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 May 7, 2004
TENARIS, S.A.
(Translation of Registrant's name into English)
TENARIS, S.A.
23 Avenue Monterey
2086 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 X
--- ---
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 consolidated
condensed interim financial statements for the period ended March 31, 2004.
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: May 7, 2004
Tenaris, S.A.
By: /s/ Cecilia Bilesio
Cecilia Bilesio
Corporate Secretary
TENARIS S.A.
CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
MARCH 31, 2004
Rue Beaumont 13
L - 1219 Luxembourg
Consolidated condensed interim income statement
Three-month period ended March
31,
----------------------------------
(all amounts in USD thousands, unless otherwise stated) Notes 2004 2003
----------------------------------
(Unaudited)
Net sales 1 859,346 789,579
Cost of sales 2 (620,457) (558,534)
----------------- ----------------
Gross profit 238,889 231,045
Selling, general and administrative expenses 3 (139,818) (132,998)
Other operating income and expenses 3,500 521
----------------- ----------------
Operating income 102,571 98,568
Financial income (expenses), net 4 (15,438) (22,691)
----------------- ----------------
Income before tax, equity in losses of associated 87,133 75,877
companies and minority interest
Equity in losses of associated companies (461) (9,034)
----------------- ----------------
Income before income tax and minority interest 86,672 66,843
Income tax 5 (39,069) (17,927)
----------------- ----------------
Net income before minority interest 47,603 48,916
Minority interest 765 (3,404)
----------------- ----------------
Net income for the period 48,368 45,512
----------------- ----------------
Weighted average number of ordinary shares in issue
(thousands) 1,180,371 1,160,701
Basic and diluted earnings per share (USD per share) 0.04 0.04
The accompanying notes are an integral part of these consolidated condensed
interim financial statements. The limited review report of the independent
auditor on these consolidated condensed interim financial statements is issued
as a separate document.
Consolidated condensed interim balance sheet
(all amounts in USD thousands) At March 31,2004 At December 31, 2003
---------------------------- ---------------------------
Notes (Unaudited)
ASSETS
Non-current assets
Property, plant and equipment, net 6 1,924,947 1,960,314
Intangible assets, net 6 54,317 54,037
Investments in associated companies 45,361 45,814
Other investments 23,175 23,155
Deferred tax assets 124,561 130,812
Receivables 59,440 2,231,801 59,521 2,273,653
-------------- -------------
Current assets
Inventories 885,622 831,879
Receivables and prepayments 175,623 165,134
Trade receivables 7 760,801 652,782
Other investments 138,637 138,266
Cash and cash equivalents 220,968 2,181,651 247,834 2,035,895
-------------- -------------
-------------- --------------
Total assets 4,413,452 4,309,548
============== ==============
EQUITY AND LIABILITIES
Shareholders' Equity 1,888,437 1,841,280
Minority interest 118,387 119,984
Non-current liabilities
Borrowings 8 333,787 374,779
Deferred tax liabilities 395,172 418,333
Other liabilities 197,299 191,540
Provisions 30,345 23,333
Trade payables 11,548 968,151 11,622 1,019,607
-------------- -------------
Current liabilities
Borrowings 8 585,099 458,872
Current tax liabilities 102,083 108,071
Other liabilities 167,214 207,594
Provisions 31,544 39,624
Customers advances 67,715 54,721
Trade payables 484,822 1,438,477 459,795 1,328,677
-------------- -------------
-------------- --------------
Total liabilities 2,406,628 2,348,284
-------------- --------------
Total equity and liabilities 4,413,452 4,309,548
============== ==============
Contingencies, commitments and restrictions to the distribution of profits
(Note 10)
The accompanying notes are an integral part of these consolidated condensed
interim financial statements. The limited review report of the independent
auditor on these consolidated condensed interim financial statements is issued
as a separate document.
Consolidated condensed interim statement of changes in shareholders' equity
(all amounts in USD thousands)
Statutory balances according to Luxembourg Law
-----------------------------------------------------------------------------------
Other
Share Legal Share Distributable Retained
Capital Reserves Premium Reserve Earnings Total
-----------------------------------------------------------------------------------
Balance at January 1, 1,180,288 118,029 609,269 96,555 201,480 2,205,621
Currency translation
differences - - - - - -
Capital Increase (Note 12) 249 25 464 82 - 820
Net income - - - - 52,259 52,259
-----------------------------------------------------------------------------------
Balance at March 31, 1,180,537 118,054 609,733 96,637 253,739 2,258,700
-----------------------------------------------------------------------------------
Total at March 31,
-----------------------------------------------------------------------
Currency
Adjustments translation Retained
to IFRS adjustments Earnings 2004 2003
-----------------------------------------------------------------------
(Unaudited)
Balance at January 1, (634,759) (34,194) 304,612 1,841,280 1,694,054
Currency translation
differences - (2,031) - (2,031) (16,594)
Capital Increase (Note 12) - - - 820 -
Net income (52,259) - 48,368 48,368 45,512
-----------------------------------------------------------------------
Balance at March 31, (687,018) (36,225) 352,980 1,888,437 1,722,972
-----------------------------------------------------------------------
For additional disclosure related to the Distributable Reserve and the Retained
Earnings calculated under Luxembourg Law see Note 10 (vi).
The accompanying notes are an integral part of these consolidated condensed
interim financial statements. The limited review report of the independent
auditor on these consolidated condensed interim financial statements is issued
as a separate document. Consolidated condensed interim cash flow statement
(all amounts in USD thousands) Three-month period ended March
31,
----------------------------------
2004 2003
(Unaudited)
Net income for the period 48,368 45,512
Depreciation and amortization 53,824 47,867
Tax accruals less payments (10,320) 4,338
Equity in earnings (losses)
of associated companies 461 9,034
Interest accruals less
payments (1,551) 2,426
Net provisions (1,068) 3,203
Minority interest (765) 3,404
Change in working capital (174,981) 52,415
Currency translation
adjustment and others (3,477) (10,135)
---------------- -----------------
Net cash (used in) provided
by operations (89,509) 158,064
---------------- -----------------
Capital expenditure (39,912) (43,611)
Acquisitions of subsidiaries
and Associates 191 (20,013)
Proceeds from disposition of
property, plant and equipment 6,519 658
---------------- -----------------
Net cash used in investment
activities (33,202) (62,966)
---------------- -----------------
Proceeds from borrowings 147,694 84,493
Repayments of borrowings (51,471) (94,374)
---------------- -----------------
Net cash provided by (used
in) financing activities 96,223 (9,881)
---------------- -----------------
(Decrease) / Increase in cash
and cash equivalents (26,488) 85,217
---------------- -----------------
Cash and cash equivalents at
January 1, 247,834 304,536
Effect of exchange rate
changes on cash and cash
equivalents (378) 298
(Decrease) / Increase in cash
and cash equivalents (26,488) 85,217
---------------- -----------------
Cash and cash equivalents at March 31, 220,968 390,051
---------------- -----------------
Non-cash financing activity:
Fair value adjustment of
minority interest acquired - 748
---------------- -----------------
The accompanying notes are an integral part of these consolidated condensed
interim financial statements. The limited review report of the independent
auditor on these consolidated condensed interim financial statements is issued
as a separate document.
Accounting policies
Index to accounting policies
A Business of the Company and basis of presentation
B Translation of financial statements and transactions in currencies
other than the measurement currency
C Use of estimates
D Summary of accounting policies regarding specific asset and liability
categories
E Revenue recognition
F Earnings per share
Accounting policies
The consolidated condensed interim financial statements have been prepared in
accordance with International Financial Reporting Standards ("IFRS") adopted by
the International Accounting Standards Board ("IASB") and interpretations issued
by the International Financial Reporting Interpretations Committee ("IFRIC") of
the IASB.
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 the consolidated condensed interim financial
statements are consistent with those used in the consolidated financial
statements for the year ended December 31, 2003, unless specified.
The following is a summary of the principal accounting policies followed in the
preparation of these consolidated condensed interim financial statements. This
summary has been included for the convenience of the reader and should not be
regarded as a complete explanation of the accounting policies used by the
Company.
A Business of the Company and basis of presentation
Tenaris S.A. (the "Company" or "Tenaris"), a Luxembourg corporation, was
incorporated on December 17, 2001, to hold investments in steel pipe
manufacturing and distributing companies. The Company holds, either directly or
indirectly, controlling interests in certain subsidiary companies. A detail of
the principal holdings is included in Note 15.
These consolidated condensed interim financial statements consolidate the
financial information of Tenaris with those of its subsidiaries at March 31,
2004 and 2003 and for the three-month periods then ended. Subsidiary companies
are entities in which Tenaris has an interest of more than 50% of the voting
rights or otherwise has the power to exercise control over their operations.
Certain comparative amounts have been reclassified to conform to changes in
presentation in the current period. Elimination of all material intercompany
transactions and balances among the Company and its consolidated subsidiaries
has been made.
These consolidated condensed interim financial statements were approved by
Tenaris's Board of Directors on May 5, 2004.
B Translation of financial statements and transactions in currencies other
than the measurement currency
The measurement currency of Tenaris is the U.S. dollar. Although the Company is
located in Luxembourg, Tenaris operates in several countries with different
currencies. The U.S. dollar is the currency that best reflects the economic
substance of the underlying events and circumstances relevant to Tenaris as a
whole. Generally, the measurement currency of the main companies in these
financial statements is the respective local currency. As further explained in
the Company's consolidated financial statements for the year ended December 31,
2003, the measurement currency for Siderca and its Argentine subsidiaries is the
U.S. dollar, because:
o Siderca is located in Argentina and its local currency has been
affected by recurring severe economic crises;
o Sales are denominated and settled in U.S. dollars or, if in a currency
other than the U.S. dollar, the price is sensitive to movements in the
exchange rate with the U.S. dollar;
o Purchases of critical raw materials are financed in U.S. dollars
generated by financing or operating activities;
o Most of the net financial assets and liabilities are mainly obtained
and retained in U.S. dollars.
Income statements of subsidiary companies stated in currencies other than the
U.S. dollar are translated into U.S. dollars at the average exchange rates for
the quarter, while balance sheets are translated at the exchange rates at period
end. Translation differences are recognized in shareholders' equity. Should any
such subsidiary be sold or otherwise disposed of, any accumulated translation
difference would be recognized in the income statement as part of the gain or
loss on sale.
Transactions in currencies other than the measurement currency are accounted for
at the exchange rates prevailing at the date of the transactions. Gains and
losses resulting from the settlement of such transactions and from the
translation of monetary assets and liabilities denominated in currencies other
than the measurement currency are recognized in the income statement. Further
reference regarding the accounting policies applied for the translation of
financial statements and transactions subject to the consolidation process is
included in the notes to the Company's consolidated financial statements for the
year ended December 31, 2003.
C Use of estimates
The preparation of 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 at the balance sheet
dates, and the reported amounts of revenues and expenses during the reporting
periods. Actual results may differ from these estimates.
D Summary of accounting policies regarding specific asset and liability
categories
An overview of relevant accounting policies applied in the recognition and
valuation of assets and liabilities is described below. A more detailed
description is included in the notes to the Company's consolidated financial
statements for the year ended December 31, 2003.
(1) Property, plant and equipment and Intangible assets
Property, plant and equipment are recognized at historical acquisition or
construction cost less depreciation, calculated using the straight line method
to amortize the cost of each asset over its estimated useful life. In the case
of business acquisitions proper consideration to the fair value of the assets
has been given as explained in the notes to the consolidated financial
statements for the year ended December 31, 2003. Major overhaul and rebuilding
expenditures are capitalized as property, plant and equipment only when the
investment enhances the condition of an asset beyond its original condition.
Intangible assets including goodwill; certain costs directly related to the
development, acquisition and implementation of information systems; and
expenditures on acquired patents, trademarks, technology transfer and licenses
are capitalized and amortized using the straight line method over their useful
lives; the useful lives of Tenaris's intangible assets average 5 years. Research
and development expenditure is recognized as expenses as incurred. Negative
goodwill is recognized as income on a systematic basis over the remaining
weighted average useful life of the identifiable acquired depreciable assets.
(2) Impairment
Circumstances affecting the recoverability of tangible and intangible assets and
investments in other companies may change. If this happens, the recoverable
amount of the relevant assets is estimated. The recoverable amount is determined
as the higher of the asset's net selling price -when available- and the present
value of the estimated future cash flows. If the recoverable amount of the asset
has dropped below its carrying amount the asset is written down immediately to
its recoverable amount.
No impairment provisions were recorded, other than the investment in Amazonia,
as discussed in the Company's consolidated financial statements at December 31,
2003.
(3) Cash and cash equivalents, Other investments and Derivative Financial
Instruments
Cash and cash equivalents and highly liquid short-term securities are carried at
fair market value.
Under IAS 39 "Financial Instruments: Recognition and Measurement", investments
have to be classified into the following categories: held-for-trading,
held-to-maturity, originated loans and available-for-sale, depending on the
purpose for which the investments were made. Investments that do not fulfill the
specific requirements of IAS 39 for held-for-trading, held-to-maturity or
originated loan categories have to be included in the residual
"available-for-sale" category. All of Tenaris's investments, which include
primarily deposits in trust funds and insurance companies, are currently
classified as available-for-sale as defined by IFRS, despite the fact that they
are not technically available for disposition according to the terms of the
underlying contracts.
(3) Cash and cash equivalents, Other investments and Derivative financial
instruments (Cont'd.)
Trust funds comprise mainly financial resources placed by Siderca, Siat and
Confab within trusts, the objective of which is exclusively to ensure that the
financial needs for normal development of their operations are met. At March 31,
2004 the trustee has informed us that it had allocated USD 64.8 million of such
funds to create guarantees within the scope of the trust agreement.
All purchases and sales of investments are recognized on the trade date, not
significantly different from the settlement date, which is the date that Tenaris
commits to purchase or sell the investment.
Subsequent to their acquisition, available-for-sale investments are carried at
fair value. Realized and unrealized gains and losses arising from changes in the
fair value in those investments are included in the income statement for the
period in which they arise. Investments in companies for which fair values
cannot be measured reliably are reported at cost.
Derivative financial instruments are initially recognized in the balance sheet
at cost and subsequently remeasured at fair value. Changes in the fair value of
any derivative instruments are recognized immediately in the income statements
as financial results.
(4) Inventories
Inventories are stated at the lower of cost and net realizable value as a whole.
The cost of finished goods and work in progress comprises raw materials, direct
labor, other direct costs and related production overhead costs. Net realizable
value is estimated collectively for inventories as the selling price in the
ordinary course of business, less the costs of completion and selling expenses.
Goods in transit at period end are valued at supplier invoice cost. An allowance
for obsolescence or slow-moving inventory is made in relation to supplies and
spare parts and based on the management's analysis of their aging, the capacity
of such materials to be used based on their levels of preservation and
maintenance and the potential obsolescence due to technological changes. An
allowance for slow-moving inventory is made in relation to finished goods based
on management's analysis of their aging.
(5) Trade receivables
Trade receivables are carried at original invoice amount less an estimate made
for doubtful accounts. The Company analyzes its trade accounts receivable on a
regular basis and, when aware of a certain client's difficulty to meet its
commitments to Tenaris, it impairs the amounts due by means of a charge to the
provision for doubtful accounts. This provision is adjusted periodically based
on management's analysis of their aging.
(6) Borrowings
Borrowings are recognized initially for an amount equal to the proceeds received
net of transaction costs. In subsequent periods, borrowings are stated at
amortized cost; any difference between proceeds and the redemption value is
recognized in the income statement over the period of the borrowings.
(7) Income Taxes - Current and deferred
Under present Luxembourg law, so long as the Company maintains its status as a
holding billionaire company, no income tax, withholding tax (including with
respect to dividends), or capital gain tax is payable in Luxembourg by the
Company. The current income tax charge is calculated on the basis of the tax
laws in force in the countries where Tenaris's subsidiaries operate. Deferred
income taxes are calculated using the liability method, on temporary differences
arising between the tax bases of assets and liabilities and their carrying
amounts in the financial statements. A more detailed description of temporary
differences can be found in the Company's consolidated financial statements for
the year ended December 31, 2003.
(8) Employee-related liabilities
(a) Employees' statutory profit sharing
Under Mexican law, Tenaris's Mexican subsidiary companies are required to pay
their employees an annual benefit calculated using a similar basis to the one
used for the calculation of the income tax. Employees' statutory profit sharing
is provided under the liability method. This provision amounts to USD 58.5
million at March 31, 2004 and USD 51.1 million at December 31, 2003. Temporary
differences arise between the "statutory" bases of assets and liabilities used
in the determination of the profit sharing and their carrying amounts in the
financial statements.
(b) Employees' severance indemnity
This provision comprises the liability accrued on behalf of employees at
Tenaris's Italian and Mexican subsidiaries at the balance sheet date in
accordance with current legislation and the labor contracts in effect in the
respective countries.
Employees' severance indemnity costs are assessed annually using the projected
unit credit method: the cost of providing this obligation is charged to the
income statement over the service lives of employees in accordance with the
advice of the actuaries. This provision is measured at the present value of the
estimated future cash outflows using applicable interest rates. This provision
amounts to USD 53.2 million and USD 66.4 million at March 31, 2004 and December
31, 2003, respectively.
(c) Pension obligations
Certain Argentine Tenaris officers are covered by a defined benefit employee
retirement plan designed to provide retirement, termination and other benefits
to those officers.
Tenaris is accumulating assets for the ultimate payment of those benefits in the
form of investments that carry time limitation for their redemption. The
investments are neither part of a particular plan nor segregated from Tenaris's
other assets. Due to these conditions, the plan is classified as "unfunded"
under the IFRS definition.
Retirement costs are assessed using the projected unit credit method: the cost
of providing retirement benefits is charged to the income statement over the
service lives of employees based on actuarial calculations. This provision is
measured at the present value of the estimated future cash outflows using
applicable interest rates and amounts to USD 9.3 million and USD 8.6 million at
March 31, 2004 and December 31, 2003, respectively. Actuarial gains and losses
are recognized over the average remaining service lives of employees.
Benefits provided by the plan are in U.S. dollars, and are calculated based on a
three-year or seven-year salary average (whichever is more favorable to the
beneficiary) for those executives who have retired or were terminated before
December 31, 2003. After this date, the benefits of the plan are calculated on a
seven-year salary average.
(9) Provisions and Other liabilities
Provisions are accrued to reflect estimates of amounts due relating to expenses
as they are incurred based on information available as of the date of
preparation of the financial statements. Furthermore, Tenaris accrues
liabilities when it is probable that future cost could be incurred and that cost
can be reasonably estimated in relation to a contingent liability or potential
claim, resulting from lawsuits and other proceedings.
E Revenue recognition
Sales are recognized as revenues when earned and realized or realizable. This
includes satisfying the following criteria: the arrangement with the customer is
evident, usually through the receipt of a purchase order; the sales price is
fixed or determinable; delivery -as defined by the risk transfer provisions of
the sales contracts- has occurred, which may include delivery to the customer
storage facility at one of the Company's subsidiaries; and collectability is
reasonably assured. Interest income is recognized on an effective yield basis.
F Earnings per share
Earnings per share are calculated by dividing the net income attributable to
shareholders by the daily weighted average number of ordinary shares issued
during the period.
Notes to the consolidated condensed interim financial statements
Index to the notes to the consolidated condensed interim financial statements
1 Segment information
2 Cost of sales
3 Selling, general and administrative expenses
4 Financial income (expenses), net
5 Tax charge
6 Property, plant and equipment and Intangible assets, net
7 Trade receivables
8 Borrowings
9 Derivative financial instruments
10 Contingencies, commitments and restrictions to the distribution
of profits
11 2002 exchange offer and other events with impact on minority
interest
12 Business and other acquisitions
13 Subsequent events
14 Related party transactions
15 Principal subsidiaries
Notes to the consolidated condensed interim financial statements
(In the notes all amounts are shown in USD thousands, unless otherwise stated)
1 Segment information
Primary reporting format: business segments
----------------------------------------------------------------------------------
Welded & Other
Metallic
Seamless Products Energy Other Total
----------------------------------------------------------------------------------
Three-month period ended (Unaudited)
March 31, 2004
Net sales 673,815 66,388 103,923 15,220 859,346
Cost of sales (455,694) (53,610) (100,569) (10,584) (620,457)
Gross profit 218,121 12,778 3,354 4,636 238,889
Depreciation and
amortization 48,732 3,010 959 1,123 53,824
Three-month period ended
March 31,2003
Net sales 565,565 98,521 72,081 53,412 789,579
Cost of sales (375,174) (66,189) (71,310) (45,861) (558,534)
Gross profit 190,391 32,332 771 7,551 231,045
Depreciation and
amortization 43,564 2,008 1,133 1,162 47,867
Tenaris's main business segment is the manufacture of seamless steel pipes.
Secondary reporting format: geographical segments
-------------------------------------------------------------------------------
South Europe North Middle East Far East & Total
America America & Africa Oceania
-------------------------------------------------------------------------------
Three-month period ended (Unaudited)
March 31, 2004
Net sales 164,519 307,460 198,486 92,008 96,873 859,346
Depreciation and
amortization 26,432 15,893 9,879 10 1,610 53,824
Three-month period ended
March 31, 2003
Net sales 189,557 226,371 182,792 90,801 100,058 789,579
Depreciation and
amortization 28,752 11,914 5,811 3 1,387 47,867
Allocation of net sales is based on the customers' location. Allocation of
depreciation and amortization is based on the related assets' location.
Although Tenaris's business is managed on a worldwide basis, the companies
forming part of Tenaris operate in the five main geographical areas detailed
above.
2 Cost of sales
Three-month period ended
March 31,
-------------------------------
2004 2003
---------------- --------------
(Unaudited)
Raw materials, energy and consumables used and change
in inventories 399,913 352,505
Services and fees 62,613 75,705
Labor cost 87,352 65,967
Depreciation of property, plant and equipment 46,302 39,490
Amortization of intangible assets 2,301 1,160
Maintenance expenses 19,180 12,042
Allowance for obsolescence (1,123) 520
Taxes 655 1,150
Others 3,264 9,995
---------------- --------------
620,457 558,534
---------------- --------------
3 Selling, general and administrative expenses
Three-month period ended
March 31,
-------------------------------
2004 2003
---------------- --------------
(Unaudited)
Commissions, freights and other selling expenses 49,459 45,783
Labor cost 35,449 30,788
Services and fees 25,266 28,639
Taxes 11,635 9,422
Depreciation of property, plant and equipment 2,544 4,412
Amortization of intangible assets 2,677 2,805
Provisions for contingencies 1,275 1,356
Allowance for doubtful accounts 3,721 248
Others 7,792 9,545
---------------- --------------
139,818 132,998
---------------- --------------
4 Financial income (expenses), net
Three-month period ended
March 31,
-------------------------------
2004 2003
---------------- --------------
(Unaudited)
Interest expense (8,693) (7,591)
Interest income 3,095 2,265
Net foreign exchange transaction losses (15,279) (16,581)
Others 5,439 (784)
---------------- --------------
(15,438) (22,691)
---------------- --------------
5 Tax charge
Three-month period ended
March 31,
-------------------------------
2004 2003
---------------- --------------
(Unaudited)
Current tax (a) 50,614 48,101
Deferred tax (4,360) (16,012)
Effect of currency translation on tax base (b) (7,185) (14,162)
---------------- --------------
39,069 17,927
---------------- --------------
(a) Current tax amounts recorded in the first quarter of 2004 include the
adjustments made to the preliminary provisions recorded at December 31,
2003 , corresponding to Income Tax Filings for the year 2003.
(b) Tenaris, using the liability method, recognizes a deferred income tax
charge on temporary differences between the tax bases of its assets and
their carrying amounts in the financial statements. By application of this
method, Tenaris recognized gains and losses on deferred income tax due to
the effect of the change in the value of the Argentine peso on the tax
bases of the fixed assets of its Argentine subsidiaries.
6 Property, plant and equipment and Intangible assets, net
Net Property, Net Intangible
Plant and
Equipment Assets
--------------- ------------------
(Unaudited) (Unaudited)
Three-month period ended March 31, 2004
Opening net book amount 1,960,314 54,037
Translation differences (15,528) 872
Additions 35,596 4,316
Disposals (6,345) (174)
Transfers (244) 244
Depreciation/ Amortization charge (48,846) (4,978)
--------------- ------------------
At March 31, 2004 1,924,947 54,317
--------------- ------------------
7 Trade receivables
At March 31, At December 31,
2004 2003
--------------- ------------------
(Unaudited)
Current accounts 700,889 605,119
Notes receivables 87,235 71,666
--------------- ------------------
788,124 676,785
Allowance for doubtful accounts (27,323) (24,003)
--------------- ------------------
760,801 652,782
--------------- ------------------
8 Borrowings
At March 31, At December 31,
2004 2003
--------------- ------------------
(Unaudited)
Non-current
Bank borrowings 325,191 299,965
Debentures - 65,375
Finance lease liabilities 8,596 9,439
--------------- ------------------
333,787 374,779
--------------- ------------------
Current
Bank borrowings 343,082 273,607
Bank overdrafts 15,628 9,804
Debentures and other loans 222,505 171,062
Finance lease liabilities 4,743 5,266
Costs for issue of debt (859) (867)
--------------- ------------------
585,099 458,872
--------------- ------------------
Total borrowings 918,886 833,651
--------------- ------------------
9 Derivative financial instruments
The net fair values of derivative financial instruments at the balance sheet
date, in accordance with IAS 39, were:
Net fair value of derivative financial
instruments At March 31, At December 31,
2004 2003
------------ ---------------
(Unaudited)
Contracts with positive fair values:
Forward foreign exchange contracts 2,208 2,947
Commodities contracts 1,481 1,197
Contracts with negative fair values:
Interest rate swaps contracts (5,023) (3,505)
Forward foreign exchange contracts (3,041) (2,937)
Commodities contracts (2,098) (1,592)
10 Contingencies, commitments and restrictions to the distribution of profits
Tenaris is involved in litigation arising from time to time in the ordinary
course of business (exception made of the litigation with the consortium led by
BHP -see (i) below-). Based on management's assessment and the advice of legal
counsel, it is not anticipated that the ultimate resolution of existing
litigation will result in amounts in excess of recorded provisions that would be
material to Tenaris's consolidated financial position or income statement.
(i) Claim against Dalmine
On December 30, 2003, Dalmine and a consortium led by BHP Billiton ("BHP")
reached a full and final settlement to put an end to a litigation commenced in
1998. According to the terms of the settlement, a total of GBP 108.0 million was
agreed as compensation to the consortium, inclusive of expenses. The final
settlement set forth a three-year instalments payment scheme for the balance
amount agreed net of advances previously made . The three yearly installments of
GBP30.3 million, GBP30.4 million and GBP30.4 million, are due in January 2004,
December 2004 and December 2005, respectively. A Libor + 1% interest rate
applies to the outstanding amounts. During January 2004 the first such
installment was paid.
The pipe that has been the subject of the litigation with BHP was manufactured
and sold, and the tort alleged by BHP took place, prior to the privatization of
Dalmine. Techint Investments Netherlands BV ("Tenet") -the Tenaris subsidiary
party to the contract pursuant to which Dalmine was privatized-has commenced
arbitration proceedings against Fintecna S.p.A.-which controlled Dalmine prior
to its privatization- to compel it to indemnify Dalmine for any amounts Dalmine
paid or payable to BHP. Fintecna has denied that it has any contractual
obligation to indemnify, asserting that the indemnification claim is time-barred
under the terms of the privatization contract and, in any event, subject to a
cap of EUR13 million. Tenet disputes this assertion. No assurances can be given
as to when the arbitration proceedings currently in progress will conclude or
that Finctecna will be required to reimburse any amounts paid or payable to BHP.
For additional information regarding the litigation with BHP, refer to the
Company's consolidated financial statements at December 31, 2003.
(ii) Consorcio Siderurgia Amazonia, Ltd.
The financial restructuring of Siderurgica del Orinoco CA ("Sidor") and
Consorcio Siderurgico Amazonia, Ltd. ("Amazonia") concluded during 2003 ("2003
Restructuring") entailed the termination of certain guarantees and commitments
to further finance Amazonia and Sidor that Tenaris had entered into as a result
of the privatization of Sidor and previous restructuring agreements. The
restructuring agreements contemplate, however, certain continuing obligations
and restrictions to protect the claims held by the financial creditors of Sidor.
These obligations and restrictions include pledges over all of Amazonia's
existing shares and shares of Sidor held in its possession, that mature in the
third quarter of 2005.
During 2003, as part of the 2003 Restructuring, Tenaris obtained a 24.4% equity
stake in Ylopa Servicos de Consultadoria Ltda ("Ylopa"), a special purpose
vehicle incorporated in Madeira, created to support Sidor and Amazonia an
associated company of Tenaris- in their financial restructuring. The acquisition
was made by means of an aggregate cash contribution of USD 32.9 million,
primarily in the form of subordinated convertible debt. As a result of the
consummation of the 2003 Restructuring, Ylopa (a) received new debt instruments
of Amazonia, convertible into 67.4% of the common stock of Amazonia at Ylopa's
choice, and (b) became Sidor's creditor (in a "Participation Account Agreement")
of a non interest bearing loan, payable if and when Sidor reaches certain
financial goals defined as "Excess Cash".
The 2003 Restructuring set forth a mechanism for Sidor to repay its debts under
the "Participation Account Agreement" whereby Ylopa is entitled to receive its
percentage on the participation of Sidor's Excess Cash (determined in accordance
with a specific formula). Sidor has been distributing Excess Cash to Ylopa on a
semiannual basis starting October 2003.
(iii) Tax claims
Siderca
On December 18, 2000, the Argentine tax authorities notified Siderca of an
income tax assessment related to the conversion of tax loss carry-forwards into
Debt Consolidation Bonds under Argentine Law No. 24,073. The adjustments
proposed by the tax authorities represent an estimated contingency of ARP 54.4
million (approximately USD 19.0 million) at March 31, 2004 in taxes and
penalties. On the basis of information from Siderca's tax advisors, Tenaris
believes that the ultimate resolution of the matter will not result in a
material obligation. Accordingly, no provision was recorded in the financial
statements.
Argentine subsidiaries
In their respective calculations of income tax liabilities for the year ended
December 31, 2002, Siderca and Siat, two subsidiaries of Tenaris domiciled in
Argentina used the inflation adjustment procedure set forth in Title VI of the
Argentine Income Tax Law. The application of such procedure, however, has been
suspended since March 1992, pursuant to article 39 of Law 24.073, which was
passed in the context of price stability prompted by the introduction of the
convertibility regime that pegged the peso to the United States dollar at a
fixed rate of ARP1=USD1.
Both subsidiaries have started legal proceedings objecting to the constitutional
grounds for the abovementioned suspension, on the ground that compliance with it
would render artificial gains arising from the impact of inflation on monetary
positions during 2002 fully taxable. Moreover and in order to protect themselves
from potential actions by the fiscal authority aimed at demanding collection of
the resulting differences, the subsidiaries have also obtained an injunction
that prevents the tax authorities from summarily executing their claims while
resolution of the proceedings is pending. The injunction has been appealed by
the Argentine Tax Authority before the Federal Court of Appeals. Irrespective of
the final result of the legal proceedings under way, the Company maintains a
reserve for the full potential tax liability on the alleged artificial gains
plus interest according to regulation in force, but excluding any other
potential punitive charges. At March 31, 2004 the referred contingent reserve
totaled ARP70.7 million (approximately USD24.7 million).
(iv) Other proceedings
Dalmine is currently subject to two civil proceedings and a consolidated
criminal proceeding before the Court of Bergamo, Italy, for work-related
injuries arising from the use of asbestos in its manufacturing processes from
1960 to 1980. Of the 21 cases originally involved in the consolidated criminal
proceeding, 20 have been settled.
In addition to the civil and criminal cases, another 29 asbestos related
out-of-court claims have been forwarded to Dalmine.
Dalmine estimates that its potential liability in connection with the claims not
yet settled or covered by insurance is approximately EUR8.8 million (USD 10.7
million).
(v) Commitments
The following are the main off-balance sheet commitments:
(a) Tenaris entered into an off-take contract with Complejo Siderurgico de
Guayana C.A. ("Comsigua") to purchase on a take-or-pay basis 75,000 tons of
hot briquetted iron, or HBI, annually for twenty years beginning in April
1998 with an option to terminate the contract at any time after the tenth
year upon one year's notice. Pursuant to this off-take contract, Tenaris
would be required to purchase the HBI at a formula price reflecting
Comsigua's production costs during the first eight contract years;
thereafter, it would purchase the HBI at a slight discount to market price.
The agreements among the parties provide that, if during the eight-year
period the average market price is lower than the formula price paid during
such period, Tenaris would be entitled to a reimbursement of the difference
plus interest, payable after the project financing and other specific
credits are repaid. In addition, under the shareholders' agreements,
Tenaris has the option to purchase on an annual basis up to a further
80,000 tons of HBI produced by Comsigua at market prices. Under its
off-take contract with Comsigua, as a result of weak market prices for HBI,
Tenaris paid -on average- higher-than-market prices for its HBI and
according to the original contract accumulated a credit. During the first
quarter of 2004, Tenaris paid lower-than-market prices for its HBI
purchases, which resulted in a decrease to the previously recorded amount.
At March 31, 2004, Tenaris credit with the off-taker amounted to
approximately USD11.9 million., which were completely offset by a
provision.
In connection with Tenaris's original 6.9% equity interest in Comsigua,
Tenaris paid USD8.0 million and agreed to cover its share of Comsigua's
cash operating and debt service shortfalls. In addition, Tenaris pledged
its shares in Comsigua and provided a proportional guarantee of USD11.7
million (USD4.0 million outstanding as of March 31, 2004) in support of the
USD156 million (USD53.6 million outstanding as of March 31, 2004) project
financing loan made by the International Finance Corporation, or IFC, to
Comsigua. Tenaris has been also required to pay an aggregate of USD 1.5
million, representing its share of a shortfall of USD14.7 million payable
by Comsigua under the IFC loan and additional operating shortfalls of
USD5.3 million. Comsigua's financial condition was adversely affected by
the consistently weak international market conditions for HBI since its
start-up in 1998. Market conditions improved during 2003 and therefore,
Tenaris has no longer been required to pay additional amounts as a sponsor
in Comsigua. If current conditions prevail at similar levels, Tenaris would
not be required to make additional proportional payments in respect of its
participation in Comsigua and its purchases of HBI under the off-take
contract would be paid in lower-than-market prices.
(b) In August 2001, Dalmine Energie S.p.A. signed a ten year agreement with Eni
S.p.A. Gas & Power Division for the purchase of natural gas with certain
take or pay conditions until October 1st, 2011. In August 2003 Dalmine
Energie S.p.A. received confirmation from Snam Rete Gas, the transportation
company, of the yearly allocation of the necessary capacity on the
international connection infrastructure until October 1st 2010. The
outstanding value of the contract at March 31, 2004 is approximately
EUR553.6 million (USD675.1 million) taking into consideration prices
prevailing as of the time of the confirmation. In due course, Dalmine
Energie S.p.A will be requesting Snam Rete Gas, the necessary capacity for
the last year of purchase contract. Such capacity is allocated following
regulations enacted by the Italian energy regulatory authority taking into
consideration all allocation capacity requests.
(c) Under a lease agreement between Gade Srl (Italy) and Dalmine, executed in
2001, relating to a building site in Sabbio Bergamasco used by Dalmine's
former subsidiary Tad Commerciale, Dalmine is obligated to bid in the
auction for the purchase of a building from Gade for a minimum amount of
EUR8.3 million (USD10.1 million). The notice of the auction, according to
the contract, was not to take place before January 1, 2003. Up to the date
of these financial statements, the auction was not yet announced.
(d) On October 24, 2003, Tenaris subsidiaries Siderca and Generadora del Parana
S.A. ("Generadora"), together with Siderar, a related party to Tenaris,
entered into a joint gas purchase agreement with Repsol-YPF. Under the
agreement, which incorporates certain take-or-pay conditions, Tenaris
commited to purchase up to 800 million cubic meters of gas during the life
of the four-year contract, expiring at the end of 2006 at a price to be
negotiated by the parties on a yearly basis. In December 2003, Generadora
transferred all of its assets and the rights originated in the purchase
agreement with YPF to Siderca. Considering its Campana facility and the
facilities received from Generadora, Siderca has an annual estimated gas
consumption of 800 million cubic meters. Tenaris's share of the outstanding
value of the contract resulting from the take-or-pay conditions totals USD
3.2 million.
(vi) Restrictions to the distribution of profits
Under Luxembourg law, at least 5% of the net income per year calculated in
accordance with Luxembourg law and regulations must be allocated to the creation
of a reserve until such reserve has reached to an amount equal to 10% of the
share capital. At March 31, 2004 the Company has created this reserve in full.
Shareholders' equity at March 31, 2004 under Luxembourg law and regulations
comprises the following captions (amounts in USD thousand):
----------------
Thousands of USD
----------------
Share capital 1,180,537
Legal reserve 118,054
Share premium 609,733
Other distributable reserve 96,637
Retained earnings including net income for the three month
period ended March 31, 2004 253,739
----------------
Total shareholders equity according to Luxembourg law 2,258,700
================
Dividends may be paid by Tenaris to the extent distributable retained earnings
and distributable reserve calculated in accordance with Luxembourg law and
regulations exist.
At March 31, 2004, the distributable reserve and retained earnings of Tenaris
under Luxembourg law totalled USD350.4 million - as detailed below- and were
higher than the consolidated retained earnings of the Company, calculated under
IFRS. On March 2nd, 2004, Tenaris announced that its board of directors will
propose, for the approval of the annual general shareholders' meeting to be held
on May 26, 2004, the payment of a dividend of USD 0.114 per share (approximately
USD 135 million).
----------------
Thousands of USD
----------------
Distributable reserve and retained earnings at December 31, 298,035
2003 under Luxembourg law
Dividends received 50,912
Other income and expenses for the three-month period ended
March 31, 2004 1,347
Increase in reserve due to capital increase
(see Note 11 (b) ) 82
----------------
Distributable reserve and retained earnings at
March 31, 2004 under Luxembourg law 350,376
================
11 2002 exchange offer and other events with impact on minority interest
(a) 2002 exchange offer
On October 18, 2002, Sidertubes -63.0% shareholder of Tenaris- contributed all
of its assets to Tenaris in exchange for shares of its common stock. The assets
that Sidertubes contributed included the shares and voting rights that it held
directly in Siderca, Tamsa, Dalmine, Tenaris Global Services S.A. and Invertub
S.A. Siderca held additional participations in Tamsa, Dalmine, Metalmecanica and
Metalcentro.
During 2002, Tenaris successfully completed an offer to exchange shares and ADSs
of its common stock for all outstanding Class A ordinary shares and ADSs of
Siderca, all outstanding common shares and ADSs of Tamsa and all outstanding
ordinary shares of Dalmine ("the 2002 Exchange Offer"). These acquisitions were
accounted for under the purchase method and the acquisition costs, which
totalled USD 811.3 million gave rise to a net negative goodwill of USD5.2
million.
(b) Subsequent acquisitions and residual offers
Acquisition of Remaining Minority Interest in Tamsa and Capital Increase
On September 15, 2003 Tenaris concluded an exchange offer in the United States
for shares and ADSs of Tamsa. As per the commitment assumed by Tenaris at the
time of the 2002 Exchange Offer, the exchange ratio used was equal to that of
the 2002 Exchange Offer. Thus, in exchange for the Tamsa shares received,
Tenaris issued 19,586,870 new shares of its common stock for USD 51,611 thousand
The acquisition cost was determined on the bases of the price of Tenaris's
shares on September 12, 2003.
For the 356,392 shares of Tamsa's common stock outstanding in the Mexican
market, Tenaris and Sidertubes established a fiduciary account with Banamex, in
which Sidertubes deposited the necessary number of Tenaris's shares to provide
for the exchange of the remaining interests in Tamsa. According to the terms of
the fiduciary account, holders of Tamsa's common stock were able to exchange
their shares under the escrow arrangement during a six-month period. At the end
of the six-month exchange offer period, investors had exchanged 235,512 shares
of Tamsa for 249,166 shares of Tenaris. As a result, Tenaris was indebted to
Sidertubes for 249,166 shares with a market value of USD0.8 million.
On February 13, 2004, Tenaris increased its capital by issuing 249,166 new
common shares, which were transferred to Sidertubes to pay off its outstanding
loan. The capital increase was allocated USD 0.249 million to share capital, USD
0.025 million to legal reserve, USD 0.464 million to a share premium and USD
0.082 million to other distributable reserve, in accordance with Luxemburg law.
As of March 31, 2004, Tenaris held, directly or indirectly, more than 99.9% of
the common stock of Tamsa.
Subsequent acquisitions of Dalmine Shareholding
Pursuant to purchases made in the open market up to March 10, 2003, Tenaris
held, directly or indirectly, 90.0003% of Dalmine's common stock. On July 11,
2003, Tenaris concluded a cash offer for the remaining minority interest in
Dalmine and announced that it held directly or indirectly, 96.8% of the shares
of Dalmine. At March 31, 2004, as a result of shares accepted and effectively
paid during the tender offer as well as shares purchased in subsequent
transactions, Tenaris held directly or indirectly 98.8% of the shares of
Dalmine.
Acquisition of Remaining Minority Interest in Siderca
On April 3, 2003 the Argentine securities regulator approved Tenaris's proposal
to acquire the remaining minority interest in Siderca, which amounted to 0.89%
of the shares of such company. As a result of Tenaris's gaining beneficial
control of 100% of the common stock of Siderca this company was effectively
delisted and its ADR program terminated.
12 Business and other acquisitions
As explained in Note 11 (b), during the three-month period ended March 31, 2004
Tenaris acquired 0.03 % of Tamsa and 0.002% of Dalmine, for considerations of
USD 0.3 million -in kind as noted in Note 11 (b)- and USD 0.5 million,
respectively.
On January 31, 2004 Tenaris Investments Limited was incorporated in Ireland to
assist the financing activities of the Company and its other subsidiaries; on
that date, Tenaris underwrote all of the common shares of the new company and in
March 2004, it contributed USD 10,000 to its capital.
Additionally, on February 2, 2004, Tenaris completed the purchase of the land
and manufacturing facilities that were previously leased by its Canadian
operating subsidiary. The assets were acquired from Algoma Steel Inc. for the
price of approximately USD 9.6 million, plus transaction costs.
On March 19, 2004, Tenaris signed a letter of intent with a private investor
group, which may lead to Tenaris obtaining a controlling interest in S.C.
Silcotub S.A., Zalau, the leading Romanian producer of small diameter seamless
pipes for OCTG and other applications that has an annual capaicity of 180,000
tons of seamless pipes. Its facilities include a continuous mandrel mill,
finishing facilities and a cold-drawing plant.
13 Subsequent events
On April 27, 2004 Tenaris and Sidor signed an agreement with Posven, a
Venezuelan company in which Posco of Korea has a 60% shareholding, for the sale
and purchase of its assets -principally an industrial facility for the
production of pre-reduced hot briquetted iron, or HBI, located in Ciudad
Guayana, Venezuela- for a price of USD 120 million. The acquisition, will be
effected by a newly-formed company, of which Tenaris will hold 55% and Sidor
45%, remains subject to a number of closing conditions.
The facility has a nominal annual design capacity of 1.5 million tons of HBI and
has been shut down since 2001. This investment, which complements a previous
investment in the Comsigua HBI plant described in Note 10 v (a), will allow
Tenaris to secure a further low-cost source of high quality ferrows raw
material.
14 Related party transactions
The following transactions were carried out with related parties:
Three-month period ended March,
------------------ ------------------
2004 2003
(Unaudited)
(i) Transactions
(a) Sales of goods and services
Sales of goods 12,384 22,475
Sales of services 4,280 1,856
------------------ ------------------
16,664 24,331
================== ==================
(b) Purchases of goods and services
Purchases of goods 11,205 29,337
Purchases of services 8,340 15,617
------------------ ------------------
19,545 44,954
================== ==================
At March 31, At December 31,
------------------ ------------------
2004 2003
(Unaudited)
(ii) Period-end balances
(a) Arising from sales/purchases of
goods/services
Receivables from related parties 45,823 42,116
Payables to related parties (46,237) (37,219)
------------------ ------------------
4,897
(1,414)
================== ==================
(b) Cash and cash equivalents
Time deposits 661 420
================== ==================
(c) Other balances
Trust fund 118,394 118,087
Loan to Ylopa 34,765 33,508
------------------ ------------------
151,595
153,159
================== ==================
(d) Financial debt
Borrowings and overdrafts (5,248) (5,716)
Borrowings from trust fund (1,789) (1,789)
------------------ ------------------
(7,037) (7,505)
================== ==================
15 Principal subsidiaries
The following is a list of Tenaris's subsidiaries and its direct or indirect
percentage of ownership of each company at March 31, 2004 and 2003 is disclosed.
------------------------------------------------------------------------------------------------------------------
Company Country of Main activity Percentage of
Organization ownership at
March 31,
------------------
2004 2003
------------------------------------------------------------------------------------------------------------------
Algoma Tubes Inc. Canada Manufacturing of seamless steel 100% 98%
pipes
------------------------------------------------------------------------------------------------------------------
Confab Industrial S.A. and subsidiaries Brazil Manufacturing of welded steel 39% 39%
pipes and capital goods
------------------------------------------------------------------------------------------------------------------
Dalmine Holding B.V. and subsidiaries Netherlands Holding company 99% 90%
------------------------------------------------------------------------------------------------------------------
Dalmine S.p.A. Italy Manufacturing of seamless steel 99% 90%
pipes
------------------------------------------------------------------------------------------------------------------
Empresas Riga S.A. de C.V. Mexico Manufacturing of welded fittings 100% 94%
for seamless steel pipes
------------------------------------------------------------------------------------------------------------------
Exiros S.A. (b) Uruguay Procurement services for 100% -
industrial companies
------------------------------------------------------------------------------------------------------------------
Information Systems and Technologies N.V. Netherlands Software development and 75% 71%
and subsidiaries maintenance
------------------------------------------------------------------------------------------------------------------
Inmobiliaria Tamsa S.A. de C.V. Mexico Leasing of real estate 100% 94%
------------------------------------------------------------------------------------------------------------------
Insirger S.A. and subsidiaries (a) Argentina Electric power generation 100% 99%
------------------------------------------------------------------------------------------------------------------
Invertub S.A. and subsidiaries Argentina Holding of investments 100% 100%
------------------------------------------------------------------------------------------------------------------
Lomond Holdings B.V. and subsidiaries Netherlands Procurement services for 100% 71%
industrial companies
------------------------------------------------------------------------------------------------------------------
Metalcentro S.A. Argentina Manufacturing of pipe-end 100% 99%
protectors and lateral impact
tubes
------------------------------------------------------------------------------------------------------------------
Metalmecanica S.A. Argentina Manufacturing steel products for 100% 99%
oil extraction
------------------------------------------------------------------------------------------------------------------
NKK Tubes K.K. Japan Manufacturing of seamless steel 51% 51%
pipes
------------------------------------------------------------------------------------------------------------------
Scrapservice S.A. Argentina Processing of scrap 75% 74%
------------------------------------------------------------------------------------------------------------------
Siat S.A. Argentina Manufacturing of welded steel 82% 81%
pipes
------------------------------------------------------------------------------------------------------------------
Siderca International A.p.S. Denmark Holding company 100% 99%
------------------------------------------------------------------------------------------------------------------
Siderca S.A.I.C. Argentina Manufacturing of seamless steel 100% 99%
pipes
------------------------------------------------------------------------------------------------------------------
Sidtam Limited B.V.I. Holding company 100% 97%
------------------------------------------------------------------------------------------------------------------
SO.PAR.FI Dalmine Holding S.A. Luxembourg Holding company 99% 90%
------------------------------------------------------------------------------------------------------------------
Sociedad Industrial Puntana S.A. (a) Argentina Manufacturing of steel products 100% -
------------------------------------------------------------------------------------------------------------------
Socominter de Bolivia S.R.L. Bolivia Marketing of steel products 100% 100%
------------------------------------------------------------------------------------------------------------------
Socominter S.A. Venezuela Marketing of steel products 100% 100%
------------------------------------------------------------------------------------------------------------------
Socominter Ltda. Chile Marketing of steel products 100% 100%
------------------------------------------------------------------------------------------------------------------
Tenaris Global Services (Panama) S.A. Panama Marketing of steel products 100% 100%
------------------------------------------------------------------------------------------------------------------
Tamsider S.A. de C.V. and subsidiaries Mexico Promotion and organization of 100% 94%
steel-related companies
------------------------------------------------------------------------------------------------------------------
Tamtrade S.A.de C.V. Mexico Marketing of steel products 100% 94%
------------------------------------------------------------------------------------------------------------------
Techint Investment Netherlands B.V. Netherlands Holding company 100% 99%
------------------------------------------------------------------------------------------------------------------
Tenaris Global Services Norway AS Norway Marketing of steel products 100% 100%
------------------------------------------------------------------------------------------------------------------
Tenaris Autopartes S.A. de C.V. (b) Mexico Manufacturing of supplies for the 100% -
automotive industry
------------------------------------------------------------------------------------------------------------------
Tenaris Connections A.G. and subsidiaries Liechtenstein Ownership and licensing of steel 100% 94%
technology
------------------------------------------------------------------------------------------------------------------
Tenaris Financial Services S.A. (b) Uruguay Financial Services 100% -
------------------------------------------------------------------------------------------------------------------
Tenaris Global Services S.A. Uruguay Holding of investments 100% 100%
------------------------------------------------------------------------------------------------------------------
Tenaris Global Services (Canada) Inc. Canada Marketing of steel products 100% 100%
------------------------------------------------------------------------------------------------------------------
Tenaris Global Services (U.S.A.) Corporation U.S.A. Marketing of steel products 100% 100%
------------------------------------------------------------------------------------------------------------------
Tenaris Global Services (UK) Ltd United Kingdom Marketing of steel products 100% 100%
------------------------------------------------------------------------------------------------------------------
Tenaris Global Services (Japan) K.K. Japan Marketing of steel products 100% 100%
(previously DST Japan K.K.)
------------------------------------------------------------------------------------------------------------------
Tenaris Global Services B.V. Netherlands Sales agent of steel products 100% 100%
------------------------------------------------------------------------------------------------------------------
Tenaris Global Services Far East Pte. Ltd. Singapore Marketing of steel products 100% 100%
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
Tenaris Global Services Korea (b) Korea Marketing of steel products 100% -
------------------------------------------------------------------------------------------------------------------
Tenaris Global Services LLC U.S.A. Sales agent of steel products 100% 100%
------------------------------------------------------------------------------------------------------------------
Tenaris Global Services (B.V.I.) Ltd. B.V.I. Holding company 100% 100%
------------------------------------------------------------------------------------------------------------------
Tenaris West Africa Ltd. United Kingdom Finishing of steel pipes 100% 98%
------------------------------------------------------------------------------------------------------------------
Texas Pipe Threaders Co. U.S.A. Finishing and marketing of steel 100% 99%
pipes
------------------------------------------------------------------------------------------------------------------
Tubos de Acero de Mexico S.A. Mexico Manufacturing of seamless steel 100% 94%
pipes
------------------------------------------------------------------------------------------------------------------
Tavsa, Tubos de Acero de Venezuela S.A. Venezuela Manufacturing of seamless steel 70% 66%
pipes
------------------------------------------------------------------------------------------------------------------
Tubular DST Nigeria Ltd. Nigeria Marketing of steel products 100% 100%
------------------------------------------------------------------------------------------------------------------
Tenaris Global Services Ecuador S.A. (b) Ecuador Marketing of steel products 100% -
------------------------------------------------------------------------------------------------------------------
Tenaris Investments Ltd. (c) Ireland Holding company 100% -
------------------------------------------------------------------------------------------------------------------
(a) Acquired during 2003
(b) Incorporated during 2003
(c) Incorporated during 2004
Tenaris holds 99% of the voting shares of Confab Industrial S.A. and has,
directly or indirectly, the majority of voting rights in all of its
subsidiaries.
Carlos Condorelli
Chief Financial Officer