.

   January 01, 2013

IFRIC 20

   Stripping Costs in the production phase of open pit mines Issued in October 2011, regulates the recognition of costs for the removal of waste overload “Stripping Costs” in the production phase of a mine as an asset, the initial and subsequent measurement of this asset. Additionally, the interpretation requires entities to produce financial statements mining IFRS assets punish “Stripping Costs” existing retained earnings when they cannot be attributed to an identifiable component of a reservoir.    January 01, 2013

 

29


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

Amendments and improvements

  

Contents

  

Obligatory application for
years beginning after

IAS 28

   Investments in associates and joint ventures Issued in May 2011, regulates the accounting treatment of these investments by applying the equity method. Early adoption is permitted in conjunction with IFRS 10, IFRS 11 and IFRS 12 and the amendment to IAS 27.    January 01, 2013

IAS 1

   Presentation of Financial Statements Issued in June 2011. The main modification of this amendment requires that the items of Other Comprehensive Income will be categorized and grouped by evaluating whether they will be potentially reclassified to earnings in subsequent periods. Early adoption is permitted.    July 01, 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.

 

30


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

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.

 

     03/31/2012    12/31/2011

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
     03/31/2012    12/31/2011

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

   113,152,446

 

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 ThU.S.$ 21,350 (ThU.S.$66,438 as of March 31, 2011) presented in Consolidated Statement of Changes in Net Equity corresponds to the provision of minimum dividend registered corresponding to the 2012 period (see Note 26).

In the Statements of cash flows, the line “Dividends paid by the parent company” reflects the amount of ThU.S.$2,646 as of March 31, 2011, which corresponds to payments made by special purpose companies.

As of March 31, 2012, there has been no payment of dividends.

The following are the dividends paid during fiscal year 2011 and the corresponding amount per share:

 

Detail of Dividend Paid, Ordinary Shares

  

Dividend Paid

   Provisional Dividend

Type of Shares for which there is a Dividend Paid

   Unlisted Ordinary Shares

Date of Dividend Paid

   12-13-2011

Amount of Dividend

   ThU.S.$ 87,997

Number of Shares for which Dividends are Paid

   113,152,446

Dividend per Share, Ordinary Share

   U.S.$ 0.77768

 

31


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

Detail of Dividend Paid, Ordinary Shares

  

Dividend Paid

   Final Dividend

Type of Shares for which there is a Dividend Paid

   Unlisted Ordinary Shares

Date of Dividend Paid

   05-10-2011

Amount of Dividend

   ThU.S.$ 182,770

Number of Shares for which Dividends are Paid

   113,152,446

Dividend per Share, Ordinary Share

   U.S.$ 1.61525

 

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.

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.

 

32


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

d) Disclosures of other Information

Below are balances of Other Income by activity, Other Expenses by activity, Financing Income, Financing Costs and Participation in income (loss) of associates and joint venture as of March 31, 2012 and 2011:

 

      January - March  
      2012
ThU.S.$
    2011
ThU.S.$
 

Classes of Other Income by activity

    

Other Operating Income, Total

     61,725        64,575   

Gain from changes in fair value of biological assets (See note 20)

     43,890        57,184   

Revenue from export promotion

     746        1,581   

Insurance compensation, net of earthquake related losses (*)

     —          408   

Leases received

     757        811   

Gain on sales of assets

     5,874        321   

Other operating results (sale materials and waste, Right of way, indemnity insurance)

     10,458        4,270   

Classes of Other Expenses by activity

    

Total of other expenses by activity

     (34,137     (12,410

Depreciations

     (156     (151

Contingent provision

     (945     (840

Gastos operacionales plantas detenidas

     (11,055     (955

Expenses projects

     (4,186     —     

Loss on sale / Loss of assets

     (5,706     —     

Loss of forest due to fires

     (2,218     (3,556

Other Taxes

     (1,266     (1,096

Research and development expenses

     (1,457     (664

Compensation and eviction

     (1,070     (603

Other expenses (cost of projects and studies, donations, fines, adjustments, repayments insurance )

     (6,078     (4,545

Classes of financing income

    

Financing income, total

     3,797        7,286   

Financial income from mutual funds—deposits

     2,695        5,272   

Financial income resulting from swap—forward

     —          1,613   

Other financial income

     1,102        401   

Classes of financing costs

    

Financing costs, Total

     (58,082     (51,575

Interest expense, Loans banks

     (2,786     (2,088

Interest expense, Bonds

     (41,121     (42,203

Interest expense, financial instruments

     (10,754     (4,185

Other financial costs

     (3,421     (3,099

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

    

Total

     (429     (3,896

Investments in associates

     1,093        169   

Joint ventures

     (1,522     (4,065

 

(*) Corresponds to the income from indemnity insurance net costs of impairment write offs and operational costs of affected plants.

 

33


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

Below is the Balance of Expenses by nature:

 

      January - March  

Cost of sales

   2012
ThU.S.$
     2011
ThU.S.$
 

Timber

     219,447         187,864   

Forestry labor costs

     141,517         126,304   

Depreciation

     53,431         51,993   

Maintenance costs

     43,873         51,531   

Chemical costs

     76,693         74,556   

Sawmill Services

     45,925         42,937   

Others Raw Materials

     35,056         26,575   

Indirect costs

     43,956         20,568   

Energy and fuel

     31,005         25,854   

Cost of electricity

     13,108         15,959   

Port Costs

     6,280         6,142   

wages and others salaries

     20,559         13,346   

Total

     730,850         643,629   
      January - March  

Distribution expenses

   2012
ThU.S.$
     2011
ThU.S.$
 

Sale costs

     7,811         10,606   

Commissions

     3,646         3,484   

Insurances

     1,023         760   

Doubtful assets

     5         634   

Other sales expenses

     3,137         5,728   

Shipping and freight costs

     91,222         95,932   

Port services

     711         845   

Freights

     86,110         89,736   

Otrher shipping and freight costs

     4,401         5,351   

Total

     99,033         106,538   
     January - March  

Administration expenses

   2012
ThU.S.$
     2011
ThU.S.$
 

wages and others salaries

     41,624         35,942   

Marketing, advertising, promotion and publications expenses

     1,740         1,502   

Insurances

     6,242         2,197   

Depreciations and amortizacion not paid

     2,684         2,332   

Computer services

     3,080         3,642   

Office, warehouse and machinery leases

     2,705         2,535   

External audits

     1,059         785   

Donations, contribitions, grants

     2,064         1,823   

Fees (advices technical. Legal )

     14,258         13,416   

Property taxes, patents and municipal rigths

     2,630         3,332   

Other administration expenses (travel within and outside the country,cleaning services, security, basic services)

     24,736         17,531   

Total

     102,823         85,037   

 

            January - March  

Expenses for

       Note          2012
ThU.S.$
     2011
ThU.S.$
 

Depreciations

     7         57,195         56,713   

Employee benefits

     10         93,446         77,963   

Amortization

     19         373         336   

 

34


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

NOTE  3. INVENTORIES

 

Components of Inventory

   03/31/2012
ThU.S.$
     12/31/2011
ThU.S.$
 

Raw Materials

     108,929         90,587   

Production Supplies

     73,019         74,658   

Work in progress

     47,760         58,594   

Finished goods

     432,846         446,289   

Parts

     130,132         123,071   

Other Inventories

     1,961         1,905   

Total Inventories

     794,647         795,104   

As of March 31 2012, a cost of sales of inventories amounted to ThU.S.$ 725,196 (ThU.S.$ 633,436 as of March 31, 2011).

In order to allow the registered inventories to net realizable value, at March 31, 2012, a reduction of inventories has been recognized, related to allowance of obsolescence as of ThU.S.$457 (ThU.S.$ 2,957 as of December 31 , 2011) and impaired inventories of ThU.S.$20,235 (ThU.S.$ 315 as of December 31, 2011) This reduction of inventory is mainly a result of the fire on Panels division that occurred in January 2012 in the forestry and industrial complex Nueva Aldea.

The obsolescence provision is calculated according to the historical information and the age of the inventories.

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

Agricultural Products

Agricultural Products relate mainly to forestry products that are intended for sale pertaining to the operation and are valued at fair value at the closing period. These are presented in the Consolidated Balance Sheet under Inventories in the Raw Material item.

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.

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.

 

35


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

Components of Cash and Cash Equivalents

   03/31/2012
ThU.S.$
     12/31/2011
ThU.S.$
 

Cash on hand

     3,351         527   

Banks

     48,178         31,097   

Short term deposit

     320,096         128,526   

Mutual Funds

     149,312         155,751   

Other cash and cash equivalents (*)

     17,033         —     

Total

     537,970         315,901   

The following tables detail the value of the cost of assets and liabilities acquired by Arauco Panels USA LLC. Dated on January 24, 2012 and the investments in Greenagro S.A. dated on December 20, 2011. (see Note 14).

 

2012

Purchase of assets

   ThU.S.$  

Adquisition on Arauco Panels USA LLC.

  

Cash paid for acquisitions and cash equivalents

     62,711   

Cash and cash equivalents held by acquired entities

     —     

Net cash paid to acquire entities

     62,711   
  

 

 

 

Net Assets less Cash and Cash equivalents of acquired entity

     62,711   
  

 

 

 

 

2011

Purchase of Investments

   ThU.S.$  

Acquisition: Greenagro S.A.

  

Cash paid for acquisitions and cash equivalents

     10,768   

Cash and cash equivalents held by acquired entities

     (537

Net cash paid to acquire entities

     10,231   
  

 

 

 

Net Assets less Cash and Cash equivalents of acquired entity

     10,231   
  

 

 

 

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 March 31, 2012 and applied uniformly to all periods presented in these consolidated interim financial statements.

Changes in the Treatment of Accounting Policy

The financial statements as of March 31, 2012 do not show changes in accounting policies compared to the same period last year.

 

36


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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 20% in Chile, 35% in Argentina and 34% in Brazil.

On July 30, 2010 Law No. 20,455 for national reconstruction financing was published in the Chilean Official Gazette (Diario Oficial de Chile). One of the most important changes was the increase in First Category Taxes for revenues received and /or accrued during commercial years 2011 and 2012, which increased rates of 20% and 18.5%, respectively.

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.

Deferred Tax Assets

The following table details deferred tax assets:

 

Deferred Tax Assets

   03/31/2012
ThU.S.$
     12/31/2011
ThU.S.$
 

Deferred Tax Assets related to Provisions

     3,813         7,878   

Deferred Tax Assets related to accrued liabilities

     4,033         4,766   

Deferred Tax Assets related to Post-Employment obligations

     7,082         6,625   

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

     1,762         1,721   

Deferred Tax Assets related to Financial Instruments Restatements

     455         789   

Deferred Tax Assets related to tax losses

     76,560         71,870   

Valuation of biological assets

     4,612         5,244   

Valuation of inventory

     3,774         3,543   

Income provision

     4,131         4,064   

Trade debtors and receivables

     4,273         4,458   

Defferred tax Assets related to Others

     28,503         24,932   

Deferred Tax Assets Total

     138,998         135,890   

As of the date of the present financial statement, some of Arauco’s subsidiaries present tax losses of ThU.S.$ 398,309 (ThU.S.$ 343,311 as of December 31, 2011) 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.

 

37


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

Deferred Tax Liability

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

The following table details deferred tax liabilities:

 

Deferred Tax Liabilities

   03/31/2012
ThU.S.$
     12/31/2011
ThU.S.$
 

Deferred Tax Liabilities related to Revaluated Property, Plant and equipment

     749,107         747,450   

Deferred Tax Liabilities related to Financial Instrument restatement

     12,770         3,723   

Valuation of biological asset

     420,897         426,250   

Valuation of inventory

     13,742         14,509   

Valuation of prepaid expenses

     17,616         —     

Differences in valuation of deferred expenditures

     47,198         41,487   

Deferred Tax Liabilities related to Others (goodwill, investment affiliates,unemployment insurance)

     16,375         22,814   

Deferred Tax Liabilities Total

     1,277,705         1,256,233   

The effect of deferred taxes related to financial hedging instruments corresponds to a payment of ThU.S.$ 1,098 as of March 31, 2012 (payment of ThU.S.$ 455 as of March 31, 2011), which is presented under Hedge reserves in the Statement of Changes in Net Equity.

From the deferred tax assets and deferred tax liabilities listed in the above tables, approximately ThU.S.$ 17,002 and ThU.S.$ 111,906 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.

Temporary Differences

The following tables summarize current asset and liability temporary differences:

 

     03/31/2012      12/31/2011  

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

     62,438            64,020      

Tax Loss

     76,560            71,870      

Deferred Tax Liabilities

        1,277,705            1,256,233   

Total

     138,998         1,277,705         135,890         1,256,233   

 

     January - March  

Detail of Temporary Difference Income and Loss Amounts

   2012
ThU.S.$
    2011
ThU.S.$
 

Deferred Tax Assets

     (1,965     (9,341

Tax Loss

     7,769        11,731   

Deferred Tax Liabilities

     (11,461     (11,261

Total

     (5,657     (8,871

 

38


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

Income Tax Expense (Income)

Income Tax consists of the following:

 

     January - March  

Income Tax composition

   2012
ThU.S.$
    2011
ThU.S.$
 

Current income tax expense

     (10,088     (39,159

Tax benefit arising from unrecognized tax assets previously used to reduce tax expense

     6,240        —     

Previous period current tax adjustments

     212        949   

Other current tax expenses

     (35     (79

Current Tax Expense, Net

     (3,671     (38,289

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

     (14,590     (22,607

Deferred income from taxes relative to tax rate changes or new fees

     86        2,005   

Tax benefit arising from unrecognized tax assets previusly used to reduce expenses due to deferred taxes

     7,943        11,731   

Other current tax expenses

     904        —     

Total deferred Tax Expense, Net

     (5,657     (8,871

Income Tax Expense, Total

     (9,328     (47,160

The following table details the income tax for foreign and national companies as of March 31, 2012 and 2011:

 

     January - March  
     2012
ThU.S.$
    2011
ThU.S.$
 

Foreign current tax

     (1,556     (12,979

National current tax

     (2,115     (25,310

Current tax, Total

     (3,671     (38,289

Foreign deferred tax

     6,599        2,575   

National deferred tax

     (12,256     (11,446

Deferred tax, Total

     (5,657     (8,871

Income (expense) due to Income Tax, Total

     (9,328     (47,160

Income Tax Expense Reconciliation using the Effective Rate method

Income tax expenditure reconciliation is as follows:

 

     January - March  

Reconciliation of Income tax from Statutory Rate to Effective Tax Rate

   2012
ThU.S.$
    2011
ThU.S.$
 

Tax Expense Using Statutory Rate

     (11,440     (44,733

Tax effect of rates in other jurisdictions

     606        (5,477

Tax effect of non taxable ordinary income

     2,689        4,382   

Tax effect of non tax deductible expenses

     (8,199     (8,174

Tax effect of tax loses unrecognized for previous periods

     1,754        734   

Tax effect of tax rates changes

     86        2,511   

Tax effect of excess tax for previous periods

     212        949   

Other Increases (Decreases) Legal Taxes

     4,964        2,648   

Adjustment to Tax Expense using the Statutory Rate, Total

     2,112        (2,427

Tax Expenses Using the Effective Rate

     (9,328     (47,160

 

39


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

NOTE 7. PROPERTY, PLANT AND EQUIPMENT

 

Properties, Plant and Equipment, Net

   03/31/2012
ThU.S.$
    12/31/2011
ThU.S.$
 

Construction in progress

     793,173        663,971   

Land

     812,901        805,804   

Buildings

     1,445,872        1,459,759   

Plant and equipment

     2,257,263        2,290,423   

Information technology equipment

     22,983        23,740   

Fixed facilities and accessories

     5,840        6,010   

Motorized vehicles

     9,349        10,152   

Others

     60,291        64,313   

Total Net

     5,407,672        5,324,172   

Properties, Plant and Equipment, Gross

    

Construction in progress

     793,173        663,971   

Land

     812,901        805,804   

Buildings

     2,614,698        2,616,914   

Plant and equipment

     4,312,946        4,321,846   

Information technology equipment

     55,510        55,772   

Fixed facilities and accessories

     24,129        23,942   

Motorized vehicles

     34,010        34,447   

Others

     83,969        87,983   

Total Gross

     8,731,336        8,610,679   

Accumulated depreciation and impairment

    

Buildings

     (1,168,826     (1,157,155

Plant and equipment

     (2,055,683     (2,031,423

Information technology equipment

     (32,527     (32,032

Fixed facilities and accessories

     (18,289     (17,932

Motorized vehicles

     (24,661     (24,295

Others

     (23,678     (23,670

Total

     (3,323,664     (3,286,507

 

40


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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.

 

     03/31/2012
ThU.S.$
     12/31/2011
ThU.S.$
 

Collateral amount of property, plant and equipament

     45,300         56,279   

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

 

     03/31/2012
ThU.S.$
     12/31/2011
ThU.S.$
 

Amount committed for the acquisition of property, plant and equipment

     77,668         114,212   
     03/31/2012
ThU.S.$
     12/31/2011
ThU.S.$
 

Disbursements for property, plant and equipment under construction

     137,875         537,398   

 

41


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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 March 31, 2012 and December 31, 2011:

 

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 01/01/2012

    663,971        805,804        1,459,759        2,290,423        23,740        6,010        10,152        64,313        5,324,172   

Changes

                 

Additions

    138,128        546        1,054        4,926        8        13        583        436        145,694   

Adquisiones de Negocios

    —          36        12,215        43,753        —          —          —          —          56,004   

disposals

    —          —          (12     (114     —          —          —          —          (126

Withdrawals

    (6,912     (14     (20,778     (42,635     (91     (74     (934     (5,088     (76,526

Depreciation costs

    —          —          (18,887     (41,681     (666     (385     (725     (74     (62,418

Exchange rate increase (decrease) of foreign currency

    3,455        6,529        4,161        6,034        (14     40        273        394        20,872   

Transfers work in progress closed

    (5,469     —          8,360        (3,443     6        236        —          310        —     

Total changes

    129,202        7,097        (13,887     (33,160     (757     (170     (803     (4,022     83,500   

Closing balance 03/31/2012

    793,173        812,901        1,445,872        2,257,263        22,983        5,840        9,349        60,291        5,407,672   

 

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

    537,398        5,549        5,281        16,747        276        750        1,288        4,184        571,473   

Acquisitions of business

    —          7,293        499        86        —          —          51        1        7,930   

disposals

    (1,213     (1,113     (203     (632     —          —          (39     (768     (3,968

Withdrawals

    (10,587     (871     (85     (2,789     (3     (2     (7     (5,352     (19,696

Depreciation costs

    —          —          (74,478     (171,646     (2,781     (1,463     (2,615     (1,458     (254,441

Net movement of earthquake assets

    (61,209     —          7,232        76,432        63        (2     (242     7,497        29,771   

Provision Impairment

    —          —          (34     (4,064     —          —          —          (2,803     (6,901

Exchange rate increase (decrease) of foreign currency

    (15,227     (28,022     (10,686     (31,448     (88     (174     (53     (2,045     (87,743

Reclassification of assets held for sale

    —          (8     137        (1,127     —          —          —          —          (998

Transfers work in progress closed

    (347,500     1,688        114,412        220,541        9,310        3,244        1,712        (3,407     —     

Total changes

    101,662        (15,484     42,075        102,100        6,777        2,353        95        (4,151     235,427   

Closing balance 03/31/2011

    663,971        805,804        1,459,759        2,290,423        23,740        6,010        10,152        64,313        5,324,172   

 

42


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

The depreciation charged to income as of March 31, 2012 and 2011 is as follows:

 

     January -March  

Depreciation

   2012
ThU.S.$
     2011
ThU.S.$
 

Cost of sale

     53,431         52,586   

Administration expenses

     2,311         1,996   

Other operation expenses

     1,453         2,131   

Total

     57,195         56,713   

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   

The following table is a sensitivity analysis for depreciation based on changes in useful life:

 

Useful life variance

   %  

5% +

     4.76

5% -

     -5.26

 

43


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

NOTE 8. LEASES

Leases

 

     03/31/2012
ThU.S.$
     12/31/2011
ThU.S.$
 

Property, Plant & Equipment Financial Leasing

     40         58   

Plant and equipament

     40         58   

Reconciliation of Financial Lease Minimum Payments:

 

     03/31/2012  

Minimum lease payments, lease payment oblogations

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

Due within one year

     31         —           31   

Due within one and five years

     —           —           —     

Due beyond five years

     —           —           —     

Total

     31         —           31   
     12/31/2011  
     Gross
ThU.S.$
     Interest
ThU.S.$
     Present
Value
ThU.S.$
 

Due within one year

     47         1         46   

Due within one and five years

     —           —           —     

Due beyond five years

     —           —           —     

Total

     47         1         46   

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.

Lessor

Reconciliation of Financial Lease Minimum Payments:

 

     03/31/2012  

Minimum Financial Lease Payments Receivable, Financial Lease

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

Due within one year

     3,180         212         2,968   

Due within one and five years

     2,327         163         2,164   

Due beyond five years

     —           —           —     

Total

     5,507         375         5,132   
     12/31/2011  

Minimum Financial Lease Payments Receivable, Financial Lease

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

Due within one year

     3,510         249         3,261   

Due within one and five years

     2,766         186         2,580   

Due beyond five years

     —           —           —     

Total

     6,276         435         5,841   

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.

Arauco reports the value of its lease contracts under financial leasing. These contracts include leases of forestry machinery and equipment, for periods not exceeding five years and market interest rates. They also include an early termination option, according to general and special conditions established in each contract.

 

44


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

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

NOTE 9. ORDINARY REVENUE

 

     January - march  

Types of Ordinary Revenue

   2012
ThU.S.$
     2011
ThU.S.$
 

Sale of goods

     979,417         1,011,898   

Service Contracts

     31,012         29,823   

Total

     1,010,429         1,041,721   

NOTE 10. EMPLOYEE BENEFITS

Classes of Benefits and Expenses by Employee

 

     January - March  
      2012
ThU.S.$
     2011
ThU.S.$
 

Personnel Expenses

     93,446         77,963   

Wages and salaries

     89,856         75,821   

Compensation for years of service

     3,590         2,142   

The main actuarial assumptions used by Arauco in the calculation of the prevision of compensation for year services as of March 31, 2012 and December 31, 2011 are:

 

Discount rate

   3.50%

Inflation

   3.00%

Mortality rate

   RV-2009

The following tables detail the balances and the movement of payments for years of service provisioned as of March 31, 2012 and December 31 2011:

 

     03/31/2012
ThU.S.$
    12/31/2011
ThU.S.$
 

Current

     3,534        3,307   

Non-current

     38,635        36,102   

Total

     42,169        39,409   

Roll- forward

   03/31/2012
ThU.S.$
    12/31/2011
ThU.S.$
 

Opening balance

     39,409        39,276   

Current service cost

     413        1,668   

Interest cost

     625        2,553   

Actuarial gains

     2,801        6,274   

Benefits paid

     (3,663     (6,837

Increase (decrease) for currency exchange

     2,584        (3,525

Closing balance

     42,169        39,409   

 

45


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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 March 31, 2012 and December 31, 2011 are as follows:

 

     03-31-2012
ThU.S.$
     12-31-2011
ThU.S.$
 

Total Current Assets

     2,847,225         2,462,660   

Cash and Cash Equivalents

     537,970         315,901   

U.S Dollar

     422,479         196,546   

Euro

     25,808         58,328   

Real

     41,981         35,238   

Argentine pesos

     6,465         4,960   

Other currencies

     7,361         7,212   

$ not adjustable

     33,876         13,617   

Other Financial Assets, Current

     149         —     

U.S Dollar

     149         —     

Other current non financial assets

     233,769         207,196   

U.S Dollar

     162,249         138,815   

Euro

     64         14   

Real

     23,192         23,319   

Argentine pesos

     11,368         10,553   

Other currencies

     10,620         12,500   

$ not adjustable

     24,859         21,995   

U.F.

     1,417         —     

Trade and Other receivables-net

     840,630         740,416   

U.S Dollar

     573,246         500,790   

Euro

     27,609         25,800   

Real

     80,229         70,564   

Argentine pesos

     26,340         26,827   

Other currencies

     28,389         30,480   

$ not adjustable

     100,122         82,754   

U.F.

     4,695         3,201   

Related party receivables, Current

     99,123         70,179   

U.S Dollar

     97,568         69,356   

Real

     881         822   

$ not adjustable

     674         1   

Inventories

     794,647         795,104   

U.S Dollar

     680,232         677,337   

Real

     93,580         99,304   

$ not adjustable

     20,835         18,463   

Biological assets, current

     275,805         281,418   

U.S Dollar

     245,562         238,812   

Real

     30,243         42,606   

Tax receivables

     49,839         37,153   

U.S Dollar

     18,262         10,763   

Euros

     18         —     

Real

     8,001         6,745   

Argentine pesos

     1,714         7   

Other currencies

     11,942         11,199   

$ not adjustable

     9,902         8,439   

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

     15,293         15,293   

U.S Dollar

     15,293         15,293   

 

46


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

     03-31-2012
ThU.S.$
     12-31-2011
ThU.S.$
 

Total Non Current Assets

     10,199,980         9,995,062   

Other non-current financial assets

     48,430         1,162   

U.S Dollar

     47,288         —     

Pesos Argentinos

     1,142         1,162   

Other non-current and non-financial assets

     105,912         99,901   

U.S Dollar

     87,288         78,046   

Real

     16,885         19,971   

Argentine pesos

     548         525   

Other currencies

     127         383   

$ not adjustable

     1,064         976   

Trade receivables, non current

     7,044         7,332   

U.S Dollar

     489         641   

$ not adjustable

     2,567         2,538   

U.F.

     3,988         4,153   

Investment in associates accounted for using equity method

     934,807         886,706   

U.S Dollar

     670,916         634,440   

Real

     263,891         252,266   

Intangible assets

     16,745         17,609   

U.S Dollar

     11,586         12,729   

Real

     5,030         4,751   

Other currencies

     25         26   

$ not adjustable

     104         103   

Goodwill

     60,782         59,124   

U.S Dollar

     2,857         2,857   

Real

     57,925         56,267   

Property, plant and equipment

     5,407,672         5,324,172   

U.S Dollar

     4,633,387         4,599,582   

Euros

     38         37   

Real

     763,722         715,486   

$ not adjustable

     10,525         9,067   

Biological assets, non-current

     3,479,590         3,463,166   

U.S Dollar

     3,058,181         3,060,006   

Real

     421,409         403,160   

Deferred tax assets

     138,998         135,890   

U.S Dollar

     75,232         77,179   

Real

     49,896         46,478   

Argentine pesos

     13,326         11,688   

Other currencies

     87         150   

$ not adjustable

     457         395   

 

47


CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Notes to the Consolidated Financial Statements

March 31, 2012

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

 

 

     Up to 90 days
ThU.S.$
     03-31-2012
From 91 days to
1 year

ThU.S.$
     Total
ThU.S.$
     Up to 90  days
ThU.S.$
     12-31-2011
From 91 days to
1 year

ThU.S.$
     Total
ThU.S.$
 

Total Liabilities, current

     836,909         171,155         1,008,064         924,097         107,848         1,031,945   

Other financial liabilities, current

     60,798         124,268         185,066         157,944         91,048         248,992   

U.S Dollar

     40,018         115,870         155,888         143,129         74,523         217,652   

Real

     6,736         —           6,736         11,849         20         11,869   

U.F.

     14,044         8,398         22,442         2,966         16,505         19,471   

Bank Loans

     32,197         93,836         126,033         120,847         64,971         185,818   

U.S Dollar

     25,461         93,836         119,297         108,998         64,951         173,949   

Real

     6,736         —           6,736         11,849         20         11,869   

Financial Leases

     18         13         31         18         28         46   

U.F.

     18         13         31         18         28         46   

Other Loans

     28,583         30,419         59,002         37,079         26,049         63,128   

U.S Dollar

     14,557         22,034         36,591         34,131         9,572         43,703   

U.F.

     14,026         8,385         22,411         2,948         16,477         19,425   

Trade and Other payables

     408,031         15,766         423,797         389,902         7,171         397,073   

U.S Dollar

     79,669         7,506         87,175         73,583         412         73,995   

Euro

     4,639         —           4,639         43,392         —           43,392   

Real

     51,834         —           51,834         9,117         —           9,117   

Argentine pesos

     29,034         —           29,034         32,235         —           32,235   

Other currencies

     4,253         195         4,448         2,119         —           2,119   

$ not adjustable

     238,017         3,121         241,138         229,245         3,648         232,893   

U.F.

     585         4,944         5,529         211         3,111         3,322   

Related party payables

     12,339         —           12,339         9,785         —           9,785   

U.S Dollar

     12,339         —           12,339         9,751         —           9,751   

$ no reajustables

     —           —           —           34         —           34   

Other provisions, current

     8,965         —           8,965         8,607         —           8,607   

Dólares

     138         —           138         244         —           244   

Argentine pesos

     8,827         —           8,827         8,363         —           8,363   

Tax liabilities

     128,204         102         128,306         143,008         1,981         144,989   

U.S Dollar

     126,607         —           126,607         139,838         1,571         141,409   

Euros

     105         —           105         78         —           78   

Real

     12         —           12         14         —           14   

Argentine pesos

     46         —           46         2,219         —           2,219   

Other currencies

     106         102         208         30         284         314   

$ not adjustable

     1,328         —           1,328         829         126         955   

Current provision for employee benefits

     3,189         345         3,534         2,976         331         3,307   

$ not adjustable

     3,189         135         3,324         2,976         123         3,099   

U.F.

     —           210         210         —           208         208   

Other current non-financial liabilities

     215,383         30,674         246,057         211,875         7,317         219,192   

U.S Dollar

     157,873         28,869         186,742         160,505         5,652         166,157   

Real

     36,818         —           36,818         28,094         —           28,094   

Argentine pesos

     4,810         —           4,810         5,230         —           5,230   

Other currencies

     12,567         —           12,567         11,626         —           11,626   

$ not adjustable

     3,314         943         4,257         6,419         865         7,284   

U.F.

     1         862         863         1         800         801   
     Up to 90 days
ThU.S.$
     03-31-2012
From 91 days to
1 year

ThU.S.$
     Total
ThU.S.$
     Up to 90 days
ThU.S.$
     12-31-2011
From 91 days to
1 year

ThU.S.$
     Total
ThU.S.$
 

Total non-current liabilities

     2,356,377         2,581,403         4,937,781         2,097,788         2,297,839         4,395,627   

Other non-current financial liabilities

     1,428,750         2,055,911         3,484,661         1,187,737         1,781,278         2,969,015   

U.S Dollar

     1,302,492         1,501,877         2,804,369         1,067,739         1,278,879         2,346,618   

Real

     3,839         12,665         16,504         6,462         690         7,152   

U.F.

     122,419         541,369         663,788         113,536         501,709         615,245   

Bank Loans

     371,484         14,777         386,261         406,754         769         407,523   

U.S Dollar

     367,645         2,112         369,757         400,292         79         400,371   

Real

     3,839         12,665         16,504         6,462         690         7,152   

Other Loans

     1,057,266         2,041,134         3,098,400         780,983         1,780,509         2,561,492   

U.S Dollar

     934,847         1,499,765         2,434,612         667,447         1,278,800         1,946,247   

U.F.

     122,419         541,369         663,788         113,536         501,709         615,245   

Other non-current provisions

     9,092         1,862         10,954         7,799         1,889         9,688   

U.S Dollar

     —           —           —           2,959         27         2,986   

Real

     9,092         —           9,092         4,840         —           4,840   

Argentine pesos

     —           1,862         1,862         —           1,862         1,862   

Deferred tax liabilities

     766,377         511,328         1,277,705         753,603         502,630         1,256,233   

U.S Dollar

     562,297         284,971         847,268         553,131         276,008         829,139   

Real

     203,890         —           203,890         200,339         —           200,339