-----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, VFFQTNl1u3Sq4FDPvEvlCHUX5hpS2k0vAJ/Jb5BOYd1eIlNvTnL6rjj/xn9ESf8a 9x975ZDiywh7AoX3Ezk7Dw== 0000950170-99-001438.txt : 19990915 0000950170-99-001438.hdr.sgml : 19990915 ACCESSION NUMBER: 0000950170-99-001438 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990714 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990914 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANDEAN DEVELOPMENT CORP CENTRAL INDEX KEY: 0000943184 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT [8700] IRS NUMBER: 650548697 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-28806 FILM NUMBER: 99710805 BUSINESS ADDRESS: STREET 1: 200 E LAS OLAS SUITE 1900 CITY: FT LAUDERDALE STATE: FL ZIP: 33301 BUSINESS PHONE: 4074826336 MAIL ADDRESS: STREET 1: 200 E LAS OLAS BLVD CITY: FT LAUDERDALE STATE: FL ZIP: 33301 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT SECOND AMENDMENT TO FORM 8-K Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 14, 1999 ANDEAN DEVELOPMENT CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) FLORIDA 33-90696 65-0648697 State or other (Commission (IRS Employer jurisdiction of File Number) Identification No.) incorporation) 600 BRICKELL AVENUE, SUITE 301-B, MIAMI, FLORIDA 33131 - ------------------------------------------------ ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (305) 358-4400 Item 2. ACQUISITION OR DISPOSITION OF ASSETS. On June 30, 1999, Andean Development Corporation ("ADC") acquired 1,332,600 shares of common stock of Consonni USA, Inc. ("CONUSA") representing 44.32% of the issued and outstanding common stock of CONUSA from Pedro Pablo Errazuriz, ADC's Chairman and CONUSA's controlling shareholder. ADC acquired the CONUSA common stock in exchanged for certain assets, including certain real property located in Chile, as well as the forgiveness of debt in the sum of approximately $125,000 due from Errazuriz. The Company obtained an independent appraisal of the common stock of CONUSA as well as an independent appraisal of certain of the assets exchanged for the stock. Prior to this transaction, ADC owned 11.18% of CONUSA's common stock. ADC owns 55.5% of CONUSA's common stock as a result of this transaction. CONUSA is a holding company and its main asset is 88% of Construcciones Electromecanicas Consonni S.A. of Bilbao, Spain, a manufacturer of control panels and substations. Item 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Business Acquired. The audited financial statements of Equipos de Control Electrico, S.A. for the year ended December 31, 1998 are being filed herewith as Exhibit 99.1 and the audited financial statements of Construcciones electromecanicas Consonni, S.A. for the year ended December 31, 1998 are being filed herewith as Exhibit 99.2. (b) Pro Forma Financial Information. The pro forma financial information for the year ended December 31, 1998 and for the six months ended June 30, 1999 are being filed herewith as Exhibit 99.3. (c) Exhibits. The following documents are being filed as exhibits to this report: 23.1 Consent of Price Waterhouse Auditores, S.A, independent auditors as to Equipos de Control Electrico, S.A. 99.1 Audited Financial Statements of Equipos de Control Electrico, S.A. as of December 31, 1998. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ANDEAN DEVELOPMENT CORPORATION Date: September 13, 1999 By:/S/ MAURICIO DE LA BARRA -------------------------------------- Mauricio De la Barra, President EXHIBIT INDEX EXHIBITS DESCRIPTION - -------- ----------- 23.1 Consent of Price Waterhouse Auditores, S.A, independent auditors as to Equipos de Control Electrico, S.A. 99.1 Audited Financial Statements of Equipos de Control Electrico, S.A. as of December 31, 1998. EX-23.1 2 INDEPENDENT AUDITORS' REPORT ON THE ANNUAL ACCOUNTS To the shareholders of Construcciones Electromecanicas Consonni, S.A. 1. We have audited the annual accounts of Construcciones Electromecanicas Consonni, S.A., consisting of the balance sheet at 31 December 1998, the profit and loss account and the notes for the year then ended, whose preparation is the responsibility of the Company's Directors. Our responsibility is to express an opinion on the aforementioned annual accounts as a whole, based on our audit work carried out in accordance with generally accepted auditing standards in Spain, which require examining, on a test basis, evidence supporting the annual accounts, as well as evaluating their overall presentation and assessing the accounting principles applied and estimates made. 2. In accordance with company legislation, the Directors have presented, for comparative purposes only, for each item of the balance sheet, the profit and loss account and the statement of source and application of funds, the corresponding amounts for the previous year as well as the amounts for 1998. Our opinion refers exclusively to the annual accounts for 1998. On 16 April 1998 and 4 March 1999 we issued our audit report on the annual accounts for 1997 in which we expressed a qualified opinion. 3. As mentioned in Note 1 to the annual accounts, Company Management applied for a declaration of temporary receivership, in a decision adopted by the Board of Directors on 23 July 1996, which was ratified by the Universal, Extraordinary General Shareholders Meeting on 10 September 1996. On 5 March 1998 the Court Decision which approved the Agreement with Creditors was given. Under the terms of the Agreements reached between the Company and its Creditors, an overall acquittal of thousands of Pesetas - PThs 735,744 was made, with respect to the debts originally recorded, which the Company recorded crediting the profit and loss account for the year 1997. In accordance with the principle of prudence, and as any failure to comply with the terms of the Creditors' Agreement or the agreements with the Preferred Creditors would lead to their termination and, hence, to the cancellation of the acquittal recorded, this item should be taken to profit and loss in proportion to the amount of the related debt repaid (Notes 1 and 11 to the accompanying annual accounts). Up to 31 December, and in accordance with the terms of the agreed plan, debts relating to the receivership have been cancelled (net of the corresponding acquittal, PThs 213,056) for an amount of PThs 115,817. At 31 December 1998, the Company presents, net of the outstanding payments of capital, PThs 213,500 (Note 12 to the accompanying annual accounts), a positive net equity of PThs 208,236, which includes the profit for 1998, amounting to PThs 97,655. In spite of the improvement in the economic and financial situation and of the Company's profits in 1998, the strengthening of the Company's financial situation and equity and its ability to meet its financial commitments and, hence, to continue as a going concern, will depend on the fulfillment of the objectives and plans set out in Note 17 to the annual accounts and the payment commitments entered into with its preferred and ordinary creditors, affected by the temporary receivership (Notes 1 and 11 to the annual accounts). 4. The accompanying annual accounts have been prepared on the basis of accounting principles generally accepted in Spain and include, to facilitate your understanding, a summary of significant differences between Spanish and U.S. Generally Accepted Accounting Principles and their effect on the Company's equity (Note 19 to the annual accounts). 5. In our opinion, except for the effects of any adjustment that might be necessary if we knew the final outcome of the uncertainty described in Paragraph 3, above, the accompanying annual accounts for 1998 present fairly, in all material respects, a true and fair view of the shareholders' equity and financial position of Construcciones Electromecnicas Consonni, S.A. at 31 December 1998 and the results of its operations and the resources obtained and applied for the year then ended, and they contain the necessary and relevant information in order to adequately interpret and understand them, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. 6. The accompanying Directors' Report for 1998 contains the information considered relevant to the Company's situation, the evolution of its business and of other matters and does not form an integral part of the annual accounts. We have verified that the accounting information contained in the aforementioned Directors' Report coincides with that of the annual accounts for 1998. Our work as auditors is limited to verifying the Directors' Report within the scope already mentioned in this paragraph and does not include the review of information other than that obtained from the Company's accounting records. Price Waterhouse Auditores, S.A. /S/ F. JAVIER DOMINGO - -------------------------------- F. Javier Domingo Partner - Auditor 12 March 1999 EX-99.1 3 EXHIBIT 99.1 Equipos de Control Electrico, S.A. Audit report and annual accounts as at 31 December 1998 and Directors' Report for the period ended 31 December 1998 EQUIPOS DE CONTROL ELECTRICO, S.A. - -------------------------------------------------------------------------------- AUDIT REPORT OF THE ANNUAL ACCOUNTS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ANNUAL ACCOUNTS AT 31 DECEMBER 1998 - -------------------------------------------------------------------------------- FREE TRANSLATION FROM THE ORIGINAL IN SPANISH - -------------------------------------------------------------------------------- EQUIPOS DE CONTROL ELECTRICO, S.A. BALANCE SHEETS AS AT 31 DECEMBER AND AS AT 31 JANUARY 1998 (Expressed in thousands of Pesetas -- PThs)
ASSETS 1998 1997 - ------ A) UNCALLED SHARE CAPITAL (Note 11) 213,500 350,000 ----------- ------------- B) FIXED ASSETS 246,183 259,826 ----------- ------------- II. Intangible assets (Note 5) 69,644 74,288 ----------- ------------- 1. Research and development expenses 98,737 98,737 2. Concessions, patents, licenses, 3,096 3,096 trademarks, similar 5. Computer applications 23,293 19,003 7. Lease premiums 7,408 -- 8. Amortization (62,890) (46,548) III. Tangible fixed assets (Note 6) 170,279 183,753 ----------- ------------- 2. Technical installations and 271,434 269,034 machinery 3. Other installations, equipment and furniture 110,094 106,406 5. Other property, plant and equipment 9,034 9,034 7. Depreciation (220,283) (200,721) IV. Investments (Note 7) 6,260 1,785 ----------- ------------- 5. Long-term securities portfolio 450 175 7. Long term deposits and guarantees 5,810 1,610 C) DEFERRED EXPENSE (Note 8) 665 -- ----------- ------------- D) CURRENT ASSETS 913,531 605,986 ----------- ------------- II. Inventories 256,184 236,065 ----------- ------------- 2. Raw materials and supplies 91,524 90,245 3. Work in progress and semi-finished 173,741 61,246 products 4. Finished goods -- 94,842 6. Prepayments 1,382 195 7. Provisions (10,463) (10,463) III. Accounts receivable 654,069 323,089 ----------- ------------- 1. Customer's accounts for sales and services (Note 9) 128,589 291,655 2. Group companies receivable (Note 10) 499,347 -- 4. Other debtors 10,158 32,253 5. Personnel 15,977 313 6. Public entities (Note 11) 1,324 194 7. Provisions (Note 9) (1,326) (1,326) VI. Cash and banks 451 45,819 ----------- ------------- VII. Prepayments and accrued income 2,827 1,013 ----------- ------------- ----------- ------------- TOTAL GENERAL PTHS 955,361 1,215,812 =========== =============
LIABILITIES 1998 1997 - ----------- A) SHAREHOLDERS' EQUITY (Note 12) 421,736 324,081 I. Share capital 350,000 350,000 III. Revaluation reserve 14,535 14,535 V. Previous years' results (40,454) (223,027) 2. Losses carried forward from prev. yrs. 97,655 182,573 VI. Profit for the year 97,655 182,573 D) LONG TERM LIABILITIES 498,969 548,091 ------------ ------------ II. Bank loans (Note 13) 5,799 -- ------------ ------------ IV. Other creditors 493,170 548,091 ------------ ------------ 4. Public entities (Note 11) 481,631 524,933 2. Other debts arising out of the temporary receivership 11,539 23,158 E) SHORT TERM LIABILITIES 453,174 343,640 ------------ ------------ -- 2,421 II. Debts with credit entities (Note 13) 33,301 35,168 ------------ ------------ 1. Loans and other debts 33,301 35,168 IV. Trade accounts payable 327,400 185,769 ------------ ------------ 2. Debts for purchases and services received 327,400 185,769 V. Other non-trade accounts payable 92,473 122,703 ------------ ------------ 1. Public entities (Note 11) 76,413 103,332 4. Accrued payroll payable 16,060 19,371 ----------- ----------- GENERAL TOTAL PTHS 1,373,879 1,215,812 ============ ============
FREE TRANSLATION FROM THE ORIGINAL IN SPANISH - -------------------------------------------------------------------------------- Page 5 EQUIPOS DE CONTROL ELECTRICO, S.A. NOTES TO THE ANNUAL ACCOUNTS FOR THE 11-MONTH PERIOD ENDED 31 DECEMBER 1998 (EXPRESSED IN THOUSANDS OF PESETAS - PTHS) NOTE 1 - ACTIVITIES Equipos de Control Electrico, S.A., (hereinafter the Company) was formed in 1959 under the name of Industrias de Deusto, S.A. Subsequently its name was changed to Fiammeta, S.A. and in 1995, the Company's General Shareholders Meeting held on 27 July approved the new name. On 5 June 1998, the Extraordinary Meeting adopted a Resolution to change the Company's corporate object, thereby establishing its engineering, manufacture, marketing and sales intermediation of electromechanical equipment and turnkey plants, as well as technological and financial consulting relating to the development of projects. The Company's registered office is located in Madrid and its administrative office in Bilbao. The Company recommenced activities in February 1996, after being dormant for several years. Approximately 77% of purchases are made from the group company Construcciones E1ectricas Consonni, S.A. (Notes 7 and 12.2). NOTE 2 - BASES OF PRESENTATION OF THE ANNUAL ACCOUNTS The annual accounts are obtained from the Company's books of account and have been prepared in accordance with the generally accepted accounting principles in Spain and included in the legislation in force. Although the annual accounts at December 31, 1998 are pending approval by the General Shareholders Meeting, the Company's Directors do not expect any changes as a result of such approval. The amounts included in the balance sheet, the profit and loss account and these notes are expressed in thousand of pesetas - PThs. On 5 June 1998, the Extraordinary Shareholders Meeting adopted a Resolution to change the Company's financial year, which will hereafter run from 1 January to 31 December. Therefore the amounts included in the accompanying profit and loss account at 31 December 1998 are not comparable to those at 31 January 1998 since the former covers a 12-month period and the latter an 11-month period. FREE TRANSLATION FROM THE ORIGINAL IN SPANISH - -------------------------------------------------------------------------------- Page 6 NOTE 3 - PROPOSED DISTRIBUTION OF PROFIT The proposal which will be submitted to the General Meeting with respect to the distribution of profit is as follows: AVAILABLE FOR DISTRIBUTION: Profit for the year 978 === DISTRIBUTION: Legal reserve 98 Voluntary reserve 880 --- PThs 978 === NOTE 4 - VALUATION STANDARDS The most significant accounting principles and practices used in the preparation of the annual accounts are described bellow: a) TANGIBLE FIXED ASSETS Tangible fixed assets are valued at acquisition cost less relevant financial expense and are depreciated over their estimated useful lives. The estimated useful lives used to depreciate tangible fixed assets are as follows: Buildings 33.33 years Plant and machinery 6.66 years Fixtures and fittings 10 years Computer equipment 4 years In 1998 no depreciation has been included under the heading Land and buildings as this heading consist of industrial premises not used in operations. In addition there is an appraisal of the value of this property which states that the market value of the land on which the building is located exceeds the book value recorded in this respect. b) INVENTORIES Work in progress is valued at production cost, which is the sum of the acquisition cost of raw materials and other consumables and costs which are directly attributable to production. FREE TRANSLATION FROM THE ORIGINAL IN SPANISH - -------------------------------------------------------------------------------- Page 7 In circumstances in which the market or replacement value of inventories is less than those indicated in the above paragraph, including expenses yet to be incurred, value corrections are recorded and the relevant provisions for depreciation are made. c) BALANCES WITH GROUP COMPANIES AND ASSOCIATED UNDERTAKINGS For the purposes of presentation Group companies and associated undertakings are considered to be those which are not investee companies but which are directly or indirectly linked, through the same company or individual, to the shareholders of Equipos de Control E1ectrico, S.A. (Note 9). d) TRADE DEBTORS AND CREDITORS Short and long term trade debtors and creditors are recorded at nominal values. All value corrections necessary to make provision for doubtful debts are recorded in the accounts. e) CURRENT ASSET INVESTMENTS Current asset investments mainly relate to shares acquired on the stock market which are recorded at acquisition cost as at 31 December 1998. f) OTHER CREDITORS AND DEBTORS Other creditors, both long and short term, are recorded at the amount received. Other debtors, both short and long term, are recorded at repayment value. g) RECORDING TO INCOME AND EXPENSE. RECOGNITION OF PROFIT Income and expense are recorded according to an accruals principle, regardless of the moment at which the relevant payment is made or received and are recorded net of input or output value added tax. The Company markets products which are not recorded under inventories, because they do not enter into its warehouse and records the income and expense arising from the marketing of each product in the same period. At 31 December 1998, inventories reflected in the balance sheet relate to extraordinary orders which at that date were being assembled. FREE TRANSLATION FROM THE ORIGINAL IN SPANISH - -------------------------------------------------------------------------------- Page 8 h) CORPORATE INCOME TAX The profit and loss account for each period records any relevant corporate income tax expense, the calculation of which includes the tax accrued during the year as well as any tax credits or deductions to which the Company is entitled. In accordance with the prudence principle, tax credits deriving from tax-loss carryforwards yet to be offset and other credits or deductions to which the Company is entitled are not recorded in the profit and loss account in the year they are generated, but rather they are used to lower the corporate income tax expense in the year they are applied. i) LONG TERM ASSETS AND LIABILITIES Long term assets and liabilities are those which fall due in more than one year. NOTE 5 - TANGIBLE FIXED ASSETS Movements in the balances included under this heading are as follows:
BALANCE AT 31 BALANCE AT 31 JANUARY 1998 ADDITIONS DECEMBER 1998 ------------ --------- ------------- GROSS Buildings and other construction 60,000 -- 60,000 Plant and machinery -- 813 813 Fixtures and fittings 3,114 4,960 8,074 ------ ----- ------ 63,114 5,773 68,887 ------ ----- ------ ACCUMULATED DEPRECIATION Buildings and other construction (510) -- (510) Plant and machinery -- (57) (57) Fixtures and fittings (660) (853) (1,513) ------ ----- ------ (1,170) (910) (2,080) ------ ----- ------ NET PThs 61,944 66,807 - --- ====== ======
The heading buildings and other construction (PThs 60,000) records the adjudication of industrial premises at public auction at this price. These premises were not used in production as at 31 December 1998, and the Company intends to sell it without incurring a loss. In addition, FREE TRANSLATION FROM THE ORIGINAL IN SPANISH - -------------------------------------------------------------------------------- Page 9 these premises are subject to mortgages with the same privilege in favor of the Social Security authorities totaling PThs 309,748 and to the Vizcaya Local authorities for a maximum amount of PThs 347,444 as a guarantee for the amounts owed by the Construcciones Electromecanicas Consonni, S.A. group company (Notes 4.c) and 9) to these authorities. The Company's policy is to contract all insurance policies it deems necessary to protect tangible fixed assets from all possible risks. NOTE 6 - ACCOUNTS RECEIVABLE 6.1 Customers' accounts for sales and services rendered at 31 December 1998 are as follows: Trade debtors 412,268 Discounted bills yet to fall due (Note 10) 101,314 ------- PThs 513,582 6.2 Movements during the 11-month period ended 31 December 1998 in the provision for bad debts are as follows: Balance at 31 January 1998 42,483 Transfers 300 Recoveries in 1998 (7,974) Application of the provision for doubtful debts (34,509) ------- Balance at 31 December 1998 PThs 300 ======== NOTE 7 - BALANCES WITH GROUP AND ASSOCIATED COMPANIES The balances with group and associated companies at 31 December 1998 are described below: DEBTOR CREDITOR BALANCES BALANCES -------- -------- Consonni USA Inc. (Note 9): - - Prepayments on account 3,750 -- - - Invoices yet to be received -- 5,000 Construcciones Electricas Consonni, S.A. - - Invoices yet to be paid -- 349,511 - - Invoices yet to be received -- 149,836 ----- ------- PThs 3,750 504,347 ===== ======= FREE TRANSLATION FROM THE ORIGINAL IN SPANISH - -------------------------------------------------------------------------------- Page 10 NOTE 8 - PUBLIC ENTITIES The breakdown of taxes payable and receivable at 31 December 1998 is as follows: DEBTOR CREDITOR BALANCES BALANCES -------- -------- Taxes: - - VAT 66,850 -- - - Personal income tax withholdings -- 1,817 - - Corporate income tax (Note 11.2) -- 285 Social Security -- 591 ------ ----- PThs 66,850 2,693 ====== ===== NOTE 9 - SHAREHOLDERS' EQUITY 9.1 Amounts and movements recorded under capital and reserves during the year ended 31 January 1998 are as follows:
DISTRIBUTION SHARE BALANCE AT OF 1997 CAPITAL 1998 BALANCE AT 31.01.98 PROFITS INCREASE PROFITS 31.12.98 -------- -------- ------- -------- Share capital 14,000 -- 86,000 -- 100,000 Legal reserve -- 4,647 -- -- 4,647 Losses from previous years (937) 937 -- -- -- Profit/(loss) for the year 5,584 (5,584) -- 978 978 ------ ------ ------ --- ------- PThs 18,647 -- 86,000 978 105,625 ====== ====== ====== === =======
9.2 On 5 June 1998, the Extraordinary Shareholders Meeting adopted a Resolution to increase share capital by PThs 86,000 through the issue of 86,000 new registered shares with a par value of Ptas 1,000 each, fully subscribed and 25% was paid in 25%. The remaining amount PThs 64,500 will be paid in cash within five years. At the date these annual, accounts were drawn up the deed relating to this increase was being entered into the Mercantile Registry. 9.3 At 31 December 1998, share capital was represented by 100,000 registered shares with a par value of Ptas 1,000 each, of which the first 14,000 shares were fully paid and 25% of FREE TRANSLATION FROM THE ORIGINAL IN SPANISH - -------------------------------------------------------------------------------- Page 11 the remaining 86,000 shares had been paid in. At 31 December 1998 shareholders were as follows: AMOUNT INTEREST Consonni USA Inc. 86,000 86% Other individual shareholders 14,000 14% ------- ---- PThs 100,000 100% ======= ==== 9.4 The legal reserve is not freely distributable and may only be used to offset losses, in which case it must be replenished by future profits. NOTE 10 - BANK LOANS At 31 December 1998 this heading breaks down as follows: Loan granted by Banco Exterior de Espana 76,726 Discounted bills (Note 6) 101,314 ------- PThs 178,040 ======= The loan granted by Banco Exterior de Espana, (PThs 76,726), relates to payments made in respect of invoices yet to fall due as at 31 December 1998. They fall due in 1999 and the relevant amount accrues interest at 8% per year. NOTE 11 -TAX SITUATION 11.1 The Company is open to inspection for all taxes corresponding to the non-prescribed years. 11.2 The reconciliation of the difference between book and reported profits for corporate income tax purposes at 31 December 1998 is as follows: Book profit before taxes 1,263 Application of tax-loss carryforwards (157) Permanent differences (292) ----- Taxable income PThs 814 ===== FREE TRANSLATION FROM THE ORIGINAL IN SPANISH - -------------------------------------------------------------------------------- Page 12 Tax payable totaling PThs 285 (Note 8), arises from the application of the 35% tax rate to taxable income totaling PThs 814. NOTE 12 - INCOME AND EXPENSE 12.1 The distribution of sales resulting from the Company's ordinary activity during the 11-month period ended 31 December 1998 is described below: Domestic sales 1,067,698 Exports 188,506 --------- PThs 1,256,204 ========= 12.2 The transactions carried out in 1998 with group companies and associated undertakings are as follows: PTHS ---- Raw materials and consumables 1,197,350 External services 5,000 Financial income (12,534) 12.3 During the 11-month period ended 31 December 1998 the Company employed 4 persons. The distribution of employees by category during the year is described below: University graduates 2 Administrative clerks 2 - 4 = NOTE 13 - GUARANTEE COMMITMENTS WITH THIRD PARTIES AND OTHER CONTINGENT LIABILITIES At 31 December 1998, the Company had presented guarantees instrumented through financial institutions to third parties totaling PThs 117,334, as deposits to cover obligations deriving from compliance with contracts concluded with these third parties. FREE TRANSLATION FROM THE ORIGINAL IN SPANISH - -------------------------------------------------------------------------------- Page 13 NOTE 14 - OTHER INFORMATION 14.1 During the 11-month period ended 31 December 1998 the Directors of the Company received gross remuneration totaling PThs 4,318. In addition they received PThs 600 for per travel allowances. 14.2 The Company's computer systems will not be significantly affected by the year 2000 issue or the introduction of the Euro. Consequently, the Company has not incurred any expense during the year in this respect or will there be any significant additional expenses in the future for relating to these matters. NOTE 15 - STATEMENT OF SOURCE AND APPLICATION OF FUNDS FOR THE 11-MONTH PERIOD ENDED 31 DECEMBER 1998 AND THE YEAR ENDED 31 JANUARY 1998 APPLICATIONS 31.12.98 31.01.98 SOURCES 31.12.98 31.01.98 3. Purchases of fixed assets 1. Funds generated from 1,888 6,940 b) Tangible fixed assets 5,773 60,092 operations c) Investments -- 43 -------- -------- c.3) Other investments -- 743 2. Shareholders' contribu- tions 21,500 -- a) Capital increases 21,500 -- ------ -------- 7. Repayment of long-term financing 2,421 -- 7. Repayment of long-term debts 2,421 -- -------- -------- ------ -------- Total applications PThs 8,194 60,835 Total sources PThs 25,809 6,940 ======== ======== ====== ======== EXCESS OF SOURCES OVER EXCESS OF APPLICATIONS APPLICATION OF FUNDS OVER SOURCES OF FUNDS (INCREASE IN WORKING (REDUCTION OF WORKING CAPITAL) PThs 17,615 CAPITAL) PThs 53,895 ======== ========
CHANGES IN WORKING CAPITAL 31.12.98 31.01.98 --------------------------------- ---------------------------------- INCREASES DECREASES INCREASES DECREASES --------- --------- --------- --------- 2. Inventories 220,053 -- -- 299,398 3. Debtors -- 10,061 356,828 -- 4. Creditors -- 154,274 -- 139,789 5. Current asset investments 2,275 -- 2,500 -- 6. Cash and bank -- 40,378 25,964 -- ------- ------- ------- ------- Total 222,328 204,713 385,292 439,187 ------- ------- ------- ------- VARIATION IN WORKING CAPITAL INCREASE/DECREASE Pthas 17,615 53,895 ======= =======
FREE TRANSLATION FROM THE ORIGINAL IN SPANISH - -------------------------------------------------------------------------------- Page 14 Sources of funds from operations break down as follows: 31.12.98 31.01.98 Profit/(loss) for the year 978 5,584 Tangible fixed asset depreciation 910 1,356 -------- -------- Sources from operations PThs 1,888 6,940 ======== ======== ******** ---------------------------------------------------------------------------- DIRECTORS' REPORT FOR 1998 ---------------------------------------------------------------------------- 1998 DIRECTORS' REPORT This financial year closed on December 31, had a duration, therefore, of eleven months, following the change in the Company's Articles of Association relating to this issue. The company has thereby adapted itself to the year-end close of the new majority shareholders. It should be noted that, during this financial year, the Company decided to increase its share capital by 86 million pesetas (eighty six million pesetas), to reach a figure of 100 million (one hundred million pesetas), for the purpose of promoting the business activities and improving our presence in markets where traditionally we have not enjoyed a significant degree of penetration, which should result in a sustained growth in sales for the coming years. Orders have been maintained at the same levels as last year in spite of the reduction in sales motivated, mainly, by the one month less in the year. It is important to emphasize that, besides the stabilization of the Company in the domestic market, particularly in the petrochemical sector, the business initiatives in neighboring countries have intensified, which have permitted us to gain important contracts with Lurgi Metallurgie, as well as strengthen the collaboration with important multinational companies such as ABB in Switzerland, SIEMENS in Germany and CEGELEC in France, which, without doubt, will result in the obtention of contracts during the next year for the plants that the aforementioned companies are installing using the "turnkey" method. The electricity sector will gain increased importance in the future, particularly in the electricity generation market, where the main national companies (ENDESA, IBERDROLA, etc.) anticipate building several combined cycle power stations, which will provoke a greater demand within this sector for electromechanical equipment. Finally, taking advantage of our majority shareholder's knowledge of the south American market, we intend to explore the possibilities in this area, especially in the electrical sector and in water treatment where we do not rule out strategic collaboration with major companies from this sector. In view of the above, we are facing a year in which our positioning in the electrical sector will be fundamental, and mainly in export markets, in order to reach the growth objectives we have established. ********* PREPARATION OF THE ANNUAL ACCOUNTS AND DIRECTORS' REPORT The Board of Directors of Equipos de Control E1ectrico, S.A., on March 9, 1999, and in compliance with the provisions of Articles 34 and 35 of the Commerce Code and Article 171 of FREE TRANSLATION FROM THE ORIGINAL IN SPANISH - -------------------------------------------------------------------------------- the Spanish Companies Act, has prepared the annual accounts and Directors' report for the year 1 January 1998 to 31 December 1998. SIGNATORIES Mr. Pedro Pablo Errazuriz Ossa /s/ PEDRO PABLO ERRAZURIZ OSSA (CHAIRMAN) --------------------------------- Mr. Gustavo Sarachaga Ruiz s/s GUSTAVO SARACHAGA RUIZ (VICE-CHAIRMAN) --------------------------------- Mr. Javier Arribas Moso JAVIER ARRIBAS MOSO (MEMBER) --------------------------------- Mr. Jose Antonio Goicoechea Arana s/s JOSE ANTONIO GOICOECHEA ARANA (MEMBER) --------------------------------- Mr. Juan Phillips Davile JUAN PHILLIPS DAVILE (MEMBER) --------------------------------- FREE TRANSLATION FROM THE ORIGINAL IN SPANISH - -------------------------------------------------------------------------------- FORMULACION DE LAS CUENTAS ANUALES E INFORME DE GESTION El Consejo de Adrninistracion de Equipos de Control E1ectrico, S.A., en fecha 9 de marzo de 1999, y en cumplimiento de lo dispuesto en los articulos 34 y 35 del Codigo de Comercio y del articulo 171 del Texto Refundido de la Ley de Sociedades Anonimas, a continuacion se forrnulan las cuentas anuales y el informe de gestion, del ejercicio romprendido entre el l de enero de 1998 y el 31 de diciembre de 1998. FIRMANTES D. Pedro Pablo Errazuriz Ossa /s/ PEDRO PABLO ERRAZURIZ OSSA (PRESIDENTE) ------------------------------------------ D. Gustavo Sarachaga Ruiz s/s GUSTAVO SARACHAGA RUIZ (VICEPRESIDENTE) ------------------------------------------ D. Javier Arribas Moso JAVIER ARRIBAS MOSO (VOCAL) ------------------------------------------ D. Mr. Jose Antonio Goicoechea Arana s/s JOSE ANTONIO GOICOECHEA ARANA (MEMBER) (VOCAL) ------------------------------------------ D. Juan Phillips Davile JUAN PHILLIPS DAVILE (VOCAL) ------------------------------------------ -----END PRIVACY-ENHANCED MESSAGE-----