Corporacion Durango S/A/De C/V · 6-K · For 6/30/06

Filed On 8/8/06 5:45pm ET   ·   SEC File 1-13148   ·   Accession Number 925262-6-10

Report of a Foreign Private Issuer   ·   Form 6-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 6-K         Corporacion Durango Partially Consolidated Second      9±    37K 
                          Quarter Results                                        

Document Table of Contents

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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 August, 2006             
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-_____________.                            

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CORPORACION DURANGO AND REPORTING GUARANTOR GROUP                                       
PARTIALLY CONSOLIDATED CONDENSED BALANCE SHEETS                                         
AS OF DECEMBER 31, 2005 AND JUNE 30, 2006 (UNAUDITED)                                   
EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS                             
AS OF JUNE 30, 2006                                                                     
(Stated in thousands of Pesos and Dollars)                                              
                                                                                        
                                                                              US$ DLLS. 
                                                      December 31, Jun 30,     Jun 30,  
                                                         2005        2006        2006   

     ASSETS                                                                             
CURRENT ASSETS:                                                                         
  Cash and cash equivalents ........................$    504,434$    307,328      27,264
  Accounts receivable, net .........................   1,088,617   1,251,681     111,040
  Taxes recoverable and other assets ...............      65,765      42,310       3,753
  Inventories, net .................................     794,451     835,471      74,117
  Prepaid expenses .................................       4,802       8,920         791
            Total current assets ...................   2,458,069   2,445,710     216,966
LONG-TERM RELATED PARTIES ..........................     287,290     226,557      20,099
PROPERTY, PLANT AND EQUIPMENT, net .................   7,226,152   7,667,654     680,221
INVESTMENT IN SUBSIDIARIES .........................   3,590,501   3,713,732     329,456
OTHER ASSETS, net ..................................     200,588     196,910      17,468
            Total  assets ..........................$ 13,762,600$ 14,250,563   1,264,211

     LIABILITIES AND STOCKHOLDERS' EQUITY                                               
CURRENT LIABILITIES:                                                                    
  Bank loans and current portion of long-term debt .     189,450     189,766      16,835
  Interest payable .................................       2,660       1,488         132
  Trade accounts payable ...........................     395,658     390,381      34,632
  Notes payable ....................................      27,235      16,466       1,461
  Accrued liabilities ..............................     279,001     386,944      34,327
  Employee profit-sharing ..........................         286         284          25
            Total  current liabilities .............     894,290     985,329      87,412
LONG-TERM DEBT .....................................   5,824,148   5,956,273     528,399
LONG-TERM RELATED PARTIES ..........................     778,132     859,553      76,254
LONG-TERM NOTES PAYABLE ............................      20,721      18,209       1,615
DEFERRED TAXES......................................   1,173,935   1,188,831     105,465
LIABILITY FOR EMPLOYEE BENEFITS.....................     302,891     300,838      26,688
            Total long term liabilities ............   8,099,827   8,323,704     738,421
            Total  liabilities .....................   8,994,117   9,309,033     825,833
STOCKHOLDERS' EQUITY:                                                                   
  Majority interest ................................   4,740,859   4,913,319     435,875
  Minority interest ................................      27,624      28,211       2,503
            Total stockholders' equity .............   4,768,483   4,941,530     438,378
            Total liabilities and stockholders' equi$ 13,762,600$ 14,250,563   1,264,211

               Exchange rate: $ 11.2723                                                 

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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 JUNE 30, 2006                                                                                 
(Stated in thousands of Pesos and Dollars)                                                          
                                                                                                    
                                                                                              *     
                                                                  Full Year   Acum. Jun   Acum. Jun 
                                                                     2005        2006      US$ 2006 

OPERATING ACTIVITIES:                                                                               
Net income (loss) ..............................................$    179,738$   -237,399     -21,060
    Add (deduct)- Charges (credits) to income which do                                              
       not require (generate) resources:                                                            
       Loss in subsidiaries ....................................     341,874      -2,340        -208
       Depreciation and amortization ...........................     261,667     126,628      11,234
       Loss (gain) on sale of property, plant and equipment ....      10,595        -740         -66
       Deferred income taxes ...................................    -193,691     -57,480      -5,099
       Other....................................................     -25,827      21,805       1,934
       Total items which do not require cash....................     394,618      87,873       7,795
  Net resources generated from income ..........................     574,356    -149,526     -13,265
    Changes in operating assets and liabilities:                                                    
    Decrease (Increase) in inventories .........................     -94,247     -41,020      -3,639
    Decrease (Increase) in current assets ......................      26,403      19,337       1,715
    Decrease (increase) in account receivables, net ............      -1,441    -163,064     -14,466
    (Decrease) increase in accounts payable and                                                     
      accrued liabilities ......................................    -158,319      90,723       8,048
  Resources generated by continued operating  ..................     346,752    -243,550     -21,606
  Assets and liabilities discontinued ..........................     -23,315           0           0
  Resources generated by operating activities ..................     323,437    -243,550     -21,606
FINANCING ACTIVITIES:                                                                               
       Increase (Decrease) in bank loans and others ............  -4,562,968     235,051      20,852
       Increase (Decrease) in capital ..........................     292,617           0           0
       Gain on shares sales ....................................   2,993,053           0           0
  Net resources generated from financing activities ............  -1,277,298     235,051      20,852
INVESTMENT ACTIVITIES:                                                                              
       Acquisition and sale of property, plant and equipment....     -67,622    -181,255     -16,080
       Profit on sale of discontinued operations................      72,922           0           0
       Acquisition of shares ...................................     669,392           0           0
       Increase in deferred assets .............................      -6,331      -7,352        -652
  Net resources applied to investing activities ................     668,361    -188,607     -16,732
INCREASE IN CASH AND CASH EQUIVALENTS ..........................    -285,500    -197,106     -17,486
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD............     789,934     504,434      44,750
CASH & CASH EQUIVALENTS AT END OF THE PERIOD ...................$    504,434$    307,328US    27,264

* The exchange rate of 11.2723 was used for translation purposes.                                   

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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 JUNE 30, 2006                                                                                        

                                                                                                           

                                           Thousands of Pesos               Thousands of Dollars           
                                              2Q          2Q                    2Q          2Q             
                                             2005        2006      Var         2005        2006     Var    

NET SALES ...............................$ 1,162,085$  1,358,720       17%     104,524     120,536      15%
COST OF SALES ...........................    975,442   1,105,816       13%      87,737      98,100      12%
     Gross profit........................    186,643     252,904       36%      16,787      22,436      34%

     Selling and Administrative expenses     110,612     117,535        6%       9,949      10,427       5%
     Operating income ...................     76,031     135,369       78%       6,838      12,009      76%
FINANCIAL EXPENSE:                                                                                         
Interest expense ........................    126,144     165,670       31%      11,346      14,697      30%
Interest income .........................    -13,601     -10,224      -25%      -1,223        -907     -26%
Exchange (gain) loss, net ...............   -259,535     249,900   N/A         -23,344      22,169  N/A    
Gain on monetary position ...............     -1,676       6,930   N/A            -151         615  N/A    
  Total financial expense ...............   -148,668     412,276   N/A         -13,372      36,574  N/A    
OTHER INCOME (EXPENSES):                                                                                   
Other income (expense), net .............    -63,678      76,597   N/A          -5,728       6,795  N/A    
  Total other income (expense) ..........    -63,678      76,597   N/A          -5,728       6,795  N/A    
  Income (loss) before income and asset t    161,021    -200,310   N/A          14,482     -17,770  N/A    
Provisions for income and asset taxes ...      3,220       4,572       42%         290         406      40%
Provision for deferred income taxes .....    194,378     -57,358   N/A          17,483      -5,088  N/A    
  Net income after taxes ................    -36,577    -147,524      303%      -3,291     -13,088     298%
Discontinued operations .................    -31,178           0     -100%      -2,804           0    -100%
Loss (Gain) in subsidiaries .............    -37,261     -20,462      -45%      -3,348      -1,816     -46%
Net income before minority interest......$    31,862$   -127,062   N/A           2,861     -11,272  N/A    
  Minority interest......................     -1,983      -1,068      -46%        -178         -95     -47%
  Majority net income....................$    33,845$   -125,994   N/A           3,039     -11,177  N/A    

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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 JUNE 30, 2006                                                                                        

                                                                                                           

                                           Thousands of Pesos               Thousands of Dollars           
                                              Ac          Ac                    Ac          Ac             
                                             2005        2006      Var         2005        2006     Var    

NET SALES ...............................$ 2,287,840$  2,498,424        9%     202,129$    225,389      12%
COST OF SALES ...........................  1,936,816   2,020,687        4%     171,090     182,268       7%
     Gross profit........................    351,024     477,737       36%      31,039      43,121      39%

     Selling and Administrative expenses     216,168     224,729        4%      19,101      20,289       6%
     Operating income ...................    134,856     253,008       88%      11,938      22,832      91%
FINANCIAL EXPENSE:                                                                                         
Interest expense ........................    263,350     324,811       23%      23,242      29,338      26%
Interest income .........................   -377,606     -24,117      -94%     -32,783      -2,185     -93%
Exchange (gain) loss, net ...............   -235,189     418,990   N/A         -21,233      37,726  N/A    
Gain on monetary position ...............    -60,015     -45,889      -24%      -5,209      -4,244     -19%
  Total financial expense ...............   -409,460     673,795   N/A         -35,983      60,635  N/A    
OTHER INCOME (EXPENSES):                                                                                   
Other income (expense), net .............   -125,146     129,344   N/A         -11,057      11,648  N/A    
  Total other income (expense) ..........   -125,146     129,344   N/A         -11,057      11,648  N/A    
  Income (loss) before income and asset t    419,170    -291,443   N/A          36,864     -26,155  N/A    
Provisions for income and asset taxes ...      3,220       5,776       79%         290         517      78%
Provision for deferred income taxes .....    283,452     -57,480   N/A          25,206      -5,099  N/A    
  Net income after taxes ................    132,498    -239,739   N/A          11,368     -21,573  N/A    
Discontinued operations .................    -43,499           0     -100%      -3,872           0    -100%
Loss (Gain) in subsidiaries .............    218,272      -2,340   N/A          18,830        -121  N/A    
Net income before minority interest......$   -42,275$   -237,399      462%      -3,590$    -21,452     498%
  Minority interest......................     -3,147      -1,144      -64%        -279        -102     -63%
  Majority net income....................$   -39,128$   -236,255      504%      -3,311$    -21,350     545%

CORPORACION DURANGO, S.A. 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. DE C.V. AND THE FOLLOWING               
SUBSIDIARIES:                                                                   
COMPANIA PAPELERA DE ATENQUIQUE, S.A. DE C.V.                             
EMPAQUES DE CARTON TITAN, S.A. DE C.V.                                    
ADMINISTRACION CORPORATIVA DE DURANGO, 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 MEXICAN GAAP 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`S EXCHANGE RATE.      
THE EXCHANGE RATE ON JUNE 30st, 2006 WAS $11.2723.                              

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 JUNE 30st, 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 JUNE 30st., 2006 AND 2005, THE SEGMENT INFORMATION IS PRESENTED           
AS FOLLOWS:                                                                     

PROPERTY    
PLANT AND     
TOTAL          EQUIPMENT            SEGMENT 
2006          INCOME        ACQUISITION           ASSETS                
------        ---------     ------------      --------------              
PACKAGING        2,230,618           7,798          30,119,802                  
PAPER            1,510,772          49,865           9,023,251                  
OTHERS              57,106         126,795             515,157                  
ELIMINATONS     (1,300,072)                        (25,407,647)                 
----------     ------------      -------------- 
TOTAL            2,498,424         184,458          14,250,563                  
==========     ============      ============== 

PROPERTY    
PLANT AND     
TOTAL          EQUIPMENT          SEGMENT   
2005          INCOME        ACQUISITION         ASSETS                  
------        ---------     ------------     --------------               
PACKAGING        2,167,959          28,240         21,961,779                   
PAPER            1,400,494           8,375          8,359,933                   
OTHERS              44,895             663            933,018                   
ELIMINATIONS    (1,325,508)                       (17,614,419)                  
----------     ------------     --------------  
TOTAL            2,287,840          37,278         13,640,311                   
==========     ============     ==============  

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:  Aug 8, 2006              By /s/ Mayela Rincon de Velasco                 
                                --------------------------------
                               Name:  Mayela Rincon de Velasco
                              Title: Chief Financial Officer

Dates Referenced Herein   and   Documents Incorporated By Reference

This 6-K Filing		Date		Other Filings
		6/1/04
		12/31/05		6-K, 20-F
		1/1/06
For The Period Ended		6/30/06		6-K
Filed On		8/8/06		6-K
Filed As Of		8/9/06		6-K
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