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