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-_____________. 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 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. 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 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