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 August 8, 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 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
--- ---
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 June 30, 2005.
2
TENARIS S.A.
CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
JUNE 30, 2005
46a, Avenue John F. Kennedy - 2nd Floor.
L - 1855 Luxembourg
3
Consolidated condensed interim income statement
(all amounts in thousands of U.S. dollars, unless otherwise stated) Three-month period ended Six-month period ended
June 30, June 30,
-------------------------------------------
Notes 2005 2004 2005 2004
-------------------------------------------
(Unaudited)
Net sales 3 1,744,311 996,849 3,197,238 1,856,195
Cost of sales 4 (1,043,774) (677,655)(1,908,902)(1,298,112)
-------------------------------------------
Gross profit 700,537 319,194 1,288,336 558,083
Selling, general and administrative expenses 5 (212,510) (167,547) (397,593) (307,365)
Other operating income (expense), net 2,602 2,065 5,569 5,565
-------------------------------------------
Operating income 490,629 153,712 896,312 256,283
Financial income (expense), net 6 (42,643) (3,885) (84,450) (19,323)
-------------------------------------------
Income before equity in earnings (losses) of associated companies and
income tax 447,986 149,827 811,862 236,960
Equity in earnings (losses) of associated companies 38,279 40,130 68,442 39,669
-------------------------------------------
Income before income tax 486,265 189,957 880,304 276,629
Income tax (144,645) (60,911) (258,714) (99,980)
-------------------------------------------
Income for the period (1) 341,620 129,046 621,590 176,649
-------------------------------------------
Attributable to (1):
Equity holders of the Company 313,456 127,314 577,690 175,682
Minority interest 28,164 1,732 43,900 967
-------------------------------------------
341,620 129,046 621,590 176,649
-------------------------------------------
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 1,180,537 1,180,537 1,180,477
Earnings per share (U.S. dollars per share) 0.27 0.11 0.49 0.15
(1) Prior to December 31, 2004 minority interest was shown in the income
statement before net income, as required by International Financial
Reporting Standards in effect. For periods beginning on or after January 1,
2005, IAS 1 (revised) requires that income for the period as shown on the
income statement not exclude minority interest. Earnings per share,
however, continue to be calculated on the basis of net income attributable
solely to the equity holders of the Company (see Note 2 (a)).
The accompanying notes are an integral part of these consolidated
condensed interim financial statements. The Report of the Independent
Registered Public Accounting Firm on these consolidated condensed
interim financial statements is issued as a separate document.
4
Consolidated condensed interim balance sheet
(all amounts in thousands of U.S. dollars) At June 30, 2005 At December 31, 2004
-------------------- --------------------
Notes (Unaudited)
ASSETS
Non-current assets
Property, plant and equipment, net 8 2,209,065 2,164,601
Intangible assets, net (see Note 2 (b)) 8 161,607 49,211
Investments in associated companies 224,685 99,451
Other investments 25,225 24,395
Deferred tax assets 171,900 161,173
Receivables 35,317 2,827,799 151,365 2,650,196
---------- ----------
Current assets
Inventories 1,389,631 1,269,470
Receivables and prepayments 167,647 279,450
Current tax assets 95,911 94,996
Trade receivables 1,258,981 936,931
Other investments 5,000 119,666
Cash and cash equivalents 450,586 3,367,756 311,579 3,012,092
-------------------- --------------------
Total assets 6,195,555 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
Currency translation adjustments (51,622) (30,020)
Retained earnings 1,106,574 2,963,276 617,538 2,495,924
---------- ----------
Minority interest 217,880 165,271
---------- ----------
Total equity 3,181,156 2,661,195
---------- ----------
LIABILITIES
Non-current liabilities
Borrowings 682,551 420,751
Deferred tax liabilities 362,331 371,975
Other liabilities 164,599 172,442
Provisions 41,469 31,776
Trade payables 3,963 1,254,913 4,303 1,001,247
---------- ----------
Current liabilities
Borrowings 481,972 838,591
Current tax liabilities 262,302 222,735
Other liabilities 180,867 194,945
Provisions 30,307 42,636
Customer advances 109,427 108,847
Trade payables 694,611 1,759,486 592,092 1,999,846
-------------------- --------------------
Total liabilities 3,014,399 3,001,093
---------- ----------
Total equity and liabilities 6,195,555 5,662,288
========== =========
Contingencies, commitments and restrictions to the distribution of profits are disclosed in Note 9.
The accompanying notes are an integral part of these consolidated
condensed interim financial statements. The Report of the Independent
Registered Public Accounting Firm on these consolidated condensed
interim financial statements is issued as a separate document.
5
Consolidated condensed interim statement of changes in equity
(all amounts in thousands of U.S. dollars)
Attributable to equity holders of the Company
--------------------------------------------------------------------- Minority
Other Currency Retained Interest
Share Legal Share Distributable translation Earnings (see
Capital Reserves Premium Reserve(*) adjustments (*) 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 - - - - (21,602) - 10,453 (11,149)
Acquisition and increase of
minority interest - - - - - - 986 986
Dividends paid in cash - - - (82) - (199,429) (2,730) (202,241)
Income for the period - - - - - 577,690 43,900 621,590
-----------------------------------------------------------------------------------------
Balance at June 30, 2005 1,180,537 118,054 609,733 - (51,622)1,106,574 217,880 3,181,156
-----------------------------------------------------------------------------------------
Attributable to equity holders of the Company
--------------------------------------------------------------------- Minority
Other Currency Retained Interest
Share Legal Share Distributable translation Earnings (see
Capital Reserves Premium Reserve(*) adjustments (*) 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 - - - - (23,364) - (5,852) (29,216)
Capital Increase and acquisition
of minority interest 249 25 464 82 - - (742) 78
Dividends paid in cash - - - (96,555) - (38,498) (23) (135,076)
Income for the period - - - - - 175,682 967 176,649
----------------------------------------------------------------------------------------
Balance at June 30, 2004 1,180,537 118,054 609,733 82 (57,558) 8,517 114,334 1,973,699
----------------------------------------------------------------------------------------
(*) The Distributable Reserve and Retained Earnings calculated according
to Luxembourg Law are disclosed in Note 9 (v).
The accompanying notes are an integral part of these consolidated
condensed interim financial statements. The Report of the
Independent Registered Public Accounting Firm on these
consolidated condensed interim financial statements is issued as
a separate document.
6
Consolidated condensed interim cash flow statement
Six-month period
ended June 30,
------------------
(all amounts in thousands of U.S. dollars) 2005 2004
------------------
(Unaudited)
Cash flows from operating activities
Income for the period 621,590 176,649
Adjustments for:
Depreciation and amortization 103,743 101,829
Income tax accruals less payments 35,756 8,110
Equity in (earnings) of associated companies (68,442) (39,669)
Interest accruals less payments, net 6,210 2,993
Changes in provisions (2,636) (962)
Proceeds from Fintecna arbitration award net of BHP settlement (See Note 9 (i)) 66,594 -
Changes in working capital (334,106)(311,021)
Currency translation adjustment and others 16,979 (20,829)
------------------
Net cash provided by (used in) operating activities 445,688 (82,900)
==================
Cash flows from investing activities
Capital expenditures (131,634) (82,783)
Capital increase and acquisitions of subsidiaries and associated companies (see Note 10) (47,930) (188)
Cost of disposition of property, plant and equipment and intangible assets 2,890 8,969
Dividends and distributions received from associated companies 41,118 16,802
Changes in restricted bank deposits 9,634 -
Reimbursement from trust funds 119,666 -
------------------
Net cash used in investing activities (6,256) (57,200)
==================
Cash flows from financing activities
Dividends paid (199,511)(135,053)
Dividends paid to minority interest in subsidiaries (2,730) (23)
Proceeds from borrowings 645,763 341,471
Repayments of borrowings (734,247) (51,720)
------------------
Net cash (used in) provided by financing activities (290,725) 154,675
------------------
Increase in cash and cash equivalents 148,707 14,575
Movement in cash and cash equivalents
At beginning of the period 293,824 238,030
Effect of exchange rate changes (12,247) 2,700
Increase in cash and cash equivalents 148,707 14,575
------------------
At June 30, 430,284 255,305
==================
Cash and cash equivalents At June 30,
----------------
2005 2004
----------------
Cash and bank deposits 450,586 268,969
Bank overdrafts (16,436) (13,664)
Restricted bank deposits (3,866) -
----------------
430,284 255,305
================
The accompanying notes are an integral part of these consolidated
condensed interim financial statements. The Report of the Independent
Registered Public Accounting Firm on these consolidated condensed
interim financial statements is issued as a separate document.
7
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 Dividends per share
8 Property, plant and equipment and Intangible assets, net
9 Contingencies, commitments and restrictions to the distribution
of profits
10 Business acquisitions, incorporation of subsidiaries and other
significant events
11 Related party disclosures
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
(In the notes all amounts are shown in U.S. dollars, 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 consolidates
the financial statements of Tenaris subsidiary companies, as detailed in Note 32
to audited Consolidated Financial Statements for the year ended December 31,
2004, and modified as discussed in Note 10 to these Consolidated Condensed
Interim Financial Statements.
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 these consolidated condensed interim financial
statements are consistent with those used in the audited consolidated financial
statements for the year ended December 31, 2004, except for the impact of
changes resulting from the adoption of new accounting pronouncements, as
discussed in Note 2. These consolidated condensed interim financial statements
should be read in conjunction with the audited consolidated financial statements
for the year ended 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 as of the balance sheet dates, and also the reported amounts of
revenues and expenses for the reported 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 functional
currency of the Company's subsidiaries differ from each other results in the
generation of foreign exchange gains (losses) that are included in the
consolidated condensed interim income statement under "Financial income
(expense), net".
These consolidated condensed interim financial statements were approved by the
Board of Directors of Tenaris on August 4, 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 apply to annual periods beginning on or after
January 1, 2005 and have been adopted in accordance with the respective
transition provisions. In addition, during 2004 International Financial
Reporting Standard (IFRS) 3, "Business Combinations" was issued. The main
impacts to the Company's consolidated financial statements are:
8
(a) Presentation of minority interest
IAS 1 (revised) requires disclosure on the face of the income statement of an
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 Company". Earnings per share continue to
be calculated on the basis of net income attributable solely to the equity
holders of the entity. Also, for periods beginning on or after January 1, 2005
minority interest is included within equity in the consolidated balance sheet
and is no longer shown as a separate category in the Liabilities section of the
balance sheet. This change resulted in an increase of U.S. $165.3 million in the
Company's reported equity at January 1, 2005.
(b) Goodwill and negative goodwill
Prior to January 1, 2005 goodwill was amortized on a straight line basis over
its estimated useful life, not to exceed 15 years, and tested for impairment at
each balance sheet date in the event indicators of impairment were present. As
required by IFRS 3, the Company ceased amortization of goodwill for periods
beginning on or after January 1, 2005. In addition, accumulated amortization as
of December 31, 2004 has been netted against the cost of the goodwill.
Furthermore, for years ending on or after December 31, 2005 goodwill is required
to be tested annually for impairment, as well as when there are indicators of
impairment. Amortization of goodwill expense included in the six-month period
ended June 30, 2004 amounted to U.S. $5.9 million.
IFRS 3 also requires accumulated negative goodwill at December 31, 2004 to be
derecognized through an adjustment to retained earnings. The derecognition of
negative goodwill in this manner resulted in an increase of U.S. $110.8 million
in the beginning balance of the Company's equity at January 1, 2005.
Amortization of negative goodwill income included in the six-month period ended
June 30, 2004 amounted to U.S. $5.7 million.
(c) Financial instruments: recognition and measurement
In accordance with the transition provisions of IAS 39 (revised), the Company
designated financial assets previously recognized as "available for sale" as
"financial assets carried at fair value through profit or loss". Accordingly,
the Company changed the classification of these financial assets using the new
designation in its 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
(all amounts in thousands of U.S. dollars)
------------------------------------------------
Welded &
Other
Metallic
Seamless Products Energy Other Total
------------------------------------------------
Six-month period ended June 30, 2005 (Unaudited)
Net sales 2,413,116 415,866 256,193 112,063 3,197,238
Cost of sales (1,320,512)(273,314)(248,406)(66,670)(1,908,902)
------------------------------------------------
Gross profit 1,092,604 142,552 7,787 45,393 1,288,336
Depreciation and amortization 88,851 7,356 1,570 5,966 103,743
Six-month period ended June 30, 2004
Net sales 1,472,469 156,224 196,727 30,775 1,856,195
Cost of sales (973,249)(116,220)(190,461)(18,182)(1,298,112)
------------------------------------------------
Gross profit 499,220 40,004 6,266 12,593 558,083
Depreciation and amortization 91,619 6,056 1,949 2,205 101,829
9
Secondary reporting format: geographical segments
(all amounts in thousands of U.S. dollars)
Middle Far East
South North East & &
America Europe America Africa Oceania Total
--------------------------------------------------
Six-month period ended June 30, 2005 (Unaudited)
Net sales 884,884 789,659 879,846 360,206 282,643 3,197,238
Depreciation and amortization 41,578 35,471 23,472 30 3,192 103,743
Six-month period ended June 30, 2004
Net sales 362,789 593,340 479,133 230,083 190,850 1,856,195
Depreciation and amortization 47,916 31,225 19,425 16 3,247 101,829
Allocation of net sales to geographical segments is based on the
customers' location. Allocation of depreciation and amortization is
based on the geographical location of the underlying assets.
4 Cost of sales
Six-month period ended
June 30,
---------------------
(all amounts in thousands of U.S. dollars) 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 1,513,516 936,795
Services and fees 153,656 122,564
Labor cost 201,826 174,686
Depreciation of property, plant and equipment 89,219 86,712
Amortization of intangible assets 3,541 5,132
Maintenance expenses 50,039 37,749
Provisions for contingencies 1,200 155
Allowance for obsolescence 1,202 10,517
Taxes 1,477 1,194
Other 13,387 7,382
---------------------
2,029,063 1,382,886
Less: Inventories at the end of the period (1,389,631) (916,653)
---------------------
1,908,902 1,298,112
=====================
10
5 Selling, general and administrative expenses
Six-month period ended
June 30,
-------------------------
(all amounts in thousands of U.S. dollars) 2005 2004
-------------------------
(Unaudited)
Services and fees 63,130 55,832
Labor cost 97,324 70,486
Depreciation of property, plant and equipment 5,014 4,918
Amortization of intangible assets 5,969 5,067
Commissions, freight and other selling
expenses 144,549 115,327
Provisions for contingencies 5,439 4,571
Allowances for doubtful accounts 6,936 4,796
Taxes 40,189 26,301
Other 29,043 20,067
-------------------------
397,593 307,365
-------------------------
6 Financial income (expense), net
Six-month period ended
June 30,
-------------------------
(all amounts in thousands of U.S. dollars) 2005 2004
-------------------------
(Unaudited)
Interest expense (29,746) (19,224)
Interest income 8,781 6,883
Net foreign exchange transaction losses and
changes in fair value of derivative
instruments (66,564) (12,746)
Other 3,079 5,764
-------------------------
(84,450) (19,323)
-------------------------
7 Dividends per share
Dividends paid in 2005 and 2004 were approximately U.S. $199.5
million and U.S. $135.1 million, respectively, corresponding to U.S.
$0.169 and U.S. $ 0.114 per share, respectively.
8 Property, plant and equipment and Intangible assets, net
Net Property,
Plant and Net Intangible
Equipment Assets
---------------- --------------
(all amounts in thousands of U.S. (Unaudited) (Unaudited)
dollars)
Six-month period ended June 30, 2005
Opening net book amount 2,164,601 49,211
Effect of adopting IFRS 3 (see Note 2
(b)) - 110,775
Currency translation differences (47,805) (255)
Transfers 3 (3)
Additions 122,784 8,850
Disposals (2,858) (32)
Increase due to business acquisition 66,573 2,571
Depreciation/ Amortization charge (94,233) (9,510)
---------------- --------------
At June 30, 2005 2,209,065 161,607
---------------- --------------
11
9 Contingencies, commitments and restrictions to the distribution of profits
This note should be read in conjunction with Note 25 included in the
Company's audited consolidated financial statements for the year ended December
31, 2004. Significant changes or events since the date of the annual report are
the following:
(i) Arbitration proceeding against Fintecna
On December 28, 2004, an 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 this arbitration proceeding, Tenaris sought
indemnification from Fintecna for amounts paid or payable by Dalmine to a
consortium led by BHP Billiton Petroleum Ltd. ("BHP") as indemnification for the
failure of an underwater pipeline manufactured and sold prior to the
privatization of Dalmine. Pursuant to this final award, Fintecna paid Tenaris a
total amount of euros 93.8 million (approximately U.S. $124.9 million) on March
15, 2005. In addition, on March 29, 2005, Tenaris prepaid a total of British
pounds 30.4 million plus interest (approximately U.S. $57.0 million)
corresponding to payment in full of its liability under the terms of the
settlement agreement with BHP. As a result of these settlements, the arbitration
proceedings have been definitively concluded and Tenaris has no further
oustanding obligations under the BHP settlement agreement.
(ii) Capitalization of Convertible Debt of Consorcio Siderurgia Amazonia, Ltd.
("Amazonia")
On February 3, 2005, Ylopa Servicos de Consultadoria Lda. ("Ylopa")
exercised its option to convert the convertible debt it held in Amazonia into
common stock. As a result, Tenaris' ownership stake in Amazonia increased from
14.5% to 21.2%, and its indirect ownership in Siderurgica del Orinoco C.A.
("Sidor") increased from 8.7% to 12.6%.
On May 18, 2005, the Company announced that it will exchange its 12.6%
indirect equity interest in Sidor, held through its ownership stakes in
Amazonia, and its equity interest in Ylopa, for shares in the new company in
which the Techint group has announced it intends to consolidate its Latin
American holdings in flat and long steel producers. The exchange will be made at
a value to be determined by an internationally recognized investment bank which
will be specifically engaged for this purpose. As of the date of these financial
statements, this independent valuation has not been completed.
(iii) Tax matters: Application of inflationary adjustment correction deduction
On February 11, 2005, Siderca S.A.I.C. ("Siderca") was granted the right to
participate in the promotional tax regime established by Argentine Law 25,924
under which it could potentially earn certain tax benefits. As a condition to
receive these benefits, Siderca withdrew its claim against the Argentine fiscal
authorities seeking relief through the application of the inflationary
adjustment correction in the calculation of its income tax liability for the
year ended December 31, 2002. On February 21, 2005, Siderca paid ARP $69.4
million (U.S. $23.8 million). No charges against income resulted from this
payment, as Tenaris had previously recorded a provision related to 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 ("IFC"), for approximately U.S. $42.5
million, related with project financing loans. Tenaris has
applied to the IFC for release from its proportional guarantee
commitment of Comsigua's project loan.
b) As discussed in Note 25 to the audited Consolidated Financial
Statements for the year ended December 31, 2004, Dalmine Energie
S.p.A. entered into two agreements with Eni S.p.A. Gas & Power
Division for the purchase of natural gas with certain take-or-pay
provisions. The outstanding value of these commitments at June
30, 2005 amount to approximately euros 938.0 million
(approximately U.S. $1,134 million).
(v) Restrictions to the distribution of profits and payment of dividends
As of June 30, 2005, shareholders' equity as defined under Luxembourg law and
regulations consisted of the following:
12
(all amounts in thousands of U.S. dollars)
Share capital 1,180,537
Legal reserve 118,054
Share premium 609,733
Retained earnings including net income for the six
month period ended June 30, 2005 581,620
---------------
Total shareholders equity according to Luxembourg
law 2,489,944
===============
At least 5% of the net income per year as calculated in accordance
with Luxembourg law and regulations must be allocated to the creation
of a legal reserve equivalent to 10% of share capital. As of June 30,
2005, this reserve is fully allocated and additional allocations to
the reserve are not required under Luxembourg law. Dividends may not
be paid from this reserve.
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 June 30, 2005, the distributable reserve, including retained
earnings, of Tenaris under Luxembourg law totalled U.S. $581.6
million, as detailed below.
(all amounts in thousands of U.S. dollars)
Distributable reserve at December 31, 2004 under
Luxembourg law 536,541
Dividends and distributions received 183,089
Other income and expenses for the six-month period
ended June 30, 2005 61,501
Dividends paid (199,511)
---------------
Distributable reserve at June 30, 2005 under
Luxembourg law 581,620
---------------
10 Business acquisitions, incorporation of subsidiaries and other
significant events
(a) The financial assets held in trust funds at December 31, 2004 (U.S. $119.7
million) were received in shares of two wholly-owned Chilean subsidiaries
(Inversiones Berna S.A. and Inversiones Lucerna S.A.) on January 1, 2005.
(b) On May 4, 2005, the Company completed the acquisition of 97% of the equity
in S.C. Donasid S.A., a Romanian steel producer, for approximately U.S.
$47.9 million in cash and assumed liabilities. The shares of Siprofer A.G.
and Donasid Service s.r.l. were also acquired as part of this transaction.
The assets and liabilities arising from the acquisitions are as a follows:
Six-month period ended
June 30, 2005
----------------------
(all amounts in thousands of U.S. dollars) (Unaudited)
----------------------
Other assets and liabilities (net) (42,822)
Property, plant and equipment 66,573
Goodwill 2,571
----------------------
Net assets acquired 26,322
Minority Interest (986)
----------------------
Purchase consideration 25,336
Liabilities paid as part of purchase agreement 22,594
----------------------
Total disbursement related to S.C. Donasid S.A.
and related companies 47,930
======================
13
(c) On May 18, 2005, Siat S.A., a subsidiary of Tenaris, and Acindar Industria
Argentina de Aceros S.A. ("Acindar") signed a letter of intent pursuant to
which Siat confirmed its intention to acquire Acindar's welded pipe assets
and facilities located in Villa Constitucion, province of Santa Fe,
Argentina, for approximately U.S. $28.0 million. Completion of this
acquisition is subject to due diligence findings and negotiation of
definitive documentation and other precedent conditions, including the
approval of the Argentine antitrust authorities (Comision Nacional de
Defensa de la Competencia).
11 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.
Transactions and balances disclosed as with "Associated" companies are
those with companies in which Tenaris owns 20% to 50% of the voting rights or
over which Tenaris exerts significant influence, but does not have control. All
other transactions with related parties which are not Associated and which are
not consolidated are disclosed as "Other".
The following transactions were carried out with related parties:
(all amounts in thousands of U.S. dollars)
Six-month period ended June 30, 2005
Associated (1) Other Total
(i) Transactions
(a) Sales of goods and services
Sales of goods 51,322 42,806 94,128
Sales of services 1,541 4,800 6,341
-------------------------------------
52,863 47,606 100,469
=====================================
(b) Purchases of goods and services
Purchases of goods 21,079 21,821 42,900
Purchases of services 9,835 25,285 35,120
-------------------------------------
30,914 47,106 78,020
=====================================
(all amounts in thousands of U.S. dollars)
Six-month period ended June 30, 2004
Associated (1) Other Total
(i) Transactions
(a) Sales of goods and services
Sales of goods 2,383 21,951 24,334
Sales of services 3,330 4,978 8,308
-------------------------------------
5,713 26,929 32,642
=====================================
(b) Purchases of goods and services
Purchases of goods 11,424 15,383 26,807
Purchases of services 255 22,334 22,589
-------------------------------------
11,679 37,717 49,396
=====================================
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At June 30, 2005
Associated (1) Other Total
-------------------------------------
(ii) Period-end balances
(a) Related to sales/purchases of
goods/services
Receivables from related parties 36,703 23,957 60,660
Payables to related parties (25,924) (8,806) (34,730)
-------------------------------------
10,779 15,151 25,930
=====================================
(b) Other balances
Receivables 23,728 - 23,728
(c) Financial debt
Borrowings (2) (53,330) - (53,330)
At December 31, 2004
Associated (1) Other Total
-------------------------------------
(ii) Period-end balances
(a) Related to sales/purchases of
goods/services
Receivables from related parties 25,593 27,070 52,663
Payables to related parties (4,914) (12,487) (17,401)
-------------------------------------
20,679 14,583 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 (3) (51,457) (5,449) (56,906)
(1) Includes Condusid C.A., Ylopa Servicios de Consultadoria Ltda., Consorcio
Siderurgia Amazonia Ltd. and Sidor C.A.
(2) Borrowings from Sidor to Matesi, Materiales Siderurgicos S.A.
(3) Includes borrowings from Sidor to Matesi, Materiales Siderurgicos S.A.
(U.S. $51.5 million at December 31, 2004)
(iii) Officers and director's compensation
The aggregate compensation of the directors and executive officers earned
during the six-month period ended June 30, 2005 amounted to U.S. $6.2 million.
Carlos Condorelli
Chief Financial Officer
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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: August 8, 2005
Tenaris, S.A.
By: /s/ Cecilia Bilesio
-----------------------
Cecilia Bilesio
Corporate Secretary
16