Printer Friendly


 Note 6. Long-term Det
 Long-term debt at Sept. 30, 1993 and 1992 consisted of:
 Periods ended Sept. 30 1993 1992
 New New
 Mexican U.S. Mexican U.S.
 Pesos Dollar(A) Pesos Dollar(A)
 Floating rate notes,
 maturing in semi-annual
 installments from 1992
 through 1999 NP 77,286 $24,789 NP 96,804 $28,416
 Notes payable to bank,
 maturing in semi-annual
 installments from 1992
 through 1999 89,975 28,858 112,697 33,081
 Revolving credits
 maturing in 1999 73,074 23,438 92,619 27,188
 Notes payable to Mexican
 financial institution
 maturing in semi-annual
 installments from 1993
 through 1995 96,776 31,040 109,013 32,000
 Convertible debentures
 due 1997 155,890 50,000 170,334 50,000
 Medium term notes
 maturing in 1995 155,890 50,000 170,334 50,000
 Medium term notes
 maturing in 1999 62,356 20,000 68,134 20,000
 Financial leasing contract
 with semi-annual payments
 from 1992 to 1997 21,045 6,750 -- --
 Notes payable to Mexican
 financial institution
 maturing in semi-annual
 installments from 1992
 to 1997 7,795 2,500 17,034 5,000
 Other notes payable 19,596 6,285 13,933 4,090
 Subtotal 759,683 243,660 850,902 249,775
 Less current portion 61,183 19,624 51,685 15,172
 NP698,500 $224,036 NP 799,217 $234,603
 NOTE: (A) Represents the outstanding U.S. dollar debt of the company in nominal U.S. dollars.
 U.S. $30,230 in the form of Floating Rate Notes and U.S. $35,193 in notes payable to the Export/Import Bank of the U.S. are payable in the following manner:
 -- The first two installments paid in 1992 each equal to three percent of the principal amount.
 -- Thirteen installments in an amount equal to six percent of the principal amount, and,
 -- A final installment as of August 5, 1999, in an amount equal to the then unpaid principal amount of these two obligations (16 percent).
 U.S. $30,000 in the form of revolving credits are payable to a Mexican financial institution in 32 equal quarterly installments beginning February 1992, each payment equivalent to 3.125 percent of the total amount.
 On June 12, 1992, the company issued $50 million principal amount of debentures. The debentures may be converted, at the option of the holder, into shares of common stock of the company or American Depositary Receipts ("ADRs") evidencing American Depositary Shares ("ADS"). The conversion rate will be approximately 85.1063 shares of common stock for each one thousand U.S. dollars principal amount of debentures, subject to adjustment under certain circumstances. The company may redeem the debentures, in whole or in part, at specified prices, on any date, if the average of the high and low sale price of the company's common stock has been equal to or greater than 140 percent, of the then current conversion price for any 20 consecutive trading days ending within five trading days of the date the company's notice of its intent to redeem. The maturity date of the debentures is June 12, 1997. The debentures bear interest at a rate of 7.50 percent per annum. Payments of interest and any premiums paid with respect of the debentures are subject to a 15 percent Mexican withholding tax. The company will pay additional amounts in respect of such withholding tax on interest payments, but may elect to redeem the debentures prior to maturity under certain circumstances.
 On Jan. 21, 1992, a global program was established for the issuance of notes up to $125,000 with maturities from one to seven years and variable interest rate. To finance the payment of bank loans maturing in 1992, on January 30 of this year notes in the amount of $50 million U.S. dollars were issued under the global program. The notes bear a 9.75 annual interest rate, were issued at a 99.54 of the face value and their maturity date is Jan. 30, 1995. On March 10, 1992 an additional $20 million U.S. dollars was issued under the global program at a 10.53 annual interest rate and maturity in 1999.
 Minimum payments due on long-term debt as per loan agreements in each of the next five years based on the exchange rate effective on Sept. 30, 1993 are as follows: 1993 NP. 5,916; 1994 NP. 59,891; 1995 NP. 277,825; 1996 NP. 40,124; and 1997 NP. 196,014. The average interest rates on long-term debt in the six months ended Sept. 30, 1993 and 1992 were 9.2 percent and 9.7 percent, respectively.
 The loan agreements, among other things, impose certain covenants: maintenance of certain levels of net worth and working capital; maintenance of certain ratios of debt to net worth; restrictions on the payment of cash dividends (See Note 8); incurrence of additional debt and debt service. At Sept. 30, 1993 the company was not in compliance with a number of these covenants and has obtained waivers from all creditors waiving compliance with such covenants until Jan. 1, 1994.
 NOTE 7: Contingent Liabilities and Commitments
 The company is contingently liable for employee severance compensation as explained in Note 3D.
 NOTE 8: Capital Stock and Restrictions on Shareholder's Equity
 Capital stock as of Sept. 30, 1993 and 1992 consisted of 69,210,600 and 55,815,000 shares issued and outstanding, of no par common stock. In 1991, 13 million shares were issued and 7 million shares were held in treasury for conversion of debentures. In June 1993, 13,695,600 shares were issued. All shares carry identical rights and obligations.
 In accordance with article 6 of the company's Articles of Incorporation, the subscribed and paid-in capital stock as of Sept. 30, 1993 was in the amount of NP. 1,199,700 and consisted of common shares with no par value, analyzed as follows:
 Shares Issued
 Held in treasury for
 Authorized conversion of debentures Outstanding
 First Series 69,210,600 -- 69,210,600
 Second Series 7,000,000 7,000,000 --
 76,210,600 7,000,000 69,210,600
 Less shares owned by Tamsider,
 S.A. de C.V., a subsidiary of
 the company eliminated for
 consolidation purposes from
 shareholders' equity (1,000,000)
 The consideration for the stated capital as Sept. 30, 1993 and 1992, expressed in Mexican pesos with purchasing power as of Sept. 30, 1993 was as follows:
 Shares New Mexican
 Cash 24,151,340 NP.1,153,739
 Capitalization of property
 revaluation in 1954 20,000 37
 Capitalization of reinvested
 earnings, subject to income tax
 if shares are redeemed 834,556 1,531
 Capitalization of appreciation
 from appraisal of property,
 plant and equipment 15,389,704 28,251
 Capitalization of accumulated
 excess of monetary and
 nonmonetary gains -- 540,226
 Shares issued in exchange
 for long-term debt 28,815,000 1,038,223
 69,210,600 NP.2,762,007
 Shares New Mexican
 Cash 10,755,740 NP. 917,592
 Capitalization of property
 revaluation in 1954 20,000 37
 Capitalization of reinvested
 earnings, subject to income
 tax if shares are redeemed 834,556 1,531
 Capitalization of appreciation
 from appraisal of property,
 plant and equipment 15,389,704 28,251
 Capitalization of accumulated
 excess of monetary and
 nonmonetary gains -- 540,226
 Shares issued in exchange
 for long-term debt 28,815,000 1,038,223
 Total outstanding capital
 stock 55,815,000 NP. 2,525,860
 The company computes corporate tax expense in accordance with the parcial liability method, as required by bulletin D-4 issued by the institute, under which deferred income taxes are provided for identifiable, non-recurring timing differences (those expected to turn around over a definite period of time) at rates in effect at the time such differences arise. Benefits from loss carryforwards are not permitted to be recognized before the period in which the carryforward is effectively made. Had the company adopted FASB statement 109 as of Jan. 1, 1993 it would not have affected the net loss for the nine months ended Sept. 30, 1993 or shareholders' equity at that date. The significant components of the deferred tax liabilities and assets that would have been registered as of Jan. 1, 1993 are as follows:
 Deferred tax liabilities:
 Inventories NP.190,790
 Total deferred tax liabilities NP.190,790
 Deferred tax assets:
 Net operating loss carryforwards NP.(217,517)
 Tax over book value of property,
 plant and equipment (86,484)
 Allowances for decreases in
 investments (2,970)
 Allowances for uncollectible accounts (729)
 Total deferred tax assets (307,700)
 Valuation allowance for deferred
 tax assets 116,910
 Net deferred tax assets NP.(190,790)
 Note 10. Other Information
 Following are details of certain amounts included in the consolidated statements of financial position at Sept. 30, 1993 and 1992:
 1993 1992
 Accounts and notes receivable:
 Customers NP.234,866 NP.268,253
 Officers and employees 4,763 4,154
 Other accounts 9,013 7,363
 Total NP.248,642 NP.279,770
 Raw materials NP.54,255 NP.78,991
 Finished and in process products 134,356 147,407
 Accessories, spare parts and
 general store 281,375 308,195
 Total NP.469,986 NP.534,593
 Other accounts payable and
 accrued expenses:
 Interest and commissions payable NP.37,430 NP.42,899
 Taxes payable 4,231 4,608
 Other accounts payable 15,788 8,808
 Total NP.57,448 NP.56,315
 In 1993, and 1992 the amount of interest paid was NP.48,946 and NP.37,516, respectively. The amount of income taxes and tax on net assets paid in 1993, and 1992 was NP.7,741 and NP.21,587, respectively.
 Note 11. Unusual Costs and Expenses
 As a result of a severe contraction in the demand both in the international and domestic markets during 1992 the company reviewed its operating strategies in order to improve competitiveness and future profitability and with this purpose undertook a major rationalization program of its productive installations which included a permanent workforce reduction. As a result, NP.87,759 are presented as a separate item in the 1992 consolidated statement of earnings as unusual costs and expenses and are analyzed as follows:
 Permanent workforce reduction -- Note 3D NP.64,536
 Production facilities temporary stoppage and
 start up 23,223
 Total NP.87,759
 Note 12. Fair Values of Financial Instruments
 The following methods and assumptions were used by the company in estimating its fair values disclosures for financial instruments:
 Investments in less than 20 percent owned companies carried at cost: It is not practicable to estimate the fair value of the company's investment in these companies because of the lack of a quoted market price and the inability to estimate fair value without incurring excessive costs. The carrying amounts of these investments at Sept. 30, 1993 was NP.55,033 which represents the original cost of these investments, which management believes is not impaired.
 Notes payable to banks: The carrying amounts of the company's borrowings under its short-term credit agreements approximate their fair value. These liabilities are presented in the consolidated statement of financial position at their face value. The interest payable on these liabilities is included under other accounts payable and accrued expenses.
 Long-term debt: The fair value of the company's publicly traded long-term liabilities was determined using quoted market prices. The carrying amount of the remainder of the company's long-term liabilities approximates their fair value.
 The carrying amounts and fair values of the company's financial instruments at Sept. 30, 1993 are as follows:
 Carrying Fair
 amount value
 Investments in associated and
 affiliated companies and other
 assets NP.55,033 NP.55,033
 Notes payable to banks and
 long-term debt NP.1,503,128 NP.1,486,526
 -0- 11/1/93 AA NY057
 /PRNewswire -- Nov. 1/

CO: Tubos De Acero De Mexico, S.A. ST: IN: CST SU: ERN

TM-LD -- NY057A -- 9181 11/01/93 13:10 EST
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Nov 1, 1993

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters