UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of February , 2000
-------------------------------
Desc, S.A. de C.V.
----------------------------------------
(Translation of registrant's name into English)
Paseo de los Tamarindos 400-B, Bosques de las Lomas, 05120 Mexico, D.F., Mexico
-------------------------------------------------------------------------------
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports
under cover of 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-___________.
NY2:\878815\01\41150.0012
<PAGE>
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.
Desc, S.A. de C.V.
---------------------------------------------
(Registrant)
Date: February 15, 2000 By /s/ Ernesto Vega Velasco
- ---------------------------------- ---------------------------------
(Signature)*
Name: Ernesto Vega Velasco
Title: Chief Financial Officer
* Print the name and title under the signature of the signing officer.
2
<PAGE>
EXHIBIT INDEX
Sequential
Item Page Number
---- -----------
1. Press Release announcing the Registrant's Fourth
Quarter Unaudited Results for the Period ended
December 31, 1999.................................... 4
2. Press Release announcing clarification to the
Registrant's Fourth Quarter Release.................. 16
3
DESC, S.A. de C.V.
Exhibit 1
[DESC LOGO] [THOMSON FINANCIAL
INVESTOR RELATIONS
LOGO]
FOR IMMEDIATE RELEASE
<TABLE>
<CAPTION>
Contacts in Mexico Contacts in New York
- ------------------ --------------------
<S> <C>
Arturo D'Acosta Ruiz, Corporate Treasurer Blanca Hirani, Associate Director
Tel: 525 261 8000 ext 2830 Tel: 212-701-1826
Alejandro de la Barreda, Manager of Investor Relations [email protected]
Tel: 525 261 8000 ext 2813 Maria Barona, Director
[email protected] mx Tel: 212-701-1830
DESC, S.A. de C.V. [email protected]
Thomson Financial Investor Relations
</TABLE>
DESC ANNOUNCES FOURTH QUARTER UNAUDITED RESULTS
-----------------------------------------------
FOR THE PERIOD ENDED DECEMBER 31, 1999
--------------------------------------
Mexico City, February 10, 2000 - DESC, S.A. de C.V. ("Desc" or the "Company")
(NYSE: DES; BMV: DESC), one of Mexico's largest conglomerates, with activities
in the auto parts, petrochemicals and diversified products, food and real estate
industries, announced today its unaudited results of operations for the fourth
quarter ended December 31, 1999.
<TABLE>
<CAPTION>
Figures in millions of pesos (Ps.) and dollars (US$)
- ------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
4Q99 4Q98 Change % Full Year Full Year Change %
1999 1998
- ------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Sales (Ps.) 5,779 6,082 -5.0% 23,246 24,024 -3.2%
Sales (US$)1 605 531 14.1% 2,335 2,159 8.2%
Exports2 250 200 25.0% 933 822 13.5%
Operating Income (Ps.)1 681 783 -13.0% 3,054 3,465 -1l.9%
Operating Income (US$) 71 68 4.5% 307 311 -1.3%
Operating Margin 11.8% 12.9% 13.1% 14.4%
EBITDA(Ps.) 976 1,096 -11.0% 4,057 4,512 -10.1%
EBITDA (US$)1 99 97 1.6% 403 406 -0.8%
Net Income (P.) 45 457 -90.2% 1,757 1,039 62.2%
Net Income (US$)1 5 38 -85.8% 173 88 97.7%
- ------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
1 Figures in U.S. dollars for Sales, Operating Income, EBITDA and Net Income
are calculated using monthly figures in current pesos divided by the average
monthly exchange rate.
2 Exports are calculated based on invoices for dollar-denominated sales.
4
<PAGE>
DESC, S.A. de C.V.
- --------------------------------------------------------------------------------
Sales
- -----
For the quarter ended December 31, 1999, total consolidated sales reached US$605
million, a 14% increase when compared to the figures recorded during the fourth
quarter of 1998. The result reflects improved volumes in Unik, Girsa and
Agrobios, which were partially offset by the falling petrochemicals, phosphates,
chicken and pork prices. Dine reported an increase in sales during the quarter
due to a better market environment.
Exports increased 25%, when compared to the same quarter of 1998, to US$250
million due to improved volumes and contracts established by Unik and Agrobios
with international customers. Exports contributed 41% to Desc's total
consolidated sales.
[A PIE CHART DEMONSTRATING SALES BREAKDOWN]
Unik 43%
Agrobios 24%
Petrochemicals 15%
Dine 3%
Diversified Products 15%
Operating Income, Margins and Cash Flow
- ---------------------------------------
The Company's fourth quarter operating income showed a 4.5% increase when
compared to the fourth quarter of 1998 and a 1.3% decrease year-over-year. The
results were mostly affected by the appreciation of the Peso and its impact on
the correlation between peso-denominated operating costs and dollar-denominated
prices, which is the case for a large percentage of Desc's products. In
addition, salaries and employee benefits increased over 25% in dollar terms,
while final prices remained stable.
Margins in the petrochemical sector were affected by higher prices in raw
materials, which were partially reflected in final prices. Food division margins
were also affected by lower chicken prices. These previously stated factors,
were partially compensated by higher productivity in all the sectors which is
expected to improve during 2000.
EBITDA
- ------
During the fourth quarter, EBITDA was US$99 million, remaining in-line with the
US$97 million recorded during the fourth quarter ended December 31, 1999.
5
<PAGE>
[Line chart depicting [Bar graph depicting
EBTDA MARGINS] EBITDA]
4Q98 18.0% 1Q98 90
1Q99 18.0% 2Q98 111
2Q99 18.4% 3Q98 108
3Q99 16.4% 4Q98 97
4Q99 16.9% 1Q99 95
2Q99 112
3Q99 97
4Q99 99
Net Income
- ----------
The Company's net income for the fourth quarter was US$5 million, an 86%
decrease when compared to the same quarter of the previous year. The result
reflects the lower foreign exchange gains and higher taxes. Net income for the
year ended December 31, 1999, was US$173 million, a 98% increase when compared
to the previous year, reflecting the positive results on foreign exchange and
monetary changes experienced during the year.
During the year Desc experienced US$27 million in net extraordinary charges most
of them related to the restructure of the food division. The extraordinary
income perceived from the divestiture of the chicken business, partially
compensated the food's division restructure which includes the write off of
assets, personnel reduction, and accelerated goodwill amortization, among
others.
Taxes
- -----
For the year ended December 31, 1999, Desc's provisions reached US$83 million.
This 85% increase, year-over-year, was derived from: i) foreign exchange gains,
ii) currency appreciation, iii) the elimination of the accelerated depreciation
for fiscal effects, and iv) the depletion of fiscal losses from previous results
in all the divisions.
6
<PAGE>
Financial Structure
- -------------------
The following are the main highlights to Desc's Balance Sheet, as of December
31, 1999, achieved via its Debt Restructure Plan:
o The Company's debt was US$1,071 million, while cash reached US$175 million.
o Total debt was broken down into: 25% short-term debt and 75% long-term
debt.
o Total debt: 90% dollar-denominated and 10% peso-denominated.
o Prepayment of short-term loan for US$ 74 million during December 1999.
o Buy back of 10% of the outstanding Dine debt for US$15 million.
o Issued 7-year medium-term UDI-denominated notes, for the equivalent US$88
million.
o During January 2000, Desc prepaid a syndicated loan for US$120 million.
o During January 2000, Girsa received financing from IFC for US$105 million,
of which US$ 53 million will be rolled over from short-term debt to
long-term debt due in 2010.
In millions of U.S. dollars
- ---------------------------- ------------------------- -------------------------
December 31, 1999 December 31, 1998
- ---------------------------- ------------------------- -------------------------
Cash 175 111
Debt 1,071 1,043
- ---------------------------- ------------------------- -------------------------
[Bar graph showing Debt Amortization Profile (December 31 1999)]
2000 208
2001 267
2002 207
2003 82
2004 10
2005 6
2006 93
2007 136
2008 1
2009 1
2010 61
7
<PAGE>
DESC, S.A. de C.V.
- --------------------------------------------------------------------------------
Investments and Divestitures
- ----------------------------
During 1999, Desc directly financed important investments in all its divisions
through their own resources and proceeds from the divestiture of the tortilla
and chicken business in February 1999 and December 1999, respectively.
It is important to notice that while the Company undertook important
investments, its level of indebtedness did not increase over the year. The total
amount invested on fixed assets was US$305 million, divided as follows:
o Unik US$85 million
o Girsa US$80 million (petrochemical and diversified products)
o Agrobios US$74 million
o Dine US$70 million
Working Capital
- ---------------
The Company's working capital during the year deteriorated due to the: i) higher
inventories in Girsa and Agrobios, ii) higher account receivables in Girsa, and
iii) lower accounts payable in all of Desc's divisions.
Desc's management is looking to reduce the correlation between the sale of
working capital and each one of the sectors. Thus, goals were established for
each one of the Company's sectors.
RESULTS BY DIVISIONS
UNIK
(Auto Parts)
<TABLE>
<CAPTION>
Figures in millions of pesos (Ps.) and dollars (US$)
- ---------------------------------- ----------- ----------- ------------- ----------- ------------ -------------
4Q99 4Q98 Change % Full Year Full Year Change %
1999 1998
- ---------------------------------- ----------- ----------- ------------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Sales (Ps.) 2,511 2,545 -1.3% 9,962 9,982 -0.2%
Sales(US$)1 263 222 18.5% 999 899 11.2%
Exports2 167 145 14.9% 638 555 15.1%
Operating Income (Ps.) 392 412 -4.9% 1,590 1,521 4.5%
Operating Income (US$)1 41 36 14.1% 160 136 17.0%
Operating Margin 15.6% 16.2% 16.0% 15.2%
Operating Cash Flow (Ps.) 540 528 2.2% 2,075 2,012 3.1%
Operating Cash Flow (US$)1 56 46 20.6% 206 178 15.6%
- ---------------------------------- ----------- ----------- ------------- ----------- ------------ -------------
</TABLE>
1 Figures in U.S. dollars for Sales, Operating Income and Operating Cash Flow
are calculated using quarterly figures in current pesos divided by the
average monthly exchange rate.
2 Exports are calculated based on invoices for dollar-denominated sales.
Results in the auto parts division continued to grow, reflecting the increasing
exports. Therefore, Unik's sales nearly reached close to US$ 1 billion for the
year ended December 31, 1999. In this manner, export sales represented 65% of
the sales. During
8
<PAGE>
DESC, S.A. de C.V.
- --------------------------------------------------------------------------------
the fourth quarter of 1999, sales reached US$ $263 million, an 18% increase when
compared to the same quarter of 1998.
The division's results, for the quarter ended December 31, 1999, reflect the: a)
19.0% increase in axles, b) 32.8% increase in gears and c) 12.2% rise in cardan
shafts. In addition, sales of steel wheels increased by 35% as a result of
higher exports, while stamping products (pick-up boxes and others) rose 8.1%,
reflecting the recently establish contracts with Chrysler, Ford and General
Motors.
As of December 31, 1999, Unik's business units installed capacity for
transmissions, stamping, axles and CVJ's, reached 86%, 80%, 78% and 94%,
respectively.
The operating margin decreased significantly due to the appreciation of the peso
compared with the dollar. Thus, considering the proportion of sales expressed in
dollars, the impact was not substantial. The operating cash flow represented a
20.6% increase, principally due to the increase in productivity, particularly
the sales per employee index, which increased from US$81,000 to US$87,000
year-over-year. For 2000, we expect this indicator to continue growing.
During the year, Unik realized important investment projects, totaling
approximately US$85 million and including:
EXPANSION PROJECTS
o Expansion of the capacity of stamping and painting products
o New installations of valves for exports
o Installation of a new production line of cardan shafts
o Expansion of the plants of aluminum and steel wheels, where we are
installing a capacity of 1.1 million of wheels annually
o Increase in the capacity to export gears
MODERNIZATION PROJECTS
o Automation of several lines of axles
o Automation of cardan shafts
o Automation of the production processes of gears
o Internal production of several components for transmission that were
previously imported, as well as the continuation of the modernization and
automation of these plants (Tremec and TSP)
o Integration of state-of-the-art technology of constant velocity joints with
the foundering that was purchased from third parties
9
<PAGE>
DESC, S.A. de C.V.
- --------------------------------------------------------------------------------
o Concentration of the installation of pistons in Celaya (Guanajuato),
together with an aggressive modernization and automation program
GIRSA
(Petrochemicals)
<TABLE>
<CAPTION>
Figures in millions of pesos (Ps.) and dollars (US$)
- -------------------------------- ------------ ----------- ------------- ------------ ------------ ------------
4Q99 4Q98 Change % Full Year Full Year Change %
1999 1998
- -------------------------------- ------------ ----------- ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Sales (Ps.) 861 891 -3.3% 3,325 3,839 -13.4%
Sales (US$)1 90 77 16.9% 334 346 -3.5%
Exports2 29 27 6.9% 124 127 -2.5%
Operating Income (Ps.) 43 129 -67.0% 386 683 -44.4%
Operating Income (US$)1 4 11 -63.6% 40 60 -33.3%
Operating Margin 4.9% 14.5% 11.6% 17.8%
Operating Cash Flow (Ps.) 86 187 -54.0% 554 876 -36.7%
Operating Cash Flow (US$)1 9 16 -43.8% 56 79 -29.5%
- -------------------------------- ------------ ----------- ------------- ------------ ------------ ------------
</TABLE>
1 Figures in U.S. dollars for Sales, Operating Income and Operating Cash Flow
are calculated using quarterly figures in current pesos divided by the
average monthly exchange rate.
2 Exports are calculated based on invoices for dollar-denominated sales.
1999 represented a difficult year for the petrochemical sector. Various factors
affected results, including: the downturn of the petrochemical business cycle,
resulting in decreased margins, and the appreciation of the peso during the
year, which affected the results because of the dollarization of the sector.
These effects were partially compensated with increases in volume, as well as an
improvement in productivity and savings in operating expenses.
During the fourth quarter of 1999, sales decreased significantly when compared
with the same period of the previous year. The sales volumes were the highest in
every business category synthetic rubber +5%, polystyrene +25% and carbon black
+11%. Where possible, we have increased the price of our products, as in the
case of polystyrene, which as of September to date, has increased an average of
23%. In synthetic rubber, carbon black and phenol the competitive pressure has
forced us to maintain or adjust our sales prices for the international as well
as domestic market.
During the last quarter, the biggest impact was on the operational income, due
to the increase in prices for raw materials, which resulted from an increase, in
1999, of oil prices directly affecting some raw materials of our products such
as: butadiene, styrene and cumene, In the case of styrene, this price increase
has resulted in a 60% premium.
10
<PAGE>
DESC, S.A. de C.V.
- --------------------------------------------------------------------------------
[GRAPH SHOWING PRICES OF RAW MATERIALS DURING 1999 FOR
BUTADIENE, STYRENE AND CUMENE]
The utilization rate of our plants are close to 100% capacity. The plants are
operating at full capacity due to the high demand which exists in the domestic
and international market.
Investments in fixed assets during 1999 reached US$67 million, with the most
important project being the construction of a new plant with a 40 MTPA capacity
for the global production and commercialization of nitrile rubber (this plant is
jointly owned with Uniroyal Chemical). The expansion of our polystyrene plants,
which actually reached an annual installation capacity of 120 MTPA, represented
an increase of 33% when compared to the previous year.
In regards to the joint venture with Repsol to commercialize and produce a
global level of solution rubber, we have begun implementing the synergies that
will result in the future profitability of this business.
GIRSA
(Diversified Products)
<TABLE>
<CAPTION>
Figures in millions of pesos (Ps.) and dollars (US$)
- ---------------------------------- ----------- ----------- ------------- ----------- ------------ -------------
4Q99 4Q98 Change % Full Year Full Year Change %
1999 1998
- ---------------------------------- ----------- ----------- ------------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Sales (Ps.) 878 1031 -14.9% 3,646 3,921 -7.0%
Sales(US$)1 92 90 2.2% 366 353 3.7%
Exports2 18 19 -3.2% 74 77 -3.1%
Operating Income (Ps.) 112 135 -17.3% 472 512 -7.7%
Operating Income (US$)1 12 12 -1.2% 46 48 -4.2%
Operating Margin 12.7% 13.1% 13.0% 13.1%
Operating Cash Flow (Ps.) 134 163 -18.1% 568 616 -7.8%
Operating Cash Flow (US$)1 14 14 -2.1% 57 56 2.5%
- ---------------------------------- ----------- ----------- ------------- ----------- ------------ -------------
</TABLE>
1 Figures in U.S. dollars for Sales, Operating Income and Operating Cash Flow
are calculated using quarterly figures in current pesos divided by the
average monthly exchange rate.
2 Exports are calculated based on invoices for dollar-denominated sales.
The results in laminates and consumer products (glues and waterproofing
products) were highly satisfactory, due to high volume, thus leading to
recuperation of margins and an increasing participation in the domestic market.
In the case of adhesives and waterproofing, prices have increased an average of
8% during the quarter. In the case of glues and their derivatives, the price
increase was 6%. In addition to these increases, the benefits resulting from
increased productivity helped partially offset the impact of more expensive raw
materials.
The results for the fourth quarter were negatively affected by the decrease in
phosphate prices (a business that represents 36% of the sales in this sector)
due to the excess capacity in international markets and price wars sparked by
competitors. This previously-mentioned situation negatively impacted the sector,
to the extent of reducing the benefit of the operating income in other
businesses, mentioned above. The utilization rate at the Company's plants is
close to 100%, with an exception of the phosphates business, whose plant
operates at 79% capacity.
11
<PAGE>
DESC, S.A. de C.V.
- --------------------------------------------------------------------------------
The investments in fixed assets during 1999 reached US$13 million. Among the
most important projects are, the substitution of some equipment of the
phosphates plants (both in Mexico State), as well as the installation of
machinery to produce a new line of products in the waterproofing and laminates
business.
AGROBIOS
(Food Division)
<TABLE>
<CAPTION>
Figures in millions of pesos (Ps.) and dollars (US$)
- ---------------------------------- ----------- ----------- ------------- ----------- ------------ -------------
4Q99 4Q98 Change % Full Year Full Year Change %
1999 1998
- ---------------------------------- ----------- ----------- ------------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Sales (Ps.) 1,436 1,540 -6.8% 5,487 5,436 0.9%
Sales(US$)1 151 135 11.8% 552 486 13.4%
Exports2 36 19 85.1 96 66 46.2%
Operating Income (Ps.) 93 100 -7.6 382 490 -21.9%
Operating Income (US$)1 10 9 10.6% 38 44 -12.6%
Operating Margin 6.5% 6.6% 7.0% 9.1%
Operating Cash Flow (Ps.) 144 182 -21.0% 574 692 -17.0%
Operating Cash Flow (US$)1 15 16 -7.3% 57 62 -8.8%
- ---------------------------------- ----------- ----------- ------------- ----------- ------------ -------------
</TABLE>
1 Figures in U.S. dollars for Sales, Operating Income and Operating Cash Flow
are calculated using quarterly figures in current pesos divided by the
average monthly exchange rate.
2 Exports are calculated based on invoices for dollar-denominated sales.
During the month of December, the Company concluded the sale of the poultry
business for a total of US$ 155 million at an EBITDA multiple of 5.2x. During
1999, this business registered sales of US$ 230 million, an operating margin of
8.4%, EBITDA of US$30 million and US$27 million in debt.
Regarding the Company's quarterly results, sales increased in terms of U.S.
Dollars, mainly due to improved volumes in brand-name products. In annual terms,
these translated into increases of 17% in Corfuerte, 22% m Nair and 7% in ASF.
These increases are due to stronger sales and marketing efforts. The decrease in
Desc's operating margin and EBITDA is a result of lower commodity prices
(primarily in poultry). Operating margins are as follows:
<TABLE>
<CAPTION>
- ------------------------------- ------------------- ------------------ ------------------- ------------------
Operating Margins 4Q99 4Q98 Full Year 1999 Full Year 1998
- ------------------------------- ------------------- ------------------ ------------------- ------------------
<S> <C> <C> <C> <C>
Commodities 3.8% 7.9% 5.6% 10.4%
- ------------------------------- ------------------- ------------------ ------------------- ------------------
Branded Products 10.5% 4.6% 9.3% 6.7%
- ------------------------------- ------------------- ------------------ ------------------- ------------------
</TABLE>
Since this business represents a different strategy from the past one, the
following are the actions taken in the various business units:
PORK
>> During the quarter, the Company continued to experience the global problem
of weak pork prices, which caused an exit of smaller products from the
market.
>> The agreement was formalized between Desc's pork product division and an
important producer in southeast Mexico. This placed us as the main producer
and distributor to the national market.
>> This new alliance also strengthened the medium-term strategy of the Company
of increasing profits over capital and sharing the risk with partners.
>> These investments reached US$ 35 million, which were primarily dedicated to
working capital and integration from the production, processing and
distribution.
12
<PAGE>
DESC, S.A. de C.V.
- --------------------------------------------------------------------------------
>> Sales volumes during 1999 were one million of pork units in various types
of forms. This is an increase of 13% compared to 1998.
BRANDED PRODUCTS
>> During the year, the number of SKU's decreased from 532 to 110. This is
expected to allow the Company to better focus on leading products such as
tomato sauce and vegetables.
>> Marketing expenses increased significantly, strengthening our presence in
those markets.
>> In order to better support margins, we implemented an industrial
re-conversion project in Corfuerte (La Corona plant dedicated to vegetable
production) with a US$5.7 million investment.
>> In order to ensure the competitiveness of our raw materials, we implemented
an agricultural project (tomato production) along with our suppliers, which
will allow us to increase the harvesting volumes by 17% to 200,000 tons of
tomatoes.
>> The Company restructured distribution center operations as well as engaged
in a sales reorganization, together with an integral logistical plan.
>> Beginning during the second semester of 1999, there were also changes in
most of the businesses at the managerial level.
DINE
(Real Estate)
<TABLE>
<CAPTION>
Figures in millions of pesos (Ps.) and dollars (US$)
- ---------------------------------- ----------- ----------- ------------- ----------- ------------ -------------
4Q99 4Q98 Change % Full Year Full Year Change %
1999 1998
- ---------------------------------- ----------- ----------- ------------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Sales (Ps.) 196 53 268.5% 802 822 -2.4%
Sales(US$)1 21 5 336.1% 81 73 11.8%
Operating Income (Ps.) 57 -4 N/A 266 294 -9.4
Operating Income (US$)1 6 0 N/A 27 26 3.9%
Operating Margin 29.0% -7.7% 33.1% 35.6%
Operating Cash Flow (Ps.) 70 5 N/A 303 321 -5.6%
Operating Cash Flow (US$)1 7 0 N/A 30 29 5.5%
- ---------------------------------- ----------- ----------- ------------- ----------- ------------ -------------
</TABLE>
1 Figures in U.S. dollars for Sales, Operating Income and Operating Cash Flow
are calculated using quarterly figures in current pesos divided by the
average monthly exchange rate.
During 1999, Dine sales reached US$802 million, of which 64% resulted from sales
of the Bosques de Santa Fe project, followed by Punta Mita resort and the Santa
Fe shopping mall, obtaining 9% from the sale of each. After a difficult quarter,
as was the previous one, Dine's results improved significantly both in sales,
operating income and operating cash flow. These strong results were supported by
sales in Bosques de Santa Fe Hacienda de las Palmas (practically depleting its
inventory levels during the month of December); sales in commercial locations in
the Arcos Bosques corporate center as well as the positive performance of the
Centro Comercial Santa Fe and Punta Mita (Four Seasons Hotel), which was opened
to the public in September 1999.
Highlights for fiscal year 1999 in this area include:
>> Bosques de Santa Fe ends the year with 54% sales of one-family lots and 25%
of multi-family lots.
>> The Four Seasons Hotel in Punta Mita reached a 90% occupancy level.
13
<PAGE>
DESC, S.A. de C.V.
- --------------------------------------------------------------------------------
>> 50% strategic partnership with Grupo ICA for the construction of the Norte
B building, which has a total office area of 17,00Gm2. In this area, Dine
contributed the necessary land.
14
<PAGE>
DESC, S.A. de C.V.
- --------------------------------------------------------------------------------
DESC S.A. DE C.V.
CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1999 AND 1998
(Millions of Constant Mexican Pesos as of December 31, 1999 non audited numbers)
<TABLE>
<CAPTION>
1999 1998
CURRENT ASSETS
<S> <C> <C> <C> <C>
Cash and Cash equivalents Ps.$ 1,676.8 Ps.$ 1,133.0
Other current assets 7,689.2 7,834.5
Total current assets 9,366.0 8,967.5
FIXED ASSETS 17,858.9 19,311.2
OTHER ASSETS 2,474.2 2,638.5
Total assets 29,699.1 30,917.2
LIABILITIES
Liabilities without cost Ps.$ 3,454.0 Ps.$ 3,601.9
Debt 10,236.6 11,644.5
Total liabilities 13,690.6 15,246.4
STOCKHOLDERS' EQUITY
Mayority stockholder' equity 11,396.2 11,734.3
Minority stockholders' equity 4,612.2 3,936.5
Total stockholders' equity 16,008.5 15,670.8
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
DESC S.A. DE C.V.
CONSOLIDATED STATEMENT OF INCOME AS OF JUNE 30, 1999 AND 1998
(Millions of Constant Mexican Pesos as of December 31, 1999 non audited numbers)
<TABLE>
<S> <C> <C> <C>
NET SALES 23,245.8 24,023.7
OPERATING PROFIT Ps.$ 3,053.6 Ps.$ 3,465.2
COMPREHENSIVE FINANCIAL RESULT (441.5) 1,323.7
PROVISIONS FOR TAXES AND EMPLOYEE PROFIT SHARING 830.9 488.3
ALLOCATION FOR NET CONSOLIDATED PROFIT Ps.$ 2,384.9 Ps.$ 1,517.2
Mayority interest Ps.$ 1,757.3 Ps.$ 1,038.7
Minority interest Ps.$ 627.5 Ps.$ 478.5
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
COVENANT RATIOS
<S> <C> <C> <C>
Interest coverage ratio 3.8 5.35
Total Debt / Capitalization 0.39 0.43
Earnings per share (last 12 months) Ps.$ 1.18 Ps.$ 0.69
Book Value Ps.$ 7.71 Ps.$ 7.86
Earnings per ADS (last 12 months) US$ 2.5 US$ 1.02
FX rate at the end of the quarter 9.5500 9.9395
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
Total Outstanding Shares
<TABLE>
<S> <C> <C>
Series "A" 612,147,900 41.4%
Series "B" 550,606,760 36.9%
Series "C" 315,979,765 21.2%
------------------- -------------- --------
Total 1,490,731,425 100.0%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
DESC, S.A. de C.V.
- --------------------------------------------------------------------------------
Exhibit 2
[DESC LOGO] [THOMSON FINANCIAL
INVESTOR RELATIONS
LOGO]
FOR IMMEDIATE RELEASE
<TABLE>
<S> <C>
Contacts in Mexico Contacts in New York
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Arturo D'Acosta Ruiz, Corporate Treasurer Blanca Hirani, Associate Director
Tel: 525 261 8000 ext 2830 Tel: 212-701-1826
Alejandro de la Barreda, Manager of Investor Relations [email protected]
Tel: 525 261 8000 ext 2813 Maria Barona, Director
[email protected] mx Tel: 212-701-1830
DESC, S.A. de C.V. [email protected]
Thomson Financial Investor Relations
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DESC ISSUES CLARIFICATION NOTE TO ITS
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FOURTH QUARTER 1999 RELEASE
Mexico City, February 10, 2000 - DESC, S.A. de C.V. ("Desc" or the "Company")
(NYSE: DES; BMV: DESC), one of Mexico's largest conglomerates, with activities
in the auto parts, petrochemicals and diversified products, food and real estate
industries, issued clarifying note to its Fourth Quarter 1999 earnings release
distributed today.
The difference in fourth quarter sales reflects the consolidation of Desc's
service companies to the SAP system as of October 1999. This consolidation
offsets operating costs and expenses in such way that operating income is not
affected.
The Consolidated Income Statement label (page 11) should read Consolidated
Statement of Income as of December 31, 1999 and 1998, instead of Consolidated
Statement of Income as of June 30 1999 and 1998.
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