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 March 3, 2004
TENARIS, S.A.
(Translation of Registrant's name into English)
TENARIS, S.A.
13, rue Beaumont
L-1219 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- .
---
Tenaris Announces 2003 Annual Results
LUXEMBOURG--(BUSINESS WIRE)--March 2, 2004--Tenaris S.A. (NYSE:TS)
(Buenos Aires:TS) (BMV:TS) (MTA Italy:TEN)
The financial and operational information contained in this press
release is based on audited consolidated financial statements prepared
in accordance with international financial reporting standards (IFRS)
and presented in U.S. dollars.
Tenaris S.A. (NYSE:TS) (Buenos Aires:TS) (BMV:TS) (MTA Italy:TEN)
("Tenaris") today announced its results for the fiscal year and
quarter ended December 31, 2003 with comparison to its results for the
fiscal year and quarter ended December 31, 2002.
Summary of 2003 Annual Results
(2003 vs 2002)
-- Net sales of US$3,179.7 million, down 1.2% from US$3,219.4
million
-- Operating income of US$288.2 million, down 38.9% from US$471.9
million
-- Net income of US$210.3 million, up from US$94.3 million
-- Net earnings per share of US$0.178 (US$1.78 per ADS)
-- Dividend proposed of US$0.114 per share (US$1.14 per ADS)
Net sales for the year were marginally lower than in 2002
following a 40% drop in sales in our welded pipe business and the
discontinuation of trading in non-pipe steel products not produced by
Tenaris. Net sales in our seamless pipes business rose 6% on stable
volume helped by a more favorable market and product mix and higher
U.S. dollar-denominated prices in Europe following the appreciation of
the Euro.
Operating and net income results were affected by losses incurred
in relation to a longstanding lawsuit brought against Dalmine, our
principal Italian subsidiary, by a consortium led by BHP Billiton
Petroleum Ltd., which was finally settled in December 2003. The
lawsuit, for which provisions had previously been made in 2001 and
2002, related to pipes produced and delivered by Dalmine prior to its
privatization in 1996. The pipes were used in the construction of an
underwater pipeline which failed in the Bay of Liverpool. Tenaris has
brought arbitration proceedings against Fintecna SpA, an entity owned
by the Italian government and successor to the government-owned
seller, to compel Fintecna to indemnify it for the amounts paid and
payable by Dalmine to the consortium. In respect of the lawsuit and
its settlement, Tenaris recorded a loss in other operating expenses
for the year of US$114.2 million and a positive deferred income tax
impact of US$39.6 million, making for a net loss of US$74.6 million.
Excluding such loss, operating income would have been US$402.4
million, or 12.7% of net sales, and net income would have been
US$284.9 million, or 9.0% of net sales. Operating income, excluding
the loss recorded in respect of the BHP lawsuit, plus depreciation and
amortization was US$602.2 million, or 18.9% of net sales.
Excluding the loss relating to the BHP lawsuit, the contribution
of our seamless business to operating income rose marginally over that
of 2002 and the reduction in operating income was due to reduced sales
in our welded pipe business. Strong demand in our local markets of
Mexico and Argentina, where sales include a higher component of
services and logistics costs are lower, our focus on higher value
products and synergies resulting from a more cost-efficient allocation
of orders among our worldwide production facilities helped to minimize
the effect of substantial increases in steelmaking raw material and
energy costs during the year. Our seamless gross margin remained in
line with that recorded in the previous year during the first nine
months of 2003 before declining two percentage points in the fourth
quarter as steelmaking raw material costs continued to rise.
Net income on a comparable basis -- excluding losses relating to
the BHP lawsuit and taken before minority interest attributable to
participations acquired in the exchange offer following which Tenaris
became a public company -- rose 39% to US$284.9 million compared to
US$205.5 million in 2002. Substantially lower tax provisions, which
had been particularly affected by the large devaluation of the
Argentine peso in 2002, partially reversed in 2003, and a positive
result on Tenaris's indirect investment in Sidor, following a
financial restructuring completed in 2003 and a turnaround in market
conditions for its products, outweighed the reduction in operating
income.
Free cash flow (net cash provided by operations less net
expenditure on plant, property and equipment and intangible assets)
decreased 64% to US$119.0 million from US$328.3 million in 2002. In
addition to lower income from operations, cash flow from operations
decreased due to higher income taxes paid in 2003 in respect of the
results of the previous year, which exceeded by US$138.6 million
income taxes accrued in 2003. Working capital increased by US$107.2
million principally reflecting an increase in inventories, much of
which occurred in the fourth quarter. Capital expenditure on plant,
property and equipment and intangibles rose 10% to US$162.6 million
from US$147.6 million reflecting increased expenditure on information
systems and a small increase in expenditure on plant, property and
equipment.
As of December 31, 2003, Tenaris had cash and cash equivalents of
US$247.8 million and a further US$138.3 million invested in trust
funds to support its Argentine and Brazilian activities and whose term
expires during 2004. Total financial debt, excluding amounts payable
in respect of the settlement of the BHP lawsuit, as of the same date
was US$833.7 million, up from US$715.9 million as of December 31,
2002. Net debt increased by US$174.5 million over the year, reflecting
the use of US$96.4 million in acquisitions and the Sidor refinancing
and restructuring, the payment of US$129.1 million in dividends,
US$14.1 million of which was paid to minority interests, and increases
in the recorded value of non-US dollar denominated debt, principally
debt in Euros held at our principal Italian subsidiary.
The 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 US$135.0 million, or US$0.114 per share
(US$1.14 per ADS), with payment and ex-dividend dates of June 16, 2004
and June 9, 2004, respectively.
Market Background and Outlook
During 2003, capital discipline on the part of the oil and gas
majors and production discipline on the part of the OPEC nationals, as
well as specific factors affecting exploration and production activity
in Iraq, Venezuela and Nigeria, resulted in overall drilling activity
outside of North America remaining flat in spite of the relatively
high level of oil prices sustained throughout the year. The increase
in drilling activity in North America was driven by high natural gas
prices in USA and Canada and an increase in exploration and production
spending by Pemex in Mexico. At the same time, industrial production
in Europe remained stagnant throughout the year. Demand for seamless
pipes increased in Tenaris's Mexican and Argentine local markets
driven mainly by increased investment in oil exploration and
production activity but demand in Venezuela and Canada remained at
levels similar to 2002.
As we move into 2004, global demand for oil is increasing as
economic growth picks up, which should help to sustain a limited
increase in exploration and production activity at current oil price
levels. Even if capital discipline on the part of the majors and
production discipline on the part of OPEC nationals continue to be
maintained, global drilling activity and demand for seamless pipe
products from the oil and gas sector should show a limited increase
over the levels of 2003. In Tenaris's local markets, demand for
seamless pipes is expected to increase in Canada, Mexico and
Venezuela, where rig counts have been rising, and to remains stable in
Argentina. Industrial production activity in North America and Japan
has been recovering but recovery in Europe remains fragile and could
be affected by the appreciation of the euro.
Increased global demand for Tenaris's seamless pipes should
support significant price increases following the substantial
increases in steelmaking raw material costs and in the cost of steel
used for the production of welded pipes experienced during 2003. These
costs are continuing to appreciate rapidly due to supply constraints
in the wake of the strong growth of China's consumption and production
of steel products.
Demand for Tenaris's welded pipes is to a large extent driven by
projects to construct oil and gas pipelines in South America. In 2002,
overall demand was high with deliveries made to large pipeline
projects in Ecuador, Peru and Bolivia. In 2003, demand in the local
Brazilian market increased significantly but overall demand remained
well below the levels recorded in 2002 due to a lack of projects in
other South American markets. It was further affected in the second
half of the year by the postponement of deliveries to ongoing
projects. For 2004, demand for Tenaris's welded pipes will depend
primarily on the completion of postponed deliveries and the
realization of further oil and gas pipeline projects previously
announced in the Brazilian market.
Recent Developments
In December 2003, as commented above, a full and final settlement
was reached in respect of a lawsuit brought against our Italian
subsidiary, Dalmine SpA, by a consortium led by BHP Billiton Petroleum
Ltd.
On February 2, 2004, we completed the purchase of the land and
buildings that were being leased by our Canadian subsidiary, Algoma
Tubes Inc. at a cost of C$12.5 million (US$9.6 million).
On February 11, 2004, a trust (fideicomiso) established in
accordance with Mexican law in connection with the delisting of our
Mexican subsidiary, Tubos de Acero de Mexico S.A. (Tamsa), concluded
and, as a result, an additional 249,166 of Tenaris shares have been
issued in exchange for the shares of Tamsa deposited therein. Tenaris
currently has 1,180,536,830 shares outstanding and holds, directly or
indirectly, 99.96% of the outstanding shares of Tamsa.
On February 17, 2004, Pedro Pablo Kuczynski resigned from our
board of directors following his appointment as Minister of Economy
and Finance in the government of Peru.
Analysis of 2003 Annual Results
(metric tons)
-------------------- --------- --------- -------------------
Sales volume 2003 2002 Increase/(Decrease)
-------------------- --------- --------- -------------------
South America 322,000 324,000 (1%)
North America 608,000 401,000 52%
Europe 617,000 637,000 (3%)
Middle East & Africa 365,000 528,000 (31%)
Far East & Oceania 366,000 392,000 (7%)
Total seamless pipes 2,278,000 2,283,000 ( 0%)
Welded pipes 355,000 585,000 (39%)
Total steel pipes 2,633,000 2,868,000 (8%)
Sales volume of seamless pipes remained stable at 2,278,000 tons
in 2003 compared to 2,283,000 tons in 2002. Sales volume in South
America declined marginally by 1%, with demand in Argentina showing an
increase due to strong activity in the oil sector, demand in Venezuela
remaining low but on an upward trend following a national strike
centered on the state-owned oil industry at the beginning of the year,
and demand from oil and gas sector in the rest of the region showing a
slight decline. Sales volume in North America increased by 52% due to
a substantial increase in demand, sustained quarter on quarter, from
the oil and gas sector in Mexico and increased sales in the U.S.A,
including increased sales to deepwater pipeline projects in the Gulf
of Mexico. Sales volume in Europe decreased by 3% as demand from the
industrial sector declined slightly and sales to pipeline projects in
the North Sea area fell. Sales volume in the Middle East and Africa
decreased by 31% as demand was affected by increased security and
other risks surrounding the U.S.-led military invasion of Iraq and
political and security risks affecting oil and gas activities in
Nigeria and sales efforts were concentrated on higher value products.
Sales volume in the Far East and Oceania fell by 7% as sales to China
remained firm but sales to the oil and gas sector in South East Asia
were lower.
Sales volume of welded pipes decreased by 39% to 355,000 tons in
2003 from 585,000 tons in 2002. Increased demand from the local
Brazilian market was not sufficient to offset the decline in demand
from other markets following the termination of deliveries made in
2002 to major gas pipeline projects in Ecuador, Peru and Bolivia.
Sales of electric energy in Italy increased by 43% to 3.0 TWh in
2003 from 2.1 TWh in 2002 and sales of natural gas increased by 10% to
503 million scm in 2003 from 456 million scm in 2002. These increases
reflect the continuing expansion of the customer base.
(US$ million)
-------------- ------- ------- -------------------
Net sales 2003 2002 Increase/(Decrease)
-------------- ------- ------- -------------------
Seamless pipes 2,375.9 2,244.1 6%
Welded pipes 350.7 580.0 (40%)
Energy 333.2 210.4 58%
Others 119.8 184.8 (35%)
Total 3,179.7 3,219.4 (1%)
Net sales in 2003 decreased 1% to US$3,179.7 million, compared to
US$3,219.4 million in 2002. Excluding sales of discontinued other
steel products, net sales increased 2% to US$3,130.9 million, compared
to US$3,075.6 million. Net sales of seamless pipes rose by 6% due to
higher average selling prices resulting from a more favorable market
and product mix and higher prices in Europe following the appreciation
of the Euro. Net sales of welded pipes decreased 40% as sales volume
of welded pipes and sales of metal structures made by Tenaris's
Brazilian welded pipe subsidiary (down to US$63.0 million from US$93.7
million) both declined. Net sales of electricity and natural gas by
Dalmine Energie increased by 58% reflecting the continuing expansion
of the business, whose rate of growth is now slowing, and the increase
in the value of the Euro against the U.S. dollar. Net sales of other
goods and services, excluding sales of other steel products which have
been discontinued, rose 73% to US$71.0 million in 2003, compared to
US$41.0 million in 2002 due primarily to increased sales of sucker
rods and the commencement of sales of steam and electric power to
third parties from the Argentine power generation facility acquired in
February 2003.
Cost of sales, expressed as a percentage of net sales, rose 2.0
percentage points to 69.4% in 2003, compared to 67.4% in the same
period of 2002. This increase resulted from lower gross margins in the
welded business, higher sales of low-margin energy products and higher
cost of sales for seamless pipe products. Cost of sales for seamless
pipe products, expressed as a percentage of net sales, increased 0.8
percentage points to 64.1% in 2003, compared to 63.3% in 2002.
Increased sales in our local markets of Mexico and Argentina, where
sales include a higher component of services, and a more
cost-efficient allocation of orders among our main production
facilities compensated for the impact of rising raw material and
increased energy and labor costs for much of the year but further
increases in raw material costs towards the end of the year led to the
overall increase in cost of sales, expressed as a percentage of net
sales, for the year. Cost of sales for welded pipe products, expressed
as a percentage of net sales, increased 12.9 percentage points to
78.3% in 2003, compared to 65.4% in 2002 due to a substantial
reduction in export sales, whose sales prices include a component
associated with the higher selling expenses and different delivery
conditions associated with exports, the cost of which is recorded in
selling, general and administrative expenses, and negative margins on
sales of metal structures following a contraction in sales and
provisions relating to contractual claims. Cost of sales for energy
products, expressed as a percentage of net sales, rose 0.6 percentage
points to 95.0% in 2003, compared to 94.4% in 2002 as margins remained
relatively stable in spite of increased competition in a maturing
business. Cost of sales for other products, expressed as a percentage
of net sales, decreased 14.5 percentage points to 77.3% in 2003,
compared to 91.9% in 2002, due to reduced sales of low-margin other
steel products, which were discontinued during the year, and increased
sales of products with higher margins such as sucker rods.
Selling, general and administrative expenses, or SG&A, remained
stable at US$566.8 million, or 17.8% of net sales in 2003, compared to
US$567.5 million, or 17.6% of net sales, during 2002. Although selling
expenses decreased, due to substantially lower exports of welded pipes
and a reduction in sales commissions following corporate
reorganization activities, general and administration expenses
increased, due to increased costs in Italy and Argentina following the
revaluation of the Euro and the Argentine peso against the U.S.
dollar, additional taxes in Argentina and non-recurring costs relating
to the delisting of subsidiaries and corporate reorganization
activities. Towards the end of the period there was an increase in
freight costs registered in selling expenses.
Other operating income and expenses showed a net loss of US$116.8
million in 2003 compared to a net loss of US$10.8 million in 2002.
Excluding losses and provisions recorded in respect of the BHP lawsuit
and settlement, other operating income and expenses would have showed
a net loss of US$2.6 million in 2003 compared to a net gain of US$8.2
million in 2002.
Net financial expenses totalled US$29.4 million in 2003, compared
to net financial expenses of US$20.6 million in 2002. Net interest
expenses decreased to US$16.7 million compared to US$20.3 million.
Losses of US$16.2 million were recorded on foreign exchange
translations compared to a gain of US$11.6 million with the change in
position principally reflecting the effects of the devaluation of the
Argentine peso against the US dollar during 2002 and its subsequent
revaluation in 2003. Net financial expenses in 2002 also included a
loss of US$8.8 million relating to financial discounts on trade
receivables.
Results of associated companies generated a gain of US$27.6
million in 2003, compared to a loss of US$6.8 million in 2002. These
results reflect the change in returns on Tenaris's indirect investment
in Sidor, which carried out a financial restructuring during the
period and had more favorable market conditions for its products.
Income tax provisions of US$63.9 million were recorded during
2003, compared to income tax provisions of US$207.8 million, net of a
tax refund of US$36.8 million following a judicial claim brought by
Tenaris' principal subsidiary in Mexico, during 2002. This variation
in income tax provisions principally reflects the effects of the
devaluation of the Argentine peso against the U.S. dollar during 2002,
and its subsequent revaluation in 2003, on income tax provisions
recorded by Tenaris's subsidiaries in Argentina. During 2002, Tenaris
recorded significant income tax provisions in relation to gains, in
local currency terms, on foreign currency-denominated monetary assets
at its Argentine subsidiaries and to the tax base of their
non-monetary assets, whereas, during 2003, its income tax provisions
were reduced by a reduction in income taxes actually paid and a
partial reversal of deferred taxes. Deferred tax liabilities, net of
deferred tax assets, decreased from US$386.2 million at December 31,
2002 to US$287.5 million at December 31, 2003.
Minority interest showed a loss of US$12.1 million in 2003,
compared to a loss of US$142.4 million in 2002. Minority interest in
2002 included a loss of US$99.5 million in respect of participations
in subsidiaries acquired in the exchange offer completed in December
2002. The reduced loss, on a comparable basis, was due to a
deterioration in the results of Confab where minority shareholders
shared US$7.4 million of Confab's income in 2003 compared to US$27.3
million of Confab's income in 2002 and the acquisition of almost all
the remaining publicly held shares of Tamsa and Siderca during the
year.
Fourth Quarter Results
(4Q03 vs 4Q02)
-- Net sales of US$761.6 million, down 11.3% from US$859.0
million
-- Operating loss of US$32.1 million, down from income of
US$112.9 million
-- Net income of US$13.7 million, down from US$52.6 million
-- Net earnings per share of US$0.012 (US$0.12 per ADS)
Net sales for the quarter declined due to a substantial drop in
sales of welded pipes and the discontinuation of trading in non-pipe
steel products not produced by Tenaris. Net sales of seamless pipes
remained at a similar level to those of the fourth quarter of 2002.
However, sales volume of seamless pipes was 5% lower than that of the
fourth quarter of 2002 and the gross margin on sales of seamless pipes
declined to 34.3% compared to an average margin of 36.4% in the first
nine months of 2003 and 36.6% during the 2002 fiscal year.
Operating and net income results were further affected by a loss
of US$108.2 million recorded in other operating expenses following the
settlement agreed with the consortium led by BHP Billiton Petroleum
Ltd. After adjusting for income tax provisions, the net loss recorded
on the settlement during the quarter was US$70.9 million. Excluding
this loss operating income was US$76.1 million, or 10.0% of net sales,
and operating income plus depreciation and amortization was US$129.9
million, or 17.1% of net sales.
(metric tons)
-------------------- -------- -------- -------------------
Sales volume 4Q 2003 4Q 2002 Increase/(Decrease)
-------------------- -------- -------- -------------------
South America 91,000 96,000 (5%)
North America 164,000 75,000 119%
Europe 145,000 150,000 (3%)
Middle East & Africa 66,000 163,000 (60%)
Far East & Oceania 80,000 91,000 (12%)
Total seamless pipes 545,000 574,000 (5%)
Welded pipes 39,000 156,000 (75%)
Total steel pipes 584,000 730,000 (20%)
Sales volume of seamless pipes declined by 5% to 545,000 tons in
the fourth quarter of 2003 from 574,000 tons in the same period of
2002. In South America higher sales volumes in the larger markets of
Argentina and Venezuela were insufficient to offset reduced sales to
the rest of the region. A substantial increase in sales volumes to
North America, where drilling activity in Mexico continued to increase
and sales in USA and Canada were also higher, was offset by
substantially lower sales volumes to Middle East and Africa,
reflecting continuing political and security issues in Iraq and
Nigeria and lower sales to the oil and gas sector in the Middle East.
In Europe, demand from the industrial sector remained weak and demand
from the North Sea oil and gas sector declined. In the Far East and
Oceania, higher sales in China and Japan were insufficient to offset
reduced sales to the rest of the region.
Sales volume of welded pipes decreased by 75% to 39,000 tons in
the fourth quarter of 2003 from 156,000 tons in the same period of
2002. Delays in issuing necessary environmental clearances in Rio de
Janeiro state and a dispute between Petrobras and the Rio de Janeiro
state government have led to the suspension of deliveries to the
Campinas-Rio pipeline project and a slowdown in new project activity
by Petrobras.
(US$ million)
--------------- ------- ------- -------------------
Net sales 4Q 2003 4Q 2002 Increase/(Decrease)
--------------- ------- ------- -------------------
Seamless pipes 593.2 589.3 1%
Welded pipes 51.0 134.8 (62%)
Energy 99.2 65.3 52%
Others 18.2 69.6 (74%)
Total 761.6 859.0 (11%)
Net sales in the quarter ended December 31, 2003 decreased 11% to
US$761.6 million, compared to US$859.0 million in the corresponding
quarter of 2002. Excluding sales of discontinued other steel products,
net sales decreased 6% to US$761.3 million, compared to US$806.0
million. Net sales of seamless pipes rose by 1%, as higher average
selling prices offset the reduction in sales volume. The increase in
average selling prices primarily reflected changes in market and
product mix and increased prices in Europe following the appreciation
of the Euro. Net sales of welded pipes decreased 62%, reflecting the
decline in sales volume. Net sales of welded pipes included US$16.6
million corresponding to sales of metal structures made by Tenaris's
Brazilian welded pipe subsidiary compared to US$19.0 million in the
corresponding quarter of 2002. Net sales of electricity and natural
gas by Dalmine Energie increased by 52%, reflecting the continuing
expansion of the business and the increase in the value of the Euro
against the U.S. dollar. Net sales of other goods and services,
excluding discontinued sales of other steel products, rose 8% to
US$17.9 million compared to US$16.6 million.
Cost of sales, expressed as a percentage of net sales, increased
1.3 percentage points to 70.4% in the fourth quarter of 2003, compared
to 69.1% in the same period of 2002. This results from a reduction in
gross margins in our seamless and welded pipe businesses, partially
offset by the discontinuation of sales of low-margin non-pipe steel
products not produced by Tenaris. Cost of sales for seamless pipe
products, expressed as a percentage of net sales, increased 3.1
percentage points to 65.7% in the fourth quarter of 2003 compared to
62.5% in the same period of 2002 and 63.4% for the 2002 fiscal year.
This deterioration resulted principally from increases in steelmaking
raw material, energy and labor costs. Cost of sales for welded pipe
products, expressed as a percentage of net sales, increased 13.2
percentage points to 85.1% in the fourth quarter of 2003, compared to
71.9% in the same period of 2002 due to a higher proportion of
low-margin sales of metal structures in this segment and a substantial
reduction in export sales, whose sales prices include a component
associated with the higher selling expenses and different delivery
conditions associated with exports, the cost of which is recorded in
selling, general and administrative expenses. Cost of sales for energy
products, expressed as a percentage of net sales, decreased 3.9
percentage points to 92.5% in the fourth quarter of 2003, compared to
96.4% in the same period of 2002. Cost of sales for other products,
expressed as a percentage of net sales, decreased 29.7 percentage
points to 63.8% in the fourth quarter of 2003, compared to 93.5% in
the same period of 2002, reflecting the discontinuation of sales of
low-margin other steel products.
Selling, general and administrative expenses, or SG&A, increased
to US$147.8 million, or 19.4% of net sales in the quarter ended
December 31, 2003, compared to US$144.3 million, or 16.8% of net
sales, during the corresponding quarter of 2002. General and
administrative expenses increased due to higher costs in Italy,
Argentina and Brazil reflecting local currency appreciation against
the U.S. dollar. Although selling expenses were lower due to
substantially lower exports of welded pipes, there was an increase in
freight costs.
Other operating income and expenses showed a net loss of US$109.5
million in the fourth quarter of 2003, with a loss of US$108.2 million
recorded in respect of the settlement of the BHP lawsuit, compared to
a net loss of US$8.3 million in the fourth quarter of 2002.
Net financial income totalled US$7.2 million in the fourth quarter
of 2003, compared to net financial income of US$6.5 million in the
same period of 2002.
Results of associated companies generated a gain of US$11.3
million in the fourth quarter of 2003, compared to a loss of US$2.6
million in the fourth quarter of 2002. The gain of US$11.3 million
results from Tenaris's indirect investment in Sidor.
A gain on income tax provisions of US$26.1 million was recorded
during the fourth quarter of 2003, which included the recognition of a
positive deferred income tax effect of US$37.3 million in respect of
the loss in respect to the BHP lawsuit, compared to income tax
provisions of US$17.5 million during the corresponding quarter of
2002.
Cash Flow and Liquidity
Net cash provided by operations in 2003 was US$275.6 million.
Income taxes paid exceeded income tax provisions by US$138.6 million.
Net working capital increased by US$107.2 million, principally
reflecting an increase in inventories (US$151.8 million), most of
which occurred in the fourth quarter.
Net cash used in investment activities was US$252.4 million, which
includes investments of US$162.6 million in property, plant and
equipment and intangible assets (principally information systems),
US$41.7 million in relation to the acquisition of minority interests
in Siderca and Dalmine, US$23.1 million in the acquisition of an
Argentine power plant and US$32.9 million used in connection with the
financial restructuring at Sidor, US$31.1 million of which was in the
form of subordinated convertible debt recorded as a non-current
receivable.
Net cash used in financing activities was US$83.2 million, which
includes the payment of US$129.1 million in dividends, of which
US$14.1 million was paid to minority interests, and a net increase
(excluding the effect of exchange rate variations) of US$45.9 million
in borrowings.
Some of the statements contained in this press release are
"forward-looking statements". Forward-looking statements are based on
management's current views and assumptions and involve known and
unknown risks that could cause actual results, performance or events
to differ materially from those expressed or implied by those
statements. These risks include but are not limited to risks arising
from uncertainties as to future oil prices and their impact on
investment programs by oil companies.
Consolidated Income Statement
Three-month period Fiscal year ended
ended December 31, December 31,
(All amounts in US$ ------------------- -----------------------
thousands) 2003 2002 2003 2002
------------------- -----------------------
Net sales 761,566 859,027 3,179,652 3,219,384
Cost of sales (536,357) (593,483) (2,207,827) (2,169,228)
--------- --------- ----------- -----------
Gross profit 225,209 265,544 971,825 1,050,156
Selling, general and
administrative
expenses (147,758) (144,303) (566,835) (567,515)
Other operating income
and expenses (109,519) (8,335) (116,800) (10,764)
--------- --------- ----------- -----------
Operating income (32,068) 112,906 288,190 471,877
Financial income
(expenses), net 7,183 6,517 (29,420) (20,597)
--------- --------- ----------- -----------
Income before income
tax and equity in
earnings (losses) of
associated companies (24,885) 119,423 258,770 451,280
Equity in earnings
(losses) of associated
companies 11,312 (2,639) 27,585 (6,802)
--------- --------- ----------- -----------
Income before income
tax and minority
interest (13,573) 116,784 286,355 444,478
Income tax 26,130 (17,506) (63,918) (207,771)
--------- --------- ----------- -----------
Net income before
minority interest 12,557 99,278 222,437 236,707
Minority interest (1) 1,126 (12,204) (12,129) (42,881)
--------- --------- ----------- -----------
Net income before other
minority interest 13,683 87,074 210,308 193,826
Other minority
interest (2) - (34,427) - (99,522)
--------- --------- ----------- -----------
Net income 13,683 52,647 210,308 94,304
(1) Minority interest excluding minority interest attributable to
participations in consolidated subsidiaries acquired in the Exchange
Offer
(2) Minority interest attributable to participations in consolidated
subsidiaries acquired in the Exchange Offer
Consolidated Balance Sheet
December 31, 2003 December 31, 2002
(All amounts in US$ ------------------- ---------------------
thousands)
Assets
Non-current assets
Property, plant and
equipment, net 1,960,314 1,934,237
Intangible assets, net 54,037 32,684
Investments in associated
companies 45,814 14,327
Other investments 23,155 159,303
Deferred tax assets 130,812 113,864
Receivables 59,521 2,273,653 16,902 2,271,317
Current assets
Inventories 831,879 680,113
Receivables and
prepayments 165,134 172,683
Trade receivables 652,782 653,249
Other investments 138,266 0
Cash and cash equivalents 247,834 2,035,895 304,536 1,810,581
Total assets 4,309,548 4,081,898
Equity and Liabilities
Shareholders' equity 1,841,280 1,694,054
Minority interest 119,984 186,783
Non-current liabilities
Borrowings 374,779 322,205
Deferred tax liabilities 418,333 500,031
Other liabilities 191,540 123,023
Provisions 23,333 33,874
Trade payables 11,622 1,019,607 18,650 997,783
Current liabilities
Borrowings 458,872 393,690
Current tax liabilities 108,071 161,704
Other liabilities 207,594 53,428
Provisions 39,624 73,953
Customers advances 54,721 37,085
459,795 1,328,677
Trade payables 1,203,278
483,418
Total liabilities 2,348,284 2,201,061
Total equity and
liabilities 4,309,548 4,081,898
Consolidated Statement of Cash Flows (selected)
Three-month period ended Fiscal year ended
December 31 December 31
------------------------ ------------------
(All amounts in US$
thousands) 2003 2002 2003 2002
Net income (loss) for
the period 13,683 52,647 210,308 94,304
Depreciation and
amortization 53,862 47,665 199,799 176,315
Result of BHP litigation 108,187 18,923 114,182 18,923
Tax accruals less
payments (72,752) 39,722 (138,570) 174,478
Equity in (gains) losses
of associated companies (11,312) 2,639 (27,585) 6,802
Interest accruals less
payments (2,479) 4,832 (3,032) 4,780
Net provisions (2,780) (3,590) (13) (27,473)
Result from disposition
of investment in
associated companies - - (1,018) -
Minority interest (1,127) 46,631 12,129 142,403
Change in working
capital (104,557) (103,215) (107,156) (100,842)
Currency translation
adjustments and others 43,127 13,802 16,592 (28,254)
-------------- --------- ---------- ---------
Net cash provided by
operations 23,852 120,056 275,636 461,436
-------------- --------- ---------- ---------
Capital expenditure (39,164) (47,305) (162,624) (147,577)
Proceeds from
disposition of
property, plant and
equipment 2,784 4,119 5,965 14,427
Acquisitions of
subsidiaries (3,627) (14,787) (65,283) (15,107)
Proceeds from associated
companies - - 1,124 -
Convertible loan to
associated companies - - (31,128) -
Acquisitions of minority
interest - - (299) -
Changes in Trust fund - (20,442) - (32,349)
-------------- --------- ---------- ---------
Net cash used in
investment activities (40,007) (78,415) (252,245) (180,606)
Dividend paid - - (115,002) (39,290)
Dividend paid to
minority interest in
subsidiaries (8,387) (3,261) (14,064) (41,484)
Proceeds from borrowings 219,191 77,198 590,490 425,268
Repayments of borrowings (155,869) (119,776) (544,606) (528,870)
-------------- --------- ---------- ---------
Net cash (used in)
provided by financing
activities 54,935 (45,839) (83,182) (184,376)
-------------- --------- ---------- ---------
Increase (decrease) in
cash and cash
equivalents 38,780 (4,198) (59,791) 96,454
-------------- --------- ---------- ---------
Cash at the beginning of
the period, 208,592 310,279 304,536 213,814
Effect of exchange rate
changes on cash and
cash equivalents 462 (1,545) 3,089 (5,732)
Increase (decrease) 38,780 (4,198) (59,791) 96,454
Cash at the end of the
period 247,834 304,536 247,834 304,536
CONTACT: Tenaris
Investor Relations, 888-300-5432
www.tenaris.com
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's press release announcing
its 2003 annual results
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: March 3, 2004
Tenaris, S.A.
By: /s/ Cecilia Bilesio
-----------------------
Cecilia Bilesio
Corporate Secretary