6-K 1 cdngg4q2006.txt CD' PARTIALLY FOURTH QUARTER 2006 RESULTS SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 OF THE SECURITIES EXCHANGE ACT OF 1934 For the month of March, 2007 Durango Corporation (f/k/a Grupo Industrial Durango, S.A. de C.V.) - ------------------------------------------------------------------- (Translation of registrant's name into English) Torre Corporativa Durango, Potasio 150, Cuidad Industrial, Durango, Durango, Mexico - ------------------------------------------------------------------- (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F [x] Form 40-F Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes No [x] If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_____________. CORPORACION DURANGO AND REPORTING GUARANTOR GROUP 10.8116 PARTIALLY CONSOLIDATED CONDENSED BALANCE SHEETS AS OF DECEMBER 31, 2005 AND DECEMBER 31, 2006 (UNAUDITED) EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS AS OF DECEMBER 31, 2006 (Stated in thousands of Pesos and Dollars) US$ DLLS. December 31, Dec 31, Dec 31, 2005 2006 2006 ASSETS CURRENT ASSETS: Cash and cash equivalents ........................$ 521,474$ 332,865 30,788 Accounts receivable, net ......................... 1,125,391 1,316,213 121,741 Taxes recoverable and other assets ............... 67,986 46,629 4,313 Inventories, net ................................. 821,287 868,845 80,362 Prepaid expenses ................................. 4,964 15,494 1,433 Total current assets ................... 2,541,102 2,580,046 238,637 LONG-TERM RELATED PARTIES .......................... 296,995 25,927 2,398 PROPERTY, PLANT AND EQUIPMENT, net ................. 7,470,254 7,240,533 669,700 INVESTMENT IN SUBSIDIARIES ......................... 3,655,246 3,939,992 364,423 OTHER ASSETS, net .................................. 207,363 164,584 15,223 Total assets ..........................$ 14,170,960$ 13,951,082 1,290,381 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Bank loans and current portion of long-term debt . 195,850 171,682 15,879 Interest payable ................................. 2,750 1,939 179 Trade accounts payable ........................... 409,024 441,812 40,865 Notes payable .................................... 28,155 44,857 4,149 Accrued liabilities .............................. 288,427 511,600 47,320 Employee profit-sharing .......................... 296 1,168 108 Total current liabilities ............. 924,502 1,173,058 108,500 LONG-TERM DEBT ..................................... 6,020,891 5,538,181 512,244 LONG-TERM RELATED PARTIES .......................... 804,418 642,856 59,460 LONG-TERM NOTES PAYABLE ............................ 21,421 120,999 11,192 DEFERRED TAXES...................................... 1,213,591 1,205,208 111,474 LIABILITY FOR EMPLOYEE BENEFITS..................... 313,123 299,972 27,745 Total long term liabilities ............ 8,373,444 7,807,216 722,115 Total liabilities ..................... 9,297,946 8,980,274 830,615 STOCKHOLDERS' EQUITY: Majority interest ................................ 4,844,456 4,948,590 457,711 Minority interest ................................ 28,558 22,218 2,055 Total stockholders' equity ............. 4,873,014 4,970,808 459,766 Total liabilities and stockholders' equi$ 14,170,960$ 13,951,082 1,290,381 Exchange rate: $ 10.8116

CORPORACION DURANGO AND REPORTING GUARANTOR GROUP PARTIALLY CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN FINANCIAL POSITION (UNAUDITED) EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS AS OF DECEMBER 31, 2006 (Stated in thousands of Pesos and Dollars) * Full Year Acum. Dec Acum. Dec 2005 2006 US$ 2006 OPERATING ACTIVITIES: Net income (loss) ..............................................$ 185,845$ 148,810 13,764 Add (deduct)- Charges (credits) to income which do not require (generate) resources: Loss (Gain) in subsidiaries ............................. 353,384 -326,366 -30,187 Depreciation and amortization ........................... 270,506 254,827 23,570 Loss (gain) on sale of property, plant and equipment .... 10,953 0 0 Impairment of long-lived assets ......................... 0 227,510 21,043 Deferred income taxes ................................... -200,234 28,915 2,674 Other.................................................... -26,700 42,103 3,894 Total items which do not require cash.................... 407,909 226,989 20,995 Net resources generated from income .......................... 593,754 375,799 34,759 Changes in operating assets and liabilities: Decrease (Increase) in inventories ......................... -97,430 -47,558 -4,399 Decrease (Increase) in current assets ...................... 27,294 57,456 5,314 Decrease (increase) in account receivables, net ............ -1,490 -237,451 -21,963 (Decrease) increase in accounts payable and accrued liabilities ...................................... -163,752 272,724 25,225 Resources generated by continued operating .................. 358,376 420,970 38,937 Assets and liabilities discontinued .......................... -24,103 0 0 Resources generated by operating activities .................. 334,273 420,970 38,937 FINANCING ACTIVITIES: Increase (Decrease) in bank loans and others ............ -4,717,107 -358,599 -33,168 Increase (Decrease) in capital .......................... 302,501 0 0 Gain on shares sales .................................... 3,094,160 0 0 Net resources generated from financing activities ............ -1,320,446 -358,599 -33,168 INVESTMENT ACTIVITIES: Acquisition and sale of property, plant and equipment.... 5,479 -218,642 -20,223 Investment in subsidiaries .............................. 692,004 -32,005 -2,960 Increase in deferred assets ............................. -6,545 -333 -31 Net resources applied to investing activities ................ 690,938 -250,980 -23,214 INCREASE IN CASH AND CASH EQUIVALENTS .......................... -295,235 -188,609 -17,445 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD............ 816,709 521,474 48,233 CASH & CASH EQUIVALENTS AT END OF THE PERIOD ...................$ 521,474$ 332,865US 30,788 * The exchange rate of 10.8116 was used for translation purposes.

CORPORACION DURANGO AND REPORTING GUARANTOR GROUP PARTIALLY CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED) EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS AS OF DECEMBER 31, 2006 Thousands of Pesos Thousands of Dollars 4Q 4Q 4Q 4Q 2005 2006 Var 2005 2006 Var NET SALES ...............................$ 1,202,105$ 1,389,365 16% 108,639 128,507 18% COST OF SALES ........................... 1,022,005 1,136,262 11% 92,363 105,097 14% Gross profit........................ 180,100 253,103 41% 16,276 23,410 44% Selling and Administrative expenses 148,498 99,367 -33% 13,421 9,191 -32% Operating income ................... 31,602 153,736 386% 2,855 14,219 398% FINANCIAL EXPENSE: Interest expense ........................ 144,458 164,353 14% 13,055 15,202 16% Interest income ......................... -24,492 -19,941 -19% -2,213 -1,844 -17% Exchange (gain) loss, net ............... -100,525 -117,220 17% -9,085 -10,842 19% Gain on monetary position ............... -103,767 -90,810 -12% -9,378 -8,399 -10% Total financial expense ............... -84,326 -63,618 -25% -7,621 -5,883 -23% OTHER INCOME (EXPENSES): Other income (expense), net ............. -131,214 -58,244 -56% -11,858 -5,387 -55% Total other income (expense) .......... -131,214 -58,244 -56% -11,858 -5,387 -55% Income (loss) before income and asset t -15,286 159,110 N/A -1,382 14,715 N/A Provisions for income and asset taxes ... -6,450 49,295 N/A -583 4,559 N/A Provision for deferred income taxes ..... -307,228 -49,111 -84% -27,766 -4,542 -84% Net income after taxes ................ 298,392 158,926 -47% 26,967 14,698 -45% Impairment .............................. 0 227,510 N/A 0 21,043 N/A Discontinued operations ................. -92,170 0 -100% -8,330 0 -100% Loss (Gain) in subsidiaries ............. 283,290 -278,181 N/A 25,604 -25,731 N/A Net income before minority interest......$ 107,272$ 209,597 95% 9,693 19,386 100% Minority interest...................... 1,331 -2,016 N/A 120 -186 N/A Majority net income....................$ 105,941$ 211,613 100% 9,573 19,572 104%

CORPORACION DURANGO AND REPORTING GUARANTOR GROUP PARTIALLY CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED) EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS AS OF DECEMBER 31, 2006 Thousands of Pesos Thousands of Dollars Ac Ac Ac Ac 2005 2006 Var 2005 2006 Var NET SALES ...............................$ 4,751,483$ 5,423,787 14% 414,601$ 483,945 17% COST OF SALES ........................... 4,015,512 4,413,595 10% 350,365 393,833 12% Gross profit........................ 735,971 1,010,192 37% 64,236 90,112 40% Selling and Administrative expenses 487,878 455,589 -7% 42,685 40,580 -5% Operating income ................... 248,093 554,603 124% 21,551 49,532 130% FINANCIAL EXPENSE: Interest expense ........................ 592,733 666,523 12% 51,731 59,447 15% Interest income ......................... -434,323 -58,511 -87% -36,701 -5,251 -86% Exchange (gain) loss, net ............... -334,877 129,029 N/A -29,549 10,143 N/A Gain on monetary position ............... -197,284 -256,155 30% -17,346 -23,205 34% Total financial expense ............... -373,751 480,886 N/A -31,865 41,134 N/A OTHER INCOME (EXPENSES): Other income (expense), net ............. -236,473 59,905 N/A -20,800 4,867 N/A Total other income (expense) .......... -236,473 59,905 N/A -20,800 4,867 N/A Income (loss) before income and asset t 385,371 133,622 -65% 32,616 13,265 -59% Provisions for income and asset taxes ... 5,205 54,753 952% 437 5,030 1051% Provision for deferred income taxes ..... -200,234 28,915 N/A -18,871 2,672 N/A Net income after taxes ................ 580,400 49,954 -91% 51,050 5,563 -89% Impairment .............................. 0 227,510 N/A 0 21,043 N/A Discontinued operations ................. 41,171 0 -100% 3,432 0 -100% Loss (Gain) in subsidiaries ............. 353,384 -326,366 N/A 30,791 -29,981 N/A Net income before minority interest......$ 185,845$ 148,810 -20% 16,827$ 14,501 -14% Minority interest...................... -586 -2,602 344% -53 -235 343% Majority net income....................$ 186,431$ 151,412 -19% 16,880$ 14,736 -13%

CORPORACION DURANGO, S.A.B. DE C.V. AND REPORTING GUARANTOR GROUP COMPLEMENTARY NOTES TO THE FINANCIAL INFORMATION SUMMARY OF SIGNIFICANT ACCOUNTING AND FINANCIAL POLICIES: FOLLOWING IS A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOLLOWED BY THE COMPANY IN THE PREPARATION OF THE PARTIALLY - CONSOLIDATED FINANCIAL STATEMENTS. 1.1 CONSOLIDATION BASIS: THE PARTIALLY - CONSOLIDATED FINANCIAL STATEMENTS INCLUDE THE FINANCIAL STATEMENTS OF CORPORACION DURANGO, S.A.B. DE C.V. AND THE FOLLOWING SUBSIDIARIES: ADMINISTRACION CORPORATIVA DE DURANGO, S.A. DE C.V. CARTONPACK, S.A. DE C.V. COMPANIA PAPELERA DE ATENQUIQUE, S.A. DE C.V. EMPAQUES DE CARTON TITAN, S.A. DE C.V. INDUSTRIAS CENTAURO, S.A. DE C.V. PAPEL Y EMPAQUES TIZAYUCA, S.A. DE C.V. PONDEROSA INDUSTRIAL DE MEXICO, S.A. DE C.V. ALL SIGNIFICANT INTERCOMPANY BALANCES AND TRANSACTIONS HAVE BEEN ELIMINATED FOR CONSOLIDATION PURPOSES. THE PARTIALLY - CONSOLIDATED FINANCIAL STATEMENTS INCLUDE THE ASSETS, LIABILITIES AND INCOME OR LOSS OF THE PARENT COMPANY AND THE SUBSIDIARIES WITH MORE THAN 50% OF OWNERSHIP. AS OF JUNE 1, 2004, THE MEXICAN BOARD FOR RESEARCH AND DEVELOPMENT OF FINANCIAL REPORTING STANDARDS, OR CINIF, ASSUMED THE RESPONSIBILITY OF ESTABLISHING MEXICAN ACCOUNTING AND REPORTING STANDARDS. AS PART OF ITS RESPONSIBILITY, AND AFTER DUE EXPOSURE IN 2004 AND 2005, THE CINIF ISSUED SEVERAL FINANCIAL REPORTING STANDARDS (NORMAS DE INFORMACION FINANCIERA, OR NIFS) THAT BECAME EFFECTIVE ON JANUARY 1, 2006. THE PRINCIPAL OBJECTIVE OF THE CINIF IN ISSUING THE NIFS IS TO ACHIEVE GREATER CONCURRENCE BETWEEN MEXICAN GAAP AND INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSS). THE STRUCTURE OF THE NIFS IS AS FOLLOWS: - NEW BULLETINS AND INTERPRETATIONS TO THE BULLETINS ISSUED BY CINIF. - EXISTING BULLETINS ISSUED BY THE ACCOUNTING PRINCIPLES BOARD OF THE MEXICAN INSTITUTE OF PUBLIC ACCOUNTANTS THAT HAVE NOT BEEN AMENDED, REPLACED OR REPEALED BY THE NEW NIFS. - IFRSS THAT ARE SUPPLEMENTARY GUIDANCE TO BE USED WHEN MEXICAN GAAP DOES NOT PROVIDE PRIMARY GUIDANCE. THE CIRCULARS ISSUED BY THE ACCOUNTING PRINCIPLES BOARD WILL CONTINUE TO HAVE THE STATUS OF RECOMMENDATIONS AND WILL BE PART OF THE NIFS UNTIL SUCH TIME AS THEY ARE REPLACED OR REPEALED BY NIFS. THE NIFS ISSUED TO DATE ARE NOT EXPECTED TO HAVE A SIGNIFICANT EFFECT ON FINANCIAL INFORMATION REPORTING. THEY ARE THE FOLLOWING: NIF A-1 "FINANCIAL INFORMATION STANDARDS STRUCTURE". NIF A-2 "BASIC PRINCIPLES". NIF A-3 "USERS REQUIREMENTS AND FINANCIAL STATEMENTS OBJECTIVES". NIF A-4 "FINANCIAL STATEMENTS QUALITATIVE CHARACTERISTICS". NIF A-5 "FINANCIAL STATEMENTS BASIC ELEMENTS". NIF A-6 "RECOGNITION AND VALUATION". NIF A-7 "PRESENTATION AND DISCLOSURE". NIF A-8 "SUPPLEMENTARY STANDARDS TO MEXICAN GAAP". NIF B-1 "ACCOUNTING CHANGES AND ERROR CORRECTIONS". 1.2 BASIS FOR COMPARISSON EFFECTS IN THE FINANCIAL STATEMENTS: A) THE PARTIALLY CONSOLIDATED FINANCIAL STATEMENTS HAVE BEEN PREPARED IN ACCORDANCE WITH THE NIFS AND REFLECT THE PURCHASING POWER OF THE MEXICAN PESO AS OF THE MOST RECENT REPORTIND DATE. FOR COMPARISON PURPOSES, PARTIALLY CONSOLIDATED FINANCIAL STATEMENTS OR PRIOR YEAR HAVE ALSO BEEN RESTATED TO REFLECT IDENTICAL PURCHASING POWER, USING FACTORS DERIVED FROM CHANGES IN THE NATIONAL CONSUMER PRODUCTS INDEX (NCPI) ISSUED BY BANCO DE MEXICO. B) CONVERSION FIGURES OF FOREIGN SUBSIDIARIES IS DONE IN ACCORDANCE WITH BULLETIN B-15 "FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION OF FINANCIAL STATEMENTS OF FOREIGN OPERATIONS" ACCORDINGLY , THE TRANSLATION IS DONE UNDER THE "FOREIGN ENTITIES" 1.3 VALUATION OF TEMPORARY INVESTMENTS: THESE INVESTMENTS ARE REALIZABLE WITHIN THREE MONTHS AND ARE VALUED AT MARKET PRICE. THE INCOME OR LOSS GENERATED IS INCLUDED IN THE STATEMENTS OF OPERATIONS. 1.4 RIGHTS AND LIABILITIES VALUATION IN FOREIGN CURRENCY: ASSETS AND LIABILITIES IN FOREIGN CURRENCY, MAINLY IN AMERICAN DOLLARS, ARE EXPRESSED IN MEXICAN PESOS AT THE CLOSING OF THE YEAR EXCHANGE RATE. THE EXCHANGE RATE ON DECEMBER 31st, 2006 WAS $10.8116. 1.5 INVENTORY VALUATION: INVENTORIES ARE STATED AT AVERAGE COST, AND DO NOT EXCEED MARKET VALUE. THE AVERAGE COST APROXIMATES THE LAST PURCHASE OR PRODUCTION COST. PROPERTY, PLANT AND EQUIPMENT: PROPERTY, PLANT AND EQUIPMENT OF MEXICAN ORIGIN ARE RECORDED AT ACQUISITION COST AND ARE RESTATED TO REFLECT MEXICAN PESOS OF CONSTANT PURCHASING POWER USING FACTORS DERIVED FROM CHANGES IN THE NATIONAL CONSUMER PRICE INDEX (NCPI). PLANT AND EQUIPMENT OF NON-MEXICAN ORIGIN ARE RECORDED AT ACQUISITION COST AND THE ACQUISITION COST IS RESTATED TO CONSTANT CURRENCY USING THE INFLATION OF THE COUNTRY OF ORIGIN, THEN CONVERTED INTO MEXICAN PESOS AT THE EXCHANGE RATE IN EFFECT AT THE BALANCE SHEET DATE. DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT, IS CALCULATED BASED ON UNITS PRODUCED IN THE PERIOD IN RELATION TO THE TOTAL ESTIMATED PRODUCTION OF THE ASSETS OVER THEIR SERVICE LIVES. ASSETS ARE DEPRECIATED AS FOLLOWS: YEARS BUILDINGS 25-50 MACHINERY & EQUIPMENT 23-40 OFFICE EQUIPMENTS 5-10 TRANSPORTATION VEHICLES 1-5 COMPUTER EQUIPMENT 1-3 THESE ASSETS ARE EVALUATED ANNUALLY FOR POTENTIAL IMPAIRMENT. RECURRING MAINTENANCE AND REPAIR EXPENDITURES ARE CHERGED TO OPERATING EXPENSES AS INCURRED. MAJOR OVERHAULS TO FIXED ASSETS ARE CAPITALIZED AND AMORTIZED OVER THE PERIOD IN WHICH BENEFITS ARE EXPECTED TO BE RECEIVED. NET COMPREHENSIVE FINANCING COST INCURRED DURING THE PERIOD OF CONSTRUCTION AND INSTALLATION OF PROPERTY, PLANT AND EQUIPMENT IS CAPITALIZED AND RESTATED APPLIYING FACTORS DERIVED FROM CHANGES IN THE NCPI. CONTINGENCY LIABILITIES: LABOR OBLIGATIONS: THE COMPANY ADOPTED THE NORMATIVE DISPOSITIONS RELATED TO BULLETIN D-3 "LABOR OBLIGATIONS" ISSUED BY THE MEXICAN INSTITUTE OF PUBLIC ACCOUNTANTS, THIS NORMATIVITY MODIFIES THE BASIS FOR CUANTIFICATION, RECOGNITION AND DISCLOSURE OF EXPENSES AND LIABILITIES RELATED TO RETIREMENT AND SENIORITY PREMIUMS, INCLUDING FORMAL AND INFORMAL, REQUIRING ITS VALUATION USING THE ACTUARIAL METHOD OF "PROJECTED UNITARY CREDIT" WICH STATES THE OBLIGATION TO RECOGNIZE A LIABILITY (ASSET) OF TRANSITION AT THE MOMENT OF THE APPLICATION OF THIS BULLETIN, WHICH IS AMORTIZED IN DIRECT LINE OVER THE REMAINIG AVERAGE LABOR LIFE OF THE EMPLOYEES EXPECTED TO RECEIVE SUCH BENEFITS FROM THE RETIREMENT PLANS, REQUIRES AN ADDITIONAL LIABILITY IN CASE THE ACTUAL LIABILITY IS LARGER THAN THE PROJECTED NET LIABILITY (ASSET). THE COST OF THE EMPLOYEE RETIREMENT PLANS (PENSIONS AND SENIORITY PREMIUMS), ARE RECOGNIZED AS COST IN THE YEARS IN WHICH THE SERVICES ARE PAID IN ACCORDANCE WITH CALCULATION PERFORMED BY INDEPENDENT ACTUARIES. IN THE COMPANIES ESTABLISHED IN THE UNITED STATES OF AMERICA, THERE IS A BENEFIT AND RETIREMENT PLAN (THE PLAN), WHICH COVERS ALL THE EMPLOYEES THAT MEET CERTAIN ELEGIBILITY REQUIREMENTS. THE BENEFITS OF THE PLAN ARE MAINLY BASED IN THE YEARS OF SERVICE AND THE COMPENSATION OF SUCH EMPLOYEES. CORPORACION DURANGO, S.A. DE C.V. AND SUBSIDIARIES (THREE SUBSIDIARY COMPANIES) RECOGNIZES "MODIFICATIONS TO THE BULLETIN D-3 ON 2004" A NEW 2004 PLAN "ADDITIONAL BENEFITS AT RETIREMENT" IN ACCORDANCE TO MODIFICATIONS TO BULLETIN D-3. STOCKHOLDERS' EQUITY: CAPITAL STOCK, STOCK SALE PREMIUM, STATUTORY LEGAL RESERVE AND RETAINED EARNINGS, INCLUDE THE RESTATED EFFECT, ACCORDING WITH THE NATIONAL CONSUMER PRICE INDEX (NCPI) FROM THE DATE THE CAPITAL WAS CONTRIBUTED AND FROM THE YEAR THE RESULTS AND PREMIUMS WERE DETERMINED RESPECTIVELY. THE RESTATED AMOUNT REPRESENTS THE REQUIRED AMOUNT TO MAINTAIN THE CONTRIBUTIONS AND ACCUMULATED RESULTS IN CONSTANT PESOS AS OF DECEMBER 31st, 2006. FIXED AND VARIABLE EQUITY COMPONENTS AMOUNT NUMBER OF SHARES FIXED PORTION 982,074 65,419,089 VARIABLE PORTION 678,873 45,222,022 ---------- ------------ 1,660,947 110,641,111 DEFERRED TAXES: AS OF JANUARY 1st.,2000, WITH THE ISSUANCE OF BULLETIN D-4 ("DEFERRED TAXES" THE COMPANY RECOGNIZED TO THAT DATE (JANUARY 1st.,2000) THE INITIAL EFFECT OF DEFERRED TAXES DERIVED FROM TEMPORARY DIFFERENCES AS A GAIN OR A LOSS, IN SUBSECUENT PERIODS THE COMPANY IS IN COMPLIANCE WITH THE BULLETIN. IN ORDER TO RECOGNIZE THE DEFERRED INCOME TAX, THE HOLDING COMPANY AND ITS SUBSIDIARIES USE THE INTEGRAL ASSETS AND LIABILITIES METHOD, WHICH CALCULATES SUCH TAX, USING THE APPLICABLE STATUTORY TAX RATE TO THE TEMPORARY DIFFERENCES BETWEEN BOOK AND TAX VALUES OF THE ASSETS AND LIABILITIES AS OF THE END OF THE PERIOD. DISCONTINUED OPERATIONS: THE COMPANY REPORTS ON DISCONTINUED OPERATIONS THE RESULT OF THE PARTICLEBOARD PLANT FROM PONDEROSA INDUSTRIAL DE MEXICO, S.A. DE C.V., FOR 2005. BUSINESS SEGMENTS INFORMATION: SEGMENT REPORTING INFORMATION IS PREPARED IN ACCORDANCE WITH BULLETIN B-5 "FINANCIAL INFORMATION BY SEGMENT". THE SEGMENTS REPORT BASED ON THE INTERNAL REPORT METHOD USED BY THE COMPANY. THE COMPANY PRESENTS THE FOLLOWING BUSINESS SEGMENTS: 1. PACKAGING. THIS SEGMENT INCLUDES THE PRODUCTION AND SALES OF CORRUGATED CONTAINER, MULTI-WALL SACKS AND PAPER TUBES. 2. PAPER. THIS SEGMENT INCLUDES THE PRODUCTION AND SALES OF KRAFT AND SEMI-KRAFT PAPER PRODUCED FROM VIRGIN FIBERS OR RECYCLED FIBERS. 3. OTHERS. THIS SEGMENT INCLUDES THE PRODUCTION AND SALE OF PLYWOOD. AS OF DECEMBER 31st., 2006 AND 2005, THE SEGMENT INFORMATION IS PRESENTED AS FOLLOWS: PROPERTY PLANT AND TOTAL EQUIPMENT SEGMENT 2006 INCOME ACQUISITION, NET ASSETS ------ --------- ---------------- -------------- PACKAGING 4,814,823 116,066 28,239,771 PAPER 3,402,162 102,597 9,235,650 OTHERS 125,310 (21) 447,288 ELIMINATONS (2,918,508) (23,971,627) ---------- ------------ -------------- TOTAL 5,423,787 218,642 13,951,082 ========== ============ ============== PROPERTY PLANT AND TOTAL EQUIPMENT SEGMENT 2005 INCOME ACQUISITION, NET ASSETS ------ --------- ---------------- -------------- PACKAGING 4,571,840 (26,872) 28,419,124 PAPER 2,926,352 14,481 8,809,371 OTHERS 106,603 6,912 1,090,638 ELIMINATIONS (2,853,312) (24,148,173) ---------- ------------ -------------- TOTAL 4,751,483 (5,479) 14,170,960 ========== ============ ============== THE FINANCIAL INFORMATION PRESENTED ABOVE IS USED IN THE DECISITION MAKING PROCESS BY THE COMPANY. INTERNAL CONTROL: THE COMPANY HAS STARTED IMPLEMENTATION ON THE SARBANES OXLEY ACT WITH THE ADVISE OF EXPERT ADVISORS. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CORPORACION DURANGO, S.A. DE C.V. Date: March 21, 2007 By /s/ Mayela Rincon de Velasco -------------------------------- Name: Mayela Rincon de Velasco Title: Chief Financial Officer

CORPORACION DURANGO S.A .DE C.V. 6-K