-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vmy9uoZWC/xvDJs/Ap66p9Xh1EuCCHoSr+pICV8AfCu5kBlRPtdD5w4mbBa+xcR0 cDDMRHWHIfgWiRppriegXg== 0001157523-05-004473.txt : 20050509 0001157523-05-004473.hdr.sgml : 20050509 20050509105321 ACCESSION NUMBER: 0001157523-05-004473 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20050509 FILED AS OF DATE: 20050509 DATE AS OF CHANGE: 20050509 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TENARIS SA CENTRAL INDEX KEY: 0001190723 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31518 FILM NUMBER: 05810152 BUSINESS ADDRESS: STREET 1: 420 FIFTH AVENUE STREET 2: 18TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: 212-376-6500 MAIL ADDRESS: STREET 1: 23 AVENUE MONTEREY CITY: LUXEMBOURG STATE: N4 ZIP: L 2086 6-K 1 a4882902.txt TENARIS FORM 6 - K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A - 16 OR 15D - 16 OF THE SECURITIES EXCHANGE ACT OF 1934 As of May 9, 2005 TENARIS, S.A. (Translation of Registrant's name into English) TENARIS, S.A. 46a, Avenue John F. Kennedy L-1855 Luxembourg (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or 40-F. / Form 20-F _\/_ Form 40-F____ Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12G3-2(b) under the Securities Exchange Act of 1934. / Yes _____ No _\/_ If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- . The attached material is being furnished to the Securities and Exchange Commission pursuant to Rule 13a-16 and Form 6-K under the Securities Exchange Act of 1934, as amended. This report contains Tenaris' consolidated condensed interim financial statements as of March 31, 2005. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: May 9, 2005 Tenaris, S.A. BY: /S/ CECILIA BILESIO - ----------------------- Cecilia Bilesio Corporate Secretary TENARIS S.A. CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS MARCH 31, 2005 46a, Avenue John F. Kennedy - 2nd Floor. L - 1855 Luxembourg 3
CONSOLIDATED CONDENSED INTERIM INCOME STATEMENT (all amounts in USD thousands, unless otherwise stated) THREE-MONTH PERIOD ENDED MARCH 31, -------------------------------- NOTES 2005 2004 --------------- ---------------- (UNAUDITED) Net sales 3 1,452,927 859,346 Cost of sales 4 (865,128) (620,457) --------------- ---------------- Gross profit 587,799 238,889 Selling, general and administrative expenses 5 (185,083) (139,818) Other operating income (expenses), net 2,967 3,500 --------------- ---------------- Operating income 405,683 102,571 Financial income (expenses), net 6 (41,807) (15,438) --------------- ---------------- Income before equity in earnings (losses) of associated 363,876 87,133 companies and income tax Equity in earnings (losses) of associated companies 30,163 (461) --------------- ---------------- Income before income tax 394,039 86,672 Income tax (114,069) (39,069) --------------- ---------------- Income for the period (1) 279,970 47,603 --------------- ---------------- ATTRIBUTABLE TO (1): Equity holders of the Company 264,234 48,368 Minority interest 15,736 (765) --------------- ---------------- 279,970 47,603 --------------- ---------------- EARNINGS PER SHARE ATTRIBUTABLE TO THE EQUITY HOLDERS OF THE COMPANY DURING THE PERIOD (1) Weighted average number of ordinary shares in issue (thousands) 1,180,537 1,180,371 Earnings per share (USD per share) 0.22 0.04
(1) Up to December 31, 2004 minority interest was shown in the income statement before net income. As required by IAS 1 (revised) as from January 1, 2005 the income for the period disclosed in the income statement does not show minority interest. Earnings per share continue to be calculated on the net income attributable solely to the equity holders of Tenaris (see Note 2 (a)). The accompanying notes are an integral part of these consolidated condensed interim financial statements. The Report of Independent Registered Public Accounting Firm on these consolidated condensed interim financial statements is issued as a separate document. 1
CONSOLIDATED CONDENSED INTERIM BALANCE SHEET (all amounts in USD thousands) AT MARCH 31, 2005 AT DECEMBER 31, 2004 ---------------------------- -------------------- NOTES (UNAUDITED) ASSETS NON-CURRENT ASSETS Property, plant and equipment, net 7 2,116,339 2,164,601 Intangible assets, net (see Note 2 157,733 (b)) 7 49,211 Investments in associated companies 208,108 99,451 Other investments 23,963 24,395 Deferred tax assets 153,946 161,173 Receivables 32,310 2,692,399 151,365 2,650,196 -------------- -------------- CURRENT ASSETS Inventories 1,360,708 1,269,470 Receivables and prepayments 167,690 279,450 Current tax assets 96,604 94,996 Trade receivables 1,131,168 936,931 Other investments - 119,666 Cash and cash equivalents 477,106 3,233,276 311,579 3,012,092 ---------------------------- --------------------------- TOTAL ASSETS 5,925,675 5,662,288 ============== ============= EQUITY (SEE NOTE 2 (A)) CAPITAL AND RESERVES ATTRIBUTABLE TO THE COMPANY'S EQUITY HOLDERS Share capital 1,180,537 1,180,537 Legal Reserves 118,054 118,054 Share Premium 609,733 609,733 Other Distributable Reserve 82 82 Currency translation adjustments (71,126) (30,020) Retained earnings 992,547 2,829,827 617,538 2,495,924 -------------- -------------- MINORITY INTEREST 178,383 165,271 -------------- -------------- TOTAL EQUITY 3,008,210 2,661,195 -------------- -------------- LIABILITIES NON-CURRENT LIABILITIES Borrowings 546,896 420,751 Deferred tax liabilities 346,105 371,975 Other liabilities 166,882 172,442 Provisions 33,219 31,776 Trade payables 4,070 1,097,172 4,303 1,001,247 -------------- -------------- CURRENT LIABILITIES Borrowings 578,915 838,591 Current tax liabilities 276,547 222,735 Other liabilities 124,056 176,393 Provisions 36,908 42,636 Customers advances 189,975 127,399 Trade payables 613,892 1,820,293 592,092 1,999,846 ---------------------------- ---------------------------- TOTAL LIABILITIES 2,917,465 3,001,093 -------------- -------------- TOTAL EQUITY AND LIABILITIES 5,925,675 5,662,288 ============== ==============
Contingencies, commitments and restrictions to the distribution of profits are disclosed in Note 8. The accompanying notes are an integral part of these consolidated condensed interim financial statements. The Report of Independent Registered Public Accounting Firm on these consolidated condensed interim financial statements is issued as a separate document. 2 CONSOLIDATED CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (all amounts in USD thousands)
----------------------------------------------------------------------------------------------- Attributable to equity holders of the Company ----------------------------------------------------------------------- Other Currency Minority Share Legal Share Distributable translation Retained Interest Capital Reserves Premium Reserve adjustments Earnings (see Note 2) Total ------------ ---------- ----------- ---------- ------------ -------- ------------ ---------- (Unaudited) Balance at January 1, 2005 1,180,537 118,054 609,733 82 (30,020) 617,538 165,271 2,661,195 Effect of adopting IFRS 3 (see Note 2(b)) -- -- -- -- -- 110,775 -- 110,775 ---------------------------------------------------------------------------------------------- Adjusted balance at January 1, 2005 1,180,537 118,054 609,733 82 (30,020) 728,313 165,271 2,771,970 Currency translation differences -- -- -- -- (41,106) -- (2,586) (43,692) Acquisition of minority interest -- -- -- -- -- -- (38) (38) Income for the period -- -- -- -- -- 264,234 15,736 279,970 ---------------------------------------------------------------------------------------------- Balance at March 31, 2005 1,180,537 118,054 609,733 82 (71,126) 992,547 178,383 3,008,210 ---------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------- Attributable to equity holders of the Company ----------------------------------------------------------------------- Other Currency Minority Share Legal Share Distributable translation Retained Interest Capital Reserves Premium Reserve adjustments Earnings (see Note 2) Total ------------ ---------- ----------- ---------- ------------ -------- ------------ ---------- (Unaudited) Balance at January 1, 2004 1,180,288 118,029 609,269 96,555 (34,194) (128,667) 119,984 1,961,264 Currency translation differences -- -- -- -- (2,031) -- (213) (2,244) Capital Increase and acquisition of minority interest 249 25 464 82 -- -- (619) 201 Income for the period -- -- -- -- -- 48,368 (765) 47,603 ---------------------------------------------------------------------------------------------- Balance at March 31, 2004 1,180,537 118,054 609,733 96,637 (36,225) (80,299) 118,397 2,006,824 ----------------------------------------------------------------------------------------------
The Distributable Reserve and Retained Earnings calculated according to Luxembourg Law are disclosed in Note 8 (v). The accompanying notes are an integral part of these consolidated condensed interim financial statements. The Report of Independent Registered Public Accounting Firm on these consolidated condensed interim financial statements is issued as a separate document. 3 CONSOLIDATED CONDENSED INTERIM CASH FLOW STATEMENT
THREE-MONTH PERIOD ENDED MARCH 31, ---------------------------------------- (all amounts in USD thousands) 2005 2004 --------------------- ------------------ (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES Income for the period 279,970 47,603 Adjustments for: Depreciation and amortization 51,977 53,824 Income tax accruals less payments 37,478 (10,320) Equity in (earnings) losses of associated companies (30,163) 461 Interest accruals less payments, net 2,344 1,551 Changes in provisions (4,285) (1,068) Proceeding from Fintecna arbitration award net of BHP settlements (See Note 8 (i)) 66,594 (55,090) Change in working capital (209,878) (119,891) Currency translation adjustment and others (11,344) (6,579) --------------------- ------------------ NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 182,693 (89,509) --------------------- ------------------ CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (47,316) (39,912) Capital increase and acquisitions of subsidiaries and associated companies (38) 191 Cost of disposition of property, plant and equipment and intangible assets 1,442 6,519 Dividends and distributions received from associated companies 19,520 - Changes in restricted bank deposits (27,680) - Reimbursement from trust funds 119,666 - --------------------- ------------------ NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 65,594 (33,202) --------------------- ------------------ CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings 398,269 132,066 Repayments of borrowings (516,422) (41,667) --------------------- ------------------ NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (118,153) 90,399 --------------------- ------------------ INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS 130,134 (32,312) MOVEMENT IN CASH AND CASH EQUIVALENTS At beginning of the period 293,824 238,030 Effect of exchange rate changes (298) (378) Increase / (decrease) in cash and cash equivalents 130,134 (32,312) --------------------- ------------------ AT MARCH 31, 423,660 205,340 ===================== ================== CASH AND CASH EQUIVALENTS AT MARCH 31, ---------------------------------------- 2005 2004 ---------------------------------------- Cash and bank deposits 477,106 220,968 Bank overdrafts (12,266) (15,628) Restricted bank deposits (41,180) - ---------------------------------------- 423,660 205,340 ========================================
The accompanying notes are an integral part of these consolidated condensed interim financial statements. The Report of Independent Registered Public Accounting Firm on these consolidated condensed interim financial statements is issued as a separate document. 4 NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS INDEX TO THE NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS 1 Basis of presentation 2 Impact of New Accounting Pronouncements: International Financial Reporting Standards 3 Segment information 4 Cost of sales 5 Selling, general and administrative expenses 6 Financial income (expenses), net 7 Property, plant and equipment and Intangible assets, net 8 Contingencies, commitments and restrictions to the distribution of profits 9 Business acquisitions, incorporation of subsidiaries and other significant events 10 Related party disclosures 5 NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (In the notes all amounts are shown in USD thousands, unless otherwise stated) 1 BASIS OF PRESENTATION Tenaris S.A. (the "Company" or "Tenaris"), a Luxembourg corporation (societe anonyme holding), was incorporated on December 17, 2001 to hold investments in steel pipe manufacturing and distributing companies. The Company holds, either directly or indirectly, controlling interests in various subsidiaries. These consolidated condensed interim financial statements have been prepared in accordance with IAS 34, "Interim Financial Reporting". The accounting policies used in the preparation of the consolidated condensed interim financial statements are consistent with those used in the consolidated financial statements for the year ended December 31, 2004, except for the changes explained in Note 2. These consolidated condensed interim financial statements should be read in conjunction with the consolidated financial statements at December 31, 2004. Certain comparative amounts have been reclassified to conform to changes in presentation in the current period. The preparation of consolidated condensed interim financial statements requires management to make estimates and assumptions that might affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the balance sheet dates, and the reported amounts of revenues and expenses during the reporting periods. Actual results may differ from these estimates. Material intercompany transactions and balances between Tenaris's subsidiaries have been eliminated in consolidation. However, the fact that the measurement currency of some subsidiaries is their respective local currency, generates some financial gains (losses) arising from intercompany transactions, that are included in the consolidated condensed interim income statement under Financial income (expenses), net. These consolidated condensed interim financial statements were approved by Tenaris's board of directors on May 2, 2005. 2 IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS: INTERNATIONAL FINANCIAL REPORTING STANDARDS In December 2003, as a part of the IASB's project to improve International Financial Reporting Standards, the IASB released revisions to certain standards including: IAS 1, "Presentation of Financial Statements"; IAS 16, "Property, Plant and Equipment"; IAS 24, "Related Party Disclosures" and IAS 33, "Earnings per Share". The revised standards must be applied for annual periods beginning on or after January 1, 2005. In addition, during 2004 International Financial Reporting Standard (IFRS) 3, "Business Combinations" was issued. The main impacts on the Tenaris consolidated financial statements are: (a) Presentation of minority interests IAS 1 (revised) requires disclosure, on the face of the income statement, of the entity's income or loss for the period and the allocation of that amount between "income or loss attributable to minority interest" and "income or loss attributable to equity holders of the parent". Earnings per share continue to be calculated on the net income attributable solely to the equity holders of Tenaris. Also, as from January 1, 2005 minority interests is included as equity in the consolidated balance sheet and not longer shown as a separate category. The effect of this change increased the Company's equity at January 1, 2005 by USD165.3 million. (b) IFRS 3 - goodwill and negative goodwill Until December 31, 2004 goodwill was amortized on a straight line basis over its estimated useful life, not to exceed 15 years, and assessed for an indication of impairment at each balance sheet date. Under IFRS 3, the Company ceased amortization from January 1, 2005; accumulated amortization as at December 31, 2004 has been offset against the cost of goodwill. For years ending December 31, 2005 onwards, goodwill have to be tested annually for impairment, as well as when there are indicators of impairment. Amortization included in the three months period ended March 31, 2004 amounted to USD2.2 million. Also, IFRS 3 requires accumulated negative goodwill at December 31, 2004 to be derecognized with a corresponding adjustment to retained earnings. The effect of this change is an increase in the opening balance of the Company's equity at January 1, 2005 of USD110.8 million. Amortization included in the three months period ended March 31, 2004 amounted to USD2.2 million. 6 2 IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS: INTERNATIONAL FINANCIAL REPORTING STANDARDS (CONT'D) (c) IAS 39 Financial instruments: recognition and measurement In accordance with the transition provisions of IAS 39 (revised), the Company designated previously recognized available for sale financial assets as financial assets at fair value through profit or loss. Accordingly, the Company restated the financial asset using the new designation in the comparative financial statements. Adoption of new or revised standards has been made in accordance with the respective transition provisions. 3 SEGMENT INFORMATION PRIMARY REPORTING FORMAT: BUSINESS SEGMENTS
-------------------------------------------------------------------------------- WELDED & OTHER METALLIC SEAMLESS PRODUCTS ENERGY OTHER TOTAL -------------------------------------------------------------------------------- THREE-MONTH PERIOD ENDED (UNAUDITED) MARCH 31, 2005 Net sales 1,105,252 160,434 143,972 43,269 1,452,927 Cost of sales (601,517) (101,631) (137,484) (24,496) (865,128) -------------------------------------------------------------------------------- Gross profit 503,735 58,803 6,488 18,773 587,799 Depreciation and amortization 44,363 3,622 799 3,193 51,977 THREE-MONTH PERIOD ENDED MARCH 31, 2004 Net sales 674,266 66,388 103,923 14,769 859,346 Cost of sales (456,709) (53,610) (100,569) (9,569) (620,457) -------------------------------------------------------------------------------- Gross profit 217,557 12,778 3,354 5,200 238,889 Depreciation and amortization 48,911 3,010 959 944 53,824 Tenaris's main business segment is the manufacture of seamless steel pipes.
SECONDARY REPORTING FORMAT: GEOGRAPHICAL SEGMENTS
------------------------------------------------------------------------------------ SOUTH MIDDLE EAST FAR EAST & AMERICA EUROPE NORTH AMERICA & AFRICA OCEANIA TOTAL ------------------------------------------------------------------------------------ THREE-MONTH PERIOD ENDED (UNAUDITED) MARCH 31, 2005 Net sales 354,590 405,743 414,058 146,623 131,913 1,452,927 Depreciation and amortization 21,083 17,781 11,477 11 1,625 51,977 THREE-MONTH PERIOD ENDED MARCH 31, 2004 Net sales 164,519 307,460 198,486 92,008 96,873 859,346 Depreciation and amortization 26,432 15,893 9,879 10 1,610 53,824
Allocation of net sales is based on the customers' location. Allocation of depreciation and amortization is based on the related assets' location. Although Tenaris's business is managed on a worldwide basis, the companies forming part of Tenaris operate in the five main geographical areas detailed above. 7 4 COST OF SALES
THREE-MONTH PERIOD ENDED MARCH 31, -------------------------------- 2005 2004 ----------------- -------------- (UNAUDITED) INVENTORIES AT THE BEGINNING OF THE PERIOD 1,269,470 831,879 PLUS: CHARGES OF THE PERIOD Raw materials, energy, consumables and other movements 706,519 453,656 Services and fees 73,495 62,613 Labor cost 99,060 87,352 Depreciation of property, plant and equipment 44,812 46,302 Amortization of intangible assets 1,711 2,301 Maintenance expenses 23,048 19,180 Provisions for contingencies 1,200 - Allowance for obsolescence 1,264 (1,123) Taxes 975 655 Others 4,282 3,264 ----------------- -------------- 956,366 674,200 LESS: INVENTORIES AT THE END OF THE PERIOD (1,360,708) (885,622) ----------------- -------------- 865,128 620,457 ----------------- --------------
5 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
THREE-MONTH PERIOD ENDED MARCH 31, ------------------------------- 2005 2004 ---------------- -------------- (UNAUDITED) Services and fees 31,487 25,266 Labor cost 46,035 35,449 Depreciation of property, plant and equipment 2,479 2,544 Amortization of intangible assets 2,975 2,677 Commissions, freights and other selling expenses 68,024 49,459 Provisions for contingencies 1,878 1,275 Allowances for doubtful accounts 5,314 3,721 Taxes 16,822 11,635 Others 10,069 7,792 ---------------- -------------- 185,083 139,818 ---------------- --------------
6 FINANCIAL INCOME (EXPENSES), NET
THREE-MONTH PERIOD ENDED MARCH 31, ------------------------------- 2005 2004 ---------------- -------------- (UNAUDITED) Interest expense (12,442) (8,693) Interest income 2,959 3,095 Net foreign exchange transaction losses and changes in fair value of derivative instruments (*) (33,879) (15,279) Miscellaneous 1,555 5,439 ---------------- -------------- (41,807) (15,438) ---------------- --------------
(*) Includes a loss of USD12.4 million originated by Materiales Siderurgicos Matesi S.A.'s debt with Talta and Sidor. 8 7 PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS, NET
NET PROPERTY, NET INTANGIBLE PLANT AND EQUIPMENT ASSETS -------------------- ------------------ (UNAUDITED) (UNAUDITED) THREE-MONTH PERIOD ENDED MARCH 31, 2005 Opening net book amount 2,164,601 49,211 Effect of adopting IFRS 3 (see Note 2 (b)) - 110,775 Translation differences (43,788) (624) Transfers 3 (3) Additions 44,228 3,088 Disposals (1,414) (28) Depreciation/ Amortization charge (47,291) (4,686) -------------------- ------------------ AT MARCH 31, 2005 2,116,339 157,733 -------------------- ------------------
8 CONTINGENCIES, COMMITMENTS AND RESTRICTIONS TO THE DISTRIBUTION OF PROFITS This note should be read in conjunction with Note 25 included in the consolidated financial statements for the year ended December 31, 2004. The significant changes or events since the annual report are the followings: (i) ARBITRATION PROCEEDING AGAINST FINTECNA On December 28, 2004 the arbitral tribunal rendered a final award in the arbitration proceeding against Fintecna S.p.A. ("Fintecna"), an Italian state-owned entity and successor to ILVA S.p.A, the former owner of Dalmine S.p.A. ("Dalmine") in which Tenaris sought indemnification from Fintecna for amounts paid or payable by Dalmine to the consortium led by BHP Billiton Petroleum Ltd. ("BHP") regarding the failure of an underwater pipeline, manufactured and sold prior to the privatization of Dalmine. According to this final award, Fintecna paid a total amount of EUR93.8 million (approximately USD124.9 million) on March 15, 2005. In addition, on March 29, 2005 Tenaris prepaid to BHP the final instalment of GBP30.4 million plus interests. Consequently, both BHP settlement agreement and the arbitration proceedings have been definitively concluded. (II) CONSORCIO SIDERURGIA AMAZONIA, LTD. ("AMAZONIA") On February 3, 2005 Ylopa Servicos de Consultadoria Lda. ("Ylopa") exercised its option to convert convertible debt instruments it held in Amazonia into common stock. As a result, Tenaris's participation in Amazonia increased from 14.5% to 21.2%, thereby increasing its indirect participation in Siderurgica del Orinoco C.A. ("Sidor") from 8.7% to 12.6%. All of Amazonia's existing shares and shares of Sidor continue to be pledged until the third quarter of 2005. (III) TAX SITUATION: APPLICATION OF INFLATION ADJUSTMENT PROCEDURES As explained in Note 25 (iii) of the consolidated financial statements for the year ended December 31, 2004, on February 11, 2005 Siderca S.A.I.C. ("Siderca") obtained the benefits of a promotional regime established by Argentine Law 25.924. For this reason, Siderca withdrew its legal proceeding related to the application of the inflation adjustment procedure in the income tax returns for the year ended December 31, 2002. On February 21, 2005 Siderca paid ARP69.4 million (USD23.8 million). No charges against the income statement arose from this payment, as Tenaris had previously recorded a provision for this matter. (IV) COMMITMENTS (a) On March 15, 2005 Complejo Siderurgico de Guayana C.A. ("Comsigua") prepaid 100% of the amount owed to the International Finance Corporation, or IFC, for approximately USD42.5 million, related with project financing loans. Tenaris has applied to the IFC for the release from its proportional guarantee of such project loan. 9 8 CONTINGENCIES, COMMITMENTS AND RESTRICTIONS TO THE DISTRIBUTION OF PROFITS (CONT'D) (IV) COMMITMENTS (CONT'D) (b) On March 3, 2005 Tenaris Financial Services S.A., a subsidiary of the Company, made a deposit of USD25.0 million at Deutsche Bank AG London Branch as a collateral for a financial transaction between the mentioned bank and another Tenaris subsidiary, generating a restriction on the availability of such funds. Consequently, total restricted cash at March 31, 2005 amounts to USD41.2 million. (V) RESTRICTIONS TO THE DISTRIBUTION OF PROFITS Under Luxembourg law, at least 5% of the net income per year calculated in accordance with Luxembourg law and regulations must be allocated to the creation of a reserve until such reserve has reached to an amount equal to 10% of the share capital. At March 31, 2005 the Company has created this reserve in full. Shareholders' equity at March 31, 2005 under Luxembourg law and regulations comprises the following captions: Share capital 1,180,537 Legal reserve 118,054 Share premium 609,733 Other distributable reserve 82 Retained earnings including net income for the three month period ended March 31, 2005 731,808 ----------- Total shareholders equity according to Luxembourg law 2,640,214 =========== Tenaris may pay dividends to the extent that it has distributable retained earnings and distributable reserve calculated in accordance with Luxembourg law and regulations. At March 31, 2005, the distributable reserve, including retained earnings, of Tenaris under Luxembourg Law totalled USD731.9 million, as detailed below. Distributable reserve at December 31, 2004 under Luxembourg 536,541 law Dividends and distributions received 132,776 Other income and expenses for the three-month period ended March 31, 2005 62,573 --------- Distributable reserve at March 31, 2005 under Luxembourg law 731,890 ========= 9 BUSINESS ACQUISITIONS, INCORPORATION OF SUBSIDIARIES AND OTHER SIGNIFICANT EVENTS The financial resources in trust funds at December 31, 2004 (USD119.7 million), were contributed to two wholly-owned Chilean subsidiaries (Inversiones Berna S.A. and Inversiones Lucerna S.A.) on January 1, 2005. 10 10 RELATED PARTY DISCLOSURES The Company is controlled by I.I.I. Industrial Investments Inc. which owns 60.2% of Tenaris's shares and voting rights. The remaining 39.8% is publicly traded. The ultimate controlling entity of the Company is Rocca & Partners S.A., a British Virgin Islands corporation. The following transactions were carried out with related parties:
THREE-MONTH PERIOD ENDED MARCH 31, 2005 ASSOCIATED OTHER TOTAL TRANSACTIONS (A) SALES OF GOODS AND SERVICES Sales of goods 181 40,686 40,867 Sales of services 235 2,854 3,089 --------------- -------------- --------------- 416 43,540 43,956 =============== ============== =============== (B) PURCHASES OF GOODS AND SERVICES Purchases of goods 27 17,649 17,676 Purchases of services 40 16,239 16,279 --------------- -------------- --------------- 67 33,888 33,955 =============== ============== =============== THREE-MONTH PERIOD ENDED MARCH 31, 2004 ASSOCIATED OTHER TOTAL TRANSACTIONS (A) SALES OF GOODS AND SERVICES Sales of goods 337 12,047 12,384 Sales of services 1,477 2,803 4,280 --------------- -------------- --------------- 1,814 14,850 16,664 =============== ============== =============== (B) PURCHASES OF GOODS AND SERVICES Purchases of goods - 11,205 11,205 Purchases of services - 8,340 8,340 --------------- -------------- --------------- - 19,545 19,545 =============== ============== =============== AT MARCH 31, 2005 ASSOCIATED OTHER TOTAL --------------- -------------- --------------- PERIOD-END BALANCES (A) ARISING FROM SALES/PURCHASES OF GOODS/SERVICES Receivables from related parties 2,032 50,517 52,549 Payables to related parties (9) (18,568) (18,577) --------------- -------------- --------------- 2,023 31,949 33,972 =============== ============== =============== (B) CASH AND CASH EQUIVALENTS Time deposits - 6 6 (C) OTHER BALANCES Receivables 2,080 107 2,187 (D) FINANCIAL DEBT Borrowings and overdrafts (1) - (52,363) (52,363)
(1) Includes borrowings from Sidor to Matesi, Materiales Siderurgicos S.A. (USD52,363 at March 31, 2005) 11 10 RELATED PARTY DISCLOSURES (CONT'D.)
AT DECEMBER 31, 2004 ASSOCIATED OTHER TOTAL -------------- --------------- -------------- PERIOD-END BALANCES (A) ARISING FROM SALES/PURCHASES OF GOODS/SERVICES Receivables from related parties 3,396 49,267 52,663 Payables to related parties (49) (17,352) (17,401) -------------- --------------- -------------- 3,347 31,915 35,262 ============== ============== ============== (B) CASH AND CASH EQUIVALENTS Time deposits - 6 6 (C) OTHER BALANCES Trust fund - 119,666 119,666 Convertible debt instruments - Ylopa 121,955 - 121,955 (D) FINANCIAL DEBT Borrowings and overdrafts (1) - (56,906) (56,906)
(1) Includes borrowings from Sidor to Matesi, Materiales Siderurgicos S.A. (USD51,457 at December 31, 2004) Carlos Condorelli Chief Financial Officer 12 -----END PRIVACY-ENHANCED MESSAGE-----